1. Update on Oil and Gas Regulatory Activities in Texas and the Use of the Self Audit Privilege Act Susan Jablonski, P.E. Area Director, Central Texas Bryan Sinclair Director, Enforcement Division Presented: May 3, 2016 Texas Commission on Environmental Quality Office of Compliance and Enforcement

2. Oil & Gas Activities: Last Five Years Increased activities across all media statewide Increased air monitoring and infrastructure issues in rural Eagle Ford Shale

3. Who Regulates Oil and Gas Activities in Texas? The Railroad Commission of Texas (RRC) has primary regulatory jurisdiction over the oil and gas (O&G) industry. The Texas Commission on Environmental Quality (TCEQ) is the environmental agency for the state (impact to the public and the environment). There is a Memorandum of Understanding (MOU) between the RRC and TCEQ detailing jurisdictions of O&G activities. The Railroad Commission of Texas (RRC) has primary regulatory jurisdiction over the oil and gas (O&G) industry. The Texas Commission on Environmental Quality (TCEQ) is the environmental agency for the state (impact to the public and the environment). There is a Memorandum of Understanding (MOU) between the RRC and TCEQ detailing jurisdictions of O&G activities.

4. TCEQ’s Regulatory Role TCEQ’s primary regulatory role with O&G is regulating air emissions and ensuring air quality, as well as any potential impact to water. There are investigations performed in response to oil and gas activities in multiple programs: – Air quality, water quality, public water supply, wastewater collection and treatment, solid waste disposal/illegal dumping, dust control, surface water usage, and water rights. TCEQ’s primary regulatory role with O&G is regulating air emissions and ensuring air quality, as well as any potential impact to water. There are investigations performed in response to oil and gas activities in multiple programs: – Air quality, water quality, public water supply, wastewater collection and treatment, solid waste disposal/illegal dumping, dust control, surface water usage, and water rights.

5. TCEQ Investigation Types There are several reasons why a regulated entity might be investigated by TCEQ staff: – Regularly scheduled investigation – Complaint response investigation – U.S. EPA or TCEQ initiative – Spill response or emergency response – Referral from another governmental entity There are several reasons why a regulated entity might be investigated by TCEQ staff: – Regularly scheduled investigation – Complaint response investigation – U.S. EPA or TCEQ initiative – Spill response or emergency response – Referral from another governmental entity

6. Multimedia Investigations Investigations related to oil and gas activities are conducted in programs other than air. – Industrial Hazardous, and Municipal Waste – On-site Sewage Facilities – Public Water Supplies – Wastewater and Sludge – Stormwater – Water Rights – Underground Injection Control – Aggregate Production Operations Investigations related to oil and gas activities are conducted in programs other than air. – Industrial Hazardous, and Municipal Waste – On-site Sewage Facilities – Public Water Supplies – Wastewater and Sludge – Stormwater – Water Rights – Underground Injection Control – Aggregate Production Operations

7. Multimedia Investigations Investigations related to oil and gas activities are conducted in programs other than air. – Industrial Hazardous, and Municipal Waste – On-site Sewage Facilities – Public Water Supplies – Wastewater and Sludge – Stormwater – Water Rights – Underground Injection Control – Aggregate Production Operations Investigations related to oil and gas activities are conducted in programs other than air. – Industrial Hazardous, and Municipal Waste – On-site Sewage Facilities – Public Water Supplies – Wastewater and Sludge – Stormwater – Water Rights – Underground Injection Control – Aggregate Production Operations

8. Complaint Response TCEQ responds to all complaints received under its jurisdiction: – Considered a core mission of the agency – Complaints are assigned a priority with corresponding investigation timeline – Alleged health related issues are considered our highest priority TCEQ responds to all complaints received under its jurisdiction: – Considered a core mission of the agency – Complaints are assigned a priority with corresponding investigation timeline – Alleged health related issues are considered our highest priority

