Chronology of Hydraulic Fracturing in North Carolina

The following are a selection of events and resources relevant to the regulation of hydraulic fracturing in North Carolina, compiled by Kate A. Preston in preparation for an oral history interview with Amy Pickle.

1945: NC General Assembly enacts the Oil and Gas Conservation Act to regulate the oil and gas industry in the state. Section 10 prohibits operators of oil wells from “wasting” oil and gas, which according to the act, includes “drowning with water of any stratum or part thereof capable of producing oil or gas.” Section 13(d) of the Act mandates that oil and gas wells “shall not unreasonably vary from the vertical drawn from the center of the hole at the surface.” Together these provisions prohibit the practice of hydraulic fracturing in the state of North Carolina since “fracking” requires the injection of pressurized water into horizontal wells to release shale gas.[1]

 

2009: North Carolina Geological Survey releases a report on potential shale gas deposits beneath the Dan River, Deep River, and Davie County Basins in central North Carolina. The deposits lie beneath 12 different counties, including Durham, Orange, Wake, Lee, Chatham and Moore counties. In the months following the release of the report, NCGS officials share their findings with state officials, environmentalists, and energy companies.[2] See: http://lee.ces.ncsu.edu/files/library/53/NCGS_OFR_2009-01_20090709-2.pdf

 

April 4, 2010: John Murawski publishes his first article in the Raleigh News & Observer on the possibility of shale gas extraction in North Carolina, sparking public interest in the expansion of “fracking” in North Carolina.[3]

2010: Newspapers around North Carolina begin to comment on the possibility of shale gas extraction, publishing editorials both condemning and encouraging the practice, as well as explanatory articles referencing the national conversation about hydraulic fracturing, explaining the potential for local shale gas exploration, and the hurdles to fracking in North Carolina. At this point, hydraulic fracturing is outlawed in the state of North Carolina.[4]

April 19, 2011: NC State Senators Rucho, Brown and Tucker file the Energy Jobs Act (SB709).[5]

May 31, 2011: House passes H242, which raises the bonds and fees associated with oil and gas drilling and directs the North Carolina Department of the Environment and Natural Resources (DENR) to “study the issue of oil and gas exploration in the State and the use of directional and horizontal drilling and hydraulic fracturing.” The bill directs DENR to hold at least two public hearings on the issues of horizontal drilling and hydraulic fracturing before February 12, 2012.[6]

June 23, 2011: Gov. Beth Perdue signs H242, enacting Session Law 2011-276. As Section 4 stipulates, “the Department of Environment and Natural Resources, in conjunction with the Department of Commerce and the Consumer Protection Division of the Department of Justice, shall report their findings and recommendations, including specific legislative proposals, to the Environmental Review Commission no later than May 1, 2012.”

June 30, 2011: Gov. Beth Perdue vetoes the Energy Jobs Act.[7]

July 13, 2011: Senate votes to override Energy Jobs Act veto. Measure succeeds 31-17, then sent to House of Representatives for vote. Veto override never voted on in the House.

November 27, 2011: Legislative session starts again, fracking opponents protest SB709 at the General Assembly’s Legislative Building. No vote is taken on SB709 in the House during this legislative session.

February 2012: American Petroleum Institute (API) hosts a forum for government officials, lawmakers, and industry representatives in Raleigh on the merits of natural gas exploration and hydraulic fracturing.[8]

March 2012: DENR releases draft report of study on oil and gas exploration pursuant to S.L. 2011-276. Throughout the month, DENR holds a series of Public Hearings in Sanford, Chapel Hill and Pittsboro to allow the public to comment on the draft text. The received comments are then reviewed by DENR for possible incorporation into the final text of the report.[9]

April 9, 2012: Durham County Commissioners unanimously pass a resolution urging the General Assembly to refrain from legalizing fracking until federal impact studies are completed in 2014.[10]

April 18, 2012: NC Senate Committee on Energy Policy approves proposals to legalize hydraulic fracturing with two years and establish a new regulatory framework for safe natural gas extraction within the two year period. [11]

May 1, 2012: DENR publishes final report on horizontal drilling and hydraulic fracturing in North Carolina. Report determines that hydraulic fracturing can be safe if proper regulations are put into place.[12]

