Document 8R19eYkewYbBJeRpKvgLqJ6Ke

UNITED STATES ENVIRONMENTAL PROTECTION AGENCY REGION6 1445 ROSS AVENUE~ SUITE 1200 DALLAS, TX 75202-2733 AUG 2 2 2018 SENT VJA EMAIL AND CERTIFIED MAIL: 7015 1520 0003 3990 7886 Melissa L. Reeves 16285 Park Ten Place, Suite 400 Houston, Texas 77084 mlreeves@edge-es.com RE: In the Matter of 1776 Energy Operators, LLC Davis IH Unit, CAA-06-2018-3336 Dear Ms. Reeves, Please find enclosed a copy of the fully-executed Administrative Order on Consent ("AOC"). Please note the tiineframes that apply to 1776 En~rgy Operators, LLC under the AOC. If you have an_y questions, please contact Cheryl Barnett by phone at 214-6658328 or by email at barnett.cheryl@epa.gov. Sincerely, ~~ Director Compliance Assurance and Enforcement Division EnClosure (1) cc: Lany Bynum, VP of Operations 1776 Epergy Operators, LLC 2044~ State Highway 249, Ste."450 Houston, Texas 77070 ecc: Michael Miller, TCEQ (michael.miller@tceq.texas.gov) UNITED STATES ENVIRONMENTAL PROTECTION AGENCY REGION6 BEFORE THE ADMINISTRATOR In the Matter of: 1776 Energy Operators, LLC Davis Unit Respondent EPA Docket No. CAA 06-2018-3336 ADMINISTRATIVE COMPLIANCE ORDER ON CONSENT The following Administrative Compliance Order on Consent ("Consent Order") is issued pursuant to the authority of Section 113(a)(l)(A) of the Clean Air Act, 42 U.S.C. 7413(a)(l )(A) (hereinafter referred to as "the Act"). Section 113(a)(l) of the Act authorizes the Administrator of the United States Environmental Protection Agency ("EPA") to 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 Compliance Assurance and Enforcement Division, EPA Region 6. STATUTORY AND REGULATORY BACKGROUND 1. The Act is designed to protect and enhance the quality of the nation's air so as to promote public health and welfare and the productive capacity of its population. CAA lOl(b)(l), 42 U.S.C. 740l(b)(l). 2. Section 109(a) of the CAA, 42 U.S.C. 7409(a), requires the Administrator of EPA to publish national ambient air quality standards ("NAAQS") for certain 1776 Energy Operators, LLC (Davis lH Unit) Docket No. CAA 06-2018-3336 pollutants. The NAAQS establish primary air quality standards to protect public health and secondary standards to protect public welfare. 3. To achieve the objectives ofthe NAAQS and the Act, Section 1lO(a) of the CAA, 42 U.S.C. 741 O(a), requires each State to adopt a state implementation plan ("SIP") that provides 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 program for standard permits, which can be found at 30 T.A.C. Chapter 116, Subpart F- Standard Permits. See 40 C.F.R. 52.2270(c). 5. Subchapter F of Chapter 116 of the Texas Administrative Code regulates standard permits for air pollution control projects that reduce or maintain authorized emission rates for existing facilities. This Subchapter also establishes standards for emission control equipment. See 30 T.A.C. 116.601-620. a. The standard permit regulations state that "[a]11 representations with regard to construction plans, operating procedures, and maximum emission rates in any registration for a standard permit become conditions upon which the facility or changes thereto; must be constructed and operated." 30 T.A.C. 116.615(2). b. The standard permit regulations further provide that "facilities covered by the standard permit may not be operated unless all air pollution emission capture and abatement equipment is maintained in good working order and operating properly during normal facility operations." 30 T.A.C. 116.615(9). c. 30 T.A.C. 116.620 establishes standards for emission controls at oil and gas facilities. d. 30 T.A.C. 116.620(a)(12) requires adequate combustion in flares and pilot flame monitoring. Page 2of11 1776 Energy Operators, LLC (Davis lH Unit) Docket No. CAA 06-2018-3336 6. 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. FINDINGS OF FACT AND CONCLUSIONS OF LAW 7. 1776 Energy Operators, LLC ("1776 Energy" or "Respondent") is a corporation doing busin.ess in the state of Texas. Respondent is a "person" within the meaning of Section 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). 8. At all times relevant to this Consent Order, Respondent has oW:ned and/or operated an oil and natural gas production facility, the Davis lH Unit, located in/near Falls City, Texas in the Eagle Ford Shale area (the "Facility"). 9. Respondent is the owner and/or operator of the Facility within the meaning of 40 C.F.R. 51.IOO(f). 10. At all times relevant to this Consent Order, Respondent owned and/or operated an oil and gas Facility that emits Volatile Organic Compounds. 