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[Senate Report 110-122]
[From the U.S. Government Publishing Office]

                                                       Calendar No. 256
110th Congress                                                   Report
                                 SENATE
 1st Session                                                    110-122

======================================================================

 
                 MORE WATER AND MORE ENERGY ACT OF 2007

                                _______
                                

                 June  28, 2007.--Ordered to be printed

                                _______
                                

   Mr. Bingaman, from the Committee on Energy and Natural Resources, 
                        submitted the following

                              R E P O R T

                        [To accompany H.R. 902]

    The Committee on Energy and Natural Resources, to which was 
referred the Act (H.R. 902) to facilitate the use for 
irrigation and other purposes of water produced in connection 
with development of energy resources, having considered the 
same, reports favorably thereon with an amendment and 
recommends that the Act, as amended, do pass.
    The amendment is as follows:
    Strike out all after the enacting clause and insert in lieu 
thereof the following:

SECTION 1. SHORT TITLE, FINDINGS, AND PURPOSE.

    (a) Short Title.--This Act may be cited as the ``More Water, More 
Energy, and Less Waste Act of 2007''.
    (b) Findings.--The Congress finds that--
          (1) development of energy resources, including oil, natural 
        gas, coalbed methane, and geothermal resources, frequently 
        results in bringing to the surface water extracted from 
        underground sources;
          (2) some of that produced water is used for irrigation or 
        other purposes, but most of the water is returned to the 
        subsurface or otherwise disposed of as waste;
          (3) reducing the quantity of produced water returned to the 
        subsurface and increasing the quantity of produced water that 
        is made available for irrigation and other uses--
                  (A) would augment water supplies;
                  (B) could reduce the costs to energy developers for 
                disposing of the water; and
                  (C) in some cases, could increase the efficiency of 
                energy development activities; and
          (4) it is in the national interest
                  (A) to limit the quantity of produced water disposed 
                of as waste;
                  (B) to optimize the production of energy resources; 
                and
                  (C) to remove or reduce obstacles to use of produced 
                water for irrigation or other purposes in ways that 
                will not adversely affect water quality or the 
                environment.
    (c) Purposes.--The purposes of this Act are--
          (1) to optimize the production of energy resources--
                  (A) by minimizing the quantity of produced water; and
                  (B) by facilitating the use of produced water for 
                irrigation and other purposes without adversely 
                affecting water quality or the environment; and
          (2) to demonstrate means of accomplishing those results.

SEC. 2. DEFINITIONS.

    In this Act:
          (1) Lower basin state.--The term ``Lower Basin State'' means 
        any of the States of--
                  (A) Arizona;
                  (B) California; and
                  (C) Nevada.
          (2) Produced water.--The term ``produced water'' means water 
        from an underground source that is brought to the surface as 
        part of the process of exploration for, or development of--
                  (A) oil;
                  (B) natural gas;
                  (C) coalbed methane; or
                  (D) any other substance to be used as an energy 
                source.
          (3) Secretary.--The term ``Secretary'' means the Secretary of 
        the Interior.
          (4) Upper basin state.--The term ``Upper Basin State'' means 
        any of the States of--
                  (A) Colorado;
                  (B) New Mexico;
                  (C) Utah; and
                  (D) Wyoming.

SEC. 3. IDENTIFICATION OF PROBLEMS AND SOLUTIONS.

    (a) Study.--The Secretary shall conduct a study to identify--
          (1) the technical, economic, environmental, and other 
        obstacles to reducing the quantity of produced water;
          (2) the technical, economic, environmental, legal, and other 
        obstacles to increasing the extent to which produced water can 
        be used for irrigation and other purposes without adversely 
        affecting water quality or the environment;
          (3) the legislative, administrative, and other actions that 
        could reduce or eliminate the obstacles identified in 
        paragraphs (1) and (2); and
          (4) the costs and benefits associated with reducing or 
        eliminating the obstacles identified in paragraphs (1) and (2).
    (b) Report.--Not later than 1 year after the date of enactment of 
this Act, the Secretary shall submit to the Committee on Natural 
Resources of the House of Representatives and the Committee on Energy 
and Natural Resources of the Senate a report describing the results of 
the study under subsection (a).

