Tuesday, September 2, 2014

LGCR's West Virginia Natural Gas Blog Has Moved!


LGCR's West Virginia Natural Gas Blog is now
Appalachian Shale Gas Blog.
Please
click here to see the new blog.

Monday, August 18, 2014

Ten Lewis Glasser Attorneys Listed As 'Best Lawyers'; Mark Sadd Honored For Eminent Domain, Condemnation Law

Ten attorneys from Lewis Glasser Casey & Rollins PLLC have been listed as “Best Lawyers” for the Charleston, W.Va. region.  Best Lawyers in America is one of the most visible and targeted peer review publications in the legal profession. In addition, Mark A. Sadd has been named Charleston W.Va. 2015 “Lawyer of the Year” in the practice area of Eminent Domain and Condemnation Law.

Last year Lewis Glasser attorney Martin Glasser was named the Best Lawyers’ 2014 Charleston-W.Va. Corporate Law "Lawyer of the Year."  In 2013 Richard Gottlieb was named Best Lawyers' 2013 Charleston, W.Va. Oil & Gas Law “Lawyer of the Year”.

Tuesday, August 12, 2014

LGCR's Nick Casey Elected Treasurer Of American Bar Association

Nick Casey, a member of Lewis Glasser Casey & Rollins PLLC, has been elected Treasurer of the American Bar Association.  Casey, who is part of the law firm's natural gas practice, assumed his leadership position this week during the ABA's 2014 Annual Meeting in Boston. As Treasurer, Casey will serve the national association as a member or a liaison to various internal entities including the executive committee, audit committee, retirement program and endowment.

"I am honored to be elected to this important leadership position with such a prominent organization as the American Bar Association,” Casey said. “Many important legal matters are facing consideration on a national basis, including ones such as privacy protections, regulatory powers, discrimination matters, civil rights and criminal justice,” Casey noted. “Through my role as part of the ABA's leadership team, I will help to ensure that the views of West Virginia's legal community and citizens will be considered on important policy matters that come before the ABA."

Columbia Pipeline To Invest $1.75B In Marcellus, Utica Region

Columbia Pipeline Group announced plans today to invest $1.75 billion to expand transportation in Marcellus, Utica Region.  The investment in infrastructure will enable the pipeline company to transport up to 1.5 billion cubic feet per day (Bcf/D) of natural gas from Marcellus and Utica production areas to markets served by its Columbia Gas Transmission (Columbia Transmission) and Columbia Gulf Transmission (Columbia Gulf) pipeline systems.

Click to read the company's press release.

Wednesday, August 6, 2014

'Let The Good Times Flow' - Marcellus Shale Gas Production Hits Record

Marcellus shale gas production continues to increase at a very significant pace and set a record in July...and a record for the U.S. -
http://m.bizjournals.com/pittsburgh/blog/energy/2014/08/marcellus-shale-gas-production-sets-record-in-july.html?r=full

Tuesday, July 29, 2014

Ohio Supreme Court To Determine Dormant Minerals Act Issues

The Ohio Supreme Court has accepted two certified questions from the U.S. District Court for the Southern District of Ohio in Corban v. Chesapeake Exploration, L.L.C..  First, the Court will determine whether the 2006 or the 1989 version of the Ohio Dormant Minerals Act applies to claims asserted after 2006.  The Court will then decide whether delay rental payments during the primary term of an oil and gas lease constitute a “title transaction” and “savings event” under the Dormant Minerals Act.  Much of the DMA litigation in Ohio attempts to apply the 1989’s automatic abandonment to claims asserted after the 2006 version of the DMA was passed.  Therefore, if the Court were to determine that the 2006 version applies to such claims, this may curtail some of the growth in DMA lawsuits.  We will continue to monitor DMA litigation. 

Please do not hesitate to contact us with any questions regarding any DMA issues. For more information, please contact Paul Garinger in LGCR's Columbus office at (800) 695-6958 or email pgaringer@lgcr.com.

Tuesday, July 22, 2014

LGCR Environmental Attorney Publishes Article On Chemical Spill In ABA Newsletter

Joseph Jenkins, an oil and natural gas environmental, energy and natural resources associate at Lewis Glasser Casey & Rollins PLLC, recently wrote an article on the January 9, 2014 chemical spill in Charleston, West Virginia.  His article was published in the nationally distributed Trends, ABA Section of Environment, Energy, and Resources Newsletter (Vol. 45 No. 6, July/August 2014).  The article focuses on the regulatory landscape surrounding the spill and the state’s legislative response that culminated in the recently passed Aboveground Storage Tank Act and Public Water Supply Protection Act.  To read his article, please click here.

