New Study on Fracking Highlights Mineral Rights
Stronger laws to protect landowners and mineral rights holders will be needed if North Carolina legalizes fracking, according to a new draft report.
“This is still an emerging issue for lenders in North Carolina,” the Consumer Protection Division of the N.C. Department of Justice said in its draft report last week. But “at least two North Carolina lenders ... have stated that they will not make or purchase mortgage loans on residential properties where the buyer does not own their mineral rights, or has leased their mineral rights.”
Jordan Treakle, mineral rights project coordinator at the Rural Advancement Foundation International-USA in Pittsboro, said North Carolina landowners who sign such leases could be ineligible for mortgages from the State Employees Credit Union (SECU) and mortgages backed by Fannie Mae or Freddie Mac.
“The (SECU) policy adds another layer to the debate over legalizing fracking in North Carolina,” Treakle said. “It highlights the risk that mineral rights leases present for landowners even before drilling starts.”
In addition, there is no requirement under current state law for a property seller to disclose to a prospective buyer that the mineral rights on a parcel of land have been sold or conveyed to another person or company.
“If hydraulic fracturing is allowed in North Carolina, the existence of severed mineral rights will be an important disclosure and consumer education issue for homebuyers,” the report said.
The Department of Justice report — titled “Impacts on Landowners and Consumer Protection Issues” — highlights many other potentially “long-lasting and profound impacts on landowners” from oil and gas leasing.
“It is critical that North Carolina get landowner protection rights, and the report is a good first step,” RAFI-USA Executive director Scott Marlow said.
Molly Diggins, state director of the N.C. Sierra Club, said the report makes clear that “the landowners’ voice hasn’t been heard in the debate as much as it needs to be.”
“We’re really concerned,” Diggins said. “The report is compounded by the proposed Senate fracking bill that takes away the ability of local government to protect landowners.”
Fracking, a controversial method of natural gas extraction, is important to northern Moore County, which lies atop the Deep River Basin, where state geologists believe a 40-year supply of natural gas exists.
Fracking is illegal in North Carolina — for now. But legislation passed last year by the General Assembly authorized a study by the N.C. Department of Environment and Natural Resources (DENR) and moved the state closer to shale gas development.
DENR issued a draft report last March concluding that fracking can be done safely and responsibly as long as the right laws and protections are in place. The Department of Justice draft report complemented the DENR report.
The final report was scheduled to be submitted yesterday to the General Assembly.
Contact Ted M. Natt Jr. at (910) 693-2474 or firstname.lastname@example.org.
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