Arkansas has sufficient regulations to manage the state’s natural gas industry but is running out of grant money for extra help brought in to monitor gas operations, the head of the state’s pollution control agency told lawmakers today.

Teresa Marks, director of the state Department of Environmental Quality, said a $1.09 million grant that allowed her department to hire four additional natural gas inspectors, a supervisor and two enforcement analysts runs out at the end of the fiscal year in June.

“After that, we don’t know of any other source of funding we will have” for the personnel, Marks told a joint meeting of the House and Senate Agricultural, Forestry and Economic Development committees.

ADEQ currently has 21 inspectors to cover the state’s burgeoning natural gas exploration, centered in the Fayetteville Shale play of north-central Arkansas.

Marks comments came as legislators considered five proposed new regulations on the industry, all of which were referred for interim study after stalling in this year’s regular legislative session.

The measures would:

— Place new regulations on water usage by the natural gas industry.

— Require annual inspections of gas wells.

— Mandate studies of all watersheds in the Fayetteville Shale Play.

— Require full disclosure of natural gas drilling chemicals.

— Require bonds for drilling.

Witnesses debated the need for new regulations on an industry widely seen as helping Arkansas to better weather the economic downturn than some other states.

Alan Perkins, a Little Rock attorney representing Arkansas Independent Producers and Royalty Owners, was among those who told lawmakers additional regulations are unnecessary, while Bill Kopsky, director of the Arkansas Public Policy Foundation, said additional regulations to make sure environmental concerns are addressed must be studied.

“We need vigilant inspections and enforcement occurring,” Kopsky said.

“Even today, I have heard that Arkansas is very lax in their oil and gas regulations, and I have heard that Arkansas has some of the most strict regulations nationwide,” said Rep. Homer Linderman, D-Brookland, addressing Marks. “Where are we at on that?”

The ADEQ director said Arkansas compares “pretty favorably nationwide.”

“There are going to be different regulations in other states, maybe they’re dealing with different issues … or different complaints, but we feel like we’re doing pretty well currently,” she said.

According to testimony, ADEQ inspections of drilling operations in the Fayetteville Shale play have risen significantly in the past two years.

Marks credited much of the increase to the hiring of the additional inspectors and enforcement personnel after a 2009 interagency agreement with the state Game and Fish Commission.

Under the agreement, Game and Fish agreed to give ADEQ $1.09 million — some of the revenue the commission received for leasing gas drilling rights on commission land — to hire additional staff to primarily monitor drilling that land.

The agreement ends at the end of the fiscal year.

Some lawmakers were worried that losing the inspectors and other staff would make it more difficult for ADEQ to fully monitor and inspect gas drilling operations.

“What we would have to do is seek other sources of funding,” Marks said.

She said ADEQ is in negotiations with Game and Fish to possibly extend the life of the grant for several more months, noting that a lawsuit filed against the commission over the natural gas leasing rights pushed back the commission’s ability to fund the grant to ADEQ for several months.

“We are behind on spending it because we didn’t get started at the time we thought we would,” Marks said. “We’re negotiating with the commission to extend the (memorandum of understand) to cover the expenditure of that money … after that, we don’t know of any source of funding that we will have.”

During the meeting, Sen. Jason Rapert, R-Bigelow, said that on Nov. 8 the group State Review of Oil & Natural Gas Environmental Regulations (STRONGER), an Oklahoma-based nonprofit, will begin a study on how Arkansas’ rules and regulations governing the natural gas industry compare with other states.

Last month, the state Oil and Gas Commission approved Rapert’s request for the group to conduct the study. Rapert is chairman of the Legislature’s Fayetteville Shale Caucus, a bipartisan group of legislators who represent areas where much of the gas exploration is taking place.

In July, the commission voted to shut down a natural gas drilling injection well and ban any future injection wells in a 1,500-square mile earthquake-prone area of Cleburne and Faulkner counties. Some officials suspect a connection between gas exploration and hundreds of small quakes in the area, though no direct link has been found.

Marks told reporters Tuesday that she welcomes the STRONGER study. She also said the federal Environmental Protection Agency is studying groundwater and air regulations associated fracking, the controversial drilling process used to break through rock to get to underground natural gas deposits.

“We’re going to see how those tests come out. Those reports may indicate that there are some additional regulations that need to come forward,” “Right now we think we have adequate regulations in place.”