May 17, 2012: Senate Bill 820 introduced in the Senate. Sponsored by Sen. Rucho, Blake and Walters, SB820, the Clean Energy and Economic Security Act, proposes the creation of a new Oil and Gas Board to create a modern regulatory program for the use of hydraulic fracturing and horizontal drilling. The proposed bill authorizes the process of hydraulic fracturing and horizontal drilling (previously prohibited), but places a moratorium on the issuance of permits until July 1. 2014.[13]

June 2012: U.S. Geological Survey (USGS) unveils their assessment of oil and gas reserves in North Carolina, which could meet the state’s oil and gas consumption for more than five years according to Kenneth Taylor, the chief geologist at the NC Geological Survey.[14]

May 21-June 21, 2012: Clean Energy and Economic Security Act is revised and amended by both Houses of the General Assembly until ratified on June 21. The final bill reconstitutes the state’s Mining Commission as the Mining and Energy Commission (MEC) within DENR and legalizes hydraulic fracturing. Responsible for administering the Oil and Gas Conservation Act, the MEC is also tasked with creating and implementing a new regulatory framework for horizontal drilling and hydraulic fracturing. Section 2(b) of the act expands the definition of “base fluids” for hydraulic fracturing to expressly include water, and section 3(b) creates an exception for the vertical wells requirement for “wells drilled for the purpose of exploration or development of natural gas through the use of horizontal drilling through hydraulic fracturing treatments,” thereby removing previous restrictions on the extraction technique. The bill is sent to Gov. Perdue for her signature.

July 1, 2012: Gov. Beth Perdue vetoes the Clean Energy and Economic Security Act.[15]

July 2, 2012: In separate votes, each house of the NC General Assembly votes to override Gov. Perdue’s veto. The Clean Energy and Economic Security Act is enacted into law as Session Law 2012-143.[16]

September 6, 2012: MEC Commission members are sworn in by Deputy Secretary of State Haley Haynes. New commissioners attend orientation session on rule-making process.[17]

September 28, 2012: James Womack, a Lee County Commissioner from Sanford, NC and outspoken fracking advocate, is elected Chairman of the MEC.

November 2, 2012: MEC approves the creation of several committees within the commission, including: Water and Waste Management, Administration of Oil & Gas, Environmental Standards, and the Rules Committee. Environmental conservationist, George Howard, is elected as Vice Chairman of the MEC. Amy Pickle is selected to chair the Rules Committee. The MEC also creates a series of standing groups to study regulation of fracking in regard to local government, compulsory pooling, and potential funding levels.

November 6, 2012: Pat McCrory is elected as the next governor of North Carolina. For the first time in over one hundred years, all three houses of the state government will belong to the Republic Party.

January 2013-May 2013: MEC Study groups and committees discuss rules and write draft fracking policies.

February 11, 2013: State Sen. Newton, Rucho and Brock file Senate Bill 76, the “Domestic Energy Jobs Act,” authorizing DENR to begin issuing fracking permits on March 1, 2015. As proposed, the also bill directs the MEC to study comprehensive permitting plans for fracking and removes two positions from the commission: the State Geologist, and the Assistant Secretary of Energy for the North Carolina Department of Commerce. The bill additionally revises the membership requirements and goals for the Energy Jobs Council.[18]

February 12, 2013: H.B. 94 is introduced in the State House of Representatives. The original bill as filed focused on the regulation and sanitation of landfills. The final version of the bill expanded to 43 pages of amendments to state environmental laws, including directing the MEC to adopt a rule prohibiting the government from retaining any information about any fracking chemicals that may be considered trade secrets. Despite having versions of this bill passed in both houses of the General Assembly, H.B. 94 was not enacted into law. Chemical disclosure laws remain one of the most controversial components of the fracking debate. According to then chairman of the MEC, James Womack, the MEC was not consulted on the proposed rules during initial House and Senate negotiations.[19]

February 27, 2013: State senate passes SB76. Bill is passed to House for vote where it is reviewed by the House Committee on the Environment for the remainder of the session.

