What is the New Owner Clean Air Act Audit Program?

The New Owner Clean Air Act Audit Program (the Program) was finalized by the Environmental Protection Agency (EPA) on March 29, 2019. The Program was designed for oil and natural gas exploration and production facilities, with a specific emphasis on upstream exploration and production sites. Historically a significant number of these facilities have been noncompliant and have outstanding violations of the federal Clean Air Act (CAA). The Program targets newly acquired well sites with excess emissions from tank systems and vapor control systems related to operations, maintenance or design issues.

This newly released program allows new owners of these noncompliant facilities to identify, disclose and correct any outstanding violations so that they can have a clean start to a recently acquired facility. It is important to keep in mind that the New Owner Clean Air Act Audit Program is entirely voluntary—this program is an opportunity for new owners to avoid penalties and remain in environmental compliance.

What is the purpose of this program?

This voluntary disclosure program was created to provide a cost-effective and time-efficient way to significantly reduce pollution, protect the environment and public health, and ensure oil and gas facilities are compliant with the Clean Air Act. New owners are incentivized to disclose and correct violations to the EPA because doing so ensures that the EPA will not impose penalties or fines for those violations. This Program is important because owners can identify causes of excess emissions that are often overlooked during due diligence or post-closing assessments.

Who does this program affect?

If you are a new owner who has recently acquired an upstream oil or natural gas facility (after March 2018), and you were not responsible for environmental compliance prior to the acquisition date, you may be eligible. Additionally, you may not be eligible for the program if the EPA or a state environmental agency has already identified violations at the facility. You can check if the facility has any outstanding violations by checking the EPA’s Enforcement and Compliance History Online (ECHO) tool.

How do I report?

After newly acquiring an oil and gas facility, you have nine months to express interest in the Program to the EPA. Below are specific steps to successfully report under this voluntary disclosure program:

  • Step One: Enter into the New Owner Audit Program Agreement

The first step is to read, sign, and submit the New Owner Audit Program Agreement. The signed Agreement should be submitted to the EPA within nine months of acquiring a new facility.

  • Step Two: Audit the Facility

After entering into the Agreement, the next step is to conduct an audit of the facility. Review facility operations, processes, and designs. Determine if there are any excess emissions from tanks or vapor control systems at the facility. Identify any potential or outstanding violations of the Clean Air Act.

  • Step Three: Take Corrective Actions

The next step is to correct all violations within the proper time frame. For violations identified while completing Appendix B of the Agreement, you have 180 days from time of discovery to correct the violation. For violations identified outside of completing Appendix B, you have 60 days from time of discovery to correct the violations. Violations that present an immediate or substantial endangerment to public health must be corrected as soon as possible.

  • Step Four: Maintain Reporting Requirements

Once you have taken corrective actions, the last step is to maintain reporting and recordkeeping requirements. Within 60 days of expressing interest in the Program, you must submit Audit protocols and checklists that you will perform to determine compliance. Then, you must send the EPA a semi-annual report every 6 months disclosing all violations discovered during the audit and corrective actions taken. This semi-annual report is due on the 15th day of the month. You must continue to send the EPA semi-annual reports until a final report is delivered. Within 60 days of completing the Audit program and all necessary corrective actions, you must send the EPA a final report detailing facility compliance such as date of noncompliance, corrective actions taken, estimated amount of pollutants reduced by corrective actions, and more. These reports must be certified by your company’s responsible corporate official.

What happens after I report?

The EPA will review your final report and determine if the corrective actions you have taken have satisfactorily corrected all violations of the Clean Air Act. If deemed adequate, the EPA will issue a “Final Determination” which resolves the Program Agreement. After receiving a Final Determination, you must maintain records for a minimum of two years. Be aware that the Final Determination does not resolve you of any criminal liability.

What more information?

For more information or assistance on the New Owner Clean Air Act Audit Program, please contact Vidhi Singhal, P.E. with ESE Partners at 281-501-6100 or vidhi@esepartners.com.

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