[41 Pa.B. 1173]
[Saturday, March 5, 2011]

[Continued from previous Web Page]

 Entire basin leaseholds includes all leaseholds in the basin 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. To the extent that project sponsors obtain rights to conduct natural gas development activities, including but not limited to the extraction of natural gas, through property interests other than or in addition to a leasehold, for purposes of these Natural Gas Development Regulations those rights shall be administered in the same manner and subject to the same restrictions as leaseholds.

 The requirement to submit and receive Commission approval of an NGDP applies to all project sponsors of natural gas well pad projects proposed to be constructed after the effective date of these regulations. Project sponsors that are required to prepare an NGDP may apply for approvals of natural gas well pad projects prior to the receipt of NGDP approval in accordance with these regulations. A project sponsor who is required to prepare a NGDP may make an application to the Commission for up to five (5) well pad approvals prior to and during pendency of the NGDP application. These five well pad approvals can be any combination of exploratory well pads, stratigraphic well pads, well pads that do not employ hydraulic fracturing, low volume hydraulically fractured well pads, or high volume hydraulically fractured well pads.

 A project sponsor may make an application to the Commission proposing the division of its basin wide leaseholds into separate leasehold units based on the nature, disparate relationship, or geographic separation of the leaseholds. The Commission or the Executive Director may deny, approve, or approve with conditions all or part of the requested division of leaseholds. A project sponsor may also make an application to the Commission requesting an exemption from the preparation of a NGDP where the project sponsor demonstrates that: it will propose five (5) or fewer natural gas well pads despite having leaseholds in excess of 3,200 acres in the basin; and the well pad sites are geographically disparate. Well pads sited in leaseholds that are contiguous, or are located such that the produced natural gas from the well pads will be transmitted through a common collection system do not qualify as geographically disparate for purposes of an exemption to the requirement to prepare an NGDP. The Commission or the Executive Director may deny, approve, or approve with conditions the requested exemption from the requirement to prepare an NGDP.

 A project sponsor may also make an application to the Commission for approval of phased development of its leaseholds. Where the project sponsor represents to the Commission that natural gas development activities will not take place on portions of the leasehold within five (5) years of the date of the application submitted for the project sponsor's first natural well pad on a leasehold in the basin, the Commission may consider the phased development request. The Commission or the Executive Director may deny, approve, or approve with conditions all or part of the requested phased developments of the project sponsor's leaseholdings. A project sponsor that receives approval of phased development must file an application with the Commission to modify its existing approved NGDP, or for approval of a new NGDP for each of the succeeding development phases. Commission approval of the amended or new NGDP and well pads must be received before the Project sponsor initiates construction in the unapproved phase of the leasehold. The limitation of up to five (5) total natural gas well pad dockets in the basin for a project sponsor until the Commission approval of an NGDP applies regardless of the Commission or Executive Director's approval of the division or phasing of a project sponsor's leasehold.

 To the extent that project sponsors obtain rights to conduct natural gas development activities, including but not limited to the extraction of natural gas, through property interests other than or in addition to a leasehold, for purposes of these Natural Gas Development Regulations those rights shall be administered in the same manner and subject to the same restrictions as leaseholds.

 (2) Commission Action. The Commission may grant, deny, approve or approve with conditions, a docket for an NGDP or a natural gas well pad in accordance with this Section 7.5. In addition to the project application review fee specified in item (e) in Table 7.3.1 for the NGDP application, each natural gas well pad that is included in the NGDP application or added to an approved NGDP shall be subject to the project review fee specified in item (g) in Table 7.3.1. The project sponsor will be notified in writing of the Commission's or Executive Director's decision, including any conditions of approval.

 (3) NGDP Application Requirements.

 (i) Lease Area Map. A lease area map is a map of all a project sponsor's leaseholds in the basin. The leasehold map(s) must be a United States Geologic Survey (USGS) 7.5 minute or 15 minute series topographic quadrangle if necessary due to size. The map(s) must show development units within the leaseholds that will be developed in 5 year increments.

 (ii) Landscape Map. A landscape analysis is a series of maps for the basin leaseholds or specified leasehold unit prepared in accordance with the following:

 (A) State Orthophotography of the geographic area covered by the Plan and parcels within a 0.5 mile radius of the leasehold.

 (B) List of property and mineral rights owners of the leaseholds located within 0.5 mile of any proposed well pad site.

 (C) 7.5 minute USGS quad showing (lease area plus a 0.5 mile perimeter around the leasehold): existing roadways, existing rights of way—utility lines, pipelines, transmission lines, existing oil and gas wells, existing water supply wells—community, domestic (within a 0.5 mile radius of any proposed natural gas well pads), and any wellhead protection area prescribed by the state, and existing buildings.

 (D) Hydrology Map (or overlay) 7.5 minute quadrangle showing (lease area plus a 0.5 mile perimeter around the leasehold): Watershed boundaries (HUC 12 level), Water bodies—rivers, streams, ponds, springs, reservoirs, lakes, etc., Wetlands (NWI or site specific survey).

 (E) Geology Map—including areas of glacial till, fluvial landforms (lease area).

 (F) Soils Series Map—with list of hydric and erodible soils (lease area).

 (G) Slope Map—Highlighting slopes greater than 15% and greater than 20% (lease area).

 (H) Critical Habitat Map—areas designated for a federal or state threatened or endangered species.

 (I) Natural Heritage Sites—Map showing areas as designated by federal, state or county agencies (lease area plus 0.5 mile) that include important areas of biodiversity and unique ecological communities, including management areas of the National Park Service Units.

 (J) Map of all forested landscapes (lease area).

 (iii) Constraints Analysis Map. A constraints analysis map is a composite of maps for the basin leaseholds or specified leasehold unit prepared utilizing the landscape maps generated in Section (ii) above and with the following:

 (A) All restricted areas (as defined in Section 7.5 (b)(3).

 (B) All buffers/setbacks (as defined in Section 7.5 (b)(4).

 (iv) Circulation Plan. A map and description of existing and proposed roads and rights-of way on the leasehold that will be used for vehicular, pipeline or utility access to and among identified well field development areas, natural gas well pads, compressor stations and other ancillary equipment, within or connecting to areas outside of the geographic area covered by the Plan. Linear infrastructure must be co-located whenever feasible. If there are any proposed changes to the plan, project sponsors may apply to the Executive Director for adjustments to the locations of these sites and routes included in a Commission approved NGDP. The Executive Director may deny, approve or approve with conditions the requested adjustments to the siting.

 If any of the proposed infrastructure is proposed to be located in delineated areas of constraints, the project sponsor must include an accompanying report which provides the reasons for the proposed siting.

 (v) Monitoring program. A compilation and map of all surface and groundwater monitoring locations as required in Section 7.5(h)(2)(i).

 (d) Natural Gas Well Pad Docket Application Requirements.—The project sponsor must submit a lease area map as described in Section 7.5(c)(3)(i) above for all its leaseholds in the basin as of the date of the application. This map is required to be submitted with the well pad application. The project sponsor must also submit a landscape map, a constraints analysis map, and a circulation plan as described in Sections 7.5(c)(3)(ii)(iii) and (iv) above for the area within 0.5 miles of the well pad sites proposed in the application at submittal.

 Project sponsors are also required to submit to the Commission the results of a NDIA. 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. The Commission reserves the right to prepare a separate NDIA at the expense of the project sponsor if it determines that a separate assessment is required.

