Local governments tackle an in-your-face rush on coalbed methane

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    Jeff Widen
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    Ray Ring
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    Ray Ring
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    Ray Ring
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    Ray Ring

Note: a sidebar article headlined "One Colorado county takes a stand" accompanies this story.

BOZEMAN, Mont. - Marty Lambert isn't the kind of guy you'd expect to take an environmental stand. He's a Republican who pays dues to no environmental group and doesn't hike or fish. Elected as the Gallatin County attorney, with 19 years in law enforcement, he makes his career taking on murderers, rapists, robbers, thugs and other threats to his community.

But in his cinder-block office one recent morning, dressed conservatively in blue shirt and tie, Lambert stacks up thick case files from a lawsuit that places him on the same side as local environmentalists. Surprisingly, he's also allied with leaders of both political parties, and local business and property owners.

The unusual coalition aims to protect the character of a landscape, pure groundwater and wildlife habitat, but it also fights for a principle: that local people should have power over oil and gas development here. "I'm representing the people of Gallatin County," says Lambert tersely.

In school auditoriums packed to overflow for public meetings, and in a firestorm of letters to the local newspaper, it's become clear that most people here oppose a multinational company's plan to drill for coalbed methane on some of the best private land in the county. Horror stories of gas development elsewhere have stoked up the opposition - tales of methane wells transforming ranch land and residential neighborhoods into industrial zones, with pipeline scars, heavy machinery and truck traffic, even gas leaks causing tap water to explode.

If the Gallatin County government can't assert some power, the company that wants to drill here will have its way.

Lambert calls it "a chess game." When oil and gas giant J.M. Huber Corp., based in New Jersey and Denver, makes a move, the county makes a countermove, then the company tries to outflank it or files lawsuits. The company "had the opening move," Lambert says. "We answered with the Sicilian defense. We're in a tense middle game now."

A similar struggle is heating up a thousand miles south of here in Colorado, where dozens of county and municipal governments have tried to assert local laws over oil and gas development - sometimes getting walloped in court and sometimes winning a bit of ground.

Gallatin County and Delta County, Colo., have made the boldest moves yet in the struggle over oil and gas. It's a struggle that was set in motion more than a century ago, when the federal government "split the estate," distributing land to homesteaders while holding onto the mineral rights or selling them to industry. Today, the West's growing population and demographic changes, with more people moving onto the land for its vistas and lifestyle, conflict with the industry's rush to drill for coalbed methane.

As the locals grow stronger, asserting their vision of the land, the politics and economies, they are shaping the future for much of the rural West.

It's up to the locals

For people worried about coalbed methane development on private lands, local governments seem to be the only line of defense. Higher levels of government have not been tough enough.

The federal government still owns oil and gas rights beneath some private land in the West, but it's a patchwork, and typically states take the lead in regulating drilling. Pro-industry state agencies such as the Colorado Oil and Gas Conservation Commission and the Montana Board of Oil and Gas Conservation have tended to be enablers, granting permits for wells with minimal protection for the environment and little opportunity for public input. Most of their leaders and staffers are tied to the industry, a preference backed by the state legislatures (HCN, 9/25/00:'It's corporate greed').

Reformers have made many uphill runs at the legislatures in Colorado and Montana, trying to pass laws to make the state agencies more responsive. They have occasionally succeeded, but the number of local governments complaining today indicates the reforms have fallen short.

In the courts, where struggles for local control are fought, it's a lawsuit free-for-all based on a conflicting jumble of laws. Counties, cities and towns have powers over land use, spelled out in state laws, but these powers conflict with other state laws that call for no oil and gas to be "wasted," much the same way that water is supposed to be put to "beneficial use." The constitutional rights of property owners - owners of oil and gas rights, the surface and the land next door - often conflict. Every law is a basis for beginning an argument, not ending one.

Even the big dogs of the environmental movement have been disorganized when it comes to oil and gas.

"A lot of the national environmental groups have a huge blind spot on this. They think natural gas is a clean fuel. They don't look at the impacts of extraction," says Tom Morrissey, an organizer of the East of Huajatolla Citizens Alliance, a handful of people who watchdog gas companies in rural Las Animas and Huerfano counties in Colorado. "Also, the national groups tend to focus on public lands, and they think private lands are sacrificial."

Until last year, there was no national group dedicated solely to policing oil and gas, no parallel to the Mineral Policy Center on mining. The Oil and Gas Accountability Project claims to be the only group dedicated to that nationwide mission today, and it has all of three staffers operating from an office over a sporting goods store in Durango, Colo.

