PUBLIC HEARING ON APPLICATION FOR A CONSOLIDATED

Staff Report & Agenda Item Details

PUBLIC HEARING ON APPLICATION FOR A CONSOLIDATED DRILLING AND PRODUCTION PERMIT WITH AUTHORIZATION IO EXPORT FOR CHARLTON RESOURCES, LLC Call to order at 10:52 a.m. by Board President Jerry McGuairt. Party representing application: Mark Harral, Attorney representing Charlton Resources, LLC. Public Comment: None at this time. There were comments at the beginning of the Board Meeting regarding this application. Protestant to application: Adam Friedman, Attorney representing Alpha Water Resources. (Written comments submitted 05-14-2018 by Mr. Friedman) e Justiciable Interest: Alpha Water Resources has leased the exclusive groundwater rights underneath approximately 1,450 acres in Pecos County, Texas, known as the “MRK Lease.” The lease was previously filed with the District as part of Alpha’s application to transfer a drilling, production and export permit into its name. The District granted that transfer application on April 18, 2917. The permit authorizes Alpha to produce and transport up to 5,000 acre-feet per year from the MRK Lease. e Potential Harm/Adverse Affects: The southernmost boundary of Alpha's leased groundwater rights is approximately 1.5 miles from the center of depression, and approximately 2.8 miles from Charlton’s proposed new well. One of Alpha’s existing water wells is approximately 3.3 miles from the Charlton proposed new well. Charlton's proposed new well is approximately 1.3 miles from the center of depression. Multiple factors Middle Pecos GCD Minutes for May 15, 2018 Page 5 documented in the “Phase II[A-TxDOT Geophysical Surveys Report” (submitted to TxDOT on April 8. 2018) indicate that pumping over 300 million gallons per year in such close proximity to the “active” subsidence structure could accelerate and expand subsidence into an area that may adversely affect Alpha's groundwater rights. Requests a contested case hearing Requests party status in the contested case hearing Charlton Resources, LLC./Mark Harral, Attorney: Response to Alpha Water Resources request for party status: Adam Mr. Harral filed an objection to party status, and in the event that party status is granted has filed a request for State Office of Administrative Hearing on May 15, 2018 Mr. Harral questioned their justiciable interest to do business in the State of Texas because documents cannot be found in filings with the Texas Secretary of State, the Delaware Secretary of State, or with the Pecos County Clerk. Statement 1: Alpha Water did not perfect a production permit because it failed to obtain a bond to plug the free flowing water wells, which was a permit condition placed upon their permit. Statement 2: Alpha Water encouraged Charlton to pursue the project. Charlton Resources and Alpha Resources entered into discussions to create a joint venture to resolve the artesian Water well issues near Imperial. Statement 3: Alpha Water in not compliant with MPGCD and Texas Laws. MPGCD rules 11.1(a); 14.1; 14-2; 14.3. TDLR rules 76.72; 76.101; 76.102; 76.103. Charlton Resources requested that MPGCD begin enforcement and investigation proceedings into the rule violations. Statement 4: Alpha Water is adversely impacting all landowners located in the Imperial area with its own illegal activity and committing trespass. Statement 5: Alpha Water's May 14, 2018 letter is misleading and factually wrong, and states that impacts to groundwater are unknown. Charlton Resources request that a State Office of Administrative Hearings {SOAH) be granted and that the hearing be held in Fort Stockton so Imperial residents can attend and be a part of the process to solve the environmental disaster harming their community. Friedman, Attorney representing Alpha Water Resources response: The bond requirement was a condition to be presented before any water was drilled. The permit was issued, the permit is valid, and the MRK lease is valid. He will retrieve the document proving that Alpha Water Resources can do business in Texas. The lease

This motion is scored as RESTRAINS_GOVERNMENT (Impact Weight: 5.0/10). Under the Bastiat Liberty Watchdog Index, voting YES on measures that cap or reduce ad valorem tax burdens, expand taxpayer exemptions, retire debt early, enforce competitive bidding caps, or remove regulatory/zoning barriers to private property rights earns a positive Pro-Liberty score.