Two men convicted of federal charges related to illegally operating a saltwater disposal well near Dickinson will not go to prison for the environmental crimes, a judge ruled Monday.
Jason Halek, 44, of Southlake, Texas, will serve up to one year in a halfway house and pay a $50,000 fine, U.S. District Judge Daniel Hovland ruled.
Halek, who pleaded guilty to three felony counts of violating the Safe Drinking Water Act, also was ordered to serve three years of supervised release.
Stephen Foster, trial attorney for the U.S. Department of Justice Environmental Crimes Section, argued that Halek should serve 2.5 years in prison for environmental crimes in early 2012 that put drinking water sources at risk. Foster also argued that Halek, who has a history of fraud, questionable business practices and environmental violations in Texas, attempted to cover up his crimes with false statements and failing to provide documents to a grand jury.
Defense attorney Alexander Reichert pointed out there is no indication that any groundwater was contaminated or that any leaks from the well occurred. Reichert also argued that Halek has already been punished for prior violations, which include allegations from the U.S. Securities and Exchange Commission that he defrauded investors in Texas oil and gas projects.
Halek apologized for his involvement in the case and asked the court for mercy.
“I would never intentionally harm the environment,” Halek told the court.
Hovland noted that Halek’s liabilities are listed at $71.1 million in a pre-sentence investigation report. Hovland said he thinks serving time in a halfway house with work release privileges is an appropriate punishment that will allow Halek to continue working to pay off his debts.
Halek said in court he continues to operate 50 older oil and gas wells in Texas, earning about $8,000 a month, but would like to return to his previous business of selling cars.
In addition to the $50,000 fine, restitution will be resolved at a later date. The state of North Dakota is requesting restitution estimated at $115,000 to plug and reclaim the well, court records show.
“We’re obviously pleased that the judge acknowledged there was no environmental damage,” Reichert said after the hearing.
A second defendant, Nathan Garber, 48, Kalispell, Mont., was sentenced Monday to serve three years of supervised release.
Federal prosecutors again argued for prison time, but defense attorney James Cailao said Garber provided substantial cooperation to investigators and helped secure Halek’s conviction.
Garber pleaded guilty to 11 charges, including violations of the Safe Drinking Water Act, conspiracy and aiding and abetting in the concealment of the crimes. Foster said Halek was the one who had more oil and gas experience and directed Garber to illegally inject the saltwater, a waste byproduct of oil production.
Garber told the judge he sold a business and, based on the advice of a mutual friend, he invested the $510,000 he earned with Halek for an oil and gas well in Texas. When the well wasn’t successful, Halek hired Garber to work for him in Texas and in North Dakota to try to recoup some of his losses, even though Garber did not have oil and gas experience.
“I believe I’ve learned some very hard lessons. I want to move forward making good choices,” Garber said.
Hovland left Garber with some advice: “Stay away from fancy talkers that are in the oil and gas business.”
The case was investigated by the Environmental Protection Agency’s Criminal Investigation Division with cooperation by the state of North Dakota and the North Dakota Industrial Commission.
U.S. Attorney for the District of North Dakota Chris Myers said in a statement that the case is a great example of state and federal authorities working together to protect natural resources.
“Those individuals who seek to exploit and damage our natural resources to increase their own personal wealth will be held accountable,” Myers said.
State regulators allege that more than 1.8 million gallons of saltwater were injected illegally into the well between December 2011 and March 2012.
The injections of saltwater occurred without having state regulators witness a test of the well’s integrity and in violation of permit requirements designed to protect groundwater. Halek was accused of directing Garber to move a safety device within the well, known as a “packer,” to deceive inspectors. Garber also violated an order from the state to stop injecting into the well.
State regulators have been waiting on the EPA to provide information from the investigation that might affect how the well is plugged, Director of Mineral Resources Lynn Helms said in an interview last week.
The North Dakota Industrial Commission fined Halek Operating $1.5 million in civil penalties. To date, the commission has been able to collect about $140,000 in bonds from the company.