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Senate | May 21, 2014 | Chamber | Senate session

Full MP3 Audio File

Senate will come to order. Sargent At Arms, close the door. Members will go to their seats. Members and guests in the gallery, please silence all electronic devices. Leading the Senate in prayer today is Reverend Peter Milner, Senate Chaplain. All members and guests in the gallery will please stand. [SPEAKER CHANGES]. Let's pray together. Father, thank you for sending your holy spirit here, right now, that carries us along as a body. You've brought us this far and you're gonna bring us to the destination that you would choose fit. Lord, none of us are appointed by chance. Nor have any of us have gotten to this place on our own esteem. We are keenly aware of that. This is a secret, sovereign appointment. May we be humbled today by that knowledge. Thankful for the gift of this place, this assembly, those that have come before, those that will come after us. And so Lord, we can feel the largeness of this place. We're only gnats sometimes Lord. What would it be like if we were to worry less about people's opinions and the approval of others? So Lord, may our confidence to legislate calm from your favor, from your assurance, rather than from our own ambivalence or our own attempts to make up what we want to make up. Give us freedom and give us faith. Thank you Lord for that. We pray in Christ's name. Amen. [SPEAKER CHANGES] Senator, please recognize for a motion. [SPEAKER CHANGES] Thank you, Mr. President. The journal for Tuesday, May 20th 2014 has been examined and found to be correct. I move that the Senate dispense with the reading of the Journal and that it's found approved as read. [SPEAKER CHANGES] That objection, the journal from May 20th stands approved as written. Senators today we have leaves of absence, granted for Senators Berger, Harmon, and Soucek. Senators, we do have a doctor today and a couple of nurses today. With us today, we have Dr. Ward Adcock from Gastonia, North Carolina. Our nurses are Jennifer Lam from Rocky Mountain, North Carolina and Anne Marie Patterson Powell from Cary, North Carolina. If you all please stand and be recognized, thanks for your service in the Senate. Senators filed a motion, Senator Daniel Burke of Cleveland County, the chair is happy to extend courtesies of the gallery to the Cleveland County Chamber of Commerce. Members from the chamber here with us, please stand and be recognized. File the motion of Senator Harry Brown of Onslow County, the chair is happy to extend courtesies of the gallery to the Jacksonville Onslow Chamber of Commerce Leadership Group. If you're with us, please stand and be recognized. Everybody must be in the house today. To file the motion of Senator Josh Stein of Wake County, the chair is happy to extend courtesies of the gallery to Superior Court Clerks from across the state, along with Lauren Freeman, clerk of Wake County and President of the North Carolina Conference of Superior Court Clerks. If we have any of those folks with us today, please stand and be recognized. Thank you for joining us. Senator ?? is recognized for a motion. [SPEAKER CHANGES] Thank you, Mr. President. First motion, a move to rules be suspended to the end that all the veterans in the gallery may continue to wear their hats while Senate is in session. This is rule 17A. [SPEAKER CHANGES] Objection still ordered. [SPEAKER CHANGES] Thank you, Mr. President, members. I moved that Senate resolution 809, Fair Valley Veterans Appreciation Day be moved to the front of the calendar. [SPEAKER CHANGES] That objection's still ordered. [SPEAKER CHANGES] Thank you.

Quite a retinue of things he had done. He was a member of this body, he was an adviser to the governors, and he was a mentor a a lot of young legislators from both parties, I might add. Zeb was a very unselfish person, he gave of himself entirely and I can remember, I just got to know him over the past six years or so, but there are some around who knew Zeb Aly forty years ago, some of his law partners who are in here today. Zeb was a great fella and I understand he represented all of the veterans organizations in the state before the general assembly as their lobbyist, pro bono. Now knowing Zeb Aly that's not like him, but he did that as a labor of love because of the roles that the veterans have played in our state for all of these years. Now, over the past several years, Zeb was not in the greatest of health, but he would hold court every morning that general assembly was in session down in the legislative snack bar at breakfast time, and he had something wise to say about everybody that walked in the door, be it an old guy like me or a young woman, he was much more flatteringly speaking about them than he was me, but he was great to sit with, and hear him with all of his stories. Now before we got into this silly rule of not being seen in public with lobbyist anymore, back in the days lobbyists and legislators did hang out together quite a bit at night. Zeb had several rather infamous watering holes around town, where he would go and invite people to come in and share a little spirits with him , and Zeb was quite the character along those ways. One of my fondest memories was hearing him sing melancholy maybe. Zeb Aly was certainly a true friend to not only the general assembly and this state government, but to the veterans and that's where our concentration is today. And Mr. President I commend this resolution to the members of the body and the memory of Zeb Aly and in honor of all of our veterans here today. [Speaker changes] Thank you senator. Any further discussion? Bearing none, the question is for the senate is the passage of SR 809. [Speaker changes] Mr. President. [Speaker changes] Senator Davis what purpose here lies? [Speaker changes] To just speak briefly on the bill. [Speaker changes] Senator Davis you have the floor. [Speaker changes] I think it's important for us to recognize all of our veterans, those who have served. But I do want to pause, and say, I was wondering if I should, but I think it's appropriate to stand to our disabled veterans, those who are reminded everyday, of the service the sacrifice, the pain, the scars of battle, especially to our disabled veterans, we continue to say thank you for your service and thank you for what you endure for us. Speaker changes] Thank you senator. Any further discussion? Hearing none. The question for the senate is the passage of senate resolution 809. We will take one electronic vote, all in favor vote aye, opposed vote no, five seconds will be allowed for the voting, and the clerk will record the vote. Curtis Makisik. [Speaker Changes] aye. [Speaker changes] senator Curtis. [speaker changes] aye. [speaker changes] Everybody's in. Forty seven having voted the affirmative, and zero in the negative, SR 809 is adopted. At this time the chair is honored to extend courtesies to the gallery to the veterans who are here with us today in the gallery as well as any veterans that are on the...

The floor of the Senate please stand and be recognized. Thank you for your service to America. Senator Apadak is recognized. [SPEAKER CHANGES] Mr. President I believe the next bill will be SB 786, energy modernization act. I move rules be spend it to the end of Senator Rucho may have staff join him on the floor. [SPEAKER CHANGES] My objection, Sir ordered. Senator Harditil has a leave of absence for the remainder of this session. Also, upon the motion of Senator Newton and Bryant of Wilson county. The chair is happy to extend courtesies of the gallery to Wilson North Carolina chamber dynamic leadership program. If your with us from that program today please stand and be recognized. Thank you so much for being with us. So, at this time Senators were going to move into the remainder of calendar public bills, second reading roll call bill SB 786; the clerk will read. [SPEAKER CHANGES] Senate bill 786 energy modernization act. [SPEAKER CHANGES] Senator Rucho is recognized. [SPEAKER CHANGES] Mr. President thank you and members of the senate. Yesterday, we had both in commerce and finance a rigorous debate and also discussion and questions regarding SB 786 energy modernization act. This bill is a continuation of our process to make North Carolina energy independent, to diversify our economy into the oil and gas service industry. And what that does ladies and gentlemen it is will promote economic, stimulate economic growth and create many good jobs beyond the 220,000 we've created up to this point. I will go through briefly with each of the items that are of top priority so that what we can do is continue our chance to better understand this bill. It is a very important bill. And we will be able to respond to any questions subsequently. First part is on section one, where we did change the date. That allows the mining and energy commission an opportunity to have some additional time if need be, to January 1st of 2015. To allow them to do the proper due diligence and providing us with the safe and efficient rules and regulations that will be the best in the entire country and North Carolina will be proud of them. Second, we will talk about some A.P.A regulation changes that basically allow for a process of changing certain the time schedule from legislative date to calendar days so that we can expedite the process and allow a little more efficiency in that sense. Well also talk about, in section 2f were exempting fiscal notes so that well have an opportunity to and again there is a date certain or a sunset of December 31st so that the oil and gas commission will have the opportunity to move forward as they make the decisions in managing Shell Gas exploration and development in North Carolina. The, part 3 section 3a, there is a date certain that has been established. And as we were discussing yesterday, what this does, it authorizes the department of energy, excuse me of environment and natural resources and the M.E.C which is the Mining and Energy Commission to issue permits for

