[Congressional Record Volume 144, Number 147 (Thursday, October 15, 1998)]
[House]
[Pages H10937-H10939]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




  PROTECTING SANCTITY OF CONTRACTS AND LEASES ENTERED INTO BY SURFACE 
           PATENT HOLDERS WITH RESPECT TO COALBED METHANE GAS

  Mrs. CUBIN. Mr. Speaker, I move to suspend the rules and pass the 
Senate bill (S. 2500) to protect the sanctity of contracts and leases 
entered into by surface patent holders with respect to coalbed methane 
gas.
  The Clerk read as follows:

                                S. 2500

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

     SECTION 1. PROTECTION OF SANCTITY OF CONTRACTS AND LEASES OF 
                   SURFACE PATENT HOLDERS WITH RESPECT TO COALBED 
                   METHANE GAS.

       (a) In General.--Subject to subsection (b), the United 
     States shall recognize as not infringing upon any ownership 
     rights of the United States to coalbed methane any--
       (1) contract or lease covering any land that was conveyed 
     by the United States under the Act entitled ``An Act for the 
     protection of surface rights of entrymen'', approved March 3, 
     1909 (30 U.S.C. 81), or the Act entitled ``An Act to provide 
     for agricultural entries on coal lands'', approved June 22, 
     1910 (30 U.S.C. 83 et seq.), that was--
       (A) entered into by a person who has title to said land 
     derived under said Acts, and
       (B) that conveys rights to explore for, extract, and sell 
     coalbed methane from said land; or
       (2) coalbed methane production from the lands described in 
     subsection (a)(1) by a person who has title to said land and 
     who, on or before the date of enactment of this Act, has 
     filed an application with the State oil and gas regulating 
     agency for a permit to drill an oil and gas well to a 
     completion target located in a coal formation.
       (b) Application.--Subsection (a)--
       (1) shall apply only to a valid contract or lease described 
     in subsection (a) that is in effect on the date of enactment 
     of this Act;
       (2) shall not otherwise change the terms or conditions of, 
     or affect the rights or obligations of any person under such 
     a contract or lease;
       (3) shall apply only to land with respect to which the 
     United States is the owner of coal reserved to the United 
     States in a patent issued under the Act of March 3, 1909 (30 
     U.S.C. 81), or the Act of June 22, 1910 (30 U.S.C. 83 et 
     seq.), the position of the United States as the owner of the 
     coal not having passed to a third party by deed, patent or 
     other conveyance by the United States;
       (4) shall not apply to any interest in coal or land 
     conveyed, restored, or transferred by the United States to a 
     federally recognized Indian tribe, including any conveyance, 
     restoration, or transfer made pursuant to the Indian 
     Reorganization Act, June 18, 1934 (c. 576, 48 Stat. 984, as 
     amended); the Act of June 28, 1938 (c. 776, 52 Stat. 1209 as 
     implemented by the order of September 14, 1938, 3 Fed. Reg. 
     1425); and including the area described in section 3 of 
     Public Law 98-290; or any executive order;
       (5) shall not be construed to constitute a waiver of any 
     rights of the United States with respect to coalbed methane 
     production that is not subject to subsection (a); and
       (6) shall not limit the right of any person who entered 
     into a contract or lease before the date of enactment of this 
     Act, or enters into a contract or lease on or after the date 
     of enactment of this Act, for coal owned by the United 
     States, to mine and remove the coal and to release coalbed 
     methane without liability to any person referred to in 
     subsection (a)(1)(A) or (a)(2).

