[Federal Register Volume 74, Number 187 (Tuesday, September 29, 2009)]
[Rules and Regulations]
[Pages 49809-49813]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E9-23281]


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SUSQUEHANNA RIVER BASIN COMMISSION

18 CFR Parts 806 and 808


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) 
including provisions restricting the use of docket reopening petitions 
to avoid abuses of process; amending the ``Approval by Rule'' (ABR) 
process to allow for project sponsors to utilize approved water sources 
at approved drilling pad sites without the need for modification of the 
ABR; clarifying that the public hearing requirement for rulemaking 
shall be applicable to the proposed rulemaking stage of that process; 
and further providing for the time period within which administrative 
appeals must be filed. These amendments were first proposed in a Notice 
of Proposed Rulemaking (NOPR) that appeared at 74 FR 31647 on July 2, 
2009.

DATES: These rules are effective on November 1, 2009.

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

FOR FURTHER INFORMATION CONTACT: Richard A. Cairo, General Counsel, 
telephone: 717-238-0423, ext. 306; 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:

Background and Purpose of Amendments

    The Commission convened public hearings on August 4, 2009, in 
Harrisburg, Pennsylvania and on August 5, 2009, in Elmira, New York. A 
written comment period was held open until August 15, 2009. Comments 
were received at both the hearings and during the comment period. A 
summary of the comments and the Commission's responses thereto follows.

Comments by Section, Part 806

Section 806.4 Projects Requiring Review and Approval
    Comment: The Commission's proposal to require review and approval 
for any hydroelectric project regulated by the Federal Energy 
Regulatory Commission (FERC) and initiating a licensing or licensing 
amendment is defective and should not be adopted because: (1) As 
currently worded, the

[[Page 49810]]

