[Federal Register Volume 76, Number 134 (Wednesday, July 13, 2011)]
[Proposed Rules]
[Pages 41154-41157]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-17573]


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SUSQUEHANNA RIVER BASIN COMMISSION

18 CFR Part 806


Review and Approval of Projects

AGENCY: Susquehanna River Basin Commission.

ACTION: Notice of proposed rulemaking and public hearing.

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SUMMARY: This document contains proposed rules that would amend the 
project review regulations of the Susquehanna River Basin Commission 
(Commission) to: Include definitions for new terms that are used in the 
proposed rulemaking; provide for administrative approval of interbasin 
transfers of flowback and production fluids between drilling pad sites 
that are isolated from the waters of the basin; provide for 
administrative approval of out-of-basin transfers of flowback or 
produced fluids from a Commission approved hydrocarbon development 
project to an out-of-basin treatment or disposal facility; insert 
language authorizing ``renewal'' of expiring approvals, including 
Approvals by Rule (ABRs); delete specific references to geologic 
formations that may be the subject of natural gas development using 
hydrofracture stimulation and replace with a generic category--
``unconventional natural gas development;'' broaden the scope of ABRs 
issued to include hydrocarbon development of any kind utilizing the 
waters of the basin, not just unconventional natural gas well 
development; memorialize the current practice of requiring post-
hydrofracture reporting; standardize at 15 years the term of ABR 
approvals for both gas and non-gas projects; and provide further 
procedures for the approval of water sources utilized at projects 
subject to the ABR process.

DATES: Comments on these proposed rules may be submitted to the 
Commission on or before August 23, 2011. The Commission has scheduled 
two public hearings on the proposed rules, to be held August 2, 2011, 
in Harrisburg, Pennsylvania, and August 4, 2011, in Binghamton, New 
York. The locations of the public hearings are listed in the addresses 
section of this notice.

ADDRESSES: Comments may be mailed to: Mr. Richard A. Cairo, Susquehanna 
River Basin Commission, 1721 N. Front Street, Harrisburg, PA 17102-
2391, or by e-mail to [email protected].
    The public hearings will be held on Tuesday, August 2, 2011, at 10 
a.m., at the Rachel Carson State Office Building, 400 Market Street, 
Harrisburg, PA 17101, and on Thursday, August 4, 2011 at 7 p.m., at the 
Holiday Inn Binghamton Downtown, 2-8 Hawley Street, Binghamton, New 
York 13901. Those wishing to testify are asked to notify the Commission 
in advance, if possible, at the regular or electronic addresses given 
below.

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 proposed 
rulemaking, visit the Commission's Web site at http://www.srbc.net.

SUPPLEMENTARY INFORMATION:

