1. 1 ACT 955 of 2010 SURFACE WATER MANAGEMENT USING COOPERATIVE AGREEMENTS FOR WITHDRAWAL OF RUNNING WATER OF THE STATE September 16, 2010 Louisiana Deptartment of Natural Resources

2. SURFACE WATER MANAGEMENT THE FRAC-ING PROCESS TO PRODUCE HAYNESVILLE SHALE GAS WELLS REQUIRES THE UNPRECEDENTED USE OF ENORMOUS AMOUNTS OF WATER. WITH THIS NEED COMES A REAL POTENTIAL FOR CHAOS AND CONFLICTS OVER UNCONTROLLED WATER USE. ACT 955 WAS PASSED TO PROVIDE LOUISIANA’S FIRST RUNNING SURFACE WATER MANAGEMENT TOOL TO PROVIDE ORDERLY SAFE ACCESS TO THIS VALUABLE RESOURCE.. 2

3. SURFACE WATER MANAGEMENT WHY WAS LEGISLATION ENACTED? –In response to several requests the Attorney General issued a memorandum opining that “Under Louisiana Law, persons with the possible exception of riparian landowners, are not authorized to remove State owned surface water without obtaining the prior written approval of the State and without paying fair value.” –In addition, in subsequent legal opinions the Attorney General opined that such waters are owned by the State in its capacity as a public person and holds it in trust for the people of the State. 3

4. WHY WAS LEGISLATION ENACTED? (Continued) –The Attorney General opined that that such waters are “a thing of value that belongs to the people of the State of Louisiana”. He further opined that such waters must be purchased pursuant to the laws governing the sale of State property if it is to be used for anything other than a public purpose and that La. Const. Art.VII Section 14 applies (State can’t donate property, or things of value) SURFACE WATER MANAGEMENT 4

5. WHY WAS LEGISLATION ENACTED? (Continued) –The Attorney General has opined that agreements for the sale of surface water must: Be a writing in the form of a contract or cooperative endeavor agreement; Be approved by the Secretary of Natural Resources, and the Attorney General; And be for a fair value. SURFACE WATER MANAGEMENT 5

6. WHY WAS LEGISLATION ENACTED? (continued) –To provide clear and specific statutory authority meeting applicable constitutional mandates to provide for the sale of running waters of the state for commercial purposes. Applicable Constitutional Mandates –La. Const. Art. VII, Section 14: “Except as otherwise provided by this constitution, the…property, or things of value of the state or any political subdivision shall not be…donated to or for any person, association, or corporation, public or private. –La. Const. Art. IX, Section 1: “The natural resources of the state, including air and water,….shall be protected, conserved, and replenished insofar as possible and consistent with the health, safety, and welfare of the people….” SURFACE WATER MANAGEMENT 6

7. WHO IS INCLUDED IN THE NEW LAW ? –Commercial users who are not riparian owners, who seek to withdraw water from the running surface waters of the state. A riparian owner is one whose land touches the source of the surface water. SURFACE WATER MANAGEMENT 7

8. WHO IS NOT INCLUDED? –Uses or groups not part of the law Riparian Owners Agricultural Users SURFACE WATER MANAGEMENT 8

9. How Is Act 955 Being Implemented ? The statute authorized the Secretary of DNR to develop an application and to enter into Cooperative Endeavor Agreement for withdrawal of running surface water. The Mineral And Energy Board developed and approved an initial agreement form. The Attorney General has approved the agreement Form. A process for reviewing applications was created. SURFACE WATER MANAGEMENT 9

10. In review of proposed withdrawal agreements, what must be considered? –Would the proposed contract follow good management practices? –Is the proposal based upon sound scientific data? –Is the proposal consistent with the required balancing of environmental and ecological impacts with the economic and social benefits found in Art. IX, Sec. 1 of the Louisiana Constitution. SURFACE WATER MANAGEMENT 10

11. In review of proposed withdrawal agreements, what must be considered? (Continued) –Both potential and real effects on the sustainability of the water body, on navigation, and on the environment and ecology balanced against the social and economic benefits of the contract for withdrawal. –Whether the proposed use is consistent with Louisiana’s Comprehensive Master Plan for a Sustainable Coast. SURFACE WATER MANAGEMENT 11

12. Which Uses Get Priority ? –First, Human consumption via a public water system, or private water system that provides domestic potable water service; and –Second, Agricultural uses that provide sustenance to animals or irrigation to plants; and –Third, Commercial or industrial activity. SURFACE WATER MANAGEMENT 12

13. What Impacts Must be Considered by the Secretary in Reviewing a Proposed Withdrawal Agreement? –stream or water flow energy –sediment load and distribution –navigation –aquatic life –other vegetation or wildlife SURFACE WATER MANAGEMENT 13

14. PROTECTION OF THE RESOURCE –The secretary is required to make sure each withdrawal agreement provides for the secretary’s authority to protect the resource and to maintain sustainability and environmental and ecological balance. –The secretary may take action to protect the resource including: Suspension or termination of the withdrawal of water. Other necessary actions. SURFACE WATER MANAGEMENT 14

15. IMPLEMENTATION OF ACT 955 Upon signing of Act 955 into law, (then) Ground Water Resources Commission Chair, Scott Angelle, established a Task Force to : Draft a cooperative endeavor agreement. Draft the application for the Cooperative Endeavor Agreement. Contact existing commissions and water districts to gather information. Gather federal, other state and local government requirements for implementation.

16. IMPLEMENTATION OF ACT 955 The comments received from stakeholders were considered by a DNR Task Force and where appropriate incorporated into the Cooperative Endeavor Agreement that was approved by the State Mineral and Energy Board at its August Meeting. The Task Force meets periodically to address new comments, performing a continuous review of the agreement form for submission to the State Mineral and Energy Board and the Attorney General for approval.

