Opinion
2017-013-L
07-28-2023
STEPHEN AND ELLEN GERHART v. COMMONWEALTH OF PENNSYLVANIA, DEPARTMENT OF ENVIRONMENTAL PROTECTION and SUNOCO PIPELINE, L.P., Permittee
For the Commonwealth of PA, DEP: Curtis C. Sullivan, Esquire For Appellants: Richard Raiders, Esquire For Permittee: Robert Fox, Esquire, Diana Silva, Esquire, Aaron S. Mapes, Esquire, Mica T. Iddings, Esquire
For the Commonwealth of PA, DEP: Curtis C. Sullivan, Esquire
For Appellants: Richard Raiders, Esquire
For Permittee: Robert Fox, Esquire, Diana Silva, Esquire, Aaron S. Mapes, Esquire, Mica T. Iddings, Esquire
OPINION AND ORDER ON RULE TO SHOW CAUSE
Bernard A. Labuskes, Jr., Judge
Synopsis
The Board dismisses and closes an appeal following a remand from the Pennsylvania Supreme Court where the only issue before the Board on remand-the division of the payment of attorney's fees between the Department and a permittee-has been settled by the Department and the permittee, and the fee applicants were paid following the Board's award of fees and costs in 2020.
OPINION
This matter is before us on remand from the Pennsylvania Supreme Court. In 2017, Stephen and Ellen Gerhart appealed a water obstruction and encroachment permit and an erosion and sedimentation control permit issued to Sunoco Pipeline, L.P. ("Sunoco") from the Department of Environmental Protection (the "Department") for the installation of a natural gas liquids pipeline that crossed the Gerharts' property. Sunoco's pipeline was part of its Mariner East 2 project. In 2019, we issued an Adjudication sustaining in part the Gerharts' appeal, finding that a forested wetland on the Gerharts' property had been improperly classified by the Department and Sunoco as an emergent wetland. Gerhart v. DEP, 2019 EHB 534. Since the wetland had been improperly classified, we ordered Sunoco to restore the portion of the wetland that was impacted from the installation of the pipeline as a forested wetland in accordance with Sunoco's permits and approved restoration and replanting plans. We denied the Gerharts' appeal in all other respects.
Following the issuance of our Adjudication, the Gerharts filed an application for costs and fees, seeking to recover $265,976.27 in attorney and expert witness fees from both the Department and Sunoco under Section 307(b) of the Clean Streams Law, 35 P.S. § 691.307(b).On January 7, 2020, we issued an Opinion and Order in which we awarded the Gerharts $13,135.77 in fees due to the Gerharts' limited success in relation to their overall appeal, and the fact that Sunoco had offered a settlement early on in the litigation that would have given the Gerharts precisely the relief we eventually afforded to them in our Adjudication. Gerhart v. DEP, 2020 EHB 1. With respect to the question of the division of responsibility for payment of the award, we relied on a then-recent Board decision on attorney's fees in which we held that, in order to seek fees from a permittee or other private party (as opposed to the Department), the fee applicant needed to demonstrate that the permittee engaged in dilatory, obdurate, vexatious, or bad faith conduct. See Clean Air Council v. DEP, 2019 EHB 228. Because the Gerharts did not address this standard in their fee application filings, and we did not detect any bad faith on behalf of Sunoco, we ordered the Department to pay the Gerharts the fee award on its own.
Section 307(b) provides in relevant part: "The Environmental Hearing Board, upon the request of any party, may in its discretion order the payment of costs and attorney's fees it determines to have been reasonably incurred by such party in proceedings pursuant to this act." 35 P.S. § 691.307(b).
The Department, but not the Gerharts or Sunoco, then filed a petition for review of our Opinion and Order with the Commonwealth Court, challenging the bad faith standard applied by the Board when an applicant for costs and fees seeks to recover from both the Department and a permittee. Soon after filing its petition for review, the Department filed an application requesting that we stay its obligation to pay the Gerharts the fee award pending the outcome of the Commonwealth Court appeal. The Gerharts argued in opposition that, depending on the outcome of the appellate litigation, Sunoco could simply reimburse the Department for any fee amount and there was no reason to delay payment to the Gerharts. We issued an Order on March 24, 2020 denying the Department's application to stay the fee payment.