proposed amendment to 18 CFR 806.4 (a) would exceed the Commission's 
project review powers under Section 3.10 of the Susquehanna River Basin 
Compact (Compact); (2) The proposed amendment to 18 CFR 806.4 (a) would 
produce duplicative and redundant licensing proceedings for review of 
hydroelectric projects and run afoul of the intent of Congress under 
the Federal Power Act and paragraph (w) of the Federal Reservations to 
the Compact to retain sole, unimpeded licensing authority in FERC; and 
(3) the Commission already has sufficient powers under its existing 
regulations and its compact authority to review aspects of 
hydroelectric and nuclear projects that affect water resources, and 
there is no need to single out these facilities for review in the 
proposed amendment to 18 CFR 806.4 (a). Despite the Commission's claim 
in the Notice of Proposed Rulemaking (NOPR) that it is merely codifying 
its current practice, the proposal represents a break with past 
Commission practice regarding both hydroelectric facility and nuclear 
power plant review without any explanation or justification for the 
change, and is therefore arbitrary and capricious.
    The NOPR seeks to infringe on the exclusive authority of FERC 
granted to it under the Federal Power Act and reserved by Congress when 
it consented to the Compact. Nothing in the Compact provides, or even 
suggests, that the United States and the other parties to the Compact 
intended to grant the Commission review and approval authority of 
licensing or license amendment proceedings before FERC. There is no 
need for the additional language proposed in the NOPR in that the 
Commission has ample authority to review and approve ``projects'' that 
are separately undertaken and that affect the water resources of the 
basin under its existing regulatory program. With regard to projects 
regulated by the Nuclear Regulatory Commission (NRC), the Compact, the 
Commission's existing regulatory program and current practices are 
clear enough, well-established, and fully recognized by NRC, thus 
questioning the need for the suggested modification.
    The Commission appears to be proposing that before an application 
can even be submitted to FERC or the NRC, application and approval must 
first be obtained from the Commission, which directly and materially 
interferes with FERC and NRC's procedures and processes.
    Response: The Commission exercises concurrent jurisdiction with 
FERC and the NRC and believes that its exercise of same is both 
appropriate and authorized under the Compact. Furthermore, it has no 
intention of exercising that authority in a manner that conflicts or 
interferes with that exercised by these two federal agencies. Nor was 
it the intention of the proposed change to require Commission approval 
prior to the submission of licensing applications to the federal 
agencies. Rather, the intention was to have the initiation of federal 
licensing likewise initiate project review by the Commission. As was 
the case in a recent hydroelectric facility licensing process, the 
Commission undertakes a single, coordinated review with all federal and 
state resource agencies that serves both regulatory schemes.
    However, it is apparent from the comments received and the 
Commission's own reconsideration that the proposed changes, as drafted, 
do not provide the clarification originally sought. Therefore, the 
Commission believes it is appropriate to suspend final action on this 
element of the NOPR so that it can be re-drafted, particularly to 
ensure that it does not interfere with FERC and NRC procedures. (This 
is especially the case with respect to the comment that the proposal 
could be interpreted as requiring both review and approval prior to 
initiating licensing actions.) The Commission will move forward with 
publication of a new NOPR at such time as it completes development of a 
revised set of proposed changes for projects involved in licensing 
procedures.
    Licensing and licensing amendment actions are projects that often 
have significant effects upon the water resources of the basin and the 
SRBC Comprehensive Plan. Federal Reservations, Section 2, paragraph w 
of the Compact, while preserving the authority of federal licensing 
authorities, also makes clear that use of the waters of the basin shall 
be subject to approval in accordance with the terms of the Compact.
    Both the Compact and the Commission's current regulations require 
review and approval for, but not limited to: (1) Projects on or 
crossing the boundary between signatory states; (2) projects in one 
signatory state having a significant effect on the water resources 
within another signatory state; and (3) projects included in the 
Commission's Comprehensive Plan or which would have a significant 
effect upon the plan. All hydroelectric and nuclear facilities in the 
basin meet one or more of these requirements. The Commission will 
therefore continue, as appropriate and as it has done in the past, to 
exercise concurrent authority with federal licensing authorities to 
review and approve such projects.
    Comment: The deletion of the existing Sec.  806.4(a)(8) language, 
which requires Commission review and approval of any natural gas well 
development project targeting the Marcellus or Utica shale formations 
and involving a withdrawal, diversion or consumptive use of water, 
regardless of quantity, was alarming. The Commission's acknowledgement 
that the deletion of Sec.  806.4(a)(8) was a drafting error, the public 
recognition of the error it posted on its Web site upon discovery of 
the error, and its willingness to correct the error at the final 
rulemaking stage is appreciated.
    Response: The Commission regrets the inadvertent proposed deletion 
of the provision and any confusion resulting from the error. Given that 
the Commission is not moving forward with any revisions to Sec.  
806.4(a)(8) as a part of this final rulemaking action, the error is of 
no effect and the provision in question remains effective. At such time 
as the Commission moves forward with revisions to Sec.  806.4 as part 
of a new NOPR, it will be certain not to repeat the error.
Section 806.22 Standards for Consumptive Use of Water
    Comment: Deletion of the contiguous landowner notification 
requirement in exchange for a display ad newspaper notice would leave 
such landowners without direct or effective notice, nor any guarantee 
that newspaper notification would provide adequate time for meaningful 
participation in the Approval by Rule (ABR) process. Any participation 
in the process would be markedly diminished, even though they remain 
the citizens most immediately affected. Moreover, some contiguous 
landowners do not reside on the affected land and thus may not be 
reached by the general newspaper notice. And as more newspapers fold as 
a result of declining readership and advertisement revenue, such notice 
will become increasingly inadequate.
    Do not eliminate the requirement that project sponsors notify 
contiguous landowners as part of the ABR process; it is only fair that 
notice be given to the persons who are directly affected by such 
projects, and adjacent landowners are well placed to inform the 
Commission about potential adverse impacts of the approval.
    Contiguous landowners need to have notice concerning water 
withdrawals since the presence of streams, pond or wetlands, and 
groundwater, contributes significantly to the value of the property. 
They should be entitled to notice and allowed a sufficient amount

