Chesapeake Ordered to Pay $3.2M Fine in West Virginia
Natural Gas Intelligence
20 December 20, 2013
By Jamison Cocklin
In one of the largest fees ever assessed by the federal government
for violating the Clean Water Act, both the U.S. Department of
Justice and the U.S. Environmental Protection Agency (EPA) said
Thursday that Chesapeake Appalachia LLC, a subsidiary of onshore
oil and gas giant Chesapeake Energy, would pay a civil penalty of
$3.2 million for violations that occurred in West Virginia.
The company will also pay an estimated $6.5 million to restore 27
sites across West Virginia damaged by the unauthorized discharge
of fill material into streams and wetlands in Boone, Kanawha,
Lewis, Marshall, Mingo, Preston, Upshur and Wetzel counties where
horizontal drilling and hydraulic fracturing (fracking) activities
were occurring.
"With this agreement, Chesapeake is taking important steps to
comply with state and federal laws that are essential to
protecting the integrity of the nation's waters, wetlands and
streams," said Robert G. Dreher, acting assistant attorney general
of the Justice Department.
EPA Regional Administrator Shawn Garvin added that "this case
sends a clear message that EPA and other federal and state
regulatory agencies will do what is necessary to ensure compliance
with the Clean Water Act and to protect these valuable resources
and the health of our communities."
The settlement also resolves alleged violations of state law
brought by the West Virginia Department of Environmental
Protection (WVDEP). The state itself will receive half of the
civil penalty.
Several years ago, both state and federal regulators discovered
some of the violations after receiving tips from the public and
after routine inspections. The company also disclosed potential
violations at 19 of the sites following an internal audit (see
Shale Daily, March 5, 2012). In 2010 and 2011, the EPA issued
administrative compliance orders for violations at 11 sites. Since
then, the company has been engaged in restoration efforts at those
sites.
According to federal and state regulators, Chesapeake impounded
streams and discharged sand, dirt, rocks and other fill material
into streams and wetlands without a federal permit in order to
construct well pads, water impoundments, road crossings and other
drilling-related facilities.
"Chesapeake Appalachia LLC has reached a key milestone in the
settlement process to resolve federal and state claims relating to
surface construction activities that occurred in West Virginia
prior to 2010," said Chesapeake spokesman Gordon Pennoyer in a
statement provided toNGI's Shale Daily. "The company is fully
committed to regulatory compliance and is working with the EPA,
Army Corps of Engineers and [the] WVDEP to restore impacted
sites."
When asked, Pennoyer did not elaborate on why the company chose to
discharge unauthorized fill material into streams and wetlands.
Last year, the company pleaded guilty to three violations of the
Clean Water Act at one of the West Virginia sites related to the
current settlement (see Shale Daily, Oct. 9, 2012). The company
was ordered to pay a $600,000 penalty in that case after
regulators discovered that crushed stone and gravel had been
dumped into Blake Fork stream to create a roadway to improve
access to a drilling site.
The current order is open to a 30-day public comment period and a
court must still approve it.