SPOC Challenges Sewer Transfer to PSD

In Re Lisa A. McClung (successor to Allyn G. Turner), Director Division of Water and Waste Management, West Virginia Department of Environmental Protection v. Snowshoe Mountain, Inc. and Snowshoe Water and Sewer, Inc.

THE SNOWSHOE PROPERTY OWNER COUNCIL’S OBJECTIONS
TO THE PROPOSED CONSENT DECREE

The Snowshoe Property Owners Council (SPOC), by counsel submits the following objections to a proposed consent decree purporting to resolve a case currently pending in Pocahontas County, West Virginia (Civil Action No. 03-C-29), between the West Virginia Department of Environmental Protection (WVDEP) and Snowshoe Mountain, Inc. and Snowshoe Water and Sewer, Inc. (hereinafter referred to collectively as Snowshoe or Defendants unless otherwise specified).
Introduction and Procedural History
The proposed consent decree consists in large part of a “penalty” that would essentially transfer the sewer equipment and facilities of Snowshoe Water and Sewer to the Pocahontas Public Service District (PSD). There is an underlying history relating to Snowshoe’s attempts to rid itself of responsibility for the sewer utility which has not been addressed and which reveals Snowshoe’s underlying motivation in entering into this consent decree.
In 2005, the PSD filed for a certificate of convenience and necessity with the Public Service Commission (PSC) for creation of the PSD. Attached to this filing was a proposed transfer agreement which would transfer certain existing Snowshoe facilities and equipment to the PSD under a phased approach after construction of a regional plant. A copy of the proposed transfer agreement is attached as Exhibit 1. The certificate of convenience and necessity was granted, but the PSC specifically did not approve the terms of the transfer agreement. The order is attached as Exhibit 2. The order further required PSC approval “should the project’s scope or proposed financing change for any reason.”
On August 17, 2007, Snowshoe and the PSD submitted an amended transfer agreement whereby the entire Snowshoe utility would be acquired by the PSD immediately upon execution, even though a regional plant has not been built and plans have not been finalized or approved. The amended transfer agreement is attached as Exhibit 3. Snowshoe and the PSD also filed with the PSC a motion for a limited re-opening, or no re-opening at all, seeking to avoid PSC review of the amended transfer agreement, despite the PSC’s earlier order requiring approval of all changes in scope and financing. This motion is attached is Exhibit 4.
Various groups have made filings in opposition to the proposed transfer as well as the proposed site of the new regional plant. SPOC filed a Complaint with the PSC on September 28, 2007 alleging that, among other things, Snowshoe and the PSD failed to submit financial documents demonstrating the PSD’s ability to run the sewer utility, as required by PSC regulations, see, 150 CSR §1.10.5, and that the earlier approval of the certificate of convenience and necessity did not contemplate the immediate transfer of the utility onto a shell PSD. 07-1890-WS-PSD-C. No Order has been issued granting or denying this request. Eight Rivers Safe Development, Inc., a West Virginia corporation concerned with safe development of karst terrain has filed a mandamus action in Kanawha County circuit court to prevent approval of a proposed site for the plant given the likelihood environmental catastrophes.
Throughout this process, there have been no financial documents submitted to the PSC demonstrating the financial standing of the PSD, or even documentation tending to show that the PSD has the technical wherewithal to adequately run a sewer utility. Upon information and belief, the PSD has no capital, no experience, and currently only one employee. Faced with this mounting opposition to the transfer, Snowshoe now seeks to enter into the subject consent decree to effectively force the transfer of the sewer utility and thereby relieve itself of compliance with PSC regulations. Although SPOC recognizes the past environmental problems with the Snowshoe utility, allowing a willful abandonment of the utility onto a shell corporation is not the answer. If WVDEP is serious in addressing Snowshoe’s environmental deficiencies, it should work with the utility and those residents affected to achieve the best solution rather than facilitating Snowshoe’s abdication of duties owed to property owners.
This Consent Decree is Simply an Effort to Circumvent PSC Proceedings
The consent decree purports to “punish” Snowshoe by ordering that the sewer facility and equipment be transferred to a shell PSD under the guise of a Supplemental Environmental Project (SEP). The SEP contemplated by the consent decree consists largely of:
Defendants’ support of the new regional wastewater treatment plant to be constructed by the Pocahontas County PSD, and that much of a proposed SEP is anticipated to consist of Defendant(s) providing certain valuable equipment to the Pocahontas PSD that will substantially reduce the cost to the PSD of the construction project and substantially enhance its ability to finance such construction.

