March 9, 2011 James Eubanks James & Mike Eubanks P. O. Box 516 Smackover, AR 71762-0516 RE: AFIN: 70-00600, Permit Tracking No.: 0584-WG-SW-1 Howard SWDS SWD System Dear Mr. Eubanks: On February 22, 2011, I performed a routine compliance inspection of the referenced facility in accordance with the provisions of the Arkansas Water and Air Pollution Control Act and the regulations promulgated thereunder. This inspection revealed the following violations:

1. Firewall berms are low at all tank battery sites. See Photo Nos. 1, 3, 5, 6 & 7. Any change to the information previously submitted in an NOI requires submittal of a new NOI prior to the changes taking effect. This is a violation of Part III.A.1. of the general permit.

2. Oil waste observed inside the containment area of the Howard Battery. See Photo No. 2.

Waste may not be placed in a manner where it is likely to cause pollution of any waters of the state. This is a violation of Ark. Code Ann. § 8-4-217(a)(2).

3. Tree observed on the firewall berm of the Howard saltwater battery. See Photo No. 4. The

operator is required to properly operate and maintain all parts of the system and may not place waste in a manner where it is likely to cause pollution of any waters of the state. This is a violation of Part III.B.7. of the general permit and Ark. Code Ann. § 8-4-217(a)(2).

4. The Patterson & Leverett Battery & Lane Battery configurations do not match current tank

battery drawings. See Photo Nos. 5 & 7. Any change to the information previously submitted in an NOI requires submittal of a new NOI prior to the changes taking effect. This is a violation of Part III.A.1. of the general permit.

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James & Mike Eubanks March 9, 2011 Page 2 The above item requires your immediate attention. Please submit a written response to these findings to Cindy Garner, Water Division Enforcement Branch Manager. This response should be mailed to the address below. This response should contain documentation describing the course of action taken to correct each item noted. This corrective action should be completed as soon as possible, and the written response with all necessary documentations (i.e. photos) is due by March 21, 2011. If you have questions, or if I can be of assistance, please contact me at (870) 682-5941 or via e-mail at salter@adeq.state.ar.us. Sincerely, Connery Salter, ADEQ Inspector Water Division, El Dorado cc: file (AFIN: 70-00600, Permit Tracking No.: 0584-WG-SW-1)

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ARKANSAS DEPARTMENT OF ENVIRONMENTAL QUALITY

GENERAL PERMIT 0000-WG-SW INSPECTION FORM

AFIN: 70-00600

Permit No.: 0584-WG-SW-1 Inspection Date: 2-22-11

Media: Water Inspector: Connery Salter

Compliance Status: IN / O OUT 1. Permittee (Operator): James & Mike Eubanks System Name: Howard SWDS SWD System Location: N 33.34013 W 92.71358 (T) County: Union 2. Name of On-Site Representative: N/A 3. Name of Responsible Official: James Eubanks Address: P. O. Box 516 Smackover, AR 71762-0516 Telephone: 870-818-5111 4. Production Wells:

Production Well Number Location Tank Battery Number Balkenbush No. 1 Howard Nos. 6 & 7 Kane No. 1 Leverett Nos. 1 & 3 Patterson Nos. 1, 5, 6 & 7

5. Are complaints registered against this permitted facility? Yes O No If yes, give date and description of complaint: 6. Are there any additions, modifications, or corrections to the facility since the last inspection? O Yes No If yes, explain: The Patterson & Leverett Battery & Lane Battery configurations do not match current tank battery drawings.

