F I LED BEFORE THE BOARD OF OIL, GAS AND MINING

DEPARTMENT OF NATURAL RESOURCES

STATE OF UTAH

OCT 31 2012 SCCRETARY, BOARD OF

OIL, GAS l MINING

IN THE MATTER OF THE APPLICATION OF NEW WATER FINANCIAL, LLC FOR ADMINISTRATIVE APPROVAL OF THE HARLEY DOME I-X SWD WELL LOCATED IN SECTION 10, TOWNSHIP 19 SOUTH, RANGE 25 EAST, S.L.M., GRAND COUNTY, UT AH, AS A CLASS II INJECTION WELL

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FINDINGS OF FACT, CONCLUSIONS OF LAW, AND

REMAND ORDER

Docket No. 2012-28 Cause No. 279-01

This Cause came on regularly for hearing before the Utah Board of Oil, Gas and

Mining (the "Board") on Wednesday, October 24,2012, at the hour of9:00 a.m. in the Colorado

Room of Red Cliffs Lodge, Mile Post 14 Highway 128, Moab, Utah. The following Board

members were present and participated in the hearing: James T. Jensen, Chairman, Ruland 1. Gill,

Jr., Kelly L. Payne, Chris Hansen, and Carl Kendell. John R. Baza, Director, and John Rogers,

Associate Director-Oil and Gas, were present for the Utah Division of Oil, Gas and Mining (the

"Division"). The Board was represented by Michael S. Johnson, Assistant Attorney General.

The petitioner, New Water Financial, LLC ("New Water"), was represented by

Thomas W. Clawson of Van Cott, Bagley, Cornwall & McCarthy. The Division was represented by

Steven F. Adler, Assistant Attorney General. Respondent Living Rivers was represented by Patrick

A. Shea. No other persons or parties appeared at or participated in the hearing.

At the hearing and based on the Stipulation between New Water and Living Rivers

filed in this Cause, Living Rivers made an oral motion to withdraw its Objection to New Water's

Request for Agency Action. Also at the hearing and based on the Stipulation and Living Rivers'

motion, New Water made an oral motion for the Board to remand this Cause to the Division for its

administrative review and approval of New Water's Application for the Harley Dome #I-X SWD

Well as a Class II injection well (the "Subject Well"). The Board granted both motions.

The Board, having fully considered New Water's and Living Rivers' motions, being

fully advised, and good cause appearing, hereby makes the following findings of fact, conclusions

of law, and order:

FINDINGS OF FACT

1. New Water filed its Request for Agency Action (the "Request") in this

Cause on August 8, 2012. The Request was scheduled to be heard by the Board at its regularly

scheduled September 26, 2012 hearing. Concurrently with the Request, New Water also filed its

Motion to Convert Informal Adjudicative Proceeding (the "Motion to Convert").

2. The Presiding Officer in the informal adjudicative proceeding granted New

Water's Motion to Convert by that certain Order Converting Informal Adjudicative Proceeding

issued September 10, 2012.

3. Notices of the time, place, and purposes of the Board's regularly scheduled

September 26,2012 hearing were mailed to all interested parties by first-class mail, postage prepaid,

and were duly published in the Salt Lake Tribune, Deseret News, and the Moab Times Independent

pursuant to the requirements of Rules R641-106-IOO and R649-5-3(2), Utah Administrative Code

(U.A.C.). Copies of the Request were mailed or emailed by New Water to all interested parties

pursuant to Rule R641-104-135, UA.C.

4. On September 10,2012, Living Rivers filed its Objection to Granting the

Application of New Water Financial, LLC for the Administrative Approval of the Harley Dome I­

X SWD Well Located in Section 10, Township 19 South, Range 25 East, S.L.M., Grand County,

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Utah, as a Class II Injection Well (the "Objection"). Living Rivers' Objection was the only

response to the Request that was filed in this Cause.

5. On September 19,2012, New Water filed a Motion to Continue Hearing (the

"Motion to Continue"), which sought to continue the hearing in this Cause from the September 26,

2012 hearing to the Board's October 24,2012 regularly scheduled hearing. The Motion to Continue

was mailed to all of the interested parties. Living Rivers did not oppose the Motion to Continue.