Wednesday, June 11, 2014

Richard Gottlieb To Speak AT WVONGA's Spring Meeting

Richard Gottlieb, managing member of LGCR and head of the firm’s natural gas practice, will be providing a presentation at the upcoming Spring Meeting of the West Virginia Oil & Natural Gas Association.  That meeting will be held June 16-18 at Glade Springs Resort in Daniels, W.Va. Gottlieb will provide a presentation on “Recent Significant Oil and Natural Gas Litigation in West Virginia, Ohio and Pennsylvania.”  Gottlieb’s remarks will concentrate on challenges by lessors to validity of leases, lease extensions, and lease forfeitures.

W.Va. DEP Opens Registration Period For Aboveground Storage Tanks

Provided is a statement from the W.Va. DEP:

As part of its work to implement a new Aboveground Storage Tank Regulatory Program, the West Virginia Department of Environmental Protection (DEP) today opened the registration period for tank owners to submit information required for a statewide inventory. Any tanks that are subject to the Aboveground Storage Tank Act (Senate Bill 373) that are not registered with the DEP by Oct. 1 will be out of compliance with state law. The legislation gave the DEP until July 6 to get the registration and inventory process ready but the agency worked to launch registration early so that tank owners would have more time to submit the required information.

The law, drafted in response to a Jan. 9 chemical spill that contaminated the drinking water of approximately 300,000 West Virginia residents, was passed by the Legislature in March and went into effect June 6. It applies to all aboveground storage tanks located in the state that are large enough to hold at least 1,320 gallons of fluid, are in one place for more than 60 days, are 90 percent or more above ground and are not considered “process vessels” as defined by the legislation. One common example of “process vessels,” which are exempt from the program, would be sewage treatment tanks.
Registration information is being collected online through the agency’s Electronic Permitting/Electronic Submission System (ESS) so that data can quickly and easily be stored and accessed.

Companies that already use ESS for permit applications and/or discharge monitoring reporting can use their existing user IDs and passwords. Tank owners who do not already have ESS user IDs and passwords need to visit the DEP’s Aboveground Storage Tank web page for instructions on how to gain access to the system.

The page, www.dep.wv.gov/tanks, also includes a complete explanation of the program requirements and deadlines, a survey to help tank owners determine if they need to register and links to useful information such as frequently asked questions, nationally recognized standards for tanks, and public input received by the agency about the rules for the program.


Questions about the new law and requirements can be directed to Joe Jenkins, an environmental attorney with Lewis Glasser, at jjenkins@lgcr.com.

Tuesday, June 10, 2014

W.Va. Legislature To Study Several Oil, Natural Gas Matters - Including Lease Integration

The West Virginia Legislature has outlined its legislative interim studies for 2014, and there are a number of oil and gas matters that lawmakers will be examined over the coming months.

Key among these will be another study of “lease integration” by the Joint Standing Committee on Judiciary, and this study will focus on the feasibility of various methods to compensate persons affected by lease integration.  A study of how to handle drill cuttings also will be examined by the committee.

The Joint Legislative Oversight Commission on State Water Resources was assigned two topics:  HCR 51 — examining the need for interconnectivity and other improvements in West Virginia’s water resources and SCR 98 — examining the management of contaminants that can impact public water quality and distribution.

Two other matters will be taken up as part of interim studies - studying “workplace safety issues generally” and “needs or education requirements for future Marcellus driven industries.”  As of  this time it is not clear which committees will be assigned these topics to study.

Lewis Glasser, and its government relations affiliate LGCR Government Solutions, will be tracking and monitoring these matters during the monthly legislative interim meetings across the state.

Wednesday, May 28, 2014

WVDEP Launches New Web Site For Aboveground Storage Tanks

West Virginia DEP’s new website for aboveground storage tanks (AST) has gone live and can be found here: http://www.dep.wv.gov/WWE/abovegroundstoragetanks/Pages/default.aspx.  This website has been created to assist the regulated community in complying with the new AST statute passed as part of the sweeping SB373 addressing January’s chemical leak and contamination of drinking water in Charleston, W.Va. 

On the website, WVDEP sets forth important, upcoming deadlines to keep in mind: June 6th – statute becomes effective; June 10th  - registration anticipated to begin; September 1st – deadline for NPDES general permit holders with ASTs within a zone of critical concern to apply for an individual NPDES permit; and October 1st – all ASTs must be registered.  Additional deadlines follow regarding specific requirements of the statute for submission of spill prevention response plans (December 3rd) and inspection and certification of ASTs by qualified persons (January 1, 2015).

