H.B. 09-1303: Admin Mineral Development Water Wells

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Here’s a look at the recent decision by the Colorado Supreme Court upholding the water court ruling that dewatering used in production of coalbed methane puts the groundwater to beneficial use and therefore is subject to prior appropriation, from Joe Hanel writing for the Durango Herald. From the article:

The ruling means that all 4,600 coal-bed methane wells across the state have two months to get a water well permit from the state Division of Water Resources. However, both sides in the case are backing a bill in the Legislature that would avert the chaos the ruling could cause. House Bill 1303 calls for a timeout on the need for water permits until March 31, 2010…

The opinion, written by Justice Allison Eid, appears to affect only coal-bed methane wells, [Sarah Klahn, attorney for the plaintiffs] said. But it could open the door for challenges to other types of wells…

Even if only coal-bed methane wells were affected, the applications could swamp the state engineer’s office. In anticipation of the ruling, lawmakers introduced HB 1303. The sponsors are Rep. Kathleen Curry, D-Gunnison, and Sen. Jim Isgar, D-Hesperus. Isgar and State Engineer Dick Wolfe met Monday afternoon to see if the bill needs to be changed in the wake of the court ruling. But most people think the bill will work, Isgar said. “Right now, it looks like the bill’s in good shape, and it is needed because of this Supreme Court decision,” Isgar said. HB 1303 passed the House 60-0 on April 7…

Five justices joined the majority opinion. Justice Alex Martinez did not participate, and Justice Nathan Coats dissented. Coats agreed with one part of the majority’s opinion – that the Colorado Oil and Gas Conservation Commission does not have exclusive jurisdiction over all gas and oil activities in the state.

More coverage from the Pueblo Chieftain (Chris Woodka):

The decision will have implications for the Arkansas Valley, since coalbed methane wells are operating in Las Animas and Huerfano counties…

Depending on location, water from gas-drilling operations can vary in quality. But in areas where it helps feed surface streams, it must now be treated as a “beneficial use” and part of the overall water supply, according to the ruling. Coalbed methane drilling extracts natural gas by draining coal seams, producing large amounts of water while releasing the gas. The ranchers claimed the energy wells were a threat to their own agricultural wells, which have senior water rights, because of the decline in groundwater pressure. Typically, the water taken from the coal seams in the San Juan basin was reinjected to greater depths…

The court opinion, written by Justice Allison Eid, rejected all of the state’s arguments. “The use of water in coalbed methane production is an integral part of the process itself,” Eid wrote. “The presence and subsequent controlled extraction of the water makes the capture of methane gas possible.” Justice Nathan Coats concurred, but said it is not necessary to apply the standard of “beneficial use” to the coalbed methane process in order to give the state engineer authority to regulate the gas wells.

The state was anticipating that it would lose the Supreme Court case and has been working with legislators to draft new legislation that allows the state engineer to regulate water produced by oil and gas wells, Wolfe said Monday. The bill, HB1303, has passed the House and is awaiting Senate action. HB1303 meets the issues raised in the lawsuit, said attorney Sarah Klahn, who represented the ranchers in the case. “It gives everyone a year to get their act together,” Klahn said.

More Coyote Gulch coverage here and here.

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