As North America's energy demands grow in the face of diminishing conventional fossil fuel resources, unconventional oil and gas figures to play an increasingly important role. This article assesses two important unconventional fossil fuel deposits, namely the oil sands located in Alberta, Canada and the Marcellus Shale gas located in America's Appalachian region as well as the importance of properly crafted regulatory regimes that safeguard another critical natural resource - fresh water. Development of unconventional fossil fuels requires considerable quantities of fresh water for extraction and produces substantial quantities of contaminated wastewater as a byproduct. This analysis addresses the importance of unconventional fossil fuels, compares the two resources in terms of extraction and water impact, highlights the weaknesses in the regulatory regimes in Alberta and the Marcellus Shale states, and proposes federal intervention and/or regional management as a possible solution, as justified by traditional theories of regulation (i.e., the externalization of pollution and race to the bottom theory). Commercial oil sands extraction has been ongoing for at least forty years and, above all, the Canadian experience demonstrates the importance of properly considered regulation and regional monitoring prior to accelerated development in the Marcellus Shale gas play.