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West Virginia Senate Unanimously Passes Marcellus Shale Bill

The West Virginia state Senate unanimously approved Gov. Earl Ray Tomblin's version of a Marcellus Shale regulatory reform bill on Tuesday by a 33-0 vote.

The bill, known as the Natural Gas Horizontal Wells Control Act, now awaits passage by the House of Delegates. By 5 p.m. EST Tuesday, after four hours of debate, members of the House Judiciary Committee had begun adding their own amendments to the bill.

"I don't expect the House to just take what we did and adopt it without making their own changes," Senate Judiciary Committee Chairman Corey Palumbo (D-Kanawha) told MetroNews on Tuesday. "I would be pretty surprised if they did that. But I'm hopeful that any differences we have will be able to be worked out."

The Senate version of the bill -- SB 4001 -- was introduced and sent to the Senate Judiciary Committee on Sunday before advancing to the Senate Finance Committee on Monday. Six floor amendments were adopted through a voice vote on Tuesday, leading up to passage.

Palumbo said most of the amendments attached to the bill on Tuesday involved notification requirements.

"[The amendments provide] sooner notice for people and...more accurate means of notice," Palumbo said. "There are also a couple of provisions dealing with current well permits. This is not applying to permits that are already in the pipeline."

Meanwhile, a version of the bill before the House of Delegates -- HB 401 -- was introduced Sunday and sent to the House Judiciary Committee, followed by a public hearing on Monday. But with SB 4001's quick passage it was unclear if HB 401 would advance any further.

"We really need to get these regulations in place and passed," Palumbo said. "I think the public is really clamoring for additional regulations and I think its incumbent upon us to provide those for them."

Matthew Ballard, CEO of the Charleston Area Alliance (CAA), told NGI's Shale Daily that he had not read the amendments suggested by the Senate, but predicted the bill's passage by the House could be tricky.

"Our Senate is never the problem, it's what happens in the House that could be where the challenges are," Ballard said Tuesday, adding that the CAA supports Marcellus Shale regulatory reform. "Unless any of those amendments were particularly onerous to business or extraordinary, we would probably be supportive of them."

Early media reports painted an unclear picture of SB 4001's chances to pass the House. While House Speaker Rick Thompson (D-Wayne) lauded the efforts of the Joint Select Committee on Marcellus Shale (JSCMS) in an interview with the Charleston Gazette, House Judiciary Committee Vice Chairman Mark Hunt (D-Kanawha) told the newspaper that Tomblin and the Senate wouldn't like the changes the House ultimately makes to the bill.

"I don't think [passage] is a sure thing," Hunt said. "I think it's 50-50."

Although Tomblin's version of the regulatory reform bill generally mirrors the recommendations of the JSCMS, there are some notable disparities.

On the issue of industry employment, Tomblin wants the state Workforce Investment Council to create a report detailing how many jobs were created, how much the jobs pay and where the employees live. The governor also called for a requirement that all oil and gas well inspectors be citizens of West Virginia. The JSCMS version had required all operators to submit employment information to the state Division of Labor, including data on contractors and subcontractors (see Shale Daily, Aug. 11).

Tomblin's version empowers the secretary of the state Department of Environmental Protection (DEP), granting "the sole authority to regulate all horizontal wells," to use DEP inspectors to enforce and promulgate the new Marcellus Shale law and to perform inspections and investigations.

The governor's version of the bill also modifies the distinction between shallow and deep wells drilled in the state. In his version, wells drilled to a depth of 100 feet into the Onondaga Formation for purposes other than production may still be classified as shallow wells.

Despite the changes, a controversial provision calling for operators to pay a $10,000 permitting fee for the first well drilled on a pad, plus $5,000 for each additional well, remains intact. The shale gas industry is purported to be opposed to the bill on the grounds that permit fees are too high (see Shale Daily, Nov. 22; Oct. 17; Sept. 16).

The JSCMS, a bipartisan 10-member panel of lawmakers from both chambers of the legislature, was formed in June and began meeting in August to try and reach a consensus over several key regulatory issues (see Shale Daily, June 17). The panel used a failed bill called the Natural Gas Horizontal Well Control Act, also known as SB 424, as the foundation for its bill.

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