Oil and gas exploration, development, production, etc., including horizontal drilling and hydraulic fracturing. What this does is it establishes a date certain so that what many of the businesses or industries that are looking to come to North Carolina to help us develop our energy resources, will know how to plan for the future. And what this does is it gives them an opportunity to make, to prepare themselves for the investment in our state. Going on to Section, or Part 4, there will be, since the Mining Energy Commission will have achieved its goals early in '15, then we will have established a North Carolina Oil and Gas Commission. These are the people that don't do the due diligence and planning the rules. But these are the ones who will help us implement the process if that those rules have been established. We will also restore the mining commission back to its original purpose of overseeing the mining in the state of North Carolina. Section 8, we have established what is a trade secrets. And there are a lot of folks that are saying, wow, trade secrets. We have trade secrets in the state of North Carolina all the time. And under the circumstances there was a procedure for them to be managed. Whether you're talking about trade secrets in products liabilities and the like, and also under oil and gas trade secret protection. It's just a requirement that is there, but we do have a process to store, safeguard and make available trade secrets upon any point during an emergency situation, so that the first responders, the police in that area and/or any medical staff will be able to know exactly what is going on and will be able to have access immediately upon request. Section 9 talks about the landowner will be responsible for providing the survey if there is any type of dispute. And it takes the state out of that, primarily because that will be a battle between the individual and/or any type of neighbor or any kind of driller in that sense. The Section 11, when there is a fee for drilling. That fee from the DENR actually is there to pay for the paperwork and all that's necessary for that one piece, roughly two-acre plot for the drilling to occur and that first fee was set at $3,000. And then talking subsequently with administration and the like, we found that $1,500 of additional for every other well beyond that point. So the first well is $3,000 permitting fee and any one beyond that would be $1,500. Since the work has already been done, there's no reason to have to pay a higher price for redoing the same work on that site. We also are clarifying monitoring of the water quality. This has always been a key part of this and I will tell you that Chairman Womack of the Mining and Energy Commission and his MEC, Mining and Energy Commission members, have done a remarkable job over the last two-plus years in putting together the rules and regulations that will safeguard shale gas exploration and development in North Carolina. And again, as I mentioned earlier, will lead to North Carolina being energy independent. And that can't do anything but to help our businesses and small families survive in or state even at a higher level. But Section 13 clarifies the area to monitor water quality. And what we did establish is a one-mile diameter from the well site, which is half a mile radius, which is the strictest size of actual radius in the country. It's second,it's actually the strictest. Pennsylvania was at 2,500 feet and we'll be about 2,600 and some change. So what that does is it allows for monitoring of the quality of water during the entire drilling process, to make sure that there is no contamination and this will help safeguard our environment. Again, a continuation of 13, there is a requirement that any type of information that is received on the water quality must go to DENR within 30 days, and also to.

adjacent property owners as a matter of sharing the information. There were a couple of good things that were done in addition and what was accomplished so that there will be no misunderstanding is the rules that are set by the state of North Carolina and built on science and safety within the environment and ?? are the rules that we will all live with and they can’t be exceeded by local rules. It also prevents waste water from being injected back through waste water wells. The way the MEC has established it, all the waste water products will go back and be recycled to be reused again which is a very efficient process of doing so. Another area that we’re talking about is providing noise abatement as we reduce the sound from what would be natural gas compressor stations which will also improve the environment surrounding that kind of activity. The other part that we were able to activity during our ?? visit to Arkansas, and we used a number of their very good suggestions included in our rules and regulations and also on this legislation, is a bad actor provision. Now what that means ladies and gentlemen is the fact that other companies, drilling companies alike have been working elsewhere in the country and they may not have abided by safety rules, they may not have paid their bills, they my not have abided by environmental laws and like, and part of the DENR process in evaluating whether a permit should indeed be issued is that if you are a bad actor that is a reason not to allow you not to receive a permit in North Carolina. We only want the top quality drillers in this state so that whatever we do will be done the right and the safe way. There’s always a provision that seismic serving cannot be considered trespassing because it never really impacts the local property owner’s lands. Sections seventeen through nineteen parts six is the severance tax. Now what that is, you can see the chart before you talking about oil and gas condensates, marginal gas, and gas in general. The first years ’15 to ‘18 an incentive to convince and to entice drilling to occur in North Carolina so we can indeed find out exactly what we have in North Carolina and that is if you don’t drill you won’t know just the quality of the oil and gas, and actually natural gas and condensates. So it is an incentive to say come here and you can get a cheaper cost on taxes, but then you see in ’19 and ’20 and so forth all the way out beyond 2023, that tax increases and is going to be based on the price of natural gas which is a sliding scale that will be very beneficial to the state of North Carolina as we receive revenues and as this industry is growing. The remaining parts were dealing with studies and the studies that were part, and this is an additional effort to try to better understand exactly what we will be doing in planning for the development once we can drill and identify the natural gas reserves we have there, you can’t bring it to the marketplace without transmission lines and all the other things that will be necessary for that kind of activity to actually generate the good quality jobs and the like. So we’re studying what type of infrastructure is going to be required to accomplish how we would do it but there’s no way of knowing exactly where it is until you know where you have the natural gas reserves so it’s just a planning phase and that’s why it’s a study. We are also studying the feasibility of an LNG port and another very important part and we experienced that in Pennsylvania when we were there if and what effect that kind of traffic and transportation pressures will have on the traffic infrastructure in the area that the drilling is occurring and we have the Department of Transportation and DENR..

Help us determine what steps need to be taken to be sure those road infrastructures are protected along with our bridges. I believe that that probably takes care of the significant parts of the bill, and I will ask members of the committee to pay close attention and to go on to the MEC, Mining and Energy website. And this is a copy, hard copy of all of the, there’s roughly 120 rules and 103 pages of what has been worked on by Chairman Womack and the Mining and Energy Commission. I urge you to read it. It’s public knowledge. It’s there. And my understanding is that each of those are nearly unanimous from the entire commission as to how these rules were approved. The process will continue, and once they finish the rules, it is turned over to the Rules Review Commission who will go through the rules, make sure that they’re in compliance, and then subsequently turn it over to the General Assembly sometime after January, 2015. I urge members of the committee, public to spend some time looking and reviewing these. These will be the actual perfect example of what rules and regulations in shale gas exploration and development for the entire country. We were able to use people’s good ideas. We were able to find the mistakes they made. And we put North Carolina in the position where we can avoid or minimize any risk in any manner. Mr. President, I believe I’ve reviewed the bill. I’ve talked about the rules and regulations that are there. And I would be willing to answer any questions. I have some staff to assist me on any legal issues. And then subsequently, I know Senator Newton and Senator Brock would like to add a few comments. [SPEAKER CHANGES] Thank you, Senator. Is there any discussion or debate? Senator Newton, what purpose ?? [SPEAKER CHANGES] Speak to the bill. [SPEAKER CHANGES] Senator Newton, you have the floor. [SPEAKER CHANGES] Thank you, Mr. President. Colleagues, we’ve been at this process for quite some time. North Carolina began investigating the possibility of developing our energy resources through shale development before I was elected. I was elected in 2010. Governor Perdue looked at this issue. I believe she even took a trip to Pennsylvania to check it out. As I recall, her Administration concluded that we could develop our shale resources here in North Carolina safely and responsibly and that it would be a good thing to do. When I was elected in 2010, beginning in 2011 with Senator Rucho and others in the chamber, we began the process. We legalized horizontal drilling. We legalized hydraulic fracturing. And we began the course of what we needed to do to put in place a modern, regulatory system to make sure that if we’re going to develop these resources, that we do it safely and responsible, so that our citizens, so that these pages and their families, so that our economy would grow. Now, colleagues, all across this nation, wells are being drilled and have been for more than a decade. Millions and millions and millions of dollars of economic activity have been occurring in states like Mississippi, Louisiana, Arkansas, Pennsylvania, West Virginia, Ohio, Colorado, Oklahoma. Oh, yeah, Texas, North Dakota. I read a story in the Wall Street Journal not long ago about one of the only stores that Home Depot was going to open anywhere in the country, because they weren’t in an expansion mode, was going to be in North Dakota. And that was a very tiny town with no population. I wish I’d a brought it with me today, but I didn’t. And you wouldn’t think they’d put a Home Depot store there in the middle of nowhere. And the reason was because that was where the action was. That’s where the activity was. That’s where people wanted to buy for their homes and their home improvements. That was where they needed a store. And North Carolina, unfortunately, has missed out on some of that because we have been very deliberate. We’ve been very steady in our progress towards making sure that we are ready to develop our shale resources. So, after almost four years of work, and it’ll be close to five years by the time permitting would be authorized under this bill, we

