Despite concerns about not seeing settlement, Environmental Quality Council endorses bond deal

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CHEYENNE, Wyoming — The review board for the Wyoming Department of Environmental Quality voted Tuesday to dismiss bond forfeiture proceedings against a coal-bed methane developer despite concern among some members that they hadn't seen the settlement behind their decision.

The 6-1 vote by the Environmental Quality Council allows a surety bond company to proceed with inventory and reclamation of as many as 143 small reservoirs in northeast Wyoming.

The reservoirs were built to contain groundwater discharged by coal-bed methane wells that belonged to Sheridan-based High Plains Gas. Though landowners often find use for them as stock ponds, such reservoirs also have caused environmental problems such as excess soil salinity.

Reservoir abandonment is just part of the fallout of the Powder River Basin's recent coal-bed methane bust. Companies have shut in thousands of coal-bed methane wells and in some cases walked away without bothering to plug their wells.

Last year, the Department of Environmental Quality began a process last year to pull $2.2 million in bonds for the High Plains Gas reservoirs. The company had failed to pay permit fees and bond some of its reservoirs, the department alleged.

The department, High Plains Gas and Fidelity and Deposit Company of Maryland agreed to a settlement in the matter in February.

Department officials provided a copy of the six-page document to The Associated Press in response to a request. Council members taking part in Tuesday's teleconference said they hadn't seen it, however.

"I have a level of discomfort in agreeing to dismiss something like this without having seen at least a synopsis of what the agreement is," council member Aaron Clark said.

The council's role in this case isn't to scrutinize the settlement terms but simply to verify a settlement was reached, not unlike to how a state district court judge would consider a settlement in a civil matter, assistant attorney general Jeremy Gross told the council.

"Typically in those situations the parties don't file a settlement, or the agreement, with the court," Gross said.

The settlement wasn't among several public documents in the bond forfeiture case posted on the council website.

The council members are "basically spectators" and, when a settlement isn't contested, doing anything besides signing off on it is "kind of above our pay grade," said council member Tim Flitner.

"I don't mind being a spectator," said Clark, who cast the lone vote against dismissal. "I just would like to see what I'm supposed to be looking at to be a spectator."

High Plains Gas also has run into trouble with bonding for coal-bed methane wells. Last fall, the company forfeited $8 million in bonds and the state took possession of 2,300 of its idle coal-bed methane wells to plug and clean up.

The Wyoming Oil and Gas Conservation Commission is supervising an unprecedented effort to plug and clean up a total of around 3,500 orphan wells over the next several years. Department of Environmental Quality officials say agreeing to let Fidelity oversee inventory and remediation coal-bed methane reservoirs will save them a lot of work.

Under the settlement, Fidelity will count how many of the 143 bonded reservoirs actually were built and how many of those landowners want to keep. A landman contracted by the company for the job already has contacted 100 such landowners, Fidelity attorney David Slaughter told the council.

Fidelity will either proceed with remediation or, if the projected cost tops $2.2 million, agree to have its bonds reclaimed. In that case, the state would assume remediation responsibilities.

"I am optimistic, as is F and D, that in fact there will be sufficient funds in the penal sum of the bonds to cover all of the remediation," Slaughter told the council.


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