CHEYENNE - The major losers in coal-bed methane development are the off-site landowners who live downstream from the end of the discharge water pipes, a University of Wyoming professor said Wednesday.

Roger Coupal, associate professor of agriculture and applied sciences, said the state could apply a small discharge fee against industry that could be used to pay for administration and mitigation for the off-site landowners for damage to their property.

It was one of several alternatives offered by Coupal, who testified Wednesday at a Wyoming Environmental Quality Council public hearing.

The hearing, which packed the Cheyenne City Council chambers, stems from a petition from the Powder River Basin Resource Council calling for state regulation of coal-bed methane discharge water.

The group contends the lands of its rancher members are being damaged or flooded by poor quality water from coal-bed methane wells and that the Department of Environmental Quality is obligated to regulate that water.

The hearing continues today.

One of those off-site landowners is Eric Barlow of Campbell County, who attended the hearing and said he hopes the council "will come up with a workable solution to accommodate all the interests."

Barlow, who is one of the petitioners, said his ranch is in the heart of coal-bed methane territory but the wells are upstream from his place. If it were on his land, he said he would confine the water.

"My neighbors don't have the same philosophy," he said during a break in the hearing. He added that some landowners welcome the water for their agricultural operations.

He and the other petitioners have no intention of depriving industry of its rights of production but want to protect the value of their property, he said.

"Unfortunately, we have a disagreement with other landowners and industry and even the regulators," Barlow said.

Merl F. Raisbeck, professor of veterinary services at the University of Wyoming, explained his department's study of water quality for wildlife and livestock. Among other things, the ambitious team study will address salinity, one of the problems with coal-bed methane discharge water.

The team will present recommendation in its report to DEQ on July 1. The study, he added, will have some information that will make the council's job easier.

John Wagner, administrator of the DEQ's water quality division, recommended that the council wait to decide on new rules for coal-bed methane water until Raisbeck's study is finished.

"Let's wait six months before we get into rulemaking," Wagner said.

He said the current rules on safe levels of salinity and other minerals were put together 35 years ago.

"Any change will be controversial because we've lived with the standard for so long," Wagner said.

The council also heard witnesses for opponents of the petition, including consultant Penny Hunter of Geomega, who said studies support current allowed water levels of sulfates.

Dan Arthur,an engineer and researcher with the U.S. Department of Energy, said increasing treatment of the coal-bed methane water would mean more treatment plants - Wyoming has only three, all at capacity - and more pipelines.

It would also mean more truck traffic from 300 truckloads a day hauling discharge water to treatment plants, he said.

If production is uneconomical, industry will shut down the coal-bed methane wells, Arthur said.

Gov. Dave Freudenthal's administration earlier criticized the Environmental Quality Council for proceeding with rulemaking that could force state regulators to tighten controls on coal-bed methane water.

The state of Wyoming filed suit against Montana after its environmental regulatory authority imposed rules that would require Wyoming's coal-bed methane industry to prevent its by-product water from entering Montana. Limiting the volume of water produced from coal-bed methane wells could result in higher production expenses or lower production volumes, according to the industry.

This year, the Powder River Basin Resource Council joined the state of Montana in that lawsuit and suggested that Wyoming state government is so enamored with the energy industry that its members must look to Montana to protect their ranchlands.

Capital bureau reporter Joan Barron can be reached at (307) 632-1244 or at joan.barron@casperstartribune.net.