In July 2012, North Carolina’s state assembly overrode the governor’s veto to enact a bill lifting a ban on hydraulic fracturing and requiring state regulators to pass and implement rules relating to hydraulic fracturing activities, including the disclosure of chemicals to state agencies and local emergency responders, by October 1, 2014.

On May 15, 2014, several state senators introduced a bill (S.B. 786 or Energy Modernization Act) to extend the deadline to January 1, 2015, and to modify certain provisions relating to oil and gas activities.

The bill provides for the confidentiality of hydraulic fracturing chemicals, “upon a showing satisfactory to the [North Carolina Oil and Gas] Commission by any person that [the] information…, if made public, would divulge methods or processes entitled to protection as confidential information…” § 113-391A(b). The designated custodian of the confidential information would be the state geologist. § 113-391A(b).

There are exceptions for health care providers and fire department officials who need the information for emergencies. If confidential information is given to the emergency personnel, the owner of that information must be notified within 24 hours. The owner may require the emergency personnel to sign a confidentiality agreement. § 113-391A(c)(2) and (3).

The bill provides for penalties if the confidential information is unlawfully disclosed. Any person who has access to the confidential information and who knowingly discloses that information is guilty of a Class I felony; and, if the information is knowingly or negligently disclosed, the person is subject to civil action for damages. § 113-391A(d).

Other provisions of the bill include:

  • At least 30 days before initiating any operations, an oil and gas developer or operator must provide the lessor with written notice that describes the exploration or development plan. § 113-420(b2).
  • There is a presumption that an oil and gas operator is responsible for contamination of all water supplies that are within one-half mile radius of a wellhead unless (1) the contamination existed prior to the commencement of drilling activities, (2) the landowner refused pre-drilling testing of the water, (3) the water supply is not within the one-half mile radius of the operator’s activities, or (4) the contamination was caused by something other than the operator’s activities. § 113-421(a). 
  • Any local ordinance that prohibits or has the effect of prohibiting oil and gas exploration, development, and production activities is invalid as being preempted by the Mining and Energy Commission. § 113-415A(a). However, a local zoning or land-use ordinance is presumed to be valid and enforceable to the extent the ordinance imposes requirements, restrictions, or conditions that are generally applicable to development, including but not limited to setback, buffer, and storm water requirements. § 113-421(f).
  • Subsurface injection of wastes from oil and gas operations including hydraulic fracturing treatments is prohibited. § 113-395B.
  • Persons collecting seismic and geophysical data may only conduct such activity by undershooting from an off-site location unless the landowner’s consent is given in writing. Persons conducting seismic activities are civilly liable for any physical or property damage caused by those activities. § 113-395D.


This post was written by Barclay Nicholson (barclay.nicholson@nortonrosefulbright.com or 713.651.3662) from Norton Rose Fulbright’s Energy Practice Group.