IN THE COMMONWEALTH COURT OF PENNSYLVANIA

Clean Air Council, The Delaware : Riverkeeper Network, and : Mountain Watershed Association, Inc., :

: Petitioners :

:

v. : No. 309 C.D. 2019

: Commonwealth of Pennsylvania, : Department of Environmental : Protection, :

: Respondent :

Department of Environmental : Protection, :

: Petitioner :

:

v. : No. 313 C.D. 2019

: Argue d: June 10, 2020 Clean Air Council, The Delaware : Riverkeeper Network, Mountain : Watershed Association, Inc. : and Sunoco Pipeline, L.P., :

: Respondents :

BEFORE: HONORABLE MARY HANNAH LEAVITT, President Judge 1

HONORABLE RENÉE COHN JUBELIRER, Judge HONORABLE P. KEVIN BROBSON, Judge HONORABLE PATRICIA A. McCULLOUGH, Judge HONORABLE ANNE E. COVEY, Judge HONORABLE MICHAEL H. WOJCIK, Judge HONORABLE ELLEN CEISLER, Judge

1 This case was assigned to the opinion writer before Judge Brobson succeeded Judge Leavitt as President Judge

.2

OPINION BY JUDGE WOJCIK FILED: February 1 6 , 2021

In these consolidated appeals, the Clean Air Council, The Delaware

Riverkeeper Network, and Mountain Watershed Association, Inc. (collectively,

Objectors), and the Department of Environmental Protection (DEP), petition for

review of the order s of the Environ mental Hearing Board (EHB) denying the fee

applications of Objectors and Sunoco Pipeline, L .P. (Sunoco) filed pursuant to the

provisions of T he Clean Streams Law

. 2 Also before the Court is Sunoco’s

Application to Quash DEP’s appeal. We grant the Application to Quash , quash

DEP’s appeal, and affirm EHB’s order.

On February 13, 2017, DEP granted a total of 20 permits to Sunoco, 3

for erosion and sediment control 3 and 17 for water obstruction and encroachme nt, 4

2 Act of June 22, 1937, P.L. 1987, as amended , 35 P.S. §§691.1

- 691.1001.

3 These are referred to as “Chapter 102” permits, granted under the provisions of Chapter 102 of DEP’s regulations, 25 Pa. Code §§102.1

- 102.51. See, e.g.

, Becker v. Department of
Environmental Protection (Pa. Cmwlth., No. 560 C.D. 2017, filed December 1, 2017), slip op. at
15 (“ Under T he Clean Streams Law and its regulations promulgated at Chapter 102 of Title 25 of the Pennsylvania Code, [DEP] has the authority to issue orders to prevent the pollution of waters of the Commonwealth, which are defined very broadly to include .

. . ‘ any a nd all rivers, streams

. . . or parts thereof. ’ Section 1 of T he Clean Streams Law, 35 P.S. §691.1[.]”); Delaware County Community College v. Fox , 342 A.2d 468

, 479

- 80 (Pa. Cmwlth. 1975) (holding that
DEP’s regulations in Ch apter 102 of the Pennsylvania C ode, relat ing to erosion and
sedimentation control

, provide protection against secondary polluting effects should they become
imminent )

.

4 These are referred to as “Chapter 105” permits, granted under the provisions of Chapter 105 of DEP’s regulations, 25 Pa. Code §§ 105.1

- 105.64. As we have previously explained:

The [ Dam Safety and Encroachments Act (DSEA)

, Act of November 26, 1978, P.L. 1375, as amended , 32 P.S. §§ 693.1

- 693.27 ], similar to T he Clean Streams Law, provides [DEP’s] statutory authority for Chapter 105 regulations governing water obstructions and encroachments, the scope of which is broadly (Footnote continued on next page...)3

which Sunoco had sought relating to its plan to construct the Pennsylvania Pipeline

Project also known as the Mariner East 2 natural gas pipeline. EHB Op. at 2. This

decision was appealed to the EHB on Feb ruary 14, 2017

, by the Organizations

, i d.

,
which led to a series of additional appeals, filings, and negotiations resulting in a

settlement agreement between Objectors and the DEP , which stated that it

generally provides for the development or revision of [DEP] policies and procedures relating to future natural gas pipelines in consideration for [Objectors] withdrawing their appeal. The settlement provides for the establishment of a stakeholder group on pipeline construction, and for the online availabili ty of pipeline permit applications and review documents. No part of the settlement altered any of the 20 permits under appeal, [a February 8, 2018 consent order and agreement between DEP and Sunoco] , or the various other stipulated orders entered into by all the parties. [Objectors] received $27,500 in reimbursement of cos ts and attorney’s fees from [DEP] in the settlement and

(continued...)

delineated to include “[a]ll water obstructions and encroachments

. . . located in, along, across or projecting into any watercourse

, floodway or body of water, whether temporary or permanent.” Section 4 of the DSEA, 32 P.S. §693.4 (emphasis added).

Becker , slip op. at 16. See also Section 105.15(b) of DEP’s regulations, 25 Pa. Code §105.15(b) (“ For structures or activities where water quality certification is required under section 401 of the Clean Water Act (33 U.S.C.A. §1341), an applicant

. . . s hall prepare and submit to [DEP] for review, an environmental assessment containing the information required by subsection (a) for every dam, water obstruction or encroachment located in, along, across or projecting into the regulated water of this Commonwealth .”); Solebury Township v. Department of Environmental

Protection , 9 28 A.2d 990, 999 (Pa. 2007) (“[W]e conclude that, at least under the circumstances
present ed in this case, challenges to T he Clean Streams Law aspects of the issuance of Section 401 Certifications are ‘proceedings pursuant to this act’ for purposes of the fee

- shifting provisions of Section 307 [of The Clean Streams Law].”).4 agreed not to seek further reimbursem ent for fees and costs from [DEP]

. Id. at 4. Sunoco was not a party to this settlement agreement. Id.