New Water's Motion to Continue was granted by the Board's Order Continuing Hearing issued on

September 26,2012, which also was mailed to all of the interested parties. Notice of the Board's

October 24,2012 hearing was duly published in the Salt Lake Tribune, Deseret News, and Moab

Times Independent newspapers.

6. On October 18,2012, New Water and Living Rivers filed their joint

Stipulation, wherein those parties agreed that the Board could include in its order regarding the

Subject Well certain conditions as specified in paragraph 4 of the Stipulation.

7. At the October 24,2012 hearing, Living Rivers moved the Board for leave to

withdraw its Objection based on the parties' Stipulation (the "Motion to Withdraw Objection") and

New Water moved the Board to enter an order remanding this Cause to the Division for its

administrative review and approval and that such an order should contain the conditional provisions

agreed to by New Water and Living Rivers as stated in the Stipulation (the "Motion to Remand").

8. After deliberating, the Board voted to grant Living Rivers' Motion to

Withdraw Objection and New Water's Motion to Remand.

CONCLUSIONS OF LAW

1. Due and regular notice of the time, place, and purposes of the Board's

regularly scheduled September 26,2012 and October 24,2012 hearings was given to all interested

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parties in the form and manner and within the time required by law and the rules and regulations of

the Board. Due and regular notice of the filing of the Request was given to all interested parties in

the form and manner required by law and the rules and regulations of the Board.

2. The Board has exclusive jurisdiction of the parties and subject matter of the

Request, and has the power and authority to make and issue the order herein set forth pursuant to

Sections 40-6-5(5)(a) and 63G-4-202(3) of the Utah Code Annotated and Rules R649-5-l and

R649-5-3(4), UA.C.

3. Good cause appears to grant Living Rivers' Motion to Withdraw Objection

and New Water's Motion to Remand.

ORDER

Based upon New Water's Request for Agency Action and Living Rivers' Motion to

Withdraw Objection and New Water's Motion to Remand, both made "at the Board's October 24,

2012 hearing, and the [mdings of fact and conclusions oflaw as stated above, it is therefore ordered

that:

1. Living Rivers' Motion to Withdraw Objection and New Water's Motion to

Remand are granted.

2. Living Rivers' Objection is hereby withdrawn and this Cause is hereby

remanded to the Division for its administrative review and approval of New Water's Application for

Administrative Approval of the Harley Dome I-X SWD Well as a Class II injection well.

3. Pursuant to New Water's and Living Rivers' agreement as provided in

paragraph 4 of the Stipulation, the Board hereby adopts herein the following provisions of the

Stipulation:

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(a) In the event that the Division approves New Water's UIC

Application regarding the Subject Well, New Water shall drill a monitoring well to monitor the

approved injection operations (the "Monitoring Well") at a location and to a depth to be agreed to

by New Water and Living Rivers. If New Water and Living Rivers cannot reach such an agreement

within 90 days after sustained injection operations in the Subject Well have commenced, either New

Water or Living Rivers may petition the Board to set a public hearing regarding such Monitoring

Well.

(b) If a Monitoring Well is not drilled within one year after this Order is

issued and New Water and Living Rivers have not agreed in writing to an extension oftime to drill

such well, either New Water or Living Rivers may petition the Board to set a public hearing

regarding such Monitoring Well, and the injection operations in the Subject Well shall be shut in, if

possible, or reduced to the extent possible without damaging the Subject Well pending the outcome

ofthe hearing.

(c) If the hydraulic data obtained from the Subject Well and the

Monitoring Well indicate that the approved injection operations may significantly affect the

hydraulic gradient in the Wingate Sandstone between the Subject Well and the Colorado River at

the position of the Monitoring Well because the gradient at that position is less than 0.001 ftlft

sloping away from the Colorado River and New Water and Living Rivers cannot agree how to

modifY the injection operations in a manner consistent with this Order and the Division's

supervision of the operations to eliminate the impact to the hydraulic gradient, either New Water or

Living Rivers may petition the Board to set a public hearing regarding the approved injection

operations, and the injection operations in the Subject Well shall be shut in, if possible, or reduced

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to the extent possible without damaging the Subject Well pending the outcome of the public

hearing.

