USCA4 Appeal: 23-1696 Doc: 40 Filed: 04/17/2024 Pg: 1 of 21
PUBLISHED
UNITED STATES COURT OF APPEALS FOR THE FOURTH CIRCUIT
No. 23-1696
WEST VIRGINIA HIGHLANDS CONSERVANCY; SIERRA CLUB,
Plaintiffs – Appellees,
and
APPALACHIAN HEADWATERS, INC, Nonparty in whose favor an order has been entered,
Party-in-Interest,
v.
ERP ENVIRONMENTAL FUND, INC; RECEIVERSHIP ESTATE OF ERP ENVIRONMENTAL FUND, INC.,
Defendants – Appellants,
VCLF LAND TRUST, INC, Nonparty against whom an order may be enforced,
DOSS SPECIAL RECEIVER, LLC,
Receiver.
Appeal from the United States District Court for the Southern District of West Virginia, at Huntington. Robert C. Chambers, District Judge. (3:11-cv-00115) USCA4 Appeal: 23-1696 Doc: 40 Filed: 04/17/2024 Pg: 2 of 21
Argued: January 26, 2024 Decided: April 17, 2024
Before AGEE and RUSHING, Circuit Judges, and KEENAN, Senior Circuit Judge.
Vacated and remanded with instructions by published opinion. Judge Agee wrote the opinion in which Judge Rushing and Senior Judge Keenan joined.
ARGUED: Christopher M. Hunter, I, JACKSON KELLY PLLC, Charleston, West Virginia, for Appellants. Elizabeth A. Bower, APPALACHIAN MOUNTAIN ADVOCATES, INC., Lewisburg, West Virginia, for Appellees. ON BRIEF: M. Shane Harvey, JACKSON KELLY PLLC, Charleston, West Virginia, for Appellants. Derek O. Teaney, APPALACHIAN MOUNTAIN ADVOCATES, INC., Lewisburg, West Virginia, for Appellees.
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AGEE, Circuit Judge:
This appeal turns on the proper interpretation of a consent decree negotiated by the
parties and previously approved by the district court. Relevant here, that consent decree
expressly prohibits the Receivership Estate of ERP Environmental Fund, Inc. (the
“Receivership Estate”) from conducting surface coal mining at certain sites unless it is
necessary for and incidental to reclamation of the site. The question presented is whether
that prohibition also applies to a third-party permit transferee of a specific site—the
Chestnut Oak Surface Mine in Lincoln County, West Virginia. The district court held that
it did, broadly stating that all third-party permit transferees are bound by the terms of the
consent decree. Because the district court’s interpretation cannot be squared with the plain
text of the decree, we now vacate and remand with instructions.
I.
The consent decree at issue here originates from a 2011 citizen suit under the Clean
Water Act (“CWA”), 33 U.S.C. § 1365, and the Surface Mining Control and Reclamation
Act (“SMCRA”), 30 U.S.C. § 1270. The plaintiffs, the West Virginia Highlands
Conservancy and the Sierra Club (collectively, the “Conservation Groups”), alleged that
now-defunct Patriot Coal Corporation and three of its subsidiaries (collectively, “Patriot
Coal”) violated federal environmental laws by discharging excessive amounts of selenium
(a toxic pollutant) in connection with its surface mining operations. To resolve the
litigation, the parties negotiated a consent decree, which the U.S. District Court for the
Southern District of West Virginia approved. Among other things, the decree significantly
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limited Patriot Coal’s surface mining operations in Central Appalachia and required the
company to “reclaim” its mining sites—that is, to return the mined land to a useable state.
Patriot Coal later went bankrupt, and ERP Environmental Fund, Inc. (“ERP”) was
substituted as the defendant, taking on Patriot Coal’s obligations under the consent decree.
