B&R Resources, LLC and R.F. Campola v. DEP , 180 A.3d 812 ( 2018 )

IN THE COMMONWEALTH COURT OF PENNSYLVANIA
B&R Resources, LLC and :
Richard F. Campola, :
:
Petitioners :
:
v. : No. 1234 C.D. 2017
: Argued: February 5, 2018
:
Department of Environmental :
Protection, :
:
Respondent :
BEFORE: HONORABLE RENÉE COHN JUBELIRER, Judge
HONORABLE CHRISTINE FIZZANO CANNON, Judge
HONORABLE JAMES GARDNER COLINS, Senior Judge
OPINION BY
SENIOR JUDGE COLINS FILED: March 15, 2018
This matter is a petition for review of an adjudication of the
Environmental Hearing Board (EHB) that dismissed the appeal of B&R Resources,
LLC (B&R) and Richard F. Campola (Campola) of a Department of Environmental
Protection (DEP) administrative order (the Administrative Order) issued pursuant to
Section 3253 of the oil and gas statutes enacted by Act 13 of February 14, 2012, P.L.
87 (the 2012 Oil and Gas Act), 58 Pa. C.S. § 3253. The Administrative Order
required B&R and Campola (collectively, Petitioners) to plug 47 abandoned oil and
gas wells in Erie County and Crawford County, Pennsylvania (the Wells). For the
reasons set forth below, we reverse and remand this matter to the EHB.
B&R is an Ohio limited liability company engaged in oil and gas
exploration activities in Pennsylvania. (EHB Adjudication Finding of Fact (F.F.)
¶2; Stipulation ¶2, Reproduced Record (R.R.) at 670a.) Campola purchased B&R
in July or August 2011 and is B&R’s sole member and managing member. (EHB
Adjudication F.F. ¶¶4-6; Stipulation ¶4, R.R. at 671a.) At the time that Campola
purchased B&R, B&R had an inventory of approximately 157 to 160 wells in
Pennsylvania, consisting of 67 producing wells and 90 or more non-producing wells.
(EHB Adjudication F.F. ¶17; Hearing Transcript (H.T.) at 14-15, R.R. at 690a-
691a.) Between August 2011 and September 2012, B&R put seven of the non-
producing wells back into production. (EHB Adjudication F.F. ¶20; H.T. at 21-22,
41, R.R. at 697a-698, 717a.)
In December 2011, DEP notified Campola by email that a number of
B&R’s wells appeared to be abandoned and inquired what B&R intended to do with
respect to those wells. (EHB Adjudication F.F. ¶30; DEP Ex. C, R.R. at 472a.) Four
times between August 2012 and March 2014, DEP sent Campola notices of
violations with respect to some of the Wells stating they were abandoned wells and
that B&R was required to plug them. (EHB Adjudication F.F. ¶¶34-36, 38-39; DEP
Exs. B, E, G, H, R.R. at 458a-470a, 476a-480a, 484a-488a, 490a-493a.) Campola
received these notices and understood that DEP was advising him that B&R was
required to plug those wells. (EHB Adjudication F.F. ¶¶34, 37, 40; H.T. at 31-35,
38-39, R.R. at 707a-711a, 714a-715a; DEP Exs. F, I, R.R. at 482a, 495a.)
On September 12, 2014, DEP sent Campola a notice of violations with
a list of the Wells, advising that the Wells were abandoned, advising that B&R was
required under the 2012 Oil and Gas Act to plug the Wells, and requesting a written
response stating when B&R would comply. (EHB Adjudication F.F. ¶41; DEP Ex.
2
J, R.R. at 497a-501a.) Campola received this notice and in response sent DEP a
letter asserting that DEP had “singled out” B&R, that B&R was “not in any position
to plug any wells at this time,” and that “B&R’s intent was never to plug the wells,
but to produce them.” (EHB Adjudication F.F. ¶42; DEP Ex. K, R.R. at 578a.)1 In
this letter, Campola also requested that DEP “allow us to fix problems without DEP
interference.” (EHB Adjudication F.F. ¶42; DEP Ex. K, R.R. at 578a.) On June 4,
2015, DEP again sent Campola a notice of violations with respect to the Wells.
