SAN FRANCISCO — Cottage Bakery, Inc., which is owned by Downers Grove, Ill.-based Ralcorp Frozen Bakery Products, has reached a settlement with the U.S. Environmental Protection Agency and the San Joaquin Valley Air Pollution Control District under which Lodi, Calif.-based Cottage will pay more than $1.3 million for violations and installation of air pollution controls.

According to the E.P.A., Cottage will pay $625,000 for failing to obtain permits and install proper air pollution controls at its Lodi facility. In addition, the company paid $750,000 to install and operate a thermal oxidizer that reduces volatile organic compound (VOC) emissions by 95%. VOC emissions are considered a precursor to ozone and particulate pollution, the E.P.A. said.

The E.P.A.’s investigation of the facility included an inspection conducted on July 27, 2009. The investigation revealed that the facility had never applied for air pollution permits to install and operate the facility’s ovens and associated air pollution controls. Ethanol, a VOC, is generated during the leavening stage of bread manufacturing and is later released during baking. Cottage Bakery’s production facility includes three bread ovens installed at various times between 1997 and 2006.

Cottage Bakery is a large-scale commercial bakery with about 625 employees. The facility produces frozen bread and cake products that are used by retail bakeries and the food service industry throughout the United States and Canada.