I 

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. 

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 

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.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE; FINDINGS; PURPOSE. 

4 (a) SHORT TITLE.—This Act may be cited as the 

5 ‘‘Western Waters and Surface Owners Protection Act’’. 

6 (b) FINDINGS.—The Congress finds the following: 
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1 (1) Domestic oil and gas resources, including 

2 coalbed methane, are an important part of the Na3 tion’s energy supply portfolio and their development 

4 in appropriate locations and in appropriate ways can 

5 help reduce dependence on imported energy supplies. 

6 (2) In many areas of the Western United 

7 States, federally owned minerals, including oil and 

8 gas, are in lands where the surface estate belongs to 

9 non-Federal parties whose interests can be adversely 

10 affected if the development of the minerals is not 

11 done in an appropriate manner. 

12 (3) Development of oil and gas—and especially 

13 coalbed methane—often involves removal of a sig14 nificant volume of groundwater. 

15 (4) Some of the water extracted in connection 

16 with this development is reinjected into the ground, 

17 while some is retained in surface holding ponds or 

18 released on the surface and allowed to flow into 

19 streams or other waterbodies, including ditches used 

20 for irrigation. 

21 (5) The quality of these extracted waters varies 

22 from one location to another. Some of these waters 

23 are of good quality, but they often contain dissolved 

24 minerals (such as sodium, magnesium, arsenic, or 

25 selenium) that can contaminate other waters as a re-
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1 sult of leaks or leaching from holding ponds or dis2 charge of extracted waters. In addition, extracted 

3 waters often have other characteristics, such as high 

4 acidity and temperature, that can adversely affect 

5 agricultural uses of land or the quality of the envi6 ronment. 

7 (6) Clearer requirements for proper disposal of 

8 these extracted waters is necessary in order to avoid 

9 adverse effects on the quality of ground and surface 

10 waters as well as the productivity of surrounding ag11 ricultural lands. 

12 (7) To reduce the chance of potential harm to 

13 water supplies, agricultural production, and the envi14 ronment that otherwise could result from disposal of 

15 water extracted in connection with coalbed methane 

16 development or the development of other oil or gas 

17 resources, the Congress should act to ensure that 

18 such disposal is subject to regulation under the Fed19 eral Water Pollution Control Act (33 U.S.C. 1251 et 

20 seq.) and the Mineral Leasing Act (30 U.S.C. 181 

21 et seq.). 

22 (8) Under the Stock-Raising Homestead Act 

23 (43 U.S.C. 291 et seq.) and other laws, the Federal 

24 Government has transferred to other parties the sur25 face estate in millions of acres in Western States 
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1 where ownership of coal, oil, gas, and other minerals 

2 has been retained by the Federal Government. 

3 (9) Under current Federal law, the leasing of 

4 federally owned coal on lands where the surface es5 tate is not owned by the United States is subject to 

6 the consent of the surface estate owners, but neither 

7 this consent requirement nor the operating and 

8 bonding requirements applicable to development of 

9 federally owned locatable minerals applies to the 

10 leasing or development of oil or gas in similar split11 estate situations. 

12 (10) To better balance the need for develop13 ment of oil and gas resources (including coalbed 

14 methane) with the rights and interests of the owners 

15 of the surface estate of affected lands, current law 

16 should be revised so as to increase the involvement 

17 of the surface estate owners in developing and imple18 menting plans for such development and to provide 

19 clearer and more adequate standards for such devel20 opment. 

21 (c) PURPOSE.—The purpose of this Act is to provide 

22 for the protection of water resources and surface estate 

23 owners in the development of oil and gas resources, includ24 ing coalbed methane. 
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1 TITLE I—PROTECTION OF 

2 WATER RESOURCES 

3 SEC. 101. MINERAL LEASING ACT REQUIREMENTS. 

4 Section 17 of the Mineral Leasing Act (30 U.S.C. 

5 226) is amended by adding at the end the following: 

6 ‘‘(p) WATER REQUIREMENTS.—

7 ‘‘(1) An operator producing oil or gas (includ8 ing coalbed methane) under a lease issued under this 

9 Act shall—

10 ‘‘(A) replace the water supply of a water 

11 user who obtains all or part of such user’s sup12 ply of water for domestic, agricultural, or other 

13 purposes from an underground or surface 

14 source that has been affected by contamination, 

15 diminution, or interruption proximately result16 ing from drilling operations for such produc17 tion; 

18 ‘‘(B) assure that any reinjection of water 

19 produced by drilling in connection with oper20 ations under the lease will return the water into 

21 the same aquifer from which it was extracted or 

22 an aquifer of no better water quality; and 

23 ‘‘(C) comply with all applicable require24 ments of Federal and State law for discharge of
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1 any water produced under the lease that is not 

2 reinjected. 