(EHB Adjudication F.F. ¶43; DEP Ex. L, R.R. at 580a-657a.) Campola received
this notice and responded that B&R had difficulties that affected its ability to bring
the Wells into production, but did not commit to plugging any of the Wells. (EHB
Adjudication F.F. ¶44; DEP Ex. M, R.R. at 659a.) DEP also informed Campola in
meetings and telephone conversations in 2014 and 2015 that the Wells were
abandoned and must be plugged. (EHB Adjudication F.F. ¶¶46-49; H.T. at 115-18,
R.R. at 791a-794a.) DEP requested in at least one of these meetings that Campola
provide a schedule for bringing the Wells into compliance, but Campola did not
provide any such schedule. (EHB Adjudication F.F. ¶50; H.T. at 55, 116, 118, R.R.
at 731a, 792a, 794a.)
B&R did not plug any of the Wells following the notices of violations
or return any of the Wells to production. (EHB Adjudication F.F. ¶¶14, 16;
Stipulation ¶¶6, 9.) Campola, as B&R’s managing member, made all operational
decisions for B&R, including decisions on which wells to produce and decisions on
whether to plug wells. (EHB Adjudication F.F. ¶7; Stipulation ¶¶12-13, R.R. at
671a; H.T. at 23, R.R. at 699a.) Campola was involved in a serious car accident in
1
Under the 2012 Oil and Gas Act, an operator is not required to plug inactive wells that it intends
to put in production in the future if it obtains a DEP grant of inactive status. 58 Pa. C.S. §§ 3203,
3214, 3220(a). Neither Petitioners nor DEP discuss whether B&R sought inactive status for any
of the Wells.
3
January 2012, and suffered a stroke in August 2014 for which he was hospitalized
for approximately one month. (EHB Adjudication F.F. ¶¶32, 60-61; Stipulation
¶¶17, 23-24, R.R. at 673a-674a.)
On June 22, 2015, DEP issued the Administrative Order requiring B&R
and Campola to plug the Wells. The Administrative Order found that the Wells were
abandoned wells, that B&R was required to plug the Wells because it was the owner
and the operator of the Wells and that Campola “personally participated” in B&R’s
failure to plug the Wells and was an operator of the Wells. (Administrative Order
Findings ¶¶C, E, H, I, K, R.R. at 2a-3a.)
Petitioners appealed the Administrative Order to the EHB, contending
that it was premature and unwarranted because the Wells were not abandoned wells
and that it could not apply to Campola because he was not an operator of the Wells
and was not liable for B&R’s obligations on a participation theory of liability.
Following discovery, Petitioners filed a motion for partial summary judgment
seeking judgment as a matter of law that the Administrative Order could not apply
to Campola. On July 15, 2016, the EHB granted Petitioners’ motion insofar as it
sought dismissal of DEP’s claim that Campola was liable as an operator of the Wells,
but denied Petitioners’ motion as to Campola’s liability under the participation
theory on the grounds that there were disputed issues of material fact.
Prior to the EHB’s evidentiary hearing on Petitioners’ appeal,
Petitioners and DEP stipulated to a number of facts in the appeal. In this stipulation,
Petitioners admitted that all of the Wells were abandoned wells under the 2012 Oil
and Gas Act, that B&R was required to plug the Wells under Section 3220(a) of the
2012 Oil and Gas Act, 58 Pa. C.S. § 3220(a), and that B&R had not plugged any of
the Wells. (Stipulation ¶¶5-9, R.R. at 671a.) The parties also stipulated that
4
Campola is not the permittee of any of the Wells and is not an operator of the Wells
under the 2012 Oil and Gas Act. (Id. ¶¶10-11, R.R. at 671a.) On November 9, 2016,
the EHB held a one-day evidentiary hearing on the only remaining issue in the
appeal, whether Campola was liable for B&R’s failure to plug the Wells under the
participation theory.
