Air Permit Compliance for the Texas Oil & Gas Industry – What is TCEQ’s “Find It and Fix It” Initiative?

Texas Commission on Environmental Quality (TCEQ) Creates the Find It and Fix It Program (FIFI): A Permian Basin Only, Short-term Option for Penalty-Free Resolution of Oil & Gas Air Quality Violations

The TCEQ Office of Compliance and Enforcement is implementing the FIFI initiative to incentivize compliance with air quality rules and regulations at oil and gas operations in the 61 counties comprising the Permian Basin. In virtual meetings about the FIFI, the TCEQ indicated that there have been significant increases in excess emissions events reported from oil and gas operations within the Permian Basin. TCEQ emphasized that these events, when repeated, may be treated as routine operational emissions subject to permit requirements, and do not qualify as “upsets” or emissions events.

The FIFI program allows Permian facility owners and operators to evaluate their operations and current air authorizations to ensure that future incidents of excess emissions are reported correctly. To be considered for enforcement discretion, owners and operators must meet all FIFI deadlines and address non-compliance issues in a timely manner. TCEQ retains enforcement authority and will consider enforcement if FIFI program requirements are not met.

It is important to note that participation in FIFI does not exempt a facility from any other applicable rules, reporting, notification, record keeping, or permit conditions. Emissions events that occur during participation with the program are required to be reported to TCEQ under state and federal rules. TCEQ states that they reserve the right to withdraw from the participation agreement at any time.

How Do I Participate in FIFI?

To participate in the program, an owner or operator must submit a notification form, provided on TCEQ’s website, by Jan. 31, 2021. Then, a Compliance Plan must be submitted to TCEQ within 30 days of the date you submit the notification form.  The facility must document full compliance within 180 days from submission of the notification form. If a facility cannot achieve compliance with air permitting rules within the 180-day timeframe, a request to enter into a Permian Basin Compliance Agreement with TCEQ’s Enforcement Division can be submitted.

Environmental, Health, and Safety Audit Privilege Act (Texas Audit Act “TAA”) as an Alternative to FIFI: Pros, Cons, and Eligibility

The TAA is similar to the FIFI in that TCEQ penalties are waived in exchange for prompt corrections. The TAA, however, can provide longer timelines for corrections and other potential advantages over the FIFI. Many Permian facility operators have received information requests or other communications from the TCEQ which question whether their reported emission events should actually be permitted as recurrent operational emissions. Importantly, owners and operators that are on notice of existing violations may not participate in both the FIFI initiative and choose to self-audit under the TAA. To receive penalty immunity, TAA requires advanced notification to the TCEQ before auditing and discovery of violations. FIFI only requires notification before participation and prior notice of violations does not disqualify facility operators from the proposed penalty waivers.

The FIFI initiative may not be appropriate for all air quality compliance issues (e.g. those that will take longer than 180 days to return to compliance), and owners and operators may rather seek immunity from administrative or civil penalties by self-disclosing violation(s) under the TAA. Also, since FIFI only applies to facilities within the Permian Basin, if there are suspected compliance issues at facilities that are outside the Permian Basin, the TAA could be a useful tool in the management of those issues. Either way, facility operators should consider whether to make use of these options to avoid penalties while coming into compliance.

United States Environmental Protection Agency (EPA) Self-Audit/Self-Disclosure Policy as an Alternative to FIFI: Pros, Cons, and Eligibility

If facility operations are authorized under federal permits or regulations, an owner or operator may also consider seeking immunity from administrative or civil penalties by auditing and self-disclosing violation(s) under the EPA Self-Audit/Self-Disclosure Policy. The EPA Policy can be particularly well-suited to addressing non-compliance issues that arise in multiple States or EPA Regions. For the reasons discussed above, owners and operators that are on notice of potential non-compliance are unlikely to be eligible for both the FIFI initiative and penalty immunity under the EPA’s policy. However, EPA’s policy remains an important tool for managing potential federal compliance issues at facilities outside the Permian Basin.

Advantages of FIFI Penalty Forgiveness/Compliance Programs

• “Voluntary” audit act eligibility not required: FIFI can be used for compliance issues not found during an audit or where notice of an audit was not given to the TCEQ
• A single FIFI notification can be used to resolve violations at multiple facilities (within the Permian Basin)
• Can be used by the Permian Oil & Gas facilities which received TCEQ notifications challenging excess emissions reports. If the event is found to be a “routine event” based on TCEQ’s decision tree, then a facility can use the FIFI

Limitations of FIFI Penalty Forgiveness/Compliance Program

• FIFI applies only to state statutes and regulations
• FIFI does not apply to facilities outside the Permian Basin
• Must correct violations within the 180-day timeframe
• TCEQ may deny enforcement discretion for violations that adversely impact human health and the environment (TAA and EPA’s Audit Policy provide similar exceptions for significant harm)
• Failure to comply with FIFI timelines and notification requirements may result in loss of enforcement discretion
• Participation in the program is not confidential; information on companies will be posted on an external website
• Documentation is subject to the Public Information Act (although, companies may designate confidential information submitted with their compliance plans)

What Should I Do Next?

Environmental, Health, and Safety professionals within the Oil & Gas industry should evaluate their air quality operations and compliance challenges and decide whether TCEQ’s short-term FIFI program fits their needs, or if another self-audit/self-disclosure option would best work for their facility or facilities. We would be happy to discuss the options with you.