Objectors then filed an application for costs and fees with EHB,
seeking to recover $228,246 from Sunoco for Objectors’ efforts relating to certain

segments of their EHB appeal and the c osts incurred in the fee application process

itself. EHB Op. at 5

- 6. Sunoco responded with an application of its own,
requesting $298,906.12 in costs and fees from Objectors, in order to partially cover

the expenses Sunoco had incurred by defending again st the EHB appeal, as well as

any costs and fees resulting from the fee application process. Id. at 6.

On February 19, 2019, in a divided opinion, EHB denied both

applications. Noting that Sect ion 307(b) of T he Clean Streams Law 5 affords wide

latitude to award costs and fees, the EHB majority stated that it applies a three

- step
process when a party seeks such compensation from DEP: “ (1) [EHB determines]

whether the fees have been incurred in a p roceeding pursuant to T he Clean Streams

Law; (2) [EHB then determines] whether the applicant has satisfied the threshold

criteria for an award; and (3) if those two prongs are satisfied, [EHB] then

determine [s] the amount of the award. ” EHB Op. at 7.

However, the majority highlighted that different goals and

responsibilities were involved in this matter , as the applications under

consideration sought costs and fees from private parties, rather than from

Commonwealth entities

. EHB Op. at 7

- 8. The majo rity stated that “ the standard

5 3 5 P.S. §691.307(b). Section 307(b) states, in relevant part: “The [EHB], upon the request of any party, may in its discretion order the payment of costs and attorney’s fees it
determines to have been reasonabl y incurred by such par ty in proceedings pursuant to [T he Clean Streams Law].”5

for awarding fees against any private party need not be concomitant with the

standard for fees against [DEP]

. ” Id. at 8.

A ccordingly, the majority held that it should impose a more stringent

test, in which a private party could be liable for such costs and fees only if EHB

found that the private party “ engaged in dilatory, obdurate, vexatious, or bad faith

conduct in the course of prosecuting or defending [an] appeal [ to the EHB.]” EHB

Op. at 10. The majority reasoned tha t this would protect permittees’ right s to due

process in the context of a third

- party appeal and would not result in permittees

being “ dissuaded from vigorously protecting their interests in those proceedings in

good faith. ” Id. at 9.

In support of this conclusion, the majority cited and discussed the

Pennsylvania Supreme Court’s opinion in Lucchino v. Department of

Environmental Protection , 809 A.2d 264 ( Pa. 2002) , which affirmed EHB ’s use of

a bad faith standard in determining whether to impose an award of costs and fees

against a private individual. EHB Op. at 9

- 10. 6 Furthermore, the majority

reasoned that, “[f] or purposes of the instant appeal , no other credible, workable

alternative to the bad faith standard has been proposed.” Id. at 10. Ap plying this

standard to the facts herein , the majority found that neither Objectors , nor Sunoco,

had operated in bad faith during the course of O bjector s’ appeal and, on that basis,

denied their respective fee applications. Id. at 11

- 17.

In contrast, alt hough the EHB minority agreed that neither Objectors

nor Sunoco w as entitled to attorney’s fees under the circumstances, the minority

6 In Lucchino , the Supreme Court noted that EHB determined that the objector in that

case had used the administrative appeal process in bad faith, to do nothing more than harass DEP and the affected permittee. 809 A.2d at 269.6

disputed the propriety of using the bad faith test to evaluate such fee applications.

EHB Op. at 19. The minority stated that there is no legal basis for applying a bad

faith standard, nor for using different tests depending upon whether the application

is lodged against a government entity or a private party. Id. at 19

- 21.

Rather, the minority mai ntained that Section 30 7(b) of T he Clean

Streams Law clearly and unambiguously establishes a uniform standard that

permits EHB, upon request, to assess costs and fees a t its discretion , without any

need for a finding of bad faith. EHB Op. at 20. The minority distinguished

Lucchino from this matter, arguing that while it read Lucchino as requiring the

EHB to apply a bad faith standard when considering a fee application lodged

against a third

- party appellant, no such mandate exists for those directed towards

permittees. Id. at 21.

In addition, the minority did not “believe that allowing attorney’ s fee

awards against permittees [would] have a ‘chilling effect’ on permit applicants.”

EH B Op. at 21

. The minority explained that this was so because the interests at
play are different for permit applicants compared to likely third

- party appellants

,
such as Objectors herein, who might otherwise be discouraged from making their

voice heard if an appeal mounted in good faith could nonetheless result in a hefty

financial penalty. Id. Furthermore, the minority noted that Section 307(b)’s fee

shifting provision is to be liberally construed. The minority determined that, given

a permittee’s role in the permitting process and any resultant appeals, “ if the law

mandates an award of attorney’ s fees under T he Clean Streams Law [to the

appellant]

, . . . a permittee should shoulder at least some of its rightful

responsibility .” Id. at 21

- 25.7 Both Objectors and DEP separately appealed EHB’s decision to this

Court, and the appeals were consolidated. Subsequently, Sunoco intervened in the

appeal s and filed the Application to Quash seeking to quash DEP’s appeal, arguing

that DEP does not have sta nding to appeal the EHB’s fee application decision.

Application to Quash ¶¶1

- 5.

I.

Preliminarily, w ith respect to the Application to Quash

, we n ot e that

DEP submitted a brief to EHB regarding permittee liability under Section 307(b)

of T he Clean Streams Law

, and participated in oral argument before EHB. See
DEP’s Answer to Application ¶¶12

- 18. It appears that this was done with the

assent of both O bjectors and Sunoco. Id. However, the record of this case does

not show that DEP ever formally sought interven tion in the attorney’s fee and cost

a pplication proceedings. See Section 4(e) of the Environmental Hearing Board

Act 7 (“Intervention.