At the evidentiary hearing, DEP introduced in evidence the notices of
violations that it sent between 2011 and 2015, Campola’s responses, and testimony
concerning its meetings with Campola. Campola testified that he made a business
decision that B&R would spend its funds on its producing wells, on bringing wells
into production, and on other expenses, and that it would not spend any funds to plug
any of the Wells. (H.T. at 52-54, 70-71, 101-06, R.R. at 728a-730a, 746a-747a,
777a-782a.) Petitioners contended that Campola could not be liable on the
participation theory because B&R did not have sufficient financial resources to plug
the Wells. Petitioners introduced in evidence B&R profit and loss statements
prepared by Campola for the years 2011 through 2014. (H.T. at 80-82, 88, R.R. at
756a-758a, 764a.) This evidence showed that B&R’s profits for the years 2011
through 2014, net of money that it paid out for expenses, totaled $154,578. (EHB
Adjudication F.F. ¶63; H.T. at 82-86, 98-99, 101, 106-07, R.R. at 758a-762a, 774a-
775a, 777a, 782a-783a.) Campola testified that he paid out $23,000 of B&R’s funds
to himself in 2013. (H.T. at 86, R.R. at 762a.) The profit and loss statements showed
that between 2011 and 2014, B&R also spent approximately $46,000 on legal fees
and approximately $80,000 on line repair costs. (EHB Adjudication F.F. ¶¶64, 66;
H.T. at 99-103, R.R. at 775a-779a.) Campola testified that it costs $20,000 to
$25,000 to plug a well. (H.T. at 71, 74-75, R.R. at 747a, 750a-751a.) Petitioners
did not introduce in evidence any profit and loss statement for 2015, any balance
5
sheets, or any appraised value of B&R’s assets or mineral rights. Petitioners also
argued that B&R’s access to a number of its wells was impeded by disputes with
landowners. Only one of the 47 Wells was affected by these problems, however,
and DEP introduced evidence that this landowner dispute prevented B&R from
producing the well, but did not prevent B&R from plugging it. (H.T. at 57-58, R.R.
at 733a-734a; Certified Record Item 29, Wolford Affidavit.)
On August 9, 2017, following post-hearing briefs of the parties, the
EHB issued its adjudication finding that Campola was liable for B&R’s failure to
plug all 47 of the Wells and dismissing Petitioners’ appeal of the Administrative
Order. The EHB held that under this Court’s decision in Kaites v. Department of
Environmental Resources, 529 A.2d 1148 (Pa. Cmwlth. 1987), and its decision in
Whitemarsh Disposal Corp. v. Department of Environmental Protection, (EHB
Docket No. 97-099-L filed March 20, 2000), 2000 EHB 300, 2000 WL 305765,
Campola was personally liable under the participation theory because he had
knowledge of the violations, intentionally neglected to remedy the violations and
had the authority and duty to address the violations.
The EHB found that Campola had actual knowledge, from the multiple
notices that he received from DEP and his meetings with DEP, that B&R was
required to plug the Wells and that B&R was in violation of the 2012 Oil and Gas
Act. (EHB Adjudication, Discussion at 14-17.) The EHB concluded that Campola’s
conduct constituted intentional neglect because the evidence showed that Campola
made no effort to have B&R plug any of the Wells, actively avoided and resisted
addressing the violations when they were brought to his attention, and “sought to
hold off” DEP’s efforts to have the Wells plugged. (Id. at 18-21.) The EHB rejected
Campola’s argument that his failure to act was not intentional because B&R lacked
6
the financial resources to plug all of the Wells, concluding that “[w]hile B&R had
some financial difficulties, it also had some financial resources that Mr. Campola
decided to spend for other purposes rather than correct the violations.” (Id. at 20-
21.) The EHB made no finding concerning the cost of plugging a well and no finding
that Campola’s testimony on this subject was or was not credible.
The EHB also rejected Campola’s arguments that landowner problems
and his health problems excused the failure to plug the Wells, finding that the
landowner disputes did not prevent B&R from plugging any of the Wells and that
Campola’s health problems interfered with his ability to act for only a limited period
of time. (EHB Adjudication, Discussion at 17, 19-20.) The EHB found that
Campola had the authority and duty to address the violations because he was the sole
member and managing member of B&R, made all operational decisions for B&R,
including decisions on responding to DEP notices of violations and decisions on
spending B&R’s funds, and was the only person who could authorize B&R to
address the violations. (Id. at 21-22.)
