Chesapeake Energy facing justice department investigation

Chesapeake Energy facing justice department investigation

CHARLESTON, W.Va. (AP)

The Department of Justice is investigating possible environmental violations by Chesapeake Energy at three of its well sites in West Virginia.

Federal investigators are looking into the possibility of criminal violations and other liabilities under the Clean Water Act, Chesapeake said in a filing Wednesday with the Securities and Exchange Commission.

Michael Kehs, a spokesman for Chesapeake, said the investigation involves “the movement of dirt or rock without proper permitting.”

Chesapeake said in the filing that it also is working with the Environmental Protection Agency to resolve compliance orders issued in the fourth quarter of 2010 concerning the company’s compliance with Clean Water Act permitting requirements in West Virginia.

The company did not provide details about the EPA’s orders.

In November 2010, the EPA cited a subsidiary, Chesapeake Appalachia LLC, for allegedly filling in four streams in Wetzel and Marshall counties while building roads and laying pipeline for Marcellus shale gas drilling projects. In one case, inspectors found that Blake Fork and a picturesque waterfall near New Martinsville had been completely filled with gravel for a road.

Penalties under the Clean Water Act could be as high as $37,500 per day, per violation, Chesapeake said. Criminal penalties could range from $2,500 to $25,000 per day, per misdemeanor and between $5,000 and $50,000 per day for a felony.

“We believe that resolution of the EPA’s compliance orders and the DOJ’s investigation will each include monetary sanctions exceeding $100,000 but are unable to estimate the amount of any fines that might be imposed in these matters,” the company said in its filing.

Also, Chesapeake said in the filing that the West Virginia Department of Environmental Protection has issued orders for compliance related to alleged violations of the state’s Dam Control and Safety Act at four structures constructed for Chesapeake.

“We are working closely with all appropriate regulatory authorities to resolve these matters,” Kehs said.