Federal Facility Enforcement Project Involving WPAFB

By: Christine Swetz & By: Christine Swetz & JefferisJefferis CananCanan

RAPCARAPCA

June 9, 2004June 9, 2004

WPAFB Enforcement Case1995-2000

•• Failed performance tests for PMFailed performance tests for PM•• Silver Recovery Incinerator (1995)Silver Recovery Incinerator (1995)

•• CoalCoal--fired boilers (1995 & 1996)fired boilers (1995 & 1996)

Topics::

•• Boiler & incinerator violationsBoiler & incinerator violations

•• Sovereign ImmunitySovereign Immunity

•• Corollary enforcement case involving bad coalCorollary enforcement case involving bad coal

Silver Recovery Incinerator (N002)

• Incinerator used to recover silver from destruction of confidential photographs

• Installed 1976• PM allowable = 0.10 lb/100 lbs material charged

Opacity < 5%• Performance test conducted March 7, 1995• Actual PM emission rate = 0.52 lb/100 lbs material

charged• RM 9 opacity readings ranged from 10% - 80%

Corrective Actions to IncineratorActions to Incinerator

• Permanent shutdown of N002 immediately following failed emissions test on March 7, 1995

Coal-Fired Boilers (B003 & B004)

• Two coal-fired heating plants (“Buildings 20770 & 31240”)• Three coal-fired boilers at each plant• Dedicated ESP for PM removal from each boiler• Building 20770:

• 183 mmBtu/hr chain grate stoker coal-fired boilers • Installed 1980• PM allowable = 0.10 lb/mmBtu

• Emissions testing conducted on B003 & B004 demonstrated compliance on multiple occasions prior to 1995

• 2 boilers at Bldg. 20770 (B003 & B004) failed performance tests conducted in March 1995 & January 1996

• Boiler testing at Bldg. 31240 stopped; suspected violations

Particulate Emissions SummaryCoal-fired boilers at Bldg. 20770

Emissions Emissions UnitUnit

Test DateTest Date Actual PMActual PM

lb/mmBtulb/mmBtuActual PMActual PM

lbs/hrlbs/hr

B003B003 33--2121--9595 0.270.27 41.941.9

11--99--9696 0.2100.210 30.630.6

B004B004 33--2222--9595 0.260.26 36.436.4

11--1010--9696 0.1570.157 22.122.1

•• PM limitations = 0.10 lb/mmBtuPM limitations = 0.10 lb/mmBtu

15.0 lbs/hr 15.0 lbs/hr

Corrective Actions to BoilersActions to Boilers

•• Following failed performance tests in 1995:Following failed performance tests in 1995:

•• Boilers: Boilers: Air passages cleared; Refractory cracks sealed; Air passages cleared; Refractory cracks sealed; Cinder nozzles replaced; Forced air ductwork patched; Leaks Cinder nozzles replaced; Forced air ductwork patched; Leaks in power plant roof repaired; Water tubes, mud drum & in power plant roof repaired; Water tubes, mud drum & rotary seals cleaned with high pressure airrotary seals cleaned with high pressure air

•• Cyclones:Cyclones: Access hatches installed allowing for maintenance Access hatches installed allowing for maintenance & cleaning; Cyclones reconfigured to eliminate soot & cleaning; Cyclones reconfigured to eliminate soot accumulation at inlet; Hopper & cyclone casing seams weldedaccumulation at inlet; Hopper & cyclone casing seams welded

Corrective Actions to Boilers con’t

•• ESPs:ESPs: Water washed all internal areas; Defective Water washed all internal areas; Defective components & anticomponents & anti--sway insulators replaced; Damaged sway insulators replaced; Damaged vibrators, rapper assemblies & support tubes replacedvibrators, rapper assemblies & support tubes replaced

•• Total cost of repairs following failed tests in 1995 = Total cost of repairs following failed tests in 1995 = $175,383.52 $175,383.52

•• Following failed performance tests in 1996:Following failed performance tests in 1996:

•• Hired boiler expert, Charles Schmidt (Schmidt Associates Hired boiler expert, Charles Schmidt (Schmidt Associates Inc.) to identify reasons for failed performance testsInc.) to identify reasons for failed performance tests

Corrective Actions to Boilers con’t (1996)

•• Poor quality coal identified as cause of damage to boiler and coPoor quality coal identified as cause of damage to boiler and control equipment ntrol equipment and reason for failed tests:and reason for failed tests:

