Article published Oct 29, 2007

Judge upholds coal-methane water rules

By AMY BETH HANSON

Associated Press Writer

HELENA — A judge has upheld the state's water-quality standards aimed at protecting rivers in the Powder River Basin from pollution from coal-bed methane development.

Some oil and gas companies sued the state, saying the standards adopted in 2003 and 2006 were too restrictive. They alleged the standards were not based on science, and were in some cases more stringent than naturally found in the environment.

District Judge Blair Jones of Columbus ruled the state Board of Environmental Review and the Department of Environmental Quality followed the law in creating the standards.

"When water quality is at stake, the BER and DEQ are mandated to afford protection," Jones wrote in the Wednesday ruling.

Mark Fix, a Tongue River rancher and chairman of the Northern Plains Resource Council, which intervened in the suit on behalf of the state, was pleased with the decision.

"There was never any doubt in our minds that the state acted properly when it set water quality rules to protect Montana ranching and farming families like mine," he said. "We're comforted that the judge found so strongly in our favor."

Attorney General Mike McGrath said the judge's decision means the Board of Environmental Review standards are lawful and consistent with the science presented to them. "I think this is a good decision for the people of Montana," McGrath said.

The state adopted the standards following requests by the council and the Tongue River Water Users Association to protect agriculture from pollution and crop losses caused by coal-bed methane development.

Drilling for the natural gas found in coal seams requires pumping to the surface and disposing of huge amounts of groundwater. The groundwater in the northern portion of the basin is high in sodium, which farmers say could harm soils and crops.

The companies — Marathon Oil Co., its subsidiary Pennaco Energy Inc. and Fidelity Exploration and Production Co. — appealed the rules, saying the protections were established without sound scientific basis.

Jones said under the Montana Water Quality Act, the state has classified the Tongue, Powder and Little Powder rivers as suitable for irrigation and must maintain them as such.

"Given the long term projection for massive (coal-bed methane) development, the rules were 'reasonably necessary' to ensure consistency in permitting, and for promoting the overriding goal of protecting irrigated agriculture as a designated use," Jones wrote.

An attorney for Pennaco Energy Inc., did not return a phone call Friday seeking comment.

Bruce Williams, the vice president of operations for Fidelity Exploration in Sheridan, Wyo., said the ruling doesn't change anything.

"The rules are already in place," he said. "We are complying with those rules today, and the fact that they continue to be in place just won't have an impact."

The companies also challenged the Board of Environmental Review's decision in April 2006 to designate salinity as harmful under state regulations that prohibit industry from polluting rivers and streams unless they have permission from the state.

Jones' ruling notes the 9th U.S. Circuit Court of Appeals has established that water produced during coal-bed methane drilling is a "harmful pollutant," necessitating a permit before discharge into surface waters.

Montana's 2003 water quality standards were approved by the Environmental Protection Agency.

Marathon, Pennaco and Devon Energy Corp., sued the EPA last year seeking to overturn that approval.

"We think (Jones' ruling) strengthens our hand in terms of the federal litigation that is proceeding," McGrath said.

Montana's 2006 rules have been submitted to the EPA, but have yet to be approved.