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108th CONGRESS
1st Session
H. R. 3698
To assure that development of certain Federal oil and gas resources
will occur in ways that protect water resources and surface owner
rights, and for other purposes.
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IN THE HOUSE OF REPRESENTATIVES
December 8, 2003
Mr. Udall of Colorado (for himself and Mr. Udall of New Mexico)
introduced the following bill; which was referred to the Committee on
Resources, and in addition to the Committee on Transportation and
Infrastructure, for a period to be subsequently determined by the
Speaker, in each case for consideration of such provisions as fall
within the jurisdiction of the committee concerned
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A BILL
To assure that development of certain Federal oil and gas resources
will occur in ways that protect water resources and surface owner
rights, and for other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE; FINDINGS; PURPOSE.
(a) Short Title.--This Act may be cited as the ``Western Waters and
Surface Owners Protection Act''.
(b) Findings.--The Congress finds the following:
(1) Domestic oil and gas resources, including coalbed
methane, are an important part of the Nation's energy supply
portfolio and their development in appropriate locations and in
appropriate ways can help reduce dependence on imported energy
supplies.
(2) In many areas of the Western United States, federally
owned minerals, including oil and gas, are in lands where the
surface estate belongs to non-Federal parties whose interests
can be adversely affected if the development of the minerals is
not done in an appropriate manner.
(3) Development of oil and gas--and especially coalbed
methane--often involves removal of a significant volume of
groundwater.
(4) Some of the water extracted in connection with this
development is reinjected into the ground, while some is
retained in surface holding ponds or released on the surface
and allowed to flow into streams or other waterbodies,
including ditches used for irrigation.
(5) The quality of these extracted waters varies from one
location to another. Some of these waters are of good quality,
but they often contain dissolved minerals (such as sodium,
magnesium, arsenic, or selenium) that can contaminate other
waters as a result of leaks or leaching from holding ponds or
discharge of extracted waters. In addition, extracted waters
often have other characteristics, such as high acidity and
temperature, that can adversely affect agricultural uses of
land or the quality of the environment.
(6) Clearer requirements for proper disposal of these
extracted waters is necessary in order to avoid adverse effects
on the quality of ground and surface waters as well as the
productivity of surrounding agricultural lands.
(7) To reduce the chance of potential harm to water
supplies, agricultural production, and the environment that
otherwise could result from disposal of water extracted in
connection with coalbed methane development or the development
of other oil or gas resources, the Congress should act to
ensure that such disposal is subject to regulation under the
Federal Water Pollution Control Act (33 U.S.C. 1251 et seq.)
and the Mineral Leasing Act (30 U.S.C. 181 et seq.).
(8) Under the Stock-Raising Homestead Act (43 U.S.C. 291 et
seq.) and other laws, the Federal Government has transferred to
other parties the surface estate in millions of acres in
Western States where ownership of coal, oil, gas, and other
minerals has been retained by the Federal Government.
(9) Under current Federal law, the leasing of federally
owned coal on lands where the surface estate is not owned by
the United States is subject to the consent of the surface
estate owners, but neither this consent requirement nor the
operating and bonding requirements applicable to development of
federally owned locatable minerals applies to the leasing or
development of oil or gas in similar split-estate situations.
(10) To better balance the need for development of oil and
gas resources (including coalbed methane) with the rights and
interests of the owners of the surface estate of affected
lands, current law should be revised so as to increase the
involvement of the surface estate owners in developing and
implementing plans for such development and to provide clearer
and more adequate standards for such development.
(c) Purpose.--The purpose of this Act is to provide for the
protection of water resources and surface estate owners in the
development of oil and gas resources, including coalbed methane.
TITLE I--PROTECTION OF WATER RESOURCES
SEC. 101. MINERAL LEASING ACT REQUIREMENTS.
Section 17 of the Mineral Leasing Act (30 U.S.C. 226) is amended by
adding at the end the following:
``(p) Water Requirements.--
``(1) An operator producing oil or gas (including coalbed
methane) under a lease issued under this Act shall--
``(A) replace the water supply of a water user who
obtains all or part of such user's supply of water for
domestic, agricultural, or other purposes from an
underground or surface source that has been affected by
contamination, diminution, or interruption proximately
resulting from drilling operations for such production;
``(B) assure that any reinjection of water produced
by drilling in connection with operations under the
lease will return the water into the same aquifer from
which it was extracted or an aquifer of no better water
quality; and
``(C) comply with all applicable requirements of
Federal and State law for discharge of any water
produced under the lease that is not reinjected.
``(2) An application for a lease under this subsection
shall be accompanied by a proposed water management plan
including provisions to--
``(A) protect the quantity and quality of surface
and ground water systems, both on-site and off-site,
from adverse effects of the exploration, development,
and reclamation processes or to provide alternative
sources of water if such protection cannot be assured;
``(B) protect the rights of present users of water
that would be affected by operations under the lease,
including the discharge of any water produced in
connection with such operations that is not reinjected;
and
``(C) identify any agreements with other parties
for the beneficial use of produced waters and the steps
that will be taken to comply with state and Federal
laws related to such use.''.
SEC. 102. CLEAN WATER ACT REQUIREMENTS.
Section 402(b) of the Federal Water Pollution Control Act (33
U.S.C. 1342) is amended by adding at the end the following:
``(10) To issue permits that comply with subsection (a) and
any other relevant requirements of this Act, and to ensure that
waters extracted from a subsurface formation in connection with
development of oil or gas, including coalbed methane, will be
subject to appropriate requirements to minimize adverse effects
on any lands or waters that would be affected by disposal or
other uses of such extracted waters.''.
