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Montana Pollution Rules Draw Federal Objections

By Juliet Eilperin
Washington Post Staff Writer
Sunday, April 9, 2006

Federal energy officials are opposing new rules by Montana to force companies that extract methane gas from underground coal beds to clean up the water pollution caused by drilling operations, even as state officials cite an unreleased 2003 federal report that says cleanup costs are relatively inexpensive.

The Denver office of the Environmental Protection Agency produced the report but never published it, saying it related to a proposed drilling application that was dropped.

A Montana consulting firm obtained a copy of the EPA report, however, and handed it over to Gov. Brian Schweitzer (D). Last month, Montana's Board of Environmental Review, citing the EPA paper and other economic studies, voted to force coalbed methane companies to leave the state's streams as clean as they were before drilling started, although the companies do not have to clean up existing pollution.

"We want to develop energy in Montana, but we want to do it right," Schweitzer said in an interview. "Here's the bottom line with the federal government: They're usually not helpful, and they weren't this time, either."

The Energy Department and the Wyoming congressional delegation are backing companies that are trying to block Montana's new rules, on the grounds that they could hamper energy development. The department submitted analyses by two of its national laboratories concluding that the state's regulations were "unnecessarily stringent" and "inconsistent."

Wyoming's two senators and one House member wrote that the regulations, "under the guise of environmental benefit, could severely limit [coalbed methane] production without any significant additional protection for water quality or existing water uses in Wyoming or Montana." Wyoming's governor, Dave Freudenthal (D), has also written to the EPA asking the agency to block Montana's new rules.

Bruce Williams, vice president of operations at Fidelity Exploration and Production Co., said Montana is asking his company to use technology that only recently came onto the market.

"It's not as clear-cut as folks want to make it out to be," said Williams, whose Colorado-based company operates more than 520 coalbed methane natural gas wells in Montana. "There's technology out there, but we haven't tried it, and it took two years to get permission from the state to try it."

The debate centers on how best to mitigate the environmental impact of coalbed methane extraction, which provides 9 percent of the nation's natural gas supply and requires pumping water from underground to release the methane. At the end of the process, drilling companies are left with water high in salinity and sodium that is often dumped into nearby streams, where it can damage soil, crops and wildlife.

Mark Fix, a Montana rancher who chairs a community group that pushed for the state regulations, said the alfalfa crop on his 9,700-acre cattle ranch has suffered since gas companies started dumping water from drilling 100 miles upstream.

"If they dump too much water, it will just destroy our soils and destroy our crops," Fix said.

EPA and state officials who conducted analyses of what it would take to prevent more pollution agreed that the energy firms can afford to do it, though industry officials said it could hinder their operations.

The 2003 EPA draft report, obtained by The Washington Post from the nonprofit, nonpartisan Natural Resources News Service, which investigates environmental matters, said requiring companies to hold the contaminated water in storage ponds "would not have a major impact on production or any of the financial parameters measured by the economic model of any of the geographic regions investigated [Wyoming, Montana or Indian Country]." More expensive strategies include cleaning the water through reverse osmosis.

Schweitzer, Montana's governor, said the state estimates that the cost of complying with the regulations would amount to 8 percent of what companies receive for their gas; Williams said it would cost between 9 and 13 percent, and would "result in increased costs and fewer opportunities for a landowner and operator to work together to manage the water."

Environmentalists in Montana and Wyoming said they suspect that the administration suppressed EPA's initial estimate of cleanup costs.

"We do think EPA deliberately sat on this report because the powers that be in the administration and the industry didn't want it to get out," said Jill Morrison, a community organizer at the Powder River Basin Resource Council in Sheridan, Wyo.

The EPA has not taken a position on Montana's regulations. Spokeswoman Jessica Emond said the agency conducted the 2003 cleanup cost analysis because it was preparing to rule on a permit application concerning Montana's Crow reservation.

"The development never occurred," Emond said, adding that the EPA then shelved the report as having limited use.

Energy Department spokeswoman Megan Barnett said the department views the coalbed methane supply "through environmentally safe channels [as] a valuable part of the nation's energy mix."

Schweitzer, however, said he was convinced that his state needs the restrictions.

"The place where people are developing coalbed methane is the place where people make a living irrigating," he said. "The coalbed methane company is going to come and go in 10 years. But that rancher and his family have been there for 150 years. Who's going to take care of that rancher's grandchildren when there's no water?"

Researcher Karl Evanzz contributed to this report.

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