Case 3:21-cv-00301 Document 1 Filed 05/17/21 Page 1 of 12 PageID #: 1
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`IN THE UNITED STATES DISTRICT COURT
`FOR THE SOUTHERN DISTRICT OF WEST VIRGINIA
`HUNTINGTON DIVISION
`
`OHIO VALLEY ENVIRONMENTAL
`COALITION, WEST VIRGINIA
`HIGHLANDS CONSERVANCY, and
`THE SIERRA CLUB,
`
`Plaintiffs,
`
`v.
`
`Civil Action No.
`3:21-cv-00301
`
`GLENDA OWENS, ACTING
`DIRECTOR, OFFICE OF SURFACE
`MINING RECLAMATION AND
`ENFORCEMENT,
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`Defendant.
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`COMPLAINT
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`INTRODUCTION
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`1.
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`This is a citizen suit for declaratory and injunctive relief against Defendant, Glenda Owens
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`in her official capacity as Acting Director of the Office of Surface Mining Reclamation and
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`Enforcement (“OSMRE”), pursuant to § 520(a)(1) and (a)(2) of the Surface Mining Control and
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`Reclamation Act (“SMCRA”) for failure to comply with the nondiscretionary duty set forth in 30
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`C.F.R. § 732.17(c).
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`2.
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`As detailed below, Plaintiffs allege that OSMRE has failed to make the required
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`determination of whether an amendment to West Virginia’s SMCRA Program is necessary within
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`the 30-day period following receipt of notice from the West Virginia Department of Environmental
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`Protection (“WVDEP”).
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`3.
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`Plaintiffs seek a declaration that Defendant has violated her non-discretionary duty, an
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`injunction requiring her to conform her future conduct to the federal law, and costs and expenses
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`including attorneys’ and expert witness fees.
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`JURISDICTION AND VENUE
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`4.
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`5.
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`This Court has jurisdiction over this action pursuant to 30 U.S.C. § 1270(a).
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`On March 12, 2021, Plaintiffs mailed a notice of the violation and their intent to file suit in
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`letters addressed to the Defendant, the Acting Secretary of the United State Department of the
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`Interior, the Regional Director for OSMRE, and WVDEP as required by § 520(b)(1)(A) of
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`SMCRA. 30 U.S.C. § 1270(b)(1)(A).
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`6.
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`More than sixty days have transpired since the notice letters were sent and Defendant has
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`failed to make a determination pursuant to 30 C.F.R. § 732.17(c) and redress the violation
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`described in the notice letter.
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`7.
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`Venue is appropriate pursuant to 30 U.S.C. § 1270(c) because the surface coal mining
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`operations complained of are in this judicial district.
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`PARTIES
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`8.
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`Defendant is a “person” within the meaning of § 701(19) of SMCRA. 30 U.S.C. §
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`1291(19).
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`9.
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`Ms. Owens is the Acting Director of OSMRE. She is responsible for ensuring that OSMRE
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`meets its obligations under SMCRA and its implementing regulations as the Director of the
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`agency.
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`10.
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`Plaintiff Ohio Valley Environmental Coalition is a nonprofit organization incorporated in
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`Ohio. Its principal place of business is Huntington, West Virginia. It has approximately 550
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`members. Its mission is to organize and maintain a diverse grassroots organization dedicated to
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`the improvement and preservation of the environment through education, grassroots organizing,
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`coalition building, leadership development, and media outreach. The Coalition has focused on
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`water quality issues and is a leading source of information about water pollution in West Virginia.
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`11.
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`Plaintiff West Virginia Highlands Conservancy is a nonprofit organization incorporated in
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`West Virginia. It has approximately 1,000 members. It works for the conservation and wise
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`management of West Virginia’s natural resources, and is one of West Virginia’s oldest
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`environmental activist organizations. The West Virginia Highlands Conservancy is dedicated to
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`protecting our clean air, clean water, forests, streams, mountains, and the health and welfare of the
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`people that live in West Virginia and those who visit to recreate.