ERP and the Conservation Groups later negotiated a Second Modified Consent Decree, the
current version of the consent decree at issue here, which the district court approved in
October 2016. 1 The Second Modified Consent Decree, which we refer to as the “Decree,”
added a new term found in Paragraph 63. That provision, which applies to ERP as the
“Substituted Defendant,” provides:
Notwithstanding any other provision of this Second Modified Consent Decree, from the Effective Date of this Second Modified Consent Decree, Substituted Defendant and its Affiliated Companies shall not conduct Surface Mining at any location formerly owned or operated by Patriot Coal Corporation or one of Patriot Coal Corporation’s subsidiaries, except that Surface Mining necessary and incidental to reclamation. To the extent there is a conflict between this Paragraph 63 and any other Paragraph in Section VIII of this Second Modified Consent Decree, Paragraph 63 shall control.
J.A. 334 (emphasis added).
Like its previous versions, the Decree provides that the district court retains
jurisdiction to enforce its terms.
In 2020, ERP ran out of money and ceased all operations. As a result, a West
Virginia state court appointed Doss Special Receiver, LLC (the “Receiver”) to administer
ERP’s Receivership Estate. In this role, the Receiver is charged with managing ERP’s
1 The consent decree was first modified by Patriot Coal and the Conservation Groups in 2013. 4 USCA4 Appeal: 23-1696 Doc: 40 Filed: 04/17/2024 Pg: 5 of 21
business, which includes limited assets and millions of dollars in reclamation liabilities,
and with bringing ERP’s operations into compliance with its mining permits, the CWA,
and the SMCRA.
In 2022, the Receiver sought to finance its administration of the Receivership Estate
by authorizing third parties to surface mine at a former Patriot Coal facility—the Buck
Fork Surface Mine. The Conservation Groups intervened, arguing that such surface mining
would violate Paragraph 63 of the Decree. The district court below agreed, explaining that
“[i]n obtaining operator assignments and entering into a reclamation services agreement,
[the Receiver] authorized mining at [the] Buck Fork [Surface Mine] beyond that which is
‘necessary and incidental to reclamation,’” “in violation of paragraph 63 of the Second
Modified Consent Decree.” W. Va. Highlands Conservancy, Inc. v. ERP Env’t Fund, Inc.,
Civil Action No. 3:11-0115, 2022 WL 5226026, at *7 (S.D.W. Va. Oct. 5, 2022).
The Receiver did not appeal that ruling. Instead, it sought authorization in West
Virginia state court to enter into a permit transfer agreement with a third party in connection
with a different former Patriot Coal mine—the Chestnut Oak Surface Mine. In exchange
for transferring the relevant mining permits and executing coal mining subleases at the
Chestnut Oak Surface Mine, the Receiver would receive cash and a royalty for any coal
mined. The third-party permit transferee would in turn fully reclaim the site so long as it
could also remove coal in the process to offset the remediation costs. According to the
Receiver, this arrangement would be in the Receivership Estate’s best interest because it
lacks the resources and ability to reclaim the site and because the transaction would not
only discharge reclamation liabilities at the Chestnut Oak Surface Mine but also offset
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reclamation costs at other ERP sites. The West Virginia state court granted authorization
for the permit transfer agreement, but in doing so, it specifically ruled that such
authorization should not be construed to modify or otherwise affect the terms and
conditions of the Decree.
The Conservation Groups notified the Receiver of their position that such a permit
transfer agreement would similarly violate Paragraph 63 of the Decree. The Receiver
responded that third parties accepting transfer of the Chestnut Oak Surface Mine permits
would not be bound by the Decree. At an impasse, the parties filed cross-motions before
the district court to enforce the Decree.
The district court agreed with the Conservation Groups and issued an opinion
finding that the “Decree’s restrictions on surface mining, as laid out in Paragraph 63, are
binding upon any third-party permit transferee.” W. Va. Highlands Conservancy, Inc. v.
ERP Env’t Fund, Inc., Civil Action No. 3:11-0115, 2023 WL 2330427, at *7 (S.D.W. Va.
Mar. 2, 2023). In doing so, the court relied in part on Paragraph 24 of the Decree, which
states that “[t]he provisions of this Second Modified Consent Decree apply to and are
binding . . . upon Substituted Defendant and any of its respective successors and/or
assigns.” J.A. 298 (emphasis added). In the court’s view, state and federal surface mining
laws, under which the Decree’s terms generally are to be construed, “indicate that a third-
party permit transferee would constitute at least a ‘successor’” and thus would be bound
by the Decree, including Paragraph 63. W. Va. Highlands Conservancy, Inc., 2023 WL
2330427, at *4. The court drew further support for its holding from Paragraph 25, one
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sentence of which provides: “In any event, all transferees . . . shall be bound by the terms
of this Second Modified Consent Decree, consistent with applicable law.” J.A. 299.
