Document 704z2RJ0r9m1oQMkD2G9qGYjR

UNITED STATES ENVIRONMENTAL PROTECTION AGENCY REGION 6 BEFORE THE ADMINISTRATOR In the Matter of: Centennial Resource Production, LLC Midland, Texas Respondent ) ) ) EPA Docket No. CAA-06-2020-3395 ) ) ) ) ADMINISTRATIVE COMPLIANCE ORDER ON CONSENT The pursuant to the authority of Section 113(a)(1)(A) of the Clean Air Act, 42 U.S.C. 7413(a)(1)(A) (hereinafter referred to ). Section 113(a)(1) of the Act issue an order requiring compliance to any person whom the Administrator finds to be in violation of the Act. The authority to issue this Consent Order has been delegated to the Regional Administrator of EPA Region 6 and re-delegated to the Director of the Enforcement and Compliance Assurance Division, EPA Region 6. STATUTORY AND REGULATORY BACKGROUND 1. The Act is designed to protect and enhance the quality of the N resources so as to promote the public health and welfare and the productive capacity of its population CAA 101(b)(1), 42 U.S.C. 7401(b)(1). 2. Section 109(a) of the CAA, 42 U.S.C. 7409(a), requires the Administrator of EPA air pollutants. Section Centennial Resource Production, LLC Docket No. CAA-06-2020-3395 109(b) of the CAA, 42 U.S.C. 7409(b), provides that the NAAQS establish primary air quality standards to protect public health and secondary standards to protect public welfare. 3. To achieve the objectives of the NAAQS and the Act, Section 110(a) of the CAA, 42 U.S.C. 7410(a), requires each State for the implementation, maintenance, and enforcement of the NAAQS, and to submit it to the Administrator of EPA for approval. 4. The State of Texas has adopted a SIP that has been approved by EPA. See 40 C.F.R Part 52, Subpart SS. The Texas SIP includes authorization for Texas to establish a permit by rule Tex. Admin. Code Chapter 106 Permits by Rule. See 40 C.F.R. 52.2270(c). 5. establishes general requirements that apply to all PBR established under Chapter 106 and contains the requirements that a facility must meet to qualify for a PBR. See 30 Tex. Admin. Code 106.1- 13. 6. Subchapter O of Chapter 106 of the TAC regulates permitting by rule for oil and gas facilities that produce more than a de minimis level of emissions, but too little for other permitting options. See 30 Tex. Admin. Code 106.4(a) and 106.351-359. 7. Subchapter V of Chapter 106 of the TAC regulates permitting by rule for thermal control devices, including flares that meet the design requirements and operational conditions in 30 Tex. Admin. Code 106.492. See 30 Tex. Admin. Code 106.491-496. 8. Chapter 106 of the TAC provides the following requirements applicable to this Consent Order: a. 30 Tex. Admin. Code 106.4(c) provides a general requirement for facilities subject to a PBR Page 2 of 13 Centennial Resource Production, LLC Docket No. CAA-06-2020-3395 and regulations of the [Texas Commission on Environmental Quality ] and with the intent of the Texas Clean Air Act (TCAA), including protection of health and property of the public, and all emissions control equipment shall be maintained in good condition and operated properly during operation of the b. 30 Tex. Admin. Code representations with regard to construction plans, operating procedures, and maximum emission rates in any certified registration under this section become conditions upon which the facility c. Under 30 Tex. Admin. Code vary from [the representations described in 106.6(b)] if the change will cause a change in the method of control of emissions, the character of the emissions, or will result in an increase in the discharge of the various emissions, unless the d. 30 Tex. Admin. Code 106.352(l) applies except those specified in subsection (a)(1) of this section Subsection 106.352(l) facility, or oil or gas pipeline facility consisting of one or more tanks, separators, dehydration units, free water knockouts, gunbarrels, heater treaters, natural gas liquids recovery units, or gas sweetening and other gas conditioning facilities . . . associated with the production, conditioning, processing, and pipeline transfer of fl e. 30 Tex. Admin. Code 106.352(l)(1) requires 106.492 and 106.512 of this title . . . meet the requirements of f. 30 Tex. Admin. Code 106.492(l)(B) states that flares continuously burning pilot or other automatic ignition system that assures gas ignition . . . . 9. EPA is authorized by Section 113 of the CAA, 42 U.S.C. 7413, to take action to ensure that air pollution sources comply with all federally applicable air pollution control requirements. These include requirements promulgated by EPA and those contained in federally- enforceable SIPs or permits. Page 3 of 13 Centennial Resource Production, LLC Docket No. CAA-06-2020-3395 FINDINGS OF FACT AND CONCLUSIONS OF LAW 10. Centennial Resource Production, LLC is a limited liability company, doing business in the state of Texas. Respondent 113(a) of the CAA, 42 U.S.C. 7413(a), and as defined in Section 302(e) of the CAA, 42 U.S.C. 7602(e). 