Administrative changes to existing regulations and regulation of activities associated with high volume hydraulic fracturing.
Public hearing(s) will be held at:
1:00 p.m. and 6:00 p.m., Nov. 16, 2011 at Dansville Middle School Auditorium, 31 Clara Barton St., Dansville, NY; 1:00 p.m. and 6:00 p.m., Nov. 17, 2011, at The Forum Theatre, 236 Washington St., Binghamton, NY; 1:00 p.m. and 6:00 p.m., Nov. 29, 2011 at Sullivan County Community College, Seelig Theatre, 112 College Rd., Loch Sheldrake, NY; and 1:00 p.m. and 6:00 p.m., Nov. 30, 2011 at Tribeca Performing Arts Center, 199 Chambers St., New York, NY.
Interpreter Service:
Interpreter services will be made available to hearing impaired persons, at no charge, upon written request submitted within reasonable time prior to the scheduled public hearing. The written request must be addressed to the agency representative designated in the paragraph below.
Accessibility:
All public hearings have been scheduled at places reasonably accessible to persons with a mobility impairment.
Substance of proposed rule (Full text is posted at the following State website:http://www.dec.ny.gov):
The proposed rules include revisions and additions to the Department's oil and gas regulations, regulations on the management of state land and regulations pertaining to State Pollutant Discharge Elimination System (SPDES) permitting. The proposed rules include some administrative changes to the Department's regulations. However, most of the revisions and additions are intended to promulgate mitigation measures identified in the Department's revised draft Supplemental Generic Environmental Impact Statement (2011 dSGEIS) related to the approval of permits to drill a natural gas well when high-volume hydraulic fracturing (HVHF) is planned. HVHF involves the fracturing of wells utilizing more than three hundred thousand gallons of water as the base fluid for fracturing operations. Issuance of a permit to drill, deepen, plug back or convert an HVHF well or issuance of a SPDES permit covering HVHF will involve programs administered by the Divisions of Mineral Resources; Lands and Forests; Fish Wildlife and Marine Resources: and, Water.
Mineral Resources.
Several of the changes proposed for the oil and gas well regulations are administrative in nature and are necessary to update existing regulations to current Department and industry practices. Included in this category of changes is the language proposed to be added to section 552.2, which will clarify that the expiration of a permit to drill, deepen, plug back or convert a well does not relieve an operator from compliance with the terms specified in a permit when the operator commences operations during the permit term. Definitions will also be added to Part 550 for the terms hydraulic fracturing, true measured depth, true vertical depth, well spud, and workover.
The proposed rules will also modify 6 NYCRR section 551.6 to remove the blanket bond available to operators who drill multiple wells and will revise 6 NYCRR section 552.2 to extend the term of a permit to drill, deepen, plug back or convert a well from six months to two years. 6 NYCRR section 552.3 is proposed to be modified to allow the Department to re-issue a permit to another operator for a location that has already been permitted by the Department.
Several provisions in the proposed rules will also modernize the Department's regulations to make them consistent with statutory changes made to ECL Article 23 in 2005 and 2008. Chapter 386 of the Laws of 2005 made a number of significant changes to the statewide spacing scheme in place for natural gas wells and the proposed rules will incorporate some of those changes. Statutory statewide spacing provisions for oil and gas wells were also adopted by the Legislature in 2008. The proposed rules will promulgate the 2008 legislative changes related to shale well development.
Additional recordkeeping requirements are included in the proposed rules, including a provision that will require operators to file an interim completion report for any gap in drilling operations lasting longer than thirty days. Enhancements are also proposed for Part 555, which contains standards for the plugging and abandonment of wells under the Department's jurisdiction. Other proposed changes to section 555.5 would require operators to obtain well logs prior to plugging to aid in determining the appropriate plugging procedures. The proposed rules will also clarify the density of the fluid that may be utilized between plugs set in the bore hole during plugging of the well and will clarify the reclamation requirements for the land adjacent to the surface location of the well.
A new Part 560 is proposed in the Department's rulemaking to address HVHF. Part 560 will consist of seven sections, beginning with section 560.1 which makes Part 560 applicable to all wells where HVHF is planned. Section 560.1 also states that Parts 550-558 will continue to apply to the extent not superseded by Part 560. Proposed section 560.2 contains several definitions related to HVHF including chemical additives, chemical constituent, flowback, and HVHF, as well as definitions related to new setbacks specific to HVHF surface activities.
Proposed section 560.3 will promulgate many of the application requirements specified in the 2011 dSGEIS including: the need for a blowout preventer use and testing plan; detailed mapping requirements; and disclosure of chemical additives proposed to be used during hydraulic fracturing including the proposed volume of each additive and the proposed percent by weight of water, chemical additives and proppants.
In section 560.4, the Department proposes to promulgate additional setbacks for HVHF for surface activities, including setbacks for wells proposed within 500 feet of a primary aquifer and specified distances from water resources such as private water wells and reservoirs. Section 560.5 of the proposed rules will promulgate the well testing, recordkeeping and reporting requirements in the 2011 dSGEIS. This section will include requirements for well operators to test residential water wells within a specified distance from the proposed gas well. The regulations will also authorize the Department to require additional water well testing after the wells permitted under 6 NYCRR Part 552 are completed, to investigate whether drilling activities have impacted residential water well quality.
Section 560.6 of the proposed rules contains detailed well construction and operational requirements for HVHF wells and separate subdivisions are included in the rule to specify requirements for: site preparation; site maintenance, such as the design standards for reserve pits; drilling, hydraulic fracturing and flowback, such as the need for intermediate casing and monitoring requirements during fracturing operations; and reclamation requirements that specify how wastes generated on the well pad should be managed and further specifying that partial and final reclamation of the well site must be approved by the Department.
