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.
House committee substitute makes the following changes to the 5th edition.
Changes the long title.
PART I, PERMIT ISSUANCE
Amends Part I title, changing the title to PERMIT ISSUANCE. Makes technical changes. Establishes that permits issued for oil and gas exploration and development activities using horizontal drilling or hydraulic fracturing treatments will not become effective until the General Assembly takes affirmative legislative action, including the repeal of subsection (d) of Section 3 of SL 2012-143, as amended by subsection (b) of Section 1 of this act.
Amends Section 3(d) of SL 2012-143, (repealed in the previous edition), providing that permits issued for oil and gas exploration and development activities using horizontal drilling or hydraulic fracturing treatments pursuant to GS 113-395 will not become effective until the General Assembly takes affirmative legislative action to allow the permits to become effective. Establishes that similar permits from other agencies and entities will also not become effective until the General Assembly takes action.
Provides new Part II to the bill, titled - REQUIRED REPORTS AND STUDIES: COORDINATED PERMITTING; IMPOSITION OF A SEVERANCE TAX SUFFICIENT IN AMOUNT TO FUND ADMINISTRATION OF A REGULATORY PROGRAM AND SUFFICIENT TO COVER FUNDING FOR ANY EMERGENCY SITUATIONS THAT MAY ARISE FROM OIL AND GAS ACTIVITIES; IMPOSITION OF AN IMPACT FEE, OR DEDICATION OF A PORTION OF ANY SEVERANCE TAX TO BE IMPOSED, THAT WOULD BE SUFFICIENT TO COVER ALL COSTS THAT MAY REASONABLY BE EXPECTED TO ACCRUE TO LOCAL GOVERNMENTS AS A RESULT OF OIL AND GAS ACTIVITIES OCCURRING WITHIN THEIR JURISDICTIONS; AND CREATION OF A RESTITUTION FUND FOR LANDOWNERS HARMED AS A RESULT OF AN ACT OF FRAUD, DECEPTION, MISREPRESENTATION, OR KNOWING OMISSION OF MATERIAL FACTS. Amends Section 2(a), concerning the creation of a coordinated permitting program, previously Section 1(c) in the 5th edition, to remove studying permitting of subsurface injection of fluids used for fracking. Provides that the Mining and Energy Commission (MEC) must only report its finding to the Environmental Review Commission (previously, was directed to also report to the Joint Legislative Commission on Energy Policy) on or before March 1, 2014 (was, October 1, 2013). Provides new Section 2(b), requiring the MEC, DENR and the Departments of Revenue and Commerce, to study an appropriate rate of severance tax that should be imposed in association with oil and gas exploration and development activities using horizontal drilling or hydraulic fracturing treatments. Sets out specified studies and information that the entities are required to consider. Directs the specified entities to formulate recommendations for different levels of funding which should be maintained to address emergency events associated with oil and gas exploration. Sets out the procedures for utilizing those funds. Provides new Section 2(c), which amends Section 2(j) of SL 2012-143, enhancing a study requirement enacted by federal law, adding the Department of Commerce to the list of entities required to study appropriate levels of funding and potential sources for funding to support local governments that are impacted by the gas and oil industry. Requires the specified agencies and entities to issue a recommendation for the imposition of an impact fee, or dedication of a portion of any severance tax imposed on oil and gas activities, that would cover all costs that can reasonably be expected to be incurred by local governments. Findings and recommendation must be reported to the Environmental Review Commission on or before March 1, 2014. Also requires a study on a restitution fund for landowners suffering damage due to fraud or misrepresentation of facts related to oil or gas interests. Requires a report to the Environmental Review Commission by March 1, 2014.
PART III, MINING AND ENERGY COMMISSION APPOINTMENT MODIFICATIONS (previously Part II)
Amends GS 143B-293.2, regarding the composition of the MEC, providing that the MEC will consist of 15 members (was, 13 members). Eliminates one ex officio member of the MEC, the Assistant Secretary of Energy for the Department of Commerce. Adds a member to be appointed by the Governor, who must own land in the Triassic Basin of NC. Reinstates the State Geologist's designee, ex officio as a member of the MEC (position deleted in the previous edition). Amends the requirements for the appointments found in GS 143B-293.2(a)(5) and (9), providing that one must be an elected official of a municipal government in the Triassic Basin and the other must be a member of a board of commissioners of a county located in the Triassic Region. Modifies the position designated for a member that is knowledgeable in the principles of water and air resources management, providing that they must also be a member of the Environmental Management Commission. Modifies the position designated for the Commission for Public Health, eliminating the specific knowledge requirement concerning the principles of waste management. Deletes language concerning the expiration of the terms of the different members.
