Since North Carolina had no experience with getting fracked like Texans do, there has been two legislative attempts by the North Carolina General Assembly in 2012 and then in 2014.
In this video, Mr. Robinson refers to the legislation in 2012 called “session law 2012-143” that required certain oil & gas lease terms (may not be a complete list):
- getting educational materials on the process before signing a lease,
- that there be compensation if water is to be used from the property,
- that operators arrange & pay reasonable costs for baseline water testing,
- presumed operator liability for contaminated water within 5,000 sq ft of a well head
- replacement water be provided if contamination occurs
- operators liable for any property damages
- 2 year surface reclamation
He covered topics on getting mortgage lender approval before signing a lease (unknown property devaluation risks), split estate, and compulsory pooling.
Mr. Robinson presented some of the changes to the General Assembly lease requirements in 2014 called “SL 2014-4” that:
- required chemical disclosure unless protected by a trade secret law,
- presumed liability for water contamination was reduced to 1/2 mile radius from the well head,
- the shifting of the burden of arranging pre-drilling, baseline well water testing from the operator to the land owner (the companies would still have to pay a reasonable amount for baseline water testing) which weakens the presumed operator liabilities if the land owner doesn’t know or forgets to get the water tested,
- the repeal of local ordinances trying to regulate site placement (yep that would be like our version of Texas’ HB40 ‘ban on fracking ban’)
The next presenter was attorney Theodore (Ted) Feitshans, of North Carolina State University’s Department of Agricultural and Resource Economics. Regarding lease terms in land conveyances, he discussed the difference between a deeded right and a lease.
He covered the topic that bankruptcy interests are subjected to distributions to creditors. “If theres a lease…. those lease hold interests will be part of the bankruptcy, but because the ownership of the oil, gas, and minerals remains with the landowner, the underlying assets are not part of the bankruptcy of the person that holds the lease”.
Mineral vs Natural Gas: Feitshans said ” in Pennsylvania theres a rebuttable presumption that Natural Gas is NOT included in the grant of a mineral estate…..what is transferred depends on the intent of the grantor, that is person transferring the interests, but the presumption in the absence of the evidence of the contrary is that Natural Gas is NOT included in the mineral estate“.
So how inclusive is Texas in distinguishing a minerals estate from oil & gas assets? Maybe this doc is the quickest answer on that question as they seem to use the terms “minerals, oil & gas” interchangeably….