This is the second post in a three part series which discusses water rights & regulation in the Utica and Marcellus Shale regions. The first post discussed how oil & gas companies select water resources to supply their drilling activities. The post also reviewed two different strategies employed by companies when accessing water resources:
- Companies who look to access nearby water resources to reduce transportation costs; and
- Companies that invest upfront in significant water infrastructure to ensure access to reliable sources of fresh water over the long term.
This post provides an overview of water withdrawal regulation and water rights in the Midwest (Ohio, Pennsylvania and West Virginia).
Overview of Water Rights and Regulation
Water rights is a method of allocating water among users. Water rights in the United States is directly related to the availability of water. In states west of the Mississippi, where water is more scarce, water rights is governed by the prior appropriation doctrine (i.e. “First in time means first in line”).
In states east of the Mississippi, where water has been more abundant, water rights are based upon the principal that each holder of water rights is entitled to an equal share of water, while at the same time no landowner is guaranteed a certain amount of water.
Some states, such as Ohio, continue to rely principally on the doctrine of riparian water rights to regulate water use. Other states, such as Pennsylvania and West Virginia, have layered on top of the riparian rights doctrine specific regulations directed at the oil & gas industry designed to regulate water withdrawals.
What has emerged in these Midwest states is a regulatory philosophy where gaps in regulation or limited regulations are back-stopped by the doctrine of riparian rights. Therefore, to understand how water withdrawals by the oil & gas industry are regulated, you must review both the specific regulations adopted by each state (the third post in the series) as well as gain an understanding of the riparian rights doctrine.
Riparian Water Rights
Ohio, West Virginia and Pennsylvania each have adopted the doctrine for water rights (i.e. riparian water rights associated with real property ownership).
The riparian water rights doctrine was in place in each state long before the resurgence in oil & gas development. These states have preserved the riparian water rights doctrine as the principal means of allocating water among users.
What are Riparian Rights and How Does Water Get Allocated Among Water Users
Land qualifies as riparian if it fronts a stream, lake or river. It is not just individuals who can own riparian water rights. Corporations and partnership can hold riparian rights if they own property that qualifies as riparian.
The core principle of the riparian rights doctrine is that all landowners that own property that front a watercourse have an equal right to the use of its water, provided that no one causes harm to another riparian water rights landowner. The right to use water is not absolute, but is limited by similar rights held by other riparian landowners. In other words, a riparian landowner may make any and all reasonable uses of water as long as they do not interfere with the other riparian landowners’ opportunity for reasonable use.
Basic Principals of Water Allocation under the Riparian Water Rights Doctrine
Case law has resulted in certain core principals in relation to riparian water rights. These include:
- Preference is given to water uses for domestic needs;
- A specific use of water is not unreasonable unless the use causes harm to another;
- The fact that a use of water creates a perceptibly diminished flow of water does not automatically constitute an unreasonable use; and
- Water transferred off the riparian land is either per se unreasonable or less favored than on land uses.
Who Decides Whether a Water Use is Reasonable?
Courts, not regulators, are the arbiters of water rights. First, the Courts must consider the interest of the parties involved in the dispute over water. Those interests include:
- The interest of the person making the use
- The interests of the person harmed by the use, and;
- The interests of society as a whole in the use of the water.
After considering the interests of the various parties in a dispute involving allocation of water, Court then must weigh certain factors to determine if the use is "reasonable." Some of the factors include:
- Purpose of the use;
- Suitability of the use to the watercourse;
- Economic value of the use;
- Social value of the use; and
- Extent and amount of harm the use causes
Riparian water rights, along with the associated factors which determine whether a use is reasonable, govern allocation of water among users. As discussed in the final post in this series, Pennsylvania and West Virginia have elected to go beyond allocations between users and have enacted specific regulations limiting water withdrawals by the oil & gas industry.