EPA to unveil policy aimed at avoiding legal action over oil and gas polluters: source

The Environmental Protection Agency’s (EPA) office of enforcement will announce a new policy aimed specifically at helping polluters in the oil and gas industry, The Hill has learned.

The new policy, which has not been finalized, will focus on offering more flexibility to oil and gas companies that choose to self-audit their emissions and report any failures to meet EPA’s regulations, according to an EPA employee with knowledge of the plan.

EPA’s head of the Office of Enforcement and Compliance Assurance (OECA), Susan Bodine, has plans to announce the policy Friday at the EarthX Law and Policy symposium in Dallas. The announcement is timed with Earth Day, which is Sunday. The date is also notable because it’s the eight year anniversary of the Deepwater Horizon oil spill, which dumped nearly 5 million barrels of oil into the Gulf of Mexico.

Bodine will be speaking on a panel focused on sustainable and ethical corporate decisionmaking.

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Since 1995, the EPA has offered incentives to industries who choose to self-audit their potential pollution. Under the policy called “Incentives for SelfPolicing: Discovery, Disclosure, Correction and Prevention of Violations,” companies that find they are breaking the law and report it to EPA promptly, and then fix the problem, will get certain fee exemptions. Another policy from 2008 offers exemptions to owners who buy companies and find during an audit that the previous owners were not in compliance.

The idea is that companies will choose to self-audit and fix their problems rather than wait for EPA to conduct its own investigation, which could lead to a costly and lengthy legal battle.

The new EPA pilot program will at first focus solely on offering more audit alternatives to the oil and gas industry and will first focus specifically on companies bought recently and audited by the new owner, according to the EPA source.

The program would slightly modify the national audit program and give more flexibility to that sector if they self-disclose. One of the areas of focus is jumpstarting more compliance in tank vapor control systems, of which the agency has seen an uptick in noncompliance, according to the source.

One of the flexibilities under consideration in the policy is extending the period of time that oil and gas polluters can take to fix the pollution after they reported their violations to EPA. 

Bodine says the new program will be mirrored after an audit policy agreement negotiated in 2017 with Range Resources, a Texas based natural gas company, after it acquired a business in Louisiana.

“EPA is exploring whether the Range Resources agreement can serve as a model for the development of a New Owner Audit Policy for the Oil and Gas Sector. We view this as an opportunity to achieve prompt and cost-effective return to compliance. EPA will be conducting outreach and seeking feedback from industry and other stakeholders as we develop the program,” Bodine told The Hill in a statement Friday.

According to an EPA case study of the Range Resources negotiation dated March 2018, the natural gas company said one of its biggest “challenges and issues” with the current audit policy was the short timeframe made available after they self disclosed their noncompliance.

“Although extensions are not generally given up front; you can submit a proposed corrective action schedule and hope that it is accepted. Again, if not accepted, you remain potentially subject to enforcement. EPA has a track record of providing reasonable extensions, but there are no guarantees,” the Range Resources wrote.

Range was ultimately given three years to complete audits for all of its 390 acquired facilities. The default corrective action period under the current audit is 60 days from discovery of a violation.

The company wrote in the case study that under the “New Owner Policy” any “violations originating with the previous owner and discovered and corrected by Range, will typically receive 100% penalty mitigation.”

The policy change is part of the Trump administration’s push to find alternatives to formal lawsuits and aims to highlight the message that the new “audit refresh” is “open for business,” according to the source.

While EPA’s audit policy was available under the Obama administration, Bodine and others believe the policy should be at the forefront of the new administration’s compliance push.

In a letter Bodine wrote to staff in in early February, she highlighted the EPA’s new approach to polluters. The memo was sent days before the agency released its annual enforcement data, which showed a distinct drop in lawsuits brought and filed against polluters under the Trump administration.

“Some outside entities that are unfamiliar with the true nature of our work here in OECA and have tried to measure the worth of what you do simply through the dollar amount of federal penalties and the number of federal case initiations,” Bodine wrote in the office-wide email reviewed by The Hill.

“However it is also important for EPA to help and, if necessary, persuade states to take actions to address violations and informal actions can bring about a return to compliance more quickly.”

The Department of Justice (DOJ), which is responsible for bringing cases against polluters for EPA, has issued similar memorandum.

In a March 12 letter sent to the chiefs of the DOJ’s Environment and Natural Resources Division, acting Assistant Attorney General Jeffrey Wood highlighted a policy that would include “enhancing cooperative federalism.”

The idea involves findings ways to work with noncompliant individuals or industries to avoid taking them to court.

“In fact, many kinds of environmental violations can be, and often are, addressed and resolved without federal involvement,” the memo read.

Updated at 3:28 pm