A bill to regulate development of the Marcellus shale is back on the floor of the House Friday morning for a second reading after surviving scrutiny in the House Finance Committee.

Attempts to regulate the Marcellus shale industry began with two separate bills early in the session. One was drafted by legislative staff, the other under the direction of the West Virginia Department of Environmental Protection.

Reconciling elements of the two bills, as well as adding additional pieces of legislation, kept lawmakers, surface owners, environmentalists and industry representatives busy under the dome in Charleston over the past few weeks.

Pieces of the stalled House bill, as well as a few new amendments, found their way back into the Senate-passed Marcellus regulations via the House Judiciary Committee. Wednesday, the Senate bill passed the House judiciary with amendments and came before the House Finance Committee Thursday morning. Later in the day, it was scheduled to be sent back to the floor for Friday’s second reading.

All of the bills going through the legislative process ran into a roadblock Thursday, with a seldom-used motion from Delegate Ron Walters, R-Kanawha, to have every bill read on the House floor. The move was chastised by House Speaker Rick Thompson and other lawmakers in the House. Walters was also removed from the House Finance Committee.

Thompson said the purpose of Walters’ removal was to push forward with important legislation held up in the finance committee. Gary Zuckett, executive director of the West Virginia Citizens Action Group, expressed concern that Walters’ action would stall important legislation, including the Marcellus bill.

“We’re very concerned with the meltdown in the House,” Zuckett said. “...The Marcellus bill is a big bill that has had a lot of work done to it. It would be a shame for these important public policy issues to be held up by the shenanigans going on on the House floor right now.”

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After hearing a summary of the provisions offered by the amended Marcellus bill, Delegate Mitch Carmichael, R-Jackson, called for a response concerning the potential harm that the industry may experience as a result of the regulations. He asked the representatives of the gas and oil industry to discuss what the bill before the finance committee would do to natural gas development in West Virginia.

Phil Reale, a lobbyist representing the West Virginia Oil and Gas Association, said some of the regulations offered would induce a “chilling effect” on the industry. He said the increased regulations and resulting permit delays would harm the potential of the industry.

“Without a question, this will have a chilling effect,” Reale said.

He pointed out that not all Marcellus shale is equal. The portion of the shale containing the gas under much of Pennsylvania, for instance, is of a higher pressure and in thicker deposit layers. He said there is some real opportunity in some northern counties of West Virginia.

“We want to drill it responsibly; no one wants to drill it irresponsibly,” Reale said.

He said the industry has experienced “a good working relationship” with the West Virginia DEP. Continuing to develop an economic environment that fosters industry’s ability to attract capital investment from across the world, he said, will depend on regulations that aren’t overly restrictive.

He also pointed to requirements to test water within 5,500 feet of a well at the landowner’s request.

“That’s a circular area with a diameter over two miles,” Reale said. “The inventorying of all those occupied dwellings and buildings in that area, and notifying people and testing water wells in that massive area is very problematic and will take a lot of time as well.”

The amended bill would also require contract language in 16-point bold font that encourages landowners to consult with an attorney before signing a new oil and gas lease; give a 30-day advance notice of entry to survey; and require drillers to meet with the surface owner. It also gives coal companies an opportunity to more easily register for notification of oil and gas well permits.

One of the more popular amendments among environmentalists and surface owners is the elimination of the Oil and Gas Inspector Board so that inspectors may be hired and fired in a manner consistent with other WVDEP inspectors.

The new legislation would also require a water management plan, including the source and volume of water used, to be filed with the WVDEP.

The areas that can be drilled would also be altered by the bill coming before the House. Horizontal shallow wells will be required to be 1,000 feet from occupied dwellings, unless consent is given by the occupants. Horizontal wells would also be required to be 100 feet from a watercourse and 1,000 feet upstream from a public surface or groundwater supply.  Permits would also be deniable if near parks, rare habitats, historical sites or bodies of water.

The new bill would also give surface owners a say in determining the location of well sites on their property. The bill would also allow landowners to request a list of chemicals used in the fracturing process, though the company may choose not to disclose the quantity or “recipe” of their fracking solution.

However, in a medical emergency, the company must disclose each constituent chemical and the formula of the solution.

The bill also provides a provision calling for further study of drilling in karst areas, locations that are typically above cave formations, which is a common geological formation in West Virginia. Further reports about the need for future legislative action are to be provided regularly through 2016 if the bill is passed.

Dave McMahon, attorney and co-founder of the West Virginia Surface Owners Rights Organization, said he did not expect Carmichael’s questioning implying that the additional regulation may not be needed.

“We were really disappointed in Mitch Carmichael for setting that up, because most of the Republicans we talked to see the need for the bill. Nothing is perfect, but it’s something that needs to be done,” McMahon said.

He said despite Carmichael’s questions, he felt most lawmakers were prepared to move forward on the bill.

“We’re optimistic the bill will pass if we can get through all of this rigmarole, because we have rural Republicans and urban Republicans and environmental and middle-of-the-road Democrats supporting this,” McMahon said. “It’s just a matter of convincing the legislators that all of the things the industry lobby is saying is not true, that this is not a ‘Chicken Little’ bill and the sky is not falling.”

Though the bill is not perfect, McMahon said, it would be a good start.

Issues regarding the burial of pit waste and similar issues were still not addressed in the bill. McMahon said the legislation still does not address provisions to provide public notice to those who live near the wells but do not necessarily live on the property where it is drilled. 

Delegate Woody Ireland, R-Ritchie, agreed the bill was not perfect, but also emphasized that the committee worked very hard to ensure they had produced a fair Marcellus bill.

“We spent an awful lot of time, particularly in the judiciary in the House, on this particular issue,” Ireland said. “There was a lot of debate going back and forth while we took input from industry, surface owners and various stakeholders.”

Despite the imperfections, Ireland said he would be voting for the bill when it comes back before the House.

“It is a bill that is not perfect, but it approaches some of the things that we need to be improving on,” he said. “We are going to come back to it, without any doubt. Is it a good bill? I’m going to vote for it, certainly. Is it perfect? No, it is not.”

Ireland said the amended bill does do a lot to protect the rights of surface owners and the environment and allow the expansion of the oil and gas industry in West Virginia. He also pointed out a portion of the bill that offers surface owners twice the value of their timber cleared, in addition to the timber cleared by drillers.

Ireland said the overall goal of drafting the bill was to create a “win-win-win” for surface owners, the environment and industry.

Leslee McCarty, a West Virginia Environmental Coalition lobbyist, said she had a list “a mile long” of issues not addressed in the new bill but would like to see lawmakers pass the bill as amended by the judiciary.

“If it passed as is, I’d be just as pleased as punch,” McCarty said. “Who knows if that is going to happen? If we can get it out of the House, then we’ll have a conference committee.”

Uncertainty about what amendments may be introduced by the conference committee or on the House floor is what many are concerned about.

McCarty said she was hoping the bill would not simply die this session, because she watched similar legislation go uncompleted last year.

“I am really hoping that does not happen this year,” McCarty said. “If it does not happen this year, I think we have to be ready with a resolution for a moratorium. If you aren’t going to regulate them and just give them tax breaks, how can you protect the citizens?’

Delegate John Pino, D-Fayette, said the current bill does represent a compromise but not one that compromises water quality standards. If it did, he said he would vote against it, but he said he feels the bill is currently on the right path.

“We knew all along that it would be a contentious issue to get this done with everything else we have to do,” Pino said. “I don’t give any alibis about working hard. I came down here to work. I want to finish the things we have to do, and I consider it one of the most important things we need to do.”