Signed by Governor Patrick McCrory

Vote Smart's Synopsis:

Vote to adopt a conference report that amends requirements for hydraulic fracturing activities and promotes a regional energy compact.

Highlights:

• Prohibits any agency of the state from issuing a permit for oil and gas exploration or development activities using horizontal drilling or hydraulic fracturing techniques until a “modern regulatory program” and “appropriate environmental standards” for the management of these techniques become effective (Sec. 1).

• Requires the Mining and Energy Commission and the Department of Environment and Natural Resources to study the development of a “comprehensive environmental permit” to govern certain activities using horizontal drilling and hydraulic fracturing techniques including, but not limited to, the following activities (Sec. 2):
• The construction of wells; 
• The maintenance of water quality;
• The management of waste; and
• The regulation of air emissions.

• Requires the Commission and the Department of Revenue to study the establishment of a severance tax associated with activities using horizontal drilling and hydraulic fracturing techniques sufficient to cover the following activities (Sec. 2):
• To administer a “modern regulatory program” for the management of activities using horizontal drilling and hydraulic fracturing;
• To address expected impacts to infrastructure in areas where drilling activities may occur; and
• To maintain an emergency fund to address “emergency events” associated with oil and gas exploration.

• Amends appointments to the North Carolina Mining and Energy Commission by authorizing certain means including, but not limited to, the following means (Sec. 3): 
• By authorizing the Secretary of Environment and Natural Resources to appoint a designee of his or her choice in place of the state geologist;
• By authorizing the governor to appoint 1 designee, at large; and
• By repealing the requirement for the designee from the Environmental Management Commission to be knowledgeable in the principles of water and air resources management.

• Requires the Commission to study matters related to the registration of “landmen” and to report its findings and recommendations to the Environmental Review Commission and the Joint Legislature Commission on Energy Policy by no later than April 1, 2015 (Sec. 2).

• Appropriates any revenues and royalties resulting from offshore leasing exploration, development, and production of all energy resources to the Offshore Emergency Fund until the Fund reaches $250 million (Sec. 6). 

• Appropriates revenues and royalties after the Offshore Emergency Fund reaches $250 million as follows (Sec. 6):
• 75 percent shall be credited to the General Fund;
• 5 percent shall be credited to the North Carolina Highway Trust Fund;
• 5 percent shall be transferred to the Board of Governors of The University of North  Carolina System; 
• 5 percent shall be transferred to the Department of Environment and Natural Resources;
• 3 percent shall be transferred to the State Ports Authority; and
• 2 percent shall be transferred to the Department of Commerce.

• Encourages the governor to commence negotiations with the governors of South Carolina and Virginia to develop a unified regional strategy for the exploration, development, and production of all “commercially viable” federal and state offshore energy resources within the 3-state region (Sec. 7).

• Amends the Energy Policy Council by transferring the Energy Policy Council to the Department of Environment and Natural Resources and by reducing the Council membership from 16 to 13 members (Sec. 8).

Full Bill Text

Vote Smart's Synopsis:

Vote to adopt a conference report that amends requirements for hydraulic fracturing activities and promotes a regional energy compact.

Highlights:

• Prohibits any agency of the state from issuing a permit for oil and gas exploration or development activities using horizontal drilling or hydraulic fracturing techniques until a “modern regulatory program” and “appropriate environmental standards” for the management of these techniques become effective (Sec. 1).

• Requires the Mining and Energy Commission and the Department of Environment and Natural Resources to study the development of a “comprehensive environmental permit” to govern certain activities using horizontal drilling and hydraulic fracturing techniques including, but not limited to, the following activities (Sec. 2):
• The construction of wells; 
• The maintenance of water quality;
• The management of waste; and
• The regulation of air emissions.

• Requires the Commission and the Department of Revenue to study the establishment of a severance tax associated with activities using horizontal drilling and hydraulic fracturing techniques sufficient to cover the following activities (Sec. 2):
• To administer a “modern regulatory program” for the management of activities using horizontal drilling and hydraulic fracturing;
• To address expected impacts to infrastructure in areas where drilling activities may occur; and
• To maintain an emergency fund to address “emergency events” associated with oil and gas exploration.

• Amends appointments to the North Carolina Mining and Energy Commission by authorizing certain means including, but not limited to, the following means (Sec. 3): 
• By authorizing the Secretary of Environment and Natural Resources to appoint a designee of his or her choice in place of the state geologist;
• By authorizing the governor to appoint 1 designee, at large; and
• By repealing the requirement for the designee from the Environmental Management Commission to be knowledgeable in the principles of water and air resources management.

• Requires the Commission to study matters related to the registration of “landmen” and to report its findings and recommendations to the Environmental Review Commission and the Joint Legislature Commission on Energy Policy by no later than April 1, 2015 (Sec. 2).

• Appropriates any revenues and royalties resulting from offshore leasing exploration, development, and production of all energy resources to the Offshore Emergency Fund until the Fund reaches $250 million (Sec. 6). 

• Appropriates revenues and royalties after the Offshore Emergency Fund reaches $250 million as follows (Sec. 6):
• 75 percent shall be credited to the General Fund;
• 5 percent shall be credited to the North Carolina Highway Trust Fund;
• 5 percent shall be transferred to the Board of Governors of The University of North  Carolina System; 
• 5 percent shall be transferred to the Department of Environment and Natural Resources;
• 3 percent shall be transferred to the State Ports Authority; and
• 2 percent shall be transferred to the Department of Commerce.

• Encourages the governor to commence negotiations with the governors of South Carolina and Virginia to develop a unified regional strategy for the exploration, development, and production of all “commercially viable” federal and state offshore energy resources within the 3-state region (Sec. 7).

• Amends the Energy Policy Council by transferring the Energy Policy Council to the Department of Environment and Natural Resources and by reducing the Council membership from 16 to 13 members (Sec. 8).

Full Bill Text

Vote Smart's Synopsis:

Vote to pass a bill that authorizes the Department of Environment and Natural Resources and the Mining and Energy Commission to issue permits for fracking and horizontal drilling.

Highlights:

• Authorizes the Department of Environment and Natural Resources and the North Carolina Mining and Energy Commission to issue permits for oil and gas exploration using horizontal drilling and hydraulic fracturing ("fracking") treatments in the State, effective March 1, 2015 (Sec. 1).

• Prohibits the Department of Environment and Natural Resources and the Mining and Energy Commission from issuing permits until horizontal drilling and hydraulic fracturing regulations have been finalized (Sec. 1).

• Rescinds the positions of State Geologist and the Assistant Secretary of Energy for the Department of Commerce from the North Carolina Mining and Energy Commission (Sec. 2).

• Repeals the Landmen Registry that requires an individual who negotiates oil and gas business interests in the state to register with the Department of Environment and Natural Resources (Sec. 3).

• Prohibits the discharge of waste produced during energy extraction via wells to the subsurface or groundwater (Sec. 4).

• Specifies that this bill does not prohibit the operation of “closed loop groundwater remediation systems” or the injection of hydraulic fracturing fluid for the exploration or development of natural gas resources (Sec. 4).

• Establishes a severance tax for the extraction of energy minerals from the soil or water (Sec. 5).

• Prohibits local governments from imposing any tax, other than property taxes, on energy exploration companies (Sec. 5).

• Establishes the Energy Jobs Council within the Department of Environment and Natural Resources to make recommendations on increasing domestic energy exploration, development, and production within the state (Sec. 9).

Full Bill Text