 If the project sponsor is required to submit a NGDP, within 3 months of filing its first well pad application, they must submit a NGDP application, which should contain the landscape map and the constraints analysis map as described in Section 7.5(c)(3)(ii) and (iii) above for its entire basin leaseholds or specified leasehold unit. Within 12 months of filing the well pad application, the project sponsor must supplement their NGDP application with the circulation plan as described in 7.5(c)(3)(iv) above for the entire basin leaseholds or specified leasehold unit.

 The Commission may grant, deny or condition a Natural Gas Well Pad Docket in accordance with this section. The project sponsor will be notified in writing of the Commission's decision, including any conditions of approval.

 (e) Approval by Rule (ABR). The project sponsor must submit a lease area map as described in Section 7.5(c)(3)(i) above for all its leaseholds in the basin as of the date of the application. This map is required to be submitted with the well pad application. The project sponsor must also submit a landscape map, a constraints analysis map, and a circulation plan as described in Sections 7.5(c)(3)(ii)(iii) and (iv) above for the area within 0.5 miles of the well pad sites proposed in the application at submittal. ABRs may only be issued in accordance with this section for a well pad that meets the following criteria:

 (1) The project has been identified and is in conformance with an approved NGDP; or meets all of the following:

 (2) It must not be located on a forested site, as that term is defined by these regulations; and

 (3) It must be located on a site with a pre-alteration slope, as that term is defined by these regulations, not in excess of 15 per cent; and

 (4) It must be located outside management areas of the National Park Service (NPS), including the Upper Delaware Scenic and Recreational River (UPDE) and the Delaware Water Gap National Recreation Area (DEWA) and other areas in which the National Park Service or other federal agencies have a management interest; and

 (5) It must be located outside of the watersheds that drain to New York City's Delaware River Basin Reservoirs; and

 (6) It must meet the applicable siting and design criteria in Section 7.5(b)(3) and 7.5(b)(4).

 (7) For exploratory and low volume hydraulically fractured well pads a project sponsor must have a state issued approval for well construction and operation.

 (f) Well Pads added to an approved NGDP. Project sponsors for well pad projects proposed in accordance with an approved NGDP may apply for an ABR if they meet the following criteria:

 (1) The project sponsor must be the holder of the docket approving the NGDP. Transfer from one entity to another of a docket for a NGDP must be completed, including issuance of written approval by the Executive Director, before an application in accordance with this section will be considered; and

 (2) The project sponsor must be in compliance with the conditions of the docket approving the NGDP.

 The Executive Director may grant, deny or condition an ABR for a well pad in accordance with Sections 7.5 (e) and (f). The project sponsor will be notified in writing of the Executive Director's decision, including any conditions of approval.

 (g) Well Pad Dockets. A well pad that does not meet the requirements for an ABR may apply for approval by the Commission via docket.

 (h) Well Pad Requirements. The following describe the applicable requirements for well pads involving high volume hydraulically fractured wells and well pads that are used exclusively for the development of exploratory wells or low volume hydraulically fractured wells.

 (1) Applicable Requirements for all Well Pads.

 (i) Planning Requirements. If a project sponsor meets the criteria in Section 7.5(c), it must submit a Lease Area Map in accordance with Section 7.5(c)(3)(i) with its first ABR application. A NGDP must be submitted and approved prior to initiating the development of its sixth well pad in the basin. Upon approval of the NGDP, all subsequent well pads constructed exclusively for exploratory or low volume hydraulically fractured natural gas wells not included in the approved NGDP docket, but within the boundaries of the NGDP, and in accordance with the terms and conditions of the NGDP, are eligible for ABRs.

 (ii) Public notification. The project sponsor must demonstrate compliance with the applicable requirements of Section 7.3(i).

 (iii) Water Source Requirements.

 (A) The well pad project sponsor may only use water at well pads obtained from DRBC approved sources.

 (B) Proposed Sources. The well pad project sponsor's application must include the following information relative to any water, flowback water, production water, wastewater, non-contact cooling water, mine drainage water or combination thereof to be used at the well pad site:

 (1) Proposed sources of all such waters to be used at the well pad site; and

 (2) Source water docket number, protected area permit or ABR number, allocation, and DRBC approval date; and

 (3) If the water is imported from outside of the Delaware River Basin, the project sponsor must show compliance with requirements of Article 2, Section 2.30 of the Water Code.

 (C) Water Recording. Well pad project sponsors must monitor and record the volume of all water delivered to the well pad site from each source used on a daily frequency. The project sponsor must maintain a record of each truck/pipeline delivery and its source. The project sponsor must submit the records in a Commission-specified electronic format to the Commission upon request by the Executive Director.

 (D) Water Reporting. The well pad sponsor must submit to the Commission on a quarterly basis reports indicating monthly and daily total volumes of water delivered at individual natural gas well sites in a format prescribed by the Executive Director.

 (E) Water supply charge. The holder of a natural gas well pad approval, whether or not the well pad is part of a Natural Gas Development Plan, is required to pay the Commission's water supply charge for consumptive use based on quarterly water reporting noted above. 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 as item (n) in Table 7.3.1. 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 or included in NGDP dockets (see items (c), (d), (e) and (g) in Table 7.3.1). Water use associated with ABR's for exploratory and low volume hydraulically fractured wells is exempt from the water supply charge for consumptive use.

 (F) Water Conservation. The project sponsor must implement a continuous program to encourage water conservation in all types of use within the facilities served by the Commission's well pad approval. The water conservation program must include the reuse and recycling of flowback and production waters to the greatest extent possible. Applies to all well pad project sponsors, except those approved by an ABR for exploratory or low volume hydraulically fractured wells.

 (iv) Wastewater. All well pad project sponsors must satisfy the following requirements:

 (A) Disposal.

 (1) Non-domestic wastewater may only be disposed of at a facility;

 (i) within the basin only if the Commission has approved it to accept non-domestic wastewater and that has obtained applicable state permits and approvals; or

 (ii) outside the basin, if the facility has obtained applicable state permits and approvals and the project sponsor has Commission approval to export non-domestic wastewater.

 (2) The well pad project sponsor must submit a copy of the written contractual agreement or permit between the well pad project sponsor and the disposal facility as part of the application.

 (3) The well pad project sponsor may also transport and reuse flowback or production water at a Commission and state approved location

 (4) Wastewater, recovered flowback and or production water and brines from natural gas well pads may not be applied to any road or other surface within the Delaware River Basin.

 (5) Domestic, non-domestic wastewater, unused water, recovered flowback and production water, combination of recovered flowback or production water and fresh waters or fluids approved for use at the well pad, may not be discharged to groundwater or surface waters of the Delaware River Basin without written Commission and appropriate state agency approval.

 (B) Recording. Well pad project sponsors must record the volume of all non-domestic wastewater produced onsite on a daily frequency. Well pad project sponsors must keep a transportation record of all non-domestic wastewater leaving the well pad. The transportation record must include the volume of non-domestic wastewater shipped offsite by individual trucks and/or pipeline, the name, permit and docket number and destination of the receiving reuse and or treatment and disposal facilities. The project sponsor will also obtain confirmation that the transferred wastewater was received by the facility that received the wastewater and keep records associated with such transfers. The project sponsor must submit the records in a Commission-specified electronic format to the Commission upon request by the Executive Director.

 (C) Reporting.

 (1) Well pad project sponsor must submit a ''DRBC Post Hydraulic Fracturing Report'' to the Commission within 60 days of completion of each hydraulic fracturing event.

