TO: (1) ESTABLISH AN OIL AND GAS BOARD WITH JURISDICTION AND AUTHORITY OVER MATTERS RELATED TO OIL AND GAS EXPLORATION AND DEVELOPMENT IN THE STATE, INCLUDING THE USE OF HORIZONTAL DRILLING AND HYDRAULIC FRACTURING FOR THAT PURPOSE, AND TO DIRECT THE BOARD TO CREATE A MODERN REGULATORY PROGRAM FOR MANAGEMENT OF OIL AND GAS EXPLORATION AND DEVELOPMENT IN THE STATE, INCLUDING THE USE OF HORIZONTAL DRILLING AND HYDRAULIC FRACTURING FOR THAT PURPOSE; (2) AUTHORIZE THE PROCESSES OF HORIZONTAL DRILLING AND HYDRAULIC FRACTURING FOR THE PURPOSE OF OIL AND GAS EXPLORATION AND DEVELOPMENT IN THE STATE AND PLACE A MORATORIUM ON PERMITTING RELATED TO THOSE PROCESSES UNTIL JULY 1, 2014; (3) ENACT VARIOUS OTHER PROVISIONS RELATED TO MANAGEMENT OF OIL AND GAS EXPLORATION ACTIVITIES, INCLUDING PROVISIONS RELATED TO LOCAL GOVERNMENT AUTHORITY OVER THESE ACTIVITIES; (4) ESTABLISH THE JOINT LEGISLATIVE COMMISSION ON ENERGY POLICY WITH LEGISLATIVE OVERSIGHT OF ALL MATTERS RELATED TO OIL AND GAS EXPLORATION AND DEVELOPMENT IN THE STATE, AND OTHER ENERGY-RELATED ISSUES; (5) DIRECT THE DEPARTMENT OF PUBLIC INSTRUCTION TO PURCHASE SCHOOL BUSES THAT OPERATE ON COMPRESSED NATURAL GAS (CNG); (6) DIRECT THE DEPARTMENT OF TRANSPORTATION TO PURCHASE NEW THREE-QUARTER TON PICK UP TRUCKS AND NEW ONE-HALF TON PICK UP TRUCKS THAT OPERATE ON COMPRESSED NATURAL GAS (CNG) OR COMPRESSED NATURAL GAS (CNG) AND GASOLINE; (7) CREATE AN INTERAGENCY TASK FORCE TO ESTABLISH PUBLIC-PRIVATE PARTNERSHIPS FOR THE CONSTRUCTION AND DEVELOPMENT OF COMPRESSED NATURAL GAS (CNG) FUELING INFRASTRUCTURE; (8) ESTABLISH CRITERIA FOR THE OPERATION OF ELECTRIC VEHICLE CHARGING STATIONS LOCATED AT STATE-OWNED REST STOPS ALONG THE HIGHWAYS; (9) ENSURE THE USE OF FUEL-EFFICIENT AND COST-EFFICIENT RETREAD TIRES ON STATE VEHICLES; AND (10) AMEND THE ENERGY JOBS ACT OF 2011 IF THE ENERGY JOBS ACT OF 2011 BECOMES LAW, AS RECOMMENDED BY THE LEGISLATIVE RESEARCH COMMISSION ENERGY ISSUES POLICY COMMITTEE.
House committee substitute makes the following changes to 2nd edition.
NC Mining and Energy Commission. Amends proposed Part 6A in Article 7 of GS Chapter 143B, which creates the NC Mining and Energy Commission (Commission) as follows. Removes the Commission’s power to hear permit appeals and conduct full hearings on decisions made by the Department of Environment and Natural Resources (DENR) under the Oil and Gas Conservation Act. Makes conforming changes. Increases from 14 to 15 the number of members on the Commission, and makes modifications to the membership, including replacing members in the oil and gas exploration field with local government representatives. Specifies that a member may be reappointed to two consecutive three-year terms (previously allowed indefinite successive terms). Authorizes the chair to create other committees composed of Commission members, including a Committee on Mining, and prohibits a member from hearing or voting on any matter in which the member has an economic interest. Moves the provisions setting out the factors the Commission must consider when evaluating violations to GS 113-410 (penalties) and requires consideration of those factors when determining penalties. Also moves provision permitting the Attorney General to initiate a civil action for nonpayment of civil penalties to GS 113-410. Makes the changes concerning the Commission effective August 1, 2012 (was, October 1, 2012).
Regulatory Program. Adds several defined terms in GS 113-389 and modifies the definitions for hydraulic fracturing fluid and hydraulic fracturing treatment. Enacts new subsection (a3) to GS 113-391 to direct the Environmental Management Commission to adopt rules, after considering the Commission’s recommendations, for stormwater control and the regulation of toxic air emissions related to oil and gas development and drilling (previously granted this authority to the Commission). Makes clarifying and conforming changes to the rules to be adopted by the Commission. Makes clarifying changes to GS 113-415 (concerning conflicting laws). Clarifies that changes pertaining to the regulatory program, authorizing studies, and requiring rule adoption are effective August 1, 2012.
Landowner and Public Protections. Replaces references to private drinking water wells and water supply wells with the term water supplies in the provisions concerning water contamination. Restores provision requiring compensation for any damage to a water supply in use before the developer or operator started activities, which is due to those activities. Adds that the developer or operator must provide, before beginning activities, a bond running to the surface owner that will cover reclamation of the surface owner’s property if the developer or operator is not the surface owner of the property. Provides that a developer or operator must comply with other requirements to remediate contamination. Requires the developer or operator to provide a replacement water supply, as detailed, if a water supply of the surface owner or third parties is contaminated due to the developer’s or operator’s activities. Requires the developer or operator to provide the surface owner, if such person is not the lessor, with specified landowner rights publications. Deletes provision that allowed royalty payments to be reduced by production costs. Adds a requirement that payments must be paid within 60 days of execution of the lease, with interest charged on late payment. Requires any lease with a surface owner to include a notification to lenders and sets out form language. Requires all leases to be subject to a three-day right of withdrawal. Sets out procedure to cancel the lease within this period. Clarifies that landmen manage oil or gas interests (deletes mineral interests).
Modifies a whereas clause related to the report issued by DENR. Makes other clarifying changes. Clarifies that changes authorizing horizontal drilling and hydraulic fracturing and the creation of the Energy Policy Oversight Commission become effective August 1, 2012 (was, October 1, 2012).
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