May 4, 2013: The Durham Herald-Sun reports that a proposed chemical disclosure rule, already approved by the MEC’s Environmental Standards Committee, was withdrawn last minute from the commission agenda at the request of oil industry giant Halliburton to be reworked by staff members at the North Carolina Department of the Environment and Natural Resources.[20]

June 7, 2013: SB76 added to House calendar for vote. The bill is amended in the House, and then returned to the Senate in late July.

July 29, 2013: Gov. Pat McCrory signs SB76 into law. The new law, S.L. 2013-365 prohibits the issuance of permits for hydraulic fracturing until “all rules required to be adopted by the MEC, Environmental Management Commission, and Commission on Public Health pursuant to S.L.2012-143 have become effective.” The law also directs the MEC to study coordinated permitting, severance taxes, and landmen registration requirements for the process of hydraulic fracturing, and slightly modifies the position requirements for members of the commission. [21]

September 2013: For the first time since the development of the EPA Wetlands Program Development Grants, almost $600,000 in federal grants is refused by the North Carolina Department of Energy and Natural Resources. The grants were earmarked to study water quality in the North Carolina Piedmont in advance of oil and gas drilling.[22]

September 2013-April 2014: MEC races to finish a comprehensive regulatory framework for hydraulic fracturing in North Carolina. Meeting at least once a month, and then bi-weekly, the Commission, its Study Groups and Committees meet with stakeholder and experts throughout the process to evaluate and draft rules for the state. Thirty minutes of every meeting are reserved for public comments before the MEC. The final regular meeting of the MEC is held on April 16, 2014.[23]

May 15, 2014: State Senators Rucho, Newton and Brock file S.B. 786, the Energy Modernization Act, in the North Carolina General Assembly. The original version of the bill extends the deadline for the MEC to complete the fracking rules from October 1, 2014 to January 1, 2015; it would dissolve the MEC following the completion of the rule-making process and reconstitute it as two separate commissions—the North Carolina Oil & Gas Commission and the North Carolina Mining Commission. The bill would make the disclosure of fracking trade secrets a Class I felony in the state and prohibit local governments from enacting moratoriums on the practice. Additionally the bill created a framework for severance taxes related to oil and gas development.[24]

May 15-16, 2014: MEC meets to begin final review of the overall draft rules for final regulatory framework for hydraulic fracturing.

June 4, 2014: Governor McCrory signs the Energy Modernization Act into law. The new law, S.L. 2014-4 extended the deadline for final MEC rules from October 1, 2014 to January 1, 2015 and lifts the moratorium on hydraulic fracturing in the state on July 1, 2015. Upon the completion of this term for all MEC commissioners on July 31, 2015 the MEC will be dissolved and reconstituted into two separate commissions. The new North Carolina Oil & Gas Commission and the reinstated Mining Commission will take over the regulation of energy extraction for the state starting August 1, 2015. The final bill requires that companies disclose their chemical formulas to local regulators and emergency responders and lowered the penalty for the unlawful disclosure of these trade secrets to a Class I misdemeanor. The law establishes a framework for presumptive liability for water contamination, compensation for other damages and developer responsibility for the reclamation of all surface areas affected by the operation of the well within two years of the completion of drilling. The new law does forbid local governments from enacting ordinances that outright prohibit hydraulic fracturing and established a framework for severance taxes on energy minerals.[25]

June 5-6, 2014: MEC reviews the final draft bundle for the hydraulic fracturing rules and votes on a final approval of the rules. With the commission’s affirmative vote, all 120 rules completed by the MEC are sent to DENR for the administration of the public comment period.

July 15, 2014: DENR announces that the state will begin accepting written public comments through September 15, 2015. The public can submit comments in hard copy form or electronically through the department’s website. North Carolina residents and organizations are also invited to participate in several public hearings throughout the state.

July 24, 2014: The MEC meets to discuss the public comment process. Prior to the meeting, three public hearings are scheduled to take place throughout August in Raleigh, Sanford and Wentworth, NC. During the meeting, commissioners vote to create a fourth public hearing located in western North Carolina. The fourth public comment period is scheduled for September 12, 2014 at the Western Carolina University Campus. This is the last meeting for Chairman Womack and Vice Chair Charles Holbrook whose terms as chairs end July 31. Starting August 1, Dr. Vickram Rao will assume responsibilities of Chair and Amy Pickle will become Vice Chair of the MEC.[26]

August 8, 2014: MEC meets under new leadership of Chairman Rao and Vice Chair Pickle to determine the details of the public hearings. Recognizing an error in the original publication of the rules, the MEC votes to extend the public comment period from September 15, 2014 to September 30, 2015.

