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Agenda 10/14/2014 Item # 12A
10/14/2014 12.A. EXECUTIVE SUMMARY Request that the Board of County Commissioners provide direction to the County Attorney as to whether to intervene in litigation with the Florida Department of Environmental Protection ("FDEP") against the Dan A. Hughes Company, L.P., based on Hughes Company's ("Hughes Company") unauthorized acid fracking activities in Collier County. OBJECTIVE: To obtain Board direction on whether the County should intervene in the FDEP litigation against Hughes Company; FDEP presently has a civil matter pending in Collier County Circuit Court and an administrative matter pending in Tallahassee. CONSIDERATIONS: Following an unauthorized Workover Operation by Hughes at the Collier-Hogan Well from December 30, 2013 to January 1, 2014, FDEP issued a Cease and Desist Order, followed by a Consent Order with Hughes Company, which the County challenged through a Petition for an Administrative Hearing. The Petition, as amended, sets forth the historical and procedural history of this matter and is included in the back-up material. In its Amended Petition (which is included in the back-up), filed with FDEP July l St, the County seeks the following relief: 1) That the FDEP accept this Petition for Administrative Hearing and refer this matter to the Division of Administrative Hearings for a Formal Administrative Hearing pursuant to Sections 120.569 and 120.57; 2) That the Administrative Law Judge enter a Recommended Order recommending that FDEP enter a Final Order denying the Consent Order, and ordering the suspension and revocation of DEP Drilling Permit No. 1349H Collier Hogan Well 20-3H; and 3) If the Consent Order is not reversed, and the permit is not revoked, that the Consent Order be modified (remainder omitted): On July 18th, FDEP took action by revoking all of Dan A. Hughes Company's permits, including the Collier-Hogan well, and filing a lawsuit in Collier County. Briefly stated, FDEP is seeking the following relief in its civil suit: 1) A mandatory injunction requiring Hughes to permanently plug, abandon the well, and otherwise remediate the site, and thereafter cease all operations involving the well. 2) A mandatory injunction requiring Hughes to conduct a contamination assessment at the site. and to pay for an independent expert selected by FDEP to conduct an assessment of the site. 3) An order requiring Hughes to produce all records concerning operation of the well. 4) FDEP is also seeking civil penalties and costs incurred by FDEP. Packet Page-493- 10/14/2014 12.A. In the Administrative Proceeding, FDEP issued a Notice of Revocation to the Hughes Company for all of its permits. The Revocation is based on the Hughes Company failure to comply with the terms of the Consent Order by: (1) failing to submit an adequate Interim Spill Prevention and Cleanup Plan; (2) failing to make a good faith effort to reach an agreement with FDEP on the selection of third-party experts; and (3) failing to submit an analytic sampling of the flowback material prior to its final disposal which was a required component of the groundwater monitoring plan. In addition, FDEP found that Hughes Company refused to submit records request by FDEP regarding the flowback material generated by the workover operation, failed to post required safety signs, and failed to maintain a required permit for its dumpster. Hughes Company has filed a petition for a formal hearing challenging the revocations. A copy of the.County's Amended Petition, FDEP's Revocation, and the FDEP'S Petition for Enforcement and Amended Complaint is included in the back-up. It is the opinion of the County Attorney that these affirmative actions by FDEP, buttressed by their recent written commitment to the Board, renders the County's Amended Petition moot. It is also the opinion of the County Attorney that continuing the challenge to the Consent Order undermines FDEP's pending litigations, as the Consent Order cannot become final while a challenge is underway. During its presentation on September 9, 2014, FDEP formally invited the County to intervene in the remaining litigation against Hughes Company. The issue presented here is whether the County should join FDEP in both the administrative proceeding now pending in Tallahassee concerning the revocation, and the civil action now pending in Collier County concerning the enforcement and penalties. The reasons in joining these proceedings include: 1) As an intervenor, the County will have equal rights and standing as a party, will have access to all discovery, and full participation in any mediation or settlement discussions. 2) Our joining in both proceedings greatly hinders the ability of FDEP to later withdraw from these proceedings, which may be of some utility should there be a change of administrations or FDEP policy. The reasons in not joining these proceedings include: 1) Given what's at stake to Hughes, I have little doubt that this litigation will be strenuously contested, difficult to predict, and absent settlement or appropriate rule-making which resolves the matter, may be lengthy. Absent a quick resolution, there will be a material cost involved to the County (including potential outside counsel and expert witnesses). 2) The County Attorney believes legislation and rule-making to be far more valuable in the long-term protection of the County's well-water compared to litigation. Accordingly, County resources may be better allocated towards rule-making and research rather than litigation. Because FDEP has the statutory duty to protect this State's natural resources, the County's efforts in the litigation may prove redundant. Packet Page -494- 10/14/2014 12.A. The County Attorney recommends an all-or-nothing approach, as I see little utility or cost- savings in joining in on just one of these proceedings. GROWTH MANAGEMENT IMPACT: None. FISCAL IMPACT: Should the County intervene in the administrative proceeding in Tallahassee, the County Attorney recommends that the Board authorize the County Attorney to engage Greg Stewart from the law firm of Nabors, Giblin & Nickerson to represent the County in this matter as co-counsel. Mr. Stewart and his firm have extensive experience in administrative proceedings and working with FDEP, and are located in Tallahassee. At this time, the County Attorney does not expect to engage outside counsel for the Collier County Circuit proceeding, and will staff this litigation internally. The County will most likely be required to engage one or more expert witnesses for either or both proceedings. Total litigation costs should be under $50,000 prior to the conclusion of the next Legislative Session, with the bulk of these litigation costs to be outside experts. RECOMMENDATION: That the Board of County Commissioners provide direction to the County Attorney as to whether to intervene in litigation with the Florida Department of Environmental Protection against the Dan A. Hughes Company, L.P., based on Hughes Company's unauthorized acid fracking activities in Collier County. Prepared by: Jeffrey A. Klatzkow, County Attorney Packet Page -495- 10/14/2014 12.A. COLLIER COUNTY Board of County Commissioners Item Number: 12.B. Item Summary: Request that the Board of County Commissioners provide direction to the County Attorney as to whether to intervene in litigation with the Florida Department of Environmental Protection ("FDEP") against the Dan A. Hughes Company, L.P., based on Hughes Company's("Hughes Company") unauthorized acid fracking activities in Collier County. Meeting Date: 9/23/2014 Prepared By Name: KathynellCrotteau Title:Legal Secretary, CAO Office Administration Approved By Name: ColleenGreene Title: Assistant County Attorney, CAO General Services Date: 09/15/2014 02:06:28 PM Name: markisackson Title: Director-Corp Financial and Mngmt Svs, Office of Management&Budget Date: 09/15/2014 02:36:14 PM Name: klatzkowjeff Title: County Attorney, Date: 09/15/2014 02:48:11 PM Name: ochs_l Title: County Manager. County Managers Office Date: 09/15/2014 04:09:02 PM Packet Page -496- 10/14/2014 12.A. BEFORE THE STATE OF FLORIDA DEPARTMENT OF ENVIRONMENTAL PROTECTION COLLIER COUNTY and COLLIER IN THE DIVISION OF COUNTY WATER-SEWER DISTRICT, WATER RESOURCE MANAGEMENT Petitioners, OGC File No.: 14-0012 v. FLORIDA DEPARTMENT OF ENVIRONMENTAL PROTECTION, and DAN A. HUGHES COMPANY, L.P., Respondents. COLLIER COUNTY AND THE COLLIER COUNTY WATER-SEWER DISTRICT'S AMENDED PETITION FOR ADMINISTRATIVE HEARING Petitioners, the Collier County Board of County Commissioners (hereinafter referred to as "Collier County") and the Collier County Water-Sewer District (hereinafter referred to as the "District"), by and through the undersigned counsel, and pursuant to Sections 120.569 and 120.57, Fla. Stat., and Rules 28-106.202 and 62-110.106, Florida Administrative Code (F.A.C.), hereby file this Amended Petition for Formal Administrative Hearing challenging a Consent Order entered into between the Florida Department of Environmental Protection and the Dan A. Hughes Company, L.P. on April 8, 2014 (OGC File No. 14-0012, attached hereto as Exhibit "A"), relating to Dan A. Hughes Company, L.P.'s violation of Permit No. 1349H, Collier-Hogan 20-3H Well. (Attached hereto as Composite Exhibit "B" — Oil and Gas Well Drilling Permit and Five Year Operating Permit.) 1 Packet Page -497- 10/14/2014 12.A. PROCEDURAL BACKGROUND 1. On or about December 18, 2012, the Department of Environmental Protection (hereinafter referred to as the "DEP") issued an Oil and Gas Well Drilling Permit (Permit No. 1349H, Collier-Hogan 20-3H Well) to the Dan A. Hughes Company, L.P. (hereinafter referred to as the "Hughes Company") to construct a well located at the Hogan Island Farm in Collier County, Florida. This Permit authorized the Hughes Company to drill a "horizontal completion targeting the Lower Sunniland Formation." 2. The Sunniland Formation is a well-defined, onshore oil reserve stretching from Ft. Myers to Miami. Oil was first discovered in the Sunniland in 1943 by the Humble Oil and Refining Company, now known as Exxon. Since then, eight commercial oil fields have produced more than 118 million barrels of oil at some of the highest onshore per-well flow rates in the country. Wells in the Sunniland produce from limestone formations located more than two miles below the surface. The variety of oil produced in the Sunniland Formation is"heavy sour" which when refined produces auto and aviation fuels, diesel fuel, lube oils and asphalt. A large part of the Sunniland is located within the Big Cypress National Preserve, which was created in 1974. The Collier family conveyed more than 159,000 acres for the establishment and expansion of the Preserve but maintained private ownership of the mineral rights. 3. Production in the Sunniland peaked in the 1970's. Production was by traditional vertical drilling methods, and over the past 70 years of production no material environmental issues are known by Petitioners. Production over the past few decades has been a small fraction of peak production periods, with new activity virtually non-existent. 4. On information and belief, at all relevant times herein it was the intent of the Hughes Company to engage in a process commonly known as fracking in an attempt to revive what had 2 Packet Page -498- 10/14/2014 12.A. largely been depleted fields. This process includes drilling a vertical shaft into the oil producing formation, then drilling horizontal borings, into which chemicals are injected under pressure to dissolve the rock and create fissures, allowing the release of additional oil. On information and belief, this production method had never before been undertaken in Collier County. 5. Neither the Permits nor the applications on which the Permits were based put Petitioners or the public on notice of the true nature of the drilling that was intended, or the chemicals that they intended to inject into the ground. 6. By e-mail dated April 18, 2013, Collier County formally requested from DEP that (1) it be provided with an electronic copy of the Hughes Company application and permit with respect to the oil well which is the subject of this Petition; and (2) that we be placed on DEP's Oil and Gas Interested Parties List for all Oil and Gas Activities within Collier County. That request was acknowledged by DEP that same day. (Attached hereto as Exhibit "C" — e-mail dated April 18, 2013.) 7. By letter signed by all five members of the Collier County Board of County Commissioners, received by DEP on June 28, 2013, Collier County requested that DEP "establish direct communication protocols with Collier County regarding safety and environmental monitoring, emergency response, and all public health and safety issues that arise, should permits for drilling and extraction be issued in Collier County". (Attached hereto as Exhibit "D".) 8. Upon completion of the construction of the 20-3H Collier-Hogan Well, DEP issued a Five Year Operating Permit to Hughes Company on August 9, 2013, under the same permit number (Permit No. 1349H) to operate the well as an oil production well. On information and belief, Collier County was not notified on this issued Permit. 3 Packet Page -499- 10/14/2014 12.A. 9. On or about December 23, 2013, the Hughes Company e-mailed the DEP a workover notification concerning its operating permit for the 20-3H Collier-Hogan Well indicating its intent to conduct a "Workover Operation" commencing on December 28 or 29, 2013. Subsequently, at the request of the DEP, Hughes Company agreed to delay the Workover Operation until at least December 30 to allow DEP additional time to review and respond to the notice. The Hughes Company proceeded with the Workover Operation on December 30, 2013, and continued through January 1, 2014, despite oral notification by the DEP that the proposed Workover Operation was not approved. Collier County was given no notice of any of this. 10. On December 31, 2013, the DEP entered a Final Order Requiring Operations at Well 20-3H Collier-Hogan to Cease and Desist. (Attached hereto as Exhibit "E".) The Final Order noted that "the Department is not satisfied that it has sufficient information that the proposed workover would be protective of the State's groundwater resources" and ordered that the Hughes Company "CEASE AND DESIST all operations proposed in the December 23, 2013, workover notice." 11. Even though DEP was clearly concerned that the Hughes Company's actions could adversely impact the State's groundwater resources, no notice of this Final Order was given to Petitioners Collier County or the District, nor to the residents of Collier County, who depend and rely on these groundwater resources for their sole source of drinking water. Repeatedly ignoring the County's multiple acknowledged requests for Notice with respect to this project and all other oil well drilling operations, Collier County was kept in the dark as to the true nature of these drilling activities. 12. On April 18, 2014, DEP issued the following Press Release: 4 Packet Page -500- 10/14/2014 12.A. "STATEMENT FROM DEP REGARDING CONSENT ORDER WITH THE DAN A. HUGHES COMPANY,L.P. TALLAHASSEE — The Florida Department of Environmental Protection (DEP) finalized a Consent Order last week with the Dan A. Hughes Company, L.P. for unauthorized activities at the Collier—Hogan well south of Lake Trafford in Collier County. "The department caught the Dan. A. Hughes Company conducting unauthorized activities and immediately took action to assess the maximum civil penalties. In addition, the department is requiring Dan A. Hughes to hire an independent expert, approved by the department, to conduct ongoing groundwater monitoring of the area to ensure no damage to the environment or risk to the public occurred because of their unauthorized actions. The results of the monitoring will be reviewed by DEP experts." Background: The department closely regulates oil and gas exploration and extraction to protect public safety and our environment. Every activity is thoroughly reviewed to address waste fluid disposal, well integrity, groundwater protection and spill prevention. On Dec. 23, 2013, the Florida Department of Environmental Protection received a well completion procedure notice, also known as a workover notice, from the Dan A. Hughes Company, L.P. This request was for work to be conducted for well permit number 1349H, the Collier— Hogan well located south of Lake Trafford in Collier County. The drilling permit for this well was issued on Dec. 18, 2012, and the operating permit for the well was issued on Aug. 9, 2013. The department had concerns about the workover notice, which proposed an enhanced extraction procedure that had not previously been used in Florida. The company proposed to inject a dissolving solution at sufficient pressure to achieve some openings in the oil bearing rock formation that would be propped open with sand in pursuit of enhancing oil production. The department requested Dan A. Hughes Company, L.P. not move forward with the workover procedure until additional review could be performed. However, on Dec. 31, 2013, the department became aware the workover procedure had commenced, without approval. Because of the actions of Dan A. Hughes Company, the department was not afforded the opportunity to complete its review of the proposed procedure before operations began. As a result, a Cease and Desist Order was issued and the department immediately pursued formal enforcement." ************************* 13. Petitioners first received notice of both the Cease and Desist Order and the April Stn Consent Order from an April 18th Naples Daily News article that referenced the April 18th Press Release. This Amended Petition is timely as provided for in F.A.C. Rule 28-106.202. 5 Packet Page -501- 10/14/2014 12.A. 14. Collier County and the District hereby file this Notice of Administrative Amended Petition to challenge the Consent Order and seek revocation of the Permit. AFFECTED AGENCY 15. The affected agency is the Florida Department of Environmental Protection, Division of Resource Management, 3900 Commonwealth Boulevard, Tallahassee, Florida 32399. DEP is an agency within the meaning of Section 120.52, Florida Statutes, and is the administrative agency for the State of Florida having the power and duty to protect Florida's air and water resources and to administer and enforce the provisions of Chapters 377 and 403, Florida Statutes, and Chapters 62C-25 through 62C-30, Florida Administrative Code (Conservation of Oil and Gas). CHALLENGED AGENCY ACTION 16. A Consent Order issued by DEP on or about April 8, 2014 (OGC File No. 14-0012), and ultimately the improper issuance of the Hughes Company Permits. THE PETITIONERS 17. The Petitioners are the Collier County Board of County Commissioners and the Collier County Water-Sewer District. For the purposes of this proceeding, Petitioners' address and telephone number are: Jeffrey A. Klatzkow, County Attorney 3299 Tamiami Trail East, Suite 800 Naples, FL 34112 Office: 239.252.8400 Fax: 239.252.6300 j effklatzkow @colliergov.net colleengreene @colliergov.net 6 Packet Page -502- 10/14/2014 12.A. COLLIER COUNTY AND THE COLLIER COUNTY WATER-SEWER DISTRICT'S SUBSTANTIAL INTERESTS AND STANDING 18. Collier County is a political subdivision of the State of Florida. Collier County operates as a non-charter County, governed by a five member Board of County Commissioners. By virtue of Article VIII of the Florida Constitution and Chapter 125, Florida Statutes, the Collier County Board of County Commissioners enjoys broad home rule powers, including traditional police powers, and is responsible for the public health and welfare of all Collier County residents, many of whom rely on relatively shallow wells for their water supply. 19. The Collier County Water-Sewer District is an independent special district in Collier County, and presently operates under Chapter 2003-353, Laws of Florida, having been initially established by Chapter 73-437. This 2003 Special Act reestablished the District as a political subdivision of the state and a body corporate and politic, and designated the Collier County Board of County Commissioners as its governing board. The 2003 Special Act provided the following legislative intent for the District: "It is declared as a matter of legislative determination that the extensive growth population and attendant commerce throughout Collier County continue to give rise to public health and water supply concerns...that it is the intent of the legislature to continue to authorize the Board of County Commissioners of Collier County to act as the governing board (district board) of the Collier County Water- Sewer District with overall responsibility for the provision of water and sewer services to specified geographic areas of Collier County as hereinafter provided." Laws of Fla. ch. 2003-353, § 3 20. The District currently services over 200,000 Collier County residents with drinking water, and must strictly comply with stringent Federal and State regulations to ensure the water's safety and quality. 21. There are presently two areas in Florida with oil fields. One area is north of Pensacola, and constitutes two-thirds of Florida's inland oil production. The other area is largely 7 Packet Page -503- 10/14/2014 12.A. within Collier County, and is known as the Sunniland Oil Field, and includes the 20-3H Collier- Hogan Well. Production in the Sunniland Field dates back to the 1940's. 22. The concern is not with traditional oil extraction methods, but the introduction of modern production methods commonly referred to as "fracking," which is intended to fracture oil bearing rock. The concern arises out of the fact that Collier County is located over a Karstic Aquifer system with non-contiguous porous confining layers consisting mostly of sandstone, dolomite, and shell beds which are particularly vulnerable to any pollution sources. A number of utilities operate well fields in Collier County, including the City of Naples, the Collier County Water-Sewer District, the Immokalee Water Sewer District, the City of Marco Island, and various private utilities. DISPUTED ISSUES OF MATERIAL FACT 23. Whether the Workover Operation included activities outside the scope of Permit No. 1349H, Collier Hogan 20-3H Well, including whether the Respondent Hughes Company engaged in the practice of hydraulic fracturing or "fracking." Section 62C-25.002(61), F.A.C., provides that Workover "shall mean an operation involving a deepening, plug back, repair, cement squeeze, perforation, hydraulic fracturing, acidizing, or other chemical treatment which is performed in a production, disposal, or injection well in order to restore, sustain, or increase production, disposal, or injection rates". (Emphasis added.). 24. Whether DEP and/or the Hughes Company are able to provide competent substantial evidence that the Workover Operation did not violate any applicable groundwater quality standard as suggested in the Consent Order Paragraph 16. 25. Whether DEP and/or the Hughes Company are able to provide competent substantial evidence that the Workover Operation did not violate any groundwater standard in the nearby 8 Packet Page -504- 10/14/2014 12.A. groundwater aquifer used as public and private water supply as suggested in the Consent Order Paragraph 19. 26. Whether in light of the relatively recent and quickly evolving fracking technology, the DEP has adopted sufficient and appropriate rules to ensure that all precautions are taken to prevent the spillage of oil or any other pollutant in all phases of the drilling for, and extraction of, oil, gas, or other petroleum products, as provided for and required in Section 377.22(2)(a)-(y), Fla. Stat., Rules and Orders. 27. Whether the DEP acted within the full extent of its statutory duty to enforce the rules and orders as provided in Section 377.22(2)(a)-(y), Fla. Stat., Rules and Orders. 