Raleigh, N.C. — The state's Joint Legislative Commission on Energy Policy voted Thursday to recommend some key changes to the state’s existing laws governing horizontal drilling, or "fracking," for natural gas. The draft legislation approved by the panel will be considered in the short session that begins next week.
Environmentalists are pleased that the draft bill requires fracking operators to give the state a list of the chemicals – even trade secrets – being used in their operation. That’s a significant departure from the position of the state’s Mining and Energy Commission.
The commission had recommended that trade secrets should not be given to state regulators but remain in the custody of the drilling operator, who would have to release the information within 48 hours in case of emergency.
The committee is recommending instead that the state Division of Emergency Management should have that information on hand, kept secure but immediately accessible in case it’s needed by first responders or medical personnel in the event of a spill.
The draft bill also changes the area of “presumptive liability” around horizontal drilling well heads from 5,000 feet to 2,600 feet. Under the current law, the mining operator has to either conduct or pay for testing of wells and waters within that area before and after drilling. Shrinking the area cuts down on the number of tests for which operators would be responsible.
Legislative commission Co-chairman Rep. Mike Hager insisted the change would actually increase, not decrease, the testing buffer area. "You know, it was actually 5,000 feet diameter" in the original law, he told reporters. The change makes it a 2,600-foot radius around the well head.
"We went actually a little extra to get to that half-mile range," he said. "Those are some of the toughest rules in the nation."
But stakeholders from the Southern Environmental Law Center to mining commission Chairman Jim Womack disagreed with Hager, R-Rutherford, noting that the original law doesn't say "diameter" and had instead been interpreted as a 5,000-foot radius. Under that reading, the change would diminish the buffer area.
"It seems to me that they've almost cut that distance in half," said SELC attorney Mary McLean Asbill.
Another key change is already causing consternation among local government groups. The recommended bill would essentially ban city or county governments from taking any action or passing any laws to prohibit fracking or impose conditions on the process.
"It really hamstrings local governments almost completely with regard to drafting ordinances that are just land-use ordinances, really," Asbill noted. "We don't think that's a good idea."
The ban also extends to counties’ ability to levy taxes on drilling operations. The draft bill prohibits county and city governments from charging any type of tax except property tax on any aspect of fracking operations. It also bars cities and counties from collecting in any given year more than 108 percent of the preceding year’s property tax revenue.
Asked why the panel had settled on an 8 percent increase cap, Hager answered, "Well, you've got to start somewhere."
The draft bill also includes more than a half-dozen recommended studies, from the feasibility of a natural gas export terminal on the state’s coast to job training for oil and gas drilling at community colleges.
One study could actually slow the advance of large-scale fracking in the state. The bill requires the Department of Environment and Natural Resources to study the issue of compulsory, or forced, pooling in North Carolina and bring back recommended legislation on the issue by October 2015.
Hager said the additional study of the issue was prompted by concerns about landowner property rights. Compulsory pooling allows gas companies to drill under property without the owners' consent if the company has already secured rights to enough neighboring acres in a parcel. It’s a hot topic for many critics of fracking.
"I think we've got to take a step back. We want to get it right," he said. "We want the economy to thrive, we want the jobs to be created, but we've got to be careful on the personal property rights issue."
According to Hager, lawmakers are still aiming to approve fracking rules and lift the state’s moratorium on the practice by next March. But several experts have said that the geography and geology of North Carolina’s shale gas deposits means forced pooling would be necessary to make drilling here profitable.
With an October 2015 deadline for the compulsory pooling study, it could be May 2016 before legislators take up that issue.
The bill also gives the Mining and Energy Commission an additional three months to finish its work drafting recommended rules. They would be due to lawmakers by Jan. 1, 2015, instead of the beginning of October. The measure compensates for the lost time by speeding up the rules review process.
"We've run into some of these issues that we're just really concerned about, that we need to take a second look at," Hager said.