Chesapeake subsidiary to pay $3.2 million civil penalty to resolve Clean Water Act violations

WASHINGTON (Legal Newsline) -- A subsidiary of Chesapeake Energy, the nation's second largest natural gas producer, will spend an estimated $6.5 million to restore sites damaged by unauthorized discharges of fill material into streams and wetlands.

According to the federal Environmental Protection Agency and the U.S. Department of Justice, Chesapeake Appalachia LLC will restore 27 different sites and implement a comprehensive plan to comply with state and federal water protection laws at its natural gas extraction sites in West Virginia. Many of the sites involve hydraulic fracturing operations.

The company also will pay a civil penalty of $3.2 million for violations of Section 404 of the Clean Water Act. The act prohibits the filling or damming of wetlands, rivers, streams and other waters without a federal permit.

"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," Robert G. Dreher, acting assistant attorney general of the DOJ's Environment and Natural Resources Division, said in a statement Thursday.

"We will continue to ensure that oil and gas development, including development through the use of hydraulic-fracturing techniques, complies with the Clean Water Act and other applicable federal laws."

The federal government and the West Virginia Department of Environmental Protection allege that the company impounded streams and discharged sand, dirt, rocks and other fill material into streams and wetlands without a federal permit to construct well pads, impoundments, road crossings and other facilities related to natural gas extraction.

The alleged violations occurred at sites located in the West Virginia's Boone, Kanawha, Lewis, Marshall, Mingo, Preston, Upshur and Wetzel counties, including 16 sites involving hydraulic fracturing operations.

The government alleges that the violations impacted about 12,000 linear feet of stream, or about 2.2 miles, and more than three acres of wetlands.

The settlement requires that Chesapeake fully restore the wetlands and streams wherever feasible, monitor the restored sites for up to 10 years to assure the success of the restoration, and implement a comprehensive compliance program to ensure future compliance with the CWA and applicable state law.

To offset the impacts to sites that cannot be restored, the company will perform compensatory mitigation, which will likely involve purchasing credits from a wetland mitigation bank located in a local watershed, the EPA explained.

The settlement also resolves alleged violations of state law brought by WVDEP. The state of West Virginia is a co-plaintiff in the settlement and will receive half of the civil penalty.

The consent decree, lodged Thursday in the U.S. District Court for the Northern District of West Virginia, is subject to a 30-day public comment period and court approval.

From Legal Newsline: Reach Jessica Karmasek by email at jessica@legalnewsline.com.