Chesapeake Energy 2014 Annual Report Download - page 24

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Air Emissions
Our operations are subject to the federal Clean Air Act (CAA) and comparable state laws and regulations. Among
other things, these laws and regulations regulate emissions of air pollutants from various industrial sources, including
our compressor stations, and impose various control, 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 oil and gas 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 with a
compliance deadline of January 1, 2015. In 2013 and 2014, the EPA issued updated rules regarding storage tanks
and made additional clarifications to these rules. In December 2014, the EPA issued additional amendments to these
rules that, among other things, distinguish between multiple flowback stages during completion of hydraulically fractured
wells and clarify that storage tanks permanently removed from service are not affected by any requirements. Further,
in 2012, seven states sued the EPA to compel the agency to make a determination as to whether standards of
performance limiting methane emissions from oil and gas sources are appropriate and, if so, to promulgate performance
standards for methane emissions from existing oil and gas sources. In April 2014, the EPA released a set of five white
papers analyzing methane emissions from the industry and, based on responses received, announced in January
2015 that it plans to issue a rule governing methane emissions from oil and gas sources in the summer of 2015. The
Bureau of Land Management (BLM) is also expected to address methane emissions from oil and gas sources on
federal lands in the summer of 2015.
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. We anticipate final resolution to this litigation
in the near future.
In addition, in December 2014, the EPA published its proposal to revise downward the ozone national ambient
air quality standard to 65-70 parts per billion. A final rule is expected in 2015. We cannot predict the actions that these
regulations will require or prohibit, but our business and operations could be subject to increased operating and
compliance costs associated with these regulations.
Discharges into Waters
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 U.S. waters. In April
2014, the EPA and USACE jointly proposed guidance regarding the definition of waters of the United States that
substantially expands the waters regulated under the CWA. The placement of dredge or fill material into jurisdictional
water or U.S. wetlands is prohibited, except in accordance with the terms of a permit issued by the USACE. 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. Spill prevention, control and countermeasure regulations 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 CWA and analogous state laws require individual permits or
coverage under general permits for discharges of storm water runoff from certain types of facilities and construction
activities.
The Oil Pollution Act of 1990 (OPA) establishes strict liability for owners and operators of facilities that release oil
into waters of the United States. The OPA and its associated regulations impose a variety of requirements on responsible
parties related to the prevention of oil spills and liability for damages resulting from such spills. A ''responsible party''
under the OPA includes owners and operators of certain onshore facilities from which a release may affect waters of
the United States.