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Trans Energy Admits Clean Water Act Violations; Incidents Will Cost Millions

Less than a month after federal regulators levied a $3 million fine against Trans Energy Inc. for illegally dumping materials into streams and wetlands in West Virginia, the company pleaded guilty in U.S. District Court on Wednesday to three counts of violating the Clean Water Act (CWA).

The West Virginia-based Marcellus Shale pure-play company admitted that it dumped pollutants into waterways in Marshall County. It agreed to a plea agreement calling for a $600,000 fine, at $200,000 for each conviction, according to the U.S. Attorney's Office for the Northern District of West Virginia, which issued a press release after the deal was reached.

Those penalties, and the $3 million in fines issued earlier this month, come on top of what federal regulators said will likely cost more than $13 million to complete restoration and mitigation work required under a consent order the company reached with the U.S. Environmental Protection Agency (EPA), the U.S. Department of Justice and the West Virginia Department of Environmental Protection (see Shale Daily, Sept. 3).

The final tally is likely to sting Trans Energy, which primarily operates across more than 45,000 gross acres in Marshall, Wetzel and Marion counties, WV. The company is backed by private equity and is relying on Dallas-based Republic Energy to fund $15 million of this year's capital budget to pursue a strategy aimed at monetizing or selling its assets, according to a recent investor presentation.

"Trans Energy has fully cooperated with the EPA and federal authorities since the very first day the company became aware of the permitting issues identified by the government," said Trans Energy President John Corp in a statement issued after the plea agreement was reached. "The company is committed to meeting all regulatory obligations through updating training procedures and compliance protocols. Trans Energy, a small West Virginia-based company, has accepted responsibility for these misdemeanor charges of negligently violating the Clean Water Act."

Corp also signed on behalf of Trans Energy the plea agreement, which calls for two years of company probation and supervision by the court. The U.S. Attorney's Office agreed that separate violations committed by the company would be addressed by the civil penalties against it.

The charges and regulatory action stemmed from violations committed by Trans Energy in 2011 and 2012. Routine field inspections found that the company had impounded streams, and discharged sand, dirt, rocks and other materials into waterways and wetlands without a federal permit to construct well pads, impoundments, road crossings and other surface facilities, according to regulators.

The violations were found to have occurred at 15 separate sites that impacted 13,000 linear feet of streams and more than an acre of wetlands. Under its settlement with regulators, Trans Energy agreed to reconstruct impacted wetlands and streams, develop a program to ensure future compliance with the CWA and monitor those sites for up to 10 years, among other things.

The U.S. Attorney's Office said Trans Energy admitted that "it failed to properly train and supervise its employees and that it relied upon the unsubstantiated representations of a nearby property owner when determining whether environmental laws were being followed."

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