SEC. 4. IMPLEMENTATION.

    (a) Grants.--Subject to the availability of appropriations, the 
Secretary shall provide financial assistance for the development of 
facilities, technologies, and processes to demonstrate the feasibility, 
effectiveness, and safety of--
          (1) optimizing energy resource production by reducing the 
        quantity of produced water generated; or
          (2) increasing the extent to which produced water may be 
        recovered and made suitable for use for irrigation, municipal, 
        or industrial uses, or other purposes without adversely 
        affecting water quality or the environment.
    (b) Limitations.--Assistance under this section--
          (1) shall be provided for--
                  (A) at least 1 project in each of the Upper Basin 
                States; and
                  (B) at least 1 project in at least 1 of the Lower 
                Basin States;
          (2) shall not exceed $1,000,000 for any project;
          (3) shall be used to pay not more than 50 percent of the 
        total cost of a project;
          (4) shall not be used for the operation or maintenance of any 
        facility; and
          (5) may be in addition to assistance provided by the Federal 
        Government pursuant to other provisions of law.

SEC. 5. CONSULTATION, ADVICE, AND COMMENTS.

    In carrying out this Act, including in preparing the report under 
section 3 (b) and establishing criteria to be used in connection with 
an award of financial assistance under section 4, the Secretary shall--
          (1) consult with the Secretary of Energy, the Administrator 
        of the Environmental Protection Agency, and appropriate 
        Governors and local officials;
          (2)(A) review any relevant information developed in 
        connection with research carried out by others, including 
        research carried out pursuant to subtitle J of title IX of the 
        Energy Policy Act of 2005 (42 U.S.C. 16371 et seq.); and
          (B) to the extent the Secretary determines to be advisable, 
        include that information in the report under section 3 (b);
          (3) seek the advice of--
                  (A) individuals with relevant professional or 
                academic expertise; and
                  (B) individuals or representatives of entities with 
                industrial experience, particularly experience relating 
                to production of oil, natural gas, coalbed methane, or 
                other energy resources (including geothermal 
                resources); and
          (4) solicit comments and suggestions from the public.

SEC. 6. RELATION TO OTHER LAWS.

    Nothing in this Act supersedes, modifies, abrogates, or limits--
          (1) the effect of any State law or any interstate authority 
        or compact relating to--
                  (A) any use of water; or
                  (B) the regulation of water quantity or quality; or
          (2) the applicability or effect of any Federal law (including 
        regulations).

SEC. 7. AUTHORIZATION OF APPROPRIATIONS.

    There are authorized to be appropriated--
          (1) $1,000,000 to carry out section 3; and
          (2) $7,500,000 to carry out section 4.

                                PURPOSE

    The purpose of H.R. 902 is to facilitate the use for 
irrigation and other purposes of water produced in connection 
with development of energy resources.

                          BACKGROUND AND NEED

    In 2002, 2.1 billion barrels of oil and 196 trillion cubic 
feet of natural gas were produced in the United States (API). 
These activities resulted in nearly 22 billion barrels of 
produced water (2.9 million acre-feet)--water that is brought 
to the surface with oil and gas as a byproduct of production. 
The most common method of disposal of the produced water is 
subsurface injection which is expensive and does not make use 
of a potentially valuable resource.
    Currently, there are technical, economic, environmental, 
and legal issues which need to be addressed before the use of 
produced water becomes an industry norm. The potential 
benefits, though, are significant. Adding a new water resource 
in the water-short Western United States can help address 
future projected water shortages in the region. The produced 
water that contains the lowest concentration of dissolved 
solids (less than 10,000 ppm) is found in the West. For 
example, energy operations in the Powder River basin in north-
central Wyoming produce approximately 1.4 million barrels of 
relatively good quality water per day.
    Reducing the amount of produced water can also have 
significant benefits to the oil and gas industry. One estimate 
indicates that significantly reducing the volume injected into 
disposal wells can reduce the energy loss of operations by as 
much as 20 percent.