3 ‘‘(2) An application for a lease under this sub4 section shall be accompanied by a proposed water 

5 management plan including provisions to—

6 ‘‘(A) protect the quantity and quality of 

7 surface and ground water systems, both on-site 

8 and off-site, from adverse effects of the explo9 ration, development, and reclamation processes 

10 or to provide alternative sources of water if 

11 such protection cannot be assured; 

12 ‘‘(B) protect the rights of present users of 

13 water that would be affected by operations 

14 under the lease, including the discharge of any 

15 water produced in connection with such oper16 ations that is not reinjected; and 

17 ‘‘(C) identify any agreements with other 

18 parties for the beneficial use of produced waters 

19 and the steps that will be taken to comply with 

20 state and Federal laws related to such use.’’. 

21 SEC. 102. CLEAN WATER ACT REQUIREMENTS. 

22 Section 402(b) of the Federal Water Pollution Con23 trol Act (33 U.S.C. 1342) is amended by adding at the 

24 end the following: 
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1 ‘‘(10) To issue permits that comply with sub2 section (a) and any other relevant requirements of 

3 this Act, and to ensure that waters extracted from 

4 a subsurface formation in connection with develop5 ment of oil or gas, including coalbed methane, will 

6 be subject to appropriate requirements to minimize 

7 adverse effects on any lands or waters that would be 

8 affected by disposal or other uses of such extracted 

9 waters.’’. 

10 SEC. 103. RELATION TO STATE LAW. 

11 Nothing in this Act or any amendment made by this 

12 Act shall—

13 (1) be construed as impairing or in any manner 

14 affecting any right or jurisdiction of any State with 

15 respect to the waters of such State; or 

16 (2) be construed as limiting, altering, modi17 fying, or amending any of the interstate compacts or 

18 equitable apportionment decrees that apportion 

19 water among and between States. 

20 TITLE II—SURFACE OWNER 

21 PROTECTION 

22 SEC. 201. DEFINITIONS. 

23 As used in this title—

24 (1) the term ‘‘Secretary’’ means the Secretary 

25 of the Interior; 
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1 (2) the term ‘‘lease’’ means a lease issued by 

2 the Secretary under the Mineral Leasing Act (30 

3 U.S.C. 181 et seq.) or any other law, providing for 

4 development of oil and gas resources (including coal5 bed methane) owned by the United States;

6 (3) the term ‘‘lessee’’ means the holder of a 

7 lease; and 

8 (4) the term ‘‘operator’’ means any person that 

9 is responsible under the terms and conditions of a 

10 lease for the operations conducted on leased lands or 

11 any portion thereof. 

12 SEC. 202. POST-LEASE SURFACE USE AGREEMENT. 

13 (a) IN GENERAL.—Except as provided in section 203, 

14 the Secretary may not authorize any operator to conduct 

15 exploration and drilling operations on lands with respect 

16 to which title to oil and gas resources is held by the United 

17 States but title to the surface estate is not held by the 

18 United States, until the operator has filed with the Sec19 retary a document, signed by the operator and the surface 

20 owner or owners, showing that the operator has secured 

21 a written surface use agreement between the operator and 

22 the surface owner or owners that meets the requirements 

23 of subsection (b). 

24 (b) CONTENTS.—The surface use agreement shall 

25 provide for—
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1 (1) the use of only such portion of the surface 

2 estate as is reasonably necessary for exploration and 

3 drilling operations based on site-specific conditions; 

4 (2) the accommodation of the surface estate 

5 owner to the maximum extent practicable, including 

6 the location, use, timing, and type of exploration and 

7 drilling operations, consistent with the operator’s 

8 right to develop the oil and gas estate; 

9 (3) the reclamation of the site to a condition ca10 pable of supporting the uses which such lands were 

11 capable of supporting prior to exploration and drill12 ing operations; and 

13 (4) compensation for damages as a result of ex14 ploration and drilling operations, including but not 

15 limited to—

16 (A) loss of income and increased costs in17 curred; 

18 (B) damage to or destruction of personal 

19 property, including crops, forage, and livestock; 

20 and 

21 (C) failure to reclaim the site in accord22 ance with this paragraph (3). 

