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Tank law too expensive, restrictive for small oil and gas drillers

Dozens of natural gas and oil drillers in West Virginia say it’s impossible for them to comply with the new regulations approved after the Freedom Industries chemical spill last January.

The Legislature, in response to the spill of thousands of gallons of MCHM that fouled the water supply for 300,000 West Virginians, passed SB 373, the Above Ground Storage Act.  The law, among other things, set up strict standards for the registration and inspection of nearly 40,000 storage tanks.

Dennis Xander, a West Virginia gas well operator, is among those arguing that the new law goes too far and is particularly punitive for smaller gas and oil operations.

For example, Xander argues there are not enough qualified engineers available to inspect and certify every tank in the state by the January 1, 2015 deadline.  He also says compliance costs are prohibitive.

Xander estimates the certification of each well will cost at least $3,000. He has 96 wells. “My costs would increase by almost $300,000, which is way more than our net income for all our WV production,” he wrote in an email to me.

The oil and gas operators have an ally in House of Delegates Speaker Tim Miley.  The Democrat, whose district of Harrison County is in the middle of the state’s drilling region, says the Legislature rightly passed a law to prevent another Freedom Industries, but the bill has had unintended consequences.

“These small producers of conventional wells are in survival mode at this time,” Miley wrote in a letter to Governor Tomblin.  “Any significant cost of compliance with new regulations is very problematic.  I would note that these operators and their operations had nothing to do with the chemical spill in the Elk River earlier this year.”

Miley, in his July 9th letter, called on Governor Tomblin to use his executive authority to provide some relief for the drillers.

That task has now fallen to state Department of Environmental Protection Secretary Randy Huffman, who has been meeting with drillers.  Huffman has some latitude to ease the burden, but he cannot, and should not, circumvent the law.

Government regulation is always a balancing act.  Policy makers must enact laws that protect the public safety, but are also reasonable enough to allow business and industry to operate.

The Governor and the Legislature moved quickly this year to plug a hole in the state’s regulatory system that permitted the untenable contamination of the water supply to a nine county region.  They had the right idea.

However, it’s evident now that with some parts of the law the pendulum swung too far.  Certain measures that may have sounded good at the time in a legislative committee meeting are just impractical.

State leaders need to figure out a way, either through executive action or a special session, to make the needed corrections to the law.





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