A complex fracking policy has unexpectedly emerged in the waning days of the state legislative session, giving rise to fears that lawmakers are making a last-ditch push to repeal North Carolina’s moratorium on shale gas exploration.
The move comes after a recent attempt to lift the moratorium failed to get past House lawmakers who said they intended to keep their pledge to citizens not to allow shale gas exploration until all safety regulations were in place.
But now the state House and Senate are poised to take up the complicated fracking bill that has not been reviewed by a committee or studied at length by lawmakers. The legislation, added into Senate Bill 127 which deals with changes to the Department of Commerce, surfaced Wednesday, the result of eleventh-hour negotiations with lawmakers and the environmental regulators who would oversee fracking here.
Gov. Pat McCrory unexpectedly visited the legislature for an hour on Wednesday and met with Republicans in a legislative strategy session. On his way out of the building, McCrory said he wanted to get an update on key legislation, adding: “I’m interested in energy. Energy development is what’s going to get us moving on the economy.”
The measure includes new provisions that would repeal a key feature in last year’s energy law that expressly prohibits issuing fracking permits to drilling companies until the N.C. Mining and Energy Commission writes safety rules and the legislature approves those rules. Instead of a prohibition, the bill says the state could issue drilling permits as of July 1, 2015, provided that fracking rules “have become effective.”
The chairman of the Mining and Energy Commission, James Womack, a Republican commissioner in Lee County, was surprised by the legislation.
“We didn’t know about it,” said Womack. “All it does is introduce confusion.”
Rep. Pricey Harrison, a Democratic from Guilford County, said the new language is an open door to issue permits by a specific date, whether the state is ready or not to oversee shale gas exploration.
“They continue to go back on their word,” Harrison said of Republican lawmakers who want to take steps to encourage the energy industry to drill here.
Rep. Mike Hager, a Rutherfordton Republican who has been active in the negotiations, said Senate Bill 127 would not undo the protections in the current law.
He acknowledged the bill may not come to a vote if it remains divisive among Republicans, but he’s confident his colleagues’ anxieties will by assuaged by the time the vote is scheduled Thursday. Hager said some Republicans are wary of last-minute legislation that alters the fracking bill passed last year. The bill, which passed by a single vote, contained explicit language to prohibit the issuance of fracking permits.
“Anything to do with fracking is going to be controversial,” he said. “We don’t want to create the appearance that we’re speeding this up, that we’re recklessly going into this.”
The most complex fracking parts in Senate Bill 127 relate to a severance tax program on the oil and gas industry, based on the grade and quantity of fossil fuel extracted. The money raised by taxing drilling operations would go to local governments, emergency funds and other uses.
Hager said the Mining and Energy Commission will also review severance taxes in the coming year, and the commission’s advice could help modify state law, but this legislation sets a direction.
“We want to attract business, so we don’t want to have the highest severance tax,” Hager said. He said bargain-basement taxes are also a bad idea but said North Carolina should have lower taxes as a matter of public policy.