Bill Summary for S 76 (2013-2014)

Summary date: 

Feb 11 2013

Bill Information:

View NCGA Bill Details2013-2014 Session
Senate Bill 76 (Public) Filed Monday, February 11, 2013
A BILL TO BE ENTITLED AN ACT TO (1) PROVIDE FOR AUTOMATIC REVIEW OF MINING AND ENERGY COMMISSION RULES BY THE GENERAL ASSEMBLY; (2) EXEMPT THE MINING AND ENERGY COMMISSION, THE ENVIRONMENTAL MANAGEMENT COMMISSION, AND THE COMMISSION FOR PUBLIC HEALTH FROM PREPARING FISCAL NOTES FOR RULES THAT PERTAIN TO THE MANAGEMENT OF OIL AND GAS EXPLORATION AND DEVELOPMENT; (3) DIRECT THE MINING AND ENERGY COMMISSION TO STUDY DEVELOPMENT OF A COMPREHENSIVE ENVIRONMENTAL PERMIT FOR OIL AND GAS EXPLORATION AND DEVELOPMENT ACTIVITIES USING HORIZONTAL DRILLING AND HYDRAULIC FRACTURING TREATMENTS; (4) REQUIRE THE MINING AND ENERGY COMMISSION AND THE DEPARTMENT OF REVENUE TO STUDY ESTABLISHMENT OF A TAX FOR THE SEVERANCE OF ENERGY MINERALS FROM THE SOIL OR WATER OF THE STATE IN AN AMOUNT SUFFICIENT TO COVER ALL COSTS ASSOCIATED WITH ADMINISTRATION OF A MODERN REGULATORY PROGRAM FOR THE MANAGEMENT OF OIL AND GAS EXPLORATION AND DEVELOPMENT ACTIVITIES USING THE PROCESSES OF HORIZONTAL DRILLING AND HYDRAULIC FRACTURING TREATMENTS FOR THAT PURPOSE, INCLUDING CREATION OF AN EMERGENCY FUND TO PROTECT AND PRESERVE THE STATE'S NATURAL RESOURCES, CULTURAL HERITAGE, AND QUALITY OF LIFE; (5) DIRECT THE MINING AND ENERGY COMMISSION TO STUDY MATTERS RELATED TO REGISTRATION OF LANDMEN; (6) MODIFY APPOINTMENTS TO THE MINING AND ENERGY COMMISSION; (7) MODIFY PROVISIONS IN THE OIL AND GAS CONSERVATION ACT CONCERNING THE MINING AND ENERGY COMMISSION'S AUTHORITY TO SET "ALLOWABLES"; (8) CLARIFY BONDING REQUIREMENTS ASSOCIATED WITH OIL AND GAS ACTIVITIES; (9) ASSIGN FUTURE REVENUE FROM ENERGY EXPLORATION, DEVELOPMENT, AND PRODUCTION OF ENERGY RESOURCES IN ORDER TO PROTECT AND PRESERVE THE STATE'S NATURAL RESOURCES, CULTURAL HERITAGE, AND QUALITY OF LIFE; (10) ENCOURAGE THE GOVERNOR TO DEVELOP THE REGIONAL INTERSTATE OFFSHORE ENERGY POLICY COMPACT; (11) AMEND THE ENERGY POLICY ACT OF 1975 AND THE ENERGY POLICY COUNCIL; AND (12) DIRECT THE MEDICAL CARE COMMISSION TO ADOPT RULES AUTHORIZING FACILITIES LICENSED BY THE DEPARTMENT OF HEALTH AND HUMAN SERVICES TO USE COMPRESSED NATURAL GAS AS AN EMERGENCY FUEL.
Intro. by Newton, Rucho, Brock.

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Bill summary

Issuance of Permits. Effective March 1, 2015, authorizes the Department of Environment and Natural Resources (DENR) and the Mining and Energy Commission (MEC) to issue permits for oil and gas exploration and development using horizontal drilling and hydraulic fracturing. Effective March 1, 2015, repeals provision in the 2012 Clean Energy and Economic Security Act that prohibited the issuance of such permits until MEC developed a regulatory program. Directs MEC and DENR to study a coordinated program to issue single comprehensive environmental permits to govern multiple activities at a site, and requires MEC to report on such a program by October 1, 2013.