In this appeal, Petitioners argue that Campola cannot be individually
liable for B&R’s failure to plug the Wells because his involvement consisted of
inaction and that the EHB imposed liability on Campola based on his status as sole
owner and manager of B&R, rather than his own conduct. Petitioners also argue
that if the Court holds that participation theory liability can be based on intentional
refusal to act, Campola’s liability must be limited to the number of wells that B&R
could have plugged if its resources had been used to plug the Wells. We address
each of these issues in turn.2
2
This Court’s review of the EHB’s adjudication is limited to determining whether the EHB
violated constitutional rights or committed errors of law, or whether any necessary findings of fact
are not supported by substantial evidence. Kiskadden v. Pennsylvania Department of
Environmental Protection, 149 A.3d 380, 387 (Pa. Cmwlth. 2016); Herzog v. Department of
7
Under Pennsylvania law, a corporate officer can be liable in tort for his
own wrongful conduct on behalf of the corporation, even though the corporation is
not a sham and there is no basis for piercing the corporate veil. Wicks v. Milzoco
Builders, Inc., 470 A.2d 86, 89-90 (Pa. 1983); Francis J. Bernhardt, III, P.C. v.
Needleman, 705 A.2d 875, 878 (Pa. Super. 1997); Bank of Landisburg v. Burruss,
524 A.2d 896, 901 (Pa. Super. 1987). This basis of individual liability, known as
the participation theory, is predicated on the corporate officer’s own actions and
participation in the corporation’s wrongful conduct, rather than the corporation’s
status and his relationship to the corporation. Wicks, 470 A.2d at 89-90. In Wicks,
our Supreme Court explained:
“The general, if not universal, rule is that an officer of a
corporation who takes part in the commission of a tort by the
corporation is personally liable therefor; but that an officer of a
corporation who takes no part in the commission of the tort
committed by the corporation is not personally liable to third
persons for such a tort, nor for the acts of other agents, officers
or employees of the corporation in committing it, unless he
specifically directed the particular act to be done or participated,
or cooperated therein.” … Liability under this theory attaches
only where the corporate officer is an actor who participates in
the wrongful acts. Therefore, corporate officers may be held
liable for misfeasance. Nevertheless, corporate officers and
directors may not be held liable for mere nonfeasance. Thus, the
Environmental Resources, 645 A.2d 1381, 1387 (Pa. Cmwlth. 1994). Resolution of conflicts in
the evidence and questions of witness credibility and evidentiary weight are within the EHB’s
exclusive discretion, and this Court must, in determining whether substantial evidence exists, view
the record in the light most favorable to the party that prevailed before the EHB, and give that
party the benefit of all reasonable inferences that can be drawn from the evidence. Kiskadden, 149
A.3d at 387; Herzog, 645 A.2d at 1387. The issues of whether the participation theory can apply
to intentional inaction and whether it can apply to inaction where the company lacked the financial
ability to comply, however, are issues of law. See Kaites, 529 A.2d at 1152. Those issues are
therefore subject to this Court’s plenary, de novo review. Department of Environmental Protection
v. Cumberland Coal Resources, LP, 102 A.3d 962, 970 (Pa. 2014).
8
mere averment that a corporate officer should have known the
consequences of the liability-creating corporate act is subject to
a motion to strike for impertinence and proof of that averment
alone is insufficient to impose liability.
Id. at 90 (quoting 3A Fletcher, Cyclopedia of the Law of Private Corporations §
1137 (1975)) (citations omitted).
The participation theory applies to officers of limited liability
companies. Commonwealth ex rel. Corbett v. Manson, 903 A.2d 69, 71, 73 (Pa.
Cmwlth. 2006). Although it was initially adopted in tort actions, this Court has held
that the participation theory applies to statutory violations and is a basis for
imposition of individual liability on company officers in DEP administrative orders.
Id. (limited liability company officer held liable for civil penalties for company’s
violations of consumer protection statute under participation theory); Herzog v.
Department of Environmental Resources, 645 A.2d 1381, 1392-93 (Pa. Cmwlth.
1994) (corporate representative was liable for environmental violations and was
subject to DEP compliance order under participation theory); see also Kaites, 529
A.2d at 1151-52 (analyzing corporate officer liability for environmental violation
under participation theory but holding that requirements were not satisfied).
Petitioners and amicus curiae Pennsylvania Independent Oil & Gas
Association (Amicus) contend that the participation theory requires proof that the
defendant committed an affirmative act and cannot apply where his conduct
consisted of inaction, no matter how knowing, intentional and deliberate the failure
to act may have been. We do not agree.
The law is clear that a defendant is not liable under the participation
theory merely because of his status and responsibilities as a company officer or
because he is the sole individual directing the company’s actions. Longenecker v.
