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Finally…..The Final Aboveground Storage Tank and Horizontal Well Rules
July 06, 2016
In March 2016, we predicted that the Aboveground Storage Tank Act (“AST Act”) and changes to the Natural Gas Horizontal Well Control Act (“Horizontal Well Act”) legislative rules would be approved by the West Virginia Legislature (“Legislature”) by the end of its regular session. To the contrary, the Legislature did not pass House Bill 4053, which included all of the West Virginia Department of Environmental Protection’s (“WVDEP”) legislative rules. Thus, the timing for implementation of all of the WVDEP’s legislative rules became uncertain and unpredictable.
 
Governor Tomblin convened a special session of the Legislature to consider and approve a budget for West Virginia for the fiscal year beginning July 1, 2016. He added the WVDEP’s legislative rules package for consideration and approval. Afterward, the three AST Act legislative rules and changes to the Horizontal Well Act legislative rule were approved by the Legislature for promulgation. On June 2, the Legislature approved the WVDEP’s legislative rules bundle and on June 8, Governor Tomblin signed the bill. On June 9, 2016, the WVDEP promulgated amendments to the Horizontal Well Development Rule, 35 C.S.R. 8, and established an effective date of July 9, 2016.  Then on June 27, the WVDEP promulgated three rules implementing the AST Act: “Aboveground Storage Tank Rule,” 47 C.S.R. 63 (“AST Rule”); “Rule Governing Aboveground Storage Tank Fee Assessments,” 47 C.S.R. 64 (“Fee Rule”); and “Aboveground Storage Tank Administrative Proceedings and Civil Penalty Assessment,” 47 C.S.R. 65 (“Administrative Rule”), and established an effective date for each of August 1, 2016.
 

AST Rules – Effective August 1, 2016


 
All aboveground storage tanks as defined in the AST Act (“ASTs”) are subject to the registration requirements contained in § 3 of the AST Rule before July 1, 2015. For ASTs placed in service before July 1, 2015, the registration fee is $40 per AST. For ASTs placed in service beginning July 1, 2015 the registration fee is $20 per AST. If you have any tanks in use that are included in the definition of ASTs, you should immediately take steps to register those ASTs using the online registration system established by the WVDEP for that purpose.
 
In addition, Level 1 and Level 2 regulated tanks, as defined in the AST Act (collectively “Regulated ASTs”), will be assessed an “annual operating fee” of $201 for Level 1 tanks and $40 for Level 2 tanks. WVDEP is likely to begin mailing invoices to AST owners fairly soon after the August 1, 2016 effective date. In addition, WVDEP is authorized to collect an “annual response fee” to fund the Protect Our Water Fund established pursuant to the AST Act. However, no annual response fee amount has been established by WVDEP and that fee will only be collected as necessary to maintain a $1 million balance in the Protect Our Water Fund.
 
The AST Rule establishes the requirements for installing, inspecting, operating, maintaining and closing Regulated ASTs. The ASTs that are not Level 1 or Level 2 ASTs are only subject to the registration, signage and spill reporting requirements, but not the more substantive and costly requirements established for Regulated ASTs. Thus, as of August 1, 2016, AST owners or operators must begin compliance with the AST Rule.
 
The AST Act, effective on June 12, 2015, requires that all registered ASTs have signage installed on or near each tank that includes the
  1. tank registration number,
  2. owner or operator emergency contact number and
  3. DEP Spill Reporting Hotline number (1.800.642.3074). 
 
The labels or markings on the tanks shall be placed at least three ft. above ground level and be clearly visible and legible. Signs must have letter size of 1½ inches in high contrast colors on physical sign 18-inches by 24-inches which is clearly visible and legible. In addition, spill prevention and response plans, or certification of same, for existing Regulated ASTs were due to WVDEP by December 9, 2015. To the extent that a regulated AST owner has not done so, spill prevention and response plans, or authorized certifications, should be promptly submitted to WVDEP.
 
AST owners may be able to avoid some of the costly requirements associated with Regulated ASTs by
  1. closing and eliminating the tank from operation if feasible,
  2. moving the tank outside the zone of critical concern or zone of peripheral concern, or  
  3. replacing the tank with one having a capacity of less than 1,320 gallons, which may include technically appropriate “manifolding” of such tanks so they do not qualify as ASTs under the AST Act. 
 
Note that ASTs closed and dismantled after July 31, 2016 will be subject to requirements in § 11.3 “Permanent Closure of Regulated AST Systems.”
 

New Requirements


 
On August 1, 2016, the financial responsibility provisions contained in § 12 of the AST Rule take effect. Owners of Regulated ASTs must “demonstrate financial responsibility for taking corrective action caused by accidental releases.” The required financial responsibility is calculated at 20 cents per gallon of aggregate storage capacity for Level 1 ASTs and 10 cents per gallon for Level 2 ASTs. However, well operators may fulfill the financial assurance requirements through “bonds or other surety alternatives issued in accordance with” conventional or horizontal well work permit requirements; “provided that the operator provides proof that the bond will cover tank-related costs of corrective action up to the amount of the bond.” The WVDEP should be providing forms by which evidence of financial responsibility may be submitted.
 

