[Federal Register Volume 77, Number 30 (Tuesday, February 14, 2012)]
[Rules and Regulations]
[Pages 8095-8100]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-2504]


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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 final rules that would amend the 
project review regulations of the Susquehanna River Basin Commission 
(Commission) to include definitions for new terms and an amended 
definition; 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; and provide further 
procedures for the approval of water sources utilized at projects 
subject to the ABR process.

DATES: Effective April 1, 2012.

ADDRESSES: Susquehanna River Basin Commission, 1721 North 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; email: 
[email protected]. Also, for further information on the proposed 
rulemaking, visit the Commission's Web site at www.srbc.net.

SUPPLEMENTARY INFORMATION:

[[Page 8096]]

Comments and Responses to Proposed Rulemaking

    Notice of proposed rulemaking was published in the Federal Register 
on July 13, 2011; the New York Register on July 27, 2011; the 
Pennsylvania Bulletin on July 23, 2011; and the Maryland Register on 
July 29, 2011. The Commission convened public hearings on August 2, 
2011, in Harrisburg, Pennsylvania and on August 4, 2011, in Binghamton, 
New York. Public information meetings were also held on October 25, 
2011 in Williamsport, Pennsylvania, and on October 27, 2011, in Camp 
Hill, Pennsylvania. The original 60-day comment period first 
established on June 23, 2011, was extended until November 10, 2011, 
pursuant to an action taken by the Commission on September 15, 2011. 
Comments on the proposed rulemaking were received at both the hearings 
and during the comment period. The comments can be divided into two 
categories: (1) General Comments--These comments are not directed to 
specific language of the proposed rulemaking, but rather address 
perceived environmental and policy impacts; and (2) Comments by 
Section--These comments are directed at the specific language of the 
proposed rulemaking, often offering further revisions to this language. 
A summary of both categories of comments and the Commission's responses 
thereto follows.