The site is still under construction and more information will be added as WVDEP continues the rulemaking process, and policies and forms are drafted for use.  Some of the currently available information incudes copies of the public comments submitted as part of the informal, preliminary rulemaking process (http://www.dep.wv.gov/WWE/abovegroundstoragetanks/Pages/ASTPublicInput.aspx) and an FAQ explaining some of the statute’s requirements (http://www.dep.wv.gov/WWE/abovegroundstoragetanks/Pages/FAQ.aspx).  If you are still unsure as to whether you must register your AST, WVDEP has also prepared a short survey to help answer that question:  https://apps.dep.wv.gov/ast/astsurvey.cfm.

LGCR’s Joseph Jenkins, an environmental and oil and gas attorney, will continue to monitor WVDEP’s rulemaking progress and provide important updates.  In the meantime, should you have any questions please feel free to contact him at jjenkins@lgcr.com or 304-345-2000. 

Wednesday, May 21, 2014

WVDEP Begins Registration, Rule-Making Process For Aboveground Storage Tanks

West Virginia's DEP will begin accepting online registrations for aboveground storage tanks soon after June 6th – the effective date of the new Aboveground Storage Tank Act recently passed by the West Virginia Legislature.  Although registration isn’t required until the Act’s October 1st deadline, WVDEP is wanting to ensure everyone has sufficient time to register.  WVDEP has also started the rule-making process for the new legislation and recently accepted preliminary comments from stakeholders.  A formal commenting period will take place once a draft set of rules is released – likely in mid-July. 

LGCR’s Joseph Jenkins, an environmental and oil and gas attorney, will continue to monitor WVDEP’s rulemaking progress and provide important updates.  In the meantime, should you have any questions please feel free to contact him at jjenkins@lgcr.com or 304-345-2000.

Monday, May 5, 2014

Media Scrutiny Focuses On Deaths Occurring In State's Natural Gas Industry

Provided are recent stories that show heightened media scrutiny of the state's natural gas drilling and production industry:


AP IMPACT: Deadly side effect to fracking boom -
http://www.statejournal.com/story/25431053/ap-impact-deadly-side-effect-to-fracking-boom

Charleston Gazette: Deaths increase in West Virginia oil, gas industry -
http://www.wvgazette.com/article/20140504/GZ01/140509776/1101

Tuesday, April 15, 2014

West Virginia's Utica Shale Resource -- The Next Boom?

Two articles have been published recently that highlight growing interest in the Utica shale formation in West Virginia. Typically, northern and northcentral West Virginia have been attractive because of the prolific Marcellus formation.  Now, drillers are moving quickly to develop the state's lower Utica shale resources:
Utica Shale Rush Comes to W.Va.
The Wheeling Intelligencer, April 13, 2014
http://www.theintelligencer.net/page/content.detail/id/598764/Utica-Shale-Rush-Comes-to-W-Va-.html?nav=515

Utica's Next Frontier Moving To West Virginia, Pennsylvania
NGI Shale Daily, March 26, 2014
http://www.naturalgasintel.com/articles/97844-uticas-next-frontier-moving-to-west-virginia-pennsylvania

Monday, April 14, 2014

ODNR Announces New Permit Conditions For Drilling Near Known Faults or Seismic Activity


On April 11, 2014, the Ohio Department of Natural Resources announced that “New permits issued by ODNR for horizontal drilling within 3 miles of a known fault or area of seismic activity greater than a 2.0 magnitude would require companies to install sensitive seismic monitors.  If those monitors detect a seismic event in excess of 1.0 magnitude, activities would pause while the cause is investigated.  If the investigation reveals a probable connection to the hydraulic fracturing process, all well completion operations will be suspended.”  ODNR also announced that it will develop new criteria and permit conditions for new applications in light of this change in policy and will review previously issued permits that have not been drilled.  ODNR’s new permit conditions are likely in response to recent seismic events in areas of hydraulic fracturing. 

Here is a link to ODNR’s announcement:
http://oilandgas.ohiodnr.gov/oil-gas-home/post/ohio-announces-tougher-permit-conditions-for-drilling-activities-near-faults-and-areas-of-seismic-activity

For more information on these matters, please contact Paul Garinger at pgaringer@lgcr.com.

Ohio Appellate Court Affirms Automatic Vesting of Severed Mineral Interests Under Ohio’s 1989 Dormant Minerals Act

The Ohio 7th District Court of Appeals, in Walker v. Noon, held on April 3, 2014, that severed mineral interests automatically revert back to the surface owner under the 1989 Dormant Mineral Act. The Ohio Appellate Court held that the 1989 version of the Dormant Mineral Act automatically vested a surface owner with a severed mineral interest where no savings events occurred within the statute’s look-back period.  The Appellate Court further held that the notice requirements of the 2006 amendment to the Act do not apply retroactively.  The Appellate Court also reaffirmed that a severed mineral interest was not the subject of a title transaction that only conveyed the surface with a restatement of a prior mineral reservation.   This 7th District Decision adds further clarity to the Dormant Mineral Act issues that continue to arise in Ohio’s trial courts.

