April 29, 2009

The Honorable Linda McCulloch

Secretary of State

State Capitol

Helena, MT 59620

Dear Secretary McCulloch:

In accordance with the power vested in me as Governor by the Constitution and the laws of the State of Montana, I hereby veto House Bill 575, “AN ACT PROVIDING THAT WATER PRODUCED IN ASSOCIATION WITH COAL BED METHANE PRODUCTION MAY BE USED FOR CERTAIN PURPOSES; ALLOWING A TEMPORARY PERMIT FOR THE BENEFICIAL USE OF WATER FROM COAL BED METHANE PRODUCTION; INCREASING COMPENSATION FROM THE COAL BED METHANE PROTECTION PROGRAM; ASSESSING A FEE; REQUIRING A STUDY OF ISSUES RELATED TO WATER IN ASSOCIATION WITH OIL AND GAS PRODUCTION; AMENDING SECTIONS 15-36-331, 76-15-904, 76-15-905, AND 82-11-175, MCA; REPEALING SECTION 10, CHAPTER 531, LAWS OF 2001; AND PROVIDING AN IMMEDIATE EFFECTIVE DATE AND AN APPLICABILITY DATE.”

I have vetoed House Bill 575 because I believe the bill reverses longstanding principles of Western and Montana water law by allowing the issuance of a permit for the use of water associated with coal bed methane (“CBM”) production without providing protection to senior water rights holders, other than some limited compensation under a government program. Some of the water rights in jeopardy date back to the late 1800s. Reliance on this water has served as the basis of a stable agricultural economy in southeast Montana for generations. Montanans want energy development, but they also want to ensure that their agricultural neighbors are able to continue their successful operations well into the future without compromise of their established rights.

House Bill 575 was written in response to recent court decisions, but the “solution” devised in the bill is contrary to those decisions. With a sleight of hand, House Bill 575 classifies CBM groundwater as surface water, thereby circumventing the requirements of Montana’s Water Use Act, Montana’s cornerstone for protection of senior water rights. Ultimately, the bill fails to reconcile the substantive conflict between the extraction of water in the CBM process and senior water rights.

We must do better. Montana needs to take a new approach to devising a strategy that protects senior water rights holders, reduces discharges of untreated water into our surface waters, and allows responsible CBM development. CBM producers, like all other users of water, need to show that existing water rights are not being adversely affected, or they must devise long-term mitigation plans that will provide replacement water now and into the future, after CBM production ceases.

I pledge that over the coming interim, my administration will work with lawmakers and stakeholders to try to reach an agreement as to legislation that accomplishes these objectives.

Sincerely,

BRIAN SCHWEITZER

GOVERNOR

cc: Legislative Services Division