Powers and Jurisdiction of the Department

• Pursuant to N.C. Gen. Stat. § 113-391, the Department will have jurisdiction and authority of and over all persons and property necessary to administer and enforce effectively the provisions of this law and all other laws relating to the conservation of oil and gas.
• The Department will have the authority and it will be its duty to make such inquiries as it may think proper to determine whether or not waste over which it has jurisdiction exists or is imminent.  In the exercise of such power the Department shall have the authority to collect data; to make investigations and inspections; to examine properties, leases, papers, books and records; to examine, check, test and gauge oil and gas wells, tanks, refineries, and means of transportation; to hold hearings; and to provide for the keeping of records and the making of reports; and to take such action as may be reasonably necessary to enforce this law.

Pursuant to N.C. Gen. Stat. § 113-391(c), the Department may make rules and orders as may be necessary from time to time in the proper administration and enforcement of this law, including rules or orders for the following purposes:

• To require the drilling, operation, casing and plugging of wells to be done in such manner as to prevent the escape of oil or gas out of one stratum to another; to prevent the intrusion of water into an oil or gas stratum from a separate stratum; to prevent the pollution of freshwater supplies by oil, gas or salt water, or to protect the quality of the water, air, soil or any other environmental resource against injury or damage or impairment; and to require reasonable bond condition for the performance of the duty to plug each dry or abandoned well.
• To require the making of reports showing the location of oil and gas wells, and the filing of logs and drilling records.
• To prevent the drowning by water of any stratum or part thereof capable of producing oil or gas in paying quantities, and to prevent the premature and irregular encroachment of water which reduces, or tends to reduce, the total ultimate recovery of oil or gas from any pool.
• To require the operation of wells with efficient gas-oil ratios, and to fix such ratios.
• To identify the ownership of all oil or gas wells, producing leases, refineries, tanks, plants, structures and all storage and transportation equipment and facilities.
• To limit and prorate the production of oil or gas, or both, from any pool or field for the prevention of waste as herein defined.
• To require, either generally or in or from particular areas, certificates of clearance or tenders in connection with the transportation of oil or gas.
• To regulate the spacing of wells and to establish drilling units.
• To prevent, so far as is practicable, reasonably avoidable drainage from each developed unit which is not equalized by counter-drainage.
• To prevent where necessary the use of gas for the manufacture of carbon black.
• To regulate and, if necessary in its judgment for the protection of unique environmental values, to prohibit the location of wells in the interest of protecting the quality of the water, air, soil or any other environmental resource against injury, or damage or impairment.

Suits by Department

Pursuant to N.C. Gen. Stat. § 113-399, the Department may bring an action in any court of competent jurisdiction in the State to enforce, by injunction or another remedy, an order issued or rule adopted by the Department.  The court may enter any judgment or order necessary to enforce an order issued or rule adopted by the Department.

Administrative Review

Pursuant to N.C. Gen. Stat. § 113-402, a party who is dissatisfied with a decision or order of the Department can obtain administrative review of the decision by filing a petition for a contested case within 10 days after the decision or order is made.

Penalties

Pursuant to N.C. Gen. Stat. § 113-409, any person who intentionally makes or causes to be made any false entry or statement of fact in any report required to be made by this law or by any rule or order, or who, omits full, true and correct entries in such accounts, records, or memoranda, of all facts and transactions pertaining to the interest or activities in the petroleum industry of such person as may be required by the Department under authority given in this law or by any rule or order or who mutilate, alter, or by any other means falsify, any book, record, or other paper, pertaining to the transactions regulated by this law, or by any rule or order will be deemed guilty of a Class 2 misdemeanor.

Pursuant to N.C. Gen. Stat. § 113-410, any person who knowingly and willfully violates any provision of this law will be subject to a penalty of up to one thousand dollars a day for each and every day of such violation, and for each and every act of violation.

The payment of any penalty will not have the effect of changing illegal oil into legal oil, illegal gas into legal gas, or illegal product into legal product, nor will such payment have the effect of authorizing the sale or purchase or acquisition, or the transportation, refining, processing, or handling in any other way, of such illegal oil, illegal gas, or illegal product.  Moreover, a penalty will be imposed for each prohibited transaction relating to such illegal oil, illegal gas, or illegal product[i].

North Carolina Oil and Gas Laws

[i] N.C. Gen. Stat. § 113-410.