11. At all times relevant to this Consent Order, Respondent has owned and/or operated the oil and natural gas production facilities listed in Attachment A, which are located in the Texas Permian Basin ies 12. Respondent is the owner or operator of the Facilities within the meaning of 40 C.F.R. 51.100(f). 13. At all times relevant to this Consent Order, Respondent owned or operated oil and gas facilities that emit VOCs. 14. The Facilities are subject to Rule program for oil and gas facilities under Subchapter O of Chapter 106 of the TAC. 15. TCEQ issued air permits to Respondent, listed in Attachment A, under the SIP- The permits cover various emission units at the Facilities, including process equipment, vapor recovery systems, tanks, and flares. 16. Respondent is required by the permits listed in Attachment A to control the emission of waste gas streams from the Facilities. These permits require Respondent to operate in compliance with certain provisions of the Texas SIP. 17. During September 10 October 3, 2019, EPA conducted helicopter flyovers of the Permian Basin area to assess energy extraction facility emissions using Optical Gas Imaging technology. Page 4 of 13 Centennial Resource Production, LLC Docket No. CAA-06-2020-3395 18. Based upon its review of the images obtained during the flyovers and preliminary permit information available from online state databases for oil and gas facilities, EPA identified unauthorized emissions at facilities that EPA believed were owned or operated by Respondent. 19. On November 26, 2019, EPA sent Respondent OGI video captures showing hydrocarbon emissions from process equipment, vapor recovery systems, tanks, and flares at these facilities. EPA asked Respondent to verify ownership, provide current site-specific permit information, and take any necessary corrective action to address unauthorized hydrocarbon emissions at each facility. EPA considered information provided by Respondent to determine whether violations occurred at the facilities. 20. On December 13, 2019, Respondent provided information to EPA that corrective actions were completed at the Facilities to address some of the compliance issues observed during the flyovers. 21. EPA Region 6 notified Respondent and TCEQ of violations of the Texas SIP on May 12, 2020. 22. On May 20, 2020, Respondent and EPA Region 6 conferred regarding violations of the Texas SIP. 23. EPA has conducted a comprehensive review of the facility-specific information gathered based upon observations made from the OGI video captures, facility permitted operations, and information provided by Respondent. Based on this review, EPA has made the following findings for the Facilities: a. Respondent violated 30 Tex. Admin. Code 106.4(c) by failing to maintain in good condition and properly operate the emissions control equipment at the Facilities. Page 5 of 13 Centennial Resource Production, LLC Docket No. CAA-06-2020-3395 b. Respondent violated 30 Tex. Admin. Code 106.6(b) by failing to operate equipment consistent with operating procedures in the certified registration for the c. Respondent violated 30 Tex. Admin. Code 106.6(c) by varying from representations in the certified registration f regarding emissions at the Facilities. d. Respondent violated 30 Tex. Admin. Code 106.352(l)(1) by failing to comply with the requirements of 30 Tex. Admin. Code 106.492. e. Respondent violated 30 Tex. Admin. Code 106.492(l)(B) by failing to equip the Facilities with a continuously burning pilot or other automatic ignition system that assures gas ignition. 24. More than thirty (30) days before the issuance of this Consent Order, Respondent was notified of the violations alleged herein. On May 12, 2020, Respondent and the State of Texas were notified of the violations alleged herein, in accordance with Section 113(a)(1) of the CAA, 42 U.S.C. 7413(a)(1). 25. The parties to this Consent Order agree that an opportunity to confer has been satisfied in accordance with Section 113(a)(4) of the CAA, 42 U.S.C. 7413(a)(4). 26. The parties further agree that in order to avoid protracted litigation, and in the best interest of all the parties and the environment, this Administrative Compliance Order will be entered into on Consent and by mutual agreement of the parties. 27. Only for the purposes of this proceeding, including any subsequent proceeding by EPA to enforce this document, Respondent admits the jurisdictional allegations contained herein; however, Respondent neither admits nor denies the specific findings of fact and conclusions of law contained in this Consent Order. 