WATER:

Coalbed methane decision adds salt to Mont. farmers' wounds

Roger Muggli has worked his family's 1,700-acre farm in east Montana almost the entire length of his 61 years, and he considers the nearby Tongue River to be the very lifeblood of his alfalfa and barley crops.

But three years ago, something happened to the river's water, Muggli said, as routine irrigation began turning the Custer County farm's once-rich soil the consistency of mayonnaise. The soils could not hold the plant material, he said, and within weeks, large sections of his crops turned yellow and died.

"It looked like this slime had fallen out of the sky," he said. "I picked up a handful of dirt, and it just squirted all over the place. It was terrifying."

The culprit was salt in the river water, which when mixed with clay soils turned the cropland into a soggy mush.

Muggli and Montana state regulators believe the high salt content is at least partly the result of deep groundwater extraction by coalbed methane (CBM) operations in neighboring Wyoming -- one of the nation's leading producers of coalbed methane. The water, pumped by the millions of gallons from coal seams to help coax gas to the surface, is then routinely pumped back into the Tongue River and other watersheds by CBM operators, where it indiscriminately mixes with downstream water supplies.

In an effort to protect farmers like Muggli from upstream CBM discharges, Montana -- with U.S. EPA's backing -- adopted stringent water quality regulations governing salinity in its portions of the Tongue, Powder and Little Powder rivers, all of which drain from Wyoming.

But Montana's regulations are now in jeopardy following a Wyoming federal judge's ruling this month that held EPA, when approving the regulations, failed to properly review studies and other arguments made by the natural gas industry that Montana's water-quality standards "were not based on sound science."

What's more, "The EPA simply has failed to articulate the basis for its action," U.S. District Judge Clarence Brimmer in Cheyenne, Wyo., wrote in an Oct. 13 ruling stemming from an industry lawsuit challenging Montana's regulations. CBM producers have argued, among other things, that the regulations would stifle domestic energy production at a time when the Obama administration has made it a national priority.

The state of Wyoming has also argued in court filings that it is not required under the Clean Water Act to ensure industry compliance with Montana's water-quality standards.

Brimmer's ruling, while up for appeal, has left Montana regulators and their federal counterparts scrambling for a solution to what many in Montana believe could become the West's next major water war. While Montana's salinity standards continue to apply to CBM operations at home, officials say cleaning up the water coming from Wyoming is paramount to protecting Montana's cropland and ranchland.

"We're trying to do the best job we can by barely setting a standard that will protect our resources," said Bob Bukantis, water quality standards section supervisor for the Montana Department of Environmental Quality. "We're trying to protect the water. It doesn't matter who's discharging into it. We expect everyone doing so to meet the standard."

EPA has until Nov. 3 to tell the Justice Department whether it wants to appeal Brimmer's ruling. If not, the agency could initiate a new review of the regulations, revise them, or drop them entirely, said Karen Hamilton, chief of the water quality division at EPA's regional office in Denver.

"No decisions have been made yet," Hamilton said.

Feuding states

The CBM water controversy is the latest in an ongoing series of feuds between Montana and Wyoming involving natural resource management, and it once again places Wyoming's booming methane industry under scrutiny from both regulators and environmental groups.

Last month, Wyoming regulators pulled back their own rule intended to protect farmland from CBM discharges after an independent analysis concluded that dying crops and other environmental stresses stemmed primarily from localized flooding caused by the "uncontrolled and unmanageable" quantity of water being pumped from the ground by CBM operators rather than water quality concerns involving sodium content (Land Letter, Oct. 1).

But Montana is not prepared to toe the same line. The state's agricultural industries produce significant quantities of the nation's livestock, grains, alfalfa, sugar beets and other crops, with an estimated economic value of $2.8 billion a year, according to Agriculture Department statistics.

Mike Volesky, natural resources policy adviser for Montana Gov. Brian Schweitzer (D), said his state's priority is protecting farmers and ranchers who provide economic stability over the long-term as opposed to methane drillers who often pack up and leave once a coal seam is played out.

"Anyone recognizes that CBM is a one-shot deal. It's around for 10 or 15 years, and then it's gone," Volesky said. "But once they're gone, there are still ranchers and farmers out there that have to depend on the water for a living. One industry should not have to suffer to accommodate the actions of another."

Yet even before the latest flare-up over CBM discharges, Montana believed its environmental interests were being undermined by neighboring Wyoming.

In 2007, Montana sued Wyoming, claiming it had violated a decades-old bilateral water-use agreement by withdrawing more water than allowed from the Tongue and Powder rivers in the Yellowstone River Basin. The two rivers flow out of the Bighorn Mountains in northern Wyoming into southeastern Montana, but officials in Montana say not as much water is making its way downstream as in years past (Land Letter, Nov. 6, 2008).

One reason for the shortage, Montana officials insist, is that Wyoming is allowing CBM operators to pump excessive amounts of water from ground reserves that feed the Tongue and Powder rivers. That pumping, Montana argues, violates the 1951 Yellowstone River Compact, which governs how the two states share water from the two rivers.

Wyoming has countered that the reduced river flows were due primarily to a decade-long drought that plagued both states until just last year.

