BEFORE THE OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
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IN THE MATTER OF ALLEGED VIOLATIONS OF THE RULES AND REGULATIONS OF THE COLORADO OIL AND GAS CONSERVATION COMMISSION BY BENCHMARK ENERGY LLC, LOGAN COUNTY, COLORADO |
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CAUSE NO. 1V DOCKET NO. 150300138
TYPE: ENFORCEMENT ORDER NO. 1V-496
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ADMINISTRATIVE ORDER BY CONSENT
(Pursuant to Rule 522.b.(3) of the Rules and Regulations of the
Colorado Oil and Gas Conservation Commission, 2 CCR 404-1)
FINDINGS
1. Benchmark Energy LLC (“Benchmark”) (Operator No. 10380) is the operator of the Sec 1 8N54W Tank Battery Facility (“Facility”) (Facility No. 437485) in Logan County.
2. On June 4, 2014, a spill due to an injection pump failure was discovered by Benchmark (Spill/Release Report #2, Doc. No. 400634998). According to the corrected Spill/Release Report, Form 19, filed on July 2, 2014, between 5 and 100 barrels of oil were released. Benchmark did not verbally notify the local government, surface owner, or COGCC within 24 hours of the spill’s discovery, as required by Rule 906.b.
3. On June 6, 2014, COGCC staff discovered the spill, which was both inside and outside of containment, during an inspection of the Facility (Doc. No. 667200124). The inspection report noted that the spill outside of containment was approximately 300 feet in length and varying in width from approximately 2 feet to 15 feet. The spill pathway extended across the lease road into an adjacent pasture. Wildlife tracks were also observed in the oily waste (Photo. No. 667200127). Due to the operator’s delayed response in controlling the spill, it resulted in a significantly larger impacted area.
4. On June 9, 2014, Benchmark verbally notified the local government, COGCC, and the surface owner of the spill (Spill/Release Report #2, Doc. No. 400634998).
5. On June 9, 2014, Benchmark filed a Form 19 (Spill/Release Report #1, Doc. No. 670600319) with the COGCC that had incorrect information, including that the report stated that only produced water had been spilled while COGCC inspectors observed spilled oil. A corrected Form 19 was filed on July 2, 2014 (Spill/Release Report #2, Doc. No. 400634998).
6. On June 18, 2014, COGCC staff inspected the Facility and noted the discrepancies between the submitted Form 19 and observations in the field (Doc. No. 670600318). COGCC staff observed oil waste stockpiled without berms and without storage on plastic liners. The Inspection Report required the operator to submit a Form 27 by June 27, 2014. Staff also observed that E&P waste had been transported from the site and requested disposal documentation. Rule 907.b.(2) requires E&P transportation records to be maintained and made available for COGCC inspection.
7. On July 23, 2014, COGCC staff inspected the Facility (Doc. No. 667200244) and observed that none of the required corrective actions from the previous inspection reports had been completed.
8. On August 1, 2014, COGCC staff issued Notice of Alleged Violation (“NOAV”) No. 200409785 to Benchmark for violations at the Facility of the following COGCC Rules of Practice and Procedure, 2 CCR 404-1 (“Rule” or “Rules”):
a. Rule 906.a. (Spills and Releases, General) for failing to control and contain the spill immediately upon discovery;
b. Rule 906.b.(1)A (Spill/Release Reporting, Verbal Report) for failing to verbally report a release both inside and outside of containment to COGCC, the local government, or the surface owner;
c. Rule 906.b. (Spill/Release Reporting, Written Report) for filing a Spill/Release Report, Form 19, more than 72 hours after discovery of the spill; and
d. Rule 907.b. (Waste Transportation) for failing to maintain and provide records for E&P waste transported off the Facility in June 2014.
9. On August 14, 2014, Benchmark submitted a Form 27, Site Investigation and Remediation Workplan, for the Facility to the COGCC. On September 22, 2014, the Form 27 was approved with several conditions of approval, which are included as required corrective actions in this AOC. This conditionally approved Form 27 gave Benchmark until October 31, 2014 to complete the corrective actions.
10. On October 28, 2014, Benchmark requested an extension to complete the corrective actions set forth in the approved Form 27. This extension was granted and Benchmark was given a new deadline of November 30, 2014. Staff attempted to contact Benchmark shortly after the deadline and received no response.