28. Whether the Hughes Company acted in strict compliance with Section 62-30.005, F.A.C., to drill in the Big Cypress Watershed. 29. Whether the Hughes Company purposefully omitted from their Application their intent to engage in fracking. 30. Whether DEP would have issued the original Permit had the Hughes Company made full disclosure in its Application. 31. Whether Petitioners and other parties with substantial interests had their due process rights to challenge the original Permit wrongfully denied by Hughes Company's failure to so disclose. 32. Whether the activities engaged in by the Hughes Company warrants the revocation of the Permit, or in lieu thereof, an amendment of the Consent Order. 33. Whether DEP ought to have given Petitioners notice of the issuance of the Operating Permit, the unapproved Workover Operation activities when first discovered by DEP in 9 Packet Page -505- 10/14/2014 12.A. December of 2013, as well as notice of the proposed Consent Order, all of which occurred after Collier County had sent two requests to be notified. ULTIMATE FACTS AND SPECIFIC FACTS WARRANTING REVOCATION OR MODIFICATION OF THE PERMIT OR, IN THE ALTERNATIVE, MODIFICATION OF THE CONSENT ORDER 34. The Workover Operation engaged in by the Hughes Company was not only outside the scope of the Permit (Permit No. 1349H, Collier Hogan 20-3H Well), but the Hughes Company continued these activities despite notification by DEP that the Workover Operation was not approved. 35. The Workover Operation violated applicable groundwater quality standards, as suggested by Consent Order Paragraph 16. 36. The Workover Operation violated groundwater standards in the nearby groundwater aquifer used as public and private water supply as suggested by Consent Order Paragraph 19. 37. DEP has not adopted sufficient and appropriate rules in response to the relatively recent and quickly evolving technology of fracking to ensure that all precautions are taken to prevent the spillage of oil or any other pollutant in all phases of the drilling for, and extraction of, oil, gas, or other petroleum products, as provided for and required in Section 377.22(2)(a)-(y), Fla. Stat., Rules and Orders. 38. DEP did not act within the full extent of its statutory duty to enforce the rules and n 377.22(2)(a)-(y), Fla. Stat. Rules and Orders. orders as provided in Section Stat., 39. The Hughes Company failed to act in strict compliance with Section 62-30.005, F.A.C., in drilling within the Big Cypress Watershed. 10 Packet Page -506- , 10/14/2014 12.A. 40. The disregard by the Hughes Company of DEP's oral notification that the proposed Workover Operation was not approved warrants the revocation of the Permit, or in lieu thereof, an amendment of the Consent Order consistent with Petitioners' requests described below. 41. The DEP ought to have given Petitioners notice of the activities when first !, discovered by DEP in December of 2013. 42. That until DEP demonstrates, through appropriate studies, that fracking in the Sunniland Formation, when done pursuant to strictly defined guidelines and parameters, poses no known risk to the groundwater and aquifers that Petitioners and the public rely on for their drinking water, and implements these guidelines and parameters through appropriate rulemaking, that no Permit should have issued which involves non-traditional drilling techniques. 43. That DEP would never have issued, or should never have issued, the Permit to the Hughes Company had the true nature of this drilling been initially disclosed. 44. That had the Hughes Company, who consistently represented to the people of Collier County that no fracking would occur, disclosed the true nature of the proposed drilling in their application, that Petitioners and other parties with substantial interests would have had the ability to challenge the Permit before any drilling had commenced. 45. That had DEP given Notice to Collier County of the issuance of the Operating Permit, the unapproved Workover Operation activities when first discovered by DEP in December of 2013, as well as notice of the proposed Consent Order, all of which occurred after Collier County had sent two requests to be notified, Petitioners and other parties with substantial interests would have had the opportunity to challenge these agency actions then and there. RULES AND STATUTES ENTITLING PETITIONERS TO RELIEF 46. The following statutes and rules entitle Petitioners to relief: 11 Packet Page-507- 10/14/2014 12.A. a. Chapter 377, Florida Statutes, including but not limited to Section 377.22(2) b. Chapter 403, Florida Statutes c. Chapters 62C-25 through 62C-30,Florida Administrative Code d. Chapter 2003-353, Laws of Florida e. Florida Administrative Code Chapter 62-520 (Ground Water Classes, Standards and Exemptions); and Rule 62-520.440, Rule 62-520.430, Rule 62-520.420, and Rule 62-520.400. RELIEF REQUESTED WHEREFORE the Petitioners, Collier County and the District, respectfully request the following relief: (1) That the DEP accept this Amended Petition for Administrative Hearing and refer this matter to the Division of Administrative Hearings for a Formal Administrative Hearing pursuant to Sections 120.569 and 120.57; (2) That the DOAH ALJ enter a Recommended Order recommending that the DEP enter a Final Order denying the Consent Order, and ordering the suspension and revocation of DEP Drilling Permit No. 1349H Collier Hogan Well 20-3H. (3) If the Consent Order is not reversed, and the permit is not rescinded, Petitioners respectfully request the Consent Order be modified as follows: a. Amend paragraph 11 of the Consent Order to provide "...the Company shall provide to the Department and Collier County the information in paragraphs 12- 14 below." 12 Packet Page -508- 10/14/2014 12.A. • b. Amend paragraph 15 of the Consent Order to provide "...The ISPC Plan shall be submitted to the Department and Collier County within fourteen (14) days of the effective date of this Consent Order..." c. Amend paragraph 16 of the Consent Order to provide that Collier County will be given the requested information and analysis, and that DEP, in consultation with Collier County, directly retain the requested independent third-party experts at the Hughes Company's sole cost and expense to do the work described therein. d. Amend paragraph 17 of the Consent Order to include Collier County as a recipient and meaningful reviewer of the Report. e. Amend paragraph 18 of the Consent Order that gives Collier County 30 days after receipt of the Report to consult with DEP prior to DEP providing written notice to the Hughes Company that it has satisfied the Report requirements. f. Amend paragraph 19 to include Collier County as a recipient of the Plan and require that the Plan be reviewed by independent third party experts retained by DEP in consultation with Collier County, to be paid by the Hughes Company. g. Include the following new provisions in the Consent Order: (i) That Hughes Company immediately notify Collier County or its designee of any accident or incident occurring at the well site. (ii) That Hughes Company be fully liable for any and all remediation costs and post a ten (10) million dollar performance bond sufficient to cover potential assessment and remediation costs. (iii) Require a mechanical integrity test of the well casing at the subject production well, and any associated disposal wells, and nearby 13 Packet Page -509- 10/14/2014 12.A. abandoned wells including testing of the cement, and require tracer dye studies to determine upward movement of fluid around well casings. (iv) Require additional third party independent groundwater monitoring in all aquifers to provide earlier and better detection of contamination of the aquifers, particularly those aquifers used for drinking water, and require a tracer dye study between the subject horizontal Hughes well and the two nearby dry bore holes. (v) Require additional third party independent groundwater flow modeling to simulate workover pressures, flow and chemical fate of any workover activities undertaken, especially in the absence of actual measurements during the procedure. (vi) Require an operational plan to ensure that there is no excessive dissolution of rock or forcing of fluids to areas other than the targeted area be provided to Collier County. (vii) Require the reporting of the location and method of wastewater disposal to assess and ensure that injected workover fluids are not dissolving rock formations, especially rock formations that restrict upward migration of the fluids. (viii) Require groundwater flow modeling and tracer-dye testing to assess potential contaminant migration along fractures to existing private and public drinking water wells, in the vicinity of the subject oil production well. 14 Packet Page -510- 10/14/2014 12.A. (ix) Require the two nearby abandoned wells be logged and tested prior to any additional production and/or workover activities at the subject oil production well and then properly cased, plugged, capped and integrity tested. (x) Require that a complete list of all chemicals that were used, and in what quantities, and their material safety data sheets, be provided to Collier County. (xi) Require that a water balance showing the amount of water obtained by source, used, recovered and disposed and the disposal location be provided to Collier County. (xii) Require that a groundwater injection prevention, containment, recovery and remediation plan to provide assurance that injected fluids will not migrate to other groundwater formations or aquifers be provided to Collier County. (xiii) Require that a spill prevention and containment plan for surface spills covering the entire drill pad in accordance with best management practices to assure that all potential sources of contamination are within containment and that the containment area can hold 110% of the volume of the largest on-site holding tank be provided to Collier County. (4) That until these conditions are met, that the stop work order be reinstated and all work at the well should stop until reasonable assurances are provided, reviewed and approved or denied. 15 Packet Page -511- 10/14/2014 12.A. (5) Grant any other relief that this Agency deems just and proper. Respectfully submitted this 1s` day of July, 2014. ' -.pectfu ti 5mitted. ('1 t By JEFF' `' KLATZKOW I ; ' County Attorney Fri Bar No. 0644625 COLLI✓ N M. GREENE Assistant County Attorney Florida Bar No. 502650 Collier County Attorney's Office 3299 East Tamiami Trail, Suite 800 Naples,FL 34112-5749 Telephone: (239)252-8400 Facsimile: (239) 774-0225 COUNSEL FOR PETITIONER .1effklatzkowa,colliergov.net colleenm-eene rt:�colliereov.net nancvbradl ey@coll i ergov.net CERTIFICATE OF SERVICE 1 HEREBY CERTIFY that a true and correct copy of the Amended Petition for Administrative Hearing has been furnished via email upon: The Office of General Counsel, FLORIDA DEPARTMENT OF ENVIRONMENTAL PROTECTION, lea_crandallrhdep.state.fl.us; FLORIDA DEPARTME NT OF ENVIRONMENTAL PROTECTION. Mark Thomasson, P.E., Director. Division of Water Resource Management, marl:.:Iiornasson J d °p state.11.us: and Counsel for DAN A. l-IL L41HES COMPAN't . L.P.. Timothy M. Riley, Esq.. Richard S. Brightman, Esq., and French B411, sq., Hopping, Green Sams. P.A., timothvr�cilhuslaw.com; richardb'a:huslaw.corn and hi k has,lav, corm on thislst day of iuly, 2014. e. B): ,,� JEFFREY _' _ .1.t TZI OW, ESQ. l l kia.?tiow a volt i t 2oN .nee colIe n r ii a coilier t, .nel nanAralcv tricolli 'r q,... ne: OGC`-I4-001:. '; 16 Packet Page -512- 10/14/2014 12.A. BEFORE THE STATE OF FLORIDA DEPARTMENT OF ENVIRONMENTAL PROTECTION COLLIER COUNTY and COLLIER IN THE DIVISION OF COUNTY WATER-SEWER DISTRICT, WATER RESOURCE MANAGEMENT Petitioners, OGC File No.: 14-0012 V. FLORIDA DEPARTMENT OF ENVIRONMENTAL PROTECTION, and DAN A. HUGHES COMPANY, L.P., Respondents. Exhibit "A" COLLIER COUNTY'S AMENDED PETITION FOR ADMINISTRATIVE HEARING Packet Page -513- 10/14/2014 12.A: BEFORE THE STATE OF FLORIDA DEPARTMENT OF ENVIRONMENTAL PROTECTION • STATE OF FLORIDA DEPARTMENT IN THE DIVISION OF OF ENVIRONMENTAL PROTECTION WATER RESOURCE MANAGEMENT OGC FILE NO. 14-0012 vs. DAN A.HUGHES COMPANY,L.P. CONSENT ORDER This Consent Order("Order")is entered into between the State of Florida Department of Environmental Protection,("Department")and the Dan A.Hughes Company,L.P.("Company"), to reach settlement of certain matters at issue between the Department and the Company. 1. The Department is the administrative agency of the State of Florida having the power and duty to protect Florida's air and water resources and to administer and enforce the provisions of Chapters 377 and 403,Florida Statutes("F.S."),and Chapters 62C-25 through 62C•30,Florida Administrative Code("F.A.C."). The Department has jurisdiction over the matters addressed in this Order. 2. The Company is a"person"within the moaning of Section 403.161 and 403.031(5),F.S. 3. The Company obtained an Oil&Gas Well Drilling Permit from the Department in December of 2012(Permit No: 1349H,Collier-Hogan 20-3H Well)to construct a well to be located at the Hogan Island Farm in Collier County,Florida. 4. Upon completion of the construction of the 20.3H Collier-Hogan Well("Well"), the Company obtained a Five Year Operation Permit In August of 2013 to operate the Wdl as an oil production well. Exhibit "A" Collier County's Amended Petition for Administrative Hearing Packet Page -514- 10/14/2014 12.A. 5. On December 23,2013,the Company submitted to the Department a Workover Notification indicating that it intended to conduct a"Workover Operation"as described in Exhibit 1 attached hereto. This notice stated that the Company planned to commence the Workover Operation on December 28 or 29. Subsequently,at the request of the Department,the Company agreed to delay the Workover Operation until at least December 30 to allow the Department more time to review and respond to the notice. 6. The Workover Operation proposed by the Company began on December 30, 2013,and continued through January 1,2014. 7. On December 31,2013,the Department entered a Final Order Requiring •Operations at Well 20-3H Cease and Desist and served a copy of the Final Order on the Company on December 31,2013. A copy of the Final Order is attached hereto as Exhibit 2. • 8. The Company continued the Workover Operations until approximately 2:30 PM on the afternoon of January 1,2014. 9. The Company contends that at all times it was operating lawfully under a valid permit and followed all applicable procedures required to conduct the Workover Operations described in Exhibit 1. Having reached resolution of the matter,the Department and the Company mutually agree and it is, ORDERED: • 10. Within 10 days of the effective date of this Order,the Company shall pay the Department$25,000 in settlement of the regulatory matters addressed in this Order. This amount includes$20,000 for civil payments and$5,000 for costs incurred by the Department during the investigation of this matter and the preparation and tracking of this Order. • Packet Pa•e -515- 10/14/2014 12.A. . WELL SAFETY 11. Immediately upon execution of this Order or upon becoming available to the Company(whichever is later),the Company shall provide to the Department the information in paragraphs 12-14 below. 12. The Company shall provide Material Safety Data Sheets(MSDS)for all materials used in the Workover Operation described in Exhibit 1 attached hereto,along with the proportion and total volume of each material used in the Workover Operation. 13. The Company shall identify the total volume of water used in the Workover, Operation,and the source of the water,including the permit number if the water was obtained from a permitted source and confirmation that the volume of water used for the Workover Operation does not exceed any limitation set in the permit. 14. The Company shall provide the following information concerning the flowback material management for the Well operations: (a) estimate of the total volume of flowback material;(b)storage capacity at the pad to contain any flowback material that is anticipated to be held onsite;(c)description of the secondary containment measures employed at the site;(d)the final disposal location for the flowback material resulting from the Workover Operation;and(e) and confirmation of the regulatory conditions on final disposal,including the permitting agency and permit number(s). 15. The Company shall submit an Interim Spill Prevention and Cleanup Plan("ISPC Plan")to be implemented at the Well. The ISPC Plan shall be submitted to the Department within fourteen(14)days of the effective date of this Consent Order. If the Department requests additional information or notifies the Company that the ISPC Plan is inadequate or otherwise unacceptable,the Company shall provide the additional information or submit a revised ISPC Packet Page -516- — 10/14/2014 12.A. Plan within the time frame,not less than fourteen(14)days,specified by the Department in the request or notification. Implementation of the Department approved ISPC Plan constitutes satisfaction of this requirement. ANALYSIS AND MANAGEMENT 16. The Company shall provide information and analysis to confirm that this Workover Operation was designed and carried out in a way that it is not likely to cause or contribute to any violation of any applicable groundwater quality standard. The Company,at its sole expense,shall retain independent third-party experts with the appropriate qualifications to assess the likelihood that the Workover Operation will cause or contribute to a violation of any • applicable groundwater quality standards. This analysis shall consider at a minimum,the potential for injected or native fluids to migrate through the deep geological formations or the • Well casing into surrounding groundwater bearing zones with total dissolved solids concentrations of 10,000 ppm or less. The Department and the Company shall make a good faith effort to reach mutual agreement on the selection of the third-party experts and the"Scope of Work"to be performed by the experts within 60 days of the effective date of this Order. Neither the Department nor the Company shall unreasonably withhold their approval of the experts or the Scope of Work for the analysis. The Scope of Work will be limited to analyses reasonably necessary to evaluate the likelihood that Workover Operations similar to the Workover Operations described in Exhibit 1 will cause or contribute to any violations of any applicable • groundwater quality standards. The experts shall prepare a Report and submit the Report to the Department by December 1,2014. 17. Upon receipt of the Report,the Department shall review the Report and in a timely manner determine whether it provides sufficient information to evaluate the likelihood Packet Page -517- 10/14/2014 12.A. that Workover Operations similar to the Workover Operations described in Exhibit I will cause or contribute to any violations of any applicable groundwater quality standards. To this end, within 30 days of the receipt of the Report the Department shall notify the Company and the Report author of any apparent errors or omissions and request any additional information needed to evaluate the likelihood groundwater standard violations would result from similar Workover Operations.The Company shall provide the additional information reasonably requested by the Department within 30 days of receipt of the Department's request. If at any time before the study is accepted by the Department anyone files a Workover notice for a Workover Operation similar to the Workover Operation described in Exhibit 1,the Department will respond to such notice with a request for information similar to the Scope of Work for the Report 18. ,No future Workover Operations similar to the Workover Operation described in Exhibit 1 shall be implemented at any of the Company's wells(existing and proposed under valid permits)until the completion and submittal of the Report described in paragraph 16. The Department agrees to provide written notice to the Company when it has satisfied the Report requirements of this Consent Order. 19. Within 30 days of the effective date of this Order,the Company shall submit a groundwater monitoring plan("Plan')to the Department. The objective of the Plan is to provide • information regarding the likelihood that the Workover Operation will cause or contribute to any violation of any groundwater standard in the nearby groundwater aquifer used as public and • private water supply. The Plan shall be developed and implemented at the expense of the Company. The Plan shall include:(a)a one-time analytical sampling of the flowback material prior to its final disposal. In addition to the analysis identified in Exhibit 3,the one-time analytical sampling of the flowback material shall be conducted using the following analytical Packet Page -518- 10/14/2014 12.A. methods: EPA Method 350.1—total ammonia,EPA Method 8260 with required reporting of all target analytes and tentatively identified compounds having greater than 10%relative abundance, EPA Method 8270 with required reporting of all target analytes and tentatively identified compounds having greater than 10%relative abundance,EPA Method 8015C with all alcohols and glycols using the heated purge option cited in Section 11.1.2,FL PRO(State of Florida petroleum range organics),MA VPH(State of Massachusetts volatile petroleum hydrocarbons), Standard Methods 2504B—total dissolved solids,and Standard Methods 4500-CL F(listed as residual chlorine but measures total residual oxidants); ; (b)installation of a series of shallow monitoring wells,placed at the NW,NE,SW,SE corners of the pad. The wells shall be designed to test the full column of the potable water zone;(c)installation of one deep groundwater monitoring well on the pad and southwest of the subject well to a depth equal to the base of the sandstone aquifer(approximately 400');(d)ground water quality sampling and analyses of all wells;; (e)sampling and analyses of all monitoring wells on a quarterly basis for either ten(10) years from the date upon which the Department approves the groundwater monitoring plan or for five(5)years after plug and abandonment of the Well,which ever monitoring period shall expire first;(f)an inventory of freshwater supply wells within a quarter mile of the well bore hole;and(g)a schedule for implementing the Plan. 20. If the Department requests additional information or notifies the Company that the Plan is inadequate or otherwise unacceptable,the Company shall provide the additional information or submit a revised Plan within the time frame specified by the Department in the request or notification. Within 30 days of notification from the Department that the Plan is acceptable,the Company shall begin implementing the Plan. • Packet Page -519- 10/14/2014 12.A. SETTLEMENT OF ALL DISPUTES 21. The terms of this Consent Order,upon execution,shall supersede the requirements of the.Final Order Requiring Operations at Well 20-3H Cease and Desist. • 22. This Consent Order is in settlement of all disputes between the Company and the Department regarding the Permit No. 1349H,20-30H Collier-Hogan Well. The Department and the Company agree to act in good faith and to cooperate fully with each other in carrying out the intent of this Consent Order,and all matters related thereto,and for that purpose agree to execute any additional documents or take such action as may prove reasonably necessary to accomplish that intent. CONFIDENTIALITY 23. If any of the information submitted by the Company in response to the requirements of this Order is considered a trade secret or is otherwise confidential information in accordance with Chapter 377 or Section 403.111,F.S.,the Company shall request upon submittal of the information that the Department keep such information confidential. The Department will thereafter keep such information confidential in accordance with the requirements of Chapter 377 and Section 403.111,F.S. ORDER ADMINISTRATION 24. The Company acknowledges and waives its right to an administrative hearing pursuant to Sections 120.569 and 120.57,F.S.,on the terms of this Order. The Company acknowledges its right to appeal the terms of this Order pursuant to Section 120.68,F.S.,and waives that right upon signing this Order. 