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`12.
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`Plaintiff Sierra Club is a nonprofit corporation incorporated in California, with more than
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`780,000 members and supporters nationwide, including approximately 2,700 members who reside
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`in West Virginia and belong to its West Virginia Chapter. Sierra Club is dedicated to exploring,
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`enjoying, and protecting the wild places of Earth; to practicing and promoting responsible use of
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`the Earth’s resources and ecosystems; to educating and enlisting humanity to protect and restore
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`the quality of the natural and human environment; and to using all lawful means to carry out these
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`objectives. Sierra Club’s concerns encompass the exploration, enjoyment, and protection of
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`surface waters in West Virginia.
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`13.
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`Plaintiffs’ members, including Cindy Rank, Ronda Harper, and others use and enjoy the
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`areas affected by WVDEP’s failure to fully reclaim all underground and surface mine sites in West
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`Virginia that have been abandoned since the enactment of SMCRA on August 3, 1977—and
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`OSMRE’s failure to require the state agency to do so. Specifically, Plaintiffs’ members visit, live
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`near, drive by and/or fly over areas of the State and observe the adverse impacts which have
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`resulted from the failure of WVDEP to fully reclaim all mine sites which SMCRA permittees have
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`abandoned before completion of reclamation. The observable adverse impacts of the failure to
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`properly reclaim these surface mines and the pollution of streams resulting from inadequate
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`bonding adversely affect these members’ property, recreational, aesthetic and environmental
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`interests. For example, unreclaimed mines owned by ERP Environmental Fund discharge
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`excessive amounts of selenium and other pollutant discharges that degrade water quality and harm
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`aquatic life in downstream waters, including Rum Creek, the Mud River and its tributaries.
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`Because of this pollution, Plaintiffs’ members refrain from using or restrict their usage of waters
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`receiving these discharges.
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`14.
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`At all relevant times, Plaintiffs were and are “persons” as the term is defined by § 701(19)
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`of SMCRA, 30 U.S.C. § 1291(19).
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`STATUTORY AND REGULATORY FRAMEWORK
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`15.
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`Section 732.17 of OSMRE’s implementing regulations for SMCRA require a State
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`regulatory authority to notify OSMRE “of any significant event or proposed changes which affect
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`the implementation, administration or enforcement of the approved State [SMCRA] program.”
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`30 C.F.R. § 732.17(b).
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`16. Within 30 days of OSMRE’s receipt of that notification, the Director of OSMRE “shall
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`determine whether a State program amendment is required and notify the State regulatory authority
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`of the decision.” Id. § 732.17(c).
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`17.
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`To guide OSMRE in making its determination, the regulations further provide a list of three
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`examples of when State program amendments may be required:
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`(1) As a result of changes in [SMCRA] or regulations of this chapter,
`the approved State program no longer meets the requirements of
`[SMCRA] or this chapter; or (2) Conditions or events change the
`implementation, administration or enforcement of the State
`program; or (3) Conditions or events indicate that the approved State
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`program no longer meets the requirements of [SMCRA] or this
`chapter.
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`Id. § 732.17(e)(1)-(3).
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`Thus, when the State program no longer meets the requirements of SMCRA, a program
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`18.
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`amendment is necessary. Id. § 732.17(e)(2).
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`19.
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`SMCRA requires permittees to post bonds in an amount that is sufficient to assure
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`completion of reclamation by the State regulatory authority in the event of forfeiture—that is, if
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`the operator refuses or is unable to complete reclamation. 30 U.S.C. § 1259(a), (b). West Virginia’s
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`SMCRA program imposes the same requirement. W. Va. Code § 22-3-11. The State regulatory
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`authority must ensure that adequate bond coverage is in effect “at all times.” 30 C.F.R. § 800.4(g).
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`20.
