Senate Report 110-122 - MORE WATER AND MORE ENERGY ACT OF 2007

[Senate Report 110-122]
[From the U.S. Government Publishing Office]

Calendar No. 256
110th Congress Report
SENATE
1st Session 110-122

======================================================================

MORE WATER AND MORE ENERGY ACT OF 2007

_______

June 28, 2007.--Ordered to be printed

_______

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

R E P O R T

[To accompany H.R. 902]

The Committee on Energy and Natural Resources, to which was
referred the Act (H.R. 902) to facilitate the use for
irrigation and other purposes of water produced in connection
with development of energy resources, having considered the
same, reports favorably thereon with an amendment and
recommends that the Act, as amended, do pass.
The amendment is as follows:
Strike out all after the enacting clause and insert in lieu
thereof the following:

SECTION 1. SHORT TITLE, FINDINGS, AND PURPOSE.

(a) Short Title.--This Act may be cited as the ``More Water, More
Energy, and Less Waste Act of 2007''.
(b) Findings.--The Congress finds that--
(1) development of energy resources, including oil, natural
gas, coalbed methane, and geothermal resources, frequently
results in bringing to the surface water extracted from
underground sources;
(2) some of that produced water is used for irrigation or
other purposes, but most of the water is returned to the
subsurface or otherwise disposed of as waste;
(3) reducing the quantity of produced water returned to the
subsurface and increasing the quantity of produced water that
is made available for irrigation and other uses--
(A) would augment water supplies;
(B) could reduce the costs to energy developers for
disposing of the water; and
(C) in some cases, could increase the efficiency of
energy development activities; and
(4) it is in the national interest
(A) to limit the quantity of produced water disposed
of as waste;
(B) to optimize the production of energy resources;
and
(C) to remove or reduce obstacles to use of produced
water for irrigation or other purposes in ways that
will not adversely affect water quality or the
environment.
(c) Purposes.--The purposes of this Act are--
(1) to optimize the production of energy resources--
(A) by minimizing the quantity of produced water; and
(B) by facilitating the use of produced water for
irrigation and other purposes without adversely
affecting water quality or the environment; and
(2) to demonstrate means of accomplishing those results.

SEC. 2. DEFINITIONS.

In this Act:
(1) Lower basin state.--The term ``Lower Basin State'' means
any of the States of--
(A) Arizona;
(B) California; and
(C) Nevada.
(2) Produced water.--The term ``produced water'' means water
from an underground source that is brought to the surface as
part of the process of exploration for, or development of--
(A) oil;
(B) natural gas;
(C) coalbed methane; or
(D) any other substance to be used as an energy
source.
(3) Secretary.--The term ``Secretary'' means the Secretary of
the Interior.
(4) Upper basin state.--The term ``Upper Basin State'' means
any of the States of--
(A) Colorado;
(B) New Mexico;
(C) Utah; and
(D) Wyoming.

SEC. 3. IDENTIFICATION OF PROBLEMS AND SOLUTIONS.

(a) Study.--The Secretary shall conduct a study to identify--
(1) the technical, economic, environmental, and other
obstacles to reducing the quantity of produced water;
(2) the technical, economic, environmental, legal, and other
obstacles to increasing the extent to which produced water can
be used for irrigation and other purposes without adversely
affecting water quality or the environment;
(3) the legislative, administrative, and other actions that
could reduce or eliminate the obstacles identified in
paragraphs (1) and (2); and
(4) the costs and benefits associated with reducing or
eliminating the obstacles identified in paragraphs (1) and (2).
(b) Report.--Not later than 1 year after the date of enactment of
this Act, the Secretary shall submit to the Committee on Natural
Resources of the House of Representatives and the Committee on Energy
and Natural Resources of the Senate a report describing the results of
the study under subsection (a).

SEC. 4. IMPLEMENTATION.

(a) Grants.--Subject to the availability of appropriations, the
Secretary shall provide financial assistance for the development of
facilities, technologies, and processes to demonstrate the feasibility,
effectiveness, and safety of--
(1) optimizing energy resource production by reducing the
quantity of produced water generated; or
(2) increasing the extent to which produced water may be
recovered and made suitable for use for irrigation, municipal,
or industrial uses, or other purposes without adversely
affecting water quality or the environment.
(b) Limitations.--Assistance under this section--
(1) shall be provided for--
(A) at least 1 project in each of the Upper Basin
States; and
(B) at least 1 project in at least 1 of the Lower
Basin States;
(2) shall not exceed $1,000,000 for any project;
(3) shall be used to pay not more than 50 percent of the
total cost of a project;
(4) shall not be used for the operation or maintenance of any
facility; and
(5) may be in addition to assistance provided by the Federal
Government pursuant to other provisions of law.

