Here’s a guest column from Durango water attorney, Amy Huff, that is critical of the new rules promulgated by the legislature and the state engineer for regulating produced water from coalbed methane wells. Ms. Huff wonders if the rules will protect senior rights holders. From the article:
Last April, the court held that the extraction of water – often called “produced water” – that occurs in the process of extracting coal-bed methane is a beneficial use of water, requiring a water right, which must be administered in our priority system. That ruling resulted in the Legislature revising Colorado’s statutes to give special rights to those claiming to use nontributary water for mineral purposes, in the state engineer promulgating rules that define certain areas of the groundwater in the San Juan Basin to be nontributary, and in the gas industry racing to the courthouse to adjudicate water rights for its coal-bed methane wells. These significant changes to Colorado’s water administration system should be carefully reviewed to ensure all water users are treated fairly, and to protect their property rights…
Before the recent legislative changes, people seeking non-tributary water rights, which would not be subject to the prior appropriation system, had to demonstrate they had the landowner’s consent to withdraw the water. The recent legislative changes have exempted those seeking nontributary ground water for mineral development, including oil and gas development, from obtaining landowner consent, and now the state engineer has designated an area of groundwater in the San Juan Basin as nontributary, as long as the permittee is using the water for mineral development.
In response, there were 12 water court applications filed last month by gas operators to obtain water rights for coal-bed methane production purposes. In total, these applications identify approximately 1,300 existing coal-bed methane wells and contemplate an additional 2,000 wells. Many landowners have received notice that a company has filed for a water right that will be diverted through a structure located on their property. The applications filed by entities such as ConocoPhillips, XTO Energy, Southern Ute Tribe, BP, Samson Resources, Four Star Oil & Gas, and Chevron are confusing because, in many instances, the locations of the water rights sought by these companies are broadly defined and are often described as a “well field,” making it very difficult to know where the energy company is planning to drill.
Additionally, some applications claim a right to nontributary water. Colorado case law has confirmed that the legislative intent has been to allocate the right to withdraw nontributary ground water according to overlying land ownership; nonetheless, the Legislature has now exempted those using non-tributary water for mineral development from needing to obtain that landowner’s consent.
The legality of this preferential treatment is uncertain and, therefore, debatable. It is inequitable that an entity can withdraw nontributary water for mineral development without landowner consent, while an entity that wishes to withdraw the same water for any other purpose is still required to obtain such consent. A more detailed notice of the water court filings can be found at the following Web site: http://www.courts.state.co.us/Courts/Water/Division.cfm/Water_Division_ID/7.
With the Legislature’s authorization to promulgate rules to assist in the administration of nontributary water used for mineral development, the state engineer developed Produced Non-tributary Ground Water Rules, which set forth the procedures for obtaining a nontributary designation and also establish certain areas of ground water that are nontributary, if the permittee is using water to facilitate the mining of minerals. It is problematic whether the state engineer should have the authority to establish different procedures for permitting wells that withdraw nontributary water when the water is used to facilitate mineral development and whether he can designate the ground water beneath landowners’ property as non-tributary to benefit those who are in the business of mining minerals. For more details, visit http://water.state.co.us/ for a copy of the rules. In particular, examine the maps that show the boundaries of the nontributary area in the San Juan Basin.