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Court Declares Pennsylvania DEP’s Calculation of Continuing Penalties for “Seemingly Endless” Violations Unlawful under the Clean Streams Law

On January 11, 2017, the Pennsylvania Commonwealth Court held Section 301 of the Clean Streams Law “is a provision that prohibits acts or omissions resulting in the initial active discharge or entry of industrial waste into waters of the Commonwealth and is not a provision that authorizes the imposition of ongoing penalties for the continuing presence of an industrial waste in a waterway of the Commonwealth following its initial entry into the waterways of the Commonwealth.” EQT Production Co. v. Com., Dep’t of Envtl. Prot., 485 MD 2014, slip op. at *24 (Jan. 11, 2017).

This case arose out of a release from an impoundment at a Marcellus Shale well pad site in Tioga County, Pennsylvania. It is undisputed that EQT stopped the source of the release within twelve days of reporting it on May 30, 2012 and thereafter entered the Act 2 program to achieve cleanup standards for soil and groundwater. In May 2014, the Department sought a non-negotiable penalty of $1.2 million for the release. EQT filed a complaint in Commonwealth Court in September 2014 challenging the Department’s use of a “continuing violation” theory to support this penalty calculation. Subsequently, in October 2014, the Department filed a Complaint for Civil Penalties with the Pennsylvania Environmental Hearing Board, seeking a penalty of $4.5 million for the same release. The Department’s post-hearing brief in the EHB proceeding states that a penalty of nearly $470 million is supported by the Clean Streams Law.

The Department argued in the Commonwealth Court that “the illegal activity continues so long as the leaked industrial waste exists in any water of the Commonwealth” and that “the natural flow of waste from that water into another water of the Commonwealth” constitutes a new violation. Id. at *17-18. The Court noted that adopting the Department’s theory “would result in potentially limitless continuing violations for a single unpermitted release” and “would be tantamount to punishing a polluter indefinitely.” Id. at *20-21. The Court stated that the Department’s theory was “not supported by the statutory provisions and framework or the rules of statutory construction.” Id. at *20.

By clarifying the limits of the Department’s penalty authority to the days a waste or pollutant actually enters into groundwater or surface water, this precedential decision prevents the Department from threatening unauthorized civil penalties under the Clean Streams Law to leverage settlements in any context involving the Clean Streams Law, not just in the oil and gas industry.