Lands and Forests and Fish, Wildlife and Marine Resources.
Parts 52 and 190 of 6 NYCRR will be modified to prohibit the leasing of state-owned land for surface activities related to HVHF. The prohibition, however, will not prevent the Department from leasing state land to allow subsurface access to the state's mineral rights from locations adjacent to state-owned land.
Ground and Surface Water.
The proposed rules will update sections 750-1.1, 750-1.4, and 750-1.5 of 6 NYCRR. The updates to section 750-1.1 ensure protection of water resources by including language to clearly state that the regulations provide water quality protection for activities that do not require a SPDES permit and to refer to the certain prohibited activities and discharges associated with HVHF. The updates to section 750-1.4 and 750-1.11 ensure the protection of water resources by requiring a SPDES permit for HVHF operations so that there is no discharge of a pollutant in a manner other than prescribed by the SPDES permit. The revision to section 750-1.5 clarifies the existing regulation to conform to the current federal process for issuance of Underground Injection Control permits.
A new Part 750-3 will also be added. The new Part 750-3 will consist of twenty-five sections. Section 750-3.2 incorporates the definitions provided in 750-1.2 and provides additional definitions specific to HVHF. Section 750-3.3 incorporates the requirements provided in section 750-1.3. Section 750-3.3 prohibits certain HVHF activities and discharges and does not allow the issuance of a SPDES permit for such activities or discharges. Similar to the setbacks proposed for Part 560, these specifically include HVHF operations on the ground surface: within 4,000 feet of an unfiltered surface water supply watershed; within 500 feet of a primary aquifer; and within specified distances from other water resources such as floodplains and water supply wells.
Section 750-3.4 incorporates the requirements provided in section 750-1.4. To obtain a SPDES permit for HVHF operations section 750-3.4 also provides a list of the certifications required by the well operator or provides for alternative plans that are approvable by the Department. This list includes: proper handling and disposal of waste fluids from HVHF operations; closed loop system; depth of the HVHF drilling; and evaluation and use of less toxic alternative additive products.
Section 750-3.5 incorporates the requirements provided in section 750-1.5. Section 750-3.5 explains that the Department's determination under 750-1.5(a)(6)(ii) that groundwater or surface water quality will not be degraded shall be based in part upon the certifications submitted in compliance with and pursuant to 750-3.4. Section 750-3.6 incorporates the requirements provided in section 750-1.6. Section 750-3.6 requires the development of a comprehensive stormwater pollution prevention plan (SWPPP), which addresses the construction, HVHF and production phases of an HVHF well. This section further identifies the criteria required to obtain an HVHF SPDES permit and provides triggers for when each phase of HVHF may commence.
Section 750-3.11 incorporates the requirements provided in section 750-1.11. Section 750-3.11 includes the details of the Construction SWPPP and HVHF SWPPP and requires that such SWPPPs be developed in accordance with the Department's technical standards. This section also includes conditions applicable to all HVHF operations, including: stabilization of all disturbed areas; the development and use of less toxic alternative additive fluids and maintenance of a list of such on-site; proper disposal of wastewater; partial site reclamation; spill prevention, control and countermeasure plan; and use of closed loop tank system. A new section 750-3.12.2 will be added. This section details the requirements for the permittee to demonstrate that all flowback water and production brine will be treated, recycled or otherwise disposed of over the projected life of the well. The SPDES permit application must include a Fluid Disposal Plan. This section details the requirements for disposal options, including: disposal at publicly owned treatment works; disposal at privately owned industrial treatment facilities; on-site treatment and recycling; disposal wells; disposal in accordance with the terms of a Department-approved beneficial use determination; and disposal in accordance with another option subject to the Department's approval.
Section 750-3.13 incorporates the requirements provided in section 750-1.13. Section 750-3.13 will also include monitoring, reporting and recording requirements applicable to all phases of the HVHF operation. Monitoring is required for stormwater discharges during HVHF operations. The HVHF SWPPP must include provisions for monitoring, recording and reporting, source water and additives for HVHF operations, and HVHF wastewater.
Section 750-3.14 incorporates the requirements provided in section 750-1.14, which details the requirements to ensure no increase in discharge loading of the listed pollutant of concern for stormwater discharges to impaired waterbodies listed pursuant to Clean Water Act § 303(d) or for which there has been an approved Total Maximum Daily Load.
Section 750-3.20 incorporates the requirements provided in section 750-1.20. Section 750-3.20 also provides the Department with the ability to deny, suspend or revoke a SPDES permit for HVHF operations if the Department determines that the permittee has failed to implement any measures certified pursuant to section 750-3.4 or has otherwise violated any provision of Part 750-3.
Section 750-3.21 incorporates the requirements provided in section 750-1.21. Section 750-3.12 provides the requirements for obtaining and maintaining coverage under the HVHF General Permit, including development of a SWPPP and the operation and maintenance of stormwater management practices; duration of the HVHF General Permit; transfer of the HVHF General Permit; denial, suspension, or revocation of the HVHF General Permit; fee for coverage under the HVHF General Permit; and termination of the HVHF General Permit. Section 750-3.21 also includes the authority for the Department to issue a stop work order.
This section lists activities that are ineligible for coverage under the General Permit, which for HVHF operations specifically includes: construction of centralized flowback impoundments; construction for HVHF operations on steep slopes; HVHF operations at certain depths of hydraulic fracturing; and HVHF operations within certain buffers to water resources.
