[Federal Register Volume 73, Number 247 (Tuesday, December 23, 2008)]
[Rules and Regulations]
[Pages 78618-78621]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E8-30315]


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SUSQUEHANNA RIVER BASIN COMMISSION

18 CFR Part 806


Review and Approval of Projects

AGENCY: Susquehanna River Basin Commission.

ACTION: Final rule.

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SUMMARY: This document contains amendments to the project review 
regulations of the Susquehanna River Basin Commission (Commission) 
requiring review and approval of any natural gas well development 
project targeting the Marcellus or Utica shale formations and involving 
the withdrawal, diversion, or consumptive use of waters of the 
Susquehanna River Basin, adding a provision providing for a specific 
approval by rule process for consumptive water use associated with such 
projects, and modifying the definitions of ``construction'' and 
``project.'' In addition, editorial changes are made to the existing 
approval by rule provision related to the consumptive use of water 
withdrawn from public water supply systems to make that provision 
consistent with the new approval by rule provision for natural gas well 
development projects.

DATES: These rules are effective on January 15, 2009.

ADDRESSES: Susquehanna River Basin Commission, 1721 N. Front Street, 
Harrisburg, PA 17102-2391.

FOR FURTHER INFORMATION CONTACT: Richard A. Cairo, General Counsel, 
717-238-0423; fax: 717-238-2436; e-mail: [email protected]. Also, for 
further information on the final rulemaking, visit the Commission's Web 
site at http://www.srbc.net.

SUPPLEMENTARY INFORMATION:

[[Page 78619]]

Background and Purpose of Amendments

    As a result of advances in hydraulic fracturing and higher natural 
gas prices, natural gas well development activity in the Susquehanna 
River Basin has increased dramatically in the past year, resulting in a 
large number of project applications being filed with the Commission 
seeking approval for the withdrawal and consumptive use of water for 
that activity. The Commission is hereby adopting a final rulemaking 
action to handle the large and immediate influx of project 
applications, and to avoid adverse, cumulative adverse or interstate 
effects to the water resources of the basin.
    The final rule modifies the definitions of ``construction'' and 
``project'' for purposes of natural gas well development; requires 
review and approval of any natural gas well development project 
involving the withdrawal, diversion, or consumptive use of water; and 
adds a specific approval by rule process associated with the 
consumptive use of water by such projects. The Commission's current 
approval by rule process is available for use only if the sole source 
of water is a public water supply system. Under this rule change, the 
new approval by rule process will allow for the consumptive use of 
wastewater, acid mine water, and other sources of water for natural gas 
well development projects. The final rule will not change the current 
process used to review groundwater or surface water withdrawals.
    In addition, editorial changes are made to the existing approval by 
rule provision relating to the consumptive use of water withdrawn from 
public water supply systems to make that provision consistent with the 
new approval by rule provision for natural gas well development 
projects.
    The Commission convened public hearings on October 21, 2008, in 
Williamsport, Pa. and on October 22, 2008, in Binghamton, N.Y. A 
written comment period was held open until October 31, 2008. Comments 
were received at both the hearings and during the comment period, one 
set coming mainly from the environmental community or those concerned 
about environmental issues, and another set coming from industry 
representatives.
    Comments from the environmental community expressed concern that an 
approval by rule process applying to gas well drilling projects would 
not provide sufficient protection to environmental resources such as 
aquifers and streams. There was a concern that the approval by rule 
process would somehow supersede or short cut all other forms of review 
conducted by the Commission. However, full review and approval will 
continue to be required for all withdrawals by well drilling projects. 
To make this point clear, the Commission is adding language to Sec.  
806.22(f)(9) of the final rule stating that the issuance of an approval 
by rule for a consumptive use shall not be construed to waive or exempt 
the project sponsor from obtaining Commission approval for any water 
withdrawals or diversions subject to review pursuant to Sec.  806.4(a).
    Several citizens were also concerned that chemicals added to water 
used for hydro-fracturing will not be treated properly and could 
somehow cause pollution of aquifers and streams. The Commission does 
not presently regulate water quality; however, the Commission's member 
jurisdictions regulate the treatment and disposal of flowback fluids or 
produced brines from well drilling operations. The Commission is 
therefore including a provision in Sec.  806.22(f)(8) that requires gas 
well applicants to certify to the Commission that all such flowback 
fluids will be treated and disposed of in accordance with applicable 
state and federal law. In addition, project sponsors are required under 
Sec.  806.22(f)(7) to obtain all necessary permits and approvals that 
are required for the project from other Federal, State, or local 
government agencies having jurisdiction.
    Industry comments pointed to various sections of the proposed 
regulations felt to be either unnecessary or burdensome. While not 
agreeing with all such comments, the Commission has made the following 
changes to the final rulemaking, which it believes responds adequately 
to industry concerns:
    1. The requirement for approval by rule of natural gas drilling 
projects in Sec.  806.4(a)(8) is limited to those projects targeting 
the Marcellus or Utica Shale Formations, unless additional shale 
formations are identified by the executive director of the Commission 
in a formal determination pursuant to Sec.  806.5. The reference to 
``other shale formations'' in the proposed rulemaking has been deleted.
    2. The requirement to submit a Notice of Intent (NOI) ``at least 60 
days'' prior to undertaking a project or increasing a previously 
approved quantity under Sec.  806.22(f)(2) is removed. Applicants will 
only be required to submit the NOI prior to such undertaking.
    3. In Sec.  806.22(f)(8), project sponsors are required to 
``certify'' that all flowback fluids have been treated and disposed of 
in accordance with applicable law, instead of having to ``demonstrate 
to the satisfaction of the Commission'' that this has been done. 
Concern was raised that the term ``demonstrate'' was overly vague. 
Certification would be subject to laws relating to unsworn 
falsification to authorities.
    4. In Sec.  806.22(f)(10), it is made clear that an approval by 
rule does not rescind, but merely supersedes any previous consumptive 
use approval.
    5. The provision contained in the proposed rulemaking prohibiting 
the transfer of Sec.  806.22(f) approvals is deleted, allowing such 
approvals to be transferred in accordance with the rules applying to 
any project approval under Sec.  806.6.
    In response to a comment from the Commission's member 
jurisdictions, the term ``Executive Director'' replaces the term 
``Commission'' in Sec.  806.22(f)(7), (9) and (10) as the entity 
responsible for issuing an approval by rule and exercising oversight on 
that approval. Similar changes have been made in Sec.  806.22(e)(1), 
(6) and (7) to be consistent with this change and to clarify current 
Commission practice. In response to another comment from member 
jurisdictions, the notice requirements in Sec.  806.22(f)(3) have been 
modified to reference the notice requirements contained in Sec.  806.15 
that apply to all projects generally, and to require applicants to copy 
the appropriate agencies of the member state with any NOI submitted 
under the rule. A final change made in response to the Commission's 
member jurisdictions was to clarify the language in Sec.  806.22(f)(11) 
related to the process for obtaining authorization to utilize 
additional sources of water subsequent to the issuance of an approval 
by rule.