 (2) The well pad sponsor must submit to the Commission on a quarterly basis reports indicating monthly and daily total volumes of flowback and production water collected and transported offsite from the well pad and results of any flowback/production water samples in a format prescribed by the Executive Director.

 (v) Non-point source pollution control plan. If the well pad is located within the drainage area of a portion of the Delaware River classified by the Commission as Special Protection Waters (SPW), the project sponsor must demonstrate compliance with section 3.10.3A.2.e. of the Commission's Water Quality Regulations, providing for development and implementation of a Non-Point Source Pollution Control Plan (NPSPCP). The NPSPCP must be consistent with the more stringent of Commission and state requirements for erosion and sedimentation controls to be implemented at the well pad, including measures to control stormwater both during and after construction. The post-construction portion of the plan must describe the final site conditions, including a pre- and post-construction project hydrograph analysis, permanent facilities, equipment, access roads, and all stormwater control structures that may be necessary after final site restoration has been completed. No site clearing or construction work at the well pad may be initiated until the NPSPCP has been approved by the Commission, or by the host State in accordance with an Administrative Agreement between the Commission and the host State. The Commission will rely upon host state erosion and sediment control plan and post construction stormwater management plan requirements for NPSPCPs for well pads approved by an ABR for exploratory or low volume hydraulically fractured wells.

 (vi) Mitigation, Remediation and Restoration.

 (A) The project sponsor must immediately report to the Executive Director as well as appropriate local, state and federal agencies any release or threatened release to the environment of any substance, pollutant or contaminant at or from the natural gas well, well pad site or from associated equipment and structures, and from any materials or wastewater transported to or from the well pad site that has the potential to reach groundwater or surface water or may cause an adverse impact to water resources of the Delaware River Basin. Oral notification must always be followed up in writing directed to the Executive Director.

 (B) The project sponsor must take steps to prevent any threatened release and immediately mitigate and remediate any release. The project sponsor must report as required under Section 7.5(h)(vi)(A). If necessary, the project sponsor must stop all other operations to effectuate the mitigation or remediation of the release or spill.

 (C) The project sponsor must also provide written notification to all potentially impacted users of wells or surface water users of the project sponsor's responsibilities under this condition. Any ground or surface water user which is substantially adversely affected, rendered dry or otherwise diminished as a result of the release must be repaired, replaced or otherwise mitigated at the expense of the project sponsor. A report of investigation and/or mitigation plan prepared by a qualified professional must be submitted to the Executive Director as soon as practicable or within the time frame directed by the Executive Director. The Executive Director will make the final determination regarding the validity of such complaints, the scope or sufficiency of such investigations, and the extent of appropriate mitigation measures, if required.

 (D) The project sponsor must close the natural gas well, well pad site and associated equipment and structures, and restore land disturbances caused by the natural gas well project according to host state requirements.

 (2) Additional Requirements for all Well Pads involving High Volume Hydraulically Fractured Wells.

 (i) Groundwater and Surface Water Monitoring.

 (A) Pre-alteration Report. Well pad project sponsors must submit to the Commission's Executive Director c/o the project review section a pre-alteration groundwater and surface water monitoring study report as part of the well pad application.

 (1) The pre-alteration report must include an inventory and the mapped locations of any artificial penetrations including groundwater wells within 2,000 ft of the project well pad. The report must also include the results of groundwater sampling and laboratory analysis of a representative number of groundwater wells within 1,000 ft of the well pad. If the project sponsor or the Executive Director concludes that an insufficient number of existing wells are identified within this distance to adequately characterize the groundwater, the sampling distance must be extended up to 2,000 ft from the gas well pad. If there are no existing groundwater wells or the project sponsor is unable to gain access to any existing groundwater wells within 2,000 ft of the project well pad, the project sponsor will be required to install a monitoring well or wells within 1,000 ft of the project well pad. The well monitoring study report must also identify any of the sampled wells that the project sponsor proposes not to monitor on an annual basis. The Executive Director may approve their exclusion or require these wells to be included in the annual studies required by subparagraph (B) below.

 (2) The report must also include the mapped locations and the results of surface water monitoring in the nearest water body(ies) up gradient and down gradient of the well pad for temperature and specific conductivity, water chemistry parameters and benthic macroinvertebrates. At least one upstream and one downstream sampling site is required. Sampling frequency, sample parameters, analytical methods and required detection limits for both the groundwater and surface water monitoring will be specified by the Executive Director.

 (3) All monitoring data must also be submitted to the Commission in an Electronic Data Deliverable format specified by the Executive Director. It is recommended that applicants discuss the pre-alteration well monitoring and surface water monitoring study with Commission staff prior to implementation and prior to submittal.

 (4) All sampling must be performed by a qualified professional experienced and trained in the collection of environmental samples for physical, chemical and biological analysis. Sample analysis must be conducted by a state certified laboratory for those parameters covered by a basin state program. Project sponsors may propose an alternative analytical method to those specified by the Executive Director, but must demonstrate that the alternative methods will meet the required detection limits and will provide comparable precision and accuracy.

 (5) Samples must not be filtered. If a project sponsor can demonstrate matrix interferences, filtration of metals samples may be allowed, but all pre- and post-drilling comparisons must be made on the same basis (unfiltered or filtered).

 (6) If, despite reasonable efforts of the project sponsor, owners of wells do not cooperate with the proposed groundwater program, the Executive Director may approve an alternative program based on monitoring wells established to accomplish this requirement.

 (7) Additional sampling and analysis may be required by the Executive Director based on the monitoring results.

 (B) Post Construction Report. After construction of any well on a well pad, the wells included in the pre-alteration well monitoring study described above, except for those wells identified in the study as proposed for no future monitoring and not required by the Commission to be monitored, must at a minimum be monitored for the same parameters monitored in the pre-alteration monitoring study on an annual basis until all natural gas wells installed at the well pad site are plugged and sealed according to the standards of the state in which the well is located. Surface water monitoring must also continue at the same locations and for the same parameters monitored in the pre-alteration monitoring study on an annual basis or until a reduced frequency is authorized by the Executive Director.

 (1) The annual report(s) must be submitted to the Commission by March 1 of each calendar year and include all data collected through at least December 31 of the previous calendar year.

 (2) All monitoring data collected through December 31 of the previous calendar year must also be submitted to the Commission in an Electronic Data Deliverable format specified by the Executive Director. A summary of the sampling results must be provided to the sampled well's owner within thirty (30) days of the submission of the report to the Commission or, if the sampling results reveal analytes exceeding drinking water primary or secondary maximum contaminant levels, immediately after receipt of the results. A higher frequency of adjacent well monitoring and/or monitoring for an expanded list of parameters may be required by the Executive Director, based on actual or potential contamination of a particular well.

 (ii) Hydraulic Fracturing.

 (A) Prior to the initiation of hydraulic fracturing of the gas well where flowback reuse is not planned, the project sponsor must submit to the Commission's Executive Director written verification that the wastewater treatment and disposal facilities have all applicable approvals from the host state and DRBC, if located in the Delaware River Basin . The project sponsor must also verify that the approved wastewater treatment and disposal facilities have the capacity and capability to accept the non-domestic wastewater generated from the hydraulic fracturing operation.

 (B) Project sponsors must provide notice to the Commission at least 48 hours in advance of the initiation of well stimulation.

 (C) Project sponsors must meter the volume of water used for each hydraulic fracturing event at each well. The volume must be metered with an automatic continuous recording device or equivalent that measures to within 5 percent of actual flow. The Executive Director may grant a written exception to the 5 percent performance standard, but no greater than 10 percent, if the project sponsor presents a demonstration acceptable to the Executive Director that maintenance of the 5 percent performance is not technically feasible or economically practicable.