Sections 750-3.1, 750-3.7, 750-3.8, 750-3.9, 750-3.10, 750-3.15, 750-3.16, 750-3.17, 750-3.18, 750-3.19, 750-3.22, and 750-3.23 simply incorporate corresponding and related existing protections in 750-1 into the regulations for HVHF operations. Section 750-3.12 clarifies that 750-1.12 does not apply to HVHF operations. Section 750-3.24 incorporates the requirements provided in section 750-1.24. Section 750-3.24 also specifically references the Department's technical standards for the development of an HVHF SWPPP.
Section 750-3.25 incorporates the requirements provided in section 750-2. Section 750-3.25 also requires that both the Construction SWPPP and HVHF SWPPP must be kept current and that all stormwater management controls be operated and maintained in effective operating condition.
Text of proposed rule and any required statements and analyses may be obtained from:
Eugene Leff, Deputy Commissioner, Department of Environmental Conservation, 625 Broadway, Albany, New York 12233-6510, (518) 402-8044, email: public@gw.dec.state.ny.us
Data, views or arguments may be submitted to:
Eugene Leff, Re: dSGEIS Comments, Department of Environmental Conservation, 625 Broadway, Albany, New York 12233-6510, (518) 402-8044, email: http://www.dec.ny.gov/energy/76838.html
Public comment will be received until:
December 12, 2011.
Additional matter required by statute:
Draft Supplemental Generic Environmental Impact Statement (SGEIS) related to high-volume hydraulic fracturing available at www.dec.ny.gov. This rule must be approved by the Environmental Board.
This action was not under consideration at the time this agency's regulatory agenda was submitted.
Summary of Regulatory Impact Statement
The proposed rulemaking will modify the Department of Environmental Conservation's (Department) existing regulations and promulgate new regulations related to the use of high-volume hydraulic fracturing (HVHF) to facilitate production of natural gas from wells permitted by the Department. Also included in the proposed rules are updates to the Department's oil and gas and State Pollutant Discharge Elimination System (SPDES) regulations.
Statutory Authority and Legislative Objectives. The Department proposes these regulations to ensure potential environmental impacts resulting from HVHF are mitigated to the maximum extent practicable consistent with the legislative objectives provided in the Environmental Conservation Law (ECL). The Department's general authority for the proposed rules is found at ECL Article 1 and Article 3, which identifies the state's responsibility to manage water, land, fish, wildlife and air resources to assure their protection, enhancement, and balanced utilization, without risk to health and safety.
The ECL at sections 23-0301, 23-0303, 23-0305, 23-0501 and 23-0503 provides specific authority for proposed changes to Parts 550 through Part 555, and a new Part 560. These provisions provide the Department with the power to regulate drilling, casing, operation, plugging, replugging and posting of financial security for wells and the reclamation of surrounding land.
Among the changes to the Department's existing rules are: clarifying language to Section 552.2 to specify that the expiration of a permit to drill, deepen, plug back or convert a well does not relieve an operator from compliance with the terms in a permit once operations have commenced; removal of a cap on financial security requirements for wells longer than 6,000 feet; updates to statewide spacing regulations; and, enhancements to the Department's minimum requirements for the plugging and abandonment of wells.
The new Part 560, applicable to all HVHF wells, will promulgate much of the mitigation specified in the revised draft Supplement Generic Environmental Impact Statement on the Oil and Gas Regulatory Program (2011 dSGEIS). Included in the proposed rule are: the need for a blowout preventer use and testing plan; detailed mapping requirements; disclosure of chemical additives; and, well pad siting setbacks. The proposed rules also contain detailed well construction, site preparation, operational, and maintenance requirements for HVHF wells.
These proposed regulations further the state's legislative goals by ensuring that wells are properly constructed and operated. Having a comprehensive regulatory scheme in place also facilitates the state's goal to provide for the efficient development, production and utilization of natural resources of oil and gas in such a manner as to prevent injury to the operator, mineral rights' owners and the state as a whole.
With respect to the proposed rules related to SPDES, the ECL provides broad authority for the protection of the waters of the State, including groundwaters. Statutory authority for the proposed rules is provided in ECL Sections 15-0103, 15-0105, 17-0101, 17-0303, 17-0501 and 17-0511 17-0807 17-1709 and 71-1929. These sections authorize the Department to regulate activities that damage or otherwise adversely affect the waters of the State and to perform its duties to conserve and control water resources of the State for public health, safety or welfare.
Additional specific authority for the proposed water regulations is found at ECL Sections 17-0101 and 17-0303, which declares it to be the public policy of the State to maintain reasonable standards of water purity and authorizes the Department to prevent the pollution of the waters of the State in accordance with water quality standards. Furthermore, ECL Section 17-0501 makes it unlawful to discharge to any water of the State in violation of a water quality standard.
This proposed rulemaking updates Sections 750-1.1, 750-1.4, and 750-1.5 and will add a new Part 750-3. The updates to Sections 750-1.1 and 750-1.4 are necessary to clarify which activities do not require a SPDES permit, while ensuring the protection of water resources by requiring a SPDES permit for HVHF operations. The update to Section 750-1.5 conforms the regulation to the current federal process for issuance of Underground Injection Control permits.
Part 750-3 will prohibit certain HVHF activities and discharges and prevent the issuance of a SPDES permit for such activities or discharges within the following specified distances from water resources: within 4,000 feet of an unfiltered surface water supply watershed; within 500 feet of a primary aquifer; and, within 100 year floodplains.
The proposed changes to Part 750 also specify the conditions under which an applicant may receive a SPDES permit. Included in the proposed rule are: a list of certifications required by the applicant; the need to develop a comprehensive stormwater pollution prevention plan (SWPPP); construction, reclamation and drilling requirements for HVHF wells; requirements that all flowback water and production brine will be treated, recycled or otherwise disposed of; monitoring, reporting and recording requirements; and, testing requirements for residential water wells.
