MAUI ELECTRIC COMPANY, LTS (MECO) APPLIED FOR AUTHORITY TO CONSTRUCT (ATC) AND PREVENTION OF SIGNIFICANT DETERIO- RATION (PSD) PERMITS FROM THE HAWAII DEPARTMENT OF HEALTH ON FEBRUARY 23, 1987. MECO APPLIED FOR PERMITS FOR TWO 12.5 MW DIESEL ELECTRIC GENERATORS AT MECO'S MAALAEA GENERATING STATION ON THE ISLAND OF MAUI. ON JULY 2, 1987 THE HAWAII DEPARTMENT OF HEALTH (DOH) GRANTED AN AUTHORITY TO CONSTRUCT PERMIT NO. A-712-654 TO MECO FOR THE TWO DIESEL GENERATORS (CALLED UNITS 12 AND 13). THE ATC LIMITED THE HOURS OF OPERATION OF THE UNITS TO 260 HOURS PER YEAR WHICH LIMITED THE HOURS OF OPERATION OF THE UNITS TO 260 HOURS PER YEAR WHICH LIMITED THE EMISSIONS TO BELOW THE PSD SIGNIFICANCE LEVEL (THAT IS, THE LEVEL TRIGGERING THE REQUIREMENT OF A PSD PERMIT). EPA WAS NOT NOTIFIED OF THE GRANTING OF THE ATC. SINCE UNITS 12 AND 13 ARE BASE LOAD UNITS THAT WILL BE USED ALL THE TIME (NOT 260 HOURS PER YEAR), MECO STILL PURSUED THE PSD APPLICATION. UNKNOWN TO EPA, MECO BEGAN CONSTRUCTION OF UNITS 12 AND 13, COMPLETING CONSTRUCTION OF UNIT 12 ABOUT APRIL 5, 1988. WHEN EPA REGION 9 BECAME AWARE THAT MECO HAD CONSTRUCTED UNIT 12 AND WAS READY TO START OPERATION WITHOUT RECEIVING A PSD PERMIT, EPA ISSUED A NOTICE OF VIOLATION (NOV) TO MECO, DATED APRIL 12, 1988, FOR CONSTRUCTION OF A MAJOR MODIFICATION WITHOUT A PSD PERMIT. LA