Marcellus Bill Passes

Officials all agree it’s a starting point

Morgantown Dominion Post
15 December 2011
By David Beard

CHARLESTON — The Legislature passed the Marcellus shale bill, wrapping up its special session Wednesday.

After two hours of debate and speeches, the House voted to approve HB 401, including the Natural Gas Horizontal Well Control Act, 92-5.

The Senate speedily put its seal of approval on HB 401, passing it 33-0.

The bill now goes to Gov. Earl Ray Tomblin for a signature.

“For all West Virginians,” he said, “the Legislature and I have worked together to open the door to new job opportunities and reasonable regulations for Marcellus shale development. ... This landmark piece of legislation provides clear rules to the natural gas industry, protects our communities, surface owners and waterways while sending a clear message: West Virginia wants jobs and we will protect our rights and our environment.”

Tomblin was joined by Senate President Jeff Kessler, D-Braxton; House Speaker Rick Thompson, D-Wayne; and Joint Select Committee on Marcellus Shale co-chairmen Sen. Doug Facemire, D-Marshall, and Delegate Tim Manchin, D-Marion; for a celebratory press conference after the session.

Legislators and special interest representatives offered mixed reviews of the bill. Virtually all said it’s not perfect and more issues — such as forced pooling and various environmental and surface owner concerns — will have to be addressed in January and the coming years.

But they all agreed it’s a starting point.

“I do think we have some progress here,” House Majority Whip Mike Caputo, D-Marion, said on the House floor.


Senate Approves SB 401 Quickly and Unanimously

Morgantown Dominion Post
15 December 2011
By David Beard
CHARLESTON — The Senate wrapped up the Marcellus special session by unanimously approving the House bill, 32-0.

There were no speeches, no amendments, no debates. They got it, they passed it, they adjourned. Then they headed downstairs for the governor’s celebratory press conference.

This bill was based on the bill crafted by the Joint Select Committee on Marcellus Shale during the summer. Gov. Earl Ray Tomblin used it to craft his own 99-page bill.

The Senate added seven amendments to its bill, SB 4001. Then the House incorporated SB 4001 into its bill, HB 401, and added eight more amendments. HB 401, with its 15 amendments, is what the House approved Wednesday, and the Senate received and also approved.

After the Senate session, Sen. Bob Beach, D-Monongalia, commented on some people’s criticisms of the Department of Environmental Protection (DEP). Some say it has done too little to regulate the gas industry so far, and worry about what it may or may not do in the future. Portions of the bill direct the DEP to craft rules to govern the horizontal drilling industry.

“I think the one thing that has not been brought out in all the process is the DEP’s rule-making ability and what that entails,” Beach said. Those rules require legislative OK. “I think that’s an issue that’s been overlooked. There’s a lot of fear and angst out there about the DEP’s authority. I think that needs to be calmed a little bit with them knowing we do have oversight over the rules.”

About the bill itself, Beach had mixed reviews. “It’s not a good bill. It’s not a bad bill. It’s just a bill. It gets some regulations out there that we know are necessary for the industry,” and to protect people and the environment.

Sen. Dave Sypolt, R-Preston, had similar views.

“I’m certainly pleased that we got something passed,” he said. “I’m a little disappointed that it didn’t go quite as far in some areas as I’d like to have seen. We can always revisit that in the regular session and tune it up a little bit. You’re never going to make everyone happy. Fortunately, this is a far cry from what we had on the books. If we had left here without a bill, it would have been a tragedy.”

Governor’s press conference

After the House and Senate adjourned, many of the members moved downstairs for the 2 p.m. press conference. Surrounding Tomblin were Senate President Jeff Kessler, D-Marshall; House Speaker Rick Thompson, DWayne; and Select Committee co-chairs Sen. Doug Facemire, D-Braxton, and Delegate Tim Manchin, DMarion.

They took turns congratulating each other and praising the Legislature’s accomplishment. Manchin and Tomblin acknowledged they were often at odds — Manchin pushed for surface owner and environmental protections over concessions to industry. But they joked, shook hands. Tomblin even gave Manchin a big hug.

“Today marks an exciting achievement in our state’s history,” Tomblin said. “Unlike what happens in Washington, the Legislature worked long and hard together to create this milestone piece of legislation.