25. If any event,including administrative or judicial challenges by third parties unrelated to the Company,occurs which causes delay or the reasonable likelthood of delay,in Packet Pa e-520- w 10/14/2014 12.A. complying with the requirements of this Consent Order,the Company shall have the burden of •proving the delay was or will be caused by circumstances beyond the reasonable control of the Company and could not have been or cannot be overcome by the Company's due diligence. The • failure of a contractor,subcontractor,materialman or other agent(collectively referred to as "contractor")to whom responsibility for performance is delegated to meet contractually imposed deadlines shall not be a cause beyond the control of the Company,unless the cause of the contractor's late performance was also beyond the contractor's control. Upon occurrence of an event causing delay,or upon becoming aware of a potential for delay,the Company shall notify the Department orally within 24 hours or by the next working day and shall,within seven calendar days of oral notification to the Department,notify the Department in writing of the • anticipated length and cause of the delay,the measures taken or to be taken to prevent or minimize the delay and the timetable by which the Company intends to implement these measures. If the parties can agree that the delay or anticipated delay has been or will be caused by circumstances beyond the reasonable control of the Company,the time for performance hereunder shall be extended for a period equal to the agreed delay resulting from such circumstances. Such agreement shall adopt all reasonable measures necessary to avoid or minimize delay. Failure of the Company to comply with the notice requirements of this paragraph in a timely manner shall constitute a waiver of the Company's right to request an extension of time for compliance with the requirements of this Consent Order. 26. Entry of this Consent Order does not relieve the Company of the need to comply with applicable federal,state or local laws,regulations or ordinances. 27. The terms and conditions set forth in this Consent Order may only be enforced in a court of competent jurisdiction pursuant to Sections 120.69 and 403.121,F.S. Failure to Packet Page -521- 10/14/2014 12.A. comply with the terms of this Consent Order shall constitute a violation of Section 403.161(1Xb),F.S. 28. All submittals and payments required by this Consent Order to be submitted to the Department shall be sent to the Program Administrator of the Oil&Gas Program,Division of Water Resource Management,Florida Department of Environmental Protection,2600 Blair Stone Road,MS 3588,Tallahassee,FL 32399. 29. The Department hereby expressly reserves the right to initiate appropriate legal action to prevent or prohibit any violations of applicable statutes or the rules promulgated there- under that are not specifically addressed by the terms of this Consent Order. 30. This Consent Order is a settlement of the Department's civil and administrative authority arising under Florida law to resolve the matters addressed herein.This Order is not a settlement of any criminal liabilities which may arise under Florida law,nor is it a settlement of any violation which may be prosecuted criminally or civilly under federal law. 31. Electronic signatures or other versions of the parties' signatures,such as pdf or facsimile,shall be valid and have the same force and effect as originals. No modifications of the terms of this Order shall be effective until reduced to writing,executed by both Respondents and the Department, and filed with the clerk of the Department NOTICE OF RIGHTS 32. This Consent Order is a final order of the Department pursuant to Section 120.52(7),F.S.,and it is final and effective on the date filed with the Clerk of the Department unless a Petition for Administrative Hearing is filed in accordance with Chapter 120,F.S. Upon the timely filing of a petition,this Order will not be effective until further order of the Department. Packet Page -522= UMW 10/14/2014 12.A. 33. Persons who are not parties to this Order,but w se substantial interests are affected by it,have a right to petition for a,ATninistrative hearing un er Sections 120.569 and 120.57,F.S. Because the administrative hearing process is designed to formulate final agency action,the filing of a petition concerning this Order means that the Department's final action may be different from the position it has taken in the Order. • The petition for administrative hearing must contain all of the following information: a) The OGC Number assigned to this Order, b) The name,address,and telephone number of each petitioner;the name,address,and telephone number of the petitioner's representative,if any,which shall be the address for service purposes during the course of the proceeding c) An explanation of how the petitioner's substantial interests will be affected by the Order, d) A statement of when and how the petitioner received notice of the Order; e) Either a statement of all material facts disputed by the petitioner or a statement that the petitioner does not dispute any material facts; f) A statement of the specific facts the petitioner contends warrant reversal or modifeatinn of the Order; g) A statement of the rules or statutes the petitioner contends require reversal or modification of the Order;and h) A statement of the relief sought by the petitioner,stating precisely the action petitioner wishes the Department to take with respect to the Order. The petition must be filed(received) at the Department's Office of General Counsel,3900 Commonwealth Boulevard, MS 35,Tallahassee,Florida 32399-3000 within 21 days of receipt of Packet Page -523- 10/14/2014 12.A. this notice. Failure to file a petition within the 21-day period constitutes a person's waiver of the right to request an administrative hearing and to participate as a party to this proceeding under Sections 120.569 and 120.57,F.S. Before the deadline for filing a petition,a person whose substantial interests arc affected by this Order may choose to pursue mediation as an alternative remedy under Section 120.573, F.S. Choosing mediation will not adversely affect such person's right to request an administrative hearing if mediation does not result in a settlement. Additional information about mediation is provided in Section 120.573,Florida Statutes and Rule 62- 110.1.06(12), F.A.C. FOR THE COMPANY: DAN A. HUGHES COMPANY, L.P. By Dan A.Hughes Management,L.L.C. Its general partner �} gait 1 it!�a , _ DATE C- y •mers, 14+-• ice President of Land P.O,Drawer 669.$geLvilJg,,Txas 78!U4 ADDRESS DONE AND ORDERED this 8th day of April 2014,in Tallahasseq Florida. STATE OF FLORIDA DEPARTMENT OF ENVIRONMENTAL PROTECTION Mark Thomason P.E. Director, Division of Water Resource Management Packet Page -524- . 10/14/2014 12.A. Filed,on this date,pursuant to Section 120.52,Fla.Stat.,with the designated Department Clak, receipt of which is hereby acknowledged. 41,/tGedf-a tr-//1 Clerk Date Copies furnished to: Lea Crandall,Agency Clerk Mail Station 35 Packet Page -525- 10/14/2014 12.A. EXHIBIT l • This exhibit is protected as a confidential trade secret under section 815.045,Florida Statutes, and has been submitted separately. • • Packet Page -526- 10/14/2014 12.A. EXHIBIT 2 Packet Page -527- 10/14/2014 12.A. BEFORE THE STATE OF FLORIDA DEPARTMENT OF ENVIRONMENTAL PROTECTION COLLIER COUNTY and COLLIER IN THE DIVISION OF COUNTY WATER-SEWER DISTRICT, WATER RESOURCE MANAGEMENT Petitioners, OGC File No.: 14-0012 V. FLORIDA DEPARTMENT OF ENVIRONMENTAL PROTECTION, and DAN A. HUGHES COMPANY, L.P., Respondents. • • 4 4 Composite Exhibit B COLLIER COUNTY'S AMENDED PETITION FOR ADMINISTRATIVE HEARING Packet Page -528- 10/14/2014 12.A. STATE OF FLORIDA DEPARTMENT OF ENVIRONMENTAL PROTECTION PERMITTEE PERMIT No: 134911 I PA No 315034-001 Dan A.Hughes Company,L.P. WELL 20-3H Collier-Hogan 208 E.Houston SECURITY: Single Bond No.RLB0014778 Beeville,TX 78102 PROJECT:Collier County Wildcat Well FINAL ORDER OIL&GAS WELL DRILLING PERMIT FINDINGS OF FACT: Dan A Hughes Company, LP., filed a complete application on November 8, 2012„ with the Florida Department of Environmental Protection (the Department) to drill the 20-3H Collier-Hogan well in Collier County, Florida. The proposed exploratory well will be drilled within a non-routine drilling unit in accordance with Rule 62C-26.004(6) Florida Administrative Code (F.A.C.). AIl of the mineral ownership of the 428-acre drilling unit has been leased by the applicant The permittee has provided all documentation required under Chapters 62C-25 through 62C-30,F.A.C. The application was reviewed and deemed consistent with requirements of Sections 377.241, 377.242, and 377.243,Florida Statutes (FS.),and implementing Chapters 62C-25 through 62C-30,F.A.C. This permit authorizes the Dan A.Hughes Company,LP.,to drill a horizontal completion targeting the Lower Scrubland Formation. The surface hole location (SHL) is 2,116 feet from the south line and 3,315 feet from the east line of Section 20,Township 47 South, Range 28 East in Collier County.The proposed bottom hole location(PBHL)will be 1,342 feet from the south line and 2,003 feet from the west line of Section 21,Township 47 South, Range 28 East. A new drilling pad will be constructed in a tomato field at the Hogan Island Farm that is owned by the Barron Collier Company. The well site will be located within the Big Cypress Swamp watershed,but there will be no wetlands impacts. The procedure calls for the operator to drill a pilot hole to a total vertical depth(TVD)of 13,500 feet[13,500 feet measured depth (MD)j,to evaluate the geology. If the permittee chooses to continue drilling operations,the bottom of the pilot hole will be plugged back with cement and then kicked off at 11,187 feet TVD(11,187 feet MD)to directional drill a 8 1/2 inch hole with a steerable assembly while building angle. After reaching 11,836 feet TVD (12,000 ft MD) 7 5/8 inch casing will be set in the hole and cemented it in place. After setting casing the procedure calls for drilling a 6 1 inch open hole until obtaining an inclination angle of 90 degrees at the landing point at a depth of 11,903 TVD (12,312 feet MD). At this depth the well will be completed drilling horizontally 4,588 feet to the proposed bottom hole location at 11,903 TVD (16,900 MD)in the targeted pay zone of the Lower Sunniland Formation. Composite Exhibit "B" Collier County's Amended Petition for Administrative Hearing Packet Page -529- 10/14/2014 12.A. • r Dan A.Hughes Company,L.P. FDEP Drilling Permit No.1349H Page 2 of 7 Access to the proposed drilling site will utilize existing private farm roads whose only improvements will consist of surface hardening to accommodate vehicle traffic. No new utilities will be brought into the site. The site plan includes a two-foot earthen berm constructed around the perimeter of a newly built drilling pad.A secondary containment area within the perimeter of the site will be covered by high-density polyethylene to contain and collect any minor accidental spills from drilling operations and to prevent storm water runoff from leaving the site. There will be no earthen mud pits. Drilling mud and well fluids will circulate through a dosed system of portable steel tanks and plumbing lines. The operator has applied for a water use permit from the South Florida Water Management District The permit will allow Hughes to withdraw fresh water from onsite wells for milling, drilling, and cementing operations. The application includes an H2S contingency plan,with predefined responses in the event of an accidental gas release. The plan calls for coordination with other governmental agencies in the unlikely event of an emergency. Safety equipment including blowout preventers will be installed and routinely tested during drilling operations. The wellhead and flow lines are required to be maintained, monitored, and tested by the operator's personneL Best industry practices will be incorporated into the operator's daily work routine with compliance monitored by inspectors from the Department's Ft Myers Oil and Gas Office. CONCLUSION OF LAW: This application as approved complies with the standards and criteria of Chapter 377,Part I,FS.,and Chapters 62C-25 through 62C-30,F.A.C. GENERAL PERMIT CONDITIONS 1. This drilling permit expires one year from the issuance date.If drilling has not begun within that time then, upon written request by the permittee, the Department shall extend the permit for an additional year. In accordance with Rule 62C-26.003(2), F.A.C.,subsequent requests for extensions shall be treated as new applications. 2. This permit authorizes drilling within the state of Florida as designated on the attached location plat prepared by Pickett&Associates,Inc.,dated November 21,2012. 3. Issuance of this permit does not relieve the permittee of the responsibility to comply with all applicable federal, state, county, municipal, and special district laws, ordinances and rules,nor is the permittee relieved of the responsibility to obtain any licenses or permits which may be required by federal, state, county, municipal, or special district laws. Packet Page -530- 10/14/2014 12.A. Dan A.Hughes Company,L.P. FDEP Drilling Permit No.1349H Page 3 of 7 4. By accepting this permit, the permittee agrees to conduct all operations in accordance with this permit and the application upon which it is based, Chapter 377, F.S., and Chapters 62C-25 through 62C-30,F.A.C. 5. The permittee shall notify the Ft Myers Oil and Gas Field Office at(239)344-5721 not less than twenty-four hours prior to starting work and thereafter as directed. 6. The permittee shall file Form 8(Well Record)within 30 days after reaching total depth, Form 9 (Well Completion Report) within 30 days after testing the well, a directional survey within 30 days after logging the well,and Form 16(Plugging Report)within 30 days after plugging the well. Geophysical well logs, mud logs, samples, core chips, laboratory core analysis reports, etc., must be submitted to the Oil and Gas Section within 30 days after reaching total depth. 7. Any violation of these permit conditions may result in the suspension or revocation of this permit pursuant to Section 120.60, F.S., or may result in penalties, pursuant to Sections 379.407,377.37,and 403.121,PS. 8. The additional data derived from this well shall be used to refine existing prospect interpretations and shall provide the basis for determining whether additional field wells,special field rules,or field unitization will be necessary. 9. If additional wells are necessary before adopting special field rules or unitizing the field, commercial production from this well may be governed by allowables to be set by the Department or the distributable royalty interest shall be escrowed until such rules are adopted or unitization proceedings, as outlined in Section 377.28(4), P.S.,are completed. 10.If unitization is required pursuant to Section 377.28, F.S., to prevent waste and protect the coequal and correlative rights of all potentially impacted parties, the operator shall begin unitization proceedings within 60 days after testing is completed, in which case commercial production may be restricted or distributable interests escrowed until a unitization package is approved by the Department This drilling unit shall be included within the field limits. Any additional areas subsequently included within the field shall be defined on the basis of not less than quarter-quarter-quarter sections (square blocks of approximately 10 acres)and shall include all blocks below which the oil pool is projected. 11.During the period between well testing and adoption of special field rules or field �� unitization in accordance with Section 377.28, F.S., the operator shall be allowed to '-a produce the well but shall escrow all undistributed mineral interests' funds for the � CN � rh (v rY Packet Page -531- 10/14/2014 12.A. Dan A.Hughes Company,L.P. PDEP Drilling Permit No.1349H Page 4 of 7 benefit of any unpaid royalty owners or yet to be determined royalty owners in the case of unitization, SPECIFIC PERMIT CONDITIONS 1. A directional survey shall be run from at least the surface casing shoe to total depth and shall be filed with the administrator within 30 days after logging pursuant to Rule 62C-26.004(5)(e),F.A.C. 2. If the well is successful and it is configured for production, a modified survey plat based on the directional survey must be submitted prior to issuance of the operating permit 3. If produced test fluids will be removed from the site by transporter(s) not authorized by the Form 14 on file with the Department for this well, a modified Form 14 designating the transporter(s)must be submitted to the Department prior to removing those test fluids. RIGHTS OF AFFECTED PARTIES A person whose substantial interests are affected by the Department's action may petition for an administrative proceeding (hearing) under Sections 120.569 and 120.57, F.S. The petition must contain the information set forth below and must be filed (received by the clerk) in the Office of General Counsel of the Department at 3900 Commonwealth Boulevard,Mail Station 35,Tallahassee,Florida 32399-3000. Under Rule 62-110.106(4), F.A.C., a person whose substantial interests are affected by the Department's action may also request an extension of time to file a petition for an administrative hearing.The Department may, for good cause shown, grant the request for an extension of time. Requests for extension of time must be filed with the Office of General Counsel of the Department at 3900 Commonwealth Boulevard,Mail Station 35, Tallahassee, Florida 32399-3000, before the applicable deadline. A timely request for extension of time shall toll the running of the time period for filing a petition until the request is acted upon. If a request is filed late,the Department may still grant it upon a motion by the requesting party showing that the failure to file a request for an extension of time before the deadline was the result of excusable neglect If a timely and sufficient petition for an administrative hearing is filed, other persons whose substantial interests will be affected by the outcome of the administrative process have the right to petition to intervene in the proceeding. Intervention will be Packet Page -532- 10/14/2014 12.A.■ Dan A.Hughes Company,L.P. FDEP Drilling Permit No.1349H Page 5 of 7 permitted only at the discretion of the presiding officer upon the filing of a motion in compliance with Rule 28-106.205,P.A.C. In accordance with Rule 62-110.106(3),F.A.C.,petitions for an administrative hearing by the applicant must be filed within 21 days of receipt of this written notice.Petitions filed by any persons other than the applicant,and other than those entitled to written notice under Section 120.60(3),F.S.,must be filed within 21 days of publication of the notice or within 21 days of receipt of the written notice, whichever occurs first. Under Section 120.60(3),F.S.,however,any person who has asked the Department for notice of agency action may file a petition within 21 days of receipt of such notice,regardless of the date of publication. The petitioner shall mail a copy of the petition to the applicant at the address indicated above at the time of filing. The failure of any person to file a petition for an administrative hearing within the appropriate time period shall constitute a waiver of that person's right to request an administrative determination (hearing)under Sections 120.569 and 120.57,F.S. A petition that disputes the material facts, on which the Department's action is based, must contain the following information: (a) The name and address of each agency affected and each agency's file or identification number,if known; (o) The name, address, and telephone number of the petitioner; the name, address, and telephone number of the petitioner's representative, if any, which shall be the address for service purposes during the course of the proceeding;and an explanation of how the petitioner's substantial interests are or will be affected by the agency determination; (c) A statement of when and how the petitioner received notice of the agency decision; (d) A statement of all disputed issues of material fact. If there are none, the petition must so indicate; (e) A concise statement of the ultimate facts alleged, including the facts that the petitioner contends warrant reversal or modification of the agency's proposed action; (f) A statement of the specific rules or statutes that the petitioner contends require reversal or modification of the agency's proposed action, including an explanation of how the alleged facts relate to the specific rules or statutes;and (g) A statement of the relief sought by the petitioner,stating precisely the action that th.e petitioner wishes the agency to take with respect to the agency's proposed action. 1 Packet Page -533- 10/14/2014 12.A. Dan A.Hughes Company,L.P. FDEP Drilling Permit No.1349H Page 6 of 7 Under Sections 120.569(2)(c)and (d),P.S., a petition for administrative hearing must be dismissed by the agency if the petition does not substantially comply with the above requirements or is untimely filed. This permit constitutes an order of the Department Subject to the provisions of Section 120.68(7)(a), F.S., which may require a remand for an administrative hearing, the applicant has the right to seek judicial review of the order under Section 120.68,F.S.,by the filing of a notice of appeal under Rule 9.110 of the Florida Rules of Appellate Procedure with the Clerk of the Department in the Office of General Counsel, 3900 Commonwealth Boulevard, Mail Station 35, Tallahassee, Florida 32399-3000; and by filing a copy of the notice of appeal accompanied by the applicable filing fees with the appropriate district court of appeal. The notice of appeal must be filed within 30 days from the date when the order is filed with the Clerk of the Department. The files associated with this order are available for public inspection during normal business hours, 8:00 a.m. to 5:00 p.m.,Monday through Friday, except legal holidays,at the Department of Environmental Protection, 2051 East Paul Dirac Drive, Tallahassee, Florida 32310-3760. Packet Page -534- 10/14/2014 12.A.■ Dan A.Hughes Company,L.P. FDEP Drilling Permit No.1349H Page 7 of 7 Executed in Tallahassee,Florida. STATE OF FLORIDA DEPARTMENT OF ENVIRONMENTAL PROTECTION S‘,.-11( '41 .61-e__.k, Danielle Fondren,PWS,Deputy Director Division of Water Resource Management Department of Environmental Protection CERTIFICATE OF SERVICE The undersigned duly designated deputy clerk hereby certifies that this final order was mailed before the close of business on D...4,..4,11 If,2012,to the above listed persons. PILING AND ACKNOWLEDGMENT FILED,on this date,pursuant to Section 120.52(7),F•S., with the designated Deputy Department Clerk,receipt of which is hereby acknowledged. yeritty Clerk ate Prepared by: SS/EG. 2 page(s)attached. Attachment(s): 1, Survey Plat,2-3H Collier-Hogan,Pickett&Associates,Inc.,revision date November 21,2012. 2. Form 3,Application for Permit to Drill,dated November 21,2012. Packet Page -535- 10/14/2014 12.A.• Sealed Original COLLI ER-HOGAN Drawing on File Oil Well Permit#1349 COLLIER-HOGAN 20-3H 18 17 . _ . , _ _.. , � . 