The Pennsylvania Department of Environmental Protection (DEP) may see new challenges in negotiating settlements with purported violators of Pennsylvania's Clean Streams Law. A Pennsylvania appellate court recently ruled that ongoing penalties are impermissible for a single waterway leak from fracking activities under the state's Clean Streams Law. The law punishes violators for pollution released into state waters.

In EQT Production Co v DEP, a natural gas production company sued the DEP for interpreting the Clean Streams Law to allow the DEP to impose a minimum $1.2 million penalty for a leak from a gas well pad that entered a state waterway. The $1.2 million penalty was proposed as a settlement in lieu of what the DEP asserted as the "continuing violation theory"; under this theory, the DEP argued that the Clean Streams Law permitted larger, ongoing penalties for each day that the contamination remained in state waters.

The company, which fixed the site of the leak and is engaging in ongoing clean-up efforts, rejected the settlement amount and sought to litigate the issue. In response, the DEP filed a complaint with the Pennsylvania Environmental Hearing Board seeking a $4.5 million penalty instead.

The company argued that this ongoing penalty theory was unfair and unlawful, as the Clean Streams Law authorises punishing the "entr[y]" of wastes into state waters, not its movement after initial entry. The appellate court agreed, stating that "[a] violation of Section 301 occurs when a person or municipality does what is prohibited—i.e., allows industrial waste to enter into the waters of the commonwealth—and once it ceases that conduct, violations cease".

This ruling is important, because instead of fearing endless and unquantifiable liability, companies can concentrate more on clean-up efforts and improving industrial procedures.

The DEP has the right to appeal the appellate court's decision to the Pennsylvania Supreme Court.

For further information on this topic please contact Barclay Richard Nicholson or Laura Thetford at Norton Rose Fulbright LLP by telephone (+1 713 651 5151) or email (barclay.nicholson@nortonrosefulbright.com or laura.thetford@nortonrosefulbright.com). The Norton Rose Fulbright website can be accessed at www.nortonrosefulbright.com.

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