North Carolina moved one step closer to issuing fracking permits when Governor Pat McCrory signed the Energy Modernization Act on June 4, 2014. This new law builds upon a 2012 law that authorized fracking regulations to be developed in the Tar Heel state but prohibited fracking permits from being issued. Fracking regulations are now expected to be adopted later this year, and the new law allows fracking permits to be issued two months after the regulations are adopted, likely sometime in 2015.
The 2012 law created the North Carolina Mining & Energy Commission of the Department of Environment & Natural Resources, and gave this Commission the power to regulate fracking. The Commission earlier this year issued draft fracking regulations, and scheduled three Public Comment Meetings on these draft regulations for August 2014. The original deadline for the Commission to adopt regulations was October 1, 2014, but the new law extends this deadline to January 1, 2015. And while the 2012 law placed a moratorium on fracking permits, the new law allows fracking permits to be issued 61 days after the regulations are adopted.
The new law elaborates on the protection of confidential information, including trade secrets, related to fracking. The 2012 law required the disclosure of all chemicals and constituents in fracking fluids, with an exception for trade secrets. The new law continues to protect confidential information, but provides that it may be disclosed to the Division of Emergency Management of the Department of Public Safety, a treating healthcare provider who determines that the information is necessary for treatment, and a fire chief who determines that the information is necessary to address an emergency. A person who knowingly and willfully discloses confidential information to a person not authorized to receive it shall be guilty of a Class 1 misdemeanor and subject to a civil action for damages and an injunction by the owner of the confidential information. The Commission shall determine whether information constitutes “confidential information” under G.S. 132-1.2, and the Commission’s decision may be appealed to a Business Court Judge under G.S. 7A-45.3.
The new law also prohibits local governments from banning fracking. The operator of a proposed fracking operation may petition the Commission to review a local ordinance. The Commission must hold a public hearing in the affected locality within 60 days, and determine in writing within 60 days of the hearing the extent to which the local ordinance is preempted. The Commission’s decision may be appealed to a superior court under G.S. 150B-43 through 150B-52.
Finally, the new law prohibits the disposal of fracking fluid and other waste using subsurface injection wells; decreases the distance for presumptive liability for water contamination from 5,000 feet to a one-half mile radius of a wellhead; splits the Mining & Energy Commission into the Oil & Gas Commission, which will regulate fracking, and the Mining Commission, which will regulate mining; and directs the Department of Commerce to study the desirability and feasibility of siting, constructing, and operating a liquefied-natural-gas export terminal in North Carolina.