10. TCEQ Air Monitoring Stations

11. Air Monitoring - Eagle Ford Shale Karnes County, near courthouse in Karnes City Activated New Site: December 17, 2014 Automated Gas Chromatograph Karnes County, near courthouse in Karnes City Activated New Site: December 17, 2014 Automated Gas Chromatograph

12. Hazardous Spills/Response Which State Agency has Jurisdiction? Dependent on what is spilled and where  Texas Commission on Environmental Quality  General Land Office  Railroad Commission of Texas  Texas Department of State Health Services  Texas Parks and Wildlife Department  Texas Department of Public Safety  Governor’s Division of Emergency Management Which State Agency has Jurisdiction? Dependent on what is spilled and where  Texas Commission on Environmental Quality  General Land Office  Railroad Commission of Texas  Texas Department of State Health Services  Texas Parks and Wildlife Department  Texas Department of Public Safety  Governor’s Division of Emergency Management

13. General Findings from Air Investigations A very small percentage of sites/facilities are found to have authorized or unauthorized emissions Most issues documented arise from human or mechanical failures These issues are quickly remedied and could be avoided through increased diligence on the part of the operator Common findings: worn gaskets, closing open hatches, and repairing stuck valves Corrective actions: replacing worn gaskets, closing open hatches & repairing stuck valves A very small percentage of sites/facilities are found to have authorized or unauthorized emissions Most issues documented arise from human or mechanical failures These issues are quickly remedied and could be avoided through increased diligence on the part of the operator Common findings: worn gaskets, closing open hatches, and repairing stuck valves Corrective actions: replacing worn gaskets, closing open hatches & repairing stuck valves

14. Common Investigation Tools Optical Gas Imaging Camera Toxic Vapor Analyzer Mini RAE Summa canister

15. Optical Gas Imaging Camera (OGIC) Using the OGIC, we can potentially locate under reported or unrecognized VOC source types The camera is capable of locating and imaging emissions from various sources of air pollution Documented images of emissions for follow-up Using the OGIC, we can potentially locate under reported or unrecognized VOC source types The camera is capable of locating and imaging emissions from various sources of air pollution Documented images of emissions for follow-up

16. Imaging for Volatile Organic Compound (VOC) Emissions

17. Innovative Approaches The TCEQ has undertaken numerous projects that use state-of-the-art science and technology to assess and address emissions from oil and gas activities. These initiatives have resulted and will continue to result in emissions reductions as well as improved agency policy and guidance. TCEQ has conducted multiple contractor-led aerial surveys or flyovers using a helicopter mounted with an optical gas imaging camera (OGIC) capable of detecting sources of air emissions: – Effective screening tool – Evaluate large geographical areas – Allows focus of resources on potentially problematic areas – Thousands of individual tanks have been surveyed The TCEQ has undertaken numerous projects that use state-of-the-art science and technology to assess and address emissions from oil and gas activities. These initiatives have resulted and will continue to result in emissions reductions as well as improved agency policy and guidance. TCEQ has conducted multiple contractor-led aerial surveys or flyovers using a helicopter mounted with an optical gas imaging camera (OGIC) capable of detecting sources of air emissions: – Effective screening tool – Evaluate large geographical areas – Allows focus of resources on potentially problematic areas – Thousands of individual tanks have been surveyed

19. TCEQ’s Outreach Activities Publications, Web Info, & FAQs Local Government Workshops, Public Workshops, Townhall Meetings & Open Houses Outreach to County Judges Coordination with Railroad Commission of Texas TCEQ Environmental Trade Fair – Oil & Gas Track – In May of each year Publications, Web Info, & FAQs Local Government Workshops, Public Workshops, Townhall Meetings & Open Houses Outreach to County Judges Coordination with Railroad Commission of Texas TCEQ Environmental Trade Fair – Oil & Gas Track – In May of each year

20. Approaches to Best Utilize Resources Additional stationary monitors Increased collection of ambient air canister samples Flyovers using infrared imaging Targeted mobile monitoring Conducting complaint-driven and routine investigations Wide variety of outreach activities within communities across the State Additional stationary monitors Increased collection of ambient air canister samples Flyovers using infrared imaging Targeted mobile monitoring Conducting complaint-driven and routine investigations Wide variety of outreach activities within communities across the State

22. Other Avenues to Compliance The Texas Audit Act is one avenue to helping an entity achieve voluntary compliance The TCEQ Environmental Assistance Division also offers assistance through programs like the Compliance Commitment (C2) Program and other compliance assistance options. The Texas Audit Act is one avenue to helping an entity achieve voluntary compliance The TCEQ Environmental Assistance Division also offers assistance through programs like the Compliance Commitment (C2) Program and other compliance assistance options.

