The West Virginia Department of Environmental Protection (WVDEP) is in the midst of finalizing changes to general permits and rules in three (3) different areas pertaining to natural gas production and processing. These new requirements add to the growing list of steps that must be followed by those who plan to explore for, produce, process and/or transport natural gas in West Virginia, especially for operations involving production from the Marcellus Shale through horizontal wells using hydraulic fracturing.

WVDEP Division of Air Quality General Permit G70-A.

The extended public comment period on the WVDEP’s new General Permit G70-A, “General Permit for the Prevention and Control of Air Pollution in Regard to the Construction, Modification, Relocation, Administrative Update and Operation of Natural Gas Production Facilities Located at the Well Site,” closed on May 17, 2013. As with other general permits issued by the WVDEP’s Division of Air Quality (“WVDAQ”), the intent is to incorporate many different permitting and operational requirements applicable to the particular industrial activity into one comprehensive permit, making it relatively easier to obtain necessary approvals and providing a single document against which the regulated entity and the public may evaluate a facility’s air pollution control compliance. The focus of General Permit G70-A are gas wells and associated facilities located at a well site.

Among other covered sources, G70-A is expected to apply to some (but not all) “affected facilities” (those built, modified, or reconstructed after August 23, 2011) as defined in EPA’s New Source Performance Standards (“NSPS”) for Crude Oil and Natural Gas Production, Transmission and Distribution (40 CFR. Part 60, Subpart OOOO). See Client Alert, “EPA Issues Final Rule Targeting Air Emissions from Oil and Gas Operations,” April 25, 2012. This includes facilities such as gas wells; compressors between the wellhead and point of custody transfer to the natural gas transmission segment; and storage vessels. In addition, the permit as drafted would incorporate a host of other State and federally delegated regulations, including 45 W.Va. CSR 2 (indirect heat exchangers); 45 W. Va. CSR 10 (sulfur oxides); 45 CSR 13 (the WVDAQ’s minor source construction permit rule); 45 W.Va. CSR 21 (volatile organic compounds); and 40 CFR 60, Subpart JJJJ (Stationary Spark Ignition Internal Combustion Engines). Complicating matters, on April 12, 2013, EPA proposed substantial changes to its NSPS applicable to storage vessels, and it may propose other changes to those NSPS soon. Whether any such future changes to the NSPS will be deemed to be incorporated into the G70-A permit, without further action by the WVDEP, is unknown.

In its draft form, affected facilities that are not covered by G70-A include processing units, sweetening units and compressor stations, as well as any production facility with a dehydration unit. In addition, any facility that qualifies as a major source under other federally delegated programs (those with a potential to emit 100 tons per year (TPY) of any criteria pollutant, or 10 TPY of any single hazardous air pollutant (“HAP”) or 25 TPY of any combination of HAPs) may not be permitted under G70-A, but will instead be required to covered by an individual permit issued under the WVDAQ’s Series 14 /16 and 30 permitting programs. On the other hand, facilities that do not meet the minimum thresholds for permitting under the WVDAQ’s minor source permit rule (Series 13) do not need to be covered under any permitting program, including G70-A. This generally includes those that do not have: (a) the potential to emit 6 lbs./hour and 10 TPY, or 144 lbs./day, of criteria pollutants; or (b) a potential to emit other threshold quantities of hazardous and toxic pollutants

Some significant questions have been raised in comments submitted on the draft G70-A, and determining the applicability of the various air pollution control rules to different equipment and processes at a well site will remain a complicated task. However, once finalized, General Permit G70-A should offer some real benefit in terms of faster permitting decisions and the consolidation of air quality regulations that apply to the activities undertaken at a well pad.

WVDEP Division of Water and Waste Management, Oil and Gas Construction Stormwater General Permit.

On May 13, 2013, the WVDEP issued its General Stormwater Permit for stormwater construction runoff from oil and gas construction activities and exploration, production, processing and/or treatment operations disturbing one acre or greater of land. The permit will be effective June 12, 2013, and is intended to provide stormwater permit coverage to any activities at a well site that are not encompassed within the scope of a drilling (well work) permit issued by the WVDEP’s Office of Oil and Gas. Because most all construction activities associated with oil and gas exploration and production are excluded by federal law from the requirement of obtaining coverage under the Clean Water Act’s National Pollutant Discharge Elimination System (“NPDES”), this permit is not designated as a general NPDES permit.

