PROPOSED RULEMAKING
DELAWARE RIVER
BASIN COMMISSION
[ 25 PA. CODE CH. 901 ]
Proposed Amendments to the Water Quality Regulations, Water Code and Comprehensive Plan to Provide for Regulation of Natural Gas Development Projects
[41 Pa.B. 1173]
[Saturday, March 5, 2011]Summary: The Delaware River Basin Commission (Commission) proposes to amend its Water Quality Regulations (WQR), Water Code and Comprehensive Plan by adding a new Article 7 to the WQR providing for the conservation and development of water resources of the Delaware River Basin during the implementation of natural gas development projects. Proposed Article 7 applies to all natural gas development projects involving siting, construction or use of production, exploratory or other wells in the Basin regardless of the target geologic formation, and to water withdrawals, well pad and related activities and wastewater disposal activities comprising part of, associated with or serving such projects.
Dates and Locations: The public hearings are scheduled for two dates in February 2011 at three locations as set forth in detail on the Commission's web site at www.drbc.net.
Addresses: Written comments for the record may be submitted either (a) electronically, through the public comment collection system to which a link is provided on the DRBC web site, www.DRBC.net.; or (b) in hard copy, via U.S. Mail to Natural Gas Regulations c/o Commission Secretary, DRBC, P. O. Box 7360, West Trenton, NJ 08628-0360; via private carrier to Natural Gas Regulations c/o Commission Secretary, DRBC, 25 State Police Drive, West Trenton, NJ 08628-0360; or by hand to DRBC staff at any of the Commission's public hearings or at the Commission's office building in West Trenton, New Jersey. Comments submitted by other means will not be included in the rulemaking record.
Further Information, Contact: Detailed information concerning the public hearings and submission of written comments is posted on the Commission's web site at www.DRBC.net. Questions concerning how to submit oral and written comments also may be addressed to Mr. John Calkin at 609-477-7266 or Ms. Paula Schmitt at 609-883-9500, ext. 224.
Supplemental Information: The Draft Natural Gas Development Regulations (draft regulations) were posted on the Commission's web site, www.drbc.net, on December 9, 2010 and remain available there. Notice of the availability of the draft regulations was published in the Federal Register on January 1, 2011. Hard copies of the draft regulations may be obtained at cost by contacting Ms. Paula Schmitt at 609-883-9500, ext. 224.
Purpose, Authority and Scope: The Commission is proposing a new Article 7 of DRBC's Water Quality Regulations to protect the water resources of the Basin during the construction and operation of natural gas development projects. This Article applies to all natural gas development projects involving siting, construction or use of production, exploratory or other wells in the Basin regardless of the target geologic formation, and to water withdrawals, well pad and related activities and wastewater disposal activities comprising part of, associated with or serving such projects. The provisions of this Article rely on the state oil and gas regulatory programs of Pennsylvania and New York where separate administration by the Commission would result in unnecessary duplication. If approved, Article 7 would supersede the Executive Director's determinations issued on May 19, 2009, June 14, 2010 and July 23, 2010.
Draft Article 7 implements the statutory authority that the Basin states of Delaware, New Jersey, New York and Pennsylvania and the federal government granted to the Commission in the Delaware River Basin Compact and supplements the Commission's Comprehensive Plan with respect to natural gas development projects within the Basin. Commission regulations are one mechanism by which the Basin states and federal government work together to manage water resources in an integrated manner for the benefit of all citizens of the Basin.
Strategic Regulatory Framework: Proposed Article 7 is divided into sections addressing water sources for natural gas development, well pad siting, and wastewater disposal. The Commission relies on the state regulatory programs applicable to oil and gas development projects and the experienced staff of the states in which natural gas wells are located to manage well construction and operation.
Water Sources for Uses Related to Natural Gas Well Development: Existing Commission regulations establish a program for regulating water withdrawals. These Commission requirements serve multiple water resources objectives, including among others, preserving river flows to protect in-stream living resources and downstream withdrawers, and ensuring adequate assimilative capacity for approved discharges. The Commission has in other regulations established thresholds for project review based on the thirty-day average volume of water withdrawals. Water withdrawals for natural gas development, including high volume hydraulic fracturing, may have substantial water quality impacts due to their high intermittent daily withdrawal volume. Consequently, this Article requires that water used for natural gas development projects must come from water sources that have been approved by the Commission for use for natural gas development. The requirements for approval are designed to protect minimum stream flows, provide a record of water transfers and otherwise ensure that water resources are not adversely affected. A streamlined approval process is provided that encourages the use of existing Commission-approved water sources to minimize the need to construct and operate new water sources. This Article permits water sources located within the physical boundaries of an approved Natural Gas Development Plan (NGDP) to be approved for uses within the NGDP. This Article also permits flowback and production waters, treated wastewater and mine drainage waters to be reused for natural gas development under specified conditions.
Natural Gas Development Plan (NGDP) and Well Pad Siting Requirements: The severity of the risks to water resources from well pad construction and operation depends in large part on where the well pads are placed. Article 7 seeks to minimize impacts to water resources from natural gas development by establishing NGDP and well pad siting and planning requirements, including:
• Mandatory preparation of NGDPs by sponsors of natural gas well pad projects who have total lease holdings in the Delaware River Basin of over 3,200 acres or intend to construct more than five natural gas well pads designed for any type of natural gas well.
• Identification, through the NGDP, of the project sponsor's foreseeable natural gas development in a defined geographic area. The NGDP requirement is designed to foster protection of water resources through broad scale lease area planning rather than limited site-by-site decision making, thereby encouraging development only in areas most suitable for it and minimizing impact to sensitive water resource features. These plans identify geographic and hydrological constraints to natural gas development and identify measures to minimize those impacts.
• Restrictions regarding siting in flood hazard areas, on steep slopes, and areas that serve as critical habitat for federal- or state-designated threatened and endangered (T&E) species.
• Minimum setbacks from water bodies, wetlands, surface water supply intakes and water supply reservoirs at distances specified in the regulations, and from occupied homes, public buildings, public roads, public water supply wells, and domestic water supply wells as provided by regulations of the state in which the well pad is located.
• A requirement for pre- and post-project monitoring of surface water and groundwater near well pads involving high volume hydraulically fractured wells, including a characterization of the hydrology, water chemistry and biological resources of surface waters and the water chemistry of groundwaters.
• Requiring the monitoring, tracking, and reporting of water usage and wastewater treatment and disposal. All wastewaters must be transported to approved treatment and disposal facilities.
Well Construction and Operation Procedures: The Commission principally relies on the states' implementation of state laws, regulations and programs concerning construction and operation of natural gas wells, well pads, and appurtenant structures to satisfy the requirements of the Compact and the Commission's Comprehensive Plan. In proposed Article 7, the Commission is separately requiring that all non-domestic wastewater be transferred to appropriate tanks for temporary storage on the well pad site or to a centralized wastewater storage facility and that fluids and drill cuttings from horizontal wellbores in the target formation be beneficially reused or disposed of at an appropriate waste facility.
Wastewater Generated from Natural Gas Act- ivities: Wastewater produced at natural gas well sites contains salts and other chemicals that present water treatment challenges. Article 7 provides that any wastewater treatment facility within the Basin may accept non-domestic wastewater from a natural gas development project only if the facility first obtains approval from the Commission in the form of a docket or modification of an existing docket.
To obtain such an approval, a project sponsor must submit a treatability study to demonstrate that acceptance of the non-domestic wastewater will not interfere with the facility's operations, and provide information to show that the facility's discharge will neither (a) cause primary and secondary Safe Drinking Water Act standards to be exceeded where surface water may be used as a public water supply; nor (b) violate zone-specific stream quality objectives and effluent limitations. Article 7 includes a comprehensive tracking system designed to promote the proper disposal of wastewater from natural gas development projects.