SEC. 103. RELATION TO STATE LAW.
Nothing in this Act or any amendment made by this Act shall--
(1) be construed as impairing or in any manner affecting
any right or jurisdiction of any State with respect to the
waters of such State; or
(2) be construed as limiting, altering, modifying, or
amending any of the interstate compacts or equitable
apportionment decrees that apportion water among and between
States.
TITLE II--SURFACE OWNER PROTECTION
SEC. 201. DEFINITIONS.
As used in this title--
(1) the term ``Secretary'' means the Secretary of the
Interior;
(2) the term ``lease'' means a lease issued by the
Secretary under the Mineral Leasing Act (30 U.S.C. 181 et seq.)
or any other law, providing for development of oil and gas
resources (including coalbed methane) owned by the United
States;
(3) the term ``lessee'' means the holder of a lease; and
(4) the term ``operator'' means any person that is
responsible under the terms and conditions of a lease for the
operations conducted on leased lands or any portion thereof.
SEC. 202. POST-LEASE SURFACE USE AGREEMENT.
(a) In General.--Except as provided in section 203, the Secretary
may not authorize any operator to conduct exploration and drilling
operations on lands with respect to which title to oil and gas
resources is held by the United States but title to the surface estate
is not held by the United States, until the operator has filed with the
Secretary a document, signed by the operator and the surface owner or
owners, showing that the operator has secured a written surface use
agreement between the operator and the surface owner or owners that
meets the requirements of subsection (b).
(b) Contents.--The surface use agreement shall provide for--
(1) the use of only such portion of the surface estate as
is reasonably necessary for exploration and drilling operations
based on site-specific conditions;
(2) the accommodation of the surface estate owner to the
maximum extent practicable, including the location, use,
timing, and type of exploration and drilling operations,
consistent with the operator's right to develop the oil and gas
estate;-
(3) the reclamation of the site to a condition capable of
supporting the uses which such lands were capable of supporting
prior to exploration and drilling operations; and
(4) compensation for damages as a result of exploration and
drilling operations, including but not limited to--
(A) loss of income and increased costs incurred;
(B) damage to or destruction of personal property,
including crops, forage, and livestock; and
(C) failure to reclaim the site in accordance with
this paragraph (3).
(c) Procedure.--(1) An operator shall notify the surface estate
owner or owners of the operator's desire to conclude an agreement under
this section. If the surface estate owner and the operator do not reach
an agreement within 90 days after the operator has provided such
notice, the matter shall be referred to third party arbitration for
resolution within a period of 90 days. The cost of such arbitration
shall be the responsibility of the operator.
(2) The Secretary shall identify persons with experience in
conducting arbitrations and shall make this information available to
operators.
(3) Referral of a matter for arbitration by a person identified by
the Secretary pursuant to paragraph (2) shall be sufficient to
constitute compliance with paragraph (1).
(d) Attorneys Fees.--If action is taken to enforce or interpret any
of the terms and conditions contained in a surface use agreement, the
prevailing party shall be reimbursed by the other party for reasonable
attorneys fees and actual costs incurred, in addition to any other
relief which a court or arbitration panel may grant.
SEC. 203. AUTHORIZED EXPLORATION AND DRILLING OPERATIONS.
(a) Authorization Without Surface Use Agreement.--The Secretary may
authorize an operator to conduct exploration and drilling operations on
lands covered by section 202 in the absence of an agreement with the
surface estate owner or owners, if--
(1) the Secretary makes a determination in writing that the
operator made a good faith attempt to conclude such an
agreement, including referral of the matter to arbitration
pursuant to section 202(c), but that no agreement was concluded
within 90 days after the referral to arbitration;
(2) the operator submits a plan of operations that provides
for the matters specified in section 202(b) and for compliance
with all other applicable requirements of Federal and State
law; and
(3) the operator posts a bond or other financial assurance
in an amount the Secretary determines to be adequate to ensure
compensation to the surface estate owner for any damages to the
site, in the form of a surety bond, trust fund, letter of
credit, government security, certificate of deposit, cash, or
equivalent.
(b) Surface Owner Participation.--The Secretary shall provide
surface estate owners with an opportunity to--
(1) comment on plans of operations in advance of a
determination of compliance with this title;
(2) participate in bond level determinations and bond
release proceedings under this section;
(3) attend an on-site inspection during such determinations
and proceedings;
(4) file written objections to a proposed bond release; and
(5) request and participate in an on-site inspection when
they have reason to believe there is a violation of the terms
and conditions of a plan of operations.
(c) Payment of Financial Guarantee.--A surface estate owner with
respect to any land subject to a lease may petition the Secretary for
payment of all or any portion of a bond or other financial assurance
required under this section as compensation for any damages as a result
of exploration and drilling operations. Pursuant to such a petition,
the Secretary may use such bond or other guarantee to provide
compensation to the surface estate owner for such damages.
(d) Bond Release.--Upon request and after inspection and
opportunity for surface estate owner review, the Secretary may release
the financial assurance required under this section if the Secretary
determines that exploration and drilling operations are ended and all
damages have been fully compensated.
SEC. 204. SURFACE OWNER NOTIFICATION.
The Secretary shall--
(1) notify surface estate owners in writing at least 45
days in advance of lease sales;
(2) within ten working days after a lease is issued, notify
surface estate owners of regarding the identity of the lessee;
(3) notify surface estate owners in writing concerning any
subsequent decisions regarding a lease, such as modifying or
waiving stipulations and approving rights of way; and
(4) notify surface estate owners within five business days
after issuance of a drilling permit under a lease.
TITLE III--RECLAMATION AND BONDING
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