  The SPEAKER pro tempore. Pursuant to the rule, the gentlewoman from 
Wyoming (Mrs. Cubin) and the gentleman from California (Mr. Miller) 
each will control 20 minutes.
  The Chair recognizes the gentlewoman from Wyoming (Mrs. Cubin).
  Mrs. CUBIN. Mr. Speaker, I yield myself such time as I may consume.
  Mr. Speaker, I rise in strong support of S. 2500 which, as passed by 
the other body, is identical to my bill, H.R. 4598. This bill is a 
bipartisan response to the vexing question of the rightful ownership of 
methane gas which resides in the voids of coal seams; in other words, 
their coal will be so many feet deep, and then there will be space 
where methane gas exists, and beneath that will be another seam of 
coal.
  S. 2500 takes the position that where the United States has patented 
the surface estate together with all minerals except coal under the 
authority of either the 1909 or 1910 Coal Lands Act that the methane 
molecules belong to the patentee or his successor or interest. The bill 
excludes all interests where the United States has transferred its 
reserved coal interest to the third parties such as the Southern Ute 
Tribe in southwest Colorado.
  Mr. Speaker, this bill is necessary because of a recent Tenth Circuit 
Court decision concerning the aforementioned tribe and an oil company 
producing coalbed methane from the private lands within the Southern 
Utes' reservation. Again though, this bill has no effect whatsoever 
upon that court case for which we expect the United States Supreme 
Court will grant a writ of certiorari and decide the ownership question 
for those situations where the U.S. has granted its reserve coal rights 
to third parties. In the meantime, however, S. 2500 will allow 
patentholders to be secure in the knowledge that whatever leases or 
contracts that they have already entered into with coalbed methane 
producers are valid. Without such relief, these landowners would be 
left in a legal conundrum not of their own making.
  A Solicitor's opinion issued in 1981 appeared to settle the ownership 
question. My constituents in the Powder

[[Page H10938]]