-- Any interested party may interven e in any matter pending

before [EHB].”).

7 Act of July 13, 1988, P.L. 530, 35 P.S. §7514(e)

. Regarding the application of Section 4(e), we have stat ed:

[I] n the context of intervention, the phrase “any interested party” actually means any person or entity interested, i.e. , concerned, in the proceedings before [EHB]

. The interest required, of course, must be more than a general interest in the proceedings; it must be such that the person or entity seeking intervention will either gain or lose by direct operation of [EHB]’ s ultimate determination. See
Black ’ s Law Dicti onary 730 (5th ed. 1979); see also [Section 101 of the Administrative Agency Law,] 2 Pa. C.S. §101 [,] wherein a party is defined as “[a]ny person who appears in a proceeding before an agency who has a direct interest in the subject matter of such proceedin g.” To interpret this phrase any differently, under (Footnote continued on next page...)8 The t raditional concept of standing “is rooted in the notion that for a

party to maintain a challenge to an official order or action, he must be aggrieved in

that his rights have been invaded or infringed.” Frankl in T o w nshi p v. Dep artmen t
of Env ironmen t

a l Res ources , 452 A.2d 718, 719 (Pa. 1982). “[A] party who is not

negatively affected by the matter he seeks to challenge is not aggrieved, and thus,

has no right to obtain judicial resolution of his challenge.” Ci ty of Philadelphia v.

Com monwealth , 838 A.2d 566, 577 (Pa. 2003). To that end , an individual’s

standing in a matter is normally contingent upon their ability to articulate an

interest that is substantial, direct, and immediate. See

, e.g. , Fumo v. City of

Philadelphia , 972 A.2d 487, 496 (Pa. 2009); Dep artmen t of Env ironmen t a l

Res ources v. Jubelirer , 614 A.2d 199, 203 (Pa. 1989); William Penn Parking

Garage, Inc. v. City of Pittsburgh , 346 A.2d 269, 280

- 83 (Pa. 1975).

However, the notion of trad itional standing does not apply when

dealing with appeals from administrative agencies. Our Supreme Court has held :

[B] y virtue of Section 702 of the Administrative Agency Law, [ 2 Pa. C.S. §702,] neither party status nor traditional aggrievement is neces sary to challenge actions of an administrative agency. Rather, standing to appeal administrative decisions extends to “persons,” including

non

- parties, who have a “direct interest” in the subject

(continued...)

these circumstances, would lead to an absurd and unreasonable
result as well as render the [Environmental Hearing Board] Act ’ s intervention provision ineffective; presumably, neither of which the legisla ture intended here. Section 1922(1), (2) of the Statutory Construction Act of 1972, 1 Pa. C.S. § 1922(1), (2)

.

Browning

- Ferris, Inc. v. Department of Environmental Resources , 598 A.2d 1057, 1060

- 61 (Pa. Cmwlth. 1991).9 matter, as distinguished from a “direct, immediate, and sub stantial” interest. [

Application of El Rancho Grande

, Inc. , 437 A.2d 1150, 1152 (Pa. 1981 ) ] (quoting 2 Pa. C.S. §702). A direct interest requires a showing that the matter complained of caused harm to the person’s interest. South Whitehall Township Poli ce Service v. South Whitehall Township

, [ 555 A.2d 793, 795 ( Pa. 1989) ]

. Although not the full equivalent of “direct, immediate, and substantial,” the direct interest requirement retains the function of differentiating material interests that are discrete to some person or limited class of persons from more diffuse ones that are common among the citizenry

. Citizens Against Gambling Subsidies, Inc. v. Pennsylvania Gaming Control B oar d

, 916 A.2d 624, 628 (Pa. 2007) ( Citizens )

.

Nevertheless, this relaxed test for standing does not excuse a party

from formally intervening at the administrative level. Mere participation, even

rising to the level of filing a brief or engagin g in oral argument before an

administrative agency , is not enough to con fer standing to a party in the absence of

formal, approved intervention. As the Pennsylvania Supreme Court has observed:

This conclusion is in accord with our finding in Citizens that permitting an appeal absent intervention in the proceedings before th e [Pennsylvania Gaming Control] Board is “inconsistent with orderly rules of procedure and would foster untenable impracticalities in terms of the development of an essential record for consideration on appeal.” 916 A.2d at 629

. . . .
Further, [p] etitioners’ attempt to distinguish Citizens on the ground that the petitioners there chose not to intervene is unpersuasive. The salient fact in Citizens was simply that the petitioners did not intervene when the y had the opportunity to do so. Moreover, the fact that [p] etitioners participated at the hearing without intervening does not afford them standing. See Stanbro v. Zoning Hearing Board of Cranberry Township

, [ 566 A.2d 1285, 1287 ( Pa. Cmwlth. 1989) ] (holding that10 participation at the trial court level by filing a brief and participating in oral argument without intervention is insufficient to be accorded standing to appeal).

Soc iet y Hill Civic Ass ociatio n v. P ennsylvania Gaming Control B oar d , 928 A.2 d

175, 183 (Pa. 2007) ( footnote and emphasis omitted ). Therefore, becaus e DEP did

not formally intervene before EHB, DEP does not have standing under the

Administrative Agency Law to appeal EHB’s decision deny ing Objector s’

A pplication.

As a result, the only basis upon which DEP could possess standing in

this matter would be pursuant to its statutory powers. In Pennsylvania Game

Commissio n v. Dep artmen t of Env ironmental Res ources , 555 A.2d 812, 815 (Pa.

