The Georgia Department of Transportation and a Tennessee-based contractor must pay a record $1.5 million fine and spend about $1.3 million on cleanup to settle a federal complaint accusing them of polluting Georgia streams with rocks and soil cast off during roadwork.

It is the largest environmental penalty ever against the Georgia DOT, according to the DOT and the state Environmental Protection Division. It is also one of the largest federal penalties of its kind ever assessed under the Clean Water Act, according to the Environmental Protection Agency.

The DOT and the contractor deny any wrongdoing but say they are settling to put years of legal fighting behind them.

The DOT hired its contractor, Tennessee-based Wright Brothers, to dispose of rock and soil from 2004 to 2007 from two Georgia highway projects in Rabun County, widening U.S. 76 and U.S. 441. The federal government says that with the DOT's approval, Wright Brothers buried all or part of seven trout streams and rerouted the water through pipes. An investigator in the case, Joel Strange, said the streams were covered by about 1 million cubic yards of dirt and rock and that some of the stream water eventually flowed toward Tallulah Falls.

The penalties come under a settlement and are not final; they are subject to a 30-day comment period and court approval.

“Dumping dirt and waste rock into our nation’s waters threatens water quality and aquatic habitats,” Cynthia Giles, assistant administrator for the EPA’s Office of Enforcement and Compliance Assurance, said in the statement. “Today’s settlement will restore damaged streams, protecting trout habitat and recreational opportunities for the people of northeastern Georgia.”

The money that goes to cleanup may not go directly to the sites concerned in the case. Instead, the DOT and the contractor will spend about $1.3 million to buy "mitigation credits" that will go toward restoration in the general area. "They’re going to try to restores what they can," Strange said. "But on a lot of these areas, there’s just so much over it that the chance of doing more harm is greater if we have them restore it."

He added, "It will recover, but it will take some time."

The EPA says it does not have exact data on fish and wildlife harmed by the actions.

It is legal in some cases to dump dirt in the path of water, but there are strict rules, environmental officials said. It can be legal to dump in a drainage ditch, but it is unlikely the government would permit dumping in a trout stream, said Bert Langley, manager of the mountain district for the state EPD.

Langley said this case was an important one in raising awareness about following the rules for dumping.

The state DOT is Georgia's largest violator of state environmental erosion rules because of the large amount of soil that comes off its road projects each year. The DOT has attempted to get state law changed to exempt it from state environmental fines, under the theory that such fines simply transfer state money from one agency to another.

In this case, DOT spokesman David Spear said the department did not violate the law but settled in order to put the dispute behind it.

Spear added, “we are the largest land-disturbing entity in the state,” and that of about 400 digging projects a year, 98 percent had produced no environmental issues.

Spear said the DOT would not comment on specifics of the allegations because the settlement was still pending, but he said in general the department disagreed with the EPA about whether the waters in question were federal waters, were streams or drainage ditches, or were even in existence.

The DOT also would not disclose how much of the fine would be paid by the department and how much by the contractor until after the public comment period is closed, saying only that "both parties will bear significant portions" of it.

The contractor was equally adamant. “We have been entangled with the EPA for five years, spending hundreds of thousands of dollars with no end in sight," said Stephen Wright, president of Wright Brothers. "We settled because it looked like we were going to run out of credit before the U.S. government [did]. Other than that, my grandmother told me as a young man if I had nothing nice to say ... say nothing."

The U.S. stands by its complaint, said Wyn Hornbuckle, a spokesman for the U.S. Department of Justice, which filed the action.