Any new activities that are not addressed in another WVDEP permit and that disturb one acre or more after the effective date are required to apply for coverage under the general permit. For projects that will disturb less than three acres, that do not discharge upstream of or directly to a Tier 3 water, and for which grading will last for less than one year (a “minor construction project”), a Notice of Intent is required to be filed at least ten (10) days before the construction phase of the project is to begin. For projects with stormwater runoff that would discharge upstream of a Tier 3 water, a more detailed Site Registration Application (including a Stormwater Pollution Prevention Plan or “SWPPP”) must be filed at least forty-five (45) days before construction starts if the grading phase will last less than one year, and ninety (90) days before commencement of construction if grading will last for one year or longer. In either case, the applicant must timely respond (by the deadlines set forth in the permit) to requests for clarification or correction of the application in order to obtain permit coverage.

For projects that will discharge directly into Tier 3 waters, advanced Best Management Practices (“BMPs”) will be required, and a public notice and comment period must precede the issuance of registration under the permit. (A list of Tier 3 waters may be found on the WVDEP website; they generally include high quality waters or naturally reproducing trout streams located in State and national parks, and streams and rivers designated under one of several federal statutes.) Even if the project will only involve discharges into streams located upstream of Tier 3 waters, public notice and a comment period is required prior to registration if the project will disturb 100 acres or more, or the grading phase of the project will last more than one year.

The General Stormwater Permit, along with detailed instructions and forms for filing appropriate requests for coverage, are available on the WVDEP website at www.dep.wv.gov, under the Division of Water and Waste Management’s portal for permitting documents. In addition to SWPPPs and Groundwater Protection Plans, applicants must submit descriptions of general management controls, structural controls, provisions to control fugitive dust, and how they will comply with recordkeeping and internal reporting requirements.

Within 24 hours of submitting a request for coverage under the permit, applicants must erect a sign near the proposed construction site, containing information regarding the pending application, a summary of the project, and the WVDEP telephone number where copies of pertinent documents may be obtained. Permit coverage (and annual fee assessment) continues until “Site Stabilization” (as defined in the permit) has been achieved, which will be evaluated by the WVDEP upon receipt of a Notice of Termination from the permittee. A Notice of Termination must be filed within thirty (30) days after the permittee has achieved final stabilization.

WVDEP Office of Oil and Gas, Amendments to Horizontal Well Rules.

Senate Bill 243, enacted by the 2013 West Virginia Legislature, approved amendments to the WVDEP’s regulations at Title 35, Series 8 (“Rules Governing Horizontal Well Development”), which implement the Natural Gas Horizontal Well Control Act, W.Va. Code Chapter 22, Article 6A (“Horizontal Well Act”). Those amendments, most of which were proposed by the WVDEP, will become effective on July 1, 2013.

The provisions that were changed or expanded include regulations addressing certification of erosion and sediment control plans; certification of site construction plans; well site safety plans; defining “occupied dwelling”; requiring annual reports of natural gas, oil and natural gas liquids production; and requiring the disclosure of hydraulic fracturing additives. The rules also include extensive sections addressing well control and blowout prevention, well killing operations, and notification and protective zone requirements. In addition, that part of the existing Series 8 that addressed drilling deeper than the original target formation for a horizontal well (section 13.5) was deleted.

With respect to additives used in the hydraulic fracturing or stimulation process, Senate Bill 243 specifies that the operator or its service provider must generally report each chemical’s CAS registry number, maximum concentration, and volume of base fluid used as part of the well completion report. This may be accomplished by submitting such information to the “FracFocus Chemical Disclosure Registry” at www.fracfocus.org, and to the WVDEP. However, should the operator or service provider designate the specific identity or concentration of such a chemical as a confidential trade secret, that data need not be provided unless and until either the DEP Secretary requests it as part of an ongoing investigation or a health care professional requests it in a medical emergency or for diagnostic or treatment purposes.

W. Va. CSR 35-8-3 incorporates by reference all forms used by the WVDEP in conjunction with the horizontal well regulations, and authorizes the agency to amend those forms as deemed necessary. Recent changes to the WVDEP Horizontal Well forms includes provisions that require specific information that will enable the agency to link leases to those shown on a plat; mandatory checklists that require the submission of either certified mail receipts or affidavits for each permitting action that is required to be subject to personal notice; and the requirement of a topographic map depicting the location of all water wells (rather than just a listing or satellite photo). All such forms are available on the WVDEP website under the Office of Oil and Gas “Horizontal Drilling” tab.