Background and Purpose of Amendments

    The basic purpose of the regulatory amendments set forth in this 
proposed rulemaking is to make further modifications to the 
Commission's project review regulations, most of which relate to the 
approval of hydrocarbon development projects.
    New terms are used in these amendments that require further 
definition in 18 CFR 806.3. These include definitions for the terms 
flowback, formation fluids, hydrocarbon development, hydrocarbon water 
storage facility, production fluids, tophole water, and unconventional 
natural gas development.
    In order to encourage the reuse of least quality water instead of 
fresh water for hydraulic fracturing by unconventional natural gas 
development, the Commission proposes to add paragraph (a)(3)(iv) to 
Sec.  806.4, which would provide for administrative approval of 
diversions involving flowback or production fluids from hydrocarbon 
development projects being transferred across the basin boundary from 
one drilling pad site to another drilling pad site, provided this water 
is handled in a manner that isolates it from the waters of the basin. 
Such diversions would be approved administratively under the provisions 
of Sec.  806.22(f), rather than Sec.  806.4. This change would 
incorporate into the regulation a policy adopted by the Commission on 
March 10, 2011.
    To encourage reuse, treatment and proper disposal, paragraph 
(a)(3)(v) of Sec.  806.4 would also be added, which would provide for 
diversions involving flowback or production fluids transferred to an 
out-of-basin treatment or disposal facility operating under separate 
governmental approval to be subject to administrative approval under 
the provisions of Sec.  806.22(f), rather than being subject to docket 
approval under Sec.  806.4.
    Currently, Sec.  806.4(a)(8) states that natural gas well 
development projects targeting the Marcellus and Utica shale formation, 
or any other shale formations identified in an Executive Director 
determination, involving a withdrawal, diversion or consumptive use of 
water in any quantity, must be approved by the Commission. Rather than 
attempting to name every possible geologic formation that may be the 
subject of development using hydrofracture stimulation (beyond 
Marcellus and Utica and the additional formations referenced in the 
Executive Director's recent Notice of Determination issued on April 21, 
2011), the specific formation references would be deleted and replaced 
with a generic category--``unconventional natural gas development,'' 
which relates to the extraction of gaseous hydrocarbons from low 
permeability geologic formations utilizing enhanced drilling, 
stimulation and recovery techniques. The ``gallon one'' regulatory 
threshold currently applicable under the regulations to gas well 
development in the specifically named formations would instead be 
extended to this broader category.
    Language is inserted into Sec. Sec.  806.13 and 14 authorizing 
``renewal'' of expiring approvals, including Approvals by Rule (ABRs). 
Currently, the regulations have no specific reference to a ``renewal'' 
process for expiring approvals. Renewals are also provided for in 
additions to Sec.  806.22(e)(6) and (f)(9).

[[Page 41155]]

    Adjustments are made to Sec.  806.15--Notice of Application to 
account for changes and additions to Sec.  806.22(f) described below 
relating to source registrations and administrative approvals of 
sources.
    Currently, Sec.  806.22(f) establishes an ABR process for 
consumptive use approvals related to natural gas well development. The 
Commission proposes to broaden the scope of ABRs issued under Sec.  
806.22(f) to include hydrocarbon development of any kind utilizing the 
waters of the basin, not just unconventional natural gas well 
development. Rather than requiring such projects to go through review 
and docket approval under Sec.  806.4, they would be regulated under 
the administrative ABR process for consumptive use approvals, which has 
become a very effective mechanism for managing this type of activity. 
The inclusion of ``unconventional natural gas well development'' as a 
subcategory of hydrocarbon development retains coverage of well 
development using unconventional stimulation or recovery techniques 
such as hydraulic fracturing under the ABR process.
    Proposed Sec.  806.22(f)(4) would clarify that post-hydrofracture 
reporting is intended to be included in the metering, daily use 
monitoring and quarterly reporting requirement specified in Sec.  
806.30. This would memorialize an ongoing practice of the Commission.
    Proposed Sec.  806.22(f)(8) would broaden the certification 
provided by project sponsors on their compliance with state and federal 
laws to include ``re-use'' as well as treatment and disposal of 
flowback and production fluids.
    Revised Sec.  806.22(f)(9) would extend the concept of ``renewal'' 
to an existing ABR, where it is not explicitly mentioned in the current 
regulations.
    The current regulations only provide a 4-year duration for natural 
gas development project ABRs. This relatively short approval term was 
implemented to give the Commission a near-term opportunity to evaluate 
the use of an administrative approval process for natural gas-related 
consumptive use activity. Revised Sec.  806.22(f)(10) would extend the 
term of an approval by rule from 4 years to 15 years from the date of 
notification by the Executive Director, reflecting the knowledge and 
experience gained by the Commission in reviewing natural gas 
development projects. A 15-year term is the standard approval term for 
all other ABRs.
    Water source approvals under the hydrocarbon development ABR 
program are restructured in three ways. First, language would be 
inserted in Sec.  806.22(f)(11) to identify water sources that are 
authorized for use by operation of the rule, rather than by separate 
approval. These sources would continue to be subject to tracking, 
recordkeeping and reporting requirements. The existing provisions of 
Sec.  806.22(f)(12) would be split apart, resulting in revised language 
and the creation of a new Sec.  806.22(f)(13). As revised, Sec.  
806.22(f)(12) sets out the registration procedure for hydrocarbon 
developers to use a source of water approved by the Commission pursuant 
to Sec.  806.4(a) and issued to persons other than the project sponsor. 
The new Sec.  806.22(f)(13) authorizes approvals for sources, 
including, but not limited to public water supplies, wastewater, and 
hydrocarbon water storage facilities not otherwise associated with 
docket approvals issued by the Commission or ABRs issued by the 
Executive Director. By issuing approvals for such hydrocarbon water 
storage facilities, a tracking mechanism would be created authorizing 
use of these sources by operation of the rule, rather than needing 
individual registrations or approvals. Such an approach provides the 
necessary management controls.

