Responding to the Freedom Industries chemical spill
The Department of Environmental Protection is holding a hearing this Thursday evening on its proposed rules to implement the new aboveground storage tank law – the one weakened by the legislature earlier this year. Recall that the bill passed earlier this year gutted the bill passed by the legislature during the water crisis – reducing the number of regulated tanks from nearly 50,000 to 12,000; reducing the frequency of inspections; and allowing even more tanks to be exempted if they show compliance with existing DEP permits.
The Department of Environmental Protection is in the process of making the rules to implement the law. The DEP rules process is another place where industry can push for more exemptions and weak enforcement of the law. The DEP still has a lot of discretion on implementation, including establishing criteria for design and maintenance of tanks and secondary containment facilities, determining fees to assess on storage tank owners, etc. The DEP’s proposed rules are not serious about making storage tank owners show that they’re capable of covering the cost of a potential spill. If the Freedom site had been regulated under these proposed rules, Freedom would have had to demonstrate its ability to pay just $9,600 to cover what is now clearly a multi-million dollar cleanup effort.
The public hearing on the rules will be held Thursday at 6pm at DEP Headquarters (601 57th Street SE, Charleston). Comments can be emailed to email@example.com with “Aboveground Storage Tank Comments” in the subject line. Suggested talking points include:
1. Rules should not weaken standards for tanks or relax timelines for enforcement;
2. Rules should provide an opportunity for public notice and comment on amendments to permits and plans
before a tank is excused from the Act’s requirements;
3. Registration fees should be established that adequately fund and staff the program; and
4. Bond amounts should be increased so that they cover potential liability of a tank failure.
Yesterday, Judge Copenhaver issued an order in the ongoing dispute over the confidentiality of certain documents in the federal court case “Good vs. West Virginia American Water.” The Gazette has the story:
The judge said if the parties could not come to an agreement to release the records, the defendants in the case — West Virginia American Water Co. and Eastman Chemical Co. — would have until Friday to file a response to a legal filing in which the residents’ lawyers said they favored making the records public.
Copenhaver said that the defendants should be “mindful of the restrictions on the sealing of public documents filed with the court and the well-settled rules governing public access.” Generally, court records are to be open to the public unless there is a compelling reason for them to be sealed.
Any interested parties may submit comments to the court about the status of the records by July 17, the judge said. The judge said that if no agreement is reached between the parties, issues about sealing the documents would be discussed at a status conference, scheduled to take place in open court at 9:30 a.m. on July 20.
The status hearing in the case – which is open to the public – will be at the federal courthouse, 300 Virginia Street, East, Suite 2400 in Charleston next Monday at 9:30. Location information including details regarding cell phone and camera use is available on the Court website.
Yesterday, West Virginia American Water took out a full-page ad in the Sunday Gazette-Mail to offer their apology for the recent Dunbar water main breaks that left thousands of customers without water for days. The company says it will “continue the important conversation about our water system.” So far, this “conversation” has consisted of the water company taking out numerous newspaper ads, writing op-eds, and providing inserts in our water bills. When it comes to spreading their message, they’re doing great. When it comes to actually having a “conversation” with their customers, not so much.
When customers have tried to get their questions about the water company’s service answered, the company has responded with stalling and delays. In the Public Service Commission’s general investigation into the water company’s response to the Freedom leak, the company refused to answer basic questions regarding its emergency planning and preparedness. The company insisted on a high degree of secrecy, refusing to disclose its emergency planning documents. When the PSC ordered the water company to produce its emergency plan, the company produced a version that had even the PSC’s 1-800 number blacked out as confidential.
WV American Water provided more information about the repeated water main breaks in Dunbar in a statement on its website. The company notes how hard it was to repair the leaks in Dunbar and how difficult it is to provide accurate estimates of how long it will take to restore water service. The latter problem is a product of the company’s own business strategy of expanding its system and interconnecting more and more water systems onto the same intake – after 30 years or so of that strategy, they have a complex system with 179 different pressure zones (most water systems have less than a dozen), which makes it very complicated and time-consuming to restore water service.