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`To ensure adequate bond coverage, states may adopt an alternative bonding system
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`(“ABS”) that “will achieve the objectives and purposes of the bonding program pursuant to
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`[SMCRA].” 30 U.S.C. § 1259(c).
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`21.
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`To achieve this, the state ABS “must assure that the regulatory authority will have available
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`sufficient money to complete the reclamation plan for any areas which may be in default at any
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`time.” 30 C.F.R. § 800.11(e)(1) (emphasis added). The words “at any time” include both present
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`and potential future insolvencies.
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`22. West Virginia has adopted an ABS, which is funded by a tax levied on each ton of coal
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`mined to support the Special Reclamation Fund (“SRF”) that is to be used to complete reclamation
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`at forfeited sites. Whenever the amount of forfeited and posted bonds for a mine is less than the
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`actual cost of reclamation, WVDEP must withdraw funds from the SRF to pay for reclamation.
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`W. Va. Code §§ 22-3-11(g), (i).
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`23.
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`In approving West Virginia’s program, OSMRE stated that 30 C.F.R. § 800.11(e) “requires
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`that West Virginia modify its ABS to (A) eliminate the deficit and (B) ensure that sufficient money
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`will be available to compete land and water reclamation on all existing and future bond forfeiture
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`sites.” 67 Fed. Reg. 37610, 37613 (May 29, 2002) (emphasis added). OSMRE also approved West
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`Virginia’s establishment of the Special Reclamation Advisory Council to meet the requirements
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`of 30 C.F.R. § 800.11(e); it explained that “the Advisory Council will have to determine current
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`and anticipated bond forfeiture reclamation obligations, including water treatment.” Id. (emphasis
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`added). OSMRE further stated, “the Advisory Council has an obligation under State law to monitor
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`the [SRF], address funding-related issues, and recommend measures to ensure the long-term
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`solvency of the [SRF].” Id. at 37614.
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`FACTS
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`24.
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`On December 30, 2020, WVDEP sent OSMRE a letter notifying the agency and the
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`Director at the time, Lanny Erdos, of significant events that affect the West Virginia SMCRA
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`program and may necessitate a program amendment.
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`25.
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`That notice was the result of litigation between Plaintiffs and WVDEP. In their lawsuit
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`against WVDEP, Plaintiffs asserted that WVDEP had violated its own non-discretionary duty by
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`failing to provide notice to OSMRE of a significant change in the State’s program.
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`26.
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`Plaintiffs’ allegations were primarily based upon the statements of WVDEP’s own Director
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`of Mining and Reclamation, Harold Ward, in an affidavit filed in West Virginia state court, which
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`made clear that the 2020 insolvency of coal mine operator ERP Environmental Fund threatened
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`the viability of the SRF.
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`27.
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`In denying WVDEP’s motion to dismiss that lawsuit, this Court found, as a matter of law,
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`that the Plaintiffs’ “allegations present a plausible claim because the alternative bonding system is
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`an important source of funding for the state’s SMCRA program and may be significantly impacted
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`when a major permit holder becomes insolvent.” Memorandum Opinion, Ohio Valley
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`Environmental Coalition v. Caperton, No. 3:20-cv-470, at *10, 2020 WL 6703129 (S.D. W.Va.
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`November 13, 2020).
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`28.
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`Statements from Harold Ward from his affidavit in West Virginia state court were quoted
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`both in the Plaintiffs’ complaint and this Court’s order, both of which were provided to OSMRE
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`as attachments to WVDEP’s § 732.17(b) notice letter. Specifically, the Court’s opinion quoted the
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`following statements made by Mr. Ward in his affidavit:
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`a. ERP holds more than 100 permits issued by WVDEP. Ward Affidavit at ¶ 9.
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`b. Since 2015, WVDEP has issued 160 notices of violation against ERP, 118 failure to
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`abate cessation orders, and 41 orders to show cause why relevant ERP permits should
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`not be revoked. Id. at ¶¶ 5–7.