On February 21, 2021, the Commonwealth Court affirmed the Board's Opinion and Order. Cmwlth. v. Gerhart, No. 107 C.D. 2020, 2021 Pa.Commw. Unpub. LEXIS 97 (Pa. Cmwlth. Feb. 16, 2021). On the same day the Court's Gerhart Opinion was issued, the Commonwealth Court also affirmed the Board in an appeal of the Clean Air Council attorney's fees decision in which we discussed the bad faith standard for collecting fee awards from permittees and other private parties, which we relied on in our Gerhart fees decision. See Clean Air Council v. Cmwlth., 245 A.3d 1207 (Pa. Cmwlth. 2021). Both of the Commonwealth Court decisions were appealed to the Pennsylvania Supreme Court. See No. 73 MAP 2021 and No. 74 MAP 2021. Our Supreme Court consolidated argument on the two cases and decided them in the same Opinion, vacating the Commonwealth Court's affirmance of our two decisions and remanding both appeals back to the Board for further proceedings. Clean Air Council v. Cmwlth., 289 A.3d 928, 955 (Pa. 2023).
Further proceedings in the Clean Air Council appeal, EHB Docket No. 2017-009-L, are currently pending.
The Supreme Court rejected the standard we had established requiring a fee applicant to show that a permittee engaged in bad faith or vexatious conduct in order to recover fees from a permittee. In terms of the Gerhart appeal, the Supreme Court held:
In Gerhart, DEP is the appellant, and its argument is not that it should not have been assessed the modest fees ordered, but rather that it should not have to bear
the cost of those fees alone. Even more so than in Clean Air Council, we cannot conclude that the Board, bereft of the per se rule upon which it relied, would not have divided those fees between the parties, especially because the Board limited fees specifically to those incurred before Sunoco offered to restore the Gerharts' wetlands as requested. Up until that point at least, Sunoco was very much a target of the Gerharts' appeal. We will return this case as well to the Board to make this determination in the first instance.Clean Air Council v. Cmwlth., 289 A.3d 928, 955 (Pa. 2023). Thus, the Court directed that on remand we must determine how to divide the payment of the $13,135.77 in fees we awarded to the Gerharts between the Department and Sunoco.
Following the issuance of the Supreme Court's Opinion, we held a conference call with the parties on March 27, 2023 to discuss the procedures moving forward following the remand. On the call, it was evident that there was not a consensus among the parties on whether additional proceedings would be necessary. The parties suggested that they confer further on whether or not a mutually agreeable resolution could be obtained and then inform the Board of the outcome of those discussions.
On May 12, 2023, the Department and Sunoco filed what they called a Notice of Settlement and Request to Mark Case Settled. In that filing, the Department and Sunoco asserted that the only issue to be resolved following the Supreme Court's remand was the allocation of the payment of the award of costs and fees between the Department and Sunoco. They told us that, on March 23, 2023, they resolved the allocation of the fee award between the two of them. Accordingly, the Department and Sunoco asserted that there was no longer any issue for the Board to adjudicate. Although the Department and Sunoco said that the Gerharts declined to consent in the filing, the Department and Sunoco asked that we issue their proposed order marking the case settled and closed.
On May 30, the Gerharts filed an answer objecting to the Department and Sunoco's request. The Gerharts asserted that they were not permitted to review any agreement between the Department and Sunoco regarding the allocation of the payment of the fees. They argued that, because the settlement agreement was related to Commonwealth funds, the agreement could not be kept private or confidential because they maintained that the General Assembly disfavors hiding public access to Commonwealth financial records. The Gerharts said that they would not object to the settlement if it were made part of the public record on the Board's docket. The Gerharts then said that, if the settlement agreement was not made part of the record, the Board should hold a hearing to allocate the fees between the Department and Sunoco.