To learn more, please contact Paul Garinger at pgaringer@lgcr.com.

Friday, April 11, 2014

OHIO EPA Adopts New Air Pollution Rules For Horizontal Wells

On April 4, 2014 the Ohio EPA issued new emission rules (click to see) for horizontal oil and gas well sites.  The new rules are aimed at what the EPA calls “fugitive emissions” from leaking valves or connectors in drilling equipment.  The EPA’s stated goal is to stop emissions that can become smog and methane.   Companies are now required to scan well-site equipment quarterly using a device that can detect potential pollutants.  Any discovered leaks must be fixed within five days and repair reports submitted to state regulators.  The new EPA rules only apply to horizontal wells, which studies show may emit up to twice the methane of traditional vertical wells.  Ohio is the third state to adopt stricter fugitive emissions rules over the last six months, following Wyoming and Colorado.

For more information, please contact Paul Garinger at pgaringer@lgcr.com.

Tuesday, March 11, 2014

LGCR Overview: State's New Storage Tank Regulatory Bill And Impacts On Natural Gas

The W.Va. Legislature passed a comprehensive bill (SB 373) in the last hours of the 2014 regular session in an attempt to address the causes of a recent chemical spill in West Virginia that contaminated the water supply of 300,000 people.  The bill will put into place new regulatory requirements on aboveground storage tanks and, hopefully, will prevent similar incidents from occurring again.  The bill had a tumultuous journey from its initial introduction, going through five committees, undergoing debate of more than 100 amendments and working of several drafts before reaching its final configuration. 

Although the official language of the bill has not been formally finalized (as it takes a few days to prepare the enrolled bill for the Governor’s signature), the bill and last-day amendments can be pieced together for a final analysis of what SB373 ultimately entails.
The bill creates a broad and expansive regulatory program that covers many industries beyond the oil and natural gas industry.  What follows is a summary of the provisions most likely having a direct impact on oil and natural gas operations:

