In a case with potentially millions of dollars at stake, the Pennsylvania Supreme Court invalidated the Pennsylvania Department of Environmental Protection's practice of imposing ongoing penalties against polluters for the continued migration of contaminants within state waters.

But the court declined to address the department's continuing violation theory of liability for the passive migration of contaminants from soil into water, instead leaving that for the Commonwealth Court to tackle at a later date.

At issue in EQT Production v. Department of Environmental Protection was the DEP's reading of the Clean Streams Law as allowing the agency to levy ongoing penalties against a company for water pollution based on the theory that each day that contaminants spread from one body of water to another region of water constitutes a violation.

On March 28, the high court ruled 5-2 to affirm the Commonwealth Court's holding that the DEP's statutory interpretation, referred to in the Supreme Court's opinion as the “water-to-water theory,” was too broad.

“We appreciate the critical need for protection to vindicate the constitutional entitlement of the citizenry to a clean environment and recognize that the Clean Streams Law is designed as a mechanism to advance this salutary objective,” Chief Justice Thomas Saylor wrote in the majority's opinion. “Nevertheless, and at bottom, we believe that if the General Assembly wished to create the sort of massive civil penalty exposure administered by the department on a strict-liability basis … it would have said so more expressly. In the absence of such clarity, we find the agency's expansive construction of a statute that is inexplicit in such regards to be too unreasonable to support an affordance of deference.”

But Saylor, joined by Justices Max Baer, Debra Todd, David Wecht and Sallie Updyke Mundy, made clear that the General Assembly is still free to enact legislation codifying the water-to-water theory of serial Clean Streams Law violations.

“We have found it unreasonable, however, to believe that it would have chosen to do so absent
clear and explicit notice signaling the potential scope, scale, and duration of the liability
exposure,” Saylor said.

Justice Christine Donohue issued a concurring and dissenting opinion, joined by Justice Kevin Dougherty, agreeing that the soil-to-water theory was not properly at issue before the court but arguing that the majority's ruling on the water-to-water theory ”is clearly aimed at protecting against limitless penalties for pollution, but in my view, it does so at the expense of abating pollution.”

“It is not the role of this court, however, to second-guess and/or limit the scope of penalties imposed by the General Assembly,” Donohue said. “Instead, our focus must be confined to interpreting penalty provisions in accordance with the rules of statutory interpretation.”

The controversy began after EQT discovered leaks in one of its subsurface impoundments containing water contaminated during fracking operations, prompting the DEP to demand payment of $1.27 million in penalties for what it deemed to be continuing violations of the Clean Streams Law, according to court documents.

EQT disputed the DEP's position, maintaining that the Land Recycling and Environmental Remediation Standards Act, or Act 2, determines a company's essential remediation efforts. The company commenced an original-jurisdiction proceeding in the Commonwealth Court per the Declaratory Judgments Act, court documents said.

The agency then lodged a complaint against EQT before the Environmental Hearing Board seeking more than $4.5 million, including levies of up to $10,000 per day. It also filed preliminary objections in the declaratory judgment proceeding, asserting the Commonwealth Court lacked jurisdiction, according to court papers. The DEP alleged that an administrative remedy was available to EQT before the EHB and no issue had matured to the point of actual controversy when EQT commenced its action.

The Commonwealth Court sustained the DEP's preliminary objections, holding that the EHB had exclusive authority to determine the appropriate penalty. The case then made its first trip up to the Supreme Court, which ruled that EQT's challenge to the DEP's interpretation of the law presented a “sufficient, actual controversy” for the Commonwealth Court to consider.

On remand, the court said the DEP misinterpreted the Cleans Streams Law.

“The General Assembly did not intend for these sections to establish seemingly endless violations following but a single release of industrial waste or other prohibited substances from a point source or otherwise into a water of the commonwealth,” the court said, adding that, had the legislature intended to allow for a continuing violation until remediation is complete, it would have made it clear in the statute.

Following that ruling, the EHB imposed a $1.1 million penalty on EQT, which is now pending review before the Commonwealth Court.

Meanwhile, the DEP appealed the Commonwealth Court's decision on the water-to-water theory to the Supreme Court again, this time making the rare move of hiring an attorney from outside the state to argue the case: veteran Washington, D.C., litigator Jonathan S. Massey, whose resume includes representing former Vice President Al Gore in the 2000 Florida ­election litigation.

In its arguments to the high court, the agency maintained that, under the Clean Streams Law, the flow of pollutants from one part of state waters to another constitutes a violation, even if the source of the pollution is corrected.

The Supreme Court majority, while acknowledging ambiguity in the statute, ultimately sided with EQT, which had argued that only the discharge of pollutants into a body of water—not the continued presence of pollutants in the water—could constitute a violation.

“Of the competing constructions, we find it most reasonable to conclude the legislature was focused on protecting the waters of the commonwealth with reference to the places of initial entry,” Saylor said. “Again, we find this to be the most natural reading of the statute. Moreover, we agree with EQT that, had the General Assembly intended differently, it would have been a simple matter to address water-to-water migration in express terms. At the very least, had the legislature wished to codify the water-to-water theory, it could have sanctioned movement of contaminants 'into or among' any of the waters of the commonwealth, rather than merely 'into' any such waters.”

But Saylor said the separate issue of the soil-to-water theory was “not sharply in focus before us,” and instead suggested the matter should be addressed in the Commonwealth Court's upcoming review of the EHB's penalty determination.

EQT was represented by Robert Byer of Duane Morris in Pittsburgh, as well as Kevin Garber and Jean Mosites of Babst, Calland, Clements & Zomnir in Pittsburgh.

They referred comment to an EQT spokesperson, who said in a statement, “EQT is pleased that the Supreme Court upheld key holdings in the January 2017 Commonwealth Court's decision to reject the Pennsylvania DEP's erroneous interpretation of the state's Clean Streams Law. The Supreme Court correctly captures much of the problem with the DEP's interpretation, which is that it creates uncertainty and leads to a never-ending and unquantifiable liability in cases of this nature.”