11. On February 17, 2015, Benchmark submitted an invoice for a disposal that occurred at Logan County Landfill on June 17, 2014. This invoice did not identify the waste transporter, the location of the waste pickup, or that the waste was E&P waste.
12. Following a factual investigation and legal review of the violations alleged in the NOAVs referenced above, COGCC Staff now asserts Benchmark has committed the following violations:
|
Rule Violation |
Penalty Act and Class/Impact |
Base Penalty |
Start Date |
End Date |
Days of Violation |
Penalty per Violation |
|
906.a. |
Old |
$1,000 |
6/4/2014 |
6/18/2014 |
10, Statutory Maximum |
$10,000 |
|
906.b.(1)A (Verbal Reporting) |
Old |
$1,000 |
6/5/2014 |
6/9/2014 |
4 |
$4,000 |
|
906.b. (Written Reporting) |
New Class 2/Minor |
$2,500 |
6/7/2014 |
6/9/2014 |
2 |
$5,000 |
|
907.b. |
New Class 1/Minor |
$500 |
6/18/2014 |
2/17/2015 |
244, Duration Matrix applied |
$9,400 |
|
TOTAL PENALTY |
$28,400 |
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13. Pursuant to Rule 523 and the Commission’s Enforcement and Penalty Policy, Hearings Staff calculated a penalty of $28,400 for these violations. The penalty calculation is based on the following:
a. Under the COGCC Enforcement and Penalty Policy, Rule 907.b. is classified as a Class 2 violation. However, subpart (2) of this Rule is a paperwork violation – the failure to keep and provide records. Therefore, the Director chose to exercise his discretion to reclassify subparts and classified this violation as a Class 1. In addition, to ensure the penalty was still appropriate for the nature of the violation, the per day penalty was assigned as $500 under the proposed Rule 523, instead of the $200 for Class 1, minor violations in the Rules adopted by the Commission that became effective on March 3, 2015 (after this matter was noticed for hearing).
b. The Rule 906.a. and 906.b. violations began before the effective date of HB 14-1356 (June 6, 2014). The Rule 906.a. violation began on June 4, 2014 – the date the spill was discovered by Benchmark and the operator failed to contain the spill. The Rule 906.b. violation for failure to report the spill within 24 hours began on June 5, 2014 – the day after the spill was discovered. The penalty for these violations was calculated pursuant to the version of Rule 523 in effect at the time of the violation.
c. The Rule 906.b. and 907.b. violations occurred after the effective date of HB 14-1356. The Rule 906.b. violation for failing to file a Form 19 began on June 7, 2014 (72 hours after the spill was discovered) and ended on June 9, 2014, when the Form 19 was filed. The violation for not providing the waste disposal documentation began on June 18, 2014 when the documentation was requested by Staff and ended on the date that the operator began good faith negotiations with Staff regarding returning to compliance. The penalty for these alleged violations was calculated pursuant to HB 14-1356, with reference to the revised Rule 523 as guidance.
d. No aggravating or mitigating factors; and
e. No pattern of violation or gross negligence or knowing & willful misconduct.
14. In determining whether to allow a payment plan in this case, the Commission considered documentation submitted by Benchmark demonstrating financial hardship. This documentation showed that Benchmark’s total current liabilities exceeded its current assets by over $120,000 as of September 30, 2014. This shows a company with short-term liquidity problems. In addition, the operator's net income continued to decline from -$53,259 in 2013 to -$72,813 in 2014, which represents a 36.7% decline.
AGREEMENT
NOW, THEREFORE, based on the Findings and pursuant to Rule 522.b.(3) and the Commission’s Enforcement and Penalty Policy, the Director proposes and Benchmark agrees to settle the NOAV on the following terms and conditions:
a. $3,550 is due on June 30, 2015.
b. $3,550 is due on September 30, 2015.
c. $3,550 is due on December 31, 2015.
d. $3,550 is due on March 31, 2016.
e. $3,550 is due on June 30, 2016.
f. $3,550 is due on September 30, 2016;
g. $3,550 is due on December 30, 2016; and
h. $3,550 is due on March 27, 2017.
