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Both the Maryland House and Senate pass bills restricting hydraulic fracturing

Both chambers of the Maryland General Assembly passed separate bills Tuesday aimed at curbing hydraulic fracturing in the state. The measures are the most aggressive action the legislature has taken against fracing to date, reports The Baltimore Sun.

The Maryland House of Delegates passed a three-year ban on fracing and the Senate approved new legal standards that will make drillers liable for their “ultrahazardous and abnormally dangerous” activities. Each bill must clear the other chamber and then face a potential veto from the Governor, but the legislature proved it is willing to go further than it has before to limit natural gas drilling.

Maryland has been under a de facto ban for more than three years after former Democratic Gov. Marin O’Malley put any permit review on hold while a commission studied the industry and his administration wrote regulations to enforce hydraulic fracturing operations. The progression is eerily similar to steps taken by New York, which dragged out an environmental review for more than six years before banning the practice in December 2014.

The current Governor, Republican Larry Hogan, has said he supports fracing and the jobs that it would create in Western Maryland – as long as it can be done safely. The state’s current dry gas production is minimal – it has averaged yearly production of just 36 MMcf since 1999 from small, older wells.

The proposed legislation against fracing 

The Maryland Senate voted 29-14 in favor of holding any future drillers to liability standards that are among the strictest in the country. The legislation would make it easier to hold drillers financially responsible for any contamination and health or environmental problems, even if drillers follow all regulations. It would also require operators to have a $10 million insurance policy that extends six years beyond the drilling operation, among other provisions.

“This bill is about … when there are problems, when there’s contamination, when someone is injured, who pays?” said Sen. Bobby Zirkin, one of the bill’s sponsors. Opponents of the bill say the regulations are so strict they constitute a de facto ban, and said it is premature to pass liability requirements when the state still does not have any fracing regulations. “It’s putting the cart before the horse,” said Sen. George Edwards.

The House voted 93-45 in favor of a three-year moratorium on fracing while a committee studies implications for public health and tourism. The study done under the O’Malley administration did not fully vet those issues, say proponents.

Western Maryland delegates and several Republicans from Baltimore Country objected to the moratorium, arguing that fracing only impacts a small part of the state whose residents and local leaders are ready to welcome the practice.

More hurdles to overcome before the bills become law

The bills are now heading to opposite chambers for consideration. Both bills need to pass the opposite legislative chamber before they can be sent to the governor. Gov. Hogan released a statement saying he would review both pieces of the legislation before commenting further.

“I think we’re going to have to be very creative with” getting the Senate to pass the moratorium, said David Fraser-Hidalgo, one of the bill’s sponsors, to news outlet RT. “We have a veto-proof majority in the House, which I’m very excited about. But the chairman of the [Senate] committee it would go to is not quite as… interested in the legislation.”

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Important disclosures: The information provided herein is believed to be reliable; however, EnerCom, Inc. makes no representation or warranty as to its completeness or accuracy. EnerCom’s conclusions are based upon information gathered from sources deemed to be reliable. This note is not intended as an offer or solicitation for the purchase or sale of any security or financial instrument of any company mentioned in this note. This note was prepared for general circulation and does not provide investment recommendations specific to individual investors. All readers of the note must make their own investment decisions based upon their specific investment objectives and financial situation utilizing their own financial advisors as they deem necessary. Investors should consider a company’s entire financial and operational structure in making any investment decisions. Past performance of any company discussed in this note should not be taken as an indication or guarantee of future results. EnerCom is a multi-disciplined management consulting services firm that regularly intends to seek business, or currently may be undertaking business, with companies covered on Oil & Gas 360®, and thereby seeks to receive compensation from these companies for its services. In addition, EnerCom, or its principals or employees, may have an economic interest in any of these companies. As a result, readers of EnerCom’s Oil & Gas 360® should be aware that the firm may have a conflict of interest that could affect the objectivity of this note. EnerCom, or its principals or employees, may have an economic interest in any of the companies covered in this report or on Oil & Gas 360®. As a result, readers of EnerCom’s reports or Oil & Gas 360® should be aware that the firm may have a conflict of interest that could affect the objectivity of this report.