28. Respondent also issue this Consent Order or enforce its terms. Further, Respondent Page 6 of 13 Centennial Resource Production, LLC Docket No. CAA-06-2020-3395 jurisdiction to either compel compliance with this Consent Order in any subsequent enforcement terms of this Consent Order or impose sanctions for violations of this Consent Order. Respondent consents to the terms of this Consent Order. ORDER ON CONSENT 29. Section 113(a)(1) of the CAA, 42 U.S.C. 7413(a)(1), provides in pertinent part that the Administrator may issue an Order requiring compliance with any requirement of a SIP. Pursuant to this authority, EPA has decided to issue this Consent Order after investigating all relevant facts, taking into account compliance history, efforts made by Respondent to comply with applicable regulations, and based upon the foregoing Findings of Fact and Conclusions of Law herein. 30. Respondent has consented to, and is hereby ordered to satisfy, the following requirements regarding the Facilities listed in Attachment A: a. Within four (4) months of the Effective Date of this Consent Order, Respondent shall complete all permitting and operations reviews and all site inspections in b. An engineering assessment, as outlined in Section C of the Checklist, shall be completed at each facility where emissions are not due to operational upsets, and routine inspections and/or maintenance of process equipment indicate the need for a facility design-related analysis to determine an appropriate corrective action. An engineering assessment shall also be completed where recurring emission releases for specific facility operations are identified (e.g., where repairs and/or replacements for the same equipment have occurred multiple times over the last 12-month period). All engineering assessments shall be completed within seven (7) months of the Effective Date of this Consent Order. c. Within eleven (11) months of the Effective Date of this Consent Order, Respondent shall send a letter report to EPA outlining all corrective actions taken or improvements made or planned to be made, including best practices implemented at the Facilities and any equipment repaired or replaced under Section D of the Checklist, that will ensure or improve compliance in accordance Page 7 of 13 Centennial Resource Production, LLC Docket No. CAA-06-2020-3395 with Section E of the Checklist. The letter report should also include an estimation of the total emission reductions for specific completed or planned actions at the Facilities (see item E.2. of the Checklist). 31. Any information or correspondence submitted by Respondent to EPA under this Consent Order shall be addressed to the following: Jamie Salabogi Air Permitting Enforcement Section (ECDAP) Enforcement and Compliance Assurance Division U.S. EPA - Region 6 1201 Elm Street, Suite 500 Dallas, Texas 75270 Phone: (214) 665-7533 Email: Salabogi.Jamie@epa.gov 32. To the extent this Consent Order requires Respondent to submit any information to EPA, Respondent may assert a business confidentiality claim covering part or all of that information, but only to the extent and only in the manner described in 40 C.F.R. 2.203. EPA will disclose information submitted under a confidentiality claim only as provided in 40 C.F.R Part 2, Subpart B. See 41 Fed. Reg. 36,902 (Sept. 1, 1976). If Respondent does not assert a confidentiality claim, EPA may make the submitted information available to the public without further notice to Respondent. Emission data provided under Section 114 of the CAA, 42 U.S.C. 7414, is not entitled to confidential treatment under 40 C.F.R Part 2, Subpart B. data is defined in 40 C.F.R. 2.301. 33. By signing this Consent Order, Respondent acknowledges that this Consent Order will be available to the public and agrees that this Consent Order does not contain any confidential business information. Page 8 of 13 Centennial Resource Production, LLC Docket No. CAA-06-2020-3395 GENERAL PROVISIONS 34. Pursuant to Section 113(a)(4) of the CAA, 42 U.S.C. 7413(a)(4), this Consent Order shall be effective when fully executed, as set forth below in Paragraph 52, shall not exceed a term of one year, and shall be nonrenewable. 35. The provisions of this Consent Order shall apply to and be binding upon Respondent, its officers, directors, agents, and employees solely in their capacity of acting on behalf of Respondent. 36. Respondent neither admits nor denies any of the factual or legal determinations made by EPA in this Consent Order. 37. The provisions of this Consent Order shall be transferable to any other party, upon sale or other disposition of the Facilities. Upon such action, the provisions of this Consent Order shall then apply to and be binding upon any new owner or operator, its officers, directors, agents, employees, and any successors in interest. 