Document jyZb1z7Y64kgyLBRYB49mgaKO

In the Matter of: Cimarex Energy Co. Tulsa, Oklahoma Respondent UNITED STATES ENVIRONMENTAL PROTECTION AGENCY REGION 6 BEFORE THE ADMINISTRATOR ) ) ) EPA Docket No. CAA-06-2020-3388 ) ) ) ) ADMINISTRATIVE COMPLIANCE ORDER ON CONSENT The following Administrative Compliance Order on Consent ("Consent Order") is issued 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 as "the Act" or the "CAA"). Section 113(a)(1) 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 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 Nation's air 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 to publish national ambient air quality standards ("NAAQS") for certain air pollutants. Section Cimarex Energy Co. Docket No. CAA-06-2020-3388 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 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 permit by rule ("PBR") program, found at 30 Tex. Admin. Code Chapter 106 - Permits by Rule, and a program for standard permits, found at 30 Tex. Admin. Code Chapter 116, Subpart F - Standard Permits. See 40 C.F.R. 52.2270(c). 5. Subchapter A of Chapter 106 of the Texas Administrative Code ("TAC") 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 106.113. 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: Page 2 of 17 Cimarex Energy Co. Docket No. CAA-06-2020-3388 a. 30 Tex. Admin. Code 106.4(c) provides a general requirement for facilities subject to a PBR: "[t]he emissions from the facility shall comply with all rules and regulations of the [Texas Commission on Environmental Quality ("TCEQ")] 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 facility." b. 30 Tex. Admin. Code 106.6(b) provides 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." c. Under 30 Tex. Admin. Code 106.6(c), "[i]t shall be unlawful for any person to 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 certified registration is first revised." d. 30 Tex. Admin. Code 106.352(l) applies "to new and modified facilities except those specified in subsection (a)(1) of this section." Subsection 106.352(l) 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 liquids 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." e. 30 Tex. Admin. Code 106.352(l)(1) requires flares to "meet the requirements of 106.492 and 106.512 of this title . . . ." f. 30 Tex. Admin. Code 106.492(1)(A) requires flares to be "equipped with a flare tip designed to provide good mixing with air, flame stability, and a tip velocity less than 60 feet per second (ft/sec) for gases having a lower heating value less than 1,000 British thermal units per cubic foot (Btu/ft3 ) or a tip velocity less than 400 ft/sec for gases having a lower heating value greater than 1,000 Btu/ft3." g. 30 Tex. Admin. Code 106.492(l)(B) states that flares "shall be equipped with a continuously burning pilot or other automatic ignition system that assures gas ignition . . . ." 9. Non-rule Standard Permits must comply with Subchapter F of Chapter 116 of the TAC, which regulates standard permits for air pollution control projects that reduce or maintain Page 3 of 17 Cimarex Energy Co. Docket No. CAA-06-2020-3388 authorized emission rates for existing facilities. This Subchapter also establishes standards for emission control equipment. See 30 Tex. Admin. Code 116.601 - 116.620. The State of Texas issued the Air Quality Standard Permit for Oil and Gas Handling and Production Facilities ("TCEQ Non-Rule Standard Permit for Oil and Gas Facilities"). 10. The TCEQ Non-Rule Standard Permit for Oil and Gas Facilities provides the following requirements applicable to this Consent Order: a. The non-rule standard permit states that "[a]ll facilities which have the potential to emit air contaminants must be maintained in good working order and operated properly during facility operations." TCEQ Non-Rule Standard Permit for Oil and Gas Facilities (e)(1). b. The non-rule standard permit requires that any combination of process equipment and storage facilities with an uncontrolled potential to emit equal to or greater than 25 tons per year of VOC be captured and routed to a control device with a minimum design control efficiency of at least 95%. TCEQ Non-Rule Standard Permit for Oil and Gas Facilities (e)(5) and (m) Table 10. c. The non-rule standard permit requires all seals and gaskets in VOC or H2S service to be "installed, checked, and properly maintained to prevent leaking" and "[t]ank hatches, not designed to be completely sealed, shall remain closed (but not completely sealed in order to maintain safe design functionality) except for sampling, gauging, loading, unloading, or planned maintenance activities." TCEQ Non-Rule Standard Permit for Oil and Gas Facilities (e)(6). d. The non-rule standard permit allows flares used for control of emissions from production, planned maintenance, startup, and shutdown ("MSS"), emergency, or upset events to claim a design destruction efficiency of 98% for VOCs. TCEQ Non-Rule Standard Permit for Oil and Gas Facilities (e)(11). 11. 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 4 of 17 Cimarex Energy Co. Docket No. CAA-06-2020-3388 FINDINGS OF FACT AND CONCLUSIONS OF LAW 12. Cimarex Energy Co. ("Cimarex" 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). 13. 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 (the "Facilities"). 14. Respondent is the "owner or operator" of the Facilities within the meaning of 40 C.F.R. 51.100(f). 15. At all times relevant to this Consent Order, Respondent owned or operated oil and gas facilities that emit volatile organic compounds ("VOCs"). 