1989) (citation omitted), our Supreme Court discussed the nature of how an agency

may possess legislatively established standing:

Although our law of standing is generally articulated in terms of whether a would

- be litigant has a “substantial interest” in the controverted matter, and whether he has been “aggrieved” or “adversely affected” by the action in question, we must remain mindful that the purpose of the “standing” requirement is to insure that a legal challenge is by a proper party.

. . . The terms “substantial interest ,” “aggrieved [,] ” and “adversely affected” are the general, usual guides in that regard, but they are not the only ones. For example , when the legislature statutorily invests an agency with certain functions, duties and responsibilities, the agency has a legislatively conferr ed interest in such matters. From this it must follow that, unless the legislature has provided otherwise, such an agency has an implicit power to be a litigant in matters touching upon its concerns. In such circumstances the legislature has implicitly o rdained that such an agency is a proper party litigant, i.e. , that it has “standing.”11 In that case, the Supreme Court considered the Pennsylvania Game

Commission’s statutory authority under the Game and Wildlife Code, 8 and

concluded that it “ has a substa ntial interest in the lands and wildlife under its

control. This alone would be sufficient to give it standing to legally challenge any

action which allegedly would have an adverse impact on those interests. ” 555

A.2d at 816. In addition, the Supreme Co urt noted that a specific provision of the

Dam Safety and Encroachments Act ( DSEA ) “ expressly gives the Commission the

power to enforce th [at statute ] where a violation of it would adversely impact upon

th e property under the Commission’ s control. ” Id. On this alternate basis, the

Supreme Court “conclude[d] that the Commission had standing to raise the DSEA

in its challenge to [the Department of Envir onmental Resources ’ 9 ] issuance of [a]

solid waste permit in this case. ” Id.

The General Assembly has expressly conferred upo n DEP the

authority to enforce T he Clean Streams Law. See Section 1901

- A (20) of T he

Administrative Code of 1929 10 (“ The Departme nt of Environmental Resources

shall

. . . continue to exercise the powers and perform the duties by law heretofore

vested in and imposed upon

. . . [t] he Department of Health by the act

. . . known

as ‘ The Clean Streams Law [.] ’ ” ) . Specifically

, under Sectio n 5(5) of T he Clean

Streams Law, DEP has the power to “[r] eview and take appropriate action on all

8 34 Pa. C.S. §§101

- 2965.

9 DEP was formerly named the Department of Environmental Resources. Adams
Sanitation Co

. v. Pennsylvania Dep artment of Environmenta l Prot ection , 683 A.2d 981, 982 n.1 (Pa. Cmwlth. 1996), aff’d on other grounds , 715 A.2d 390 (Pa. 1998).

10 Act of April 9, 1929, P.L. 177, as amended , added by Act of December 3, 1970, P.L.
834

, 71 P.S. §510

- 1 (20)

.12

permit applications submitted pursuant to the provisions of [T he Clean Streams

Law] and to issue, modify, suspend, limit, renew or revoke permits pursu ant to

[T he Clean Streams Law] and to the rules and regulations of the [DEP]

. ” 35 P.S.

§691.5 (5).

However, a s noted above, DEP’s interest herein is merely prospective,

based on its concern that EHB’s decision in this matter will enshrine the bad faith

st andard as the appropriate standard to be applied in all similar costs and fees

application cases in the future. See

, e.g. , DEP’s Answer to Application ¶24

(“EHB’ s decision establishes precedent to be applied in future fees litigation under

Section 307(b). Given t he substantial imp act the EHB’ s decision will have on

attorney ’s fees litigation, [DEP] has an immediate need to determine the proper

standard to apply. ”).

The competing fee applications herein were filed by, and directly

affected, only Objectors and Sunoco; regardless of EHB’s decision, there was no

possibility that EHB would have imposed additional costs and fees on DEP in

addition to those that it already agreed to as part of its settlement ag reement with

Objectors. Thus, neither the traditional concept of standing, nor the legislatively

established standing outlined above

, is broad enough to encompass a challenge

rooted solely in the pot ential, prospective effects of the dispos ition of a fee

application under T he Clean Streams Law between private parties where, as here,

DEP’s authority or actions under T he Clean Streams Law or the award of costs and

fees against DEP thereunder are not implicated

. Accordingly, the Application to

Quash is grant ed and DEP’s appeal is quashed.13 II.

Turning to the merits of Objector s ’ appeal, Objectors first note that

the standard for determining whether to award costs and fees to a party where a

matter has been resolved without a decision on the merits is the “c atalyst test,” in

which:

( 1) the applicant must show that the opposing party

provided some of the benefit the fee

- requesting party sought in the underlying suit, (2) the applicant must show that the suit stated a genuine claim, and (3) the applicant must show that the suit was a substantial or significant reason why the opposing party, voluntarily or otherwise, provided the benefit or partial benefit that the fee requesting party sought in the underlying suit.
Objectors’ Br ief at 9

- 10 (quoti ng Upper Gwynedd Towamencin Mun icipal

Auth ority v. D epartment of E nvironmental P rotection , 9 A.3d 255, 264

- 65 (Pa.

Cmwlth. 2010) )

. Objectors argue that bad faith is not the only “workable”

standard for this type of scenario, and that EHB erred by not usin g the catalyst test

to evaluate the Organizations’ fee application. Id. at 10

- 13. Moreover, Objectors

state that EHB’s use of the bad faith standard is, under the circumstances, not

supported by the plain language of Section 307(b) of The Clean Streams L aw, case
law, or public policy considerations. Id. at 14

- 15, 20

- 24. Contrary to EHB’s

interpretation, Section 307(b) should be const rued as neither requiring third

- party
appellants to prove bad faith conduct to recover costs and fees , nor mandating that

EHB should review DEP’s and permittees’ actions using different standards when

considering a fee application. Id. at 16

- 20.