17 16 — _ . _ , — 19 20 T 20 21 Legend: T FSL—From South Section Line • I 1 FEL—From East Section Line WELL HEADS do PERMIT � ' SECTION 20, NUMBER PROVIDED BY FLORIDA I %ELL /20-314 TOWNSHIP 47 SOUTH,RANGE 1 I '" O DEPARTMENT OF SURFACE HOLE LOCATION EAST ENVIRONMENTAL PROTECTION CAT. 2872'20.102"N COLLIER COUNTY,FLORIDA LONG Bt 32'27,o9s• w N 741361.82 DISTANCES ARE IN FEET. I I E 479083.05 GROUND ELEVATION 1 DRILLING MST SOUNDARY • NAVD 8820.6' • NQVO 29.20.9' 2.116 feet FSL = DRIWNG UNIT BOUNDARY 3 315 feet ILL. . 1_ . _ . __ . __ -�_4_ i WELL J20-3N BOTTOM HOLE LOCATION t 4 T.LA 26'22'12.953 N I 7 C LONG. 81'31'28.507' W ty I N 740817.99 _ d E 484408.74 1,342 feat FSL i G NELL#20-314 s....."• Z003 feet FK ..- /..;.' PENETRATION POINT INTO ,'` I I RUBBLE -' LAT. 2822'19.552'N .1 LONG. 8I 32'22.586` W ` . �.� N 741304.56 IE 479493.04 SECTION 21, I • I 2054 het f SL 1/ TOWNSHIP 47 SOUTH,RANGE• 204 /eat EAST DRI W NG UNIT BOUNDARY COLLIER COUNTY,FLORIDA 19120 • . . - , . I . -_ . 20 21 DRILLING UNIT BOUNDARY . I e 29 28 29 ATE OAROAD U ewe vs. me V' MIS SURVEYOR's NOTES: 4..�� v 1. Thle Is 0 specific purpose survey prepared to Illustrate proposed well locajlp�,. OW �vr 2. North and the coordinate values shown hereon ore referenced to the �+,1�� Zone of the F1oritoli tote Plane Coordinate System. NAD 83. Vertkal values ore NAVD 88. the NGYD 29 e1$i?ARA* were converted .NORTH from NAVD 88 using Corpecon. Units are in U.S. Survey feet. 3. The east and south lines of Section 20 are based upon a field survey of J€I g m ritatlon. The • remainder of the Section Is Posed upon information obtained from ufpller County on is sli Wn for o boo, i 1200 information only. THIS IS NOT A BOUNDARY SURVEY. L2�r 4. Distances are in U.S. Sunny Feet. RE, ..-C�l!T�;�'j,r} .5.., �i4 ( IN FEET ) ,��;gppg ly }* 1 1 inch = 1200 ft.. T�� FIN M. CLYATT, P.S.M. - . REGSTRATTON No. 4092 '-DA7E- GRAPHIC k INTENDED DISPLAY SCALE ICKETT Cc ASSOCIATES. - FL. REGISTRATION No. L9 364 SPECIFIC PURPOSE SURVEY NUM h011104 MS LOCATED IN SECTIONS 20 & 21, d ApicKETT ,. TOWNSHIP 47 SOUTH, RANGE 28 EAST PREPARED FOR: DAN A. HUGHES COMPANY, L.P. +r SURVEYING&PHOTOGRAMMETRY PROJECT, COWER—HOGAN RC 1T ASSOCIATEe`I Project No.: 16925 No. Dote Approved REVISION NOT VALID WITHOUT Horiz. Scale: 1" — 1200' OR 11/05/12 JAIC Original Release THE SIGNATURE AND THE ORIGINAL RAISED DWG. Name: 7es2s-Kf L -•3N 1 11/21/12 JAW Add Drilling Unit Boundary SEAL Or A FLORIDA LICENSED SURVEYOR Drown By GBA AND MAPPER. Field Bk / Pg.: 801 Drawing t' 503138 Packet Page -536- -- f 10/14/2014 12.A. F' )DA DEPARTMENT OF ENVIRONMENTAL PROTECT l APPLICATION FOR PERMIT TO DRILL Fauna aria 620046.005.-MO For information and fees regarding drilling permits for o8 and gas related wells,refer to Chapter 020.20,Florida Administrative Code. File this form with the Chief,Florida Geolegieal Survey,903 West Tennessee Street,Tallahassee.,Florida 32304-7700 (phone numbers 850/487-2219 and 4884191;fax 850/488.8080). Dam A. !Odes Cagan,ny, L.P. Pawls Name erne Mews) 208 F. Houston BecviLle, Texas 78102 Phone Number: (861) 358-3752 Fax Number: (361) 362-2839 Wet Name and Number: Collier - Bpgatp 20-3H(19071i(4. No. i5,41 N> Ground Elevation:20.6' NAVD88 Acres Assigned to Wet: 428 Latitude: 26 22'20"Lorpitude:81 32'27" SHL: N741361.82 E479083.05 Sec 20 T. 47S Rte, SHL: N740617.9Q F484GOR-7. Sec._,71 T.A77__N.28E Field/Area: Wildcat Field County: Collier Distance to nearest drilling unit boundary: va",,72,5-r-441 Proposed Depth:16,90011D 111,903'1VD) Do you have all of the mineral Interest In the drilling unit under lease or title? Yes (Yes or No) If rot,attach lease map showing ownership of all mineral acreage within the drilling unit and Ast the names and addresses of all nonooneentlrp mineral owners. (See section 377.2411 and.247,Florida Statutes.) (Please crew YES or NO) Is the structure Intended for the drilling or production of this well located(See section 37724,F.S.) a) in a municipality? No b) In tidal waters within 3 miles of•municipality? No c) on an Improved beach? lei d) on any submerged lend within a bay,estuary,or offshore waters? No a) within one mile seaward of the coastline of the state? No I)within one mile seaward of the boundary of a local,state or federal park or an aquatic or wildlife preserve? No g) On the surface of a freshwater lake,river or abeam? No h)within one mile Inland from the shoreline of the Gulf ofMeXLco,the Atlantic Ocean or any bay or estuary? No I)within one mile of any freshwater lake,river or stream? No If the answer to e,b,or c is YES,attach copies of local governing authorities'permits. If the answer to h or I is YES,attach a contingency plan specifying safeguards being implemented to prevent accidents and/or blowouts and to protect the natural resources of such bodies of water and shore areas In the event of an accident or blowout The security for this well Is attached (attached or on tile)with the Florida Geological Survey(see Rule 620.- 26.002)and beers Serial Number Iif0014778 ZUSIC.V..011t163CITSIMO:711011MIMM111161.14. ..... 1=7...5(1M....21==.210311711. Company's Statement State: TEXAS County: BEE I, J. Henry Archers ,am the Q ftrr_rating_atti wr/Vie-w Preaieir-..t i,..,rl (Name) (Tea) of an A. Hughes Company, L.P. and attest to at information contained herein to be this and correct. lorparraPON Signature: Date: ///4J'0.• L OF A?JN v ir„ File Number, Action: Data: A.P.I.Number, FDEP (Approved,Gamed) Me 403(11) DEC 4 2012 Rws.r aree RECEIVED Packet Page -537- 10/14/2014 12.A• STATE OF FLORIDA DEPARTMENT OF ENVIRONMENTAL PROTECTION PERMIT l EE: Permit No: 1349H PA: 315034 Dan A.Hughes Company LP WELL: 20-3H Collier-Hogan 208 E.Houston/ Drawer 669 API No: 09-021-20211 Beeville,TX 78104 SECURITY: Bond No.RLB0014778 EXPIRATION DATE: August 6,2018 FINAL ORDER FIVE YEAR OPERATING PERMIT FINDINGS OF FACT: Dan A. Hughes Company LP filed an application for a permit to operate the 20-3H Collier-Hogan with the Department of Environmental Protection on August 5,2013. The surface hole is located 2,114 feet from the south line and 3,314 feet from the east line of Section 20, Township 47 South, and Range 28 East in Collier County, Florida. This well has been constructed as a production well having a total vertical depth of 11,903 feet below ground level. The application was reviewed and deemed consistent with requirements of Sections 377.241, 377.242, and 377.243, Florida Statutes (F.S.), and implementing Chapters 62C-25 through 62C-30, Florida Administrative Code (F.A.C.). The well site was inspected in accordance with Rule 62C-26.008(5),F.A.C. CONCLUSION OF LAW: This application as approved complies with the standards and criteria of Chapter 377,Part I,F.S.,and Chapters 62C-25 through 62C-30,F.A.C. GENERAL PERMIT CONDITIONS 1. Issuance of this permit does not relieve the permittee of the responsibility to comply with all applicable federal, state, county, municipal, and special district laws, ordinances, and rules nor is the permittee relieved of the responsibility to obtain any. licenses or permits which may be required by federal, state, county, municipal, or special district laws. 2. By accepting this permit the applicant agrees to conduct all operations in accordance with Chapter 377,F.S.,and Chapters 62C-25 through 62C-30,F.A.C. 3. Pursuant to Rule 62C-26.008(2), F.A.C., this operating permit is valid for the life of the well, but must be recertified every five years. Application for recertification must be submitted no later than 90 days prior to the end of each 5-year permit term. 4. Pursuant to Rule 62C-29.006(1),F.A.C.,the permittee shall notify the Department's Oil and Gas Field Office in Ft. Myers at phone number 239.344.5721, or 239.344.5611, not Packet Page -538- 10/14/2014 12.A. Permit 1349H Page 2 of 5 less than twenty-four hours prior to starting workover operations, and shall report emergencies as soon as possible. 5. A spill prevention and clean-up plan(SPCP)designed to prevent spills of crude oil and associated fluids and to expeditiously remove these fluids from the environment should a spill occur will be on file with the Department. Pursuant to Rules 62C- 26.008(3)(d) and 28.004(2), F.A.C., the permittee shall keep these plans current and readily available for use onsite as needed in accordance with the plan. 6. Pursuant to Rule 62C-29.009, F.A.C., the permittee shall obtain Department approval prior to commencing plugging and abandonment procedures. 7. Any violation of these permit conditions may result in the suspension or revocation of this permit pursuant to Section 120.60, FS., or may result in penalties pursuant to Sections 379.407 and 377.37,FS. SPECIFIC PERMIT CONDITIONS 1. Pursuant to Rule 62C-26.008(2), F.A.C., this operating permit shall be valid for the life of the well. However, the well and permit must be re-certified every five years. The 5-year operating permit term authorized by this order shall be effective beginning August 7,2013,and will expire on August 6,2018. RIGHTS OF AFFECTED PARTIES A person whose substantial interests are affected by the Department's action may petition for an administrative proceeding (hearing) under Sections 120.569 and 120.57, F.S. The petition must contain the information set forth below and must be filed (received by the clerk) in the Office of General Counsel of the Department at 3900 Commonwealth Boulevard, Mail Station 35,Tallahassee,Florida 32399-3000. Under Rule 62-110.106(4), F.A.C., a person whose substantial interests are affected by the Department's action may also request an extension of time to file a petition for an administrative hearing. The Department may, for good cause shown, grant the request for an extension of time. Requests for extension of time must be filed with the Office of General Counsel of the Department at 3900 Commonwealth Boulevard, Mail Station 35, Tallahassee, Florida 32399-3000, before the applicable deadline. A timely request for extension of time shall toll the running of the time period for filing a petition until the request is acted upon. If a request is filed late, the Department may still grant it upon a motion by the requesting party showing that the failure to file a request for an extension of time before the deadline was the result of excusable neglect. If a timely and sufficient petition for art administrative hearing is filed, other persons whose substantial interests will be affected by the outcome of the administrative process have the right to petition to intervene in the proceeding. Intervention will be W:\DATA\OIL_GPS\FAO'S\Active Drafts\Hughes\i849H OP FAO Packet Page -539- 10/14/2014 12.A. Permit 1349H Page 3 of 5 permitted only at the discretion of the presiding officer upon the filing of a motion in compliance with Rule 28-106.205,F.A.C. In accordance with Rule 62-110.106(3),P.A.C.,petitions for an administrative hearing by the applicant must be filed within 21 days of receipt of this written notice.Petitions filed by any persons other than the applicant,and other than those entitled to written notice under Section 120.60(3),F.S.,must be filed within 21 days of publication of the notice or within 21 days of receipt of the written notice, whichever occurs first. Under Section 120.60(3),F.S.,however, any person who has asked the Department for notice of agency action may file a petition within 21 days of receipt of such notice,regardless of the date of publication. The petitioner shall mail a copy of the petition to the applicant at the address indicated above at the time of filing. The failure of any person to file a petition for an administrative hearing within the appropriate time period shall constitute a waiver of that person's right to request an administrative determination (hearing) under Sections 120.569 and 120.57,F.S. A petition that disputes the material facts, on which the Department's action is based, must contain the following information: (a) The name and address of each agency affected and each agency's file or identification number,if known; (b) The name, address, and telephone number of the petitioner; the name, address, and telephone number of the petitioner's representative, if any, which shall be the address for service purposes during the course of the proceeding; and an explanation of how the petitioner's substantial interests are or will be affected by the agency determination; (c) A statement of when and how the petitioner received notice of the agency decision; (d) A statement of all disputed issues of material fact. If there are none,the petition must so indicate; (e) A concise statement of the ultimate facts alleged, including the facts that the petitioner contends warrant reversal or modification of the agency's proposed action; (f) A statement of the specific rules or statutes that the petitioner contends require reversal or modification of the agency's proposed action, including an explanation of how the alleged facts relate to the specific rules or statutes;and (g) A statement of the relief sought by the petitioner, stating precisely the action that the petitioner wishes the agency to take with respect to the agency's proposed action. Under Sections 120.569(2)(c) and (d), F.S., a petition for administrative hearing must be dismissed by the agency if the petition does not substantially comply with the above requirements or is untimely filed. l\':\DATA\OLL_.GAS\FAO'S\Active Pr:i(tti\Hugiu',\'13-0H OP FAO Packet Page -540- 10/14/2014 12.A. Permit 13491-1 Page 4 of 5 This permit constitutes an order of the Department. Subject to the provisions of Section 120.68(7)(a), F.S., which may require a remand for an administrative hearing, the applicant has the right to seek judicial review of the order under Section 120.68,F.S.,by the filing of a notice of appeal under Rule 9.110 of the Florida Rules of Appellate Procedure with the Clerk of the Department in the Office of General Counsel, 3900 Commonwealth Boulevard, Mail Station 35, Tallahassee, Florida 32399-3000; and by filing a copy of the notice of appeal accompanied by the applicable filing fees with the appropriate district court of appeal. The notice of appeal must be filed within 21 days from the date when the order is filed with the Clerk of the Department. The files associated with this order are available for public inspection during normal business hours, 8:00 a.m. to 5:00 p.m.,Monday through Friday,except legal holidays, at the Florida Department of Environmental Protection, 2600 Blair Stone Road, Tallahassee,Florida 32399-2400. Executed in Tallahassee,Florida. STATE OF FLORIDA DEPARTMENT OF ENVIRONMENTAL PROTECTION Ed Garrett,P.G.,Oil and Gas Program Administrator Florida Department of Environmental Protection 2600 Blair Stone Road,MS 3588 Tallahassee,FL 32399-2400 \DA TA\OIL_CAS\FAG'S\Artier Drafts\Hughes\11.19H CAP FAO Packet Page -541- 10/14/2014 12.A. Permit 1349H Page 5 of 5 CERTIFICATE OF SERVICE b The undersigned duly designated deputy clerk he r e y mailed before the close of business on Q , certifies that this final order was 2013,to the above listed persons. FILING AND ACKNOWLEDGMENT FILED,on this date,pursuant to Section 120.52(7),F.S., with the designated Department Clerk,receipt of which is hereby acknowledged. ' G+�C/ 4fN�/_�_ 1 �.� Clerk Date Prepared by: SS Attachment(s): 1. Form 14, Application for Permit to Operate Well, dated August 1,2013. ;N:\DATA\OILGAS\FAO'S\Active Drafts\Hughes\1349H OP FAO Packet Page -542- 10/14/2014 12.A. FLORIDA DEPARTMENT OF ENVIRONMENTAL PROTECTION APPLICATION FOR PERMIT TO OPERATE WELL/REQUEST FOR RECERTIFICATION Fong 14 Rule e2C-28006 Fib this turn with the Chief,Flodde Geological Survey;903 West Tennessee Street Tel lehuscea,Florida 32304-7700(phone numbers 850/487.2219 and 488-4191:fax 850/488.8088).Allow 90 days for proeesalng. Pimet Number. 134911 Apt Numbs.: 09-021-20211 County. 6llie COI s toe Web Name and Number: c°1"`"'"9""2"" Field: Wldeat Lottude 28.22'20.102aN tan9fbmde 8r3T27.096'W sermon Casa • N741226.7e 8479177.44 2114'RR.x 3314'F0. Sacdan 20 Township 478 Range rte Operators Name: Den A.Hughes Company,L.P. Mailing Address. 208 E.Houston/Drawer 889 • Beeville.Texas 78104 Plane Number. 381-358.3762 Fax Number. 38145840598 Is this an Applcatton for Parma to Operate Wel or a request for Recer9arallon7 Operete (Permit to O est.lRsaroacNbn) Attach or(,dude by reference the(Wowing Item.(Rule 62C-28.008): 1.AppecatioMRecertlecrtlon fee 2. Revised/continued bond or security coverage. The security for 814 well to p"A' (attached or on tee)Milt the FlrxwaGedogk al Survey end bears Serial Number cam""" ,The surety campery Is w e.ev 3. New/revised spill prevention and dean up plat. 4.New/revised flowttne spectBOetions and kindle/On plans. 5.Secondary containment fatally eatlScaions.If appropriate. 6.Required reports and data(reporting forms,driers logs,well legs•etc.) List each transporter authorized by producer to transport hydrocarbons from Isaac. Inokx*tensporters address,phone number.and tree amount by percent(%)of each product transported. Describe the trenaporteaon system used by each transporter.Attach additional sheets as necessary. Authorized Transports. ..sent Erma iranoa•4"Re DOT e844114) Product: -. %too Add,e43: 1551010019M boos Dan Transportation System Description: m".‘4 Tam Tho0, Phone Number 21°41'4"42 r4i Fax Number. Authorized Trenspoder. Product .Address: Transportation System Description: Phone Number: Fax Number. Authorized Trensponer PIDOJC Address: Transportation Syetam Daalpdorc U OF r _ ) • FOE;` Phone Number. AUG Fax Number 5 :.0 n- Producers Statement I State: Tiuu RECEIVED • colrmty: Bee ! +� Jeffery R.Ilseng Operations Manager £ i�,Cj am ante (Name) ("The) of Dan A.Hughes Canteny,L.P. and attest to all forams,• • true and correct (Company) ' ` T Derv: 8,1/13 .s.v.r.�..e�...��� Signature' • Dopertm.nt Action Action.: 8y. (AAPro.etl.Darted) (NrneRlee) Date: Signature: DC-P s,atrnp . NICE.W Packet Page -543- 10/14/2014 12.A. BEFORE THE STATE OF FLORIDA DEPARTMENT OF ENVIRONMENTAL PROTECTION COLLIER COUNTY and COLLIER IN THE DIVISION OF COUNTY WATER-SEWER DISTRICT, WATER RESOURCE MANAGEMENT Petitioners, OGC File No.: 14-0012 V. FLORIDA DEPARTMENT OF ENVIRONMENTAL PROTECTION, and DAN A.HUGHES COMPANY, L.P., Respondents. • r " Exhibit "C " COLLIER COUNTY'S AMENDED PETITION FOR ADMINISTRATIVE HEARING Packet Page -544- 10/14/2014 12.A. Bill Attached is the a pp lication and permit. I gave you a copy of the permit but the application is 125 pages. Let me know If you want a printed copy of the application and I will re-format it to a 30-40 page document. Richard From:Spencer, Steve [mallto:Steve.Soenceradeo.state.fl.us] Sent:Thursday,April 18, 2013 2:10 PM To: OrthRlchard Cc: Garrett, Ed Subject: FW: Information Request and Notification to be added to the Interested Parties List Mr. Orth, I have added you to the interested parties Iist for reviewing oil well application. In addition I am attaching to this email the Dan A.Hughes application for the 20-31-I Collier-Hogan well (DEP Permit 1349H)that is currently being drilled. If you have questions, please contact me at the location shown below. Thanks, ss Steve Spencer, P.G. Florida Department of Environmental Protection Oil and Gas Program 2051 East Paul Dirac Drive, MS 715 Tallahassee, FL 32310 Phone No. 850.488.8217, ext. 65 Please take a few minutes to share your comments on the service you received from the department by clicking on this link. DEP Customer Survey. From: Garrett, Ed Sent:Thursday, April 18, 2013 1:52 PM To: Spencer, Steve Subject: FW: Information Request and Notification to be added to the Interested Parties List See below... Sincerely, Ed Garrett, PG,CPM 4 4 Oil d 6as Section Administrator Bureau of Mining d Minerals Regulation 11 Department of Environmental Protection 2051 East Paul Dirac Drive Tallahassee, FL 32310 - (850)488-8Z17, Ext 1Z Direct Line: (850)413-8192 Ext, IZ Other Oil d Gas Ext, 's: Steve=65, DaveT=26, Levi=64, Nathan=Z3 Voice Mall: (854)413-8192 Ext. 12, Fax Me: (850)488-1254 Exhibit "C" 2 Collier County's Amended Petition for Administrative Hearing Packet Page -545- 10/14/2014 12.A. From: OrthRichard [mailto:RichardOrtftcolliergov.net] Sent: Thursday, April 18, 2013 1:50 PM To: Garrett, Ed Cc: LorenzWilliam; Attwood, Paul Subject: Information Request and Notification to be added to the Interested Parties List Dear Mr. Garrett: This correspondence is in regard to two items related to the exploration and production of oil in Collier County. I would like to formally request the following two items: • An electronic copy of the Dan Hughes application,supporting documents and permit,the oil well was recently permitted and is currently under construction just northeast of Immokalee Road and Everglades Boulevard in Collier County Florida. • I would like to formally request that I be placed on the Department's Oil and Gas Interested Parties List for all Oil and Gas activities within Collier County. The e-mail address to send me the requested information is RichardOrth(ECollierGov.Net. If you have any questions please contact me at any of the links below. Sincerely, Richard Orth Richard Orth, P.G.,Sr. Project Manager Collier County Pollution Control& Prevention Department 2800 N. Horseshoe Drive,Naples, FL 34104 Office 239-252-5092,Cellular239-634=9b14 RichardOrth(«CallierGov.Net Under Florida Law,e-mail addresses are public records.If you do not want your e-mail address released in response to a public records request,do not send electronic mail to this entity.Instead,contact this office by telephone or in writing. 3 Packet Pa•e -546- 10/14/2014 12.A. BEFORE THE STATE OF FLORIDA DEPARTMENT OF ENVIRONMENTAL PROTECTION COLLIER COUNTY and COLLIER IN THE DIVISION OF COUNTY WATER-SEWER DISTRICT, WA'T'ER RESOURCE MANAGEMENT Petitioners, OGC File No.: 14-0012 V, FLORIDA DEPARTMENT OF ENVIRONMENTAL PROTECTION, and DAN A. HUGHES COMPANY, L.P., Respondents, Exhibit "D " COLLIER COUNTY'S AMENDED PETITION FOR ADMINISTRATIVE HEARING Packet Page -547- 10/14/2014 12.A. r. ewe .; • Board of Collier County Commissioners Donna Fiala Georgia A.Hiller,Esq. • Tom Henning Fred W.Coyle Tim Nance District 1 District 2 District 3 District 4 District 5 State of Florida Department of Environmental Protection Oil and Gas Program of the Florida Department of Environmental Protection 2600 Blair Stone Road/MS 715 Tallahassee,FL 32399-2400 Attn:Ed Garrett Secretary of DEP Mr,Garrett, Re: Collier County Comments-Permit Application No.1353H(Collier 22-3H)and Related Permit Application No. • 1354(Collier 22-5 SWDW) Collier County understands that on May 2, 2013, the Oil and Gas Program of the Florida Department of Environmental Protection received a drilling application from the Dan A. Hughes Company, L.P., to drill an oil production well(Permit 1353H;Collier 22-3H)in Collier County,Florida. The surface-hole location Is In Section 22, Township 49 South,and Range 28 East and the bottom hole will be in Section 27,Township 49 South,and Range 28 East.This well is proposed to be drilled to a vertical depth of 12,064 feet below land surface and have a horizontal section that extends to a proposed total(16,600 feet measured depth). Please recognize that the location of the proposed production well is within 1,000 feet of the Golden Gate Estates Subdivision.The residents receive their water from on-site wells and typically draw water from the Surficial Aquifer system. Collier County requests that your agencies carefully and judiciously review the comments and concerns of Collier County property owners and affected citizens regarding the permitting and operation of Oil Exploration and Oil Well Extraction operations in the vicinity of these residential properties. Collier County further requests that your agencies establish direct communication protocols with CoHler County regarding safety and environmental monitoring,emergency response,and all public health and safety Issues that arise,should permits for drilling and extraction be issued in Collier County. More specifically we request that your agency coordinate and communicate with Collier County on the approval of the permits and provide the County with your responses to citizens concerns and final permit conditions,If any Respe ull , • Chairwoman Donn Fiala Vice Chair Georgia Hiller,Esq Commissioner District 1 Tom Henning Commissioner District 2 Commissioner District 3 CeiYg (r*0J d ttFDEP d j 26 3 28X13_, BMR 04. ,�,1R L(-C ohos 3299 Tamiaml Trail East,Suite 303•Naples,Florida 341125746.239.252.8097-FAX 233-252-3602 Exhibit i D ii Collier County's Amended Petition for Administrative Hearing Packet Page-548- 10/14/2014 12.A.