List of Subjects in 18 CFR Part 806

    Administrative practice and procedure, Water resources.

    Accordingly, for the reasons set forth in the preamble, the 
Susquehanna River Basin Commission proposes to amend 18 CFR Part 806 as 
follows:

PART 806--REVIEW AND APPROVAL OF PROJECTS

Subpart A--General Provisions

    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.

    2. Amend Sec.  806.3 by adding definitions for ``Flowback'', 
``Formation fluids'', ``Hydrocarbon development'', ``Production 
fluids'', ``Project'', ``Tophole water'', and ``Unconventional natural 
gas development'' to read as follows:


Sec.  806.3  Definitions.

* * * * *
    Flowback. The return flow of water and formation fluids recovered 
from the well bore of an unconventional natural gas or hydrocarbon 
development well within 30 days following the release of pressures 
induced as part of the hydraulic fracture stimulation of a target 
geologic formation, or until the well is placed into production, 
whichever occurs first.
    Formation fluids. Fluids in a liquid or gaseous physical state, 
present within the pore spaces, fractures, faults, vugs, caverns, or 
any other spaces of formations, whether or not naturally occurring or 
injected therein.
* * * * *
    Hydrocarbon development. Activity associated with the siting, 
drilling, casing, cementing, stimulation and completion of wells, 
including but not limited to unconventional natural gas development 
wells, undertaken for the purpose of extraction of liquid or gaseous 
hydrocarbon from geologic formations.
    Hydrocarbon water storage facility. An engineered barrier or 
structure, including but not limited to tanks, pits or impoundments, 
constructed for the purpose of storing water, flowback or production 
fluids for use in hydrocarbon development.
* * * * *
    Production fluids. Water or formation fluids recovered at the 
wellhead of a producing hydrocarbon well as a by-product of the 
production activity.
    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 hydrocarbon 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.
* * * * *
    Tophole water. Groundwater that is encountered collected at the 
surface during drilling operations undertaken in conjunction with 
hydrocarbon development.
    Unconventional natural gas development. Activity associated with 
the siting, drilling, casing, cementing, stimulation and completion of 
wells undertaken for the purpose of extraction of gaseous hydrocarbons 
from low permeability geologic formations utilizing enhanced drilling, 
stimulation or recovery techniques.
* * * * *
    3. In Sec.  806.4, revise paragraph (a)(3) introductory text, add 
paragraphs

[[Page 41156]]

(a)(3)(v) and (a)(3)(vi), and revise paragraph (a)(8), as follows:


Sec.  806.4  Projects Requiring Review and Approval.

