Chesapeake Energy 2013 Annual Report Download - page 23

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Hazardous Substances and Waste
Federal and state laws, in particular the federal Resource Conservation and Recovery Act, or RCRA, regulate
hazardous and non-hazardous solid wastes. In the course of our operations, we generate petroleum hydrocarbon
wastes such as produced water and ordinary industrial wastes. Under a longstanding legal framework, certain of these
wastes are not subject to federal regulations governing hazardous wastes, although they are regulated under other
federal and state waste laws.
Federal, state and local laws may also require us to remove or remediate previously disposed wastes or hazardous
substances otherwise released into the environment, including wastes or hazardous substances disposed of or released
by us or prior owners or operators in accordance with current laws or otherwise, to suspend or cease operations at
contaminated areas, or to perform remedial well plugging operations or response actions to reduce the risk of future
contamination. Federal laws, including the Comprehensive Environmental Response, Compensation, and Liability Act,
or CERCLA, and analogous state laws impose joint and several liability, without regard to fault or legality of the original
conduct, on classes of persons who are considered legally responsible for releases of a hazardous substance into the
environment. These persons include the owner or operator of the site where the release occurred, persons who disposed
of or arranged for the disposal of hazardous substances at the site, and any person who accepted hazardous substances
for transportation to the site. CERCLA and analogous state laws also authorize the EPA, state environmental agencies
and, in some cases, third parties to take action to prevent or respond to threats to human health or the environment
and to seek to recover from responsible classes of persons the costs of such actions.
The Safe Drinking Water Act (SDWA), Underground Injection Control (UIC) program prohibits any underground
injection unless authorized by a permit. Chesapeake recycles and reuses some produced water and we also dispose
of produced water in Class II UIC wells, which are designed and permitted to place the water into deep geologic
formations, isolated from fresh water sources. Permits for Class II UIC wells may be issued by the EPA or by a state
environmental agency if EPA has delegated its UIC Program authority.
Air Emissions
Our operations are subject to the federal Clean Air Act (CAA) and comparable state laws and regulations. These
laws and regulations regulate emissions of air pollutants from various industrial sources, including our compressor
stations, and impose various monitoring and reporting requirements. Permits and related compliance obligations under
the CAA, each state's development and promulgation of regulatory programs to comport with federal requirements,
as well as changes to state implementation plans for controlling air emissions in regional non-attainment or near-non-
attainment areas, may require natural gas and oil exploration and production operators to incur future capital
expenditures in connection with the addition or modification of existing air emission control equipment and strategies.
In 2012, the EPA published final New Source Performance Standards (NSPS) and National Emissions Standards
for Hazardous Air Pollutants (NESHAP) that amended the existing NSPS and NESHAP standards for oil and gas
facilities and created new NSPS standards for oil and gas production, transmission and distribution facilities. While
these rules remain in effect, the EPA announced in 2013 that it would reexamine and reissue the rules over the next
three years. The EPA has issued updated rules regarding storage tanks and additional rules are expected. In 2010,
the EPA published rules that require monitoring and reporting of greenhouse gas emissions from petroleum and natural
gas systems. We, along with other industry groups, filed suit challenging certain provisions of the rules and are engaged
in settlement negotiations to amend and correct the rules. The EPA is also conducting a review of the National Ambient
Air Quality Standards for ozone, but an expected completion date for that review is not currently known.
Water Discharges
The federal Water Pollution Control Act, or the Clean Water Act (CWA), and analogous state laws impose
restrictions and strict controls regarding the discharge of pollutants into state waters as well as waters of the U.S. The
placement of material into jurisdictional water or wetlands of the U.S. is prohibited, except in accordance with the terms
of a permit issued by the United States Army Corps of Engineers. The discharge of pollutants into regulated waters is
prohibited, except in accordance with the terms of a permit issued by the EPA or a state agency delegated with EPA's
authority. Further, Chesapeake's corporate policy prohibits discharge of produced water to surface waters. See Item
3. Legal Proceedings for a description of a consent decree that we recently entered into with the U.S. and the West
Virginia Department of Environmental Protection in connection with alleged civil violations of the CWA related to well
pads, pond sites and a compressor station that we formerly owned in West Virginia. Spill prevention, control and
countermeasure requirements of federal laws require appropriate containment berms and similar structures to help
prevent the contamination of regulated waters in the event of a hydrocarbon tank spill, rupture or leak. In addition, the