Could Kentucky's petroleum tank cleanup fund reimburse a landowner's lawyer fees?

Plain-English summary

In 1993, Kentucky's Attorney General said the Petroleum Storage Tank Environmental Assurance Fund Commission could reimburse some attorney fees as part of corrective-action costs. The key was the work's connection to assessing or remediating a particular petroleum tank release. The opinion allowed reasonable fees for work that was necessary to the cleanup, supported by complete invoices, and directly beneficial to the effort at an identifiable site.

The AG drew a firm line around general advice. An initial consultation explaining a landowner's obligations or how to obtain reimbursement did not qualify. By contrast, legal work needed to prepare a contract with the company performing assessment or remediation, or to arrange work on another person's land, could qualify if the Commission found the direct connection to the cleanup.

Currency note

This opinion was issued in 1993. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

Historical summary

Tank owners and operators

The opinion described a possible path for reimbursement of necessary legal work connected to a specific site's assessment or remediation. It did not say every attorney bill was covered. The AG said the work had to be reasonably required and documented by comprehensive invoicing.

Fund administrators

The AG said the Commission should require expenses to be fully documented and specifically related to facilitating work at an identifiable site. It distinguished those fees from general legal advice that did not directly advance assessment or remediation.

Environmental attorneys

The opinion gave two examples of potentially reimbursable work: preparing a necessary contract with an assessment or cleanup company, and legal agreements or assistance needed to work on land owned by someone else. In each case, the Commission had to find that the activity was directly related to the particular cleanup.

Common questions

Were all lawyer fees on a petroleum tank claim reimbursable?

No. The AG limited reimbursement to reasonable, documented work necessarily connected to assessment or remediation at a specific site.

Could the fund pay a lawyer for explaining how to file a claim?

The opinion said no for an initial consultation about the owner's obligations or measures needed to obtain reimbursement. It treated that work as separate from assessment or remediation.

Could contract drafting for a cleanup company be reimbursed?

Yes, if the contract was necessary for the assessment or remediation effort. The AG offered that as an example of legal work the Commission could reimburse.

Did the ordinary rule against shifting litigation attorney fees decide this issue?

No. The AG said that rule concerned litigation between private parties, while the Commission was deciding whether attorney work counted as an expense of corrective action.

Background and statutory framework

Commission Executive Director Jack B. Hall asked whether claimant attorney fees were reimbursable "costs" under KRS 224.60-140(2)(a). The AG read that provision alongside KRS 224.60-115(5)'s corrective-action definition and the fund's remediation purpose. It said fees could fit "costs, expenses and other obligations" when tied to taking corrective action. The opinion distinguished Kentucky State Bank's litigation-fee rule and used Seaboard Oil and City of Owensboro when explaining statutory purpose.

Citations and references

• KRS 224.60-140(2)(a): reimbursement authority for corrective-action costs, expenses, and obligations.
• KRS 224.60-115(5): corrective-action definition quoted by the AG.
• KRS 446.080: statutory-construction rule quoted in the opinion.
• Kentucky State Bank v. AG Services, Inc., Ky. App., 663 S.W.2d 754 (1984): ordinary litigation-fee rule distinguished here.
• Seaboard Oil Company v. Commonwealth, 193 Ky. 629, 237 S.W. 48, 49 (1922): whole-act and statutory-purpose interpretation.
• City of Owensboro v. Noffsinger, Ky., 280 S.W.2d 517, 519 (1955): statutory-purpose authority cited by the AG.

Source

• Landing page: https://www.ag.ky.gov/Resources/Opinions/Opinions/OAG93-034.htm

Original opinion text

OAG 93-34

April 16, 1993

Jack B. Hall, Executive Director

Petroleum Storage Tank Environmental

Assurance Fund Commission

59 Fountain Place

Wilkinson Boulevard

Frankfort, KY 40601

RE: Petroleum Storage Tank Environmental Assurance Fund Commission

Reimbursement of Attorney Costs

Dear Mr. Hall:

This office is in receipt of your letter requesting an opinion regarding the interpretation of statutory authority possessed by the Petroleum Storage Tank Environmental Assurance Fund Commission ("Commission"). Under KRS 224, Subchapter 60, the Commission is authorized "to reimburse petroleum storage tank owners or operators for the costs, expenses, and other obligations incurred for corrective action as the result of a release into the environment from a petroleum storage tank." KRS 224.60-140(2)(a). You have also noted in your letter that corrective action is further defined by KRS 224.60-115(5) as meaning:

[t]hose actions necessary to protect human health and the environment in the event of a release from a petroleum storage tank. Corrective action includes initial responses taken pursuant to KRS 224.60-135, remedial actions to clean up contaminated groundwater, surface waters, or soil, actions to address residual efforts after initial corrective action is taken, and actions taken to restore or replace potable water supplies. Corrective action also includes actions necessary to monitor, assess, and evaluate a release, as well as actions necessary to monitor, assess, and evaluate the effectiveness of remedial action after a release has occurred.

