September 2, 2022

New York AG James Announces $2 Million Fine Against Oil Company for Failure to Plug Wells

Lori Kalani, Bernard Nash

Cozen O'Connor

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Cozen O'Connor

New York AG Letitia James and Governor Kathy Hotchul announced the assessment of a $2 million penalty against James R. Lee and his affiliate companies for violating the state’s Environmental Conservation Law through their failure to properly maintain approximately 406 oil and gas wells. The penalty is the largest ever imposed in the state in an oil and gas well case.
The Decision and Order, which follows a 2020 default judgment against the defendants, states that Lee violated the state’s Environmental Conservation Law by failing to (1) produce or plug the wells; (2) file annual well reports; (3)submit organization reports; and (4) submit financial security for a period of at least ten years. The penalty was calculated based on the maximum statutory penalty, economic benefit realized by noncompliance, the gravity of the violations, culpability, cooperation, history of non-compliance and ability to pay.
In assessing the maximum penalty against Lee and his companies, the order notes that the oil and gas wells “pose ongoing health and environmental risks to the people of the State of New York; indeed, several of these wells discharged oil to land and surface waters.” The order went on to describe how the defendants were aware of their violations, but have “blatantly flouted [ ] statutes, regulations, orders, and judgments over the course of decades.”

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