Business, Government Legal News from throughout WVCommittee Approves Marcellus Bill; Tensions Remain

Committee Approves Marcellus Bill; Tensions Remain

In a meeting Wednesday the Joint Select Committee on Marcellus Shale moved that the Marcellus regulation bill be moved from committee back to the House and Senate. The bill passed out with nearly unanimous support of the committee members.

Delegate and committee co-chair Tim Manchin, D-Fairmont, said in consultation with the clerk of the House, the bill will be referred to the joint committee on government and finance with recommendation of passage in the event of Gov. Earl Ray Tomblin calling a special session to pass the bill.

Sen. Karen Facemyer, R-Jackson, said she would be a "no" vote on the regulations. She said there were discrepancies to work out in regard to amendments that passed without consensus from both the House and Senate members of the joint committee. Manchin said the rules of the committee did not require a majority from both, but only a majority of those present.

Facemyer called the business of Marcellus shale drilling "volatile."

"I think we're sending a very anti-business sentiment with some of the provisions of this bill," Facemyer said.

Del. Barbara Fleischauer, D-Monongalia, disagreed, calling the bill a "pretty good balance" of business and environmentally friendly regulations. She strongly urged passage of the bill. Del. Woody Ireland, R-Ritchie, moved the co-chairs write letters to leadership to consider a special session for passage of the bill.

Gov. Earl Ray Tomblin, inaugurated 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," said Sen. and co-chair Doug Facemire, D-Braxton. "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 a committee meeting Monday, 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 just $400 per well.

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

An amendment to the bill made Nov. 14 also would require inspectors to 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.

Committee members also debated how to facilitate agreements between surface and mineral rights owners. 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.

"There not the kind of incentives that we were looking for," McMahon said. "We're certainly disappointed that it says ‘may,' (as in) 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 (of Delegates) 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."

Manchin said it was not surprising some people still take issue with the bill.

"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 progressing. 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.