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Clean Air Council v. Commonwealth, 2023 Pa. LEXIS 234 (S. Ct. February 22, 2023) (Wecht, J.) The General Assembly has charged the Department of Environmental Protection (“DEP”) with the authority to grant permits for activities regulated under the Clean Streams Law (“CSL”). The principal responsibility for ensuring that permits have been issued properly and that the permitted activities are consistent with the CSL’s mandates lies with interested citizens and organizations. Specifically, the CSL provides that “[a]ny person or municipality adversely affected” by DEP actions may appeal to the Environmental Hearing Board (“the Board”). So it falls to these individuals and entities to identify any flaws or irregularities in the approval process and to appeal DEP decisions, often at considerable expense. The General Assembly has accordingly granted the Board discretion to shift the costs and attorney’s fees associated with CSL permit appeals among the parties to those appeals. Significantly, the statutory language neither limits nor guides the Board’s discretion. The lone qualitative textual proviso is that only “reasonable” fees may be shifted from one party to another.

Against the backdrop of this broad legislative grant of discretion, the Board has opted on its own to cabin that discretion. Put differently, the Board has imposed strictures upon itself that address the question of when it will order one party to compensate another for fees incurred in litigating an appeal. For example, the Board has made clear that only a party which “prevails” may recover fees. The self-imposed limitation at issue in today’s cases, which we consolidated for argument and which we now decide together in this Opinion, is 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.

We conclude that the to-all-appearances per se bad-faith standard that the Board has come to apply to any effort to recover fees against a private party is incompatible with the intent embodied in the CSL. The Board has justified its contrary view with an overbroad reading of our case law, relying upon an assumed equivalency between permit applicants and citizen objectors that we cannot reconcile with the parties’ respective roles and incentives in pursuing or defending such appeals under the CSL. We further conclude that DEP should stand on an equal footing with all other parties at the outset of a fee-shifting inquiry, subject to disparate treatment only when it bears disparate responsibility for whatever prompted a successful appeal.