-.01,;. _ I Fred Coyle I Nance Commissioner District 4 III Commissioner District 5 cc: Leo E.Ochs, County Manager Steve Spencer,P.G. Florida Department of Environmental Protection Oil and Gas Program • 2051 East Paul Dirac Drive,MS 725 Tallahassee,FL 32310 era 4G 'N. ti~ TOP .• Packet Page -549- 10/14/2014 12.A. BEFORE THE STATE OF FLORIDA DEPARTMENT OF ENVIRONMENTAL PROTECTION COLLIER COUNTY and COLLIER IN THE DIVISION OF COUNTY WATER-SEWER DISTRICT, WATER RESOURCE MANAGEMENT Petitioners, OGC File No.: 14-0012 v. FLORIDA DEPARTMENT OF ENVIRONMENTAL PROTECTION, and DAN A.HUGHES COMPANY, L.P., Respondents. ! y Exhibit COLLIER COUNTY'S AMENDED PETITION FOR ADMINISTRATIVE HEARING Packet Page -550- 10/14/2014 12.A. STATE OF FLORIDA DEPARTMENT OF ENVIRONMENTAL PROTECTION In re: Dan A Hughes Company LP Permit No: 1349H WeN:20-3H Collier-Hogan • 1 CEASE AND DESIST Pursuant to Section 403.061(8),Florida Statutes,the Department of Environmental Protection CD.partment')is entering this Final Order requiring the Dan A.Hughes Company LP Invnediately cease and desist from any further operations at the 20.3H Collier-Hogan well as proposed in Its Weil Proposal, Proposal No: 1001164796,dated December 23,2013. The Department enters this Final Omer in exercise of its power and duty to Issue orders that are necessary to protect the ms's waters from water pollution and states as follows: 1. On December 23,2013, Dan A.Hughes Company LP,through counsel, smelled the Department a workover notification concerning its operation permit for the 20-3H Collier-Hogan well indicating that it intended to conduct a workover operation. The notification provided seven pages of Information on the workover proposal. 2. The December 23,2013,email Indicated that the proposed workover operation would commence on December 29,2013. The proposed workover operation was Initiated on December 30,2013,and is continuing to date despite oral notification by the Department that the proposed workover operation was not approved. Exhibit "E" Collier County's Amended Petition for Administrative Hearing c Packet Page -551- 10/14/2014 12.A.1 • 3. After reviewing the documents attached to the December 23,2013 email, the Department is not satisfied that It has sufficient Information that the proposed workover would be protective of the State's groundwater resources,and it is therefore ORDERED that Dan A. Hughes Company, LP CEASE AND DESIST all operations proposed in the December 23,2013,workover notification concerning the 20-3H Collier- Hogan well. Any party to this Final Order has the right to seek Judicial review of the Final Order under Section 120.68,Florida Statutes,by filing a Notice of Appeal under Rules 9.110 and 9.190, Florida Rules of Appellate Procedure,with the Clerk of the Department of Environmental Protection,Office of the General Counsel, Mall Station 35, 3900 Commonwealth Boulevard,Tallahassee,Florida 32399-3000, and by filing a copy . of the Notice of Appeal accompanied by the applicable filing fees with the appropriate district court of appeal. The Notice of Appeal must be fired within 30 days after this notice is filed with the clerk of the Department. Executed in Leon County, Florida on December 31,2013, STATE OF FLORIDA DEPARTMENT OF ENVIRONMENTAL PROTECTION vit -•'- -I Vinyard Secretary 2 Packet Page -552- 10/14/2014 12.A. III. . ORTIFICATE OF BERYICE I CERTIFY that a true copy of the foregoing was sent electronic mail only to • Richard S. Brightman and Timothy M RNey, Hopping Green&Sam PA, P.O.Box 8528, Tallahassee,Florida 32314-8526,Attorneys for Dan A.Hughes Company, L.P.at richardb©hgslaw.com;timothyrdithoslaw..om,on this 31st day of December,2013. , AIWA Dep c - erat _, FILED ON THIS DATE PURSUANT TO 5120.52, FLORIDA STATUTES,WITH THE DESIGNATED DEPARTMENT CLERK,RECEIPT OF WHICH IS HEREBY ACKNOWLEDGED. ZSAZdaidelr n /3///3 CLERK DATE 3 Packet Page -553- 10/14/2014 12.A. EXHIBIT 3 • Packet Pare -554- 10/14/2014 12.A. I April 26,2011 414 4111114)' FTSCO,Ltd 1100!t1SCO Ave.-Agee,7X 71332 Fa: Any Company Field: N/A Anywhere.USA County: N/A • • Sample XYZ Well Date: 11/8/2011 Type: Well Water Timm. 0800 Formation: N/A Depth(Pt): N/A REPORT OF WATER ANALYSIS s*s Dissolved Solids s*sss*ssssssss* se*s*s*ss**s***Other Properties ss*s*s**ssasss* me- • Sodium(Na) 11563.70 • 502.99 pH 6.90 Calcium(Ca) 279.69 13.96 Specific Otavfty€060450 p 1.020 . • Magnesium(Mg) 44.08 3.6 2 Resistivity(Ohm-metes®77.0`F) — 0.227 Barium(Eta) 1.96 0.03 Potassium(K) 73.22 1.87 iron(Fe) 0.13 — Chloride(Cl) 17640.00 497.60 Still-Davis CaCO3 Stability Index Sulfate(SO4) 95.00 1.98 ff 40- Carbonate(CO3) 0.00 0.00 I BO' Bicarbonate(HCO3) 407.00 647 1 Hydroxide(OH) D.00 0.00 120• $ 140- Sulfide(H2S) 0.00 I 6 160 Total Solids 30105 Total Alkalinity(CaCO3) 333 -2 .1 0 1 2 Total Hardness(CaCO3) 880 ; `•Corrosive : Seam.* ' Standard-mem Par Liter a - '1 ; ... . —WW1 100 OD 00 10 20 0 20 40 00 00 100 120 • I • -'q Par Liter a t1oo3 yQ . _ `: '. ... ;_... _.. . . !. ...._j•_-,- ' . L sot 5 4 3 2 1 0 1 2 3 4 5 6 • Certified: FESCO,Ltd. - *Alice.Texas *^` I‘•40,1 David Demhaus 361-661-7015 lob Number: 99999 . 9999 • Packet Page -555- � Filing# 17383669 Electronically Filed 08/21/2014 04:39:11 PM 10/14/2014 12.A. IN THE CIRCUIT COURT OF THE TWENTIETH JUDICIAL CIRCUIT IN AND FOR COLLIER COUNTY,FLORIDA STATE OF FLORIDA,DEPARTMENT OF ENVIRONMENTAL PROTECTION, Plaintiff, v. Case No.: 11-2041-CA-001643-0001-XX DAN A. HUGHES COMPANY, L.P. Defendant. PETITION FOR ENFORCEMENT AND AMENDED COMPLAINT Plaintiff, State of Florida, Department of Environmental Protection ("Department"),by and through its undersigned attorney, files this Petition for Enforcement and Amended Complaint against Dan A. Hughes Company,L.P. ("Defendant"), and alleges as follows: 1. This is an action for enforcement of a consent order pursuant to section 120.69, Florida Statutes, and a civil complaint for injunctive relief and penalties, which exceed $100,000.00, exclusive of interest, costs, and attorney's fees,pursuant to sections 403.121, 403.131, 403.141, and 403.161,Florida Statutes. 2. This Court has jurisdiction over this action pursuant to Article V, Section 5 of the Constitution of the State of Florida, and sections 26.012, 120.69(1), 377.34, 377.37, 403.121, 403.131, 403.141, and 403.161,Florida Statutes. 3. Venue properly lies in this Circuit because the subject matter of this action is located in Collier County, Florida, and because the events giving rise to this action took place in Collier County,Florida. Packet Page -556- Filed with Collier County Clerk of Courts 10/14/2014 12.A. 4. The Department is the administrative agency of the State of Florida created by section 20.255, Florida Statutes, charged with the power and duty to enforce chapters 377 and 403, Florida Statutes, and rules promulgated thereunder in Title 62 of Florida Administrative Code. 5. Defendant is a person within the meaning of sections 403.031(5), 403.161, and 377.19(20) Florida Statutes. 6. The Defendant obtained an Oil & Gas Well Drilling Permit from the Department in December of 2012 (Permit No: 1349H, 20-30H Collier-Hogan Well) to construct a well to be located at the Hogan Island Farm in Collier County, Florida. 7. Upon completion of the construction of the 20-3H Collier-Hogan Well ("Well"), located at the Hogan Island Farm in Collier County, Florida("Site"), the Defendant obtained a Five Year Operation Permit in August of 2013 to operate the Well as an oil production well. 8. On December 23, 2013, the Defendant submitted to the Department a Workover Notification indicating that it intended to conduct a workover operation at the Well that included an enhanced acid stimulation procedure not previously encountered by the Department. 9. Despite oral notification from the Department that the Defendant was not approved to conduct the workover operation, Defendant conducted the procedure described in its Workover Notification from December 30, 2013 through January 1, 2014. 10. On December 31, 2013 the Department entered a final order requiring operations at the Well to cease and desist and served a copy of the final order on the Defendant on December 31, 2013. The Defendant thereafter made a decision to ignore the Department's cease and desist order and continue the workover operation at the Well until the workover operation was completed on January 1, 2014. Packet Page -557- 10/14/2014 12.A. 11. On April 8,2014,the Department and the Defendant entered into a Consent Order that addressed the Defendant's failure to comply with the Department's cease and desist order entered on December 31, 2013. A copy of the executed Consent Order is attached hereto as Exhibit 1. 12. The Department now alleges that the Defendant has failed to comply with certain requirements set forth in the Consent Order and alleges additional violations as follows. COUNT I PETITION FOR ENFORCEMENT OF CONSENT ORDER 13. The allegations contained in paragraphs 1-11 are re-alleged and incorporated herein. 14. Paragraph 15 of the Consent Order required the Defendant to submit an Interim Spill Prevention and Cleanup Plan("ISPC")to the Department within 14 days of the effective date of the Consent Order. Defendant submitted an inadequate ISPC to the Department on April 22, 2014. On May 6,2014 the Department requested that the Defendant provide additional information on the ISPC, The Defendant and the Department met on May 14,2014 to discuss the inadequacies of the ISPC, and the Department informed the Defendant at that meeting that it had 14 days from the date of the meeting to submit an amended ISPC. The Defendant failed to submit an amended ISPC as required by paragraph 15 of the Consent Order until June 26, 2014. 15. Paragraph 16 of the Consent Order required the Defendant, at its sole expense, to retain independent third-party experts with the appropriate qualifications to assess the likelihood that the workover operation would cause or contribute to a violation of any applicable groundwater quality standards, which is a critical component of Consent Order compliance. The Packet Page -558- 10/14/2014 12.A. Defendant was also required to make a good faith effort to reach agreement with the Department on the selection of the third-party experts and the scope of work to be performed by the experts within 60 days of the effective date of the Consent Order, (i.e. June 9, 2014). The Department met with the Defendant on April 30, 2014 to discuss the selection of third-party experts. At that meeting, the Defendant proposed hiring a contractor that had previously been hired to do work for the Defendant, which the Department found to be a conflict of interest. The Department informed the Defendant at that meeting that proposing a contractor that had a previous business relationship with the Defendant was not acceptable and was not consistent with the requirement in paragraph 16 of the Consent Order which required the Defendant to retain independent third- party experts. 16. The Department and the Defendant met again on May 14, 2014 in an attempt to reach agreement on the independent third-party experts to be retained by the Defendant. At that meeting, the Defendant again proposed the same contractor that the Department previously rejected at the meeting on April 30, 2014. Since the meeting on May 14, 2014, the Defendant has failed to propose any additional experts it would be willing to retain to conduct the assessment of the workover operations. The Defendant has failed to make a good faith effort to reach agreement with the Department on the selection of the third-party experts within 60 days of the effective date of the Consent Order, (i.e. June 9, 2014) as required by paragraph 16 of the Consent Order. 17. Paragraph 19 of the Consent Order required the Defendant to submit a groundwater monitoring plan to the Department within 30 days of the effective date of the Consent Order. A key element of the groundwater monitoring plan required the Defendant to conduct a one-time analytical sampling of the flowback material prior to its final disposal. Packet Page -559- 10/14/2014 12.A. Without notice to the Department, the Defendant disposed of the flowback material that had been generated at the time of the workover operation without conducting an analytic sampling, in violation of paragraph 19 of the Consent Order. Defendant failed to submit the sampling results, a required component of the groundwater monitoring plan,within the time required by the Consent Order. In addition,by disposing of the flowback material generated in the time period, Defendant rendered it impossible to achieve the purpose and intent of the Consent Order. 18. Under paragraph 22 of the Consent Order, the Defendant agreed to act in good faith and to cooperate fully with the Department in carrying out the intent of this Consent Order. In the conduct described in this Count,the Defendant has violated that paragraph by failing to act in good faith and to cooperate fully with the Department. PRAYER FOR RELIEF WHEREFORE,the Department respectfully requests that this Court: A. Issue a mandatory injunction requiring the Defendant to permanently plug and abandon the Well and otherwise remediate the site, and thereafter cease all operations involving the Well pursuant to section 120.69(2),Florida Statutes. B. Issue a mandatory injunction authorizing the Department to select independent third-party experts to conduct an assessment of the likelihood that the workover operation conducted by the Defendant at the Site caused or contributed to a violation of any applicable water quality standards at the sole expense of the Defendant pursuant to section 120.69(2), Florida Statutes. C. Impose civil penalties in the amount of$10,000 per day for each day that the Defendant was late in submitting an amended ISPC to the Department pursuant to section 120.69(2), Florida Statutes. Packet Page -560- 10/14/2014 12.A. D. Impose civil penalties in the amount of$10,000 per day for each day that the Defendant has failed to retain an expert agreed to by the Department to conduct the assessment of the likelihood that the workover operation conducted by the Defendant at the Site will cause or contribute to a violation of any applicable water quality standards. E. Impose civil penalties in the amount of$10,000 for the Defendant's disposal of the flowback material without conducting an analytical sampling pursuant to section 120.69(2), Florida Statutes. F. Award the Department its investigative costs and expenses in maintaining this action pursuant to sections 120.69(7) and 403.141, Florida Statutes. G. Award the Department its attorney's fees pursuant to section 120.69(7), Florida Statutes. COUNT H FAILURE TO PROVIDE RECORDS 19. The allegations contained in paragraphs 1-7 are re-alleged and incorporated herein. 20. During the workover operation that the befendant conducted between December 30, 2013 and January 1, 2014, the Defendant injected a number of chemicals down the Well. The enhanced acid stimulation process used in the workover operation generated flowback material that contained water and the chemicals used in the acid stimulation process. This flowback material was produced from the Well over the period since the procedure occurred. 21. The Defendant stored flowback material generated by the enhanced acid stimulation process in storage tanks at the Site. Packet Page -561- 10/14/2014 12.A. 22. On three different occasions while at the Site,on April 16th, April 23"l and May 5th, 2014 the Department specifically asked the Defendant or its contractor to provide the manifests for the material that the Defendant had generated from the construction and operation of the Well and was transporting off the Site. It was of critical importance to the Department that it have information about what was being transported for disposal, and how much volume was being transported to be able to determine what was happening with the flowback material that the Defendant was obligated to sample and analyze before final disposal. 23. The Defendant refused to provide the records requested by the Department on all three occasions in violation of section 62C-25.001(3),Florida Administrative Code. PRAYER FOR RELIEF WHEREFORE, the Department respectfully requests that this Court: A. Issue a mandatory injunction requiring the Defendant to permanently plug and abandon the Well and otherwise remediate the site, and thereafter cease all operations involving the Well pursuant to sections 403.141 and 377.34,Florida Statutes. B. Issue a mandatory injunction requiring the Defendant to produce all records requested by the Department concerning the operation of the Well pursuant to sections 403.141 and 377.34, Florida Statutes. C. Impose civil penalties in the amount of$10,000 per day for each day that the Defendant failed to produce the records requested by the Department pursuant to sections 403.161 and 377.37, Florida Statutes. D. Award the Department its investigative costs and expenses in maintaining this action pursuant to sections 377.37 and 403.141, Florida Statutes. Packet Page -562- 10/14/2014 12.A. COUNT III FAILURE TO POST REOUIRED SIGNAGE 24. The allegations contained in paragraphs 1-7 are re-alleged and incorporated herein. 25. Every person drilling or operating an oil or gas well shall keep posted in a conspicuous place near the Well a sign legible from 100 feet and displaying the name of the operator, fee owner, well number, Department permit number, county name, section, township, and range. 26. Every person drilling or operating an oil or gas well must have a sign posted in a prominent place on site that provides diagrams of the gas detection and fire fighting systems together with schedules and procedures for testing safety equipment. 27. The Department conducted an inspection of the Site on July 14, 2014 and determined that the Defendant has failed to post the required sign at the Site in violation of section 62C-27.001(1), Florida Administrative Code. 28. At the same inspection of the Site on July 14, 2014 the Department determined that the Defendant has failed to post the required safety sign in violation of section 62C- 28.004(8), Florida Administrative Code. PRAYER FOR RELIEF WHEREFORE, the Department respectfully requests that this Court: A. Issue a mandatory injunction requiring the Defendant to post the signs required by sections 62C-25.001(1) and 62C-28.004(8), Florida Administrative Code pursuant to section 377.34,Florida Statutes. Packet Page -563- 10/14/2014 12.A. B. Impose civil penalties in the amount of$10,000 per day for each day that the Defendant failed to have signs posted at the Site as required by section 62C-25.001(1) and 62C- 28.004(8), Florida Administrative Code pursuant to sections 377.37 and 403.161,Florida Statutes. C. Award the Department its investigative costs and expenses in maintaining this action pursuant to sections 377.37 and 403.141, Florida Statutes. COUNT IV MAINTAINING A STATIONARY INSTALLATION WITHOUT A PERMIT 29. The allegations in paragraphs 1-5 are re-alleged and incorporated herein. 30. On July 14, 2014 the Department conducted an inspection of the Site. During the inspection, a roll off dumpster was observed staged between a canal, and a dirt road adjacent to and south of the berm area around the well pad. The dumpster was nearly full with the load consisting of 4"hoses,buckets,pieces of liner and other items,much of which were covered with oil. 31. On the grass adjacent to the north side of the dumpster were observed several oiled areas. There was also watery fluid dripping to the ground from the east side of the dumpster. The water was dripping into a large frying pan-sized basin. The soil in the basin was stained a dark red color. At the time of the observation the basin was nearly full,but was not discharging. It was evident from erosion patterns that there had been flow from the dumpster discharge area several feet east and then south several feet to an open water canal, waters of the state. Areas of multicolored iridescent sheen were observed on the open soil surface in this eroded area between the dumpster and the canal. Packet Page -564- 10/14/2014 12.A. 32. The following morning,the Department returned to complete the inspection and to conduct a sampling of the discharge area from the dumpster. The dumpster had been removed from the site. The area of erosion between the dumpster and the open canal, although still discernable,had been impacted by heavy equipment movement. Soil and water quality samples were taken from the dumpster discharge flow area and the canal. At the time of the sampling, sheen and suspected oil or petroleum by-products were observed on and within the canal. 33. The analyses of the surface water samples taken from the canal on the Site on July 15, 2014 indicate that the freshwater surface water cleanup target level in section 62-777, Florida Administrative Code for TRPH was exceeded by the releases of petroleum from the oil well operations at the Site. The analyses of the samples taken from the canal at the Site found TRPH at 9 mg/l. 34. The Defendant's dumpster is part of the Defendant's oil well operation at the Site, and the Defendant's oil well operation is an installation pursuant to section 403.031(4), Florida Statutes. 35. The Defendant was maintaining a stationary installation without a Department permit in violation of section 403.087(1), Florida Statutes. PRAYER FOR RELIEF WHEREFORE,the Depai tinent respectfully requests that this Court: A. Issue a mandatory injunction requiring the Defendant to conduct a contamination assessment at the Site pursuant to chapter 62-780, Florida Administrative Code. B. Impose civil penalties in the amount of$10,000 per day for each day that the Defendant maintained a stationary installation at the Site without a Department permit pursuant to section 403.161, Florida Statutes. Packet Page -565- 10/14/2014 12.A. C. Award the Department its investigative costs and expenses in maintaining this action pursuant to sections 377.37 and 403.141,Florida Statutes. COUNT V VIOLATIONS OF SURFACE WATER QUALITY CRITERIA 36. The allegations in paragraphs 1-5 and 29-31 are re-alleged and incorporated herein. 37. The Department entered the Site on July 15, 2014 to complete an inspection of the petroleum releases at the Site and to conduct sampling of the canal near a dumpster the Defendant had been using to dispose of waste from its oil well operations. 38. On July 15, 2014 surface water samples were taken from the canal near where the dumpster the Defendant had been using to dispose of waste from its oil well operations at the Site had been located. 