The proposed rules also contain requirements regarding coverage under a new HVHF General Permit. Several other sections of Part 750 are proposed to be modified to make those sections applicable to HVHF, or to clarify if HVHF does not apply.
Statutory authority for the proposed rules concerning state-owned lands is found in New York State Constitution, Article XIV, and at ECL Sections 9-0105, 9-0301, 9-0501, 9-0507, 11-2101, 11-2103, and 45-0117. The Department has the responsibility to exercise care, custody and control of state-owned lands and to make rules and regulations governing their use. The ECL also provides the Department with the authority to receive and accept land for conservation, watershed protection, forest management and to conserve rare plants and ecological communities on state-owned lands and lands under the jurisdiction of the Department. The proposed regulation fulfills the legislative objectives by ensuring that the production of natural gas using HVHF does not interfere with the purpose for which state-owned land was acquired.
Needs and Benefits. The proposed revisions to Parts 550 through 558 will update and improve regulatory conditions in the state by ensuring that well operators obtain adequate financial security to cover the cost of plugging deep wells, providing the regulated community with sufficient time to commence operations, and specifying requirements for properly plugging and abandoning a well. The new Part 560 and new Part 750-3 are proposed to ensure the potential environmental impacts to New York's water resources, ecosystems, and air quality, as well as the impacts of HVHF on communities where these wells are expected to be drilled, is minimized. These regulatory revisions will inform and serve the public and regulated community, supplement the Department's ability to monitor and enforce certain measures identified in the 2011 dSGEIS, and will update some of the Department's regulations to reflect technological advances and current industry practice.
Benefits of the adoption of these regulations would accrue to the environment as well as the public. The regulations, by providing for a balanced use of both the surface environment and the natural gas in the subsurface, promote a greater level of environmental protection than would be the case without the regulations. Greater environmental protection includes minimizing the probability and risk to uncontaminated aquifers and drinking water wells, streams and surface waters, and maintaining the passive use of natural resources, amongst others. Additionally, as identified in the 2011 dSGEIS, by approving the utilization of HVHF it is expected that there will be extensive job creation.
Costs to Industry. The costs to the regulated community for the proposed regulations will generally not differ from the potential costs that should have expected from the mitigation measures and permit conditions identified in the 2011 dSGEIS. The use of the General Permit for stormwater management will reduce regulatory fees and other burdens below what would be required if individual permits were issued. The proposed prohibition of surface activities associated with HVHF on state-owned lands might render some gas resources unavailable, which could result in potential lost opportunity for industry and leaseholders. In addition, costs to such leaseholders could increase if they choose to acquire surface access outside state-owned lands.
State Costs. The adoption of these regulations will create additional costs for several state agencies, including the Departments of Environmental Conservation (DEC), Health (DOH), Transportation (DOT), Public Service and Agriculture and Markets. DOH would incur costs investigating possible public health issues; DOT would be expected to review transportation plans that drillers submit with well applications; Public Service staff would be involved in the siting and construction of natural gas transmission pipelines; and, Agriculture and Markets would incur additional costs in its Agricultural District Program.
The actual costs that may be incurred by DEC and other state agencies cannot be currently estimated, given a lack of necessary information. However, the implementation of these regulations can be expected to require a significant increase from the existing DEC staffing levels to carry out the large number of activities relating to permits.
Local Government Mandates. While the proposed regulations do not mandate the expenditure of funds by any sector of local government, local governments will likely incur some indirect effects as a result of the Department's approval to utilize HVHF. The proposed rules would require well operators to test private residential water wells within 1,000 feet of a well pad's location, or 2,000 feet in some circumstances. County health departments may need to respond to issues with these residential water wells that may arise as a result of testing. Those costs will be complaint driven and cannot be quantified at this time.
An element of this proposal allows operators, under certain requirements, to dispose of flowback water and production brine through publically owned treatment works (POTWs). To accept this water, POTWs must perform a headworks analysis to ensure they can properly remove contaminants expected to be present in flowback water and production brine prior to discharge.
In addition, heavy truck traffic will result in local costs for road maintenance, though the proposed rules contain requirements to assist in mitigating those impacts. It is projected that HVHF activities would result in a substantial increase in economic activity in the affected areas and also result in a substantial increase in tax revenues to the state and to localities. These revenues are expected to offset local government costs that may result from HVHF activities.
Paperwork. The proposed rules include new paperwork requirements for all well operators, including: the need to notify and receive approval to re-fracture a well; a requirement to submit an interim Well Drilling and Completion Report; and new paperwork requirements specific to HVHF. The draft regulations also require certain submissions to the Department pursuant to the stormwater general permit. However, since the majority of HVHF activities would be done pursuant to the General Permit using standardized forms, less paperwork will be generated than required by an individual permit.
Duplication. This proposal is not intended to duplicate any other federal or State regulations or statutes, as there is no federal regulatory program covering HVHF.
Alternatives. The Department examined the no regulatory action or "no-action" alternative, in which mitigation measures and other requirements resulting from the environmental review process would stand-alone to direct these operations. However, the no-action alternative would create uncertainty for the regulated community and the public because controls over HVHF activities would not become state law. The Department also considered the denial of permits for HVHF, but while this alternative would fully protect the environment from any environmental impacts associated with HVHF, it would also eliminate all of the economic benefits generated by the activity.