•• High coal ash content: (8.3High coal ash content: (8.3--10.2% during 1995/1996 tests vs. 5.510.2% during 1995/1996 tests vs. 5.5--6.6% during 1987 6.6% during 1987 tests)tests)

•• High mineral content: (phosphorus pentoxide identified as heavy High mineral content: (phosphorus pentoxide identified as heavy fouling material fouling material within boiler)within boiler)

•• Contractor lab analysis indicated coal was within contract specsContractor lab analysis indicated coal was within contract specs, but analysis by , but analysis by WPAFB lab did notWPAFB lab did not

•• Consultant concluded that ESPs not likely to handle varying coalConsultant concluded that ESPs not likely to handle varying coal quality; quality; Recommended installation of pulse jet baghouseRecommended installation of pulse jet baghouse

•• WPAFB installed pulse jet baghouses on all 3 coalWPAFB installed pulse jet baghouses on all 3 coal--fired boilers at heating plant in fired boilers at heating plant in 19961996

•• Total cost of project = $5,400,000.00 Total cost of project = $5,400,000.00

Particulate Emissions Summaryfollowing installation of new baghouses on

coal-fired boilers

Emissions Emissions UnitUnit

Test DateTest Date Actual PMActual PM

lb/mmBtulb/mmBtuActual PMActual PM

lbs/hrlbs/hr

B003B003 11--2424--9797 0.0380.038 5.375.37

B004B004 11--2323--9797 0.0050.005 0.670.67

•• PM limitations = 0.10 lb/mmBtuPM limitations = 0.10 lb/mmBtu15.0 lbs/hr15.0 lbs/hr

Enforcement response/Sovereign Immunity

•• Agency Notices of Violation issued July 1995 & August 1995Agency Notices of Violation issued July 1995 & August 1995

•• RAPCA’s initial enforcement strategy RAPCA’s initial enforcement strategy –– resolve with Administrative resolve with Administrative OrdersOrders

•• Drafted documents to include facility compliance plan & civil Drafted documents to include facility compliance plan & civil penaltiespenalties

•• Facility ‘petitioned’ for Consent Order without penalties, citinFacility ‘petitioned’ for Consent Order without penalties, citing g sovereign immunity defensessovereign immunity defenses•• 1992 CWA/RCRA case involving DOE/Fernald facility1992 CWA/RCRA case involving DOE/Fernald facility

Enforcement response/Sovereign Immunitycon’t

•• Discussions among RAPCA, OAG, & OEPA about sovereign immunity Discussions among RAPCA, OAG, & OEPA about sovereign immunity during summer of 1996during summer of 1996

•• RAPCA referred incinerator and boiler enforcement cases to Ohio RAPCA referred incinerator and boiler enforcement cases to Ohio EPA for EPA for resolution, via an Enforcement Action Request, in September 1996resolution, via an Enforcement Action Request, in September 1996

•• Case formally referred from OEPA to OAG in October 1996 with reqCase formally referred from OEPA to OAG in October 1996 with requestuest

“. . . to seek appropriate penalties for civil violations “. . . to seek appropriate penalties for civil violations of ORC Chapter 3704.”of ORC Chapter 3704.”•• Formalize plan/scheduleFormalize plan/schedule

•• Injunctive reliefInjunctive relief

•• Stipulated penaltiesStipulated penalties

Legal Maneuvering

•• August 1997: OAG contacts WPAFB and issues an August 1997: OAG contacts WPAFB and issues an “invitation to dance”; says that a settlement must “invitation to dance”; says that a settlement must include injunctive relief plus payment of civil penaltiesinclude injunctive relief plus payment of civil penalties

•• August 1997 WPAFB response: No enforcement August 1997 WPAFB response: No enforcement necessary plus sovereign immunity appliesnecessary plus sovereign immunity applies•• Two cases cited: 1992 DOE vs. Ohio; & Two cases cited: 1992 DOE vs. Ohio; &

1995 US vs. Georgia DNR1995 US vs. Georgia DNR

•• Also cited: Air Force policy to not pay penalties for CAA Also cited: Air Force policy to not pay penalties for CAA violationsviolations

Legal Maneuvering, part II• September 1997: OAG position with WPAFB was to hold firm

on civil penalties

• Cited cases:• ‘76 Hancock vs. Train - not definitive on the sovereign immunity/civil

penalty question• ‘77 CAA amendments resolved the sovereign immunity question• ‘92 DOE vs. Ohio case involved the CWA and RCRA, but not the CAA• ‘95 US vs. Georgia DNR case decision was not binding in 6th Circuit• ‘87 Dept. of Air Force vs. Ohio was controlling case law in the sovereign

immunity waive issue• ‘97 US vs. Tennessee A.P. Control Board asbestos decision by district

court waived sovereign immunity (appealed to 6th Circuit Court of Appeals)

