Document NaeDjoE8ee1yeBnm0Ro5QnQQ

UNITED STATES ENVIRONMENTAL PROTECTION AGENCY REGION 6 1445 ROSS AVENUE, SUITE 1200 DALLAS, TX 75202-2733 11 SP 2018 SENT VIA EMAIL AND CERTIFIED MAIL:7003 0500 0003 0872 2650 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 Bordovsky 2H Unit; CAA 06-2018-3345 Ms. Reeves, Please find enclosed a copy of the fully-executed Administrative Order on Consent ("AOC"). Please note the timeframe that applies to 1776 Energy Operators, LLC under 'the AOC. If you have any questions, please contact Cheryl Barnett by phone at 214-6658328 or by email at barnett.cheryl@epa.gov. Sincerely, cc~~ Cheryl T. Sbg~r Director Compliance Assurance and Enforcement Division Enclosure (1) cc: Lany Bynum, VP of Operations 1776 Energy Operators, LLC 20445 State Highway 249, Ste. 450 Houston, Texas 77070 ecc: Michael Miller, TCEQ (michael.miller@tceq.texas.gov) UNITED STATES ENVIRONMENTAL PROTECTION AGENCY REGION 6 BEFORE THE Al)MJNISTRATOR In the Matter of: 1776 Energy Operators, LLC Bordovsky 2H Unit Respondent EPA Docket No. CAA 06-2018-3345 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) ofthe 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 ('$PA") 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 Region6. STATUTORY AND REGULATORY BACKGROUND 1. The Act is designed to protect and enhance the quality of the nation's ah so as to promote public health and welfare and the productive capacity of its population. CAA IOI(b)(l), 42 U.S.C. 7401(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 (Bordovsky 2H Unit) Docket No. CAA 06-2018-3345 pollutants. 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 llO(a) ofthe CAA, 42 U.S.C. 7410(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, Subpatt SS. The Texas SIP includes authorization for Texas to establish a petmit by rule ("PBR") program, which can be found at 30 T.A. C. Chapter 106- Permits by Rule. See 40 C.F.R. 52.2270(c). 5. Subchapter 0 of Chapter 106 ofthe Texas Administrative Code regulates petmitting by tule for oil and gas facilities that produce more than a de minimis level of emissions, but too little for other permitting options. See 30 T.A.C. 106.4(a) and 106.351-59. a. The provisions of30 T.A.C. 106.4(c) provides a general requirement for facilities subject to a permit by nJ!e: "[t]he emissions from the facility shall comply with all rules 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 shaH be maintained in good condition and operated properly during operation ofthe facility." b. Cettain conditions are applicable to oil and gas site ("OGS") facilities as delineated at 30 T.A.C. 106.352(a): "This section applies to all stationary facilities, or groups of facilities, at a site which handle gases and liquids associated with the production, conditioning, processing, and pipeline transfer of fluids or gases found in geologic formations on or beneath the earth's surface including, but not limited to, crude oil, natural gas, condensate, and produced water..." Page 2 ofl3 1776 Energy Operators, LLC (Bordovsky 2H Unit) Docket No. CAA 06-2018-3345 c. The provisions of30 T.A.C. 106.352(e) specify "BMP and Minimum Requirements. For any new project, and any associated emission control equipment registered under this section, paragraphs (I)- (5) of this subsection shall be met as applicable. These requirements are not applicable to existing, unchanging facilities. Equipment design and control device requirements listed in paragraphs (6) - (12) of this subsection only apply to those that are chosen by the operator to meet the limitations of this section." d. 30 T.A.C. 106.352(e)(1) requires "[a]ll facilities which have the potential to emit air contaminants must be maintained in good working order and operated properly during facility operations." e. 30 T.A.C. 106.352(e)(l 1) requires that "[f]lares used for control of emissions from production" be designed and operated such that "flares must be lit at all times when gas streams are present." 30 T.A.C. 106.352(e)(l l)(E). f. The provisions of 30 T.A.C. 106.352(1) apply "to new and modified facilities." This section provides that "[a]ny oil or gas production facility, carbon dioxide separation facility, or oil or gas pipeline facility consisting of one or more tanks, separators, dehydration units, free water knockouts, gunbarrels, heater treaters, natural gas liquid recovery units, or gas sweetening and other gas conditioning facilities ... are permitted by rule" for "those facilities named which handle gases and liquids associated with the production, conditioning, processing, and pipeline transfer of fluids found in geologic formations beneath the earth's surface." 30 T.A.C. 106.352(1). g. 30 T.A.C. 106.352(1)(1) requires that "flares shall meet the requirements of 106.492." h. 30 T.A.C. 106.492(l)(B) states that every flare subject to this section "shall be equipped with a continuously burning pilot or other automatic ignition system that assures gas ignition ...." i. 30 T.A.C. 106.6(b) states that "[a]ll 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 permitted by rule shall be constructed and operated." Page 3 of 13 1776 Energy Operators, LLC (Bordovsky 2H Unit) Docket No. CAA 06-2018-3345 a. 30 T.A.C. 106.6(c) states that "[i]t shall be unlawful for any person to vary from such repTesentation if the change will cause a change in the method of control of emissions, the character of the emissions, OT will result in an incTease in the dischaTge of the various emissions, unless the cettified registration is first revised." 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 business 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 owned and/or operated an oil and natural gas production facility, the Bordovsky 2H Unit, in/near Panna Maria, Karnes County, Texas located 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. 51.1 OO(f). I 0. 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 Permits by Rule program for oil and gas facilities under Subchapter 0 of Chapter 106 of the Texas Administrative Code. 12. The Texas Commission on Environmental Quality ("TCEQ") issued Respondent Permit No. 130979, an air permit issued under the SIP-approved Permits by Page 4 of 13 1776 Energy Operators, LLC (Bordovsky 2H Unit) Docket No. CAA 06-2018-3345 Rule program. Permit No. 130979 covers various emission units at the Facility, including the flares. 13. Respondent utilizes flares to control the emission of waste gas from the Facility. Permit No. 130979 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 August 2, 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 August 2, 2018. 17. On August 8, 2018, Respondent and EPA Region 6 conferred regarding violations of the Texas SIP at the Facility. 18. On August 8, 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. On July 31, 2018, 1776 Energy changed out the pilot regulator and a bad ignition battery. 19. EPA has conducted a comprehensive review of the facility-specific information gathered based upon observations made from the flyover video captures and Page 5 of13