2011 North Carolina General Statutes
Chapter 113 Conservation and Development.
Article 27 - Oil and Gas Conservation.
113-421. Presumptive liability for water contamination; compensation for other damages; responsibility for reclamation.

113‑421. Presumptive liability for water contamination; compensation for other damages; responsibility for reclamation.

(a) Presumptive Liability for Water Contamination. It shall be presumed that an oil or gas developer or operator is responsible for contamination of all water supplies that are within 5,000 feet of a wellhead that is part of the oil or gas developer's or operator's activities unless the presumption is rebutted by a defense established as set forth in subsection (a1) of this subsection. If a contaminated water supply is located within 5,000 feet of a wellhead, in addition to any other remedy available at law or in equity, including payment of compensation for damage to a water supply, the developer or operator shall provide a replacement water supply to the surface owner and other persons using the water supply at the time the oil or gas developer's activities were commenced on the property, which water supply shall be adequate in quality and quantity for those persons' use.

(a1) [Rebuttal of Presumption. ] In order to rebut a presumption arising pursuant to subsection (a) of this section, an oil or gas developer or operator shall have the burden of proving by a preponderance of the evidence any of the following:

(1) The contamination existed prior to the commencement of the drilling activities of the oil or gas developer or operator, as evidenced by a pre‑drilling test of the water supply in question conducted in conformance with G.S. 113‑423(f).

(2) The surface owner or owner of the water supply in question refused the oil or gas developer or operator access to conduct a pre‑drilling test of the water supply conducted in conformance with G.S. 113‑423(f).

(3) The water supply in question is not within 5,000 feet of a wellhead that is part of the oil or gas developer's or operator's activities.

(4) The contamination occurred as the result of a cause other than activities of the developer or operator.

(a2) Compensation for Other Damages Required. The oil or gas developer or operator shall be obligated to pay the surface owner compensation for all of the following:

(1) Any damage to a water supply in use prior to the commencement of the activities of the developer or operator which is due to those activities.

(2) The cost of repair of personal property of the surface owner, which personal property is damaged due to activities of the developer or operator, up to the value of replacement by personal property of like age, wear, and quality.

(3) Damage to any livestock, crops, or timber determined according to the market value of the resources destroyed, damaged, or prevented from reaching market due to the oil or gas developer's or operator's activities.

(a3) Reclamation of Surface Property Required. An oil or gas developer or operator shall reclaim all surface areas affected by its operations no later than two years following completion of the operations. If the developer or operator is not the surface owner of the property, prior to commencement of activities on the property, the oil or gas developer or operator shall provide a bond running to the surface owner sufficient to cover reclamation of the surface owner's property.

(a4) Remediation Required. Nothing in this Article shall be construed to obviate or affect the obligation of a developer or operator to comply with any other requirement under law to remediate contamination caused by its activities.

(a5) Replacement Water Supply Required. If a water supply belonging to the surface owner or third parties is contaminated due to the activities of the developer or operator, in addition to any other remedy available at law or in equity, the developer or operator shall provide a replacement water supply to persons using the water supply at the time the oil or gas developer's activities were commenced on the property, which water supply shall be adequate in quality and quantity for those persons' use.

(b) Time Frame for Compensation. When compensation is required, the surface owner shall have the option of accepting a one‑time payment or annual payments for a period of time not less than 10 years.

(c) Venue. The surface owner has the right to seek damages pursuant to this section in the superior court for the county in which the oil or gas well is located. The superior court for the county in which the oil or gas well is located has jurisdiction over all proceedings brought pursuant to this section. If the surface owner or the surface owner's assignee is the prevailing party in an action to recover unpaid royalties or other damages owed due to activities of the developer or operator, the court shall award any court costs and reasonable attorneys' fees to the surface owner or the surface owner's assignee.

(d) [Certain Limits Void. ] Conditions precedent, notice provisions, or arbitration clauses included in lease documents that have the effect of limiting access to the superior court in the county in which the oil or gas well is located are void and unenforceable. (2011‑276, s. 3(b); 2012‑143, s. 4(b).)