1V-561

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 DCP MIDSTREAM, LP, WELD COUNTY, COLORADO

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CAUSE NO. 1V

DOCKET NO. 151200560

TYPE: ENFORCEMENT

ORDER NO. 1V-561

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. DCP Midstream, LP (“DCP”) (Operator No. 4680) is the operator of a natural gas gathering line located in Section 8, Township 4 North, Range 65 West in Weld County, Colorado.

2. On or about February 23, 2015, COGCC received a complaint (No. 200425182) regarding an unreported spill related to the gathering line operated by DCP. The complainant alleged a gathering line failure and the use of contaminated soils to backfill the repair excavation.

3. On February 26, 2015, after being contacted by the COGCC, DCP began complying with COGCC spill reporting requirements. The delay in reporting being caused by the belief that the “dry gas” release did not meet reportable thresholds for a spill of hydrocarbon liquids outside of containment.

4. On March 5, 2015, after receiving lab results indicating the presence of E&P waste, DCP submitted cleanup plans to the COGCC.

5. On July 23, 2015, Commission Staff issued a Notice of Alleged Violation (“NOAV”) (No. 200436084) to DCP citing violations of the following COGCC Rules of Practice and Procedure, 2 CCR 404-1 (“Rule” or “Rules”):

a. Rule 906. (Spills and Releases)

b. Rule 907. (Management of E&P Waste)

6. Pursuant to Rule 523 and the Commission’s Enforcement and Penalty Policy, Hearings staff calculated a penalty of $32,500. The penalty calculation is based on the following:

Rule	Class	Impact	Daily Penalty	Start Date	End Date	Days	Total Penalty
906	Class 2	Minor	$2,500	2/23/2015	2/26/2015	3	$7,500
907	Class 2	Minor	$2,500	2/23/2015	3/05/2015	10	$25,000
Final Penalty							$32,500

a. Violations beginning after the effective date of HB 14-1356 (June 6, 2014);

b. The penalty calculation has a start date of February 23, 2015, the date the complaint was filed. The penalty calculation has an end date of February 26, 2015, the date DCP begins complying with COGCC spill reporting requirements, for the Rule 906 violation, and an end date of March 5, 2015, the date DCP submitted cleanup plans, for the Rule 907 violation. There were 13 days of violation;

c. Application of the COGCC Enforcement Guidance and Penalty Policy’s Duration Matrix;

d. Penalty suspension;

e. No aggravating or mitigating factors; and

f. 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 Commission’s Enforcement and Penalty Policy, the Director and DCP agree to settle the NOAV in lieu of a contested hearing on the following terms and conditions:

1. The COGCC finds DCP in violation of Rules 906 and 907, as described above.

2. DCP will be assessed a penalty of $32,500 for this violation.

a. DCP will pay $24,375 of this penalty within 30 days after the approved AOC is mailed by the Commission.

b. The remaining $8,125 of the penalty will be suspended pending timely compliance with the actions required by Agreement Paragraph 3 of this AOC, below, for one year from the date this AOC is approved by the Commission. If DCP complies, the suspended portion of the penalty will be vacated. If DCP does not comply, the suspended penalty will be due upon demand by the Director without further action by the Commission.

3. With respect to future Dry Gas Releases[1] on gathering pipelines operated by DCP, DCP agrees to implement the following procedures:

a. DCP will regularly coordinate between its operations group and its environmental group to evaluate all Dry Gas Releases from ruptured or broken gathering pipelines, whether or not soil contamination is suspected.

b. DCP’s environmental group representative will informally notify the COGCC area Environmental Protection Specialist (“EPS”) within 24 hours when a Dry Gas Release is initially investigated and has the reasonable potential of causing soil contamination reflecting a release of the equivalent of 1 barrel (“bbl”) or more of E&P Waste or produced fluids to soils outside of containment. The notification may be telephonic or by electronic mail (e-mail being preferred), and will include the location and nature of the Dry Gas Release, and steps DCP is taking to evaluate the release. During this initial investigation DCP will keep the area EPS updated regarding material new information learned by DCP.

