DEP Sympathetic to Gas Drillers, But Bill Leaves Few Exemption Options

Charleston Gazette
3 August 2014
By Ken Ward Jr., Staff writer

On Jan. 20, Gov. Earl Ray Tomblin announced his proposal for legislation to increase regulation of above-ground chemical storage tanks across West Virginia. It was less than two weeks after the Freedom Industries’ leak that contaminated drinking water for 300,000 residents in Charleston and surrounding counties.

Despite public outrage over the water crisis, Tomblin took a cautious approach that aides said was aimed at not “overregulating” industry. The governor’s proposal, crafted in part in behind-the-scenes talks with corporate lobbyists, included a long list of exemptions for whole classes of chemical storage tanks and entire industries.

With the Freedom leak fresh in their minds, many lawmakers were wary of the governor’s proposal. It took two months of debate by multiple committees, but the Legislature eventually moved to mostly abandon the governor’s business-friendly model. Lawmakers passed SB373, setting up a long list of new chemical tank safety mandates and giving industry limited options for avoiding new permitting and inspection requirements.

Now, House Speaker Tim Miley, D-Harrison, is taking up the cause of oil and gas drillers who want a broad exemption from the new law. Early last month, Miley urged Tomblin to somehow use executive powers to delay the bill, or to call lawmakers into special session to let oil and gas operators off the hook.

Miley, in a letter to Tomblin written six months to the day after the Jan. 9 Freedom leak, insisted that he considers “our obligation to provide clean and potable water for the citizens of our state sacred,” but that state leaders also “have an obligation to avoid the excessive regulation of an industry” whose operations “pose little threat to public water intakes around our state.”

“If not, lost jobs and an increase in bankruptcy filings may be the undesired result,” Miley wrote in his July 9 letter to the governor.Nearly a month after Miley’s letter, the Tomblin administration is still trying to craft a concrete response.

Officials said the governor is sympathetic to the situation but has no plans for an executive order. It’s not clear yet if Tomblin will consider a special session.DEP officials say they are likewise sympathetic, but they are quick to point out that the Legislature had the chance to exempt oil and gas industry tanks from the bill and didn’t, and gave agency regulators very narrow authority to create such waivers as they write a rule to implement the law.

“I don’t know how much room there is,” said Scott Mandirola, director of the DEP’s Division of Water and Waste Management, whose office is writing the agency’s rule. “A lot of these things were discussed by the Legislature, about who should be covered and who shouldn’t be covered.”

Mandirola’s boss, DEP Secretary Randy Huffman, said last week, “The law is what it is, and we’re going to enforce it.

”In writing SB373, lawmakers set up three basic mandates for above-ground chemical storage tanks:
The law defines “above-ground storage tank” to include any tank that holds more than 1,320 gallons of most types of fluids. The law requires the DEP to compile an inventory of such tanks by Oct. 1, and agency officials are in the process of doing that now, by requiring owners to register their tanks.

In his letter to Tomblin, Miley alleged, among other things, that the registration process is too time-consuming and costly for many small oil and gas operators. Miley complained, for example, about operators needing to report who owns the land where they have their chemical tanks, information Miley said is “not normally found in the files” of the operators.

Miley did not return a message seeking an interview for this report. The speaker copied his letter to Tomblin to S. Michael Shaver, president of Bridgeport-based Mountain V Oil & Gas Inc. Shaver had complained about the law’s requirements in a May 21 letter to the DEP, saying he feared that “pressure to ‘do something’” in the aftermath of the Freedom leak would “override a common sense approach to adopt meaningful regulation.”

In his letter, Miley said he was concerned about the impacts of the bill on small oil and gas drillers that have smaller — about 100 barrels or 4,200 gallons — tanks that they use to temporarily store salty brine-water, oil and other liquids from their operations.

Such tanks are large enough to meet the new law’s definition of an above-ground storage tank. However, if they are already covered by a federal “Spill Prevention, Control and Countermeasure” plan, as Miley says they are, they already are generally exempt from needing to get an additional permit under the new state law. Tanks with such plans would be required to get a state permit if they are located in a “zone of critical protection” near public drinking water intakes. Miley also complained about the potential costs of the annual engineering inspection.

The DEP’s Mandirola said the law doesn’t currently give the DEP a way to exempt tanks that meet the Legislature’s definition from the requirement to register with the DEP. The law does allow the DEP to exempt entire categories of tanks from the state permit requirement, if the agency concludes those categories of tanks are covered by another regulatory program with safety standards similar to those in SB373, Mandirola said.

But, the ability of the DEP to create categorical exemptions doesn’t appear to apply to the requirement for annual engineering inspections of all tanks. So, tanks could be exempt from permit requirements, but still have to be registered with the DEP and inspected annually, officials said.

The DEP’s Huffman said last week that he agrees with much of what Miley says in his letter and is sympathetic to the oil and gas industry’s concerns.

In an interview, Huffman described a gas company tank he sees frequently when he’s hunting: It sits on top of a hill, inside an earthen dike, located nowhere near a public water system intake. It’s old, but it’s rarely full. Huffman said he’s “absolutely confident” that such tanks pose little if any threat to public health or the environment, Huffman said.Huffman and Chris Stadelman, the governor’s communications director, noted that Tomblin’s proposed legislation would have exempted these kinds of tanks. Tomblin’s bill contained a specific exemption for “tanks that are used to store brines, crude oil, or any other liquid or similar substances or materials that are directly related to the exploration, development, stimulation, completion, or production” of oil or gas.

“The face of the bill changed significantly from the governor’s bill,” Huffman noted.Lawmakers removed many of the exemptions after a hearing in which numerous DEP staff members who regulate various industries testified that they weren’t sure where those exemptions came from or what the impact of the exemptions would be, and told lawmakers that existing regulatory programs don’t necessarily contain the sort of engineering inspections of tanks being proposed in the new bill.

Last week, Huffman said his agency doesn’t yet have a lot of data about the oil and gas industry’s tanks. The DEP is still compiling its inventory. Exact locations, contents and condition of tanks haven’t been gathered together yet, Huffman said. And it’s possible some of these tanks have had problems in the past. “They are old,” he said, “and I am sure there are leaks associated with them, and I’m sure that, in the history of these programs, there have been a lot of leaks associated with them.”

Huffman said he doesn’t support “categorical exclusions,” but he would consider something less drastic that would help the oil and gas industry.One option for dealing with the oil and gas industry complaints would be to find a way to exempt tanks that aren’t located in a “zone of critical concern” near drinking water intakes.

In a prepared statement responding to Gazette-Mail questions about the issue, Stadelman said the governor believes “the goals of the legislation can be accomplished without undue burden on West Virginia’s businesses.”

The statement said Tomblin is committed to following “the intent” of the legislation and that the DEP “is discussing and is committed to ensuring zones of critical concern receive priority so our water sources are protected.”

Meanwhile, during the DEP’s initial public comment period, held while agency officials drafted their first cut of a rule to implement SB373, various industry lobby groups outlined their own requests for exemptions. The West Virginia Coal Association said existing laws do enough to regulate tanks at mine sites. The state Farm Bureau is concerned about whether the law applies to certain agricultural tanks or not. The West Virginia Manufacturers Association outlined ways it believes various types of tanks should be exempt.

Environmental groups, meanwhile, are worried where the exemptions will end.“It’s important for state leaders to think very carefully about excluding large numbers of tanks from the new regulations,” said Evan Hansen, an environmental consultant with the Morgantown firm Downstream Strategies. “Which tanks will be left?”

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