 (D) Project sponsors must maintain a record of the volumes/amounts of all chemicals/additives used for each hydraulic fracturing event. A list of the individual chemicals/additives with Chemical Abstract Services (CAS) registry number and Material Safety Data Sheets (MSDS) as well as amounts used for hydraulic fracturing must to be submitted to the Commission in the ''DRBC Post Hydraulic Fracturing Report''.

 (E) Project sponsors must meter the volume of all flowback water and production water with an automatic continuous recording device or equivalent that measures to within 5 percent of actual flow. The Executive Director may grant a written exception to the 5 percent performance standard, but no greater than 10 percent, if the project sponsor presents a demonstration acceptable to the Executive Director that maintenance of the 5 percent performance is not technically feasible or economically practicable. Flowback water volumes must be submitted to the Commission in the ''DRBC Post Hydraulic Fracturing Report''. Production water volumes must be submitted to the Commission on a quarterly basis in a format prescribed by the Executive Director.

 (F) Sampling. Project sponsors must collect samples representative of all flowback and production water and analyze each sample for the same parameters monitored in the pre-alteration groundwater and surface water monitoring study. Sampling frequency, sample parameters, analytical methods and required detection limits for the samples will be specified by the Executive Director.

 (1) All sampling must be performed by a qualified professional experienced and trained in the collection of environmental samples for physical, chemical and biological analysis. Sample analysis must be conducted by a state certified laboratory for those parameters covered by a basin state program. Project sponsors may propose an alternative analytical method to those specified by the Executive Director, but must demonstrate that the alternative methods will meet the required detection limits and will provide comparable precision and accuracy.

 (2) Samples must not be filtered. Filtration of metals samples may be allowed, if the project sponsor can demonstrate matrix interferences and samples collected in the groundwater and surface water study were also filtered.

 (3) All monitoring data must be submitted to the Commission in an Electronic Data Deliverable format specified by the Executive Director.

 (G) Project sponsors must store flowback and production waters in accordance with Section 7.5(h)(2)(iv) below in water tight tanks for temporary storage on the well pad site or transport it to a treatment and discharge facility that has received applicable approvals from the host state and by the DRBC if located within the Delaware River Basin. Subject to approval, recovered flowback and production water may be reused at subsequent wells on the same well pad, removed from the well pad site for use at another well pad, recycled and/or disposed at a wastewater treatment facility that has received applicable approvals from the host state, or transferred to a centralized wastewater storage facility having applicable approvals from the host state. All recovered flowback must be reused or disposed of within 45 days of the date of well stimulation unless an extension is approved in writing by the Executive Director or the project sponsor provides the Executive Director with documentation of host state approval.

 (H) The project sponsor may not transfer recovered flowback to any other well pad site, or transfer it to a centralized wastewater storage facility unless approved in a docket, ABR, or in writing by the Executive Director.

 (iii) Drilling Fluids and Drill Cuttings from Horizontal Wellbores in the target formation.

 (A) The cuttings and fluids must be properly transported offsite and beneficially reused or disposed of at an appropriate waste disposal facility(s) approved by the host state. All cuttings and liquids must be removed from the site within 45 days from the completion of well drilling or the capping of the well prior to production or the commencement of production.

 (B) The project sponsor must notify the Commission within 48 hours of the completion of drilling.

 (iv) Wastewater Storage.

 (A) All wastewaters must be stored in such a manner as to prevent their release to the environment. Storage tanks must be designed and constructed of materials suitable to safely contain the wastewater stored. The storage tanks must be used and maintained according to manufacturer specifications.

 (B) Recovered flowback and production water may, subject to approval, be reused at subsequent wells on the same well pad, removed from the well pad for use at another well pad, recycled and/or disposed at treatment facilities that have received applicable approvals by the host state and DRBC (where applicable) or transferred to a centralized storage facility having the applicable approvals from the host state.

 (1) All recovered production water must be temporarily stored on-site in water-tight tanks as necessary to safely contain the production water.

 (2) No on-site discharge of recovered flowback or production water other than as expressly permitted in the docket is permitted. The volume of all flowback and production water recovered, reused at the site or removed from the site must be recorded and reported to the DRBC in accordance with the recording and reporting conditions of the docket.

 (3) Production water that is not approved for reuse must be transported to and treated at an approved treatment and discharge facility.

 (4) Under no circumstances may wastewater including flowback and production water be placed into any freshwater impoundment, or discharged to the ground surface at the well pad site.

 (v) Wastewater Treatment and Disposal Plan. The project sponsor must submit as part of the application, a wastewater treatment and disposal plan.

 (A) The treatment and disposal plan must address all domestic and non-domestic wastewater produced at the well pad.

 (B) The treatment and disposal plan must identify the treatment and disposal locations, docket number and state permit number if the treatment and disposal facilities are located in the basin.

 (C) The treatment and disposal plan must identify the treatment and disposal locations and the state permit number if the treatment and disposal facilities are outside the Basin.

 (D) The treatment and disposal plan must include written evidence that the treatment and disposal facilities have all applicable state approvals.

 (E) The treatment and disposal plan must include the contractual agreement or permit between the well pad project sponsor and the treatment and disposal facilities.

 (F) Disposal at a UIC Program well within the Basin is allowed only if the docket holder of the UIC disposal well first obtains Commission approval pursuant to Section 7.6 below to accept flowback and production water.

Section 7.6. Wastewater Generated by Natural Gas Development.

 (a) Approval Requirements. Project sponsors of treatment and disposal facilities that propose to accept non-domestic natural gas wastewater at new or existing wastewater treatment facilities located in the Delaware River Basin are required to obtain approval from the Commission pursuant to Section 3.8 of the Compact prior to accepting any such wastewaters. Section 7.6 of these regulations applies to all project sponsors of wastewater treatment and disposal facilities. Sponsors of well pad projects generating natural gas development wastewater must comply with the wastewater requirements in Sections 7.5(h)(1)(iii)(C) and (D) of these regulations, and with Section 7.6, if they are also sponsors of wastewater treatment and disposal facilities.

 (b) Treatability Study. If the proposed wastewater treatment and disposal facility is located in the Delaware River Basin, the project sponsor of the treatment and disposal facility must submit a treatability study. The treatability study must be prepared by a professional engineer, licensed to practice in the state in which the proposed discharge is located, and must demonstrate that the introduction of the non-domestic wastewater into the receiving treatment facility will not result in any interference in the treatment operations, or sludge treatment and disposal operations. In addition, the treatability study must also demonstrate that the resulting combined effluent will comply with the wastewater discharge and disposal permit requirements of the state in which the wastewater treatment facility is located and the approved docket of the Commission.

 (c) Ensuring non-exceedance of primary and secondary safe drinking water standards. Consistent with the intent of Section 3.10.3.B.2. of the Commission's Water Quality Regulations (WQRs), all project sponsors, except for those that discharge to Zones 4, 5 & 6 of the Estuary, are required to conduct an analysis that demonstrates their proposed discharge will not result in basin waters being rejected for public water supply. Accordingly, the project sponsor must conduct an analysis that demonstrates the discharge of non-domestic natural gas wastewater does not result in an exceedance of the EPA's Primary & Secondary Standards for the following parameters: Total Dissolved Solids, Chloride, Strontium, Barium, Sulfate, Iron, Nitrite, Fluoride, Manganese, Zinc, Nitrate as N, Aluminum, Copper, Lead, Cyanide-Total, Chromium, Arsenic, Thallium, Selenium, Antimony, Silver, Cadmium, Beryllium, Mercury, gross-alpha, gross beta, pH, radium-226 + radium-228 and uranium. Additional parameters to be included in this analysis may be specified by the Executive Director.