39. The analyses of the surface water samples from the canal indicate that the petroleum releases that entered the canal at the Site exceeded the surface water quality criteria for total PAHs in violation of section 62-302.530, Florida Administrative Code. The total PAH parameter acenaphthene was found in one of the surface water samples at .32 ug/L and in another surface water sample at .13 ug/L. The total PAH parameter phenanthrene was found in one of the surface water samples at 1.9 ug/L and in another surface water sample at 1.7 ug/L. The annual average for the total PAH parameters acenaphthene and phenanthrene exceeded the allowable annual average of.031 ug/L for total PAHs. 40. The analyses of the surface water samples from the canal indicate that the petroleum releases that entered the canal at the Site exceeded the surface water quality criteria Packet Page -566- 10/14/2014 12.A. for oils and greases in violation of section 62-302.530, Florida Administrative Code. The TRPH sample result of 9mg/L exceeded the oils and greases surface water quality criteria of 5 mg/L. 41. The canal where the surface water samples were taken is a Class III surface water body of the state within the meaning of 62-302.530. • PRAYER FOR RELIEF WHEREFORE,the Department respectfully requests that this Court: A. Issue a mandatory injunction requiring the Defendant to conduct a contamination assessment and implement a remedial action plan at the Site pursuant to chapter 62-780, Florida Administrative Code. B. Impose civil penalties in the amount of$10,000 per day for each day that the water quality criteria was exceeded in violation of section 62-302.530, Florida Administrative Code. C. Award the Department its investigative costs and expenses in maintaining this action pursuant to sections 377.37 and 403.141,Florida Statutes. COUNT VI FAILURE TO REPORT SPILLS 42. The allegations in paragraphs 1-5 are re-alleged and incorporated herein. 43. On July 14th and 15th of 2014 the Department conducted inspections at the Site. During those inspections the Department observed spills of crude petroleum or associated fluid from the Defendant's oil well operations at the Site. 44. The spills resulted from the disposal of waste materials that included materials with crude petroleum or associated fluid from the Defendant's oil well operations in an Packet Page -567- 10/14/2014 12.A. uncovered dumpster at the Site. During rain events,the crude petroleum or associated fluid on the waste materials in the dumpster were spilled onto the ground and washed into a canal at the Site. 45. The Defendant failed to report to the Department any spills of crude petroleum or associated fluid from the dumpster that occurred on at least July 14th and 15th of 2014 in violation of section 62C-28.005, Florida Administrative Code. PRAYER FOR RELIEF WHEREFORE, the Department respectfully requests that this Court: A. Impose civil penalties in the amount of$10,000 per day for each day that the Defendant failed to report spills of crude petroleum or associated fluids from its oil well operations at the Site pursuant to section 403.161, Florida Statutes. B. Award the Department its investigative costs and expenses in maintaining this action pursuant to sections 377.37 and 403.141, Florida Statutes. COUNT VII FAILURE TO MAINTAIN EQUIPMENT TO PREVENT POLLUTION 46. The allegations in paragraphs 1-5 are re-alleged and incorporated herein. 47. On July 14th and 15th of 2014 the Department conducted inspections at the Site. During those inspections the Department observed spills of crude petroleum or associated fluid from the Defendant's oil well operations at the Site. 48. The spills resulted from the disposal of waste materials that included materials with crude petroleum or associated fluid from the Defendant's oil well operations in an uncovered dumpster at the Site. The Defendant had located the dumpster on bare ground within Packet Page -568- 10/14/2014 12.A. a short distance from a canal at the Site. During rain events,the crude petroleum or associated fluid on the waste materials in the dumpster were spilled onto the ground and washed into a canal at the Site. 49. The Defendant failed to maintain the dumpster within the pad and berm area on the Site resulting in spills of crude petroleum or associated fluids to the ground and nearby canal in violation of section 62C-28.004(3), Florida Administrative Code. PRAYER FOR RELIEF WHEREFORE, the Department respectfully requests that this Court: A. Impose civil penalties in the amount of$10,000 per day for each day that the Defendant failed to maintain the dumpster at the Site in a manner necessary to prevent pollution pursuant to section 403.161, Florida Statutes. B. Award the Department its investigative costs and expenses in maintaining this action pursuant to sections 377.37 and 403.141, Florida Statutes. Dated this 21'day of August, 2014. MATTHEW Z. LEOPOLD Gen al Counsel ,e1.__ tint.A4, .....____. M"ORGAN Senior Deputy General Counsel State of Florida Department of Environmental Protection 3900 Commonwealth BIvd., MS #35 Tallahassee, FL 32399-3000 Telephone: (850) 245-2246 Facsimile: (850) 245-2301 Florida Bar No.: 0220205 larry.morgan@dep.state.fl.us m arv.wilson(a,dep.state.fl.us DEP.enforcement @dep.state.fl.us Packet Page -569- 10/14/2014 12.A. CERTIFICATE OF SERVICE I CERTIFY that a true and correct copy of the foregoing was served by electronic mail on this 21'day of August, 2014 to: Frank E. Matthews Winston K. Borkowski Timothy M. Riley H. French Brown, IV HOPPING GREEN & SAMS, P.A. 119 South Monroe St., Suite 300 Tallahassee, FL 32301 frankm @hgslaw.corn winstonb@hgslaw.com timothyr(algslaw.com frenchb4hgslaw.com Packet Page -570- 10/14/2014 12.A. BEFORE THE STATE OF FLORIDA DEPARTMENT OF ENVIRONMENTAL PROTECTION STATE OF FLORIDA DEPARTMENT IN THE DIVISION OF OF ENVIRONMENTAL PROTECTION WATER RESOURCE MANAGEMENT OGC FILE NO. 14-0012 • vs. DAN A.HUGHES COMPANY, L.P. CONSENT ORDER This Consent Order("Order")is entered into between the State of Florida Department of Environmental Protection,("Department")and the Dan A.Hughes Company,L.P. ("Company"), to reach settlement of certain matters at issue between the Department and the Company. • 1. The Department is the administrative agency of the State of Florida having the power and duty to protect Florida's air and water resources and to administer and enforce the provisions of Chapters 377 and 403,Florida Statutes("F. S."),and Chapters 62C-25 through 62C-30,Florida Administrative Code("FAC."). The Department has jurisdiction over the matters addressed in this Order. 2. The Company is a`person"within the meaning of Section 403.161 and 403.031(5),F.S. 3. The Company obtained an Oil&Gas Well Drilling Permit from the Department in December of 2012(Permit No: 1349H,Collier-Hogan 20-3H Well)to construct a well to be located at the Hogan Island Farm in Collier County,Florida. 4. Upon completion of the construction of the 20-3H Collier-Hogan Well("Well"), the Company obtained a Five Year Operation Permit in August of 2013 to operate the Well as an oil production well. EXHIBIT I Packet Page -571- 10/14/2014 12.A. 5. On December 23,2013,the Company submitted to the Department a Workover • Notification indicating that it intended to conduct a"Workover Operation"as described in Exhibit 1 attached hereto. This notice stated that the Company planned to commence the Workover Operation on December 28 or 29. Subsequently,at the request of the Department,the Company agreed to delay the Workover Operation until at least December 30 to allow the Department more time to review and respond to the notice. 6. The Workover Operation proposed by the Company began on December 30, 2013,and continued through January 1,2014. 7. On December 31,2013,the Department entered a Final Order Requiting •Operations at Well 20-3H Cease and Desist and served a copy of the Final Order on the Company on December 31,2013. A copy of the Final Order is attached hereto as Exhibit 2. 8. The Company continued the Workover Operations until approximately 2:30 FM on the afternoon of January 1,2014. 9. The Company contends that at all times it was operating lawfully under a valid permit and followed all applicable procedures required to conduct the Workover Operations described in Exhibit 1. Having reached resolution of the matter,the Department and the Company mutually • agree and it is, ORDERED: 10. Within 10 days of the effective date of this Order,the Company shall pay the Department$25,000 in settlement of the regulatory matters addressed in this Order. This amount includes$20,000 for civil payments and$5,000 for costs incurred by the Department during the investigation of this matter and the preparation and tracking of this Order. • • Packet Page -572- 10/14/2014 12.A. WELL SAFETY 11. Immediately upon execution of this Order or upon becoming available to the Company(whichever is later),the Company shall provide to the Department the information in paragraphs 12-14 below. 12. The Company shall provide Material Safety Data Sheets (MSDS)for all materials used in the Workover Operation described in Exhibit I attached hereto, along with the proportion and total volume of each material used in the Workover Operation. 13. The Company shall identify the total volume of water used in the Workover Operation,and the source of the water,including the permit number if the water was obtained from a permitted source and confirmation that the volume of water used for the Workover Operation does not exceed any limitation set in the permit 14. The Company shall provide the following information concerning the flowback material management for the Well operations: (a) estimate of the total volume of flowback material;(b)storage capacity at the pad to contain any flowback material that is anticipated to be held onsite;(c)description of the secondary containment measures employed at the site;(d)the final disposal location for the flowback material resulting from the Workover Operation;and(e) and confirmation of the regulatory conditions on final disposal,including the permitting agency - and permit number(s). 15. The Company shall submit an Interim Spill Prevention and Cleanup Plan("ISPC Plan")to be implemented at the Well. The ISPC PIan shall be submitted to the Department within fourteen(14)days of the effective date of this Consent Order. If the Department requests additional information or notifies the Company that the ISPC Plan is inadequate or otherwise unacceptable,the Company shall provide the additional information or submit a revised ISPC Packet Page -573- 10/14/2014 12.A. Plan within the time frame,not less than fourteen(14)days,specified by the Department in the request or notification. Implementation of the Department approved ISPC Plan constitutes satisfaction of this requirement. ANALYSIS AND MANAGEMENT 16. The Company shall provide information and analysis to confirm that this Workover Operation was designed and carried out in a way that it is not likely to cause or contribute to any violation of any applicable groundwater quality standard. The Company, at its sole expense,shall retain independent third-party experts with the appropriate qualifications to assess the likelihood that the Workover Operation will cause or contribute to a violation of any • applicable groundwater quality standards. This analysis shall consider at a minimum,the potential for injected or native fluids to migrate through the deep geological formations or the • Well casing into surrounding groundwater bearing zones with total dissolved solids concentrations of 10,000 ppm or less. The Department and the Company shall make a good faith effort to reach mutual agreement on the selection of the third party experts and the"Scope of Work"to be performed by the experts within 60 days of the effective date of this Order. Neither the Department nor the Company shall unreasonably withhold their approval of the experts or the Scope of Work for the analysis. The Scope of Work will be limited to analyses reasonably necessary to evaluate the likelihood that Workover Operations similar to the Workover Operations described in Exhibit 1 will cause or contribute to any violations of any applicable groundwater quality standards. The experts shall prepare a Report and submit the Report to the Department by December 1,2014. 17. Upon receipt of the Report,the Department shall review the Report and in a timely manner determine whether it provides sufficient information to evaluate the likelihood Packet Page -574- • 10/14/2014 12.A. that Workover Operations similar to the Workover Operations described in Exhibit 1 will cause or contribute to any violations of any applicable groundwater quality standards. To this end, within 30 days of the receipt of the Report the Department shall notify the Company and the Report author of any apparent errors or omissions and request any additional information needed to evaluate the likelihood groundwater standard violations would result from similar Workover Operations.The Company shall provide the additional information reasonably requested by the Department within 30 days of receipt of the Department's request, If at any time before the study is accepted by the Department anyone files a Workover notice for a Workover Operation similar to the Workover Operation described in Exhibit 1,the Department will respond to such notice with a request for information similar to the Scope of Work for the Report. 18. .No future Workover Operations similar to the Workover Operation described in Exhibit 1 shall be implemented at any of the Company's wells(existing and proposed under valid permits)until the completion and submittal of the Report described in paragraph 16. The Department agrees to provide written notice to the Company when it has satisfied the Report requirements of this Consent Order. 19. Within 30 days of the effective date of this Order, the Company shall submit a groundwater monitoring plan("Plan")to the Department. The objective of the Plan is to provide •information regarding the likelihood that the Workover Operation will cause or contribute to any • violation of any groundwater standard in the nearby groundwater aquifer used as public and private water supply. The Plan shall be developed and implemented at the expense of the Company. The Plan shall include:(a)a one-time analytical sampling of the flowback material prior to its final disposal. In addition to the analysis identified in Exhibit 3,the one-time analytical sampling of the flowback material shall be conducted using the following analytical Packet Page -575- 10/14/2014 12.A. methods: EPA Method 350.1—total ammonia,EPA Method 8260 with required reporting of all target analytes and tentatively identified compounds having greater than 10%relative abundance, EPA Method 8270 with required reporting of all target analytes and tentatively identified compounds having greater than 10%relative abundance,EPA Method 8015C with all alcohols and glycols using the heated purge option cited in Section 11.1.2,FL PRO(State of Florida petroleum range organics),MA VPH(State of Massachusetts volatile petroleum hydrocarbons), Standard Methods 2504B—total dissolved solids,and Standard Methods 4500-CL F(listed as residual chlorine but measures total residual oxidants); ; (b)installation of a series of shallow monitoring wells,placed at the NW,NE,SW,SE corners of the pad. The wells shall be designed to test the full column of the potable water zone;(c)installation of one deep groundwater monitoring well on the pad and southwest of the subject well to a depth equal to the base of the sandstone aquifer(approximately 400');(d)gonad water quality sampling and analyses of all wells;;(e) sampling and analyses of all monitoring wells on a quarterly basis for either ten(10) years from the date upon which the Department approves the groundwater monitoring plan or for five(5)years after plug and abandonment of the Well,which ever monitoring period shall expire first; (f)an inventory of freshwater supply wells within a quarter mile of the well bore hole;and(g)a schedule for implementing the Plan. 20. If the Department requests additional information or notifies the Company that the Plan is inadequate or otherwise unacceptable,the Company shall provide the additional information or submit a revised Plan within the time frame specified by the Department in the request or notification. Within 30 days of notification from the Department that the Plan is acceptable,the Company shall begin implementing the Plan. Packet Page -576- 10/14/2014 12.A. SETTLEMENT OF ALL DISPUTES 21. The terms of this Consent Order,upon execution,shall supersede the requirements of the Final Order Requiring Operations at Well 20-3H Cease and Desist. • 22. This Consent Order is in settlement of all disputes between the Company and the Department regarding the Permit No. 1349H,20-30H Collier-Hogan Well. The Department • the Company agree to act in good faith and to cooperate fully with each other in carrying out the intent of this Consent Order,and all matters related thereto,and for that purpose agree to execute any additional documents or take such action as may prove reasonably necessary to accomplish that intent. CONFIDENTIALITY 23. If any of the information submitted by the Company in response to the requirements of this Order is considered a trade secret or is otherwise confidential information in accordance with Chapter 377 or Section 403.111,F.S.,the Company shall request upon submittal of the information that the Department keep such information confidential. The Department will thereafter keep such information confidential in accordance with the requirements of Chapter 377 and Section 403.111,F.S. ORDER ADMINISTRATION 24. The Company acknowledges and waives its right to an administrative hearing pursuant to Sections 120.569 and 120.57,F.S.,on the terms of this Order. The Company acknowledges its right to appeal the terms of this Order pursuant to Section 120.68,F.S.,and waives that right upon signing this Order. 25. If any event,including administrative or judicial challenges by third parties unrelated to the Company,occurs which causes delay or the reasonable likelihood of delay,in Packet Page -577- 10/14/2014 12.A. •complying with the requirements of this Consent Order,the Company shall have the burden of proving the delay was or will be caused by circumstances beyond the reasonable control of the Company and could not have been or cannot be overcome by the Company's due diligence. The failure of a contractor,subcontractor,materialman or other agent(collectively referred to as "contractor')to whom responsibility for performance is delegated to meet contractually imposed deadlines shall not be a cause beyond the control of the Company,unless the cause of the contractor's late performance was also beyond the contractor's control. Upon occurrence of an event causing delay,or upon becoming aware of a potential for delay,the Company shall notify the Department orally within 24 hours or by the next working day and shall,within seven calendar days of oral notification to the Department,notify the Department in writing of the anticipated length and cause of the delay,the measures taken or to be taken to prevent or minimize the delay and the timetable by which the Company intends to implement these • measures. If the parties can agree that the delay or anticipated delay has been or will be caused by circumstances beyond the reasonable control of the Company,the time for performance hereunder shall be extended for a period equal to the agreed delay resulting from such circumstances. Such agreement shall adopt all reasonable measures necessary to avoid or minimize delay. Failure of the Company to comply with the notice requirements of this paragraph in a timely manner shall constitute a waiver of the Company's right to request an extension of time for compliance with the requirements of this Consent Order. 26. Entry of this Consent Order does not relieve the Company of the need to comply with applicable federal,state or local laws,regulations or ordinances. 27. The terms and conditions set forth in this Consent Order may only be enforced in a court of competent jurisdiction pursuant to Sections 120.69 and 403.121,F.S. Failure to Packet Page -578- 10/14/2014 12.A. comply with the terms of this Consent Order shall constitute a violation of Section 403.161(1)(b),F.S. 28. All submittals and payments required by this Consent Order to be submitted to the Department shall be sent to the Program Administrator of the Oil&Gas Program,Division of Water Resource Management,Florida Department of Environmental Protection,2600 Blair Stone Road,MS 3588,Tallahassee,FL 32399. 29. The Department hereby expressly reserves the right to initiate appropriate legal action to prevent or prohibit any violations of applicable statutes or the rules promulgated there- under that are not specifically addressed by the terms of this Consent Order. 30. This Consent Order is a settlement of the Department's civil and administrative • authority arising under Florida law to resolve the matters addressed herein.This Order is not a settlement of any criminal liabilities which may arise under Florida law, nor is it a settlement of any violation which may be prosecuted criminally or civilly under federal law. 31. Electronic signatures or other versions of the parties' signatures,such as pdf or facsimile,shall be valid and have the same force and effect as originals. No modifications of the terms of this Order shall be effective until reduced to writing,executed by both Respondents and the Department, and filed with the clerk of the Department. NOTICE OF RIGHTS 32. This Consent Order is a final order of the Department pursuant to Section 120.52(7),F.S.,and it is final and effective on the date filed with the Clerk of the Department unless a Petition for Administrative Hearing is filed in accordance with Chapter 120,F.S. Upon the timely filing of a petition, this Order will not be effective until further order of the Department. Packet Page -579- 10/14/2014 12.A. 33. Persons who are not parties to this Order,but whose substantial interests are affected by it,have a right to petition for an administrative hearing under Sections 120.569 and 120.57,F.S. Because the administrative hearing process is designed to formulate final agency action,the filing of a petition concerning this Order means that the Department's final action may be different from the position it has taken in the Order. The petition for administrative hearing must contain all of the following information: • a) The OGC Number assigned to this Order, b) The name,address,and telephone number of each petitioner;the name, address,and • telephone number of the petitioner's representative,if any,which shall be the address for service purposes during the course of the proceeding; c) An explanation of how the petitioner's substantial interests will be affected by the Order; d) A statement of when and how the petitioner received notice of the Order; e) Either a statement of all material facts disputed by the petitioner or a statement that the petitioner does not dispute any material facts; f) A statement of the specific facts the petitioner contends warrant reversal or modification of the Order; . g) A statement of the rules or statutes the petitioner contends require reversal or - modification of the Order;and h) A statement of the relief sought by the petitioner,stating precisely the action petitioner wishes the Department to take with respect to the Order. The petition must be filed(received)at the Department's Office of General Counsel,3900 Commonwealth Boulevard,MS 35,Tallahassee,Florida 32399-3000 within 21 days of receipt of Packet Page -580- 10/14/2014 12.A. this notice. Failure to file a petition within the 21-day period constitutes a person's waiver of the right to request an administrative hearing and to participate as a party to this proceeding under Sections 120,569 and 120.57,F. S. Before the deadline for filing a petition,a person whose substantial interests arc affected by this Order may choose to pursue mediation as an alternative rerncdy under Section 120.573, F.S. Choosing mediation will not adversely affect such person's • right to request an administrative hearing if mediation does not result in a settlement. Additional information about mediation is provided in Section 120.573, Florida Statutes and Rule 62- 110.1,06(12), F.A.C. FOR THE COMPANY: DAN A, HUGHES COMPANY, L.P. By Dan A.Hughes Management, L.L.C. Its general partner pyLsi, ga Aff DATE "'. * " retncrs, 'Nice President of Land P.O, Drawer 669.Beeville,Texas 7810 ADDRESS DONE AND ORDERED this 8th day of AprP 2014, in Tallahassee Florida. -' + STATE OF FLORIDA DEPARTMENT OF ENVIRONMENTAL PROTECTION Mark Thomasson P.E. Director, Division of Water Resource Management Packet Page -581- 10/14/2014 12.A. • Filed,on this date,pursuant to Section 120.52,Fla. Stat,with the designated Department Cleric, receipt of which is hereby acknowledged. S-19. Clerk Date Copies furnished to: Lea Crandall,Agency Clerk Mail Station 35 • Packet Page -582- 10/14/2014 12.A. EXHIBIT 1 This exhibit is protected as a confidential trade secret under section 815.045,Florida Statutes, and has been submitted separately. Packet Page -583- 10/14/2014 12.A. EXHIBIT 2 • Packet Page -584- 10/14/2014 12.A. STATE OF FLORIDA DEPARTMENT OF ENVIRONMENTAL PROTECTION In re: Dan A Hughes Company LP Permit No: 1349H Well:20-3H Collier-Hogan I • FINAL ORDER REQUIRING OPERATIONS AT WELL 2 CEAtig AND DIST _I.IER-HOGrezzt Pursuant to Section 403.081(8), Florida Statutes,the Department of Environmental Protection ("Department')is entering this Final Order requiring the Dan A. Hughes Company LP immediately cease and desist from any further operations at the 20-3H Collier-Hogan well as proposed in its Well Proposal, Proposal No: 1001184798,dated December 23, 2013. The Department enters this Final Order in exercise of Its power and duty to issue orders that are necessary to protect the State's waters from water pollution and states as follows: 1. On December 23, 2013, Dan A. Hughes Company LP, through counsel, walled the Department a workover notification concerning its open permit for the 20-3H Collier-Hogan well indicating that it intended to conduct a workover operation. The notification provided seven pages of Information on the workover proposal. 