Commonwealth, 596 A.2d 1261, 1263 (Pa. Cmwlth. 1991); Kaites, 529 A.2d at
9
1151-52. The law is also clear that a company officer is not liable on the
participation theory for failure to stop or correct conduct of other company
employees where he had no actual knowledge of that conduct. Wicks, 470 A.2d at
90; Shay v. Flight C Helicopter Services, Inc., 822 A.2d 1, 19-20 (Pa. Super. 2003).
These principles do not, however, require that the courts exempt
intentional and knowing wrongdoing of corporate officers from liability simply
because their conduct consists of deliberate inaction. In Wicks, the Supreme Court
did not hold that inaction can never be sufficient to support participation theory
liability. Rather, the Court held that “mere nonfeasance” is not sufficient. 470 A.2d
at 90 (emphasis added). The Court, moreover, gave as an example of “mere
nonfeasance” a claim based on the fact that the corporate officer “should have
known” of the wrongful act. Id. The conduct that the Court held sufficient to
support participation theory liability in Wicks consisted of directing that work on a
development proceed with knowledge that construction of the development created
an unreasonable risk of damage to the plaintiffs’ property. Id.
This Court has held that intentional and knowing inaction can be
sufficient to support participation theory liability for a statutory violation. In Kaites,
this Court analyzed the participation theory in the context of an environmental
violation and held it requires proof that the corporate officer committed “intentional
neglect or misconduct” that contributed to the violation. 529 A.2d at 1152.
Petitioners and Amicus argue that the Court’s language in Kaites
concerning intentional neglect should be disregarded as dicta. Statements in a
court’s opinion that are not essential to its decision are dicta and have no precedential
value. Valley Township v. City of Coatesville, 894 A.2d 885, 889 (Pa. Cmwlth.
2006); City of Lower Burrell v. City of Lower Burrell Wage & Policy Committee,
10
795 A.2d 432, 437 n. 7 (Pa. Cmwlth. 2002). The Court in Kaites found that the
corporate officer was not liable because the only evidence on which the participation
theory was based consisted of his status and duties as president and chief executive
officer of the corporation. 529 A.2d at 1151-52. The Court therefore could have
decided Kaites without ruling that intentional neglect was sufficient to support
liability. Instead, however, the Court repeatedly discussed intentional neglect as a
standard that satisfies the requirements of the participation theory in concluding that
the corporate officer was not liable and noted that there was evidence that the
corporate officer had twice attempted to correct the violation. Id. The Court in
Kaites ruled that the corporate officer was not liable under the participation theory
because “there is no specific evidence demonstrating [p]etitioner’s intentional
neglect or misconduct which would support imposing individual liability on him”
and because there was a “lack of sufficient evidence demonstrating that [p]etitioner
has contributed, by personal actions of neglect or misconduct, to the existing
nuisance.” Id. at 1152. In addition, the Court rejected the argument that individual
liability should be imposed based on the defendant’s corporate responsibilities alone
on the grounds that “under Pennsylvania law, the public interest will not be violated
by requiring specific evidence of acts of intentional neglect or misconduct before
imposing individual liability on a corporate officer for abating a public nuisance.”
Id. Given its central role in the Court’s reasoning, the discussion in Kaites of
intentional neglect as a basis for liability under the participation theory cannot be
casually dismissed as dicta.
Moreover, in Manson, this Court specifically upheld liability under the
participation theory for intentional and knowing failure to act. In that case, Manson,
the chief executive officer of Unclaimed Freight Company, LLC, was found liable
11
at trial for the company’s consumer protection law violations. This Court affirmed
the trial court’s judgment against him on the ground that proof that he knew that the
company was violating the statute and did not stop the violations was sufficient to
establish liability under the participation theory. 903 A.2d at 73. The Court
explained:
Unclaimed Freight took orders and received funds from
customers for merchandise when it knew or should have known
that the merchandise would not be delivered to those customers.
Manson was aware of this practice, controlled the company’s
day-to-day operations and the company’s deceptive practice
continued under his control. Thus, Manson participated in or
cooperated in the wrongful act.
Id.None of the cases cited by Petitioners or Amicus holds that a corporate
or limited liability company officer cannot be held personally liable on the
participation theory for intentional and knowing refusal to act. To the contrary, in
those cases where participation theory liability has been rejected, there was no
evidence that the individual had knowledge of the company’s wrongful conduct and
made a choice to not take action. See Chester-Cambridge Bank & Trust Co. v.