River basin and others in the West where most coal seams are federally 
owned relied upon the Solicitor's analysis to assert their claims of 
coalbed methane ownership before leasing their rights to this gas.
  Mr. Speaker, I have a college degree in chemistry, and I am here to 
tell my colleagues that an atom of carbon that is bound to four 
hydrogen atoms is methane, it is a methane molecule pure and simple, 
and in my view and in the view of many other people the genesis of that 
molecule is unimportant when it comes to mineral ownership questions. 
What counts is who has the right to develop oil and gas resources 
within a particular tract of land, and without the common sense 
certainty of S. 2500 we have gridlock in the Powder River Basin coalbed 
methane business and in other places, too, such as the San Juan Basin 
of New Mexico.
  Mr. Speaker, natural gas, which is composed primarily of methane, is 
thought by many to be the fuel of the future. It is a very clean 
burning fuel. As a matter of fact, the competition between burning coal 
and clean coal and burning methane goes on within industry all the 
time. But methane certainly is a good fuel and a promising fuel to use.
  With S. 2500 enacted into law, our Nation's supply of natural gas 
from available domestic sources will be enhanced. This can only be good 
for the country, and I urge my colleagues to support this bill.
  Mr. Speaker, I reserve the balance of my time.
  Mr. MILLER of California. Mr. Speaker, I yield myself such time as I 
may consume.
  (Mr. MILLER of California asked and was given permission to revise 
and extend his remarks.)
  Mr. MILLER of California. Mr. Speaker, I had a lot I wanted to say on 
this legislation, but having just heard Professor Cubin's discussion of 
this, I do not think I want to match wits, her chemistry degree against 
my degree in American humor, on this topic, although I still do not 
quite get how the molecules belong to the surface guys, but the coal 
belongs to the subsurface. But we can go into that at another time. I 
think the gentlewoman has explained this bill quite properly.
  Mr. Speaker, this is an important piece of legislation, it is 
necessary to provide certainty for people with the existing agreements, 
and I support the legislation.
  This bill is very important to the western states and for those 
individuals who own or lease federally-owned coal. We understand that 
the bill's sponsors have been working with other members and with the 
Department of Interior to craft this agreement.
  As many of my colleagues know, in the west, it is not uncommon for 
the mineral estate, in this case oil and gas, to be in separate 
ownership from the surface of the land--what is commonly known as 
``split-estate.'' This system of split mineral estates is the result of 
the many federal statutes that granted varying levels of patents to 
homesteaders.
  In 1981, the Interior Department Solicitor issued an opinion that 
allowed surface owners in public lands states, like Wyoming and New 
Mexico, to lease the rights to coalbed methane gas to companies 
interested in developing this resource.
  Subsequent to that decision, other mineral estate owners, such as the 
Southern Ute Tribe, challenged the decision. Initially the Interior 
opinion was upheld, but on July 20, of this year, the 10th Circuit 
Court of Appeals, in a final en banc decision, ruled that methane gas 
produced out of coal seams is part of the coal itself, and not actually 
a gas.
  Consequently, the coalbed methane gas--instead of belonging to the 
owners of land as previously believed--is held to be owned by the owner 
of the mineral estate, or the owner of the coal. Therefore, in many 
places where these two resources occur together, there are separate 
owners.
  The bill's sponsors, and many of the landowners affected by the 
judicial decision, believe that the judicial decision will strip away a 
majority of the private ownership of gas in certain western states, and 
at a minimum, will cause a certain amount of confusion and potential 
monetary loss.
  To alleviate this situation, the bill would grandfather the leases 
that have been negotiated, in good faith, according to the policies of 
the federal government. The legislation would ensure that existing 
leases to produce methane remain valid and that there is no future 
assertion of ownership by the federal government on these parcels. The 
bill before applies only to federally owned coal. It would not have any 
effect on tribally owned or state-owned land or coal.
  While this bill provides an opportunity to provide some certainty for 
people with existing agreements, I would note that it has not been 
subject to any hearing or consideration by either the House Resources 
Committee or the Senate Energy Committee--despite the fact that the 
Court decision occurred approximately three months ago. The Interior 
Department has assured us that this bill is acceptable to them, and 
therefore, we will not oppose it today.
  Mr. Speaker, I yield back the balance of my time.
  Mrs. CUBIN. Mr. Speaker, I yield myself such time as I may consume.
  Mr. Speaker, I would like to let the body know for certain that I 
would never match my degree in chemistry against the gentleman from 
California's Ph.D. in humor.
  Mr. McINNIS. Mr. Speaker, my colleague, Mrs. Cubin and I would like 
to clarify several issues regarding S. 2500, the coalbed methane gas 
bill, for the record. We understand that this bill is very important to 
this country, including the Third District of Colorado and the State of 
Wyoming, as well as large parts of at least six states with coalbed 
methane gas patents, contracts and leases. This bill will address the 
uncertainty that has arisen elsewhere following a decision in the case 
Southern Ute Reservation v. Amoco Production Company in the 10th 
Circuit Court of Appeals. People may not realize the impact the 
litigation has made upon an area in the district of the gentleman from 
Colorado, Mr. McInnis. We wanted to take this opportunity to discuss 
and clarify some issues on behalf of constituents of the gentleman from 
Colorado, Mr. McInnis, who are concerned about the possible impact of 
this bill.
  First, this bill specifically exempts any interest in coal that was 
transferred, conveyed or restored by the United States to a federally 
recognized Indian tribe. The goal of this bill was not to impact the 
ongoing Southern Ute litigation. This bill is meant to address concerns 
raised elsewhere as to the ownership of coalbed methane gas and prevent 
financial hardship and disruption.
  Second, this bill is not intended ion any way to be construed to 
prejudice the right of any person to petition the Supreme Court of the 
United States for a writ of certiorari in the case of Southern Ute 
Reservation v. Amoco Production Company. This legislation specifically 
carves out the subject matter of the Southern Ute case and should not 
impact any decision by the United States Supreme Court as to whether to 
take the case on appeal from the 10th Circuit Court of Appeals.
  Third, supporting passage of S. 2500 should not be considered 
opposition to the Supreme Court hearing the Southern Ute case. Several 
parties, including many of the states impacted by the Southern Ute 
case, plan to offer briefs urging the United States Supreme Court to 
hear this case. This bill, S. 2500, should not prevent any interested 
parties from seeking Supreme Court review. Moreover, the gentlelady 
from Wyoming, Ms. Cubin, has pledged to work towards getting 
appropriate interested parties to write amicus briefs asking the United 
States Supreme Court to hear arguments in the Southern Ute case. After 
all, as discussed above, this legislation specifically carves out 
interests in coal transferred by the United States to Indian tribes. 
The normal appeals process to the United States Supreme Court is the 
appropriate manner for resolving the ongoing Southern Ute litigation.
  Mr. RAHALL. Mr. Speaker, I rise in support of S. 2500, legislation 
dealing with the ownership of coalbed methane as a source of energy in 
situations where a federal coal estate is involved.
  Until July of this year, the issue of how to allow the development of 
coalbed methane resources where a federal mineral estate was present 
seemed to be well settled. As a result of two Department of the 
Interior Solicitor opinions, it was held that the right to extract 
coalbed methane was vested with the owner of oil and gas rights rather 
than the coal resources. In situations where the federal government 
owned both, the Department required that an oil and gas lease be issued 
to extract the coalbed methane.
  There are other situations, however, where the federal government 
reserved to itself just the rights to the coal resource. These 
situations arise from federal policies pursued during the early part of 
this Century. Starting with the Coal Lands Act of 1909, the United 
States reserved coal deposits in lands subsequently disposed for 
agricultural purposes. This policy was also elaborated upon in a 1910 
Act. And it culminated with the 1916 Stock Raising Homestead Act which 
extended the reservation to all minerals whenever lands were patented 
to ranchers. But with respect to the 1909 and 1910 Coal Acts, it had 
been held that only the coal was reserved to the United States. The 
owner of any oil and gas rights could validly extract coalbed methane. 
Subsequently, a thriving coalbed industry has grown encouraged to a 
great part by the section 29

