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  • Summary date: May 22 2012 - View Summary

    Development of Regulatory Program. Includes legislative findings and references to the Department of Environment and Natural Resources (DENR) March 2012 draft report on oil and gas resources. Directs DENR and other specified entities to continue studying oil and gas exploration in North Carolina and the use of horizontal drilling and hydraulic fracturing, and to gather information necessary to create standards and regulatory requirements for the management of natural gas exploration and development activities. Lists issues to be addressed, including the development of a modern oil and gas regulatory program, and the potential for an oil and gas board. Sets out reporting requirements for DENR on the study and recommendations with specified reports due December 1, 2012; March 1, 2013; July 1, 2013; and March 1, 2014.
    Consumer Protection Provisions. Amends GS 113-420 (notice and entry to property) to require an oil or gas developer or operator to give written notice to the surface owner of property at least 14 days (rather than seven) before the date of entry, when the oil or gas operations will not disturb the surface. Requires written notice of 30 days (rather than 14) when the oil or gas operations will disturb the surface. Requires oil or gas personnel to carry identification. Provides that entry onto land creates a rebuttable presumption that the surface owner properly protected the developer or operator personnel against personal injury or property damage while on the land. Rewrites GS 113-421 to create a rebuttable presumption that an oil or gas developer or operator is responsible for contamination of a water supply within 2,500 feet of the applicable oil or gas well. Details the remedy and compensation for the contamination and damage, and sets out the procedure for rebutting the presumption. Modifies the indemnification clause under GS 113-422.
    Amends GS 113-423 to require a developer or operator to provide copies to the surface owner of specified statutory provisions and a consumer protection publication before executing a lease or conveyance to separate rights to oil or gas from the freehold estate of surface property. Provides for royalty payments of at least 12.5% on the oil or gas produced from the property, and requires the lease separating oil or gas rights to state whether the property’s water supplies will be used, at the landowner’s permission and with full compensation. Requires the developer or operator to initially test water supplies within 2,500 feet of a well operation and follow-up two times within 24-month period. Provides for recordation of leases and notice of assignment within 30 days. Enacts new GS 113-423.1 to permit the developer or operator and the surface owner to enter into an agreement setting out the rights and obligations of the parties. Requires minimal intrusion upon and damage to the land surface, as detailed. Enacts new GS 113-425 to require landmen, as defined, to register with DENR, and allows DENR to deny registration and penalize registrants. Directs the Consumer Protection Division of the NC Department of Justice and the NC Real Estate Commission to develop a publication on consumer protection issues and landowner rights by October 1, 2012. Amends GS 113-380 to clarify that any violation of Article 27 (Oil and Gas Conservation) of GS Chapter 113 is a Class 1 misdemeanor. Amends GS 113-410 to impose a penalty not to exceed $25,000 (was, $1,000) a day for violations. Makes other conforming and clarifying changes.
    Enacts new subsection (b2) to GS 47E-4 (required disclosures under the Residential Property Disclosure Act) to require property owners to provide an oil, gas, and mineral rights disclosure statement to a purchaser, as specified. Makes conforming changes to GS Chapter 47E. Applies to real estate transfers or dispositions occurring on or after December 1, 2012. Requires the Real Estate Commission to develop the disclosure form by October 1, 2012.
    Directs DENR and the Consumer Protection Division to study North Carolina’s law and other states’ laws on compulsory pooling and to report findings by January 1, 2013.
    Appropriates $300,000 to establish three positions in DENR dedicated to hydraulic fracturing matters.
    Create Energy Policy Oversight Commission. Enacts new Article 33 in GS Chapter 120, creating a ten- member Joint Legislative Commission on Energy Policy (Commission) to oversee energy policy in North Carolina. Details the membership, term limits, organization, and powers of the Commission.