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W.Va.
Legislative Update
On November 16,
2011, the Joint Select Committee on Marcellus
Shale (the "Committee") reported a 121 page bill
governing horizontal wells that utilize 210,000
gallons of water or more per month or that
involve surface disturbance of 3 acres or more.
The final version of the bill was
posted to the West Virginia Legislature's
website on November 18, 2011 (the "Bill"). The
Bill is based in large part on Senate Bill 424
as passed by the Senate during the 2011 Regular
Session, but was further modified by the
adoption of 33 amendments by the
Committee.
A shortcoming of the new bill
is that the myriad of amendments distract from
what is most important to the long term
interests of the State of West Virginia and its
citizens: the establishment of a set of laws and
regulations that can be interpreted and enforced
consistently. Such legislation would serve to
reduce uncertainty and create a sense of
stability, thereby encouraging employers to
invest in West Virginia projects that yield jobs
for West Virginians and generate tax revenue for
the State. These amendments are undermining the
opportunity to address through targeted and
specific legislation legitimate concerns,
including (1) the protection of water supplies,
(2) the use and disposal of waters of the State,
and (3) the use, maintenance and repair of
county roads for natural gas exploration and
development.
Amendments inhibiting the
ability to quickly enact legislation include the
following provisions:
- Expanded well location restrictions that
preclude drilling within 100 feet of any
"watercourse," lake, pond or reservoir, or 200
feet from a "wetland," or 300 feet from a
naturally producing trout stream, or 1,000 feet
from a surface water or groundwater source of a
public water supply. These limitations are
not supported by science and are not necessary
based on the broad base of experience obtained
through decades of natural gas drilling
operations;
- Requiring the Secretary of the DEP to
suspend a well work permit upon a notice from
the Division of Highways that an operator has
been found in violation of a letter of
certification related to using public roadways
without any due process protections;
- An exclusion to preemption language for the
"traditional power of local government to
regulate zoning and land development of gas
activities as well as other aspects, such as the
time and the place of operations to protect the
health, safety and welfare of the general public
through local ordinances and enactments."
This exclusion would virtually cancel the
preemption language;
- Expanding the rights of surface owners,
including making an offer of compensation before
construction begins and giving surface owners
the right to recover attorneys fees.
Expansion beyond existing law does not
remedy the issues created by drilling and
completing horizontal wells in shale formations.
Current law provides adequate rights to surface
owners' compensation under § 22-7-3;
- Establishing detailed casing and cementing
standards, on a cookie-cutter,
one-size-fits-all basis, rather than allowing
regulators to perform the work of shaping
standards that will work for the particular
facts involved in each drilling scenario.
Natural gas drilling operations involve complex
engineering practices that can vary from well to
well and formation to formation. Establishing a
single statutory standard simply ignores the
realities of drilling operations. The standards
should provide for adequate flexibility to
implement new and improved techniques that
fulfill the policy.
Governor
Tomblin has yet to announce whether he will call
a special session to consider legislation
governing horizontal well development. We can
all hope that legislation will be developed to
address the truly important issues, leaving the
extraneous matters for consideration at another
time.
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Beginning
with the January 2012 issue, Marcellus
Fairway: The Play Today will be distributed
under a new name: The Shale Play Today.
This new title better reflects the scope of the
information we provide to you, our readers, on a
monthly basis.
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Pa.
Senate Passes Comprehensive Marcellus Shale Bill
by
Barry A. Naum
Harrisburg,
Pa.
On
November 15, 2011, the Pennsylvania Senate passed
S.B. 1100, a fairly comprehensive legislative
effort aimed at increasing governmental oversight
of the development and production of Marcellus
Shale resources. This measure, if adopted by the
Pennsylvania House and approved by Governor
Corbett, would impose significant new regulations
and requirements on natural gas producers related
to, among other things, well permitting,
reporting, environmental and drinking water
protection and conservation, transportation,
bonding, regulatory, and regulatory and civil
penalties. The bill is currently under
consideration before the Pennsylvania House of
Representatives. Chief among the issues
presented by S.B. 1100, however, is the
introduction of "shale impact fees," which have
been contemplated in Pennsylvania for months.
Under the S.B. 1100 proposal, these impact fees
would be assessed, beginning retroactively as of
January 1, 2011, at $50,000 for the first year of
a well's production and decreasing by $10,000 each
subsequent year until settling at $10,000 for
years 11 through 20 of a well's productive life.
The majority of the proceeds from these impact
fees (i.e., 55%) would primarily go to the local
Marcellus Shale region counties and municipalities
for use in funding a wide realm of activities,
including transportation infrastructure, emergency
preparedness, water and wastewater preservation,
and reclamation, environmental and conservation
initiatives, and even tax reductions and housing
programs. The remainder of the impact fee revenues
would be designated for statewide environmental,
transportation, and water and wastewater
infrastructure initiatives. For wells in operation
before January 1, 2011, S.B. 1100 would also
impose a one-time assessment fee of $20,000 that
would similarly fund a statewide "Natural Gas
Energy Development Program" formed by S.B. 1100
that is intended to promote natural gas-fueled
transportation throughout the Commonwealth.
Read
the full article on our website. |
Local
Drilling Bans Update
by
Kevin M. Eddy
Pittsburgh
On
November 8, 2011, three municipalities in western
Pennsylvania put direct democracy to the test with
referendums that would essentially ban natural gas
drilling in their communities. Two of the
referendums were overwhelmingly defeated while one
succeeded with overwhelming support.
Read
the full article on our website. |
Useful
Resource:
Baker
Hughes Rig Counter
Baker
Hughes has been compiling rig count data since
1944, and that information is now housed online.
Click here to view historical or
current rig counts.
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Marcellus
Shale Team Member
Kevin
M. Eddy (Pittsburgh)
Kevin
is a litigator who regularly represents energy and energy
support companies in the courts throughout Pennsylvania and
New York. He has handled disputes ranging from breach of
contract, regulatory matters, product liability, insurance,
coverage, environmental, toxic torts, quiet title, royalty and
lease litigation. Kevin also has broad labor and employment
experience representing companies in disputes with employees.
Click here to
view Kevin's full professional biography. |
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Please be aware that this email publication is
distributed with the understanding that the author, publisher
and distributor are not rendering legal or other professional
advice on specific facts or matters and, accordingly, assume
no liability whatsoever in connection with its use.
Responsible Attorney: Michael J.
Basile | | |
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