38. By signing this Consent Order, the undersigned representative of Centennial certifies that he or she is fully authorized by Respondent to execute and enter into the terms and conditions of this Consent Order and has the legal capacity to bind Respondent to the terms and conditions of this Consent Order. 39. criminal authorities, or that of other Federal, State, or local agencies or departments to obtain compliance, penalties, or injunctive relief under any applicable Federal, State, or local laws or regulations, including the power of EPA to undertake any action against Respondent or any person in response to conditions that may present an imminent and substantial endangerment to the public health, welfare, or the environment. Page 9 of 13 Centennial Resource Production, LLC Docket No. CAA-06-2020-3395 40. Nothing contained in this Consent Order shall affect the responsibility of Respondent to comply with all other applicable Federal, State, or local laws or regulations, including Section 303 of the CAA, 42 U.S.C. 7603. 41. EPA does not waive any rights or remedies available to it for any violations by Respondent of Federal laws, regulations, statutes, or permitting programs. 42. Any and all information required to be maintained or submitted pursuant to this Consent Order is not subject to the Paperwork Reduction Act of 1995, 44 U.S.C. 3501 et seq., because it seeks to collect information from specific entities to assure compliance with this administrative action. 43. By signing this Consent Order, Respondent certifies that the information it has supplied concerning this matter was at the time of submission, and is, to the best of its knowledge and belief, truthful, accurate, and complete for each submission, response, and statement. Respondent acknowledges that there are significant penalties for submitting false or misleading information, including the possibility of fines and imprisonment for knowing submission of such information, under 18 U.S.C. 1001. 44. EPA and Respondent agree to the use of electronic signatures for this matter. EPA and Respondent further agree to electronic service of this Consent Order by email to the following addresses: To EPA: Stopper.Nathan@epa.gov To Respondent: Clayton.Smith@cdevinc.com 45. EPA reserves all of its statutory and regulatory powers, authorities, rights, and remedies, both legal and equitable, which may pertain to Respo failure to comply with any of the requirements of this Consent Order. This Consent Order shall not be construed as a Page 10 of 13 Centennial Resource Production, LLC Docket No. CAA-06-2020-3395 covenant not to sue, release, waiver, or limitation of any rights, remedies, powers, and/or authorities, civil or criminal, which EPA has under any statutory, regulatory, or common law authority of the United States. 46. This Consent Order does not resolve any civil or criminal claims of the United States for the violations alleged in this Consent Order; nor does it limit the rights of the United States to obtain penalties or injunctive relief under the Act or other applicable federal law or regulations. 47. Respondent enters into this Consent Order in good faith without trial or adjudication of any issue of fact or law. 48. Respondent waives any and all remedies, claims for relief and otherwise available rights to judicial or administrative review that Respondent may have with respect to any issue of fact or law set forth in this Consent Order, including any right of judicial review under Section 307(b)(1) of the CAA, 42 U.S.C. 7607(b)(1). 49. The parties shall bear their own costs and fees in this action, including attorneys fees. 50. For purposes of the identification requirement of Section 162(f)(2)(A)(ii) of the Internal Revenue Code, 26 U.S.C. 162(f)(2)(A)(ii), performance of Paragraph 30 is restitution or required to come into compliance with the law. FAILURE TO COMPLY 51. Failure to comply with this Consent Order may result in an enforcement action for appropriate injunctive relief as well as civil penalties pursuant to Section 113(b) of the CAA, 42 U.S.C. 7413(b) or, in appropriate cases, criminal penalties. Page 11 of 13 Centennial Resource Production, LLC Docket No. CAA-06-2020-3395 EFFECTIVE DATE 52. This Consent Order shall become effective upon the later of the two signatures below. __________ Date __________ Date _______________________ Clayton Smith Vice President Operations Centennial Resource Production, LLC 1001 17th Street Denver, Colorado Digitally signed by CHERYL SEAGER DN: c=US, o=U.S. Government, ou=Environmental Protection Agency, cn=CHERYL SEAGER, 0.9.2342.19200300.100.1.1=68001003651793 