Chapter 3B The States' Legal Framework: Northeastern Region The Regulation Of Water Use And Handling In The Oil & Gas Industry In Appalachia
| Jurisdiction | United States |
(Nov 2011)
THE STATES' LEGAL FRAMEWORK: NORTHEASTERN REGION THE REGULATION OF WATER USE AND HANDLING IN THE OIL & GAS INDUSTRY IN APPALACHIA
Diana Prulhiere
Steptoe & Johnson PLLC
Charleston, West Virginia
ARMANDO BENINCASA is with the firm of Steptoe & Johnson PLLC in West Virginia. He concentrates his practice in the areas of energy law, environmental law, environmental litigation, administrative law, government affairs and lobbying. His practice consists of cases involving permitting and regulatory requirements for solid waste, water resources, underground storage tanks, and voluntary remediation, and the drafting of rules and statutes related to the environment. He has extensive experience in governmental matters, as well as representing various energy companies before state agencies and the West Virginia Legislature. Prior to joining Steptoe & Johnson, he was with the West Virginia Department of Environmental Protection, Office of Legal Services. He is Chair of the Environment Committee of the West Virginia Chamber of Commerce, and is a member of the Board of Directors of the Air & Waste Management Association, the Water Environment Association, the Independent Petroleum Association of America, West Virginia Oil & Natural Gas Association, Marcellus Shale Coalition, and the Energy & Mineral Law Foundation.
1. Overview of Hydraulic Fracturing and Related Issues1
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Horizontal oil and gas well drilling has become commonplace in Appalachia. Likewise, hydraulic fracturing, or fracing, has become a key element of natural gas development. Combining horizontal drilling with hydraulic fracing has resulted in the development of unconventional shale plays, like the Marcellus and Utica in states such as West Virginia, Pennsylvania, Ohio and New York.
Fracing requires large volumes of water that must be transported to the wellsite. Once on-site, the water is mixed with chemicals and a propping agent, called a proppant, commonly sand. Wells are stimulated by pumping millions of gallons of this fracing fluid into the desired rock formation at high pressure to fracture the rock. As the injection pressure is reduced, the fluid returns to the surface, leaving behind the sand to prop open the fractures; this allows the natural gas to be collected from the rock and flow up the well. A portion of the injected fluid remains underground, and in addition to naturally occurring substances in the formation, is returned to the surface as flowback and produced water. Naturally occurring substances in rock formations may include: barium, calcium bicarbonate, iron, magnesium sulfate, sodium chloride, strontium and naturally occurring radioactive material ("NORM"). Fracing usually occurs once when the well is first drilled, and again several years thereafter when the rate of flow declines.
The process of hydraulic fracturing raises many significant issues, specifically issues related to water use and handling. First, appropriate sources of water that may be utilized for fracing must be identified, with corresponding measures taken to protect the water source from depletion. Second, safeguards must be put in place to ensure that the fracing process does not contaminate surface waters or groundwaters. This is accomplished through proper construction of the well and the handling of fluids at the surface. Third, once the fracing process is complete and the fluid is returned to the surface as flowback or produced water, adequate treatment and/or disposal of the wastewater must be ensured. There are a number of agencies, statutes and regulations which govern the above issues in the Appalachian Basin. This paper will consider the regulation of the first and third issues as they pertain to the Marcellus and Utica Shale in Appalachia.
2. Regulatory Agencies in Appalachia
The various shale plays stretch over miles of the Appalachian Basin, encompassing primarily parts of Pennsylvania, New York, Ohio and West Virginia. There are a number of regulatory agencies in Appalachia that play a role in governing the development and production of oil and natural gas.
In Pennsylvania, the Pennsylvania Department of Environmental Protection ("PADEP") is largely responsible for administering Pennsylvania's environmental laws and regulations. PADEP's Bureau of Oil and Gas ("Bureau") controls statewide oil and gas conservation and environmental programs. The Bureau also develops policies and programs for the regulation of
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oil and gas development and production, and oversees the oil and gas permitting and inspection programs.
