Marcellus Committee OKs Bill

Letter will recommend calling special session

Morgantown Dominion Post
17 November 2011
By Davis Beard

CHARLESTON — The Joint Select Committee on Marcellus Shale approved a draft regulatory bill Wednesday afternoon, in hopes of a December special session.

The bill, incorporating 33 amendments to last session’s SB 424, goes to the Joint Committee on Government and Finance with a recommendation for a special session.

The co-chairs will draft a letter of recommendation to Senate President Jeff Kessler and House Speaker Rick Thompson, urging they collaborate in seeking the governor’s call for a special session.

Sen. Karen Facemyer, R-Jackson, was the sole vote against moving the bill. Senate co-chair Doug Facemire, D-Braxton, will draft the letter against his will. And stakeholders from both ends of the spectrum — surface owners and industry — criticized the bill.

Facemyer prefaced her no vote with her reasons for opposing the bill. “I think we’re still sending a very anti-business sentiment out there with some of the provisions of this bill.”

Protections are needed, but “this is a business that is very ... volatile.” Other states have shale gas reserves, and right now drilling rigs are moving to Ohio to reach oil in the Utica shale. West Virginia fees and taxes are already too high, and will be higher when the rigs come back — if they come back.

“Where’s the market going to be?” Facemyer asked. “We don’t know. There might not be a market for this and we’ve lost totally. ... I want a bill out of here as much as anybody, but the cries for urgency and the complaints about delays are wrong-headed.”

The Legislature had a bill ready two years ago that got amended to death on the last day of the session, she said. The bill she referred to wasn’t a comprehensive regulatory bill; sponsored by House cochair Tim Manchin, D-Marion, it dealt simply with some surface water protections and tracking of fracking fluids.

“We need to take the time to make sure we do this right,” Facemyer said. “I don’t think we’ve come to real good conclusions on this.”

Delegate Barbara Evans Fleischauer, D-Monongalia, prefaced the vote with words of support.

“I strongly support this bill and strongly believe it is urgent to get a bill adopted as soon as possible,” she said. There are 15 inspectors in the field and thousands of wells. “We’ve got a lot of activity going on.” Waiting until the regular session could delay effective regulation until 2013.

And the gas isn’t going anywhere. The vast majority of the M a rc e l l u s shale gas sits under three states: West Virginia, Ohio and New York.

“I’m very proud of what we have done,” Fleischauer said. The panel reached bipartisan solutions to road, air and water issues. “I think we’ve achieved a pretty good balance. ... I don’t think that passage of this bills sends an anti-business message.” It may need tweaks, but “if there turns out to be a problem, we can look at matters again.”

Co-chair Facemire voted to OK the bill, but voted against drafting a letter. His answer to questions about why was terse and tense: “My job was to chair this meeting and come up with a bill. We’ve done that. My job is complete. It’s up to the leaders of the respective bodies and the governor to do what they feel is the right thing to do.”

M a n ch i n praised the committee for its work. “Everybody voted their conscience.” The bill may not be perfect, but everybody put in their best effort.

After the meeting, Manchin said he expects opposition from both sides — environmental and industry. Industry in particular opposes a public comment period. In his view, the bill does “no substantial harm to industry. ... The citizens of West Virginia have a right to know what’s going on.”

He can’t predict the outcome of a special session. “A majority of both houses want this bill. Will it pass muster? I don’t know that.” What he does know is, “It’s our job to protect the citizens of West Virginia.”

Stakeholder and leader comments

Doug Malcolm, chairman of the Government Relations Committee of the Independent Oil and Gas Association of West Virginia (IOGA) appreciated the panel’s work, but not the bill.

“We are disappointed with the outcome,” he said. “We support responsible, reasonable legislation. I don’t think this really fits that description. ... It does send an anti-business message to the state. That’s not what we really need right now. We need certainty, not delays.”

The bill, including the public comment period, introduces too many chances to slow down permitting and production, and increases the likelihood of legal action.

Regarding public comment and public hearings, he said the bill allows “everyone and their brother” to comment, whether they’re affected or not, and allows opponents to use public comments to force the Department of Environmental Protection to call public hearings.

“I don’t think the governor would want to call a special session on this bill.”

David McMahon, cofounder of the West Virginia Surface Owner Rights Organization (SORO), said: “We think this bill is just a series of halfway steps and baby steps and outright omissions. It’s a real problem to us.”

For example, one amendment allows a well 650 feet from a home — a change from the current 200 feet. “If that well’s 600 feet from your house, you can’t sleep at night in your house.”

The $10,000 and $5,000 permit fees are too low — representing what he termed .06 percent of the potential income from a single well. “We need a lot more money than that to properly oversee this industry.”

Both IOGA and SORO are reviewing the bill and haven’t decided if they will oppose it or try to amend it.

Kessler said he’s already had preliminary discussions with the governor’s office. “I expect over the next couple weeks that we’ll be working diligently with their office to review the bill from both sides” and see if Gov. Earl Ray Tomblin offers changes. “And hopefully see if we can’t get this done in December.”

Asked about timing, he said he’d like to see it during the Dec. 12-14 interims, with maybe some days before if extra time would be needed. He said that running the session too long after interims could prove cumbersome, bumping into members’ Christmas preparations.

Thompson emailed a statement to The Dominion Post: “I commend committee members for all their hard work in developing legislation to address such a complex issue. I have long said that the Legislature needs to develop a regulatory framework for the relationship between oil and gas extractors, and surface and mineral rights owners that protects the environment and ensures proper labor practices. I look forward to discussing with the Senate president and the governor the details of the draft legislation and a special session.”