August 20-Sept 12, 2014: MEC Commissioners attend four public hearings throughout the state to listen to comments on the proposed fracking rules. These public hearings are well attended by both pro- and anti-fracking advocates and received extensive newspaper coverage by the Raleigh Daily News & Observer.[27]

September 30, 2014: The public comment period for the MEC’s proposed rules on hydraulic fraction regulation closes. The MEC received over 200,000 comments in the three-month comment period. [28]

October 2014: Amy Pickle, along with the MEC’s DENR staff, begin sorting through and responding the public comments on the draft rules, identifying potential areas of revision in the rules.

October 23, 2014: State Ethics Committee publically identifies more than a dozen potential conflicts of interest for twelve of the MEC commissioners. A conflict of interest does not necessarily disqualify a commissioner from serving, but the ethics evaluations caused quite a bit of controversy for commission members. The Ethics Commission was widely criticized for releasing the evaluations after the rules had been written and for using outdated information to establish conflicts. Nonetheless, Chairman Rao publically acknowledged the potential conflicts at the next MEC meeting.[29]

November-December 2014: The MEC reviews the recommendations from public comments and votes on potential revisions to the rules. In mid-December, these finalized are the final rules are sent to the Rules Review Commission (RRC).[30]

December 17, 2014: The Rules Review Commission approves 117 of the 120 final MEC rules. The RRC sends its recommendations for the three remaining rules to the MEC for discussion on December 19.[31]

December 19, 2014: The MEC discusses the RRC recommendations and then votes to approve the final rules. The commission then sends the rules back to the DENR staff to clean up the final language of the bills prior to final submission to the North Carolina General Assembly on January 1, 2015.

January 6, 2015: The Raleigh News & Observer reports that the Southern Environmental Law Center, on behalf of the Haw River Assembly and local landowner Keely Wood Puricz, has filed suit to challenge the constitutionality of the MEC on the grounds that the commission violates separation of powers (Haw River Assembly v. MEC). The MEC is considered an extension of the Executive branch, yet the majority of commissioners were appointed by the legislature, effectively giving the legislature majority control over the executive commission. This is one of three similar lawsuits brought to the North Carolina courts. A separate lawsuit challenging the constitutionality of the Energy Modernization Act is brought forth by Governor McCrory and two former governors of North Carolina (McCrory v. Berger).[32]

February 2015: Democrats in both houses of the General Assembly propose bills seeking to disapprove the MEC rules (See SB72). Both bills languish in House and Senate committees.

March 16, 2015: A three-judge panel ruled that the governor, not the legislature has the power to appoint members of boards that are “administrative or executive in character,” thereby halting the appointments to many of the state’s boards and commissions and further throwing into question the constitutionality of the MEC and the new regulatory framework for hydraulic fracturing.[33]

March 17, 2015: State lifts the moratorium on horizontal drilling and hydraulic fracturing, becoming the 34th state to allow the practice. With the moratorium lifted operators can apply for permits under DENR and the MEC to begin the fracking process. To date, no permit applications have been filed.

May 20, 2015: Wake County Superior Court Judge Donald Stephens temporarily enjoins all processing of fracking permit applications pending an appellate decision in McCrory v. Berger case or further action by the courts regarding the constitutionality of the MEC appointments, effectively reinstating the moratorium on fracking in North Carolina.[34]

 

Notes:

[1] See North Carolina General Statutes, Chapter V, Article 27, Subchapters 113-381 through 113-390 for bill text of Oil and Gas Conservation Act and revised chapters: http://www.ncleg.net/EnactedLegislation/Statutes/HTML/ByArticle/Chapter_113/Article_27.html

[2] Many reports on North Carolina’s oil and gas deposits can be found at Department of Energy and Natural Resources page on Oil and Gas Research, for original and updated reposts on shale gas basins in the state see: http://portal.ncdenr.org/web/lr/oilandgasresearch. For a condensed version of the original report published by Dr. Jeffrey C. Reid and Dr. Kenneth Taylor in 2009, see: http://portal.ncdenr.org/c/document_library/get_file?uuid=cee978f1-82d4-43ac-a2aa-8d6ed8a863cb&groupId=38334, or http://lee.ces.ncsu.edu/files/library/53/NCGS_OFR_2009-01_20090709-2.pdf.