Objectors then argue that the EHB majority misinterpreted Lucchino

, asserting that “[t] he question Lucchino resolved was not wheth er bad faith was the

right standard, but whether fees could be awarded against an appellant at all ,” and14

that “ [EHB] misunderstands the holding in Lucchino

, which did not require or set a

new standard but merely affirmed a fee award against an appellant. ” Objectors’

Brief at 25. According to Objectors, the EHB majority’s concerns about

permittees’ due process rights was entirely misplaced, especially because Lucchino

did not mention due process concerns. Objectors’ Brief at 26. Furthermore,

Objectors point out that

[t] he [“] chilling effect [”] the [ Lucchino ] Court

. . . was primarily concerned about is one that would disincentivize bringing meritorious appeals, not defending against them. 809 A.2d at 270. Permittees, being the beneficiary of the permit, will always have an interest in defending the permit. Lucchino also concerns guarding against frivolous suits, id. , but that is not an issue here.

Id.

In contrast, Sunoco asserts that EHB appropriately exercised its

discretion in electing to appl y a bad faith standard in evaluating the fee

applications, rather than the catalyst test, arguing that this decision was supported

by both case and statutory law. Sunoco’s Br ief at 17

- 36. In addition, Sunoco

highlights its lack of involvement in the sett lement between DEP and Objectors,

through which DEP agreed to revise its permit review process and which effected

no changes upon Sunoco’s aforementioned permits. Id. at 34

- 35.

Also, according to Sunoco, a bad faith standard is warranted for

several reas ons related to public policy considerations. First, it is DEP’s statutory

responsibility to enforce The Clean Streams Law. Sunoco’s Br ief at 38

- 39.

Second, on appeal, EHB reviews DEP’s actions, rather than those of the permittee.

Id. at 39

- 40. Third, the catalyst test is fact

- intensive and difficult to consistently

apply. Id at 40

- 41. Sunoco contends that using the catalyst test in this kind of15

scenario would result in a greatly increased workload for EHB and would

discourage settlements. Id. at 41

- 44. Sunoco claims that the catalyst test would be

especially inappropriate for use here, because the complexity of this matter would

require the EHB to conduct a lengthy and involved inquiry to determine the

reasons for each of the actions taken and decis ions made by the parties. Id. at 44

-

46.

Initially, a s this Court has explained:

Our review of EHB determinations u nder Section 307(b) of The Clean Streams Law is limited to determining whether the EHB abused its discretion

. Solebury T

o w nshi p v. Dep artmen t of Env ironmen t a l Prot ection

, [ 928 A.2d 990, 997 n.8 (Pa. 2007)]

. In Kwalwasser [ v. Department of Environmental Resources

, 569 A.2d 422, 424 (Pa. Cmwlth. 199 0)

, 11 ] we noted that our disagreement with the EHB’s reasoning or result is

11 As the Pennsylvania Supreme Court has explained:

In cases involving both Section 307 and Section 4(b) [ of the Surface Mining Conservation and Re clamation Act, Act of May 31, 1945, P.L. 1198

, as amended , 52 P.S. §1396.4(b), superseded

, 27 Pa. C.S. §7708 ,] the EHB explained that, to determin e whether an award of attorneys’ fees is appropriate, courts have applied an analysis that has become known as the Kwalwasser test, according to which “(1) a final order must have been issued; (2) the applicant for the fees and expenses must be the prevailing party; (3) the applicant must have achieved some degree of success on the merits; and (4) the applicant mu st have made a substantial
contribution to a full and final determination of the issues.” Big B. Mining Co. v. Department of Environmental Resources

, [ 624 A.2d 713, 715 ( Pa. Cmwlth. 1993) ] (citing [ Kwalwasser ] ). The EHB determined that it was appropriate to apply this test to the present matter, as, in its view, there was no reason to apply different criteria for petitions solely under Section 307

.

Solebury T

o w nshi p , 928 A.2d at 99 5.16 not sufficient ground to overturn the EHB’s decision. We may not substitute our judgment for that of the EHB. [ Id. ] Rather, “[a]n abuse of discretion occurs if, in reaching a co nclusion, the law is overridden or misapplied or the judgment exercised is manifestly unreasonable or is the result of partiality, prejudice, bias, or ill will.” Luzerne County Children & Youth Services

v

. Department of Human Services , 203 A.3d 396, 398 ( Pa. Cmwlth. 2019).
Sierra Club v. Dep artmen t of Env ironmen t a l Prot ection , 211 A.3d 919, 92 4

- 25

(P a. C mw lth . 2019)

.

As indicated above, in disposing of the request for costs and fees , the

EHB majority relied upon Lucchino

, in which the Supreme Court affirmed EHB ’s

use of a bad faith standard in determining whether to impose an award of costs and

fees against a private individual objector . The Court stated , in relevant part:

Although the EHB recognized that a citizen has a right to challenge agency actions that conflict with the law and directly affect the citizen, it properly found that the appeal here was an abuse of the administrative adjudicatory system because it did not challenge the [DEP]’s action, but was merely an attack on agency employees and officials. Where, as here, the record supports a tribunal’s finding of fact that the conduct of the party was dilatory, obdurate, vexatious, or in bad faith, this Court will not disturb an award of counsel fees in the absence of an a buse of discretion. Township of South Strabane v. Piecknick , [686 A.2d 1297 (Pa. 1996)] ( a warding counsel fees appropriate if record supports finding of fact that the conduct of the party was dilatory, obdurate, or vexatious). We find no abuse of discret ion in this instance and an award of counsel fees is appropriate. We do not reach this decision lightly for, as [the objector] reminds us, any grant of attorney’s fees against an individual litigant in a suit against his government has a potential “chilli ng effect” on the willingness of the ordinary citizen to pursue resolution of his disputes in the courts. However, recognizing that we must strike a delicate balance, it is equally important that17 this phrase not be employed to defeat the protections again st frivolous suits afforded to a defendant.

