Nation's second largest natural gas producer to pay major CWA penalty

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WASHINGTON, DC, Dec. 20, 2013 -- Chesapeake Appalachia LLC, a subsidiary of Chesapeake Energy -- the nation's second largest natural gas producer -- will spend an estimated $6.5 million to restore 27 sites damaged by unauthorized discharges of fill material into streams and wetlands.

Further, the company will also pay a civil penalty of $3.2 million -- one of the largest ever levied by the federal government -- for violations of Section 404 of the Clean Water Act (CWA), which prohibits the filling or damming of wetlands, rivers, streams, and other waters of the United States without a federal permit.

The penalty was announced by the Department of Justice and the Environmental Protection Agency (EPA) on Thursday, Dec. 19, and purports to implement a comprehensive plan to comply with federal and state water protection laws at the company's natural gas extraction sites in West Virginia, many of which involve hydraulic fracturing operations.

"Wetlands and streams serve important roles in the aquatic ecosystem by supporting aquatic life and wildlife. Wetlands also play a valuable role in recharging our groundwater and drinking supplies, and reducing flood risks," said EPA Regional Administrator Shawn M. Garvin. "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 federal government and the West Virginia Department of Environmental Protection (WVDEP) allege that the company 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, impoundments, road crossings, and other facilities related to natural gas extraction. The alleged violations being resolved by today's settlement occurred at 27 sites located in the West Virginia Counties of Boone, Kanawha, Lewis, Marshall, Mingo, Preston, Upshur, and Wetzel, including 16 sites involving hydraulic fracturing operations. The government alleges that the violations impacted approximately 12,000 linear feet of stream, or approximately 2.2 miles, and more than three acres of wetlands.

"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's Environment and Natural Resources Division. "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 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.

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