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North Carolina Nails Down Law Against Local Bans on Oil/Gas Development

In an eleventh hour move last week before adjourning for the next seven months, the North Carolina General Assembly passed a bill to make crystal clear earlier legislation invalidating local ordinances that regulate oil and gas activities, including hydraulic fracturing (fracking).

In the early morning hours before adjournment, SB 119, a 41-page technical corrections bill, passed the state Senate on a 28-15 vote. Six minutes later, the bill passed the state House, 61-22. Republican Gov. Pat McCrory signed the bill into law a day later.

Under SB 119, if a local zoning or land use ordinance restricts oil and gas activities, an operator may petition the state Oil and Gas Commission (OGC) for a public hearing. The OGC could then subsequently preempt the local ordinance under certain conditions, but that decision could be appealed to a court for a final decision.

But the law stipulates that "...all provisions of local ordinances, including those regulating land use, adopted by counties, municipalities or other local authorities that regulate or have the effect of regulating oil and gas exploration, development and production activities...within the jurisdiction of a local government are invalidated and unenforceable..."

North Carolina lawmakers lifted a ban on fracking and implemented rules governing shale gas development in March (see Shale DailyMarch 17).

“Under the original bill that passed, it was clear that a local government was not authorized to use zoning changes and/or any type of ordinances that would actually inhibit or prohibit any type of shale gas exploration and development,” said state Sen. Bob Rucho (R-Mecklenburg), a longtime proponent of shale development in the Tar Heel State. He discussed the bill with NGI’s Shale Daily on Wednesday. “Apparently the language wasn’t as tight as it was intended to be, and in doing what we did we just clarified that language in SB 119 so that it’s totally clear as to what the intent was.”

The Southern Environmental Law Center (SELC), which opposes fracking, said it was considering its options in the wake of SB 119's passage.

"This is yet another example of the state attempting to lure the fracking industry to North Carolina over the objection of those who would be most directly impacted," SELC Attorney Brooks Rainey Pearson said Tuesday.

But Rucho said he thought this was the end of the debate, adding that foes of shale development “bent and misinterpreted” the original law. “I would expect this to be the end of it because there was no gray area,” he said. “It was clearly outlined in the clarification language.”

SB 119 was the last bill to pass the assembly for the session that ended last week. The legislature is to reconvene next April.

Last month, officials in Stokes County, NC, enacted an ordinance establishing a three-year moratorium on oil and gas development, including fracking (see Shale DailySept. 29). According to the SELC, Anson and Chatham counties have also recently enacted moratoriums, and Lee and Wake counties were planning to pass similar measures this month.

North Carolina is home to the Deep River Basin, a region the North Carolina Geological Survey said is a 150-mile half-graben that traverses most of the central part of the state in a southwest-to-northeast direction. The basin is divided into three sub-basins from north to south -- the Durham, Sanford and Wadesboro sub-basins -- each of which include about 7,000 feet of Triassic strata.

In 2012, the U.S. Geological Survey (USGS) estimated that there was a 95% chance the Deep River Basin held undiscovered resources that included 779 Bcf of natural gas and 35 million bbl of natural gas liquids (NGL) (see Shale DailyJune 21, 2012). USGS also estimated a 50% chance the basin held 1.53 Tcf and 75 million bbl of NGLs, and a 5% chance for 2.99 Tcf and 158 million bbl of liquids. The mean averages of the USGS estimates are 1.66 Tcf and 83 million bbl of NGLs.

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