EPA, Colorado Attorney General sue Occidental-connected firm for alleged over-pollution in Fort Lupton plant

DENVER and FORT LUPTON — The U.S. Environmental Protection Agency and the Colorado Attorney General’s Office are jointly suing a local midstream operator connected to oil giant Occidental Petroleum Corp. (NYSE: OXY) for multiple alleged violations of the Clean Air Act and Colorado air quality laws at its natural gas processing plant near Fort Lupton.

In filings with the U.S. District Court of Colorado Wednesday evening, the EPA and Attorney General’s office claim Kerr-McGee Gathering LLC, has been releasing various volatile compounds and pollutants out of a trio of natural gas processing plants near Fort Lupton for years.

Kerr-McGee is owned by Western Midstream Partners LP (NYSE: WES), which Occidental held a majority stake in up until January, when it sold off some of its position as part of a larger debt reduction strategy. The suit claims Occidental remains the ultimate parent company.

The plants have operated since at least 1998, but the suit argues that equipment modifications made to the plants in the early part of the last decade made them subject to a stricter level of monitoring and repairing liquid and vapor leaks, which Occidental allegedly did not do from October 2012 to at least the end of 2018.

In particular, the suit claims the plant’s release of volatile compounds that form ground-level ozone is exacerbating already-low air quality levels in the Denver metro and Northern Colorado area, and is close enough to Rocky Mountain National Park where it can cause damage to protected lands.

“The Fort Lupton Complex is located in an area of Colorado where air quality is so degraded that it exceeds the relevant standards for ground-level ozone and thus is considered to be in “serious nonattainment” with the ozone (National Ambient Air Quality Standards),” the suit claims.

Ozone is a gaseous molecule that filters out certain bands of ultraviolet light from the sun when located in the Earth’s atmosphere, but is a precursor to smog and a pollutant when located closer to the planet’s surface.

The EPA and attorney general are asking a court to fine Occidental thousands of dollars for state and federal violations per day, including following days where existing leaks and monitoring systems aren’t fixed. As of Thursday, the fines rack up to well north of $200 million.

Occidental referred questions to Western Midstream LP (NYSE: WES), its subsidiary for oil and gas refining. In a statement, Western said it had been in discussions over the plant with the EPA and Colorado officials for years.

“While we were surprised, and disappointed, by the EPA’s decision to abruptly file suit in the midst of what we thought were constructive negotiations, we remain committed to working to achieve an equitable resolution to this dispute,” it said.

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