D&L, State Will Argue Over Lupo Ownerships

Attorneys trying to argue for the reinstatement of D&L Energy injection well permits will argue next week that the company’s owner, Ben Lupo, who is facing federal criminal charges for ordering chemically-laced oilfield waste dumped down a storm sewer that led into the Mahoning River, was acting on behalf of another company he owned when he ordered the dump.

Lupo, who owns D&L Energy, Hardrock Excavating and Mohawk Disposal, all of which share the same Salt Springs Road address, ordered Hardrock employee Michael Guesman to dump the oilfield waste into the storm sewer on Jan. 31 while investigators watched, but was acting as the owner of Hardrock, not D&L, according to briefs submitted to the Oil and Gas Commission.

Lupo’s attorneys wrote the Ohio Department of Natural Resources unlawfully revoked D&L Energy’s six injection well permits and denied three pending permit applications because D&L is a “sister” company and not a subsidiary or parent company to Hardrock and Mohawk.

They wrote Hardrock would financially benefit from improperly dumping waste because it’s a brine transportation company. But D&L, an injection well company, would receive no financial gain from the dump because the two companies deal with unrelated parts of the oil and gas industry. Attorneys wrote the D&L injection wells were available for the brine to be dumped into legally, showing that Lupo was only acting on Hardrock’s behalf.

The attorneys will make those and several other arguments surrounding a complicated web of Lupo-owned limited liability companies involved in the brine dump that led to federal criminal charges against Lupo and Guesman, 32, of Cortland, during an appeal hearing of ODNR’s revocation order next week in front of the Oil and Gas Commission.

Both Lupo, 61, of Poland, and Guesman, 32, of Cortland, are expected to testify at the hearing scheduled for Wednesday and Thursday, along with several investigators and Lupo employees, according to case filings.

Attorneys for the state’s attorney general’s office and ODNR contend the illegal dumping happened at D&L’s headquarters and that Lupo controlled Hardrock and Mohawk, which shares the same address and insurance as D&L.

State attorneys wrote because Lupo was the controlling shareholder for D&L, the sole manager of Hardrock and the agent for Mohawk when he admittedly ordered the brine dump, the three companies as well as Lupo are all liable for the illegal dumping.

Officials will also argue D&L contracted with Mohawk, which had no permit to haul brine. D&L, however, contend that has nothing to do with D&L and that Hardrock, which was permitted to haul brine, leased the trucks to use for their company’s purpose.

Lupo has since stepped down as D&L’s president but retained an 81 percent ownership in the companies, according to records.

Lupo and Guessman are facing federal illegal dumping charges in U.S. Northern District Court in Cleveland that carry a maximum three year prison sentence.

A field report by the Ohio Environmental Protection Agency filed with the D&L’s appeal brief says Lupo told investigators ordering brine dumps into the storm sewer  on a “regular basis” and later said it he ordered the dumps at least six times between September and February. He said the brine was “light water” that came from cleaning out frac tanks that stored a variety of fracking fluids.

Lupo said he was allowed to let the cleaning runoff to drain off his property but collected it because he believed former business partners were watching him. He said the water dumped also included rain runoff that contained brine and other oil and gas residues, according to the field report.

Lupo said he tried to dispose the water in the Koontz well in Leavittsburg and the Peribeck well in New Lyme but the tanks were full, so he ordered they be dumped into the storm drain.

D&L is also known for owning an injection well that was found to be the cause of 11 earthquakes in late 2011 and early 2012 in the Youngstown area. Those injection wells were shut down by the state. The company was cited for more than 50 violations in Ohio since the 1980s, but ODNR granted Lupo a permit for a new injection well on Jan. 7, according to records obtained by WKBN.COM.

The company has filed for Chapter 11 bankruptcy. Filings say D&L owns assets totaling more than $50 million and expects to make more than $2 million this year. Lupo resigned his position as president of the company the day after he was indicted, but kept an 81 percent ownership in the company filings say. His wife, Holly Serensky Lupo, owns four percent and Susan Faith, of Girard, owns the remaining 15 percent.

Bankruptcy filings also say officials may have improperly diverted funds from D&L to other companies the group owns and operates.

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