The Mining and Energy Commission (MEC) finished drafting its first set of hydraulic fracturing rules. Public comments were accepted between July 15 and September 30, 2014. As written, the rules do not protect landowners from forced pooling, do not provide adequate setbacks from schools, hospitals, and private homes, and fail to require other basic landowner protections like mandatory surface use agreements. The draft rules address only the issues mandated by the legislature and do not address many critical landowner issues. As a result, they leave tremendous gaps in critical landowner protections. The more than 120 rules were developed to govern the fracking process and cover everything from the permitting process to land reclamation.
Schedule of Public Hearings
Public Hearing 1
Location: NCSU’s McKimmon Center 1101 Gorman St, Raleigh, NC 27606
Date: August 20, 2014
Time: 10am – 2pm
Public Hearing 2
Location: Wicker Civic Center 1801 Nash St, Sanford, NC 27330
Date: August 22, 2014
Public Hearing 3
Location: Rockingham County High School 180 High School Rd, Reidsville, NC 27320
Date: August 25, 2014
Public Hearing 4
Location: Liston B. Ramsey Regional Activity Center
92 Catamount Road
Date: September 12, 2014
Key Landowner Protection Issues the Rules Should Address
Forced Pooling (General Comment)
Forced Pooling, known as compulsory pooling in North Carolina, is used to create a drilling unit by forcing non-consenting landowners into participating in a proposed drilling unit. Current North Carolina laws gives the MEC the authority to pool landowners this way (G.S. § 113-393) (1945). However, statutory language does not provide any information about when forced pooling can be used or the process for force pooling a landowner. In 2013, the MEC’s Compulsory Pooling Study Group recommended statutory changes but the large majority of those recommendations were not addressed during the 2014 legislative session.
- The MEC should not approve any forced pooling application for unconventional drilling.
- If forced pooling is used, the Mining and Energy Commission should not approve an application unless a majority of landowners are voluntarily leased before approving the forced pooling of any unleased landowner. Data suggests this could be accomplished by requiring that 95 percent of the acreage within a drilling unit be voluntarily leased before using forced pooling.
- There should be no surface development or disturbance on any property that is forced into a pool unless the surface owner agrees and enters into a surface use agreement with the operator.
Comments regarding forced pooling should be submitted as general comments.
Surface Use Agreements (General Comment)
A surface use agreement (SUA) between a landowner and oil and gas company allows a landowner to protect their land by restricting surface use, setting out detailed plans for reclamation and restoration, and requiring additional environmental protections. Currently, SUAs are not required in North Carolina. If required, SUAs would ensure that every landowner who signs an oil and gas lease has a fair opportunity to participate in the planning for surface use. It also would allow landowners who are force pooled or own the surface of a split estate to prohibit use of the surface of their property.
- The MEC should require that a SUA for a well and other infrastructure be in place on each property in a proposed drilling unit before considering any application for that drilling unit.
- Each SUA at minimum should include detailed rules for operator use of the property, transfer of any liability for damages to the gas operator, prices for all property uses, and detailed plans for reclamation and restoration of the property once use is completed.
Comments regarding surface use agreements should be submitted as general comments.
Setback Distances- Well Construction and Completion (Section 0.1600)
Setback distances protect residents from both the health impacts of natural gas drilling as well as widely reported nuisance issues, such as noise, light and dust pollution. States that have experience with this industry have begun to increase their setback distances to provide greater protection for residents. For example, Colorado recently increased the required setback distance for high occupancy buildings, such as schools and hospitals, and occupied dwellings to 1000 ft with the possibility of a variance down to 500 ft for occupied dwellings.
Draft setback rules for North Carolina allow wells to be drilled at 650 ft from both occupied dwellings and high occupancy buildings. In addition, waivers may be granted for occupied dwellings that allow wells to be drilled as close as 400 feet. The variance application would not require a landowner’s permission before a variance could be approved.
- Setback distances from high occupancy buildings must be at least 1000 ft.
- Setback variance for residential dwellings must be no less than 500 ft.
- Any setback waiver must require consent from the owner of the occupied dwelling.
Comments regarding setback issues relate to the Construction and Well Standards Section 0.1600.