General Comments

    Comment: The Commission should more clearly explain the scientific 
basis for the proposed rulemaking. Also, the Commission should conduct 
a full life cycle cumulative impact study of the basinwide impacts of 
unconventional natural gas extraction prior to issuing this rulemaking.
    Response: The proposed rulemaking is administrative in nature and 
involves no substantive change in the review standards applied to 
projects. Therefore, the basis of the rulemaking does not involve the 
analysis, evaluation or re-evaluation of scientific principals. On the 
whole, it is an attempt to codify within the rules certain definitions, 
existing practices and policies, and to establish certain procedures 
related to implementation of the Commission's regulatory authority.
    Comment: The more extensive use of the Approval by Rule (ABR) 
process in this proposed rulemaking will weaken the Commission's 
regulatory oversight and will simply make it easier for gas well 
developers using hydrofracture stimulation methods to withdraw the 
waters of the basin.
    Response: The Commission believes that this comment indicates a 
basic misunderstanding of the scope of the ABR process and the fact 
that all withdrawal projects will continue to be docketed and acted on 
by the full Commission. Through the docketing process, the Commission 
actively manages the use of the basin's waters and mitigates impacts on 
surface and ground waters through appropriate conditions limiting use. 
The ABR process then provides an efficient monitoring system for waters 
that are consumptively used. The Commission applies the same approval 
standards to all approvals, no matter the form they take. It exercises 
continuing jurisdiction and oversight to ensure compliance, and can 
reopen approvals and issue new orders or conditions if warranted.
    Comment: Use of the ABR process to oversee the interbasin transfer 
of flowback and produced fluids and for the out of basin diversion of 
such fluids for treatment poses a danger to the waters of the basin due 
to its toxic content and the potential for spillage. The ABR process 
also bypasses the usual analysis given to proposed diversions of water.
    Response: The proposed rules simply formalize practices that are 
already in place for the transfer of such fluids. These procedures will 
provide a net benefit to the basin by encouraging the use and reuse of 
lesser quality water instead of unimpaired water from streams or ground 
water sources. Furthermore, unlike the typical diversion of water out 
of the basin where the consumptive loss occurs and is evaluated in the 
context of the proposed diversion activity, the consumptive loss in 
this situation is considered to have occurred at the time of the 
initial withdrawal from the system, before its first use within the 
basin and prior to being diverted out of the basin. For into-basin 
diversions, the existing standards are focused on limiting any 
introduction of contaminated sources into the waters of the basin. The 
final rulemaking, as structured, provides that same standard. What it 
changes is the form of the approval, not the standard that should be 
applied.
    Comment: The Commission places too much reliance on allegedly 
inadequate state water quality laws relating to wastewater disposal and 
residual waste. For example, the Commission cannot rely on such state 
laws and regulations to isolate from the waters of the basin the 
flowback and production fluids whose interbasin transfer the Commission 
proposes to approve administratively. Therefore, it is incumbent on the 
Commission to invoke its own water quality regulatory authority and 
ensure that wastewater is indeed handled in a manner that isolates it 
from the waters of the basin.
    Response: The Susquehanna River Basin Compact, Public Law 91-575, 
Section 5.2(b) gives specific emphasis to the primary role of the 
states in water quality management and control. Member states are 
already exercising or preparing to exercise their water quality 
authority with respect to gas drilling activity and are also 
strengthening their laws and regulations. At this stage, there appears 
to be no justification for the Commission to assume water quality 
jurisdiction. As noted in response to a comment below, the Commission 
is taking steps to replace the term ``isolate from the waters of the 
basin'' with language that references the standards and requirements of 
member jurisdictions.
    Comment: The Commission's refusal to promulgate water quality 
regulations relating to gas well development will allow the non-uniform 
treatment of water users throughout the basin and therefore not conform 
to the purposes of the Susquehanna River Basin Compact.
    Response: The compact purpose of ``uniform treatment of water 
users'' does not require that the Commission exclusively regulate all 
aspects of water resources in the basin. If state regulations and 
standards are compatible with the Commission's Comprehensive Plan and 
do an adequate job of fulfilling the purposes of the plan, the 
Commission will not attempt to duplicate those regulations and 
standards. Where it does act, it does so in a manner that provides for 
uniform treatment of all water users.
    Comment: The expanded use of the ABR process lessens the 
opportunity for public input and scrutiny on project approvals.
    Response: The Commission disagrees. The ABR applications must be 
noticed by applicants and there is an opportunity for interested 
citizens to comment on these applications before an approval is issued. 
ABRs are also subject to the same approval standards as docketed 
approvals, and may be reopened and modified by the Executive Director 
should unforeseen problems arise. Furthermore, notice of issuance of an 
ABR is published in the Federal Register and any such approval is 
subject to appeal pursuant to Sec.  808.2.
    Comment: The Commission should not be extending the scope of the 
ABR program to include other forms of hydrocarbon development without 
first determining if the ABR program is

[[Page 8097]]

suitable for these other forms of development.
    Response: The ABR process has proven to be a valuable tool for 
monitoring consumptive use related activity on pad sites. This 
rulemaking, which as noted above is administrative in nature, would 
extend the use of this valuable tracking tool to other forms of 
hydrocarbon development. Water withdrawals by any water user, including 
that undertaken for use in other forms of hydrocarbon development, will 
still undergo the full docket approval process, and be subject to all 
applicable Commission standards and requirements.
    Comment: The Commission is a federal agency under the Susquehanna 
River Basin Compact and is subject to the National Environmental Policy 
Act (NEPA). It must therefore complete all NEPA requirements in 
connection with this proposed rulemaking action.
    Response: The Commission categorically rejects any suggestion that 
it is subject to NEPA. This is consistent with the position the 
Commission has taken on NEPA since the 1980s. Instead of a federal 
agency, the Commission is a federal-interstate compact agency 
representing all four of its member jurisdictions. The federal 
government is only one voting member of the Commission and any action 
of the Commission requires the vote of a majority of the members. 
Therefore, the actions of the Commission are not the actions of the 
federal government, but the joint actions of the member jurisdictions. 
Also, Congress has specifically exempted the Commission from the 
provisions of the federal Administrative Procedures Act (APA). Federal 
court decisions have taken a consistent view, namely that agencies not 
subject to the APA are not federal agencies in the conventional sense 
and are therefore not subject to NEPA or similar laws imposing 
requirements on ``federal agencies.''

