The NC Mining & Energy Commission has requested public comment on a package of 120+ rules establishing an entirely new regulatory and permitting program for fracking operations in the state. This factsheet is intended to provide background information for concerned citizens planning to comment on a critical but somewhat obscure feature of the proposed program: the bundles of all state authorizations for drilling into a single ‘coordinated permit’ (15A NCAC 05H.1303).

As proposed by the Commission, the coordinated permit will merge multiple permitting processes into a single process led by staff of Division of Mining Energy & Land Resources, with review contributed by staff of other programs, including air quality, stormwater, erosion & sediment control, water resources, and the state geological survey within 30 days. According to a Mining and Energy Commission study group the coordinated permit only covers well construction and completion; once the well is in operation other environmental permitting may be necessary.

How the Coordinated Permitting Process Works

The applicant fills out the required forms and submits them to the Department of Environment and Natural Resources (DENR). Then multiple environmental divisions of DENR are allowed 30 days to review and make comments on the application. DENR is required to consider the comments from all divisions before approving or denying a permit (15A NCAC 05H.1307(d)). Whether the Department has to act on these comments is not mentioned.

The Coordinated Permit does not provide enough Environmental Protection

The proposed coordinated permit should be stronger in these ways:

• The permit requires applicants to include water management and waste management plans. This information includes where water will be sourced from and in what quantities. Additionally, the waste management plan requires that applicants have a basic plan for disposing of mining waste, including produced water and flowback. However, the rules do not require air quality management practices or plans for managing airborne based pollutants associated with fracking. Drilling operations have the potential to significantly affect air quality in North Carolina.
• The permitting process allows DENR to deny an application for environmental purposes provided that “the operation will have significant adverse effects” on the environment (15A NCAC 05H.1309(a)(3)). It is good that this stipulation is included in the permitting process. However, what constitutes significant adverse effects is not defined, and as such is left up to interpretation, which can vary depending on who is reviewing the application.
• The permitting process allows variances to be granted to operators provided that they made a “good faith effort” to comply with the requirements or are unable to comply with the requirements (15A NCAC 05H .0301(a)). Variances should be granted in only exceedingly rare circumstances after showing that environmental and human health protections will not be undermined. A variance should not be granted simply because an operator cannot comply with the rules. To do so undermines the rules and the protections that come with them.

Coordinated Permit and Monetary Funding

Permit fees may not be sufficient to cover all the costs associated with oil and gas exploration. This is especially concerning considering that fracking staff will not receive any additional funding according to Appropriations Act of 2014 (S744). Current funding sources are listed below. These funds will be used to directly support the oil and gas program.

• $3,000 fee per well drilled
• $450 fee per abandoned well
• Severance tax of 2% on oil and condensates
• Severance tax of 0.9% for natural gas (0.4% for marginal gas wells)

A Mining and Energy Commission (MEC) study group recommended that the NC General Assembly authorize an impact fee to help cover the costs imposed on local governments such as damage to roads and other public infrastructure. Unfortunately, the General Assembly has not acted on this recommendation, leaving these costs unaddressed.

Comments and Recommendations of the Proposed Rules

• The permitting process needs wording that explicitly requires the Department to address comments received in internal reviews by other DENR divisions under section 15A NCAC 05H.1307.
• Air quality permitting should be part of the application process. Studies have shown that gas drilling operations can release toxic chemicals into the air during multiple drilling stages. The MEC should require that wells be constructed to meet green completion standards to address this problem under section 15A NCAC 05H.1304. Green completion standards require the capture of methane and other gasses that are released during the construction of wells rather than releasing them which is the current operating procedure.
• The wording of section 15A NCAC 05H.1309(3) needs to be adjusted to quantify what constitutes a “significant adverse effect”. The definition of a significant adverse effect should be detailed in a manner similar to thedefinition of impact levels found in Arkansas’ recommendations for oil and gas development in environmentally sensitive areas.
• Impact fees, like those recommended by the MEC study group on funding levels and potential funding sources, should be included in the permitting process under section 15A NCAC 05H.1306. Local governments need these fees to recover the costs associated with hydraulic fracturing.
• Section 15A NCAC 05H.0301(a) of the proposed rules need to be rewritten so that variances are not so easily granted. Specifically, the phrase “has made a good faith effort to comply, or is unable to comply with the specific requirements contained in the rule or rules from which it seeks a variance” should be removed. This phrase should be replaced with language that states that a variance may be granted only if it can be thoroughly demonstrated that the protections from the rules in which the variance is requested will not be compromised.

You can download this factsheet and use it to submit your own comments here.