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

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Here’s a look at last week’s ruling by the Colorado Supreme Court which upheld a water court decision that water produced from coalbed methane wells is a beneficial use of the water and therefore subject to regulation by the state, from Randy Woock writing for the Trinidad Times-Independent. From the article:

The Supreme Court’s decision cited the Water Right Determination and Administration Act of 1969, which defined beneficial use as “…the use of that amount of water that is reasonable and appropriate under reasonably efficient practices to accomplish without waste the purpose for which the appropriation is lawfully made.” The court’s decision stated that, “Under the language of the Act, the (CBM) process “uses” water – by extracting it from the ground and storing it in tanks – to “accomplish” a particular “purpose” – the release of methane gas. Consequently, the extraction of water to facilitate (CBM) production is a “beneficial use” as defined in the Act and a “well” as defined in the Colorado Ground Water Management Act. ” The produced water from the CBM process had previously been considered a waste by-product, but the court’s decision rejected such a classification. “We reject the argument that water used in (CBM) production is merely a nuisance rather than a ‘beneficial use.'” the decision stated. “On the contrary, the use of water in (CBM) production is an integral part of the process itself. The presence and subsequent controlled extraction of the water makes the capture of methane gas possible.”[…]

Pioneer Natural Resources, the largest operator of CBM wells in Las Animas County, issued a response Thursday to The Times regarding the Supreme Court’s decision in the Vance case. “Pioneer has been following the case for some time and is presently evaluating the ramifications of the Supreme Court’s ruling,” Tom Sheffield, Vice President of Pioneer’s Rockies Assets Team, stated. “We appreciate the foresight of Representative (Kathleen) Curry, Senator (Jim) Isgar and the (SEO) for introducing a measure providing adequate time for a coordinated roll out of activities required by the new ruling while protecting existing tributary water rights in the state. That legislation, House Bill 1303, will be key to all Las Animas County water owners when it is passed and signed into law.”

According to Curry, House sponsor of HB 09-1303, the bill would provide breathing space for the large number of operators whose wells were just rendered out of compliance by the court’s decision. The bill would extend the amount of time available to operators to bring their wells into compliance with the permitting process as required by the court’s decision from 60 days to 270. “If I hadn’t run (HB 09-1303)…the Vance case affirms that about 5,000 gas wells would have been shut down, so we ran that bill to make sure there was a permitting process in place for (CBM) wells,” Curry said. “If we hadn’t run the bill, the Vance case, based on the ruling…all of those wells would have been out of compliance; we were guessing the the Supreme Court would rule that produced water is a beneficial use.”

Curry described the primary goal of the bill as setting up a regulatory process to “ensure that preexisting water users aren’t injured,” while also creating a process to brings all the CBM wells into the SEO’s regulatory framework. “It implements the decision, so I think we did a preemptive strike, knowing that the decision could put us in a position where they (the SEO) could have to review well permits for 5,000 wells in a 60 day period, and that’s just not practical,” she said. “They only do 1,000-2,000 well permits a year, and there would have been a 60 day period where all the operators on those (CBM) wells would have had to come into the (SEO) to get a permit. At least this way now we’ve got a way where the state can handle the workload and the operators can come into compliance.” HB 09-1303 also provides a requirement for augmentation for wells that might be depleting senior domestic water rights or existing domestic wells, and gives the state engineer the right to set additional guidelines for determining tributary versus non-tributary waters, along with the right to take the necessary steps to bring an operation into compliance should the operator have failed to have done so within the 270 day period. The bill stated that it was the legislature’s general intent to “clarify the circumstances under which permits are required when non-tributary ground water is removed in conjunction with the mining of minerals.” Non-tributary water is defined by HB 09-1303 as possessing several characteristics, such as being “withdrawn from a well that is completed in a confined sedimentary bedrock formation,” in addition to, “the well is not completed…in the Raton Basin and the well is located more than (12) miles from any point of contact between the aquifer and any natural stream, including its alluvium.”

More Coyote Gulch coverage here, here and here.

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