The company assures us that it does in fact do long-term planning to prioritize the investments it makes in the system – though, of course, it doesn’t provide any details of those plans. The company states that its proposed 28% rate increase is driven by capital investments and that those “include upgrades to the distribution system, water treatment facilities, storage tanks, pumping stations and technology and are necessary to enhance customer service and maintain water quality, service reliability and fire protection for approximately one-third of the state… We have made necessary investments to provide safe and reliable water service because it is the right thing to do for our customers.”
But when it comes to the crucial point – catching up with all of the deferred maintenance on its water lines – WV American Water says,
[A]n additional $12 million would be needed each year to take the replacement cycle from 400 years down to 100 years, which is considered a target rate. However, customers eventually pay for every single system improvement through their monthly water bills once those improvements are rolled into rates. Consistent with PSC oversight, West Virginia American Water must balance the need for increased infrastructure investment with the direct rate impact it has on customers.
In other words, WV American Water is still not going to invest any more money in main replacement without a rate increase, beyond the 28% that it’s already asking for.
Reporter Ken Ward of the Charleston Gazette published an excellent article yesterday on recent developments in “Good vs. WV American Water” – the federal court case against WV American Water, its parent company American Water Works and Eastman Chemical (the manufacturer of MCHM). A number of documents have been filed confidentially in the case that the judge is considering releasing publicly:
U.S. District Judge John T. Copenhaver Jr. had issued an order saying that the “proposed sealing” by the plaintiffs of what the judge said was more than 500 pages of material “is patently inconsistent with binding United States Supreme Court and other precedent, along with the Local Rules of Civil Procedure and the administrative procedures” for the court’s online filing system.
Copenhaver gave the plaintiffs until Thursday [today] to “show cause in writing” why “the entirety of the documents proposed for sealing should not be spread upon the public record.”
The information that has been released publicly so far is very interesting.
The Gazette article links to a legal brief in the case that makes this allegation about WV American Water’s lack of a second water source:
As the Court is aware, there exists substantial dispute over the apparent failure of WVAW to build the Kanawha Valley Treatment Plant (“KVTP”) in accordance with the plan approved by the Public Service Commission (“PSC”) in 1969. Those plans called for the continued use of the then-existing source water intake upstream from the Freedom Industries site, which, if followed, would have avoided the impact of the Spill on the water supplied by WVAW.
So the original design for the treatment plant allegedly called for the continued use of an intake already in existence further upstream on the Elk River. Is this true? Did WV American Water fail to build its plant in accordance with the design that its regulators approved? Why? And how did this go unnoticed for 40+ years?
This is the sort of allegation that the Public Service Commission should be looking into. Unfortunately it can’t really do that – its general investigation into the water company’s response to the spill has been stalled since December because there aren’t enough commissioners to pursue the investigation. When is Governor Tomblin going to appoint someone so the PSC can do its job?
Three recent water main breaks in Dunbar within the space of a week left thousands of customers without water for days.
Come to a town hall meeting this Thursday to talk with your neighbors about what we can do:
Dunbar Town Hall Meeting on Water
Thursday, July 9th
Dunbar United Methodist Church (1401 Myers Ave., Dunbar)
Have you been affected by WV American Water’s outages?
Have you had enough?
Want to know what you can do?
The Public Service Commission issued an order yesterday setting out the schedule for WV American Water’s rate case. The Commission will be holding public hearings on the company’s proposed 28% rate increase in different parts of the state where the water company does business:
That’s the main message of yesterday’s editorial in the Charleston Daily Mail.
According to the editorial, the public has two alternatives: pay even higher rates to WV American Water, or continue to suffer from unreliable service and increasingly severe water main breaks as the infrastructure falls apart.
The rate hike required to get there is politically unpalatable, but the alternative — more and more water main breaks and service interruptions — is even more so. For the sake of a healthy and reliable water supply, the company, and its customers, are going to have to make the necessary investments.
The editorial presents this conclusion without asking some basic questions such as, how is it that WV American Water customers already pay some of the highest rates in the state yet our infrastructure is crumbling? And, if we do end up paying higher rates to WV American Water, what mechanisms could be put in place to make sure that money is spent effectively to improve reliability? And, are there less expensive ways to fund the needed infrastructure improvement than to continue funneling money to WV American Water?