23 (c) PROCEDURE.—(1) An operator shall notify the 

24 surface estate owner or owners of the operator’s desire to 

25 conclude an agreement under this section. If the surface 
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1 estate owner and the operator do not reach an agreement 

2 within 90 days after the operator has provided such notice, 

3 the matter shall be referred to third party arbitration for 

4 resolution within a period of 90 days. The cost of such 

5 arbitration shall be the responsibility of the operator. 

6 (2) The Secretary shall identify persons with experi7 ence in conducting arbitrations and shall make this infor8 mation available to operators. 

9 (3) Referral of a matter for arbitration by a person 

10 identified by the Secretary pursuant to paragraph (2) 

11 shall be sufficient to constitute compliance with paragraph 

12 (1). 

13 (d) ATTORNEYS FEES.—If action is taken to enforce 

14 or interpret any of the terms and conditions contained in 

15 a surface use agreement, the prevailing party shall be re16 imbursed by the other party for reasonable attorneys fees 

17 and actual costs incurred, in addition to any other relief 

18 which a court or arbitration panel may grant. 

19 SEC. 203. AUTHORIZED EXPLORATION AND DRILLING OP20 ERATIONS. 

21 (a) AUTHORIZATION WITHOUT SURFACE USE

22 AGREEMENT.—The Secretary may authorize an operator 

23 to conduct exploration and drilling operations on lands 

24 covered by section 202 in the absence of an agreement 

25 with the surface estate owner or owners, if—
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1 (1) the Secretary makes a determination in 

2 writing that the operator made a good faith attempt 

3 to conclude such an agreement, including referral of 

4 the matter to arbitration pursuant to section 202(c), 

5 but that no agreement was concluded within 90 days 

6 after the referral to arbitration; 

7 (2) the operator submits a plan of operations 

8 that provides for the matters specified in section 

9 202(b) and for compliance with all other applicable 

10 requirements of Federal and State law; and 

11 (3) the operator posts a bond or other financial 

12 assurance in an amount the Secretary determines to 

13 be adequate to ensure compensation to the surface 

14 estate owner for any damages to the site, in the 

15 form of a surety bond, trust fund, letter of credit, 

16 government security, certificate of deposit, cash, or 

17 equivalent. 

18 (b) SURFACE OWNER PARTICIPATION.—The Sec19 retary shall provide surface estate owners with an oppor20 tunity to—

21 (1) comment on plans of operations in advance 

22 of a determination of compliance with this title; 

23 (2) participate in bond level determinations and 

24 bond release proceedings under this section; 
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1 (3) attend an on-site inspection during such de2 terminations and proceedings; 

3 (4) file written objections to a proposed bond 

4 release; and 

5 (5) request and participate in an on-site inspec6 tion when they have reason to believe there is a vio7 lation of the terms and conditions of a plan of oper8 ations. 

9 (c) PAYMENT OF FINANCIAL GUARANTEE.—A sur10 face estate owner with respect to any land subject to a 

11 lease may petition the Secretary for payment of all or any 

12 portion of a bond or other financial assurance required 

13 under this section as compensation for any damages as 

14 a result of exploration and drilling operations. Pursuant 

15 to such a petition, the Secretary may use such bond or 

16 other guarantee to provide compensation to the surface 

17 estate owner for such damages. 

18 (d) BOND RELEASE.—Upon request and after inspec19 tion and opportunity for surface estate owner review, the 

20 Secretary may release the financial assurance required 

21 under this section if the Secretary determines that explo22 ration and drilling operations are ended and all damages 

23 have been fully compensated. 

24 SEC. 204. SURFACE OWNER NOTIFICATION. 

25 The Secretary shall—
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1 (1) notify surface estate owners in writing at 

2 least 45 days in advance of lease sales; 

3 (2) within ten working days after a lease is 

4 issued, notify surface estate owners of regarding the 

5 identity of the lessee; 

6 (3) notify surface estate owners in writing con7 cerning any subsequent decisions regarding a lease, 

8 such as modifying or waiving stipulations and ap9 proving rights of way; and 

10 (4) notify surface estate owners within five 

11 business days after issuance of a drilling permit 

12 under a lease. 