So environmentalists are working through smaller regional groups such as the Northern Plains Resource Council in Montana and the Western Colorado Congress, and through tiny local groups such as Morrissey's and the San Juan Citizens Alliance in Durango. As their names imply, the grassroots groups are really more citizens' groups than strictly environmental; their concerns include such issues as property values and conflicts with other businesses, such as oil and gas vs. tourism.

Colorado rages

It's up to the grass roots, and this kind of grass roots sprang up first in Colorado. That is where the push for natural gas in the Rocky Mountains took hold early and where the chances for conflict were greatest due to a larger population and a rapid influx of newcomers.

Rebellions ignited as far back as the 1980s in two regions: On Colorado's Front Range, conventional gas wells cropped up on some of the state's most fertile farmland and right inside cities and towns; and in southwest Colorado, La Plata County received the nation's first major coalbed methane play -- some 1,000 wells -- at the same time the local economy was converting to tourism, quality-of-life emigrants and New West real estate.

In both regions, people objected to suddenly having gas wells for neighbors. Near the Front Range city of Greeley, almost an entire square block exploded when a leaking conventional gas well ignited. Massive amounts of groundwater had to be pumped to free the coalbed methane in La Plata County, and once freed, the methane leaked out through older conventional gas wells, drifting into drinking water wells.

Reacting to outcries from residents, the counties and municipalities began to enact regulations. Some mirrored the state's rules, merely adding local oversight, while some got tougher. Greeley, home to the University of Northern Colorado, enacted a total ban on oil and gas wells inside city limits in 1985. La Plata County put into place the most comprehensive body of local regulations in the state in 1988 and added to them over the years, becoming stricter than the state on issues such as well placement near homes and protection of scenery, and on controlling noise and lights from machinery and impacts on wildlife and water.

But the industry filed lawsuit after lawsuit challenging the local laws in Colorado. And it won back some ground.

The city of Greeley suffered a total defeat. Greeley cannot ban all drilling, the Colorado Supreme Court said in 1992, because the state has an overriding interest in making sure the resources aren't "wasted" by not being developed at all.

That same year, La Plata County notched a win for local governments, when the high court ruled that the county can require companies to go through local review. But the question of how strict the local regs can be, short of a ban, was left unsettled.

La Plata County also suffered defeats. Following another industry lawsuit, it had to give up a tough noise standard and an attempt to let landowners decide where on their property gas companies could drill wells. The power to determine final well placement is still claimed by the county government itself, though.

The most recent court ruling has local governments around Colorado holding their breaths. Frederick, a small Front Range town, sued a gas company that shrugged off town regulations. A month ago, the Colorado Court of Appeals tossed out the town's standards for well placement, noise and visual impacts, saying those are "operational" considerations that the state Oil and Gas Commission decides.

It's expected that both sides will appeal the Frederick ruling to the Colorado Supreme Court, but for now, the appeals court seems to say that local governments can't get tougher than the state on many aspects of oil and gas regulation.

It's not as if the industry has been stymied. Today, La Plata County has about 2,200 active wells, accounting for 55 percent of Colorado's total natural gas production. La Plata County has never outright rejected a well that the state approved, and companies have generally cooperated with the county process. Frederick, with about 4,400 residents, has about 130 active oil and gas wells inside town limits. In Greeley, companies have drilled about 80 wells. If you live there, it's in your face.

But particularly with the recent rush for coalbed methane, more local governments are trying to lay down the law. At least 11 counties and 15 municipalities in Colorado have adopted laws regarding oil and gas, concerned about public health, safety, the environment, and orderly land use. Gunnison County, home to the Crested Butte ski resort, just imposed a nine-month moratorium on methane drilling. Delta County just made history as the first county in Colorado to reject wells OK'd by the state (see sidebar on Delta County's stand).

The Colorado Oil and Gas Conservation Commission seeks total supremacy over the locals. The agency adopted a rule last year saying, "The permit-to-drill shall be binding with respect to any conflicting local government permit or land use approval process."

No fewer than five counties are now challenging that rule by suing the Oil and Gas Commission, but the agency's director, Rich Griebling, defends it. He says well technology has improved and there are fewer problems now, partly because state laws passed in the 1990s added environmental awareness to the agency. "The Legislature has articulated (that) there is some value in having oil and gas regulated consistently statewide, and not to have 40-some counties with differing regulations."