Federal Standards. There is no federal regulatory framework over HVHF and there are no applicable Federal standards for groundwater protection. Thus, the proposed rules exceed minimum federal government standards. There are applicable Federal standards for stormwater and New York meets or exceeds all federal requirements.
Compliance Schedule. The regulated community will be required to comply upon enactment of the rules.
Regulatory Flexibility Analysis
The New York State Department of Environmental Conservation (Department) proposes to revise 6 NYCRR Parts 52, 190, 550-555, 560 and 750. The purpose of the proposed rulemaking is to amend the Department's oil and gas regulations to modernize existing regulations to reflect current Department and industry practice and to add new regulations to the Department's state lands, mineral resources and water regulations to address the use of high-volume hydraulic fracturing (HVHF). The Department is currently involved in a multi-year environmental review of HVHF. As a result of this process, the Department has identified a number of application requirements and mitigation measures that are expected to be uniformly applied to all HVHF wells to ensure such wells are drilled and operated properly.
The proposed rules will supplement the Department's ability to monitor and enforce certain measures identified in the Department's revised draft Supplemental Generic Environmental Impact Statement (2011 dSGEIS), and will, at the same time, update some of the Department's regulations to reflect technological advances and current industry practice. The Department's review of HVHF under the State Environmental Quality Review Act (SEQRA) has already been the subject of one public comment period and the Department will receive further public comments on a 2011 dSGEIS.
Effect of rules. These rules will not have substantial adverse effects on small businesses and local governments. The proposed rules will apply to any well operator who intends to utilize HVHF to produce natural gas from wells permitted by the Department. This will, for the most part, involve large national and international corporations. Approval of well drilling permits where HVHF is planned will create opportunities for small businesses to engage in waste hauling, water hauling, basic construction services such as land clearing and grading, as well as lodging, food and other personal services.
This proposal does not directly mandate the expenditure of funds by any sector of local government, although municipally owned wastewater treatment plants may opt to treat wastewater from gas wells subject to the proposed rules. Although the acceptance of wastewater from regulated entities will involve some costs, those costs are expected to be offset by the income generated by acceptance of the waste. In addition, one of the measures contained in the proposed rules will require well operators to test residential water wells prior to drilling. Results of water well testing may increase complaints to the county health department regardless of whether contamination is pre-existing or attributed to nearby HVHF wells. These costs are speculative and cannot be quantified. Approval of HVHF is also expected to impact local roads, leading to increased maintenance costs. To mitigate this impact the proposed rules require an applicant for HVHF to submit a transportation plan detailing proposed routes, estimated number of truck trips and local road conditions, and such plan will assist local government to respond to local infrastructure needs. Well operators will also be encouraged to engage local government early in the planning process by entering into road use agreements, so that both the regulated community and local governments can prepare for the potential impacts of HVHF use in a given area.
Compliance requirements. The regulated community which is the main focus of the proposed rules are well operators who plan to drill wells and utilize HVHF to facilitate production of natural gas. Well operators capable of acquiring sufficient mineral rights to enable them to apply for a Department permit, and who plan to utilize HVHF, are typically well funded national and international companies. The costs to the regulated community for the proposed regulations related to HVHF will not differ substantially from the potential costs that the regulated community should have expected from the mitigation measures and/or permit conditions that have been identified in the 2011 dSGEIS.
Certain aspects of drilling a well, such as clearing the site to construct the well pad and securing enough fresh water to use during fracturing operations will, however, likely involve some small businesses. The proposed rules do not impose substantial costs on small business, with such costs limited to paperwork requirements. Small businesses, to the extent that small businesses apply for a permit to drill a well where HVHF will be used, are required to comply with the same permitting requirements as other regulated entities.
In situations where a small business controls the mineral rights in an area where HVHF may be used, and such small business enters into a joint operating agreement with the well operator or elects to participate in the operation through the Department's compulsory integration process, the proposed rules will increase the costs of participating in the operation. In such cases, the cost of complying with the proposed rules will still fall largely on the well operator since the well operator is required by the Environmental Conservation Law to control a requisite percentage of the mineral rights in the area that will be produced before the well operator is allowed to apply for a permit to drill. The new application, reporting and operating requirements proposed to be added as a new Part 560, are identified by the Department as necessary measures to ensure HVHF wells are drilled and operated properly and to ensure all waste generated during well construction, hydraulic fracturing and production are handled appropriately.
Local governments are not required to take any affirmative actions under the proposed rules. However, municipalities that operate publicly owned treatment works (POTW) may elect to accept wastewater from HVHF operations for disposal. In general, POTWs must have a DEC approved pretreatment program for accepting any HVHF wastewater and must notify DEC if they plan to receive wastewater at their facility. POTWs are required to perform certain analyses to ensure they can handle the wastewater without upsetting their system or causing a problem in the receiving water. While there are costs associated with the POTW analyses and securing DEC approval of such, this is offset by the disposal fee the municipality may impose for allowing disposal of the HVHF wastewater at their facility.
Indirectly, the proposed rules may also require local governments to respond to additional complaints about water well quality as well owners are made aware of water well testing required by the proposed rules. Approval of HVHF is also expected to increase local traffic and in some areas, increase the local population. As a result, local governments may experience increased demand on local services, such as emergency response and local road maintenance. The 2011 dSGEIS contains a detailed analysis of the socioeconomic impacts associated with approval to utilize HVHF.
Professional services. Local governments are not required to take any affirmative actions under the proposed rules. However, in order to be responsive to situations that could arise, local governments may want to retain professional services to assist with emergency response and traffic control in certain circumstances. It is not anticipated that small businesses associated with high-volume hydraulic fracturing will need to enter into contracts for professional services to comply with these regulations.
