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North Carolina Governor Issues Order to Develop Frack Rules

Gov. Bev Perdue issued an executive order on Monday calling on various state agencies to organize a work group to study hydraulic fracturing (fracking) and then make recommendations for the best ways to regulate the practice.

Executive Order No. 118 directs the state Department of Commerce's Division of Energy (DOE) and the Department of Environment and Natural Resources (DENR) to form the work group, with the former required to report its progress, findings and any recommendations to the governor in six months, plus every six months thereafter.

"North Carolina needs a strong set of standards in place before we allow fracking here," Perdue said Monday. "If done safely, fracking can be part of a larger energy solution to create jobs and help lower energy costs. Before we permit anyone to frack in North Carolina, however, we must hear from all sides, address all issues, and develop a robust set of rules.

"First and foremost, those rules must put every necessary precaution into place to protect our drinking water and safeguard the health and safety of every single North Carolinian. The rules must also protect the interests of landowners and address the needs of county and municipal governments."

Perdue said she wants representatives from the Department of Health and Human Services' Division of Public Health, the Department of Revenue, the Department of Transportation and the State Highway Patrol on the work group. She also wants DOE and DENR to invite representatives from the North Carolina Utilities Commission, the Department of Labor and the attorney general's Consumer Protection Division to participate.

The order also calls for the speaker of the state's House of Representatives, the president pro tempore of the Senate, and the minority leaders from both chambers of the General Assembly to each appoint one representative to the work group.

"[This order] will help to establish guidelines and create a framework for considering the type of standards that must be developed before any energy development begins," Perdue said.

Under the guiding principles of Executive Order No. 118, Perdue said the work group should consider:

Perdue, a Democrat, isn't the only politician with ideas on how fracking should be regulated in North Carolina. Last week, a series of legislative proposals submitted by Sen. Bob Rucho (R-Mecklenburg) -- including creating a nine-member Oil and Gas Board and a moratorium on fracking until mid-2014 -- passed the muster of the Legislative Research Commission (see Shale Daily, May 18). Rucho's proposals have since been written into a bill, SB 820, also known as the Clean Energy and Economic Security Act. SB 820 passed its first reading in the Senate on Monday and was referred to the Senate Committee on Agriculture, Environment and Natural Resources.

"We are pleased Gov. Perdue shares our goal of creating a vibrant energy jobs sector in North Carolina and agree there needs to be a strong regulatory framework," Rucho said Monday. "We look forward to passing [SB 820] and having Gov. Perdue sign it into law."

Meanwhile, a separate bill, HB 1054, also known as the Clean Energy and Economic Security Act, was filed Tuesday by Rep. Mitch Gillespie (R-McDowell). HB 1054 would also create a nine-member Oil and Gas Board and establish a moratorium on fracking that expires in mid-2014, but it would also enact various other provisions related to oil and gas exploration.

The North Carolina Geological Survey (NCGS) believes technically recoverable gas underlies parts of the Triassic basins in North Carolina. These include the state's Sanford sub-basin -- which crosses Chatham, Durham, Granville, Lee, Moore, Orange and Wake counties in the central part of the state -- and the Dan River sub-basin in northern North Carolina, in Rockingham and Stokes counties.

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