Home Financial responsibility Attorney General James and Governor Hochul announce $2 million fine against company that illegally operated oil wells

Attorney General James and Governor Hochul announce $2 million fine against company that illegally operated oil wells


James Lee was ordered to plug hundreds of oil wells that
Drinking water at risk in Steuben and Cattaraugus counties

The decision includes the largest financial penalty ever imposed for violations of plugging well

NEW YORK – New York Attorney General Letitia James and Governor Kathy Hochul today announced a $2 million judgment in a lawsuit against James R. Lee and his affiliates for gross violations of immigration regulations. Status of Oil and Gas Wells and Community Endangerment in Steuben and Cattaraugus Counties. . Lee and his companies were ordered by a state Supreme Court judge to pay the fine – the heaviest financial penalty imposed in an oil and gas well case – and put his oil wells in full swing. compliance with state laws. For years, Lee and his companies failed to properly cap the wells they operated, which posed a significant hazard to drinking water supplies and methane release in areas surrounding the wells.

“This is a critical victory for our efforts to protect New York’s air and water. These illegally operated oil wells were threatening drinking water for countless families in southern and western New York and causing significant environmental damage,” said Attorney General James. “This case should make it clear that New York will stand up to anyone who threatens the health of our communities or our natural resources. I am grateful to Governor Hochul, Commissioner Seggos and our partners at DEC for their partnership in stopping polluters and protecting people.

“My administration is focused on taking decisive action to protect drinking water in communities across the state, and the record financial penalty announced today is a major victory for New York,” said Governor Hochul. “We remain steadfast in our efforts to hold accountable anyone who endangers the health and safety of New Yorkers. I thank Attorney General Letitia James for her partnership in taking action to protect public health and the environment in Steuben and Cattaraugus counties.

“This judgment is a significant judgment day for Lee and his companies after years of blatant disregard of New York State’s strict requirements at hundreds of oil well sites in Steuben and Cattaraugus counties,” said DEC Commissioner Seggos. “I thank Attorney General James, his team and my staff for their tireless work in bringing this persistent offender to justice. This unprecedented case demonstrates that New York State will spare no effort to aggressively pursue polluters and hold them accountable for the damage they cause to our environment and our communities.

For many years, Lee and its fictitious subsidiaries – Lee Oil Company, Inc., Whitesville Producing Corporation, Whitesville Production Corp., Allegro Oil & Gas Inc. and Allegro Investments Corporation – owned or operated hundreds of oil wells in Steuben and Cattaraugus. counties. These illegal operations have been the subject of numerous enforcement actions brought by the Office of the Attorney General (OAG) and the DEC. After failing to follow environmental laws and properly plug more than 400 of the wells, OAG and DEC filed a lawsuit against Lee and his companies to force them to comply, including properly plugging their wells, as well as to pay fines for their flagrant and long-standing violations. .

The court ruled in favor of OAG and DEC in their case against Lee and determined that:

  • Defendants failed to plug over 400 oil wells;
  • The defendants did not submit more than 10 years of required annual reports for the wells;
  • Defendants failed to file required DEC organizational reports for well operators;
  • The defendants did not provide an adequate financial guarantee intended to ensure the clogging of the wells;
  • James Lee is personally responsible for the sanctioning and compliance of wells and is not protected by its defunct affiliates; and
  • Responsibility for plugging pits may be transferred to successor owners of the affected mining property.

The $2 million fine was imposed on Lee and his affiliates, in part on the fact that the state proved that Lee benefited financially – at least $1 million – by failing to comply. state environmental law and returning judgments against them. In its decision, the court found that Mr. Lee and his companies violated these laws for years and ignored repeated attempts by the state to bring Mr. Lee and his companies into compliance.

Disconnected oil and gas wells pose serious threats to drinking water supplies and the environment in general. Several of Lee’s wells have already spilled oil into surrounding waters and pose ongoing threats to public health. Additionally, these sinks can emit methane, a potent greenhouse gas that is a major contributor to climate change.

The court said its decision should send a strong message to discourage other well operators from considering abandoning their own obligations on oil and gas wells around New York State and letting taxpayers pay for their clogging. The decision also sets an important real estate law precedent that can be used to require owners of properties with unplugged wells to fully comply with state well plugging requirements.

DEC will continue to rigorously monitor Lee’s wells and ensure that the court order is followed by bringing all wells into compliance. Mr. Lee has alleged an inability to pay for the patching, but DEC will seek to recover any assets it has that could be used to meet the obligations imposed by the judgment.

The case was handled by Assistant Attorneys General Meredith Lee-Clark and Brian Lusignan, overseen by Senior Enforcement Counsel Andrew Gershon and Bureau Chief Lem Srolovic of the OAG’s Environmental Protection Office. . The Environmental Protection Bureau is part of the Social Justice Division, which is led by Chief Deputy Attorney General Meghan Faux and overseen by Senior Deputy Attorney General Jennifer Levy. For DEC, the case was handled by the office of General Counsel David Keehn, with support from Mineral Resources Section Chief Ted Loukides, overseen by Lisa Wilkinson and Scott Crisafulli, with Deputy Commissioner and Counsel General of the DEC, Thomas S. Berkman.