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Assessing and Addressing Environmental Liabilities

Charlotte L. Neitzel, Colin Harris, Due Diligence in Oil & Gas Transactions

EPA's recent pronouncements regarding the oil and gas and mining industries highlight the importance of organized and effective due diligence. EPA's six National Enforcement Initiatives for Fiscal Years 2011-2013 include two that specifically relate to oil and gas and mining: (1) reducing pollution from mineral processing operations; and (2) assuring energy extraction sector compliance.1 EPA cites inspections of “65 mining and mineral processing sites that pose significant risk to communities and found many to be in serious non-compliance with hazardous waste and other environmental laws.”2 It also states that “toxic spills into waterways from mining and mineral processing caused massive fish kills and impacted the livelihood of low income communities.”3 With respect to energy extraction, EPA states that new techniques for oil and gas extraction pose a risk of pollution of air, surface waters, and groundwater if not properly controlled.4 In addition, EPA claims that “an unprecedented acceleration of oil and gas leasing and development has led to a significant rise in the level of air pollution throughout the intermountain West,” and that “[d]rilling activities have led to concerns about ground water pollution and the safety of drinking water supplies in various parts of the country.”5

As a result of these regulatory concerns, a facility may be subject to regulatory