In a little noticed case, a unit of Chesapeake Energy pled guilty last month to environmental crimes.
The company was fined $600,000 and placed on probation.
Federal officials charged Chesapeake with discharging sixty tons of crushed stone and gravel into Blake Fork in Wetzel County, West Virginia on at least three different occasions in December of 2008.
“Chesapeake illegally filled at least three sensitive wetlands,” said David McLeod, a special agent in charge of the Environmental Protection Agency’s criminal enforcement program in West Virginia. “In one instance, Chesapeake obliterated a natural waterfall.”
It was the first criminal guilty plea in a case to grow out of the controversial practice of hydraulic fracturing – or fracking.
The company was represented by Jason Hutt, a partner at Bracewell Giuliani in Washington, D.C.
Hutt is a 1998 graduate of the Vermont Law School – a school that boasts that it has “the largest and deepest environmental program of any law school.”
We wanted to know from Hutt whether as a young law student, he wanted to be an environmentalist.
“I am an environmentalist,” Hutt said in an interview with Corporate Crime Reporter last week.
What would you say to environmentalists who are pushing for a ban or moratorium on hydraulic fracturing because of the risk the technology poses to drinking water supplies?
“There is no scientific evidence that that is true,” Hutt said. “Any new process needs to be understood and studied to make sure we are doing it in a safe and environmentally responsible way. There is no form of energy that doesn’t have an environmental consequence. Natural gas and to some extent oil that we derive from hydraulic fracturing has saved the job market in our country, provided us with a tremendous amount of energy independence, and is fifty percent better for the global warming issue because of its carbon footprint.”
“People need to understand that at a more detailed level. People have a knee jerk reaction and don’t spend the time to understand its true benefits and impacts.”
What about complaints from people in Wetzel County, West Virginia that companies like Chesapeake have turned their lives upside down – noise, truck traffics, accidents, threat to water, damage to the water supply?
“There were some concerns raised by a handful of folks in Wetzel County as the industry rolled in there,” Hutt says. “I can certainly understand why the trucks would be disruptive to their day to day lives. There are small roads in a rural environment. And those trucks navigating up and down those roads would affect how you get to work or the grocery store.”
“The companies have gotten in there and gotten that feedback. And they have worked hard to mitigate those impacts, talked to the people in the communities, tried to address their concerns, improve the roads, worked on the timing of the operations. But there are very few roads going in and other of those areas. So, there are limited options in that respect.”
“You could talk to a lot of people in Wetzel County who think that the development of shale gas in the Marcellus region has been a savior in terms for them financially and for the community in terms of the jobs, the money and the development it has brought to the county.”
“There are two sides to that coin. I understand the concerns. I don’t understand the water contamination concerns.”
“Dimock, Pennsylvania was one of the sweet spots of the Marcellus shale region. A company by the name of Cabot Oil and Gas Corporation was performing hydraulic fracturing there early on.”
“There were accusations brought that their activities had contaminated drinking water wells in the area. And in Pennsylvania there is a legal presumption that says that if there is contamination of a drinking water well within 1,000 feet of an oil and gas well, it is presumed that the oil and gas well caused that contamination.”
“And the only way to rebut that presumption would be to test the drinking water well before you drill the well. Companies were not as sophisticated in the beginning about doing base line testing to establish that they hadn’t caused any contamination that might be in a well.”
“There are no drinking water well construction standards in Pennsylvania. And that’s a problem. People build very shallow wells that are not properly constructed or vented. So, they are often contaminated. There is methane and other contaminates naturally occurring in the shallow groundwater of Pennsylvania.”
“While their wells may be contaminated, it may not relate to the oil and gas drilling activities. But if you don’t do the baseline testing, you can’t show whether it was already there or not caused by your activities.”
“So, a controversy arose, and Cabot agreed to shut down its operations in Dimock while an investigation ensued. And then of course, there was litigation. But eventually, after the DEP and the EPA investigated, and all of these wells were tested for contaminates of potential concern, the EPA and DEP found nothing in the drinking water wells that they believed rose to the level that caused a health risk to the people who had those wells.”
“So, Cabot was given permission to resume its operations in the region. That’s one instance.”
“The second was Parker County in Texas. And the third was in Pavillion, Wyoming. You have extensive investigations being undertaken by scientists for government agencies. And there has not yet been any well where the link has been established. So, it’s important to remember that when you see all of this fear being brought about by people who oppose hydraulic fracturing.”
“Some of those concerns arose because of well construction practices that have evolved tremendously since those initial wells were drilled and fracked.”
“Now, much more cement and steel is used between the open hole and the drinking water aquifer that people want to protect. The standards have evolved and the companies’ practices have evolved.”
With the Gulf Oil spill cases and the fracking cases, will we start to see the environmental crimes defense business start to crank up again?
“I don’t know that it will. It’s kind of a unique combination of factors that give rise to these kinds of cases,” Hutt said. “There will be a handful of firms that have a real focus in the energy sector and have environmental and white collar capabilities. But I don’t know that one could build a practice group just to handle those sorts of matters.”
“Hopefully, we won’t have another incident like the Deepwater Horizon that will trigger a whole separate unit of the Justice Department to look into it from a criminal standpoint.”
“There is only one case so far that has come to a resolution on the criminal side in the hydraulic fracturing side. So, I don’t know that there is a big practice that one would seek to build there.”
[For the complete Interview with Jason Hutt, see 26 Corporate Crime Reporter 41(12), October 22, 2012, print edition only.]