PA Supreme Court Rules Against PADEP Mere Presence and Water-to-Water Discharge Theories
On March 28, 2018, in a 5-2 decision, the Pennsylvania Supreme Court decided that the Pennsylvania Department of Environmental Protection (“PADEP”) cannot assess daily penalties under the Clean Streams Law (“CSL”) on the basis that contaminants released to groundwater, or other “Waters of the Commonwealth,” remain in those “waters” or have migrated from one “water” to another. The Court struck down the so-called “mere presence” and “water-to-water” discharge theories, put forth by PADEP in opposition to a declaratory judgment action filed by EQT Production Company (“EQT”). PADEP had used these theories of liability to support, in part, an over $4.5 million civil penalty lodged against EQT for a release of hydraulic fracturing “flow-back” water from a lined impoundment.
The Court’s decision delivers significant clarification regarding the scope of potential civil penalty liability under the CSL. It is also the first opinion providing meaningful limitations on PADEP’s authority to issue daily civil penalties for groundwater contamination under liability theories that PADEP has only advocated recently. As illustrated by PADEP’s proposed $4.5 million civil penalty against EQT, civil penalties in such cases can be exorbitant, as it often takes years, if not decades, to fully remediate groundwater contamination using industry best-practices.
The Supreme Court’s decision affirmed the Commonwealth Court’s decision to strike down the “mere presence” and “water-to-water” discharge theories, a decision we wrote about last year. As discussed in our previous article, PADEP made several arguments on appeal, including that there are separate violations of the CSL for each day contaminants remain within a single area of groundwater (i.e., the “mere presence” theory), for each day contaminants migrate from groundwater to surface waters or other distinct areas of groundwater (i.e., the “water-to-water” theory), and for each day contaminants in soil or bedrock leach into groundwater (i.e., the “soil-to-water” theory).
Although the Supreme Court affirmed the Commonwealth Court’s decision, it also vacated significant portions of its opinion. Specifically, the Court vacated the Commonwealth Court’s factual findings, its discussion of the meaning of the term “discharge,” and its determination that penalties could not be issued under Sections 307 and 401 of the CSL. The Court left the door open for similar arguments in the future, however, as it opined only that the Commonwealth Court overstepped its authority by making these decisions sua sponte.
The Court also expressly declined PADEP’s invitation to opine upon the “soil-to-water” discharge theory, which is of at least equal import as the “water-to-water” theory. One permutation of this theory is arguably as far reaching as the “water-to-water” theory, and is, in many respects, just a back door to the “water-to-water” theory. In particular, PADEP has argued that separate violations occur when there is a discharge from soil or bedrock that was first contaminated by contact with moving, contaminated groundwater. In other words, even after all soil and bedrock impacted by the original release have been removed or remediated, if groundwater contaminated by the release rises and leaves residual contaminants behind while returning to its original depth, PADEP has argued that the subsequent “re-depositing” of those contaminants into groundwater constitutes a new violation of the CSL. Thus, like the “water-to-water” theory, the “soil-to-water” theory can provide a basis for continuing violations from the time of an initial release until contaminated groundwater is fully remediated.
The Supreme Court could rule on the validity and scope of the “soil-to-water” theory in the relatively near future. In a parallel proceeding, EQT has appealed to the Commonwealth Court the Environmental Hearing Board’s civil penalty assessment of $1.1 million, which was issued on the basis of the “soil-to-water” theory following the Commonwealth Court’s ruling that the “water-to-water” theory was invalid.1 No matter what the Commonwealth Court decides, it is expected that the aggrieved party will seek leave to appeal.2
If given the opportunity to rule on the “soil-to-water” theory, it is uncertain how the Supreme Court will rule. Many of the bases for striking down the “water-to-water” theory, which the Court called an “expansive” interpretation of the CSL lacking clear legislative authority, also could be applied to the “soil-to-water” theory, and in particular the “re-depositing” aspect. However, in determining that the CSL is ambiguous on the “water-to-water” theory, the 5-justice majority stated that “once contaminants no longer pass through the initial point of entry into water, it is reasonable to say that the substances are no longer being released into any of waters of the Commonwealth [sic] on that pathway” (emphasis added). It is not clear whether this same logic – particularly the phrase “into water” – would lead the justices to conclude that the CSL also is ambiguous on the “soil-to-water” theory.
1Although the EHB’s assessment followed the Commonwealth Court’s ruling, given the appeal pending at the time, the EHB was not sure whether or not it was constrained by ruling. However, since its penalty was issued on the basis of direct releases and the “soil-to-water” theory, rather than the “water-to-water” theory, the EHB determined that its decision was not in conflict with the Commonwealth Court’s opinion.
2 It is worth noting, however, that if EQT’s appeal reaches the Pennsylvania Supreme Court, the validity of the “re-depositing” aspect of the “soil-to-water” theory, described above, may not be decided. Although clearly relying on the “soil-to-water” theory in issuing the $1.1 million civil penalty, “for reasons other than liability,” the EHB did not impose any penalties “for the periods when EQT’s only new releases were strictly from the soils outside of the pit.” The EHB did find, however, “for purposes of creating a complete record,” that new releases from soils outside the impoundment were new violations, and that such releases continued up until the date of the hearing, even though EQT had excavated all of the contaminated soil within the impoundment years prior.
Disclaimer: This post does not offer specific legal advice, nor does it create an attorney-client relationship. You should not reach any legal conclusions based on the information contained in this post without first seeking the advice of counsel.