In my never-ending effort to improve my position in life by associating with people who are smarter and more knowledgable than I am (my wife being a notable example), this entry is by noted environmental lawyer Cynthia Bishop (cbishop@cbishoplaw.com) on a topic that is important to anyone in the energy business.

If your E&P or service company is growing quickly, you could be overlooking environmental regulations that are triggered by the very growth and success your hard work has achieved. Fortunately, the EPA and many states, including Texas and Oklahoma, have voluntary disclosure or internal audit programs that can waive or greatly reduce penalties.

Most environmental regulations apply to operations with a capacity (such as throughput or equipment size) above a certain threshold. As a result, many startup companies are exempt at the outset of their operations, but later fall under permitting or reporting requirements as they expand. Examples are spill prevention plans, air permits, and annual EPA Form “R” reports. These companies are so focused on meeting the increased demand that they sometimes do not think about environmental compliance.

The disclosure programs allow a company to audit itself and then disclose and correct any violations identified during the audit. In return for the self-disclosure and corrective action, the agency will waive or greatly reduce typical penalties. Each audit program contains specific requirements that must be met in order to qualify for the penalty waiver, so be sure to check with applicable guidlines and regulations.

See the EPA’s Audit Policy

See the TCEQ Audit Privilege Act

The Oklahoma law can be found at OAC 252:4-9-5(a).