[[Page 49811]]

of time to comment on the impact of proposed withdrawals.
    If the Commission wants to enhance public transparency, it should 
make information concerning applications submitted to it available on 
the Commission's Web site. In addition to providing information on the 
name of applicants, amount of water requested, location of withdrawals, 
date, and details of final action taken by the Commission, it should 
also plot withdrawals on a map display so that it is easy to see how 
much water is being withdrawn in a given area.
    Response: The Commission acknowledges the concerns raised in the 
comments, but notes that there is some confusion about the scope of the 
ABR process. First, the process does not involve approvals for 
withdrawals from surface or groundwater sources. A number of the 
comments received spoke to the legitimate right of contiguous 
landowners to receive notice of proposed withdrawals because of the 
potential impact of their use and enjoyment and potentially diminished 
value to their land. Withdrawals are regulated separately by the 
Commission, they require separate docket approval, and contiguous 
landowner notification is required in advance of any Commission action. 
The proposed revisions do not modify those notification provisions in 
any way.
    The ABR process involves an administrative approval for consumptive 
use at the natural gas well drilling pad site and enables the 
Commission to track all sources of water transported to the site, the 
quantities used in development of the well, and the fate of flowback 
and produced fluids. These data are important to assess the cumulative 
impact of this industry's activity on the water resources of the basin. 
A number of the comments received, however, spoke to the 
appropriateness of landowner notification if well drilling and 
hydrofracing activity was occurring adjacent to their property. The ABR 
process does not involve approval to drill or hydrofrac; it is limited 
to regulating the consumptive use of water involved in either of those 
activities. Approval to drill (and to undertake the related 
hydrofracture development activity) is a separate governmental action 
undertaken by the Commission's member states in the form of gas well 
permitting.
    The impetus behind the Commission's proposal to modify contiguous 
landowner notice provisions in the ABR process stem from the fact that 
they have been problematic, administratively burdensome, and often lead 
to confusion at the landowner level. And while those shortcomings are 
pronounced with the ABR process, given the recent level of natural gas 
development activity, the Commission acknowledges that a number of 
those shortcomings are likewise present with its contiguous landowner 
notification requirements for docket applications as well. Therefore, 
after review and consideration of the comments received, as well as its 
own reconsideration of the appropriate scope of amendments to its 
existing notification procedures, the Commission believes it is 
appropriate to suspend action on this element of the NOPR as part of 
this final rulemaking action. Accordingly, it will move forward with 
publication of a new NOPR at such time as it completes development of a 
revised set of proposed changes to its general application notification 
requirements.
    With respect to public transparency, please note that the 
Commission continues to increase the amount of information contained on 
its Web site, www.srbc.net, for the benefit of the public. Further 
improvements are underway and are anticipated to be completed by the 
end of 2009 that will afford greater access to approvals, requests for 
approval, lists of approved water sources by project sponsor, location 
information about approved withdrawal and consumptive use sites, and 
mapping features to display information to better inform the public.
    Comment: The flexible use of approved water withdrawal sources by 
gas well developers at various drill pad sites without modification of 
their pad site ABR under proposed regulation Sec.  806.22 (f) (11 & 12) 
will mean that such withdrawals, and the ABR approved well pad sites 
they serve, will receive less regulatory scrutiny.
    Response: All such withdrawals will have already been fully 
reviewed and approved by the Commission prior to any use and will have 
met all public notice requirements at the time of their initial 
approval. This means that the impacts of withdrawals will have been 
fully evaluated and appropriate conditions such as passby requirements 
included. All users of these approved sources will be subject to the 
same limitations and conditions contained in the approved docket.
    In approving a withdrawal, the Commission exercises continuing 
regulatory oversight and can, at any time, reopen the docket approval 
and add new conditions or make further orders to meet any changed 
conditions and otherwise protect the public welfare and the 
environment. In addition, the main purpose of the proposed change is to 
simplify administrative procedures without compromising regulatory 
oversight.
    Again, as noted above, the ABR process involves an administrative 
approval for consumptive use at the natural gas well drilling pad site 
and enables the Commission to track all sources of water transported to 
the site, the quantities used in development of the well, and the fate 
of flowback and produced fluids. The substantive evaluation of 
withdrawals and the conditions under which they may be undertaken 
without impact to the environment or other users occurs under the 
Commission's withdrawal regulations, and not the ABR process for which 
changes are proposed under this NOPR.
    Comment: The proposed changes to Sec.  806.22(f)(11) and (f)(12) 
would eliminate core safeguards for the water-related values that the 
Commission is committed to protect by allowing project sponsors to 
shift water from one project to another without even registering the 
transfer with the Commission.
    Response: This is a misreading of the NOPR and implies that project 
sponsors will be shifting water sources from one drilling pad site to 
another without oversight by the Commission. To the contrary, what the 
Commission is proposing is a system whereby each project sponsor 
engaged in natural gas development will have an approved list of water 
sources for which it has received docket approvals, with accompanying 
conditions to properly limit and monitor its withdrawals from each of 
those sources. The sources are added to the list at the time of docket 
approval, which effectively registers them for use at the project 
sponsor's approved drilling pad sites. The Commission sees no need to 
require a separate registration action by the project sponsor when it 
can be done administratively at the time of docket approval. All other 
sources that the project sponsor may use at its approved drilling pad 
sites must first be registered or otherwise approved by the Commission.
    Comment: The proposed changes to Sec.  806.22(f)(12) would permit 
project sponsors to share and trade water sources without obtaining new 
or modified ABRs, and without certifying to the Commission their 
intention to comply with all terms and conditions of each other's ABRs, 
and would authorize new sources of water without modifying the existing 
ABRs.
    Response: The terms and conditions incorporated into every water 
source approval, and every ABR issued by the

