Document 6bYaRLmGwQ2vvmobz40ZOkv9g

UNITED STATES ENVIRONMENTAL PROTECTION AGENCY REGION6 1201 ELM STREET, SUITE 500 DALLAS, TEXAS 75270-2102 May 2, 2023 TRANSMITTED VIA E-MAIL Ms. Jenny Buttram Contango Resources, LLC 1717 South Boulder, Suite 900 Tulsa, OK 74119 j e nny.buttram@ contango.com Re: Final Administrative Order Well Number: 30W3 EPA Inventory ID: OS2898000 Docket Number: SDWA-06-2023-11 08 Dear Ms. Buttram: Attached is a Final Administrative Order (Final Order) issued by the United States Environmental Protection Agency (EPA) to Contango Resources, LLC (Respondent) for violation of the Safe Drinking Water Act (SOWA). The Final Order requires the Respondent to comply with the regulatory requirements specified in the Final Order. EPA requests that the Respondent immediate ly confirm receipt of this e-mail and the attached Final Order by a response e-mail to rudolph.matthew@epa.gov. The violation of the SOWA was identified through a review of files that EPA maintains on the referenced injection well. The violation was for failing to successfully demonstrate mechanical integrity and maintaining the injection well in a manner that could allow the movement of fluid that contains contaminants into an underground source of drinking water (USDW). The Final Order does not assess a monetary penalty; however, it does require compliance with SOWA requirements and specifies deadlines for compliance. The Final Order requires the Respondent to comply with certain SOWA regulatory requirements. Please be aware that failure to comply with the Final Order may subject the Respondent to additional enforcement action by EPA, including the initiation of legal proceedings to seek monetary . penalties. The effective date of the Final Order is thirty (30) days after issuance unless an appeal is taken pursuant to Section 1423(c)(6) of the SOWA, 42 U.S.C. 300h- 2(c)(6). The SOWA provides that you may file an appeal of the Final Order with the United States District Court for the District of Columbia or the district in which the violations occurred. Such appeal must be filed within 30 days after the Final Order is issued. If you file an appeal, you must simultaneously send a copy of the appeal by certified mail to the Administrator of the Environmental Protection Agency and to th~ United States Attorney General. Re: Contango Resources, LLC 2 SDWA-06-2023-1108 Also enclosed is an "Information Sheet" relating to the Small Business Regulatory Enforcement Fairness Act and a "Notice of Registrant's Duty to Disclose" relating to the disclosure of environmental legal proceedings to the Securities and Exchange Commission. The EPA is committed to ensuring compliance with the requirements of the Underground Injection Control program, and my staff will assist you in a_ny way possible. If you have any questions regarding this matter, please contact Mr. Matthew Rudolph, of my staff, at (214) 665-6434. Sincerely, Dig itally signed by c,._,!( c1 ~'Ur"" ~~:~~;~~~~ 08:25:37 -05'00' Cheryl T. Seager, Director Enforcement and Compliance Assurance Division Attachments ec: Mr. Craig Walker, Osage Nation DNR, Environmental Supervisor cmwalker@osagenation-nsn.gov Ms. Julie Anderson, BIA Osage Agency Acting Superintendent jut ie.anderson@bia.gov . ; = q ff_-" UNITED STATES ENVIRONMENTAL PROTECTION AGENcv r '...,,, '.~ f) REGION 6 Dallas, Texas 75270 23 HAY-3 AH 8: 56 In the Matter of Contango Resources, LLC Respondent. -~i:ClCli i,-,_ hf.:,,fi/,'iG er~R'.f cp ,.., '-~ " '- I \ hEG!ON VI Docket No. SDWA-06-2023-1108 FINAL ADMINISTRATIVE ORDER STATUTORY AUTHORITY The following findings are made, and Final Administrative Order issued, under the authority vested in the Administrator of the U.S. Environmental Protection Agency (EPA) by Section I423(c) of the Safe Drinking Water Act (the Act), 42 U.S.C. 300h- 2(c). The authority to issue this Final Administrative Order has been delegated by the Administrator to the Regional Administrator of EPA Region 6 who further delegated such authority to the Director of the Enforcement and Compliance Assurance Division. The EPA has primary enforcement responsibility for underground injection within the meaning of Section 1422(c) of the Act, 42 U.S.C. 300h-l(c), to ensure that owners or operators of Class II injection wells within Osage County, Oklahoma, comply with the requirements of the Act. FINDINGS I. Contango Resources, LLC (Respondent) is a limited liability company doing business in the State of Oklahoma and, therefore, is a " person," within the meaning of Section 140 I( 12) of the Act, 42 U.S.C. 300f(l2). 