SEC. 5. CONSULTATION, ADVICE, AND COMMENTS.

In carrying out this Act, including in preparing the report under
section 3 (b) and establishing criteria to be used in connection with
an award of financial assistance under section 4, the Secretary shall--
(1) consult with the Secretary of Energy, the Administrator
of the Environmental Protection Agency, and appropriate
Governors and local officials;
(2)(A) review any relevant information developed in
connection with research carried out by others, including
research carried out pursuant to subtitle J of title IX of the
Energy Policy Act of 2005 (42 U.S.C. 16371 et seq.); and
(B) to the extent the Secretary determines to be advisable,
include that information in the report under section 3 (b);
(3) seek the advice of--
(A) individuals with relevant professional or
academic expertise; and
(B) individuals or representatives of entities with
industrial experience, particularly experience relating
to production of oil, natural gas, coalbed methane, or
other energy resources (including geothermal
resources); and
(4) solicit comments and suggestions from the public.

SEC. 6. RELATION TO OTHER LAWS.

Nothing in this Act supersedes, modifies, abrogates, or limits--
(1) the effect of any State law or any interstate authority
or compact relating to--
(A) any use of water; or
(B) the regulation of water quantity or quality; or
(2) the applicability or effect of any Federal law (including
regulations).

SEC. 7. AUTHORIZATION OF APPROPRIATIONS.

There are authorized to be appropriated--
(1) $1,000,000 to carry out section 3; and
(2) $7,500,000 to carry out section 4.

PURPOSE

The purpose of H.R. 902 is to facilitate the use for
irrigation and other purposes of water produced in connection
with development of energy resources.

BACKGROUND AND NEED

In 2002, 2.1 billion barrels of oil and 196 trillion cubic
feet of natural gas were produced in the United States (API).
These activities resulted in nearly 22 billion barrels of
produced water (2.9 million acre-feet)--water that is brought
to the surface with oil and gas as a byproduct of production.
The most common method of disposal of the produced water is
subsurface injection which is expensive and does not make use
of a potentially valuable resource.
Currently, there are technical, economic, environmental,
and legal issues which need to be addressed before the use of
produced water becomes an industry norm. The potential
benefits, though, are significant. Adding a new water resource
in the water-short Western United States can help address
future projected water shortages in the region. The produced
water that contains the lowest concentration of dissolved
solids (less than 10,000 ppm) is found in the West. For
example, energy operations in the Powder River basin in north-
central Wyoming produce approximately 1.4 million barrels of
relatively good quality water per day.
Reducing the amount of produced water can also have
significant benefits to the oil and gas industry. One estimate
indicates that significantly reducing the volume injected into
disposal wells can reduce the energy loss of operations by as
much as 20 percent.

LEGISLATIVE HISTORY

H.R. 902 was introduced on February 7, 2007 by
Representative Mark Udall for himself, and Representatives Chet
Edwards and Steve Pearce, and referred to the House Natural
Resources Committee. Under suspension of the rules, H.R. 902
passed the House of Representatives on March 19, 2007. A
similar measure, S. 1116 was introduced by Senator Salazar for
himself, and Senator Bingaman, Senator Domenici, and Senator
Thomas on April 16, 2007, and referred to the Committee on
Energy and Natural Resources. The Subcommittee on Water and
Power held a hearing on S. 1116 and H.R. 902 on April 25, 2007.
At its business meeting on May 23, 2007, the Committee ordered
H.R. 902 favorably reported, with an amendment in the nature of
a substitute.

COMMITTEE RECOMMENDATION

The Senate Committee on Energy and Natural Resources, in an
open business session on May 23, 2007, by a unanimous voice
vote of a quorum present, recommends that the Senate pass H.R.
902, if amended as described herein.

COMMITTEE AMENDMENT

During the consideration of H.R. 902, the Committee adopted
an amendment in the nature of a substitute to improve the bill.
The first change modifies the purpose of the bill to make
clear that it is intended to help optimize energy production.
The second change directs the Director of the Bureau of Land
Management to participate in the study required under section
3. The third change expands the scope of the study to include
an analysis of obstacles to reducing the quantity of produced
water, the means to reducing those obstacles, and the relative
costs and benefits of doing so. The fourth change modifies the
Secretary's authority to provide grants to include projects to
reduce the amount of produced water generated. The fifth change
specifies that the Secretary shall provide grants to at least
one project in each of the Upper Basin States and one project
in the Lower Basin States. The final change increases the
authorization for grants from $5,000,000 to $7,500,000.