809 A.2d at 269 (footnotes omitted).

Additionally, i n Solebury Township , two townships sought review of

EHB’s order denying their request for costs and fees from DEP and the

Department of Transportation (PennDOT ), as a governmental permittee, in which

EHB employed the catalyst test. EHB determined that the townships did not

prevail in the matter as required by that test because DEP had rescinded the

contested Section 401 Certifications under The Clean Water Act on PennDOT’s

request, and the case was ultimately dismissed as moot. I n remanding the matter

,
the Court stated:

[G] iven Pennsylvania ’ s strong policy to justly compensate parties who challenge agency actions by liberally interpreting fee

- shifting provisions, see Lucchino

, [ 809 A.2d at 269 ] , we agree with the [t] ownships that the EHB ’ s narrow application of the Kwalwasser criteria in the present matter was erroneous

.
More specifically, the broad grant of discretion to the EHB in awarding attorney ’ s fees under Section 307 renders [EHB’s and PennDOT’s] argument that a formal judgment is necessary to a finding that a party has prevailed wit h some degree of success on the merits untenable. Instead, we agree with the Commonwealth Court that the practical relief sought by the [t] ownships should be considered when characterizing them as prevailing parties for purposes of the Kwalwasser test. A ccord Buckhannon [ Board & Care Home, Inc. v. West Virginia Department of Health & Human Resources , 532 U.S. 598, 633 (2001)] (Ginsburg, J., dissenting) (“[W]here the ultimate goal is not an arbiter ’ s approval, but a favorable alteration of actual circumsta nces, a formal declaration is not essential.”). In addition, the EHB ’ s exclusive focus on the dismissal of the case as moot, without conducting a hearing or making further factual findings and legal conclusions, does not justify its18 holding that the [t] ow nships did not achieve some degree of success on the merits and did not make a substantial contribution to the full and final determination of the issues.

Finally, as Lucchino makes clear, the EHB may, in its discretion, award attorney ’s fees under Secti on 307 solely on the basis of a finding of bad faith or vexatious conduct, which is supported by the record, without reference to the Kwalwasser criteria. See Lucchino

, [ 809 A.2d at 269

- 70 ]

. In this regard, however, we agree with [EHB and PennDOT] that the Commonwealth Court erred by characterizing [their] conduct as vexatious on the undeveloped record before it

. . . .

Since we conclude that the EHB ’ s application of the Kwalwasser criteria i n the present matter was too narrow in view of the broad language of Section 307 and the public policy favoring liberal construction of fee

shifting provisions, we cannot determine the propriety of the EHB ’ s denial of the [t] ownships ’ motion for attorney ’ s fees under Section 307 on the present record. Accordingly, the order of the Commonwealth Court is vacated, and the matter is remanded to the EHB for further proceedings consistent with the above

. 928 A.2d at 1004

- 05.

Based on the foregoing Supreme Court analyses , and contrary to

Objectors’ assertions, the catalyst test is not the sole and exclusive standard that

EHB may em pl o y in disposing of a request for costs and fees against a permittee

under Section 307(b) of The Clean Streams Law. In deed, we have specifically

recognized that EHB’s “broad discretion includes the authority to adopt standards

by which [it] will evaluate applications for costs and fees.” Sierra Club , 211 A.3d

at 926. In the instant case, it was entirely within EHB’s discretion, and e minent ly

appropriate

, to apply the instant bad faith s t andard in de cid ing whether or not to

impose costs and fees upon a private party p ermittee

. In sum, “ our disagreement19

with the EHB’s r easoning or result is not sufficient ground to overturn the EHB’s

decision,” and “[w]e may not substitute our judgment for that of the EHB” in this

regard. Id. ( citing Kwalwasser )

.

Accordingly, we grant Sunoco’s Application to Quash DEP’s appeal;

we quas h DEP’s appeal; and we affirm EHB’s order.

MICHAEL H. WOJCIK, Judge

Judge Fizzano Cannon did not participate in the decision of this case.IN THE COMMONWEALTH COURT OF PENNSYLVANIA

Clean Air Council, The Delaware : Riverkeeper Network, and : Mountain Watershed Association, Inc., :

: Petitioners :

:

v. : No. 309 C.D. 2019

: Commonwealth of Pennsylvania, : Department of Environmental : Protection, :

: Respondent :

Department of Environmental : Protection, :

: Petitioner :

:

v. : No. 313 C.D. 2019

: Clean Air Council, The Delaware : Riverkeeper Network, Mountain : Watershed Association, Inc. : and Sunoco Pipeline, L.P., :

: Respondents :

O R D E R

AND NOW, this 1 6 th day of February , 20 2 1

, Sunoco Pipeline, L.P.’s

Motion to Quash is GRANTED; the Department of Environmental Protection’s

above

- captioned appeal is QUASHED; and the order of the Commonwealth of

Pennsylvania, Department of Environmental Protection is AFFIRMED.