The battle arrives in Montana

Montana had no history of local governments resisting oil and gas, but until recently it also had relatively little development. When the coalbed methane rush got to Montana in 1999, it hit the plains first, where the opposition amounted to a few ranchers and spread-thin environmentalists (HCN, 11/5/01:Wyoming's powder keg). But when the J.M. Huber Corp. announced last year it wanted to explore for methane here in Gallatin County, it picked the perfect place to stir up local opposition.

Gallatin County borders Yellowstone National Park, has two ski resorts and stretches of three fishable rivers, and is Montana's top county for tourism income. It's also home to Montana State University and thousands of entrepreneurs and retirees.

The Huber Corp., which reportedly has diversified operations including timber and chemicals in 11 states and 17 countries, with $1.3 billion in annual sales, had years of experience drilling gas wells in Colorado's La Plata County. The company was either incredibly arrogant or feigning ignorance about local sentiments when it came to Gallatin County.

Huber Corp. leased about 18,000 acres of gas rights and announced plans to drill for coalbed methane around Bozeman Pass, a loosely settled neighborhood in the mountains just outside the county seat, Bozeman. If the play pans out, it could install more than a hundred wells and a network of pipelines and pumps where forests and pastures are laced around homes worth from $300,000 up to millions. The ranchettes and trophy homes are occupied by doctors, professors, retired CEOs, wildlife photographers, an Earthjustice lawyer, a former director of the National Endowment for the Arts, and a B&B where guests are serenaded by the howling of captive wolves.

"A test well could be the start of a cancer that will affect all of us," a real estate agent who lives in the Bozeman Pass area wrote to the county planners. "The stigma will cause a reduction in values and negatively affect our tax base," warned a nationally prominent broker who also lives in the area.

So the chess game began.

Despite local objections, the company plunged in, getting an OK to drill from the Montana Board of Oil and Gas Conservation, which has never turned down a well proposal for environmental reasons. With the state approval, the company asked the county for a permit to drill a test well where coal seams are most accessible, which happens to be in the Bridger Canyon Zoning District.

Residents formed the zoning district more than 30 years ago to deflect all kinds of development. The public hearings on the test well, run by the Bridger Canyon Planning and Zoning Commission, lasted 15 hours, spread over two days in January 2002. The hearings had to be held in a school auditorium and the county fairgrounds, because hundreds of people turned out, almost all opposed to the drilling. They worried about the full range of impacts, from wildlife to water quality to fire danger and real estate.

The planning commission, composed of the three county commissioners, the county clerk and the county treasurer - only one Democrat in the bunch - considered approving the well with as many as 37 conditions, including asking the company to post a $25 million bond against future property damage. "We told the company, 'If you're going to do this at all, we're going to have oversight and mitigation measures,'" says commissioner Bill Murdock, adding that those conditions were negotiable.

But the company's arrogant attitude and "total disregard" for the county's process soured the relationship, says Jennifer Madgic, the county's director of planning. So the planning commission voted unanimously to deny the proposal.

The Huber Corp., however, was ready to show the locals that resistance is futile.

Moves and countermoves

Represented by one of Montana's most prominent law firms, the Huber Corp. promptly slapped Gallatin County with two lawsuits, one in state court challenging the county's power, and another in federal court calling the county's denial an unconstitutional takings and seeking monetary damages.

It's a lot to handle. County Attorney Lambert, who calls the company "stiff-necked and unreasonable," is defending the state case, and he's enlisted a hired gun at a private firm to defend the federal case. Property owners and an environmental group, the Greater Yellowstone Coalition, have chipped in to hire another lawyer to intervene on the county's side. The county's legal bills could run to hundreds of thousands of dollars.

Next move: Even as the lawyers began to niggle over the fine print of Montana laws, the Huber Corp. announced it would go ahead on the ground by drilling just outside the Bridger Canyon Zoning District.

Countermove: The county government rushed to create an emergency zoning district that takes in everything in the Bozeman Pass area that isn't zoned (32,000 acres), and imposed a one-year moratorium on coalbed methane drilling there.

Next move: With only a few days' notice, the company asked the Montana Board of Oil and Gas Conservation for a permit to drill for conventional natural gas instead of coalbed methane. That sidestep was even too much for the state board. On Aug. 8, the board OK'd the company's plan to drill for conventional gas on Bozeman Pass, but said the company can't begin drilling until Sept. 15. That gives the county time to rush language about conventional gas into its emergency moratorium.

"Changing the name from coalbed methane to gas is artful," the state board's attorney, Donald Garrity, told the Bozeman Daily Chronicle. But the state has to "avoid any appearances (of) participating in any sort of hide-the-bag game."

