	Introduction

Until relatively recently, natural gas-rich shale formations throughout the United States were not considered to have significant resource value because no technologies existed to economically recover the gas. Development and deployment of advanced drilling and reservoir stimulation methods have dramatically increased the gas production from these "unconventional gas shales." The Marcellus Shale formation of the Appalachian basin, in the northeastern United States, potentially represents one of the largest unconventional natural gas resources in the United States. Directional drilling and "hydraulic fracturing" are essential to exploiting shale gas resources. Although oil and gas developers have applied these technologies in conventional oil and natural gas fields for some time, recent improvements in both technologies have allowed them to be applied effectively to unconventional gas shales on an industrial scale. As with oil and gas production generally, development of the Marcellus Shale is primarily subject to state law and regulation, and requirements for well construction and operation differ among the states. Additionally, provisions of two federal laws—the Safe Drinking Water Act (SDWA) and the Clean Water Act (CWA)—can apply to some activities, specifically those related to wastewater disposal through underground injection or discharge to surface waters. A second issue is the potential contamination of water wells from surface activities related to gas production. In this case, state regulators attributed the contamination to faulty well construction. The report also discusses relevant federal and state regulatory authorities, recent developments at the federal and state levels, and pending federal legislation. The black, organic-rich, Marcellus Shale lies beneath much of West Virginia, western and northeastern Pennsylvania, southern New York, eastern Ohio, and parts of Virginia and Maryland. Federal and State Laws and Regulations Affecting Marcellus Shale Gas Development

Development of natural gas resources in the Marcellus Shale is subject to regulation under several state and federal environmental laws. In particular, the large volumes of water needed to drill and hydraulically fracture the shale, and the disposal of this water and other wastewater associated with gas extraction, may pose significant water quality and quantity challenges that trigger regulatory attention. Groundwater and Drinking Water Protection

A controversial water quality issue associated with development of the Marcellus Shale regards the potential for hydraulic fracturing operations to contaminate groundwater and drinking water wells (as discussed under " Potential Risks to Groundwater "). Responding to widespread public concern, the 111 th Congress urged EPA to study the impact that fracturing may have on potable aquifers and drinking water supplies. However, EPA is not authorized to regulate the underground injection of fluids for hydraulic fracturing purposes, except where diesel fuel is used. The agency expects to publish initial research results in 2012, and a final report in 2014. to protect water resources. As noted, managing the large volumes of wastewater produced during natural gas production (including flowback from hydraulic fracturing and brine produced from the rock formation) has emerged as a major water quality issue related to Marcellus Shale development. (See " Other Surface Water Quality Issues .") Several of these states include watersheds that are subject to specific regulations, usually resulting from the adoption of an interstate compact. Three interstate compacts may have a direct impact on potential water resources for the development process: the Delaware River Basin Compact, the Susquehanna River Basin Compact, and the Great Lakes-St. Lawrence River Basin Water Resources Compact.
Until relatively recently, natural gas-rich shale formations throughout the United States were not considered to have significant resource value because no technologies existed to economically recover the gas. Development and deployment of advanced drilling and reservoir stimulation methods have dramatically increased the gas production from these "unconventional gas shales." The Marcellus Shale formation potentially represents one of the largest unconventional natural gas resources in the United States, underlying much of West Virginia and Pennsylvania, southern New York, eastern Ohio, western Maryland, and western Virginia. Directional drilling and "hydraulic fracturing" are essential to exploiting these low permeability shale gas resources. Although oil and gas developers have applied these technologies in conventional oil and natural gas fields for some time, recent improvements in both technologies have allowed them to be applied effectively to unconventional gas shales on an industrial scale.
While creating significant economic benefits, development of the Marcellus Shale faces infrastructure challenges, such as the need for gathering pipelines. Marcellus development also has generated controversy due to its potential scale and its potential impacts on land and water resources, communities, public infrastructure, and environmental quality.
Several water quality issues have arisen, including concerns about the potential for hydraulic fracturing operations to contaminate groundwater and drinking water supplies. The 111th Congress urged the U.S. Environmental Protection Agency (EPA) to study this issue, and the agency expects to publish initial research results in 2012 and a final report in 2014. Notably, EPA does not have the authority to regulate hydraulic fracturing (except where diesel fuel is used).
Additionally, managing the large volumes of wastewater produced during natural gas production (including flowback from hydraulic fracturing and water produced from the shale formation) has emerged as a major water quality issue related to Marcellus development. In some areas across the Marcellus Shale region, the geology may limit the use of underground injection wells (the most common produced-water disposal practice in oil and gas fields), and wastewater disposal is posing treatment, quality, and regulatory challenges. Both industry best practices and state regulations continue to evolve.
Other concerns associated with shale gas development include the contamination of water from surface spills, migration of methane gas and contaminants into residential water wells from faulty well construction, siltation of streams from drilling and pad construction activities, and potential impacts that large water withdrawals might have on water resources, streams, and aquatic life.
The development of the Marcellus Shale on private or state land is subject primarily to state laws and regulations, including requirements for well construction and operation. Provisions of two federal water quality laws—the Safe Drinking Water Act (SDWA) and the Clean Water Act (CWA)—can apply to activities related to wastewater disposal through underground injection and discharge to surface waters. Additionally, several of the states include watersheds that are subject to water resource regulations resulting from the adoption of interstate compacts (primarily the Delaware River Basin Compact and the Susquehanna River Basin Compact).
This report reviews the Marcellus Shale resource, development processes, and related surface water and groundwater issues. It also discusses related federal and state regulatory authorities and related developments, and pending federal legislation.