State Begins Oil and Gas Permitting (Fracking Included)

By Frederick A. Moreno, Deputy Legal Counsel

As of March 17, 2015, the North Carolina Department of Environment and Natural Resources (DENR) was authorized to begin issuing permits for oil and gas exploration, including fracking.

Effective January 1, 2015, in advance of the expected approval of permitting by the General Assembly, new Commission rules require real estate brokers to provide property owners with the mandatory disclosure statement displayed and explained below.

Brokers should be aware of the process to apply for and receive a permit to conduct oil and gas exploration on a property. The rule (15A NCAC 05H 1307) governing the review process can be found on the Office of Administrative Hearings website, http://www.ncoah.com/rules/.

Briefly, an applicant completes a Form-2 Oil or Gas Well Permit Application. DENR then sends notice to various Federal and State agencies requesting that they review and provide written comment on the application within 30 days. Public notice of the application will also be given when DENR posts it on its website (and allows 30 days for the submission of public comments). Finally, DENR has 180 days from receipt of the complete application to approve, approve with conditions, or deny the application. Once a permit is issued, drilling may commence.

Development of the permitting process occurred throughout 2014 when the newly formed Mining and Energy Commission adopted rules, which were approved by the General Assembly. These rules cover items such as chemical disclosure requirements, buffer setback requirements, well spacing, water testing, and permit application procedures.

The Rules Review Commission approved the rules in January 2015 and sent the regulations to the General Assembly for their approval. On March 17, 2015, the drilling moratorium was lifted.

The Commission expects all brokers to be familiar with the required Mineral and Oil and Gas Rights Mandatory Disclosure Statement (displayed on this page). Moreover, you should apprise your clients about their rights as landowners by sharing with them the information produced by the North Carolina Department of Justice.

Note: on March 16, 2015, a three judge panel of Superior Court judges ruled that the Legislature violated the North Carolina Constitution when it was allowed to appoint members to the Oil and Gas Commission as well as the Mining Commission, which it created. The case has now been appealed to the North Carolina Supreme Court. A ruling by the Supreme Court may impact the future of oil and gas exploration in NC. As of the writing of this article, however, the permitting process has not been impacted.

 

Further Information

Real Estate Bulletin – October 2012:

http://bulletins.ncrec.gov/fracking-what-every-agent-needs-to-know/.

NC Department of Justice:

http://www.ncrec.gov/pdfs/oilgaslandownerrights.pdf

http://www.ncrec.gov/pdfs/OilGasSummaryOfLaw.pdf

Real Estate Bulletin – February 2013:

http://bulletins.ncrec.gov/doj-oil-and-gas-leasing-documents-merit-real-estate-brokers-attention/

This article came from the May 2015-Vol46-1 edition of the bulletin.