Oil company fails to pay fine, faces criminal judgment

WILLISTON, N.D. – The North Dakota Industrial Commission plans to pursue a criminal judgment against an oil and gas operator after it failed to pay a $1.5 million fine by the deadline, an official said Wednesday.

The fine against Halek Operating ND LLC for violations that put Stark County’s drinking water at risk represents the largest fine ever levied against an oil and gas operator in North Dakota.

The company missed last Friday’s deadline to pay the fine, so the commission is preparing paperwork to pursue a monetary judgment in district court, said Lynn Helms, director of the Department of Mineral Resources.

However, Helms said he “seriously doubts” the company will pay the full fine, pointing out that associated company Halek Energy LLC filed for bankruptcy in Texas.

By filing for a criminal judgment, the Industrial Commission will be able to pursue confiscation of Halek’s $140,000 bond with the state, Helms said.

In addition, the commission will try in court to confiscate other assets, including the disposal well where the violation occurred and a marginally producing oil well in the same area, Helms said.

Halek injected saltwater – a byproduct of oil production – into a disposal well after being told to stop because the well was not up to state standards. An administrative judge who reviewed the evidence said the “egregious violations” caused considerable risk of contaminating underground drinking water sources.

A related criminal case against Montana man Nathan Garber was resolved this week in Southwest Judicial District Court with Garber ordered to serve probation and pay a $2,500 fine. Garber also is ordered to pay restitution of $1,804 to the Department of Mineral Resources Oil and Gas Division.

Meanwhile, the Environmental Protection Agency also is investigating the matter, and Helms said he anticipates Garber could face federal charges. The plea agreement with Garber was written so that if he is charged in any court for offenses related to the state case, it would not be considered a violation of his probation.

The EPA has interviewed the state’s Department of Mineral Resources field inspectors, the assistant attorney general and other staff members, Helms said.

The EPA is affected by the government shutdown and a request for comment was not returned Wednesday.

Attorneys for Halek Operating and Garber did not return calls seeking comment.

“We hope that this sends a strong message to operators and to their employees that we will aggressively pursue civil penalties and criminal penalties for willful violations,” Helms said.

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