DEP Wants $5K Fee Per Well Permit
Official says he plans to meet with group
Morgantown Dominion Post
22 September 2011
By David Beard
West Virginia Department of Environmental Protection (DEP)
Secretary Randy Huffman would like to go before the Joint Select
Committee on Marcellus Shale in October to more clearly explain
the agency’s needs and to propose a different permit fee — $5,000
per well.
That figure is a best estimate based on current information and
the requirements of the emergency rules recently enacted, he told
The Dominion Post on Wednesday.
Last week, the committee amended its draft Marcellus bill — a
resurrected Senate Bill 424 from March — to include horizontal
well permit fees of $10,000 for the initial well on a pad, and
$5,000 for each subsequent well. On a six-well pad, that would
generate $35,000.
Huffman explained some of the reasoning behind his revised figure.
Permit fees are the only means the DEP has to raise money to pay
for inspectors and permitting staff. The DEP originally asked for
$10,000 per well in the bill it offered the Legislature in
January. That was “extremely high,” he acknowledged, but they
didn’t know how the final bill would turn out.
It died, as did the Legislature’s own bill, SB 424.
Existing staff, including 15 inspectors now in the field, isn’t
enough to meet the requirements of the emergency rules, Huffman
said. The department needs more people in the office and in the
field.
DEP General Counsel Kristin Boggs previously told the committee
that only three to four office staffers handle all gas well
permits — last year that was about 450 horizontal wells and nearly
1,000 conventional wells.
The DEP’s Office of Oil and Gas is dealing with a roughly $1.1
million annual shortfall because of changes in the industry,
Huffman said. Conventional well permits dropped from about 3,000
per year to less than 1,000. While there were only 450 horizontal
well permits, the workload has risen significantly while the
income has dropped.
Huffman believes his proposed fee — $30,000 per pad, about $2.2
million total — would fill the financial shortfall, allow DEP to
fill three vacant positions (two inspectors and one staffer) and
nine other jobs to meet the requirements of the emergency rules.
Boggs previously said those nine would be six inspectors and three
staffers.
Huffman said the difference between his proposal and the
committee’s amendment might be about $400,000 to $500,000, but it
will meet the immediate need.
Meanwhile, hiring the additional staff will take time — the better
part of a year, he said. “Then we’ll be in a better position to
evaluate what we need.”
It wouldn’t be right, Huffman said, to overestimate the need and
collect an exorbitant fee. There’s an opportunity once every year
to revisit the fee and make sure they’re tracking industry
activity properly.
Huffman said that if he’s available, he would like to go before
the committee himself during October interims — Oct. 11-13 — and
explain more clearly the DEP’s needs and thinking. “We have an
obligation to give them a better answer than we gave them last
time.”
Members had expressed frustration that DEP staffers didn’t explain
their position very well at this month’s interims.
Huffman cautions that whatever bill the Legislature ultimately
passes could change things. “When you use numbers, people have a
tendency to hold you to those forever. It’s not an exact science.”
Determining a fee structure should be “evolution not revolution.”
His figure is based on the emergency rules. “If there are
additional mandates on DEP from the bill, that could change the
number. We haven’t fully evaluated the current bill.”
Huffman adds another caution: “As we continue to evaluate our
emergency rule and the duties that are going to be associated with
that, there’s no guarantee we might not revise that number
downward.” The $5,000 is based on the best information they have
now, projecting that into the next year.
Delegate Manchin Responds
Briefed broadly on Huffman’s points, Delegate Tim Manchin,
D-Marion and House co-chair of the committee, said: “It’s
frustrating. We’ve been trying to get accurate information on the
needs of the DEP for quite some time.”
The DEP’s January proposal of $10,000 per well was reflected in
the September amendment as originally proposed. The committee
agreed to trim it to $10,000 and $5,000.
“It didn’t seem unreasonable to me.” It would have allowed DEP to
put another 15 people on staff — in the field and in the office.
“If the bill passes with the provision on public comment, they’ll
probably need more people.”
But Manchin said he is willing to listen. “If they have some solid
numbers and can provide more input, then I’m certainly willing to
reconsider it.”
The problem is the lack of time, he said. At the end of the
September meetings, committee members were talking about a
November special session.
Asked about the mechanics of changing the fee, if members want to,
Manchin said there are several ways.
One way would be for a member of the prevailing side — which is
anyone on the committee since the amendment passed by unanimous
voice vote — to ask to have it reconsidered.
Another way: Hash it out during House-Senate negotiations after
the committee finishes the bill, and before it goes to the floor
in a special session. “It could work out in that process,” Manchin
said.
Both sides will likely amend the bill again during the session,
it’s been said.
But broad agreement will be essential to get a special session
called, and to get the bill passed, Manchin said.
“It’s got to be a cooperative effort,” he said.