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Another delay sought in PSC probe of water crisis

Public Service Commissioners Brooks McCabe and Kara Williams are considering dates for a hearing in the PSC’s investigation of the January 2014 water crisis.

Consumer advocates and business groups are asking the West Virginia Public Service Commission to delay its long-stalled investigation of the 2014 Kanawha Valley water crisis until more details are available about a settlement that aims to resolve pending federal and state lawsuits.

The complaints were brought against West Virginia American Water over the company’s role in the contamination of the regional drinking water supply.

Jacqueline Roberts, director of the PSC’s Consumer Advocate Division, urged commissioners to consider not scheduling a formal evidentiary hearing in the investigation until lawyers in the federal and state cases submit a full draft of their settlement agreement to U.S. District Judge John Copenhaver. So far, lawyers have provided Copenhaver with only a brief “term sheet” that describes the broad concepts of their proposed settlement.

“It would be our preference to put it off until the dust settles on the settlement,” Roberts said during a short PSC status conference Monday morning. Roberts said more details are needed, to know how the class-action settlement affects the PSC investigation.

Lawyers for the citizen group Advocates for a Safe Water System and a group of local businesses that also intervened in the PSC investigation agreed with Roberts.

Commissioners, though, did not seem particularly interested in a further delay of their hearings, which have been postponed twice already. Commissioner Kara Williams told the parties to hold open the date of Dec. 21, for a prehearing conference, and the week of Jan. 3, for an evidentiary hearing that could last up to three days.

The PSC, which regulates West Virginia American and other water utilities, launched its investigation in May 2014, after receiving numerous complaints from citizens whose drinking water supply was contaminated by the Jan. 9, 2014, chemical spill at Freedom Industries. The Freedom facility was located just 1.5 miles upstream from West Virginia American’s Elk River intake, which the company says serves 300,000 people in Charleston and surrounding communities.

Commissioners are examining West Virginia American’s handling of the spill, trying to determine if the company’s actions constituted “unreasonable or inadequate practices, acts or services” under West Virginia utility law. The commission could order West Virginia American to take steps to remedy such practices if they are found to have existed.

The PSC case is being heard by Williams and Commissioner Books McCabe. Commissioner Chairman Michael Albert recused himself, citing his longtime work as a lawyer for West Virginia American.

West Virginia American has consistently — including in motions filed last month — tried to narrow the focus of the PSC probe to only what happened on Jan. 9, 2014, and the days afterward. The water company also argues that inclusion of new drinking water safety requirements by the Legislature in a bill responding to the Freedom spill overlaps with the commission probe and makes PSC action unnecessary.

Consumer advocates and business groups, though, argue for a broader investigation by the PSC. They want the probe to include examination of how well West Virginia American prepared for a potential upstream spill, including a look at its decision to abandon an intake at Coonskin Shoals, located upstream from the Freedom site, and whether the Kanawha Valley Treatment Plant was producing adequate stored water in the days before the spill to allow a brief closure of the Elk River intake while the chemicals passed by the plant.

Commissioners held Monday’s status conference to schedule a date for an evidentiary hearing and to get an update from the lawyers involved on the settlement of the court cases.

The settlement provides up to $151 million to compensate residents, businesses and workers who lost water service during the “do not use” order following the spill. The deal includes $126 million from West Virginia American and $25 million from Eastman Chemical, which sold Crude MCHM, the main chemical in the spill, to Freedom Industries.

Anthony Majestro, a lawyer for the business intervenors in the PSC case and for state court plaintiffs in the settlement, noted that West Virginia American promised, as part of the deal, not to seek rate hikes to cover $4 million in spill-response costs or for any of the settlement cost itself.

In response to questions from Williams, Majestro and water company lawyer Thomas J. Hurney Jr. said the class-action settlement does not include any provisions regarding West Virginia American’s conduct. The settlement also does not require any changes in the water company’s future operations, things that the consumer groups in the PSC probe might ask the commission to order.

“This settlement relates to resolving the claims for damages,” Hurney said.

Attorneys for all sides are due back for a closed-door meeting with Copenhaver on Nov. 14, and the parties have asked the judge for 30 days from Oct. 31 to come up with the more detailed settlement agreement document. Majestro said Copenhaver likely will conduct a hearing to decide whether to grant preliminary approval of that document.

If that preliminary approval is granted, a public notice would be issued, giving members of the plaintiff class time to either “opt out” of the settlement or object to it receiving final approval. Majestro said it ususally takes 60 to 90 days from preliminary approval of such a settlement before a hearing takes place for the judge to consider final approval.

Hurney said Copenhaver has indicated that he wants the public notice to go out before the end of the year, a deadline that puts a lot of pressure on the lawyers in the case to get the settlement document and other necessary court filings prepared.

“I can tell you that this is a complex settlement,” Hurney said. “We may look back and think that getting an agreement in principle was the easy part.”

Williams also asked the parties to submit, by Wednesday, an update on whether any documents that the PSC has allowed to be kept confidential in its water crisis investigation were made public as part of the pretrial litigation in the class-action case. Hurney noted that, when the settlement was reached, a water company motion — opposed by the plaintiffs — was still pending to keep a water company assessment of the treatment plant’s vulnerabilities secret.

Williams also said the commission would issue an order to notify the parties of its decision on a date for the evidentiary hearing.

Reach Ken Ward Jr. at

304-348-1702 or follow

@kenwardjr on Twitter.

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