SECTION-BY-SECTION ANALYSIS

Section 1 provides the short title, findings, and purposes
of the Act.
Section 2 defines the terms used in the Act.
Section 3(a) directs the Secretary to conduct a study to
identify obstacles to reducing the quantity of produced water;
obstacles to increasing the use of produced water; actions to
minimize the identified obstacles; and costs and benefits
associated with minimizing the identified obstacles.
Section 3(b) directs the Secretary to submit to Congress a
report on the study under subsection (a) not later than one
year after the date of enactment.
Section 4(a) directs the Secretary, subject to
appropriations, to provide grants for the development of
facilities, technologies, and processes to demonstrate the
feasibility, effectiveness, and safety of projects to reduce
the quantity of produced water generated or to recover, clean-
up, and apply produced water to beneficial uses.
Section 4(b) provides that grants under the program shall
be subject to the conditions and limitations described.
Section 5 requires the Secretary to consult with other
Federal agencies, and with State, local, private entities, and
the public at large as described.
Section 6 disclaims that the Act supersedes, modifies,
abrogates, or limits State law, Federal law, or any interstate
compact or authority.
Section 7 authorizes appropriations to carry out the Act.

COST AND BUDGETARY CONSIDERATIONS

The following estimate of costs of this measure has been
provided by the Congressional Budget Office:

June 7, 2007.
Hon. Jeff Bingaman,
Chairman, Committee on Energy and Natural Resources,
U.S. Senate, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for H.R. 902, the More
Water, More Energy, and Less Waste Act of 2007.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contact are Tyler
Kruzich and David Reynolds.
Sincerely,
Peter R. Orszag.
Enclosure.

H.R. 902--More Water, More Energy, and Less Waste Act of 2007

Summary: H.R. 902 would authorize the Secretary of the
Interior, acting through the Bureau of Reclamation (BOR) and
the U.S. Geological Survey (USGS), to study the feasibility of
using water produced during oil and gas exploration for
irrigation. The act would authorize the Secretary to provide
grants for projects that demonstrate such use. For these
purposes, the act would authorize the appropriation of $8.5
million.
Assuming appropriations of the authorized amounts, CBO
estimates that the agencies would spend $1 million to conduct a
feasibility study in 2008 and 2009, $3 million for
demonstration project grants over the 2010-2012 period, and
about $5 million after 2012. Enacting H.R. 902 would not affect
revenues or direct spending.
The legislation contains no private-sector or
intergovernmental mandates as defined in the Unfunded Mandates
Reform Act (UMRA) and would impose no costs on state, local, or
tribal governments.
Estimated costs to the Federal Government: The estimated
budgetary impact of H.R. 902 is shown in the following table.
The costs of this legislation fall within budget function 300
(natural resources and environment).

----------------------------------------------------------------------------------------------------------------
By fiscal year, in millions of dollars--
--------------------------------------------
2008 2009 2010 2011 2012
----------------------------------------------------------------------------------------------------------------
CHANGES IN SPENDING SUBJECT TO APPROPRIATION

Estimated Authorization Level...................................... 1 0 8 0 0
Estimated Outlays.................................................. * 1 1 1 1
----------------------------------------------------------------------------------------------------------------
Note.--* = less than $500,000.

Basis of estimate: For this estimate, CBO assumes that H.R.
902 will be enacted before the end of 2007 and that the
authorized amounts will be appropriated for each year.
The act would require the USGS to study the feasibility of
using water produced during oil and natural gas exploration for
irrigation purposes. Based on information from USGS, CBO
estimates that conducting the study would cost $1 million over
the next two years.
H.R. 902 also would authorize BOR to provide grants for
demonstration projects. CBO expects that the disbursal of
grants would commence in 2010 following the completion of the
feasibility study. Based on information from BOR, CBO estimates
that grants to the states would cost $3 million over the 2010-
2012 period and an additional $5 million after 2012.
Intergovernmental and private-sector impact: H.R. 902
contains no intergovernmental or private-sector mandates as
defined by UMRA and would impose no costs on the budgets of
state, local, or tribal governments.
Estimate prepared by: Federal Costs: Tyler Kruzich and
David Reynolds; Impact on State, Local, and Tribal Governments:
Lisa Ramirez-Branum; Impact on the Private Sector: Amy Petz.
Estimate approved by: Peter H. Fontaine, Deputy Assistant
Director for Budget Analysis.

