Environmental Permitting

Equipment Leak Violations– Numerous and Costly

A related challenge is faced by government inspectors who must determine compliance with LDAR requirements under several Clean Air Act (CAA) programs and assess penalties in a rational fashion.  In September 2012, the EPA revised Appendix VI of its Stationary Source Civil Penalty Policy (General Policy), which advises inspectors on calculating settlement penalties for violations of LDAR requirements.  Appendix VI is also valuable to the regulated communities as a guide to the major issues about equipment leaks that concern the EPA and state agencies.  This article summarizes the eight types of LDAR violations and ranges of enforcement responses described in Appendix VI.

The EPA first developed its LDAR penalty policy in 1988 mainly to address violations under 40 CFR Part 61 (National Emissions Standards for Hazardous Air Pollutants).  Following the 1990 CAA Amendments, the Agency issued many new LDAR requirements under 40 CFR Part 60 (Standards of Performance for New Stationary Sources) and 40 CFR Part 63 (National Emissions Standards for Hazardous Air Pollutants for Source Categories).  Expanding the range of LDAR requirements necessitated the Appendix VI revision.  According to the Agency, while the specific equipment covered, the leak repair thresholds, and other such matters may vary between Parts 60, 61, and 63, the fundamental structure of the equipment leak standards is similar for all three parts. 

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Widespread Noncompliance

In its 2007 best practices guide, the EPA noted that there was “significant widespread noncompliance” with the LDAR requirements.  The Agency estimated that 70,000 tons per year (tpy) of VOCs and 9,000 tpy of VHAPs were released through equipment leaks.  That exceeded emissions from storage vessels, wastewater, transfer operations, or process vents, says the EPA.  At that time, the major problem for industry seemed to be properly following EPA’s Method 21, which requires use of a properly calibrated portable instrument to detect VOC leaks. 

Industry may be improving its performance, but the EPA is still finding large-scale noncompliance.  For example, in December 2012, the Agency fined two companies $970,000 for alleged LDAR violations at a chemical plant in Springfield, Massachusetts.  The charges included failure to use suitable and/or properly calibrated leak detection instruments, identify unsafe and difficult to monitor equipment, implement a plant-wide LDAR program, and properly report compliance in semi-annual certifications.  The companies were also ordered to implement an enhanced LDAR program in which they must perform monitoring of more equipment at greater frequencies than would otherwise be required under existing regulations.

Leaks themselves are not violations provided they are corrected once discovered, usually within     5 days.  The amount of a penalty for failure to fix a leak within the allotted time or failure to meet any other LDAR requirement will depend on a variety of factors, such as the substance leaked and the possible harm that could result from the violation.  For example, leaks of non-HAP VOCs in ozone attainment areas are viewed as less of a threat than release of the same substances in ozone nonattainment areas.  In the latter case, the enforcing agency may apply a multiplier of 2 to the penalty.  A multiplier of 2 “plus an upward multiplier when warranted” may be applied when HAP leaks present a risk to nearby communities. 

Following are summaries of EPA’s guidance on applying penalties for the eight types of LDAR violations that can occur under Parts 60, 61, and 63.

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Penalties for recordkeeping violations range from $250 to $37,500.  A complete failure to keep records should generally be assessed a penalty at the upper end.  A higher penalty is also appropriate for listing unregulated equipment on the equipment list, an action that can bias  the calculated leak rate to the low end.  Penalties in the upper range are particularly appropriate when the failure to keep records adversely affects other regulatory requirements; for example, absent visual inspection records may mean required visual inspections were not performed.

Incomplete records can generally be assessed lower penalties provided the objective of the recordkeeping requirement is still served.  For example, lower range penalties may be assessed for violations such as omission of a very small percentage of equipment from the equipment list.  Other factors that affect the penalty amount are the overall importance of the missing information as well as relative importance of the missing information when compared to the information present.


Reporting takes several forms–onetime reports, such as initial notification or notification of compliance status, and reports that must be submitted at regular intervals, such as semiannual reports.  Violations include failure to submit a report, submitting an incomplete report, and late submission of a report. 

As with recordkeeping, the seriousness of the violation relates to the quantity of missing information, the overall importance of the missing information to EPA’s ability to evaluate the company’s compliance with regulations, the relative importance of the missing information compared to the information present, and the degree of inattention to the regulatory requirements the company manifests by failing to report information.  Using these parameters, an agency may determine the percentage of total information missing from the report, and that percentage can be used in calculating a final penalty amount.

The minimum penalty for any reporting violation is $250.  Such a violation may involve the omission of one piece of equipment from a report.  The Appendix makes a distinction between an incomplete report and a piece of missing information.  For example, if the missing piece of information is subsequently provided on request, the penalty may be $250 and not a higher amount associated with an incomplete report.

See tomorrow’s Advisor for more summaries of penalties for LDAR violations.