Business, Government Legal News from throughout WVMarcellus Shale Regulation Bill Passes Committee

A long-awaited bill to regulate Marcellus shale gas drilling left a joint committee of the West Virginia Legislature Wednesday.

The comprehensive bill addressing numerous elements of regulation of the Marcellus shale natural gas drilling, and the specialized drilling techniques such as hydraulic fracturing and horizontal drilling that accompanies it, will not go to the joint committee on government and finance. There, the bill will be recommended for passage.

The committee co-chairmen, Delegate Tim Manchin, D-Marion, and Sen. Douglas Facemire, D-Braxton, also will write legislative leadership to recommend a special session to pass the bill. Facemire voted against the measure to write the letter, commenting that his job helping to lead the committee was done. He said it was up to legislative leaders to call for a special session.

The joint committee has been working on a bill to reconcile the very stark differences of interest between environmental, surface owner and industry groups.

Sen. Karen Facemyer, R-Jackson, protested its passage Wednesday. She said the bill would send a strong anti-business message from the state of West Virginia.

"I think we're still sending a very anti-business sentiment out there with some of the provisions of this bill," she said. "I am very concerned about making sure that we protect land owners rights and protecting water and our thing, but I also know that this is a business that is very, for lack of a better term, volatile."

She said the anti-business elements of the bill could drive wells to other states. She also said she wanted to slow the bill down until a regular session was ready.

"… We need to take the time to make sure we do this right," Facemyer said. "I'm just not sure that this committee, as a whole, we've got a good mix of views on here, and I respect everybody's views, but I don't think we've come to real good conclusions on this."

Delegate Barbara Fleischauer, D-Monongalia, said she and other committee members have learned a lot in the process of making the bill. As a result, she said, she feels the bill already is well-balanced.

"I strongly support this bill, and strongly believe that it is urgent to get a bill adopted as soon possible," Fleischauer said. "We only have 15 inspectors in the field. We have thousands of wells. We have a couple of hundreds of wells for this new dramatic, bigger form of drilling that have been issued every year since about 2008. We have a lot of activity going on." Already, she said, it could be 2013 before more inspectors are on the ground.

She said there have been "spills every day" and many "people worried."

"I am very proud of what we have done," Fleischauer said. "People have brought problems to our attention, and we tried to craft bipartisan solutions to road problems, water problems, to air problems. I think we've achieved a pretty good balance."

It is not yet clear if Gov. Earl Ray Tomblin will call the special session to pass the bill. In a statement from Tomblin, he said his office will be "analyzing" the bill.

"Just like any other interim committee legislation, we will now turn our attention to working with the Legislative leadership to determine what aspects of the proposed legislation can be agreed upon and what changes are needed so that the governor and the Legislature can come together in the hopes of passing a piece of legislation that will provide clear rules of the game for the companies that power a significant portion of our economy while at the same time protecting our environment," Tomblin said.

Despite the attempt to balance the bill and "yes" votes on all members of the committee, Facemyer said there is still plenty of disagreement among affected parties.

Douglas Malcolm, chairman of governmental relations for the West Virginia Independent Oil and Gas Association, said the bill has "laced the permitting process with potential for delays."

"In general, I think it raises the opportunities for delays," he said. "Actually, I think it lowers the bar for legal action. It slows things down, and it sends the wrong message for people who want to develop Marcellus in our state."

Malcolm said he is still examining the bill, but said his initial thought was that "this is not the kind of bill the governor wants to call a special session on." Malcolm added that the industry has "legal people" looking at the bill to see if there are any technical problems or "if the bill is even workable."

Dave McMahon, co-founder of the West Virginia Surface Owners Rights Organization, said the bill was full of "baby steps," "half-measures" and "out-right omissions." McMahon said there were still issues with the bill not going quite far enough to protect the rights of surface owners.

"I don't know that you'll get the players to reconcile," McMahon said. "But if you can get the legislators to say they have to do something, and this is what they can do, perhaps that will work, but we're clearly not satisfied with the bill, and I'm astounded that industry's not either."

McMahon said if this bill passes, another is not likely. That is one of the reasons it has been so disappointing for his group, he added.

Manchin said if either side of the Marcellus debate had been too happy, it would have been a "lousy bill." Still, he said, there are concerns about he survival of the bill outside of the committee.

"I'm absolutely convinced (members of the gas industry) are attempting to either delay or change the bill," Manchin said. "Am I concerned? Yeah. They have probably the second largest voice down here in the Legislature, just behind coal. That's a concern, but it won't keep me from doing what I think is right."

Manchin said  plenty of fear exists that over-regulation may stifle industrial growth in the state. If the industry can present a case that this bill would do that, he said, they could influence everyone from "leaders on down" to other representatives to change or scrap the bill.

"I haven't seen any credible evidence presented to us that leads me to conclude that that's the case," Manchin said. "There's just nothing here that's going to hurt them that bad. Is there stuff that's inconvenient? Yes. Is there stuff that may cost them a little money? Yes."

Despite some potential problems down the road on passage of the bill, Manchin said, he was still optimistic the bill would pass.

"I do feel pretty good about this bill," Manchin said.