July 10, Cynthia Wade J-LU Ltd. Co. 1 Palm Dr. Texarkana, TX 75503

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1 July 10, 2012 Cynthia Wade J-LU Ltd. Co. 1 Palm Dr. Texarkana, TX RE: Miller Land & Lumber No. 1 SWD System Permit Tracking No WG-SW, AFIN: Dear Ms. Wade: On June 7, 2012, I performed a follow up 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. The road into Miller L & L # s 11 & 12 has been barricaded and seeded leaving no access into these wells. This would leave me to believe that they are closed and the NOI needs to be changed before a modification of the system goes into effect. This is a violation of Part II A. 1. C. of the permit. 2. There was evidence of a large release of crude oil from Miller L & L # 3 into ditches and drains near the wellhead. This is a violation of Part I A. 6. B. of the permit. AOGC is leading the cleanup. 3. The firewall berm on the Main Disposal Battery had not been maintained to contain the amount called for in the permit. This is a violation of Part II B. 10. A. of the permit. 4. There were leaks from wellheads, tanks, valves and pumps throughout the system. This is a violation of Part II B. 10. A. of the permit.

2 J-LU Ltd. Co. July 10, 2012 Page 2 The above items require your immediate attention. Please submit a written response to these findings to Water Division Enforcement Branch of this Department. This response should be mailed to the address at the bottom of the first page of the letter or ed to Water-Inspectionreport@adeq.state.ar.us. 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 July 20, If I can be of any assistance, please contact me at voss@adeq.state.ar.us or Sincerely, Chris Voss Water Inspector Water Division No Discharge SWD Report Page 2

3 ADEQ Water SWD No Discharge AFIN: Permit Tracking No.: 0636-WG-SW ARKANSAS DEPARTMENT OF ENVIRONMENTAL QUALITY GENERAL PERMIT 0000-WG-SW INSPECTION FORM AFIN: Permit No.: 0636-WG-SW Inspection Date: June 7, 2012 Media: Water Inspector: Chris Voss Compliance Status: IN / OUT 1. Permittee (Operator): J-LU Ltd. Co. System Name: Miller Land & Lumber # 1 SWD System Location: N W (T) County: Miller 2. Name of On-Site Representative: N/A 3. Name of Responsible Official: Cynthia Wade Address: 1 Palm Dr., Texarkana, TX Telephone: Production Wells: Production Well Number Location Tank Battery Number Miller L & L # s 3, 10, 11, 12 & 2 5. Are complaints registered against this permitted facility? Yes No If yes, give date and description of complaint: 5/17/12 release of crude oil from Miller L & L # Are there any additions, modifications, or corrections to the facility since the last inspection? Yes No If yes, explain: Road into Miller L & L # s 11 & 12 was barricaded with no access. This would lead me to believe that they are closed with no change to the NOI. No Discharge SWD Report Page 3

4 ADEQ Water SWD No Discharge AFIN: Permit Tracking No.: 0636-WG-SW 7. Nearest Stream: Mercer Bayou 8. Is runoff or a discharge present, or evidence of runoff or a discharge present? Yes No If yes, describe: There was evidence of a large release from Miller L & L # Are there any oil or saltwater spills at the site? If yes, describe: Release from unplugged well. Yes No 10. Are there any pits containing oil or saltwater at the site? Yes No If yes, describe: There was a pit with oil next to Miller L & L # Is a sign posted with the information required by the general permit? Yes No If no, describe: 12. Does the firewall berm appear impermeable & able to contain 1.5 times the largest vessel? Yes No If no, describe: The firewall berm low & unmaintained on Main Disposal Battery. 13. Is the firewall free from excessive vegetation? If no, describe: Yes No 14. If a pipe is present through the firewall, is it capped to prevent a discharge? Yes No If no, explain: 15. Are the tanks & pumps free from leaks? Yes No If no, describe: Leaks from tanks, valves, pumps & wellheads throughout system. 16. Any leaks or excessive vegetation noted at the transmission lines during the inspection? Yes No If yes, describe: No Discharge SWD Report Page 4

5 ADEQ Water SWD No Discharge AFIN: Permit Tracking No.: 0636-WG-SW 17. Are there any production wells associated with the SWD system that are not listed on the permit? Yes No If yes, describe: SUMMARY OF FINDINGS/COMMENTS 1. The road into Miller L & L # s 11 & 12 was barricaded there was no access to these wells. This would lead me to believe that they were closed with no change to the NOI. 2. There was a large release of crude oil from Miller L & L # 3 into ditches and drainages near Cleanup was occurring under the direction of the AR Oil and Gas Commission. Peat moss and Dawn were being used for cleanup purposes. 3. The firewall berm on the Main Disposal Battery had not been maintained to contain the amount called for in the permit. 4. There were leaks from well heads, tanks, valves and pumps throughout system. PDS # Inspector Signature: Date of Report: June 14, 2012 Signature of Reviewer: / Eric M. Fleming Date of Review: July 9, 2012 No Discharge SWD Report Page 5

