Oil & gas development in Ohio has reinvigorated an area of law- water rights- that had laid mostly dormant for more than a century. The need for fresh water for fracking has resulted in large investments in water infrastructure and competition among companies to secure access to prime sources of fresh water.
According to the "Explore Shale" website, each drill site that utilizes hydraulic fracturing requires between 3 to 5 million gallons of water. The site states that, based upon 2011 information, there were 1,500 active wells in Pennsylvania which resulted in between 12- 20 million gallons of water used per day. According to the Ohio Department of Natural Resources (ODNR), in 2015 Ohio had 1134 wells. This likely correlates to approximately 8-15 million gallons of water used per day (extrapolating the Pennsylvania figures to Ohio).
The increased demand for water has triggered renewed interest in how Ohio regulates water withdrawals and water rights of property owners. Below is a quick overview of current Ohio law.
When is a water withdrawal permit required?
In 2012, the Ohio Legislature passed H.B. 473 which implemented the Great Lakes Compact. The bill established new regulatory standards for water withdrawals from the Lake Erie basin. From the map below you can see the most of the State lies outside the Lake Erie basin.
The majority of oil & gas drilling activity takes place in the Ohio River Basin. Therefore, the regulatory standards for new water withdrawals established in H.B. 473 typically do not apply to oil & gas play and will not be covered in this post.
In all other areas outside the Lake Erie Basin, Ohio has very limited regulations on water withdrawals. New withdrawals over 100,000 gallons per day are required to register with the Ohio Department of Natural Resources (ODNR). See, R.C. 1521.16
In the Ohio River Basin, a water withdrawal permit is not triggered unless the new or increased consumptive use exceeds 2 million gallons of water per day (averaged over any 30-day period - 60 million gallons per month). See, R.C. 1501.33 Many operations elect to keep withdrawals below 2 million gallons per day in order to avoid triggering the need for a permit from ODNR.
How much water can be used?
There are no regulations in Ohio establishing the exact quantity of water a property owner may use. Going back to the 1850's, Ohio has followed the "reasonable use" standard for determining the quantity of water a property owner may use. In 2008, Ohio amended its constitution to include the reasonable use standard to govern water rights for both surface and groundwater. Article I, Section 19d states:
"Owners of riparian land have a property interest in the reasonable use of the water in the non-navigable lake or watercourse located on or flowing through their land."
Key terms have been underlined. First, the water rights are held by property owners whose property fronts a waterway (or the groundwater beneath their property). Second, the right is a property right established by Ohio's constitution. This gives more legal weight to the right. Third, each riparian property owner has a right to "reasonable use" of the water.
Ohio courts are left to decide when a property owner has used too much water. The factors used by courts to determine "reasonable use" have been codified in Ohio law in R.C. 1521.17. These factors include:
- The purpose of the use
- Economic value of the use
- Social value of the use
- Extent and amount of harm the use causes
- Practicality of avoiding harm to other by adjusting the use or the method of use of one person or the other
Each riparian property owner has an equal right to use of water. Canton v. Shock, 66 Ohio St. 19 (1902) In order to sustain a claim that a riparian property owner's use of water has been unreasonable, it must be demonstrated that the use is causing "material and substantial injury" to another landowner. See, Cooper v. Hall, 5 Ohio 320 (1832)
Note the age of the cases cited in the preceding paragraph- each is over 100 years old. Due to the age of the case law, there is little guidance offered by the courts as to how today's water use issues will likely be resolved. These vague standards provide little guidance to Ohio property owners or companies looking to secure access to water to support their business.
Water use and water rights in focus
In 2010, Congress urged EPA to examine the relationship between hydraulic fracturing and drinking water resources in the United States. In May of 2015, U.S. EPA issued its highly detailed analysis of the impacts on drinking water resources from hydraulic fracturing. The report contained a detailed analysis of water use impacts on water supplies in the West as well as in the Marcellus and Utica shale areas.
While complex water acquisition regulations have long been in place in Western States, increased water withdrawal regulations have been initiated in the eastern Marcellus and Utica shale plays. For example, in the summer of 2012, the Susquehanna River Basin Commission developed strong new regulations regarding water withdrawals and use. The Commission strengthened its regulations to require permits to constrain the volume, rate and timing of water withdrawals.
This increased focused on oil & gas drilling and fresh water supplies in the Eastern States has resulted in the oil & gas industry investing millions of dollars in new water infrastructure to better secure reliable sources of fresh water. As drilling activity continues to increase, Ohio is very likely to see increased focus on the issue of water rights, particularly in the Ohio River basin area.