[[Page 49812]]

Commission, must be adhered to by project sponsors. The purposes of the 
proposed modifications are to facilitate efficient water use and water 
sharing by the natural gas industry, and to streamline administrative 
processes so that the Commission's resources are better focused on 
substantive review and management of water resources, not inefficient 
bureaucracy. Issuing a single approval for a given water source and 
allowing its use at any of the project sponsor's approved drilling pad 
sites, with appropriate conditions and monitoring requirements, is far 
preferable than requiring the project sponsor, and the Commission, to 
modify each and every ABR issued to the project sponsor, which could 
number in the hundreds over time. From a water resources management 
standpoint, the issue is whether the source is approvable for use 
without adverse effect, regardless of whether the project sponsor 
intends to utilize the source at one site, or multiple sites. Allowing 
water sharing limits the number of withdrawals across the basin and 
limits tanker truck traffic by allowing project sponsors to use the 
closest approved water source site, even if the withdrawal approval was 
first issued to another operator. Adherence to all docket conditions, 
and ABR recordkeeping and reporting conditions, will continued to be 
required of all project sponsors, resulting in a full daily accounting 
of all water withdrawn across the basin (by source, by date, by project 
sponsor), where it was delivered to, and quantities used on site.
    Comment: The new proposed subsections Sec.  806.22(f)(11) and 
(f)(12)(ii) contain language requiring the project sponsor to obtain 
all necessary approvals required for the project from the state agency. 
However, such reference to the need for state agency approval is absent 
from new proposed Sec.  806.22(f)(12)(i). For the regulation to be 
internally consistent and for member state agency coordination 
purposes, a sentence should be added at the end of Sec.  
806.22(f)(12)(i) that is similar to the one contained in Sec.  
806.22(f)(12)(ii), indicating that registrations ``shall be subject to 
any approval or authorization required by the member State to utilize 
such source(s).'' The proposed language would put the project sponsor 
on notice that it would also need state-level authorization to use such 
source at the time it is registered with the Commission and before its 
use for natural gas well development.
    Response: The Commission agrees with the commenter and the final 
rulemaking incorporates the proffered language.
Section 806.32 Reopening/Modification
    Comment: This procedural change will allow interested parties' to 
fully participate in Commission processes, while avoiding unnecessary 
or duplicative proceedings.
    Response: The Commission agrees.
    Comment: Due process requires that the Commission narrowly construe 
its proposal to prevent persons whose administrative appeals are denied 
from petitioning for reopening of the approval seeking the same or 
similar relief absent new facts not known or readily discernable at the 
time of the appeal. Concern is raised about the use of the term 
``similar'' being applied in such a way as to frustrate legitimate new 
claims, and the term ``functionally equivalent'' is recommended to be 
inserted in its place.
    Response: The Commission agrees and the final rulemaking 
incorporates the proffered language.
    Comment: We oppose the proposed restrictions to petitioning and 
reopening a docket.
    Response: The Commission believes that any interested party should 
have the right to petition for a reopening of a project approval, but 
believes that parties attempting to use this provision to obtain 
administrative review of matters for which administrative appeals were 
denied constitutes an abuse of process and should be restricted.

