Pennsylvania seeks record fine for EQT fracking fluid leak

Reuters News
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Posted: Oct 07, 2014 2:41 PM

(Reuters) - Pennsylvania environmental regulators on Tuesday sought a record $4.5 million penalty from EQT Corp, a natural gas producer, for damage caused by the release of fracking fluids from a gas drilling site in the Marcellus region.

The production of shale gas using hydraulic fracturing, or fracking, technology has created thousands of jobs and is one of the major contributors to economic growth in Pennsylvania.

But over the past year or so, the state has levied big fines and even pursued criminal charges against some drillers over water and soil pollution from leaking fracking fluids.

The state Department of Environmental Protection (DEP) filed the complaint with the Environmental Hearing Board requesting the $4.5 million civil penalty for what the state called a "major pollution incident" in 2012 in Tioga County.

"This action was necessary because the company has not been cooperative during our investigation. The department does not tolerate this unacceptable attitude toward compliance and proper protection of Pennsylvania's environment," Acting DEP Secretary Dana Aunkst said in a statement.

EQT meanwhile said it filed a complaint against the DEP on Sept. 19 after unsuccessful attempts to resolve the company's liability for the 2012 accidental discharge from a well pad impoundment.

"The timing is suspect, and the exorbitant proposed penalty is inconsistent with both past and recent agency practice," Lewis Gardner, EQT's general counsel and vice president for external affairs, said in the company's statement.

"The DEP`s proposed penalty seems designed more for headlines than for the lawful enforcement of the Commonwealth's environmental statutes," Gardner said.

In September, another gas producer, Range Resources Corp, agreed to pay a $4.15 million fine to settle DEP allegations of contamination of water and soil from fracking fluids. At the time, the DEP said that was the biggest fine against an oil and gas operator in the state's shale drilling era.

Separately, the state Attorney General is pursuing a criminal case against XTO Energy, an oil and gas production unit of Exxon Mobil Corp, again for damage from leaking fracking fluids. XTO has said the spill was an accident by a contractor and the criminal charges are baseless.

The DEP said EQT received the first sign of a possible leak from the impoundment containing water and fracking fluids in April 2012. The company said it became aware of the leak in May 2012 and notified the DEP.

EQT removed the soil from beneath the impoundment liner by mid-September 2012 and said the site now meets statewide clean-up standards.

The DEP, however, said the site continues to pose environmental problems, noting water was still being collected and transported off-site for treatment and disposal due to contamination.

Separately, EQT said the state attorney general filed a Pennsylvania Fish and Boat Commission misdemeanor complaint against the company related to the 2012 incident.

EQT shares fell about 0.7 percent, or 57 cents, to $88.74 at mid-afternoon.

(Reporting by Scott DiSavino and; Barani Krishnan in New York; Editing by Richard Chang)