Comments by Section, Part 806

Section 806.3--Definitions

    Comment: The 30-day rule in the proposed definition of flowback 
means that fluid produced from the well bore from the 31st day until 
the well is placed in production is neither flowback or production 
fluid within the definition (unless the well is placed into production 
during the initial 30-day period).
    Response: Agreed. The proposed definition is modified to remove the 
30-day reference and to make clear that return flow recovered post-
hydrofracture and pre-production is defined as flowback.
    Comment: The word ``siting'' in the definitions of ``hydrocarbon 
development'' and ``unconventional natural gas development'' is 
inconsistent with the ``initiation of construction'' standard in the 
Commission's project review regulations. The regulations specify the 
``spudding of the well'' to be the initiation of a well project.
    Response: Agreed. The word ``siting'' is deleted from this 
definition to avoid the inconsistency.
    Comment: The definition of ``project'' does not make clear that 
``unconventional natural gas development'' is a subset of ``hydrocarbon 
development activity.''
    Response: Language is inserted in the definition to clarify that 
the term is a sub-category of hydrocarbon development.
    Comment: Several comments expressed disagreement with the proposed 
definition of ``tophole water,'' with one suggesting use of 
Pennsylvania's definition instead and another claiming that the 
definition is too vague.
    Response: The tophole water definition is replaced with a modified 
version of the Pennsylvania definition. The modification, notably 
removing the reference to surface water, makes it generally consistent 
with New York's interpretation of the term and allows for more 
basinwide consistency.

Section 806.4--Projects Requiring Review and Approval

Paragraphs 806.4(a)(3)(v) & (vi)
    Comment: The phrase ``in such manner as to isolate it from the 
waters of the basin'' is too vague and should be replaced with a 
reference to the actual controls exercised by the member states. Also, 
because the industry may mix the waters of the basin withdrawn from 
surface and ground water sources with flowback or production fluids in 
preparation for hydrofracture use, it is not possible to isolate it 
from the waters of the basin if read strictly.
    Response: The ``isolate'' terminology is replaced with ``provided 
it is handled, transported and stored in compliance with all standards 
and requirements of the applicable member jurisdictions.'' The same 
language has also been inserted in Paragraph 806.4(a)(3)(vi), which 
similarly addresses diversions of flowback or production fluids, and is 
substituted in Paragraph 806.22(f)(11)(iii) for the same reason.
    Comment: There is no clear requirement that project sponsors keep 
track of interbasin transfers of flowback and production fluids.
    Response: Language is added to paragraphs 806.4(a)(3)(v) and (vi) 
reinforcing the requirement that all monitoring and reporting 
requirements applicable to the pad site ABR must be met. Similar 
language is added to paragraph 806.22(f)(11) to meet the same concerns 
about tracking.
Paragraph 806.4(3)(vi)
    Comment: The use of the phrase ``the same'' implies that each tank 
load of flowback or production fluid would require separate approval.
    Response: The language is replaced with ``flowback or production 
fluids'' to remove any uncertainty.

Section 806.13--Submission of Application

    Comment: The phrase ``Project sponsors of projects subject to 
review and approval'' should properly be changed to read ``Sponsors of 
projects subject to review and approval.''
    Response: Agreed. The suggested change is incorporated into the 
final rulemaking.

Section 806.14--Contents of Application

Paragraph 806.14(a)
    Comment: With respect to renewal applications, there is no clear 
indication that they will be made subject to any approval standards.
    Response: To remove any ambiguity, and to further clarify the 
original intent concerning renewal standards, the phrase ``shall be 
subject to the standards set forth in Subpart C--Standards for Review 
and Approval of this Part'' is added to this paragraph.

Section 806.15--Notice of Application

Paragraph 806.15(e)
    Comment: The requirement for a newspaper notice in areas where a 
wastewater discharge source is to be used is unworkable where such 
water is mixed with other water sources at the initial destination and 
is then redistributed, oftentimes to other locations not contemplated 
at the time notice is given.
    Response: The word ``initially'' is added before the phrase ``used 
for natural gas development'' to limit this requirement to the initial 
location(s) where this water is contemplated for use at the time of 
application.