Note: I also used "??" for words/names that I was unsure of. . . . ready to have the jobs come to North Carolina. My colleagues have heard me say it before, and I will say it again. North Carolina needs the jobs, and America needs the energy, and I’ll add something to that. I’d certainly rather buy the energy from my fellow North Carolinians than from some other country. I’d much rather send my money to Lee County or wherever it is that they found the Shell gas here in North Carolina than in some of those countries that we read about in the papers and on the news that don’t like us so much. I’d whole?? lot?? rather see new millionaires in Lee County than gazillionaires in Saudi Arabia. I challenge my colleagues who – who question whether or not we should do this. Those of us – those that we have heard in the media – tell us time and time again how the – how the world is going to come to the end, and we’ll never be able to drink a clean glass of water again if we allow this to go forward. That’s simply not the case in the other states around this country. Other states have figured out how to do it. After four years, we have slowly and carefully proceeded through this process to create a modern regulatory regime to make sure that this state will do it safely for the benefit of our citizens. This bill is one of the final steps in this process. This bill will ensure that we have these rules that Senator?? ?? referred to – the 120 rules that the MEC?? has been working on for years now that I think only one of them had one opposing vote. I believe all the rest of the rules passed unanimously. These rules that – that ensure the rules themselves – ensure that we have full disclosure of what the compounds are, requiring that these mixtures be disclosed to Frat?? Focus?? I believe that is – I have it here in front of me – Proposed Rule 15ANCAC05H.1601 – Chemical Disclosure Requirements. Go online and read it. It’s a pretty good set of rules. We’ve had the opportunity to look at what other states have done for years. We've had the opportunity to look at the mistakes that they’ve made and the things that they’ve learned, and North Carolina is in a great place because we didn’t have to make those mistakes. We didn’t have to have those learning pains. We were able to look at everybody else and say, “that’s good for North Carolina.” That’s what we need to do in North Carolina. That’s what’s going to protect our people and bring us jobs. Ladies and gentlemen, it is time for us to move forward. It is time for us to move beyond talk. It is certainly past time for us to move beyond the lies, the made-up facts, the “sky is falling” mentality. It is certainly time to move beyond the folks who want to turn the lights off. It is time for us to acknowledge that as my good colleague, ?? Tucker, pointed out in committee yesterday, this technology has been around since the 70’s. It’s time for us to move into a modern energy economy, and it is long since past time for this state to get into the energy business. I commend the bill to you. I urge your support, and as Senator?? ?? has said, I stand ready to answer your questions. Thank you. [SPEAKER CHANGES] Mr. President [SPEAKER CHANGES] Senator Brock. [SPEAKER CHANGES] Speak to the bill. [SPEAKER CHANGES] Senator Brock has the floor. [SPEAKER CHANGES] Working in the process for a long time, we’ve heard and – talked to me about – or I’ve talked to y’all about – my family that came to North Carolina to set up the first ?? in Lincoln County because of the energy and what energy means to economic development. But when we’re looking at this bill, one reason why I was very interested in it is where I live – where my family lives, maybe not – not on the property where we think it might be, my – my area, my district, or people I go to church – people I go to church with, my community, people I see on an everyday basis, and I’ll look at them eye-to-eye about how will we craft legislation, how the rule process will go through to make sure we will make this as safe as possible. And one thing, as Senator Newton said that . . .

With this slow deliberate process that we did in North Carolina we did not have the growing pains as other states. Arkansas had over a hundred whales in the ground before they started the rule process. We're way ahead of that, way ahead of that and we've looked at Pennsylvania, all the other states, we're getting to the game really late but you know what we're not going to have the missteps they did. You know as far as our dependency upon foreign sources of fuel, of what we could do here in North Carolina, what it would do to us if we ran more pipelines through the state, how it would help our military installations at Camp Lejeune and Fort Bragg. We've got transmission line that goes right up through my district, what if that went through everyone's district? Of how industries can latch onto natural gas, cut their fuel cost, cut their operation cost. I talked to one farmer, he said if he had natural gas his energy consumption would drop by two hundred thousand dollars per year. Imagine that would do with our IT companies we have in this state where some of our data farms pay almost a million dollars a month in energy bills, a million dollars a month of how we can drop the price, how we become competitive. A paper I wrote in college how economic develop follows cheap energy or low cost energy, this is it. This is how we get there and it's interesting we look at economic development and we look at all the incentives and all the packages we try to lure industry into the state and they always say the crown jewel to get, one of the big factories to get is an automobile plant manufacturing facility. Now I've got freightliner in my district and when we had the trucks rolling out before the EPA regulations on sulfur engines, it was fantastic and an automobile plant is a billion dollar investment by the automobile companies. When we were in Arkansas there were boys out there who said 'You know what about the automobile plant, that's what you're after, every state's after it. It's a billion dollar investment'. Do you know how much was invested by the companies last year for natural gas at Arkansas? A billion dollars. We get our automobile plant every year. Now we went through some really rough times and we're slowly getting out of them. Now Senator Hartsell's not here right now but when I first came to Raleigh one of the first meetings I had was over at the commerce building that the largest layoff in state history was happening in our districts. I had family in that plant and already went through an economic depression, the economic textbook version of our economy was a depression. Textiles, tobacco, and furniture were going, going, gone. But looking at what we have now, the opportunity we have and a way to do it in a safe way, this will start bringing the jobs here and those people we've reached out to across this nation and all these different areas we're way ahead of it, we're already doing it in our community college program. So when they come in to start the process it's not just people from other states, North Carolinians are working here. Arkansas said we saw people coming right across the border from Texas, we're going to have North Carolinians here as well working. I urge you to vote for the bill and let's get North Carolina to be first in economic development. [SPEAKER CHANGE] Senator Hunt what purpose do you rise? [SPEAKER CHANGE] Speak on the bill. [SPEAKER CHANGE] Senator Hunt has ?? to speak on the bill. [SPEAKER CHANGE] Thank you Mr. President. First let me say I do like the bill. I like the energy independence that it's going to bring us but we want to have the absolute best bill that we can have. The question I have, and I don't need an answer on the floor today because it's apparently very complicated. The question I have is are binding capacities sufficient to guarantee to safety of these whales? When I read the bill I just have difficulty quantifying what is the binding amount.

[0:00:00.0] So, as old Monte family hasn’t do that I can tell you I wouldn’t had a contractor that didn’t have a performers mind, the performers mind is cheap that if you, if the developers and if the contractor in this case the driller don’t do his job he is got the financial aware with it to come in there and clean up, if he does that chance make a miss. Also, binding companies would do, a lot of do diligence for you, they would not write them on if somebody is not qualified, they hadn’t got experience they don’t have a background in this. So, between today and tomorrow I’m gonna be trying to find out similar answers about binding capacity. You can get a one million dollar bind for $10,000. If you are qualified in drilling and that’s peanuts and the grand scheme is saying it’s a drilling these rails and they just seems to me we need to make sure that we are not passing an opportunity to have the financial backing that we need if something does go wrong, thanks. [SPEAKER CHANGES] Senator Stein what purpose you have? [SPEAKER CHANGES] I have ___[??] amendment. [SPEAKER CHANGES] Senator Stein forward your amendment is the amendment on the dashboard. [SPEAKER CHANGES] It is. [SPEAKER CHANGES] Amendment is on the dashboard. Members you can pull that up. [SPEAKER CHANGES] Senator Stein moves for amendment bill. [SPEAKER CHANGES] Senator Stein has recognized and speaks to the amendment. [SPEAKER CHANGES] Thank you Mr. President. The provision having to do with the chemical compounds and the packing fluid it is my strong belief that we should know, the people should know what those chemicals are. You don’t have to disclose the formula the relative weightings of those chemicals you just disclose the ingredients just like on the side of a box of cereal it take you all the different ingredients that are in that cereal they don’t tell you how much of each of those ingredients are in there that’s the secret not what the ingredients are. This bill keeps the people for knowing what the chemicals in the packing fluid are? My amendment doesn’t do however with the entire provision it focuses on Subsection B which is on page 12 lines 5 through 11 and it does a very simple thing, it gets rid of what is a disproportion of penalty, you all have made a felony for somebody who discloses the chemical compounds to somebody even if that person thought that person was entitled for the information. The only knowing requirement is that the person knows that they were disclosing it but if they thought they are disclosing it to somebody who isn’t entitled for that information you made that person subject to a felony. We have state law and trade secrets, in 24 and 66 it is entirely civil as a consequence, we have got the ___[??] management article it is a ___, I think this is wholly disproportionate particularly when this information should be public in the first place. You are happy to take any questions. [SPEAKER CHANGES] Any question, discussion or debate for Senator Stein? [SPEAKER CHANGES] Senator I want to ask about the amendment. [SPEAKER CHANGES] Senator ____[??] has forward the debate amendment. [SPEAKER CHANGES] Thank you Mr. President and thank you Senator Stein for your amendment ___[??] College not disport the amendment, if we understand it correctly if the ___ portions relating to the disclosure of this we are requiring all the chemicals or solutions that they will be held by the state geologist. So, there is disclosure, it’s just not a public disclosure in order to protect the trade secret. And also the rules that I talked about earlier the rules that the MEC has proposed and we expect to be come into effect will also require those compounds and solutions to be put on which is called Fracfocus which is a wide spread depository that deals with a number of aspects of that. So, this is unnecessary, this amendment would, it would tend to harm our ability to move forward, there are certain industries that we all understand what trade practices are and trade secrets are and a number of companies are concerned that we put a competitive… [0:04:59.7] [End of file…]