23. Texas Environmental, Health, and Safety Audit Privilege Act In 1995, the 74th Texas Legislature approved House Bill 2473 which implemented the Act. The Act provides incentives to encourage voluntary compliance. In 1995, the 74th Texas Legislature approved House Bill 2473 which implemented the Act. The Act provides incentives to encourage voluntary compliance.

24. Audit Act Incentives Limited evidentiary privilege for certain information gathered in a voluntary self- audit. Immunity from administrative and civil penalties for certain violations voluntarily disclosed as a result of such an audit. Limited evidentiary privilege for certain information gathered in a voluntary self- audit. Immunity from administrative and civil penalties for certain violations voluntarily disclosed as a result of such an audit.

25. Immunity Audit Act §10 Disclosed violations may be granted immunity from administrative or civil penalties: Proper notice of intent to conduct an audit Proper, voluntary disclosure of violations Violations corrected in a reasonable amount of time Audit Act §10 Disclosed violations may be granted immunity from administrative or civil penalties: Proper notice of intent to conduct an audit Proper, voluntary disclosure of violations Violations corrected in a reasonable amount of time

26. Total Number of Notice of Audits Received Fiscal Year

28. Oil & Gas Notice of Audit Issues Difficulty Identifying Facility Locations Listing of County or General Region Not Sufficient Companies May Provide More Specific Identification with Map Difficulty Identifying Facility Locations Listing of County or General Region Not Sufficient Companies May Provide More Specific Identification with Map

29. Number of Disclosures of Violation Received Fiscal Year

30. Audit Act Most Common Violations: Failure to obtain the proper authorization Failure to properly maintain emission control devices Failure to maintain records Most Common Violations: Failure to obtain the proper authorization Failure to properly maintain emission control devices Failure to maintain records

31. Senate Bill 1300 (83 rd Legislature) Allows new owners of facilities the opportunity to avail themselves of the Act for violations identified during their due diligence review prior to acquisition of the facility. Applies to acquisitions that occurred on or after September 1, 2013. Within 45 days after the acquisition date, must: certify that there is no connection to the prior owner; disclose violations that were discovered prior to the acquisition; and correct the violations within a reasonable amount of time. Allows new owners of facilities the opportunity to avail themselves of the Act for violations identified during their due diligence review prior to acquisition of the facility. Applies to acquisitions that occurred on or after September 1, 2013. Within 45 days after the acquisition date, must: certify that there is no connection to the prior owner; disclose violations that were discovered prior to the acquisition; and correct the violations within a reasonable amount of time.

32. TCEQ’s Oil and Gas Web Site Oil and Gas Facilities: Compliance Resources: http://www.tceq.texas.gov/assistance/industry/oi l-and-gas/oilgas.html http://www.tceq.texas.gov/assistance/industry/oi l-and-gas/oilgas.html Compliance information on air, water, waste, and spill issues Guidance documents for local governments Sign up for email updates for Oil & Gas Oil and Gas Facilities: Compliance Resources: http://www.tceq.texas.gov/assistance/industry/oi l-and-gas/oilgas.html http://www.tceq.texas.gov/assistance/industry/oi l-and-gas/oilgas.html Compliance information on air, water, waste, and spill issues Guidance documents for local governments Sign up for email updates for Oil & Gas

33. Thank you Susan Jablonski, P.E. 512-239- 6731 Susan.jablonski@tceq.texas.gov Bryan Sinclair 512-239-2171 Bryan.sinclair@tceq.texas.gov