BEFORE THE OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO

REPORT OF THE COMMISSION

The Commission heard this matter on March 5, 2012, in Suite 801, The Chancery Building, 1120 Lincoln Street, Denver, Colorado, upon application for an order to vacate sanctions imposed by Order 1V-385 imposed personally against Mr. Macchiavello.

FINDINGS

The Commission finds as follows:

1.         Gonzalo Torres Macchiavello (“Macchiavello” or “Applicant”), as applicant herein, is an interested party in the subject matter of the above-referenced hearing.

2.         Due notice of the time, place and purpose of the hearing has been given in all respects as required by law.

3.         The Commission has jurisdiction over the subject matter embraced in said Notice, and of the parties interested therein, and jurisdiction to promulgate the hereinafter prescribed order pursuant to the Oil and Gas Conservation Act.

4.         Rule 525.b. provides that whenever the Commission or the Director has evidence that an operator is responsible for a pattern of violation of any provision of the Oil and Gas Conservation Act (§34-60-101, et seq.) (the “Act”), or of any rule, permit or order of the Commission, the Director shall issue a notice to the operator to appear for a hearing before the Commission.  If the Commission finds after such hearing, that a knowing and willful pattern of violation exists, it may issue an order which shall prohibit the issuance of any new permits to the operator.

5.         On August 8, 2011, the Commission issued Order No. 1V-378 finding that West Hawk Energy (USA) LLC (“West Hawk”) (Operator #10189) had committed numerous rule violations at certain wells and imposed fines for those violations.

6.         On September 19, 2011, the Commission issued Order No. 1V-385 finding that West Hawk had committed a knowing and willful pattern of violation because West Hawk failed, for more than one year, to perform the abatement and corrective actions required by various Notices of Alleged Violation (“NOAVs”).  Order 1V-385 ordered that until the fine assessed under Order No. 1V-378 was paid in full and all required abatement and corrective actions were performed by West Hawk, the Director should not approve any application for permit-to-drill, any Certificate of Clearance and/or Change of Operator, Form 10, or other permit for conducting oil and gas operations for West Hawk or any entity of which Gonzalo Torres Macchiavello is a principal, majority owner, operational or general manager, or in which Mr. Macchiavello otherwise exercises control.

7.         On December 22, 2011, Mr. Macchiavello, by his attorneys, filed with the Commission a verified application (“Application”) for an order to vacate the sanctions imposed by Order 1V-385 imposed personally against Mr. Macchiavello.

8.         On February 9, 2012, a prehearing conference was held in this matter. The Hearing Officer’s Prehearing Conference Report and Order established time allocations for the hearing on this matter scheduled for March 5, 2012.

9.         On February 23, 2012 the Hearing Officer submitted a Hearing Officer Recommendation in this matter to the Commission and to counsel for Mr. Macchiavello. The Hearing Officer agreed that the relief requested by Mr. Macchiavello should be granted.

10.       On March 5, 2012, the Commission heard this matter in the form oral arguments on points of law as to why the sanctions imposed by Order No. 1V-385 personally against Mr. Macchiavello should be vacated.

11.       The Commission concludes the arguments advanced in the Application are persuasive, and agrees that the Hearing Officer recommendation should be approved

ORDER

NOW, THEREFORE IT IS ORDERED, that Order 1V-385 is amended to read as follows:

A.        Paragraph 3 be amended as follows:

3.         A knowing and willful pattern of violation exists because West Hawk has failed, for more than one year, to perform the abatement and corrective actions required by various Notices of Alleged Violation (“NOAVs”).  Until the fine assessed under Order No. 1V-378 is paid in full and all required abatement and corrective actions are performed by West Hawk, the Director should not approve any application for permit-to-drill, any Certificate of Clearance and/or Change of Operator, Form 10, or other permit for conducting oil and gas operations for West Hawk or any entity of which Gonzalo Torres Macchiavello is a principal, majority owner, operational or general manager, or in which Mr. Macchiavello otherwise exercises control.

B.        The first unnumbered paragraph of Order No. 1V-385 be amended to read as follows:

NOW, THEREFORE, IT IS ORDERED, that a knowing and willful pattern of violation exists because West Hawk has failed, for more than one year, to perform the abatement and corrective actions required by the NOAVs.  Until any fine assessed under Order No. 1V-378 is paid in full and all required abatement and corrective actions are performed by West Hawk under said order, the Director shall not approve any application for permit-to-drill, any Certificate of Clearance and/or Change of Operator, Form 10, or other permit for conducting oil and gas operations for West Hawk or any entity of which Gonzalo Torres Macchiavello is a principal, majority owner, operational or general manager, or in which Mr. Macchiavello otherwise exercises control.

IT IS FURTHER ORDERED, that all other findings against West Hawk Energy (USA) LLC as ordered by Orders 1V-378 and 1V-385 are unaffected by this order.

IT IS FURTHER ORDERED, that the provisions contained in the above order shall become effective immediately.

IT IS FURTHER ORDERED, that the Commission expressly reserves its right, after notice and hearing, to alter, amend or repeal any and/or all of the above orders.

IT IS FURTHER ORDERED, that under the State Administrative Procedure Act the Commission considers this Order to be final agency action for purposes of judicial review within 30 days after the date this Order is mailed by the Commission.

IT IS FURTHER ORDERED, that an application for reconsideration by the Commission of this Order is not required prior to the filing for judicial review.

ENTERED this    7th  day of March, 2012, as of March 5, 2012.
           
                                                                        OIL AND GAS CONSERVATION COMMISSION
                                                                        OF THE STATE OF COLORADO

                                                                        By____________________________________         
                                                                                    Peter J. Gowen, Acting Secretary