Approval by Rule (ABR) Procedures: Existing procedures for obtaining a Commission decision on a project application generally take six to nine months. Article 7 provides for a streamlined review process for natural gas development projects that demonstrate that they satisfy certain criteria. Commission approval for projects that meet the specified criteria may be issued through an ''approval by rule'' involving public notice and application to and approval by the Executive Director in a process that may take fewer than 30 days. Eligible projects include (a) bulk water sales for uses related to natural gas by holders of valid Commission approvals that can provide water within their current allocations; (b) well pad projects that conform to a Commission-approved Natural Gas Development Plan; (c) well pad projects that conform to specified restrictions and setback requirements; and (d) water supply projects involving the reuse of recovered flowback and production fluids as make-up water for hydraulically fracturing natural gas wells. In addition, projects that do not involve fracturing or that consist of well pads constructed exclusively for the development and operation of exploratory natural gas wells and that are expected to use no more than 80,000 gallons or equivalent of hydraulic fracturing fluids (low volume hydraulically fractured wells) are eligible for an ABR if they comply with applicable state programs and Commission setbacks and requirements. Approval by rule is not available for projects located in National Park Service Management Areas or in the watersheds of the New York City reservoirs.
Financial Assurance Requirements: Financial assurance for the plugging, abandonment and restoration of natural gas wells and the remediation of any pollution from natural gas development activities is required in the amount of $125,000 per natural gas well. After well installation and hydraulic fracturing are complete, the Executive Director may approve a reduction in the amount of the financial assurance required for individual wells if there is no evidence of harm to the water resources of the Basin and the project sponsor obtains a separate ''excess'' insurance policy or other financial assurance instrument. The text of proposed Article 7 of the Commission's Water Quality Regulations, Water Code and Comprehensive Plan is set forth below:
Article 7 of the Administrative Manual Part III—Basin Regulations Section 7.1. Purpose, Authority, Scope and Relationship to other Requirements and Rules.
(a) Purpose
(b) Authority
(c) Scope
(d) Comprehensive Plan and Project Review
(e) Planning Framework
(f) Relationship to other Commission Requirements
(g) Severability
(h) Delegation of Authority
(i) Host State Regulation of Natural Gas and Exploratory Well Construction and Operation
Section 7.2. Definitions.
Section 7.3. Administration.
(a) Types of Natural Gas Development Projects
(b) Types of Review and Approval
(c) Approval by Rule for Natural Gas Development Projects
(d) Appeal
(e) Duration of an Approval
(f) Expiration
(g) Name Changes and Transfers
(h) Docket or protected area permit modification or suspension by Director
(i) Public Notice Procedure
(j) Site Access
(k) Financial Assurance Requirements
(l) Project Review Fees
(m) Reporting Violations
(n) Enforcement
Section 7.4. Water Sources for Uses Related to Natural Gas Development.
(a) Types of Water Sources
(b) Preliminary Determinations
(c) Conditions
(d) Approval by Rule of previously approved sources to supply water for natural gas development
(e) New water sources for uses related to natural gas development
(f) Importation of water for uses related to natural gas development
(g) Use of recovered flowback and production water
Section 7.5. Well Pads for Natural Gas Activities.
(a) Purpose and Applicability
(b) Administration
(c) Natural Gas Development Plans
(d) Natural Gas Well Pad Docket Application Requirements
(e) Approval by Rule (ABR)
(f) Well Pads added to an approved NGDP
(g) Well Pad Dockets
(h) Well Pad Requirements
Section 7.6. Wastewater Generated by Natural Gas Development.
(a) Approval Requirements
(b) Treatability Study
(c) Ensuring non-exceedance of primary and secondary safe drinking water standards
(d) Effluent limitations and stream quality objectives for discharges to Zones 2-6
(e) Basin-wide effluent limitations and stream quality objectives
(f) Basin-wide Total Dissolved Solids (TDS) Stream Quality Objective
(g) Wastewater Imports
(h) Underground Injection Control
Appendix: Wording of Financial Assurance Instruments
ARTICLE 7 Section 7.1. Purpose, Authority, Scope and Relationship to other Requirements and Rules.
(a) Purpose. The purpose of this Article is to protect the water resources of the Delaware River Basin during the construction and operation of natural gas development projects. To effectuate this purpose, this Section establishes standards, requirements, conditions and restrictions to prevent, reduce or mitigate depletion and degradation of surface and groundwater resources and to promote sound practices of watershed management including control of runoff and erosion.
(b) Authority. This Article implements Sections 3.3, 3.6(b), 3.8, 4.1, 5.2, 7.1, 13.1 and 14.2(a) of the Delaware River Basin Compact and supplements the Commission's Comprehensive Plan with respect to natural gas extraction projects within the Basin.
(c) Scope. This Article applies to all natural gas development projects as defined in Section 7.2 including the construction or use of production, exploratory or other natural gas wells in the Basin regardless of the target geologic formation, and to water withdrawals, well pad and related activities, and wastewater disposal activities comprising part of, associated with or serving such pro- jects.
(d) Comprehensive Plan and Project Review. The Commission has determined that the provisions of this Article are required for the immediate and long range use of the water resources of the Basin and are therefore incorporated into the Commission's Comprehensive Plan. The Commission has also determined that all natural gas development projects may have a substantial effect on the water resources of the Basin. Consequently, in accordance with Section 3.8 of the Compact, no natural gas development project may be undertaken without first having obtained the approval of the Commission. Any approvals of natural gas development projects granted by the Commission or the Executive Director in accordance with Section 3.8 of the Compact or otherwise will contain such conditions as are appropriate to ensure that the project does not conflict with the provisions of this Section.
(e) Planning Framework. In accordance with Section 13.1 of the Compact, the Commission has adopted and from time to time amends a Comprehensive Plan designed to facilitate the optimum planning, development, conservation, utilization, management and control of the water resources of the Basin to meet present and future needs. The Plan consists of certain public and private facilities and projects, statements of policies, and programs that the Commission has determined are necessary to govern the proper development and use of the water resources of the Delaware River Basin. Recognizing that the goals of the Comprehensive Plan could not be achieved without implementation authority, the signatory parties adopted Compact provisions to enable the Commission to integrate and achieve the Compact's multiple objectives. These provisions include among others the Commission's project review authority (Compact, Section 3.8), the Commission's authority to control future pollution that may injuriously affect the waters of the basin (Article 5 of the Compact) and the Commission's authority to promote sound principles of watershed management (Article 7 of the Compact).
The Commission concludes that management of natural gas development projects should promote use and development of the Basin's water resources in a sustainable manner and should be conducted pursuant to rules and regulations that avoid pollution of or injury to the water resources of the Basin. The Commission concludes that these goals and the other goals of the Comprehensive Plan should be realized by a regulatory regime that:
(1) Builds on the rich history of planning in this region, including:
(i) Designation of 150 of 200 miles of the non-tidal river in the Upper Basin as Wild and Scenic pursuant to the National Wild and Scenic Rivers Act and the establishment of three National Park Units associated with the mainstem River;
(ii) Promulgation of Park Unit Management Plans, which recognize that the forested headwaters of the Delaware River Basin are critically important to the supply of clean water to satisfy basin needs for drinking water, aquatic life, recreation, and other designated uses;
(iii) Establishment of Management Plan Goals, the first of which is protection of the high water quality of the Upper Basin;
(iv) Development of a basinwide Water Resources Plan; and
(v) Designation of Special Protection Waters.