PART IV, MISCELLANEOUS MODIFICATIONS TO THE OIL AND GAS CONSERVATION ACT: ALLOWABLES AND REPEAL OF THE LANDMEN REGISTRY (previously Part III)
Changes title to MISCELLANEOUS MODIFICATIONS TO THE OIL AND GAS CONSERVATION ACT: ALLOWABLES AND LANDMEN REGISTRY. Reinstates GS 113-425, Registry of landmen required, previously repealed. Deletes language in GS 113-425(c) which provided for the imposition of a civil penalty on a registrant for specified violations or acts. Enacts new subsections (c1) through (c4), providing that violations are punishable by an administrative penalty not to exceed $5,000 per violation. Provides a criminal penalty for noncompliance with the registry requirements, which results in a Class 1 misdemeanor. Adds language that provides that any agreement for the acquisition or divestiture of oil or gas rights that results from any manner of negotiations with a landman who is acting in violation of the applicable provisions of the registry will be considered null and void as being against public policy of NC. Further provides that DENR can seek, and the Superior Court can grant, injunctive relief to prevent a person from violating the applicable provisions of the registry. Provides required timing for an appeal.
PART V, CLARIFY BONDING REQUIREMENTS (new section to the act)
Amends GS 113-378, clarifying that the "drilling bond", which an operator must provide when registering for drilling exploration for oil or natural gas, runs to the State. Makes a technical change to GS 113-391(a)(13a).
The committee substitute deletes the following parts of the previous edition and all the provisions provided therein, PART IV, AMEND STATUTE GOVERNING SUBSURFACE FLUID INJECTION, and PART V, SEVERANCE TAXES.
PART VI, REVENUE FROM OFFSHORE ENERGY PRODUCTION (previously part VII)
Amends GS 113B-30, regarding allocation of revenues from offshore energy production, making technical and conforming changes. Provides that monies from the Offshore Energy Management Fund will only be used after determining that sufficient funds for corrective action or emergency response cannot be obtained in a timely manner, without significant delay which would increase the threat to life or risk of damage to the environment. Establishes that the State will pursue recovery of all costs or fees incurred towards recovery action from the responsible party or parties. Deletes GS 113B-30(b) establishing how the Fund monies were to be used.
PART VII, REGIONAL INTERSTATE OFFSHORE ENERGY POLICY COMPACT (previously part VIII)
Amends Part VII, making technical and clarifying changes.
PART VIII, ENERGY POLICY ACT AND ENERGY POLICY COUNCIL AMENDMENTS (previously Part IX)
Amends GS 113B-2, making a technical change. Amends GS 113B-3, concerning the composition of the Energy Jobs Council (Council), changing the member previously designated for a representative of an investor-owned natural gas utility to being designated for a representative of a rural electric membership corporation formed in accordance with GS 117-8. Makes a technical change. Amends GS 113B-4, concerning the chairman of the council, providing that the Governor will appoint a chair of the Council (was, the Council will elect one of its members to serve as chair). Amends GS 113B-6, concerning general duties of the Council, deleting language which allowed the Council to delegate its duties where appropriate to the Division of Energy, Mineral, and Land Resources (Division), with the Council providing oversight and approval to the duties delegated to the Division. Amends GS 113B-11, concerning powers and authority of the Council, clarifying that the Division will provide the staffing capability to the Council and provides that the Utilities Commission alone is authorized to makes its staff available to the Council to assist in the development of the State energy policy (previously, the Department of Commerce was also authorized to make their staff available). Amends GS 113B-12, concerning required annual reports, providing that no later than January 1 of every even numbered year, the Council must transmit a comprehensive report of the energy conditions in the State to specified parties (previously, was required to transmit the report every two years). Amends GS 113B-21(a), making a technical change. Deletes the changes made to GS 114-4.2D. Deletes previously new GS 143B-281.1, concerning the transfer of the Energy Jobs Council. Makes a clarifying change to Section 8(s).
PART IX, MODIFY ELECTRICAL REQUIREMENTS RULE TO ALLOW HOSPITALS TO USE COMPRESSED NATURAL GAS AS EMERGENCY FUEL (previously, Part X)
Makes comforming and technical changes throughout the Part.
PART X, EFFECTIVE DATE (previously, Part XI)
Amends the effective dates of the act, providing that subsection (b) of Section 1 of this act becomes effective March 1, 22 2015. Subsection (b) of Section 4 of this act is effective when it becomes law, except that (i) GS 113-425(c2), as enacted by subsection (b) of Section 4 of this act, becomes effective December 1, 2013, and applies to offenses committed on or after that date and (ii) GS 113-425(c3), as enacted by subsection (b) of Section 4 of this act, applies to leases or contracts entered into on or after that date. GS 113B-30, enacted by Section 6 of this act, becomes effective only if authorized by the General Assembly in the Current Operations and Capital Improvements Appropriations Act of 2013. The first report due pursuant to GS 113B-12, as amended by subsection (m) of Section 8 of this act, shall be transmitted on or before January 1, 2014. Except as otherwise provided, the remainder of this act is effective when it becomes law.
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