Advantage if those are revealed so I urge you to vote against the amendment. [SPEAKER CHANGES] Mr. President. [SPEAKER CHANGES] Mr. President. [SPEAKER CHANGES] Senator (??) you are recognized. [SPEAKER CHANGES] To debate the amendment. [SPEAKER CHANGES] Senator (??) has the floor to debate the amendment. [SPEAKER CHANGES] Senator Newton provided some good insight. The bottom line is that the Mining Energy Commission and the DENR have had a chance to review this and came up with what is a very reasonable and safe way to manage a trade secret. The term felony is also in line with a previous part of the law that in the case that there is hazardous waste. That kind of provision is there for a felony. There are areas that I may be as sensitive and are down but the bottom line is the Mining Energy Commission came up with this. It makes good, positive sense and it allows us to be able to attract industry here. I’m sure Senator Stein, with his vast knowledge in organic chemistry and all the other good things would be well served with all of those chemicals but the reality is that is available for the first responders, for the police aid agencies, for the medical teams that will be responsible to meet that and there will never be a problem with them understanding exactly what’s involved. I urge the Senate to vote down this amendment and let’s move this Bill forward. Thank you. [SPEAKER CHANGES] Any further discussion today? Hearing none, question for the Senate is passage of Amendment One. All in favor vote aye, opposed vote no. Five seconds will be allowed for the voting and the clerk will record the vote. Bingham, Bingham no. Seventeen having voted in the affirmative and twenty-nine in the negative. The amendment fails. The Bill is back before the body. [SPEAKER CHANGES] Mr. President [SPEAKER CHANGES] Senator McKissick, what purpose (??) [SPEAKER CHANGES] Speak on the Bill. [SPEAKER CHANGES] Senator McKissick has the floor. Speak to the Bill. [SPEAKER CHANGES] I have heard a lot today about the need for us to move forward expeditiously in issuing permits to go, for someone go out in our countryside with cracking crews and begin cracking right away. But I think if you were to ask the average North Carolinian what they thought, they would tell you that they would want you to be cautious, deliberate, thoughtful, and make certain that when rules are adopted relating to cracking in this state that it protects our clean drinking waters, that it protects our environment. Many of us have seen the stories and documentaries about fracking up in Pennsylvania and other places where they go in there to someone’s home and they turn on the faucet you see flames coming out sometimes. Flames coming out, that’s not what I want to see in North Carolina. I don’t want to see that in anybody’s well. I don’t want to see that even be a possibility. If it takes us an extra year to get it right, it’s what we need to do. We do not need to go out here and establish a drop dead date, July 1, 2015, and say we are going to be issuing permits regardless of whether a variety of issues have been resolved and addressed fully and completely. Need a full, complete set of rules, not a partial set of rules. I commend the commission for adopting the rules they have up until this time but they just don’t go far enough in addressing a lot of critical issues that we need to be concerned about. I know there are many people who I have spoken to who are concerned about the compulsory poling issue. What’s going to happen to those who don’t want to participate? There are a lot of people who have looked at this Bill the way it is drafted right now and they look at the way we are now moving back away from the commitment that we made just a year ago dealing with the presumptive liability range for those that might be out there drilling, pulling it back from 5,000 feet to roughly a half-mile. I understand that may still be a (??) standard but why back away what we told the people that we would do. That troubles me. And when I look at the fact that when you don’t always know the concentration of all these chemicals that are going to go in to this fracking compound, this fluid that they are injecting into the earth. Grant it, it may be a trade secret. Grant it, it may be held by the commission or DENR and be pulled out in case of emergencies, but one thing we need to know is that

… pretend to be an ecologist because I’m not, but I’m sensitive, concerned and committed to protecting our environment and making certain that those pristine drinking waters remain that way and that we don’t have any flames coming out of faucets, that we don’t have any discharges into our rivers and streams that are potential pollutants, that we don’t have any unintended consequences. How many times have we had bills come back before us that we had to fix because of unintended consequences? It happens time and time and time and time again. We’ve got a chance to do it and to do it right. It’s even in the best interest of the industry to know with some certainty what they’re getting into. You heard Senator Hunt talk earlier about bonding. That’s an important and significant consideration. A lot of things we need to do. We don’t need to rush to judgment, issue a drop-dead deadline, we’re going to issue those permits regardless of whether we’ve got all these fixes in place. This is one of those fixes and we can try to work on this one today. [SPEAKER CHANGES] Mister President? [SPEAKER CHANGES] Senator Newton, for what purpose do you rise? [SPEAKER CHANGES] Speak to the amendment. [SPEAKER CHANGES] Senator Newton has the floor to speak to the amendment. [SPEAKER CHANGES] Thank you, Mister President. My good friend Senator McKissick and I have had conversations about this process of moving forward on shale gas development, and with all due respect to my colleague, I’m not sure that there would ever be enough time to satisfy him. We could be here when my son Thomas over there was elected and we’d still be debating it, and I think Senator McKissick would be happy because as I told to him yesterday, there comes a point in time where we have to fish or cut bait. We’ve been working on this for four years. You’ve raised a couple of issues about the mythology of the flaming faucets that’s been debunked a few million times now, and you brought up bonding that Senator Hunt talked about, and if you will recall, in the last bill that we had last session, we covered the bonding quite a bit, and we’re going to satisfy with Senator Hunt that we’re going to make sure it’s done adequately because we are being very deliberate. I would just generally hazard a question of if five years isn’t long enough to figure out how to do it when all the other states in the country are figuring out how to do it, how long does it take? 100 years? 200 years? Never? Eternity? This amendment does nothing but delay the process, which is what many that oppose moving forward on this area want, is to delay. We need to defeat this amendment. We need to continue the process, the deliberate process that we’ve had for the last four years, and move forward so that sometime in 2015, we might have the opportunity to have some jobs. [SPEAKER CHANGES] Mister President? [SPEAKER CHANGES] Senator Stein, for what purpose do you rise? [SPEAKER CHANGES] To see if Senator Newton will yield for a question. [SPEAKER CHANGES] Senator Newton, do you yield? [SPEAKER CHANGES] Certainly. [SPEAKER CHANGES] Thank you, Senator Newton. I’m looking at Senator McKissick’s amendment, and it’s on the section on prohibited discharge, and there are already three prohibited discharges and he’s just adding another one where it talks about waste water that has pollutions in it. How does that delay anything? It just is adding more protections to the people. It doesn’t delay when the rule takes effect or when the first issue can be licensed. It’s just looking out for the people. [SPEAKER CHANGES] Senator Stein, the Mining and Energy Commission has been working on this for years. They have addressed this – I’ve forgotten the rule number. They don’t allow the discharge to surface water under their rules. This amendment is not necessary. It’s just to continue to talk about an issue that doesn’t exist. [SPEAKER CHANGES] Is there any further discussion or debate? Senator Tucker, for what purpose do you rise? [SPEAKER CHANGES] Just to speak to the amendment. [SPEAKER CHANGES] Senator Tucker has the floor to speak to the amendment. [SPEAKER CHANGES] I just am recalling last year. Senator McKissick continues to talk about pristine drinking water, and we all want pristine drinking water; however, last year I recall from the Independent Weekly in Durham when the Durham City Council voted against a fast-track development project because they were concerned about the runoff in the Jordan River, that it was brought to the Senate floor and we fast-tracked through the development even at the disagreement of members of his own party, and so if Senator McKissick’s worried about the pristine drinking water, we need to worry about it in both cases even in Lee County and even in your county, Sir. Thank you. [SPEAKER CHANGES] Is there any further discussion or debate? Hearing none, the question before the Senate is the adoption of Amendment…