(2) Promotes the principles of sound watershed management contemplated in Article 7.1 of the Compact and the guiding principles enumerated in the Water Resources Plan for the Delaware River Basin (adopted in September 2004 by the governors of the four Basin states, the Environmental Protection Agency, the National Park Service, the U.S. Fish and Wildlife Service, US Army Corps of Engineers, US Geological Survey and the Natural Resources Conservation Service). Prominent among these principles is the recognition that integrated water management is crucial for sound results and that water resource management decisions should:
(i) Link water quality and water quantity with the management of other resources;
(ii) Recognize hydrological, ecological, social and institutional systems;
(iii) Recognize the importance of watershed and aquifer boundaries; and
(iv) Avoid shifting pollution from one medium to another or adversely impacting other locations; and push the boundaries of technological possibility while balancing economic constraints.
(3) Improves land management which is essential for improving the condition of water resources.
(i) Decision-making should be based on sound scientific principles and an understanding of the relationship between land and water resources;
(ii) Effective integrated water management requires coordinated planning and action by all levels of government including federal, regional, state and local levels; and
(iii) Existing planning efforts can provide the foundation for improving land and water resources management.
(4) Manifests regulations through a strategic regulatory framework that addresses water withdrawals, well pad siting, wastewater disposal, surface and groundwater monitoring, and water use accounting. The framework implements standards for well construction and operations primarily by relying on host state review and requirements as specified in Section 7.1 (i). The framework includes:
(i) Water withdrawal requirements that preserve river flows to protect instream living resources and downstream withdrawers, and ensure adequate assimilative capacity for approved discharges;
(ii) Well Pad requirements that protect surface and groundwater resources and facilitate tracking of water use from the withdrawal or diversion point to the point of use, and wastewater from the point of production to the point of treatment and disposal;
(iii) Natural Gas Development Plan requirements that foster protection of water resources through broad scale, rather than limited site-by-site decision making, with due consideration of environmentally sensitive landscapes;
(iv) Wastewater Docket provisions that protect receiving waters within the Delaware River Basin; and
(v) Commission approval processes that may take the form of coverage by, a protected area permit, a site-specific docket, an area-wide or leasehold area docket based on a Natural Gas Development Plan, or an Approval by Rule.
(f) Relationship to Other Commission Requirements. The provisions of this Article are in addition to all applicable requirements in other Commission regulations, dockets and permits. This Article supplements the Groundwater—Basinwide regulations set forth in Section 3.40 of the Commission's Administrative Manual—Part III Water Quality Regulations (WQR), 18 C.F.R. Section 410, that protect groundwater uses and quality and Section 2.20 of the Commission's Water Code that addresses groundwater apportionment, storage, recharge and withdrawal.
This Article also helps implement the Commission's Special Protection Waters (SPW) anti-degradation program where natural gas development projects are located within or affect waters designated by the Commission as Special Protection Waters or their drainage areas. The SPW regulations require among other things that a project cause no measurable change to existing water quality from point or nonpoint sources at control points identified in the SPW regulations and that the project implement non-point source controls (WQR 3.10.3A.2.b. and e.). An applicant for approval of a natural gas development project located in the drainage area of Special Protection Waters must comply with all SPW regulations in addition to this Article.
This Article may also assist in implementing, as applicable, the effluent limitations and stream quality objectives in Articles 3 and 4 of the WQR; the conservation standards in Article 2 of the Commission's Water Code, the flood plain requirements in Article 6 of the Administrative Manual-Part III Flood Plain Regulations and the water withdrawal requirements and limitations in the Ground Water Protected Area Regulations.
Upon adoption of this Article, the Executive Director Determinations dated May 19, 2009, June 14, 2010 and July 23, 2010 are superceded by the applicable provisions of this Article.
(g) Severability. The provisions of this Article are severable. If any provision of this Article or its application to any person or circumstances is held invalid, the invalidity will not affect other provisions or applications of this article, which can be given effect without the invalid provision or application.
(h) Delegation of Authority. Pursuant to these regulations, the Commission delegates certain authority regarding the review of natural gas development projects to the Executive Director. The Executive Director may in turn delegate such authority to staff where appropriate.
(i) Host State Regulation of Natural Gas and Exploratory Well Construction and Operation. Pursuant to their respective sovereign authorities, the Basin states of New York and Pennsylvania have enacted statutes and promulgated regulations governing the gas industry. These state laws impose requirements on, among other things, natural gas well construction and operation to protect human health and the environment, including water resources.
Section 1.5 of the Compact provides that it is the purpose of the signatory parties to the Compact to ''preserve and utilize the functions, powers and duties of existing offices and agencies of government to the extent not inconsistent with the compact.'' Section 1.5 further authorizes and directs the Commission ''to utilize and employ such offices and agencies for the purpose of this compact to the fullest extent it finds feasible and advantageous.'' In accordance with section 1.5 of the Compact, the Commission will utilize and employ existing offices and rely upon agencies of the State of New York and the Commonwealth of Pennsylvania in their respective states in lieu of separately administering natural gas and exploratory well construction and operation standards.
Subject to the provisions of this Section 7.1, a project sponsor's compliance with state laws and permit requirements relating to natural gas and exploratory well construction and operation shall constitute satisfaction of the project sponsor's obligations under section 3.8 of the Compact that relate to regulation of gas well construction and operation, except as specified in Section 7.5. In particular, a project sponsor's compliance with New York Environmental Conservation Law Article 23 (NY ECL § 23-0101 et seq.), and its implementing regulations and permitting requirements or Pennsylvania's requirements in the Oil and Gas Act, the act of December 19, 1984 (P. L. 1140, No. 223), as amended, 58 P. S. §§ 601.101 et seq., and 25 Pa. Code Chapter 78, satisfies the Commission's requirements with respect to natural gas well construction and operation.
Article 7 contains provisions relating to applications for natural gas well pad approvals, water withdrawal and water usage reviews, financial assurance and waste/wastewater management requirements that, when supplemented with the state programs referred to above, are necessary to prevent substantial effects on the water resources of the basin. Article 7 provisions relating to natural gas development plans are included to facilitate evaluation of actual development and planning for foreseeable development as a means to further prevent potential adverse effects on the water resources of the basin. Nothing in this Article 7 shall be construed to reduce the authority of the Commission to take actions or impose requirements as the Commission may determine to be necessary to prevent adverse impacts to water resources.
(2) Administrative Agreements between Commission and Host States. In accordance with and pursuant to section 1.5 of the Compact, the Commission and the Basin states may enter into an Administrative Agreements (Agreements) that coordinate their functions and eliminate unnecessary duplication of effort. The Agreements are designed to: effectuate intergovernmental cooperation, minimize the efforts and duplication of state and Commission staff resources where consistent with Commission, state and federal legal requirements, ensure compliance with Commission approved basin-wide requirements, enhance early notification of the public and other concerned interests of proposed projects in the basin, indicate that the host state requirements satisfy the Commission's regulations and clarify the relationship and project review decision making processes of the states and the Commission for projects subject to review by the states under their state authorities and by the Commission under Section 3.8 and Articles 10 and 11 of the Compact.
In accordance with section 1.5 of the Compact, the Agreements may be used as a vehicle to further reduce any overlap between the administration of the Commission's natural gas development regulations and the regulations of New York and Pennsylvania.
Section 7.2. Definitions.
For purposes of this Article, the following terms and phrases have the meanings provided. These definitions of necessity differ from those provided in regulations of one or more of the Commission's member states and federal agencies.
Access road—a road constructed to the well pad that provides access for the drilling rig and other drilling-related equipment. The road is also used to inspect and maintain the well during the operating phase.
Agriculture, agricultural operations—the use of land to produce crops, livestock or poultry; the activities undertaken to grow, produce, harvest and distribute crops livestock or poultry.
Agricultural land—any parcel of land whose predominant use is categorized as agriculture or agricultural operations by the federal satellite imagery or official state orthophotography as of January 2010.
Approval by rule (ABR)—written approval to proceed with natural gas development activities through application to and approval by the Executive Director.
