Recently, Scott Rotruck and Joseph V. Schaeffer addressed local drilling regulations and the impact on West Virginia business development for West Virginia Executive magazine.
As governor, Senator Joe Manchin famously declared West Virginia to be “Open for Business.” Whether motivated by environmental or other concerns, however, some groups believe that, when it comes to the natural gas industry, West Virginia should be anything but. Forsaking the traditional avenue to policy change through Charleston, these groups have turned to local government to advocate additional regulation, moratoria, and even bans. Use of this tactic to oppose natural gas development is hardly unique to West Virginia. Numerous local governments throughout Pennsylvania, Colorado, and Ohio have sought to regulate, suspend, or ban natural gas development within their jurisdictions.
Local government regulation of natural gas development raises an important question, though. Is it legal? The answer to this question naturally is of great interest to the natural gas industry. However, the answer also should interest the business community, generally. Businesses considering a capital investment project, such as the development of a Marcellus Shale well, expect (if not demand) stability and predictability. Ambiguous or inconsistent rules and regulations reduce stability and predictability, increase risk, and diminish a project’s attractiveness. Additionally, any rule that permits local government to regulate, suspend, or ban natural gas development would apply equally to almost any other industry.
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