You have stated that during the course of reviewing claims you have been faced with decisions regarding payments for attorney fees as "costs" which are reimbursable under the statutory authority of the Commission. The question you have presented is "whether attorney fees asserted by claimant are costs associated with corrective action." You have also indicated that in the past the Commission has determined that certain attorney fees would be appropriately reimbursable as "costs," while other fees would not.

As a general matter, it should be noted that under the laws of most of the states, including Kentucky, attorney fees are not considered allowable as costs unless there is a specific statute or agreement which authorizes the court to make such an award. Kentucky State Bank v. AG Services, Inc., Ky. App., 663 S.W.2d 754 (1984). However, the law in this area concerns suits by private parties under various statutes which impose liability for litigation, a situation not applicable to your question. Obviously, the Commission is not involved in determining who should pay the "costs" for litigation between two parties.

It is also of no assistance to examine cases interpreting KRS Chapter 224, Subchapter 60, since this law was only passed in 1990 and there are no court interpretations of which we are aware. There are, however, general principles of statutory construction which are of assistance.

First, in numerous cases the Kentucky Supreme Court has stated that in ascertaining the meaning of a statute the court is to consider the entire enactment. Budget Marketing, Inc., v. Commonwealth ex rel. Stephens, Ky., 587 S.W.2d 245, 247 (1979); Commonwealth v. Trousdale, 297 Ky. 724, 181 S.W.2d 254, 255 (1944); Seaboard Oil Company v. Commonwealth, 193 Ky. 629, 237 S.W. 48, 49 (1922); Commonwealth v. Trent, 117 Ky. 34, 77 S.W. 390, 393 (1903). Therefore, in analyzing the meaning of KRS 224.60-140(2)(a) we must necessarily include reference to KRS 224, Subchapter 60, in its entirety. In addition, KRS 446.080 states:

(1) All statutes of this state shall be liberally construed with a view to promote their objects and carry out the intent of the Legislature, and . . .

(4) All words and phrases shall be construed according tot he common and approved usage of language, but technical words and phrases, and such others as may have acquired a peculiar and appropriate meaning in the law, shall be construed according to such meaning.

Although the term "costs" does have an established, technical meaning in litigation, your question need not be answered on this basis, since attorney fees could be considered as "costs," "expenses" or "other obligations" under the statute. KRS 224.60-140(2)(a). The key point is whether attorney fees are reimbursable as part of the "costs, expenses and other obligations incurred" in taking corrective action.

To determine whether corrective action could include the work of an attorney, and what sort of work should be considered appropriate, we need to turn to another general rule of statutory construction. This rule is that, where possible, statutory interpretations should give effect to the "intent and purpose" of the law. Seaboard Oil Company v. Commonwealth, 193 Ky. 629, 237 S.W. 48, 49 (1922); City of Owensboro v. Noffsinger, Ky., 280 S.W.2d 517, 519 (1955).

It is clear from the statement of purpose contained in the Act creating the Petroleum Storage Tank Environmental Assurance Fund Commission that the Commission is to facilitate the remediation of environmental problems associated with petroleum storage tanks. The money appropriated to the Commission is used to aid landowners in these efforts. Accordingly, anything which makes it less likely that assessment and remediation will be quickly, efficiently, and effectively undertaken will undercut the stated purpose of the Act. For this reason, this office is of the opinion that, under appropriate circumstances, attorney fees may be properly considered as part of the "costs, expenses and other obligations incurred for corrective action."

This is not to say that every item for which an attorney might charge would be included. The Commission should require that all attorney expenses be fully documented and be specifically related to facilitating assessment or remedial action of a specific, identifiable site. For example, initial consultation with a landowner would not be included, even though the attorney may spend considerable time advising the client of the existence of his or her obligation and the measures necessary to obtain reimbursement from the Commission. Those costs or expenses, although associated with the fact that a problem site may exist, are not directly related to the assessment or remediation effort.

On the other hand, an attorney fee based upon services which are necessarily related to the assessment or remediation effort would, in our opinion, be properly reimbursable by the Commission. For example, where it is necessary for an attorney to draw up a contract between the landowner and the company which will actually perform the assessment or remediation, these fees may be recoverable. In some cases, the assessment or remediation may have to be undertaken on land which belongs to other individuals, or there may be specific circumstances which will require legal agreements or an attorney's assistance. If the activity is found by the Commission to be directly related to the assessment or remediation effort, it is our opinion that it would be reimbursable. Again, it should be stressed that the attorney's work must ultimately benefit the on-going cleanup effort at a particular site or sites.

In conclusion, we summarize by stating that attorney fees are, in our opinion, reimbursable by the Commission where the fee represents a reasonable cost for actually work performed, as indicated by complete and comprehensive invoicing from the attorney, and where the work performed is reasonably and necessarily required for assessment or remediation efforts of a specific site or sites. The Commission is not authorized to pay for general advice or other matters which are not specifically required for the cleanup effort.

We trust this opinion has been of assistance to you.

Sincerely,

CHRIS GORMAN

ATTORNEY GENERAL

John S. Gillig

Environmental Special Counsel

To the Attorney General

Room 118, Capitol

Frankfort, KY 40601

(502) 564-7600

JSG/rrb