CONSISTENTLY DELIVERS

Jul 5, 2012

North Carolina Enacts Hydraulic Fracturing Law over Governor's Veto

 

Culminating a whirlwind 36 hours, the North Carolina legislature has voted to override Governor Beverly Purdue’s veto of Senate Bill 820, the Clean Energy & Economic Security Act, and pave the way for hydraulic fracturing and future shale gas development in North Carolina. In another key development, the speaker of the House of Representatives and Senate president pro tempore have made their appointments to the newly reconstituted Mining and Energy Commission, which will develop the new modern regulatory framework for oil and gas development in the state.

 

Veto Overridden by General Assembly

On Sunday, July 1, Governor Perdue vetoed the legislation, asserting in her Veto Statement general support for shale gas as part of a comprehensive mix of energy sources, but finding that Senate Bill 820 did not adequately protect the environment.

Legislative action to override the governor’s veto requires a two-thirds majority vote in both chambers of the General Assembly. On Monday, July 2, the North Carolina Senate voted 29 to 13 to override the governor’s veto. The Senate vote was soon followed by a late evening 72 to 47 vote in the House of Representatives that concurred in the veto override and enacted Session Law 2012-143 into law, effective August 1, 2012.

 

Click here to read news account of override.

 

Click here to view statements of gubernatorial candidates Pat McCrory (R) and Walter Dalton (D) on governor’s veto.

 

Key Provisions of SL 2012-143 Impacting Shale Gas Development

As described in a recent McGuireWoods Consulting bulletin on the legislature’s passage of Senate Bill 820, the Clean Energy and Economic Security Act has the following key provisions:

  • Removes existing statutory prohibitions on horizontal drilling. (G.S. 113-393)
  • Reconstitutes the current Mining Commission as the Mining and Energy Commission as well as re-forms the Department of Environment and Natural Resources’ Division of Land Resources into the Division of Energy, Mineral, and Land Resources. (G.S. 143B-293.1)
  • Directs the Mining and Energy Commission to develop rules and regulations for exploration, extraction and production of natural energy resources by Oct. 1, 2014.
  • Requires future General Assembly action following the adoption of regulations before any drilling permits can be issued. (G.S. 113-393)
  • Includes strict safeguards for landowner and environmental protections.
  • Creates a new Joint Legislative Commission on Energy Policy for legislative oversight of the state’s energy policy (10 members). (G.S. 120-285)

McGuireWoods and McGuireWoods Consulting have provided legal, state government relations, and grassroots services to advance this legislation through the NC legislature. This has included educating key stakeholders, political leaders, and constituent groups to advocate on behalf of energy independence, economic growth, and job creation brought by development of natural gas found in shale rock.

 

Newly Appointed Members of Mining and Energy Commission

The 15-member Mining and Energy Commission will have the authority and responsibility to develop and oversee North Carolina’s new regulatory framework for oil and gas development in the state. Four members are to be appointed for three-year terms by the governor, Senate president pro tempore and speaker of the House of Representatives, respectively, with the remaining three members being ex officio members. In Session Law 2012-141, the Senate president pro tempore and speaker of the House of Representatives made their respective appointments to the Mining and Energy Commission. Governor Perdue’s appointments are expected to be made in the near future.