1. Overview of the NC Mining and Energy Commission Presented to the Environmental Management Commission January 10, 2013 Presented by: Tracy E. Davis, PE, CPM, Director Division of Energy, Mineral, and Land Resources 1

2. Mining & Energy Commission Fifteen Members – Three Ex officio – Four Governor appointments – Four Speaker of the House appointments – Four Senate President Pro Tem appointments 2

3. Mining & Energy Commission Members One member of county board of commissioners in Triassic Basin One elected official of municipal government in Triassic Basin Two representatives of nongovernmental conservation interests 3

4. Mining & Energy Commission Members (continued) Three Ex officio seats: – Chair of NCSU Minerals Research Lab – State Geologist – Asst. Sec. Of Energy, Dept. of Commerce Two representatives of the mining industry One geologist with experience in oil and gas exploration 4

5. Mining & Energy Commission Members (continued) One engineer with experience in oil and gas exploration One representative of a publicly traded natural gas company One licensed attorney with experience in legal matters associated with oil and gas exploration 5

6. Mining &Energy Commission Members (continued) One member of Environmental Management Commission knowledgeable in water and air resource management One member of Commission for Public Health knowledgeable in waste management 6

7. MEC Authority Develop a modern oil & gas regulatory program Adopt rules under the Oil & Gas Conservation Act (G.S. 113-391 and G.S. 143B-293.1 list over 25 specific types of rules required) Complete three studies related to funding sources, local government regulation and compulsory pooling 7

8. Limits on MEC Rulemaking Authority Rulemaking authority reserved to other state agencies: – Environmental Management Commission (stormwater and air pollution standards) – Dept. of Labor (health and safety standards for workers) – Commission for Public Health (waste management issues) Rulemaking authority is limited to onshore oil and gas activities 8

9. Coordination of Rulemaking DENR directed to coordinate rulemaking by the MEC, EMC and Commission for Public Health and complete rules by October 1, 2014 Rulemaking to be informed by consultation with technical advisors, stakeholders, and the public Existing statutes and rules should be reviewed and necessary changes recommended 9

10. Reporting Annual and quarterly reports to the Joint Legislative Commission on Energy Policy and the Environmental Review Commission – First annual report provided by October 1, 2012 – First quarterly report provided by January 1, 2013 10

11. Division of Energy, Mineral, and Land Resources Responsibilities Provide staff support to the Commission Issue permits for oil and gas activity Create a registry for “landmen” Enforce the Oil and Gas Conservation Act and rules adopted under the Act – Assess civil penalties – Issue compliance orders – Request AG to seek injunctive relief 11

12. Division of Energy, Mineral, and Land Resources Land Quality Section – Three existing regulatory programs: Erosion and Sedimentation Control Mining Dam Safety – New regulatory program: Energy - three positions were funded by 2012 General Assembly 12

13. Division of Energy, Mineral, and Land Resources Energy Program Staff: Walter Haven, PG, Energy Program Supervisor Katherine Marciniak, PG, Env. Senior Specialist Vacant, Geologist 13

14. MEC Standing Committees Two standing committees established by Senate Bill 820: – Committee on Mining – Committee on Civil Penalty Remissions 14

15. Additional MEC Standing Committees Environmental Standards – Hydrogeological investigations, collection of baseline data, well siting, setbacks, fracturing fluids, etc. Water and Waste Management – Limits on water use, water and wastewater management plan, waste disposal, etc. Administration of Oil & Gas – Pre-drilling activities, well construction, record keeping, well spacing, etc. Rules – Rules properly formatted, integrated properly 15

16. MEC Studies and Special Reports Study of Funding Needs and Financing – Identify sources of funding to address local government impacts, infrastructure repair, regulatory program costs (including remediation and reclamation of drilling sites) – Other study participants: DENR, NCDOT, N.C. League of Municipalities, N.C. Association of Co. Commissioners – Due: October 1, 2013 16

17. MEC Studies and Special Reports, Cont. Study of local government authority – Appropriate scope of local regulation of oil and gas exploration and development – Commission “shall recommend a uniform system” that allows some local regulation that does not prohibit exploration and development – Other participants: DENR, N.C. League of Municipalities, N.C. Assoc. of Co. Commissioners – Due: October 1, 2013 17

18. MEC Studies and Special Reports, Cont. Study current law on integration or compulsory pooling – Findings and recommendations for changes to the current state law – Other participants: DENR, Consumer Protection Division of the N.C. Dept. of Justice – Due: October 1, 2013 18

19. Stakeholder Group A group of individuals who represent the various stakeholder interests related to oil and gas management in North Carolina Meetings would occur as needed, perhaps every other month, starting with an orientation Meetings could be less frequent if the MEC does not need input at a particular stage in the process

20. Stakeholder Group (continued) To make discussions productive, membership would be limited to 20 to 25 people Group could disband once rules are adopted and regulatory program is established, or could continue to assist with program and rule refinement

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22. MEC Meetings To Date: September 6, 2012 (orientation meeting) September 28, 2012 (committee structure) November 2, 2012 (operating procedures and committee and study group appointments) December 18 – 19, 2012: – Committees & Study Groups* met December 18 – Mining & Energy Commission met December 19 *Compulsory Pooling Study Group met after MEC on Dec 19 22

23. 2013 MEC Meeting Schedule: January 24-25 March 7-8 May 2-3 June 6-7 July 25-26 September 5-6 (Final Meeting Before Study Group Reports Due) October 24-25 December 5-6 23

24. Ongoing Actions Hire Remaining Staff to Support Committees in the Rulemaking Process Changes in Commission Membership Expansion Budget Request Communication/Stakeholder Involvement Education & Web Publishing Public Relations/Presentations

25. To stay abreast of the activities of the Mining and Energy Commission Join the Shale Gas Listserv at: http://lists.ncmail.net/mailman/listinfo/denr.shale.gas Or Visit the Mining and Energy Commission web page at: http://portal.ncdenr.org/web/mining-and-energy- commission/home

26. Questions? 26 Tracy E. Davis, PE, CPM Director, Division of Energy, Mineral, and Land Resources (919) 707-9200 tracy.davis@ncdenr.gov