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Tick-Tock: Companies Have Twelve Months to Use the EPA’s New Oil and Gas Audit Program for Existing Owners of Upstream Facilities

On December 19, the U.S. Environmental Protection Agency (EPA) opened a limited-time opportunity for existing owners of upstream oil and gas facilities to discover, correct, and self-disclose violations of the Clean Air Act. Companies that decide to perform compliance audits and self-disclose to the EPA have until December 18, 2020, to inform the EPA of their intentions. This audit program for existing owners expires after that date. As an incentive for companies to participate in this audit program, the EPA will waive all civil penalties for violations discovered and corrected under the terms of the program.

At the same time, the EPA and its state partners continue to inspect upstream facilities and commence formal enforcement actions where warranted. Under its new National Compliance Initiative—Creating Cleaner Air for Communities—the EPA is prioritizing its work on excess emissions of volatile organic compounds (VOC) and hazardous air pollutants (HAP). This priority aligns with the EPA’s strategic plan goals of reducing the number of Clean Air Act nonattainment areas and protecting vulnerable populations living near the sources of these emissions.

The audit program for existing owners is a companion to the EPA’s March 2019 audit program for new owners. Under both programs, the EPA concluded that its 2000 audit policy and 2008 new owner audit policy should be tailored to account for the hundreds or thousands of upstream facilities that would be covered in an audit. This tailoring benefits the EPA because staff resources need not be taken up to negotiate individual audit agreements. It benefits the regulated community because the requirements of the audit are spelled out clearly in an audit template document for both existing and new owners. Both templates include reasonable timeframes of no less than six months for a company to correct any violations discovered through the audit and a list of areas of potential noncompliance to be audited.

There is one major difference between the upstream audit programs for existing and new owners. The audit program for new owners is indefinitely applicable—any new owner may use the program. But the audit program for existing owners is only available through December 18, 2020. This one-year, limited-time opportunity is designed to encourage existing owners—who, unlike new owners, have at least some culpability for violations—to step up and voluntarily correct noncompliance. The EPA’s formal enforcement efforts to reduce VOCs and HAPs from upstream facilities will continue unabated in the meantime and may well accelerate after 2020.

Patrick Traylor is a partner in Vinson & Elkin’s Environment and Natural Resources practice and was most recently the Deputy Assistant Administrator for the EPA’s Office of Enforcement and Compliance Assurance where he served as Assistant Administrator Susan Bodine’s deputy.

This information is provided by Vinson & Elkins LLP for educational and informational purposes only and is not intended, nor should it be construed, as legal advice.