List of Subjects in 18 CFR Part 806

    Administrative practice and procedure, Water resources.

0
Accordingly, for the reasons set forth in the preamble, 18 CFR part 806 
is amended as follows:

PART 806--REVIEW AND APPROVAL OF PROJECTS

0
1. The authority citation for part 806 continues to read as follows:

    Authority: Secs. 3.4, 3.5(5), 3.8, 3.10 and 15.2, Pub. L. 91-
575, 84 Stat. 1509 et seq.


0
2. In Sec.  806.3, revise the definitions of ``construction'' and 
``project'' to read as follows:


Sec.  806.3  Definitions.

* * * * *

[[Page 78620]]

    Construction. To physically initiate assemblage, installation, 
erection or fabrication of any facility, involving or intended for the 
withdrawal, conveyance, storage or consumptive use of the waters of the 
basin. For purposes of natural gas well development projects subject to 
review and approval pursuant to Sec.  806.4(a)(8), initiation of 
construction shall be deemed to commence upon the drilling (spudding) 
of a gas well, or the initiation of construction of any water 
impoundment or other water-related facility to serve the project, 
whichever comes first.
* * * * *
    Project. Any work, service, activity, or facility undertaken, which 
is separately planned, financed or identified by the Commission, or any 
separate facility undertaken or to be undertaken by the Commission or 
otherwise within a specified area, for the conservation, utilization, 
control, development, or management of water resources, which can be 
established and utilized independently, or as an addition to an 
existing facility, and can be considered as a separate entity for 
purposes of evaluation. For purposes of natural gas well development 
activity, the project shall be considered to be the drilling pad upon 
which one or more exploratory or production wells are undertaken, and 
all water-related appurtenant facilities and activities related 
thereto.
* * * * *

0
3. In Sec.  806.4, amend paragraph (a) by adding paragraph (a)(8) to 
read as follows:


Sec.  806.4  Projects requiring review and approval.

    (a) * * *
    (8) Any natural gas well development project in the basin targeting 
the Marcellus or Utica shale formations, or any other formation 
identified in a determination issued by the Executive Director pursuant 
to Sec.  806.5, for exploration or production of natural gas involving 
a withdrawal, diversion or consumptive use, regardless of the quantity.
* * * * *

0
4. In Sec.  806.22, revise paragraph (e)(1) introductory text, 
(e)(1)(ii), (e)(6), (e)(7) and add a new paragraph (f) to read as 
follows:


Sec.  806.22  Standards for consumptive uses of water.