                          LEGISLATIVE HISTORY

    H.R. 902 was introduced on February 7, 2007 by 
Representative Mark Udall for himself, and Representatives Chet 
Edwards and Steve Pearce, and referred to the House Natural 
Resources Committee. Under suspension of the rules, H.R. 902 
passed the House of Representatives on March 19, 2007. A 
similar measure, S. 1116 was introduced by Senator Salazar for 
himself, and Senator Bingaman, Senator Domenici, and Senator 
Thomas on April 16, 2007, and referred to the Committee on 
Energy and Natural Resources. The Subcommittee on Water and 
Power held a hearing on S. 1116 and H.R. 902 on April 25, 2007. 
At its business meeting on May 23, 2007, the Committee ordered 
H.R. 902 favorably reported, with an amendment in the nature of 
a substitute.

                        COMMITTEE RECOMMENDATION

    The Senate Committee on Energy and Natural Resources, in an 
open business session on May 23, 2007, by a unanimous voice 
vote of a quorum present, recommends that the Senate pass H.R. 
902, if amended as described herein.

                          COMMITTEE AMENDMENT

    During the consideration of H.R. 902, the Committee adopted 
an amendment in the nature of a substitute to improve the bill.
    The first change modifies the purpose of the bill to make 
clear that it is intended to help optimize energy production. 
The second change directs the Director of the Bureau of Land 
Management to participate in the study required under section 
3. The third change expands the scope of the study to include 
an analysis of obstacles to reducing the quantity of produced 
water, the means to reducing those obstacles, and the relative 
costs and benefits of doing so. The fourth change modifies the 
Secretary's authority to provide grants to include projects to 
reduce the amount of produced water generated. The fifth change 
specifies that the Secretary shall provide grants to at least 
one project in each of the Upper Basin States and one project 
in the Lower Basin States. The final change increases the 
authorization for grants from $5,000,000 to $7,500,000.

                      SECTION-BY-SECTION ANALYSIS

    Section 1 provides the short title, findings, and purposes 
of the Act.
    Section 2 defines the terms used in the Act.
    Section 3(a) directs the Secretary to conduct a study to 
identify obstacles to reducing the quantity of produced water; 
obstacles to increasing the use of produced water; actions to 
minimize the identified obstacles; and costs and benefits 
associated with minimizing the identified obstacles.
    Section 3(b) directs the Secretary to submit to Congress a 
report on the study under subsection (a) not later than one 
year after the date of enactment.
    Section 4(a) directs the Secretary, subject to 
appropriations, to provide grants for the development of 
facilities, technologies, and processes to demonstrate the 
feasibility, effectiveness, and safety of projects to reduce 
the quantity of produced water generated or to recover, clean-
up, and apply produced water to beneficial uses.
    Section 4(b) provides that grants under the program shall 
be subject to the conditions and limitations described.
    Section 5 requires the Secretary to consult with other 
Federal agencies, and with State, local, private entities, and 
the public at large as described.
    Section 6 disclaims that the Act supersedes, modifies, 
abrogates, or limits State law, Federal law, or any interstate 
compact or authority.
    Section 7 authorizes appropriations to carry out the Act.

                   COST AND BUDGETARY CONSIDERATIONS

    The following estimate of costs of this measure has been 
provided by the Congressional Budget Office:

                                                      June 7, 2007.
Hon. Jeff Bingaman,
Chairman, Committee on Energy and Natural Resources,
U.S. Senate, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 902, the More 
Water, More Energy, and Less Waste Act of 2007.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact are Tyler 
Kruzich and David Reynolds.
            Sincerely,
                                                   Peter R. Orszag.
    Enclosure.

H.R. 902--More Water, More Energy, and Less Waste Act of 2007

    Summary: H.R. 902 would authorize the Secretary of the 
Interior, acting through the Bureau of Reclamation (BOR) and 
the U.S. Geological Survey (USGS), to study the feasibility of 
using water produced during oil and gas exploration for 
irrigation. The act would authorize the Secretary to provide 
grants for projects that demonstrate such use. For these 
purposes, the act would authorize the appropriation of $8.5 
million.
    Assuming appropriations of the authorized amounts, CBO 
estimates that the agencies would spend $1 million to conduct a 
feasibility study in 2008 and 2009, $3 million for 
demonstration project grants over the 2010-2012 period, and 
about $5 million after 2012. Enacting H.R. 902 would not affect 
revenues or direct spending.
    The legislation contains no private-sector or 
intergovernmental mandates as defined in the Unfunded Mandates 
Reform Act (UMRA) and would impose no costs on state, local, or 
tribal governments.
    Estimated costs to the Federal Government: The estimated 
budgetary impact of H.R. 902 is shown in the following table. 
The costs of this legislation fall within budget function 300 
(natural resources and environment).

