A bipartisan panel of 10 West Virginia lawmakers is using legislation that failed to clear both chambers of the legislature earlier this year as the starting point for trying to reach a consensus over Marcellus Shale regulatory reform.

The Joint Select Committee on Marcellus Shale (JSCMS) met Monday through Thursday last week and has been using the Natural Gas Horizontal Well Control Act, also known as SB 424, as the basis for a new bill.

"We have knocked out some of the easy issues," Sen. Douglas Facemire (D-Braxton), one of the committee's co-chairs, told NGI's Shale Daily on Tuesday. "We will not be calling a special session [of the legislature]. This joint committee will get together to see if we can come up with a bill, take it back to our respective houses, and try to get it passed in our January session when we convene."

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).

Facemire said several amendments have been suggested to SB 424, including one that would require the Department of Environmental Protection (DEP) to suspend an operator's drilling permit if they run afoul of a road maintenance agreement with the state Division of Highways (DOH). Work at the well would be halted and any other pending permits would be denied until the violation with the DOH is corrected.

"We made it so that 30 days before construction starts, an operator will notify the highway department, who will then come out and film the road," Facemire said. "When the project is completed they will come out, film it again and decide the damages. The operator can then decide to fix the road themselves, hire a contractor or pay the highway department to fix it.

"We thought that was a lot fairer than making them bond these highways. That's a cumbersome process and quite expensive. It was our opinion that this accomplishes the same thing."

Another amendment calls for operators to submit their employment information to the state Division of Labor, including data on contractors and subcontractors. "We would like to know how many people are actually working, and what portion of them are West Virginians," Facemire said.

Other amendments call for:

Facemire said two additional amendments addressing air quality issues at natural gas well sites may be withdrawn from the final bill because of the proposed standards put forward by the U.S. Environmental Protection Agency on July 28 (see Shale Daily, July 29).

"That really kind of takes the DEP out of it," Facemire said. The amendments had called for the DEP to submit a report on air quality to the legislature by July 1, 2012 and create a list of rules governing air quality if the agency believes additional regulations are necessary. Also, the DEP's Air Quality Board would regulate well sites and issue air quality permits, if required. Under an air permit program, the DEP would also be required to consider the cumulative impact of multiple wells at a drilling site.

Another amendment that was proposed, but has not yet been attached to the bill, calls for eliminating the Oil and Gas Examining Board (OGEB).

"The DEP would like to have them eliminated," Facemire said of the OGEB. "[The DEP] feels like they can do it themselves and it would save them money. I disagree with that. All that board does is qualify inspectors; it doesn't hire or fire anybody. They make an oral and a written test, they administer the test and then they rank the applicants to get on the roster to be hired. I don't see where that encumbers anything."

Facemire said the committee will meet again in September. Although he sounded optimistic that lawmakers would eventually come to an agreement on Marcellus Shale regulatory reform, he said several major issues -- including permit fees -- remain to be resolved.

On the permit fee issue, Facemire said the Senate version of SB 424 called for a $5,000 fee, with an additional $1,000 fee for each additional well on the pad. "The cost of these fees is supposed to pay for the new inspectors," Facemire said. "The DEP wanted to hire four new inspectors. If you do the math, the fees we had in SB 424 would have more than adequately covered that. We would have had another $600,000 to $700,000 in excess for the DEP.

"But there are committee members who would like to see that fee go to $10,000 per well. I think that's unfair and unreasonable. There will be a squabble over that."

Facemire also predicted a squabble over some committee members' insistence that a 60-day public comment period be held before work on a natural gas well can begin. "I just don't see the need for that," Facemire said.