Rockwool Plant Developer in WV Sues School Board for Threatening to Condemn Project Property
April 15, 2019
The proposed Rockwool insulation manufacturing facility in Jefferson County, West Virginia has seen more than its share of opposition from local residents. Most recently, county residents blocked access to the Danish Embassy in Washington to express their disapproval of the facility, which is a subsidiary of a Denmark-based company. Now, Rockwool and one of its original supporters, the Jefferson County School Board, are squaring off.
Originally, the facility was greeted with open arms by the County Commission and County School Board, which both executed a “payment in lieu of taxes” (“PILOT”) agreement with Roxul USA, Inc., d/b/a Rockwool in late 2017. The PILOT agreement called for a county development authority to take title to the site at the conclusion of construction and to lease it back to Rockwool. During the term of the lease, Rockwool would have been required to make prescribed payments to the County in lieu of normal property taxes.
In late 2018, though, a group opposed to the Rockwool plant challenged the constitutionality of the PILOT agreement under state law by filing suit in state court against Rockwool, the County and the School Board. There, the challengers claim that the PILOT agreement allowed Rockwool to delay or escape property tax payments for five years, thereby violating provisions of the State Constitution requiring that all property be taxed equally. Other efforts to attack PILOT agreements in West Virginia, at least indirectly, have failed in the State Supreme Court.
More recently, local papers have reported that the County School Board is exploring whether it may withdraw from the PILOT agreement. Then, by letter of April 9, 2019 the School Board’s counsel informed Rockwool that it had identified Rockwool’s site as fitting a need for a regional student support center. The letter offered to buy the property for slightly more than $1.3 million, citing State Supreme Court precedent valuing property for the purposes of avoiding an unconstitutional “take.” The letter was from a Tysons Corner, Virginia firm that identifies itself as representing clients in Virginia, Maryland and D.C. - but not in West Virginia.
Rockwool struck back almost immediately with a lawsuit in federal court against the Board of Education. There, Rockwool claims that the Student Center is a pretext to gain favor with Rockwool opponents and that the Board just acquired 150 acres in the same town that are equally suitable for the same purpose. It claims that the Board’s letter constitutes a threat to condemn Rockwool’s property that was undertaken without any publicly-noticed meetings in violation of its federal and state constitutional due process rights. It also claims that the County is not acting for a public purpose, but rather as a means of undermining the PILOT agreement to which the Board is a party. Finally, it claims that the Board’s efforts to avoid construction of the Rockwool facility constitute pretextual challenges to environmental permits, and are preempted by the state laws providing for those permits.