----------------------------------------------------------------------------------------------------------------
                                                                       By fiscal year, in millions of dollars--
                                                                    --------------------------------------------
                                                                       2008     2009     2010     2011     2012
----------------------------------------------------------------------------------------------------------------
                                  CHANGES IN SPENDING SUBJECT TO APPROPRIATION

Estimated Authorization Level......................................        1        0        8        0        0
Estimated Outlays..................................................        *        1        1        1       1
----------------------------------------------------------------------------------------------------------------
Note.--* = less than $500,000.

    Basis of estimate: For this estimate, CBO assumes that H.R. 
902 will be enacted before the end of 2007 and that the 
authorized amounts will be appropriated for each year.
    The act would require the USGS to study the feasibility of 
using water produced during oil and natural gas exploration for 
irrigation purposes. Based on information from USGS, CBO 
estimates that conducting the study would cost $1 million over 
the next two years.
    H.R. 902 also would authorize BOR to provide grants for 
demonstration projects. CBO expects that the disbursal of 
grants would commence in 2010 following the completion of the 
feasibility study. Based on information from BOR, CBO estimates 
that grants to the states would cost $3 million over the 2010-
2012 period and an additional $5 million after 2012.
    Intergovernmental and private-sector impact: H.R. 902 
contains no intergovernmental or private-sector mandates as 
defined by UMRA and would impose no costs on the budgets of 
state, local, or tribal governments.
    Estimate prepared by: Federal Costs: Tyler Kruzich and 
David Reynolds; Impact on State, Local, and Tribal Governments: 
Lisa Ramirez-Branum; Impact on the Private Sector: Amy Petz.
    Estimate approved by: Peter H. Fontaine, Deputy Assistant 
Director for Budget Analysis.

                      REGULATORY IMPACT EVALUATION

    In compliance with paragraph 11(b) of rule XXVI of the 
Standing Rules of the Senate, the Committee makes the following 
evaluation of the regulatory impact which would be incurred in 
carrying out H.R. 902. The bill is not a regulatory measure in 
the sense of imposing Government-established standards or 
significant responsibilities on private individuals and 
business.
    No personal information would be collected in administering 
the program. Therefore, there would be no impact on personal 
privacy.
    Little, if any, additional paperwork would result from the 
enactment of H.R. 902.

                        EXECUTIVE COMMUNICATIONS

    The testimony provided by the Department of the Interior at 
the Subcommittee hearing on H.R. 902 and S. 1116, the Senate 
counterpart to H.R. 902, follows:

   Statement of Robert M. Hirsch, Associate Director for Water, U.S. 
           Geological Survey, U.S. Department of the Interior

    Mr. Chairman and Members of the Subcommittee, I am Dr. 
Robert M. Hirsch, Associate Director for Water for the U.S. 
Geological Survey (USGS). I thank you for the opportunity to 
provide the views of the Department of the Interior on H.R. 
902, the ``More Water and More Energy Act of 2007.''
    The Department agrees that the goals of the bill are 
commendable, but we have concerns regarding the availability of 
funding and the Administration's priorities. In addition, the 
USGS and Bureau of Reclamation (Reclamation) currently have 
sufficient authority to carry out the types of activities 
authorized by H.R. 902.
    Water is the lifeblood of the American West and the 
foundation of its economy, yet it is also the scarcest resource 
in some of the fastest growing areas of the country. Seeking to 
remove the obstacles to putting produced waters to beneficial 
use is important to our Nation's energy and water future.
    H.R. 902 requires the Secretary of the Interior, acting 
through the Commissioner of Reclamation, and the Director of 
the USGS, to conduct a study to identify the technical, 
economic, environmental, legal, and other obstacles to 
increasing the extent to which produced water can be used for 
irrigation and other purposes; and the legislative, 
administrative, and other actions that could reduce or 
eliminate such obstacles. It further requires the Secretary, 
within existing authorities, and subject to the availability of 
funds, appropriated for the purpose, to provide financial 
assistance for at least four demonstration projects. The $4 
million authorized for demonstration project grants would be 
used to develop facilities to demonstrate the feasibility, 
effectiveness, and safety of the processes to increase the 
extent produced water may be used for irrigation and other 
purposes.

