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Chesapeake to pay $3.2M in water pollution fines

CHARLESTON, W.Va. -- Chesapeake Energy will pay $3.2 million in fines and spend $6.5 million on restoration work in a settlement over allegations the company buried streams and wetlands without permits at more than two dozen natural gas extraction sites across West Virginia, officials announced Thursday.

The civil settlement covers 27 sites in eight counties and comes just a year after Chesapeake subsidiary Chesapeake Appalachia pleaded guilty to three criminal charges for similar violations of the Clean Water Act's "dredge-and-fill" permit requirements.

Chesapeake, the nation's second-largest natural gas producer, also agreed to implement what regulators called a "comprehensive plan" to follow federal and state water-protection laws in the future.

The deal, which is subject to court approval, was announced by the U.S. Department of Justice and the Environmental Protection Agency after first being filed in U.S. District Court in Wheeling.

"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 for environment and natural resources.

EPA Regional Administrator Shawn Garvin said the case "sends a clear message that [the] 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."

Gordon Pennoyer, a spokesman for Oklahoma City-based Chesapeake, called the settlement 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 November 2010.

"The company is fully committed to regulatory compliance and is working with the Environmental Protection Agency, Army Corps of Engineers and West Virginia Department of Environmental Protection to restore the impacted sites," Pennoyer said in an email message.

The EPA and DEP alleged that Chesapeake impounded streams and discharged sand, dirt, rocks and other fill material into streams and wetlands without federal permits. The company was constructing well pads, impoundments, road crossings and other facilities related to its natural gas extraction activities.

In a news release, the federal government said the violations covered by the settlement occurred at 27 sites located in Boone, Kanawha, Lewis, Marshall, Mingo, Preston, Upshur and Wetzel counties. Federal officials allege that the company's actions affected 12,000 linear feet of streams, or about 2.2 miles, and more than three acres of wetlands, according to the release.

The EPA said it discovered the violations through information provided by the public and routine inspections at the sites. In addition, Chesapeake voluntarily disclosed potential violations at 19 of the sites after an internal audit.

In 2010 and 2011, the EPA issued administrative-compliance orders for violations at 11 of the sites. Since that time, the company has been correcting the violations and restoring those sites, the EPA said.

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

In a related case, in December 2012, Chesapeake pleaded guilty to three criminal Clean Water Act violations for actions at one of the sites also covered by the new civil settlement.

Chesapeake paid $600,000 in fines in that plea deal after admitting to illegally discharging 60 tons of crushed stone and gravel into Blake Fork, in Wetzel County, to create a roadway and improve access to a drilling site.

Reach Ken Ward Jr. at kward@wvgazette.com or 304-348-1702.


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