Fines and Remediation: a Cost of Doing Business

Posted by By at 14 February, at 07 : 02 AM Print

The state Department of Environmental Protection announced last week it had fined Chesapeake Appalachia LLC “$565,000 for multiple violations” in its Marcellus operations. Chesapeake Appalachia is a subsidiary of Chesapeake Energy Corporation, an Oklahoma City, Okla.-based company which claims to be the nation’s second largest producer of natural gas.

In Potter County, the company was found to have insufficient erosion and sedimentation controls. The deficiency was discovered when heavy rains washed dirt off a road and a nearby well pad, into the Right Branch of Wetmore Run, an environmentally high-quality stream.

“High-quality streams receive some of the highest levels of protection in the state,” DEP Secretary Mike Krancer said in a prepared statement, “and (natural gas drilling) operators are expected to ensure their work does not negatively affect them.

The sediment carried by the stream also “impacted” Galeton Borough Authority’s water treatment filters, which, to be fair, Chesapeake paid to repair.

In Bradford County, the driller “lost control of a well head during hydraulic fracturing of the Atgas 2H Well in Leroy Township,” according to the DEP statement. Fracking fluids and rainwater washed into a nearby unnamed tributary to Towanda Creek, and then into Towanda Creek itself.

The spill, which took the company six days to fully control, dumped dissolved solids, chlorides and barium into Towanda Creek.

In addition to the fines, Chesapeake paid about $380,000 to fix the problems it had created, Krancer said.

The company also will conduct further testing of five groundwater monitoring wells near the Bradford County spill to ensure the toxic soup has not contaminated the groundwater supply.

The accidents occurred, respectively, in March and April last year.

In July, the company reported it had doubled its second quarter 2011“net income” over the same period the previous year. While Chesapeake was paying less than $1 million in fines and damage repair, it was earning $467 million in profit.

In my younger years, in another forest, I watched loggers load their trucks well above legal limits and head off to the mill. If they were stopped at a state police mobile inspection station, they would be fined.

It was a gamble. If they were caught, it was simply “a cost of doing business.”

Accidents, and the fines that sometimes result, are simply a “cost of doing business” – a cost our lawmakers have, at least temporarily, ensured will be minimally impacted.

Last week, after several weeks in secret and about 24 hours official “negotiation,” the Pennsylvania legislature, many members of which campaign on open government, put one over on their constituents.

For the past two years, legislators have postured over whether Marcellus shale development should be taxed. Gov. Corbett promised there would be no tax, and for the most part, his fellow Republicans in the legislature – who control both the House and Senate – supported that premise.

After passing through the requisite committee gamut – Finance, Appropriations, Environmental Resources and Energy, and Rules – House Bill 1950 came to a halt Dec. 20 in the Senate, where the bill lay fallow while, it was widely reported, legislative leaders and drilling industry representatives discussed behind closed doors how small a fee could be extracted from the gas extractors.

Finally, Feb. 6 – last Monday – the Senate officially turned thumbs down on HB 1950. A conference committee was appointed, as expected, comprising three senators and three representatives. The next day, the committee reported its decision, and Wednesday, both chambers passed the bill and sent it to Gov. Tom Corbett.

Some Democrats cried foul, including Rep. Mike Hanna, D-Clinton County.

“It’s clear that their goal was to avoid the open meeting law,” Hanna, a member of the conference committee said Sunday on “Face the State with Rob Hanrahan.”

“They [Republicans] did not want the press and the public to know what their negotiations were,” he said.

The bill will make possible an “impact fee” of between 1 and 2.5 percent, depending on which side is doing the calculating. Until Wednesday, Pennsylvania was the only major natural gas producing state without a tax on natural gas extraction. With the governor’s signature, Pennsylvania will be the cheapest of the major natural gas producing states, some of which tax at nearly six percent of the value of gas removed from beneath their soil.

The impact fee is optional. If drillers can convince the counties they can do better without collecting the fee …

Hanna told of one drilling company that spent four times more money than the fee would have raised over four years, in less than one year,” upgrading two roads in the single county. That county likely will take a pass on the impact fee.

In that case, there also is a loss to the state, which otherwise would receive 40 percent of the fee.

The low cost and limited levy is difficult to understand when the governor’s proposed budget has cut budgets for both DEP and the Department of Conservation and Natural Resources – just when the state’s environmental needs should be center stage.

Or maybe not.

In the worst case, to the driller, it’s just a cost of doing business, like contributing to gubernatorial campaigns.

Photo by Tom Owad

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This post was written by:
- who has written 169 posts for Rock The Capital
John Messeder is an award winning journalist with more than 35 years experience writing about education, environment and local government issues. He has lived in Maine, Florida, California and Alaska, and, by temporary turns, numerous places in between. John also is an accomplished photographer, and avid hiker, conservationist, oral history buff, and author of several books he has not yet got 'round to writing. He lives in Adams County, Pa., just over a hill from Gettysburg, with his wife and Golden Retriever. He may be contacted at john@JohnMesseder.com - Email jmesseder

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