[3] Murawski, John. “N.C. sitting on trove of natural gas” The News & Observer (Raleigh). April 4, 2010.

[4] John Murawski was the lead reporter on hydraulic fracturing for the Raleigh News & Observer, see the N&O archives for his coverage of the debates and regulatory process surrounding “fracking” in the state.

[5] Full text of the filed bill and its subsequent versions through ratification and eventual veto can be found at the following link: http://www.ncga.state.nc.us/gascripts/BillLookUp/BillLookUp.pl?Session=2011&BillID=SB709

[6] Full text of the bill and its various versions can be found at: http://www.ncga.state.nc.us/gascripts/BillLookUp/BillLookUp.pl?Session=2011&BillID=H242&submitButton=Go

[7] Citing constitutional concerns, Gov. Perdue vetoed the bill on the premise that the state legislature cannot order the executive of the state to enter into a compact with the governors of the states of South Carolina and Virginia.In her Veto Message, the Governor also highlighted concerns about the lack of consideration of renewable energy sources in the bill. To read her whole veto message, see: http://www.ncga.state.nc.us/sessions/2011/S709Veto/govobjections.pdf

[8] Murawski, John, “Speakers Tout Safety of Fracking Practices,” The News & Observer (Raleigh). Feb 3, 2012

[9] To view the draft report as well as webcasts and audio recordings of the public hearings on this report, see the DENR portal at: http://portal.ncdenr.org/web/guest/denr-study

[10] Bridges, Virginia, “Durham Board wants to slow push for fracking” The News & Observer (Raleigh) April 10, 2012

[11] Jarvis, Craig. “Senate panel approves fracking plan—Three energy bills will reach the General Assembly next month” The News & Observer (Raleigh). April 19, 2012

[12] For final DENR Study report, see: http://portal.ncdenr.org/c/document_library/get_file?uuid=9a3b1cc1-484f-4265-877e-4ae12af0f765&groupId=14

[13] For full text of the filed bill and all subsequent versions of the Act, see: http://www.ncga.state.nc.us/gascripts/BillLookUp/BillLookUp.pl?Session=2011&BillID=S820&submitButton=Go

[14] See: http://portal.ncdenr.org/web/opa/shale-gas-news-releases/-/asset_publisher/Uj51/content/statement-on-release-of-u-s-geological-survey-assessment-of-north-carolina-oil-and-gas-resources?redirect=%2Fweb%2Fopa%2Fshale-gas-news-releases

[15] Arguing that the bill “does not do enough to ensure that adequate protections for our drinking water, landowners, county and municipal governments, and the health and safety of our families will be in place before fracking begins,” Gov. Perdue vetoed the ratified bill. To see the full text of her Veto Message, see: http://www.ncga.state.nc.us/sessions/2011/S820Veto/govobjections.pdf

[16] For full text of the Session Law, see: http://www.ncga.state.nc.us/Sessions/2011/Bills/Senate/HTML/S820v6.html

[17]All agendas for MEC meetings (2012-2015) are published online on the DENR website under the Mining and Energy Commissions Meeting archive. In addition to the agendas, full minutes are included in the archive for some of the MEC Commission, study groups, and committee meetings. For access to all MEC meeting schedules, agendas, and minutes, see: http://portal.ncdenr.org/web/mining-and-energy-commission/. For Orientation Session agenda and swearing in information, see the MEC Orientation Agenda

[18] For full text of S.B. 76 and subsequent versions of the bill, see: http://portal.ncdenr.org/c/document_library/get_file?uuid=9d939d6e-e01e-4ee8-9cb9-c4a4d1782dab&groupId=8198095

[19] For the amended versions of H94, see: http://www.ncga.state.nc.us/gascripts/BillLookUp/BillLookUp.pl?Session=2013&BillID=H94&submitButton=Go;

[20] “Fracking Rule Pulled after Haliburton Objects,” The Herald-Sun (Durham), May 4, 2013

[21] To see the text of the finalized law, see: http://portal.ncdenr.org/c/document_library/get_file?uuid=9d939d6e-e01e-4ee8-9cb9-c4a4d1782dab&groupId=8198095

[22] The Raleigh News & Observer published a few articles and editorials on the return of these EPA grants. For an initial overview, see Bruce Henderson’s article “N.C. Returns Grant from EPA for Fracking Study,” published on September 25, 2013.