Artificial penetration—a human-made excavation, opening, or void beneath the ground surface that may provide a pathway for the upward migration of any potential contaminant existing or injected below the ground surface. This may include any type of well, mine, mine shafts, or tunnels.
Brine—a solution from a natural gas well that contains appreciable amounts of sodium chloride (NaCl) and/or other salts.
Best management practices (BMPs)—activities, facilities, measures, or procedures used to protect, maintain, reclaim and restore the quality of waters and the existing or designated uses of waters within the Delaware River Basin.
Centralized wastewater storage facility—an impoundment (see Impoundment) or tankage that serves or is served by more than one well pad.
Commission—the Delaware River Basin Commission (DRBC).
Commission approval—written approval in the form of a docket, protected area permit or approval by rule.
Consumptive water use—the water lost to the atmosphere from cooling devices, evaporated from water surfaces, or exported from the Delaware River Basin, or any other water use for which the water withdrawn is not returned to the waters of the basin undiminished in quantity.
Community water supply well—See public water supply well.
Contiguous—having a common side, property line or boundary in part or entirety.
Critical habitat—specific geographic areas, whether occupied by federal or state listed species or not, that are determined by the federal or state natural resource agencies to contain physical or biological features essential to the conservation and management of species listed by the federal government or state signatories to the Delaware River Basin Compact as threatened or endangered.
Disturbed area—land area where an earth disturbance activity is occurring or has occurred. A disturbed area is devoid of trees greater than 5 meters in height and substantially devoid of native woody vegetation.
Diversion—the conveyance or transfer of water.
Docket—a legal document granting approval by the Commission, including conditions for a project having a substantial effect on the water resources of the Basin.
Domestic wastewater—liquid waste that contains pollutants produced by a domestic residence or residences. It includes liquid waste discharged after treatment by domestic wastewater treatment facilities or residences or collected in portable self-contained toilets.
Domestic water supply well—any potable water well not classified as a public water supply well. A domestic well normally serves an individual residence or small business.
Drill cuttings—rock cuttings and related mineral residues generated during the drilling of an oil, gas or exploratory well.
Drilling fluid—mud, water, brine, air, gas, or other fluids pumped down the drill string that acts as a lubricant for the bit and is used to carry rock cuttings back up the wellbore.
Earth disturbance activity—a construction or other human activity that disturbs the surface of the land, including, but not limited to, clearing and grubbing, grading, excavations, creating embankments, land development, agricultural plowing or tilling, timber harvesting activities, road construction or maintenance activities, mineral extraction, and the moving, depositing, stockpiling, or storing of soil, rock or earth materials.
Erosion and sediment control plan—a site-specific plan identifying stormwater BMPs to minimize erosion from earth disturbance activity and reduce sedimentation in water bodies.
Executive Director—the Executive Director of the Delaware River Basin Commission.
Exploratory (stratigraphic) well—a well drilled outside a proven area or horizon to determine the geologic strata or the viability of natural gas production. Also referred to as a test well, such wells may or may not be converted to production wells.
Final site restoration—the process of returning or restoring the surface of a disturbed site as nearly as practicable to its condition prior to the commencement of gas drilling operations.
Flood hazard area—means the area inundated by the regulatory flood as defined in the Commission's Administrative Manual—Part III Basin Regulations—Flood Plain Regulations.
Flood, regulatory—means the flood which has a 1% chance of occurring in any one year (the ''100-year flood) as defined in the Commission's Administrative Manual—Part III Basin Regulations—Flood Plain Regulations.
Flowback—retrieved and recovered fluid from hydraulic fracturing of a natural gas well.
Forested landscape—landscape classified as forested in the USGS National Land Cover Dataset (NLCD).
Forested site—any parcel of land identified for a natural gas development project that is within a forested landscape, or that is substantially covered by tree canopy as shown on state orthophotography prior to January 2010, and which will require removal of 3 or more acres of tree canopy, for the project.
Freshwater—water containing less than 1,000 milligrams per liter of dissolved solids, most often salt.
Groundwater—includes all water beneath the surface of the ground.
High volume hydraulically fractured wells—natural gas wells that use or are expected to use greater than 80,000 gallons or equivalent of hydraulic fracturing fluids, including water. Note: This definition differs from the definition established by New York State for purposes of its natural gas regulatory program.
Horizontal wellbore—the portion of a well drilled intentionally to deviate from a vertical axis, including wells drilled diagonally and horizontally.
Hydraulic fracturing—a well stimulation technique which consists of pumping water, chemicals and a propping agent, such as sand, or other fluids and materials down the wellbore under high pressure to create and maintain induced fractures in the hydrocarbon-bearing rock of the target geologic formation.
Hydraulic fracturing fluid(s)—a mixture of water, chemicals and propping agents or other fluids and materials used in the hydraulic fracturing process.
Impoundment—a liquid containment facility that is installed in a natural topographical depression, an excavation, or a bermed area formed primarily of earthen materials. Impoundments are required to be engineered and structurally sound and lined with a geomembrane or a combination of other geosynthetic materials. An impoundment used to store wastewater is termed a wastewater impoundment; an impoundment used to store freshwater is termed a freshwater impoundment.
Invasive species—a species of plant, animal or other organism that is 1) non-native (or alien) to the ecosystem under consideration and 2) whose introduction causes or is likely to cause economic or environmental harm or harm to human health.
Leasehold—all parcels of land or mineral estates in which a project sponsor or its direct or indirect parent, subsidiary or affiliated entities has individual ownership, or common ownership, control or interest with other parties.
Low volume hydraulically fractured wells—natural gas wells that use or are expected to use less than or equal to 80,000 gallons or equivalent of hydraulic fracturing fluids, including water. Note: This definition differs from the definition established by New York State for purposes of its natural gas regulatory program.
Mine drainage water (MDW)—all water from mines (whether by gravity flow or active pumping) or mined materials. MDW can emanate from abandoned, inactive, active or orphaned mines. In addition, MDW can be in the form of surface seepage associated with certain stockpiled (mined materials) or stockpiled mined waste products.
Natural diversity inventory assessment (NDIA)—an assessment of the occurrence of state and federally listed threatened and endangered species on a site. For projects located in the Commonwealth of Pennsylvania, a Pennsylvania Natural Diversity Inventory (PNDI) assessment satisfies this requirement. For projects located in the state of New York, an assessment done in accordance with New York, 6 NYCRR Part 182 satisfies this requirement.
Natural gas development plan (NGDP)—a project sponsor's overall plan for siting and accessing natural gas development projects in its leasehold areas.
Natural gas development project—all activities necessary for the development, extraction and transportation of natural gas including but not limited to well pad, gas collection and transmission infrastructure (e.g., pipelines, compression stations,) associated access road construction, air rotary/mud rotary natural gas exploratory or production well drilling, natural gas exploratory and production well construction and testing, support vehicle tire cleaning, dust control on access roads, storage of fresh water, hydraulic fracturing well stimulation, hydraulic fracturing chemical storage, final site reclamation, and the storage, reuse, transport and disposal of all domestic and non-domestic wastewaters, including flowback and production water.
Non-domestic wastewater—liquid wastes, treated or untreated, from sources other than domestic sanitary and gray water, including brines, production water, flowback and any water containing brines, drilling muds, hydraulic fracturing fluids, flowback, well servicing fluids, oil, production water or drilling fluids, and cement mixer or cement truck washout water.
Non-point source pollution control plan (NPSPCP)—a written plan describing the proposed erosion and sedimentation controls and pre- and post-construction stormwater management. An approved NPSPCP is required for all projects in the drainage area of the DRBC Special Protection Waters regardless of the amount of area disturbed.
Normal process for Commission review and approval of projects—a procedure involving application by the project sponsor, technical review by Commission staff, publication of a draft docket, and a public hearing followed by Commission action at a public meeting.