Mining and Energy Commission. Removes the State Geologist and the Assistant Secretary of Energy for the Department of Commerce as members on the MEC. Deletes requirement that Governor's appointee from the Environmental Management Commission be knowledgeable in water and air resources management; deletes requirement that Governor's appointee from the Commission for Public Health be knowledgeable in waste management. Specifies that the terms of these two members will terminate immediately if the member's term on the respective Commission should terminate. Amends GS 113-394 to provide that the MEC may limit the total amount of oil produced in NC by fixing an allowable amount (previously required limitation when amount exceeded market demand). Makes conforming changes to make permissive (rather than mandatory) the distribution process for allowables. Makes similar changes with respect to gas production.

Landmen Registry. Repeals GS 113-425 (landmen registry); applies retroactively to October 1, 2012.

Severance Taxes. Effective for energy materials sold on or after March 1, 2015, and conditioned on legislative authorization in the 2013 Appropriations Act, imposes a severance tax on all energy materials severed from the soil or water. Sets out schedules to calculate tax rates for condensates, oil, and gas. Provides for exemptions for severance of energy materials by producers who own land from which the materials are derived. Details additional provisions related to the severance tax, including market value, return and record-keeping requirements, and a prohibition on local governments imposing the tax. Requires permit suspension for failure to pay the tax. Allocates 25%, up to $1 million, annually to DENR to administer the Oil and Gas Conservation Act. Allocates remaining revenue as follows: 50% to the General Fund and 50%, up to $10 million, to the Onshore Energy Management Fund, with excess deposited in the General Fund.

Mineral Interest Fund Appropriation. Appropriates $22,900 in 2012-13 from the Mineral Interest Fund to DENR to operate MEC.

Revenue from Offshore Energy Production. Enacts new GS 113B-30 to require the deposit of all revenues and royalties from offshore energy activities in the Offshore Energy Management Fund (Fund), up to $50 million. Requires maintenance of Fund balance at $50 million with remaining revenues allocated annually as follows: 30% to the General Fund; 10% to the Highway Trust Fund; 10% to the Community Colleges System Office; 10% to the UNC Board of Governors; 30% to DENR; 8% to the State Ports Authority; and 2% to the Department of Commerce. Effective only if authorized by the General Assembly in the 2013 Appropriations Act.

Compact. Encourages the Governor to develop a regional energy compact with South Carolina and Virginia for offshore energy exploration. Sets out requirements for the compact and a reporting timeline for the Governor to share with the General Assembly progress on the compact.

Energy Policy and Jobs Act. Renames the title of GS Chapter 113B as the "NC Energy Policy and Jobs Act," and renames Article 1 as "Energy Jobs Council." Modifies legislative findings and purpose of the Energy Jobs Council. Transfers the Council from the Department of Commerce to DENR, and makes conforming changes. Decreases from 16 to 13 and revises the membership and member qualifications of the Council. Requires appointments by July 1, 2013, and specifies that members have three year terms (was, two- or four-year terms). States the goal of the Council, and makes clarifying changes and other modifications to the Council's responsibilities. Allows public utilities to meet requirement of providing a proposed energy crisis plan by submitting the General Load Reduction and System Restoration Plan. Requires the Council to report every two years (rather than annually) to specified parties on energy conditions; makes first report due by January 1, 2014. Clarifies that a Committee on Energy Crisis Management will be created if the Governor declares an energy crisis. Makes conforming changes to various provisions in GS Chapters 113B, 114, and 143. Terminates the terms of all current members on the Council, effective on the earlier of the act's effective date or June 30, 2013.

Medical Care Commission. Directs the Medical Care Commission to authorize licensed facilities to use bi-fuel generators meeting certain requirements, and to adopt a related, permanent rule to replace the Electrical Requirements Rule.

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