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West Virginia Panel Keeps $10K Permit Fee Intact

A committee of West Virginia lawmakers made little progress this week toward settling the remaining obstacles to a Marcellus Shale regulatory reform bill, instead using their time to debate -- but ultimately leave unchanged -- a steep increase in permitting fees.

But Sen. Douglas Facemire (D-Braxton) told NGI's Shale Daily he is trying to get the 10 members of the bipartisan Joint Select Committee on Marcellus Shale (JSCMS) to meet again on Oct. 22 and 23.

"We're trying to set it up," Facemire, one of the committee's co-chairs, said Friday. "We've sent the notice out and our respective members are supposed to let us know their schedules by Monday. If we can meet, we will. We only have four amendments left."

On Wednesday and Thursday, JSCMS members discussed lowering recommended permit fees for natural gas wells. Last month the panel suggested that operators pay $10,000 for the first horizontal well drilled and $5,000 for each additional well, increases industry officials described as "dramatic" (see Shale Daily, Sept. 16). The higher fees would provide the Department of Environmental Protection (DEP) $2.5 million annually, which the agency said it would use to add as many as 15 staffers.

"We did talk about lowering the fee to $5,000 for the first well and $1,000 for each additional one," Facemire said. "But then the DEP came back and said that in order to hire nine to 10 new inspectors, plus five to six new staff members, they were going to need that [higher fee]."

Facemire said it won't be difficult for the five Democrats and five Republicans on the panel to reach a consensus on three of the remaining four amendments, which address rules for inspectors, drilling issues with underground caverns and general language surrounding permit requirements with the state Department of Environmental Protection.

"I don't think we'll get hung up too bad on those," Facemire said. "They should take no time at all."

But Facemire predicted a fourth amendment to set up the rules for surface owner agreements would be divisive. "That one could take more time," he said.

According to information from the JSCMS website, the committee was at one point considering requiring operators to negotiate surface use and compensation agreements with landowners. If no agreement is reached within 30 days, the operator would be required to post a $25,000 surety bond to cover any possible damages.

But Julie Archer, spokeswoman for the West Virginia Surface Owners' Rights Organization (WV-SORO), told NGI's Shale Daily that negotiations behind the scenes among the House and Senate members of the panel may have removed the surety bond requirement.

"All or most of the amendments have changed significantly since they were posted on the website," Archer said Friday. "Now they're talking about something that has more permissive language and eliminated the bond. We haven't seen the exact language. Supposedly there is still something in there to try to give the drillers incentives to negotiate with landowners. But they're apparently not requiring that they negotiate, and they're not going to require that they post a surety bond if there's no agreement.

"We understand that there are drillers out there that make an effort to work with landowners. The problem is there are a lot that don't. So if they're setting up something that's permissive; what's more than likely going to happen is the drillers that already negotiate will keep doing it, and the ones that aren't negotiating, won't. It won't change anything."

Also of concern to WV-SORO, Archer said, was the panel's decision to reduce the buffer zone from shale drilling operations. The panel voted to prohibit wells from being drilled within 625 feet of a structure occupied by people or animals, and within 250 feet of any existing water well or spring. Both buffers originally under consideration were 1,000 feet.

"We felt that 1,000 feet was the least they could do," Archer said. "It's really disappointing that they agreed to less. Rather than agree to less, we would have liked them to perform some studies on noise and air pollution before letting the wells get closer. Another thing to consider is that operators can always get a variance from the DEP. So landowners don't even have the assurances that it will be 625 feet."

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 session (see Shale Daily, March 15; March 11; March 4).

The JSCMS has so far reached agreement on 22 areas of Marcellus Shale regulatory reform. The West Virginia Legislature will convene Jan. 11 for its next 60-day legislative session.

Gov. Earl Ray Tomblin issued an executive order in July directing the DEP to enforce several new safeguards and to issue an emergency rule over Marcellus regulations. The DEP complied by submitting an emergency rule to Secretary of State Natalie Tennant in August (see Shale Daily, Aug. 24; July 14). Tennant signed the rule on Aug. 29, putting its changes into effect for 15 months while the West Virginia legislature debates and enacts legislation to make the changes permanent.

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