2. At all times relevant to the violations alleged herein, Respondent owned or operated an " injection well" which is a "Class II well" as those terms are defined at 40 C.F.R 147.2902. SDWA-06-2023-1108 Page 2 The injection well is located in the NW Quarter of Section 34, Township 24 North, Range 24 East, Osage County, Oklahoma, designated as injection Well No. 30W3 and EPA Inventory Number OS2898000 (the injection well). 3. Respondent is subject to underground injection control (U[C) program requirements set forth at 40 C.F.R. Part 147, Subpart GGG, which are authorized under Section 142 1 of the Act, 42 U.S.C. 300h. 4. Regulations at 40 C.F.R. 147.2903(a) require that any underground injection is prohibited except as authorized by rule or authorized by a permit issued under the UIC program. The construction or operation of any injection well required to have a permit is prohibited until the permit has been issued. The term " permit" is defined at 40 C.F .R. 147.2902. 5. Regulations at 40 C.F.R. 147.2903(b) provide that no owner or operator shall construct, operate, maintain, convert, plug, or abandon any injection well, or conduct any other injection activity, in a manner that allows the movement of fluid containing any contaminant into underground sources of drinking water, if the presence of that contaminant may cause the violation of any primary drinking water regulation under 40 C.F.R. Part 142 or may otherwise adversely affect the health of persons. 6. Regulations at 40 C.F.R. 147.2909 provide that existing injection wells (wells authorized by the Bureau of Indian Affairs and constructed or completed on or before the effective date of the Osage UIC program) are authorized by rule (ABR). Owners or operators of injection wells authorized by rule must comply with the provisions of 40 C.F.R. 147.2903, 147.2905, 147.2907, and 147.2910 through 147.2915. 7. Regulations at 40 C.F.R. 147.29 12(a) require each ABR injection well to have mechanical integrity. An injection well has mechanical integrity if there are no significant leaks in the SDWA-06-2023-1 I08 Page 3 casing, tubing, or packer and there is no significant fluid movement into the "Underground Source of Drinking Water" (USDW) through vertical channels adjacent to the well bore. The term USDW is defined at 40 C.F.R. 147.2902. 8. The injection well is authorized by rule in accordance with 40 C.F.R. 147.2909. 9. On June 25, 2019, the injection well failed a mechanical integrity test. To date, the injection well has not successfully demonstrated mechanical integrity. 10. Therefore, Respondent violated regulations set forth at 40 C.F.R. 147.2903(b), 147.2909, and 147.2912(a) by maintaining the injection well in a manner that could allow the movement of fluid that contains contaminants into an USDW and by failing to successfully demonstrate mechanical integrity. 11. Pursuant to Section 1423(c)(3)(A) of the Act, 42 U.S.C. 300h- 2(c)(3)(A), on February 28, 2023, EPA issued a Proposed Adf:linistrative Order to Respondent and provided Respondent an opportunity to request a hearing on the Proposed Administrative Order. 12. On February 28, 2023, EPA provided public notice of its proposal to issue an order for compliance in this matter in accordance with Section 1423(c)(3)(8) of the Act, 42 U.S.C. 300h-2(c)(3)(B). 