c.As a result of the initial investigation, when DCP receives sufficient information and determines that the Dry Gas Release resulted in the equivalent of 1 bbl or more of E&P Waste or produced fluids to soils outside of containment, then pursuant to Rule 906.b DCP will notify the area EPS of that discovery within 24 hours, and if no Form 19 was filed in that 24 hour period then a Form 19 will be filed no later than 72 hours after that discovery.

d. As a result of the initial investigation, if DCP determines that less than the equivalent of 1 bbl of E&P Waste or produced fluids resulted from the Dry Gas Release, then, in instances when DCP has provided the informal notification, above, DCP will provide a follow-up communication to the area EPS confirming this determination and provide any information relied on in making that determination.

e. For Dry Gas Releases reported on a Form 19 pursuant to Rule 906.b, above, if the response does not relate to groundwater or land treatment of oily waste, then DCP may document its soil response on the Form 19 or in a Form 19 Supplemental filing with the COGCC.

f. Pursuant to Rule 909.c., DCP will file a Form 27 for approval in advance where the release has impacted groundwater and/or where DCP proposes to land treat oily waste.

g. Pursuant to Rule 906.c., the area EPS may require DCP to file a Form 27 to address the reportable release to soil and the remediation thereof (which may include, for example, that the relevant soil response area be re-excavated or re-sampled) or DCP may voluntarily file a Form 27.

4. DCP agrees to the terms and conditions of this AOC for the purpose of expeditiously resolving the matter without a contested hearing. Notwithstanding the above, DCP does not admit any of the factual allegations or legal determinations set forth in this AOC.

5. Payment of the penalty pursuant to this AOC does not relieve DCP from its obligations to complete corrective actions set forth in the NOAV or relevant Form 27, as may be amended or modified by COGCC Staff.

6. This AOC terminates one year after approval of the Order of the Commission.

RECOMMENDED this ___ day of January, 2016.

OIL AND GAS CONSERVATION COMMISSION OF THE STATE OF COLORADO

Jeremy I. Ferrin, Enforcement Officer

AGREED TO AND ACCEPTED this ____ day of January, 2015.

DCP MIDSTREAM, LP

William L. Johnson

Vice President, Regional Operations North

ORDER

HAVING CONSIDERED the Agreement between the Director and DCP to resolve the NOAV, the COMMISSION ORDERS:

1. DCP is found in violation of Rules 906 and 907, as described above.

2. DCP is assessed a penalty of $32,500 this violation.

a. DCP will pay $24,375 of this penalty within 30 days after the approved AOC is mailed by the Commission.

b. The remaining $8,125 of the penalty will be suspended pending timely compliance with the actions required by Paragraph 3 of this Order, below, for one year from the date the AOC and Order are approved by the Commission. If DCP complies, the suspended portion of the penalty will be vacated. If DCP does not comply, the suspended penalty will be due upon demand by the Director without further action by the Commission.

3. With respect to future Dry Gas Releases on gathering pipelines operated by DCP, DCP will implement the following procedures:

f. Pursuant to Rule 909.c., DCP will file a Form 27 for approval in advance where the release has impacted groundwater and/or where DCP proposes to land treat oily waste.

4. 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.

5. Failure to pay the penalty or perform any corrective actions by the above deadlines is an independent violation that may be subject to additional penalties.

6. This Order terminates one year after approval of the Order by the Commission.

7. 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. For all other purposes, this Order is effective as of the date of approval by the Commission.

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 January, 2016, as of the 26^th day of January, 2016.

OIL AND GAS CONSERVATION COMMISSION

OF THE STATE OF COLORADO

Julie Murphy, Secretary

[1] A Dry Gas Release is a spill or release of vapor containing some level of hydrocarbons in a non-liquid form from a gathering pipeline.