Chesapeake Energy 2013 Annual Report Download - page 22

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promotion, which indirectly affect our gathering and compression business. In addition, the distinction between FERC-
regulated transmission facilities and federally unregulated gathering and intrastate transportation facilities is a fact-
based determination made by the FERC on a case-by-case basis; this distinction has also been the subject of regular
litigation and change. The classification and regulation of our gathering and intrastate transportation facilities are subject
to change based on future determinations by the FERC, the courts and Congress.
Our natural gas gathering operations are subject to ratable take and common purchaser statutes in most of the
states in which we operate. These statutes generally require our gathering pipelines to take natural gas without undue
discrimination as to source of supply or producer. These statutes are designed to prohibit discrimination in favor of one
producer over another producer or one source of supply over another source of supply. The regulations under these
statutes can have the effect of imposing restrictions on our ability as an owner of gathering facilities to decide with
whom we contract to gather natural gas. The states in which we operate typically have adopted a complaint-based
regulation of natural gas gathering activities, which allows natural gas producers and shippers to file complaints with
state regulators in an effort to resolve grievances relating to gathering access and rate discrimination.
Environmental, Health and Safety Matters
Our operations are subject to stringent and complex federal, state and local laws and regulations relating to the
protection of human health and safety, the environment and natural resources. These laws and regulations can restrict
or impact our business activities in many ways, such as:
• requiring the installation of pollution-control equipment or otherwise restricting the way we can handle or
dispose of wastes and other substances connected with operations;
• limiting or prohibiting construction activities in sensitive areas, such as wetlands, coastal regions or areas
that contain endangered or threatened species or their habitats;
• requiring investigatory and remedial actions to address pollution conditions caused by our operations or
attributable to former operations;
• requiring noise mitigation, setbacks, landscaping, fencing, and other measures;
• prohibiting the operations of facilities deemed to be in non-compliance with permits issued pursuant to such
environmental laws and regulations; and
• restricting access to certain equipment or areas to a limited set of employees or contractors who have proper
certification or permits to conduct work (e.g., confined space entry and process safety maintenance
requirements).
Failure to comply with these laws and regulations may trigger a variety of administrative, civil and criminal
enforcement measures, including the assessment of monetary penalties, the imposition of remedial or restoration
obligations, and the issuance of orders enjoining future operations or imposing additional compliance requirements.
Certain environmental statutes impose strict, joint and several liability for costs required to clean up and restore sites
where hazardous substances, hydrocarbons or wastes have been disposed or otherwise released. Moreover, it is not
uncommon for neighboring landowners and other third parties to file claims for personal injury and property damage
allegedly caused by the release of hazardous substances, hydrocarbons or other waste products into the environment.
In addition, local land use restrictions, such as city ordinances, zoning laws, and traffic regulations, may restrict or
prohibit the performance of well drilling in general or hydraulic fracturing in particular.
The trend in environmental regulation is to place more restrictions and limitations on activities that may affect the
environment. We monitor developments at the federal, state and local levels to anticipate future regulatory requirements
that might be imposed to reduce the costs of compliance with any such requirements. We also participate in industry
groups that help formulate recommendations for addressing existing or future regulations and that share best practices
and lessons learned in relation to pollution prevention and incident investigations.
Below is a discussion of the material environmental, health and safety laws and regulations that relate to our
business. We believe that we are in substantial compliance with these laws and regulations. We do not believe that
compliance with existing environmental, health and safety laws or regulations will have a material adverse effect on
our financial condition, results of operations or cash flow. At this point, however, we cannot reasonably predict what
applicable laws, regulations or guidance may eventually be adopted with respect to our operations or the ultimate cost
to comply with such requirements.