                               background

    Development of energy resources, such as oil, natural gas, 
and coalbed methane, produces water, sometimes in volumes that 
are difficult and costly to manage. Often the produced water is 
of such poor quality that subsurface disposal is an essential 
cost of production. Streams and aquifers can be contaminated by 
improper handling of produced water or the failure of disposal 
systems. The major concerns over produced water are potential 
impacts on soils, water, and the biota that depend on the soil 
and water. Where produced water quality is unsuitable for 
irrigation, industrial, or domestic uses, it can be disposed of 
by deep well injection, evaporation, or after appropriate 
treatment, percolation or discharge into surface water 
drainages.
    Prior to environmental regulations in the 1970s, produced 
waters, which are often highly saline (3,000 to more than 
350,000 mg/L total dissolved solids) and may contain toxic 
metals, organic and inorganic components, and naturally 
occurring radioactive materials, were commonly discharged into 
streams, creeks, and unlined evaporation ponds, causing salt 
crusts and surface- and ground-water contamination. These past 
practices and current accidental releases of produced water are 
national issues that concern managers of Native American, 
Federal, and State lands, as well as oil and gas producers, 
mineral rights and lease owners, State and Federal regulators, 
and land owners. A growing concern is the potential use of land 
for farming, housing, or other uses where produced water from 
oil and gas production has left a legacy of undesirable 
environmental effects. Even produced waters of low salinity can 
lead to problems because application of such waters to the land 
for irrigation or ground water recharge can result in rapid 
leaching of the naturally occurring salts present in the soil 
and the unsaturated zone, leading to potential contamination of 
aquifers and streams.
    The USGS has an 80-year history of conducting scientific 
studies to evaluate and describe the long-term and short-term 
effects of the disposal of produced water on soils, ground 
water, streams, and ecosystems. The USGS has also conducted 
numerous studies to describe the effects of produced-water 
salts on water and biota, techniques for detecting these 
effects, and techniques for remediation of soils and ground 
water.
    In 2002, the USGS released a national produced-water 
geochemistry database that describes the water quality of 
waters produced from conventional oil and gas fields. This 
database is an invaluable tool for coalbed methane development 
companies; land managers; Federal, State, and local water-
quality officials; and the public. The information facilitates 
evaluation of issues pertaining to energy resource development 
and environmental quality, such as the need for anti-scaling 
additives, the design of water handling and treatment systems, 
and disposal and beneficial use options.
    The USGS and the U.S. Fish and Wildlife Service are 
studying the impacts on water quality and the landscape caused 
by waters associated with coalbed methane production in the 
Powder River Basin of Wyoming. This research is being conducted 
as part of the DOI Landscapes Initiative in collaboration with 
the Department of Energy, U.S. Fish and Wildlife Service, 
Bureau of Land Management, and others. One component of that 
project is an examination of hydrology and geochemistry in the 
vicinity of a produced-water infiltration pond. Early findings 
are that slightly to moderately saline water infiltrating from 
the pond dissolved significant quantities of salts present in 
the soil and unsaturated zone, resulting in a significant 
increase in total dissolved solids. Although coalbed methane 
production in the Powder River Basin can provide ecological 
benefits by increasing stream flows and creating and enhancing 
wetlands, there are some concerns associated with the levels of 
contaminants in the Basin. Indeed, preliminary findings were 
dramatic enough to cause a State regulatory agency to order 
that disposal of produced water at the infiltration pond be 
stopped and the site be reclaimed.
    The USGS, in cooperation with the Osage Nation, Department 
of Energy, and U.S. Environmental Protection Agency, is 
investigating the effects of hydrocarbons and produced water 
(brines) on soil and ground and surface water at two sites 
adjacent to Skiatook Lake in the southeastern part of the Osage 
Reservation in northeastern Oklahoma. Results from this 
investigation will provide information needed by environmental 
officials, land managers, petroleum companies, and land owners 
to assess human and ecosystem impacts and to develop risk-based 
corrective actions to clean up contamination from produced 
water from oil and gas wells that are no longer active.
    Reclamation has extensive expertise and capabilities in 
water storage and delivery infrastructure planning and design. 
Reclamation works with the states, BLM, EPA and others in 
managing produced waters so that the quality of Western water 
supplies are not degraded by impaired produced waters.
    Pilot and demonstration projects like those described in 
this bill could help provide proof of concept from treatment to 
beneficial use in key basins where opportunities may exist for 
converting produced waters to beneficial uses. However, the 
feasibility and potential value of any demonstration project 
should be evaluated prior to making any commitments to conduct 
pilot and demonstration projects. Any such demonstration 
projects should be well coordinated at the federal, state, and 
local levels. Other federal agencies with whom Reclamation and 
USGS would coordinate such demonstration projects include BLM, 
EPA, and DOE's National Energy Technology Lab (NETL).