Pass-by flow requirement—a prescribed quantity of flow that must be allowed to pass surface water intake when withdrawal is occurring. Pass-by requirements also specify low-flow conditions during which no water can be withdrawn.
Person—any natural person, corporation, partnership, association, trust, agency, authority or other entity, public or private.
Pipeline—a temporary or permanent conduit used to convey liquids and/or gasses from one site to another. Pipelines may include, but are not limited to natural gas gathering and transmission lines, fresh water transmission lines, lines that convey flowback or production water from a well, well pad, impoundment or centralized wastewater storage facility to another well, well pad, impoundment or centralized wastewater storage facility.
Pollutants—any substance which when introduced into surface water or groundwater degrades natural water quality, including but not limited to: dredged spoil, solid waste, incinerator residue, sewage, garbage, sewage sludge, munitions, chemical wastes, biological materials, radioactive materials, heat, wrecked or discarded equipment, rock, sand, sediment, cellar dirt and industrial, municipal or agricultural waste.
Potable water—water suitable for human consumption.
Post Hydraulic Fracturing Report—a report listing the volumes and sources of water, wastewater, and flowback and the volume and amounts of all chemicals and additives used during the hydraulic fracturing of a natural gas well. Also included in the report are the total volume of flowback recovered from the well within 45 days of the completion of hydraulic fracturing, and the amounts and destinations of any flowback removed from the site for disposal or reuse.
Practicable—an activity capable of being done, effected, or put into practice, with available and reasonable means.
Production water—water and other fluids brought to the surface during production of oil or gas.
Project sponsor—any person proposing a project for Commission approval.
Protected area permit—a permit approved by the Executive Director in accordance with the Delaware River Basin Commission's Southeast Pennsylvania Ground Water Protected Area Regulations.
Private water supply well—See Domestic Well.
Proppant or propping agent—a granular substance (sand grains, aluminum pellets, or other material) that is carried in suspension by the hydraulic fracturing fluid, and that serves to keep the induced fractures open when hydraulic fracturing fluid is withdrawn after a hydraulic fracturing treatment.
Public water supply—a source of drinking water for a public or community water supply system.
Public water supply well—a well that serves a community, transient non-community or non-transient non-community water system that provides water to the public for human consumption through pipes or other constructed conveyances, if such system has at least 15 service connections or regularly serves an average of at least 25 individuals daily at least 60 days out of the year.
Public water system—a system for the provision to the public of water for human consumption through pipes or other constructed conveyances, if the system has at least 15 service connections or regularly serves at least 25 individuals (U. S. Code, Title 42, Section 300f(4)(A)).
Rules of Practice and Procedure (RPP)—DRBC Administrative Manual—Rules of Practice and Procedure.
Setback—minimum distance required between a well pad and other zones, boundaries, or natural or constructed landscape features such as wetlands, streams, or buildings.
Substantial funds—financial resources sufficient to demonstrate to the Commission that the approved project is active and viable and that completion is anticipated in a reasonable time.
Siting—the process of identifying and selecting the place where a well pad and ancillary facilities are planned to be located.
Special Protection Waters (SPW)—waters of the mainstem Delaware River located between Hancock, NY and Trenton, NJ and select tributary reaches classified by the Commission as Outstanding Basin Waters or Significant Resource Waters. (DRBC Water Quality Regulations 3.10.3 A.2.).
Spring—a place where groundwater naturally flows from rock or soil onto land or into a body of surface water.
State orthophotography—official aerial images established for counties in the basin by the states of Delaware, New Jersey and New York and the Commonwealth of Pennsylvania.
Stimulation—act of increasing production of natural gas by artificial means such as hydraulic fracturing.
Stormwater—water that originates from precipitation that washes over the land surface or any structures or improvements located on the land surface.
Structure—any assembly of material above or below the surface of land or water, including but not limited to, buildings, dams, fills, levees, bulkheads, dikes, impoundments, jetties, embankments, causeways, culverts, roads, railroads and bridges.
Surface casing—a string of casing used to isolate the well bore from fresh groundwater and to prevent the escape or migration of gas oil and other fluids from the well bore into fresh groundwater. The surface casing is also commonly referred to as the water string, water casing, or water protection casing.
Water Code—DRBC Water Code—18 CFR Part 410.
Wastewater—liquids to which pollutant(s) have been introduced and are proposed to be discharged to the ground, groundwater, or surface water, transported to storage or wastewater treatment facilities, beneficially reused or discharges to ground, groundwater or surface water after treatment. Wastewater includes both domestic and non-domestic wastewater.
Wastewater records—a record of all wastewater produced, stored, or reused at a project site on a daily basis, and the amounts and destination of all wastewaters transported offsite by individual trucks and/or pipelines.
Wastewater treatment facility—any facility storing, intercepting, transporting, treating, or discharging wastewater.
Water body—a natural or constructed landscape feature containing or conveying surface water on a permanent, seasonal, or intermittent basis, including 1) depressional features such as reservoirs, lakes, ponds, and embayments; 2) natural or constructed channels that convey flowing water such as streams, canals, ditches, and similar drainageways, and 3) wetlands.
Water for use for natural gas development—Any water intended for application in natural gas development projects, including surface water, groundwater, mine drainage, recovered flowback or production water, non-contact cooling water, or treated wastewater.
Water user—any person, who uses, takes, withdraws or diverts waters of the Delaware River Basin.
Wellbore—A borehole; the hole drilled by the bit. A wellbore may have casing in it or it may be open (uncased); or part of it may be cased, and part of it may be open. Also called a borehole or hole.
Well pad—a site constructed, prepared, leveled, or cleared in order to perform the activities and stage the equipment necessary to drill a natural gas exploratory or production well.
Wetlands—those areas which are inundated by surface or groundwater with a frequency sufficient to support a prevalence of vegetative or aquatic life that requires saturated soil conditions for growth and reproduction, or are delineated as wetlands by a signatory party.
Section 7.3. Administration.
(a) Types of Natural Gas Development Projects. For purposes of applications by project sponsors and reviews by the Commission in accordance with Section 3.8 of the Compact, each of the following types of projects require individual review unless the Executive Director approves otherwise:
(1) Water withdrawals and water use for natural gas development as described in Section 7.4.
(2) Natural Gas Development Plans (NGDP) as described in Section 7.5.
(3) Well pads for natural gas development as described in Section 7.5.
(4) Treatment and/or discharge of wastewater that was generated or reused for natural gas development as described in Section 7.6.
(b) Types of Review and Approval. Commission approvals may take the form of dockets, Southeastern Pennsylvania Groundwater Protected Area permits (protected area permits), or approvals by rule (ABR).
(1) Dockets are granted, denied or conditioned by the full Commission after public notice and hearing.
(2) Protected area permits are granted, denied or conditioned by the Executive Director and the Pennsylvania Commissioner.
(3) ABRs are granted, denied or conditioned by the Executive Director for projects that meet the requirements for an ABR in accordance with these regulations.
(c) Approval by Rule for Natural Gas Development Projects. An ABR is one way to request approval of certain defined water supply and well pad activities if prescribed conditions are met.
(1) Eligible Projects: An Approval by Rule (ABR) may be issued by the Executive Director in accordance with this section for the following types of natural gas development projects:
(i) Water Withdrawal. Refer to Section 7.4 for eligible water withdrawal projects.
(ii) Natural Gas Well Pad Projects. Refer to Section 7.5 for eligible well pad projects.
(2) Form of approval. The form of an approval in accordance with this section will be an ABR which may modify a previously issued docket or a protected area permit by establishing the conditions under which an unused portion of the previously approved allocation may be used for natural gas development for previously approved projects or an ABR with conditions as defined in Sections 7.4 and 7.5.