III. If Benchmark fails to make a payment, the entire remaining penalty ($28,400 less any payments already made) will be due within 30 days of notification from the Director and without any further action from the Commission. Failure to pay the penalty by the deadline is an independent violation that may be subject to additional penalties.
IV. Payment of the penalty pursuant to this AOC does not relieve the operator from its obligations to complete corrective actions set forth in the NOAVs, as may be amended or modified by COGCC Staff.
V. Benchmark will complete the following corrective actions within 30 days of the approval of this AOC:
a. Based on the soil sample results submitted on January 19, 2015, additional excavation, soil disposal, and soil sampling is still required. Provide GPS coordinates and soil sample location diagrams for the soil samples from the reports submitted on January 19, 2015 and any future samples.
b. Provide a summary table of the analytical results submitted on January 19, 2015 compared to Table 910-1 standards.
c. Provide a status of the backfill of excavated areas. COGCC approval was required prior to backfilling.
d. Document that the tank battery and secondary containment were rebuilt in accordance with Rule 906.d.(1) and the 600-Series Rules.
RECOMMENDED this ______ day of April, 2015.
OIL AND GAS CONSERVATION COMMISSION OF THE STATE OF COLORADO
By
Britta Beckstead, Assistant Attorney General
AGREED TO AND ACCEPTED this ______day of April, 2015.
BENCHMARK ENERGY LLC
By
Signature of Authorized Company Representative
Print Signatory Name
Title
ORDER
HAVING CONSIDERED the Agreement between the Director and Benchmark to resolve the NOAV, the COMMISSION ORDERS:
1. Benchmark is found in violation of Rules 906.a., 906.b.(1)A, 906.b., and 907.b. as described above.
2. Benchmark is assessed a penalty of $28,400. This penalty is due in quarterly payments of $3,550 over five quarters from the date this AOC is approved by the Commission under the following payment schedule:
a. $3,550 is due on June 30, 2015.
b. $3,550 is due on September 30, 2015.
c. $3,550 is due on December 31, 2015.
d. $3,550 is due on March 31, 2016.
e. $3,550 is due on June 30, 2016.
f. $3,550 is due on September 30, 2016;
g. $3,550 is due on December 30, 2016; and
h. $3,550 is due on March 27, 2017.
3. If Benchmark fails to make a payment, the entire remaining penalty ($28,400 less any payments already made) will be due within 30 days of notification from the Director and without any further action from the Commission. Failure to pay the penalty by the deadline is an independent violation that may be subject to additional penalties.
4. Payment of the penalty pursuant to this AOC does not relieve the operator from its obligations to complete corrective actions set forth in the NOAVs, as may be amended or modified by COGCC Staff.
5. Benchmark will complete the following corrective actions within 30 days of the approval of this AOC:
a. Based on the soil sample results submitted on January 19, 2015, additional excavation, soil disposal, and soil sampling is still required. Provide GPS coordinates and soil sample location diagrams for the soil samples from the reports submitted on January 19, 2015 and any future samples.
b. Provide a summary table of the analytical results submitted on January 19, 2015 compared to Table 910-1 standards.
c. Provide a status of the backfill of excavated areas. COGCC approval was required prior to backfilling.
d. Document that the tank battery and secondary containment were rebuilt in accordance with Rule 906.d.(1) and the 600-Series Rules.
6. This AOC does not relieve Benchmark from undertaking and completing additional abatement or corrective actions as required by COGCC Staff.
7. Compliance dates specified in this Order may be extended only for good cause, as determined at the Director’s sole discretion. A request for extension must be made, in writing, at least 14 days prior to the pertinent compliance deadline. Failure to receive an extension prior to the compliance deadline or the failure to meet a compliance deadline may constitute a new violation subject to additional daily penalties.
8. Entry of this Order constitutes final agency action for purposes of judicial review 30 days after the date this order is mailed by the Commission.
9. The provisions contained in the above order are effective on the date this matter is heard and approved by the Commission.
10. The Commission expressly reserves its right after notice and hearing, to alter, amend, or repeal any and/or all of the above orders.
ENTERED this _____ day of April, 2015 as of the ____ day of April, 2015.
OIL AND GAS CONSERVATION COMMISSION
OF THE STATE OF COLORADO
By
Julie Murphy, Secretary