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U.S. Department of Energy elbows in on Clean Water Act

Feds challenge Montana’s efforts to establish pollution controls for coalbed methane


Ask Wyoming rancher Marge West about the salty water that’s pumped from coalbed methane wells, and the first words out of her mouth are, "Oh, my goodness." The stuff has repeatedly flooded her hayfields and left behind a bumper crop of vigorous 6-foot-tall kochia weeds that her cattle refuse to eat.

West’s ranch is in the Powder River Basin, an immense drainage straddling the Wyoming-Montana border. Coalbed methane producers pump enormous quantities of often-salty groundwater out of coal seams to release the gas; most of that water is discharged into holding ponds, streams, and dry washes. The salt can harm aquatic ecosystems and irrigated crops, and farmers and ranchers worry that the pumping will deplete the aquifers upon which they depend.

So far, most of the 24,200 active wells in the Powder River Basin are on the Wyoming side. But companies are ready to step up drilling in Montana’s half of the basin.

"We know what kind of economic benefits coalbed methane has brought to Wyoming, but we don’t want to do it the way (they) did," says Richard Opper, director of Montana’s Department of Environmental Quality. "Much of the development has been uncontrolled."

After years of ambivalence about regulating the industry, last summer, the Montana Board of Environmental Review began considering a proposal to strictly control the discharge of coalbed methane water. Montana’s producers would have to re-inject the water into the ground or remove salts and other pollutants before dumping it into streams.

But Montana’s efforts are meeting fierce opposition from Wyoming, which lies upstream in the Powder River Basin. The new rules would require the Powder and Tongue rivers, which cross the state line into Montana, to meet tough water-quality standards. Wyoming’s congressional delegates have accused Montana of "targeting" their state’s thriving coalbed methane industry.

Now, the federal Department of Energy is intervening in a process that is usually left up to state regulators and the Environmental Protection Agency.

Department spokesman John Grasser says his agency stepped into the fray "because of (the regulations’) potential effect on national energy supply." But some experts say that the DOE’s push for gas production leaves Montana facing a rigged fight.

Battling bureaucracies

The Energy Department has been quietly jockeying with the EPA’s Rocky Mountain regional office for five years over how heavily coalbed methane operations should be regulated.

In late 2000, the EPA set out to establish regional guidelines to help states deal with the new industry and enforce the Clean Water Act. It began investigating the economic feasibility of re-injecting water underground or treating it. But that process bogged down due to disagreements between the EPA and the Energy Department over treatment’s implications for drillers’ profits and production. After the EPA released a preliminary study in 2003 showing minimal costs, the two agencies reached an impasse. EPA spokeswoman Jessica Emond says the guidelines are on hold indefinitely.

In the meantime, the fight in Montana has heated up. Under the state’s previous governor, Republican Judy Martz, Montana’s Department of Environmental Quality held that coalbed methane water is not a pollutant covered by the Clean Water Act. But in 2003, the Northern Plains Resource Council, a coalition of ranchers and environmentalists, won a federal circuit court ruling that it is a pollutant.

Last June, the Northern Plains Resource Council petitioned the state’s Board of Environmental Review to strictly regulate water from coalbed methane wells. Under the current governor, Democrat Brian Schweitzer, the atmosphere is more conducive to environmental regulation. "The governor is quite concerned about the quality of the water available for irrigation and other uses," says his chief policy advisor, Hal Harper.

The petition has drawn the Energy Department out into the open. In December, the department sent John Veil, the water policy program director at its Argonne National Laboratory, to testify against Montana’s proposed regulations at a board hearing. Veil questioned the scientific validity of the rules and argued that they overstepped Clean Water Act authority.

The Energy Department also released a pair of unfavorable reports targeting the regulations. One asserts that Montana’s proposed rules could decrease methane production in the Powder River Basin by 90 percent within five years. The other predicts potential losses of $5.3 billion to $21 billion worth of gas. That would translate into substantial losses in royalties for both states.

Bad science, bad economics

But some analysts question the Energy Department’s conclusions, noting that high gas prices are generating record profits and should make water treatment comparatively affordable.

The department "has ginned up some very unusual and flatly uneconomic techniques and they get some absurd results," says Michael Kavanaugh, an economist hired by the Northern Plains Resource Council. According to engineer Jim Kuipers, who also analyzed the report for the group, the department grossly overestimates the costs of drilling and water treatment. Kavanaugh says that both the EPA and the private firm Lookout Mountain Analysis have shown that aggressive water treatment will result in "no lost gas," even at relatively low prices.

Under the Clean Water Act, states have authority to implement strict pollution controls, but the Department of Energy could still prevail, if the fight ends up in Congress or the Supreme Court. In January, Wyoming’s entire congressional delegation, all Republicans, sent a letter to the Montana board, asserting that because the regulations will affect Wyoming, they "may impermissably regulate interstate commerce," a violation of the U.S. Constitution.

Montana also looks ready to fight. In January, 59 of the state’s Democratic legislators sent a letter encouraging the Board of Environmental Review "to move forward with this important solution to ensure protection of Montana’s water for future generations." The board will make its final decision March 23.

The author is an HCN intern.