 (d) Effluent limitations and stream quality objectives for discharges to Zones 2-6. All project sponsors that discharge to Zones 2-6 of the Delaware Estuary are required to submit an analysis that demonstrates their proposed discharge is in compliance with the applicable basin-wide effluent limitations found in Section 3.10.4, the basin-wide stream quality objectives found in Section 3.10.3.B. and the zone specific stream quality objectives found in Section 3.30 of the WQRs, including the applicable portions of Tables 3, 4, 5, 6 & 7.

 (e) Basin-wide effluent limitations and stream quality objectives. All project sponsors, except for those that discharge to Zones 2-6, are required to submit an analysis that demonstrates their proposed discharge is in compliance with the applicable basin-wide effluent limitations found in Section 3.10.4, the basin-wide stream quality objectives found in Section 3.10.3.B of the WQRs, and the following stream quality objective:

 (1) Toxic Substances.

 (i) The toxicity in non-tidal Basin waters must not exceed 0.3 Toxic Units (acute), except in small mixing areas near outfall structures that may be established by the Commission.

 (ii) For non-tidal portions of the basin, a mixing zone must meet the following requirements:

 (A) The dimension of the mixing area shall be limited to the more stringent of:

 (1) A distance of 50 times the discharge length scale in any direction from the outfall structure, or

 (2) A distance of 5 times the local water depth in any direction from the outfall structure.

 (B) Must not be located in areas which are or could be occupied by a species absent the toxic effect of pollutants; and which have those physical, chemical and biological features which are essential to the conservation and maintenance of the Delaware River Basin population. The Commission will identify and determine such areas. Such determinations shall consider the spatial and temporal requirements of the species including critical life stages. Determinations shall be governed by the Commission's Rules of Practice and Procedure relating to review, hearing and decisions of objections thereto.

 (C) Mixing areas will not be established where effluent flows over exposed benthic habitat prior to mixing with the receiving waters.

 (D) A zone of passage for free-swimming and drifting organisms equal to 50% of the surface width of the stream at the location of the discharge must be provided.

 (E) Upon the request of one or more dischargers, the Executive Director may consider requests for alternatives to the requirements of Subsections (A) through (D) above. Such requests must provide a demonstration that the alternative requested will not adversely impact free-swimming and drifting organisms, and be supported by a sound rationale and substantial scientific data and analysis.

 (iii) The toxicity in non-tidal Basin waters must not exceed 1.0 Toxic Units (chronic).

 (iv) For the purposes of determining compliance with the requirements of this section for acute and chronic toxicity, the duration of exposure of aquatic organisms must be one hour for acute toxicity and four days for chronic toxicity.

 (f) Basin-wide Total Dissolved Solids (TDS) Stream Quality Objective. All project sponsors, except for those discharging to Zones 5 & 6 of the Estuary are required to submit an analysis that demonstrates their proposed discharge is in compliance with the TDS stream quality objective.

 (1) The concentration of TDS must not exceed 133% of background (Section 3.10.3.B.1.b. of the WQRs), and in no cases may it exceed 500 mg/l (Section 3.10.3.B.2. of the WQRs). This requirement is applied Basin-wide, except for Zones 5 & 6 of the Estuary.

 (2) Background TDS must be established by using the observed concentration of TDS during low flow conditions (Q7-10) or, in the absence thereof, an estimate acceptable to the Commission (Section 3.10.6.G. of the WQRs). The Commission has established background conditions for TDS in several locations throughout the Basin. The project sponsor must confirm with Commission staff the appropriate background TDS concentration prior to submittal of a project application.

 (g) Wastewater Imports. Basin waters have limited assimilative capacity and limited capacity to accept conservative substances without significant impacts. It is the policy of the Commission to discourage the importation of wastewater into the Basin that would significantly reduce the assimilative capacity of the receiving stream on the basis that the ability of Basin streams to accept wastewater discharges should be reserved for users within the Basin (Section 2.30.2 of the Water Code). Non-domestic natural gas wastewater may only be imported into the Basin after approval by the Commission in accordance with Section 2.30 of the Water Code.

 (h) Underground Injection Control. Any entity proposing to construct an underground injection well, for the disposal of non-domestic natural gas wastewater must obtain Section 3.8 approval from the Commission (Section 3.40 of WQR).

Appendix: Wording of Financial Assurance Instruments

 (i) Surety Bond.

 1. A surety bond guaranteeing payment into a trust fund, as specified in Section 7.3(k)(12), must be worded as follows, except that instructions in brackets are to be replaced with the relevant information and the brackets deleted:

 Financial Guarantee Bond

 Date bond executed:

 Effective date:

Principal: [legal name and business address of project sponsor]

Type of Organization: [insert ''individual,'' ''joint venture,'' ''partnership,'' or ''corporation'']

 State of incorporation:

 Surety(ies): [name(s) and business address(es)]

Facilities Covered: [RBC Docket Number, name, address and amount(s) for each facility guaranteed by this bond]:

 Total penal sum of bond: $ ______

 Surety's bond number: ______

Know All Persons By These Presents, That we, the Principal and Surety(ies) hereto are firmly bound to the Delaware River Basin Commission (hereinafter ''DRBC or Commission), in the above penal sum for the payment of which we bind ourselves, our heirs, executors, administrators, successors, and assigns jointly and severally; provided that, where the Surety(ies) are corporations acting as co-sureties, we, the Sureties, bind ourselves in such sum ''jointly and severally'' only for the purpose of allowing a joint action or actions against any or all of us, and for all other purposes each Surety binds itself, jointly and severally with the Principal, for the payment of such sum only as is set forth opposite the name of such Surety, but if no limit of liability is indicated, the limit of liability must be the full amount of the penal sum.

Whereas said Principal is required, under the Delaware River Basin Compact and its implementing regulations, to secure DRBC approval in the form of a docket or, if available, an approval by rule (ABR), in order to undertake a project regarding each well pad identified above and all natural gas wells situated or to be situated on such pad, and

Whereas said Principal is required to provide financial assurance for closure, or closure and remediation, as a condition of the docket, or ABR, and

Whereas said Principal must establish a standby trust fund as is required when a surety bond is used to provide such financial assurance;

Now, therefore, the conditions of the obligation are such that if the Principal must faithfully, before the beginning of final closure of each facility identified above, fund the standby trust fund in the amount(s) identified above for the facility,

Or, if the Principal must provide alternate financial assurance, as specified in Section 7.3(k), and obtain the Executive Director's written approval of such assurance, within 90 days after the date notice of cancellation is received by both the Principal and the Executive Director from the Surety(ies), then this obligation shall be null and void; otherwise it is to remain in full force and effect.

The Surety(ies) shall become liable on this bond obligation only when the Principal has failed to fulfill the conditions described above. Upon notification by the Executive Director or designee that the Principal has failed to perform as guaranteed by this bond, the Surety(ies) must place funds in the amount guaranteed for the facility(ies) into the standby trust fund as directed by the Executive Director.

The liability of the Surety(ies) must not be discharged by any payment or succession of payments hereunder, unless and until such payment or payments shall amount in the aggregate to the penal sum of the bond, but in no event shall the obligation of the Surety(ies) hereunder exceed the amount of said penal sum.

