Steptoe & Johnson: Delaware River Basin Commission Releases Final Rules On Natural Gas Development

On Tuesday [Nov. 8], the Delaware River Basin Commission ("DRBC") released its revised rules on natural gas development in the basin after a public comment period during which the commission received over 69,000 comments.  The revised rules maintain many of the attributes of the initial draft rules issued on December 9, 2010.  Notably, the rules permit the drilling of 300 wells and call for a reassessment after 18 months. 

The rules continue to require the use of Natural Gas Development Plans for any entity seeking to permit more than five well pad sites in the basin.  All water sources within the basin used for natural gas development activities must have commission approval.  Sources previously approved by the DRBC that have excess allocations may supply in-basin natural gas development projects within the same state without any additional DRBC approval.  New withdrawals and existing sources that require increases in their allocations must receive commission approval in the form of a docket or protected area permit before serving natural gas development activities.

To encourage the use of sources other than fresh water for hydraulic fracturing of natural gas wells, the revised rules provide for Approval by Delegated Authority ("ADA") - in most cases by the DRBC's Executive Director - for the diversion into the basin of non-contact cooling water, treated wastewater that meets certain criteria, mine drainage water, and recovered flowback and production water (if within the same state) to be used in hydraulic fracturing.

Project sponsors of all natural gas development projects in the basin must also obtain a commission-issued Bulk Water Use and Management Approval ("BWA") for each natural gas well pad and each project consisting of the hydrostatic testing of natural gas gathering lines or transmission lines. A BWA must be in place before water from any source - whether inside or outside the basin - is used for natural gas development activities and before the project sponsor commences well pad construction or begins operation of a pre-existing natural gas well pad or well. Such approvals will ordinarily be in the form of an ADA issued to the natural gas development project sponsor; however, a docket issued by the Commissioners would be required for projects proposed in certain areas, including watersheds draining to New York City's Delaware Basin reservoirs. A variance also would be required in the Upper Delaware Scenic and Recreational River corridor.

Most of the conditions proposed for natural gas well pads in the December 2010 draft rules, including siting and setback restrictions, are included in the revised draft regulations as requirements of a BWA. Additional setbacks or best management practices may be required to protect public drinking water systems, water supply reservoirs or watersheds of waterbodies designated by the DRBC as Special Protection Waters, by Pennsylvania as "high quality waters" or "exceptional value waters" or by New York for extra protection.

The rules cannot take effect before the DRBC's next scheduled meeting on November 21, 2011, at which time the commission will vote to either pass or reject the final rules.  No further public input or comment is being requested.  The full text of the revised DRBC rules can be found here.  

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