Rhodes, 31 A.2d 128, 131-32 (Pa. 1943) (corporate officers had no knowledge of or
involvement in the breach of trust, which was a transfer of property by other
employees of the corporation); Cohen v. Maus, 147 A. 103, 104 (Pa. 1929) (directors
of corporation were not individually liable “for a conversion of property about which
they knew nothing, merely because, if they had examined the books of the
corporation, they might have ascertained that the conversion had taken place”);
Swentzel v. Penn Bank, 23 A. 405, 415 (Pa. 1892) (bank directors not liable for fraud
committed by others of which they had no knowledge); Longenecker, 596 A.2d at
12
1262-63 (only basis on which trial court imposed liability was defendant’s status as
sole officer and shareholder, defendant was not liable because “there is no evidence
that Longenecker intentionally neglected the properties in question”); Shay, 822
A.2d at 19-20 (corporation president not liable on participation theory because he
had no involvement in tortious act, which was committed by a mechanic, and had
no knowledge that the mechanic’s work was done improperly); Brindley v.
Woodland Village Restaurant, Inc., 652 A.2d 865, 870 (Pa. Super. 1995) (no
evidence that the condition of the premises on which tort liability was based “was a
result of an active, knowing participation by” individual defendants); Hager v.
Etting, 408 A.2d 856, 858-59 (Pa. Super. 1979) (tort claim was for failure to discover
and warn of dangerous condition of land).3
Finally, even if this Court’s precedents did not resolve the issue,
adoption of an absolute rule that intentional and knowing inaction cannot support
participation theory liability could create the anomalous result of deterring
compliance with statutory obligations. If intentional and knowing refusal to take
action were shielded from individual liability, a corporate officer could be placed at
greater risk of personal liability by taking affirmative steps to comply with the law,
if those efforts proved unsuccessful, than if he chose to have his company ignore its
3
The remaining cases argued by Petitioners and Amicus either held that the requirements of the
participation theory were met, see Roethlein v. Portnoff Law Associates, Ltd., 25 A.3d 1274, 1280
(Pa. Cmwlth. 2011) (en banc) (corporation’s principal held liable on participation theory), rev’d
on other grounds, 81 A.3d 816 (Pa. 2013); Commonwealth ex rel. Corbett v. Snyder, 977 A.2d
28, 44-48 (Pa. Cmwlth. 2009) (corporation employees held liable on participation theory); or did
not rule on whether liability could be imposed on the participation theory. See Nordi v. Keystone
Health Plan West Inc., 989 A.2d 376, 384-85 (Pa. Super. 2010) (absence of affirmative conduct
defeated underlying cause of action against company for failure to pay insurance claim, not
participation theory liability); Gordon v. Pennsylvania Blue Shield, 548 A.2d 600 (Pa. Super.
1988) (absence of affirmative conduct defeated cause of action against corporation and no claim
was asserted on participation theory or against any corporate agent).
13
obligations. Petitioners’ and Amicus’s argument that intentional inaction can never
support participation theory liability must therefore also be rejected as a matter of
public policy.
Petitioners’ argument that the EHB imposed liability on Campola based
on his status as owner and manager of B&R likewise fails. The EHB referred to
Campola’s status as sole manager, owner and employee several times in its analysis,
stating that because “all B&R Resources’ activities were conducted exclusively by
Mr. Campola[,] [i]t is difficult therefore to speak of actions by B&R Resources as
independent of Mr. Campola and vice versa,” that Campola was “the only actor on
behalf of the company” and “in essence his actions are B&R Resources’ actions,”
and that “he alone managed and controlled the Abandoned Wells.” (EHB
Adjudication, Discussion at 12 n.1, 20, 22.) The EHB, however, did not find that
Campola was liable by virtue of that status.
Rather, the EHB based its conclusion that Campola was liable on the
participation theory on its factual determinations that he knew of B&R’s obligation
to plug the Wells, that he made a decision that B&R would not plug any of the Wells,
and that he had B&R spend its financial resources for purposes other than complying
with DEP’s directions to plug the Wells. (EHB Adjudication, F.F. ¶¶7, 34-44, 46-
50, 53, 64-66, Discussion at 14-21.) Those findings concerning Campola’s
knowledge and conduct are supported by the record. (DEP Exs. B-C, E-M, R.R. at
458a-470a, 472a, 476a-480a, 482a, 484a-488a, 490a-493a, 495a, 497a-501a, 578a,
580a-657a, 659a; H.T. at 23, 31-35, 52-55, 103-04, 115-19, R.R. at 699a, 707a-711a,
728a-731a, 779a-780a, 791a-795a; Stipulation ¶¶12-13, R.R. at 671a.)
