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Ohio Valley Environmental Coalition, Inc. v. ERP Environmental Fund, Inc.

United States District Court, S.D. West Virginia, Huntington Division

June 24, 2019

ERP ENVIRONMENTAL FUND, INC. Defendant, APPALACHIAN HEADWATERS, INC., Nonparty in whose favor an has been entered, VCLF LAND TRUST, INC., Nonparty against whom an order may be enforced.



         Pending before the Court is the Motion to Enforce the Second Modified Consent Decree and Selenium Settlement Agreement and Award Attorney's Fees by Plaintiffs Ohio Valley Environmental Coalition, Inc.; West Virginia Highlands Conservancy, Inc.; and Sierra Club (collectively “Plaintiffs”). ECF No. 110. For the foregoing reasons, Plaintiffs' Motion is GRANTED. The Court FINDS ERP Environmental Fund, Inc. (“ERP”) and VCLF Land Trust, Inc. (“VCLF Land Trust”) have failed to perform the required donations to Appalachian Headwaters, Inc. (“Appalachian Headwaters”) in accordance with the terms of the Second Modified Consent Decree. Appalachian Headwaters is awarded the arrearage owed in the amount of $1, 950, 000.[1] Furthermore, the Court GRANTS attorney's fees in favor of Plaintiffs, consistent with the Second Modified Consent Decree.

         I. BACKGROUND

         The Second Modified Consent Decree, (ECF No. 105), stems from a civil action brought by Plaintiffs under the citizen suit provisions of the Clean Water Act, 33 U.S.C. § 1365, and the Surface Mining Control and Reclamation Act, 30 U.S.C. § 1270. First Am. Compl., ¶ 1, ECF No. 23. In their complaint, Plaintiffs alleged illegal discharging of selenium in excess of the limitations contained in permits held by then-defendants Patriot Coal Corporation (“Patriot Coal”) and three of its subsidiaries. Id. ¶¶ 1-2. This suit was resolved on March 15, 2012, when the Court entered a Consent Decree, (ECF No. 51), which in turn was succeeded by the Modified Consent Decree, (ECF No. 87), on January 9, 2013. The Second Modified Consent Decree, entered on October 7, 2017, represents the most recent iteration of the Court's judgment in this matter and was necessitated by Patriot Coal's bankruptcy.

         During the course of the bankruptcy proceedings, Patriot Coal negotiated the sale or transfer of substantially all of its assets to Blackhawk Mining, LLC (“Blackhawk”) and Virginia Conservation Legacy Fund (“VCLF”). Joint Mot. to Modify Modified Consent Decree, ¶ 3, ECF No. 99. The Bankruptcy Court entered its Confirmation Order on October 9, 2015, providing that Blackhawk and VCLF would assume responsibility for the portions of the Modified Consent Decree applicable to their assets. Id. ¶¶ 5-6. All obligations owed by Blackhawk and VCLF were then assumed by ERP. Id. ¶¶ 7-8. Pursuant to an Assignment and Assumption Agreement, the Court substituted ERP as the Defendant in this action on May 2, 2016. ECF No. 97.

         Upon assuming responsibility under the Modified Consent Decree, ERP acknowledged it was out of compliance and its financial condition would likely cause further violations. Id. ¶ 9. Plaintiffs and ERP accordingly agreed to a modification that would delay deadlines imposed by the Modified Consent Decree by forty-two months, and “[i]n consideration for the extended deadlines, [ERP] and its parent company VCLF Land Trust, Inc., . . . agreed to fund forest and stream restoration projects in West Virginia pursuant to a Selenium Settlement Agreement.” Id. ¶ 12; see also Second Modified Consent Decree, ¶ 18. The Selenium Settlement Agreement was both incorporated by reference and physically attached to the proposed Second Modified Consent Decree. Though the proposal stated the donation would come directly from VCLF Land Trust, it clarified that both ERP and VCLF Land Trust would be responsible for a six-million-dollar donation to Appalachian Headwaters, paid in monthly intervals. Proposed Second Modified Consent Decree, at 76-77, ECF No. 99-1. This donation was secured by one-hundred-percent interest in VCLF Loudoun Holdings, LLC, whose sole asset was an eighty-nine percent interest in 313 acres of land in Loudon County, Virginia. Id. October 7, 2016, the Second Modified Consent Decree was entered by this Court.