The New York State Department of Environmental Conservation ("NYDEC") is the state agency charged with overseeing New York's environmental laws and regulations. The Division of Mineral Resources ("Division"), a subdivision of the NYDEC, administers regulations and a permitting program over natural gas well drilling and operations. Additionally, the Division protects correlative rights of mineral owners.
The relevant agency in West Virginia is the Office of Oil and Gas ("Office"), which is part of the West Virginia Department of Environmental Protection ("WVDEP"). WVDEP is a state agency authorized to implement and enforce provisions of the West Virginia Code related to the development of oil and gas and the protection of state waters. The Office is responsible for monitoring and regulating all actions related to the exploration, drilling, storage and production of oil and natural gas. In this regard, the Office regulates surface and groundwater protection, and oversees permitting, inspection and mine safety issues.
In Ohio there are two agencies which have a somewhat joint jurisdiction. The Ohio Department of Natural Resources ("ODNR"), Division of Mineral Resources Management ("DMRM") has primary regulatory authority over oil and gas drilling and production operations, brine disposal, solution mining operations and underground injection.2 ODNR also registers transporters hauling these fluids in Ohio.3 Ohio Environmental Protection Agency ("OEPA") has regulatory authority that is focused on ensuring drilling related wastewater does not impact surface water quality. OEPA also requires proper management of drill cuttings and flowback-derived sediments that are shipped off-site for disposal.
Also, there are two main river basin commissions in Appalachia that have jurisdiction over water issues, such as rate and volume of water withdrawals. The Delaware River Basin Commission ("DRBC") is an interstate/federal agency that manages the water resources within the basin of the Delaware River, covering portions of Delaware, New Jersey, New York and Pennsylvania. The Susquehanna River Basin Commission ("SRBC"), a similar interstate/federal agency, governs the water resources of the Susquehanna River throughout New York, Maryland and Pennsylvania.
In addition to all the agencies and commissions discussed above, there are other commissions and compacts which are somehow involved in the development and production of oil and gas in Appalachia. One example of an interstate commission that is involved in water use and handling issues is the Ohio River Valley Water Sanitation Commission ("ORSANCO"). ORSANCO was established in June 30, 1948 to control and abate pollution in the Ohio River Basin.4 ORSANCO is an interstate commission representing the federal government and eight states, namely: Illinois, Indiana, Kentucky, New York, Ohio, Pennsylvania, Virginia, and West
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Virginia.5 ORSANCO operates numerous programs to improve water quality in the Ohio River and its tributaries, including setting wastewater discharge standards.6
Another example of a commission is the Great Lakes Basin Commission, which was created by the Great Lakes Basin Compact, adopted by Illinois, Indiana, Michigan, Minnesota, New York, Ohio, Pennsylvania, Wisconsin, and the Canadian provinces of Ontario and Quebec, to, among other things, promote the orderly, integrated and comprehensive development, use and conservation of the water resources in the Great Lakes Basin.7 The Great Lakes Basin Commission has the power to recommend methods for the orderly, efficient, and balanced development, use and conservation of the water resources of the Basin or any portion thereof to the party state and to any other governments or agencies having interests in or jurisdiction over the Basin or any portion thereof, as well as to recommend agreements between the US and Canada with respect to the water resources of the Basin.8
3. Common Law Principles
"Riparian rights" is a system of allocating water among those who own land which borders a source of surface water. The doctrine of riparian rights varies slightly depending upon jurisdiction, but there are several fundamental principles which are uniform. First, a "riparian right" is the right of an owner of land bordering a source of water, the "riparian" landowner, to extract and use that water on his adjoining "riparian" land.9 Second, a riparian right is a right of use, meaning that the riparian landowner does not own the water, but merely has the right to use the water, subject to the rights of other riparian owners.10
Under the reasonable use doctrine, a riparian owner may make any use of water, irrespective of its effect on the natural flow of the watercourse, as long as each user does not interfere with other users' rights to reasonable use.11 The only real limitation on a user's particular use is that it must not impose any "substantial harm," or in other words "unreasonable harm," on any other riparian owner.12 To determine whether a specific use is permissible under the reasonable use doctrine, several factors must be considered, weighing the benefit of the use to the prospective user against the detriment of the use to other riparian owners.13 Additionally, a Court will consider the cost to the defendant user of...
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