Business, Government Legal News from throughout WVMarcellus Committee Nearly Done; Concerns Remain

Lawmakers involved with regulation of Marcellus shale drilling in West Virginia are hopeful they are well on their way to pushing out a successful bill, but various interest groups are still fighting some elements of the proposed regulations.

Six amendments were added to the Marcellus regulatory package Monday. Minor tweaks are expected to continue, and the committee may wrap up the legislation this week.

Del. Tim Manchin, D-Marion, said he and Sen. Doug Facemire, D-Braxton, both believe they will be passing a bill out of the Joint Select Committee on Marcellus Shale by the end of November's interim session on Wednesday.

"I'm pleased that we've been able to put out a bill. I think there's still some areas of concern some members of the committee have," Manchin said. "We'll probably endeavor to have some discussions about some of those concerns between now and Wednesday and then perhaps we'll take some of those issues up on Wednesday."

Manchin said they would request a special session to pass the legislation through both houses of the Legislature, but that call would be left to the governor.

Gov. Earl Ray Tomblin, inaugurated just this week, has already expressed some concerns with the bill, his chief of staff told the Associated Press.

Despite concerns, Tomblin did make mention of making permanent changes to regulations that would poise West Virginia for taking advantage of Marcellus shale regulations.

Tomblin has said on numerous occasions he would not call a special session unless both the House and Senate had reached agreement before calling the session. Without agreement, Tomblin has expressed, a special session could go to waste.  

"We have a bill as a starting point," Facemire said. "My concern is that as we get into this and the industry and the different environmental people – after we actually begin implementing these – they will be coming back with the things that need to be tweaked or added to it or taken away from it, but as far as a bill, we do have a starting point now."

Facemire said at the least the committee has laid down a foundation for regulating the expanding natural gas industry.

During Monday's meeting, lawmakers examined qualifications and experiential requirements for inspectors, special consideration for drilling karst formations, surface owner agreements, inspector salaries and an amendment to change permit fees by rule.

Sen. Herb Snyder, D-Jefferson, introduced an amendment that would give the Department of Environmental Protection rulemaking authority to change permitting fees. This, he said, would streamline any further need to update permitting fees.

Currently, permit fees in joint committee proposed legislation are set at $10,000 per initial horizontal well and $5,000 for each additional well on the same pad.

Any change to the rule would still be brought before the Legislature.

Currently, permit fees are $400 per well.

Several of the amendments will still require additional consideration by lawmakers.

An amendment to the bill made Monday would also require that inspectors have three years of experience in the industry. Similar to legislation regulating the pay of coal mine inspectors, the committee also added that supervising inspectors would be paid at least $40,000 per year, and others would be paid at least $35,000 per year.

The need for additional regulations in addition to those already enforced by the West Virginia Department of Environmental Protection arose from developments in the Marcellus shale gas play. The drilling techniques used to obtain the resource, which is much deeper than traditional wells, are relatively new to West Virginia.

Technology such as hydraulic fracturing and horizontal drilling, now being used to reach rich shale gas deposits in West Virginia, were largely refined in the western United States. Most laws on West Virginia's books are tailored to traditional or conventional drilling techniques.

Facilitating agreement between those surface and mineral rights owners was also debated by the committee members. The agreement outlines incentives for owners to enter into agreements with land owners.

Operators would be required to give 30 days notice of their planned operation before they could enter the property. Owners would have rights to negotiate the offered agreement.

Dave McMahon, co-founder of the West Virginia Surface Owners Rights Organization, has been following development in the Marcellus shale very closely before legislators began to push forward with last year's attempts at a bill.

"They're not the kind of incentives that we were looking for," McMahon said. "We're certainly disappointed that it says "may", the dealer may show you their plans."

McMahon said the amendments to the law were "baby steps."

"The bill that came out of the regular session of the House last year was a great bill," McMahon said. "The Senate brought back something … that was so much more limited that we couldn't support it."

That there were still those who take issue with the bill, Manchin said, was not surprising.

"I don't think it does any substantial harm to the industry," Manchin said. "I think it's not a complete capitulation, I know the environmental and the surface owners' needs are not completely satisfied either. That's usually what we do. We find a compromise and rarely is anyone happy."

Development of the Marcellus shale has been rapidly developing. There is also some work in developing the Utica shale, a more expansive but deeper shale gas deposit.

Lawmakers have been challenged in attempting to create legislation that doesn't unfairly include or exclude conventional drillers. The task is complicated because some have argued traditional drillers also need more regulation.