However, the district court deferred disposition “as to the question of whether
proposed surface mining at Chestnut Oak is necessary and incidental to reclamation,
pending further briefing.” W. Va. Highlands Conservancy, Inc., 2023 WL 2330427, at *7.
The Receiver subsequently stipulated that “the mining proposed by the third-party
transferee would not meet the [district court’s] interpretation of ‘necessary and incidental’
to reclamation,” J.A. 526, and so requested that the court enter a final order resolving the
cross-motions. Consequently, the district court issued an order granting the Conservation
Groups’ motion to enforce the Decree and denying the Receiver’s competing motion. W.
Va. Highlands Conservancy, Inc. v. ERP Env’t Fund, Inc., Civil Action No. 3:11-0115,
2023 WL 4351534, at *2 (S.D.W. Va. May 26, 2023).
The Receiver timely appealed, and we have jurisdiction under 28 U.S.C. § 1291.
II.
“This Court reviews the interpretation of a negotiated order—here, a consent
decree—de novo.” United States v. S. Coal Corp., 64 F.4th 509, 514 (4th Cir. 2023). 2
2 We note that some of our cases have suggested that review of a district court’s interpretation of a consent decree should involve some measure of deference. See, e.g., In re Grand Jury Subpoena (T-112), 597 F.3d 189, 202 (4th Cir. 2010). But since our interpretation of the Decree would be the same regardless, “we need not determine whether our plenary review incorporates some measure of deference.” Consumer Fin. Prot. Bureau v. Klopp, 957 F.3d 454, 462 n.3 (4th Cir. 2020). 7 USCA4 Appeal: 23-1696 Doc: 40 Filed: 04/17/2024 Pg: 8 of 21
As the Supreme Court has long made clear, “[c]onsent decrees are entered into by
parties to a case after careful negotiation has produced agreement on their precise terms.”
United States v. Armour & Co., 402 U.S. 673, 681 (1971). Thus, consent decrees “cannot
be said to have a purpose”; they merely reflect the agreement negotiated by adverse parties.
Id. In that sense, a consent decree is a like a contract: its scope “must be discerned within
its four corners, and not by reference to what might satisfy the purposes of one of the parties
to it.” Id. For that reason, a consent decree’s interpretation is governed by “traditional rules
of contract interpretation, and the district court’s authority is thus constrained by the
language of the decree.” Thompson v. U.S. Dep’t of Hous. & Urb. Dev., 404 F.3d 821, 832
n.6 (4th Cir. 2005). We draw those traditional rules of contract interpretation from the law
of the state in which the consent decree was entered—here, West Virginia. See Collins v.
Thompson, 8 F.3d 657, 659 (9th Cir. 1993) (“When interpreting the terms of a consent
decree, the court applies general contract principles using the law of the state where the
agreement was made.”).
III.
The central issue in this appeal is whether Paragraph 63’s prohibition on surface
mining beyond that which is “necessary and incidental to reclamation” would apply to a
third-party permit transferee (unrelated to ERP) of the Chestnut Oak Surface Mine.
We begin with the text of Paragraph 63, which we restate below:
Notwithstanding any other provision of this Second Modified Consent Decree, from the Effective Date of this Second Modified Consent Decree, Substituted Defendant and its Affiliated Companies shall not conduct Surface
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Mining at any location formerly owned or operated by Patriot Coal Corporation or one of Patriot Coal Corporation’s subsidiaries, except that Surface Mining necessary and incidental to reclamation. To the extent there is a conflict between this Paragraph 63 and any other Paragraph in Section VIII of this Second Modified Consent Decree, Paragraph 63 shall control.