1. The bill consists of three distinct parts.  The first amends the Water Resources Protection and Management Act (W. Va. Code 22-26-1, et seq.) to update the reporting of water usage throughout the state.  This part will have little, if any, impact on oil and natural gas operations because those operations using large amounts of water are already required to use water management plans by the Horizontal Well Act and therefore is not discussed further.  The other two parts however may have an impact upon oil and gas operations.  The second consists of a new regulatory program for aboveground storage tanks, The Aboveground Storage Tank Act (“ASTA”), similar to the existing program for underground storage tanks.  The third and final creates The Public Water Supply Protection Act (“PWSPA”) and expands upon the Bureau of Public Health’s source water assessment protection program (W. Va. Code 16-1-1, et seq.).
2. The ASTA requires registration of every AST, whether operational or nonoperational, within the state.  Implementation of the registration will begin soon after the effective date of the legislation which is June 6, 2014 and all ASTs must be registered by October 1, 2014.  Additionally, WVDEP will likely begin the rulemaking process promptly because any rules, if to be reviewed by the Legislature during the 2015 regular session as required by the Act, will need to be initially filed sometime in June or July.  The rules will provide additional detail on the implementation of SB373 and will include the amount of the fees, permitting procedures, applicable standards, requirements for installation, inspection and monitoring and permit exemptions.
3. Whether an AST is subject to registration under the Act is dependent upon the definition of AST.  Beyond the basic definition that the tank’s capacity be 90% aboveground and constructed to contain fluids that are liquid at standard temperature and pressure, the definition excludes: tanks that are 1320 gallons or smaller; process vessels; temporary or mobile tanks that are on location for less than 60 days; railroad freight cars, barges and boats; and swimming pools.  Note that the definition for ASTs attempts to incorporate EPA’s Spill Prevention, Control and Countermeasure (“SPCC”) regulation’s applicability threshold of greater than 1320 aggregate gallons of oil.  In the ASTA, the definition states that ASTs are defined as containing more than 1320 gallons of fluid per tank, not in the aggregate and not just limited to oil.  Smaller aboveground storage tanks are thus excluded from regulation under the ASTA.  
4. In addition to registration under the ASTA, a permit may be required.  Although an oil and gas operation may need to register the AST it may not have to obtain a permit because the following are exempted from the ASTA’s permit requirements: pipeline facilities; liquid traps or associated gathering lines; surface impoundments, pits, ponds or lagoons; and ASTs required to have spill prevention control and countermeasure plans pursuant to EPA’s SPCC regulation (40 CFR 112).  Furthermore, WVDEP is granted explicit authority to designate additional categories of ASTs as exempt from the permitting requirement, if the ASTs are sufficiently regulated under another program; or WVDEP can incorporate the ASTA’s requirements into existing NPDES permits and well work permits to alleviate the need for a separate permit.  The permit exemption most likely to be of benefit to oil and gas producers is the EPA SPCC regulation exemption as many of the new, larger horizontal well sites with several tanks are more likely to be required to have a spill prevention control and countermeasure plan.  Otherwise, practically speaking, the new AST standards set forth in the ASTA will likely be incorporated by WVDEP into existing programs, including the Office of Oil and Gas’s well work permits, because those programs generally have few, if any, specific AST requirements. 
5. If required to obtain a permit under the ASTA, additional regulatory requirements apply including: performance standards developed by WVDEP or nationally-recognized tank standards; annual inspections by certified personnel; annual inspections by WVDEP of ASTs in zones of critical concern; monitoring, testing and leak detection; records and reporting requirements; corrective action plans; spill prevention response plans; notice to public water systems, including those that use groundwater; signage; and fees.
6. The PWSPA, along with amendments to the Bureau of Public Health’s source water assessment protection program,  applies to ALL potential sources of significant contamination (“PSSC”), regardless of how they are stored, located in a zone of critical concern above a public water system’s surface water intake or groundwater intake where the groundwater is influenced by surface water.  The PWSPA is limited geographically by the zone of critical concern, which is defined as ¼ mile downstream from an intake and upstream of the intake a distance calculated by the time it takes water in the principal stream to travel five hours plus 1000’ measured horizontally from each bank of the principal stream and 500’ from each bank of tributaries to the principal stream.  However, it extends beyond ASTs by requiring registration of all PSSC which are defined as facilities or activities that store, use or produce compounds with potential for significant contaminating impact if released into the source water of a public water supply.  Note that PSSC is not limited to fluids, but any compound with the potential to significantly contaminate a source water.
7. The PWSPA also has a two-step process.  First, all PSSC must be registered.  Therefore, if an oil and gas operation in a zone of critical concern currently stores, uses or produces a compound that could significantly contaminate a public water supply if released into the source water, then that compound must be registered.  Second, if WVDEP determines that additional regulation is in the public interest in protecting source waters and the PSSC is not currently permitted or subject to regulation under another WVDEP program, then WVDEP has the discretion to require a permit.  Given that most, if not all, oil and gas operations are subject to regulation, those operations will likely find it rare to be subjected to the PWSPA’s permitting requirement.  However, there are few specifics regarding the permitting program, which WVDEP will need to fill in the gaps via rulemaking, and since this is a new program, only time will tell on how the WVDEP fully implements the PWSPA.
8. Of significant importance is the requirement within the PWSPA to obtain an individual permit in lieu of a general permit if the permittee has an AST, as defined by the ASTA, on a site located within a zone of critical concern.  Two general permits associated with oil and gas operations may be affected by this requirement: the general permit for stormwater associated with oil and gas construction activities and the general permit for hydrostatic testing of pipelines.
9. Additional provisions in both acts provide for administrative, civil or criminal penalties for violations of the acts and for an appeal process to the Environmental Quality Board if a person is aggrieved or adversely affected by an order of the WVDEP under the acts.

There are many more specifics to the bill, and it will not be until WVDEP goes through the rulemaking process that will we have a clear picture of how everything will be implemented and potentially incorporated into existing regulatory programs. LGCR and its government relations affiliate, LGCR Government Solutions, will monitor the rulemaking process and provide additional updates as they are available.  Please contact Joseph Jenkins, LGCR’s environmental regulatory attorney, if you have any questions.     

Monday, March 10, 2014

Lawmakers Fail To Adopt Two Constitutional Amendments

Two proposed constitutional amendments that would have affected the state's natural gas industry did not make it through the Legislature's 60-day regular session.  That session ended this past weekend.

SJR 12—Proposing Water Resources Protection Amendment to the Constitution.
This proposed amendment sought to constitutionally define the state’s rights of ownership, control and regulation over water resources on and under the state.  The Senate supported this amendment, which was strongly advocated by Senate President Jeff Kessler and Majority Leader John Unger.  The House refused to support the proposed amendment on Saturday evening when the Resolution received less than a 2/3s majority.  There were significant questions raised in the House by delegates concerned over how existing property and water rights might be affected if the State were given a position of constitutional primacy over water resources.