Compliance costs. For small businesses and local governments that are not actively participating in an HVHF operation, the compliance costs for the proposed rules will be associated with: additional paperwork requirements for waste tracking; additional paperwork, permitting, testing and enforcement costs associated with operation of a wastewater treatment plant when such small business or local government plans to treat wastewater from an HVHF well; emergency response activities; impacts to county health departments who respond to complaints about water well quality; and for local government, costs associated with road maintenance. As stated above, the regulated community which is the focus of the proposed rules related to HVHF are typically large national and international corporations. It is not expected that small businesses or local government will be engaged in HVHF. For small businesses that apply for a permit to drill an HVHF well, the new Part 560 and 750-3 rules will result in increased compliance costs compared to a non-HVHF well. However, the costs are not expected to materially differ from the costs expected to implement the mitigation measures identified in the 2011 dSGEIS. Through the rulemaking process and further outreach with the regulated community, the Department expects to gather cost information for each aspect of the proposed rules.
Apart from the provisions in the proposed rules related to HVHF, the proposed changes to Parts 550-555 of 6 NYCRR will raise the minimum requirements to plug and abandon a well under the Department's jurisdiction. The proposed rules will also add a new reporting requirement for any break in drilling operations lasting longer than thirty days and will require well operators to receive approval to re-fracture a well. There have been occasions where local governments have drilled self-help wells, or wells meant to supply gas to local buildings. There also exists the possibility that abandoned wells may exist on public lands. The proposed updates mentioned above, including the changes to Part 555, would impact those wells. Part 555 currently provides minimum plugging standards for wells; however, plugging procedures often depend on site-specific factors such as the condition of the well and well construction methods. As a result, the Department often requires more stringent plugging requirements than the minimum requirements specified in the regulations. The proposed revisions to Part 555 would still specify minimum standards but the proposed changes to Part 555 would not raise the cost of plugging a well above that which is often already required by current Department practices. The costs associated with the new reporting requirements contained in the proposed changes to 6 NYCRR Parts 550-555 are expected to be minimal.
Economic and technological feasibility. There should be no economic or technological feasibility issues created by the proposed rules. To the extent that local governments or small business may want to be responsive or proactive regarding the proposed rules, HVHF activities would result in a substantial increase in economic activity in the affected areas and also result in a substantial increase in tax revenues to the state and to localities.
Minimizing adverse impact. The proposed rules contain some measures to mitigate potential impacts on local government, such as the need for well operators to submit a transportation plan to the Department prior to issuance of a drilling permit. A transportation plan would assist localities in planning for HVHF to allocate resources and initiate a dialogue with well operators. As stated above, the regulated community under the proposed rules includes large national and international corporations. Small businesses who intend to drill an HVHF well will be subject to the same rules as larger businesses and the costs of complying with the proposed rules is not expected to differ from the cost of complying with the application requirements and mitigation measures identified in the dSGEIS. Small businesses, such as waste haulers and water haulers, who provide support services to well operators will have minimal costs to comply with the rules, with such costs limited to paperwork requirements such as the need to track waste from an HVHF well pad to a destination for disposal or reuse.
Small business and local government participation. The Department participated in outreach to the regulated community through this process, including the solicitation of comments from affected industry. Additionally, the proposed use of HVHF in New York has been the subject of substantial public outreach and input over the last several years. During scoping sessions, before and after issuance of the 2009 draft SGEIS, and prior to issuance of the 2011 dSGEIS, the Department received thousands of written comments, received hundreds of verbal comments at public meetings in several of the potentially affected areas, and has had multiple interactions with the regulated community, small business, and local governments on HVHF and the quickly-evolving HVHF industry. The scope of the revised draft SGEIS also considers the impact of proposed additions and revisions of the Department's HVHF regulations, allowing for extensive participation on both the rules and the environmental review process simultaneously.
Rural Area Flexibility Analysis
The proposed rulemaking will modify the Department of Environmental Conservation's (Department) existing regulations and promulgate new regulations related to the use of high-volume hydraulic fracturing (HVHF). HVHF involves the fracturing of wells utilizing more than three hundred thousand gallons of water as the base fluid for fracturing operations and is proposed to be used in natural gas wells permitted by the Department. Also included in the proposed rules are updates to the Department's oil and gas and State Pollutant Discharge Elimination System (SPDES) regulations.
Type and Estimate of the Number of Rural Areas Affected. The proposed revisions and additions to the Department's regulations will apply to the use HVHF statewide; however, two formations likely to be initially targeted for production are the Marcellus and the Utica Shales. The prospective region for the extraction of natural gas from the Marcellus and Utica Shales has been roughly described as an area extending from Chautauqua County eastward to Greene, Ulster and Sullivan counties, and from the Pennsylvania border north to the approximate location of the east-west portion of the New York State Thruway between Schenectady and Auburn. According to 2010 Census figures, all of these nearly 30 counties, except for portions of Erie, Monroe, Onondaga, and Albany counties, would be considered rural areas. The updates to the Department's oil and gas and SPDES regulations will also apply statewide.
Compliance with the Rules. The proposed rules include recordkeeping and reporting requirements for well operators related to: well construction; private water well testing; and well completion reporting, when an operator proposes to use HVHF. These proposed requirements are applicable to HVHF activities statewide, and would not result in any disproportionate impact on the regulated community in rural areas. The proposed rules will apply to any well operator who intends to utilize HVHF to produce natural gas from wells permitted by the Department. This will, for the most part, involve large national and international corporations and the well operator's ability to comply with the proposed rules is not expected to be affected by the fact that a well is located in a rural area.
