NC Passes Legislation to Allow Hydraulic Fracturing, Awaits Action by Governor

Last week, after months of speculation and study, the North Carolina General Assembly passed legislation to allow for the exploration and development of natural gas resources from shale rock formations through the process of hydraulic fracturing. Previously the state had operated under a law adopted more than six decades ago that prohibited horizontal drilling, which is a critical component of the hydraulic fracturing process.

Senate Bill 820, the Clean Energy & Economic Security Act passed the North Carolina Senate last week by a vote of 29-19. The House of Representatives took up the Senate bill on June 14 and following hours of debate and proposed amendments passed the measure 66-43.  On Thursday, the Senate concurred with the House version by a vote of 29-15. "Now the measure goes to Governor Beverly Perdue (D) to sign or veto the within ten days. At this point it is uncertain as to what the Governor will do. If the Governor takes no action the bill will become law.

Key Provisions of the Legislation

• Removes existing statutory prohibitions on horizontal drilling. (GS 113-393)
• Creates a sub-commission under the Mining and Energy Commission to oversee the creation of a regulatory framework (15 members). (GS 143B-293.1)
• Directs the regulatory commission to develop rules and regulations for exploration, extraction and production of natural energy resources by October 1, 2014.
• Requires future General Assembly action, following the adoption of regulations before issuance of drilling permits. (GS 113-393)
• Includes strict safeguards for landowner and environmental protections.
• Creates new Joint Legislative Commission on Energy Policy for legislative oversight of the state’s energy policy (10 members). (GS 120-285)

Background

In 2011, the NC legislature directed the Department of Natural Resources (DENR) to study hydraulic fracturing in the state, including environmental and economic impacts. The DENR study released in May 2012 includes agency research of other state regulation on the process of hydraulic fracturing, as well as comment accepted during three public hearings. 

Among its key findings, the DENR study concluded that the development of natural gas from shale rock could be done in North Carolina with appropriate environmental safeguards and consumer protections.  

Earlier this month the U.S. Geological Survey (USGS) issued an assessment of undiscovered natural gas deposits across a large part of the Eastern United States. The USGS report, “estimates the mean undiscovered natural gas resources in the Deep River Basin in North Carolina to be 1,660 billion cubic feet of gas and 83 million barrels of natural gas liquids.  

McGuireWoods Consulting has provided state government relations and grassroots services to advance this legislation through the NC legislature. This has included educating key stakeholders, political leaders, and constituent groups to advocate on behalf of energy independence, economic growth, and job creation brought by development of natural gas found in shale rock.  

For more information, please contact: 

• Kerri Burke
  NC State Government Relations
• Jeff Britt
  Grassroots & Issue Management

Click here to read the API News Release on NC Senate action.

To learn more about McGuireWoods Conventional and Unconventional Gas work, click here.