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pipelines should be permitted to include in
their transportation rates an allowance for income taxes attributable
to non-corporate partnership interests. We are not able at this
time to predict the effects, if any, of these regulations on the
transportation costs associated with oil production from our oil-producing
operations.
Environmental Regulations
Our operations are subject to numerous federal,
state and local laws and regulations governing the discharge of
materials into the environment or otherwise relating to environmental
protection. These laws and regulations may require the acquisition
of a permit before drilling commences, restrict the types, quantities
and concentration of various substances that can be released into
the environment in connection with drilling and production activities,
limit or prohibit drilling activities on specified lands within
wilderness, wetlands and other protected areas, require remedial
measures to mitigate pollution from former operations, such as pit
closure and plugging abandoned wells, and impose substantial liabilities
for pollution resulting from production and drilling operations.
The failure to comply with these laws and regulations may result
in the assessment of administrative, civil and criminal penalties,
imposition of investigatory or remedial obligations or the issuance
of injunctions prohibiting or limiting the extent of our operations.
Public interest in the protection of the environment has increased
dramatically in recent years. The trend of applying more expansive
and stricter environmental legislation and regulations to the natural
gas and oil industry could continue, resulting in increased costs
of doing business and consequently affecting our profitability.
To the extent laws are enacted or other governmental action is taken
that restricts drilling or imposes more stringent and costly waste
handling, disposal and cleanup requirements, our business and prospects
could be adversely affected.
We generate waste that may be subject to the
federal Resource Conservation and Recovery Act ("RCRA") and comparable
state statutes. The U.S. Environmental Protection Agency ("EPA")
and various state agencies have limited the approved methods of
disposal for certain hazardous and nonhazardous waste. Furthermore,
certain waste generated by our natural gas and oil operations that
are currently exempt from treatment as "hazardous waste" may in
the future be designated as "hazardous waste" and therefore become
subject to more rigorous and costly operating and disposal requirements.
We currently own or lease numerous properties
that for many years have been used for the exploration and production
of natural gas and oil. Although we believe that we have implemented
appropriate operating and waste disposal practices, prior owners
and operators of these properties may not have used similar practices,
and hydrocarbons or other waste may have been disposed of or released
on or under the properties we own or lease or on or under locations
where such waste have been taken for disposal. In addition, many
of these properties have been operated by third parties whose treatment
and disposal or release of hydrocarbons or other waste was not under
our control. These properties and the waste disposed thereon may
be subject to the Comprehensive Environmental Response, Compensation
and Liability Act ("CERCLA"), RCRA and analogous state laws as well
as state laws governing the management of natural gas and oil waste.
Under these laws, we could be required to remove or remediate previously
disposed waste (including waste disposed of or released by prior
owners or operators) or property contamination (including groundwater
contamination) or to perform remedial plugging operations to prevent
future contamination. See "Management's Discussion and Analysis
of Financial Condition and Results of Operations--Risk Factors--We
are subject to various governmental regulations and environmental
risks."
CERCLA, also known as the "Superfund" law,
and analogous state laws impose liability, without regard to fault
or the legality of the original conduct, on specified classes of
persons that are considered to have contributed to the release of
a "hazardous substance" into the environment. These classes of persons
include the owner or operator of the disposal site or sites where
the release occurred and companies that disposed or arranged for
the disposal of the hazardous substances found at the site. Persons
who are or were responsible for releases of hazardous substances
under CERCLA may be subject to joint and several liability for the
costs of cleaning up the hazardous substances that have been released
into the environment, for damages to natural resources and for the
costs of certain health studies, and it is not uncommon for neighboring
landowners and other third parties to file claims for personal injury
and property damage allegedly caused by the hazardous substances
released into the environment.
Our operations may be subject to the Clean
Air Act ("CAA") and comparable state and local requirements. In
1990 Congress adopted amendments to the CAA containing provisions
that have resulted in the gradual imposition of certain pollution
control requirements with respect to air emissions from our operations.
The EPA and states have developed and continue to develop regulations
to implement these requirements. We may be required to incur certain
capital expenditures in the next several years for air pollution
control equipment in connection with maintaining or obtaining operating
permits and approvals addressing other air emission-related issues.
However, we do not believe our operations will be materially adversely
affected by any such requirements.
Federal regulations require certain owners
or operators of facilities that store or otherwise handle oil, such
as us, to prepare and implement spill prevention, control, countermeasure
("SPCC") and response plans relating to the possible discharge of
oil into surface
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