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Pipeline case spurs ruling on fees

State’s high court broadens standards for payment of attorney, other costs

The Pennsylvania Supreme Court this week broadened the standards for payment of attorney and other fees incurred in environmental cases, which often involve protests from local residents affected by projects like the recently constructed Sunoco natural gas pipeline.

One of the driving forces in bringing the case before the state’s highest court was a Huntingdon County couple, Stephen and Ellen Gerhart, who launched a protest years ago against the pipeline, which cut across 27 acres of their property bordering Trough Creek Valley Pike.

After Sunoco and the Gerharts came to a settlement that permitted the company to construct the pipeline through the property, the couple sought $265,976 in fees paid for their attorney and environmental experts.

The Environmental Hearing Board awarded the couple $13,135 to be paid by the Pennsylvania Department of Environmental Protection.

Sunoco was not ordered to pay any of the fees.

The issue in the case — as stated in the 48-page opinion issued by the Supreme Court — was “the Board’s rule that no private party to an appeal may be compelled to reimburse another party unless it has pursued or defended the appeal in bad faith or for an improper purpose.”

It was determined by the board that Sunoco had not acted in bad faith.

As it turned out, Sunoco had wrongfully classified the Gerhart property as land containing small plants rather than as a forested area that contained 250 trees and thus the proposed Sunoco restoration plan for the land was unacceptable.

Neither the Gerharts nor DEP charged Sunoco with “bad faith or fraud,” although DEP indicated there were “errors in Sunoco’s wetland sheets.”

The two sides eventually came to a settlement, according to the Supreme Court opinion, but the lack of a “bad faith” charge against the company led the Hearing Board to deny the couple’s claim against Sunoco.

The board awarded the Gerharts only a small portion of their request because they allegedly “achieved only a limited degree of success in the context of their appeal.”

The Supreme Court opinion, written by Justice David N. Wecht on behalf of Chief Justice Debra Todd and Justices Christine Donohue and Kevin M. Dougherty, posed whether the Environmental Hearing Board as a matter of law erred in applying a “per se bad faith standard” in assessing fees with respect to the state’s Clean Streams Law and whether it was wrong to impose the fees to be paid to the Gerharts from the Department of Environmental Protection?

“The answer is ‘Yes,” according to Wecht’s opinion.

“In rejecting a per se bad-faith approach for applicants (like Sunoco), we place them at the same starting line as DEP for purposes of fee liability. Each case, complicated and rife with the potential for mistake, error, or even mis- or malfeasance, stands alone,” according to the Supreme Court ruling.

Wecht noted that private applicants (like Sunoco) are able to pass expenses on to customers, but resident objectors like the Gerharts — who he described as de facto regulatory enforcers — “stand only to gain in the broad public-serving sense.”

“The closest thing to a private benefit to be derived from appeals is exemplified in (the Gerhart case) … was mitigation of damage to their real property,” the opinion noted.

Wecht concluded, “The General Assembly through its broad grant of discretion to the Environmental Hearing Board has strongly implied that it expects the board to award fees without fear or favor.

“The express goal here is clean water, and the bulwark against its degradation is the permitting process as supplemented by the availability of citizen appeals.”

“Shrinking the likelihood of fee recovery to the vanishing point can only deter citizens entrusted to police both DEP and those who solicit (like Sunoco) and then reap the benefits of DEP’s approval (of a project.)”

The Supreme Court sent the question of fees back to the Environmental Hearing Board for reconsideration.

The attorney for the Gerharts, Richard Alan Raiders of Reading, characterized the Supreme Court’s opinion a “complete victory” for resident participation in the process of approving environmentally recently constructed sensitive projects like the Sunoco pipeline.

He praised the Gerharts’ effort to come forward to challenge what Sunoco was doing to their property.

Sunoco was “sloppy” in the way it managed the project throughout the state, Raiders said.

He summed up the Supreme Court opinion by noting: “An applicant (like Sunoco) needs to do the job right. Don’t get stupid. … Just do the job. That’s where Wecht is coming from,” he said.

Raiders said the Hearing Board will hold a status conference in late March to discuss the opinion.

However, he warned that the issue of awarding fees in environmental cases will probably generate more lawsuits and court cases.

Justice Sally Updyke Mundy filed a dissenting opinion upholding the “bad faith” standard for awarding fees.

Justice P. Kevin Brobson did not participate in the opinion. He is a former Commonwealth Court judge from which the appeal to the Supreme Court was filed.

The position of former Chief Justice Max Baer, who recently died, remains unfilled.

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