All in favor, vote I. All opposed, vote no. Five seconds will be allowed for the voting. Clerk will record the vote. Clark. Senator Clark? Senator Clark? [SPEAKER CHANGES] I. [SPEAKER CHANGES] Sixteen having voted for the affirmative and thirty in the negative. Amendment two fails. The bill unamended is back before the body. Is there any further discussion or debate? Senator Rabin, for what purpose do you rise? [SPEAKER CHANGES] I represent a special interest group, folks. It’s called Lee County. Sorry. I am speaking to address the bill [SPEAKER CHANGES] Senator Rabin has the floor. [SPEAKER CHANGES] I have a special interest group. I represent Lee County. The majority of the people there would like to have us proceed. I’ve heard a lot of the rhetoric around here, and most of it that’s nice, but the mining and energy commission has done a great job. We’re ready to move forward. Lee County is ready to have this happen. The folks in Hornet County, which is contiguous and Johnson County which are within the district support the bill. I have to stand up and say that the people I represent, who are most affected by a lot of this, would like the bill to go forward so that they can get the jobs and the bread on the table. Thank you. [SPEAKER CHANGES] Senator Tillman, for what purpose do you rise? [SPEAKER CHANGES] To speak briefly on the bill. [SPEAKER CHANGES] Senator Tillman has the floor. Speak to the bill. [SPEAKER CHANGES] We are ten years and maybe even twenty years behind the curve on drilling for natural gas. And if we left it up to Senator McKissick and his party, we would get it on the twelfth, folks. The twelfth of never. [SPEAKER CHANGES] Senator McClaren, for what purpose do you rise? [SPEAKER CHANGES] Thank you, Mr. President. I’m offering an amendment. [SPEAKER CHANGES] Senator McClaren, your amendment has been sent forward. Do we have it on the dashboard? Amendment is on the dashboard. Senator McClaren, you are recognized to speak to the amendment. Clerk will read the amendment. [SPEAKER CHANGES] Senator ?? moves to amend the bill. [SPEAKER CHANGES] Senator McClaren, you are recognized to speak to the amendment. [SPEAKER CHANGES] Thank you, Mr. President. Members of the Senate, this is a very simple amendment. It would be to delete Section 14 which prohibits local governments from enacting local ordinances that regulate oil and gas exploration. Many of us come from local government backgrounds. We’ve been mayors. We’ve been county commissioners. We’ve been city council members and served in local government. So we know how important it is that we make good decisions that affect our local communities. Senator Rabin just spoke about Lee County that he represents. I couldn’t have agreed more. Local people need to be able to make this decision. But where it comes to issues that relate to public safety, health, welfare, the community, I think local governments needs some input in this process or I would just say that deleting Section 14 would enable these local governments to be able to have a voice in this process. If land use planning is something that in a rural community, for example where agriculture might be a primary industry, and that’s a concern to that community, or if it’s a larger city where it’s just not advantageous to have hydraulic fracking occur, then I think that local government ought to have input in the process. That would be amendment I ask you to support. Thank you very much. [SPEAKER CHANGES] Senator Newton, for what purpose do you rise? [SPEAKER CHANGES] To speak to the amendment. [SPEAKER CHANGES] Senator Newton has the floor to speak to the amendment. [SPEAKER CHANGES] Thank you, Mr. President. Colleagues and Senator McClaren, I appreciate your amendment. I would observe that if we are going to have an industry come and we’re going to embark upon the kind of development of the scale that we hope will have in North Carolina, we need to make sure that we have a uniform approach to this and not a patchwork of local ordinances and zoning, specifically zoning that would be designed to prohibit the activity in the first place. Senator McClaren and I, we worked on this together, and I know he’s generally a supporter of moving forward on developing our energy resources. We have had the benefit of doing a lot of examination in Arkansas of events and so forth there. One of the things, unfortunately he was not with us then, we went to Texas and we examined how this was done…

… Fort Worth which is pretty urban metropolitan area and they were able to handle it just fine. It’s important that if we’re going to encourage this development that we do so in a uniform manner. This is a mirror image of how we deal with hazardous waste and so forth. We need to make sure that we’re handling this as a state in a very uniform and even manner so that we don’t have one system a mile away from a different system. The industry needs to know what the rules are and they need to know who to go to in order to be told what it is they need to do to make sure that they fully comply. I would encourage my colleagues to feed this amendment. Thank you. [SPEAKER CHANGES] ?? Discussion of debate. [SPEAKER CHANGES] Hearing none, question for the senate is the adoption of amendment 3. All in favor will vote I, oppose the vote no. Five seconds to be allowed for the voting. The clerk will record the vote. 16 having voted the affirmative and 30 in the negative. Amendment 3 fails. The bill unamended is back before the body. [SPEAKER CHANGES] Mr. President. [SPEAKER CHANGES] Senator Woodard for what purpose do you rise? [SPEAKER CHANGES] To see if Senator Newton would yield for a question. [SPEAKER CHANGES] Senator Newton, do you yield? [SPEAKER CHANGES] I will. [SPEAKER CHANGES] Senator Newton, in reviewing your bill, I’m trying to find a little more about compulsory poolling. Can you direct me to the sections that speak to that and help me understand a little more of what this bill’s position on compulsory polling would be. [SPEAKER CHANGES] It’s a study, Senator Woodard. I believe it’s section 25. [SPEAKER CHANGES] And you’re leaving it at that with this bill then? [SPEAKER CHANGES] ??? [SPEAKER CHANGES] Go ask your question again, I’m sorry. [SPEAKER CHANGES] What I see in section 25 is the extent of how compulsory pooling is going to be addressed under practice of fracking in North Carolina. [SPEAKER CHANGES] At this stage, right now it’s the current law of North Carolina. It has been since 1945. We have compulsory pooling so we’re going to study it further to see if there’s any further changes that need to be made. Ok, alright. Make I speak to the bill, Mr. President? [SPEAKER CHANGES] Senator Woodard has the floor to speak to the bill. [SPEAKER CHANGES] Actually, Mr. President, I have an amendment I would like to offer. [SPEAKER CHANGES] Senator Woodard, if you can send your amendment forward. The clerk will read. [SPEAKER CHANGES] Senator Woodard moves to amend the bill. [SPEAKER CHANGES] Senator Woodard is recognized to speak to the amendment. [SPEAKER CHANGES] I had a chance to visit with my Farm Bureau Board of Directors in Castle County last night and we were talking about a few farming issues and asked them what was on their minds. They said two things. Coal ash, which we will be talking about in the next few weeks here, I suspect, and fracking. It’s in the 6 o’clock news. One part of fracking they were most concerned about was compulsory pooling. And we had an interesting and actually in-depth conversation about the property rights around compulsory pooling. I’ve got to say as I read this, it’s pretty thin and it really moves things down the road. This bill, as presented, breaks the promise that was made in 2012 to fully develop rules governing the practice of fracking. On this issue, this bill kicks the can down the road by asking for more study around compulsory pooling. Senator Newton in his introductory remarks called the rules a pretty good set of rules. Ladies and gentlemen, they are incomplete set of rules. The sponsors are asking you to step on the gas when we only have three wheels on the car. Landowners need to know their property rights and how these rights will be impacted by the practice of fracking before the fracking crews show up with their drills, before the fracking crews construct seven-story towers and 5000 foot long pipes under their property. Before the fracking crews start driving heavy trucks up and down their rural roads. This amendment helps define that compulsory pooling and helps not kick the can down the road and helps us complete that. So I would urge your support of this amendment on compulsory pooling. Thank you, Mr. President.

