WVONGA Legislative Issues 2015
- Ability to construct well pads and install equipment before getting permits. The West Virginia Air Pollution Control Act requires that air quality permits be obtained prior to beginning construction of emission sources, and the Natural Gas Horizontal Well Control Act prohibits any earth disturbing activities before a well work permit can be issued. Both statutes should be amended to allow well pad construction and equipment installation (but not operation) before a permit is issued.
- Aboveground storage tanks (“ASTs”). The Aboveground Storage Tank Act that was adopted during the 2014 Session is substantially flawed, and efforts will be made to amend it during the 2015 Session, to limit its effect to those ASTs that are greater than 10,000 gallons and are located within zones of critical concern, and to reduce compliance burdens. Moreover, a legislative rule also will be reviewed by the Legislature at the same time that the Act itself will be under reconsideration. This rule must be monitored closely to ensure that it is rejected by the Legislature or is amended to impose a more reasonable regulatory program.
- Drill cuttings rule and statutory amendment. In response to the 2014 amendments to the Solid Waste Management Act relating to the disposal of drill cuttings, WVDEP has proposed amendments to the Solid Waste Management Rule (33 C.S.R. 1). In light of statements by WVDEP representatives regarding the minimal radiation levels observed in drill cuttings, and burdens on operators that are imposed by the Act and the Rule, substantial changes to the Act and/or the Rule are needed. Additionally, statutory or regulatory changes may be needed to specifically address regulation of technologically enhanced naturally occurring radioactive materials (“TENORM”).
- Flexibility in air permitting. Oil and gas well emissions are unusual, in that emissions often cannot be reliably predicted in advance, and this leads to inaccuracies in permit applications, operational inflexibility, vulnerability to emissions limit violations and the need to obtain time-consuming permit modifications. A statutory change to the Air Pollution Control Act to authorize site-wide permit limits and alternative operating scenarios would give operators more flexibility to permit sites for large emissions when a well first comes on line, and to shift to different permit limits when emissions have stabilized.
- Management of asbestos-containing wrapped pipeline. Historically, asbestos-containing coal tar wrap was used as a coating on buried steel pipe as an anti-corrosion measure. WVDHHR-OEHS and WVDEP have taken the position that when wrapped pipe sections are removed, the entire length of the pipe section that is removed is the disturbed section, rather than the small areas at either end of the removed segment where the actual pipe cutting occurs. An amendment to the Bureau of Public Health’s asbestos removal regulation has been developed that would only count the actual disturbed area for purposes of applying asbestos-removal regulations, rather than the total linear feet of pipeline retired.
Oil & Gas Operations
- Lease integration/pooling. Continue efforts initiated during the 2013 and 2014 Legislative sessions to promote a bill authorizing the creation of oil and gas horizontal well drilling units combining the interests of lessor/royalty owners, lessee/mineral interest owners, and unknown or unlocatable lessor/royalty owners or lessee/mineral interest owners. Develop a coalition of interested stakeholders to support such legislation.
- Gas utility extension. Support legislation to encourage natural gas utilities to improve and upgrade existing pipelines and to extend natural gas service to unserved or underserved areas of the State. Natural gas utilities would be encouraged to develop multiyear infrastructure programs which will be capital intensive, with the benefit of creating jobs, maintaining safety, and providing more economic natural gas utility service in West Virginia.
General Business Issues
Severance tax on natural gas production. The biggest tax-related issue for the 2015 Legislative Session will be solving the projected shortfall between FY2016 expenditures and FY2016 revenues. It is anticipated that sometime in 2017, the Old Fund Workers Compensation liability will be paid (or its payment will be provided for). This has severance tax implications. In 2005 the Legislature imposed an additional severance tax on natural gas production (4.7 cents per MCF) that under current law will sunset when the unfunded liability of the Workers Compensation Old Fund has been fully paid or provided for. Depending upon the budget situation in 2016-2017 the discussion may be whether to let the additional severance tax sunset or to amend the law, continuing the tax and using the revenues for some other purpose(s). Additionally, there may be an opportunity to pursue an exemption on the severance tax for coalbed methane to encourage capture of methane emissions in light of the increased scrutiny by EPA and others on those emissions.