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PDC Facing Joint Colorado-Federal Lawsuit Over Storage Tank Emissions

In a new page in the Trump administration's playbook of regulatory rollbacks, the Department Justice (DOJ), Environmental Protection Agency (EPA) and the state of Colorado are claiming Denver-based PDC Energy Inc. illegally emitted emissions from storage tanks.

The joint lawsuit, filed in U.S. District Court in Denver, claims that PDC’s emissions helped put Colorado out of compliance with national clean air standards by illegally emitting volatile organic compounds (VOC) from its storage tanks, violating state and federal Clean Air Act standards. The state is participating on behalf of the Colorado Department of Public Health and Environment.

According to the lawsuit, PDC owns or operates about 600 groups of tanks in Adams and Weld counties that the company has certified as controlled to meet Colorado’s air quality requirements. However, at least 86 groups of tanks, and possibly hundreds more, violated several requirements, the lawsuit said.

“PDC’s failure to comply with these requirements has resulted in significant excess VOC emissions, a precursor to ground-level ozone,” said the lawsuit. “PDC operates in an area where air quality does not meet the National Ambient Air Quality Standards” for ground-level ozone. “PDC’s unlawful emissions contribute to this exceedance of the ozone” standards.

EPA Administrator Scott Pruitt said federal authorities would work with Colorado to enforce the clean air standards.

“Violations of environmental law will be pursued and punished,” Pruitt said.  “We will work with our federal, state and local partners to punish those that violate the laws to the detriment of human health and the environment.”

PDC CEO Bart Brookman said, "We're obviously very disappointed with today's filing as we have been in continuous discussions with the EPA, DOJ and State of Colorado for over a year. Since the company's original disclosure of this matter in November 2015, we have worked diligently to design, maintain and operate our production facilities in compliance with the guidelines of not only the Clean Air Act, but all relevant regulations.

"Though it is too early to know the ultimate outcome of this complaint, we are confident in our ability to work together with all regulatory agencies in coming to an agreeable solution without extended litigation,” he added. “We will continue to operate responsibly, and our priorities remain the safety of our employees, the environment and the communities in which we live and operate."

PDC produced 6.4 million boe in 4Q2016. The company at the end of 2016 had about 61,500 net acres in the Permian Basin of Texas and 96,000 acres in its core Wattenberg field in Colorado. The company, which has directed more of its focus to the Permian this year, is guiding for 82,000-90,400 boe/d this year, with up to a 45% liquids mix.

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