The West Virginia Aboveground Storage Tank Act imposes different regulatory burdens on aboveground storage tanks (“ASTs”) depending on their location relative to water supply intakes. Level 1 regulated ASTs, the most heavily regulated tanks, are those located within a “zone of critical concern” (“ZCC”), defined as the distance water will travel from an aboveground storage tank to a downstream water intake in five hours. W.Va. Code § 22-30-3(20). Level 2 regulated tanks are those located within the “zone of peripheral concern” (“ZPC”), the distance water will travel from a tank to an intake in ten hours. W.Va. Code § 22-30-3(21). The AST Act, passed in 2014 and amended in 2015, provides that the ZCCs and ZPCs are “determined using a mathematical model that accounts for stream flows, gradient and area topography,” but does not provide or define the mathematical model to be used in designating ZCCs or ZPCs or otherwise specify the manner in which WVDEP shall make the determinations.
In 2015, Dr. Michael Strager and Dr. Nicholas Zegre from West Virginia University developed a method for “Calculating Surface Water Time of Travel to Protect Public Water Intakes in West Virginia.” Their team used the model to review 163 surface water intakes and calculate upstream ZCCs and ZPCs for West Virginia Department of Environmental Protection. WVDEP applied these zones in designating ASTs as subject to Level 1 and Level 2 protections.
In late 2015, several oil and gas operators identified as having regulated tanks within a ZCC or ZPC (“Appellants”) challenged the designations, claiming that they were unlawful rules to which the rulemaking requirements of the State Administrative Procedures Act (“APA”) applied. See IOGA, McKown, et al. v. Mandirola, Appeal No. 15-16-EQB. After an evidentiary hearing conducted in January 2016, the EQB rejected Appellants’ appeal, ruling that neither the zone designations nor the mathematical model had to undergo rulemaking. It further ruled that WVDEP reasonably applied the model to both “unregulated” (rivers and streams unobstructed by dams or impoundments) and to “regulated” (obstructed) waterbodies. Id.
While the evidence in the case might support the EQB’s ruling, one cannot reach that conclusion from the EQB’s opinion itself. First, in response to the claim that the zone designations and the formula used to make them were “rules” subject to the public notice and rulemaking protections of the APA, the EQB analyzed the wrong issue. Rather than determine whether WVDEP had adopted and used Dr. Strager’s formula in a manner considered “rulemaking,” the EQB focused on whether the Legislature intended that the formula and its application would be subjected to rulemaking protections. Thus, it framed the issue as whether “the legislature intended for a rule to be made for developing a mathematical model despite there being no express requirement in the law.” That, however, was not the issue advanced by Appellants. Regardless of whether the Legislature intended that WVDEP adopt zones or a formula by rule, if WVDEP’s actions constituted legislative rulemaking, then they were required to comply with the restrictions of the APA unless the Legislature expressly exempted the agency from the rulemaking provisions, and there is no claim that such an exemption exists.
Rules are defined as standards, statements of policy, or interpretations “of general application and future effect.” W.Va. Code § 29A-1-2. “Legislative” rules, which are also subject to legislative review and approval, are those which have the force of law; grant or deny a specific benefit; or supply the basis for imposition of civil or criminal penalties. W.Va. Code § 29A-1-2(d). Here, though, there is no dispute that the Strager model and its application were used to define the ZCC and ZPC. The EQB did not, however, consider whether Dr. Strager’s model or WVDEP’s zone designations using that model fell within this definition.
If the model had been individually tailored to address each zone separately, then the challengers would have had a difficult time characterizing the model as one of “general application” and thereby qualifying as a “rule.” Indeed, WVDEP suggested and the EQB ruled that the model was appropriately designed and applied to unobstructed waterways. In the author’s experience, litigating the issue of unlawful rulemaking is always difficult in the context of a challenge to a specific application of the rule. The parties and the adjudicating body almost always move away from the question whether WVDEP’s actions were rulemaking to whether WVDEP made a reasonable decision with respect to the particular Appellant. Faced with this nearly immutable shift in focus, appellants have a difficult time prevailing in those cases unless they can show that the model unreasonably affected them. And this leads to the second deficiency in the Board’s order—it suggested that it was reasonable for WVDEP to apply the model to all streams—obstructed and unobstructed alike—without consideration of the differences between them. That conclusion supports the notion that the designations were rulemaking because the model was applied indiscriminately to all situations.
For example, WVDEP’s post-hearing brief stated that “impounded water is, for the purposes of the Zone Model, treated as free-flowing for purposes of calculating ZCCs and ZPCs.” WVDEP’s Proposed Findings of Fact, ¶ 20. WVDEP did not contend that there was an effort made to adjust the model for impounded or “regulated” streams, but the West Virginia Rivers Coalition (an Intervenor in the appeal) noted that “none of the tanks at issue in this appeal are on impounded streams.” The EQB’s treatment of these issues is confusing. Assuming it is true that no tank at issue in the case was on a “regulated” stream, the Board might have been on sounder footing to rule that the application of the model to impounded waters was simply not an issue. Instead, the Board offered an explanation seemingly at odds with WVDEP’s statement that impounded waters were treated as free-flowing for purposes of calculating the zones. Its opinion maintained that “the equation was reworked by the WVDEP to apply to regulated streams,” but in the next sentence said, therefore, “Appellants are correct that the equation was used in a way that was not originally intended.” EQB Opinion, p. 7.
Because there was no simple formula that addresses impounded waters without accounting for “a variety of site-specific conditions” and because of limited resources, the Board concluded that WVDEP’s application of the formula to impounded waters was both conservative and reasonable. EQB Opinion, pp. 7–8. By this finding, the EQB seemingly conceded that WVDEP’s application of the model was of “general application” to all circumstances regardless of specific conditions and is thereby rulemaking.
What is left for industry after the decision is unclear. The Board’s ruling that the model was reasonably applied to obstructed, as well as unobstructed, streams should be considered unenforceable dicta because the issue was not really before the Board. Also left undecided is whether the Board would consider a challenge to the zone designations by a tank owner on an obstructed stream that offered a plausible alternative zone based on the hydrologic principles of the model, but with site-specific inputs. It should.
This article was authored by Robert G. McLusky, Jackson Kelly, PLLC.