To debate the amendment. [SPEAKER CHANGES] Senator Rucho has the floor to speak to the amendment. [SPEAKER CHANGES] Senator Woodward apparently didn’t see before, but this is your rules and regulations, Senator Woodward. They’re available to you on the MEC website. Read it and it would be very helpful. Secondly, as Senator Newton alluded to, in 1940s, common law has the pooling law in place, and the law is presently there, and what we’re in the process of doing is as we proceed forward, this will be how we start. If it requires any additional changes once we start the process then it can be adjusted accordingly. There are 38 states in the United states that have some form of forced pooling and we’re in line with most of them, so in reality what we’re saying is the law is there, we will evaluate as we proceed forward to determine if indeed we need to try and alter any of the forced pooling law that we presently have under common law, and if it’s needed then the MEC and the resulting Oil and Gas Commission will make those recommendations to the General Assembly, but under the existing law, the MEC has come forward with a plan, the DENR said “Well it might not be workable by changing what we presently have,” so we do have a workable law in place, we’re going to go forward with it, all the safeguards are in place that need to be for what would be allowing everyone that would be involved in the acreage to enjoy and share in the prosperity that will come of it, and that is how it is designed and that is how it will be moved forward. And again, if need be, it can be changed upon recommendation from the body that will evaluate its effectiveness. I urge you to vote down the amendment. [SPEAKER CHANGES] Is there any further discussion or debate? Hearing none, the question before the Senate is the adoption of Amendment 4. All in favor will vote “Aye”, opposed will vote “No”. Five seconds will be allowed for the voting and the Clerk will record the vote. 16 having voted in the affirmative and 30 in the negative, Amendment 4 fails. The Bill, un-amended, is back before the body. Is there any further discussion or debate? [SPEAKER CHANGES] Mister President? [SPEAKER CHANGES] Senator Jenkins, for what purpose do you rise? [SPEAKER CHANGES] To ask the Bill sponsor, Senator Rucho, a question. [SPEAKER CHANGES] Senator Rucho, do you yield? [SPEAKER CHANGES] Yes Sir. Senator Jenkins, good day. [SPEAKER CHANGES] Senator Rucho, you’ve told us several times you’ve read all the rules from front to back and I trust you for that, and I haven’t read them and I’ll disclose in front of everybody I don’t intend to read them, so I will ask you the question I’ve got. [SPEAKER CHANGES] And Sir, I hope I have an answer that will satisfy you. [SPEAKER CHANGES] Thank you very much. I’ll trust your answer. You have mentioned that the state geologist will be the keeper of this proprietary chemical information, and I can appreciate the fact that these companies would want it kept proprietary, sort of like Coca Cola doesn’t want you to know what they make it out of, although it was interesting to read today that it will clean your tires, it will get grease out of dry-cleaning… Coca Cola does a lot of things for you. But my question is this: Does the state geologist have a responsibility to report if he reviews these chemicals – and I’m not talking about after there’s been a problem; I’m talking about when he receives them from company XYZ – if he sees something that concerns him in that cocktail, has he got any responsibility – not a moral but a responsibility to report that back to the Commission, or does he only open up the envelope to see what the cocktail’s made out of after there’s been a problem? [SPEAKER CHANGES] Senator Jenkins, all I can say is when the geologist as part of the DENR, and the emergency management people who will in advance see this and be able to determine if indeed they suspect a problem, their avenue would be go directly to the Mining and Energy Commission or subsequently the Oil and Gas Commission with any of their concerns. Nothing prohibits them from going forward and asking for clarification. [SPEAKER CHANGES] Yeah but you say that nothing prohibits them, but are they responsible? Do they have a responsibility to report it? [SPEAKER CHANGES] Just checking with our staff. [SPEAKER CHANGES] And what was the staff’s answer? [SPEAKER CHANGES] And the staff’s decision on the legal issues… I never made it to be a real lawyer. [SPEAKER CHANGES] Yeah, so you didn’t read it all either. Okay. [SPEAKER CHANGES] The custodian under the law is the geologist, but he really is…

… under the jurisdiction of the Department of Environment and Natural Resources and the Mining and Energy Commission. There are a lot of very knowledgeable people on there. When they get a chance to review that material and if they determine there’s a problem, that’s where the action will take place. [SPEAKER CHANGES] Senator Jenkins, if you’ll address further questions to the Chair please, and then we’ll… [SPEAKER CHANGES] Another question, please. [SPEAKER CHANGES] Senator Rucho, do you yield? [SPEAKER CHANGES] I do. [SPEAKER CHANGES] Then they do have a responsibility to report something that they are concerned about? [SPEAKER CHANGES] Either to report it and… they will be the recipient of that information and it will be stored by the geologists, so in reality, if they found anything there, as they did, with any of the procedures informing these rules and regulations that have been established, they will either take action through the rules process in or directed to the General Assembly for concerns that they may have. [SPEAKER CHANGES] Mister President, follow-up question? [SPEAKER CHANGES] Senator Jenkins has a follow-up question for Senator Rucho. Do you yield? [SPEAKER CHANGES] Would you agree to a friendly amendment that would make it a mandate that they have to report any concern they have instead of leave it up to their discretion as to whether they do want to report? [SPEAKER CHANGES] Having spoken with my attorney, the Mining and Energy Commission would be the appropriate group to take action on it. They will have received that document and it is nothing more than stored under the jurisdiction of the geologists, so they would be responding, as they did to any information they had as they formulated the rules. If the saw problems in there, they would have taken corrective actions that would have been there. So the DENR and the MEC would have taken that action. [SPEAKER CHANGES] I give up, Mister President. [SPEAKER CHANGES] Any further discussion or debate? [SPEAKER CHANGES] Mister President? [SPEAKER CHANGES] Senator Brock, your light is on. We’ll go with you. Senator Clark, make sure you just press your button so I know. Senator Brock. [SPEAKER CHANGES] Speak to the Bill a second time. [SPEAKER CHANGES] Senator Brock has the floor. Speak to the Bill a second time. [SPEAKER CHANGES] Members of the Senate, under the rules of the Commission, if you take a look at the rules, page 74 – if not, there’s been much made about what’s in it, at the side of a, I wish you would say Cheerwine or Pepsi, a North Carolina product can, rather than a Coca Cola. I mean it’s a fine drink but it came out of Georgia, so please use one of our North Carolina products. But if you look at what it says, it says a notification shall include the safety data sheet for each chemical and the following information: anticipated quantity, mass or volume, method of containment, chemical classification, and towards the commencement of well stimulation activities, a complete list of all base fluids and additives to be used in well stimulation activities, unless it’s a trade secret, and a trade or common name of each chemical subject to the safety data sheet, the CAS registry number, the range of anticipated concentrations by mass or volume, and the mixture for each chemical and the purpose of each chemical mixture that will serve in the well stimulation process. That’s exactly what you read on the side of a can of Cheerwine or any other soft drink that you choose to partake in. The information’s there, it’s in the rules. Then you see they’ve done a very good job of being very thorough, very safe, into making sure that we make this the safest process in all of our country. Thank you. [SPEAKER CHANGES] Mister President? [SPEAKER CHANGES] Senator Walters, for what purpose do you rise? [SPEAKER CHANGES] To ask Senator Brock a question please. [SPEAKER CHANGES] Senator Brock, do you yield? [SPEAKER CHANGES] By all means. [SPEAKER CHANGES] Senator Brock, you mentioned the material data sheets, and I assume everyone that’s in business today understands that you have to have a material data sheet on any vehicle that you have, where you can anything from grease, fuel, antifreeze, it’s required by OSHA. Well these well drillers have to have that same information. [SPEAKER CHANGES] Yes, it’s just like…

