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State attorney: NC needs consumer protections on 'fracking'

Posted April 26, 2012 1:14 p.m. EDT
Updated April 27, 2012 5:10 a.m. EDT

— A lawyer in the Attorney General's Office said Thursday that North Carolina needs to adopt consumer protections before legalizing a controversial method of natural gas drilling.

Lawmakers are expected to consider legislation when they reconvene next month that would allow drilling permits to be issued as soon as 2014.

The debate over a drilling method known as hydraulic fracturing, or "fracking," has focused mainly on environmental risks, but Assistant Attorney General Lynne Weaver said consumers also could be taken advantage of in a potential land rush for drilling sites.

"At a minimum, we believe there needs to be more written disclosure to landowners about these particular risks," Weaver, who heads the state Consumer Protection Division, told lawmakers.

Brokers have been buying up the rights to any minerals on people's property, especially in Lee County, for a couple of years.

Scott Marlow, executive director of the Rural Advancement Foundation International, a nonprofit working with Lee County residents, said the brokers often use high-pressure tactics.

"Someone knocks on the door and says, 'Sign this piece of paper, and I'll give you $500, and there was no sense of what was in those leases, what they were signing away (or) what the risks and benefits were," Marlow said.

Weaver said the contracts are full of unfamiliar terms, and landowners usually don't realize they're giving other rights aside from drilling to whomever buys the lease.

"They have a right to come onto that property, to explore, to build roads, to use water from that property," she said.

Marlow said selling mineral rights also can put people at odds with their bank since most mortgages don't allow borrowers to sell an interest in their property.

"If you're using a piece of property as collateral, the value of that property is part of that collateral, and if you sell off part of that property, you can be in violation of your loan agreement," he said.

Some banks won't make loans on land if the mineral rights belong to a third party, he added.

Weaver urged lawmakers to regulate lease brokers, give landowners a period of time to back out of any leasing arrangement and offer legal protection for people who don't own mineral rights on their property.

Rep. Mitch Gillespie, R-McDowell, said he plans to push for such protections in the upcoming legislative session.

"We cannot do nothing, because this is going on, and somebody needs to step up and do something about it," said Gillespie, who has advocated a slower approach to fracking.