                                concerns

    The Department concurs with the goals of the bill to 
identify impediments to the beneficial use of produced waters. 
Understanding the opportunities and overcoming the challenges 
involved in converting produced waters to beneficial uses will 
help irrigators, farmers, energy producers, and State and 
Federal agency efforts to increase the development of western 
energy sources while protecting the quality of our streams and 
aquifers.
    Our concerns with the bill include funding for these 
activities. The study, report, and pilot activities required by 
this bill are not currently in the FY2007 operating plans for 
the USGS or BOR and the FY 2008 President's Budget also does 
not fund these activities. The activities authorized in this 
bill should compete with other priority projects for funds.
    Additionally, language in Section 3 that directs the 
Secretary, acting through USGS and BOR, to conduct a study to 
identify the legal, legislative, and administrative obstacles 
to increasing the extent to which produced water can be used 
for irrigation and other purposes. It is not within the purview 
or expertise of the USGS or BOR to identify legal, legislative, 
or administrative obstacles.
    Another concern is that if the bill becomes law, the 
accomplishment of the study and report, as proposed in Section 
3 of H.R. 902, should be subject to the availability of funds 
appropriated for that purpose, just as the projects proposed by 
section 4 are. We anticipate that such a study would focus on 
existing and potential new technologies for treating produced 
waters to make them suitable for beneficial uses and would also 
focus on existing and potential new hydrologic and geochemical 
models needed to predict the impacts of various management 
strategies on streams, aquifers, soils and biota.
    We wish to note that S. 1116, a companion bill to H.R. 902 
which was introduced on April 17, 2007, is very similar to H.R. 
902 and that the Administration would have the same concerns 
about S. 1116 that we have discussed with respect to H.R. 902. 
We have one other comment on S. 1116. Section 3(a) of the 
Senate bill includes the Bureau of Land Management (BLM) in the 
list of agencies within the Department of the Interior that are 
to carry out the study authorized in this bill. While 
Reclamation and USGS are working with the BLM to manage 
produced waters, a study of this nature would appropriately be 
carried out by Reclamation and USGS. BLM and other Interior 
agencies, including the Fish and Wildlife Service, would 
provide assistance as appropriate but should not be listed as 
leads on the study.
    Improved technology and collaboration are among the four 
key tools proposed as part of Water 2025, an initiative of the 
Department to meet the water-supply challenges of the future.
    Thank you, Mr. Chairman, for the opportunity to present 
this testimony. I will be pleased to respond to questions you 
and other Members of the Subcommittee may have.

                        CHANGES IN EXISTING LAW

    In compliance with paragraph 12 of rule XXVI of the 
Standing Rules of the Senate, the Committee notes that no 
changes in existing law are made by the Act H.R. 902, as 
ordered reported.

                                  
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