North Carolina Passes Fracking Legislation, Overrides Veto

Jul 2012 // ABA Energy Litigation Section: News and Developments

The North Carolina legislature on July 2, 2012, overrode the governor’s veto to pass the state’s first fracking legislation. Senate Bill 820 was originally passed by the Republican legislature on June 21, but vetoed by Governor Beverly Perdue, a Democrat, on July 1. She said she supported fracking, but that the legislation contained insufficient environmental safeguards. Aided by an accidental vote in the House of Representatives, however, the Senate and House were able to muster the required three-fifths majorities to override her veto.

Senate Bill 820 creates the North Carolina Mining & Energy Commission of the Department of Environment & Natural Resources, and gives this commission the power to regulate fracking. It prohibits certain chemicals and constituents, including diesel fuel, in fracking fluids; requires the disclosure of all chemicals and constituents in fracking fluids, with an exception for trade secrets; requires the implementation of water and wastewater management plans; requires measures to mitigate impacts on infrastructure; requires safety devices and protocols; and requires notice, recordkeeping, and reporting. It also establishes a presumption that any water contamination within 5,000 feet of a wellhead is the responsibility of the well operator. This presumption can be rebutted by evidence that the contamination predated the drilling activity, based on a pre-drilling water test; that the operator was denied access to conduct a pre-drilling water test; or that the contamination was caused by something other than the drilling activity.

The new Mining & Energy Commission will consist of 15 members, including two members of a nongovernmental conservation interest, two representatives of the mining industry, two local elected officials, a representative of a publicly traded natural-gas company, a geologist, an engineer, and an attorney. Once the commission is formed, it will develop fracking regulations consistent with this legislation. The first drilling permits are not expected to be issued until 2014, at the earliest.

According to a recent U.S. Geological Survey, North Carolina contains 1.7 trillion cubic feet of natural gas in the Deep River Basin in Lee, Chatham, and Moore Counties in central North Carolina. USGS Releases Unconventional Gas Estimates for Five East Coast Basins, June 20, 2012. Based on 2010 consumption rates in North Carolina, that is a 5.6 year supply of natural gas.