    (a) * * *
    (3) Diversions. Except with respect to agricultural water use 
projects not subject to the requirements of paragraph (a)(1) of this 
section, the projects described in paragraphs (3)(i) through (3)(iv) 
below shall require an application to be submitted in accordance with 
Sec.  806.13, and shall be subject to the standards set forth in Sec.  
806.24. The project sponsors of out-of-basin diversions shall also 
comply with all applicable requirements of this part relating to 
consumptive uses and withdrawals. The projects identified in paragraphs 
(3)(v) and (3)(vi) below shall be subject to regulation pursuant to 
Sec.  806.22(f).
* * * * *
    (v) The interbasin diversion of any flowback or production fluids 
from hydrocarbon development projects from one drilling pad site to 
another drilling pad site for use in hydrofracture stimulation, and 
handled in such a manner as to isolate it from the waters of the basin, 
shall not be subject to separate review and approval as a diversion 
under this paragraph if the generating or receiving pad site is subject 
to an Approval by Rule issued pursuant to Sec.  806.22(f).
    (vi) The out-of-basin diversion of flowback or production fluids 
from a hydrocarbon development project for which an Approval by Rule 
has been issued pursuant to Sec.  806.22(f), to an out-of-basin 
treatment or disposal facility authorized under separate governmental 
approval to accept the same, shall not be subject to separate review 
and approval as a diversion under this paragraph.
* * * * *
    (8) Any unconventional natural gas development project in the basin 
involving a withdrawal, diversion or consumptive use, regardless of the 
quantity.
* * * * *

Subpart B--Application Procedure

    4. Revise Sec.  806.13, as follows:


Sec.  806.13  Submission of Application.

    Project sponsors of projects subject to review and approval of the 
Commission under Sec. Sec.  806.4, 806.5 or 806.6, or project sponsors 
seeking renewal of an existing approval of the Commission, shall submit 
an application and applicable fee to the Commission, in accordance with 
this subpart.
    5. In Sec.  806.14, revise paragraph (a), as follows:


Sec.  806.14  Contents of Application.

    (a) Except with respect to applications to renew an existing 
Commission approval, applications shall include, but not be limited to, 
the following information and, where applicable, shall be submitted on 
forms and in the manner prescribed by the Commission. Renewal 
applications shall include such information that the Commission 
determines to be necessary for the review of same, and shall likewise 
be submitted on forms and in the manner prescribed by the Commission.
* * * * *
    6. In Sec.  806.15, revise paragraphs (d), (e) and (f) and add 
paragraph (g), as follows:


Sec.  806.15  Notice of Application.

* * * * *
    (d) For applications submitted under Sec.  806.22(f)(13) for a 
public water supply source, the newspaper notice requirement contained 
in paragraph (a) of this section shall be satisfied by publication in a 
newspaper of general circulation in the area served by the public water 
supply.
    (e) For applications submitted under Sec.  806.22(f)(13) for a 
wastewater discharge source, the newspaper notice requirement contained 
in paragraph (a) of this section shall be satisfied by publication in a 
newspaper of general circulation in each area within which the water 
obtained from such source will be used for natural gas development.
    (f) For applications submitted under Sec.  806.22(f)(13) for a 
hydrocarbon water storage facility, the newspaper notice requirement 
contained in paragraph (a) of this section shall be satisfied by 
publication in a newspaper of general circulation in the area in which 
the project is located.
    (g) The project sponsor shall provide the Commission with a copy of 
the United States Postal Service return receipt for the notifications 
to agencies of member States, municipalities and county planning 
agencies required under paragraph (a) of this section. The project 
sponsor shall also provide certification on a form provided by the 
Commission that it has published the newspaper notice(s) required by 
this section and made the landowner notifications as required under 
paragraph (b) of this section, if applicable. Until these items are 
provided to the Commission, processing of the application will not 
proceed. The project sponsor shall maintain all proofs of notice 
required hereunder for the duration of the approval related to such 
notices.

Subpart C--Standards for Review and Approval

    7. In Sec.  806.22, revise paragraphs (e)(1), (e)(6), (f), (f)(1), 
(f)(4), (f)(8), (f)(9), (f)(10), (f)(11), and (f)(12), and add 
paragraph (f)(13), to read as follows:


Sec.  806.22  Standards for consumptive uses of water.

