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.
Senate committee substitute makes the following changes to 1st edition.
Mining and Energy Commission. Deletes provisions that established an Oil and Gas Board in the previous edition. Repeals Part 6 of Article 7 in GS Chapter 143B (NC Mining Commission) and reconstitutes that Commission as the 14 member Mining and Energy Commission (Commission) under new Part 6A, to adopt rules to develop the oil, gas, and mining resources in North Carolina. Sets out the powers and duties of the Commission, including the authority to hear permit appeals and hold hearings on decisions made by the Department of Environment and Natural Resources (DENR) under the Oil and Gas Conservation Act. Details the Commission members, term limits, and officers, and provides for quasi-judicial powers under the Administrative Procedure Act, as described. Provides for the transition of rule changes from the Mining Commission to the Commission created in this act, and includes reporting requirements. Effective October 1, 2012.
Regulatory Program. Amends GS 113-380 to clarify that any violation of Article 27 (Oil and Gas Conservation Act) of GS Chapter 113 is a Class 1 misdemeanor. Deletes previous amendments to GS 113-391(a) and (b) and instead directs the Commission to establish a modern regulatory program to manage oil and gas exploration and development and horizontal drilling and hydraulic fracturing in the state, by adopting rules for the listed purposes. Specifies that the adopted rules will not regulate oil and gas exploration and development in the waters of the Atlantic Ocean and certain coastal sounds. Specifies that DENR enforces the provisions of the Oil and Gas Conservation Act, except for the jurisdiction and authority reserved to the Department of Labor and the Commission. Deletes subsection (c), which authorizes DENR to make rules related to oil and gas wells. Directs the Department of Labor to adopt health and safety standards for workers engaged in oil and gas operations in NC. Includes a reporting requirement. Makes additional conforming changes to provisions in the Oil and Gas Conservation Act to add references to the Commission.
Amends GS 113-410 to impose a penalty not to exceed $25,000 a day on any person who fails to obtain a permit before drilling a well or using hydraulic fracturing treatments, or who otherwise commits a described violation (current penalty is $1,000). Amends GS 113-415 to clarify that the Oil and Gas Conservation Act does not affect the Environmental Management Commission’s authority with respect to the regulation of water and air pollution, or the Commission for Public Health’s authority with respect to the regulation of solid and hazardous waste. Adds the power to regulate horizontal drilling and hydraulic fracturing within their respective jurisdiction to the scope of the Environmental Management Commission’s powers and to the Commission for Public Health’s powers. Directs the Commission and other specified entities to identify levels and sources of funding to address the impact on local governments and infrastructure, and to make a report before January 1, 2013. Makes the above provisions effective October 1, 2012.
Effective when the act becomes law, directs the Commission and specified entities to study local government regulation, and the issue of integration or compulsory pooling, and to report as required. Requires all rules under this act to be adopted by October 1, 2014. Details additional reporting and meeting requirements.
Horizontal Drilling and Hydraulic Fracturing. Changes references from DENR to Commission in GS 113-393. Amends GS 113-395 to require the issuance of a permit before any person may use hydraulic fracturing treatments, and makes conforming changes. Deletes uncodified provisions, which prohibited DENR from taking specified actions related to wells and established a moratorium on the issuance of permits until July 1, 2014, and instead prohibits the issuance of a permit until the General Assembly takes legislative action. Effective October 1, 2012.
Landowner and Public Protections. Amends GS 113-420 (notice and entry to property) to require an oil or gas (was, and gas) developer or operator to give written notice to the surface owner of property at least 14 days (rather than seven) before the date of entry, when the oil or gas operations will not disturb the surface. Requires written notice of 30 days (rather than 14) when the oil or gas operations will disturb the surface. Requires oil or gas personnel to carry identification. Provides that entry onto land creates a rebuttable presumption that the surface owner properly protected the developer or operator personnel against personal injury or property damage while on the land. Rewrites GS 113-421 to create a rebuttable presumption that an oil or gas developer or operator is responsible for contamination of a private drinking water well or a water supply well within 5,000 feet of a wellhead. Details the remedy and compensation for the contamination and damage, and sets out the procedure for rebutting the presumption. Modifies the indemnification clause under GS 113-422.
Amends GS 113-423 to require a developer or operator to provide copies to the surface owner of specified statutory provisions and a consumer protection publication before executing a lease or conveyance to separate rights to oil or gas from the freehold estate of surface property. Provides for royalty payments of at least 12.5% of the proceeds of the oil or gas produced and sold from the property, which sum may be reduced by production costs not exceeding 10%, and requires the lease separating oil or gas rights to state whether the property’s water supplies will be used, at the landowner’s permission and with full compensation. Requires the developer or operator to initially test water supplies within 5,000 feet from a wellhead, and follow-up two times within 24-month period. Provides for recordation of leases, and notice of assignment within 30 days. Enacts new GS 113-423.1 to permit the developer or operator and the surface owner to enter into an agreement setting out the rights and obligations of the parties. Requires minimal intrusion upon and damage to the land surface, as detailed. Directs the Consumer Protection Division of the NC Department of Justice and the NC Real Estate Commission to develop a publication on consumer protection issues and landowner rights. Specifies that the remedies and protections granted to landowners are not exclusive. Makes these protections apply to wells drilled and leases or contracts entered into on or after the date the act becomes law.
Effective October 1, 2012, enacts new GS 113-425 to require landmen, as defined, to register with DENR, and allows DENR to deny registration and penalize registrants.
Enacts new subsection (b2) to GS 47E-4 (required disclosures under the Residential Property Disclosure Act) to require property owners to include an oil, gas, and mineral rights mandatory disclosure in any real estate contract, as specified; includes form language. Applies to real estate transfers or dispositions occurring on or after October 1, 2012.
Energy Policy Oversight Commission. Makes the establishment of this Commission, provided for in the previous version, effective October 1, 2012, and references the new Mining and Energy Commission.
Additional Changes. Deletes proposed GS 113-388A and GS 113-413A, which authorized local governments to impose impact fees and prohibited any local ordinance that conflicted with the regulatory scheme. Deletes the provisions that required the Department of Public Instruction and the Department of Transportation to purchase vehicles operating on compressed natural gas, and the provisions creating a task force to develop compressed natural gas fueling infrastructure. Deletes the provisions related to electric vehicle charging stations at rest areas and the use of retread tires. Also deletes the provisions amending the Energy Jobs Act of 2011 if such act becomes law. Makes modifications to whereas clauses related to oil and gas resources. Makes a conforming change to the bill title.
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