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Energy firms challenge DEP’s method to calculate fines

Energy companies facing multimillion dollar fines from Pennsylvania regulators over leaks from their pits and pipelines are challenging the state Department of Environmental Protection’s method of calculating those penalties.

In separate cases in different state legal venues, Philadelphia-based Sunoco Logistics Partners and Downtown-based EQT Corp. are asking judges to reject DEP’s interpretation of the Clean Streams Law, which the companies say regulators are using to pad fine totals.

The dispute centers on whether violations end when a leak is plugged or whether they continue until all residual contamination stops spreading into state waters.

DEP wants to fine Sunoco Logistics at least $2.3 million for spilling more than 12,000 gallons of gasoline from a pipeline in Murrysville in 2008. A 20- to 30-foot-high fountain of gasoline surged through a blown plug, and some of the gas that saturated the soil continued to seep into Turtle Creek “for days, weeks and months” after the initial spill, regulators said in legal filings.

The agency wants to fine natural gas producer EQT at least $4.5 million for allowing waste fluids from shale gas extraction to leak through holes in the liner of a 6 million gallon wastewater impoundment at a Tioga County drilling site beginning in 2012. Regulators say a pollution plume reached soil, groundwater and, eventually, streams.

In both cases, DEP counted more than 100 days when the companies allowed lingering contamination to migrate into commonwealth waters. The Clean Streams Law sets a maximum penalty of $10,000 per day for each violation. The proposed fines add up all of those days.

The companies argue that they should be fined only for the days when they actively released pollution from their facilities. For Sunoco Logistics, the release lasted less than a day. For EQT, it lasted, at most, 12 days between when the leak was first reported and when the impoundment was emptied of sludge and fluids.

In a statement on Oct. 7, the day DEP announced its proposed penalty, EQT general counsel Lewis Gardner said state regulators’ interpretation of the law “leads to the absurd result of never-ending and unquantifiable liability.”

“We disagree on this basic legal issue, and while EQT acknowledges responsibility for its contractor’s action, EQT will not agree to an excessive fine based on a faulty legal theory,” he said.

Related: DEP to DePasquale: Problems are already addressed

Sunoco Logistics is fighting its proposed penalty in the Environmental Hearing Board, which hears cases brought by DEP as well as appeals of the department’s actions. The full board heard oral arguments about the penalty dispute in late August but it has not yet issued a decision.

EQT took its case directly to the Commonwealth Court. In a complaint filed on Sept. 19, the company asked the higher court to settle the legal matter and declare DEP’s interpretation unlawful.

A DEP spokeswoman declined to comment on ongoing litigation, but a department attorney said during oral arguments in the Sunoco Logistics case that the company’s theory “is exterminated” by the unambiguous language of the law “like a vampire exposed to sunlight,” according to a transcript.

“The Pennsylvania Clean Streams Law imposes a duty on every person to keep his or her industrial waste out of the waters of the commonwealth every day all day,” said Mary Martha Truschel, DEP attorney. “Every day that your industrial waste gets into waters of the commonwealth, you have failed in that duty.”

If the courts were to side with the companies, it would significantly alter the department’s long-standing practice for calculating fines and curtail the maximum penalties that companies would face for Clean Streams Law violations, PennFuture chief counsel George Jugovic Jr. said.

Mr. Jugovic served as an attorney and regional director for DEP before taking his current position with the environmental group.

“It would limit the reach of the Clean Streams Law,” he said, “because the penalty provisions create the incentive for prompt remediation and clean up.”

The companies argue that the department’s “continuing violation” theory is not supported by any judicial precedent. DEP’s attorney countered during oral arguments that the issue has not come up very often in the hearing board because companies rarely have had the “temerity” to raise it.

Mr. Jugovic agreed, but he said the state’s invigorated oil and gas industry is challenging aspects of Pennsylvania environmental law that other industries have accepted as settled.

“Principles that were thought to be well founded and long standing are all now getting re-litigated again in the context of the gas industry,” he said.


Laura Legere: llegere@post-gazette.com

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