• WVDEP Files "Agency-Approved" Rules for Horizontal Well Development and Aboveground Storage Tanks
  • September 4, 2015 | Author: Mark D. Clark
  • Law Firm: Spilman Thomas & Battle, PLLC - Charleston Office
  • As reported in the July 2015 IOGA News, on June 24, 2015, the West Virginia Department of Environmental Protection (“WVDEP”) filed a proposed legislative rule amending the Horizontal Well Development Rule, 35 C.S.R. 8 (the “Horizontal Well Rule”), which established a public comment deadline on July 27, 2015. Then on June 25, 2015, WVDEP filed three proposed legislative rules implementing the Aboveground Storage Tank Act, as amended, W. Va. Code § 22-30-1, et seq. (“AST Act”). The three rules implementing the AST Act are 47 C.S.R. 63 - “Aboveground Storage Tanks” (“AST Rule”), 47 C.S.R. 64 - “Aboveground Storage Tank Fee Assessments” (“AST Fee Rule”) and 47 C.S.R. 65 - “Aboveground Storage Tank Administrative Proceedings and Civil Penalty Assessment” (“AST Penalty Rule”). The public comment deadline for these rules was July 30, 2015. IOGA filed timely comments to the Horizontal Well Rule, AST Rule and AST Fee Rule for consideration by WVDEP.
     
    On July 31, 2015, WVDEP filed “agency-approved” versions of all four legislative rules, along with response to many, but not all, of the comments filed by IOGA and many other individuals and entities. The “agency-approved” Horizontal Well Rule was filed only 4 days following the comment deadline and the “agency-approved” AST Rule, AST Fee Rule and AST Penalty Rule (collectively the “AST Rules”) were filed less than 24 hours following the comment deadline.
     
    Horizontal Well Rule
     
    Despite having only four days to consider comments and revise the Horizontal Well Rule, WVDEP made significant adjustments from the proposed rule filed on June 24 to the “agency-approved” rule filed on July 31. Significantly, the requirement to use “closed-loop drilling systems” and prohibit waste pits for all horizontal well work permits was eliminated. Instead, waste pits may still be included in a horizontal well work permit, but such pits will be required to comply with many of the construction requirements for centralized pits and impoundments, including structural integrity, liner, leak detection and monitoring requirements.
     
    Similarly, WVDEP responded to IOGA and other commenters’ objections to “monitor all potential conduits for unintended fracture propagation” by shrinking the area required to be reviewed for fracture propagation to a 500’ radius around the wellhead (reduced from 1,200’) and a 500’ radius around the lateral section of the wellbore (reduced from 1,000’). Also, the requirement to monitor and plug wells identified as potential conduits was modified to require notice to certain well owners with an offer to coordinate or assist with appropriate monitoring. A potential plugging, re-plugging or monitoring obligation remains for existing abandoned wells.
     
    The requirement to have berms fully enclose well pads was mitigated slightly by authorizing sumps to be installed to release stormwater, except when drilling and completion activities are in progress. Also, the WVDEP’s discretion in requiring formation integrity testing is to be based on American Petroleum Institute Standards 65 Part 2, providing an objective standard which was absent from the proposed rule.
     
    On the other hand, no significant improvements were made to the extensive groundwater supply well aquifer and hydrogeologic delineation requirements or the “karst region” requirements, despite the fact that the location of karst geology has not been mapped in adequate detail to provide notice of where the requirements will apply.
     
    AST Rules
     
    As one might expect when “agency-approved” rules are filed less than 24 hours following the comment deadline, relatively few changes were made to the AST rules. More specifically, no changes were made to the AST Penalty Rule and no substantive changes were made to the AST Fee Rule. Thus, the operating fee for Level 1 and Level 2 regulated ASTs remains at $201 and $40, respectively, each year, adjusted for inflation, while the Protect Our Water Fund fee is undetermined and will vary from year to year to maintain a $1 million balance in that fund.
     
    The more significant of the relatively minor changes to the AST Rule include: (1) manifolded tanks - revising the definition to open the door for design and connection of tanks with sufficient protections against a leak in one tank draining multiple tanks allowing each tank to be evaluated separately to determine whether any regulation applies. Thus, for example, it may be possible to connect multiple 30-barrel tanks together in a way that each is not subject to registration or regulation under the AST Act; (2) mobile tank - the definition was improved by eliminating language that would have prevented otherwise mobile tanks from exclusion from the AST Act if a tank was “installed as a fixed component (i.e. AST on saddles, legs, stilts, rack or cradle, etc.” Thus, tanks that are “designed and constructed to be moved to different service locations and its relocation is inherent in its use” and do not stay in one location for 365 days or more are not subject to the AST Act; (3) temporarily out of service - the definition was modified to increase the time period from 180 days to one year for the determination of when an AST is temporarily out of service; (4) certificates to operate - § 4.1.a was modified to more clearly state that “Certificates to Operate will be issued only for Level 1 and Level 2 regulated ASTs” eliminating some ambiguity in the proposed rule; (5) spill prevention and response (“SPR”) plans updates - the requirement for updates to SPR plans for Level 2 regulated ASTs was reduced from seven years to five years to conform to the language in the AST Act requiring updates every 5 years for all regulated ASTs; and (6) signage - reduced the sign size from 24” x 24” to 18” x 24” in those instances where signs are used rather than stencils or labels directly on the tanks.
     
    Of more concern to IOGA members is the significant financial burden associated with compliance requirements for Level 1 and Level 2 regulated ASTs. Likewise, the absence of changes to the “one-size fits all” approach to regulating both Level 1 and Level 2 regulated ASTs results in costs that do not make water supplies significantly safer. There are few differences in the regulatory requirements between Level 1 and Level 2 regulated ASTs even though Level 2 regulated ASTs are between a 5-hour and 10-hour time of travel from a public water supply intake. The financial assurance requirements continue to be quite burdensome in the context of relatively small tanks containing oil or brine. Requiring inspections of Level 1 regulated ASTs every 7 days constitutes an unnecessary and unreasonable burden on oil and brine tanks that happen to be in a zone of critical concern.
     
    The “agency-approved” rules are not the end of the approval process. These rules will next be considered by the Legislative Rulemaking Review Committee, which includes representation from both the Senate and House of Delegates and is subject to modification at that stage. Then the Rulemaking Review Committee-approved rules will be submitted to the West Virginia Legislature for consideration and approval during its next regular session that begins January 13, 2016. The rules will be subject to modification during the legislative approval process as well. IOGA will continue to work on behalf of its members to provide appropriate input and guidance regarding these proposed legislative rules.