13. Respondent did not request a hearing and EPA did not receive any public comments on the Proposed Administrative Order. SE_CTION 1423(c) COMPLIANCE ORDER 14. Based on the foregoing findings, and pursuant to the authority of Section 1423(c) of the Act, 42 U.S.C. 300h-2(c), EPA Region 6 hereby orders Respondent to: a. Cease use of the injection well for the unauthorized underground injection of fluids, and SDWA-06-2023-1108 Page 4 b. Take one ofthe following actions: 1. Repair the injection well and successfully demonstrate mechanical integrity according to regulations at 40 C.F.R. 147.2912(a) within ninety (90) days after the effective date ofthis Final Administrative Order; or 11. Complete proper plugging and abandonment in accordance with 40 C.F.R. 147.2905, within ninety (90) days after the effective date of this Final Administrative Order; or 111. Convert the injection well to production use within ninety (90) days after the effective date of this Final Administrative Order. 15. Submit copies of completed plugging reports or completed wor.k reports showing conversion to production and BIA Osage Agency Forms 139 within 120 days after the effective date of this Final Administrative Order to: Matthew Rudolph rudolph.matthew@epa.gov U.S. Environmental Protection Agency Water Enforcement Branch (ECDWE) GENERAL PROVISIONS 16. Respondent may appeal this Final Administrative Order to Federal District Court pursuant to Section 1423(c)(6) of the Act, 42 U.S.C. 300h-2(c)(6). 17. This Final Administrative Orde r does not constitute a waiver, suspension, or modification of the requirements of 40 C.F.R. Parts 144, 146, and 147, Subpart GGG, which remain in full force and effect. 18. Issuance of this Final Administrative Order is not an election by EPA to forego any civil or criminal action otherwise authorized under the Act. SDWA-06-2023-1108 Page 5 19. Violation of the terms of this Final Administrative Order after its effective date or date of final judgment as described in Section 1423(c)(6) of the Act, 42 U.S.C. 300h-2(c)(6), may subject Respondent to further enforcement action, including a civil action for enforcement of this . Final Administrative Order under Section 1423(b) of the Act, 42 U.S.C. 300h-2(b), and civi l and criminal penalties for violations of the compliance terms of this Final Administrative Order under Section 1423(b)( l) and (2) of the Act, 42 U.S.C. 300h-2(b)(l) and (2). TAX IDENTIFICATION 20. For purposes of the identification requirement in Section 162(f)(2)(A)(ii) of the Internal Revenue Code, 26 U.S.C. l 62(f)(2)(A)(ii), and 26 C.F.R. 1.162-21 (b)(2), performance of Paragraphs 14 and 15 is restitution, remediation, or required to come into compliance w ith the law. EFFECTIVE DATE 21. This Final Administrative Order becomes effective thirty (30) days after issuance unless an appeal is taken pursuant to Section 1423(c)(6) of the Act, 42 U.S.C. 300h- 2(c)(6). May 2, 2023 Date Digitally signed by CHERYL SEAGER Date: 2023.05.02 08:24:27 05'00' Cheryl T. Seager, Director Enforcement and Compliance Assurance Division Docket No.: SDWA-06-2023-1 I 08 Page I of I CERTIFICATE OF SERVICE I certify that the foregoing Final Administrative Order was sent to the following persons, in the manner specified, on the date below: Signed Original E-mailed: Regional Hearing Clerk (R6ORC) U.S. EPA, Region 6 120 I Elm Street, Suite 500 Dallas, TX 75270 vauglrn .lorena@epa.gov File Stamped Copy Transmitted via Email: Ms. Jenny Buttram Contango Resources, LLC 1717 South Boulder, Suite 900 Tulsa, OK 74119 jenny.buttram(ci),contango.com Electronic Copy: Kristine Talbot U.S. EPA, Region 6 120 I Elm Street, Suite 500 Dallas, TX 75270 talbot .kristinel@,epa.1rnv Julie Anderson, Acting Superintendent Bureau of Indian Affairs, Osage Agency P.O. Box 1539 Pawhuska, OK 74056 julie.andersonl@bia.gov Craig Walker, Environmental Supervisor Osage Nation Department ofNatural Resources 100 W. Main, Suite 304 Pawhuska, OK 74056 cmwa lkcr(ci),osagenation-nsn.2:ov Dated: 5/3/2023 Signed: MATTHEW Digitally signed by MATTHEW RUDOLPH RUDOLPH 08:25:42 05'00' Date:2023.05.03