2. The December 23,2013,email indicated that the proposed workover operation would commence on December 28, 2013. The proposed workover operation was initiated on December 30, 2013, and Is continuing to date despite oral notification by the Department that the proposed workover operation was not apps, Packet Page -585- 10/14/2014 12.A. 3. After reviewing the documents attached to the December 23,2013 email, the Department is not satisfied that It has sufficient information that the proposed ' workover would be protective of the State's groundwater resources, and it is therefore ORDERED that Dan A. Hughes Company, LP CEASE AND DESIST all operalkma proposed In the December 23,2013,workover notification concerning the 20-3H Collier- Hogan well. Any party to this Final Order has the right to seek Judicial review of the Final Order under Section 120.68, Florida Statutes, by filing a Notice of Appeal under Rules . 9.110 and 9.190, Florida Rules of Appellate Procedure,with the Clerk of the Department of Environmental Protection,Office of the General Counsel, Mall Station 35, 3900 Commonwealth Boulevard,Tallahassee, Florida 32399-3000, and by filing a copy . of the Notice of Appeal accompanied by the applicable filing fees with the appropriate . district court of appeal. The Notice of Appeal must be filed within 30 days after this notice is flied with the clerk of the Department • Executed in Leon County, Florida on December 31, 2013. STATE OF FLORIDA DEPARTMENT OF ENVIRONMENTAL PROTECTION _ � • -I Vinyard Secretary 2 Packet Page -586- 10/14/2014 12.A. ATE OF jimpi I CERTIFY that a this copy of the foregoing was sent e1ectj nic mail only to Richard S. Brightman and Timothy M May, Hopping Green&Sam PA, P.O. Box 8525, Tallahassee,Florida 32314-6528,Attorneys for Dan A. Hughes Company, LP. at richardbt hasiew.com;tirnothvalphgalaw.com,on this 31st day of December,2013. Or :4e: an Dep 3 C-_ eras •t; ; FILED ON THIS DATE PURSUANT TO$120.52, FLORIDA STATUTES,WITH THE DESIGNATED DEPARTMENT CLERIC,RECEIPT OF WI-UCH IS HEREBY ACKNOWLEDGED. • D J /3J/i3 CLERK DATE 3 Packet Page -587- 10/14/2014 12.A. EXHIBIT 3 Packet Page -588- 10/14/2014 12.A. April 26,2011 (� t 1 Mira ltd 1100 FESCO Ave.-Alice,TX 78332 For. Any Company Fieith NIA Anywhere,USA County: N/A • • Sampic XYZ Well Data: 11/8/2011 Type: Well Water Time: 080 Formation: NIA Depth(Ft): NIA REPORT OF WATER ANALYSIS ss*********eee**Diesoived Solids*********s***** ************#**Other Properties ss**too°too**s* mg/L mpq/L Sodium(Na) 1156330 • 50299 pH 6.90 Calcium(Ca) 279.69 13.96 Spectfin Gravity @ 60/50°F -- 1.020 Magnesium(Mg) 44.08 3.62 Resistivity(Olin-meters @ 77.0°F) 0.227 Barium(8a) 1.96 0.03 Potassium(K) 73.22 LB7 Iron(Fe) 0.13 — 1 Chloride(Cl) 17640.00 497.60 ' •------ — Sulfate(504) 95.00 198 Sttfl.Daves Cu=Stability Index — Carbonate(CO3) 0.00 0.00 eo• Bicarbortate(HCO3) 407.00 6.67 e0 100• Hydroxide(OH) 0.00 0.00 1213 140 \\\ Sulfide(H2S) 0.00 A 160 Total Solids 30105 180 Total Alkalinity(CaCO3) 333 X00 -2 Total Hardness(CaCO3) 880 K-corrosive 0 S� ng- Stendardanen,.Per Liter i '' ..* r+cosrt Cen P 7...-.:•••••...........-..................-..-- i – —__ 1C0 130 80 40 20 0 20 40 80 80 100 120 i Log-sueq Per Liter 5W 5 4 2 1 0 1 2 3 4 5 Emmert Certified: FESCO,Ltd. - Alice,Texas .464~bie+w! Job Number: 99999 . 9999 361-661-7015 Packet Page -589- 10/14/2014 12.A. BEFORE THE STATE OF FLORIDA DEPARTMENT OF ENVIRONMENTAL PROTECTION STATE OF FLORIDA,DEPARTMENT N THE DIVISION OF WATER OF ENVIRONMENTAL PROTECTION RESOURCE MANAGEMENT Complainant, v. OGC Case No. 14-0400 DAN A. HUGHES COMPANY, L.P. Respondent. NOTICE OF REVOCATION TO: Dan.A. Hughes, Company, L.P. 208 E. Houston Beeville, TX 78102 Pursuant to the authority of sections 120.60 and 403.087(7),Florida Statutes, section 62-4.100, Florida Administrative Code,paragraph 7 of Florida Department of Environmental Protection("Department")Permit No. 1349H,paragraph 7 of permit 1354, paragraph 7 of permit 1355H, and paragraph 7 of permit No. 1356,the Department hereby gives notice to Dan A. Hughes Company, L.P. ("Respondent")that it is revoking all of the following permits: 20-3H Collier-Hogan Operating Permit No. 1349H, 22-5 Collier Salt Disposal Well No. 1354, 7-2H Collier Drilling Permit No. 1355H, and 7-5 Collier Salt Disposal Well No. 1356,based upon the following findings of fact and conclusions of law: FINDINGS OF FACT 1. The Department is the administrative agency of the State of Florida created by section 20.255, Florida Statutes, charged with the power and duty to enforce chapters 377 and Packet Page -590- 10/14/2014 12.A. 403, Florida Statutes, and rules promulgated thereunder in Title 62 of Florida Administrative Code. 2. Respondent is the permittee of the following permits:20-3H Collier-Hogan Operating Permit No. 1349H,22-5 Collier Salt Disposal Well No. 1354, 7-2H Collier Drilling Permit No. 1355H, and 7-5 Collier Salt Disposal Well No. 1356. The location of the 20-311 Collier Hogan Well (the subject of permit 1349H)will be referred to below as the"Site." COUNTI 3. On April 8, 2014 the Department and the Respondent entered into a consent order that addressed the Respondent's failure to comply with the Department's cease and desist order entered on December 31, 2013. A copy of the executed consent order("Consent Order"), which includes that cease and desist order as an exhibit,is attached hereto as Exhibit 1. 4. Paragraph 15 of the Consent Order required the Respondent to submit an Interim Spill Prevention and Cleanup Plan ("ISPC") to the Department within 14 days of the effective date of the Consent Order. Respondent submitted an inadequate ISPC to the Department on April 22,2014. On May 6,2014 the Department requested that the Respondent provide additional information on the ISPC. The Respondent and the Department met on May 14, 2014 to discuss the inadequacies of the ISPC,and the Department informed the Respondent at that meeting that it had 14 days from the date of the meeting to submit an amended ISPC. The Respondent failed to submit an amended ISPC as required by paragraph 15 of the Consent Order until June 26, 2014. 5. Paragraph 16 of the Consent Order required the Respondent,at its sole expense, to retain independent third-party experts with the appropriate qualifications to assess the 2 Packet Page -591- 10/14/2014 12.A. likelihood that the workover operation would cause or contribute to a violation of any applicable groundwater quality standards, which is a critical component of Consent Order compliance. The Respondent was also required to make a good faith effort to reach agreement with the Department on the selection of the third-party experts and the scope of work to be performed by the experts within 60 days of the effective date of the Consent Order(i.e. June 9,2014). The Department met with the Respondent on April 30, 2014 to discuss the selection of third-party experts. At that meeting,the Respondent proposed hiring a contractor that had previously been hired to do work for the Respondent,which the Department found to be a conflict of interest. The Department informed the Respondent at that meeting that proposing a contractor that had a previous business relationship with the Respondent was not acceptable and was not consistent with the requirement in paragraph 16 of the Consent Order that the Respondent retain independent third-party experts. 6. The Department and the Respondent met again on May 14,2014 in an attempt to reach agreement on the independent third-party experts to be retained by the Respondent. At that meeting,the Respondent again proposed the same contractor that the Department previously rejected at the meeting on April 30,2014. Since the meeting on May 14, 2014, the Respondent has failed to propose any additional experts it would be willing to retain to conduct the assessment of the workover operations. The Respondent has failed to make a good faith effort to reach agreement with the Department on the selection of the third-party experts within 60 days of the effective date of the Consent Order(i.e. June 9, 2014) as required by paragraph 16 of the Consent Order. 7. Paragraph 19 of the Consent Order required the Respondent to submit a groundwater monitoring plan to the Department within 30 days of the effective date of the 3 Packet Page -592- 10/14/2014 12.A. Consent Order. A key element of the groundwater monitoring plan required the Respondent to conduct a one-time analytical sampling of the flowback material prior to its final disposal. Without notice to the Department,the Respondent disposed of the flowback material that had been generated at the time of the workover operation without conducting an analytic sampling, in violation of paragraph 19 of the Consent Order.Defendant failed to submit the sampling results, a required component of the groundwater monitoring plan,p an,within the time required by the Consent Order. In addition, by disposing of the flowback material generated in the time period, Defendant rendered it impossible to achieve the purpose and intent of the Consent Order. 8. Under paragraph 22 of the Consent Order,the Respondent agreed to act in good faith and to cooperate fully with the Department in carrying out the intent of this Consent Order. In the conduct described in this Count,Respondent has violated that paragraph by failing to act in good faith and to cooperate fully with the Department. COUNT II 9. During the workover operation that the Respondent conducted between December 30, 2013 and January 1, 2014, the Respondent injected a number of chemicals down the well at the Site. The enhanced acid stimulation process used in the workover operation generated flowback material that contained water and the chemicals used in the acid stimulation process. This flowback material was produced from the well over the period since the procedure occurred. 10. The Respondent stored flowback material generated by the enhanced acid stimulation process in storage tanks at the Site. 11. On three different occasions while at the Site, on April 16, April 23 and May 5, 2014 the Department specifically asked the Respondent or its contractor to provide the manifests 4 Packet Page -593- 10/14/2014 12.A. for the material that the Respondent was transporting off the Site. It was of critical importance to the Department that it have information about what was being transported for disposal, and how much volume was being transported to be able to determine what was happening with the fiowback material that the Respondent was obligated to sample and analyze before final disposal. 12. The Respondent refused to provide the records requested by the Department on all three occasions in violation of section 62C-25.001(3),Florida Administrative Code. COUNT III 13. Every person drilling or operating an oil or gas well is required to keep posted in a conspicuous place near the well a sign legible from 100 feet and displaying the name of the operator, fee owner, well number,Department permit number, county name, section, township, and range. 14. Every person drilling or operating an oil or gas well is required to have a sign posted in a prominent place on site that provides diagrams of the gas detection and fire fighting systems together with schedules and procedures for testing safety equipment. 15. The Department conducted an inspection of the Site on July 14,2014 and determined that the Defendant has failed to post the required sign at the Site in violation of section 62C-27.001(1), Florida Administrative Code. 16. At the same inspection of the Site on July 14, 2014 the Department determined that the Defendant has failed to post the required safety sign in violation of section 62C- 28.004(8), Florida Administrative Code. 5 Packet Page -594- 10/14/2014 12.A. COUNT IV 17. On July 14, 2014 the Department conducted an inspection of the Site. During the inspection, a roll off dumpster was observed staged between a canal and a dirt road adjacent to and south of the berm area around the well pad. The dumpster was nearly full with the load consisting of 4"hoses,buckets,pieces of liner and other items, much of which were covered with oil. 18. On the grass adjacent to the north side of the dumpster were observed several oiled areas. There was also watery fluid dripping to the ground from the east side of the dumpster. The water was dripping into a large frying pan-sized basin. The soil in the basin was stained a dark red color. At the time of the observation the basin was nearly full,but was not discharging. It was evident from erosion patterns that there had been flow from the dumpster discharge area several feet east and then south several feet to an open water canal, waters of the state. Areas of multicolored iridescent sheen were observed on the open soil surface in this eroded area between the dumpster and the canal. 19. The following morning the Department returned to complete the inspection and to conduct a sampling of the discharge area from the dumpster. The dumpster had been removed from the site. The area of erosion between the dumpster and the open canal, although still discernable,had been impacted by heavy equipment movement. Soil and water quality samples were taken from the dumpster discharge flow area and the canal. At the time of the sampling, sheen and suspected oil or petroleum by-products were observed on and within the canal. 20. The Defendant's dumpster and associated operation is an installation pursuant to section 403.031(4), Florida Statutes. 6 Packet Page -595- 10/14/2014 12.A. 21. The Defendant was maintaining a stationary installation without a Department permit in violation of section 403.087(1),Florida Statutes. CONCLUSIONS OF LAW 22. The Department has the authority to revoke the above described permits pursuant to section 403.087(7),Florida Statutes, section 62-4.100,Florida Administrative Code,paragraph 7 of Florida Department of Environmental Protection("Department") Permit No. 134911, paragraph 7 of permit 1354, paragraph 7 of permit 1355H, and paragraph 7 of permit No. 1356. 23. The Respondent is a person within the meaning of section 403.031(5), Florida Statutes. 24. The facts described in Count I constitute a violation of the Consent Order. 25. The facts described in Count II constitute a violation of section 62C-25.001(3), Florida Administrative Code and a violation of paragraph 2 in the general conditions of the 20- 311 Collier-Hogan Operating Permit No. 1349H. 26. The facts described in Count III constitute a violation of section 62C-27.001(1) and 28.004(8), Florida Administrative Code and a violation of paragraph 2 in the general conditions of the 20-3H Collier-Hogan Operating Permit No. I349H. 27. The Respondent's dumpster and associated operation described in Count IV is an installation pursuant to section 403.031(4),Florida Statutes. 28. The facts described in Count IV constitute a violation of section 403.087(1), Florida Statutes. 7 Packet Page -596- 10/14/2014 12.A. ORDER OF REVOCATION The Department has alleged that the activities described in the Findings of Fact constitute violations of Florida law and violations of a Department order. The Department has determined that based upon these violations, 20-3H Collier-Hogan Operating Permit No. 1349H,22-5 Collier Salt Disposal Well Permit No. 1354, 7-2H Collier Drilling Permit No. 1355H,and 7-5 Collier Salt Disposal Well Permit No. 1356, should all be revoked immediately. The Department will adopt this Order of Revocation as part of its Final Order in this case, and revoking those permits, unless the Respondent files a timely petition for a formal hearing or informal proceeding(See Notice of Rights). By revoking the foregoing permits,the Department does not relieve the Respondent of its obligations to plug existing wells and otherwise to remediate conditions at the sites described in those permits. Aaire ifTo . ►PIN lson, III Deputy ecretary for Regulatory Programs Florida Department of Environmental Protection 3900 Commonwealth Boulevard MS 15 Tallahassee, Florida 32399 Filed on thi e,p+ uant to Section 120.52,F.S.,with the designated Department Clerk, receipt o -which is here+ acknowledged. `AdvAllia vcd 4- Date cc: Lea Crandal , gency Clerk Mail Station 35 8 Packet Page -597- 10/14/2014 12.A. NOTICE OF RIGHTS Respondent's rights to negotiate or litigate this action are described below. Please read them carefully. Right to Negotiate 1. This matter may be resolved if the Department and Respondents enter into a Consent Order, in accordance with Section 120.57(4),Fla. Stat., upon such terms and conditions as may be mutually agreeable. Right to Request a Hearing 2. Respondent has the right to a formal administrative hearing pursuant to Sections 120.569 and 120.57(1), F.S., if Respondent disputes issues of material fact raised by this Notice of Revocation. At a formal hearing,Respondent will have the opportunity to be represented by counsel or other qualified representative,to present evidence and argument on all issues involved, and to conduct cross-examination and submit rebuttal evidence. 3. Respondent has the right to an informal administrative proceeding pursuant to Sections 120.569 and 120.57(2),F.S.,if Respondent does not dispute issues of material fact raised by this Notice. If an informal proceeding is held,Respondent will have the opportunity to be represented by counsel or other qualified representative,to present to the agency written or oral evidence in opposition to the Department's proposed action,or to present a written statement challenging the grounds upon which the Department is justifying its proposed action. 5. If Respondent desires a formal hearing or an informal proceeding,Respondent must file a written responsive pleading entitled"Petition for Administrative Proceeding" within 21 days of receipt of this Notice. The petition must be in the form required by F.A.C. Rule 28- 106.2015 and include the following: 9 Packet Page -598- 10/14/2014 12.A. (a)The name,address, any e-mail address,telephone number, and facsimile number, if any,of the respondent,if the respondent is not represented by an attorney or qualified representative. (b)The name, address, e-mail address,telephone number,and facsimile number of the attorney or qualified representative of the respondent,if any,upon whom service of pleadings and other papers shall be made. (c)A statement requesting an administrative hearing identifying those material facts that are in dispute.If there are none,the petition must so indicate. (d)A statement of when the respondent received notice of the administrative complaint. (e)A statement including the file number to the administrative complaint. A petition is filed when it is received by the Department's Office of General Counsel, 3900 Commonwealth Boulevard, MS-35, Tallahassee, Florida 32399-3000. Right to Request Mediation 6. Respondent may request mediation after filing a petition for hearing. Requesting mediation will not adversely affect the right to a hearing if mediation does not result in a settlement. The mediation will be held if the parties enter a written agreement, which is described below,within 30 days after receipt of the Notice of Revocation. The mediation must be completed within 60 days of the agreement unless the parties otherwise agree. The agreement to mediate must include the following: (a) The names,addresses,and telephone numbers of any persons who may attend the mediation; 10 Packet Page -599- 10/14/2014 12.A. (b) The name, address, and telephone number of the mediator selected by the parties, or a provision for selecting a mediator within a specified time; (c) The agreed allocation of the costs and fees associated with the mediation; (d) The agreement of the parties on the confidentiality of discussions and documents introduced during mediation; (e) The date,time,and place of the first mediation session, or a deadline for holding the first session,if no mediator has yet been chosen; (f) The name of each party's representative who shall have authority to settle or recommend settlement; and (g) The signatures of all parties or their authorized representatives. As provided in section 120.573 of the Florida Statutes,the timely agreement of all parties to mediate will toll the time limitations imposed by sections 120.569 and 120.57 for requesting and holding an administrative hearing. Unless otherwise agreed by the parties, the mediation must be concluded within sixty days of the execution of the agreement. If mediation results in settlement of the administrative dispute,the Department must enter a final order incorporating the agreement of the parties. Persons whose substantial interests will be affected by such a modified final decision of the Department have a right to petition for a hearing only in accordance with the requirements for such petitions set forth above, and must therefore file their petitions within 21 days of receipt of this notice. If mediation terminates without settlement of the dispute,the Department shall notify the Respondent in writing that the administrative hearing processes under sections 120.569 and 120.57 remain available for disposition of the dispute, and the notice will specify the deadlines that then will apply for challenging the agency action and electing remedies under those two statutes. 11 Packet Page -600- 10/14/2014 12.A. Waivers 7. Respondent will waive the right to a formal hearing or an informal proceeding if a petition is not filed with the Department within 21 days of receipt of this Notice. These time limits may be varied only by written consent of the Department. General Provisions 8. The allegations of this Notice of Revocation will be adopted by the Department in a Final Order if Respondent fails to timely file a petition for a formal hearing or informal proceeding,pursuant to Section 403.121,F.S.A Final Order will constitute a full and final adjudication of the matters alleged in this Notice. 9. This matter may be resolved if the Department and Respondent enter into a Consent Order, in accordance with Section 120.57(4),F.S., upon such terms and conditions as may be mutually agreeable. 11. The Department is not barred by the issuance of this Notice from maintaining an independent action in circuit court with respect to the alleged violations. If such action is warranted,the Department may seek injunctive relief, damages, civil penalties,and all costs of litigation. 12. Copies of Department rules referenced in this Notice may be examined at any Department Office. 