What the Penalty Amount Cannot Pay For

Kern County sits in the southern end of California’s San Joaquin Valley. It is not a place that has been treated gently by industry. The Midway Sunset Oilfield, where the Sunrise Power Plant operates, is one of the largest oilfields in the United States. The people who live near it are not, in the main, wealthy people. They are agricultural workers, refinery workers, and their families. They live with the ambient understanding that the ground beneath them is already a working industrial zone, already laced with wells and pipes and pressurized systems pushing fluids they will never see into formations they will never visit.

When well WW3 lost mechanical integrity on the morning of June 22, 2021, Sunrise Power Company knew within the hour. The timeline in the legal documents is precise: 10:10 a.m., the failure. 11:05 a.m., injection stopped. Fifty-five minutes. In that window, 12,667 gallons of industrial wastewater were pushed into a broken well. To put that in household terms: a standard bathtub holds roughly 80 gallons. Sunrise Power injected the equivalent of 158 bathtubs of industrial waste into a well that was no longer containing it.

The fluid came back up. That sentence should be allowed to land before anything else is added to it. The specific, documented consequence of operating a broken well is that what goes down comes back up, and it pooled within 30 to 40 feet of the wellhead. An underground injection well exists precisely to keep industrial waste separated from the surface world, separated from soil, separated from anything connected to the water people drink. That separation failed. The surface was contaminated.

The Safe Drinking Water Act’s Underground Injection Control program exists because of one baseline fact: the water underground is connected. Aquifers do not respect property lines. Contamination introduced into one formation can migrate toward formations that supply public water systems. The people who drink that water are not notified when a well fails. They are not told that 12,667 gallons of cooling tower blowdown and equipment drain wastewater were injected into a broken well near their water supply. They are not consulted when the penalty is set. They receive no portion of the $55,788.

What is also in this document, and what no dollar figure can address, is the gap in time. The well failed in June 2021. The legal settlement was finalized in August 2024. Three years and two months passed between the moment fluid hit the surface and the moment accountability was formalized on paper. During that entire period, the underlying permit — originally issued in 2002 and applied for renewal in 2012 — remained technically expired, operating on carryover authorization because EPA had not yet issued a new permit. The community near Midway Sunset was not operating a failed system in a vacuum. It was operating within a regulatory environment where a permit filed for renewal twelve years ago still hasn’t been reissued.

There is no victim’s name in this document. There is no record of anyone’s well water being tested after June 22, 2021. There is no compensation fund. There is no community notification requirement in the settlement terms. There is a check made out to the Treasurer of the United States of America for $55,788, and there is a CFO’s signature, and there are thirty days to pay it. That is what the record contains.

What the Documents Actually Say

These are verbatim extracts from the Consent Agreement and Final Order, Docket No. UIC-09-2024-0074, filed with the EPA Region 9 Regional Hearing Clerk on August 26, 2024.

Who Pays the Tab That Wasn’t on the Invoice

Public Health

The Safe Drinking Water Act’s Underground Injection Control program is built on one premise: contaminated water underground becomes contaminated water in people’s taps. The failure of well WW3 created documented conditions for exactly that pathway.

• The SDWA defines endangerment of drinking water as any injection that “may result in the presence of a contaminant in underground water which supplies or can reasonably be expected to supply any public water system.” Well WW3 injected into the Upper Tulare formation. Whether that formation connects to any public water supply was not disclosed in the settlement documents.
• The 12,667 gallons injected into the broken well included cooling tower blowdown, which can contain biocides, anti-corrosion chemicals, and scale inhibitors; demineralizer resins regeneration wastewater, which carries concentrated dissolved solids; and plant equipment drain water. None of the specific chemical constituents of this particular release are disclosed in the public settlement document.
• No community notification requirement appears anywhere in the Consent Agreement. People living near Midway Sunset Oilfield with private wells or who draw on the same aquifer system have no guaranteed right to know this event occurred, based on this document alone.
• The settlement does not require any post-incident groundwater monitoring or testing as a condition of compliance. Sunrise Power’s obligations under the CA/FO are to pay the penalty and comply with general permit conditions. Verification that no contaminant migration occurred is not mandated.
• Kern County has some of the worst air quality in the United States. The population around Midway Sunset already carries a disproportionate environmental burden. Adding a documented underground injection failure to an already compromised environmental baseline is not a neutral event for community health.

Economic Inequality

The economic structure of this case is a precise diagram of how environmental accountability works differently depending on which side of the table you sit on.