What's next? Neither Huber Corp.'s lawyer nor the company's vice president, who has been the point man in Gallatin County, returned HCN's calls. But it's a good bet the company will fire off more lawsuits, challenging the creation of the emergency zoning district, the moratorium, and the county's doubling back to include conventional gas.

"I consider it an all-out war," says John Vincent, a Gallatin County commissioner whose previous career was teaching high school students about government. "We've got to do everything we can to win, within the law. Full-scale mineral exploration and extraction is contrary to the long-term economy here."

The company has another move it can make on the ground. Its leases extend into neighboring Park County, which is far more rural and more open to development. Some residents there are hurriedly trying to form a zoning district, with language addressing oil and gas development. It feels like a race.

"Park County is not as affluent as Gallatin County," says Nancy Procter, who owns a cabin on the Park County side of the pass. "If wells had been proposed in Park County instead of Gallatin County to begin with, we'd probably have wells already."

The last boom

The opposition to coalbed methane development around the West doesn't surprise Ken Wonstolen of the Colorado Oil and Gas Association. "Rarely is there a local constituency for oil and gas drilling," admits the state's leading industry lawyer. "Generally, local folks don't want it in their backyard. (Local) elected officials hear from them. But ultimately, we need this activity somewhere. There is a disconnect between local desires and society's general needs."

And society needs drilling in the Rocky Mountains, Wonstolen says, since other reserves are being tapped out: In rough numbers, in the last 25 years, Gulf of Mexico production is down 24 percent, and mid-continent production (including Texas) is down 36 percent. Meanwhile, production in the Rockies has soared 518 percent.

"The Rockies have the remaining reserves," Wonstolen says. "This is where we're going to get our energy from."

If his prediction is correct, much of that energy will come in the form of methane, which is abundant in the region's widespread coal seams. The rush for methane also gets a boost from tax incentives created in 1979, due to expire at the end of this year. Congress is considering renewing the incentives, which could continue to encourage the transformation of landscapes with well pads, pipelines, roads and groundwater pumping.

"If you do coalbed methane wrong, it's the last boom," says Randy Udall, director of the nonprofit Community Office for Resource Efficiency in Aspen, Colo. "You mine everything to get this one resource out - your scenery, your lifestyle, your solitude, your wildlife. The kind of landscapes you're going to be left with, they're going to look like a carcass."

But with the grassroots and regional groups beginning to share lessons from county to county and across state lines, the impacts of methane development are more widely known now. As the struggles in Gallatin County and Delta County show, the public is getting tuned in. From here on, the degree of local opposition will vary from place to place, but it's likely that more and more the industry won't have its way without making more allowance for local concerns.

The state legislatures will continue to be a point of attack for those trying to reform the industry and how it is regulated. "We're going to see more and more pressure to drill in people's backyards, and more sophisticated campaigns to challenge the drilling," says Gwen Lachelt, head of the Oil and Gas Accountability Project. "That will create political pressure for the companies to implement creative technologies and be more cooperative in local communities. Ultimately, we need the right environment at the state level to allow local authority to regulate the surface impacts."

There may be a window of time to create that environment. The hot natural gas market of the late 1990s and 2000, which contributed to the methane rush, has cooled with the economy. The market is sure to bounce back, and when it does, local governments will be faced with even more pressure from the industry, states and nation. When it happens, though, gas companies probably won't find much of the Old West, chomping at the bit for natural resource development.

More likely, they'll run into people like Jennifer Read. Read, whose 10-acre spread with log home neighbors a parcel where the Huber Corp. wants to drill in Gallatin County, says she'd never even heard of coalbed methane until she returned from a trip to Nepal and learned of the company's plans.

She runs a small business, Tibetan Traders, hiring weavers in Katmandu to make clothes that she imports and sells. Standing in her yard, where strings of colorful prayer flags flutter in the breeze, she points to a hillside where, just out of view, the company wants to drill for either methane or conventional gas now.

"I love it out here. Sometimes you really make a connection to a place," Read says. As she talks about how she's become "obsessed" with fighting the Huber Corp., organizing the Park and Gallatin Citizens Alliance, she pauses to point out a sandhill crane taking off from her pond. Her land is used by songbirds, hawks, elk, deer, bears, lions.

"It's unrealistic to say we don't want this here and then continue to use energy" without making adjustments, including more emphasis on conservation and renewable sources like wind power, she says. "Maybe the fear of having this beautiful area industrialized will help us move forward, with longer-term solutions."

Ray Ring is Northern Rockies editor for High Country News.

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