The answer, Mister President. It’s just not the recipe for it. You see, if you look at the ingredients on the side of a can, you see the ingredients, but just not the recipe of how to make it. [SPEAKER CHANGES] follow-up. [SPEAKER CHANGES] Senator Brock, do you yield for a follow-up? [SPEAKER CHANGES] I do. [SPEAKER CHANGES] So just for clarification for me, Senator Brock, you’re saying that they will have to have on those vehicles or those trucks they’re transporting or on those jobsites, anybody could walk up, ask for their material data sheet and they would have to produce that, and what chemicals or whatever else they may have, it’s on that side? I think that’s a state law in North Carolina now. [SPEAKER CHANGES] Well I will say one thing. Working on a site as activists, they are, as the ones we saw in Arkansas, you will see something that’s a very dangerous site, somebody moving parts there, but one thing that is is that the chemical status are disclosed through the state geologists, local emergency management. They know what’s there in case if there ever is any type of incident, we know how to take care of it. [SPEAKER CHANGES] Last follow-up, Mister President. [SPEAKER CHANGES] Senator Brock, do you yield? [SPEAKER CHANGES] I do. [SPEAKER CHANGES] And I hear you and you’re defining that scope with geologists and other folks, but are we defining that for the local law enforcement, OSHA inspectors and the like? Would they also be available? Would the information be available to them? [SPEAKER CHANGES] All this information is available now and actually is available in other states. There is a public database and it’s available. [SPEAKER CHANGES] Thank you. [SPEAKER CHANGES] Senator Clark has the floor to speak to the Bill. [SPEAKER CHANGES] Mister President, I’d like to send forth an amendment. [SPEAKER CHANGES] Senator Clark, you can send forward your amendment. Can we have a page get the amendment from Senator Clark, please? Bring it up to the front up here please. Give us one second, Senator Clark. If we can get this… [SPEAKER CHANGES] Okay, Mister President. Folks, clearly… [SPEAKER CHANGES] Senator Clark, hold on one second. We need to get it scanned in, need to make sure it shows up on the dashboard. Is it on the dashboard? It is on the dashboard. The Clerk will read. [SPEAKER CHANGES] Senator Clark moves to amend the Bill. [SPEAKER CHANGES] Senator Clark is recognized to speak to the amendment. [SPEAKER CHANGES] Certainly I support energy exploration and I support bringing more jobs to the state of North Carolina, but the concern with hydraulic fracturing for a lot of folks across North Carolina is ensuring that our water is safe to drink, making sure the proper protections are made and that they have some sense of surety that frequent testing is done to ensure that the water quality remains good, and that’s what this amendment is all about. Miss Lane, could I get the graphic up please? Now one thing that we’ve often heard is we’ve heard that North Carolina has some of the most stringent requirements in terms of water quality for any state out there in the nation that’s doing hydraulic fracturing. Well it depends on what you mean when you say that. If you’re talking about the required distance from the well head up to which you will test, it’s true that we have the most stringent requirements. As a matter of fact… is that graphic up yet? [SPEAKER CHANGES] Senator Clark, excuse me one second. Just for your information, the supplemental document you’re asking to be presented is not on the dashboard. It’s not able to get it up here, so if you want to keep speaking to this, that’s fine. Go right ahead. [SPEAKER CHANGES] Okay, so we know that under the statute SB 786, what we’re asking is that the water quality be tested and water sources out to 2,600 feet, okay? Now that is by far the most of any state out there in the nation, okay? Now however, when you look at other aspects of ensuring water quality, we don’t come up to snuff. So for instance, if you look at the Illinois public law, they have some additional measures that I think that we should come up to in the state of North Carolina. For instance, both of us do require testing of the water source prior to engaging in hydraulic fracturing; however, when it comes to who’s doing the testing, things change. Okay, in the state of Illinois, they require an independent third party to do the testing. In the state of North Carolina, based on SB 786, we make that an option. I think we should make it mandatory that the testing of the water be done by an independent third party. Furthermore, we only test, according to SB 786, we will test post-start of the fracking operation twice in a 24 month period.

I don't quite think that is often enough. If we look at what the state of Illinois is doing, they're testing four times during that 24-month period. Furthermore, they specifically stated that they're going to test at the 6-month point, the 12-month point, the 18-month point, and the 24-month point. Our SB 786 says we will test two times during the 24-month period. Does that mean we can go almost two years and wait till month 21 in order to do the testing? I think we owe it to our citizens to test more frequently. Now that is the discussion with ?? a couple of days ago and the conversation went down a somewhat uncomfortable road. And she made the statement, she said, well, that made me feel some kind of way. When you're in your kitchen, when the citizens of North Carolina are there and they turn on that tap, and they put that water into that glass, and they put that glass up to their lips, I don't want them to feel some kind of way. I want them to have confidence that the water they're drinking, not only was it safe when the hydraulic fracturing started, but it continues to be safe. I would recommend that we test at a more frequent rate than what we're currently going to do based on SB 786. I urge you to support this amendment. [SPEAKER CHANGES] Senator Rucho, for what purpose do you rise? [SPEAKER CHANGES] To debate the amendment. [SPEAKER CHANGES] Senator Rucho has the floor to speak to the amendment. [SPEAKER CHANGES] I want to thank Senator Clark. He's been a real good committee member on our joint energy policy committee and we thank him for that. I think, at this point, we have depended on professionals with MEC to determine the best way to do this. And what they did say was they had to have one testing prior to any drilling activity and at least two, at least two follow up tests during the 24-month period. It doesn't preclude them, the MEC, who has the authority, to request more as they deem necessary. And under the circumstances, why wouldn't we allow the professionals to determine what would be necessary and in the best interest of the citizens of that area? Chairman Womack happens to be from Lee County and he's not about to let anything bad happen to his community, where his is a county commissioner. In reality, that would be one reason not to support this. Secondly is the fact that when you have someone paying for this testing, they say a third party, generally the oil and gas operators will accept the financial responsibility and should accept the responsibilities for that testing. Could be done by a third party, but you shouldn't preclude the independent or the oil and gas from helping to participate in what is part of the activity that they are contributing to. And the last part dealing with the requirement on a website. That information is within the ENR, MEC, oil/gas and the property owner. They should be able to determine, indeed, if there's any problems, that they'll get rectified. And be sure that if, indeed, an accident did occur, that that property owner would be kept whole. And with all of that being said, Mr. President, I would say that we would vote down this amendment and move forward. Thank you. [SPEAKER CHANGES] Any further discussion or debate? Senator McLaurin, for what purpose do you rise? [SPEAKER CHANGES] To speak on the bill. [SPEAKER CHANGES] To speak on the amendment, Senator? [SPEAKER CHANGES] I'm sorry. [SPEAKER CHANGES] Do you want to speak to the amendment or to the bill? We haven't voted on the amendment. [SPEAKER CHANGES] We're on the floor for the amendment now. No, I just support the amendment. I think the water supplies are crucial. And I think it's important that we take steps as we move through this process to be sure that citizens across our state feel very comfortable that we're doing everything possible to make sure that that water quality is safe. That drinking water is pristine as it can be and that we're all not in any way doing something to damage our drinking water. Thank you. [SPEAKER CHANGES] Any further discussion or debate? Senator Bryant, to what purpose do you rise? [SPEAKER CHANGES] To speak on the amendment. [SPEAKER CHANGES] Senator Bryant has the floor to speak to the amendment. [SPEAKER CHANGES] Mr. President, members, I also want to stand in support of this amendment. I think it's a reasonable approach to reassure our citizens about the safety of their drinking water given current experiences people are having with concerns about water quality and water safety. And I think the standards set in this amendment are very reasonable and would, I think, reassure a lot of folks, so I support the amendment. Thank you. [SPEAKER CHANGES] Is there any further discussion or debate? Hearing none.

The question before the Senate is the adoption of amendment 5, all in favor vote "aye", oppose the vote "no". Five seconds will be allowed for the voting. The clerk will record the vote. Senator Graham, "Aye". Twenty five having voted in the affirmative and 21 in the negative, amendment 5 is adopted and the bill, as amended, is back before the body. Do we have any further discussion today? Mr. President? ??? Please rise. Thank you very much. Just briefly to speak on the bill. Senator McLarin[sp?] you have the floor to speak on the bill. Thank you again, Mr President, members of of the Senate. We've had some good discussion today and for many of us, many of you, I think in the chamber, it's a clear-cut decision where we're going with this bill today. Many support hydraulic fracturing because it could lead to high-paying jobs and millions of dollars in revenue for our state. Who could be against that? Over half the states in our country allow hydraulic tracking to occur, and let me start by saying I'm not anti-fracking. I've been a part of the petroleum and energy industry for the past 34 years. You can look it up, it's public information on my statement of economic interest. I own stocks in oil companies. I'm proud to have worked in that industry for many many years. It's helped build a better America and we're far less dependent on foreign oil now because of energy exploration across our country. But I also have to share this with you, last night this bill, it kept me awake, thinking about what's best for our state, what's best for the industry, what's best for the constituents I represent back home, and certainly for our local governments. If we're going to protect North Carolina for future residents, we've got to make sure we have a clear policy that recognizes local government's authorities after the best interest of their community. I spoke about that a moment ago. Local government control and input is a conservative principle. We must also find resolution on issues like water quality and we've talked about that some today, property rights, certainly is an issue that has been discussed here today. Infrastructure needs, cost, and look beyond the uncertain dollar signs to provide safeguards for our drinking water and our land for the future, and for our children and grandchildren. And I believe we can do this. And I believe we can do it safely. And it's certainly in our best interest, and it's certainly in the industry's best interest to do that. I've learned just this week that there's a earthquake fault line in one of the counties that I represent. We've heard today legitimate questions from Senator Jenkins, Senator Walters about maybe some issues that haven't been completely worked out yet. I know we're still working on that, but these are legitimate issues, and we should always err on the side of caution, I believe. I traveled to Arkansas this past year, Senator Newton mentioned that. I didn't realize we'd been working on it for a year, Senator Newton. I've been here a year and a half, and I certainly didn't expect things to start when I got here, but I know that a lot of work and study by staff , by the Mine and Energy Commission has gone before my representation here, but I love this state too much for us to make what could be a hasty decision. I think we need to slow down and take a step and really make sure we're getting this right. It's so important for the future of our state, and I hope you'll make the right decision today, for the future, make the right decision for our citizens, because, energy independence,yes. Very, very important. But protection of our land and our water, that has to be our highest priority. Thank you. Mr President. Senator Berrigner, the purpose ??? To change my vote on amendment 5 from Nae to Yae.

