House passes fracking bill; foes hope for Perdue veto

House passes bill; foes hope Perdue will veto it

jmurawski@newsobserver.comJune 14, 2012 

  • New provisions The House version of the fracking bill includes several safeguards not found in the version that was approved by the Senate last week. The changes are: • Adds two local elected officials to the Mineral and Energy Commission, the board that would write the regulations to govern shale gas exploration in this state. The Senate version of the commission was largely represented by the oil and gas industry. • Requires that landowners be paid at least 12.5 percent in royalties from the sale of natural gas extracted from their property. The Senate version allowed energy companies to subtract certain expenses from the royalties. • Requires a conspicuous boldface disclosure that property owners who lease their mineral rights to gas exploration companies should secure written approval from their mortgage lenders. Some lenders don’t allow subsurface leasing and could demand repayment of the loan if the landowner signs such a lease. Other provisions in the legislation: The legislation requires that energy companies test groundwater before and after they drill within 5,000 feet of the drill site. Any contamination would be presumed to be caused by drilling and fracking, unless the company could prove otherwise by a preponderance of evidence. Companies that damage drinking water and groundwater would be required to truck in or pipe in drinking water to the property owner. The bill tasks the Mining and Energy Commission, N.C. Department of Environment and Natural Resources and the Consumer Protection Division in the N.C. Department of Justice to study the state’s 1945 law requiring compulsory pooling of property rights. The current laws would force unwilling property owners to let energy companies drill under their land if enough neighbors sign drilling leases.
  • More information Reaction “It’s pretty clear: It’s a safe process.” Rep. Mike Hager, R-Cleveland and Rutherford counties
    “We’re getting ready to put North Carolina on the map of energy production in the years to come.” Rep. Mitch Gillespie, R-Burke and McDowell counties
    “We’re talking about dramatically altering our landscape.” Rep. Pricey Harrison, D-Guilford County
    “Only people who’ve been in government too long can say this is a hurry-up process.” Rep. Paul Stam, Wake County
    "We’re putting the oil and gas company at the helm of this ship.” Rep. Joe Hackney, D-Chatham, Moore and Orange counties
    “Folks, this requires reflection and cooler heads to go slow.” Rep. Bill Faison, D-Caswell and Orange counties
  • More information What happens next The bill goes back to the Senate where it is expected to be approved. If the governor does not veto it, next steps include naming the members of the commission and setting a schedule for the creation of regulations and other related work. The state legislature would have to approve all new regulations and standards before any drilling and fracking permits could be issued. That vote could be at least two years away.

After several hours of personal pleas and pointed debate, the state House approved a controversial bill that would legalize fracking in the state within several years.

But opponents were relieved that supporters appeared to lack the votes needed to override a veto from the governor, who has remained silent on the issue in recent weeks.

The House voted 66 to 43 in favor of the measure that would overhaul the state’s energy policy to allow drilling for natural gas. Proponents had hoped for a stronger show of support, loading the bill with a host of environmental safeguards and public protections.

The legislation now goes back to the Senate, which last week approved a different version of the proposal. That chamber is widely expected to endorse the House version on Tuesday.

But the real decision now comes down to Gov. Bev Perdue, who has 10 days in which to veto the legislation. She has expressed support for fracking in the past, with the caveat that it had to be done safely. She is still reviewing the controversial bill and its implications, said spokesman Mark Johnson.

“There’s no question: There’s a lot riding on the Governor’s veto,” said Elizabeth Ouzts, state director of Environment North Carolina. “She could put this approach to fracking – barreling ahead, and asking questions about water and air pollution later – to rest.”

If Perdue vetoes the bill, fracking proponents would need 72 votes for an override. Republican Rep. Mitch Gillespie of Burke and McDowell counties, who led the pro-fracking effort, said the state’s prospects for fracking now rest on a razor-thin margin.

It will “be extremely close on an override,” Gillespie said. “It’ll come down to one person.”

The legislation would roll back a decades-old ban on flushing chemicals underground and drilling horizontally, the two components of natural gas extraction from hard-to-reach formations.

Fracking is industry shorthand for hydraulic fracturing, or pumping water mixed with chemicals into well bores at high pressure to fracture solid rock and release the natural gas trapped inside.

Environment vs. economy

The bill would create a special mining and energy commission to oversee the creation of safety provisions to govern fracking in the state. The legislature would have to approve those provisions in a separate vote, before the first wells could be drilled. Creating those provisions and getting them to a vote could take at least two years.

Gillespie said this state would create one of the most comprehensive regulatory systems in the country.

“I know of no common-sense person who is opposed to this,” Gillespie said. “We’re getting ready to put North Carolina on the map of energy production in the years to come.”

The three-hour debate Thursday focused on the environmental risks versus the economic benefits of bringing heavy industry to largely rural areas. The principal concern is contamination of the state’s water through chemical spills, well blowouts or underground seepage.

Fracking supporters beat back amendments intended to weaken the fracking program by delaying implementation or calling for more research in place of creating regulations.

Opponents cited examples of other states that have tougher standards than those proposed here on a number of issues, including chemical disclosure requirements. And they questioned why the legislation did not fund the seven full-time employees requested by the N.C. Department of Environment and Natural Resources to conduct further research and planning.

“The question is: What are we paying to get the 300 to 400 jobs we expect to get from this?” said Democratic Rep. Joe Hackney, who represents Chatham, Moore and Orange counties. “It makes no sense for a state with no experience in this area to try to put this together (in two years).”

The relatively small size of the gas reserve, a lack of pipelines and other infrastructure, and historically low natural gas prices suggest that it may be years before the gas industry turns its attention to North Carolina.

The U.S. Geological Survey recently said North Carolina has nearly 1.7 trillion cubic feet of gas, which is equivalent to about 5.6 years of statewide consumption based on 2010 usage. Most of the gas is believed to be concentrated in Lee, Moore and Chatham counties.

Murawski: 919-829-8932

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