One thing we do know (although the DailyMail apparently doesn’t) is that we are basically paying now for WV American Water’s failed expansion strategy. In the 1990s, the value of the infrastructure on WV American Water’s books tripled, but the number of customers paying for this infrastructure did not triple (or even double). This was a deliberate business strategy of the company; in 1994, then-company president Chris Jarrett explained “the concept for water purveyors throughout the U.S. and West Virginia is that of a regionalization concept where you build one large production facility and from that you extend water lines out to as many people as you can … It is simply more efficient and more economical, the more customers you can serve from one large production facility”. In a masterpiece of understatement the Public Service Commission noted in one of its orders in 2011 that “the plan to offset increased cost by spreading fixed costs over a larger customer base and larger sales volumes has not fully come to fruition.” In other words, it appears that much of our rate increases over the past couple decades have fueled WV American Water’s strategy of infrastructure expansion, instead of maintaining existing infrastructure.
Blindly throwing more money at WV American Water – without any change to the company’s transparency or accountability, and without exploring other means of financing infrastructure renewal – doesn’t seem like the best solution to me.
WV American Water asked the Public Service Commission to exclude the community group Advocates for a Safe Water System from participating in the company’s rate case before the Commission. In a motion filed with the Commission earlier this week, WV American Water gave a number of reasons that the Commission should exclude Advocates for a Safe Water System from the case, including that Advocates’ focus on water system safety issues is irrelevant. According to the company:
[T]he Commission will not be required to address any safety-related regulatory or policy issues; consequently, there is no reason to allow interventions motivated primarily by supposed water system safety concerns.
Recommendations on water safety issues are not “reasonably pertinent” to the Company’s rate … case.
We know that we have a serious infrastructure problem – as I write this, a major main break is affecting nearly 25,000 customers in Kanawha and Putnam counties. It will take nearly 400 years to replace the water mains at the current rate. And the Kanawha Valley’s water system loses more than a third of its water to leaks – a fact that presumably contributed to the company’s decision not to shut off its intake on January 9, 2014. Fixing these problems requires money for investment, which has to be paid for – through rates or through public funds in some way.
The company has already said that the main driver of its proposed rate increase is capital investments – it wants ratepayers to pay for nearly $200 million in recent and proposed capital expenditures. Is it really saying that none of these investments have anything to do with improving the safety and reliability of its water system?
Freedom Industries and the state Department of Environmental Protection (DEP) arrived at a settlement this past week in the Freedom bankruptcy case. The settlement would require Freedom Industries and its parent company Chemstream Holdings to contribute $2.5 million towards cleaning up the Elk River site. This is progress over a couple months ago, when Freedom argued that it could only contribute $150,000.
Assuming the settlement is approved by the bankruptcy judge, there’s more money available for the cleanup, which is a good thing. But DEP still hasn’t publicly provided any guidance on what standards it expects for the cleanup. DEP has stated that more data is necessary to determine the extent of the remediation needed – many of these data deficiencies were noted by DEP in its most recent set of comments on Freedom’s “site investigation report”. Under the proposed settlement DEP won’t be able to get any additional funds out of Freedom. Somehow, though, DEP Secretary Huffman is confident that $2.5 million will be enough to cover the unknown cleanup costs.
As part of the settlement, DEP is waiving its right to sue Freedom or Chemstream for anything related to the remediation. This is a bit worrisome given how poorly Freedom appears to be living up to its end of the Voluntary Remediation Agreement (both of Freedom’s initial work plans were rejected by DEP).
It may be that this is the best deal that DEP could have gotten out of the bankruptcy case. But there are still literally tons of MCHM sitting around in the soil at the Freedom Industries site, a mile and a half upstream from WV American Water’s intake, where the company still isn’t monitoring for MCHM. So the question then becomes, how is DEP going to be monitoring runoff from the site to make sure the public and the water company are promptly notified about any MCHM leaching into the Elk?