• Sunrise Power Company, LLC is a portfolio company of Hull Street Energy LLC, a private equity firm headquartered at 4747 Bethesda Avenue, Suite 1220, Bethesda, Maryland. Hull Street Energy manages energy infrastructure assets. The $55,788 penalty is not an existential sum for a company of this profile; it is a line item.
• The maximum penalty available under the SDWA for these violations was $348,671. EPA settled for $55,788, 16% of the ceiling. The settlement requires EPA to consider “the economic impact of the penalty on the violator.” There is no parallel provision requiring consideration of the economic impact of contamination risk on the communities near the well.
• The penalty is explicitly non-deductible for federal tax purposes under 26 U.S.C. § 162(f), meaning Sunrise Power cannot write it off as a business expense. This is a real constraint, but it still leaves the effective cost of the violation at $55,788 in an industry where replacement wells (WW5 and WW6) were presumably far more expensive to install and authorize.
• The workers at the Sunrise Power Plant are not named anywhere in this document. Whether any employee flagged the mechanical integrity issue before or during the 55-minute window is not recorded. Whether any worker was pressured to continue operations is unknown. The document records only what the company submitted to EPA in its own reports.
• If a private citizen polluted a drinking water source for 55 minutes and left fluid pooling on the surface, the legal exposure and public response would not be a $55,788 administrative settlement signed three years later. The dollar value of accountability scales with corporate status in ways that the law technically allows but that communities are not required to accept.

What $55,788 Buys

Where the Pressure Goes Next

The settlement is signed, the check has been written, and on paper this case is closed. That does not mean scrutiny has to be.

Named Parties and Responsible Roles

• Craig Herlihy, Chief Financial Officer, Sunrise Power Company, LLC: Signed the Consent Agreement and Final Order on behalf of Respondent.
• Randall Osteen, General Counsel, Hull Street Energy LLC: Named as the contact for service of the CA/FO on behalf of the Respondent. Reachable at rosteen@hullstreetenergy.com per the certificate of service.
• Amy C. Miller-Bowen, Director, Enforcement and Compliance Assurance Division, EPA Region 9: Signed for the Complainant; responsible for the penalty calculation and settlement terms.
• Beatrice Wong, Regional Judicial Officer, EPA Region 9: Issued the Final Order on August 23, 2024.
• Adam Howell, Enforcement Officer, EPA Region 9: Named contact for ongoing compliance reporting. Reachable at howell.adam@epa.gov.

Watchlist: Agencies That Have Jurisdiction Here

• EPA Region 9 Enforcement and Compliance Assurance Division: The agency that brought and settled this case. They have the authority to reopen enforcement if Sunrise Power violates the CA/FO, and to take the company to the Department of Justice if the penalty goes unpaid. The renewal application for Permit CA1020002, filed in 2012, is still pending with this office.
• EPA Underground Injection Control Program (National): The federal program under which California Class I wells are regulated. Congress funds this program; public pressure on appropriators directly affects its enforcement capacity.
• California State Water Resources Control Board: While California does not hold UIC primacy for Class I wells, the state has independent water quality authority under the Porter-Cologne Water Quality Control Act. A complaint about potential drinking water contamination in Kern County can be filed with the Central Valley Regional Water Quality Control Board.
• California Department of Conservation, Geologic Energy Management Division (CalGEM): Regulates oil and gas operations in California, including the Midway Sunset Oilfield. Has overlapping jurisdiction over underground injection activities tied to oil and gas infrastructure.
• Department of Justice, Environment and Natural Resources Division: EPA can refer unpaid or violated settlements here for federal civil enforcement action under Section 1423(c)(7) of the SDWA.

Mutual Aid, Local Organizing, and Resistance

• File a formal comment with EPA Region 9 on the pending permit renewal for Permit CA1020002. The renewal application has been sitting since 2012. Public comments on the reissuance process can demand strengthened monitoring conditions, mandatory post-incident groundwater testing, and community notification requirements as permit conditions. Contact the Region 9 Hearing Clerk at r9HearingClerk@epa.gov.
• Connect with Earthjustice’s Right to Zero campaign and Central Valley Air Quality Coalition, both of which organize directly in Kern County communities affected by fossil fuel infrastructure. Midway Sunset residents dealing with cumulative environmental burdens have active local organizing networks.
• Request that the Kern County Environmental Health Services Division conduct independent water quality testing of private wells within one mile of the Sunrise Power Plant well field. This is a formal public health request that local residents can file directly.
• Demand that EPA Region 9 make public the full application and inspection record for Permit CA1020002, including all inspection reports since 2002 and all correspondence related to the 2012 renewal. These are public records accessible under FOIA. Organizations like the Environmental Integrity Project can assist with requests.
• Contact your U.S. Representatives on the House Energy and Commerce Committee and the Senate Environment and Public Works Committee. These committees oversee EPA enforcement budgets. Chronic underfunding of the UIC program is part of why a 2012 permit renewal has not been resolved in 12 years.
• If you live near Midway Sunset and have noticed changes in your well water, report it to the California State Water Board’s GAMA (Groundwater Ambient Monitoring and Assessment) program and to your county health department. Documentation of local impacts is the foundation of any future enforcement escalation.