Now that hydraulic fracturing is legal in North Carolina, oil and gas companies are soliciting property owners for land leases.
But along with the new business opportunities come questionable – and potentially illegal -- proposals for unsuspecting landowners.
The regulations that will govern fracking in the state have not yet been developed, and the first permits for oil and gas companies won’t get issued until next spring. But North Carolina Attorney General Roy Cooper has already launched an investigation, through the Consumer Protection Division, into Crimson Holdings of Pennsylvania for pushing potentially illegal fracking leases in Durham County.
Cooper says the company proposed paying landowners $5 per acre to explore for oil and gas on their land.
Some of the other issues, according to the Consumer Protection Division: the company isn’t registered to do business in North Carolina, its leases appear to last for more than 10 years, they fail to give consumers the right to cancel, and the legally-required educational information is missing.
Crimson Holdings says it will change its leases to comply with state law.
But the investigation has prompted the Attorney General’s Office to offer guidelines for those considering leasing land for energy exploration. His number one tip: before signing anything, contact an attorney.
Further tips from the North Carolina Attorney General's Office:
Contact your mortgage lender. If you have a mortgage loan, signing an oil or gas lease could violate the terms of your mortgage. It could also prevent you from being able to refinance your mortgage in the future.
· Check out the landman. Oil or gas leases are often offered by salesmen called landmen who are required to register with the NC Department of Environment and Natural Resources. Check out a landman with DENR online or by calling 919-707-8605.
· Research the company. If you lease your land to a company for oil and gas exploration, you’ll be dealing with that company for years to come. Before you sign a lease, check with the North Carolina Secretary of State’s office to find out if the company is registered to do business in North Carolina.
· Get all promises in writing, and get a copy of your lease. Make sure any promises or conditions you discuss are in writing and are part of the lease. Also, be sure to get a copy of your lease.
· Get a copy of your legal protections. At the time landmen or companies offer you an oil or gas lease, they are required to give you a copy of the North Carolina law that protects you. Ask your lawyer to be sure your lease complies with North Carolina law or provides greater protections.
· Don’t be pressured to sign. Take your time before you a sign an oil or gas lease, and don’t let high-pressure sales tactics force you to make a decision before you’re ready.
· Know your right to cancel. If you sign, you will have seven days to cancel it under North Carolina law without any penalty. To cancel your lease, send the company a written notice that you want to cancel.
For more tips plus a detailed summary of the protections available to landowners under North Carolina law, visit ncdoj.gov/fracking.
To file a consumer complaint or talk to a consumer protection expert, call 1-877-5-NO-SCAM. Consumers can also file complaints online at www.ncdoj.gov.