Environmental and fossil fuel lobbyists react to tanked tank bill, other legislative session standouts | Energy and Environment

Even with a new Republican supermajority, the West Virginia Legislature passed fewer bills during its 2021 regular session than it did in either of the previous two years, including 21% fewer than in 2020.

But many environmentalists and other concerned citizens are glad the 281 bills the Legislature did pass didn’t include a bill that would have eased regulation of oil and gas storage tanks near drinking water intakes.

House Bill 2598 would have exempted the category of tanks closest to water intakes holding up to nearly 9,000 gallons of oil or gas from regulation under the Aboveground Storage Tank Act. The bill, which passed the House of Delegates, triggered opposition from the state Department of Environmental Protection and concerns from water utilities that it would threaten drinking water safety.

“Defeating [HB 2598] was a huge victory for clean drinking water,” West Virginia Environmental Council President Linda Frame said.

The Legislature passed the Aboveground Storage Tank Act in 2014, months after the Freedom Industries leak that contaminated the drinking water supply for 300,000 people in a nine-county area around Charleston in January 2014.

HB 2598 would have removed roughly 900 tanks containing 8,820 gallons or less in zones of critical concern from regulation under the law. Zones of critical concern are defined by the law as corridors along streams within a watershed that need close scrutiny because of a nearby surface water intake point and susceptibility to potential contaminants.

The law, in part, requires tank owners or operators to ensure secondary containment area inspections once every 14 days, and have tank systems inspected once every three years by a professional engineer or other qualified inspector.

Gas and Oil Association of West Virginia Executive Director Charlie Burd said the bill would have helped small oil and gas producers in zones of critical concern who face a “tremendous regulatory expense” from those requirements.

“In an effort to keep these wells and these tanks in service that, in many cases, supply free gas to residents, to farmers, to royalty owners, I applaud the House of Delegates for seeing the benefit of getting that bill passed,” Burd said.

But the bill drew opposition from West Virginia American Water, the Morgantown Utility Board and the West Virginia Rural Water Association, as well as environmental groups that rallied to defeat the bill. The measure died in the Senate Judiciary Committee, which briefly listed the bill toward the end of its agenda during the final week of the session but never took up the legislation.

“West Virginia American Water is pleased that members of the West Virginia Senate recognized the impacts of HB 2598 and the potential implications this legislation would have on our state’s bodies of water,” company spokeswoman Megan Hannah said.

Sen. Charlie Trump, R-Morgan, chairman of the Judiciary Committee, could not be reached for comment for this report.

“For our priorities, the defeat of House Bill 2598 was the most significant win, in terms of at least holding the line on drinking water protection,” West Virginia Rivers Coalition Executive Director Angie Rosser said.

One measure crafted to help the oil and gas industry that did pass the Legislature was House Bill 2581, which revises the state’s property tax methodology for oil and gas wells using what industry representatives said would be a fairer formula.

The bill responds to a 2019 ruling in which the West Virginia Supreme Court held, in part, that the Tax Department improperly imposed a cap on gas well operating expense deductions.

HB 2581 directs the Tax Department to propose emergency rules by July 1 on valuation of properties producing oil, natural gas and/or natural gas liquids, while providing for a tax on net profit by defining net proceeds for oil and natural gas as actual gross receipts based on sales volume minus royalties and operating costs for expenses including lease-operating, lifting, compression, processing and transportation.

Tax Department Executive Assistant Alicia Elam Clark said the bill that was passed appears to represent a method that more closely approximates actual net income than the original version of the bill. Acting Tax Commissioner Matt Irby said that earlier bill would have resulted in costs effectively being reduced twice for companies that sell at or near the well head, because it allowed companies to report their actual gross proceeds but then deduct the average cost of transporting and processing gas all the way to an interstate pipeline.

Most of the legislation advanced by the House Energy and Manufacturing Committee were favorable to fossil fuel interests. They included House Bill 2581, House Bill 2598, House Bill 2493, which would have required a coal property tax valuation process more favorable to the industry estimated to reduce property tax revenues $12.2 million for tax year 2022. They also included House Bill 2959, which would have allowed utilities to apply to the state Public Service Commission for expedited recovery of costs for installing and maintaining environmental pollution control equipment.

HB 2493 passed the House in a 64-34 vote, but died in the Senate Finance Committee. The House never voted on HB 2959.

Delegate Bill Anderson, R-Wood, chairman of the House Energy and Manufacturing Committee, could not be reached for comment.

Energy Efficient West Virginia policy director Emmett Pepper applauded the Legislature for approving House Bill 2667, which creates a cost-savings program to reduce energy usage in state buildings. Pepper said he hopes it will inspire local governments to follow suit.

Solar United Neighbors regional field director Autumn Long hailed the Legislature-approved House Bill 3310, which exempts solar power purchase agreements from the Public Service Commission’s jurisdiction. Long said it was a job-creating move that will expand affordable solar energy use and signal to large, corporate investors that the state is open to solar development.

Long said she saw the Legislature sending the opposite message with its passage of Senate Bill 492, which establishes a reclamation bonding program for wind and solar facilities that proponents said would limit environmental degradation, if such facilities are abandoned in the future.

“I think it’s unfortunate that legislators decided in this session to make it more costly for developers of wind and solar projects to operate in West Virginia,” Long said.

West Virginia Coal Association President Chris Hamilton said the legislative session was “extremely successful,” touting the passage of Senate Bill 542, which requires coal-fired power plants owned by public electric utilities to keep at least 30 days of coal supply under contract, and Senate Bill 718, which expands eligibility for the state’s coal severance tax rebate program.

Noting the GOP supermajority, Frame concluded that, from the West Virginia Environmental Council’s perspective, the session could have been worse. However, she said she’s already bracing for another proposal to roll back the Aboveground Storage Tank Act further, since the law has already been dialed back before, including an exemption put into place in 2017 for tanks outside zones of critical concern.

“Even with a supermajority that did seem to put coal above people and industry above people on many levels,” Frame said, “I think we were able to show, with the voice of the people speaking out, we can make some good things happen and kill some bad bills.”

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