[23] Well-documented, the meeting minutes and agendas for almost all MEC and related study groups and committee meetings can be found online within the DENR archive. To read the minutes and agendas, see: http://portal.ncdenr.org/web/mining-and-energy-commission/mec-schedules-and-agendas

[24] For full texts of the Energy Modernization Act in all of its versions, see: http://www.ncga.state.nc.us/gascripts/BillLookUp/BillLookUp.pl?Session=2013&BillID=S786&submitButton=Go

[25] Murawski, John. “N.C. now open to fracking—McCrory signs bill; state moving to lure natural gas drillers,” The News & Observer (Raleigh), June 5, 2014

[26] For full text of July 24, 2014 meeting minutes, see: http://portal.ncdenr.org/web/mining-and-energy-commission/mec_july-24-2014

[27] Will Doran and John Murawski primarily covered the summer’s state-wide hearings for The News & Observer. See Doran’s article “Sanford hearing reveals passions on both sides of fracking issue (August 22, 2014),” and Murawski’s article “NC fracking hearings get underway on Wednesday in Raleigh (August 17, 2014)” for more detailed coverage of the Public Comment period regarding the new fracking rules.

[28] Murawski, John “100,000-plus talk fracking—Final tally of public comments on rules could near 200,” The News & Observer (Raleigh): October 11, 2014

[29]Murawski, John. “Fracking board gets ethics review – Potential conflicts are found after safety rules already written,” The News & Observer (Raleigh): December 9, 2014

[30] Murawski, John, “Fracking Panel to revise some rules – More than 200,000 public comments submitted on rules,” Charlotte Observer (NC): November 6, 2014; Doran, Will, “Fracking regulations finalized – Recommendations to be sent to state legislature for approval,” The News & Observer (Raleigh): November 15, 2014.

[31] Murawski, John. “Some Fracking Rules Questioned – Staff recommends rejecting 3 of 124 proposed regulations,” The News & Observer (Raleigh): December 4, 2014; Murawski, John “ Fracking standards breeze through review – 117 safety standards now headed to state legislature next month,” Charlotte Observer (NC): December 19, 2014

[32] Murawski, Joh. “Group Challenges Fracking Board,” The News & Observer (Raleigh): January 6, 2015; “Conservation Groups and Landowner Challenge the Constitutionality of North Carolina Mining and Energy Commission,” Southern Environmental Law Center, Press Release, January 5, 2015. Web. Additionally, former North Carolina Assistant Secretary for the Environment, Robin Smith, administers an incredibly insightful blog on environmental issues and policy in North Carolina. For a detailed analysis of the issues at play in the constitutional challenges to the MEC and several additional state environmental commissions, as well as a many of the other controversies involving fracking in North Carolina see her blog: www.smithenvironment.com. Her April 8, 2015 post, explains the court’s orders in McCrory v. Berger, which find the provisions providing for the appointment of Oil and Gas Commissioners and Mining Commissioners under the Energy Modernization Act a violation of separation of powers under the state constitution.

[33] For the full ruling of the court in McCrory v. Berger, see: http://www.wral.com/asset/news/state/nccapitol/2015/03/16/14518779/14_CVS_15201_McCrory_v._Berger_3.16.15.pdf

[34] Ball, Bill. “Judge temporarily halts fracking permitting in North Carolina,” The Indy Weekly: May 20, 2015; “Court Temporarily Enjoins N.C. Mining and Energy Commission from Accepting or Processing Fracking Permits,” Southern Environmental Law Center, Press Release: May 20, 2015. Web.

Leave a Reply

Your email address will not be published.