As promised, here’s my interpretation of SB 76, which has already passed the Senate Finance Committee and the Senate Commerce Committee, and will head to the floor for a vote. This is not an exhaustive breakdown, and I’ve really only combed through the first version’s section on fracking and not examined the offshore stuff, but I have some issues of aspects of the bill, and especially with the discussion around it.
The “Domestic Energy Jobs Act” sure sounds nice, doesn’t it? That’s the name of the bill, and it’s a misnomer. By permitting fracking permits in March 2015, I do not think there’s a real mechanism to fund any technical training program in our community/technical colleges to have North Carolinians trained to work on natural gas development rigs. The number of jobs that will be generated by gas development, including direct, indirect, and induced jobs, is not a huge amount, as referenced in a previous discussion. And do the direct and indirect industries have any workforce development needs, communicated with local/regional workforce developers so that we can get locals employed? These networks take time and program development take time, and they have exactly 24 months in order to get the highest efficiency of employment. So right from the start, the title of this bill is misleading, and it especially reinforces the impression that the state is not already creating jobs around clean energy (even though we do have a budding solar/alternative energy industry).
Section 1 of SB 76 basically places the establishment of regulations with the MEC and DENR, eliminating the step of getting final approval from the General Assembly. I actually do not have a huge objection to this, though I would like to see some other outside party like the Environmental Management Commission chime in on proposed final rules. What Section 1 also does is establish a start date of March 1, 2015, when MEC and DENR may issue the first permit for directional drilling and hydraulic fracturing. This provides an end point for the ongoing work of the MEC in developing regulation, and they still have a lot of work to do to develop those regulations. I’ve pasted below the link to the video from part of the discussion the Senate Commerce Committee had this past Tuesday on SB 76, and want to address some issues I have with the tone of the comments there.
First, for Senator Newton to imply that DENR was in the practice of saying is grossly misleading. In my experience, DENR has always been diligent in working with upholding regulations set by both the state and EPA and coordinating with the public and utilities. DENR does the thankless jobs of ensuring our water and air is safe while facilitating industry, business, economic, and community development. Second, I really take issue with NC Petroleum Council’s Bill Weatherspoon’s message to the committee. He said no state could move slower and more responsibly and deliberately than NC has, and to disregard this “tactic” from environmentalists to “delay, delay, delay.” He said the exact same thing a year ago at the public comment session in Chapel Hill (though it may have been in Sanford) reviewing the DENR Shale Gas study. I hear several people saying we need to slow down to study this issue carefully, but I’m hearing it from local and regional leaders, affected landowners, and citizens with valid environmental concerns. I personally take offense to the comments made by Bill Weatherspoon and hope that elected leadership do, too: this state has no oil or gas industry, and we are developing rules and regulations from scratch, and doing so for an industry that is changing rapidly.
Sticking with those comments, let me next tackle what Environment North Carolina said is an issue of permitting underground injection of wastewater, supposedly facilitated in Section 4(b):
The discharge of any wastes to the subsurface or groundwaters of the State by means of wells is prohibited. This section shall not be construed to prohibit (i) the operation of closed-loop groundwater remediation systems in accordance with G.S. 143-215.1A or (ii) injection of hydraulic fracturing fluid for associated with the exploration exploration, production, or development of natural gas resources.
I’m no legal expert, but the way I read that is that fluids associated with the hydraulic fracturing process in the development of a well, and the production of that well are allowed to be injected, but not inject the flowback or produced water (what I will call wastewater). That being said, the fact that many people are reading this section otherwise means that this section must clarify the explicit prohibition of disposal of fracking wastewater via injection wells.
Back up to Section 2 which removes the ex officio seats on the MEC for the State Geologist and for the Assistant Secretary of Energy in the Department of Commerce. This is odd to me: it seems like these two perspectives would be valuable to the MEC. Senator Newton’s explanation during the Commerce Committee meeting that they present a conflict of interest doesn’t fully make sense to me, either, though he goes on to say that they could continue to sit on the commission without their seats being prescribed.
I need to come back at a future time after I’ve considered Section 3 more carefully, as this seems to really influence what some of the study groups are currently examining.
Section 5 will be a contested section as it sets a tax rate at the state level, with the lowest rate coming to the earliest customers. Quite significant in this section, it prohibits local governments from issuing taxes on gas development in their backyard, relying on the state severance tax structure to fund local governments most affected by gas development. Jim Womack expressed serious concerns over this proposal at the Local Government Regulations Study Group meeting February 15th. The design of the tax structure is to attract industry to come to the state en mass early. That doesn’t sound like a legislature confident of its resources, both natural and human, to want large, early investment instead of a well-paced development of an industry. Again, such action really calls into question the purpose behind this bill, let alone the name of it.