[Senate Report 105-408]
[From the U.S. Government Publishing Office]



                                                       Calendar No. 639
105th Congress                                                   Report
                                 SENATE

 2d Session                                                     105-408
_______________________________________________________________________


 
                          COALBED METHANE GAS

                                _______
                                

 October 10 (legislative day, October 2), 1998.--Ordered to be printed

_______________________________________________________________________


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

                              R E P O R T

                         [To accompany S. 2500]

    The Committee on Energy and Natural Resources, to which was 
referred the bill (S. 2500) to protect the sanctity of 
contracts and leases entered into by surface patent holders 
with respect to coalbed methane gas, having considered the 
same, reports favorably thereon with an amendment and 
recommends that the bill, as amended, do pass.
    The amendment is as follows:
    On page 4, line 4, after the word ``lease'' add ``on or''.

                         purpose of the measure

    The purpose of S. 2500, as ordered reported, is to assert 
that the United States will not claim ownership rights to 
coalbed methane currently being produced, or uder contract or 
lease to be produced, by landowners or their lessees or 
contractors, on certain lands conveyed by the United States 
under the Act entitled ``An Act for the protection of surface 
rights of entrymen'', app[roved March 3, 1909 (30 U.S.C. 81) or 
the Act entitled ``An Act to provide for agricultural entries 
on coal lands'', approved on June 22, 1910 (30 U.S.C 83 et 
seq.), commonly referred to as the Coal Lands Acts of 1909 and 
1910.
    The Committee does not intend for any provision in the 
legislation 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 Southern Ute case discussed below.

                          background and need

    The Act of March 3, 1909 (30 U.S.C. 81) and the Act of June 
22, 1910 (30 U.S.C. 83) allowed persons to homestand, or 
otherwise locate, select or enter under the nonimineral land 
laws of the United States, lands classified as valuable for 
coal, subject to a reservation to the United States of the coal 
in those lands. The Acts neither define coal, nor mention 
coalbed methane. The Solicitor of the Department of the 
Interior, the agency charged with administering the two states, 
has taken the position that the reservation does not include 
coalbed methane. Owners of the surface estate in lands subject 
to these Acts have entered into commercial transactions based 
upon the interpretation.
    On July 29, 1998, the United States Court of Appeals for 
the 10th Circuit rejected the Solicitor's interpretation and 
held that the Federal Government's reservation dod include 
coalbed methane. The Court's decision in Southern Ute Indian 
Reservation v. Amoco Production Company, 151 F.3d 1251 (10th 
Cir. 1998) (en banc), overturns settled legal and commercial 
expectiations of many parties, resulting in financial 
disruption and hardship.

                      summary of major provisions

    S. 2500 declares that the United States shall recognize as 
not infringing upon any ownership rights of the United States 
to coalbed methane any valid contract or lease covering land 
conveyed by the United States pursuant to the Act of 1909 and 
1910 that were in effect on the date of enactment, and which 
convey rights to explore for, extract, and sell coalbed methane 
from such lands.
    The legislation does not otherwise change the terms or 
conditions of, or affect the rights or obligations of any 
person under contracts or leases in effect on the date of 
enactment. It applies only to lands with respect to which the 
United States is the owner of coal reserved to the United 
States in patents issued under the Coal Lands Acts of 1909 and 
1910 and to which theposition of the United States has not 
passed to a third party by deed, patent or other conveyance by the 
United States.
    The legislation does 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 of 1934.

                          legislative history

    Senator Mike Enzi of Wyoming introduced S. 2500 on 
September 18, 1998, for himself, Senator Thomas, and Senator 
Bingaman.

            committee recommendations and tabulation of vote

    The Senate Committee on Energy and Natural Resources, in 
open business session on Wednesday, September 23, 1998, by a 
unanimous voice vote of a quorum present, recommended that the 
Senate pass S. 2500 as amended.

                      section-by-section analysis

    Subsection (a) provides that the United States will 
recognize that neither existing contracts or leases for coalbed 
methane production entered into by landowners who derive their 
title to the land from the 1909 and 1910 Acts, nor production 
being conducted by the landowner himself or herself, will 
infringe upon any ownership rights of the United States to 
coalbed methane in those lands.
    Subsection (b)(1) through (b)(3) are self explanatory.
    Subsection (b)(4) provides that the waiver of Federal claim 
to ownership contained in subsection (a) will not apply to any 
interest in coal or land which the United States has conveyed, 
restored or transferred to an Indian tribe.
    Subsection (b)(5) is self explanatory.
    Subsection (b)(6) is intended to ensure that the 
legislation does not itself create any new liability by lessees 
of Federal coal to parties covered in subsection (a), and that 
lessees of Federal coal may continue to mine and remove the 
leased Federal coal, and to release coalbed methane incident to 
that mining and removal, without liability to parties covered 
in subsection (a) for royalties, or any other obligation not 
already provided by law.

                   cost and regulatory considerations

    The Congressional Budget Office estimate of the costs of 
this measure has been requested but was not received at the 
time the report was filed. When the report is available, the 
Chairman will request it to be printed in the Congressional 
Record for the advice of the Senate.

                      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 
implementing S. 2500.
    The bill is not a regulatory measure in the sense of 
imposing government-established standards or significant 
economic responsibilities on private individuals and 
businesses.
    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 S. 2500.

                        executive communications

    The Committee has requested legislative reports from the 
Department of the Interior and the Office of Management and 
Budget setting forth executive views on S. 2500. These reports 
had not been received at the time the report on S. 2500 was 
filed. When the reports become available, the Chairman will 
request that they be printed in the Congressional Record for 
the advice of the Senate.

                        changes in existing law

    In compliance with paragraph 12 of rule XXXVI of the 
Standing Rules of the Senate, the Committee notes that no 
changes in existing law are made by S. 2500 as reported.