13 TITLE III—RECLAMATION AND 

14 BONDING 

15 SEC. 301. RECLAMATION STANDARD AND BOND. 

16 Section 17 of the Mineral Leasing Act (30 U.S.C. 

17 226) is amended by adding at the end the following: 

18 ‘‘(p) RECLAMATION REQUIREMENTS.—An operator 

19 producing oil or gas (including coalbed methane) under 

20 a lease issued pursuant to this Act shall—

21 ‘‘(1) at a minimum restore the land affected to 

22 a condition capable of supporting the uses that it 

23 was capable of supporting prior to any drilling, or 

24 higher or better uses of which there is reasonable 

25 likelihood, so long as such use or uses do not present 
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1 any actual or probable hazard to public health or 

2 safety or pose any actual or probable threat of water 

3 diminution or pollution, and the permit applicants’ 

4 declared proposed land use following reclamation is 

5 not impractical or unreasonable, inconsistent with 

6 applicable land use policies and plans, or involve un7 reasonable delay in implementation, or is violative of 

8 Federal, State, or local law; 

9 ‘‘(2) ensure that all reclamation efforts proceed 

10 in an environmentally sound manner and as contem11 poraneously as practicable with the oil and gas drill12 ing operations; and 

13 ‘‘(3) submit with the plan of operations a rec14 lamation plan that describes in detail the methods 

15 and practices that will be used to ensure complete 

16 and timely restoration of all lands affected by oil 

17 and gas operations. 

18 ‘‘(q) RECLAMATION BOND.—An operator producing 

19 oil or gas (including coalbed methane) under a lease issued 

20 under this Act shall post a bond that covers that area of 

21 land within the permit area upon which the operator will 

22 initiate and conduct oil and gas drilling and reclamation 

23 operations within the initial term of the permit. As suc24 ceeding increments of oil and gas drilling and reclamation 

25 operations are to be initiated and conducted within the
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1 permit area, the lessee shall file with the regulatory au2 thority an additional bond or bonds to cover such incre3 ments in accordance with this section. The amount of the 

4 bond required for each bonded area shall depend upon the 

5 reclamation requirements of the approved permit; shall re6 flect the probable difficulty of reclamation giving consider7 ation to such factors as topography, geology of the site, 

8 hydrology, and revegetation potential; and shall be deter9 mined by the Secretary. The amount of the bond shall be 

10 sufficient to assure the completion of the reclamation plan 

11 if the work had to be performed by the Secretary in the 

12 event of forfeiture. 

13 ‘‘(r) REGULATIONS.—No later than one year after 

14 the date of the enactment of this subsection, the Secretary 

15 shall promulgate regulations to implement the require16 ments of subsections (p) and (q). 

17 ‘‘(s) STUDY BY THE GENERAL ACCOUNTING OF18 FICE.—(1) The Comptroller General shall conduct a re19 view to assess the adequacy of the regulations issued by 

20 the Secretary pursuant to subsection (r) to ensure that 

21 operators will meet the requirements of subsection (p). 

22 ‘‘(2) A report of the results of the review required 

23 by paragraph (1) shall be transmitted to the Committee 

24 on Resources of the House of Representatives and the 

25 Committee on Energy and Natural Resources of the Sen-
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1 ate no later than 180 days after the date on which the 

2 Secretary promulgates regulations pursuant to subsection 

3 (r). 

4 ‘‘(3) The report required by paragraph (2) shall in5 clude findings and conclusions by the Comptroller General 

6 of the United States, and any recommendations the Comp7 troller General may make with respect to any legislation 

8 or administrative actions the Comptroller General deter9 mines would be appropriate to ensure compliance with the 

10 requirements of subsection (p).’’. 

11 TITLE IV—ABANDONED WELLS 

12 SEC. 401. DEFINITION. 

13 As used in this title, the term ‘‘abandoned well’’ 

14 means any well drilled for the purpose of exploring for 

15 or developing oil or gas resources (including coalbed meth16 ane) that—

17 (1) has not been in operation for a period of 12 

18 continuous months, unless the owner or operator has 

19 notified the Secretary of the Interior (for wells 

20 drilled to explore for or develop minerals owned by 

21 the United States) or the relevant State regulatory 

22 agency (for wells drilled to explore for or develop 

23 minerals not owned by the United States) that the 

24 well has been temporarily shut down; or 
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1 (2) has not been operative for more than 60 

2 continuous months after the owner or operator has 

3 notified the Secretary of the Interior (for wells 

4 drilled to explore for or develop minerals owned by 

5 the United States) or the relevant State regulatory 

6 agency (for wells drilled to explore for or develop 

7 minerals not owned by the United States) that the 

8 well has been temporarily shut down. 

