Chesapeake Energy 1997 Annual Report Download - page 27

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payment of monetary fines and correction of any identified deficiencies. Alternatively, regulatory agencies
could require the Company to forego construction or operation of certain air emission sources.
OSHA. The Company is subject to the requirements of the federal Occupational Safety and Health Act
("OSHA") and comparable state statutes. The OSHA hazard communication standard, the EPA community
right-to-know regulations under Title III of the federal Superfund Amendment and Reauthorization Act and
similar state statutes require the Company to organize information about hazardous materials used, released or
produced in its operations. Certain of this information must be provided to employees, state and local
governmental authorities and local citizens. The Company is also subject to the requirements and reporting set
forth in OSHA workplace standards. The Company provides safety training and personal protective equipment
to its employees.
OPA and Clean Water Act. Federal regulations require certain owners or operators of facilities that store
or otherwise handle oil, such as the Company, to prepare and implement spill prevention control plans,
countermeasure plans and facilities response plans relating to the possible discharge of oil into surface waters.
The Oil Pollution Act of 1990 ("OPA") amends certain provisions of the federal Water Pollution Control Act
of 1972, commonly referred to as the Clean Water Act ("CWA"), and other statutes as they pertain to the
prevention of and response to oil spills into navigable waters. The OPA subjects owners of facilities to strict
joint and several liability for all containment and cleanup costs and certain other damages arising from a spill,
including, but not limited to, the costs of responding to a release of oil to surface waters. The CWA provides
penalties for any discharges of petroleum product in reportable quantities and imposes substantial liability for
the costs of removing a spill. State laws for the control of water pollution also provide varying civil and
criminal penalties and liabilities in the case of releases of petroleum or its derivatives into surface waters or
into the ground. Regulations are currently being developed under OPA and state laws concerning oil pollution
prevention and other matters that may impose additional regulatory burdens on the Company. In addition, the
CWA and analogous state laws require permits to be obtained to authorize discharges into surface waters or to
construct facilities in wetland areas. With respect to certain of its operations, the Company is required to
maintain such permits or meet general permit requirements. The EPA recently adopted regulations
concerning discharges of storm water runoff. This program requires covered facilities to obtain individual
permits, participate in a group permit or seek coverage under an EPA general permit. The Company believes
that it will be able to obtain, or be included under, such permits, where necessary, with minor modifications to
existing facilities and operations that would not have a material effect on the Company.
NORM. Oil and gas exploration and production activities have been identified as generators of
concentrations of low-level naturally-occurring radioactive materials ("NORM"). NORM regulations have
recently been adopted in several states. The Company is unable to estimate the effect of these regulations,
although based upon the Company's preliminary analysis to date, the Company does not believe that its
compliance with such regulations will have a material adverse effect on its operations or financial condition.
Safe Drinking Water Act. The Company's operations involve the disposal of produced saltwater and
other nonhazardous oil-field wastes by reinjection into the subsurface. Under the Safe Drinking Water Act
("SDWA"), oil and gas operators, such as the Company, must obtain a permit for the construction and
operation of underground Class II injection wells. To protect against contamination of drinking water, periodic
mechanical integrity tests are often required to be performed by the well operator. The Company has obtained
such permits for the Class II wells it operates. The Company also has disposed of wastes in facilities other
than those owned by the Company (commercial Class II injection wells).
Toxic Substances ControlAct. The Toxic Substances Control Act ("TSCA") was enacted to control the
adverse effects of newly manufactured and existing chemical substances. Under the TSCA, the EPA has
issued specific rules and regulations governing the use, labeling, maintenance, removal from service and
disposal of PCB items, such as transformers and capacitors used by oil and gas companies. The Company may
own such PCB items but does not believe compliance with TSCA has or will have a material adverse effect on
the Company's operations or financial condition.
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