EQT Corporation Tuesday announced it has filed a complaint in Commonwealth Court against the Department of Environmental Protection after unsuccessful attempts to resolve its liability for a 2012 accidental discharge from a well pad impoundment in Duncan Township, Tioga County. 

EQT challenged the DEP’s interpretation of the applicable provisions of the Clean Streams Law.

In its lawsuit, EQT notes that the DEP’s challenged interpretation accounts for a penalty demand of $1.27 million for leaks caused by an EQT contractor, which resulted from damage to the bottom of an impoundment liner located on the drilling site.

“It is an utter waste of EQT and taxpayer resources for the parties to follow the usual administrative process while this fundamental legal issue is left unresolved by the courts”

The DEP subsequently filed its own complaint against EQT with the Pennsylvania Environmental Hearing Board, seeking $4.53 million in fines.

“The DEP’s insistence on a $1.27 million penalty during settlement negotiations, with no room for discussion or negotiation, followed by a $4.53 million demand in a lawsuit filed in response to EQT’s attempt to clarify the law in Commonwealth Court, illustrates the problem with the agency’s interpretation of the Clean Streams Law. It creates uncertainty and leads to the absurd result of never-ending and unquantifiable liability,” said Lewis B. Gardner, EQT General Counsel and Vice President, External Affairs. Gardner continued, “The timing is suspect, and the exorbitant proposed penalty is inconsistent with both past and recent agency practice. The DEP’s proposed penalty seems designed more for headlines than for the lawful enforcement of the Commonwealth’s environmental statutes. In addition, based on a preliminary review of the complaint, the DEP is wholly ignoring EQT’s remediation efforts and cooperation with the agency, as well as misstating many facts of the case.”

In May 2012, EQT became aware that the impoundment was potentially leaking and notified the DEP. EQT discontinued using the impoundment and promptly removed all fluids and solids. At that time, EQT discovered damage to the bottom of the liner, which was caused by a third-party vendor conducting DEP-approved water treatment.

EQT then began remediation efforts, and by mid-September 2012, the contaminated soil beneath the liner had been removed. Subsequent sampling confirms the site meets statewide, health-based, soil cleanup standards; and a third-party consultant has concluded that a nearby High Quality stream is biologically healthy and sustaining a wild trout population.

Gardner noted that a reasonable penalty is appropriate to hold EQT accountable for the actions of its contractor. However, in EQT’s view, the DEP is overreaching in its interpretation of the law in an attempt to justify an excessive demand. “It is an utter waste of EQT and taxpayer resources for the parties to follow the usual administrative process while this fundamental legal issue is left unresolved by the courts,” said Gardner.

In addition, EQT’s lawsuit identifies another challenge to the DEP’s reading of the Clean Streams Law. That case involves Sunoco Logistics; and the significance of the legal issue at stake is reflected by the fact that the entire Environmental Hearing Board reviewed the DEP’s legal argument at a hearing on August 28, 2014. A decision is pending.

Finally, Gardner added, “EQT has a great deal of respect for the DEP and its professionals. We have cooperated with the agency on this and many other projects and we will continue to do so. At present, 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.”

The 2012 accidental discharge incident that occurred in Tioga County is also the subject of a separate Fish and Boat Commission misdemeanor complaint against EQT filed by the Pennsylvania Attorney General on September 30, 2014.

EQT was discussing settlement with the Commission and remains ready and willing to continue such discussions with both the Commission and the Office of the Attorney General on that separate complaint.

NewsClips:

DEP Seeks $4.5M Record Fine Against EQT For Impoundment Leak

DEP Seeks $4.5 Million Penalty Against EQT

DEP Seeks Record $4.5M Fine Over Leaks At Drilling Operation

DEP Seeks Record Fine Against EQT, AG Files Criminal Charges

Record $4.5M Fine Pursued Against Gas Driller

Is PA’s Energy Industry Afraid Of Big, Bad Wolf?

Range Resources: Severance Tax Threatens PA’s Edge

Court To Hear Challenge To Oil & Gas Fund Withdrawals

DEP To DePasquale: Problems Are Already Addressed

EQT Faces Charges For Tioga County Spill From AG

Pink Drill Bits Promote Breast Cancer Awareness

Editorial: Still Not State Database On Drilling, Health

10/13/2014