[[Page 8098]]

Section 806.22--Standards for Consumptive Use of Water

Paragraph 806.22(f)(10)
    Comment: Extension of ABR approval terms to 15 years will 
essentially lessen or weaken the oversight that the Commission 
exercises over gas drilling activities.
    Response: Though the Commission feels that there is a fundamental 
misunderstanding by some who commented about the ongoing oversight that 
it exercises over approved projects, and the ability of the Commission 
to reopen approvals, it is willing to retain the current approval term 
with the addition of procedures for renewal of ABRs. Therefore, the 
proposed change is removed from the final rulemaking.
Paragraph 806.22(f)(11)
    Comment: Need to make clear that this paragraph applies to the use 
of sources in addition to those sources approved for use by the project 
sponsor pursuant to Sec.  806.4.
    Response: Wording is added to the beginning of this paragraph to 
make the suggested clarification.
Paragraph 806.22(f)(11)(i), (ii), and (iv)
    Comment: Tophole water, precipitation and storm water collected on 
the pad site or water obtained from a hydrocarbon storage facility can 
be contaminated, so there is a need to appropriately limit its use.
    Response: Language is added limiting the use of this water to 
drilling or hydrofracture stimulation only, or in the case of paragraph 
806.22(f)(11)(iv), limiting the use to that provided for in the 
approval.
Paragraph 806.22(f)(11)(iii)
    Comment: As defined, flowback and production fluids do not cover 
all fluids encountered in the drilling process that serve as a water 
source under current practice. For example, water can be recovered from 
drilling muds. Also, such fluids can be recovered from production well 
sites, in addition to drilling pad sites or hydrocarbon water storage 
facilities. Current Commission policy allows for the reuse of such 
fluids.
    Response: Drilling fluids and formation fluids are added to this 
paragraph to cover all fluids recovered during the drilling process and 
used under current practice for hydrofracture stimulation. The term 
``production well site'' is also added to clarify the sites from which 
such fluids can be recovered. The word ``only'' is also added to this 
paragraph to make clear that these fluids may only be used for 
hydrofracture stimulation. Language is also added clarifying that all 
such fluids must be handled, transported and stored in compliance with 
all standards and requirements of the applicable member jurisdiction.
Paragraph 806.22(f)(14)
    Comment: The provisions of the proposed paragraph 806.22(f)(13) 
pertaining to hydrocarbon water storage facilities need to be separated 
from provisions relating to public water supply and wastewater sources 
because of the possible application of the terms to third party water 
purveyors building hydrocarbon water storage facilities that may not be 
associated with ABRs.
    Response: The changes incorporated into the final rule break out a 
separate paragraph 806.22(f)(14), clarifying the scope and intent, but 
make no substantive changes to the provisions contained in the proposed 
rulemaking. The rule is intended to provide for the approval of such 
facilities (not otherwise associated with an ABR) to provide a 
mechanism for monitoring, reporting and tracking associated with such 
facilities, and to allow for the industry to efficiently register such 
sources for use.
Paragraph 806.22(f)(15)
    Comment: The language in paragraphs 806.22(f)(12)(i) and (ii) 
relating to providing a copy of any registration or source approval to 
the appropriate agency of a member state, etc., is repetitive.
    Response: Language related to registrations and source approvals 
that is repetitive is removed and restated once in new paragraph 
806.22(f)(15).

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 amends 18 CFR part 806 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.

Subpart A--General Provisions

0
2. Amend Sec.  806.3 by adding definitions for ``Flowback'', 
``Formation fluids'', ``Hydrocarbon development'', ``Hydrocarbon water 
storage facility'', ``Production fluids'', ``Tophole water'', and 
``Unconventional natural gas development,'' and revising the definition 
of ``Project'' to read as follows:


Sec.  806.3  Definitions.

