Colorado Court: Coal Bed Methane Producers Need Water Permits

In 2005, two ranch families who own water rights in Archuleta and La Plata counties sued the State Engineer, arguing that he was acting illegally by failing to require BP America Production Company to get permits and water court approvals to pump tributary groundwater as part of the company's coal bed methane production.

Judge Gregory Lyman, the water judge in Durango, agreed and the State Engineer and BP appealed to the Colorado Supreme Court.

At issue in the appeal was whether the state District Court, Water Division erred in not deferring to the State Engineer's determination that the removal of water from geologic formations solely to facilitate coalbed methane mining operations is not a "beneficial use" within the State Engineer's Ground Water Act permitting authority.

Coal bed methane water being discharged (Photo by M. Scott)

For years, coal bed methane producers have been allowed to pump large amounts of groundwater connected to nearby streams, called tributary groundwater, as part of their extraction operations without a water right or approvals from the State Engineer and the water courts.

Coal bed methane is natural gas, 99 percent methane, that is generated and stored in coal seams. Water keeps the coal bed methane in place in underground formations. When groundwater is pumped, the gas is released from the formation and can be captured by producers.

Coal bed methane producers often re-inject most of the water underground, but in different, deeper formations, so the water is not available to other water users or the nearby streams as it was before the methane production.

A State Engineer permit and water court approval are usually required before tributary groundwater can be pumped. These approvals are designed to ensure that the water rights of others, including instream flow rights held by the Colorado Water Conservation Board, are not injured.

Coal bed methane producers have for years argued that they are not using the water but are simply "disposing" of it, therefore they are not subject to these requirements.

Today's ruling in Vance v. Wolfe affirms Judge Lyman's decision. The Colorado Supreme Court found that the extraction of tributary groundwater for coal bed methane production is a "beneficial use" of water that is subject to water rights administration and approvals by the water courts.

"This is a victory for both ranchers and our streams," said Mely Whiting, an attorney with the conservation group Trout Unlimited, which participated in the appeal in support of the ranchers.

"The decision sends a strong message that just because you are part of the oil and gas industry, you are not above and beyond Colorado water laws," she said.

Whiting gave credit for the ruling to the Vance and Fitzgerald families who brought the suit as well as to attorney Sarah Klahn of the Denver law firm of White & Jankowski, which specializes in natural resources law. "They did the lion's share of work, and they deserve congratulations for this important achievement," she said.

"The court made a sound ruling based on a common sense reading of Colorado law," said Bart Miller, with Western Resource Advocates, which participated by filing a "friend of the court" brief on the appeal.

"The decision implicitly recognizes the scarcity and value of water in Colorado," he said. "It's an important decision."

Phase 2 of Colorado's Statewide Water Supply Initiative estimates that by 2050, Colorado may need an additional 1.7 million acre-feet of water. Without new water supplies, it is estimated that 77 percent of agriculture will be dried up.

"Produced water and disposal should not be in the same sentence," says Pat O’Toole, a rancher in Savery, Wyoming, a state that is rich in coal bed methane. "Water is much too valuable a commodity. We need to embrace the reality that CBM development will produce water and that water can be cleaned at reasonable cost."

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