In other words, Snowshoe will transfer its wastewater collection facilities to the PSD. Particularly telling is the language from the amended transfer agreement in the PSC
proceedings whereby Snowshoe would effectuate the same transfer:
As of the effective date of this Agreement, Snowshoe W&S will transfer ownership of its sewer collection facilities and its wastewater treatment facilities . . ., as is where is. Such transfer of the System shall include the transfer of rights-of-way for access for maintenance and repair, the transfer of Snowshoe W&S’ NPDES permits, all customers served by the System and all revenues associated therewith and . . . of all obligations associated with the System or the ownership or operation thereof.

Snowshoe’s goal in entering into this consent decree and undertaking the proposed SEP could not be more transparent. Simply put, it is attempting to circumvent the proceedings currently pending in the PSC by asking this agency to order what the PSC has not approved.
WVDEP has an Affirmative Duty to Order Actual Remediation and an End to the Pollution
WVDEP has an affirmative duty to order Defendants to engage in remedial activity to
correct damage caused by years of pollution. The subject consent order does not order remediation, does not order Defendants to stop pollution, and does not set forth any penalty. The “remediation” ordered in the consent decree is simply an expression of hope, that someday in the future the PSD will be in compliance with the NPDES permits. Requiring Defendants, or the PSD upon transfer of the utility, to do what they are already legally bound to do - comply with the NPDES permits - does not constitute remediation, or corrective measures.
W. Va. Code §22-11-15 provides:
If the director, on the basis of investigations, inspections and inquiries, determines that any person who does not have a valid permit issued pursuant to the provisions of this article is causing the pollution of any of the waters of the state, or does on occasions cause pollution or is violating any rule or effluent limitation of the board or the director, he or she shall either make and enter an order directing such person to stop such pollution or the violation of the rule or effluent limitation of the board or director, or make and enter an order directing such person to take corrective or remedial action.

(emphasis added). Once it is determined that an entity is polluting in violation of WVDEP rules and regulations, WVDEP has only two choices, it can either order that the pollution be stopped, or it can order that the entity take corrective or remedial action. This consent decree does not fall under either of these categories.
First, while paying lip service to the notion that the pollution must stop, it then presents a hope that cooperation by Defendants will somehow lead to a regional plant being constructed which hopefully could comply with the NPDES permits. Furthermore, the consent decree specifically allows for pollution to continue, and even sanctions increased effluent limitations by Snowshoe. Rather than ordering Snowshoe to stop polluting, WVDEP is proposing an order which would allow Defendants to continue to pollute.
Second, the WVDEP can enter an order requiring remediation or corrective measures. Again, this consent decree does not order remedial or corrective measures. Corrective measures would incorporate steps to reverse the environmental damages caused by Snowshoe’s years of pollution in excess of the NPDES permits. A general hope that the PSD will someday come into compliance with the NPDES permits does not constitute remediation. At the most, this consent decree is ordering compliance, not remediation, at some point in the unspecified future. The remedial plan consists solely of Snowshoe dumping the out-of-compliance utility onto a shell corporation, without any assurances whatsoever that the PSD will be able to comply with the NPDES permit.
Remediation should consist of actual corrective measures to compensate for the damage done by Snowshoe. Allowing Snowshoe to satisfy remedial duties by simply transferring the facility to the PSD with the hopes that someday the PSD will achieve NPDES compliance would be unfair, irrational, and contrary to the public interest See, Bragg v. Robertson, 83 F. Supp. 2d 717-18 (S.D.W.Va. 2000). In determining if a consent decree is reasonable, rational and in the public interest, one must review the policy to be served by the agency. Id. Here, WVDEP’s policy is “[t]o strengthen the commitment of this state to restore, maintain and protect the environment.” W. Va. Code §22-1-1(b)(1). This consent decree would not accomplish any of these goals. Rather, it would effectively sanction past pollution, and authorize continued pollution. In order to satisfy this statutory policy, WVDEP has an affirmative duty to order actual remediation.
The Practical Effect of this Consent Decree would be to
Reward Snowshoe for the Prior Pollution

