[CITE: DNR v. Acadian Energy LLC, 13 CADDNAR 294 (2014)]
[VOLUME 13, PAGE 294]
Cause #: 13-176G
Caption: DNR v. Acadian Energy LLC
Administrative Law Judge: Jensen
Attorneys: Boyko (DNR); Palmer (Acadian)
Date: September 15, 2014
[See Editor’s note at end of this document regarding change in the decision’s original format.]
FINAL ORDER
15. Permits 51973 and 51974 issued to Acadian are revoked.
16. Acadian is ordered to properly plug and abandon the wells authorized by Permits 51973 and 51974 as well as perform site restoration required by 312 IAC 16-5-19(c).
17. The Department may elect to plug and abandon the wells authorized by Permits 51973 and 51974.
18. A statutory lien is foreclosed in favor of the Department on the casing and all equipment located on or removed from the well sites as well as upon the leasehold of the land upon which the wells are located and upon any crude oil stored on the well sites or recovered at the time the wells are plugged and abandoned.
19. If the Department elects to plug and abandon the wells associated with Permits 51973 and 51974, Acadian remains liable for the costs of plugging and abandoning the wells.
20. If the Department elects to plug and abandon the wells associated with Permits 51973 and 51974, its agents, employees, or contractors shall dispose of all casing and equipment located on or removed from the well sites and any crude oil stored on the well sites or recovered at the time the wells are plugged and abandoned. An inventory of the casing and all equipment and any crude oil shall be made, and the salvage or other reasonable market value of the casing, all equipment and any crude oil shall be applied as a credit to offset the actual costs incurred in plugging and abandoning the wells.
FINDINGS OF FACT AND CONCLUSIONS OF LAW
Case Summary and Jurisdiction:
1. On October 28, 2013, the Claimant, Department of Natural Resources (Department), through its Division of Oil and Gas, by Counsel Ihor N. Boyko, filed with the Natural Resources Commission (Commission) its “Complaint for the Issuance of an Order to Revoke Permits” against the Respondent, Acadian Energy, LLC (Acadian).
2. The Department’s complaint sought revocation of three permits identified by the permit numbers 51973, 51974, and 51988 for the reason that Acadian had failed to comply with a previous order of the Commission requiring Acadian to post bond for the wells.
3. The Department’s Complaint further alleged that Acadian had been issued a Notice of Violation and Penalty Assessment with respect to Permit 51988 and had failed to abate the violation and pay the assessed penalty, seek an extension of time to abate the violation or request timely administrative review in accordance with Indiana Code § 4-21.5-3-6.
4. The Department administers Indiana Code §§ 14-37 and 312 IAC 16 pertaining to the regulation of wells for oil and gas purposes.
5. Procedurally this matter is governed by the Administrative Orders and Procedures Act, Indiana Code §§ 4-21.5, and administrative rules adopted by the Commission at 312 IAC 3.
6. The Commission is the “ultimate authority” for the Department relating to substantive matters controlled by Indiana Code §§ 14-37 and 312 IAC 16. Indiana Code § 4-21.5-1-15; 312 IAC 3-1-2.
7. The Commission is possessed of jurisdiction over the persons of the parties and the subject matter of this proceeding.
8. At all times Acadian has been represented by Counsel, Mark Palmer.
9. A prehearing conference was conducted on November 26, 2013 followed by status conferences that occurred on January 30, 2014, March 20, 2014 and April 24, 2014. During this time Acadian and the Department were seeking to address the dispute by transfer of the permits and/or through summary disposition.
10. On July 25, 2014, the Department filed “Claimant DNR’s Motion for Summary Disposition” seeking to have this matter dismissed as to Permit 51988, which was effectively transferred by Acadian to another operator but requesting that Permits 51973 and 51974 be revoked summarily based upon Acadian’s inability to transfer the permits or address the violations associated with the permits.
11. On July 29, 2014, a fourth telephone status conference was scheduled for August 27, 2014.
12. On August 15, 2014, Acadian, by counsel, filed “Respondent’s Acquiescence in DNR’s Motion for Summary Disposition” stating that it did not contest the violations alleged by the Department stating, in part;
1. DNR accurately represents that Acadian is not in a position to plug and abandon the wells under Permits 51973 and 51974. Acadian’s efforts to induce other operators to take over the wells have not proved fruitful. Acadian has been successful in inducing Ally Exploration to take over the Knepp well under Permit 51988.
2. The transfer of Knepp well under Permit 51988 recently occurred but Acadian has been unable to induce any other operator to take over the wells under Permits 51973 and 51974 and Acadian is unable to continue operations or to plug and abandon those wells.
…
WHEREFORE, Acadian concurs with DNR’s request that this matter be dismissed as to Permit 51988 and that Permits 51973 and 51974 be revoked together with all other just and proper relief.
Findings of Fact and Conclusions of Law:
13. Based upon the representations of the parties, it is concluded that the allegations set forth in the Department’s “Complaint for the Issuance of an Order to Revoke Permits” are factual and represent a sufficient basis for the revocation of Permits 51973 and 51974 along with the other relief requested therein.
14. Also based upon the representations of the parties, it is concluded that this proceeding should be dismissed with respect to the allegations contained in the Department’s “Complaint for the Issuance of an Order to Revoke Permits” relating to Permit 51988.
[EDITOR’S NOTE: The original format of the Administrative Law Judge’s Findings of Fact, Conclusions of Law, and Final Order has been modified to correspond with CADDNAR format. The Final Order, Paragraphs 15 through 20, has been relocated to the “Final Order” section at the beginning of this document.]