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
carrying out H.R. 902. The bill is not a regulatory measure in
the sense of imposing Government-established standards or
significant responsibilities on private individuals and
business.
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 H.R. 902.

EXECUTIVE COMMUNICATIONS

The testimony provided by the Department of the Interior at
the Subcommittee hearing on H.R. 902 and S. 1116, the Senate
counterpart to H.R. 902, follows:

Statement of Robert M. Hirsch, Associate Director for Water, U.S.
Geological Survey, U.S. Department of the Interior

Mr. Chairman and Members of the Subcommittee, I am Dr.
Robert M. Hirsch, Associate Director for Water for the U.S.
Geological Survey (USGS). I thank you for the opportunity to
provide the views of the Department of the Interior on H.R.
902, the ``More Water and More Energy Act of 2007.''
The Department agrees that the goals of the bill are
commendable, but we have concerns regarding the availability of
funding and the Administration's priorities. In addition, the
USGS and Bureau of Reclamation (Reclamation) currently have
sufficient authority to carry out the types of activities
authorized by H.R. 902.
Water is the lifeblood of the American West and the
foundation of its economy, yet it is also the scarcest resource
in some of the fastest growing areas of the country. Seeking to
remove the obstacles to putting produced waters to beneficial
use is important to our Nation's energy and water future.
H.R. 902 requires the Secretary of the Interior, acting
through the Commissioner of Reclamation, and the Director of
the USGS, to conduct a study to identify the technical,
economic, environmental, legal, and other obstacles to
increasing the extent to which produced water can be used for
irrigation and other purposes; and the legislative,
administrative, and other actions that could reduce or
eliminate such obstacles. It further requires the Secretary,
within existing authorities, and subject to the availability of
funds, appropriated for the purpose, to provide financial
assistance for at least four demonstration projects. The $4
million authorized for demonstration project grants would be
used to develop facilities to demonstrate the feasibility,
effectiveness, and safety of the processes to increase the
extent produced water may be used for irrigation and other
purposes.

background

Development of energy resources, such as oil, natural gas,
and coalbed methane, produces water, sometimes in volumes that
are difficult and costly to manage. Often the produced water is
of such poor quality that subsurface disposal is an essential
cost of production. Streams and aquifers can be contaminated by
improper handling of produced water or the failure of disposal
systems. The major concerns over produced water are potential
impacts on soils, water, and the biota that depend on the soil
and water. Where produced water quality is unsuitable for
irrigation, industrial, or domestic uses, it can be disposed of
by deep well injection, evaporation, or after appropriate
treatment, percolation or discharge into surface water
drainages.
Prior to environmental regulations in the 1970s, produced
waters, which are often highly saline (3,000 to more than
350,000 mg/L total dissolved solids) and may contain toxic
metals, organic and inorganic components, and naturally
occurring radioactive materials, were commonly discharged into
streams, creeks, and unlined evaporation ponds, causing salt
crusts and surface- and ground-water contamination. These past
practices and current accidental releases of produced water are
national issues that concern managers of Native American,
Federal, and State lands, as well as oil and gas producers,
mineral rights and lease owners, State and Federal regulators,
and land owners. A growing concern is the potential use of land
for farming, housing, or other uses where produced water from
oil and gas production has left a legacy of undesirable
environmental effects. Even produced waters of low salinity can
lead to problems because application of such waters to the land
for irrigation or ground water recharge can result in rapid
leaching of the naturally occurring salts present in the soil
and the unsaturated zone, leading to potential contamination of
aquifers and streams.
The USGS has an 80-year history of conducting scientific
studies to evaluate and describe the long-term and short-term
effects of the disposal of produced water on soils, ground
water, streams, and ecosystems. The USGS has also conducted
numerous studies to describe the effects of produced-water
salts on water and biota, techniques for detecting these
effects, and techniques for remediation of soils and ground
water.
In 2002, the USGS released a national produced-water
geochemistry database that describes the water quality of
waters produced from conventional oil and gas fields. This
database is an invaluable tool for coalbed methane development
companies; land managers; Federal, State, and local water-
quality officials; and the public. The information facilitates
evaluation of issues pertaining to energy resource development
and environmental quality, such as the need for anti-scaling
additives, the design of water handling and treatment systems,
and disposal and beneficial use options.
The USGS and the U.S. Fish and Wildlife Service are
studying the impacts on water quality and the landscape caused
by waters associated with coalbed methane production in the
Powder River Basin of Wyoming. This research is being conducted
as part of the DOI Landscapes Initiative in collaboration with
the Department of Energy, U.S. Fish and Wildlife Service,
Bureau of Land Management, and others. One component of that
project is an examination of hydrology and geochemistry in the
vicinity of a produced-water infiltration pond. Early findings
are that slightly to moderately saline water infiltrating from
the pond dissolved significant quantities of salts present in
the soil and unsaturated zone, resulting in a significant
increase in total dissolved solids. Although coalbed methane
production in the Powder River Basin can provide ecological
benefits by increasing stream flows and creating and enhancing
wetlands, there are some concerns associated with the levels of
contaminants in the Basin. Indeed, preliminary findings were
dramatic enough to cause a State regulatory agency to order
that disposal of produced water at the infiltration pond be
stopped and the site be reclaimed.
The USGS, in cooperation with the Osage Nation, Department
of Energy, and U.S. Environmental Protection Agency, is
investigating the effects of hydrocarbons and produced water
(brines) on soil and ground and surface water at two sites
adjacent to Skiatook Lake in the southeastern part of the Osage
Reservation in northeastern Oklahoma. Results from this
investigation will provide information needed by environmental
officials, land managers, petroleum companies, and land owners
to assess human and ecosystem impacts and to develop risk-based
corrective actions to clean up contamination from produced
water from oil and gas wells that are no longer active.
Reclamation has extensive expertise and capabilities in
water storage and delivery infrastructure planning and design.
Reclamation works with the states, BLM, EPA and others in
managing produced waters so that the quality of Western water
supplies are not degraded by impaired produced waters.
Pilot and demonstration projects like those described in
this bill could help provide proof of concept from treatment to
beneficial use in key basins where opportunities may exist for
converting produced waters to beneficial uses. However, the
feasibility and potential value of any demonstration project
should be evaluated prior to making any commitments to conduct
pilot and demonstration projects. Any such demonstration
projects should be well coordinated at the federal, state, and
local levels. Other federal agencies with whom Reclamation and
USGS would coordinate such demonstration projects include BLM,
EPA, and DOE's National Energy Technology Lab (NETL).