4. This Findings of Fact, Conclusions of Law, and Remand Order ("Order") is

based exclusively on the record in the adjudicative proceeding or on facts officially noted, and

constitutes the signed written order stating the Board's decision and the reasons for the decision, all

as required by the Utah Administrative Procedures Act, Utah Code Ann. § 63G-4-208 and u.A.c.

Rule R641-109.

5. Notice re Right to Request Board Reconsideration : The Board hereby

notifies all parties in interest that Utah Administrative Code Rule R641-11 0-1 00, which is part of a

group of Board rules entitled, "Rehearing and Modification of Existing Orders," states:

Any person affected by a final order or decision of the Board may file a petition for rehearing. Unless otherwise provided, a petition for rehearing must be filed no later than the 10th day of the month following the date of signing of the final order or decision for which the rehearing is sought. A copy of such petition will be served on each other party to the proceeding no later than the 15th day of that month.

Id. See Utah Administrative Code R641-11 0-200 for the required contents of a petition for

rehearing. If the Board later denies a timely petition for rehearing, the party may still seek judicial

review of the Order by perfecting a timely appeal with the Utah Supreme Court within 30 days

thereafter.

6. The Board retains continuing jurisdiction over all the parties and over the

subject matter of this Cause, except to the extent said jurisdiction may be divested by the filing of a

timely appeal to seek judicial review of this Order by the Utah Supreme Court.

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7. For all purposes, the Chairman's signature on a faxed copy of this Order

shall be deemed the equivalent o~ a ~ed o~ DATED this ~ /A1Jay of~ilm!r, 2012.

STATE OF UTAH BOARD OF OIL, GAS AND MINING

. Jensen, Chainn

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CERTIFICATE OF SERVICE

I hereby certify that I caused a true and correct copy of the foregoing FINDINGS OF FACT, CONCLUSIONS OF LAW, AND REMAND ORDER for Docket No. 2012-028 Cause No. 279-01 to bemailedwithpostageprepaid.this 1sT day of November, 2012, to the following:

Van Cott, Bagley, Cornwall & McCarthy Thomas W. Clawson Attorneys for New Water Financial, LLC 36 South State Street, Suite 1900 Salt Lake City, Utah 84111

New Water Financial, LLC c/o Mitch Burroughs 1716 East Lincoln Avenue, Suite #1 Fort Collins, CO 80524

Michael S. Johnson Assistant Attorneys General Utah Board of Oil, Gas & Mining 1594 West North Temple, Suite 300 Salt Lake City, UT 84116 [Via Email]

Steven F. Alder Fred Donaldson Assistant Attorneys General Utah Division of Oil, Gas & Mining 1594 West North Temple, Suite 300 Salt Lake City, UT 84116 [Via Email]

Grand County Road Department 125 East Center Moab, UT 84532

United States Bureau of Land Management Moab Field Office 82 East Dogwood Moab, UT 84532

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Federal Highway Administration 2520 West 4700 South, Suite 9-A Salt Lake City, UT 84118-1847

Enterprise Mid-America Pipeline c/o Enterprise Products Partners, L.P. PO Box 4324 Houston, TX 77210-4324

Utah School and Institutional Trust Lands Administration 675 East 500 South, Suite 500 Salt Lake City, UT 84102-2818

Flatirons Resources, LLC 303 East 17th Avenue, Suite 940 Denver, CO 80203-1262

Rockies Standard Oil Co., LLC 1411 East 840 North Orem, UT 84097-5846

Shiprock Helium, LLC P.O. Box 51166 Amarillo, TX 79159

Retamco Operating, Inc. Attn: Joe Glennon P.O. Box 790 Red Lodge, MT 59068-0790

Living Rivers Attn: John Weisheit P.O. Box 466 Moab, UT 84532 (john@livingrivers.org)

Bill Love 2871 East Bench Road Moab, UT 84532

United States Fish and Wildlife Service Attn: Larry Crist Utah Field Office 2369 West Orton Circle, Suite 50 West Valley City, UT 84119

Patrick A. Shea Patrick A. Shea P.C. 252 South 1300 East, Suite A Salt Lake City, UT 84102 (pas@Patrickashea.com)

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Jacque M. Ramos J. Ramos Law Firm PLLC 2709 South Chadwick Street Salt Lake City, UT 84106 (jramos@jramoslawfirm.com)