[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.
____________________