The United States Environmental Protection Agency (EPA), the United States Department of Justice (DOJ) and the State of Colorado recently announced a settlement with Denver-based HighPoint Operating Corporation (HighPoint) to resolve alleged Clean Air Act violations for failure to reduce volatile organic compounds (VOCs) emissions from its oil and natural gas production operations in the Denver-Julesburg Basin.
According to the joint press release, inspections of HighPoint operations conducted from 2014 to 2017 by EPA and Colorado found VOC emissions from HighPoint’s condensate storage tanks in violation of the Colorado State Implementation Plan, Regulation Number 7, due to undersized vapor control systems and inadequate operations and maintenance practices. Under the settlement, HighPoint will pay the United States a $275,000 civil penalty, and will pay a $55,000 civil penalty to Colorado and perform a State supplemental environmental project or “SEP” worth $220,000 involving installation and operation of vapor balancing controls to minimize emissions associated with loading of condensate into tank trucks at 10 HighPoint well pads, which will reduce HighPoint’s VOC emissions from tank truck loadout by an estimated 50 tons per year according to the press release.
Finally, the press release states that HighPoint will spend ~$3 million to implement measures to ensure the vapor control systems on its condensate storage tanks are adequately designed and sized as well as improving its operation and maintenance, monitoring and inspections practices. EPA and the State of Colorado estimate that HighPoint’s efforts will reduce VOC emissions from HighPoint’s operations by approximately 350 tons per year from 50 HighPoint tank systems in Colorado’s Denver-Julesburg Basin.
In total, HighPoint will pay $550,000 in civil penalties ($220,000 in the form of a SEP) to the United States and the State of Colorado, as well as incurring ~$3 million in implementation costs. The consent decree, which is lodged in the District Court of Colorado and is subject to a 30-day public comment period that closes on May 28, 2019, and final court approval, is available at https://www.justice.gov/enrd/consent-decrees.
Joe’s Takeaway: While EPA enforcement actions under the Trump Administration clearly have waned over the last two years, the Oil and Gas industry continues to be targeted for Clean Air Act violations with significant civil penalties. As I have cautioned, EPA is likely to target and enforce high profile environmental violations to counter criticism that EPA’s enforcement efforts have grown lax. Moreover, states like Colorado (that recently elected a Democratic Governor with significant support from environmental stakeholders) may move to fill the perceived enforcement void left by EPA under President Trump and Administrator Wheeler. Finally, remember the statute of limitations to enforce civil environmental violations is 5 years spanning into the next presidential term…
I will provide a detailed analysis of the HighPoint consent decree with practice tips at our next Environmental Regulatory Bootcamp course held in San Antonio, Texas, on June 18-21, 2019 (https://owensantarellatraining.com/course-offerings). I hope to see you there!