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Years-Old Criminal Case Against XTO Plods Forward In Pennsylvania

A criminal case brought by Pennsylvania Attorney General Kathleen Kane in 2013 against ExxonMobil Corp. subsidiary XTO Energy Inc. continues to languish in a state court, where no action is expected on it until next year. Kane, facing felony charges in another case, has had her law license suspended.

While a recent filing by XTO in Lycoming County Court acknowledges that "meaningful discussions" about a possible resolution have occurred, the attorney general's office would not confirm the status of those talks.

A pretrial proceeding is scheduled for Feb. 2. XTO has been charged with five counts of unlawful conduct under the state's Clean Streams Law and three counts of unlawful conduct under the Solid Waste Management Act (see Shale DailySept. 12, 2013). Those charges stem from a random inspection by the Pennsylvania Department of Environmental Protection (DEP) in November 2010 at a drilling site in Lycoming County where XTO was working on two wells. The DEP found an open valve on a wastewater storage tank that discharged a large amount of fluid containing chlorides, barium, strontium and aluminum.

The case represents the first time criminal charges have been filed in Pennsylvania against an unconventional oil and gas driller. In July 2013, the company agreed to pay a $100,000 penalty and spend up to $20 million in a settlement involving the same incident with the U.S. Justice Department and the U.S. Environmental Protection Agency, making the state's charges controversial at the time they were filed.

In April, a Lycoming County judge denied XTO's motion to dismiss the case (see Shale DailyJune 13, 2014), saying the settlement did not bar the state from moving forward with its own case. At issue is how the valve was opened and who should be held responsible. XTO claims the incident was accidental, while Kane charges that the company should be held liable regardless.

The state Supreme Court also recently suspended Kane's law license. She's been charged with obstruction of justice, official oppression and two felony counts of perjury for her alleged role in the leak of grand jury information to a Philadelphia newspaper. The state Senate has started proceedings to explore the possibility of removing her from office. It's unclear how that case could affect the case against XTO.

The company has about 500,000 net acres under lease in Pennsylvania. It is also fighting to dismiss a lawsuit in Western Pennsylvania, where plaintiffs are seeking class action certification for their claims that the company breached lease agreements by deducting post-production costs for compression, processing and transmission (see Shale DailySept. 24).

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