By its plain terms, Paragraph 63 applies only to “Substituted Defendant and its
Affiliated Companies.” J.A. 334. The Decree defines “Substituted Defendant” specifically
as “ERP Environmental Fund, Inc.” J.A. 303. And it defines “Affiliated Company” as “any
business organization or entity, regardless of form, directly or indirectly controlling,
controlled by, or under common control with ERP Environmental Fund, Inc.” J.A. 299.
There has been no suggestion by either party that an unrelated third-party permit
transferee of the Chestnut Oak Surface Mine would satisfy either the term “Substituted
Defendant” or the term “Affiliated Company.” To prevail, therefore, the Conservation
Groups must identify another provision of the Decree that unambiguously extends
Paragraph 63’s prohibition to such a transferee. They cite two: Paragraph 24 and Paragraph
25. We consider these provisions in turn.
A.
In relevant part, Paragraph 24 provides that “[t]he provisions of this Second
Modified Consent Decree apply to and are binding . . . upon Substituted Defendant and
any of its respective successors and/or assigns.” J.A. 298.
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The Conservation Groups argue, and the district court found, that any third-party
permit transferee would constitute a “successor” and so would be bound by the terms of
the Decree, including Paragraph 63. 3 We disagree.
To begin, the Decree does not define the term “successor.” But it does specify that
terms “that are defined in the CWA, SMCRA or in regulations issued pursuant thereto shall
have the meanings assigned to them therein.” J.A. 299. So we look to “the CWA, SMCRA
or in regulations issued pursuant thereto” and ask whether any of those authorities define
the term “successor” and thus supply the meaning for that term in the Decree. J.A. 299.
The answer to that question is clearly no: nowhere in the CWA, SMCRA, or
implementing regulations is the term “successor” defined.
The Conservation Groups don’t dispute this fact. Instead, they point to federal and
state surface mining regulations promulgated under the SMCRA that define the term
“successor in interest.” And in their view, that’s close enough. To put a finer point on it,
they contend that “[b]ecause federal and state surface mining regulations use ‘successor in
interest’ and ‘successor’ interchangeably, it is of no import that the regulations define
‘successor in interest’ but not ‘successor.’” Response Br. 22.
3 The Conservation Groups also argue on appeal that a third-party permit transferee would separately constitute an “assign” under Paragraph 24. But they did not raise this argument below, so we decline to consider it here. See Agra, Gill & Duffus, Inc. v. Benson, 920 F.2d 1173, 1176 (4th Cir. 1990) (“We will not accept on appeal theories that were not raised in the district court except under unusual circumstances that would result in a miscarriage of justice.”). And even if they had, it seems highly unlikely that an unrelated third-party permit transferee would constitute an “assignee” for reasons similar to those discussed below involving a “successor.” 10 USCA4 Appeal: 23-1696 Doc: 40 Filed: 04/17/2024 Pg: 11 of 21
As defined in the relevant regulations, “successor in interest” means “any person
who succeeds to rights granted under a permit, by transfer, assignment, or sale of those
rights.” 30 C.F.R. § 701.5; accord W. Va. Code R. § 38-2-2.122 (providing materially
identical definition). 4 Applying that definition to the term “successor” in Paragraph 24 of
the Decree, the Conservation Groups argue that a third-party permit transferee of the
Chestnut Oak Surface Mine would constitute a “successor” and thus would be bound by
Paragraph 63’s surface mining prohibition. The district court took the same view.
That approach, however, contravenes the plain language of the Decree. Under the
agreement’s express text, only those terms used in the Decree that are explicitly “defined
in the CWA, SMCRA or in regulations issued pursuant thereto shall have the meanings
assigned to them therein.” J.A. at 299. And the term “successor”—the term actually used
in Paragraph 24—is not defined in any of those authorities, so there is no specialized
meaning to “assign[]” to it. J.A. 299. Nor is there any other basis in the Decree or those
regulations for assigning the meaning of the defined term “successor in interest” to the
undefined term “successor.” 5
4 These regulations’ definition of “successor in interest” is generally consistent with the ordinary meaning of that term. See Successor in interest, Black’s Law Dictionary (11th ed. 2019) (“Someone who follows another in ownership or control of property.”). 5 Some of the relevant federal and state surface mining regulations could arguably be construed in some places to use the term “successor” as a shorthand for “successor in interest.” See, e.g., 30 C.F.R. § 774.17(d); W. Va. Code R. § 38-2-3.25.a.5. But there is nothing in the CWA, SMCRA, or related regulations that explicitly equates “successor” to a “successor in interest.” The salient fact is that only the term “successor in interest” is expressly defined in those regulations and the term “successor”—the term that ultimately matters—is not. 11 USCA4 Appeal: 23-1696 Doc: 40 Filed: 04/17/2024 Pg: 12 of 21
Of course, the parties were free to use the term “successor in interest” in Paragraph