__________________________________ MICHAEL H. WOJCIK, JudgeIN THE COMMONWEALTH COURT OF PENNSYLVANIA

Clean Air Council, The Delaware : Riverkeeper Network, and Mountain : Watershed Association, Inc., : Petitioners :

:

v. : No. 30 9 C.D. 2019

: Commonwealth of Pennsylvania, : Department of Environmental : Protection, : Respondent :

: Department of Environmental : Protection, : Petitioner :

:

v. : No. 313 C.D. 2019

: Argued: June 10, 2020 Clean Air Council, The Delaware : Riverkeeper Network, Mountain : Watershed Association, Inc. and : Sunoco Pipeline, L.P., : Respondents :

BEFORE: HONORABLE MARY HANNAH LEAVITT, President Judge

HONORABLE RENÉE COHN JUBELIRER, Judge HONORABLE P. KEVIN BROBSON, Judge HONORABLE PATRI CIA A. McCULLOUGH, Judge HONORABLE ANNE E. COVEY , Judge HONORABLE MICHAEL H. WOJCIK, Judge HONORABLE ELLEN CEISLER, Judge

CONCURRING OPINION BY JUDGE BROBSON FILED: February 1 6 , 2021

I join in Part I of the majority opinion, dismissing the appeal of the

Department of Environmental Protection (DEP) for lack of standing. I concur in thePKB

- 2

result of Part II, that being affirmance of the decision of the Environmental Hearing

Board (EHB) to deny the request by the Clean Air Council, The Delaware

Riverkeeper Network, and Mountain Watershed Association, Inc. (collectively,

Objectors) for an order directing Sunoco Pipeline, L.P. (Sunoco) to pay the costs and

fees that Objectors incurred in the a dministrative proceeding below.

I write separately for two reason s . First, I believe that Amicus Curiae the

Pennsylvania Chamber of Business and Industry (Pa. Chamber) highlights a

potential constitutional infirmity with respect to the fee

- shifting provis ion at issue in

this case

— Section 307(b) of T he Clean Streams Law. 1 In relevant part,

Section 307(b) provides: “The [EHB], upon the request of any party, may in its

discretion order the payment of costs and attorney’s fees it determines to have been

rea sonably incurred by such party

. . . . ” 35 P.S. § 691.307(b) (e mphasis added)

. There are no standards in this section or elsewhere to cabin the EHB’s discretion.

Withou t standards, Section 307(b) of T he Clean Streams Law may run afoul of

Article II, Section 1 of the Pennsylvania Constitution, which vests within the General

Assembly the exclusive authority to make laws. 2

Where, in the exercise of its legislative power, the General Assembly

delegates dis cretion to an agency to administer a particular l aw, two fundamental

limitations must be satisfied for the law to withstand constitutional scrutiny:

“First

, . . . the General Assembly must make ‘ the basi c policy choices, ’ and [,]

second, the legislation must include ‘ adequate standards which will guide a nd

restrain the exercise of the delegated administrative functions. ’ ” Protz v. Workers’

1 Act of June 22, 1937, P.L. 1987, as amended , 35 P.S. § 691.307(b).

2 “ The legislative power of this Commonwealth shall be vested in a General Assembly, which shall consist of a Senate and a House of Representatives. ” Pa. Const. art. II, § 1.PKB

- 3

Comp. Appeal Bd. (Derry Area Sch. Dist. ) , 161 A.3d 827, 834 (Pa. 2017) (quoting

Pennsylvanians Against Gambling Expansion Fund, Inc. v. Cmwlth

. , 877 A.2d 383,

418 (Pa. 2005)). T here is a substantial legal question as to whether either of these

fundamental limitations are met with respect to the EHB’s discretion to award fees

under Section 307(b) of T he Clean Streams Law . Nonetheless, the majority

appropriately avoids addressing the issue in t his case for two reasons. First, it is not

among the issues presented to us by the parties on appeal. Second, the issue would

more appropriately be addressed in a challenge to an EHB award of fees under

Section 307(b) of T he Clea n Streams Law.

Putting aside the utter lack of any statutory st andards, we must still review the

EHB’s exercise of discretion for abuse. See Solebury Twp. v. Dep’t of Env ’t Prot

. , 928 A.2d 990, 997 n.8 (Pa. 2007). “ An abuse of discretion is not merely an error of

judgment, but if in reaching a conclusion the law is overridden or misapplied or the

judgment exercised is manifestly unreasonable , or the result of partiality, prejudice,

bias, or ill will, as shown by the evidence or the record , discretion is abused.”

C ommonwealth v. Spiewak

, 617 A.2d 696 , 6 9 9 n.4 (Pa. 1992 ) (emphasis added).

Here, t he EHB adopted a “bad faith standard,” concluding that fees against a

permittee would only be warranted where the permitte e engaged in offensive

c onduct in the course of defending its appeal before the EHB. The majority holds

that this bad faith standard was “eminently appropriate” in this case.

( Clean Air Council v. Dep’t of Env’t Prot. , ___ A.3d ___, ___ (Pa. Cmwlth.,

Nos. 309 and 313 C.D. 2019, filed February 1 6 , 2021 ), slip op. at 18 .) While I agree,

as the EHB is operating without legislative guardrails, I see no reason why

“bad faith” must be the only test. I, therefore, cannot endorse it as such withPKB

- 4

respect to the exercise of the EHB’s di scretion under Section 307(b) of T he Clean

Streams Law.

Rather, I would simply affirm the EHB’s decision because there is absolutely

no basis in the record upon which the EHB could have exercise d its discretion below

in such a way as to compel Sunoco to pay Objectors’ legal fees under

Section 307(b) of T he Clean Streams Law. Sunoco was not a party to the settlement

agreement between Objectors and DEP that essentially ended Objectors’ appeals.

Moreover, Sunoco gave up nothing in the settlement or otherwi se. Sunoco kept its

permits, unaltered, as if Objectors had not even filed their appeals with the EHB

. Under such circumstances, it would be manifestly unreasonable to order Sunoco , or
any permittee, to pay Objectors’ attorney ’ s fees. For this reason, I concur in the

majority’s decision to affirm the EHB’s order.

