Sticking to his stance on water issues in coal-bed methane development, Gov. Dave Freudenthal Tuesday denied approval of new rules by the Wyoming Environmental Quality Council.

The controversial rules are a "back door" approach to limiting volumes of water that are discharged by coal-bed methane wells and exceeds the authority of the Department of Environmental Quality, which the council oversees, Freudenthal said.

"The attorney general opined on April 12, 2006, correctly in my view, that DEQ could only concern itself with water quantity when it had an effect on quality," Freudenthal said in a letter to council Chairman Richard Moore. "DEQ has always concerned itself with those issues, but that is clearly not the same as saying they have broad authority to regulate quantities and usage of discharged water."

The coal-bed methane industry in the Powder River Basin alone drills nearly 3,000 new wells each year, and pumps about 1.5 million barrels of groundwater from coal aquifers to the surface each day.

In some instances, coal-bed methane water is put to beneficial use, such as agricultural irrigation and livestock watering. However, a majority of the water isn't put a specific beneficial use and sometimes overruns low-lying grazing lands.

Supporters of the rulemaking said the governor's decision effectively galvanizes a long-standing loophole in state policy toward coal-bed methane development. DEQ places water quality parameters on waters discharged on the surface from coal-bed methane wells, but only the state engineer has authority to place limits on the volumes of waters that are discharged.

Petitioners for the rulemaking argued that the state has refused to meld those two authorities together to ensure that the water discharges don't cause damage to agricultural operations.

Freudenthal has held that such damages are limited, and that the state works diligently to address such problems individually.

It's industry's same argument.

"It's a problem to a few. And those few are not getting satisfaction," said John Robitaille, vice president of the Petroleum Association of Wyoming.

Robitaille said water flooding is a problem to an extent, but it's not up to DEQ to address. Instead, the industry, and Freudenthal's administration, are holding out on the issue until a legislative panel weighs in on the issue.

"That's something I'm sure the (Coal-bed Natural Gas Water Use Task Force) is taking up," Robitaille said. "We'll just see what they come up with."

Coal-bed methane, now more than 10 years into commercial production, is anything but a new development, so the state has clearly decided not to address the issue, according to some.

Nancy Sorenson, board member of the Powder River Basin Resource Council, said the governor's decision amounts to more of a do-nothing attitude.

"I thought we had a governor who understood that people are being damaged by this," Sorenson said. "I can kind of understand some of his legal arguments, but the fact remains that a lot of people are damaged because of the amount of water, and there's nothing being done by the state or his."

Davis & Cannon attorney Kate Fox, who led the legal push for the council rulemaking, said the governor's decision was disappointing but came as no surprise. She said the assertion that the state has failed to protect agriculture was validated by the council's rulemaking, but that's of little solace now that Freudenthal has nixed the effort.

"This impartial tribunal (Environmental Quality Council) did find that what we were trying to do did have merit -- that there was a problem with current regulations and it needed to be addressed," Fox said Monday afternoon. "The bottom line is it is a loss. My people have limited resources, and they're not in this for some sort of victory that goes nowhere."

In the midst of the coal-bed water rulemaking, a sour relation developed between Freudenthal's administration and the Environmental Quality Council. Ever since the council took up a citizen petition more than a year ago, the citizens' council has had the ire of Freudenthal's administration. Industry, DEQ and the governor's office took offense -- most notably in a December letter from Freudenthal's office chastising the council for proceeding with the measure.

And just before the 2007 legislative session, Freudenthal questioned whether the council ought to receive direct funding for an independent staff.

Just this past month, Freudenthal came under more fire for appointing three industry representatives to the council, effectively making sure that three members of seven-person council would have to recuse themselves from coal-bed methane water discharge disputes. One of the new appointees quickly resigned when he learned of the situation, and was replaced by another who could oversee such cases.

Energy reporter Dustin Bleizeffer can be reached at (307) 577-6069 or dustin.bleizeffer@casperstartribune.net.