concerns

The Department concurs with the goals of the bill to
identify impediments to the beneficial use of produced waters.
Understanding the opportunities and overcoming the challenges
involved in converting produced waters to beneficial uses will
help irrigators, farmers, energy producers, and State and
Federal agency efforts to increase the development of western
energy sources while protecting the quality of our streams and
aquifers.
Our concerns with the bill include funding for these
activities. The study, report, and pilot activities required by
this bill are not currently in the FY2007 operating plans for
the USGS or BOR and the FY 2008 President's Budget also does
not fund these activities. The activities authorized in this
bill should compete with other priority projects for funds.
Additionally, language in Section 3 that directs the
Secretary, acting through USGS and BOR, to conduct a study to
identify the legal, legislative, and administrative obstacles
to increasing the extent to which produced water can be used
for irrigation and other purposes. It is not within the purview
or expertise of the USGS or BOR to identify legal, legislative,
or administrative obstacles.
Another concern is that if the bill becomes law, the
accomplishment of the study and report, as proposed in Section
3 of H.R. 902, should be subject to the availability of funds
appropriated for that purpose, just as the projects proposed by
section 4 are. We anticipate that such a study would focus on
existing and potential new technologies for treating produced
waters to make them suitable for beneficial uses and would also
focus on existing and potential new hydrologic and geochemical
models needed to predict the impacts of various management
strategies on streams, aquifers, soils and biota.
We wish to note that S. 1116, a companion bill to H.R. 902
which was introduced on April 17, 2007, is very similar to H.R.
902 and that the Administration would have the same concerns
about S. 1116 that we have discussed with respect to H.R. 902.
We have one other comment on S. 1116. Section 3(a) of the
Senate bill includes the Bureau of Land Management (BLM) in the
list of agencies within the Department of the Interior that are
to carry out the study authorized in this bill. While
Reclamation and USGS are working with the BLM to manage
produced waters, a study of this nature would appropriately be
carried out by Reclamation and USGS. BLM and other Interior
agencies, including the Fish and Wildlife Service, would
provide assistance as appropriate but should not be listed as
leads on the study.
Improved technology and collaboration are among the four
key tools proposed as part of Water 2025, an initiative of the
Department to meet the water-supply challenges of the future.
Thank you, Mr. Chairman, for the opportunity to present
this testimony. I will be pleased to respond to questions you
and other Members of the Subcommittee may have.

CHANGES IN EXISTING LAW

In compliance with paragraph 12 of rule XXVI of the
Standing Rules of the Senate, the Committee notes that no
changes in existing law are made by the Act H.R. 902, as
ordered reported.