SJR 14—Proposing the Future Fund Amendment to the Constitution. 
This proposed amendment sought to provide constitutional protections to the “Future Fund” that were strongly advocated by Senate President Kessler as a way to guarantee that future Legislatures would be restricted in their access to the assets of the Fund.  Senior House Democratic leaders and Republicans had serious concerns about enshrining such strong protections in the state Constitutions for a reserve fund that was to be built using historically inconsistent severance tax collections, and when other needs of the State may have precedence in any given year rather than building up another reserve account in state government.  The Senate did support the passage of the amendment, but the House failed by a wide margin to provide the 2/3 vote needed to place the issue on the November ballot.

Legislation Related To Solid Waste Disposal Of Drill Cuttings Fails During Session

Lawmakers failed to enact HB 4411 (acceptance of drill cuttings by commercial solid waste facilities) during the 2014 regular legislative session, which ended March 8.  This bill was necessitated by the fact that commercial solid waste facilities in the oil and natural gas producing areas of the state were operating under a special ruling from DEP, which permitted them to accept drill cuttings even if that action caused the facility to exceed its approved monthly waste cap.  Environmental groups and a number of key members of the House of Delegates targeted this bill as a way to impede the natural gas industry’s Marcellus development by seeking requirements that would have eliminated the ability of waste facilities to accept drill cuttings unless they had already applied for a new permit to construct a site specifically dedicated to the disposal of cuttings.  The Senate had a totally opposite view that took the interests of the natural gas industry and the waste disposal facilities into account.

The bill went to a conference committee of delegates and senators and an agreement was reached but not implemented on a timely basis for reasons that only the chairman of the House conference committee, Delegate Barbara Fleischauer (D-Monongalia) can explain.  As a result, no bill was passed and, while the current order of the DEP Secretary remains in place to protect the acceptance of drill cuttings by the waste disposal facilities affected by this issue, there is a fear that litigation will be brought challenging the Secretary’s authority to take this action.  There is no indication at this point whether this issue would be added to the Legislature’s agenda while they are still in town this week to complete next year’s fiscal budget.

West Virginia Legislature Enacts Future Fund

The 2014 regular session of the West Virginia Legislature completed its work this past weekend with enactment of S.B. SB 461 — Creating the Future Fund. This legislation was the pet project of Senate President Kessler, who sought for the last two legislative sessions to create a future reserve fund based on the anticipated growth in oil and natural gas severance tax revenues and modeled after a similar reserve fund operated by North Dakota.  While some in the Senate had questions about the advisability of the strict reserve fund standards sought by Kessler, the bill passed the Senate nearly unanimously.  However, House leaders from both parties took a much dimmer view of the proposal because of their belief that the law would place significant constraints on future governors and legislators in meeting the ongoing and capital needs of the state.  Republicans believed that a strict requirement to place a specific proportion of oil and natural gas severance tax revenues into the protected fund could even result in pressures to increase severance taxes if budget priorities could not be met without having access to tax revenues that were diverted into the reserve fund.

The final version of SB 461, which passed through both houses late Saturday, embodies the protections that were demanded by the House.  As such, the bill was broadened to include all forms of natural resources severance taxes in the Fund, and was also amended to establish a variety of complex mechanisms that would allow the Legislature to avoid making contributions into the Fund if the state’s revenues were in decline or if other critical priorities needed funding.  SB 461 will now go to Governor Tomblin for his review.

Friday, February 28, 2014

LGCR Provides Update, Analysis On Latest Version Of Storage Tank Regulation Bill

To address the chemical leak in the Elk River that occurred on January 9th, Senate Bill 373 has been winding its way through the West Virginia Legislature.  Since we last reported, the bill has undergone substantial changes in the House and may undergo even more changes as it is still being debated before the House Judiciary Committee...and is slated to go to the House Finance Committee thereafter.  Although it is too early to say with certainty what the final bill may look like, there are a few things those in the oil and gas industry should be aware of as the bill currently stands:

1. The bill now consists of three distinct parts.  The first part still includes the bill’s original purpose to amend the Water Resources Protection and Management Act to update the reporting of water usage throughout the state.  The second part consists of a new regulatory program (The Aboveground Storage Tank Act (ASTA”)) for aboveground storage tanks, similar to the existing program for underground storage tanks.  The third and final part creates The Public Water Supply Protection Act (“PWSPA”) which expands upon the Bureau of Public Health’s source water assessment protection program.

2. The ASTA that was originally included in the Senate’s version of the bill had several exemptions for oil and gas operations that were permitted under other programs.  The proposed bill in House Judiciary removes many exemptions and leaves it to the WVDEP to develop rules providing a waiver from the ASTA permitting requirements on the condition that the permitted activity includes certain AST standards set forth in the statute.  Certain exemptions that remain include pipeline facilities, liquid traps or associated gathering lines, surface impoundments, pits, ponds or lagoons and process vessels.  Note however, that no AST, as defined in the Act, is exempt from the inventory and registration process set forth in the Act.  Practically speaking, the new AST standards set forth in the ASTA will likely be incorporated by WVDEP into existing programs, including the Office of Oil and Gas’s well work permits.