Comments by Section, Part 808

Section 808.1 Public Hearings
    Comment: We agree that the Commission should hold at least one 
public hearing within a reasonable period after rules revisions are 
initially proposed. The rule leaves open the option of convening 
additional hearings if, for example, the Commission recommends 
substantial changes in response to comments on the initial proposed 
rulemaking.
    Response: The Commission agrees with the interpretation of the 
commenter. As structured, the rule would require the Commission to 
convene at least one additional hearing in the event changes to an NOPR 
are substantial and result in re-publication.
Section 808.2 Administrative Appeals
    Comment: The proposed constructive notice rule allowing the appeal 
period for persons other than project sponsors to run 30 days from the 
date of publication of the action in the Federal Register is respectful 
of due process rights and is commendable.
    Response: The Commission agrees that this modification advances the 
due process rights of interested parties and has retained it in this 
final rulemaking action.
    Comment: This procedural change will maximize interested parties' 
ability to fully participate in Commission processes.
    Response: The Commission agrees.

List of Subjects in 18 CFR Parts 806 and 808

    Administrative practice and procedure, Water resources.


0
Accordingly, for the reasons set forth in the preamble, the Susquehanna 
River Basin Commission amends 18 CFR Parts 806 and 808 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, Public Law 91-
575, 84 Stat. 1509 et seq.

Subpart C--Standards for Review and Approval

0
2. In Sec.  806.22, revise paragraph (f)(11) and add paragraph (f)(12) 
to read as follows:


Sec.  806.22  Standards for consumptive use of water.

* * * * *
    (f) * * *
    (11) A project sponsor issued an approval by rule pursuant to 
paragraph (f)(9) of this section may utilize any water source approved 
for use by the project sponsor for natural gas well development 
pursuant to Sec.  806.4 or this section, at the applicable drilling pad 
site subject to any approval or authorization required by the member 
state to utilize such source(s).
    (12) The following additional sources of water may be utilized by a 
project sponsor in conjunction with an approval by rule issued pursuant 
to paragraph (f)(9) of this section:
    (i) Water withdrawals or diversions approved by the Commission 
pursuant to Sec.  806.4(a) and issued to persons other than the project 
sponsor, provided any such source is approved for use in natural gas 
well development, the project sponsor has an agreement for its use, and 
at least 10 days prior to use, the project sponsor registers such 
source with the Commission on a form and in a manner as prescribed by 
the Commission, and provides a copy of same to the appropriate agency 
of the member state. Any approval issued hereunder shall be further 
subject to any

[[Page 49813]]

approval or authorization required by the member state to utilize such 
source(s).
    (ii) Sources of water other than those subject to paragraph 
(f)(12)(i) of this section, including, but not limited to, public water 
supply, wastewater discharge or other reclaimed waters, provided such 
sources are first approved by the Executive Director pursuant to this 
section. Any request 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. Any approval issued hereunder shall be further subject to 
any approval or authorization required by the member state to utilize 
such source(s). The notice requirements related to agencies of member 
states, municipalities and counties contained in paragraph (f)(2) of 
this section, and the notice requirements contained in paragraph (f)(3) 
of this section, shall likewise be applicable to any request submitted 
hereunder.

