Federal Court Denies WVDEP's Motion to Dismiss Claim that State Failed to Notify OSM of a "Significant Event" in the State's SMCRA Bonding Program: OVEC v. WVDEP (SDWV)
December 3, 2020
Earlier this year, OVEC and other anti-mining groups sued the WVDEP, claiming the agency had failed to provide notice to OSM that the State’s surface mining reclamation program had suffered “a significant change in funding or budgeting.” The WVDEP moved to dismiss the Complaint claiming that: 1) the plaintiffs lacked standing because there had been no failure of the bonding system; 2) plaintiffs failed to state a proper claim because: a) WVDEP did send a notice to OSM; b) because the rule cited as the basis of the lawsuit does not require a notice unless WVDEP itself makes an affirmative finding that there has been a significant change in the bonding program; 3) that the case is precluded because the sufficiency of the State’s reclamation bonding program was litigated in 2001; and 4) that the 11th Amendment bars the suit since the case is really one to enforce state, rather than federal, law. Judge Robert C. Chambers (S.D.W.Va.) recently denied all of the grounds for dismissal.
The plaintiffs’ case relies on a federal surface mining rule issued under SMCRA. That rule provides that states with federally-approved mining programs, such as West Virginia, “shall promptly notify [OSM], in writing of any significant events or proposed changes which affect the implementation, administration or enforcement of the approved [state] program.” The rule defines “significant events” as including “significant changes in funding or budgeting relative to the approved program.” 30 CFR §732.17(b)(6).
In March 2020, WVDEP sought and obtained a state court order to appoint a receiver to oversee compliance by ERP Environmental Fund (ERP) with its more than 100 state-issued permits. There, WVDEP alleged that ERP was in default of many of its reclamation obligations, had laid off most of its employees, and that WVDEP had issued over 150 notices of violations and orders to show cause why permits should not be revoked. In addition, WVDEP alleged that ERP held about $115 million in bonds, that the total reclamation costs exceed $230 million, and that the simultaneous forfeiture of all of ERP’s reclamation bonds “could be problematic.” Relying on these representations, OVEC argued that WVDEP was obligated to advise OSM of a “significant event.” WVDEP moved to dismiss in advance of any consideration by the Court of the merits of the case - and the Court has not denied that motion. A summary of WVDEP’s arguments and the Court’s disposition follows:
Standing: WVDEP argued that OVEC lacked standing because it has suffered no concrete injury that would necessarily be addressed even if OVEC prevailed. WVDEP said that the reclamation bonding program (which in WV consists of site-specific bonds of up to $5,000 per acre backed by a bond “pool” funded by a tax on mined coal) had not yet been overburdened. It also said that even if WVDEP sent the notice sought by OVEC that there was no guarantee, OSM would require specific action. The Court agreed that these arguments might have merit “under a traditional standing analysis,” but said that because Plaintiffs had alleged a “procedural” injury their claims were subject to a relaxed standard. Where a plaintiff alleges that an agency has failed to provide notice or discharge some other procedural obligation, it need not show an immediate injury “so long as the procedures in question are designed to protect some threatened concrete interest of the [plaintiff]….”
The Court also found that the matter was “ripe” because the claim that the rule has been violated does not rely on future uncertainties. Here, the Court relied heavily on WVDEP’s own statements in the ERP litigation to say that “ERP’s insolvency has shifted the financial burden [of reclamation] from ERP to WVDEP and gives rise to a claim that is not dependent on future uncertainties.” The Court also found that OVEC would face a hardship if the Court withheld judgment because it would “enable WVDEP to continue avoiding OSM oversight.”
Failure to State a Claim: WVDEP argued that it had sent a notice to OSM. In particular, it cited a letter in which it forwarded OVEC’s “notice of intent to sue.” The Court rejected the letter as proper notice because WVDEP had qualified it to say that “notwithstanding [OVEC’s claims, its] allegations … are not findings by WVDEP that significant events occurred which affect … the approved State program.”
WVDEP also argued that its obligations under the rule only arise if it makes an affirmative determination that a significant event has occurred. The Court rejected this argument because the rule contains no such language.
Res Judicata: WVDEP argued that one of the several prior cases challenging the sufficiency of the state bonding program, WV Highlands Conservancy v. Norton, 147 F. Supp. 474 (S.D. W.Va. 2001), had previously ruled that the State enjoyed sovereign immunity under the 11th Amendment from suit in federal court - and that this prior ruling bound the Plaintiffs. The 11th Amendment prohibits States from being sued in federal court for violations of state, but not of federal, law. In Norton, the plaintiffs argued that WVDEP had violated federal law by not maintaining a bonding program that met SMCRA’s requirements. Relying on a prior decision of the 4th Circuit, though, the court in Norton said, “Bragg teaches … federal law is subsumed in the approved state program and, even where inconsistent with federal law and disapproved by OSM, must be enforced as state law.” Having determined that the sufficiency of a State bonding program is a matter of state law rather than federal law, the court in Norton dismissed WVDEP from the federal lawsuit under the 11th Amendment.
Judge Chambers disposed quickly of this argument, ruling that the “transaction” at issue in Norton was different than the facts or “transaction” at issue now, and, as a result, the Plaintiffs are not bound by its result.
11th Amendment: In addition to relying on the decision in Norton to say that the issue of 11th Amendment immunity was already decided, WVDEP independently argued that the Amendment barred suit against the State. Here, though, Judge Chambers held that the federal rule at issue remains in effect even after a state SMCRA program is approved and is not thereby “subsumed” by the state program. Because Plaintiffs were seeking to enforce this federal rule, which is not state law, the 11th Amendment does not bar the suit.