17. Withdrawal Applications The First Step is to Submit an Application to the Secretary of DNR. –The Application form may found on the DNR home page. An Automated online process is in development. 17

18. Content of Applications Applicants must provide: – Legal name, –Address, and –Contact information for their agent. 18

19. Content of Applications The Application must contain: –Plan of Water Use –Economic Impact Report 19

20. Content of Applications The Plan of Water Use must contain: –Name of the Water Body to be used –Statement that the proposed use is in the Public Interest Development & production of energy. Preservation/protection of drinking water aquifers. Generate public revenue –Increases state and local tax collections. –Potential increase in mineral revenue when state is mineral owner. 20

21. Content of Applications The Plan of Water Use must contain (Cont.): –The proposed end use of the water Is the water for energy production use? –How many production wells? –Identify the specific wells where the water is to be used. –End user’s name and contact info –Also any intermediary contact info 21

22. Content of Applications The Plan of Water Use must contain (Cont.): – Specific details about the amount of water to be withdrawn: Start date Daily withdrawal rate (gallons per day) Maximum rate (gallons per minute) Average number of withdrawal days per month. Maximum total term withdrawal. 22

23. Content of Applications The Plan of Water Use must contain (Cont.): –For each withdrawal point: Address and x-y coordinates Written directions from nearest highway intersection. Mapped location. Property Owner name and contact info. Stream flow, channel width and depth, data collection date. 23

24. Content of Applications The Plan of Water Use must contain (Cont.): –Copies of all other permits, authorizations, leases, etc. issued or applied for, (i.e. Corps permits, DOTD permits, etc.) 24

25. Content of Applications The Plan of Water Use must contain(Cont.): –Detailed info showing minimization & mitigation of adverse impact of withdrawal: Navigation (recreational and commercial) Other Users (human consumption, agricultural use, industrial/mining uses). Describe Impacts (flow, sediment load, aquatic life, vegetation and wildlife other than aquatic). List each and provide some discussion of how the take will not result in an unreasonable impact. 25

26. Content of Applications The Plan of Water Use must contain (Cont.): – A description of waterbody impairments, hydrological status, and potential for adverse impacts to the waterbody: Identify whether the water quality of the waterbody is impaired and the cause thereof. –Is this on the DEQ list of impaired waterbodies? –If so, Why? Statement of the period of withdrawal (i.e. dry season). 26

27. Content of Applications The Plan of Water Use must contain (Cont.): – A demonstration that the proposed withdrawal and the current use will maintain sustainability and ecological balance and will protect the resource. Example: The proposed withdrawal is so small when compared to the stream flow that the stream can support the continued current use and the proposed use without impairing the water quality. 27

28. Content of Applications The Economic Impact Report. –Applicants seeking recognition of in-kind value in lieu of payment must demonstrate at a minimum: Social & Economic benefit of the project. Employment and tax revenue increases attributable to the project. Must be specific to the proposed end use. 28

29. Content of Applications The Economic Impact Report. –Social & Economic benefit of the project. What are some examples of the Social Benefit from the production of these resources? –Social Benefits might include: »The benefit to society of a safe, affordable source of energy. »Energy for heating, cooling and cooking for homes and businesses. »Clean and efficient source of energy for transportation 29

30. Content of Applications The Economic Impact Report. –How does the economy benefit from the production of these resources? How many jobs can be attributed to production made possible by this take of water? –How many direct jobs (hands on this/these wells)? –How many indirect jobs( i.e. Service companies and suppliers)? –How many induced jobs (i.e. the waitress at the café, or the bank teller)? What are the impacts of the jobs created ? –HINT: Sum of estimated salaries is a good start. 30

31. Content of Applications The Economic Impact Report. –The Loren Scott Report A good foundation and starting point for an economic impact report. However, more detail is needed. Applicant’s economic impact report must contain sufficient detail that gives a clear picture of the value the specific use of the water for the specific project will benefit the citizens of Louisiana. –What return can the state expect in terms of increased revenue and tax collections? 31

32. Processing of Applications Applications are Forwarded to: – The DNR Hydrologist for his review of potential economic or ecological impacts and recommendation. –Commenting agencies LDNR/OC-Ground water impacts LDWF-Wildlife Impacts LDEQ-Impacts to the Environment OCPR- Master Plan Consistency –Also, a Hydrologic Review date is set 32

33. Processing of Applications Comments are considered and if needed a Hydrologic Review is conducted at the pre-set date to expedite the resolution of issues that may arise as the application is reviewed. –Only held if the hydrologist cannot otherwise resolve an issue. –The applicant will receive notice when a review is not necessary. 33

34. Processing of Applications Once the review is complete, the hydrologist makes a report to the Secretary with a recommendation on the application. Applications may be: –Accepted, –Rejected, or –Accepted with modifications/special conditions. 34

35. Processing of Applications If accepted, a duplicate original agreement is prepared by DNR, executed by the Secretary and forwarded to the applicant, who will execute both and return one. 35

36. Processing of Applications Applications are entered into a tracking system in DNR to maintain timelines. –Timeline dates include: Date application received. Date applications are forwarded to commenting agencies and to the hydrologist. Comment deadlines. Date the application must be acted upon by the Secretary. –Automation and online status via SONRIS is in development. 36

37. QUESTIONS? For More Information Call or Visit DNR (225)342-7591 617 N. Third St. Baton Rouge, Louisiana The mission of the Louisiana Department of Natural Resources is to manage, protect, and preserve the state's nonrecurring natural resources and wetlands through conservation, regulation, and scientifically sound management in a manner that builds satisfying relationships with our stakeholders who are citizens; business and industry customers; educational communities; other state, federal, and local agencies; employees; and the state legislature. 37