Marcellus Shale Watch

Carl B. Everett, Esq.

Saul Ewing, LLP

Philadelphia

On January 12, 2010, the Susquehanna River Basin Commission ordered natural gas drilling company Novus Operating, LLC to cease all water related activities at two Marcellus Shale drilling pad sites in Tioga County and to cease drilling.  The company had begun drilling two wells despite having been informed by the SRBC that its prior approval was required.   The company had not yet begun water withdrawals, which presents an interesting question of SRBC authority.  A link to the SRBC Press Release is avaiable by clicking here.

The SRBC regulations are codified at 18 CFR 801-808.  Section 806.4(a) says that no person shall undertake any of the following projects without prior review and approval by the Commission…(8) any natural gas well development project in the basin targeting the Marcellus or Utica shale formations… for exploration or production of natural gas involving a withdrawal, diversion or consumptive use, regardless of quantity.*  Each of the key words is defined.  The definition of “project” contains the following: “For purposes of natural gas development activities, the project shall be considered to be the drilling pad upon which one or more exploratory or production wells are undertaken, and all water-related appurtenant facilities and activities related thereto.” 

The regulations addressing violations impose a duty to comply (section 808.11) and further authorize the imposition of civil penalties for violations of the compact or commission rules pursuant to section 15.17 of the compact (section 808.17).  The compact authorizes penalties of not less than $50 nor more than $1,000, with each day of violation to be considered a separate offense.

The federal environmental statutes vary with respect to the need for construction permits.  The Clean Water Act applies to discharges; construction is at the risk of the owner.  The Clean Air Act contains rigorous pre-construction requirements.  The SRBC regulations are on the CAA end of the spectrum.  However, the compact itself seems more similar to the Clean Water Act as its focus is on the water resources.  Interestingly, the compact does not mention gas (or coal).  There may be an argument that the regulations, notwithstanding compliance with procedural requirements in their promulgation, exceed the authority granted by the compact.  Perhaps Novus Operating, LLC plans to press that issue.

*Section 806.4(a)(8) was erroneously proposed to be deleted, but the error was corrected 74 Fed. Reg. 49810 (September 29, 2009). 

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