Senator Barringer... hold on one second, Senator. Senator... one second... ??... That was from no to aye, Senator Barringer? [SPEAKER CHANGES] Yes, Mr. President. [SPEAKER CHANGES] Thank you. [SPEAKER CHANGES] Was the last amendment, is that correct? [SPEAKER CHANGES] That's correct, amendment 5. 26 in the affirmative, 20 in the negative. Senator Tarte, ?? your ?? [SPEAKER CHANGES] To ask the bill authors a question. [SPEAKER CHANGES] Senator Rucho, do you yield for a question, from Senator Tarte? [SPEAKER CHANGES] Yes sir, who's asking that question? [SPEAKER CHANGES] Senator Tarte. [SPEAKER CHANGES] Yes sir. [SPEAKER CHANGES] I'd be remiss, based on the conversation so far today, we've all talked about the composition of the cocktail or the chemicals being used in the list, but I think most of us, or a number of us, may recognize that arsenic is poisonous, so is selenium, actually in both directions, if you don't have any, you develop hyperthyroidism, which is fatal, or potentially fatal, if you have too much, causes brain damage, which is also fatal. Plus, equally important is the composition, the actual percentage or amount of each chemical being put together. So, my question is, does the geologist, besides knowing the actual chemicals, will they know the percentage that's being used? Because I'm completely comfortable if that person or that individual knows. [SPEAKER CHANGES] Senator Tarte, the geologist is just the keeper of it. It will be reviewed by the DENR, and they have plenty of scientists and officials that can manage any questions that they have, and then secondly, what they have is the Emergency Medical Response Group that will be part of this, will also have the expertise to determine if indeed there is a problem. So I don't think there's any concern as far as identifying it in advance, to respond to Senator Jenkins' question, or if an emergency arises, the physicians, the first responders, and all of the people that will need to respond to this emergency or accident, if it does occur, will be well prepared to manage any of the circumstances. [SPEAKER CHANGES] Mr. President. [SPEAKER CHANGES] Senator Foushee, for what purpose do you rise? [SPEAKER CHANGES] To debate the bill. [SPEAKER CHANGES] Senator Foushee has the floor to speak to the bill. [SPEAKER CHANGES] Thank you, Mr. President. Members, I rise to raise concerns that I share with many in my district and across this great state. But first, I wish to commend the Mining and Energy Commission for its work addressing many of the concerns that I think all of us have heard from constituents in our districts. However, I think it is still safe to say that threats remain regarding what fracking will bring to our state, including what we will do with toxic waste water, how to address toxic air emissions, and protect nearby families, and how to protect property and families when fracking operations cease, but contamination issues come up years later. There's too little known about the effects of fracking, and too much has been done to protect the companies in that industry from liability should something go wrong. We have all heard concerns about water quality and quantity. I represent Chatham County. Chatham County is a rural county that is adjacent to Lee County, that too often has issues with water quantity. I am concerned for farmers in western Chatham, who struggle to deal with water problems yearly. Now, these same farmers fear contamination of that water as well. We know that fracking uses millions of gallons of water per gas well, per frack, and a well can be fracked up to 20 times. There are still concerns surrounding waste water disposal, as this bill does not prohibit waste, surface discharge. I am concerned also that this bill does not provide protection for unwilling landowners to have gas extracted from their property, and has the potential of breaking the bonds of community in many of our communities. Moreover, ??

As we've already stated, property rights of those not wishing to participate are violated by compulsory pooling. Finally, as our colleague has already stated, this bill is an affront to local governments, and the communities that they govern. Counties are charged with promoting the health, safety and welfare of their residents. Therefore, they need the authority to protect their residents from the impacts of fracking. Local governments know their communities better than state, and therefore are better equipped to determine how to provide for their health and safety. So, I'll end my comments by saying that until we know more, we are not ready to move forward with this process. [Speaker Change] Any further discussion or debate? Gary Nunn, question for the Senate. Is the passage of the committee substitute the SB 786, as adopted, on it's second reading. All in favor will vote Aye, opposed will vote No, 5 seconds will be allowed for the voting, clerk will record the vote. Willsbee[sp] Aye Wade[sp] Aye 33 having voted in the affirmative and 13 in the negative, the committee substitute to SB 786 as adopted, passes it's second reading... or as amended, I’m sorry, passes it's second reading and it will remain on the calendar. That concludes our calendar for the day, do we have any notices or announcements? [Speaker Change] Senator Tarp, for what purpose are your Aye's [Speaker Change] A point of personal privilege [Speaker Change] Senator Tarp has the floor for the point of personal privilege [Speaker Change] I'd just like the members to recognize a former house member of this state who served for 14 years, passed away last night. Jim Gully, who represented the same district of Bill Browley, down in Mathews, leaves behind 2 children, 4 grand-children, and his lovely bride Suzanne. If we would pass her condolences and perhaps if we could adjourn in his honor. [Speaker Change] Senator Newton, for what purpose are your Aye's [Speaker Change] Make an announcement [Speaker Change] Senator Newton has the floor for an announcement [Speaker Change] Yes colleagues, as by way of reminder, there will be another J1 committee meeting tomorrow morning at 10 o'clock where we will continue the discussion of SB 648, that we started on Tuesday. So, I please encourage those members to attend. [Speaker Change] Senator Pate, for what purpose are your Aye's [Speaker Change] For a moment of personal privilege [Speaker Change] Senator Pate has the floor for a moment of personal privilege. [Speaker Change] Mr. President, I'd like to send forward a Senatorial statement. [Speaker Change] Senator, you can send forward your statement. [Speaker Change] The clerk has it. [Speaker Change] The clerk will read. No, we are not reading. Senator, you have the floor. [Speaker Change] Thank you. I'll give the cliff notes since the hour is late. I hope that all of you took advantage of the free blood pressure checks going on today. That's a very good thing to do, and it was nice of the people who came here from East Carolina and other places to assist us with that. And my statement is about high blood pressure resolution. Hypertension is the primary, or contributing cause for 45% of all cardiovascular disease deaths, and 45% of all strokes occurring in hypertensive individuals. In 2011, 32.4% of North Carolina adults reported being told that they had high blood pressure at some point in their lives. It has been estimated that almost half of Americans with high blood pressure either do not know they have it, or will have it adequately controlled. If hypertension was completely eliminated from the population, there would be 34.6% fewer cases of stroke, and 17.9% fewer heart attacks. Reducing hypertension would not only increase the quality of life for North Carolinians, but would also substantially impact health care costs and disability in North Carolina. 7200 Medicaid enrolled children have a diagnosis of hypertension. 222,400 Medicaid enrolled adults have diagnosed hypertension. This is 41%

Beneficiaries over age twenty, among elderly and disabled adults, the prevalence is 54%. Hypertension cannot be cured but it can be managed through effective medical treatments and preventive strategies such as reduced salt, eating more fruit sand vegetables, and being more physically active. This effort is supported by numerous partners across the state. Some of these partners including the American Heart Association, the American Stroke Association, the North Carolina Academy of Family Physicians, the Consortium Owned Southeastern Hypertension Control, and the Carolina Center for Medical Excellence are here today as part of today's activities to bring awareness to the dangers of high blood pressure and other risk factors for heart disease and stroke and provide free blood pressure screenings. Thank you Mr. President. [SPEAKER CHANGE] Thank you Senator. Do we have any other notices or announcements? Any further business to come before the senate. If not the chair recognizes the senator paid for a motion. [SPEAKER CHANGE] Thank you Mr. President and I move that the senate do now adjourn subject to their receipt and re-referral of messages from the house and the governor, the introduction of bills and resolutions, the receipt and re-referral of committed reports, and the referral and re-referral of bills and resolutions to reconvene on Thursday, May 22 2014 at 11AM. [SPEAKER CHANGE] The motion is the senate do now adjourn subject to the stipulations stated by Senator Pate and in honor of former Representative Jim Gully to reconvene Thursday, May 22 at 11AM seconded by Senator Harrington. All in favor say aye. Opposed no. The ayes have it, the senate stands adjourned.