16-03: Retaining the CBMPA Legislation

WHEREAS, coal bed strata contain the Coal Bed Methane (CBM) resource which is distributed across several Conservation Districts in Montana. While current CBM activity in Montana is currently limited due to the methane market, impacts from past actions continue, and the potential remains for future resource extraction.

WHEREAS, the Coal Bed Methane Protection Act (§ 76-15-901 through § 76-15-905, MCA), of 2000 established the Coal Bed Methane Protection Program (“Program”) for the purpose of compensating private landowners and water right holders for certain damages that are attributable to the development and/or production of coal bed methane [§ 76-15-902(5) MCA].

WHEREAS, the Act does not apply to activities outside of coal areas such as conventional oil and gas.

WHEREAS, the Act assigns administrative authority over the Program to local Conservation Districts that have coal beds within their exterior boundary or whose water sources (ground or surface), land values, or agricultural production may be adversely affected by the extraction and/or development of coal bed methane, See § 76-15-901(1), MCA. Conservation Districts meeting these criteria are directed to establish procedures for evaluating claims for compensation submitted by a private landowner or a water right holder. Conservation Districts have authority to approve or deny claims for compensation and also to receive compensation for their administrative expenses (10%) under the Program. Compensation comes from the Coal Bed Methane Protection Account (“Account’), which is administered by the Department of Natural Resources and Conservation (“DNRC”).

WHEREAS, the Act assigns DNRC the responsibility of administering the funds in the Account for use by the Conservation Districts. See § 76-15-904(6), MCA. DNRC is also responsible for approval of Conservation District-established procedures for evaluating claims for compensation under the Act. In the interest of encouraging a consistent approach among Conservation Districts administering the Act, the Coal Bed Methane Protection Act Committee (“Committee”), consisting of representatives from the Big Horn, Custer, Carbon, Carter, Powder River, Rosebud, Treasure, Wibaux, Garfield, Gallatin, Yellowstone and Prairie Conservation Districts, has prepared with approval by DNRC the procedures, guidelines, and claim forms. The DNRC’s role is limited to approval of the Conservation District’s rules and administration of funds in the Account. Other than review of rules and procedures, the DNRC has no review authority over the Conservation District’s decisions or actions implementing the Act.

WHEREAS, under the Coal Bed Methane Protection Act (§ 76-15-905 through § 76-15-905, MCA), application for Compensation for Loss of Groundwater, Surface Water or Damage to Land or Value may be made for private lands (effective after July 1, 2011).

WHEREAS, The Powder River Conservation District (PRCD) and DNRC approved four landowner claims in FY2015 which are the first approved under the DNRC-funded program. These four claims ($83,000) and PRCD overhead ($8,000) total approximately $ 91,000. The approved claims have included diminished well water for livestock and homes. The funds reimbursed two landowners for expenses to maintain water well production and another two producers to drill new wells to replace declining flow attributed to CBM. An additional FY2016 claim is pending. The claim locations are in Montana in the vicinity of the Powder River near the Wyoming / Montana state line.

WHEREAS, the approved CBMPP claims were completed after the FY2015 Legislative Session, and were previously unavailable for consideration in funding allocations.

WHEREAS, methane gas in drinking water has also increased in some wells. The presence of methane gas in drinking water, as confirmed by laboratory tests, has also reduced water well flow, and gas levels can be unsafe in some situations. The methane gas bubbles are visible in water from these taps.

WHERAS, groundwater may take a decade to be replenished and the effects from CBM may be present decades after drilling has occurred.

WHEREAS, shut-in CBM wells with depressed aquifer water levels may, in the absence of active pumping to extract methane, continue to be a source of gas that moves upslope in rock strata to adjacent producer water wells.

WHEREAS, CBM resources remain available for future extraction and there is a potential for future activities to affect private landowners, and therefore a potential for more claims.

NOW, THEREFORE, BE IT RESOLVED, that the Montana Association of Conservation Districts work with DNRC and the state legislature to assure that the Coal Bed Methane Protection Act is retained as state law in order to maintain the future option of providing a mechanism to reimburse landowners with approved claims.