BEFORE THE OIL AND GAS CONSERVATION COMMISSION

OF THE STATE OF COLORADO

IN THE MATTER OF ALLEGED VIOLATIONS OF THE RULES AND REGULATIONS OF THE COLORADO OIL AND GAS CONSERVATION COMMISSION BY MARALEX DISPOSAL LLC, LA PLATA COUNTY, COLORADO

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CAUSE NO. 1V DOCKET NO. 161000458 TYPE:  ENFORCEMENT ORDER NO: 1V-610

ADMINISTRATIVE ORDER BY CONSENT

(Pursuant to Rule 522.e. of the Rules and Regulations of the

Colorado Oil and Gas Conservation Commission, 2 CCR 404-1)

FINDINGS

1. Maralex Disposal LLC (“Maralex Disposal”) (Operator No. 10119) is the operator of Dara Ferguson #1 Location (Location No. 306963) (“Location”) in La Plata County, Colorado.

2. On July 18, 2015, a release (Spill/Release Point ID. 442572 and Remediation Project No. 9193) percolated through the earthen secondary containment berm around the Location’s two tank batteries (“Berm”) (Doc. No. 400870940).

3. At a July 30, 2015 inspection of the Location, Jim Hughes, COGCC Environmental Specialist, observed that the Berm’s walls were insufficient and required compliance with Rule 605.a.(4) of the COGCC Rules of Practice and Procedure, 2 C.C.R. 404-1 (“Rule” or “Rules”) by August 31, 2015 (Doc. No. 674900696).

4. Keith Jackson, an employee of Maralex Resources, Inc., has attested that he recompacted the southeast part of the Berm where it had been breached by the release on July 30, 2015 (Doc. No. 2193388).

5. At an August 14, 2015 inspection, Mr. Hughes observed that the Berm’s walls were insufficient and required compliance with Rule 605.a.(4) (Doc. No. 674900712).

6. Conor M. Feney, a professional engineer, has certified that Maralex Disposal reconstructed the Berm with material that consisted of native soil, bentonite, and roadbase in October of 2015 (Doc. No. 2193386).

7. At inspections of the Location on December 4, 2015 and January 29, 2016, Mr. Hughes observed that the Berm’s walls were insufficient and required compliance with Rule 605.a.(4) (Doc. Nos. 674900882, & 674900904).

8. On June 15, 2016, Maralex Disposal submitted an updated Form 27, Site Investigation and Remediation Workplan. The Form 27 was approved on the condition that Maralex Disposal comply with Rule 605.a.(4) by July 15, 2016 (Doc. No. 2526390).

9. At a July 19, 2016 inspection of the Location, Mr. Hughes observed that the Berm appeared unchanged from the previous inspections (Doc. No. 674901220).

10. On August 26, 2016, COGCC Staff issued Notice of Alleged Violation No. 401099550 (“NOAV”) to Maralex Disposal for a violation of Rule 605.a.(4) (Oil & Gas Facilities, Berms) for the failure to ensure that the Berm was sufficiently impervious.

11. On October 13, 2016, Maralex Disposal purchased Super Gel-X High-Yield Bentonite to add to the Berm’s walls (Doc. No. 2193387).

12. On November 10, 2016, Maralex Disposal obtained a certification from Mr. Feney, a third-party professional engineer, that the Berm was sufficiently impervious as of the October 2015 reconstruction (Doc. No. 2193386).

13. Pursuant to Rule 523 and the COGCC Enforcement Guidance and Penalty Policy, Hearings staff calculated a penalty of $30,000. The penalty calculation is based on the following:

Rule	Class, Impact	Daily Penalty	Start Date	End Date	Days	Total Penalty
605.a.(4)	Class 2, Minor	$2,500	7/18/2015	7/30/2015	12	$30,000

a. No application of the Duration Matrix of the COGCC Enforcement Guidance and Penalty Policy;

b. Start date of the first date there was evidence that the Berm was not sufficiently impervious;

c. End date of the commencement of the corrective action (7/30/2015, for settlement purposes);

d. No aggravating or mitigating factors; and

e. No pattern of violation, or gross negligence or knowing and willful misconduct.

AGREEMENT

      NOW, THEREFORE, based on the Findings and pursuant to Rule 522.e.(1) and the COGCC Enforcement and Penalty Policy, the Director and Maralex Disposal agree to request that the Commission enter the Order set forth below.

The Parties have agreed to this AOC for the purpose of expeditiously resolving this matter without a contested hearing. The findings and any action undertaken by Maralex Disposal pursuant to this AOC do not constitute evidence of fault or liability by Maralex Disposal with respect to any third-party claim against Maralex Disposal.

RECOMMENDED this 23^rd day of November, 2016.

OIL AND GAS CONSERVATION COMMISSION OF THE STATE OF COLORADO

By                                     _______________________

                                                             Britta Beckstead, Asst. Attorney General

AGREED TO AND ACCEPTED this ____ day of November, 2016.

MARALEX DISPOSAL LLC                          

                        By

Signature of Authorized Company Representative

Print Signatory Name and Title                  

ORDER

HAVING CONSIDERED the Findings and the Agreement between the Director and Maralex Disposal to resolve the NOAV, the COMMISSION ORDERS:

1. Maralex Disposal is found in violation of Rule 605.a.(4), as described above.

2. Maralex Disposal is assessed a penalty of $30,000 for this violation.

3. Maralex Disposal will pay $15,000 of the penalty 30 days after this Order is mailed by the Commission. Maralex will pay the remaining $15,000 of the penalty by June 30, 2017. All penalties assessed pursuant to this Order will be paid by certified check.

4. If Maralex fails to pay the penalty pursuant to Paragraph 3, the Director may require Maralex to pay the total penalty remaining (including any overdue or deferred penalties) within 30 days after service of the Director’s demand for payment pursuant to Rule 521, without further action from the Commission.

5. 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 or as soon as possible if 14 days prior notice is not feasible.

6. Failure to pay the penalty or submit a request for a compliance deadline extension by the above deadlines is an independent violation that may be subject to additional penalties. 

7. This Order is effective as of the date it is mailed by the Commission. It constitutes final agency action for purposes of judicial review.

8. The Commission expressly reserves its right after notice and hearing, to alter, amend, or repeal any and/or all of the above Order. 

===================================================================ENTERED this _____ day of December, 2016 as of the ___ day of December, 2016.

OIL AND GAS CONSERVATION COMMISSION

                                                            OF THE STATE OF COLORADO

                                                            By

                                                                        Julie Murphy, Secretary

CERTIFICATE OF MAILING

On ___________, 2016, a true and accurate copy of Order 1V-610 was mailed by certified mail, return receipt requested to the following address:

Maralex Resources, Inc.

Attn: A.M. O’Hare

P.O. Box 338

Ignacio, CO 81137

                                                            ____________________________________

                                                                                 Margaret Humecki