Gas Lawsuit Seeks Twice-Denied Permit

by Arkansas Business Staff  on Monday, Sep. 17, 2012 12:00 am  

How far will a company go to get that well permit?

Pretty far: Capstone Oilfield Disposal Services of Arkansas LLC is suing the Arkansas Oil & Gas Commission for a permit it's been denied twice, and that's not its only tactic.

According to a lawsuit filed in Pulaski County Circuit Court, Capstone applied in April for an injection well permit.

At that point, said AOGC Director Larry Bengal, the commission noticed a few of Capstone's wells had violation issues, mostly environmental. So the permit was denied.

Capstone "has a history of violating an oil and gas statute, rule, regulation, permit condition or order of the commission and the Arkansas Department of Environmental Quality, which pose a potential danger to the environment and public health and safety," the refusal notice states.

But per AOGC rules, Capstone could appeal the denial to the commission, which it did. The suit alleges that only five of the nine AOGC members showed up to the hearing, and only one of the five voted against issuing the permit. However, five "yes" votes were needed, so it was denied again.

Next step: litigation. Capstone is alleging the methods used in the AOGC's hearing were erroneous, arbitrary and lacking in evidence. The AOGC has since answered the complaint, denying the allegations.

But that's not all.

"A new company was formed and has resubmitted a new permit for that well," Bengal said.

The company, Rheba SWD LLC, was formed by some of the principals who own Capstone, Bengal said. The commission hasn't reached a decision on that request, he added.



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