Water Quality Rulemaking in Response to S.L

Background - Location 2 From Reid and Milici “Hydrocarbon Source Rocks in the Deep River and Dan River Triassic Basins, North Carolina”

Background - Volume 3 Technically Recoverable Undiscovered Unconventional Resources Assessment Unit Natural Gas (mean, BCFG) Natural Gas Liquids (mean, MMBNGL) NC Triassic Basins 1 1, Marcellus Shale (PA, NY, WVa, OH) 2 84,1983,379 Barnett Shale (TX) 3 26,2281,049 Sources: (1) USGS Fact Sheet (2) USGS Fact Sheet (3) USGS Fact Sheet BCFG: billion cubic feet of gas MMBNGL: million barrels of natural gas liquids

Major Provisions of S.L Creates Mining & Energy Commission Authorizes hydraulic fracturing and horizontal drilling Prohibits issuance of drilling permits until legislature acts Updates statutory regulations of oil & gas activities Directs EMC, Commission for Public Health, and Mining & Energy Commission to adopt necessary rules by October 1,

Mining & Energy Commission Rulemaking Responsibilities Drilling permit application requirements Baseline sampling rules Oil and gas well construction standards Siting standards for oil & gas wells and other production infrastructure Limits on water use and establishment of water management plans Management of wastes 5

Mining & Energy Commission Rulemaking Responsibilities (cont’d) Prohibitions on use of certain chemicals Disclosure of chemicals used Blowout and spill prevention and response Well closure and site reclamation 6

EMC Rulemaking Responsibilities Stormwater control for oil & gas exploration and development sites; Regulation of toxic air emissions from drilling operations; “…matters within its jurisdiction that allow for and regulate horizontal drilling and hydraulic fracturing for the purpose of oil and gas exploration and development.” 7

Water Quality Rule Development Process for SL May 2012 DENR Study Report Staff review of all EMC water quality rules Staff level coordination with DEMLR Energy Program DWR staff coordination with MEC & MEC members Rules presented to MEC Oil & Gas Stakeholder Group DWR & Stormwater participation in the MEC’s Coordinated Permitting Study Group Rule overview presented to MEC’s November 2013 meeting 8

Recommended EMC Water Quality Rule Revisions Adopt: 15A NCAC 2H.1030 – New Stormwater rule Amend: 15A NCAC 2T – Wastes not discharged to surface waters ◦2T.0113 – Permitting by Regulation ◦2T.1001 – Closed-loop recycle ◦2T.1501 – Soil Remediation 15A NCAC 2U – Reclaimed Water ◦2U Permitting by Regulation 9

Stormwater Oil & Gas operations exempt from federal NPDES stormwater requirements until after a release or water quality standard violation State stormwater regulations recommended by STRONGER and DENR study; required by SL

Stormwater Stormwater discharges and major pollutant concerns: ◦Initial grading – sediment ◦Initial drilling – sediment, trace hydrocarbons, brines ◦Production, stimulation, and maintenance – sediment, peak flow, residuals 11

Stormwater

Stormwater & Spills

New Stormwater Rule (15A NCAC 2H.1030) Proposed stormwater rule requirements for O&G: ◦Site stabilization similar to the current NPDES Construction Stormwater permit elements ◦Structural BMPs required: extend existing rules in 15A NCAC 2H.1000 Full pad containment and around battery units: already provided for within the Energy Program rules, but not in 15A NCAC 2H

New Stormwater Rule (15A NCAC 2H.1030) Design Rainfall criteria (2H.1030(c)(4)): ◦Control and treat runoff from the 1” rainfall OR ◦Control and treat the difference in pre- and post- development runoff for the 90 th percentile storm 16

Non-Discharge Rule Amendments (15A NCAC 2T) 2T.0113 – Permitting by Regulation ◦On-site disposal of drilling muds, cuttings and produced water should not be permitted by rule 17

2T.1001 – Closed-loop recycle ◦Clarify that reuse of flowback water or drilling fluids is not a “closed-loop recycle system” 2T.1501 – Soil Remediation ◦Clarify that soil remediation permits are not appropriate for spreading of oil and gas drilling muds and cuttings 18 Non-Discharge Rule Amendments (15A NCAC 2T)

Reclaimed Water Rule Amendments (15A NCAC 2U) 2U.0113 – Permitting by Regulation ◦Reuse of flowback water in oil and gas operations should be permitted by rule under conditions approved by DEMLR 19

Rulemaking Targets 20 EMC Action - send rules to public comment: May 8, 2014 NC Register filing deadline: May 9, 2014 Start of Comment period: June 2, 2014 Earliest Hearing: June 17, 2014 End Comment period: August 1, 2014

For More Information Evan Kane, Groundwater Planning & Environmental Review Branch Supervisor Division of Water Resources Jon Risgaard, Non-Discharge Unit Supervisor Division of Water Resources Ken Pickle, Stormwater Program Engineer Division of Energy, Mineral, and Land Resources