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Tomblin won’t use executive order to delay tank bill

By Dave Boucher, Capitol Bureau Chief

House Speaker Tim Miley wants to delay parts of a new law crafted after the Freedom Industries chemical leak because of concerns about its effects on the oil and gas industry.

But Gov. Earl Ray Tomblin won’t issue an executive order to do so.

“An executive order should not be used to circumvent the will of the Legislature, but the Department of Environmental Protection continues to evaluate administrative options that ensure water protection while making the compliance process feasible,” Tomblin spokesman Chris Stadelman said in an email Tuesday.

Miley wrote a letter to Tomblin on July 9 raising concerns he said he heard after speaking with oil and gas operators. The speaker asked Tomblin if his staff could look into possibly delaying implementation of pieces of the new law that relate to oil and gas field storage tanks.

“Unfortunately, the practical aspects of the recent legislation may be a total shock to the state’s economy at a time when we can least afford it,” Miley wrote in the letter.

“We must avoid, to the extent we possibly can, compounding the economic damages caused by the Freedom Industries spill, by doing what we can to minimize, if not eliminate, the unintended consequences of the (act) on the small independent oil and gas producer.”

State lawmakers spent weeks crafting new regulations for aboveground storage tank owners after thousands of gallons of chemicals leaked into the Elk River and contaminated water for 300,000 West Virginia residents earlier this year. Throughout the process lobbyists for the oil and natural gas industry, along with many other lobbyists, expressed issues they had with the law, leading to changes to the bill in several legislative committees.

In his letter, Miley says the law duplicates some regulations on the oil and natural gas industry while imposing requirements that could cost tank owners thousands of dollars.

“The threat to public water system intakes is minimal to non-existent and avoidance of unintended consequences with respect to oil and gas operations is not inconsistent with the principle purpose of the legislation; i.e. to protect public water intakes from the type of damage caused by the Freedom Industry spill,” Miley writes.

Miley says the sites are subject to inspections on secondary containment plans, and those inspections are done by registered engineers. The law would require anyone with aboveground storage tanks — as defined in the law — to have such an engineer inspect the tanks themselves every year.

The cost of such an inspection could range from $500 to $2,000 per well site, Miley said. He said someone who owns 100 well sites could be forced to pay $200,000 every year for the inspections.

“The more catastrophic circumstance is that this cost likely wipes out the entire profit of the operator for the year and likely puts the operator in a deficit posture,” Miley wrote.

The oil and natural gas industry combined to provide about $188.3 million in state and federal taxes during the last budget year, said state Deputy Revenue Secretary Mark Muchow. That tax, the severance tax, takes about 5 percent of total gross receipts, he said.

That puts the oil and gas industry in the neighborhood of $4 billion in income every year.

“That’s gross income, not net income,” Muchow added.

House spokeswoman Stacey Ruckle didn’t answer Daily Mail questions as to how Miley determined oil and gas operations posed little or no threats to public water systems, or the source of the possible costs he cites for well inspections.

She did say the Independent Oil and Gas Association, a trade organization and lobbying group, provided Miley with the estimated number of aboveground storage tanks — 35,000 to 40,000 — he cites in his letter.

The DEP is working on compiling a database of such facilities; in February the DEP said there were about 3,900 tanks at 600 facilities in the state based on information from general or individual stormwater permits.

The DEP disagrees with several of the assertions Miley makes in the letter. Although DEP spokeswoman Kelley Gillenwater said the agency doesn’t have any estimates for the cost of registered professional engineers, the agency disputes issues raised by Miley about the registration process.

Miley said the document tank owners need to fill out “calls for some very precise information” concerning land ownership that could be hard or costly for oil and gas operators to provide. Noting that some well ownership information dates back “into the 1950s and beyond” Miley said it could cost operators thousands of dollars to locate accurate surface ownership information to complete the registration form.

“Yet another large and sophisticated operator has estimated the cost of doing courthouse research to determine surface owner information required on the registration form at $60,000,” Miley writes.

“It should be noted there is nothing in the legislation that passed which requires surface owner information to be reported.”

Gillenwater said the DEP has spoken repeatedly with “representatives” of the oil and gas industry about the law and the registration process. The five-page registration form (Miley says it’s seven pages but it’s been updated since his letter) asks for the name of a land owner and the longitude and latitude of the center of a facility.

“Both of these fields are optional for oil and gas operators,” Gillenwater said, acknowledging the information isn’t required by the new law.

There’s no mention on the form itself that those fields are optional for anyone. Gillenwater said that information was communicated directly to oil and gas industry groups or individual who called the DEP with questions.

Ruckle didn’t respond to a question Wednesday about whether the speaker knew those sections of the form were optional, in the eyes of the DEP, for oil and gas operators.

Gillenwater, who said no one from the DEP had seen Miley’s letter before Tuesday, said requirements for registration are still fluid as the agency continues to work its way through making rules need following the passage of the new law.

Owners of aboveground storage tanks are required to register with the DEP by Oct. 1.

Contact writer Dave Boucher at 304-348-4843 or david.boucher@dailymailwv.com. Follow him at www.Twitter.com/Dave_Boucher1.


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