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There has already been a fair amount written about a Pennsylvania Supreme Court decision issued yesterday involving the state’s effort to penalize EQT under the Clean Streams Law (CSL) for allowing a shale gas wastewater impoundment to leak and contaminate groundwater in Tioga County in 2012.
As an initial matter, it should be noted that the Supreme Court did not decide that the Department of Environmental Protection’s (DEP’s) proposed $4.5 million dollar penalty was excessive. Because of how this case made its way to the Supreme Court, the reasonableness of DEP’s proposed civil penalty was not before the Court for a decision.
This case arose from a complaint that EQT filed in Commonwealth Court after DEP had presented EQT with a proposed civil penalty calculation based in part on groundwater contamination that resulted from operation of the impoundment. EQT asked the Commonwealth Court, under a statute known as the Declaratory Judgments Act, to decide an issue of law - whether penalties continued to accrue under the CSL so long as pollutants remained in groundwater.
The Commonwealth Court initially dismissed the complaint on procedural grounds, but the Supreme Court disagreed and returned the matter for a decision. On remand, the Commonwealth Court ruled in favor of EQT and DEP appealed that decision back to the Supreme Court. So, the question before the Supreme Court was a relatively narrow one about how to interpret the CSL, and not about the reasonableness of DEP’s proposed civil penalty.
Regarding that legal question, the Supreme Court made a number of pronouncements. First, it held that the mere presence of pollution in groundwater does not, in and of itself, constitute a violation of the CSL. The Court said that the touchstone of a violation under the CSL was the introduction of pollutants into the waters of the Commonwealth - not their continued presence in those waters.
Second, the Supreme Court addressed what came to be known as DEP’s “water-to-water theory” of liability. Under this theory, the state asserted the right to assess a penalty when the contaminants moved from one discrete body of water into another, such as when pollutants moved from groundwater into surface water, or into areas of uncontaminated groundwater. The Court rejected DEP’s argument that it could impose a penalty based on the movement of contaminants within bodies of water, or from one body of water to another.
Third, the Supreme Court rejected the Commonwealth Court’s interpretation that Section 401 of the CSL did not regulate industrial waste. Section 401 prohibits any person who owns or occupies property from discharging any substance of any kind into waters of the Commonwealth causing pollution. This was a pretty big deal, because the Commonwealth Court badly mangled and narrowed its application based on the title of the section and little more.
Finally, the Supreme Court declined to speak to the third theory, upon which DEP based its penalty assessment, namely the so-called “soil-to-water theory.” Under this theory, an ongoing violation occurs for each day that pollutants are released from soil into the waters of the Commonwealth. The EHB applied a variation on this theory in issuing a $1.1 million dollar penalty for this incident. Both DEP and EQT have appealed that decision to the Commonwealth Court. The Court’s ruling against the agency on its water-to-water theory may seem concerning at first, but there are reasons why it should, in the end, not substantially impact DEP’s ability to protect our streams and rivers.
First, it is important to understand that this case was about penalties, not about the state’s ability to prevent or clean up pollution. Penalties serve an important purpose, but DEP has many other tools to use in ensuring protection and prompt clean-up of water pollution. And the Court made clear that its decision was not intended to limit DEP’s use of those tools.
Second, this case concerned one type of penalty - a civil monetary penalty. If the state believed that a pollution event was so egregious that a civil monetary penalty did not adequately address the extent of harm or sufficiently deter future conduct, then DEP could seek to impose criminal penalties on the responsible parties.
Third, the state could use its administrative powers to effectively implement its water-to-water theory.
The argument that DEP made in court was that as pollution migrated from one water body to another, a separate violation of the CSL occurred. Consider, for example, a factory that grossly contaminated groundwater on its property, and over time, that pollution also threatened to leak into a nearby stream. The Supreme Court said that the release of pollution to the groundwater was a violation, but not migration of that pollution to another body of water.
However, DEP has authority, based on the initial violation, to issue a compliance order preventing the spread of that contamination. So, if it issued an order to the responsible party to prevent the discharge of pollution to the stream, and the pollution subsequently made it into the stream, that would constitute a violation of DEP’s order, which in turn also constitutes a violation of the CSL.
By using its administrative tools, DEP has the ability to protect, in this scenario, the stream, and penalize the actor whose conduct threatened its harm.
The Supreme Court’s decision may alter how the DEP approaches pollution incidents. The agency may need to rethink how it collects evidence and proves that there is an ongoing discharge of pollutants to waters of the Commonwealth. It may need to rethink how to use its other tools to ensure protection of other bodies of water associated with the initial release of pollutants.
Finally, the DEP may need to reconsider the role that criminal penalties should play in altering the conduct of persons who harm the waters of the Commonwealth.
In the end, however, this Supreme Court decision should not have a substantial impact on the state’s ability to protect the waters of the Commonwealth and punish those who cause them harm.