9 SEC. 402. FEDERAL REMEDIATION PROGRAM. 

10 (a) ESTABLISHMENT OF PROGRAM.—(1) The Sec11 retary of the Interior, in cooperation with the Secretary 

12 of Agriculture, shall establish a program to ensure to the 

13 maximum extent feasible the remediation, reclamation, 

14 and closure of abandoned wells that—

15 (A) are located on lands administered by an 

16 agency of the Department of the Interior or the For17 est Service; or 

18 (B) were drilled to explore for or develop min19 erals owned by the United States located on lands 

20 with respect to which the surface estate is not owned 

21 by the United States. 

22 (2) In implementing the program, the Secretary of 

23 the Interior— 

24 (A) shall cooperate with the Secretary of 

25 Agriculture and the States with respect to the 
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1 Federal lands covered by the program are lo2 cated; and 

3 (B) shall consult with the Secretary of En4 ergy and the Interstate Oil and Gas Compact 

5 Commission. 

6 (3) The Secretary of the Interior shall establish the 

7 program by no later than 3 years after the date of enact8 ment of this section. 

9 (b) PROGRAM ELEMENTS.—The program established 

10 under subsection (a) shall—

11 (1) provide for identification of abandoned wells 

12 to be covered by the program; 

13 (2) establish a means of ranking critical sites 

14 for priority in remediation based on potential envi15 ronmental harm, other land use priorities, and pub16 lic health and safety; and 

17 (3) provide as far as possible for identifying any 

18 lessees or other persons responsible for abandoned 

19 wells, and for recovering the costs of remediation to 

20 the maximum extent feasible.

21 (c) PLAN.—Within 6 months after the date of enact22 ment of this section, the Secretary of the Interior, in co23 operation with the Secretary of Agriculture, shall prepare 

24 a plan for implementing the program established under 

25 subsection (a). A copy of the plan shall be transmitted 
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1 to the Committee on Resources of the House of Represent2 atives and the Committee on Energy and Natural Re3 sources of the Senate. 

4 (d) REVIEW AND REPORT.—(1) No later than 3 years 

5 after the date of enactment of this section, the Secretary 

6 of the Interior, in consultation with the Secretary of Agri7 culture, shall complete a review of the status of remedi8 ation, reclamation, and closure actions under the program. 

9 (2) Upon completion of the review required by para10 graph (1), the Secretary of the Interior shall provide to 

11 the Committee on Resources of the House of Representa12 tives and the Committee on Energy and Natural Re13 sources of the Senate—

14 (A) a report on the results of the review; 

15 (B) information regarding any wells on lands 

16 covered by the program that have been abandoned 

17 since the date of enactment of this section; and 

18 (C) any recommendations the Secretary may 

19 choose to make regarding legislative or administra20 tion steps to further the purposes for which the pro21 gram was established. 

22 (e) AUTHORIZATION OF APPROPRIATIONS.—There 

23 are authorized to be appropriated to the Secretary of the 

24 Interior $5,000,000 for each of fiscal years 2005 through 

25 2006 to carry out this section.
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1 SEC. 403. ASSISTANCE TO STATES AND TRIBES. 

2 (a) STATE PROGRAM.—The Secretary of the Interior, 

3 in consultation with the Secretary of Energy, shall estab4 lish a program to provide technical assistance to facilitate 

5 State efforts to develop and implement practical and eco6 nomical remedies for environmental problems caused by 

7 abandoned wells on lands that are not owned by the 

8 United States. The Secretary shall work with the States, 

9 through the Interstate Oil and Gas Compact Commission, 

10 to assist the States in quantifying and mitigating environ11 mental risks of onshore abandoned wells on State and pri12 vate lands.

13 (b) TRIBAL PROGRAM.—The Secretary of the Inte14 rior, in consultation with the Secretary of Energy, shall 

15 establish a program to provide technical assistance to fa16 cilitate efforts by Indian Tribes to develop and implement 

17 practical and economical remedies for environmental prob18 lems caused by abandoned wells on Indian lands, including 

19 lands held in trust by the United States. 

20 (c) PROGRAM ELEMENTS.—So far as possible, the 

21 programs established under this section shall include—

22 (1) mechanisms to facilitate identification of re23 sponsible parties; 

24 (2) criteria for ranking critical sites based on 

25 factors such as other land use priorities, potential 

26 environmental harm and public visibility; and 
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1 (3) information and training programs regard2 ing best practices for remediation of different types 

3 of sites. 

4 (d) AUTHORIZATION OF APPROPRIATIONS.—There is 

5 authorized to be appropriated to the Secretary of the Inte6 rior for activities under this section $5,000,000 for each 

7 of fiscal years 2005 through 2007.

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