By Terry R. Bossert, Post & Schell

A recent decision of the Pennsylvania Supreme Court may foreshadow a significant shift regarding the recoverability of attorneys’ fees and costs in environmental litigation.

In Solebury Township v. Department of Environmental Protection, et al., decided August 20, 2007, the Court construed Section 307 of the Pennsylvania Clean Streams Law (“CSL”) (35 P.S. § 691.307) which gives the Pennsylvania Environmental Hearing Board (“EHB”) the authority to award fees to a party participating in a permit appeal. The Court noted that Section 307 gives the Board broad discretion to award fees to a party based on what the Court called “Pennsylvania’s strong olicy to justly compensate parties who challenge agency actions by liberally interpreting feeshifting provisions.”

In reaching the original decision to deny fees to appellants, the EHB had applied a test known as the Kwalwasser test which was derived from an earlier EHB decision affirmed by the Commonwealth Court.

That test requires that in order to award fees, the Board has to find that (1) a final order has been issued; (2) the applicant for the fees was the prevailing party; (3) the applicant achieved some degree of success on the merits and (4) the applicant made a substantial contribution to a full and final determination of the issues.

These criteria were derived federal statutory provisions relating to fees in mining cases and federal decisions interpreting those provisions. Although the Supreme Court did not specifically reject the Kwalwasser test, it did not endorse it either.

Since Section 307 of the Clean Streams Law merely provides that the EHB “may in its discretion order the payment of costs and attorneys’ fees it determines to have been reasonably incurred by such party. . . .”, the Court held that it was not improper for the EHB to adopt some standards or criteria, similar to the Kwalwasser test by which this broad discretion would be channeled. However, the Court specifically held that those criteria could not be controlled by federal provisions which were narrower than the language of Section 307.

The Court also rejected the contention that a party, in order to be “prevailing”, needed to necessarily obtain a formal judgment in its favor after litigating the matter to conclusion on the merits. In the case under consideration, the appellants had sought the revocation of a Section 401 certification issued by DEP. During the course of the litigation, DEP voluntarily rescinded the certification it had previously issued and the appeal was dismissed as moot. The Supreme Court indicated that this may, in fact, have been adequate to satisfy the language in Section 307.

Since the EHB had not developed a factual record and had relied upon criteria now disfavored by the Court, the matter was remanded to EHB for further proceedings.

Presumably the EHB will establish criteria and reevaluate the fee request, if the parties do not reach a settlement. However, since the Court stressed more than once in its Opinion that Pennsylvania had a public policy favoring liberal construction of fee shifting provisions, it can be assumed that the Board’s criteria will not be as narrowly drawn as the Kwalwasser Test.

Although Section 307 of the Clean Streams Law is one of the few provisions allowing for the recovery of attorneys’ fees in actions before the EHB, nearly all of the environmental statutes contain provisions allowing litigants to request attorneys’ fees in litigation commenced in the courts.

While the statutory provisions do not use language identical to Section 307, the language is very similar. One can easily foresee the argument that these statutory provisions likewise grant broad discretion to the courts. While one would expect that plaintiffs bringing “citizens’

Terry R. Bossert is an environmental attorney with Post & Schell, Harrisburg, and is the former Chief Counsel for the Department of Environmental Protection. He can be contacted at 717-612-6018 or send email to: tbossert@postschell.com .

9/7/2007