Federal Government Stepping Up Criminal Enforcement Actions Against Oil and Gas Drilling Companies

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In the last few months, the federal government has ramped up criminal enforcement actions against oil and gas drilling companies for violations of the Clean Water Act, and other environmental statutes. Alleged violations occurred in Ohio, Louisiana, North Dakota, Oklahoma, Texas and West Virginia.

The most recent case was filed about two weeks ago in Ohio, where the U.S. Department of Justice (DOJ) charged Ben Lupo with criminal violations of the Clean Water Act for allegedly illegal disposal of hydraulic fracturing waste. Lupo is charged with one count of violating the Clean Water Act, and according to the court affidavit the violation took place on January 31, 2013. The Ohio Department of Natural Resources arrived at Hardrock Excavating LLC, which is owned by Lupo, located in Youngstown, OH. Ohio DNR inspected and found a hose, connected to a storage tank, discharging wastewater into a stormwater drain at the facility. The case has been filed in the U.S. District Court for the Northern District of Ohio.

In Louisiana, Cedyco Corporation was sentenced in the U.S. District Court for the Eastern District of Louisiana for illegally and negligently discharging oil into the bayous of Jefferson Parish, Louisiana. The company was fined $557,000 for the misdemeanor Clean Water Act violation. Cedyco also agreed to stop operations of all hydrocarbon business in the state.

Kent Phillips, owner and operator of Kepco Operating Inc., plead guilty in the U.S. District Court for the Western District of Louisiana in June of last year. Phillips negligently discharged oil without a permit into Devil’s Creek, which was a violation of the Clean Water Act. Phillips was placed on probation for one year and fined $2500.

Two separate cases involving Clean Water Act violations settled in early January in North Dakota. The cases involved Hurley Enterprises and Mon-Dak Water & Septic Service, LLC. Hurley Enterprises admitted dumping domestic sewage onto farm land on three separate occasions, one of which occurred after receiving a notice of violation from the North Dakota Department of Health. It is estimated that the company dumped over 400 thousand gallons of sewage waste in an 18 month period. Hurley Enterprises agreed to a $50,000 fine and future compliance with the Clean Water Act’s land application regulations.

Mon-Dak Water & Septic Service, LLC admitted to dumping domestic sewage onto properties on two different occasions, and admitted in a plea agreement that the disposal was not in compliance with Clean Water Act regulations. Like Hurley Enterprises, Mon-Dak also agreed to a $50,000 fine and future compliance with the Clean Water Act’s land application regulations. The federal district court judge Daniel L. Hovland– U.S. District Court for the District of North Dakota has yet to issue a final judgment in these cases.

Last April in Oklahoma, Integrated Production Services, Inc. (IPS) was sentenced in the U.S. District Court for the Eastern District Oklahoma and ordered to pay a fine of $140,000. The fine was assessed for violations of the Clean Water Act at IPS’ operations in Atoka County, Oklahoma. The violation occurred when Gabriel Henson, a crew supervisor for IPS, drove a pickup truck through an earthen bern, causing rain water which had become contaminated with hydrochloric acid from a tank leak to flow into Dry Creek, a tributary of Boggy Creek. Henson was placed on probation and fined $2500.

Late last year, Chesapeake Appalachia, LLC was sentenced in the U.S. District Court for the Northern District of West Virginia for three violations of the Clean Water Act. Chesapeake Appalachia was ordered to pay a fine of $600,000 and was placed on a supervised release for a two year period. The company admitted to discharging 60 tons of crushed stone and gravel into Blake Fork, a waterway, on three different occasions. It did this in an effort to create a roadway to improve access to a site for Marcellus Shale drilling activity. EPA conducted a series of site inspections at sites operated by Chesapeake Appalachia and issued 11 administrative compliance orders. The company has either complied or is in the process of complying with all the orders.

In Texas, PEMCO Services, Inc. applied more than 1.3 million barrels of used drilling muds onto its land farming site, which was a violation of its permit. This occurred in Jefferson County, Texas and PEMCO was ordered to pay fines totaling $1,350,000. PEMCO then spent over $1 million to clean up the facility, which has since been closed.

For more information on the above cases and others visit the EPA Environmental Crimes Case Bulletin for January 2013.

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