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Operators of illegal disposal well in western ND ordered to pay $40,000 in restitution

BISMARCK—Two men convicted of illegally operating a saltwater disposal well near Dickinson were ordered Friday, Feb. 16, to pay $40,000 in restitution, less than half the amount North Dakota regulators requested to restore the land.

Jason Halek, of Southlake, Texas, was ordered in U.S. District Court to pay $35,000 to the North Dakota Industrial Commission as part of his sentence for felony violations of the Safe Drinking Water Act.

Halek and Nathan Garber, of Kalispell, Mont., had pleaded guilty to charges related to operating a saltwater disposal well in violation of environmental rules. Their actions put drinking water sources at risk, but no evidence was presented in the case that contamination occurred.

Garber was ordered to pay $5,000 in restitution to the Industrial Commission, court records show.

North Dakota officials had requested $115,000 in restitution, the amount the state estimated it would cost to plug the well and reclaim the land, according to court records.

Attorneys for Halek and Garber had objected to the restitution amount, and the matter was scheduled for a hearing on Friday.

The hearing was canceled after attorneys in the case reached an agreement on restitution. U.S. District Court Judge Daniel Hovland adopted terms of the agreements in orders signed Friday.

Landowner Laura Griffin, who has been waiting for the well site to be cleaned up since it was shut down in early 2012, said Friday she was disappointed with the restitution amount ordered.

"I think it's pathetic, really," Griffin said. "It's not going to even come close to restoring it back to its original state."

The North Dakota Industrial Commission will use funds from the state's Abandoned Well Plugging and Site Restoration Fund to clean up the site. The fund, often used to restore sites when a responsible party can't be found, is generated through confiscated bonds, fees and civil penalties from the oil industry and a portion of oil tax revenue.

The commission also will use proceeds from selling equipment that was confiscated from the site. The top bid for the equipment was $15,001, Industrial Commission attorney Hope Hogan wrote in an email.

The top bid for plugging the well came in at $82,768, Hogan wrote, but that does not include the cost to reclaim the land.

"We have been waiting a long time for this case to be resolved," said Oil and Gas Division spokeswoman Alison Ritter. "It's good that we can now move forward and focus solely on plugging of the well and reclamation of the site."

The agency has received information it had been waiting for from the Environmental Protection Agency investigation that was needed before state regulators could plug the well, Ritter said. A date for the work to begin has not been determined.

"I will be glad when they get it gone and get it out of here," said Griffin, who can see the abandoned equipment from her dining room window. "It is nothing but an eyesore."

Halek is required to make monthly payments of at least $500 to the Industrial Commission, with the full amount due two months prior to the completion of his three-year term of supervised release. Halek also was ordered to pay a $50,000 fine, but the restitution was ordered to be satisfied first.

During a sentencing hearing in November, Judge Hovland noted that Halek's financial liabilities were listed at $71.1 million in a pre-sentence agreement. Halek also was accused by the U.S. Securities and Exchange Commission of fraudulently selling investments in Texas oil and gas projects.

Prosecutors for the U.S. Department of Justice Environmental Crimes Section handled the case. The Department of Justice did not respond to questions Friday about the restitution amount.

The North Dakota Industrial Commission also fined Halek Operating $1.5 million in civil penalties for operating the well after regulators ordered wastewater injections to stop. The commission has not collected that fine, but confiscated about $140,000 in bonds from the company.