Similarly, the proposed changes to the Department's existing oil and gas regulations which include: a new reporting requirement to re-fracture an existing well; the need to file an interim completion report and enhanced minimum plugging requirements, will apply statewide. The capital required to secure the requisite percentage of mineral rights needed to obtain a permit from the Department, and to drill a natural gas well with or without the use of HVHF, is substantial. Therefore, the Department does not expect public or private sector interests in rural areas to be adversely affected by the proposed changes to the Department's existing oil and gas regulations. Moreover, the costs associated with notifying and receiving approval to re-fracture a well or to submit an interim completion report are expected to be minimal. Enhancement of the Department's minimum plugging requirements will also not adversely affect the regulated community, as the regulations provide only minimum standards and the Department regularly requires more stringent plugging procedures depending on site-specific circumstances. Therefore, due to current Department and industry practices, the costs associated with plugging a well by either the public or private sector in rural areas will not substantially change as a result of the proposed regulations.
Another sector of the regulated community that will be impacted by the proposed rules are mineral rights owners involved in compulsory integration proceedings administered by the Department. Compulsory integration, governed by Environmental Conservation Law (ECL) Article 23, Title 9, is the process by which the Department addresses un-leased mineral rights in the area surrounding the well established by the Department-issued permit to drill. In situations where a mineral rights owner elects to participate in the costs of developing a well where HVHF will be used, the proposed rules will increase the costs of participation. In such cases, the cost of complying with the proposed rules will still fall largely on the well operator since the well operator is required by the ECL to control at least sixty percent of the mineral rights in the area that will be produced before the well operator may apply for a permit to drill. The new application, reporting and operating requirements proposed to be added as a new Part 560 to 6 NYCRR will impact mineral rights owners. However, these requirements have been identified by the Department as necessary measures to ensure HVHF wells are drilled and operated properly and to ensure all waste generated during well construction, hydraulic fracturing and production are handled appropriately.
The proposed rules also contain testing, monitoring and recordkeeping requirements for operators of publicly owned treatment works (POTW). Therefore, POTW operators in rural areas may be affected by the proposed rules, to the extent that such POTWs accept wastewater associated with wells where HVHF was utilized. In general, POTWs must have a DEC approved pretreatment program for accepting any HVHF wastewater and must notify DEC if they plan to receive wastewater at their facility. POTWs are required to perform certain analyses to ensure they can handle the wastewater without upsetting their system or causing a problem in the receiving water. While there are costs associated with the POTW analyses and securing DEC approval of such, this is offset by the disposal fee that the municipality may impose for allowing disposal of the HVHF wastewater at their facility. Therefore, the costs associated with complying with the rule will not vary across the state or in rural areas, since the decision to accept wastewater from HVHF wells is voluntary.
Although the Department does not expect the proposed rules to adversely affect the regulated community in rural areas, the proposed rules will indirectly impact the ability of rural areas to respond to activities associated with the approval of HVHF. Indirectly, the proposed rules may require local governments to respond to additional complaints about water well quality as well owners are made aware of water well testing required by the proposed rules. Approval of HVHF is also expected to increase local traffic and in some areas, increase the local population. As a result, local governments may experience increased demand on local services, such as emergency response and local road maintenance. The 2011 dSGEIS contains a detailed analysis of the socioeconomic impacts associated with approval to utilize HVHF and proposed mitigation measures.
With respect to professional services in rural areas, the proposed rules may require the regulated community to hire professionals to assist in compliance activities required by the regulations. The additional stormwater requirements and requirements for POTWs are two examples where the proposed rules may require well operators to hire experts. However, the ability of a well operator to comply with the proposed rules is not expected to be affected by the fact that a well is located in rural areas.
Local governments are not required to take any affirmative actions under the proposed rules. However, local governments may retain professional services to assist with emergency response and traffic control in certain circumstances, where approval of HVHF leads to impacts in those areas of local government.
Costs. The recordkeeping, reporting and compliance requirements included in the proposed 6 NYCRR Part 560 and the Part 750-3, will promulgate the application requirements and mitigation measures identified by the Department in the State Environmental Quality Review Act (SEQRA) process currently underway related to HVHF. In many cases, the proposed rules adopt verbatim the permit conditions recommended for inclusion in a Department-issued permit to drill. Therefore the costs of complying with the proposed regulations pertaining to HVHF will not differ substantially from the costs of complying with the 2011 dSGEIS. The Department is awaiting cost figures from private industry on estimates to comply with the proposed rules. Until the Department receives input from the regulated community through the SEQRA and rulemaking process, costs cannot be quantified at this time.
Public entities will incur minimal costs under this proposal as the public sector is not the focus of the proposed rules. Concerning HVHF, public entities in rural areas that operate POTWs will incur costs if a POTW accepts wastewater from an operator of an HVHF well. This is no different than the public entities' role with respect to other industries, and public entities will be able to use increased tax and other revenue generated through HVHF activities to offset any increased burden on services it provides.
Apart from the provisions in the proposed rules related to HVHF, the proposed changes to Parts 550-555 of 6 NYCRR will raise the minimum requirements to plug and abandon a well under the Department's jurisdiction. The proposed rules will also add a new reporting requirement for any break in drilling operations lasting longer than thirty days and will require well operators to receive approval to re-fracture a well. There have been occasions where local governments have drilled self-help wells, or wells meant to supply oil or gas to local buildings. There also exists the possibility that abandoned wells may exist on public lands. The proposed updates mentioned above, including the changes to Part 555, would impact those wells. However, as described above, the proposed revisions to Part 555 would still specify minimum standards and the proposed changes to Part 555 would not raise the cost of plugging a well above that which is often already required by current Department practices. The costs associated with the new reporting requirements contained in the proposed changes to 6 NYCRR Parts 550-555 are expected to be minimal.
