By: Lynn Delles (Director of Strategic Communication, Jefferson County Foundation, Inc.)

Advocacy organizations in West Virginia will want to review the recent opinion issued by West Virginia’s highest court in Jefferson County Foundation, Inc. v. West Virginia Economic Development Authority. In its June 8 opinion the Supreme Court of Appeals addressed the issue of standing and held that a nonprofit advocacy organization has standing to pursue legal action on behalf of its members and the public. 

Jefferson County Foundation, Inc. (JCF), a small nonprofit in the eastern panhandle of West Virginia, had challenged the legality and constitutionality of a “sale and leaseback” agreement involving the WV Economic Development Authority (WVEDA) and heavy industrial manufacturer Rockwool’s insulation factory in Ranson, WV. In such arrangements, which are regularly used in the state to provide tax breaks to corporations, the corporation “sells” its land and factory to the state with the right to buy back for a minimal amount (here, 1 dollar) after a number of years (here, after ten years).  During the time the corporate property is owned by the state, the corporation enjoys substantial tax relief. In its legal challenge JCF asserted, among other things, that the arrangement violates the fair and equal taxation clause in the WV constitution (Article X, § 1). 

One of the arguments that the WVEDA made in its motion to dismiss at the lower court was that JCF lacked standing to bring such a case. While the lower court did not address that argument, the Supreme Court directly analyzed the issue and found that JCF has standing to bring such a legal and constitutional challenge on behalf of its members. 

The court began its analysis by explaining that “[g]enerally, standing is defined as ‘[a] party’s right to make a legal claim or seek judicial enforcement of a duty or right.’” (The opinion of the court at page 10) 

The court then explained that “An organization has representative standing to sue on behalf of its members when the organization proves that: (1) at least one of its members would have standing to sue in their own right; (2) the interests it seeks to protect are germane to the organization’s purpose; and (3) neither the claim asserted nor the relief requested requires the participation of individual members in the lawsuit.”(The opinion of the court at page 10) 

The court found that JCF satisfied (2) and (3). WVEDA had argued that JCF did not meet the first criteria because it was not a party to the sale/leaseback agreement and therefore lacked standing. However, the court found that “For standing under the Declaratory Judgments Act, it is not essential that a party have a personal legal right or interest.” (The opinion of the court at page 12) And that “When significant interests are directly injured or adversely affected by governmental action, a person so injured has standing under the Uniform Declaratory Judgments Act, W.Va. Code s 55-13-1 et seq. (1941) to obtain a declaration of rights, status, or other legal relations.” (The opinion of the court at page 12)  

The Court noted that JCF had challenged contracts to be entered into by a public entity, alleged that those contracts violate both statute and the West Virginia Constitution, and sought a declaration regarding the impact of that public contract on members’ interests that arguably fall within those protected by Article X, § 1 of the West Virginia Constitution (The opinion of the court at page 12-13). Comparing these findings to the precedent set in Shobe v. Latimer the court found that the JCF had standing to bring this case. The court’s decision confirmed the precedent of Shobe and applied it to an organization representing the public interest. 

In summary, the standing precedent established in Jefferson County Foundation v. WVEDA should be reviewed by, and may be helpful to, other public interest organizations that seek to challenge the actions of public entities in West Virginia.