24. But they didn’t. Instead, they chose “successor,” and we must respect that choice.
Indeed, “[o]ur task is not to rewrite the terms of [the Decree] between the parties; instead,
we are to enforce it as written.” Fraternal Ord. of Police, Lodge No. 69 v. City of Fairmont,
468 S.E.2d 712, 716 (W. Va. 1996).
Accordingly, we look to the “plain and ordinary meaning” of the term “successor,”
Bass v. Coltelli-Rose, 536 S.E.2d 494, 497 (W. Va. 2000) (citation omitted), mindful of the
context in which the term appears, see Chesapeake Appalachia, L.L.C. v. Hickman, 781
S.E.2d 198, 213 (W. Va. 2015) (stating that contract terms “are to be read in their context”).
When dealing with corporations like ERP, the term “successor” typically means “[a]
corporation that, through amalgamation, consolidation, or other assumption of interests, is
vested with the rights and duties of an earlier corporation.” Successor, Black’s Law
Dictionary (11th ed. 2019). 6 So the question becomes whether a third-party permit
6 This definition, we note, is entirely distinct from that of the term “successor in interest,” both as defined in the relevant federal and state surface mining regulations and according to its ordinary meaning. As contrasted with the definition of the term “successor in interest,” which implicates only a succession to rights associated with the ownership or control of certain property, the definition of the term “successor” requires a succession to the rights and duties of an earlier corporation through amalgamation, consolidation, or other assumption of interests—like, for example, a corporate merger or stock purchase, see Amalgamation, Black’s Law Dictionary (11th ed. 2019) (“The act of combining or uniting; consolidation .”). Thus, the term “successor” takes on a different and more limited meaning than the term “successor in interest.” The district court saw it differently. In its view, “a ‘successor in interest’ requires a greater enmeshment between two corporate entities than a ‘successor,’ meaning that an entity that is a ‘successor in interest’ would be a ‘successor,’ too.” W. Va. Highlands Conservancy, Inc., 2023 WL 2330427, at *5; cf. Response Br. 25 n.5 (asserting that “a (Continued) 12 USCA4 Appeal: 23-1696 Doc: 40 Filed: 04/17/2024 Pg: 13 of 21
transferee of the Chestnut Oak Surface Mine would fall within the meaning of that term.
We again answer in the negative.
To be sure, a third-party permit transferee obtains the rights in connection with the
relevant mining permits. 7 But by obtaining such permit rights, the transferee does not,
“through amalgamation, consolidation, or other assumption of interests, [become] vested
with the rights and duties of [ERP].” Id. Indeed, we agree with the Receiver that the
contemplated permit transfer at issue in this case is more akin to an asset purchase—the
transferee would be effectively purchasing mining rights for a specific mine. And as we
and several other courts have recognized, merely purchasing an asset does not generally
render the purchaser a “successor” to the seller. See, e.g., United States v. Carolina
Transformer Co., 978 F.2d 832, 838 (4th Cir. 1992) (stating that “[t]he settled rule is that
a corporation which acquires the assets of another corporation does not take the liabilities
of the predecessor corporation from which the assets are acquired” except in limited
circumstances not present here); City Mgmt. Corp. v. U.S. Chem. Co., 43 F.3d 244, 251
(6th Cir. 1994) (same); Bud Antle, Inc. v. E. Foods, Inc., 758 F.2d 1451, 1456 (11th Cir.