P. KEVIN BROBSON, Judge

Judg e Co hn Jubelirer join s in this concurring opinion.IN THE COMMONWEALTH COURT OF PENNSYLVANIA

Clean Air Council, The Delaware : Riverkeeper Network, and Mountain : Watershed Association, Inc., :

Petitioners :

:

v. : No. 309 C.D. 2019

: Commonwealth of Pennsylvania, : Department of Environmental : Protection, :

Respondent :

Department of Environmental : Protection, :

Petitioner :

:

v. : No. 313 C.D. 2019

: Clean Air Council, The Delaware : Riverkeeper Networ k, Mountain : Watershed Association, Inc. and : Sunoco Pipeline, L.P., :

Respondents : ARGUED: June 10, 2020

BEFORE: HONORABLE MARY HANNAH LEAVITT, President Judge

HONORABLE RENÉE COHN JUBELIRER, Judge HONORABLE P. KEVIN BROBSON, Judge HONORABLE PATRICIA A. McCULLOUGH, Judge HONORABLE ANNE E. COVEY, Judge HONORABLE MICHAEL H. WOJCIK, Judge HONORABLE ELLEN CEISLER, Judge

CONCURRING AND DISSENTING OPINION BY JUDGE CEISLER FILED: February 1 6 , 2021

I join the majority with regard to its disposition of Sunoco Pipeline, L.P.’s

(Sunoco) Application to Quash the Department of Environmental Protection’s

(DEP) appeal. However, I must part ways from the majority regarding it sEC

- 2

affirmation , in full, of the Environmental Hearing Board’s (EHB) February 19, 2019

decision. As our Court has previously held:

Under Section 307(b) of The Clean Streams Law, [ Act of June 22, 1937, P.L. 1987, as amended , 35 P.S. § 691.307(b),] the EHB has broad discre tion to aw ard or deny attorneys’ fees and costs in a particular proceeding. [ Solebury Twp. v. Dep’t of Env’t Prot. , 928 A.2d 990, 1003 (Pa. 2007)] . This broad discretion includes the authority to adopt standards by which the EHB will evaluate applications for costs and fees. Id. at 1004. Such standards, however, must b e consistent with “Pennsylvania’ s strong public policy to justly compensate parties [that] challenge agency actions by liberally interpreting fee

- shifting provisions.” Id.
Sierra Club v. Dep’t of Env’t Prot. , 211 A.3d 919, 926 (P a. C mw lth . 2019) ; see also

Lucchino v. Dep’t of Env ’ t Prot. , 809 A.2d 264 , 269 ( Pa. 2002) (quoting Tunison v.

Com. , 31 A.2d 521, 523 (Pa. 1943)) (“ For reasons of public policy, Pennsylvania

courts have construed

. . . statutory s ections [like Section 307(b)] liberally ‘ to justly

compensate parties who have been obliged to incur necessary expenses in

prosecuting lawful claims or in defending a gainst unjust or unlawful ones.’”).

Requiring a showing of bad faith in this kind of situation does not square with

the public policy purpose underpinning Section 307(b)’s fee

- shifting language. To

state the obvious, a permittee necessarily plays a critical role in the permitting

process, fo r without an initial permit application, there would be no reason for

subsequent litigation initiated by a third party. It does not therefore seem reasonable

that, in theory, the DEP could be saddled with fees and costs in response to

inadvertent mistakes or good faith, negotiated compromises or settlements, while a

permittee could get off scot

- free under similar circumstances unless it has conducted

itself in a dilatory, obdurate, or vexatious way.EC

- 3

Furthermore, Lucchino is distinguishable from the instant matter. While the

Supreme Court took no issue with the EHB’s use of a bad faith standard in that

matter, the context was different. There, the EHB was faced with a private

individual, whose challenge to the DEP’s issuance of various permits was nothing

mo re than a malicious attack upon the DEP and the affected permittee. Lucchino

, 809 A.2d at 269. “[T]he EHB recognized that a citizen has a right to challenge

agency actions that conflict with the law and directly affect the citizen ” and therefore

elected to require a higher burden of proof to justify an award of costs and fees in

such a situation. Id. at 269

- 70. Implicitly, the EHB recognized that to do otherwise,

by setting a lower bar for such awards, would likely dissuade people from exercising

their righ t to challenge permit approvals, due to the prospective financial

repercussions. The Supreme Court agreed with the EHB, stating:

[A] ny grant of attorney’ s fees against an individual litigant in a suit against his government, has a potential “chilling effe ct” on the willingness of the ordinary citizen to pursue resolution of his disputes in the courts. However, recognizing that we must strike a delicate balance, it is equally important that this [concern] not be employed to defeat the protections against fr ivolous suits afforded to a defendant.

Id. at 270. Here, however, there is no concern about impinging upon such rights, as

it i s a permittee, i.e. , Sunoco, rather than an objector, which is the subject of the at

issue fee application. As such, a standard l ower than “bad faith” in this situation

would have no effect on Sunoco’s ability or desire to challenge permitting actions

taken by the DEP. This lower standard could theoretically impact a permittee’s

initial decision to exercise its property rights, due to a permittee’s need to factor in

the possibility, however remote, of such costs and fees. Such a concern is

nevertheless too attenuated to justify using a bad faith requirement, as there is noEC

- 4

guarantee that a permit application will be approved upon rev iew by the DEP (a

review process that should minimize the risk of litigation, if done properly), or that

a given permitting decision will be subsequently challenged by a third par ty.

T he EHB’s use of a bad faith standard to evaluate Cl ean Air Council, Th e

Delaware Rive rkeeper Network, and Mountain Watershed Association, Inc.’s joint

fee application was thus an abuse of discretion. It follows, then, that the EHB’s

February 19, 2019 decision should be vacated in part, as well as that this matter

should be r emanded to the EHB for further proceedings , so that it can use a proper

standard to evaluate this fee application

. Therefore, I respectfully dissent from the

majority, to the extent it concluded otherwise.

__________________________________ ELLEN CEISLER, Judge