* * * * *
    (e) * * *
    (1) Except with respect to projects involving natural gas well 
development subject to the provision of paragraph (f) of this section, 
any project whose sole source of water for consumptive use is a public 
water supply withdrawal, may be approved by the Executive Director 
under this paragraph (e) in accordance with the following, unless the 
Executive Director determines that the project cannot be adequately 
regulated under this approval by rule:
* * * * *
    (ii) Within 10 days after submittal of an NOI under paragraph 
(e)(1)(i) of this section, the project sponsor shall submit to the 
Commission proof of publication in a newspaper of general circulation 
in the location of the project, a notice of its intent to operate under 
this approval by rule, which contains a sufficient description of the 
project, its purposes and its location. This notice shall also contain 
the address, electronic mail address and telephone number of the 
Commission.
* * * * *
    (6) The Executive Director will grant or deny approval to operate 
under this approval by rule and will notify the project sponsor of such 
determination, including the quantity of consumptive use approved.
    (7) Approval by rule shall be effective upon written notification 
from the Executive Director to the project sponsor, shall expire 15 
years from the date of such notification, and shall be deemed to 
rescind any previous consumptive use approvals.
    (f) Approval by rule for consumptive use related to natural gas 
well development.
    (1) Any project involving the development of natural gas wells 
subject to review and approval under Sec. Sec.  806.4, 806.5, or 806.6 
of this part shall be subject to review and approval by the Executive 
Director under this paragraph (f) regardless of the source or sources 
of water being used consumptively.
    (2) Notification of Intent: Prior to undertaking a project or 
increasing a previously approved quantity of consumptive use, the 
project sponsor shall submit a Notice of Intent (NOI) on forms 
prescribed by the Commission, and the appropriate application fee, 
along with any required attachments.
    (3) Within 10 days after submittal of a NOI under paragraph (f)(2) 
of this section, the project sponsor shall satisfy the notice 
requirements set forth in Sec.  806.15 and send a copy of the NOI to 
the appropriate agencies of the member state.
    (4) The project sponsor shall comply with metering, daily use 
monitoring and quarterly reporting as specified in Sec.  806.30, or as 
otherwise required by the approval by rule. Daily use monitoring shall 
include amounts delivered or withdrawn per source, per day, and amounts 
used per gas well, per day, for well drilling, hydrofracture 
stimulation, hydrostatic testing, and dust control. The foregoing shall 
apply to all water and fluids, including additives, flowback and 
brines, utilized by the project.
    (5) The project sponsor shall comply with the mitigation 
requirements set forth in Sec.  806.22(b).
    (6) Any flowback fluids or produced brines utilized by the project 
sponsor for hydrofracture stimulation undertaken at the project shall 
be separately accounted for, but shall not be included in the daily 
consumptive use amount calculated for the project, or be subject to the 
mitigation requirements of Sec.  806.22(b).
    (7) The project sponsor shall obtain all necessary permits or 
approvals required for the project from other federal, state, or local 
government agencies having jurisdiction over the project. The Executive 
Director reserves the right to modify, suspend or revoke any approval 
under this paragraph (f) if the project sponsor fails to obtain or 
maintain such approvals.
    (8) The project sponsor shall certify to the Commission that all 
flowback and produced fluids, including brines, have been treated and 
disposed of in accordance with applicable state and federal law.
    (9) The Executive Director may grant or deny or condition an 
approval to operate under this approval by rule and will notify the 
project sponsor of such determination, including the sources and 
quantity of consumptive use approved. The issuance of any such approval 
shall not be construed to waive or exempt the project sponsor from 
obtaining Commission approval for any water withdrawals or diversions 
subject to review pursuant to Sec.  806.4(a).
    (10) Approval by rule shall be effective upon written notification 
from the Executive Director to the project sponsor, shall expire five 
years from the date of such notification, and supersede any previous 
consumptive use approvals to the extent applicable to the project.
    (11) Subsequent to the issuance of an approval by rule pursuant to 
paragraph (f)(9) of this section, authorization to utilize additional 
sources of water for the project other than those identified in the 
approval by rule may be obtained as follows:
    (i) Water withdrawals or diversions requiring and receiving 
approval by the Commission pursuant to Sec.  806.4(a), provided such 
withdrawal source is approved for such use and is registered

[[Page 78621]]

with the Commission at least 10 days prior to use on a form and in a 
manner as prescribed by the Commission.
    (ii) Sources of water other than those subject to paragraph 
(f)(11)(i) of this section, including, but not limited to, public water 
supply, wastewater discharge or other reclaimed waters, provided such 
sources are approved prior to use as a modification to the approval by 
rule. Any request to modify an approval by rule to utilize such 
source(s) shall be submitted on a form and in a manner as prescribed by 
the Commission, and shall be subject to review pursuant to the 
standards set forth in subpart C of this part.

    Dated: December 11, 2008.
Thomas W. Beauduy,
Deputy Director.
[FR Doc. E8-30315 Filed 12-22-08; 8:45 am]
BILLING CODE 7040-01-P