Friday, February 28, 2014

LGCR Provides Update, Analysis On Latest Version Of Storage Tank Regulation Bill

To address the chemical leak in the Elk River that occurred on January 9th, Senate Bill 373 has been winding its way through the West Virginia Legislature.  Since we last reported, the bill has undergone substantial changes in the House and may undergo even more changes as it is still being debated before the House Judiciary Committee...and is slated to go to the House Finance Committee thereafter.  Although it is too early to say with certainty what the final bill may look like, there are a few things those in the oil and gas industry should be aware of as the bill currently stands:

1. The bill now consists of three distinct parts.  The first part still includes the bill’s original purpose to amend the Water Resources Protection and Management Act to update the reporting of water usage throughout the state.  The second part consists of a new regulatory program (The Aboveground Storage Tank Act (ASTA”)) for aboveground storage tanks, similar to the existing program for underground storage tanks.  The third and final part creates The Public Water Supply Protection Act (“PWSPA”) which expands upon the Bureau of Public Health’s source water assessment protection program.

2. The ASTA that was originally included in the Senate’s version of the bill had several exemptions for oil and gas operations that were permitted under other programs.  The proposed bill in House Judiciary removes many exemptions and leaves it to the WVDEP to develop rules providing a waiver from the ASTA permitting requirements on the condition that the permitted activity includes certain AST standards set forth in the statute.  Certain exemptions that remain include pipeline facilities, liquid traps or associated gathering lines, surface impoundments, pits, ponds or lagoons and process vessels.  Note however, that no AST, as defined in the Act, is exempt from the inventory and registration process set forth in the Act.  Practically speaking, the new AST standards set forth in the ASTA will likely be incorporated by WVDEP into existing programs, including the Office of Oil and Gas’s well work permits.

3. The proposed definition for ASTs attempts to incorporate the EPA’s Spill Prevention, Control and Countermeasure (“SPCC”) rule’s applicability threshold of greater than 1320 aggregate gallons of oil.  In the ASTA, the definition states that ASTs are defined as containing more than 1320 gallons of fluid per tank, not in the aggregate and not just limited to oil.  Smaller aboveground storage tanks thus would be excluded from regulation under the ASTA.

4. The PWSPA, along with amendments to the Bureau of Public Health’s source water assessment protection program,  applies to ALL potential significant contaminate sources, regardless of how they are stored, located in a zone of critical concern above a public water system’s surface water intake or groundwater intake where the groundwater is influenced by surface water.  Potential significant contaminate sources is left undefined in the Act.

5. Main distinction to remember regarding the ASTA and PWSPA is that ASTA applies to aboveground storage tanks throughout the state while the PWSPA applies to potential significant contaminate sources within the zone of critical concern.

6. Finally, one of the major concerns with the PWSPA is that it prevents WVDEP from issuing a general NPDES permit to any operation within the zone of critical concern and requires that operation to seek an individual permit instead.  Individual permits take more time and resources to obtain so this provision could have a significant impact.

LGCR and its government relations affiliate, LGCR Government Solutions, are monitoring this bill and will provide additional updates.  Please call Joe Jenkins, LGCR’s environmental regulatory attorney, if you have any questions.