The U.S. Supreme Court is charged with resolving disputes involving the Yellowstone River Compact, and last year, the court assigned Barton "Buzz" Thompson, a California lawyer and co-director of Stanford University's Woods Institute for the Environment, as special master to oversee the case.

Thompson ruled last June that Montana has standing to sue Wyoming to enforce the terms of the compact and that groundwater pumping must be counted toward each state's water allocation when the activity affects rivers and springs covered by the compact -- despite the fact that groundwater is not even mentioned in the compact document.

Thompson's interpretation of the compact was novel because groundwater use, and its effects on linked surface waters, is almost never addressed in interstate water compacts, said Reed Benson, a water law specialist at the University of New Mexico. But over the past two decades, downstream states -- including states on the Arkansas, Pecos and Republican rivers -- have been filing and winning lawsuits aimed at controlling upstream uses of groundwater, especially for irrigation.

"Just because a compact doesn't mention groundwater doesn't mean that pumping by the upstream state doesn't violate a compact. There's a lot of legal precedent supporting that," Reed said.

But the Yellowstone River case is the first involving claims that coalbed methane operations are directly affecting surface flows within a broad watershed, said Benson. And one critical question to be resolved by the Supreme Court is whether groundwater pumping by CBM operators is a "consumptive use," since the water is usually either pumped back underground or into a nearby stream channel.

If Montana's legal arguments prove successful, it could come as a major blow to Wyoming, which would probably be forced to cut water supply for other key uses like irrigation and recreation. "It's a different kind of impact and a different kind of use, and it's unclear how it's going to play out," Benson said.

Setting priorities

For its part, Montana has deemed that the irrigation of crops and watering livestock are top priorities for its portions of the Tongue and Powder rivers.

Given the high economic value of such water uses, Montana's salinity standards "appear to be both justifiable and protective," James Bauder, a water quality specialist at Montana State University, concluded in a 2007 soil quality analysis prepared for the state.

But the Powder River Basin, hugging the Montana-Wyoming border east of the Bighorn Mountains, has its own economic lifeblood: billions of tons of coal, as well as trillons of cubic feet of methane gas. Since the 1990s, energy companies primarily on the Wyoming side of the basin have been drilling deep into the coal seams -- and removing billions of gallons of groundwater -- to tap an estimated 377 billion cubic feet of gas per year.

A Wyoming-funded study last August estimated that between 1987 and 2006, CBM operators withdrew 174 billion gallons of water from the Powder River Basin, or about 77 million gallons per day -- more than twice what residents in Wyoming's state capital, Cheyenne, consume each day during its peak summer consumption season (Land Letter, Aug. 20).

Over the next two decades, the Bureau of Land Management estimates that CBM firms will drill an additional 77,000 gas wells, mostly in Wyoming's portion of the Powder River Basin, adding to the 30,000 wells already operating in the state.

That kind of robust development could be thwarted, however, if states like Montana begin imposing tougher water-quality standards that industry officials have said amount to "unreasonable" restrictions on energy development.

"No operation would be able to pass those standards, and development would just not be possible," Monica Deromedi, director of the Coalbed Natural Gas Alliance, said of the Montana water quality regulations. The alliance represents 600 energy providers, businesses, ranchers and farmers in Montana and Wyoming who claim to support responsible energy development.

Deromedi pointed to statistics showing that Montana's CBM industry, consisting of about 2,000 wells, is relatively small. She said the state's tougher regulatory environment has caused oil and gas firms to shy away from drilling there.

Industry officials have also argued in court that salinity levels are naturally high in the Powder River Basin's watersheds, and that Montana's water quality standards would be routinely violated during periods when surface water flows are below average.

Legal standing

Montana officials remain confident they are on the right track in regulating CBM discharges and believe federal regulators will take another look at the regulations, make some revisions, and approve them for a second time.

"I think the standards will stay, because [they] reflect a good current understanding of what's necessary to protect water quality," said Bukantis, the Montana DEQ official.

In his ruling, Brimmer indicated Montana might have legal standing to force Wyoming to comply with its water quality standards, so long as EPA follows the law in approving them.

"Arguably, standards properly approved and based on appropriate scientific data would be consistent with the Clean Water Act," he wrote, and thus "able to withstand constitutional challenge."

Volesky, the Montana governor's policy adviser, said his state is not seeking to punish the CBM industry. "All we're asking is that it be done right," he said, "and we've got examples to the south where it has definitely not been done right."

Meanwhile, farmers like Muggli are left to make the best of difficult circumstances.

His farm continues to lose money, since fields irrigated with salty water yield less than half the alfalfa crop that a healthy field does. Moreover, Muggli said, he has to plant new alfalfa every two years, instead of the usual five-year rotation, because the plants die after only two growing seasons.

In some cases, Muggli has simply allowed his crops to go unirrigated rather than pump salt-laden water from the Tongue River. Sometimes the plants don't make it. "It's absolutely heartbreaking," he said. "I'm so ticked off about all this it just literally makes me ill."

Scott Streater is a freelance journalist based in Colorado Springs, Colo.

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