When the Well Goes Wet
EPA enforcement actions against oil and gas drilling operations have been relatively few until recently. A case from Utah shows what happens when companies proceed to drill without following EPA's interpretation of areas subject to Clean Water Act jurisdiction. Seeking the advice of consultants or attorneys before drilling can minimize these risks. In the Utah case, the U.S. District Court for the District of Colorado entered a consent decree between Gasco Energy, Inc., the Environmental Protection Agency and Southern Utah Wilderness Alliance (SUWA) resolving alleged violations of the Clean Water Act. Gasco, a natural gas exploration and production company, had drilled one well site and prepared another with associated drill pads and access roads near the Green River in Utah.
On September 29, 2011, EPA issued Gasco a Findings of Violation and an Administrative Order for Compliance, alleging that Gasco's well sites were within jurisdictional wetlands, and Gasco's site preparation work amounted to a discharge of dredged and/or fill material in violation of Sections 301(a) and 309 of the Clean Water Act. Gasco challenged the order as arbitrary and capricious under the Administrative Procedure Act. SUWA intervened, then EPA and SUWA counterclaimed, alleging both violations of the Clean Water Act and the EPA Order and seeking wetland restoration and mitigation at Gasco's expense.
Rather than litigate, the parties agreed to a consent decree. Under the decree, Gasco will pay a $110,000 civil penalty. Gasco is also required to:
- Abandon and plug the first well site
- Install a bottomless culvert in the second site
- Remove fill material from both well pads and access roads
- Level and re-vegetate the fill areas with native plants, and
- Implement best management practices including erosion and sediment controls
Additionally, after restoration is complete, Gasco must monitor and submit annual reports for five years, or indefinitely until the restoration criteria are met. Gasco must permit EPA entry for monitoring and oversight, and transfer of the property will not relieve Gasco of its restoration duties.
This case is a pointed reminder of the importance of observing legal limitations on oil and gas exploration and production activities which may impact jurisdictional waterways. EPA and the U.S. Corps of Engineers often make aggressive determinations of what constitutes "Waters of the United States." Even normally dry streams or ditches can be subject to EPA's enforcement powers. When in doubt, a team of experienced legal and environmental consultants can assist with compliance questions.
Due diligence measures in selecting or locating a drill site and crossing areas may have avoided the expense and effort of this matter. A Phase I Environmental Assessment or even a more limited assessment conducted by a qualified environmental professional could have revealed the presence or absence of wetlands. The costs of these environmental assessments are a fraction of EPA's civil penalties, and when properly conducted with legal advice, may also provide CERCLA liability protections against known or unknown historic contamination
If you have questions about this case, what to look for in an environmental consultant, or the implications of operating near jurisdictional waters or wetlands, please contact your usual Stinson Leonard Street contact.