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West Virginia Panel OKs Three Amendments to Marcellus Bill

A panel of West Virginia lawmakers approved three amendments to a draft Marcellus Shale regulatory reform bill on Monday, recommending that the state expand the public notice and comment period over drilling activities and change the way it hires natural gas well inspectors.

The Joint Select Committee on Marcellus Shale (JSCMS) unanimously approved a proposal to give interested parties 30 days to file comments on a drilling permit, and to give the secretary of the Department of Environmental Protection (DEP) the power to convene a public hearing on a permit application within 30 days after the comment period ends.

That proposal didn't sit well with the oil and gas industry.

"It would unquestionably have a chilling effect," Phil Reale, an attorney and lobbyist who represents the Independent Oil and Gas Association of West Virginia (IOGA), told NGI's Shale Daily on Tuesday. "It would slow down the permitting process so significantly that there would be far fewer permits applied for here."

Reale, who was asked to testify on IOGA's behalf at Monday's committee meeting, said the public hearing amendment would cost the state millions if it was eventually incorporated into a Marcellus Shale regulatory reform bill.

"You would likely have between 400 and 500 public hearings every year," Reale said. "That would require millions of dollars of expenditure in the DEP budget for hearing examiners, lawyers, court recorders and for the rental of hearing sites around the state. And it would freeze [oil and gas companies'] ability to reasonably predict within their business model that they would be able to get a permit for a given project."

Reale added that although the decision of whether to call a public hearing would be up to the DEP secretary's discretion, he predicted it would be difficult to reject one.

"The fact of the matter is, if you have a high demand for a public hearing, it's very difficult to deny one," Reale said. "There are other instances [in West Virginia] where you have a public hearing component to a permitting process, and in general there is some trigger or standard that justifies having a public hearing when you reach it. But that's not the case here."

Another industry concern, according to Reale, is that the governor appoints the DEP secretary.

"A governor that is adverse to the extraction industries could appoint someone more aggressive in terms of environmental interest. You could have a hearing every day," Reale said. But he added "little credit has been given to the DEP. Quite frankly, they have done an excellent job at modifying existing policy to accommodate the nuances of horizontal drilling in the Marcellus Shale using large volumes of water for hydraulic fracturing. They have been proactive in their work."

The JSCMS also voted 4-3 to eliminate the Oil and Gas Examining Board (OGEB) and transfer its duties -- namely determining which individuals qualify as inspectors -- to the DEP.

Sen. Douglas Facemire (D-Braxton) -- one of the committee's co-chairs and an opponent of eliminating the board -- was quoted in news reports as saying "the main concern here is to have the best inspectors in the field that we can have. I just want to make it perfectly clear because when we eliminate this board, we won't know what we're going to have. We do know what we do have with this board."

But other legislators and the DEP have long favored eliminating the OGEB (see Shale Daily, Aug. 11). Kristen Boggs, an attorney with the DEP, reportedly told the committee that the board "is an overlap of resources or overlap of responsibility. It doesn't add any value to the services of state government."

Boggs added that the DEP wanted to expand its inspection force by adding soil and water experts who would be more qualified to address potential impacts from hydraulic fracturing (fracking).

A third amendment, which also passed unanimously, would require permit applicants to notify neighboring landowners -- including those with drinking water supply sources within 2,500 feet of a well -- of their intentions to drill.

The committee's website indicates that four additional amendments -- clarifying reporting requirements, permit fees, protection of water supplies and tax reimbursement -- are possibly under consideration.

The JSCMS is using the Natural Gas Horizontal Well Control Act, also known as SB 424, as the basis for a new bill. SB 424 passed the Senate by a unanimous vote on March 2, and a different version of the bill was approved by the House of Delegates on March 10. But legislators could not pass a reconciled version of the bill before the legislature convened for the 2011 season (see Shale Daily, March 15; March 11; March 4).

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