Routine Maintenance Inspections and Recordkeeping


 
Commencing August 1, 2016, AST owners must conduct visual inspections of secondary containment for Level 1 ASTs every 14 days. Similarly, visual inspections of secondary containment for Level 2 ASTs must be conducted monthly along with visual inspections of Regulated ASTs and ancillary equipment up to the first point of isolation. AST owners are also required to remove stormwater from secondary containment as soon as possible or when the water is in contact with the tank or piping and, in any event, prior to the capacity of the containment being reduced by 10 percent or more.
 
Recordkeeping must be maintained and made available to WVDEP upon request, including documentation of proof of financial responsibility, corrosion protection, stored substances, secondary containment inspections, tank system design specifications, annual inspection certification, etc. in accordance with §§ 5.1.b.5 and 6.1.a of the AST Rule.
 

Fit for Service Inspection and Certification


 
By January 27, 2017, AST owners must submit certification that each Regulated AST and its associated secondary containment structure have been evaluated by a qualified professional engineer, an individual certified to perform tank inspections by the API or STI, or a person holding a certification under another program approved by WVDEP (“Qualified Professional”); provided, however, if an inspection by a Qualified Professional was performed previously pursuant to the Interpretive Rule, 47 C.S.R. 62, then this initial inspection criteria of the AST Rule is fulfilled. Thereafter, a Qualified Professional must perform the AST and associated secondary containment inspection every third year for Level 1 ASTs and every fifth year for Level 2 ASTs.
 
Commencing January 1, 2018, AST owners must submit certification of inspection by the owner or qualified representative of the owner. A certification must be submitted by January 1 each year thereafter, including for those years during which a Qualified Professional must perform the inspection.
 

AST and Secondary Containment Upgrade Requirements


 
The following deadlines apply to those ASTs and associated secondary containment which do not meet the requirements established in the AST Rule to the extent applicable and necessary:
 
November 1, 2016
  • Secondary containment for Level 1 ASTs that do not meet the secondary containment requirements must be upgraded;
 
February 1, 2017
  • Secondary containment for Level 2 ASTs must be upgraded, to the extent necessary;
 
June 30, 2017
  • Level 2 ASTs upgrade normal and emergency vents;
  • Level 1 ASTs upgrade cathodic protection;
  • Level 1 ASTs upgrade corrosion protection for coatings;
  • Level 1 ASTs upgrade for corrosion protection for internal linings;
  • Level 1 ASTs upgrade for leak detection requirements.
 
December 31, 2017
  • Level 2 ASTs upgrade cathodic protection;
  • Level 2 ASTs upgrade corrosion protection for coatings;
  • Level 2 ASTs upgrade for corrosion protection for internal linings.
 
June 30, 2018
  • Level 2 ASTs upgrade leak detection requirements.
 
Beginning August 1, 2016, new Regulated AST installations and reconstructions must comply with the specifications in § 8.2 of the AST Rule, including being double walled, double bottomed, or placed on a release prevention barrier. Likewise, Regulated AST installations in karst designated terrain must submit documentation of new construction design criteria and engineering specifications to indicate that the installation will not result in excessive settling or unstable support as approved by a Qualified Professional.
 

Horizontal Well Rule Modifications


 
The changes to the Horizontal Well Rule proposed by WVDEP will become effective on July 9, 2016. The changes include, but are not limited to:
  1. pre-well work application testing of karst terrain in areas designated by the West Virginia Economic and Geological Survey as well as additional well work permit requirements and drilling protocols;
  2. groundwater aquifer testing protocols for approval of groundwater wells to be used in hydraulic fracturing operations;
  3. plugging procedures for horizontal component of wells;
  4. cement and formation integrity testing for all casing strings;
  5. borehole deviation limitations and corrective action;
  6. fracture propagation evaluation and monitoring requirements;
  7. require annual production reporting of produced water;
  8. require annual reporting of “condensates” instead of “natural gas liquids;”
  9. increased construction standards for centralized pits and impoundments as well as for associated waste pits;
  10. formalize minimum construction standards for well pads, including requiring berms around the entire well pad;
  11. provide for the transfer of well work permits; and
  12. formalize the requirements for compliance with all plans required as part of the well permit application.
 
The revisions to 35 C.S.R. 8 should be carefully reviewed in connection with any well work permit applications for horizontal well operations. Of course, these changes do not apply to conventional well work permits and operations governed by W. Va. Code § 22-6-1, et seq., and 35 C.S.R. 4.
 
This article only provides an overview of these complex and lengthy legislative rules. You are encouraged to study the rules carefully to identify the provisions that impact your operations. 
 
If you have questions regarding the AST Rule or Horizontal Well Rule, please contact Mark Clark or David Yaussy.

For further information please see:
Nov. 7, 2014: Latest AST Developments
Nov. 9, 2014: Webinar - Meet your Deadlines – WV AST Act Challenges
Sept. 9, 2014: AST Act Rough Draft Emergency Rule Out for Comment
Feb. 4, 2015: AST Act Update – Statutory Amendment Introduced
Sept. 2, 2015: WVDEP Files “Agency Approved” Rules for Horizontal Well Dev. & AST
Aug. 9, 2016: West Virginia Aboveground Storage Tank Act Becomes Effective  
 
Or contact one of our experienced Environmental Attorneys
 
Mark D. Clark 
304.340.3876
mclark@spilmanlaw.com

 
Environmental Law Mark D. Clark
304.340.3876
mclark@spilmanlaw.com