(3) Project sponsors for water withdrawal and well pad projects that do not meet the criteria for an ABR may apply for a docket.
(d) Appeal. An appeal from a determination of the Executive Director issued in accordance with this section may be made in accordance with Article 6 of the Commission's Rules of Practice and Procedure.
(e) Duration of an Approval.
(1) Approvals of water withdrawals and water uses for natural gas development approvals may have terms of up to 10 years.
(2) Approvals of Natural Gas Development Plans (NGDP) may have terms of up to 10 years. NGDPs may be extended for an additional 10 years by the Executive Director when the Executive Director determines there is no substantial change to the docketed NGDP and applicable Commission regulations.
(3) Approvals of well pads for natural gas development may have terms of up to 10 years. Well pad approvals may be extended for an additional 10 years by the Executive Director when the Executive Director determines there is no substantial change to the well pad approval and applicable Commission regulations.
(4) Approvals for well pads that are used exclusively for the development of exploratory wells or low volume hydraulically fractured wells may have terms that are equal to that of the host state natural gas well construction permit. If the host state permit expires, the project sponsor must notify the Executive Director. If the host state permit is renewed or extended, the project sponsor must notify the Executive Director for continued approval.
(5) Approvals for wastewater treatment and disposal/discharge may have terms of up to 5 years.
(f) Expiration. If by the third anniversary of the date of approval of a natural gas project by the Commission, neither construction nor operation of the project has commenced, the approval will be deemed expired. An extension may be granted if in advance of the three-year anniversary of the approval, the project sponsor furnishes the Executive Director with a request for extension, supported by a showing that since the approval date substantial funds (in relation to the project cost) have been expended toward construction and/or operation. Upon such a showing, the Executive Director may approve an extension of time to initiate construction of the project. Such approval will not extend beyond the expiration date in the approval. Project sponsors must submit a renewal application at least one year before the expiration date in order to qualify for an administrative continuance of the approval.
(g) Name Changes and Transfers. A project sponsor may apply for and the Executive Director may grant approval transferring a project or changing the name of a project sponsor in accordance with Resolution No. 87-15. Resolution No. 87-15 relates to changes of ownership of water resources projects approved by the Commission under Section 3.8, Article 10 and/or Article 11 of the Delaware River Basin Compact.
(h) Docket, protected area permit and ABR modification or suspension by Director. The Executive Director may modify or suspend an approval or any condition thereof, or require mitigating measures pending additional review, if in the Executive Director's judgment such modification or suspension is required to protect the water resources of the Basin. In addition, the Executive Director may approve modifications to the docket, protected area permit or ABR conditions involving reports (e.g. operation plans, monitoring requirements, etc.) and construction schedules required in the approved docket, protected area permit or ABR.
(i) Public Notice Procedure. The sponsor of a natural gas project is responsible for issuing notices as follows:
(1) Concurrent with the submission of an application to the Commission, the project sponsor must notify the appropriate agency of the host state, each municipality in which the project is located, the county planning agency of each county in which the project is located, each adjacent property owner and any other property owner within 2,000 ft of the well pad of such application. In addition the project sponsor must demonstrate that at least 10 days prior to the date of application submission, notice in at least once in a newspaper of general circulation serving the area in which the project is located was published. All notices required under this section must contain a description of the project, its purpose, and the address, electronic mail address, and phone number of both the project sponsor and the Delaware River Basin Commission.
(2) The project sponsor must provide the Commission with a copy of the United States Postal Service return receipt for the notifications to agencies of the host state, municipalities and county planning agencies required by the preceding paragraph. The project sponsor must also provide certification on a form provided by the Commission that it has issued the notices to adjacent property owners and that notice was published in the newspapers required by the preceding paragraph, if applicable. Until these items are provided to the Commission, review of the application will not proceed. The project sponsor must maintain all proofs of notice required hereunder for the duration of the corresponding approval if granted.
(j) Site Access.
(1) The project sponsor must allow any authorized representative of the Commission, at reasonable times and upon the presentation of proper credentials, to:
(i) enter any part of the approved facility for purposes of inspection, sampling, monitoring, observation or photography; and
(ii) inspect and or photocopy any records that must be kept as a condition of the approval or which demonstrate the status of compliance with the approval.
(2) Reasonable times include any hour during which the facility is operational and staffed. For unstaffed facilities, access must be provided within two hours of an entry request made during reasonable times for the office controlling the unstaffed site.
(3) The project sponsor or site operator must provide Commission representatives with an escort knowledgeable about site operating procedures as well as any specialized personal safety equipment (PSE) and site safety training upon entering the site.
(4) Facility records are required to be kept at the project site, unless approved otherwise by the Commission or Executive Director. Facility records not stored at the facility must be made available to Commission representatives within two working days of the Commission's request.
(5) Specialized PSE means any required PSE other than a long sleeve shirt, long pants, hard hat, safety shoes, hearing protection and safety glasses.
(k) Financial Assurance Requirements.
(1) The project sponsor must provide financial assurance for the plugging and abandonment, and restoration of the natural gas well, well pad site and associated equipment and structures, and for restoring land disturbances caused by the natural gas well project as required by Section 7.5(h)(1)(vi). The financial assurance required by this subsection must remain continuously in force until the Executive Director determines that closure and restoration are complete.
(2) The project sponsor must provide financial assurance for the mitigation and remediation of any release or threatened release of substances, pollutants or contaminants as required by Section 7.5(h)(1)(vi). The financial assurance required by this subsection must remain continuously in force until the Executive Director determines that any necessary remediation is complete.
(3) The financial assurance provided under this section does not limit the duty or liability of the project sponsor to close the natural gas well, well pad site and associated equipment and structures, or to restore land disturbances caused by the natural gas well project.
(4) The financial assurance provided under this section does not limit the duty or liability of the project sponsor to remediate any release or threatened release of hazardous substances, pollutants or contaminants at or from the natural gas well, well pad site or associated equipment and structures, and from any materials or wastewater transported to or from the well pad site.
(5) If necessary, the Commission may aggregate the funds of the financial assurance instruments provided by a project sponsor throughout the basin to finance the closure or response actions described in Sections 7.3(k)(1) & (2) at any one of that project sponsor's wells or pad sites.
(6) Use of Funds. After determining that the project sponsor has failed to adequately perform the closure activities specified by Section 7.5(h)(1)(vi) and Subsection (17) below, or remediation of a release or threatened release of hazardous substance, pollutants or contaminants as specified in Section 7.5(h)(1)(vi) and Subsection (17) below, the Executive Director may use the funds established by the financial instruments under these provisions to perform or finish the specified tasks.
(7) The project sponsor must satisfy the financial assurance requirements in this Section 7.3 (l) by one or a combination of the following:
(i) A surety bond satisfying the requirements of Section 7.3(k)(12).
(ii) A letter of credit satisfying the requirements of Section 7.3(k)(13).
(iii) A trust fund satisfying the requirements of Section 7.3(k)(14).
(iv) Such other manner of financial assurance as may be provided by natural gas well regulations of the state in which the well is located, provided that the amount of financial assurance is no less than the amounts specified in Section 7.3(k)(8), the coverage of the instrument or other means of assurance is at least as broad as in Section 7.3(k)(1) and (2), and the proceeds are available to the Commission to perform the closure and remediation required by in Section 7.3(k)(1) and (2).
(8) The financial assurance required by this Section must be in the amount of $125,000 per natural gas well. The financial assurance must cover all wells on a well pad. A single instrument may cover multiple well pads provided that the amount of financial assurance in the aggregate is no less than the sum of the amounts required for each well pad if separate financial assurance instruments were obtained. If the project sponsor receives approval for a natural gas development plan pursuant to Section 7.5(c) of these regulations, the Executive Director may reduce the financial assurance requirement by an amount of up to 25% upon a showing by the project sponsor that the amount of financial assurance remaining will be sufficient to pay for the closure and remediation activities required by Section 7.3(k)(1) and (2) above for the entire area covered by the plan. The Commission may, after public notice and hearing, amend the amount of financial assurance required to adjust for inflation or differing actual costs.
