An Act To Require the State To Pay Costs and Fees in Actions against Certain State Agencies
Maine Legislature, Session 125, LD 1093
Committee: Judiciary
Sponsors: MARTIN, TRAHAN
Amends: 14 MRSA §1523

Legislative Document 
No. 1093 
S.P. 326 
In Senate, March 15, 2011 
An Act To Require the State To Pay Costs and Fees in Actions 
against Certain State Agencies 
Reference to the Committee on Judiciary suggested and ordered printed. 
JOSEPH G. CARLETON, JR. 
Secretary of the Senate 
Presented by Senator MARTIN of Kennebec. 
Cosponsored by Senator: TRAHAN of Lincoln. 
Be it enacted by the People of the State of Maine as follows: 
Sec. 1.  14 MRSA §1523 is enacted to read: 
§1523.  Costs to prevailing party in certain administrative or court proceedings 
1.  Definitions.  As used in this section, unless the context otherwise indicates, the 
following terms have the following meanings. 
A.  "Administrative proceeding" means any procedure or other action before the 
Department of Administrative and Financial Services, Maine Revenue Services or the 
Department of Environmental Protection. 
B.  "Court proceeding" means any civil action brought in a court of this State. 
C.  "Position of the State" means: 
(1)  The position taken by the State in a judicial proceeding to which subsection 2 
applies; and 
(2)  The position taken by the State in an administrative proceeding to which 
subsection 2 applies. 
D.  ''Prevailing party'' means any party in any proceeding to which subsection 2 
applies: 
(1)  That has substantially prevailed with respect to the amount in controversy; or 
(2)  That has substantially prevailed with respect to the most significant issue or 
set of issues presented.  
A party may not be treated as the prevailing party in a proceeding to which 
subsection 2 applies if the State establishes that the position of the State was 
substantially justified. 
E.  "Reasonable litigation costs" includes: 
(1)  Reasonable court costs; and 
(2)  Based upon prevailing market rates for the kind or quality of services 
furnished: 
(a)  The reasonable expenses of expert witnesses in connection with a court 
proceeding, except that no expert witness may be compensated at a rate in 
excess of the highest rate of compensation for expert witnesses paid by the 
State; 
(b)  The reasonable cost of any study, analysis, engineering report, test or 
project that is found by the court to be necessary for the preparation of the 
party's case; and  
(c)  The reasonable fees paid or incurred for the services of attorneys in 
connection with the court proceeding. 
2.  Application.  This section applies to any administrative or court proceeding that is 
brought by or against this State in connection with: 
A.  The determination, collection or refund of any tax, interest or penalty under Title 
36; or 
B.  The determination of any fine, penalty or interest under Title 38. 
3.  Prevailing party if not the State.  In any proceeding described in subsection 2, if 
the State is not the prevailing party, the prevailing party may be awarded a judgment or a 
settlement for: 
A.  Reasonable administrative costs incurred in connection with an administrative 
proceeding within the Department of Administrative and Financial Services, Maine 
Revenue Services or the Department of Environmental Protection; and 
B.  Reasonable litigation costs incurred in connection with a court proceeding. 
4.  Limitations.  A judgment for reasonable litigation costs may not be awarded 
under subsection 2 in any court proceeding unless the court determines that the prevailing 
party has exhausted the administrative remedies available to the party within the 
Department of Administrative and Financial Services, Maine Revenue Services or the 
Department of Environmental Protection, as applicable. 
5.  Costs denied when party prevailing protracts proceedings.  An award for 
reasonable litigation and administrative costs may not be made under subsection 2 with 
respect to any portion of the administrative or court proceeding during which the 
prevailing party has unreasonably protracted such proceeding.  
6.  Period for applying for administrative costs.  An award may be made under 
subsection 2 by the Department of Administrative and Financial Services, Maine 
Revenue Services or the Department of Environmental Protection, as applicable, for 
reasonable administrative costs only if the prevailing party files an application with 
Maine Revenue Services or the Department of Environmental Protection for such costs 
before the 91st day after the date on which the final decision of Maine Revenue Services 
or the Department of Environmental Protection as to the determination of the tax, interest, 
fine or penalty is mailed to the party. 
7.  Right of appeal; court proceedings.  An order granting or denying, in whole or 
in part, an award for reasonable litigation or administrative costs under subsection 2 in a 
court proceeding may be incorporated as a part of the decision or judgment in the court 
proceeding and is subject to appeal in the same manner as the decision or judgment. 
8.  Right of appeal; administrative proceedings.  A decision granting or denying, 
in whole or in part, an award for reasonable administrative costs under subsection 2 by 
the Department of Administrative and Financial Services, Maine Revenue Services or the 
Department of Environmental Protection is subject to the filing of a petition for review 
with the Superior Court as a final agency action under Title 5, chapter 375. 
SUMMARY 
This bill authorizes the award of administrative costs or litigation costs to the 
prevailing party in an administrative action or a court action involving the Department of 
Administrative and Financial Services, Maine Revenue Services or the Department of 
Environmental Protection if the State is not the prevailing party. 
A judgment for reasonable litigation costs may not be awarded in any court 
proceeding unless the court determines that the prevailing party has exhausted the 
administrative remedies available to such party within Maine Revenue Services or the 
Department of Environmental Protection, as applicable.  An award for reasonable 
litigation and administrative costs may not be made with respect to any portion of the 
administrative or court proceeding during which the prevailing party has unreasonably 
protracted such proceeding. 
An application for costs must be filed within 90 days after the final decision is made.  
The award of costs may be appealed. 
A party may not be treated as the prevailing party in a proceeding if the State 
establishes that the position of the State in the proceeding was substantially justified.