We issued an Order on May 30 denying the Department and Sunoco's request to have the case marked settled because it appeared that a settlement had not been reached between all of the parties. We ordered the parties to propose, by June 29, mutually agreeable dates for prehearing proceedings and an evidentiary hearing, or, if the parties were unable to agree on dates, to submit individual proposals by the same date. On June 29, instead of getting either a joint proposed schedule of prehearing proceedings or individual proposals, we received from Sunoco and the Department a letter requesting that we hold a conference call to discuss the status of the case and the scope of any necessary proceedings. The letter said that the parties attempted in good faith to resolve the appeal without the necessity of any further proceedings before the Board, but the parties had been unable to come to a resolution. The Department and Sunoco said that, after a conference call with the Board, the parties could then provide the Board with a proposed case management order, if necessary. We did not receive anything from the Gerharts by the June 29 deadline.
On June 30, we issued a Rule to Show Cause calling attention to the fact that none of the parties complied with our earlier Order requiring them to submit joint or individual case management proposals. We also stated that it was unclear what further relief the Board could provide in this appeal, based on the parties' filings since the remand. For these reasons, we directed the parties to show cause why this appeal should not be dismissed and to file responses to the Rule to Show Cause by July 17. The parties have now filed their responses to the Rule.
The Gerharts assert in their response that they had proposed hearing dates to the Department but never heard back. They say they regret not responding to the Board's May 30 Order but fault Sunoco for not providing any input on scheduling dates or making an effort to coordinate a response from the parties. The Gerharts claim that neither Sunoco nor the Department provided a response to the Gerharts' request that any settlement between the Department and Sunoco be filed on the docket. The Gerharts contend that having a settlement be on the record "is important for accountability for the reasons raised in the Supreme Court's opinion," citing the Supreme Court's opinion at 289 A.3d 928, 951-52.
The Department and Sunoco argue that this appeal should be dismissed because the only issue remaining on remand is the allocation of the previously-awarded fees, which they say has been resolved already through a settlement between the Department and Sunoco. They tell us that their settlement involved Sunoco reimbursing the Department for the entire $13,135.77, which has already occurred, and the agreement was not reduced to writing. The Department and Sunoco add that they informed the Gerharts' counsel of the reimbursement arrangement and proposed multiple drafts of a three-party joint notice of settlement to be filed with the Board, which included the reimbursement amount, but they claim that the Gerharts' counsel rejected those drafts over the inclusion of a statement where Sunoco declined to admit any liability. Nevertheless, the Department and Sunoco point out that the amount of the fee award to the Gerharts was not appealed by any party and the Gerharts have been paid long ago the full amount of the award. They take the position that there is nothing left for the Board to adjudicate, and that the settlement agreement has rendered moot any further proceedings.
We find ourselves in agreement with the Department and Sunoco that there is nothing left for the Board to do on remand. The only issue the Pennsylvania Supreme Court left open for us on remand was to divide the fees between the Department and Sunoco that we previously awarded to the Gerharts, and the Department and Sunoco have already resolved that division among themselves. The Gerharts contend the Board should hold a hearing to allocate the fee award between the Department and Sunoco, but the Gerharts have not explained why the Board would discard a settlement agreement between two parties and force them to go to a hearing over the very issue they have settled. The Gerharts have not challenged any of the terms of the agreement between the Department and Sunoco. The Gerharts have already been paid the fees we awarded to them by the Department. Thus, the Gerharts are not awaiting the payment of the fee award in whole or in part, from any party. The money they received is not dependent in any way on the allocation of who ultimately bears responsibility for the payment of the award. In their filings since the remand, the Gerharts have provided us with no convincing reason why there is any role left for the Board to play in this matter or why there is any need for us to hold a hearing.
