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XTO Settles Criminal Charges With Pennsylvania, Ends Three Year-Old Case For $400,000

ExxonMobil Corp. subsidiary XTO Energy Inc. has reached a settlement with Pennsylvania Attorney General (AG) Kathleen Kane's office nearly three years after the state filed criminal charges against the company for an alleged discharge of wastewater at a drilling site in 2010.

The settlement requires XTO to pay $400,000, including a $300,000 civil penalty to the state Department of Environmental Protection (DEP) and $100,000 to the Susquehanna Greenway Partnership’s environmental projects in Lycoming County, where the incident occurred.

The settlement ends a legal battle that began in September 2013, when AG Kane's Environmental Crimes Unit filed charges against the company (see Shale DailySept. 12, 2013). The case was a high-profile one that for the first time found a shale driller charged with criminal offenses. After a magisterial district judge ruled in January 2014 that XTO would be tried on five counts of unlawful conduct under the Clean Streams Law and three counts of unlawful conduct under the Solid Waste Management Act, XTO filed to dismiss the charges (see Shale DailyJune 13, 2014Jan. 6, 2014).

XTO spokeswoman Suann Guthrie noted Friday that the company had reached the settlement with "no admission of liability" for the incident. "Our priority is to ensure the safety of the community, our employees and contractors, as well as protect the environment and wildlife," she said.

The settlement stems from a random inspection by the DEP of XTO's Marquardt site in Penn Township, where XTO was working on two wells at the time. The agency found an open valve on a wastewater storage tank that allegedly discharged a large amount of production water containing chlorides, barium, strontium and aluminum.

A statewide investigating grand jury, the AG's office said, reviewed evidence in the case. It found that during November 2010, more than 93,000 gallons of wastewater was transported to and stored at the Marquardt site.

"It was alleged that thousands of gallons of wastewater were unaccounted for," the AG's office said. "Further investigation showed the fracking wastewater flowed into and polluted a nearby tributary." As a result of the spill, the DEP required more than 3,000 tons of contaminated soil to be excavated and removed from the site. The AG's office said the grand jury found that XTO did not have a permit to discharge wastewater at the Marquardt site and failed to report wastewater spills to the DEP.

"This settlement will result in additional oversight over a company that was allegedly responsible for discharging thousands of gallons of fracking wastewater into the environment," Kane said in a statement. "This is an important step toward accountability, and we will continue to pursue prosecutions against companies and individuals who pollute the environment."

At issue in the case, however, was how the valve was opened and who should have been held responsible. XTO had claimed the incident was accidental, while Kane maintained that the company should have been held liable regardless.

Shortly after Kane's office filed the charges against XTO, the company reached a settlement and signed a consent decree with the Environmental Protection Agency and the Department of Justice for Clean Water Act violations. That settlement required the company to pay a $100,000 penalty and up to $20 million to reform its wastewater management practices.

The AG's settlement requires XTO to maintain compliance with the federal consent decree. AG spokesman Jeffrey Johnson called the federal compliance measure one of the "foundational aspects" of the state's settlement, which also requires XTO to enter the accelerated rehabilitative disposition (ARD) program and be subject to tighter regulatory standards.

"Typically, the supervision in ARD cases goes through the county probation office, but this is a different case," Johnson said. "One of the foundational aspects of the settlement agreement calls for XTO to maintain compliance with the federal consent decree. So, the tighter regulatory standards apply throughout the nation."

XTO has more than 576,000 acres in Pennsylvania that stretch from the southwest to northeast parts of the state. It has already completed remediation efforts at the Marquardt site.

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