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`c. ERP has acknowledged to WVDEP that it is in material default of its permit and
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`reclamation obligations, but has no sources of cash or other assets available for
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`reclamation and water treatment. Id. at ¶ 9.
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`d. As of March 19, 2020, ERP laid off all of its employees and ceased operations. Id. at ¶
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`10.
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`e. WVDEP expects ERP sites to begin to threaten imminent and identifiable harm to the
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`environment and the public health and safety if left unreclaimed. Id. at ¶ 13.
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`Memorandum Opinion, Caperton, at *4–5.
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`29.
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` Mr. Ward’s affidavit further clarified WVDEP’s inability to address ERP’s reclamation
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`obligations through the OSMRE-approved ABS:
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`a. At the time ERP acquired its permits, WVDEP estimated reclamation costs to be “in
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`excess of $230 million” with potentially “hundreds of millions” more in water
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`treatment liabilities. Ward Affidavit at ¶¶ 25–26.
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`b. WVDEP is unsure that the surety bond provider can pay out the full $115 million in
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`bonds that should be available for reclaiming ERP’s permits. Id. at ¶ 63.
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`c. Reclaiming permits through the SRF “would overwhelm the fund both financially and
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`administratively,” and therefore reclamation may not be completed as required by
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`SMCRA. Id. at ¶ 64.
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`Memorandum Opinion, Caperton, at *4–5.
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`30.
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`Additionally, Mr. Ward’s statements that were incorporated into WVDEP’s § 732.17(b)
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`notice were sufficient to convince the West Virginia Business Court to grant a preliminary
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`injunction appointing a Special Receiver and placing ERP’s assets in a receivership to avoid the
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`SRF being “overwhelmed.” Preliminary Injunction and Order Preliminarily Appointing a Special
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`Receiver for Defendant’s Property, Assets, and Operations, Harold D. Ward v. ERP
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`Environmental Fund, Inc., No. 20-C-282 (Dec. 22, 2020).
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`31.
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`The Special Receivership has not solved the problems created by ERP”s insolvency.
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`Indeed, the Special Receiver himself has stated in a status report to this Court in a related
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`proceeding that “he does not believe that there will be sufficient sources of revenue to cover all of
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`the ERP reclamation and compliance obligations on all of the remaining EPR permits in all
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`jurisdictions.”
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`32. Moreover, the creation of the Special Receivership is an extraordinary procedure meant to
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`reduce costs to the West Virginia Special Reclamation Program and ERP’s sureties rather than
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`encourage fast and efficient reclamation and SMCRA compliance at ERP’s mines. It is not
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`consistent with the State’s obligations under the Act.
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`33. While ERP’s sureties are providing money to the Special Receivership through an initial
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`contribution of $1,000,000 and ongoing preferred stock purchases, the amount pales in comparison
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`to the $115,000,000 that would be available if ERP’s bonds were forfeited.
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`34.
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`As explained in the Complaint in the Caperton case, and in Plaintiffs’ Notice of Intent to
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`Sue OSMRE, ERP is not the only major mining company in West Virginia that is currently
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`insolvent or that faces a threat of immediate insolvency.
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`35.
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`The recent bankruptcy of Blackjewel LLC and its affiliate Revelation Energy (as well as
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`other subsidiaries), resulted in bond forfeiture at mines in Kanawha County, West Virginia. The
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`WVDEP had been in ongoing litigation with that company for years over ongoing water quality
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`problems at the site and Revelation’s failure to meet its reclamation obligations.
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`36.
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`Separately, Lexington Coal Company, which holds more than 150 permits in West Virginia
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`and is operated by Blackjewel’s former CEO, Jeff Hoops, is embroiled in litigation brought by
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`Blackjewel. Blackjewel alleges that Hoops inappropriately stripped assets from Blackjewel in
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`favor of Lexington.
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`37.
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`Other companies such as Southeastern Land, LLC are not currently in bankruptcy but are
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`subject to ongoing litigation by the WVDEP for permit violations across dozens of mining permits.
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`38.