(9) The financial assurance required by this Section is separate from any financial assurance provided to the host state in accordance with state regulations.
(10) The Executive Director may approve replacing part or all of the requirements of this Section 7.3(k) with alternative requirements for financial assurance when the Executive Director determines that the alternative requirements will be at least as protective of water resources of the Basin as this Section 7.3(k). The Executive Director may incorporate his or her recommendation into a proposed docket which will become effective upon approval by the Commissioners or into a proposed ABR which will become effective upon approval of the Executive Director.
(11) The project sponsor must report the status of financial assurance to the Commission annually. The report is due on the anniversary of the date the docket, or ABR was approved.
(12) The project sponsor may satisfy the financial assurance requirements of this Section 7.3(k) by obtaining a surety bond that complies with Sections 7.3(k) 1 through 8, inclusive, above and with this Section 7.3(k) (12).
(i) The surety company issuing the bond must be among those listed as acceptable sureties on federal bonds in the latest Circular 570 of the U.S. Department of the Treasury.
(ii) The surety company must be authorized to do business in the state in which the natural gas development plans or well pad is located.
(iii) The Commission will retain, during the term of the bond, and upon forfeiture of the bond, a property interest in the surety's guarantee of payment under the bond which is not affected by the bankruptcy, insolvency or other financial incapacity of the operator or principal on the bond.
(iv) The surety must give written notice to the Executive Director, if permissible under the law and to the principal within ten days of a notice received or action filed by or with a regulatory agency or court having jurisdiction over the surety while lodging one of the following:
(A) The insolvency or bankruptcy of the surety.
(B) A violation of regulatory requirements applicable to the surety, when as a result of the violation suspension or revocation of the surety's license to do business in any jurisdiction is under consideration by a regulatory agency.
(v) The bond must be substantially in one of the forms provided in Section (i) of the Appendix.
(vi) The bond, if in the form of a payment bond, must be accompanied by a standby trust substantially in the form of Section (iii) of the Appendix.
(vii) The project sponsor must submit the bond and standby trust agreement, if any, to the Executive Director at least 60 days before the project sponsor commences any site preparation activities at the well pad site.
(13) The project sponsor may satisfy the financial assurance requirements of this Section by submitting an irrevocable stand-by letter of credit to the Commission that complies with Sections 7.3(k) 1 through 8, inclusive, above and with this Section 7.3(k)(13).
(i) The issuing institution must be an entity which has the authority to issue letters of credit and whose letter-of-credit operations are regulated and examined by a federal agency.
(ii) The letter of credit must be irrevocable and must be so designated. However, the Executive Director may accept a letter of credit for which a limited time period is stated if the following conditions are met and are stated in the letter:
(A) The letter of credit is automatically renewable for additional time periods unless the financial institution gives at least ninety (90) days prior written notice to both the Commission and the sponsor of its intent terminate the credit at the end of the current time period.
(B) The Executive Director has the right to draw upon the credit before the end of its time period if the sponsor fails to replace the letter of credit with other acceptable means of compliance with this Section within 30 days of the financial institutions notice to terminate the credit.
(iii) Letters of credit must name the Commission and the Executive Director as the beneficiary and be payable to the Commission, upon demand, in part or in full, upon presentation of the Commission's drafts at sight. The Commission's right to draw upon the letter of credit does not require documentary or other proof by the Commission that the customer has violated the conditions of the bond, the docket or other requirements.
(iv) The letter of credit will be subject to the Uniform Commercial Code and the latest revision of the International Chamber of Commerce Uniform Customs and Practices for Documentary Credits.
(v) The financial institution issuing the letter of credit may not have failed, refused or unduly delayed to pay, in full, on the letter of credit or a certificate of deposit previously submitted as collateral to the Commission.
(vi) The issuing financial institution must waive rights of set off or liens which it has or might have against the letter of credit.
(vii) The letter of credit must be substantially in the form provided in Section (ii) of the Appendix. The letter of credit must be accompanied by a standby trust substantially in the form of Section (iii) of the Appendix
(viii) The project sponsor must submit the letter of credit and standby trust agreement to the Executive Director at least 60 days before the project sponsor commences any site preparation activities at the well pad site.
(14) The project sponsor may satisfy the financial assurance requirements of this Section by establishing a trust fund that complies with Sections 7.3(k) 1 through 8, inclusive, and with this Section 7.3(k)(14).
(i) The trust fund must be funded for the full required amount specified in Section 7.3(k)(8), or funded for part of the required amount of coverage and used in combination with other mechanism(s) that provide the remaining required coverage.
(ii) The trustee must be an entity that has the authority to act as a trustee and whose trust operations are regulated and examined by a federal agency or an agency of the state in which the natural gas well is located.
(iii) If other financial assurance as specified in this Section 7.3(k) is substituted for all or part of the trust fund, the project sponsor may submit a written request to the Executive Director for release of the excess.
(iv) The wording of the trust agreement must be identical to that set forth in Section (iii) of the Appendix.
(v) The project sponsor must submit the trust agreement to the Executive Director at least 60 days before the project sponsor commences site preparation activities at the well pad site.
(15) The project sponsor may at its option reduce the amount of the initial financial assurance required by Section 7.3(k)(8) by [75%] upon receiving written approval for such reduction from the Executive Director based upon the project sponsor's certification of the following:
(i) The wellbore and associated well casing have been successfully installed;
(ii) The initial hydraulic fracturing of the well, if any, is complete and no further hydraulic fracturing of the well is planned;
(iii) At least one year has elapsed following the dates of the events specified in subsections (i) and (ii), and to the best of the project sponsor's knowledge, information and belief, no harm to water resources has occurred or been alleged, or alternatively, any actual or alleged harm does not require maintaining the full amount of financial assurance. In the event that the certification of no harm is qualified in any manner, the Executive Director may require the project sponsor to submit supplemental information in order to determine whether a reduction of the initial financial assurance limits is appropriate;
(iv) The project sponsor has obtained excess financial assurance for any undiscovered existing or future harm to water resources in accordance with the provisions of Section 7.3(k)(16).
(16) To satisfy the excess financial assurance requirements of paragraph 7.3(k)(15), the project sponsor must alone or in combination with other sponsors of natural gas well projects within the Delaware River Basin procure excess financial assurance meeting the following conditions:
(i) The excess financial assurance shall be in the amount of [$67,500] for each natural gas well covered by the financial assurance instrument until the proceeds available from the financial assurance reach an aggregate amount of [$25] million for all sponsors of all natural gas wells covered by the financial assurance instrument and located within the Delaware River Basin;
(ii) The full aggregate amount of the excess financial assurance instrument must be available to respond to any and all costs specified in Section 7.3(k)(1) and (k)(2) after exhaustion of the primary financial assurance instrument provided by the project sponsor of the natural gas well causing the costs to be incurred.
(iii) All natural gas exploratory and production wells in the Delaware River Basin from any project sponsor participating in the excess financial assurance instrument must be covered by that instrument, except for those wells that have been released from financial assurance in accordance with Section 7.3(k)(17) and except for those wells for which the full amount of financial assurance required by Section 7.3(k)(8) is maintained. Once a well is covered by the excess financial assurance instrument, the approval of the Executive Director is required for the removal of such well from coverage by that instrument.
(iv) Project sponsors may form an association or other entity for the purpose of purchasing the excess financial assurance required to comply with this section.
(v) The project sponsors purchasing excess financial assurance must immediately obtain additional excess financial assurance to meet the requirements of Section 7.3(k)(16)(i) if as a result of payment of claims or otherwise the total amount of financial assurance falls below the limits specified in Section 7.3(k)(16)(i).