We also reject the Gerharts' insistence that the settlement agreement between the Department and Sunoco be filed on the docket. The Gerharts have not directed us to anything in the Supreme Court's Opinion that requires a settlement for the allocation of fees to be filed on a public docket. More generally, the Gerharts do not point to any relevant legal provision that requires this Board or a court to force parties to make their settlement agreements public. In their answer to the Department and Sunoco's earlier request to have the case marked settled, the Gerharts cited 27 Pa.C.S. § 3131(b) for what they contended was the precept that "[t]he Department has no right to privacy in its settlement agreements, especially the financial elements of its financial agreements." (Answer at ¶ 12.) However, 27 Pa.C.S. § 3131 is a provision that falls under a statute concerning statewide water resources planning and the creation of a state water plan to inventory surface and groundwater resources and assess water demands. The specific provision cited by the Gerharts says that reports or other documents obtained by the Statewide Water Resources Committee shall be public documents. The Gerharts offer no explanation of how this is in anyway relevant to a settlement agreement between the Department and another party in a proceeding before the Environmental Hearing Board for a fee request under the Clean Streams Law. It offers absolutely no support for the Gerharts' apparent argument that we should force settlements made with the Department to be filed on our docket. It does not compel us to find that the settlement agreement here should be filed on the docket, particularly since this appeal had nothing to do with the development of a statewide water resources plan.
The Gerharts also cited SWB Yankees LLC v. Wintermantel, 45 A.3d 1029 (Pa. 2012), for what they said was a policy of favoring public access to Commonwealth financial records. However, that case involved an appeal of a decision of the Office of Open Records concerning the disclosure of bids to run concessions at a baseball park that was owned by a municipal authority. The Supreme Court held that such bids were public records under the Commonwealth's Right to Know Law, 65 P.S. §§ 67.101 - 67.3104, and the bids should be provided to the news reporter who requested them. There is simply no support in SWB Yankees for the proposition that legal settlements between a government agency and another party must be filed on the docket of the court or tribunal presiding over the litigation.
The Gerharts have cited the Board's rules at 25 Pa. Code § 1021.141(b)(2) for support for their claim that the settlement should be filed on the docket. However, that rule provides only one option for terminating proceedings before the Board by way of notifying the Board of a settlement and providing the Board a copy of the settlement agreement for inclusion in the record. Our rule on terminating proceedings also allows parties to simply notify the Board of a settlement and request that the docket be marked settled, 25 Pa. Code § 1021.141(b)(1), or for an appellant to simply withdraw its appeal, 25 Pa. Code § 1021.141(a)(1). The Board does not require parties to terminate a proceeding in any particular way. We do not typically second-guess whether or not parties want to file a settlement on the docket.
Even so, we feel compelled to point out that, to the extent the Gerharts still want the settlement (which apparently was not reduced to writing) to be public, the Department and Sunoco have already publicly stated on this docket in their response to the Rule to Show Cause that Sunoco paid the Department the full amount of the fees because Sunoco thought it was cheaper than litigating the allocation before the Board. We are not sure what more the Gerharts want.
In the context of mootness, we have held that "[a] matter before the Board becomes moot when an event occurs which deprives the Board of the ability to provide effective relief or when the appellant has been deprived of a stake in the outcome." Consol Pa. Coal Co. v. DEP, 2015 EHB 48, 55 (quoting Horsehead Res. Dev. Co. v. DEP, 1998 EHB 1101, 1103, aff'd, 780 A.2d 856 (Pa. Cmwlth. 2001)). It is not at all clear what the Gerharts' stake in the outcome of this appeal is anymore. What is clear, however, is that there is no longer any effective relief the Board can offer and there is no reason to have a hearing or any further proceedings on the division of the already-paid fee amount. Because there is simply nothing left for the Board to decide at this point, we will dismiss this appeal and close the docket.
Accordingly, we issue the Order that follows.
ORDER
AND NOW, this 28th day of July, 2023, it is hereby ordered that this appeal is dismissed for all purposes and the docket shall be marked closed.
ENVIRONMENTAL HEARING BOARD
STEVEN C. BECKMAN Chief Judge and Chairperson
SARAH L. CLARK Judge