This Post was authored by Andrew LeDonne, a MGKF summer associate. 

On June 11, 2019 the Commonwealth Court of Pennsylvania upheld a decision by the Pennsylvania Environmental Hearing Board (“EHB”) denying the Sierra Club’s application for fees and costs under section 307(b) of the Clean Streams Law. Sierra Club v. Dep't of Envtl. Prot., 2019 WL 2426771 (Pa. Commw. Ct. 2019).

On September 1, 2016, the EHB consolidated two third-party appeals filed by the Sierra Club to challenge an National Pollution Discharge Elimination System (“NPDES) permit and a Water Quality Management (“WQM”) permit issued by the Pennsylvania Department of Environmental Protection (“DEP”) to Lackawanna Energy Center, LLC (“LEC”). In April 2017, LEC redesigned its powerplant to reduce the amount of industrial wastewater generated by the facility such that the waste could be transported by truck off-site for treatment.  DEP issued a permit modification to LEC because, as a result of the changes to its planned facility, LEC no longer required either the WQM permit or the industrial wastewater discharge portion of its NPDES permit. In light of these changes, all parties moved to dismiss Sierra Club’s appeal. After the EHB dismissed the appeal, Sierra Club petitioned for attorneys’ fees and litigation costs from DEP under section 307(b) of the Clean Steams Law, which the EHB denied after holding an evidentiary hearing on the fee petition.

In denying Sierra Club’s fee petition, the EHB focused on the third element of the ‘catalyst test’ set forth in Salford Twp. Auth. v. Dep’t of Envtl. Prot., which states that to prevail on a fee petition under Section 307(b) of the Clean Streams Law, the suit must have been 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.” 67 A. 3d 50, 52 (Pa. Commw Ct. 2013).  The EHB found that Sierra Club did not meet this essential element, because it failed to “provide[] any evidence other than the relative timing of the events to show that LEC made changes to its facility as a result of Sierra Club’s appeal, either in whole or in part.” Sierra Club v. Dep’t of Envtl. Prot., 2016 EHB 047 (March 28, 2018) (emphasis original). As such, the EHB found no reason to doubt LEC’s engineers who testified that the changes made to LEC’s facility were part of ongoing efforts to make their industrial processes more efficient, and that the changes were made for purely business reasons unrelated to the Sierra Club’s appeal of the facility’s permits.

In Sierra Club’s appeal of the EHB decision, the Commonwealth Court evaluated whether the EHB abused its discretion in denying the fee petition, or whether the decision violated or misapplied positive law, or was manifestly unreasonable as a result of partiality, prejudice, bias, or ill will.  Sierra Club v. Dep't of Envtl. Prot., 2019 WL 2426771, at *5 (Pa. Commw. Ct. 2019) (citing Luzerne Cty. Children & Youth Servs. V. Dep’t of Human Servs., 203 A.3d 396, 398 (Pa. Commw Ct. 2019)). Arguing that the EHB applied too high a standard of proof, Sierra Club argued that the EHB’s holding created a standard that requires fee applicants to prove a permittee’s “true motive” in requesting permit modification. Id. The Sierra Club argued this creates an unfair, expensive, and onerous burden on an applicant trying to prevail on a claim for fees under section 307(b) of the Clean Streams Law. Id.

The Commonwealth Court disagreed with this characterization of the EHB holding. Id. at *7. By requiring Sierra Club to show that there was “more likely than not” a causal connection between its third-party appeal and the changes LEC made to its facility, the Commonwealth Court held that the EHB applied the appropriate standard of proof – Sierra Club was required to prove by a preponderance of the evidence that its third-party appeal caused LEC to redesign its facility. Id. In ultimately upholding the EHB’s decision, the Commonwealth Court noted that the EHB is both judge and jury in an administrative proceeding and is therefore “entitled to give greater weight to [LEC’s] testimony than the temporal relation between the Sierra Club's appeal” and the changes LEC made to its facility. Id. at *8. The Commonwealth Court noted that, as an appellate court it could not “second guess the EHB's credibility determinations nor reweigh the evidence.” Id. at *8. Because there was no evidence that partiality, prejudice, bias, or ill will influenced the EHB decision, the court found that the EHB did not abuse the broad discretion granted under Section 307(b) of the Clean Streams Law when it denied the Sierra Club’s fee petition.

Invoking precedent from both the Commonwealth Court and the Pennsylvania Supreme Court, the court in this case upheld the strong tradition of the state judiciary giving significant deference to the administrative proceedings of the EHB.  Where there is ample evidence that a permittee modified or eliminated a permit or permit condition because of legitimate business reasons, rather than as a reaction to a pending appeal, the EHB will remain reluctant to award attorneys’ fees under Section 307(b) of the Clean Steams Law.

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