Water Quality Rulemaking in Response to S.L. 2012-143

Background - Location From Reid and Milici. 2008. “Hydrocarbon Source Rocks in the Deep River and Dan River Triassic Basins, North Carolina”

Technically Recoverable Undiscovered Unconventional Resources Background - Volume Technically Recoverable Undiscovered Unconventional Resources Assessment Unit Natural Gas (mean, BCFG) Natural Gas Liquids (mean, MMBNGL) NC Triassic Basins1 1,709 83 Marcellus Shale (PA, NY, WVa, OH)2 84,198 3,379 Barnett Shale (TX)3 26,228 1,049 Sources: (1) USGS Fact Sheet 2012-3075 (2) USGS Fact Sheet 2011-3092 BCFG: billion cubic feet of gas (3) USGS Fact Sheet 2004-3022 MMBNGL: million barrels of natural gas liquids

Major Provisions of S.L. 2012-143 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, 2014

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 (onsite)

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

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.”

Water Quality Rule Development Process for SL 2012-143 May 2012 DENR Study Report Staff review of all EMC water quality rules Staff level coordination with DEMLR staff & MEC members Rules presented to MEC Oil & Gas Stakeholder Group Participation in MEC Coordinated Permitting Study Group Presentation to MEC’s November 2013 meeting March 2014 EMC Water Quality Committee review & action Tentative EMC Information Item - November 2013

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 .0113 - Permitting by Regulation Tentative EMC Information Item - November 2013

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 2012-143

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

Stormwater

Stormwater & Spills

New Stormwater Rule (15A NCAC 2H .1030) Site stabilization: similar to the current NPDES Construction Stormwater permit elements Structural BMPs: extend existing rules in 15A NCAC 2H .1000

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

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

Non-Discharge Rule Amendments (15A NCAC 2T) 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

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

Executive Orders, Certifications & Fiscal Notes No fiscal note required OSBM certification per G.S. 150B-19.1(h) required to publish in register (pending)

Rulemaking Targets EMC Action - send rules to public comment: May 8, 2014 NC Register filing deadline: May 9, 2014 Start of Comment period: June 2, 2014 Public Hearing: July 1, 2014, (Sanford - Wicker Center) End Comment period: August 1, 2014 Adoption: by October 1, 2014

For More Information Evan Kane, Groundwater Planning & Environmental Review Branch Supervisor Division of Water Resources 919-807-6461 evan.kane@ncdenr.gov Jon Risgaard, Non-Discharge Unit Supervisor 919-807-6458 jon.risgaard@ncdenr.gov Ken Pickle, Stormwater Program Engineer Division of Energy, Mineral, and Land Resources 919-807-6376 ken.pickle@ncdenr.gov