The Surety(ies) may cancel the bond by sending notice of cancellation by certified mail to the Principal and to the Executive Director , provided, however, that cancellation must not occur during the 120 days beginning on the date of receipt of the notice of cancellation by both the Principal and the Executive Director, as evidenced by the return receipts and must not be valid unless the Principal has provided alternate financial assurance as specified in Section 7.3(k) and obtained the Executive Director's written approval of such assurance.

The Principal may terminate this bond by sending written notice to the Surety(ies), provided, however, that no such notice must become effective until the Surety(ies) receive(s) written authorization for termination of the bond by the Executive Director.

[The following paragraph is an optional rider that may be included but is not required.]

Principal and Surety(ies) hereby agree to adjust the penal sum of the bond yearly so that it guarantees a new closure and remediation amount, provided that the penal sum does not increase by more than 20 percent in any one year, and no decrease in the penal sum takes place without the written permission of the Executive Director.

In Witness Whereof, the Principal and Surety(ies) have executed this Financial Guarantee Bond and have affixed their seals on the date set forth above.

The persons whose signatures appear below hereby certify that they are authorized to execute this surety bond on behalf of the Principal and Surety(ies) and that the wording of this surety bond is identical to the wording specified in Section 7.3(k) and Section (i) of this Appendix, as such regulations were constituted on the date this bond was executed.

Principal

[Signature(s)] ______

[Name(s)] _________________

[Title(s)] _________________

[Corporate seal] ______

Corporate Surety(ies)

[Name and address]

State of incorporation: ______

Liability limit: $ ______

[Signature(s)]

[Name(s) and title(s)]

[Corporate seal]

[For every co-surety, provide signature(s), corporate seal, and other information in the same manner as for Surety above.]

Bond premium: $ ______

 2. A surety bond guaranteeing performance of closure and/or remediation, as specified in Section 7.3(k), must be worded as follows, except that the instructions in brackets are to be replaced with the relevant information and the brackets deleted:

Performance Bond

Date bond executed: ______

Effective date: ______

Principal: [legal name and business address of project sponsor]

Type of organization: [insert ''individual,'' ''joint venture,'' ''partnership,'' or ''corporation'']

State of incorporation: ______

Surety(ies): [name(s) and business address(es)] ______

Facilities Covered: [DRBC Docket Number, State Permit Number, name, address, and amount(s) for each facility guaranteed by this bond: ______ ]

Total penal sum of bond: $ ______

Surety's bond number: ______

Know All Persons By These Presents, That we, the Principal and Surety(ies) hereto are firmly bound to the Delaware River Basin Commission (hereinafter ''DRBC), in the above penal sum for the payment of which we bind ourselves, our heirs, executors, administrators, successors, and assigns jointly and severally; provided that, where the Surety(ies) are corporations acting as co-sureties, we, the Sureties, bind ourselves in such sum ''jointly and severally'' only for the purpose of allowing a joint action or actions against any or all of us, and for all other purposes each Surety binds itself, jointly and severally with the Principal, for the payment of such sum only as is set forth opposite the name of such Surety, but if no limit of liability is indicated, the limit of liability must be the full amount of the penal sum.

Whereas said Principal is required under the Delaware River Basin Compact and its implementing regulations to secure DRBC approval in the form of a docket or, if available, an approval by rule (ABR) in order to undertake a project regarding each natural gas well identified above, and

Whereas said Principal is required to provide financial assurance for plugging and abandonment, and restoration of the natural gas well, well pad site and associated equipment and structures, as specified in Section 7.3(k) as a condition of the docket or ABR, and

Whereas said Principal must establish a standby trust fund as is required when a surety bond is used to provide such financial assurance;

Now, Therefore, the conditions of this obligation are such that if the Principal must faithfully perform closure and remediation, whenever required to do so, of each facility for which this bond guarantees closure or remediation, in accordance with requirements of the docket, or approval by rule (ABR) as such docket, or ABR may be amended, pursuant to all applicable laws, statutes, rules, and regulations, as such laws, statutes, rules, and regulations may be amended,

Or, if the Principal must provide alternate financial assurance as specified in Section 7.3(k), and obtain the Executive Director's written approval of such assurance, within 90 days after the date notice of cancellation is received by both the Principal and the Executive Director from the Surety(ies), then this obligation shall be null and void, otherwise it is to remain in full force and effect.

The Surety(ies) shall become liable on this bond obligation only when the Principal has failed to fulfill the conditions described above.

Upon notification by the Executive Director or designee that the Principal has been found in violation of the requirements of Section 7.3(k), for a facility for which this bond guarantees performance, the Surety(ies) must either perform in accordance with the docket requirements or place the amount guaranteed for the facility into the standby trust fund as directed by the Executive Director.

Upon notification by the Executive Director that the Principal has failed to provide alternate financial assurance as specified in Section 7.3(k), and obtain written approval of such assurance from the Executive Director during the 90 days following receipt by both the Principal and the Executive Director of a notice of cancellation of the bond, the Surety(ies) must place funds in the amount guaranteed for the facility(ies) into the standby trust fund as directed by the Executive Director.

The surety(ies) hereby waive(s) notification of amendments to closure plans, permits, dockets, applicable laws, statutes, rules, and regulations and agrees that no such amendment shall in any way alleviate its (their) obligation on this bond.

The liability of the Surety(ies) must not be discharged by any payment or succession of payments hereunder, unless and until such payment or payments must amount in the aggregate to the penal sum of the bond, but in no event shall the obligation of the Surety(ies) hereunder exceed the amount of said penal sum.

The Surety(ies) may cancel the bond by sending notice of cancellation by certified mail to the owner or operator and to the Executive Director, provided, however, that cancellation must not occur during the 120 days beginning on the date of receipt of the notice of cancellation by both the Principal and the Executive Director, as evidenced by the return receipts and shall not be valid unless the Principal has provided alternate financial assurance as specified in Section 7.3(k) and obtained the Executive Director's written approval of such assurance.

The principal may terminate this bond by sending written notice to the Surety(ies), provided, however, that no such notice shall become effective until the Surety(ies) receive(s) written authorization for termination of the bond by the Executive Director.

[The following paragraph is an optional rider that may be included but is not required.]

Principal and Surety(ies) hereby agree to adjust the penal sum of the bond yearly so that it guarantees a new amount, provided that the penal sum does not increase by more than 20 percent in any one year, and no decrease in the penal sum takes place without the written permission of the Executive Director.

In Witness Whereof, The Principal and Surety(ies) have executed this Performance Bond and have affixed their seals on the date set forth above.

The persons whose signatures appear below hereby certify that they are authorized to execute this surety bond on behalf of the Principal and Surety(ies) and that the wording of this surety bond is identical to the wording specified in Section 7.3(k)(12) and section (i) of this Appendix as such regulation was constituted on the date this bond was executed.

Principal

[Signature(s)]

[Name(s)]

[Title(s)]

[Corporate seal]

Corporate Surety(ies)

[Name and address]

State of incorporation: ______

Liability limit: $ ______

[Signature(s)]

[Name(s) and title(s)]

[Corporate seal]

[For every co-surety, provide signature(s), corporate seal, and other information in the same manner as for Surety above.]

Bond premium: $ ______

 (ii) Letter of Credit.