3. The proposed definition for ASTs attempts to incorporate the EPA’s Spill Prevention, Control and Countermeasure (“SPCC”) rule’s applicability threshold of greater than 1320 aggregate gallons of oil.  In the ASTA, the definition states that ASTs are defined as containing more than 1320 gallons of fluid per tank, not in the aggregate and not just limited to oil.  Smaller aboveground storage tanks thus would be excluded from regulation under the ASTA.

4. The PWSPA, along with amendments to the Bureau of Public Health’s source water assessment protection program,  applies to ALL potential significant contaminate sources, regardless of how they are stored, located in a zone of critical concern above a public water system’s surface water intake or groundwater intake where the groundwater is influenced by surface water.  Potential significant contaminate sources is left undefined in the Act.

5. Main distinction to remember regarding the ASTA and PWSPA is that ASTA applies to aboveground storage tanks throughout the state while the PWSPA applies to potential significant contaminate sources within the zone of critical concern.

6. Finally, one of the major concerns with the PWSPA is that it prevents WVDEP from issuing a general NPDES permit to any operation within the zone of critical concern and requires that operation to seek an individual permit instead.  Individual permits take more time and resources to obtain so this provision could have a significant impact.

LGCR and its government relations affiliate, LGCR Government Solutions, are monitoring this bill and will provide additional updates.  Please call Joe Jenkins, LGCR’s environmental regulatory attorney, if you have any questions. 

Wednesday, February 26, 2014

Study: Significant Long-term Economic Impacts Of Petrochemical Investment In W.Va.

A new research study shows significant potential long-term economic impacts of petrochemical investment in West Virginia and the Appalachian Basin. The study, “Building Value from Shale Gas: The Promise of Expanding Petrochemicals in West Virginia,” was prepared by Dr. Tom Witt, Chief Economist at Witt Economics LLC and a Professor Emeritus at West Virginia University.  His study was presented Tuesday to the Legislature’s natural gas caucus.

“The presence of an ethylene cracker and associated polyethylene plants would be a catalyst for even more investment, revitalizing the chemical industry in West Virginia and the region,” according to a press release on the new study.

“Construction would have an economic impact of more than $2 billion in West Virginia, with ongoing operations driving more than $110 million in annual employee compensation and more than 2,000 permanent jobs during the life of the facility. Downstream investments in end-use polyethylene converter plants could create more than 900 additional jobs and $280 million in annual output,” the study notes.

Click to read more.

Thursday, February 20, 2014

Drilling Unitization Bill To Die In House Committee

Horizontal producers likely will have be wait another year to get a drilling unitization law enacted by the West Virginia Legislature.  Yesterday the House Energy Committee adjourned without taking any action on H.B. 4558, the proposed fair pooling act that was developed jointly by WVONGA and IOGA.  The committee had received a full briefing on the provisions of the proposal from its staff counsel and had barely gotten into asking questions on various aspects of the bill when the chairman announced that, because there was a meeting of a major committee (Health), he was obligated to adjourn his meeting.  There were numerous members of the committee who wanted to ask questions, and there were already seven amendments that had filed with the chairman.  However, due to the lateness of the current 60-day session and other procedural rules, H.B. 4588 is not expected to receive further consideration.

Tuesday, February 18, 2014

Drilling Unitization Bill Expected To Receive Committee Action

Legislation that would establish unitization of interests in drilling units in connection with horizontal oil and natural gas wells is expected to be taken up tomorrow by a committee of the W.Va. House of Delegates.  The committee, the House Energy Committee, plans to consider H.B. 4558 tomorrow.  The bill is backed by both West Virginia natural gas associations.  More details about the bill will be provided in the coming days.

Monday, February 3, 2014

Storage Tank Regulation Bill Passes State Senate, Faces Triple Reference In House

The West Virginia Senate has approved its version of a bill, SB 373, that relates to water resources protection and the regulation of above-ground storage tanks. This bill is in response to the tank leak/chemical spill that happened earlier this month in Charleston.  Much work has been put into this bill, and senators worked carefully to eliminate duplicative regulations before sending it to the House of Delegates.

The bill was referred to three committees in the W.Va. House of Delegates, which is an unprecedented action for a bill that is an active part of the governor’s agenda and which the governor wanted as a quick priority in the House.