(vi) The financial assurance required by this Section 7.3k)(16) is excess of the financial assurance required by Section 7.3(k)(8). The financial assurance provided under this Section 7.3(k)(16) may not be used unless the primary financial assurance required under Section 7.3(k)(8) as adjusted under the provisions of Section 7.3(k)(15) has been exhausted or otherwise determined by the Executive Director to be unavailable.
(vii) The excess financial assurance may be in the form of a surety bond, letter of credit or trust as provided in Section 7.3(k)(7), or may be in the form of an excess insurance policy, indemnity or guarantee in a form acceptable to the Executive Director. The financial assurance instrument must provide excess coverage for plugging and abandonment, and restoration at least as broad as required by Sections 7.3(k)(1) and (2) and 7.5(h)(1)(vi) and allow for use of the funds by the Executive Director as provided in Section 7.3(k)(6).
(viii) The excess financial assurance must be of a form that remains in effect until released in accordance with Section 7.3(k)(17) unless substitute financial assurance acceptable to the Executive Director is obtained and in effect.
(ix) If the project sponsor intends to hydraulically fracture a natural gas well subject to excess financial assurance, the project sponsor must first increase its primary financial assurance limits to the full initial amount specified in Section 7.3(k)(8) without reducing the excess coverage in effect.
(17) Release from Financial Assurance.
(i) Upon completion of final restoration activities, the project sponsor must submit a statement to the Executive Director, signed by the docket holder's engineer or other responsible agent, advising the Commission that site restoration has been completed in compliance with host state regulations. The statement must include the date restoration was completed, the types, amounts and sources of materials used, and a site map showing final elevations and the types and amounts of vegetation used.
(ii) Successful restoration of well sites and access roads may only be considered complete after observations over two growing seasons indicate no significant impact on hydrologic resources and there are no outstanding compliance issues. The release from the Section 7.3(l) financial assurance requirements is dependent on the Executive Director's final determination that the final site restoration requirements contained in this subsection, 7.3(k)(17) have been fulfilled.
(l) Project Review Fees
(1) Fee Schedule
The Delaware River Basin Commission requires payment of non-refundable review fees, water charges and other fees as set forth in TABLE 7.3.1: APPLICATION FEES AND WATER CHARGES ASSOCIATED WITH NATURAL GAS EXPLORATION AND DEVELOPMENT PROJECTS for the following:
(i) Docket or protected area permit application for Water Withdrawal not eligible for Approval by Rule (Docket)—Industrial, Commercial, Private or Public
(ii) Application for Water Withdrawal eligible for Approval by Rule (ABR)—Industrial, Commercial, Private or Public
(iii) Application for Water Use at Well Pad (where well pad approval is deferred to State)—(ABR)
(iv) ABR or docket application for Individual Well Pad in the absence of a Natural Gas Development Plan Approval
(v) Docket application for Natural Gas Development Plan
(vi) ABR application for the Addition of Well Pad to an Approved NGDP
(vii) ABR for exploratory or low volume hydraulically fractured wells
(viii) Docket application for Industrial, Commercial, Private or Public Wastewater Discharge Involving Treatment and /or Disposal of Natural Gas Wastewaters
(ix) Change in ownership of an approved project
(x) Change in name of owner of an approved project. If change in name occurs concurrently with change in ownership, only the change in ownership fee is charged.
(xi) Application for Renewal of Project Approval
(xii) Natural Diversity Index Assessment
(xiii) Modification of Approvals Not Specified Above
(xiv) Consumptive Water Use Charge
(xv) Application Fee Adjustment for any project resulting in an out-of-basin diversion of water or wastewater.
(2) Fee payable for each project category. If a project involves components in more than one category, a separate fee in accordance with Table 7.3.1 is required for each component.
(3) Fees non-refundable. Application fees are non-refundable. No portion of a fee will be credited to the project sponsor if the Commission's approval authorizes a rate of withdrawal, quantity of water, or number of wells or well pads other than that requested by the project sponsor, or if the application is withdrawn during the review process or if the application is denied.
(4) Application fee worksheet. Project sponsors must complete and submit the Natural Gas Project Application Fee Worksheet posted on the Commission's web site, along with their fee payment and application.
(5) Alternative fee based on actual cost of review. When a fixed fee or fee calculated in accordance with a formula set forth in Table 7.3.1 below is deemed by the Executive Director to be insufficient to cover costs associated with review of an application or submission made by a project sponsor consistent with the conditions of a project approval, the Executive Director may impose a fee in the amount of up to 100% of the Commission's actual cost.
(6) Payment of fee with application. The appropriate review fee must be submitted to the Commission with the project application. Failure to submit payment of the fee or submission of an insufficient fee may result in return of the application to the project sponsor or, at the discretion of the Executive Director, issuance of an invoice for the balance owed. Refunds will be issued for any portion of a fee payment that exceeds the appropriate amount. The Executive Director or Commission may choose to take no action on a project application until all applicable fees are paid or may condition the approval on the payment of fees.
(7) Water supply charge. The holder of a natural gas well pad approval, whether or not the well pad is part of a NGDP is required to pay a water supply charge for consumptive use as specified in Table 7.3.1. Water supply charges apply to all groundwater and surface water used to support natural gas development projects. One hundred percent of water used by a natural gas extraction and development project is considered to be consumptive for the purpose of calculating the water supply charge due to the Commission. The water charge rate applied to all water used for natural gas well projects will be equivalent to the consumptive use rate charged for surface water usage set forth Table 7.3.1 (n). This rate applies to all water used for natural gas development projects and will be paid by the user of the water. Consumptive use water supply charges are to be paid on a quarterly basis by the project sponsor of the natural gas well pad. Payments must be received by the Commission within 30 calendar days of the end of each quarter. Late payments will be subject to an interest charge of 1% per month from the end of the month during which the payment was due. This applies to all natural gas well pads applied for and approved as dockets, ABRs and those included in NGDP dockets (see Table 7.3.1 (c), (d), (e), and (g)).
(8) ABR for well pads added to an approved NGDP. One or more additional well pad(s) may be added to an approved NGDP by means of an ABR as provided in Section 7.5(g), provided that each well pad conforms to the conditions of the NGDP approval. The fee in item (g) of Table 7.3.1 shall apply to each well pad. If the Executive Director determines that a proposed well pad does not conform to the approval conditions, the application as to that well pad will be ineligible for an ABR and shall be processed as a docket application upon request of the project sponsor and submittal of applicable fees. Any well pad that receives an ABR will be incorporated into the NGDP, including for purposes of any subsequent renewal or modification of the NGDP.
(9) Additional wells added to approved well pads. A project sponsor may apply for the addition of an individual well or wells to an approved well pad with no application fee, provided that the notification requirements and conditions provided in the well pad docket, NGDP docket or ABR are satisfied. If the Executive Director determines that any additional well does not conform to the conditions of the well pad docket, NGDP docket or ABR, the request will be processed as a modification of the approval and the project sponsor will be charged the modification fee provided in item (m) Table 7.3.1. In such cases the application may be processed as an ABR or a docket, at the discretion of the Executive Director.
(10) Annual compliance and monitoring fee. In addition to the application fee, an annual compliance and monitoring fee of $2,000 will apply to all projects approved in accordance with these regulations. A separate fee will be charged for each water withdrawal docket or ABR, each individual well pad, and each well pad approved as part of a NGDP. The annual compliance and monitoring fee will be prorated for the first year and will be due by January 31 of the following year. For each year thereafter, the fee will be due by January 31 of the following year. Annual compliance and monitoring fees not received by the Commission by January 31 will be subject to interest charges of 1% per month from January 31 until the date of receipt by the Commission.
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