Environmental Alert
(by Christopher (Kip) Power and Robert Stonestreet)
On August 12, 2019, the federal District Court for the Southern District of West Virginia (Judge Irene C. Berger) entered an order dismissing a lawsuit filed by the Sierra Club and other organizations (Citizen Groups) seeking to halt operations under a mining permit issued to Republic Energy, LLC (Republic) by the West Virginia Department of Environmental Protection (WVDEP). Coal River Mountain Watch, et al. v. Republic Energy, LLC, Civil Action No. 5:18-cv-01449, S.D. W.Va. (Memorandum Opinion and Order, August 12, 2019). The Citizen Groups had sought to bring an end to mining under the permit because operations were not initiated until 2018, even though the permit was originally issued by the WVDEP in June 2008. Pursuant to W.Va. Code § 22-3-8(a)(3) (a part of WVDEP’s approved program under the federal Surface Mining Control and Reclamation Act of 1977, 30 U.S.C. §1201, et seq. (SMCRA)), a mining permit terminates if mining activities under it are not initiated within three (3) years of its issuance, unless extended by the WVDEP. The company that previously held the Republic mining permit never requested such an extension. The WVDEP, however, granted an extension of the permit at issue in February 2012, after the agency had notified the permit holder of the expiration of the three-year limit and provided that company with an opportunity to seek a late (retroactive) extension. After the permit was transferred to Republic, it sought and received a further extension in 2015 on the basis of financial hardship, which the Court noted “is not a recognized statutory justification for an extension.”
Before filing the federal civil action, the Citizen Groups had filed an administrative complaint about the situation with the federal Office of Surface Mining Reclamation and Enforcement (OSM), which is the oversight agency under SMCRA. The Citizen Groups tried to convince OSM to invalidate the permit. OSM declined to do so and concluded that WVDEP had not acted arbitrarily or abused its discretion by extending the permit. Though not explained in the August 12 opinion, the primary reason that the WVDEP allowed Republic’s predecessor to seek an untimely, retroactive extension of the permit was based on the fact that the WVDEP (at that time) had a long-established practice of providing operators with notice of the impending expiration of the three-year limitation period. The WVDEP did not provide that notice to the permit-holder in this case, and the agency concluded that it would be unfair to penalize the company for assuming that it would receive notice under that policy.
During the pendency of the case, the WVDEP renewed the mining permit on January 10, 2019. The Citizen Groups did not avail themselves of the opportunity to pursue an administrative appeal of the renewal before the West Virginia Surface Mine Board, apparently willing to bank their hopes of terminating the operations under the permit on this federal court challenge.
Although a number of different grounds were put forward by Republic in support of its motion to dismiss, the District Court dismissed the Citizen Groups’ lawsuit on the basis of a narrow ruling that the case did not fit within the scope of SMCRA’s Citizen Suit provision at 30 U.S.C. §1270(a)(1). That provision allows affected persons to bring a citizen suit against any person “who is alleged to be in violation of any rule, regulation, order or permit” issued pursuant to SMCRA or an approved state program. The District Court found that “the essence of the Citizen Groups’ complaint is that the permit was issued (or extended) in violation of the statute,” not that Republic was operating in violation of its permit. That claim, in turn, is one in which the WVDEP’s conduct was at issue, rather than any activity by Republic. Since the Citizen Groups did not allege that Republic was violating any SMCRA rule, regulation, order, or permit, the District Court concluded that it did not have jurisdiction to consider the Citizen Groups’ claims. Therefore, the court dismissed the complaint.
The Court further observed that if the Citizen Groups had attempted to bring this action against the WVDEP, they would have likely been unsuccessful in light of the Fourth Circuit’s decision in Molinary v. Powell Mountain Coal Company, 125 F.3d 231 (4th Cir. 1997). In that case, the court ruled that SMCRA’s citizen suit provision does not allow a civil action to be brought against a state permitting agency to challenge the agency’s permitting decisions. Although not explained in the court’s opinion, this does not mean that no remedy exists for potentially improper agency permitting decisions. A challenge to a permitting decision by the WVDEP may be pursued through an administrative appeal with the West Virginia Surface Mine Board. Decisions by the Surface Mine Board may be appealed to circuit court and ultimately to the West Virginia Supreme Court of Appeals. The Citizen Groups could have challenged the legality of the WVDEP decisions to extend, and ultimately renew, the mining permit through such an appeal. The opinion does not indicate why the Citizen Groups did not pursue such an appeal.
The court’s decision is well reasoned and consistent with settled law that challenges to the issuance or terms of a mining permit must be pursued through the administrative appeal process. Such claims are not properly asserted via a citizen suit in federal court. This decision is also consistent with – and should help buttress – the regulatory framework established by SMCRA and the West Virginia mining program for the resolution of disputes over permitting decisions by state agencies.
At the same time, the proceedings described in this opinion have led the WVDEP to re-evaluate its administration of the “three-year, not started” statute, resulting in what many have perceived to be a more rigorous approach to evaluating exception requests from permittees. All mining permittees should consider creating their own internal alerts for permits as to which mining has not started within two (2) years, so that they will have sufficient time to develop their justification for an extension and present that to the WVDEP well ahead of the permit expiration date.
If you have any questions about the Republic decision or its impact on the mining industry, please contact Christopher B. (Kip) Power at (681) 265-1362 or cpower@babstcalland.com, or Robert M. Stonestreet at (681) 265-1364 or rstonestreet@babstcalland.com.
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