Oilfield company fined $1.5 million for disposal violation
BISMARCK -- The North Dakota Industrial Commission levied $1.5 million in fines against an oil and gas operator Tuesday for violations that put a county's drinking water at risk, the largest civil penalty the commission has ever issued.
The company, Halek Operating ND LLC, was accused of injecting saltwater into a Stark County disposal well after being told to stop because the site was not up to state standards.
Although water sources have not been contaminated, the risk of contamination still exists, administrative law judge Allen Hoberg wrote in his recommendation that was approved by commission members.
The fine represents the maximum penalty the commission could have imposed. Attorney General Wayne Stenehjem, who serves on the Industrial Commission with Gov. Jack Dalrymple and Agriculture Commissioner Doug Goehring, said the fine aims to send a message.
"It should never be cheaper to cut corners than it is to abide by the rules and this fine will assure that's exactly what happens," Stenehjem said.
Saltwater is a waste product from oil production. The state has regulations for how to dispose of it properly.
Halek admitted the allegations in court records, but said the company had transferred ownership and was not in control of the well at the time of the most egregious allegations.
The injections occurred between December 2011 through February 2012. Attorneys for Halek say in court briefs the company sold ownership of the well on Jan. 23, 2012, to a company called Executive Drilling.
Attorneys for Halek issued this statement Tuesday: "Halek Operating has not received the formal order from the Industrial Commission. When it does, it will be able to consider its options."
In his findings, Hoberg said Halek knew the transfer of ownership had not been approved and was the bonded operator of the well at the time and was responsible for the well until the transfer was approved.
Lynn Helms, director of the North Dakota Department of Mineral Resources, has called this most significant environmental case involving an oil and gas operator.
It also was the first time the commission pursued criminal charges against an operator.
Nathan Garber, president of Executive Drilling, who is accused of directing another company to modify the well site to mislead state inspectors, faces a criminal charge in Stark County. He is charged with violating rules and regulations of the North Dakota Industrial Commission, a Class C felony. His next court appearance is set for Aug. 13 and a jury trial is anticipated in early September.
This is the second penalty the Industrial Commission has issued for Halek. The company also was fined in 2011 for improperly cleaning up an oil spill near Dickinson.