The recently enacted Energy Modernization Act — authorizing shale oil and gas exploration, development, and production in the state of North Carolina — contains a provision that prevents individual city governments from enacting their own anti-development regulations which seek to ban or hamper these activities.
Any local ordinance that, by intent or in effect, impedes operation of energy development activities can be directly challenged by petitioning the Mining and Energy Commission (MEC) for review and remedy, including the possible pre-emption of the local act. The new law also automatically repeals any local ordinance that’s already on the books which tries to prohibit the process of hydraulic fracturing — more commonly known as fracking.
This prohibition on local regulation of fracking is needed to “maintain a uniform system for the management of oil and gas exploration, development, and production activities,” according to the language of the law. Without this provision, local governments could create a patchwork of uneven regulations across the state that might thwart development and could result in expensive lawsuits.
The Energy Modernization Act does not change the general use of local planning and zoning ordinances to the extent those ordinances apply equally to all industries in a particular zoning classification.
The MEC is in the final stages of writing and approving rules for fracking, a process that’s taken over two years and involved over 200,000 public comments from nearly 30,000 individuals and groups. By law, the commission must deliver its recommendations to the General Assembly by January 1 for final approval. The MEC is on target to make that deadline and the commission will meet again on December 17.
In the Courts
Across the country, attempts at bans on fracking by local governments have been controversial and in many instances challenged in court.
In July of this year, a District Court judge in Colorado struck down a 2012 local ban, saying that it both clearly conflicted with the state’s regulations and its interest in the efficient development of oil and gas deposits. “While the court appreciates the Longmont citizens’ sincerely held beliefs about risks to their health and safety,” Judge D.D. Mallard said, “the court does not find this is sufficient to completely devalue the state’s interest.”1
Activists supporting local fracking bans often warn of the risk of water contamination and associated health problems. The activist group that prevailed in New York claims that there is “overwhelming evidence demonstrating that it poisons water and makes people sick.”2
But on September 15, 2014, the U.S. Department of Energy released a landmark federal study on fracking and concluded that there is no evidence that chemicals or flowback from shale gas drilling cause contamination of drinking water. Other scientific studies have come to the same conclusion: that “faulty well construction is the root cause of most problems, not fracking chemicals migrating up through rocks.”
Now it’s personal
Bans imposed by city and county governments deny landowners the ability to profit from the development of the mineral assets that exist deep beneath their own property. In some states, individual royalty holders miss out on reaping the benefits of fracking when a ban is imposed.
According to a June 2014 study, the present value of untapped oil and gas below 50 sections of land in Boulder County, Colorado — totalling just one square mile — is estimated to be between $1 billion and $2 billion.
“This has become personal,” said Michelle Smith, president of the Rockies Chapter of the National Association of Royalty Owners. “The freeze is economically damaging to mineral-rights owners, many of whom are elderly and depend on royalty checks to pay for utilities and food. People rely on oil and gas for their livelihood.”3
Indeed, while the courts work out the propriety of local fracking bans, they may soon also have an opportunity to determine whether these bans constitute a government “taking” that must be compensated with taxpayer money — a consequence that could negatively impact services, bond ratings and tax burdens.
In the Public Square
However the issue is settled in the court of law, the court of public opinion is seeing the clear economic benefits of participating in the shale gas boom. In Texas, fracking has generated an astonishing $1.26 billion this year to support K-12 public education, as reported by the Texas General Land Office in September.
Two big northeastern states are in a classic contest over fracking and are demonstrating the real-world consequences of both pro-fracking policy and anti-fracking policy. The neighboring states of New York and Pennsylvania have very different views on fracking. While the economy in New York struggles and the state remains locked in a legal battle over a statewide ban on fracking, just across the state line, Pennsylvania welcomes fracking and is enjoying economic renewal following the collapse of the steel industry in the 1980s. Mayor Gabriel Campana of Williamsport, PA, explains that, “for every well that’s created, there is over a hundred jobs, different types of occupations for each well.”
“Shale energy production is generating huge revenues for Pennsylvania – in addition to driving job growth,” said Stephanie Catarino Wissman, executive director of the API-PA. “Pennsylvania has collected more than $220 million dollars from shale development fees for 2013 production. That translates into better roads, better housing, and better services for families and communities across the state.”
The economic benefits of fracking are even being felt in nearby non-fracking states. The New York Times reports:
“Although New York continues its ban, some residents are feeling the benefit of living right next door to fracking-friendly Pennsylvania as the prosperity spills over the border. This new base of customers — workers from Oklahoma, Texas and other parts of the country with long experience in drilling natural gas wells — are drawn to the region by jobs just across the state border in rural Pennsylvania, where a kind of drilling known as horizontal hydraulic fracturing, or hydrofracking, has vastly expanded over the last two years. In the same period, New York State environmental officials have been weighing whether such drilling should be allowed here. Until it does, Chemung County is savoring a hydrofracking boom without the hydrofracking.”4
For more information on the fracking process, please read this comprehensive article we published earlier this year.
- The Denver Post: “Boulder County judge strikes down Longmont fracking ban“
- New Yorkers Against Fracking: “Statement re Pro-Fracking Lawsuits“
- Bloomberg, “Fracking Bans Enrage Coloradans Sitting on Energy Riches”
- New York Times: “With Gas Drilling Next Door, County in New York“