16. The Facilities are subject to the State of Texas's Permits by Rule program for oil and gas facilities under Subchapter O of Chapter 106 of the TAC and/or the Standard Permits program under Subchapter F of Chapter 116 of the TAC. 17. TCEQ issued air permits and/or approval letters for registrations to Respondent, listed in Attachment A, under the SIP-approved Permits by Rule and/or Non-Rule Standard Permit program. The permits cover various emission units at the Facilities, including process equipment and/or tanks and flares. 18. Respondent is required by the air permits and/or approval letters for registrations to control the emission of waste gas streams from the Facilities. The permits listed in Attachment A require Respondent to operate in compliance with certain provisions of the Texas SIP. Page 5 of 17 Cimarex Energy Co. Docket No. CAA-06-2020-3388 19. During September 10 - October 3, 2019, EPA contracted helicopter flyovers of the Permian Basin area to assess energy extraction facility emissions using Optical Gas Imaging ("OGI") technology. 20. 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 from certain equipment at facilities that EPA believed were owned or operated by Respondent. 21. On November 26, 2019, EPA sent Respondent OGI video captures showing hydrocarbon emissions from process equipment, including 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. 22. On December 13 and December 30, 2019, Respondent provided information to EPA that corrective actions have been completed at the Facilities listed in Attachment A to address some of the compliance issues observed during the flyovers. 23. EPA Region 6 notified Respondent and TCEQ of violations of the Texas SIP on April 17, 2020. 24. On April 28, 2020, Respondent and EPA Region 6 conferred regarding violations of the Texas SIP. 25. EPA has conducted a comprehensive review of the facility-specific information gathered based upon observations made from the OGI video captures, facility permitted Page 6 of 17 Cimarex Energy Co. Docket No. CAA-06-2020-3388 operations, and information provided by Respondent. Based on this review, EPA has made the following findings for certain equipment on 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 certain facilities. b. Respondent violated 30 Tex. Admin. Code 106.6(b) by failing to operate equipment consistent with operating procedures in the certified registration for certain facilities. c. Respondent violated 30 Tex. Admin. Code 106.6(c) by varying from representations in the certified registration regarding emissions at certain 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)(A) by failing to equip certain facilities with a flare tip designed to provide good mixing with air, flame stability, and a tip velocity less than 60 feet per second (ft/sec) for gases having a lower heating value less than 1,000 British thermal units per cubic foot (Btu/ft3) or a tip velocity less than 400 ft/sec for gases having a lower heating value greater than 1,000 Btu/ft3. f. Respondent violated 30 Tex. Admin. Code 106.492(l)(B) by failing to equip certain facilities with a continuously burning pilot or other automatic ignition system that assures gas ignition. g. Respondent violated TCEQ Non-Rule Standard Permit for Oil and Gas Facilities (e)(1) by failing to ensure that certain facilities that have the potential to emit air contaminants were maintained in good working order and were operating properly during facility operations. h. Respondent violated TCEQ Non-Rule Standard Permit for Oil and Gas Facilities (e)(5) by failing to ensure that emissions from tanks were captured and routed to a control device with a minimum design control efficiency as specified in Table 10 at certain facilities. i. Respondent violated TCEQ Non-Rule Standard Permit for Oil and Gas Facilities (e)(6) at certain facilities by not properly maintaining seals and gaskets to prevent leaking and not ensuring that tank hatches remained closed except during sampling, gauging, loading, unloading, or planned maintenance activities. Page 7 of 17 Cimarex Energy Co. Docket No. CAA-06-2020-3388 j. Respondent violated TCEQ Non-Rule Standard Permit for Oil and Gas Facilities (e)(11) at certain facilities by failing to meet the design destruction efficiency of 98% for VOCs claimed in the permit application when operating the flare to control emissions from production, planned MSS, emergency, or upset events. 26. More than thirty (30) days before the issuance of this Consent Order, Respondent was notified of the violations alleged herein. On April 17, 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). 27. 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). 28. 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. 29. 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. 30. Respondent also consents to and agrees not to contest EPA's jurisdiction to either issue this Consent Order or enforce its terms. Further, Respondent will not contest EPA's jurisdiction to either compel compliance with this Consent Order in any 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. Page 8 of 17 Cimarex Energy Co. Docket No. CAA-06-2020-3388 ORDER ON CONSENT 31. 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 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. 