12 Packet Page -601- 10/14/2014 12.A. BEFORE THE STATE OF FLORIDA DEPARTMENT OF ENVIRONMENTAL PROTECTION STATE OF FLORIDA DEPARTMENT IN THE DIVISION OF OF ENVIRON/vIENTAL PROTECTION WATER RESOURCE MANAGEMENT OGC FILE NO. 14-0012 vs. DANA. HUGHES COMPANY, L.P. CONSENT'C+'RI This Consent Order("Order")is entered into between the State of Florida Department of Environmental Protection,("Department')and the Dan A.Hughes Company,L.P.("Cemzly"), to reach settlement Qf certain matters at issue between the Department and the Company. I. The Department is the Administrative agency of the State of Florida having the power and duty to protect Florida's air and water resources and to administer and enforce the provisions of Chapters 377 and 403,Florida Statutes("F.S."),and Chapters 62C-25 through 62C-30,Florida Administrative Code("F.A.C."). The Department has jurisdiction over the matters addressed in this Order. 2. The Company is a=person"within the meaning of Section 403.161 and 403.031(5),F.S. 3. The Company obtained an Oil&Gas Well Drilling Permit from the Department in December of 2012(Permit No: 1349H,Collier-Hogan 20-3B Well)to construct a well to be located at the Hogan Island Farm in Collier County,Florid& 4. Upon completion of the construction of the 20-3H Collier-Hogan Well("Well"), the Company obtained a Five Year Operation Permit in August of 2013 to operate the Well as an oil production well. EXHIBIT 1 TO NOTICE OF REVOCATION Packet Page -602- 10/14/2014 12.A. 5. On December 23,2013,the Company submitted to the Department a Workover Notification indicating that it intended to conduct a"Workover Operation"as described in Exhibit I attached hereto. This notice stated that the Company planned to commence the Workover Operation on December 28 or 29. Subsequently,at the request of the Department,the Company agreed to delay the Workover Operation until at least December 30 to allow the Department more time to review and respond to the notice. 6. The Workover Operation proposed by the Company began on December 30, 2013,and continued through January 1,2014. 7. On December 31,2013, the Department entered a Final Order Requiring • Operations at Well 20-3H Cease and Desist and served a copy of the Final Order on the Company on December 31,2013. A copy of the Final Order is attached hereto as Exhibit 2. $. The Company continued the Workover Operations until approximately 2:30 PM on the afternoon of January 1,2014. 9. The Company contends that at all times it was operating lawfully under a valid permit and followed all applicable procedures required to conduct the Workover Operations described in Exhibit 1. Having reached resolution of the matter, the Department and the Company mutually agree and it is, ORDr. OED: 10. Within 10 days of the effective date of this Order, the Company shall pay the Department$25,000 in settlement of the regulatory matters addressed in this Order. This amount includes$20,000 for civil payments and$5,000 for costa incurred by the Department during the investigation of this matter and the preparation and tracking of this Order. Packet Page -603- 10/14/2014 12.A. WELL SAFETY 11. Immediately upon execution of this Order or upon becoming available to the Company(whichever is later),the Company,qhall provide to the Department the information In paragraphs 12-14 below. 12 The Company shall provide Material Safety Data Sheets(MSDS) for all materials used in the Workover Operation described in Exhibit i attached hereto,along with the proportion and total volume of each material used in the Workover Operation. 13. The Company shall identify the total volume of water used in the Workover Operation,and the source of the water,including the permit number if the water was obtained from a permitted source and confirmation that the volume of water used for the Workover Operation does not exceed any limitation set in the permit. 14. The Company shall provide the following information concerning the flowback material management for the Well operations: (a)estimate of the total volume of flowbac material;(b)storage capacity at the pad to contain any flowback material that is anticipated to be held onsite;(c)description of the secondary containment measures employed at the site;(d)the final disposal location for the flowback material resulting from the Workover Operation;and(e) and confirmation of the regulatory conditions on final disposal,including the permitting agency and permit number(s). • 15. The Company shall submit an Interim Spill Prevention and Cleanup Plan("ISPC Plan")to be implemented at the Well. The ISPC Plan shall be submitted to the Department within fourteen(14)days of the effective date of this Consent Order. If the Department requests additional information or notifies the Company that the ISPC Plan is inadequate or otherwise unacceptable,the Company shall provide the additional information or submit a revised ISPC Packet Page -604- 10/14/2014 12.A. Plan within the time frame,not less than fourteen(14)days,specified by the Department in the request or notification, Implementation of the Department approved LSPC Plan constitutes satisfaction of this requirement. ANALYSi,S AND MANAORIvIENT 16. The Company shall provide information and analysis to confirm that this Workover Operation was designed and carried out in a way that it is not likely to cause or contribute to any violation of any applicable groundwater quality standard. The Company,at its ;sole expense,shall retain independent third-party experts with the appropriate qualifications to assess the likelihood than the Workover Operation will cause or contribute to a violation of any applicable groundwater quality standards. This analysis ahAlt consider at a minimum,the potential for injected or native fluids to migrate through the deep geological formations or the Well casing into surrounding groundwater bearing zones with total dissolved solids concentrations of 10,000 ppm or less. The Department and the Company shall make a good faith effort to reach mutual agreement on the selection of the third-party experts and the"Scope of Work"to be performed by the experts within 60 days of the effective date of this Order. Neither the Department nor the Company shall unreasonably withhold their approval of the experts or the Scope of Work for the analysis. The Scope of Work will be limited to analyses reasonably necessary to evaluate the likelihood that Workover Opemtions similar to the Workover Operations desczibed in Exhibit I will cause or contribute to any violations of any applicable groundwater quality standards. The experts shall prepare a Report and submit the Report to the Department by December 1,2014. 17. Upon receipt of the Report,the Department shall review the Report and in s timely manner determine whether it provides sufficient information to evaluate the likelihood Packet Page -605- 10/14/2014 12.A. that Workover Operations similar to the Workover Operations described in Exhibit 1 will cause or contribute to any violations of any applicable groundwater quality standards_ To this end, within 30 days of the r ceipt of the Report the Department shall notify the Company and the Report author of any apparent errors or omissions and request any additional information needed to evaluate the likelihood groundwater standard violations would result from similar Workover Operations.The Company shall provide the additional information reasonably requested by the Department within 30 days of receipt of the Department's request. If at any time before the study is accepted by the Department anyone files a Workover notice for a W orkover Operation similar to the Workover Operation described in Exhibit 1,the Department will respond to such notice with a request for information similar to the Scope of Work for the Report. 18. No future Workover Operations similar to the Workover Operation described in Exhibit I shall be implemented at any of the Company's wells(existing and proposed under valid permits)until the completion and submittal of the Report described in paragraph 16. The Department agrees to provide written notice to the Company when it has satisfied the Report requirements of this Consent Order. 19. Within 30 days of the effective date of this Order, the Company shall submit a groundwater monitoring plan("Plan")to the Department. The objective of the Plan is to provide • information regarding the likelihood that the Workover Operation will cause or contribute to any violation of any groundwater standard in the nearby groundwater aquifer used as public and private water supply. The Plan shall be developed and implemented at the expense of the Company. The Plan shall include: (a)a one-time analytical sampling of the flowback material prior to its final disposal. In addition to the analysis identified in Exhibit 3,the one-time analytical sampling of the flowback material shall be condc;:•ted using the following analytical Packet Page -606- 10/14/2014 12.A. methods: EPA Method 350.1—total ammonia,EPA Method 8260 with required reporting of all target analytes and tentatively identified compounds having greater than 10%relative abundance, EPA Method 8270 with required reporting of all target analytes and tentatively identified compounds having greater than 10%relative abundance,EPA Method 80I5C with all alcohols and glycols using the heated purge option cited in Section 11.1.2,FL PRO(State of Florida petroleum range organics),MA VPH(State of Massachusetts volatile petroleum hydrocarbons), Standard Methods 2504B--total dissolved solids,and Standard Methods 4500-CL P(listed as residual chlorine but measures total residual oxidants);; (b)installation of a series of shallow monitoring wells,placed at the NW,NE,SW,SE corners of the pad. The wells shall be designed to test the full column of the potable water zone; (c)installation of one deep groundwater monitoring well on the pad and southwest of the subject well to a depth equal to the base of the sandstone aquifer(approximately 400');(d)ground water quality sampling and analyses of all wells;; (e)sampling and analyses of all monitoring wells on a quarterly basis for either ten(10) years from the date upon which the Department ves the �Pm groundwater monitoring plan or for five(5)years after plug and abandonment of the Well,which ever monitoring period shall expire first; (f)an inventory of freshwater supply wells within a quarter mile of the well bore hole; and(g)a schedule for implementing the Plan. 20. If the Department requests additional information or notifies the Company that the Plan is inadequate or otherwise unacneptable,the Company shall provide the additional information or submit a revised Plan within the time frame specified by the Department in the request or notification. Within 30 days of notification from the Department that the Plan is acoegtable, the Company shall begin implementing the Plan. Packet Page -607- 10/14/2014 12.A. SE'rI LEMENT OF ALL DISPUTES 21. The terms of this Consent Order,upon execution,shall supersede the requirements of the Final Order Requiring Operations at Well 20-3H Cease and Desist. 22. This Consent Order is in settlement of all disputes between the Company and the Department regarding the Permit No. 1349H,20-30H Collier-Hogan Well. The Department and the Company agree to act in good faith and to cooperate fully with each other in carrying out the intent of this Consent Order,and all matters related thereto,and for that purpose agree to execute any additional documents or take such action as may prove reasonably necessary to accomplish that intent. CONFIDENTIALITY Y 23. If any of the information submitted by the Company in response to the requirements of this Order is considered a trade secret or is otherwise confidential information in accordance with Chapter 377 or Section 403.111,F.S.,the Company shall request upon submittal of the information that the Department keep such information confidential. The Department will thereafter keep such information confidential in accordance with the requirements of Chapter 377 and Section 403.111, F.S. ORDER ADMINISTRATION 24. The Company acknowledges and waives its right to an administrative hearing pursuant to Sections 120.569 and 120.57,F.S.,on the terms of this Order. The Company acknowledges its might to appeal the terms of this Order pursuant to Section 120.68,F.S.,and waives that right upon signing this Order. 25. If any event, including administrative or judicial challenges by third parties unrelated to the Company,occurs which causes delay or the reasonable likelihood of delay,in Packet Page -608- 10/14/2014 12.A. complying with the requirements of this Consent Order,the Company shall have the burden of proving the delay was or will be caused by circumstances beyond the reasonable control of the Company and could not have been or cannot be overcome by the Company's doe diligence. The failure of a contractor,subcontractor,materialman or other agent(collectively referred to as "contractor")to whom responsibility for performance is delegated to meet contractually imposed deadlines shalt not be a cause beyond the control of the Company,unless the cause of the contractor's late performance was also beyond the contractor's control. Upon ooetutelee of an event causing delay,or upon becoming aware of a potential for delay,the Company shall notify the Department orally within 24 hours or by the next working day and shall,within seven calendar days of oral notification to the Department,notify the Department in writing of the anticipated length and cause of the delay,the measures taken or to be takers to prevent or minimize the delay and the timetable by which the Company intends to implement these measures. if the parties can agree that the delay or anticipated delay has been or will be caused by circumstances beyond the reasonable control of the Company,the time for performance hereunder shall be extended for a period equal to the agreed delay resulting from such circumstances. Such agreement shall adopt all reasonable measures necessary to avoid or minimize delay. Failure of the Company to comply with the notice requirements of thiq paragraph in a timely manner shall constitute a waiver of the Company's right to request an extension of time for compliance with the requirements of this Consent Cam, 26. Entry of this Consent Order does not relieve the Company of the need to comply with applicable federal,state or local laws,regulations or ordinances, 27. The terms and conditions set forth in this Consent Order may only be enforced in a court of competent jurisdiction pursuant to Sections 120.69 and 403.121,F.S. Failure to Packet Page -609- 10/14/2014 12.A. comply with the terms of this Consent Order shall constitute a violation of Section 403.161(1)0),F.S. 2S. All submittals and payments required by this Consent Order to be submitted to the Department shall be sent to the Program Administrator of the Oil&Gas Program,Division of Water Resource Management,Florida Department of Environmental Protection,2600 Blair Stone Road, MS 3538,Tallahassee,FL 3.2399. 29. The Department hereby expressly reserves the right to initiate appropriate legal action to prevent or prohibit any violations of applicable statutes or the rules promulgated there- under that are not specifically addressed by the terms of this Consent Order. 30. This Consent Order is a settlement of the Department's civil and administrative authority arising under Florida law to resolve the matters addressed herein.This Order is not a settlement of any criminal liabilities which may arise under Florida law, nor is it a settlement of any violation which may be prosecuted criminally or civilly under federal law. 31. Electronic signatures or other versions of the parties' signatures,such as Of or famirnile,shall be valid and have the same force and effect as originals. No modifications of the teams of this Order shall be effective until reduced to writing,executed by both Respondents and the Department, and filed with the clerk of the Dot. NOTICE OF RIGHTS 32. This Consent Order is a final order of the Department pursuant to Section 120.52(7),F.S., and it is final and effective on the date fled with the Clerk of the Department unless a Petition for Administrative Hearing is filed in accordance with Chapter 120,P.S. Upon the timely filing of a petition, this Order will not be effective until furl order of the Department. Packet Page -610- 10/14/2014 12.A. 33. Persons who are not parties to this Order,but whose substantial interests are affected by it have a right to petition for an administrative hearing under Sections 120369 and. 120.57,F.S. Because the administrative hearing process is designed to formrdaie final agency action,the filing of a petition concerning this Order means that the Department's final action may be different from the position it has taken in the Order, The petition for administrative bearing must contain all of the following information: a) The OGC Number assigned to this Order; b) The name,address, and telephone number of each petitioner;the name,address,and telephone number of the petitioner's represenive,if any,which shall be the address for service purposes during the course of the proceeding; c) An explanation of how the petitioner's substantial interests will be affected by the Order; d) A statement of when and how the petitioner received notice of the Order., e) Either a statement of all material facts disputed by the petitioner or a statement that the petitioner does not dispute any material facts; f) A statement of the specific facts the petitioner contends warrant reversal or modification of the Order; g) A statement of the rules or statutes the petitioner contends require reversal or modificaEon of the Order;and h) A statement of the relief sought by the petitioner, stating precisely the action petitioner wishes the Department to take with respect to the Order. The petition must be filed(received)at the Department's Office of General Counsel,3900 Commonwealth onweeallth Boulevard, MS 35,Tallahassee,Florida 32399-3000 within 2 i dam of rapt of Packet Page -611- 10/14/2014 12.A. this notice. Failure to rile n petition within the 2I-day period constitutes a peon's waiver of the right to request an adminiatrntive hearing and to participate as a party to this Proceeding under Sections 1W.569 arxi 120.57, F. S. Before the deadline for filing a petition,a pawn whose substantial interests are affected by this Order may choose to puraue nsediat ion as an alternative remedy under Section 120.573, F.S. Choosing mediation will not sdvorsely affect such person's right to request an administrative hearing if irradiation does not result in a settlement. Additional information about mediation is provided in Section 120.573, Florida Statutes and Rutz,62- 110.106(32), F.A.C. FOR THE COMPANY: DAN A. HUGHES COMPANY, LP. By:Dan A.Hughes Management,L.L.G. Its general partner 0,f,* 'ice President orLarid P Q.P►►a'weL Liktcriik Tt`xaa 7$J1 04 ADDRESS DONE AND ORDERED this 8th __day or Av.ri _,2014, in Tallahassee Florida. STATE OF FLORIDA DEPARTMENT OF ENVIRONMENTAL PROTECTION Mark Thorrresson P. E, Director, Division of Water Resource Management Packet Page -612- 10/14/2014 12.A. Filed,on this date,pursuant to Section 120.52,Fla.Stat,with the designated Department Clerk, receipt of which is hereby acknowledged. /f 61:4-nzhle 89Y Clerk Date Copies furnished to: Lea Crandall,Agency Clerk Mail Station 35 Packet Page -613- 10/14/2014 12.A. EXHrBiT i This exhibit is protected as a aon5.dential trade secret under section 815.045, Fkrtida Statutes, and has been submitted separately. Packet Page -614- 10/14/2014 12.A. EX RIB IT2 Packet Page -615- 10/14/2014 12.A. STATE OF FLORIDA DEPARTMENT OF ENVIRONMENTAL PROTECTION in re: Dan A. Hughes Company LP Permit No: 1349H Welt: 20-3H Collier-Hogan air .• • Jilt, f`►C 8N0 a-� + �t • �a t.eat_ . CE $E AND DESIST Pursuant to Section 403.081(8), Fiadda Stithrtea,the Department of Environmental Protection rDepartrnenr)is entering this Final Order requiring the Dan A. Hughes Company LP knmediately cease and desist frxr n any further operations at the 20-3H Colter-Hogan well as proposed in Its Well Pry, Proposal No: 1001184796, dated December 23, 2013. The Depart ner*enters this Final Omer in exercise of its power and duty to issue caters that are necessary to protect the State's waters from water pollution and states as follows: 1. On December 23,2013, Dan A. Hughes Company LP, through counsel, emailed the Department a workover notification crone Its operation permit for the 20-3H Collier-Hogan well indicatting that it intended to conduct a workover don. The notification provided seven pages of infom atfon on the workover proposal. 2. The December 23, 2013,email indicted#hat the proposed warienrer operation would commence on December 29, 2013. The proposed workover operation was initiated on December 30, 2013, and is continuing to dale deeplte oral nottication by the Department that the proposed workover operation was not approved. Packet Page -616- 10/14/2014 12.A. 3. After reviewing the documents attached to the December 23,2013 email, the Department is not satisfied that it heal sufficient Information that the proposed workover would be protective of the State's groundwater resources, and ft is therefore ORDERED that Dan A. Hughes Company, LP CEASE AND DESIST all operations proposed In the December 23,2013,workover noon concerning the 20-3H Collier- Hogan welt Any party to this Final Order has the right to seek judicial review of the Final Order under Section 120.88, Florida Statutes, by fling a Notice of Appeal under Rules 9.110 and 9.190, Florida Rules of Appellate Procedure,with the Clark of the Department of Environmental Protection, Office of the General Counsel, Mad!Station 35, 3900 Cornmonweaf6h Boulevard,Tallahassee, Florida 32399-3000, and by filing a copy of the Notice of Appeal accompanied by the apps tie fig fees with the appropriate district court of appeal. The Notice of Appeal must be flied within 30 days seller this notice is flied with the clerk of the Department. Executed in Leon County, Florida on December 31, 20/3, STATE OF FLORIDA DEPARTMENT OF ENVIRONMENTAL PROTECTION sok "fir' r i ,r l rd r'nya Secretary ��J� 2 Packet Page -617- 10/14/2014 12.A. CERTIFICATE OF.BERVVCe I CERTIFY that a true copy of the foregoing was sent ionic mail only to Richard S. Brightman and Timothy M Riley, Hopping Green&Sam PA,P.O. Box 6628, Tallahassee,Florida 32314-8528,Atmmeys for Dan A Hughes Company, LP.at rk rdt baleg.oarn;broth hoalevr oom on this 31st day of fiber, 2013. • FILE)ON INSIS DATE PURSUANT TO 1120.52, FLORIDA STATUTES,WITH THE DESIGNATED UEPART I8JT d.ERK,RECEIPT OFN4CH IS FAY ACKNOWLEDGED. _ _ / J33/i3 CLERK DATE 3 Packet Page -618- 10/14/2014 12.A. EXHIBIT 3 Packet Page -619- 10/14/2014 12.A. _,�t April 26,2011 `441' 1100 P'a�SCO�Are.-Arita,TX 76332 For. Airy CoarptnY C Anywhere,USA N/A Co o NA tA XYZ Well Date: 1140011 Type: k'd!ware Tin 08:00 Fowmuiou MA Depth(Ft): N/A REPORT OF WATER ANALYSIS • Dissolved Solids •r•••••,F••t•.•other Pro properties 1� • •s• Sodiatn(Ns) 11 3,70 • 301J'9 pH 6.90 Calcium(Q1) 279.69 13.96 Specific(ksvity @ 60150 T - Mspesittttu(Mr) 44.08 3.62 Resistivity 1.727 Barium(�) 1.96 0.03 #y t�u�►-matas 77.0'F) azz� Potassium(K) 73.22 1.87 from(Fe) 0.13 — aaloride(a) 17640-00 497.60 St10.Dtwe CaCO3 Stability Weise _ Sulfate(SO4) x.00 1.98 ■ 40 Carbonate(CO3) 0.00 0.00 ■ ^ BO' Bicrabonate(}1CO3) 407.00 617 C too Hydroxide(OH) 0.00 0.00 ; 1 120 E. 140 Sulfide(FH:S) 0,00 ■ ii 159 Total Souris 30105 `- 1�- \ Total Alkal1ni v(CaCO3) 333 200 .3 -1 0 1 2 Total Hardness(CaOa3) 880 • •-Corrteme : Solna-s (._ _.......__.—---.---- —--Standw d Par Liter — _ _ ____.._, �/''j .. .. �` 14009r1 1OD bb 03 40 20 0 20 4D 00 00 100 120 Le6.sasa Per Liter 1304 : 5 4 3 2 1 0 1 2 3 4 5 S 6pnraenf 1 Certified: FESCO,Ltd. - Alim.,Texas 'aa,.rr David DanChew 361-[161-7015 Job Nurnhe.: SAS' . 7994 Packet Page -62G-