* * * * *
    Flowback. The return flow of water and formation fluids recovered 
from the wellbore of an unconventional natural gas or hydrocarbon 
development well following the release of pressures induced as part of 
the hydraulic fracture stimulation of a target geologic formation, and 
until the well is placed into production.
    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 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 hydrocarbons 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, including that related to unconventional natural gas 
development, 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. Water that is brought to the surface while drilling 
through the

[[Page 8099]]

strata containing fresh groundwater. Tophole water may contain drill 
cuttings typical of the formation being penetrated but may not be 
polluted or contaminated by additives, brine, oil or man induced 
conditions.
    Unconventional natural gas development. Activity associated with 
the 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.
* * * * *

0
3. In Sec.  806.4, revise paragraph (a)(3) introductory text, add 
paragraphs (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 (a)(3)(i) through 
(a)(3)(iv) of this section 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 (a)(3)(v) and (a)(3)(vi) of this section 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, 
provided it is handled, transported and stored in compliance with all 
standards and requirements of the applicable member jurisdiction, 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) and provided all 
monitoring and reporting requirements applicable to such approval are 
met.
    (vi) The 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 flowback or production fluids, shall not be subject to separate 
review and approval as a diversion under this paragraph, provided all 
monitoring and reporting requirements applicable to the Approval by 
Rule are met and it is handled, transported and stored in compliance 
with all standards and requirements of the applicable member 
jurisdiction.
* * * * *
    (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

0
4. Revise Sec.  806.13 to read as follows:


Sec.  806.13  Submission of application.

    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.

0
5. In Sec.  806.14, revise paragraph (a) introductory text to read 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, shall be subject to 
the standards set forth in Subpart C--Standards for Review and Approval 
of this part, and shall likewise be submitted on forms and in the 
manner prescribed by the Commission.
* * * * *

0
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 initially be used for natural gas 
development.
    (f) For applications submitted under Sec.  806.22(f)(14) 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 facility 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

0
7. In Sec.  806.22, revise paragraphs (e)(1), (e)(6), (f) introductory 
text, (f)(1), (f)(4), (f)(6), (f)(8), (f)(9), (f)(11), and (f)(12), and 
add paragraphs (f)(13), (f)(14) and (f)(15), 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,

[[Page 8100]]

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, drilling 
fluids, formation fluids and production fluids, utilized by the 
project. The project sponsor shall also submit a post-hydrofracture 
report 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 jurisdiction.
* * * * *
    (11) In addition to water sources approved for use by the project 
sponsor pursuant to Sec.  806.4 or this section, for unconventional 
natural gas development or hydrocarbon development, whichever is 
applicable, 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, subject to such monitoring and 
reporting requirements as the Commission may prescribe:
    (i) Tophole water encountered during the drilling process, provided 
it is used only for drilling or hydrofracture stimulation.
    (ii) Precipitation or stormwater collected on the drilling pad 
site, provided it is used only for drilling or hydrofracture 
stimulation.
    (iii) Drilling fluids, formation fluids, flowback or production 
fluids obtained from a drilling pad site, production well site or 
hydrocarbon water storage facility, provided it is used only for 
hydrofracture stimulation, and is handled, transported and stored in 
compliance with all standards and requirements of the applicable member 
jurisdiction.
    (iv) 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, 
provided it is used only for the purposes authorized therein, and in 
compliance with all standards and requirements of the applicable member 
jurisdiction.
    (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), or by the Executive 
Director pursuant to paragraph (f)(14) of this section, 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 the manner prescribed by the Commission.
    (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 or wastewater 
discharge 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 the manner 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.
    (14) A project sponsor issued an approval by rule pursuant to 
paragraph (f)(9) of this section may utilize water obtained from a 
hydrocarbon water storage facility that is 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 and are constructed and maintained in compliance with all 
standards and requirements of the applicable member jurisdiction. The 
owner or operator of any such facility shall submit a request for 
approval on a form and in the manner 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.
    (15) The project sponsor shall provide a copy of any registration 
or source approval issued pursuant to this section to the appropriate 
agency of the applicable member jurisdiction. 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 or approved hereunder. Any source approval issued 
hereunder shall also be subject to such monitoring and reporting 
requirements as may be contained in such approval or otherwise required 
by this part.

    Dated: January 27, 2012.
Thomas W. Beauduy,
Deputy Executive Director.
[FR Doc. 2012-2504 Filed 2-13-12; 8:45 am]
BILLING CODE 7040-01-P