“We may not agree on all points,” he said, “but this bill accomplishes many great things. ... The Marcellus shale horizontal well act is the catalyst we need to launch new job opportunities throughout West Virginia,” and to protect surface owners and the environment.

Kessler said, “This bill is not perfect but it gives us a basic regulatory framework so we can move forward to maximize the opportunities of Marcellus shale, to employ more people in our state, to make sure our waters are protected, our environment is protected, to protect people’s rights. ... There will be changes that may occur ... but it will certainly serve us well.”

Thompson mentioned the committee’s long hours and the difficult compromises during their meetings and in working with what greeted them in the governor’s bill.

“Once your committee works so hard,” he said, “puts in so many hours, it’s difficult to say we want to change something. I give the chairmen credit for having the vision and foresight for saying it can just be my work.” Both did everything they could to protect their work, but agreed to compromise.

“I know that nothing we pass is perfect,” Thompson said. “That’s why we keep coming back every January. But this is a monumental piece of legislation for West Virginia and I’m very proud to be part of it.”

Stakeholder comments

An environmental advocate and an industry proponent likewise had mixed feelings about the bill’s passage.

Chuck Wyrostok, West Virginia Sierra Club outreach director, said, “It’s a good start. It has a lot of good points. It really falls short in a lot of areas. ... It was kind of like watching tragic theater, watching the governor pull the rug out from under the Select Committee bill.”

For example, he said, the governor’s bill allowed for burial of drill cuttings on surface owners’ land with DEP approval. The House amended that to call for surface owner approval, too.

Companies such as Chesapeake don’t even bury cuttings anymore, he said, because they know it’s wrong.”

Other interest groups and many legislators aired the same concern.

Asked by The Dominion Post after the press conference about that criticism, Tomblin said, “I don’t think so.” The committee began with the Senate bill passed last session, and the new bill contains much of the committee’s work. “From the time that the interim committee finished their work, we were able to bring in the stakeholders at different times, heard their concerns, talked with them and were able to incorporate some of their concerns into the bill.”

West Virginia Oil and Natural Gas Association Executive Director Corky Demarco said, “I think that what they passed will allow us certainty and clarity about the rules and regulations moving forward. As an industry, we didn’t get what we wanted. I think some other folks — the environmental community and the surface owner community — got some things that they wanted. They got some things that they didn’t want.

He continued, “But I think it gives us the road map for us to be able to quickly and earnestly go after the opportunities that we have in the state. It’s incumbent upon all of us now to work together to try to maximize those opportunities.”

Asked about the criticisms that the governor’s bill reflected pro-industry changes, Demarco said, “I don’t know how a 1,400 percent increase in your fees [from $650 to $10,000] is pro-industry.” Setbacks were increased and bonds were raised. “We did lobby for lesser financial impact and we didn’t get it. I understand there are other people to appease in this process. Nobody got everything that they wanted.”

House votes yes, 92-5

Morgantown Dominion Post
15 December 2011
By David Beard

CHARLESTON — The House of Delegates passed the governor’s Marcellus bill Wednesday morning, 92-5.

The bill also sailed through the Senate and was in the works for signature by the governor.

Delegate Mike Manypenny, D-Taylor, was the only local delegate among the five opponents, and attempted two amendments before the final vote.

His first was a repeat of one he tried during Tuesday’s Judiciary meeting — to increase the 250-foot gas well setback from streams and water wells to 650 feet. It failed.

After the House approved the Judiciary Committee ver- sion of the bill, with eight more amendments OK’d Tuesday evening, Manypenny tried to replace it with the Select Committee’s bill, which contained more environmental and surface owner protections.

The committee bill, he said, included input from all stakeholders. “The governor’s bill was cooked up in a back room by lobbyists for special interests. ... We didn’t come down here to do the governor’s work. We came down here to do the people’s work.”

Judiciary Chairman Tim Miley, D-Harrison, opposed the move, saying it would be a deal killer. “I don’t accept that ‘no bill is better than this bill.’ We have to compromise. We cannot take the ‘my way or the highway’ approach.”

They could pass the amended governor’s bill and come back in January and tackle more issues.

