Oil and natural gas companies looking to drill within regulated interstate river basins need to familiarize themselves with issues facing the local river basin commission and take those issues seriously before ultimately deciding whether to drill, an industry attorney said.

While moderating a discussion on river basin commissions at the Marcellus Shale Coalition’s Shale Gas Insight 2012 Conference in Philadelphia last Thursday, Marc Gold said the industry is carefully watching the issues unfold, especially where the Delaware River Basin Commission (DRBC) is concerned.

“It appears that for this industry, the DRBC is really being put under the microscope,” Gold, a partner with the law firm Manko, Gold, Katcher & Fox LLP, told the audience. “I think a lot of what’s being set up outside in the street [by anti-shale gas development demonstrators] is really aimed at continuing the moratorium on drilling within the Delaware River Basin, despite the DRBC staff’s efforts to prepare regulations and put them up for a vote by the commissioners. And the commissioners haven’t seemed willing to get together to have that vote.”

The DRBC, a four-state interstate compact that manages the basin’s waterways, was set to vote on a proposal to revise its water quality regulations last November, but the meeting was canceled and the proposal postponed indefinitely after Delaware Gov. Jack Markell said he opposed it (see Shale Daily, Nov. 21, 2011). A de facto moratorium on fracking in the basin remains in effect.

With Delaware in opposition, Pennsylvania officials and Gov. Tom Corbett have been trying to convince New York and New Jersey officials to agree to the revised regulations (see Shale Daily, June 21).

“I think we are going to get to a majority,” said Bill Muszynski, DRBC water resources manager. “The commissioners are going to reach an agreement on what scheme they’re going to use for mutual protection. The states [within the DRBC] retain their sovereignty, but by joining the commission they have also somewhat agreed to be treated like a club member.

“They’re trying to act uniformly with respect to these particular waters, and that’s where the struggle is going on: how do you act uniformly and yet get done what you need to get done?”

During a subsequent interview with NGI’s Shale Daily, Muszynski confirmed that negotiations among the states were taking place and indicated that some progress had been made, but he declined to speculate on when an agreement would be reached (see Shale Daily, Sept. 18).

“The commissioners and their technical staffs have had meetings and discussions in depth about specific issues,” Muszynski said. “They’re trying to resolve any differences, primarily starting off from places of common understanding.

“The technical regulations [among the states] are sometimes confusing. When you look at one set of regulations — like setbacks, for example — that raises the question of what was the basis for establishing those setbacks. They are different between the states, so they are trying to gain a better understanding of why people have set those differences and to take a look at them. Those are the types of discussions that are going on.”

Gold concurred that DRBC staff was working to harmonize the regulations among the states and address the commissioners’ concerns, but he didn’t think an agreement would be reached until after the upcoming election in November.

But Gold added that even if the commissioners did come to an agreement, actual drilling within the Delaware River Basin could still be a long way off.

“When the regulations are adopted, the litigation that will flow from the adoption of those regulations could defer even further — perhaps significantly further — actual development of the resources within the basin,” Gold said. “But at least to get a set of regulations on the books will be the first step, and hopefully we will see that soon.”

Gold said another area of concern involves the legal uncertainty of whether an environmental assessment of the Delaware River Basin under the National Environmental Policy Act (NEPA) would be required before any drilling there. That concern continues despite a federal judge’s decision on Monday to dismiss a lawsuit filed by New York and environmental groups over the issue (see Shale Daily, Sept. 26).

“The NEPA litigation in New York is of particular interest because it was started by the attorney general of a basin state,” Gold said (see Shale Daily, June 1, 2011). “The issue is a little more nuanced because of the assertion that since there is a federal representative that votes on DRBC rules, that federal representative cannot act unless the NEPA process was followed.

“It creates quite a potential for freezing activities by the DRBC should a court determine that their actions must be preceded by a NEPA assessment.”

But Gold said oil and gas companies seeking to drill in the basins of the Ohio or Susquehanna rivers — which fall under the dominion of the Ohio River Valley Water Sanitation Commission (ORSANCO) and the Susquehanna River Basin Commission (SRBC), respectively — would find a “very different” experience.

“The SRBC program is vibrant and effective in supporting, within its limited role, Pennsylvania’s efforts to control and regulate natural gas development,” Gold said. He added that ORSANCO is “a program that’s evolving, emerging, and will fit somewhere in the process at some point. Maybe it will be in an advisory capacity, or maybe it will be in a science capacity.”