         Subsequent to this modification, half of the required donation was made to Appalachian Headwaters, $2, 125, 000 of which was wired directly by ERP. Second Sutton Decl, ¶¶ 10-23, ECF No. 137-1. However, both ERP and VCLF Land Trust admit they fell into arrears on the required donation. ERP's Substituted Resp., at 1, ECF No. 121; VCLF Land Trust's Resp., at 2, ECF No.132. As a result, Appalachian Headwater exercised its option to take possession of the collateral. Howell Decl., ¶¶ 5-9, ECF No. 110-3. Plaintiffs then filed the present Motion to Enforce. Mot. to Enforce, at 1, ECF No. 110.


         Consent decrees are both a “negotiated agreement that is entered as a judgment, ” as well as “a continuing order . . . having prospective effect.” Bragg v. Robertson, 83 F.Supp.2d 713, 717 (S.D. W.Va. 2000), aff'd sub nom. Bragg v. W.Va. Coal Ass'n, 248 F.3d 275 (4th Cir. 2001). Since they have the weight of a court judgment, consent decrees are “subject to the rules generally applicable to other judgments and decrees.” Rufo v. Inmates of Suffolk County Jail, 502 U.S. 367, 378 (1992) (internal citations omitted). The United States Supreme Court has recognized the dual nature of consent decrees, stating they have “elements of both contracts and judicial decrees.” Frew ex rel. Frew v. Hawkins, 540 U.S. 431, 437 (2004) (citing Firefighters v. Cleveland, 478 U.S. 501, 519 (1986)). Accordingly, courts should interpret consent decrees as a contract. In doing so, “reliance upon certain aids to construction is proper, as with any other contract. Such aids include . . . any other documents expressly incorporated in the decree.” United States v. ITT Cont'l Baking Co., 420 U.S. 223, 238 (1975) (emphasis added).

         When parties consent to a court's continuing jurisdiction to enforce a consent decree, an aggrieved party may apply for relief. See Bragg, 83 F.Supp.2d at 717. In making determinations of proper relief, a hearing is not necessary. The Fourth Circuit recognizes “the authority of a trial court [to] summarily enforce a settlement agreement and to enter judgment based on that agreement without plenary hearing.” Millner v. Norfolk & W. R. Co., 643 F.2d 1005, 1009 (4th Cir. 1981) (internal citations omitted). “This authority, however, arises not under Rule 56 of the Federal Rules of Civil Procedure but under the trial court's inherent equitable power summarily to enforce a settlement agreement when the practical effect is merely to enter a judgment by consent.” Id. (citing Wood v. Virginia Hauling Co., 528 F.2d 423, 425 (4th Cir. 1975). Summary procedures are appropriate when the existence of a binding settlement is undisputed and there is no substantial excuse for nonperformance. Id.

         When selecting a means of enforcement of a consent decree, “courts have inherent power to enforce compliance with their lawful orders through civil contempt.” Shillitani v. United States, 384 U.S. 364, 370 (1966). However, if “there was an agreed upon settlement that can be translated into terms of dollars and cents, [the court] should enforce payment of precisely that amount. It is settled that he has the power and authority to do so.” Wood v. Virginia Hauling Co., 528 F.2d 423, 425 (4th Cir. 1975).


         Plaintiffs' argument is a direct one. ERP and VCLF Land Trust have not made their required payments to Appalachian Headwaters under the terms of the Second Modified Consent Decree and they seek remedy on that basis. Mem. Supp. Mot. to Enforce, at 1, ECF No. 111. Specifically, Plaintiffs seek declaratory relief, an order of specific performance, and a judgment order in favor of Appalachian Headwaters.[2] Id. at 9-10.

         ERP and VCLF Land Trust do not deny that proper payment has not been remitted. However, they attempt to create jurisdictional and procedural smokescreens to obfuscate a simple matter. This includes claims from ERP that only VCLF Land Trust is liable for payments to Appalachian Headwater, granting Plaintiffs' requests would require a modification of the Second Modified Consent Decree or a grant of summary judgment, and Appalachian Headwaters must itself intervene in the case. ERP's Supp. Resp., at 2, 5, 8, ECF No. 136. VCLF Land Trust makes similar arguments and claims this matter is an independent breach of contract dispute between non-parties. VCLF Land Trust's Resp., at 13. VCLF Land Trust further contends the Court's ...

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