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Water crisis focus shifts to PSC investigation

Jeff McIntyre, president of West Virginia American Water, testifies at a state Public Service Commission hearing in June 2013. Then-Commissioner Jon McKinney, shown at right, has since left the PSC.

As lawyers start the process of turning a tentative lawsuit settlement into a full-fledged class-action agreement, the attention of consumer groups and local businesses that want a more public airing of West Virginia American Water Co.’s role in the January 2014 regional water crisis now turns to a long-delayed investigation by the state Public Service Commission.

Testimony before the PSC could focus on issues that also were central to the federal court case, such as whether West Virginia American wrongly did not produce enough treated water so that it could close its intake and let the chemical spill pass and why the water company decades ago abandoned a second intake that would have been located upstream from the Freedom Industries spill site.

“The PSC investigation is more important than ever in terms of understanding what went wrong on January 9th [2014], and what steps still need to be taken to ensure a safe water system,” said Cathy Kunkel, a leader of Advocates for a Safe Water System, a group that formed after the Freedom spill, has intervened in the PSC investigation and is pushing for a public takeover of the local drinking water system.

“Without the trial, we don’t have the benefit of those issues being debated in federal court, so the PSC is the only remaining venue,” Kunkel said.

Anthony Majestro, a lawyer for a group of residents and businesses that have settled cases against West Virginia American, said some of those businesses that intervened in the PSC investigation of the water company plan to continue their involvement in the commission probe.

“The settlement reached in federal court did not include the proceedings before the Public Service Commission,” Majestro said. “We are awaiting the rescheduled hearing before the PSC and look forward to presenting the case to them.”

It remains unclear when the PSC investigation — which has involved several rounds of prepared testimony submitted in writing — will move to the phase where commissioners hold a public evidentiary hearing, where lawyers for consumer and business groups will have the chance to cross-examine water company witnesses.

Last month, the PSC again postponed its evidentiary hearing, citing a request from West Virginia American Water lawyers who said the company and its attorneys simply couldn’t manage both the federal court trial and the commission hearing at the same time. The trial had been set to start on Oct. 25 and last six weeks or more, while the PSC’s last scheduled start date for its multi-day hearing was Nov. 15.

Laura Martin, a spokeswoman for West Virginia American, said the federal court settlement and the PSC investigation “are not inter-related” and referred questions about the commission probe to the PSC.

So far, the PSC has not announced a new hearing date, but lawyers involved in the case say the agency was looking at dates in the first quarter of 2017.

Even before the recent delay, the PSC investigation was stalled for much of 2015, largely because of the recusal of PSC Chairman Michael Albert, a longtime water company lawyer, and the resignation of Commissioner Jon McKinney.

Those moves — and the lack for many months of an appointment by Gov. Earl Ray Tomblin to replace McKinney — left the commission with just one member, Brooks McCabe, not enough under the law for it to take any actions in the case. In October 2015, Tomblin appointed Kara Cunningham Williams, a former Steptoe & Johnson lawyer, to fill McKinney’s seat.

On Monday, U.S. District Judge John Copenhaver Jr. made public the terms of settlements reached by West Virginia American Water and Eastman Chemical in the class-action lawsuit brought over the water crisis that followed Freedom’s January 2014 spill of Crude MCHM and other chemicals into the Elk River just 1.5 miles upstream from West Virginia American’s regional intake serving what the company estimated as 300,000 people.

The deals provide up to $151 million to compensate residents, business owners and workers who were unable to use their tap water for anything other than flushing toilets or fighting fires when the water supply and distribution system became contaminated with chemicals from the Freedom spill. The settlements have yet to be finalized, and complete details about the distribution of compensation are not yet completed.

Based on the information available so far, consumer advocates are pleased with the federal court settlement with West Virginia American, but they are also expressing concern about wanting some of the evidence that might have been presented at trial to eventually make it into the public record during the PSC hearing.

“While the settlement in the federal court case is a relief, it nevertheless leaves unanswered questions about how the drinking water contamination could have occurred in the first place,” said Karan Ireland, another leader of Advocates for a Safe Water System and a Charleston city councilwoman.

Ireland said, for example, the public deserves a more detailed accounting of West Virginia American’s decision not to close its intake.

Filings in the federal court case have raised serious questions about West Virginia American’s longstanding version of events: That it was producing as much treated water as possible at the time of the spill, but that high usage levels because of the cold weather in the days before the spill made closing the intake impossible.

“It’s up to the Public Service Commission to investigate these questions and others so that the public they serve can rest safe in the knowledge that something like this won’t happen again,” Ireland said Tuesday.

The PSC, though, has shown a strong desire to narrow the scope of its general investigation, and it’s not clear if the commission would be willing to make public — as Copenhaver had hinted he might — certain water company documents that West Virginia American has been able so far to convince the PSC to keep secret from the public in its investigation.

Jacqueline Lake Roberts, director of the PSC’s Consumer Advocate Division, said that her agency was pleased to see language added to the water company’s settlement term sheet that commits West Virginia American to not seeking a rate increase for its spill response costs or for any of its payments to the plaintiff class under the federal court settlement.

“This settlement has taken that issue completely out of the purview of the PSC,” Roberts said Tuesday.

Lawyers in the federal court case said the deal with the water company never included any possibility that West Virginia American would try to get a rate increase for the settlement costs, and they question whether the PSC would ever have had the authority to approve such a request. But the issue caused a brief commotion on Monday when Copenhaver pushed to have language added to the term sheet to make clear the water company’s commitment to not making such a request.

Roberts also said her office is committed to pushing for answers from West Virginia American during the general investigation, including to questions about why the company didn’t have enough water storage on hand to close its intake to protect against the spill.

“That will get a public airing during the general investigation,” Roberts said.

Reach Ken Ward Jr. at kward@wvgazettemail.com, 304-348-1702 or follow @kenwardjr on Twitter.

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