 A letter of credit, as specified in Section 7.3(k)(13) of this Section, must be worded as follows, except that instructions in brackets are to be replaced with the relevant information and the brackets deleted:

Irrevocable Standby Letter of Credit

Executive Director

Delaware River Basin Commission

Dear Sir or Madam: We hereby establish our Irrevocable Standby Letter of Credit No. ____ in your favor, at the request and for the account of [sponsor's name and address] up to the aggregate amount of [in words] U.S. dollars $ ____ , available upon presentation of

(1) your sight draft, bearing reference to this letter of credit no. ____ , and

(2) your signed statement reading as follows: ''I certify that the amount of the draft is payable pursuant to regulations issued under authority of the Delaware River Basin Compact.''

This letter of credit is effective as of [date] and shall expire on [date at least 1 year later], but such expiration date shall be automatically extended for a period of [at least 1 year] on [date] and on each successive expiration date, unless, at least 120 days before the current expiration date, we notify both you and [sponsor's name] by certified mail that we have decided not to extend this letter of credit beyond the current expiration date and the Principal has provided alternate financial assurance as specified in Section 7.3(k) and obtained the Executive Director's written approval of such assurance. In the event you are so notified, any unused portion of the credit shall be available upon presentation of your sight draft for 120 days after the date of receipt by both you and [project sponsor's name], as shown on the signed return receipts.

Whenever this letter of credit is drawn on under and in compliance with the terms of this credit, we shall duly honor such draft upon presentation to us, and we shall deposit the amount of the draft directly into the standby trust fund of [project sponsor's name] in accordance with your instructions.

We certify that the wording of this letter of credit is identical to the wording specified in Section 7.3(k)(13) and section (ii) of this Appendix as such regulations were constituted on the date shown immediately below.

[Signature(s) and title(s) of official(s) of issuing institution] [Date]

This credit is subject to [insert ''the most recent edition of the Uniform Customs and Practice for Documentary Credits, published and copyrighted by the International Chamber of Commerce,'' and ''the Uniform Commercial Code''].

 (iii) Trust Fund.

 A trust agreement for a trust fund, as specified in Section 7.3(k)(14), must be worded as follows, except that instructions in brackets are to be replaced with the relevant information and the brackets deleted:

Trust Agreement

Trust Agreement, the ''Agreement,'' entered into as of [date] by and between [name of the owner or operator], a [name of State] [insert ''corporation,'' ''partnership,'' ''association,'' or ''proprietorship''], the ''Grantor,'' and [name of corporate trustee], [insert ''incorporated in the State of ---------'' or ''a national bank''], the ''Trustee.''

Whereas, the Delaware River Basin Commission (DRBC), a federal interstate compact agency, has established certain regulations applicable to the Grantor, requiring that the sponsor of a natural gas well project must provide assurance that funds will be available when needed for closure of the natural gas well, well pad and associated structures and land disturbance and any required remediation,

Whereas, the Grantor has elected to establish a trust to provide all or part of such financial assurance for the well pads and wells identified herein,

Whereas, the Grantor, acting through its duly authorized officers, has selected the Trustee to be the trustee under this agreement, and the Trustee is willing to act as trustee,

Now, Therefore, the Grantor and the Trustee agree as follows:

Section 1. Definitions. As used in this Agreement:

(a)  The term ''Grantor''' means the project sponsor who enters into this Agreement and any successors or assigns of the Grantor.

(b) The term ''Trustee'' means the Trustee who enters into this Agreement and any successor Trustee.

Section 2. Identification of Facilities. This Agreement pertains to the facilities identified on attached Schedule A [on Schedule A, for each facility list the number of the state permits and DRBC dockets or approvals by rule approving the facilities and the location of the well pads and wells, for which financial assurance is demonstrated by this Agreement].

Section 3. Establishment of Fund. The Grantor and the Trustee hereby establish a trust fund, the ''Fund,'' for the benefit of DRBC. The Grantor and the Trustee intend that no third party have access to the Fund except as herein provided. The Fund is established initially as consisting of the property, which is acceptable to the Trustee, described in Schedule B attached hereto. Such property and any other property subsequently transferred to the Trustee is referred to as the Fund, together with all earnings and profits thereon, less any payments or distributions made by the Trustee pursuant to this Agreement. The Fund must be held by the Trustee, IN TRUST, as hereinafter provided. The Trustee shall not be responsible nor shall it undertake any responsibility for the amount or adequacy of, nor any duty to collect from the Grantor, any payments necessary to discharge any liabilities of the Grantor established by DRBC.

Section 4. Payment for Covered Activities. The Trustee must make payments from the Fund as the Executive Director shall direct, in writing, to provide for the payment of the costs covered by this Agreement. The Trustee must reimburse the Grantor or other persons as specified by the Executive Director from the Fund for covered expenditures in such amounts as the Executive Director shall direct in writing. In addition, the Trustee must refund to the Grantor such amounts as the Executive Director specifies in writing. Upon refund, such funds shall no longer constitute part of the Fund as defined herein.

Section 5. Payments Comprising the Fund. Payments made to the Trustee for the Fund must consist of cash or securities acceptable to the Trustee.

Section 6. Trustee Management. The Trustee must invest and reinvest the principal and income of the Fund and keep the Fund invested as a single fund, without distinction between principal and income, in accordance with general investment policies and guidelines which the Grantor may communicate in writing to the Trustee from time to time, subject, however, to the provisions of this section. In investing, reinvesting, exchanging, selling, and managing the Fund, the Trustee must discharge his duties with respect to the trust fund solely in the interest of the beneficiary and with the care, skill, prudence, and diligence under the circumstances then prevailing which persons of prudence, acting in a like capacity and familiar with such matters, would use in the conduct of an enterprise of a like character and with like aims; except that:

(i) Securities or other obligations of the Grantor, or any other sponsor, owner or operator of the facilities, or any of their affiliates as defined in the Investment Company Act of 1940, as amended, 15 U.S.C. 80a-2.(a), must not be acquired or held, unless they are securities or other obligations of the Federal or a State government;

(ii) The Trustee is authorized to invest the Fund in time or demand deposits of the Trustee, to the extent insured by an agency of the Federal or State government; and

(iii) The Trustee is authorized to hold cash awaiting investment or distribution uninvested for a reasonable time and without liability for the payment of interest thereon.

Section 7. Commingling and Investment. The Trustee is expressly authorized in its discretion:

(i) To transfer from time to time any or all of the assets of the Fund to any common, commingled, or collective trust fund created by the Trustee in which the Fund is eligible to participate, subject to all of the provisions thereof, to be commingled with the assets of other trusts participating therein; and

(ii) To purchase shares in any investment company registered under the Investment Company Act of 1940, 15 U.S.C. 80a-1 et seq., including one which may be created, managed, underwritten, or to which investment advice is rendered or the shares of which are sold by the Trustee. The Trustee may vote such shares in its discretion.

Section 8. Express Powers of Trustee. Without in any way limiting the powers and discretions conferred upon the Trustee by the other provisions of this Agreement or by law, the Trustee is expressly authorized and empowered:

(a) To sell, exchange, convey, transfer, or otherwise dispose of any property held by it, by public or private sale. No person dealing with the Trustee shall be bound to see to the application of the purchase money or to inquire into the validity or expediency of any such sale or other disposition;

(b) To make, execute, acknowledge, and deliver any and all documents of transfer and conveyance and any and all other instruments that may be necessary or appropriate to carry out the powers herein granted;

(c) To register any securities held in the Fund in its own name or in the name of a nominee and to hold any security in bearer form or in book entry, or to combine certificates representing such securities with certificates of the same issue held by the Trustee in other fiduciary capacities, or to deposit or arrange for the deposit of such securities in a qualified central depositary even though, when so deposited, such securities may be merged and held in bulk in the name of the nominee of such depositary with other securities deposited therein by another person, or to deposit or arrange for the deposit of any securities issued by the United States Government, or any agency or instrumentality thereof, with a Federal Reserve bank, but the books and records of the Trustee must at all times show that all such securities are part of the Fund;

(d) To deposit any cash in the Fund in interest-bearing accounts maintained or savings certificates issued by the Trustee, in its separate corporate capacity, or in any other banking institution affiliated with the Trustee, to the extent insured by an agency of the Federal or State government; and

(e) To compromise or otherwise adjust all claims in favor of or against the Fund.

