North Carolina Department of Justice
North Carolina Department of Justice
North Carolina Department of Justice
Submit this request

Statement by AG Cooper on fracking legislation

Release date: 6/5/2012

“While this bill includes several of our recommendations to protect North Carolina homeowners and their neighbors if fracking is allowed, some key protections are missing. Speculators are buying rights to drill now so we need to put strong consumer protections in place as soon as possible.”
 
Background:
The Senate Commerce Committee today voted in favor of Senate Bill 820, which would authorize shale gas extraction, also known as fracking, in North Carolina.
 
Cooper’s Consumer Protection Division studied legal and consumer protection issues relevant to fracking, including impacts on landowners, ownership of oil and gas rights, and existing legal protections. A report issued by the Attorney General in May recommended several legislative changes to strengthen protections and identifies areas needing further study.
 
While Senate Bill 820 includes some of the recommendations made in the report, several recommended protections are not included in the current bill:
 
  • Written disclosures for consumers and approval by mortgage lender
Notice should include that the lease may adversely impact their mortgage and their ability to refinance, that they should take sufficient time to review and understand the lease, and that oil and gas extraction will likely disrupt and possibly damage their land, among other disclosures. The oil and gas company should also be required to notify the mortgage lender and obtain their approval.
 
  • Mandatory cooling off period for landowners who sign a lease.
To combat high-pressure sales tactics, landowners should get 30 days to cancel their lease without penalty if they decide to cancel after further examination. Notice of the cancellation period should be prominently disclosed in the lease.
 
  • Compensation for all damages
Oil and gas well operators should be required to compensate landowners for all damages, including damage to real property and loss in land value, as well as to provide reimbursement for any additional taxes or assessments due to the operator’s activities. 

  • Prompt payment for landowners
Require initial payments to landowners for oil and gas leases to be made within 30 days, or landowners can cancel.
 



Media contact:  Noelle Talley (919) 716-6413