Federal regulators late Tuesday announced a settlement with Trans Energy Inc. that could find the small Marcellus Shale pure-play explorer paying a $3 million penalty and millions more to restore streams and wetlands at 15 sites across West Virginia for violating the Clean Water Act (CWA).

The U.S. Environmental Protection Agency (EPA), the U.S. Department of Justice and the West Virginia Department of Environmental Protection reached a settlement with Trans Energy on violations discovered in 2011 and 2012 through routine field inspections. Regulators allege that the company impounded streams, and discharged sand, dirt, rocks and other materials into streams and wetlands without a federal permit to construct well pads, impoundments, road crossings and other surface facilities.

The EPA said the violations impacted 13,000 linear feet of stream and more than an acre of wetlands. The CWA requires any company to obtain an EPA and U.S. Army Corps of Engineers permit prior to filling wetlands and smaller bodies of waters. Streams, rivers and wetlands reduce flood risks, filter pollutants, replenish groundwater and provide a habitat for numerous aquatic species.

The $3 million civil penalty would be divided equally between federal and West Virginia authorities. The EPA said Trans Energy likely would spend more than $13 million to complete the restoration and mitigation work required under the consent order.

The move comes at a time when Trans Energy is consolidating and growing in West Virginia, where it primarily operates across more than 45,000 gross acres in Marshall, Wetzel and Marion counties, for a strategy aimed at monetizing or selling those assets in the future, according to a recent investor presentation. It has an estimated 48 Bcfe of proved developed reserves and has recently averaged 19 MMcfe/d.

The over-the-counter stock traded down more than 7% on Wednesday to finish at $3.30.

The company receives equity financing from Energy Trust Partners and Wells Fargo, while a joint venture with privately held Republic Energy, a Dallas-based producer, is funding $15 million of this year’s capital budget.

Under the settlement, Trans Energy agreed to reconstruct impacted wetlands and streams at 15 sites, develop a program to ensure future compliance with the CWA and monitor those sites for up to 10 years, among other things, EPA said. The settlement also resolves alleged violations under West Virginia law. It remains subject to a 30-day public comment period and court approval.