On the surface, Defendants seem to be paying a price for the past pollution. Section VII of the consent decree requires a civil penalty “valued at least $2,928,000.00.” It would consist of a $128,000 cash payment, and a $2.8 million SEP. However, as is evident from the proposed transfer agreement, the bulk of the “penalty” agreed to by Snowshoe is a transfer it has already proposed, and has demonstrated that it is quite willing to perform. This is no penalty at all.
Defendants would never have to absorb the vast majority of this penalty. Rather, the members of SPOC would be subject to its immediate adverse consequences. Noticeably absent from the proposed consent decree is the effect that this transfer will have on the citizens of SPOC and others subject to the Snowshoe sewer facility. Namely, upon transfer, SPOC’s members will have monthly sewage bills as high as $102.75. In exchange a PSD that has no financial ability or practical know-how would take over the facility on a proposed site where serious environmental concerns have already been raised. Most of the proposed “penalty” will thus be borne not by Snowshoe, but by the members of SPOC through PSD assessments. In short, SPOC members who are not even parties to this proceeding and who were not even consulted about the consent decree will be paying the price for Snowshoe’s repeated CWA violations. Instead of being punished by this “penalty,” Defendants would be rewarded for their attempts to circumvent the PSC procedures. This proposed “remedy,” in short, does not pass the “smell test.”
The PSC is the Entity Charged with Approving the Transfer of a Utility
Despite the enormous practical and environmental effects such an immediate transfer would have on SPOC and its members, as well as the surrounding community, Snowshoe has been attempting to escape the scope of PSC review by petitioning for a limited re-opening of the certificate case, or no re-opening at all. SPOC objected, and filed a Complaint with the PSC requesting that a complete re-opening be held, and that the PSD be required to submit documentation demonstrating its financial condition as required by 150 CSR §1.10.5, See, 07-1890-WS-PSD-C. Rather than complete the necessary PSC review for creation of the PSD and transfer of the sewer plant, Snowshoe is now trying to sidestep this process by entering into this consent decree. However, PSC approval is necessary before any transfer can be sanctioned.
The PSC is vested with the jurisdiction over transfer of a sewer utility. See, SPOC’s Complaint. W. Va. Code §24-2-12 unequivocally provides:
Unless the consent and approval of the public service commission of West Virginia is first obtained . . . (b) no public utility subject to the provisions of this chapter . . . may purchase, lease, or in any other manner acquire control, direct or indirect, over the franchises, licenses, permits, plants, equipment, business or other property of any other utility. . .”

Despite this clear language, Snowshoe intends to transfer its customers, permitting, equipment and property to the PSD through a consent decree, instead of seeking PSC approval. This consent decree is in direct contravention of the statute.
Indeed, the PSC has exercised its jurisdiction over utilities in cases remarkably similar to this. City of South Charleston v. West Virginia Public Service Com’n., 514 S.E. 2d 622 (W. Va. 1999). There, the Court found that the PSC had authority to order the city to continue providing billing, collection, and maintenance services for a public service district’s sewage system, even after expiration of the city’s contract with the district, based on its conclusion that continuance of those services was in the public interest, given that the district had no staff of its own, no office facilities, no office equipment, and no expertise in billing, collection of fees, and general maintenance. Id.
This is precisely the current situation with the proposed transfer agreement and consent decree. Snowshoe is attempting, first with the PSC and now through the DEP, to effectuate this transfer with, upon information and belief, no staff of its own except for perhaps one person, no office facilities, no office equipment, and no expertise in billing, collection of fees, and general maintenance. Although SPOC strenuously believes that the merits of this proposed transfer militate against the transfer, for present purposes the proper focus is on what entity has the jurisdiction to make the decision. Under both West Virginia statute, as well as prior case law, that jurisdiction is vested with the PSC, not the WVDEP.
Moreover, the proposed consent decree and the concomitant agency and court action is a horrendous waste of judicial resources. W. Va. Code §24-2-12 provides:
Every assignment, transfer, lease, sale or other disposition of the whole or any part of the franchises, licenses, permits, plant, equipment, business or other property of any public utility, or any merger or consolidation thereof and every contract, purchase of stock, arrangement, transfer or acquisition of control or other transaction referred to in this section made otherwise than as hereinbefore provided shall be void to the extent that the interests of the public in this state are adversely affected, but this shall not be construed to relieve any utility from any duty required by this section.

(emphasis added). Not only is the proposed consent decree outside of WVDEP jurisdiction and authority, but any resulting approval of the consent decree would be subject to vitiation. Approving this consent decree would be tantamount to ordering the transfer. In this regard, if the WVDEP were to approve this consent decree, it would be usurping the jurisdiction statutorily granted to the PSC.
Conclusion
The vast majority of the agreed “penalty” consists of Defendants agreeing to do what they have already attempted to do in the PSC. Indeed, the “penalty” effectively grants a transfer which is currently delayed, much to Defendants’ chagrin, through legally required PSC proceedings. This consent decree would impose sham penalties on Defendants that reward them by allowing them to circumvent the PSC proceedings.
The procedural shenanigans Defendants are attempting should not be sanctioned. Accordingly, SPOC strenuously objects to the proposed consent decree and asks that Snowshoe be ordered to take meaningful action to protect property owners and the environment. SPOC further requests a public hearing to address its objections.
SNOWSHOE PROPERTY
OWNERS COUNCIL, By Council,

_________________________________________
Joshua I. Barrett (WVSB #252)
Heather M. Langeland (WVSB #9938)
DiTrapano, Barrett & DiPiero, PLLC
604 Virginia Street, East
Charleston, WV 25301
(304) 342-0133