House Judiciary Chairman Tim Manchin has indicated he does not believe SB 373 "goes far enough" and is expected to split it into two separate bills and remove many of the provisions that seek to prevent excess and inefficient regulation.

A public hearing on SB 373 will be held this evening at 5:30 p.m. in the House chamber.  The hearing will be streamed online at the website of the Legislature or over broadcast statewide over West Virginia Public Television.
News articles:
House Defends Triple Committee Reference of Senate's Water Bill
Senate leadership questions House Speaker's actions on chemical spill bill
Senate passes chemical storage tank bill

Saturday, January 18, 2014

W.Va. Lawmakers Begin Consideration Of Stricter Storage Tank Regulations

The West Virginia Legislature has begun consideration of a legislative proposal in response to last week’s chemical spill emergency in Charleston.  The new legislation, the Water Resources Protection and Management Act (SB 373), would amend and establish new storage tank regulations.  The bill, as drafted, contains several provisions that should be noted by horizontal producers:
1.      Applies to ALL aboveground storage tanks that hold ANY fluid except water.  This technically includes your gas grill’s propane tank and would apply to the vehicle LNG and Propane filling stations if the storage tanks are maintained aboveground – i.e. there is no size restriction.
2.      No specific provision regarding oil and gas operators but statute would most definitely apply to tanks installed on well pads to collect and separate the constituents of wet gas as well as your old-school condensate tanks.
3.      Although the connotation of aboveground storage tank envisages a fixed tank at one location, there is no separation between a tank fixed in one location or a mobile tank.  This could have enormous implications for hydraulic fracturing tankers delivering fracturing fluids to the well site.
4.      No specific amount of civil penalty is mentioned and leaves administrative penalty amounts up to WVDEP.  Fees are left up to WVDEP as well.
5.      In addition to leaving administrative penalty amounts and fees up to WVDEP, most of the statute intends to pass along the substance of the regulatory program to WVDEP to develop via rulemaking.


News article:
Bills introduced to regulate storage tanks
http://www.register-herald.com/todaysfrontpage/x1767985524/Bill-introduced-to-regulate-above-ground-storage-tanks

It has been reported that the Governor plans to introduce his own bill on this matter.


LGCR and its government relations affiliate, LGCR Government Solutions, are monitoring this bill and will provide additional updates.  Please call Joe Jenkins, LGCR’s environmental regulatory attorney, or me if you have any questions.

Wednesday, January 8, 2014

Legislative Interim Committee Recommends Water Usage Bill, Including Fracking Provision

The Joint Legislative Oversight Commission on State Water Resources this week adopted a proposed interim recommendation for legislative action (click to read proposed bill) in the 2014 regular legislative session that would:  modify the definition of a "large quantity user" to become a user of 300,000 gallons of water in a 30-day period; would remove the current 10% variance provision for reporting of water usage by requiring an actual monthly report; would require any agency that contributes funding to the statewide water gauge system to report to USGS and the Legislature if that agency can no longer contribute funds; would require the depth of groundwater reached to be reported by producers to DEP in addition to the current requirement for reporting longitude and latitudes for well locations and; would require annual water usage reports to be made to DEP. In addition, an amendment to the proposed interim bill was advanced by Delegate Bill Hamilton that would require any usage of water found during the course of Marcellus production in the fracking of the well where such water was discovered to also be reported.

The commission is co-chaired by Senate Majority Leader John Unger and Delegate Mike Manypenny.

The 2014 session of the West Virginia Legislature began today.

Monday, January 6, 2014

Legislative Committee Reviews Landfill Waste Disposal Of Drilling Material

The W.Va. Legislature's Joint Standing Committee on the Judiciary met January 5, 2014 to discuss the depositing of drill cutting material and waste into landfills as a result of drilling activities across West Virginia.

West Virginia University (“WVU”), which had conducted a sampling of several vertical drilling sites, shared findings of a study it had done. WVU’s study provided that certain components were elevated, but not alarming.  It was suggested that additional information be collected and studied including the best way to determine how to obtain samples and how to characterize the waste.  Additionally, it was suggested that a sampling of horizontal drilling sites take place.

There was discussion about the general concern of radioactive elements within the rock being brought to the surface during drilling. While the element of radioactivity appears to be low, some thought additional studies would be beneficial.

The W.Va. Department of Environmental Protection informed the interim committee that it has plans to require a very similar approach to that which is already in place in Pennsylvania.  This approach will help with properly detecting radiation and will also improve the safety of workers at landfill sites.

Article:

Marcellus drill cuttings study falls short
Little usable data gathered on drill cuttings, waste
The Dominion Post, Jan. 6, 2014
http://thedpost.com/Marcellus-drill-cuttings-study-f