Date: 2020.06.23 16:46:35 -05'00' _______________________ Cheryl T. Seager, Director Enforcement and Compliance Assurance Division Page 12 of 13 Centennial Resource Production, LLC Docket No. CAA-06-2020-3395 CERTIFICATE OF SERVICE I hereby certify that a true and accurate copy of the foregoing Administrative Compliance Order on Consent was sent this day in the following manner to the addressees: Copy via Email to EPA: Stopper.Nathan@epa.gov Copy via Email to Respondent: Clayton. Smith@cdevinc.com Date: ________________ NATHAN Digitally signed by NATHAN STOPPER STOPPER Date: 2020.06.24 08:44:54 -05'00' ____________________ U.S. EPA, Region 6 Dallas, Texas Page 13 of 13 Attachment A Centennial Resource Production, LLC Site Identity TB Heagney 4 48 A TB Folk 04 34 A Pop B & C 4-59 60 2H & 3H Iceman 4-24 32 Production Facility Colt 4 24 1H Wolfman 4 21-24 A 1H & B 2H Admiral 4 48 47 1H Production Facility Eady A 4 59-60 1H & Eady B 4 59-60 2H Thornton Trust 460 2H TB Oatman C19 4 B Ninja 4 50 49 2H & 3H Knight 4 51 1H Production Facility Ninja 4-50 49 4H & 5H Big House D U03H/E B03HR/F L07H Strong Fundamental A T45H Samurai 4-49 50 U35H U42H TCEQ Regulated Entity No. RN106709942 RN106707821 RN110578655 RN109612937 RN106624679 RN110488822 RN109423541 RN110520137 RN106616881 RN106802069 RN110445657 RN107274185 RN110445533 RN110385572 RN110732484 RN110322351 Permit Number 109979 109949 154547 144773 108648 153469 142773 154105 108479 110701 152593 135628 152585 151780 156022 153080 Attachment B Centennial Resource Production, LLC Injunctive Relief Checklist A. Permitting and Operations Review 1. For newly acquired facilities in Attachment A (facilities acquired six (6) months prior to the flyover), obtain and review appropriate historical environmental compliance documentation for each site to ascertain potential ongoing compliance issues for all equipment and process controls at the facility. Records to review may include but are not limited to the following: permit applications by former owners, equipment inventories provided by former owners or completed as part of the new acquisition, excess emissions reports, flare reporting and exemption status (e.g., NSPS Subparts OOOO/OOOOa reporting, etc.), spill and emergency response plans and records, well-completion information, and other information necessary to confirm the compliance status of all facility operations. Ensure that appropriate documentation, such as the Change of Name/Ownership Form, have been submitted to TCEQ. 2. For all facilities in Attachment A review current permit representations (i.e., applications), current equipment inventories, current reported production and emissions data (for all operating scenarios), and all maintenance and operating logs and repair/replacement work orders generated within the last 18 months (including those available from past owners), in order to evaluate and ascertain current or possible recurring non-compliance issues associated with equipment and process controls at the facility. B. Site Inspections 1. Inspect and evaluate oil and water storage tanks and associated hatches, valves, gaskets, and pressure relief devices. a. Consider whether the materials used are compatible with the gas compositions and whether they will deteriorate at unexpected rates. b. Ensure emergency pressure relief devices are set at the proper pressure set points. 2. Ensure flares and combustors are operating with a continuous pilot flame and that flame arrestors are properly installed. a. Consider technology upgrades to the flares and combustors. b. Consider reconfiguration of flare tips and installation of thermocouples with Supervisory Control and Data Acquisition capability, auto ignitors with pilots, air assist packages, and pressure gauges for flame arrestors. 3. Evaluate the operation of tanks, separators, compressors, vapor recovery units/towers, and other operational equipment. 4. Inspect and address liquid leaks and staining at the well and production pad site, particularly near well heads, flares, combustors, storage tanks, and separators. 5. Confirm or update equipment inventories and process operational descriptions for each site. 6. Confirm that there are no unauthorized emissions during normal operations (e.g., conduct optical gas imaging survey to detect and correct any gas leaks or fugitive emissions). C. Engineering Assessments (AOC paragraph 30.b) 1. Use condensate and gas samples, equipment inventories, and production rates to perform process flow modeling (e.g., ProMax modeling) and confirm that site equipment and design sufficiently address vapor emissions and meet regulatory requirements. 