Disposal of produced waters, pumped to the surface as part of coalbed methane (CBM) development, is a significant environmental issue in the Wyoming portion of the Powder River Basin, USA. High sodium adsorption ratios (SAR) of the waters could degrade agricultural land, especially if directly applied to the soil surface. One method of disposing of CBM water, while deriving beneficial use, is subsurface drip irrigation (SDI), where acidified CBM waters are applied to alfalfa fields year-round via tubing buried 0.92 m deep. Effects of the method were studied on an alluvial terrace with a relatively shallow depth to water table (∼3 m). Excess irrigation water caused the water table to rise, even temporarily reaching the depth of drip tubing. The rise corresponded to increased salinity in some monitoring wells. Three factors appeared to drive increased groundwater salinity: (1) CBM solutes, concentrated by evapotranspiration; (2) gypsum dissolution, apparently enhanced by cation exchange; and (3) dissolution of native Na–Mg–SO4 salts more soluble than gypsum. Irrigation with high SAR (∼24) water has increased soil saturated paste SAR up to 15 near the drip tubing. Importantly though, little change in SAR has occurred at the surface.