Minimizing Adverse Impact. The regulated community which is the main focus of the proposed rules are well operators who plan to drill wells and utilize HVHF to facilitate production of natural gas. Although natural gas wells will be located in rural areas, the proposed rules will not have an adverse impact on private or public members of the regulated community in rural areas due to the location of the well. With respect to indirect costs on local governments in rural areas, the proposed rules contain some measures to mitigate potential impacts, such as the need for well operators to submit a transportation plan to the Department prior to issuance of a drilling permit. A transportation plan would assist localities in planning for HVHF operations to allocate resources and initiate a dialogue with well operators. Supporting industries, such as waste haulers and water haulers, who provide a service to well operators will have minimal costs to comply with the rules, with such costs limited to paperwork requirements such as the need to track waste from an HVHF well pad to a destination for disposal or reuse.
Rural Area Participation. The Department participated in outreach to the regulated community through this process, including the solicitation of comments from affected industry. Additionally, the proposed use of HVHF in New York has been the subject of substantial public outreach and input over the last several years through the SEQRA process. During scoping sessions and following the release of the 2009 draft SGEIS, the Department received thousands of written comments, received hundreds of verbal comments at public meetings in several of the potentially affected rural areas, and has had multiple interactions with the regulated community, and public and private entities in rural areas. Additionally, the Department will hold public hearings on both of the 2011 dSGEIS and the draft regulations in some of the affected rural areas, which will provide additional opportunities for affected rural areas to participate in the rulemaking process.
Job Impact Statement
The New York State Department of Environmental Conservation (Department) proposes to revise 6 NYCRR Parts 52, 190, 550-555, 560 and 750. The regulations will apply statewide. The Department does not expect the proposed regulations to have a negative impact on jobs and employment opportunities in the state.
The proposed rules will amend the Department's existing regulations and will add new regulations to address the use of high-volume hydraulic fracturing (HVHF) as a method to facilitate production of natural gas from wells permitted by the Department. The Department is currently involved in a multi-year environmental review of HVHF. As a result of this process, the Department has identified a number of application requirements and mitigation measures that are expected to be uniformly applied to all HVHF wells to ensure such wells are drilled and operated properly. The proposed rules will supplement the Department's ability to monitor and enforce certain measures identified in the Department's revised draft Supplemental Generic Environmental Impact Statement (2011 dSGEIS), and will, at the same time, update some of the Department's regulations to reflect technological advances and current industry practice.
Nature of Impact. The approval of permits to drill natural gas wells and produce from low-permeability reservoirs, such as the Marcellus and Utica Shales, utilizing horizontal drilling and HVHF will promote economic activity. The proposed rules, implemented in combination with the 2011 dSGEIS, will have a positive impact on jobs and employment opportunities for such businesses as waste haulers, construction firms and providers of lodging, food and other services. Positive impacts will be created through direct employment, induced employment and indirect effects. This impact is expected to be concentrated in the counties where the Marcellus and Utica Shales are more likely to be commercially producible. Lesser though still positive impacts may also be experienced in adjacent localities and statewide.
Categories and Numbers Affected. The proposed rules themselves will not negatively affect employment opportunities, and the activities guided by the proposed rules will create jobs. Approval to utilize HVHF will provide significant economic benefits to the state. Section 6.8 of the 2011 dSGEIS provides a detailed discussion of the potential economic, population and income impacts that may accrue if the use of HVHF is approved. Based on industry estimates of potential drilling activity, and after applying certain assumptions about the amount of activity that could proceed under the 2011 dSGEIS, the Department estimates that approval of HVHF could bring as many as 6,198 jobs assuming a low rate of development. This figure is an estimate of the total number of direct jobs associated with construction and operation of well pads at the lower end of potential activity.
Assuming an average rate of development, the number of direct jobs could reach 24,795 full time equivalents. The 2011 dSGEIS also discusses the potential employee earnings associated with HVHF and the number of indirect jobs that could be created as a result of approval to use HVHF in the State. The 2011 dSGEIS also contains a detailed discussion of the tax revenue which may result from production associated with HVHF. Section 6.8 of the 2011 dSGEIS should be consulted for a more detailed summary of the potential economic benefits associated with HVHF, which was the focus of the Department's review under the State Environmental Quality Review Act (SEQRA).
Regions of Adverse Impact. There are no regions of the State expected to be negatively impacted from the proposed rules. Revisions to the Department's existing regulations for natural gas drilling are intended to modernize the regulations, to make the rules consistent with current Department and industry practices. New rules proposed to address HVHF are intended to promulgate mitigation measures identified by the Department during the SEQRA process, which will apply statewide.
Minimizing Adverse Impact. The proposed rules are not expected to have an adverse impact on jobs and employment. The Department already regulates the drilling of natural gas wells and the proposed rules, while adding new regulatory requirements applicable to HVHF, will on balance lead to new employment opportunities in some areas of the state and will have positive impacts on both income and employment levels. Having the rules in place will allow for a more consistent level of development which will be the basis for longer-term employment. Having the rules in place will also allow those jobs that rely on other natural resources and the environment such as tourism and forestry to remain viable.
Self-Employment Opportunities. Drilling a natural gas well where HVHF is planned requires extensive capital. Therefore, companies directly impacted by the proposed rules are not expected to involve many self-employment opportunities. However, there will be opportunities for self-employment for supporting industries like waste hauling, water hauling, cement mixing, construction, lodging, and food services. There may also be opportunities for self-employed consultants to advise well operators on how to comply with the proposed rules.