1985) (same); Apache Stainless Equip. Corp. v. Infoswitch, Inc., No. 18-cv-04879-JMY,
2020 WL 4195275, at *5 (E.D. Penn. July 21, 2020) (“[B]ecause Apache only acquired
‘successor-in-interest’ is a subspecies of a ‘successor’”). But that has it backwards. Because a “successor” acquires the rights and liabilities of another corporation, the “successor” relationship involves “a greater enmeshment between two corporate entities,” W. Va. Highlands Conservancy, Inc., 2023 WL 2330427, at *5, than does a “successor in interest” relationship, which requires only the acquisition of rights in certain property. 7 In that respect, a third-party permit transferee could be a successor in interest. 13 USCA4 Appeal: 23-1696 Doc: 40 Filed: 04/17/2024 Pg: 14 of 21
certain assets, and did not assume the liabilities of Mepaco, Apache did not succeed or
become a successor to Mepaco.”); Gismondi, Paglia, Sherling, M.D. v. Franco, 206 F.
Supp. 2d 597, 600 (S.D.N.Y. 2002) (holding that an asset purchaser did “not fit within the
definition of the legal term ‘successor’”).
Sidestepping the issue, the Conservation Groups argue that “a successor need not
assume all of its predecessor’s assets, rights, and duties”; rather, “an entity can be a
successor as to part of its predecessor’s estate.” Response Br. 30 (second emphasis added).
To support this assertion, the Conservation Groups note that “Black’s Law Dictionary . . .
recognizes that there are multiple species of successors, including ‘particular successors’
‘who succeed to rights and obligations that pertain only to the property conveyed.’”
Response Br. 30 (cleaned up). They then point out that any third-party permit transferee of
the Chestnut Oak Surface Mine would assume not just all the rights associated with the
permits but also all the associated duties, “including [certain] environmental protection
obligations.” Response Br. 30. As such, the Conservation Groups continue, the transferee
would be properly characterized as a “successor,” namely, a “particular successor.”
This argument fails for the same reason that the Conservation Groups’ previous
argument fails—it seeks to rewrite the agreement. The Decree uses the term “successor,”
not “particular successor” or any other subgroup of that term. Just as we will not read
“successor in interest” in place of “successor,” we will not assign a more limited meaning
to “successor” absent some indication that the parties intended that result. See Fraternal
Ord. of Police, Lodge No. 69, 468 S.E.2d at 716.
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Applying the ordinary meaning of “successor” in this context, it is clear that term
does not encompass a third-party permit transferee of the Chestnut Oak Surface Mine by
virtue of the permit transfer alone, even if the relevant permits impose certain duties on the
transferee that were previously imposed on ERP. That is to say, by simply acquiring
discrete mining permits for a particular mine, the transferee does not, “through
amalgamation, consolidation, or other assumption of interests, [become] vested with the
rights and duties of [ERP].” Successor, Black’s Law Dictionary (11th ed. 2019). For that
reason, we hold that Paragraph 24 would not bind an unrelated third-party permit transferee
to Paragraph 63’s surface mining prohibition, which, by its express terms, applies only to
“Substituted Defendant and its Affiliated Companies.” J.A. 334.
B.
We turn next to the second provision that the Conservation Groups cite in support
of their claim that a third-party permit transferee would be bound by Paragraph 63’s surface
mining prohibition: Paragraph 25.
In its entirety, that provision provides:
Except for those restrictions on Large Scale Surface Mining set forth in Paragraphs 54 through 58 herein, the applicability and duration of which shall be governed solely by the terms of Section VIII, and the restrictions on Surface Mining set forth in Paragraph 63, no transfer of ownership or operation of any Facility shall relieve Substituted Defendant of its obligation to ensure that the terms of this Second Modified Consent Decree are implemented, provided, however that, prior to any transfer, any party desiring to transfer ownership or operation of any Facility shall provide a copy of this Second Modified Consent Decree to the proposed transferee and require the transferee to provide written confirmation to the Court acknowledging the terms of the Second Modified Consent Decree and that the transferee will be bound by those terms. In such event, the transferring party shall no longer be subject to this Decree. There shall be no requirement
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to provide written confirmation to the Court if the ultimate parent of Substituted Defendant will change as a result of a transaction, but the Substituted Defendant owning or operating the Facility will not change. In any event, all transferees, subsequent owners, and operators shall be bound by the terms of this Second Modified Consent Decree, consistent with applicable law.