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`In West Virginia, the Special Reclamation Fund Advisory Council has the obligation to
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`monitor the state ABS fund, address funding-related issues, and recommend measures to ensure
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`the long-term solvency of the Fund.
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`39.
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`The 2020 Annual Report from the Special Reclamation Fund Advisory Council shows the
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`entity has failed to meet its obligations. The report does not even mention the current insolvency
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`of ERP or the Special Receivership that was approved to prevent the imminent failure of the
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`Special Reclamation Program. Likewise, the Advisory Council Annual Report fails to mention or
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`analyze any of the other current or threatened insolvencies that could result in reclamation
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`responsibilities of even greater magnitude than the failure of ERP. Instead, the Special
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`Reclamation Fund Advisory Council continues to rely on outdated projections of forfeiture rates
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`based on those of decades past, which do not represent the current state of the coal industry in
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`West Virginia.
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`40.
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`On January 29, 2021, OSMRE responded to WVDEP’s § 732.17(b) notice but,
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`significantly, did not make the determination of whether a program amendment is required despite
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`the ample evidence that such an amendment is necessary.
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`41.
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`Instead, OSMRE merely indicated its intent to cooperatively work with WVDEP and make
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`such a determination in the future. No proposed schedule or date by which this determination will
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`be made was mentioned in the letter.
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`42.
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`To date, OSMRE and WVDEP have made little or no progress towards analysis of the
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`situation.
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`43.
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`Additionally, OSMRE has still not made the requisite determination under 30 C.F.R. §
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`732.17(c).
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`CLAIM FOR RELIEF
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`(Violation of 30 C.F.R. § 732.17(c))
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`44.
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`Plaintiffs incorporate by reference all allegations contained in paragraphs 1 through 43
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`above.
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`45.
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`Pursuant to 30 C.F.R. § 732.17(c), OSMRE had 30 days from receipt of WVDEP’s
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`notification to determine whether a State program amendment is required and notify the State
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`regulatory authority of the decision.
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`46.
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`Since WVDEP sent its notification, approximately 140 days have passed without OSMRE
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`making the requisite determination of whether a State program amendment is required.
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`47.
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`Although OSMRE did respond to WVDEP’s notification, the response did not satisfy
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`OSMRE’s non-discretionary duty to make a determination of whether a State program amendment
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`is required.
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`48.
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`For these reasons, OSMRE has violated and is in continuing violation of the requirements
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`set forth in SMCRA.
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`49.
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`Because the current West Virginia Special Reclamation Fund is not able to ensure that
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`sufficient money will be available to complete land and water reclamation on all existing and future
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`bond forfeiture sites, in accordance with the requirements of 30 C.F.R. § 800.11(e), and the Special
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`Reclamation Fund Advisory Council refuses to meet in its responsibility to oversee such fund, the
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`Defendant must determine that a state program amendment is necessary.
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`REQUESTS FOR RELIEF
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`50.
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`51.
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`A Declaration that OSMRE has violated and is in continuing violation of SMCRA.
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`An Injunction compelling OSMRE to immediately comply with SMCRA and make the
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`determination that amendment to the West Virginia SMCRA program is necessary.
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`52.
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`An Order requiring OSM to comply fully and without delay with every provision of
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`SMCRA related to its oversight of the West Virginia state bonding program;
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`53.
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`An Order awarding Plaintiffs their attorneys’ fees, expert witness fees, and all other
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`reasonable costs and expenses incurred in pursuit of this action; and
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`54.
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`A Grant of any other such relief as this Court deems just and proper.
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`DATED: May 17, 2021
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`Respectfully submitted,
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`/s/ J. Michael Becher
`J.(cid:3)Michael Becher (WV Bar No. 10588)(cid:3)
`Appalachian Mountain Advocates
`P.O. Box 507
`Lewisburg, WV 24901
`(304)(cid:3)382-4798
`mbecher@appalmad.org
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`Counsel for Plaintiffs
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