Legal Decision• Late 1997 thru mid 1999: More maneuvering but little progress;

both sides agreed to defer to appellate court decision

• July 1999: 6th circuit affirms district court decision in Tennessee asbestos case• CAA waives sovereign immunity for US with respect to payment of

penalties

• August 1999: Negotiations open between OAG and DOJ on payment of penalties in WPAFB case

• August 2000: Consent Order signed• US Air Force agrees to pay $40,000 civil penalty

USA v. Denham & Lewis Processing, Wendell Elza, Clay Labs & Dennis Steely

•• Following failed performance tests and boiler evaluation, Following failed performance tests and boiler evaluation, WPAFB suspected coal supplier (Denham & Lewis) and WPAFB suspected coal supplier (Denham & Lewis) and laboratory (Clay Labs) of providing poor quality coal below laboratory (Clay Labs) of providing poor quality coal below contract specificationscontract specifications

•• Lab analysis revealed coal was within specs; Analysis by WPAFB lLab analysis revealed coal was within specs; Analysis by WPAFB lab indicated ab indicated coal below contract specs coal below contract specs

•• Investigation launched against coal supplier Investigation launched against coal supplier & laboratory for false claims& laboratory for false claims

USA v. Denham & Lewis Processing, Wendell Elza, Clay Labs & Dennis Steely

•• Criminal & civil investigations by Air Force Office of Special Criminal & civil investigations by Air Force Office of Special Investigations & Department of Defense Inspector General, Investigations & Department of Defense Inspector General, Defense Criminal Investigative ServiceDefense Criminal Investigative Service

•• Criminal Action: Supplier & lab plead guilty to one count of cCriminal Action: Supplier & lab plead guilty to one count of criminal riminal falsificationfalsification

•• Received 2 yrs probation & $50.00 fineReceived 2 yrs probation & $50.00 fine

•• Civil Action: DOJ filed Complaint against Denham & Lewis and ClCivil Action: DOJ filed Complaint against Denham & Lewis and Clay ay Labs and respective owners (Wendell Elza, Dennis Steely)Labs and respective owners (Wendell Elza, Dennis Steely)

•• Investigative findings revealed that supplier & lab had submitteInvestigative findings revealed that supplier & lab had submitted false claims d false claims under 11 DOD contracts throughout the USunder 11 DOD contracts throughout the US

•• Substandard coal suppliedSubstandard coal supplied•• Lab records for coal quality falsified to indicate coal was withLab records for coal quality falsified to indicate coal was within contract specs in contract specs

Civil Action con’t

•• Judgment rendered on November 13, 2003, by US District Court Judgment rendered on November 13, 2003, by US District Court (Eastern District of KY, London Division)(Eastern District of KY, London Division)•• Denham & Lewis / Wendell Elza:Denham & Lewis / Wendell Elza:

•• Jury trial Jury trial –– found liable for 301 violations of False Claims Actfound liable for 301 violations of False Claims Act

•• Awarded Plaintiff (USA) $2.9 millionAwarded Plaintiff (USA) $2.9 million

•• Clay Labs / Dennis Steely:Clay Labs / Dennis Steely:•• Summary judgment issued for 206 violations of False Claims ActSummary judgment issued for 206 violations of False Claims Act

•• Awarded Plaintiff $1.03 millionAwarded Plaintiff $1.03 million

•• Notice of Appeal entered on February 4, 2004, by Denham & Notice of Appeal entered on February 4, 2004, by Denham & Lewis / Wendell ElzaLewis / Wendell Elza

Implications for Future Government Contracts

•• December 30, 2003: Defense Logistics Agency issued Notice of December 30, 2003: Defense Logistics Agency issued Notice of Debarment to Denham & Lewis, Wendell Elza, Clay Labs, Debarment to Denham & Lewis, Wendell Elza, Clay Labs, Dennis Steely and Ruby Coal Company of London (owned by Dennis Steely and Ruby Coal Company of London (owned by Wendell Elza)Wendell Elza)

•• Debarment prohibits above parties from receiving Government contDebarment prohibits above parties from receiving Government contracts racts until December 29, 2006until December 29, 2006

Conclusions

• Boiler & incinerator PM violations resolved at both Buildings 20770 and 31240

• Sovereign Immunity question definitively answered • Injunctive relief & civil penalties included in Consent Decree

• Legal action taken against companies which supplied bad coal