11. The Facility is subject to the State of Texas's Standard Permits program under Subchapter F of Chapter 116 of the Texas Administrative Code. 12. The Texas Commission on Environmental Quality ("TCEQ") issued Respondent Permit No. 125764, an air permit issued under the SIP-approved Standard Permit program. Permit No. 125764 covers various emission units at the Facility, . including the flares. Page 3of11 1776 Energy Operators, LLC (Davis !H Unit) Docket No. CAA 06-2018-3336 13. Respondent utilizes flares to control the emission of waste gas from the Facility. Pe1mit No. 125764 requires, inter alia, that Respondent operate the flare in compliance with certain provisions of the Texas SIP. 14. During May 8-16, 2018, EPA conducted helicopter flyovers of the Eagle Ford Shale area to assess energy extraction facility emissions using Optical Gas Imaging ("OGI") technology. 15. On July 17, 2018, EPA sent Respondent OGI video captures of an unlit flare at the Facility emitting unburned hydrocarbons. 16. 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 Region 6 notified Respondent and TCEQ of violations of the Texas SIP on July 17, 2018. 17. On July 24, 2018, Respondent and EPA Region 6 conferred regarding violations of the Texas SIP at the Facility. 18. On July 31, 2018, Respondent provided information to EPA that they have taken corrective action measures at the Facility to address compliance issues observed during the flyovers. Specifically, Respondent provided the following: a. Upon inspection, 1776 Energy observed that the flare pilot lines were plugged and the flare voltage relay for auto ignition was not operating properly. The pilot lines were cleaned and anew flare voltage relay for auto ignition was installed on July 25, 201.8. 19. EPA has conducted a comprehensive review of the facility-specific information gathered based upon observations made from the flyover video captures and Page 4of11 1776 Energy Operators, LLC (Davis lH Unit) Docket No. CAA 06-2018-3336 facility permitted operations. Based on this review, EPA has made the following findings for the Facility: a. Respondent violated 30 T.A.C. 116.615(2) by failing to operate equipment consistent with the operating procedures set forth in the registration for Permit No. 125764; b. Respondent violated 30 T.A.C. 116.615(9) by failing to ensure that equipment was maintained in good working order and operating properly during normal facility operations; and c. Respondent violated 30 T.A.C. ll 6.620(a)(12) by failing to ensure adequate combustion in flares and failing to properly conduct pilot flame monitoring. 20. More than thirty days before the issuance of this Consent Order, the Respondentwas notified of the violations alleged herein. On July 17, 2018, the Respondent and the State of Texas were notified of the violations alleged herein, in accordance with Section l 13(a)(l) of the CAA, 42 U.S.C. 7413(a)(l). 21. The parties to this Consent Order agree that an opportunity to confer has been satisfied in accordance with Section l 13(a)(4) of the CAA, 42 U.S.C. 7413(a)(4). 22. 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 Order will be entered into on Consent and by mutual agreement of the patties. 23. 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 oflaw contained in this Consent Order. 24. Respondent also consents to and agrees not to contest EPA's jurisdiction to either issue this Consent Order or enforce its terms. Futther, Respondent will not contest EPA's jurisdktion to either compel compliance with this Consent Order in any Page 5of11 1776 Energy Operators, LLC (Davis lH Unit) Docket No. CAA 06-2018-3336 subsequent enforcement proceedings, whether administrative or judicial, or require Respondent's full compliance with the 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 25. Section 113(a)(l) of the CAA, 42 U.S.C. 7413(a)(l), provides in pertinent part that the Administrator may issue an Order requiring compliance with any requirement of a state implementation plan. Pursuant to this authority, EPA has decided to issue this Consent Order after investigating all relevant facts, taking into account Respondent's compliance history, efforts made by Respondent to comply with applicable regulations, and based upon the foregoing Findings of Fact and Conclusions of Law herein. 26. Respondent has consented to, and is hereby ordered to satisfy, the following requirements regarding the Facility: a. Within 30 days of the Effective Date of this Consent Order Respondent shall inspect all flares at the Facility to ensure that flares used for the control of emissions from production during all facility operating scenarios where gases are routed to the flares are properly operated and continuously lit. b. Within 120 days of the Effective Date of this Consent Order, based on the inspections above, Respondent shall send a letter to EPA outlining any actions taken or improvements made at the Facility, which may include flare tip replacement, changes to the auto-ignition system, installation of thermocouples, remote monitoring of flare ignition status (e.g., Supervisory Control and Data Acquisition), or any other actions taken to ensure or .improve compliance. Page 6of11 1776 Energy Operators, LLC (Davis lH Unit) Docket No. CAA 06-2018-3336 27. Any information or correspondence submitted by Respondent to EPA under this Consent Order shall be addressed to the following: Darrin Larson, Section Chief Compliance Assurance and Enforcement Division (6EN-AA) U.S. EPA, Region 6 1445 Ross Avenue Dallas, TX 75202-2733 Phone: (214) 665-7115 Email: larson.danin@epa.gov 28. 