Two state Senate committees on Tuesday unanimously passed legislation that would lift the state’s fracking moratorium next summer, with a key legislator expressing confidence that the measure would come before the full Senate this week.
The bill would lift the moratorium on shale gas drilling on July 1, 2015, allowing the state Department of Environment and Natural Resources to start issuing permits to energy companies for hydraulic fracturing and horizontal drilling.
Fracking supporters say the day has been a long time coming and predicted domestic energy exploration would generate thousands of jobs and millions of dollars of revenue for the state’s economy.
“North Carolina has been working on shale gas exploration for four years,” said Sen. E.S. “Buck” Newton, a Republican from Wilson. “North Carolina has missed out on a lot of opportunity.”
Environmental groups complain the bill breaks a pledge that lawmakers had made twice before not to lift the state’s fracking moratorium until all safety rules were in place and approved by the legislature. A previous attempt to lift the moratorium fell apart in the N.C. House last year when lawmakers upheld the drilling ban as a necessary public protection and environmental safeguard.
On Tuesday, the bill passed the Senate Commerce Committee and the Senate Finance Committee, with some Democratic members asking for assurances that the public and the environment will be protected from chemical spills and other accidents.
Republican Sen. Tom Apodaca of Hendersonville, chairman of the Senate Rules Committee, said the Energy Modernization Act would be heard by the full Senate on Wednesday and Thursday, then forwarded to the House for debate.
“It’ll be a little welcome-back present after Memorial Day,” Apodaca said.
More than 100 rules
About 120 rules have been prepared by the N.C. Mining and Energy Commission over the past two years; they will go through public hearings this summer and are set to be forwarded to lawmakers for final approval as early as October. The fracking bill gives the commission until January to finish its work if the commissioners need the three extra months.
But fracking supporters in the Senate want to get ahead of the rule-writing commission and clear the way for issuing permits by a certain date. Newton said the energy industry is awaiting a signal that North Carolina is serious about shale gas exploration.
Newton said it remains unclear whether the energy industry will be ready to start drilling in mid-2015. He blamed dilatory tactics of fracking opponents for a policy debate that has been dragging on for four years.
“We are not sure the industry will be anywhere near ready to go at that time,” Newton said. “The industry hasn’t explored here yet, because we haven’t finished what we’re doing now.”
James Womack, chairman of the Mining and Energy Commission, said lifting the moratorium will require further tinkering in the House, but he predicted it will pass this time.
Fracking refers to a method of blasting prehistoric shale rock formations with a mixture of high-pressure water and chemicals to release natural gas trapped inside. North Carolina’s shale gas deposits are believed to be concentrated in Lee, Moore and Chatham counties, but some lawmakers hope the state has vast deposits of untapped gas.
The Energy Modernization Act contains a number of provisions to reduce barriers to gas drilling in the state.
It shrinks the area in which drinking water will be tested before and after gas drilling, from a distance of 5,000 feet from the gas well, as current law specifies, to a proposed distance of one-half mile, a reduction by about half. Fracking advocates in the legislature said it would still be the longest testing distance in the nation and noted that the original 5,000 feet, passed last year, was an error.
“Honestly, it was lawyers trying to do math,” said Sen. Andrew Brock, a Republican from Mocksville and a fracking booster.
The baseline water testing requirement is intended to protect landowners from water contamination and to protect energy companies from frivolous lawsuits.
The bill sets severance taxes that are lower than other states in early years of drilling but comparable to other states in later years, said Republican Sen. Bob Rucho. It charges a fee per well of $1,500, half the amount set in the energy law passed last year. (The first well would cost $3,000.)
And it invalidates any local ordinances that would have the effect of prohibiting shale gas exploration, a provision included in last year’s energy bill.
A new proposal to cap local tax revenues at 8 percent a year was taken out of the bill and referred to a study committee.
At the same time, the measure would allow state officials to deny a drilling permit to “bad actors” who have a track record of environmental and safety violations in other states. That safeguard was requested by the Mining and Energy Commission.
No disclosing chemicals
Molly Diggins, director of the N.C. Sierra Club, predicted the House debate next week will likely include hard questions that senators avoided Tuesday. She said one topic ripe for discussion is the bill’s criminalization of publicly disclosing fracking chemicals deemed to be trade secrets by energy companies that use the substances.
The bill treats willful disclosure of trade secrets as a Class I felony, the lowest felony level, making North Carolina the only state that considers it a felony to disclose fracking chemicals classified as trade secrets.
Womack said a strict penalty for deliberately disclosing confidential business information is justified to prevent abuses by fracking foes.
“It raises the hurdle for the environmental groups, because they will want to put pressure on public officials to release the information,” Womack said.