Section 9. Taxes and Expenses. All taxes of any kind that may be assessed or levied against or in respect of the Fund and all brokerage commissions incurred by the Fund must be paid from the Fund. All other expenses incurred by the Trustee in connection with the administration of this Trust, including fees for legal services rendered to the Trustee, the compensation of the Trustee to the extent not paid directly by the Grantor, and all other proper charges and disbursements of the Trustee must be paid from the Fund.

Section 10. Annual Valuation. The Trustee must annually, at least 30 days prior to the anniversary date of establishment of the Fund, furnish to the Grantor and to the DRBC Executive Director a statement confirming the value of the Trust. Any securities in the Fund must be valued at market value as of no more than 60 days prior to the anniversary date of establishment of the Fund. The failure of the Grantor to object in writing to the Trustee within 90 days after the statement has been furnished to the Grantor and the DRBC Executive Director shall constitute a conclusively binding assent by the Grantor, barring the Grantor from asserting any claim or liability against the Trustee with respect to matters disclosed in the statement.

Section 11. Advice of Counsel. The Trustee may from time to time consult with counsel, who may be counsel to the Grantor, with respect to any question arising as to the construction of this Agreement or any action to be taken hereunder. The Trustee must be fully protected, to the extent permitted by law, in acting upon the advice of counsel.

Section 12. Trustee Compensation. The Trustee shall be entitled to reasonable compensation for its services as agreed upon in writing from time to time with the Grantor.

Section 13. Successor Trustee. The Trustee may resign or the Grantor may replace the Trustee, but such resignation or replacement shall not be effective until the Grantor has appointed a successor trustee and this successor accepts the appointment. The successor trustee shall have the same powers and duties as those conferred upon the Trustee hereunder. Upon the successor trustee's acceptance of the appointment, the Trustee shall assign, transfer, and pay over to the successor trustee the funds and properties then constituting the Fund. If for any reason the Grantor cannot or does not act in the event of the resignation of the Trustee, the Trustee may apply to a court of competent jurisdiction for the appointment of a successor trustee or for instructions. The successor trustee must specify the date on which it assumes administration of the trust in a writing sent to the Grantor, the Executive Director, and the present Trustee by certified mail 10 days before such change becomes effective. Any expenses incurred by the Trustee as a result of any of the acts contemplated by this Section must be paid as provided in Section 9.

Section 14. Instructions to the Trustee. All orders, requests, and instructions by the Grantor to the Trustee must be in writing, signed by such persons as are designated in the attached Exhibit A or such other designees as the Grantor may designate by amendment to Exhibit A. The Trustee must be fully protected in acting without inquiry in accordance with the Grantor's orders, requests, and instructions. All orders, requests, and instructions by the Executive Director to the Trustee shall be in writing, signed by the Executive Director or her designee(s), and the Trustee must act and must be fully protected in acting in accordance with such orders, requests, and instructions. The Trustee must have the right to assume, in the absence of written notice to the contrary, that no event constituting a change or a termination of the authority of any person to act on behalf of the Grantor or DRBC hereunder has occurred. The Trustee shall have no duty to act in the absence of such orders, requests, and instructions from the Grantor and/or DRBC, except as provided for herein.

Section 15. Notice of Nonpayment. The Trustee must notify the Grantor and the Executive Director, by certified mail within 10 days following the expiration of the 30-day period after the anniversary of the establishment of the Trust, if no payment is received from the Grantor during that period. After the pay-in period is completed, the Trustee shall not be required to send a notice of nonpayment.

Section 16. Amendment of Agreement. This Agreement may be amended by an instrument in writing executed by the Grantor, the Trustee, and the Executive Director, or by the Trustee and the Executive Director if the Grantor ceases to exist.

Section 17. Irrevocability and Termination. Subject to the right of the parties to amend this Agreement as provided in Section 16, this Trust shall be irrevocable and shall continue until terminated at the written agreement of the Grantor, the Trustee, and the Executive Director, or by the Trustee and the Executive Director, if the Grantor ceases to exist. Upon termination of the Trust, all remaining trust property, less final trust administration expenses, must be delivered to the Grantor.

Section 18. Immunity and Indemnification. The Trustee must not incur personal liability of any nature in connection with any act or omission, made in good faith, in the administration of this Trust, or in carrying out any directions by the Grantor or the Executive Director issued in accordance with this Agreement. The Trustee must be indemnified and saved harmless by the Grantor or from the Trust Fund, or both, from and against any personal liability to which the Trustee may be subjected by reason of any act or conduct in its official capacity, including all expenses reasonably incurred in its defense in the event the Grantor fails to provide such defense.

Section 19. Choice of Law. This Agreement must be administered, construed, and enforced according to the laws of the State in which the natural gas well is located.

Section 20. Interpretation. As used in this Agreement, words in the singular include the plural and words in the plural include the singular. The descriptive headings for each Section of this Agreement shall not affect the interpretation or the legal efficacy of this Agreement.

In Witness Whereof, the parties have caused this Agreement to be executed by their respective officers duly authorized and their corporate seals to be hereunto affixed and attested as of the date first above written: The parties below certify that the wording of this Agreement is identical to the wording specified in Section 7.3(k)(14) and section (iii) of this Appendix as such regulations were constituted on the date first above written.

[Signature of Grantor]

[Title]

Attest:

[Title]

[Seal]

[Signature of Trustee]

Attest:

[Title]

[Seal]

The following is an example of the certification of acknowledgment which must accompany the trust agreement for a trust fund as specified in Section 7.3(k)(14). State requirements may differ on the proper content of this acknowledgment.

State of ______

County of ______

On this [date], before me personally came [owner or operator] to me known, who, being by me duly sworn, did depose and say that she/he resides at [address], that she/he is [title] of [corporation], the corporation described in and which executed the above instrument; that she/he knows the seal of said corporation; that the seal affixed to such instrument is such A corporate seal; that it was so affixed by order of the Board of Directors of said corporation, and that she/he signed her/his name thereto by like order.

[Signature of Notary Public]

Dated: February 1, 2011

PAMELA M. BUSH, 
Secretary

 Fiscal Note: Fiscal Note 68-56. No fiscal impact; (8) recommends adoption.

Annex A

TITLE 25. ENVIRONMENTAL PROTECTION

PART V. DELAWARE RIVER BASIN COMMISSION

CHAPTER 901. GENERAL PROVISIONS

§ 901.2. Comprehensive Plan and water quality.

 The Comprehensive Plan regulations as set forth in 18 CFR Part 401, Subpart A ([2008] 2011) and the Water Code and Water Quality Standards as set forth in 18 CFR Part 410 ([2008] 2011) are hereby incorporated by reference and made a part of this title.

[Pa.B. Doc. No. 11-376. Filed for public inspection March 4, 2011, 9:00 a.m.]

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