This second amendment failed, too.

During floor speeches before the vote, Manypenny vowed to keep fighting for surface owners and environmental protections. “Some of us have lost the battle, but we haven’t lost the war,” he said. He has 20-plus bills ready to launch in January.

Delegate Mitch Carmichael, R-Jackson, also was among the five opponents. He views it as his job to support energy production, job creation and economic prosperity, he said. “We have a regulatory scheme in place. Here we are at the threshold of a great economic opportunity,” and are ready to impose more burdens on the gas industry.

Delegate Woody Ireland, R-Ritchie, was the only one of a handful of delegates who brought potential conflicts of interest to the House speaker’s attention who was instructed not to vote. A member of the Select Committee, he has a gas lease in negotiations and therefore had a clear conflict, the speaker decided.

Four local delegates were among those who spoke in support of the bill.

Delegate Tim Manchin, D-Marion, co-chaired the Select Committee.

“I have some reservations,” he said. “The path to this bill has been tortuous at best.” Manchin outlined the threeyear history of the bill. “In my opinion it simply doesn’t go far enough.”

The summer’s Select Committee meetings reflected a House-Senate split on many issues, with Senate leaning toward industry and the House favoring surface owner and environmental protections.

“This is the industrialization of rural West Virginia,” he said.

Manchin listed some of the committee’s provisions that were weakened or removed in the new bill. One gave industry incentives for surface owner agreements — that was diluted to a simple offer for damages in this bill.

“They should treat us like any long-term business partner,” he said of industry. “In some instances, I’ve been a little bit disappointed in industry’s approach to that. ... The industry has resisted that sit-down and I don’t understand why.”

Majority Whip Mike Caputo, also D-Marion, gave mixed reviews of the bill. “Did it go far enough? Absolutely not. Did it go fast enough? Absolutely not. But we’re better off than we were.”

He praised Manchin’s work on the committee and assured his colleagues that Manchin would stay on top of future legislation to improve the bill.

Delegate Barbara Evans Fleischauer, DMonongalia and a Select Committee member, responded indirectly to Carmichael’s comments. “The notion is preposterous that the industry does not need more regulation.”

She echoed the mixed sentiments of many bill supporters. “This bill is better than no bill at all. I’m going to work really hard to improve this process.”

The bill concerns public health, safety, quality of life and jobs, she said, and she’ll be watching the jobs issue, she said. Wetzel County, where the Silver Hill community has more than 30 well pads in an eightmile radius, has the highest unemployment in the state, and it has gotten worse since drilling began.

Delegate Dave Pethtel hails from Wetzel County. “Everyone in Wetzel County is not against the drilling,” he said. But he has made the Silver Hill tour, met the people who have suffered. Like others, he said the legislation needs improvements. “I wish it had more protections for surface owners.”

HB 401: Talking points

Horizontal well permit fees increased from $650 to $10,000 for the first well on a pad and $5,000 for subsequent wells. Will raise an estimated $2.4 million annually, allowing Department of Environmental Protection’s (DEP) Office of Oil and Gas to fill a $1.05 million deficit and hire 14 more inspectors and three permitting staffers.

Requires operators to sign an agreement with the Division of Highways regarding road maintenance and to post performance bonds.

Requires operators to give seven days’ notice to surface owners before entering a property for surveys.

Before filing a permit application, operator must publish an ad in the newspaper of record for that area and refer readers to the DEP website that will list all permit information and public comments on permits.

Setbacks from occupied dwelling structures increased from 200 feet to 650 feet. DEP will study the effects of four pollutants — noise, light, suspended dust and volatile organic chemicals — on the area around a pad and may propose a rule to change the setbacks based on the findings.

Imposes civil and criminal penalties for permit violations and other issues.

If an operator wants to bury drill cuttings on the site, the surface owner has veto power.

Requires the DEP to establish emergency rules for drilling in cavernous karst formations where underground water could be harmed.

Requires operators to reveal fracking fluid chemicals, and to provide sediment control and well site safety plans.

Obliges operators to compensate surface owners for property damages, based on a mutually agreed formula. Operator may make an offer or reject the surface owner’s claim. Where no settlement is reached, surface owner may sue in circuit court or seek binding arbitration.