[[Page H10939]]

non-conventional fuel tax credit enacted in 1980.
  Indeed, when I championed coalbed methane legislation as part of the 
Energy Policy Act of 1992 in my then capacity as chairman of the House 
Subcommittee on Mining and Natural Resources, we examined this issue 
and found no need to include provisions relating to situations where 
coalbed methane was being developed in situations involving federal 
estates or the reservation of the coal resources.
  However, on July 20th of this year, in a somewhat tortured manner, 
the Tenth Circuit Court of Appeals asserted that coalbed methane is 
part of the coal, rather than a separate mineral resource. This ruling 
came as a result of litigation pursued by the Southern Ute Tribe in 
Colorado which claimed ownership of coalbed methane from coal it 
acquired under the terms of the Indian Reorganization Act of 1934 as a 
successor in interest to the statutory reservation of coal by the 
United States under the terms of the 1909 and 1910 Acts.
  This ruling, obviously, has far-reaching ramifications for any entity 
which is producing coalbed methane where a federal land or mineral 
interest lies. In effect, the rules of the game have suddenly been 
changed on them in a manner which jeopardizes millions of dollars of 
investment.
  The legislation before us seeks to mitigate the potentially 
disastrous affects of the Court's ruling by preserving the sanctity of 
existing coalbed methane leases associated with federally-owned coal 
reserves. It does not apply to such leases where the coal reserves have 
been conveyed to a federally-recognized Indian Tribe, thus upholding 
the Court's ruling as it would narrowly apply to the interests of the 
Southern Ute and similar tribes.
  Mr. Speaker, I commend this bill to the House. While the focus of 
this legislation is on coalbed methane in the western States, this 
energy resource is of increasing importance to the Nation as a whole 
especially as we continue to work to foster a coalbed methane industry 
in the East on private lands under the terms of the Energy Policy Act 
of 1992.
  Mrs. CUBIN. Mr. Speaker, I have no further requests for time, and I 
yield back the balance of my time.
  The SPEAKER pro tempore. The question is on the motion offered by the 
gentlewoman from Wyoming (Mrs. Cubin) that the House suspend the rules 
and pass the Senate bill, S. 2500.
  The question was taken; and (two-thirds having voted in favor 
thereof) the rules were suspended and the Senate bill was passed.
  A motion to reconsider was laid on the table.

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