14
Petitioners also contend that liability cannot be imposed on Campola
for wells that B&R lacked the financial resources to plug. This argument is
meritorious.4
A corporate or limited liability company officer is liable for a statutory
violation under the participation theory only if there is a causal connection between
his wrongful conduct and the violation. Kaites, 529 A.2d at 1152 (corporate officer
could not be liable for environmental violation absent “sufficient evidence
demonstrating that [he] has contributed, by personal actions of neglect or
misconduct,” to the violation). Here, B&R’s failure to plug each of the 47 Wells
constituted separate violations of Section 3220(a) of the 2012 Oil and Gas Act, not
a single unitary violation. (See EHB Adjudication at 1, F.F. ¶¶14-15, 65,
Conclusions of Law ¶¶7-11.) There was no claim or evidence that failure to plug
one of the Wells had any effect on the condition of any of the other Wells or the
violations with respect to the other Wells.
Campola’s wrongful conduct found by the EHB consisted of an
intentional decision that B&R would not plug the Wells and that its financial
resources would be used for purposes other than plugging the Wells. Such conduct
can only have a causal effect if B&R had an ability to plug those Wells. Because
Campola is individually liable only for those violations to which his conduct
contributed, he can therefore be liable only for those wells that B&R could have
plugged if he had undertaken to bring B&R into compliance with DEP’s directives.
4
Contrary to DEP’s contention, Petitioners did not waive this argument. Petitioners argued before
the EHB that B&R did not have sufficient financial resources to plug all of the Wells and that
Campola could not be liable on the participation theory if compliance was impossible, and
Petitioners introduced evidence of B&R’s financial condition and the cost of plugging a well.
(Petitioners’ EHB Post-Hearing Br. at 2, 18, 20-23, R.R. at 847a, 863a, 865a-868a; H.T. at 74-75,
80-86, 88, 98-101, 106-07, R.R. at 750a-751a, 756a-762a, 764a, 774a-777a, 782a-783a.)
15
The EHB did not find that there was any possibility that B&R could
have plugged all 47 of the Wells or even a high percentage of the Wells. The EHB
held only that B&R had “some financial resources that Mr. Campola decided to
spend for other purposes rather than correct the violations.” (EHB Adjudication,
Discussion at 20-21) (emphasis added). Because there was no showing or finding
that Campola’s decision that B&R would not plug the Wells contributed to the
failure to plug all 47 Wells, the EHB’s ruling that Campola is liable for all 47 Wells
cannot stand.
The EHB did not make any finding as to how many of the Wells B&R
could have plugged, if any, nor did it make sufficient factual findings from which
such a determination can be made. Notably, although Campola testified concerning
the cost of plugging a well, the EHB made no finding as to the credibility of this
testimony. Remand to the EHB is therefore required for the EHB to adjudicate the
extent of Campola’s liability, if any.
Accordingly, we reverse the EHB’s dismissal of Campola’s appeal and
its holding that Campola is liable for B&R’s statutory obligation to plug all 47 of the
Wells. Because the EHB’s findings are insufficient, we remand this matter to the
EHB for additional findings of fact as to how many, if any, of the Wells could have
been plugged if Campola had caused B&R to make reasonable efforts to plug the
Wells and for an adjudication of Campola’s liability in accordance with those
findings.
__________ ___________________________
JAMES GARDNER COLINS, Senior Judge
16
IN THE COMMONWEALTH COURT OF PENNSYLVANIA
B&R Resources, LLC and :
Richard F. Campola, :
:
Petitioners :
:
v. : No. 1234 C.D. 2017
:
:
Department of Environmental :
Protection, :
:
Respondent :
ORDER
AND NOW, this 15th day of March, 2018, the order of the
Environmental Hearing Board (EHB) in the above-captioned matter is REVERSED.
This matter is REMANDED to the EHB for further proceedings consistent with this
opinion.
Jurisdiction relinquished.
__________ ___________________________
JAMES GARDNER COLINS, Senior Judge