Raleigh, N.C. — House and Senate lawmakers have worked out their differences over a bill that will make dozens of changes to the state laws governing natural gas drilling.
That bill abandons several provisions that had troubled environmental watchdogs, but it does not include the most controversial drilling law the legislature is likely to pass this session.
Senate Bill 76, dubbed the Domestic Energy Jobs Act, makes dozens of tweaks to how the Mining and Energy Commission and Department of Environment and Natural Resources will regulate natural gas drilling.
It no longer contains language that would have cleared the way for disposing of fluids used in the hydraulic fracturing and horizontal drilling processes – better known as "fracking" – by injecting them into the ground elsewhere. That had drawn objections from lawmakers representing the coastal plains of the state, where residents feared they would become a dumping ground for waste generated by drilling rigs in the Piedmont.
The bill also maintains the current timeline for issuing drilling permits. Current law requires that the Mining and Energy Commission finish drafting rules to govern the fracking process and that the legislature vote on the rules before permits are issued. Earlier drafts of the bill would have removed the requirement for a legislative vote and allowed for a pre-permitting process.
Elizabeth Ouzts, state director for Environment North Carolina, said the bill still "focuses on dirty energy sources of the past – oil and gas – which will threaten our drinking water, our rivers and lakes."
But, she said, the new bill is better than it predecessors from an environmental advocate's perspective.
"Our biggest critique and concern about the previous version of the bill was that it lifted our moratorium on hydro-fracking," Ouzts said. "This version appears to leave the moratorium in place. That's a tremendous improvement, and I think we have the House leadership and (Rep. Mike Stone, R-Lee) to thank for that."
Other environmental groups sounded a similar note.
"On balance, we're encouraged," said Molly Diggins, state director for the Sierra Club.
Still, there are a few specifics in the bill with which that she and other environmentalists are unhappy.
"It’s disappointing that the public’s right to know what the price tag of an oil and gas program is has been hampered," Diggins said, referring to a provision that exempts the bill from the normal cost analysis that measures requiring spending undergo.
Disclosure provision is part of another bill
However, Diggins and others say the most important provision dealing with fracking is nowhere to be found in Senate Bill 76.
Rather, a new law that would limit what the public can find out about the chemicals used in the fracking process has hopscotched through a series of "regulatory reform" bills, the latest version of which, House Bill 74 cleared the Senate on Friday.
In a fracking operation, companies drill into shale rock where gas is lodged, and a mix of chemicals, water and sand are forced into the well to crack the rock and access the gas. The specifics of that chemical mixture, which companies consider to be a trade secret, is the focus of the disclosure provisions.
House Bill 74, which now goes to the House for a potential final vote next week, says that drilling companies must at least temporarily disclose their specific chemical mixtures to DENR and the Mining and Energy Commission – but not to the public. Rather, the industry will be able to post the chemical "families" of some of the ingredients for their fracking recipe but won't have to post the specific chemicals if they are deemed a trade secret.
That lack of public disclosure did not sit well with Sen. Ellie Kinnaird, D-Orange, during debate on the measure.
"Certainly, we can craft something which would allow them to have those chemicals disclosed in a way that does not jeopardize the trade secrets but protects my constituents," Kinnaird said. "I’m not satisfied, nor are my constituents, that this is a safeguard."
Sen. Buck Newton, R-Wilson, advocated for the measure.
"We don’t really need to know the formula. We don’t know the secret formula for Coca-Cola, even though a lot of people drink it," Newton said. "It isn't important that we know what’s in it."
Diggins said that analogy doesn't hold.
"Using the Senate's Coca-Cola analogy, if the use of high fructose corn syrup is a trade secret, the public might only know that a sweetener is used," she said.
Newton told his colleagues that Jim Womack, the chairman of the Mining and Energy Commission, is comfortable that the bill as written would allow the commission to write effective rules.
"The fear-mongering and the 'sky is falling' mentality of the radical environmentalists on this point is simply not founded," Newton said.
Reviewing trade secrets
Womack said Newton was mostly right when he said that the commission did not have a problem with the language in the bill.
Prior versions of the disclosure language "really tied our hands," Womack said.
Those earlier bills would have prevented the commission or environmental regulators from demanding any disclosure of chemical mixtures drilling companies deemed to be trade secrets.
The provision in House Bill 74, which allows the commission to continue writing rules for disclosure and review the chemicals being used, is better that prior versions of the bill, he said.
"We should have some general latitude for the commission to review what is being claimed as a trade secret," Womack said.
The language in House Bill 74 would say the commission could not "take possession" of the trade secret information but could review it.
"What we cannot abide is that we cannot see what is a trade secret at all," he said.
That's because environmental regulators need to know what chemicals companies use in case a problem is discovered down the road or a chemical used in the process is later determined to be dangerous to human health.
"You don't know what you don't know about the environment," Womack said.
If the state doesn't "take possession" of the specific chemical mixes used in the fracking process, how will regulators track down those responsible for problems later?
"We'll work that out," he said. "We will have a way to regenerate what was approved by the commission. ... This bill will give us enough discretion to write the rules so that we can ensure the public safety."
Diggins and others are not so sure. Those rules make it impossible for outside watchdog groups to track the industry, she said.
She pointed to a blog post by Robin Smith, an environmental lawyer and former DENR assistant secretary. Smith writes that having only the temporary ability to review chemicals does not allow regulators to act in case of some future problem.
"While that approach may make the industry more comfortable, it will make it very difficult for DENR staff to have the information needed to provide adequate oversight for drilling operations – a problem that would be compounded over time by staff turnover," Smith wrote. "Allowing a DENR staff person to see the list of fracking chemicals when fracking begins does not ensure the availability of that information to staff five years later."