APEX ORCHARDS, INC. OPERATES AN ELECTRICITY PRODUCING, BIOMASS-FIRED BOILER LOCATED ON DRIVER ROAD, 1/4 MILE NORTH OF KIMBERLINA ROAD IN KERN COUNTY, CA. TESTS CONDUCTED BY CHEMECOLOGY CORPORATION ON OCTOBER 24 AND 25, 1985 SHOWED THAT THE BIOMASS-FIRED BOILER WAS EMITTING 538.7 TONS PER YEAR (TPY) OF CARBON MONOXIDE (C0). THIS AMOUNT IS MORE THAN TWICE AS MUCH CO THAN IS ALLOWED WITHOUT A PREVENTION OF SIGNIFICANT DETERIORATION (PSD) PERMIT FROM EPA. APEX DOES NOT HAVE A PSD PERMIT. ON JULY 17, 1986, EPA SENT APEX A NOTICE OF VIOLATION(NOV) STATING THAT APEX HAD CONSTRUCTED AND WAS OPERATING THE FACILITY WITHOUT A PSD PERMIT IN VIOLATION OF THE CLEAN AIR ACT. THE ATTORNEY FOR APEX MET WITH EPA REGION 9 PERSONNEL ON AUGUST 13, 1986. HE DID NOT DISPUTE APEX'S VIOLATION AND SAID THAT APEX WANTED TO NEGOTIATE A SETTLEMENT. EPA INDICATED THAT AN APPROPRIATE SETTLEMENT WOULD BE A CONSENT DECREE REQUIRING APEX TO OBTAIN A PSD PERMIT, TO INSTALL APPROPRIATE AIR POLLUTION CONTROL EQUIPMENT AND TO PAY A SIGNIFICANT CASH PENALTY. ON AUGUST 21, 1986, EPA SENT A LETTER TO APEX THAT STATED THAT EPA WOULD KEEP SETTLEMENT NEGOTIATIONS OPEN FOR 30 DAYS AND WOULD SEND A DRAFT CONSENT DECREE TO APEX BY SEPTEMBER 6, 1986.