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7. Nearest Stream: Holmes Creek

8. Is runoff or a discharge present, or evidence of runoff or a discharge present? Yes O No If yes, describe: 9. Are there any oil or saltwater spills at the site? Yes O No If yes, describe: 10. Are there any pits containing oil or saltwater at the site? Yes No If yes, describe: 11. Is a sign posted with the information required by the general permit? Yes O No If no, describe: 12. Does the firewall berm appear impermeable & able to contain 1.5 times the largest vessel? Yes O No If no, describe: Firewall berms are low at all tank battery sites. 13. Is the firewall free from excessive vegetation? Yes O No If no, describe: Tree observed on the firewall berm of the Howard saltwater battery. 14. If a pipe is present through the firewall, is it capped to prevent a discharge? O Yes No If no, explain: 15. Are the tanks & pumps free from leaks? Yes O No If no, describe: Oil waste observed inside the containment area of the Howard Battery. 16. Any leaks or excessive vegetation noted at the transmission lines during the inspection? Yes No If yes, describe:

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17. Are there any production wells associated with the SWD system that are not listed on the

permit? Yes O No If yes, describe:

SUMMARY OF FINDINGS/COMMENTS Firewall berms are low at all tank battery sites. Oil waste observed inside the containment area of the Howard Battery. Tree observed on the firewall berm of the Howard saltwater battery. The Patterson & Leverett Battery & Kane Battery configuration does not match current tank battery drawings. Inspector Signature:

Date of Report:

2-24-11

Signature of Reviewer:

Date of Review:

03/07/11

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Water Division No Discharge Industrial Photographic Evidence Sheet Location: Howard SWDS SWD System Photographer: Connery Salter Witness: None Photo No. 1 Of 7 Date: 2-22-11 Time: 1158 Description: Firewall berm is low at the Howard Battery.

Photographer: Connery Salter Witness: None Photo No. 2 Of 7 Date: 2-22-11 Time: 1200 Description: Oil waste observed inside the containment area of the Howard Battery.

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Water Division No Discharge Industrial Photographic Evidence Sheet Location: Howard SWDS SWD System Photographer: Connery Salter Witness: None Photo No. 3 Of 7 Date: 2-22-11 Time: 1158 Description: Firewall berm is low at the Howard saltwater battery.

Photographer: Connery Salter Witness: None Photo No. 4 Of 7 Date: 2-22-11 Time: 1159 Description: Tree observed on the firewall berm of the Howard saltwater battery.

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Water Division No Discharge Industrial Photographic Evidence Sheet Location: Howard SWDS SWD System Photographer: Connery Salter Witness: None Photo No. 5 Of 7 Date: 2-22-11 Time: 1210 Description: The Kane Battery configuration does not match current tank battery drawings & firewall is low.

Photographer: Connery Salter Witness: None Photo No. 6 Of 7 Date: 2-22-11 Time: 1226 Description: Firewall berm is low at the Patterson saltwater battery.

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Water Division No Discharge Industrial Photographic Evidence Sheet Location: Howard SWDS SWD System Photographer: Connery Salter Witness: None Photo No. 7 Of 7 Firewall is low. Date: 2-22-11 Time: 1228 Description: The Patterson & Leverett Battery configuration does not match current tank battery drawings.

Photographer: Connery Salter Witness: None Photo No. Of Date: Time: Description:

N/A

April 6, 2011 James Eubanks James and Mike Eubanks P.O. Box 516 Smackover, AR 71762 RE: Permit Tracking No. 0584-WG-SW-1 Howard SWDS SWD System Dear Mr. Eubanks: The Department has received your response to the February 22, 2011 inspection of your facility by our Oil and Gas Field Inspector. Your letter appears to adequately address the discrepancies identified during the visit. The Department assumes the corrective actions taken will be maintained to ensure consistent compliance with the requirements of the permit. Acceptance of this response by the Department does not preclude any future enforcement action deemed necessary at this site or any other site. The Department will keep the inspection and response on file. If future violations occur that require enforcement action, the Department will consider the inspection and response as required by the Pollution Control and Ecology Commission Regulation No. 7, Civil Penalties. This regulation requires the Department to consider the past history of your site and how expeditiously the violations were addressed in determining any civil penalty that may be necessary for any future violations. If we need further information concerning this matter, we will contact you. Thank you for your attention to this matter. Should you have any questions, feel free to contact me at 501-683-3469 or you may e-mail me at sohl@adeq.state.ar.us. Sincerely,

Jeffrey Sohl Enforcement Analyst Water Division Enforcement Branch

Sincerely,Connery Salter, ADEQ InspectorWater Division, El Dorado