2. Confirm that all emissions sources, including process equipment fire tubes, gas aspirated generators, pneumatic pumps, and pneumatically actuated control valves, have been identified and accounted for in determining total emissions. 3. Based on the preliminary compliance review and site inspections, re-evaluate whether the facilities are properly permitted; prepare permit applications or revisions where necessary. 4. Confirm that flares are operated and maintained in conformance with their designs, including recommendations and specifications provided by the flare manufacturers, and in a manner consistent with good air pollution control practices for minimizing emissions. 5. Use engineering assessment results to revise the equipment specifications and process configuration to ensure vapor control systems, where required, adequately handle maximum instantaneous vapor emissions, including working, breathing, or flashing losses from the tank batteries. 6. Based on preliminary compliance review, site inspections, and engineering containment adequacy and retention capacity. D. Equipment Repair and Replacement 1. Based on the preliminary compliance review, site inspections, and any engineering assessments: a. Develop a list of new equipment and piping to be procured, including flares, combustors, vapor recovery units/towers, tank hatches, pressure relief valves, piping, and gaskets; b. As appropriate, repair, replace, upgrade, and install equipment, including vapor recovery units/towers, flares, combustors, tank pressure relief valves, tank hatches and gaskets, and compressors; c. As appropriate, replace any piping, valves, flame arrestors, or other equipment that is inadequately sized for the flow of condensate and volume of emissions. d. As appropriate add, upgrade or replace spill containment capability. 2. Confirm that there are no unauthorized emissions during normal operations for newly installed equipment (e.g., conduct optical gas imaging survey to detect and correct any gas leaks or fugitive emissions). E. Letter Report to EPA (AOC paragraph 30.e.) 1. Describe all corrective actions taken or improvements made for each facility (or groups of facilities) that were addressed under items A, B, C, and D of this checklist. The report should include but not be limited to any equipment repairs and/or replacements, engineering assessments, and redesign. 2. Include an estimation of total emission reductions for specific completed or planned actions, with dates for each type of action identified. 3. In addition, please describe all other actions taken or improvements made or planned to be made that will ensure or improve compliance at the Facilities, including best management practices implemented at the Facilities (see the following examples). This could include all facilities operated in the Permian Basin. Examples of Best Management Practices Example 1: Integrate NewlyEnvironmental Compliance Management System. Ensure all NSPS and NESHAP regulated units are identified in, and integrated solid waste and naturallyEnsure all spill and emergency response plans conform to regulatory requirements for such programs. Confirm that operator responsibilities and priorities, facility inspection and repair protocols, and other best practices manuals and checklists are being utilized at the newly-acquired facilities. Example 2: Implement Emission Surveillance Program Develop a standard program for inspecting well sites and equipment with optical gas imaging cameras to confirm that each site has adequate vapor control systems. Perform regular surveys with optical gas imaging cameras to detect leaks and fugitive emissions; ensure surveys and survey frequency comply with federal and state requirements. Regularly inspect flares to ensure proper ignition and burning of emissions; ensure flare inspections and inspection frequency comply with federal and state requirements. Ensure proper functioning of flares and the presence of a pilot flame. Example 3: Implement Operation and Maintenance Program to Maintain Compliance Conduct training to ensure immediate and long-term compliance with environmental laws and regulations. Establish document generation and retention protocols, personnel roles and responsibilities, safety protocols, and work order systems to ensure problems are timely identified and addressed. Conduct regular inspections with standard site inspection checklist that includes evaluation of: well pad, flares, separators, heater treaters, tank batteries, compressors, fuel skid, well heads, spill containment, solid waste and chemical storage, and miscellaneous facility-wide operations. Consider system re-designs as changes in operating conditions occur. Implement a quality control program that ensures the quality, efficiency, and performance of facility maintenance activities.