Rocky Mountain Mineral Law Foundation Development Issues in Major Shale Gas Plays December 6, 2010 WATER AND WASTEWATER ISSUES IN CONDUCTING OPERATIONS IN A SHALE PLAY – THE APPALACHIAN BASIN EXPERIENCE R. Timothy Weston K&L Gates LLP Harrisburg, PA This article is for informational purposes only and does not contain or convey legal advice. The information herein should not be used or relied upon in regard to any particular facts or circumstances without first consulting with a lawyer. This paper represents an updated edition of Water Supply and Wastewater Challenges in Marcellus Shale Development, which was originally published in 30 E NERGY & M INERAL L AW I NSTITUTE Ch. 15 (2009), which is reprinted by permission from the Energy & Mineral Law Foundation.
Table of Contents 1. Introduction to the Water Supply, Water Resource Impact and Wastewater Challenge.....1 2. The Water Resource Challenge in Perspective....................................................................2 3. Water Rights and Water Withdrawal Regulation ................................................................6 3.1 Overview – What Is the Meaning of Water Rights?................................................7 3.2 “Water Rights” Granted Under Mineral Leases ......................................................9 3.3 Basis of “Water Rights” Under State Law – Common Law and Regulatory Programs ..................................................................................................................9 3.4 Common Law Principles Applicable to Water Withdrawals.................................10 (a) Classifications of Water.............................................................................10 (b) Riparian Rights in Surface Streams, Lakes and Subterranean Streams.....12 (c) Common Law Rights in Percolating Groundwater....................................16 (d) The Restatement Rules for Surface Water and Groundwater....................18 (e) Interaction Between Surface and Ground Water .......................................19 3.5 Regulated Riparian Regimes..................................................................................22 (a) Kentucky....................................................................................................22 (b) New York...................................................................................................24 (c) Ohio............................................................................................................26 (d) Pennsylvania ..............................................................................................27 (e) Virginia ......................................................................................................33 (f) West Virginia.............................................................................................35 (g) The Delaware River Basin Commission....................................................36 (h) Susquehanna River Basin Commission .....................................................41 (i) Great Lakes – St. Lawrence River Basin Water Resources Compact .......46 - ii -
4. Protection of Water Supplies .............................................................................................48 4.1 Regulation of the Fracing Process and the Proposed FRAC Act...........................48 4.2 Liability of Gas Well Operators for Impacts on Other Water Users .....................50 (a) Liability for Impacts Caused by Water Supply Development...................50 (b) Liability for Impacts Caused by Gas Well Development and Operation....................................................................................................51 5. The Flowback / Wastewater Challenge .............................................................................55 5.1 Scope of the Challenge ..........................................................................................55 5.2 Overview of Wastewater Management Issues.......................................................56 5.3 Requirements for Characterizing Flowback Wastewater ......................................56 5.4 Assuring Delivery to Appropriate Facilities..........................................................58 5.5 Treatment, Reuse and Disposal Technology Choices............................................59 (a) Natural pond evaporation...........................................................................59 (b) Direct reuse for drilling and fracing...........................................................59 (c) Underground injection of flowback & production brines..........................59 (d) Conventional treatment technologies.........................................................60 (e) TDS reduction via reverse osmosis............................................................60 (f) TDS reduction via evaporation..................................................................61 (g) TDS reduction via crystallization ..............................................................62 (h) Key regulatory questions affecting selection.............................................62 5.6 Regulatory Drivers to Technology Selection – Impending Restrictions on Surface Water Discharges......................................................................................63 (a) Overview....................................................................................................63 (b) The PA TDS Strategy and Pending Regulations .......................................63 6. Legal and Regulatory Issues in Implementing Treatment and Disposal Facilities............66 6.1 Treatment Facility Siting .......................................................................................66 - iii -
(a) Zoning and land development regulations.................................................66 (b) State siting restrictions for certain treatment facilities ..............................67 6.2 NPDES Permit Issues ............................................................................................68 (a) Establishing effluent limits ........................................................................68 (b) Special protection waters...........................................................................69 (c) Impaired waters..........................................................................................70 6.3 Water Quality Construction Permits for Wastewater Facilities.............................72 (a) Pennsylvania ..............................................................................................72 (b) Ohio............................................................................................................72 (c) Delaware River Basin Commission...........................................................72 6.4 Air Emission Issues for Water Treatment Facilities..............................................73 (a) What counts as a “source” in defining “major source”..............................74 (b) Potentially applicable air emission regulations..........................................74 6.5 Underground Injection of Wastewater or Treatment Residuals ............................76 (a) Acquiring Rights to Allow Underground Injection ...................................76 (b) Federal Safe Drinking Water Act – Underground Injection Control (“UIC”) Program........................................................................................77 (c) Pennsylvania ..............................................................................................79 (d) Ohio............................................................................................................79 (e) West Virginia.............................................................................................80 (f) New York...................................................................................................80 (g) DRBC.........................................................................................................80 6.6 Residuals Management & Disposition...................................................................81 (a) What are the treatment residuals?..............................................................81 (b) Categorization of residuals ........................................................................81 - iv -
(c) State regulation of residual or industrial waste or beneficial reuse of residuals .....................................................................................................82 6.7 Implementing Wastewater Projects – Transactional Issues...................................84 7. Summarizing Key Challenges to Wastewater Management.............................................84 8. Final Words........................................................................................................................85 - v -
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