Subpart D--Terms and Conditions of Approval

0
3. In Sec.  806.32, revise paragraph (a) to read as follows:


Sec.  806.32  Reopening/modification.

    (a) Once a project is approved, the Commission, upon its own 
motion, or upon petition of the project sponsor or any interested 
party, may at any time reopen any project approval and make additional 
orders or otherwise modify or impose such additional conditions that 
may be necessary to mitigate or avoid adverse impacts or to otherwise 
protect the public health, safety, and welfare or water resources. 
Whenever a petition for reopening is filed by an interested party, the 
burden shall be upon that interested party to show, by a preponderance 
of the evidence, that a significant adverse impact or a threat to the 
public health, safety and welfare or water resources exists that 
warrants reopening of the docket. Notwithstanding the foregoing, any 
petition filed by a party who previously sought the same or 
functionally equivalent relief identified in the petition pursuant to 
the administrative appeals process under Sec.  808.2 will not be 
eligible for consideration by the Commission absent new facts not known 
or readily discernable at the time of consideration of the petitioner's 
previous request for administrative appeal filed pursuant to Sec.  
808.2.
* * * * *

PART 808--HEARINGS AND ENFORCEMENT ACTIONS

0
4. The authority citation for Part 808 continues to read as follows:

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

Subpart A--Conduct of Hearings

0
5. In Sec.  808.1, revise paragraphs (a)(2) and (c) to read as follows:


Sec.  808.1  Public hearings.

    (a) * * *
    (2) Proposed rulemaking.
* * * * *
    (c) Notice of public hearing. At least 20 days before any public 
hearing required by the compact, notices stating the date, time, place 
and purpose of the hearing including issues of interest to the 
Commission shall be published at least once in a newspaper of general 
circulation in the area affected. Occasions when public hearings are 
required by the compact include, but are not limited to, amendments to 
the comprehensive plan, drought emergency declarations, and review and 
approval of diversions. In all other cases, at least 10 days prior to 
the hearing, notice shall be posted at the office of the Commission (or 
on the Commission Web site), mailed by first class mail to the parties 
who, to the Commission's knowledge, will participate in the hearing, 
and mailed by first class mail to persons, organizations and news media 
who have made requests to the Commission for notices of hearings or of 
a particular hearing. With regard to rulemaking, the Commission shall 
convene at least one public hearing on any proposed rulemaking it 
approves for public review and comment. For any such hearing(s), 
notices need only be forwarded to the directors of the New York 
Register, the Pennsylvania bulletin, the Maryland Register and the 
Federal Register, and it is sufficient that this notice appear only in 
the Federal Register at least 20 days prior to the hearing and in each 
individual state publication at least 10 days prior to any hearing 
scheduled in that state.

0
6. In Sec.  808.2, revise paragraph (a) to read as follows:


Sec.  808.2  Administrative appeals.

    (a) A project sponsor or other person aggrieved by any action or 
decision of the Commission or Executive Director may file a written 
appeal requesting a hearing. Except with respect to project approvals 
or denials, such appeal shall be filed with the Commission within 30 
days of the action or decision. In the case of a project approval or 
denial, such appeal shall be filed by a project sponsor within 30 days 
of receipt of actual notice, and by all others within 30 days of 
publication of notice of the action taken on the project in the Federal 
Register.
* * * * *

    Dated: September 16, 2009.
Thomas W. Beauduy,
Deputy Director.
[FR Doc. E9-23281 Filed 9-28-09; 8:45 am]
BILLING CODE 7040-01-P