32. Respondent has consented to, and is hereby ordered to satisfy, the following requirements regarding the Facilities listed in Attachment A: a. Within forty-five (45) days of the Effective Date of this Consent Order, Respondent shall inspect and evaluate all oil and water storage tanks and associated hatches, valves, gaskets, and pressure relief devices at the Facilities to ensure there are no unauthorized emissions. b. Within forty-five (45) days of the Effective Date of this Consent Order, Respondent shall inspect all flares at the Facilities to ensure that flares that are used for the control of emissions from production are properly operated and continuously lit during all facility operating scenarios where gases are routed to the flares. c. Within one-hundred and twenty (120) days of the Effective Date of this Consent Order, Respondent shall review its operation and maintenance procedures for inspecting process equipment at each Facility, and update the procedures, as necessary, to ensure that problems are timely identified and addressed to minimize emissions from process equipment. If Respondent does not have such procedures, it shall create such procedures. Respondent shall ensure that these procedures include, at a minimum, the following: i. the use of a standard site inspection checklist during regular inspections that requires evaluation of the following: well pad, flares, separators, heater treaters, tank batteries, compressors, fuel skid, well heads, spill containment, solid waste and chemical storage, and miscellaneous facilitywide operations; ii. a quality control program that ensures the quality, efficiency, and performance of facility maintenance activities; and Page 9 of 17 Cimarex Energy Co. Docket No. CAA-06-2020-3388 iii. appropriate and regular training for personnel implementing the operation and maintenance procedures. d. Within ninety (90) days from the completion of the review discussed in subparagraph "c." above, Respondent shall send a letter to EPA detailing: i. the equipment that was inspected under sub-paragraph "a." and "b." above at each Facility, the method of inspection, and any actions taken, or improvements made to ensure or improve compliance; and ii. any updates that were made to the operation and maintenance procedures for the Facilities to ensure that problems are timely identified and addressed to minimize emissions from process equipment. 33. Any information or correspondence submitted by Respondent to EPA under this Consent Order shall be addressed to the following: Brandon Bammel 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) 665-8545 Email: bammel.brandon@epa.gov 34. 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. "Emission data" is defined in 40 C.F.R. 2.301. Page 10 of 17 Cimarex Energy Co. Docket No. CAA-06-2020-3388 35. 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 36. 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 54, shall not exceed a term of one year, and shall be nonrenewable. 37. 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. 38. Respondent neither admits nor denies any of the factual or legal determinations made by EPA in this Consent Order. 39. 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. 40. By signing this Consent Order, the undersigned representative of Cimarex 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. 41. 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 Page 11 of 17 Cimarex Energy Co. Docket No. CAA-06-2020-3388 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. 42. 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. 43. EPA does not waive any rights or remedies available to it for any violations by Respondent of Federal laws, regulations, statutes, or permitting programs. 44. 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. 45. 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. 46. 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: tripathi.arati@epa.gov To Respondent: swittenbach@cimarex.com Page 12 of 17 Cimarex Energy Co. Docket No. CAA-06-2020-3388 47. 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 construed 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. 48. 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. 49. Respondent enters into this Consent Order in good faith without trial or adjudication of any issue of fact or law. 50. 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). 51. The parties shall bear their own costs and fees in this action, including attorneys' fees. 52. 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 32 is restitution or required to come into compliance with the law. Page 13 of 17 Cimarex Energy Co. Docket No. CAA-06-2020-3388 FAILURE TO COMPLY 53. 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 14 of 17 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: 2020.07.06 16:38:07 -05'00' Cimarex Energy Co. Docket No. CAA-06-2020-3388 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: tripathi.arati@epa.gov Copy via Email to Respondent: swittenbach@cimarex.com Date: ________________ Digitally signed by ARATI TRIPATHI DN: c=US, o=U.S. Government, ou=Environmental Protection Agency, cn=ARATI TRIPATHI, ARATI TRIPATHI 0.9.2342.19200300.100.1.1=68001003655634 ____________________ Date: 2020.07.07 07:56:45 -05'00' U.S. EPA, Region 6 Dallas, Texas Page 16 of 17 Cimarex Energy Co. Docket No. CAA-06-2020-3388 Attachment A Cimarex Energy Co. Site Identity Big Sky 55-16 1H Boulder State 57-32 1H, 2H Greenhorn Unit 1-35 Sawtooth State 55-6 1H Madison 2-11 1H, 2H & 3H Remington Park Compressor Station Citation 32 FEE 2H Montrose 45 Unit 1H-3H Preakness Compressor Station Gulfstream Compressor Station Barbaro 23 Unit CTB Facility Renegade/Queen City/Steamworks Facility TCEQ Regulated Entity No. RN106871064 RN108440546 RN107704603 RN107762536 RN109822536 RN109958892 RN110459856 RN110015898 RN108696527 RN106878044 RN107331530 RN110863370 Permit Number 146499 155206 N/A 124102 147292 148623 152839 149138 134557 115906 N/A 158616 Page 17 of 17