J.A. 298–99.
Following the district court’s lead, the Conservation Groups focus on the very last
sentence of this paragraph: “In any event, all transferees . . . shall be bound by the terms
of this Second Modified Consent Decree, consistent with applicable law.” J.A. 299
(emphasis added). In their view, “all means all.” Response Br. 47 (cleaned up); accord W.
Va. Highlands Conservancy, Inc., 2023 WL 2330427, at *7 (“[T]he last sentence of
paragraph 25 is clear. All transferees, without qualification, are bound by the terms of the
Consent Decree so long as it accords with applicable law.”). Thus, the argument goes, any
third-party permit transferee of the Chestnut Oak Surface Mine would be equally bound by
Paragraph 63’s surface mining prohibition. Again, we disagree.
The fundamental problem with the interpretation advanced by the Conservation
Groups and adopted by the district court is that it reads the final sentence of Paragraph 25
in a vacuum. Contract terms “are not to be construed in a vacuum, but are to be read in
their context.” Chesapeake Appalachia, L.L.C., 781 S.E.2d at 213. And that context is
critical here as it plainly demonstrates that the phrase “all transferees” in the final sentence
of Paragraph 25 refers to a specific subset of transferees that had been identified earlier in
the paragraph: all transferees of a “Facility.” J.A. 298 (emphasis added).
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We need not devote much time to this issue, for even a cursory review of Paragraph
25 illustrates the point.
Start with the first sentence, which comprises two parts. The first part provides that
except as to certain surface mining restrictions set out elsewhere in the Decree, “no transfer
of ownership or operation of any Facility shall relieve Substituted Defendant of its
obligation to ensure that the terms of this Second Modified Consent Decree are
implemented.” J.A. 298 (emphasis added). At the outset, then, Paragraph 25 cabins its
terms to a specific context, or more accurately, a specific triggering event: the transferring
of ownership or operation of any “Facility.”
The second part of the first sentence and the entire second sentence, which
collectively provide an exception to the general rule set out in the first part of the first
sentence, reinforce Paragraph 25’s limited scope:
provided, however that, prior to any transfer, any party desiring to transfer ownership or operation of any Facility shall provide a copy of this Second Modified Consent Decree to the proposed transferee and require the transferee to provide written confirmation to the Court acknowledging the terms of the Second Modified Consent Decree and that the transferee will be bound by those terms. In such event, the transferring party shall no longer be subject to this Decree.
J.A. 298–99 (emphases added). Like the first half of the first sentence, the second half
begins by identifying a specific context: when “any party desir[es] to transfer ownership
or operation of any Facility.” J.A. 298 (emphasis added). And it is within that specific
context that Paragraph 25 first uses the term “transferee”—three times, in fact. Thus, in
each of those three instances, the term “transferee” unquestionably refers to a transferee of
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a “Facility.” J.A. 298. Under the same logic, the term “transferring party” in the second
full sentence of Paragraph 25 similarly denotes the transferor of a “Facility.” J.A. 298.
In keeping with this narrow context, the third sentence of Paragraph 25 also employs
the term “Facility”: “There shall be no requirement to provide written confirmation to the
Court if the ultimate parent of Substituted Defendant will change as a result of a transaction,
but the Substituted Defendant owning or operating the Facility will not change.” J.A. 299
(emphasis added).
Against this clear backdrop, there can be no doubt that the term “transferees” in the
fourth and final sentence—“In any event, all transferees, subsequent owners, and operators
shall be bound by the terms of this Second Modified Consent Decree, consistent with
applicable law,” J.A. 299 (emphasis added)—likewise refers only to transferees of
Facilities. To conclude otherwise would be to completely ignore the context by
disregarding everything that preceded that final sentence—an indefensible result. See
Antero Res. Corp. v. Directional One Servs. Inc. USA, 873 S.E.2d 832, 842 (W. Va. 2022)
(explaining that a contract must be construed “to give meaning to every word, phrase and
clause and also render all its provisions consistent and harmonious” (cleaned up)). It would
be odd indeed for a single contract provision to repeatedly and consistently use a term
within the confines of a specific context only to jettison those confines in the final sentence.
