EPA Initiates Audit Program for New Owners of Oil and Gas Facilities

EPA announced the beginning of an audit program specifically for new owners of upstream oil and natural gas exploration and production facilities (i.e., well sites, including associated storage tanks and pollution control equipment).  EPA’s press release announcing the program states a “new” owner includes any person “who acquired facilities in the 12 months preceding the launch of this program,” which was March 29, 2019.

Full Civil Penalty Forgiveness
Unlike other EPA audit programs, the program for new oil and gas owners has the potential for full penalty forgiveness.  Paragraph 25 of the standard agreement template for this program states:

After [COMPANY’S] submission of the Final Report, EPA will determine the specific Violations that occurred and assess which were satisfactorily corrected. Pursuant to this Audit Program and as an exercise of its enforcement discretion, EPA will then resolve [COMPANY’S] civil penalty liability for the disclosed Violations that are satisfactorily corrected consistent with this Agreement’s requirements by not imposing a civil penalty for those disclosed and satisfactorily corrected Violations. EPA will memorialize the disclosed and satisfactorily corrected Violations that satisfy the terms of this Agreement in a Final Determination. 

Reports indicated this program would give penalty reductions beyond what EPA gives under its general audit policy, as mentioned in my February 4 Alert  (Increased EPA Flexibility Predicted for Oil & Gas Audits by New Owners).  However, those reports did not suggest EPA would give total penalty forgiveness for violations identified and corrected through this audit program.

Individual Audit Agreements with EPA
New owners must notify EPA within nine months of the acquisition of their interest in conducting an audit and then must consult with EPA to reach an audit agreement, which will follow the standard agreement template.

For vapor control system related violations (See Appendix B of the standard agreement template), corrective action must be completed in 180 days; extensions may be requested.  Other corrective action must be completed in 60 days.

In a Q&A document also released, EPA stated new owners may participate in state audit programs and have an agreement with EPA at the same time, but this is not required.

To see the press release: https://www.epa.gov/newsreleases/epa-launches-voluntary-audit-program-new-owners-upstream-oil-and-natural-gas-facilities

To see the Q&A: https://www.epa.gov/sites/production/files/2019-03/documents/ognewownerprogramquestionsandanswers032919.pdf

To obtain the standard agreement template: https://www.epa.gov/sites/production/files/2019-03/documents/ognewownerprogramauditagreement.pdf

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