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 infmmation, but only to the extent and only in the manner described in 40 C.F.R. 2.203. EPA will disclose infmmation 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 asse1t 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 Pait 2, Subpart B. "Emission data" is defined in 40 C.F.R. 2.301. 29. 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. GENERAL PROVISIONS 30. 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 46, shall not exceed a term of one year, and shall be nonrenewable. Page 7of11 1776 Energy Operators, LLC (Davis lH Unit) Docket No. CAA 06-2018-3336 31. 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. 32. Respondent neither admits nor denies any of the factual or legal determinations made by the EPA in this Consent Order. 33. The provisions of this Consent Order shall be transferable to any other party, upon sale or other disposition of the Facility. Upon such action, the provisions of this Consent Order shall then apply to and be binding upon any new owner/operator, its officers, directors, agents, employees, and any successors in interest. 34. By signing this Consent Order, the undersigned representative of 1776 Energy certifies that he or she is fully authorized by the 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 conditio!1s of this Consent Order. 35. Nothing in this Consent Order shall be construed to prevent or limit EPA's civil and 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 the 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 enviromnent. 36. Nothing contained in this Consent Order shall affect the responsibility of Respondent to comply with all other applicable Federal, State, or local laws or Page 8of11 1776 Energy Operators, LLC (Davis lH Unit) Docket No. CAA 06-2018-3336 regulations, including Section 303 of the CAA, 42 U.S.C. 7603. 37. EPA does not waive any rights or remedies available to.EPA for any violations by Respondent of Federal laws, regulations, statutes, or permitting programs. 3 8. 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. 39. 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, tmthful, accurate, and complete for each submission, response, and statement.. Respondent acknowledges that there are significant penalties for submitting false or misleading infmmation, including the possibility of fines and imprisonment for knowing submission of such information, under 18 u.s.c. 1001. 40. EPA reserves all of its statutory and regulatory powers, authorities, rights, and remedies, both legal and equitable, which may pertain to Respondent's failure to comply with any of the requirements of this Consent Order. This Consent Order shall not be constmed as a 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. 41. This Consent Order does notresolve 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. 42. Respondent has entered into this Order in good faith without trial or Page 9of11 1776 Energy Operators, LLC (Davis lH Unit) Docket No. CAA 06-2018-3336 adjudication of any issue of fact or law. 43. 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 fo1th in this Consent Order, including any right of judicial review under Section 307(b)(l) of the CAA, 42 U.S.C. 7607(b)(l). 44. The parties shall bear their own costs and fees in this action, including attorneys' fees. FAILURE TO COMPLY 45. 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. EFFECTIVE DATE 46. This Consent Order shall become effective upon the later of the two signatures below. 1776 Energy Operators, LLC 20445 State Highway 249, Ste. 450 Houston, Texas 77070 Date Director Compliance Assurance and Enforcement Division Page 10of11 1776 Energy Operators, LLC (Davis lH Unit) Docket No. CAA 06-2018-3336 CERTIFICATE OF SERVICE I hereby certify that a tlue and accurate copy of the foregoing Administrative Order on Consent was placedin the United States mail to the following by the method indicated: CERTIFIED MAIL -RETURN RECEIPT REQUESTED: # 7~'/JIJ;/IJ~tW/5J,27'1'/,1,,, Larry Bynum, VP of Operations 1776 Energy Operators, LLC 20445 State Highway 249, Ste. 450 Houston, Texas 77070 Date: ~i.1 J.blf .S. EPA, Region 6 Dallas, Texas ., Page 11of11