18 USCA4 Appeal: 23-1696 Doc: 40 Filed: 04/17/2024 Pg: 19 of 21
And here, there is simply no indication that the term “transferees” in the last sentence of
Paragraph 25 refers to anything other than transferees of Facilities. 8
Consequently, whether a third-party permit transferee of the Chestnut Oak Surface
Mine would be bound by Paragraph 25 depends on whether the Chestnut Oak Surface Mine
constitutes a “Facility” under the Decree. It does not.
The Decree defines the term “Facility” as “Covered Outfalls and mining operations
subject to the Covered Permits.” J.A. 301. The term “Covered Outfalls” is defined as “the
discharge points for the Covered Permits as identified in Appendix A to this Second
Modified Consent Decree.” J.A. 300. And the term “Covered Permits” is defined in
relevant part as
permits that were the subject of this litigation as those permits are now in effect and as they may be amended, modified, or renewed, following the procedures for such amendment, modification, or renewal prescribed by the applicable federal and state statutes and regulations and interpreted by this Court in relevant decisions for the duration of this Second Modified Consent Decree, including: WV/NPDES Permit[9] Nos. WV0099520, WV0093751, WV0096920, WV0096962, WV1014684, WV1017225, WV0099392, WV1016776, WV1020889, and WV1021028.
J.A. 300.
8 What’s more, interpreting the phrase “all transferees” in its broadest sense would lead to absurd results as it would encompass not just transferees of all mining permits but also transferees of any asset, thus binding them to all the Decree’s terms. See Transferee, Black’s Law Dictionary (11th ed. 2019) (“One to whom a property interest is conveyed”). We do not think the Decree countenances such a result. 9 A “WV/NPDES permit” means “a West Virginia / National Pollutant Discharge Elimination System permit issued by [the West Virginia Department of Environmental Protection] pursuant to Section 402 of the CWA.” J.A. 304. 19 USCA4 Appeal: 23-1696 Doc: 40 Filed: 04/17/2024 Pg: 20 of 21
There’s no dispute that the Chestnut Oak Surface Mine WV/NPDES permit number
is not among those listed in the definition of “Covered Permits.” See W. Va. Highlands
Conservancy, Inc., 2023 WL 2330427, at *6 (identifying the WV/NPDES permit number
for the Chestnut Oak Surface Mine as “WV1019759”). There’s also no dispute that, as a
result, the Chestnut Oak Surface Mine is not “subject to [a] Covered Permit[]” and thus
does not constitute a “Facility” under the Decree. J.A. 301. It follows, then, that Paragraph
25 of the Decree does not extend Paragraph 63’s prohibition on surface mining to a third-
party permit transferee of the Chestnut Oak Surface Mine.
****
In sum, neither Paragraph 24 nor Paragraph 25 would bind a third-party permit
transferee of the Chestnut Oak Surface Mine to Paragraph 63’s prohibition on surface
mining, a prohibition that expressly applies only to ERP and its Affiliated Companies. We
have considered the Conservation Groups’ remaining arguments, including their assertion
that any third-party permit transferee would be separately bound by the Decree under
Federal Rule of Civil Procedure 65(d)(2), and find them meritless.
20 USCA4 Appeal: 23-1696 Doc: 40 Filed: 04/17/2024 Pg: 21 of 21
IV.
For the reasons given, we vacate the district court’s order and remand with
instructions to deny the Conservation Groups’ motion to enforce the Decree and to grant
the Receiver’s competing motion, consistent with this opinion. 10
VACATED AND REMANDED WITH INSTRUCTIONS
10 The Receiver’s motion requested a ruling both that (1) the Decree does not apply to a third-party permit transferee of the Chestnut Oak Surface Mine, and (2) the mining proposed for that mine was necessary for and incidental to reclamation. Our decision today resolves only the first issue and renders the second issue moot. 21