* * * * *
    (e) * * *
    (1) Except with respect to projects involving hydrocarbon 
development subject to the provisions of paragraph (f) of this section, 
any project whose sole source of water for consumptive use is a public 
water supply, 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.
* * * * *
    (6) The Executive Director may grant, deny, suspend, rescind, 
modify or condition an approval to operate under this approval by rule, 
or renew an existing approval by rule previously granted hereunder, and 
will notify the project sponsor of such determination, including the 
quantity of consumptive use approved.
* * * * *
    (f) Approval by rule for consumptive use related to unconventional 
natural gas and other hydrocarbon development.
    (1) Any unconventional natural gas development project, or any 
hydrocarbon development project 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.
* * * * *
    (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, including stimulation additives, flowback and 
production fluids, utilized by the project. The project sponsor shall 
also submit a post-hydrofracture report

[[Page 41157]]

in a form and manner as prescribed by the Commission.
* * * * *
    (6) Any flowback or production fluids 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).
* * * * *
    (8) The project sponsor shall certify to the Commission that all 
flowback and production fluids have been re-used or treated and 
disposed of in accordance with applicable state and federal law.
    (9) The Executive Director may grant, deny, suspend, rescind, 
modify or condition an approval to operate under this approval by rule, 
or renew an existing approval by rule granted hereunder, and will 
notify the project sponsor of such determination, including the sources 
and quantity of consumptive use approved. The issuance of any approval 
hereunder 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). Any sources of 
water approved pursuant to this section shall be further subject to any 
approval or authorization required by the member State.
    (10) An approval by rule shall be effective upon written 
notification from the Executive Director to the project sponsor and 
shall expire 15 years from the date of such notification.
    (11) A project sponsor issued an approval by rule pursuant to 
paragraph (f)(9) of this section may utilize any of the following water 
sources at the drilling pad site:
    (i) Water sources approved for use by the project sponsor for 
unconventional natural gas development, or hydrocarbon development, 
whichever is applicable, pursuant to Sec.  806.4 or this section.
    (ii) Tophole water encountered during the drilling process.
    (iii) Precipitation or stormwater collected on the drilling pad 
site.
    (iv) Flowback or production fluids obtained from a hydrocarbon 
water storage facility, provided it is used for hydrofracture 
stimulation only, and is handled in such a manner as to isolate it from 
the waters of the basin.
    (v) Water obtained from a hydrocarbon water storage facility 
associated with an approval issued by the Commission pursuant to Sec.  
806.4(a) or by the Executive Director pursuant to this section.
    (12) A project sponsor issued an approval by rule pursuant to 
paragraph (f)(9) of this section may utilize a source of water 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 unconventional natural gas development, or hydrocarbon 
development, whichever is applicable, 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. The project sponsor shall also 
provide a copy of same to the appropriate agency of the member State. 
The project sponsor shall record on a daily basis, and report quarterly 
on a form and in a manner prescribed by the Commission, the quantity of 
water obtained from any source registered hereunder.
    (13) A project sponsor issued an approval by rule pursuant to 
paragraph (f)(9) of this section may also utilize other sources of 
water, including but not limited to, public water supply, wastewater 
discharge, or a hydrocarbon water storage facility not otherwise 
associated with an approval issued by the Commission pursuant to Sec.  
806.4(a) or an approval by rule issued pursuant to paragraph (f)(9) of 
this section, provided such sources are first approved by the Executive 
Director. Any request for approval shall be submitted on a form and in 
a manner as prescribed by the Commission, shall satisfy the notice 
requirements set forth in Sec.  806.15, and shall be subject to review 
pursuant to the standards set forth in subpart C of this part. Any 
approval issued hereunder shall be subject to such monitoring and 
reporting requirements as may be contained therein.

    Dated: July 1, 2011.
Thomas W. Beauduy,
Deputy Executive Director.
[FR Doc. 2011-17573 Filed 7-12-11; 8:45 am]
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