West Virginia Supreme Court Dissolves Water Replacement Obligation of Mine Operator
April 10, 2018
By Order dated April 5, 2018, the West Virginia Supreme Court issued its second ruling in the past six months exploring the duties imposed by the West Virginia Surface Coal Mining and Reclamation Act (“WV SCMRA”) upon coal mine operators. See Belcher v. Dynamic Energy, Inc.. WV SCMRA requires mine operators to “replace” water supplies of property owners who use the water for domestic, agricultural, and industrial uses where it has been contaminated or diminished by mining. W.Va. Code § 22-3-24(b). The same statute provides that:
(c) There is a rebuttable presumption of impact from mining where WVDEP determines there was a pre-mining survey that showed no contamination or interruption and also determines that contamination or diminution exists post-mining;
(d) Where WVDEP determines that there has been contamination or diminution then the mine operator must: i) provide an emergency water supply within 24 hours; ii) provide a temporary water supply (such as water buffaloes) within 72 hours; and iii) within 30 days start or outline activities for providing a permanent supply; and
(h) Where WVDEP orders water replacement a mine operator may not discontinue providing water until authorized by WVDEP.
In October 2017, the Supreme Court ruled that the statute cannot be used to compel action by WVDEP where WVDEP has investigated and failed to determine that a particular mine caused a problem. In that case, citizens sued WVDEP seeking a judicial order requiring the agency to force the mine operator to furnish water. There, the Circuit Court issued such an order, even though WVDEP had investigated and found no evidence that the mine site at issue had caused water contamination. On appeal from the Circuit Court’s water replacement order, the Supreme Court stated that:
Our reading of the legislative scheme at issue makes clear that a finding by the DEP of contamination, diminution, or interruption to an owner’s water supply is a prerequisite to the issuance of any water replacement relief under SMCRA. See W.Va. Code § 22-3-24. Not only did the circuit court lack the authority to supply the requisite finding of water contamination necessary to grant any water replacement relief under SMCRA but it further lacked the authority to grant relief in mandamus predicated on the DEP’s failure to perform a non-discretionary duty. As discussed above, the DEP had a duty to issue a notice of violation only upon its finding of a specific violation of SMCRA. See W.Va. Code § 22-3-17. But as the record reveals, the DEP never found any evidence that SMCRA had been violated by Eastern, as alleged in the Residents’ complaint. See supra note 17.
In its recent April 5, 2018 opinion, the State Supreme Court again had occasion to explore the contours of WV SMCRA’s water replacement provision. In Belcher v. Dynamic Energy, a group of citizens sued a mine operator directly rather than WVDEP. They argued that the mine operator was obligated by W.Va. Code § 22-3-24 to provide them with replacement water. In the Spring of 2014, WVDEP had investigated a complaint filed by counsel on behalf of the plaintiffs and found that a preliminary review of existing water data did not support the request for water replacement. In spite of the agency’s initial findings and ongoing investigation, the Circuit Court of Wyoming County granted a preliminary injunction in late 2014, requiring the mine operator to provide temporary water until liability was evaluated at trial.
The parties went to trial, and a jury found that the mine operator had not adversely affected the water supplies. Thereafter, WVDEP issued a July 21, 2016 letter relieving the operator of any further water replacement obligations. The mine operator understandably moved to dissolve the preliminary injunction. However, the Circuit Court denied the request, ruling that the WV SCMRA required that the injunction remain in place pending any appeal of the adverse judgment by the losing plaintiffs. In denying the request to dissolve the injunction, the Circuit Court relied on W.Va. Code § 22-3-24(h), which requires mine operators to continue providing replacement water where ordered to do so [notwithstanding a challenge to WVDEP’s order] until WVDEP has released the operator of that obligation.
On appeal, the Supreme Court reversed. The Court noted that WVDEP had issued a letter finding the operator was not responsible after the jury had rendered a verdict in the operator’s favor. Continuing, it ruled that, “pursuant to W.Va. Code § 22-3-24(h), an operator’s obligation to provide replacement water service in accordance with W.Va. Code § 22-3-24(b) and (d) ends when the [WVDEP] authorizes discontinuation thereof.” Had WVDEP not issued a letter after the jury verdict, however, it is not clear that the ruling would have been the same. That is, despite a defense verdict, the Supreme Court might have ruled that the order to provide replacement water remains in effect until the landowners have exhausted all of their available appeals.
Although the Court acknowledged in a footnote WVDEP’s complaint investigation, which pre-dated the Circuit Court’s water replacement injunction, the opinion did not discuss the extent to which the agency’s contrary findings should have—consistent with the Supreme Court’s October 2017 opinion—precluded the Circuit Court’s water replacement order in the first place. Instead, the Court observed that “[t]he parties do not dispute the propriety of the circuit court’s order granting this preliminary injunction in the first instance.” Thus, rather than focusing on the prerequisites to ordering water replacement, the arguments and the opinion focused on when it is appropriate to dissolve an injunction requiring replacement.
As an aside, at the oral argument in this case, the Supreme Court was informed that the mine operator had unilaterally stopped providing replacement water after the end of 2017 because it could no longer afford the $35,000/month cost. Even though the replacement order should have been dissolved in July 2016 (after the jury verdict and WVDEP’s letter releasing the operator), the Supreme Court was disturbed that the operator had unilaterally chosen this path after the Circuit Court refused to dissolve the injunction. Accordingly, while the Supreme Court effectively released the mine operator from the duty to continue supplying water, it remanded the case to the trial court for review of the mine operator’s refusal to comply with the water replacement order after January 1, 2018.