6 ADEQ Water SWD No Discharge AFIN: Permit Tracking No.: 0636-WG-SW Water Division No Discharge Industrial Photographic Evidence Sheet Location: Miller Land & Lumber # 1 SWD System Photo No. 1 Of 14 Date: 6/7/12 Time: 0833 Description: Main Disposal Battery leaks from tanks. Photo No. 2 Of 14 Date: 6/7/12 Time: 0835 Description: Main Disposal battery leak from tanks. No Discharge SWD Report Page 6

7 ADEQ Water SWD No Discharge AFIN: Permit Tracking No.: 0636-WG-SW Water Division No Discharge Industrial Photographic Evidence Sheet Location: Miller Land & Lumber # 1 SWD System Photo No. 3 Of 14 Date: 6/7/12 Time: 0836 Description: Miller L & L # 1 SWD Photo No. 4 Of 14 Date: 6/7/12 Time: 0834 Description: Main Disposal battery berm not maintained. No Discharge SWD Report Page 7

8 ADEQ Water SWD No Discharge AFIN: Permit Tracking No.: 0636-WG-SW Water Division No Discharge Industrial Photographic Evidence Sheet Location: Miller Land & Lumber # 1 SWD System Photo No. 5 Of 14 Date: 6/7/12 Time: 0844 Description: Leak from wellhead at Miller L & L # 10. Photo No. 6 Of 14 Date: 6/7/12 Time: 0850 Description: Leaks from tanks at Miller L & L tank battery. No Discharge SWD Report Page 8

9 ADEQ Water SWD No Discharge AFIN: Permit Tracking No.: 0636-WG-SW Water Division No Discharge Industrial Photographic Evidence Sheet Location: Miller Land & Lumber # 1 SWD System Photo No. 7 Of 14 Date: 6/7/12 Time: 0851 Description: Same as above Photo No. 8 Of 14 Date: 6/7/12 Time: 0854 Description: Pit beside Miller L & L # 2 with oil on top. No Discharge SWD Report Page 9

10 ADEQ Water SWD No Discharge AFIN: Permit Tracking No.: 0636-WG-SW Water Division No Discharge Industrial Photographic Evidence Sheet Location: Miller Land & Lumber # 1 SWD System Photo No. 9 Of 14 Date: 6/7/12 Time: 0907 Description: Cleanup site of release from Miller L & L # 3. Photo No. 10 Of 14 Date: 6/7/12 Time: 0908 Description: Same as above No Discharge SWD Report Page 10

11 ADEQ Water SWD No Discharge AFIN: Permit Tracking No.: 0636-WG-SW Water Division No Discharge Industrial Photographic Evidence Sheet Location: Miller Land & Lumber # 1 SWD System Photo No. 11 Of 14 Date: 6/7/12 Time: 0910 Description: Same as above Photo No. 12 Of 14 Date: 6/7/12 Time: 0910 Description: Same as above No Discharge SWD Report Page 11

12 ADEQ Water SWD No Discharge AFIN: Permit Tracking No.: 0636-WG-SW Water Division No Discharge Industrial Photographic Evidence Sheet Location: Miller Land & Lumber # 1 SWD System Photo No. 13 Of 14 Date: 6/7/12 Time: 0912 Description: Same as above Photo No. 14 Of 14 Date: 6/7/12 Time: 0927 Description: Road closed into Miller L & L # s 11 & 12 No Discharge SWD Report Page 12

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21 September 7, 2012 Cynthia S. Wade J-LU Ltd. Co. 1 Palm Dr. Texarkana, AR RE: Permit No.: 0636-WG-SW AFIN: Dear Ms. Wade: I have reviewed the response pertaining to my June 7, 2012 inspection of the Miller Land & Lumber # 1 SWD System. The information provided sufficiently addresses the violations referenced in my inspection report. At this time the Department has no further comment concerning this particular inspection. Acceptance of this response by the Department does not preclude any future enforcement action deemed necessary at this site or any other site. 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 or you may me at voss@adeq.state.ar.us. Sincerely, Oil & Gas Inspector Water Division cc: Linda Hanson, Water Division Permits Branch, hanson@adeq.state.ar.us