An attorney representing D&L Energy Inc. says the company will vigorously pursue its appeal before the Ohio Oil and Gas Commission, calling the Ohio Department of Natural Resources’ (ODNR) decision to shut down the company “a gross violation of due process.”
Michael Cyphert, an attorney with the Cleveland law firm Walter & Haverfield LLP, told NGI’s Shale Daily that D&L was being unjustly punished by Richard Simmers, chief of ODNR’s Division of Oil and Gas Resources Management, after oilfield waste was illegally dumped into waterways near Youngstown in late January (see Shale Daily, Feb. 11).
“The dilemma in this particular case is that Mr. Simmers, after having people report to him that two people had been seen discharging fluids, just automatically revoked or denied every license or permit that D&L had, without looking to see if the company had anything to do with those allegations, which it didn’t,” Cyphert said Monday. “It was a knee-jerk reaction.”
Cyphert said Ben Lupo, who faces one charge of violating the federal Clean Water Act (CWA), is no longer CEO of D&L.
“He no longer works for D&L,” Cyphert said, adding that Lupo’s departure occurred in February. “He is no longer an officer and he is not an employee. He has assigned his stock in the company to others, so he is no longer associated with the company in any form.” D&L could not be reached for comment on Monday.
“Ben Lupo is being accused — not found guilty, but being accused — of improperly disposing of material,” Cyphert said. “But does that mean we’re simply going to kick any company that he may have been a stockholder in, or had some relationship with, out of the state of Ohio? That’s absolutely absurd. Folks are supposed to be presumed innocent until they’re found guilty.”
Court documents in the case United States of America v. Lupo et al (No. 4:13CR113) show Lupo has so far entered “not guilty” pleas to the charge that he violated the CWA by allegedly ordering an employee of Hardrock Excavating LLC to dump the waste into a storm drain that empties into an unnamed tributary of the Mahoning River (see Shale Daily, Feb. 19).
A grand jury in U.S. District Court for the Northern District of Ohio has indicted Lupo, Hardrock, and one Hardrock employee, Michael Guesman, with one count of violating the CWA, specifically that pollutants were discharged without a National Pollutant Discharge Elimination System permit.
On Feb. 6, Simmers revoked D&L’s permits to operate six saltwater injection wells in the state: Northstar Lucky No. 4, Northstar Collins No. 6 and Mohawk No. 7 in Mahoning County, Koontz No. 1 and Northstar United No. 2 in Trumbull County, and Parobek No. 2 in Ashtabula County. Simmers also denied D&L’s permit applications for three additional saltwater injection wells (two in Trumbull County and one in Mahoning County) and ordered the company to immediately cease all injection well operations in the state. He also ordered D&L to halt all temporary storage operations at its Youngstown facility within 45 days.
The indictment said the illegal discharges began on or around Nov. 1, 2012, and occurred “on numerous occasions” over the next several months. It alleged that Lupo ordered Guesman to empty the oilfield waste into the storm drain after dark.
“Mr. Lupo’s been accused of a crime, but whether he did it or not, it’s his issue,” Cyphert said. “He wasn’t acting on behalf of [D&L]. The fact is that while D&L, through a contract, had given others the legal authority to place those storage tanks there, it did not own the tanks or any of the materials in them, nor did they take those tanks to that particular location.”
Cyphert said Hardrock was registered and had the authority to transport brine wastewater from drilling sites. But he added that in addition to Hardrock’s name and registration number being displayed on the truck, there was advertising on the truck for Mohawk, too.
“We’re apparently being accused because Hardrock may have violated part of their requirements to do certain things or put certain information on the trucks,” Cyphert said. “But that’s not D&L’s violation, that’s Hardrock’s.”
The Oil and Gas Commission hearing for D&L’s appeal is April 12. A merit hearing has also been scheduled for May 22 and 23. Preliminary witness lists are to be presented on April 16 and final witness lists by May 7.
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