“Drill Some Really Awesome Wells”

Halek Operating. Remember them?

I wrote about them a couple times earlier this summer. Those stories are here and here. But let me just refresh your memory. That’s quicker. Halek is the company, run by a fellow named Jason Halek, that was fined $1.5 million by the North Dakota Industrial Commission for illegally dumping 800,000 gallons of salt water down a well out near Dickinson. It was the kind of operation that can poison nearby ground water and drinking water, and it was a blatant violation of North Dakota law.

The Industrial Commission’s order stated: “The sum of the fines . . . is $1,525,000 and Halek Operating ND, LLC shall make payment immediately to the Industrial Commission, Oil and Gas Division.”

“Immediately.” That was the operative word in that sentence. The order was issued on July 30, 2013, a Tuesday. Not sure of how immediate “immediately” really was, I waited until Thursday to ask Industrial Commission Secretary Karlene Fine, in an e-mail, whether she had received the check yet. Karlene wrote back “A party aggrieved by a Commission order can request reconsideration by the Commission and can appeal the order to district court.” Karlene also said they have 30 days to request reconsideration.

Well, the 30 days came and went last week, but I was fishing and didn’t get around to asking Karlene if they had paid, or appealed, until yesterday. I sent her an e-mail that said:

Good morning, Karlene,
Well, it’s been 30 days since the Halek verdict, so I’m wondering:
Did they file an appeal, or did they pay the fine?
Thanks.
Jim

Now, Karlene has to be the best secretary in America (actually, she’s more like the Executive Director, given her duties, but they call her the Secretary, I think). Within a matter of a couple hours she wrote back:

Jim – I checked with the attorney and she has not received any communication that they have filed an appeal. I also checked with the accounting staff and they have not received any payment. We now take the next step as outlined in the North Dakota Century Code 38-08-16 (1) regarding civil penalties.  See below:

38-08-16. Civil and criminal penalties.

            1. Any person who violates any provision of this chapter, or any rule, regulation, or order of the commission is subject to a civil penalty to be imposed by the commission not to exceed twelve thousand five hundred dollars for each offense, and each day’s violation is a separate offense, unless the penalty for the violation is otherwise specifically provided for and made exclusive in this chapter. Any such civil penalty may be compromised by the commission. All amounts paid as civil penalties must be deposited in the abandoned oil and gas well plugging and site reclamation fund. The penalties provided in this section, if not paid, are recoverable by suit filed by the attorney general in the name and on behalf of the commission, in the district court of the county in which the defendant resides, or in which any defendant resides, if there be more than one defendant, or in the district court of any county in which the violation occurred. The payment of the penalty may not operate to legalize any illegal oil, illegal gas, or illegal product involved in the violation for which the penalty is imposed, or to relieve a person on whom the penalty is imposed from liability to any other person for damages arising out of the violation. 

Have a good day.   Karlene

So. Halek was fined $1.5 million. Payment was due immediately. They did not pay. They had 30 days to appeal. They did not appeal. So now the Attorney General has to sue them to get the money. What’s wrong with that picture?

Seems to me they ought to just throw Mr. Halek in the pokey until he writes a check for a million and a half bucks. Or until he files an appeal.

But according to reports in the news media, Halek might not have the money to pay the $1.5 million fine. Seems Jason Halek has a checkered past. Here’s an excerpt from a Dickinson Press story dated August 18:

“But even before the company drilled its first well in North Dakota, federal officials say the man behind it (Jason Halek) had swindled $22 million out of 300 investors in a Texas oil and gas project.

            “The odd facts of the case show that the state officials overseeing the nation’s oil and gas boom might need to look beyond promoting development and monitoring groundwater and keep their eyes open for plain old fraud.” (emphasis added by me)

            “(Jason Halek) was . . . CEO of Halek Energy LLC, the company at the center of the Texas oil fraud allegations, until it collapsed into bankruptcy in 2011. He settled the Texas fraud charges with the Securities and Exchange Commission by agreeing to a $50,000 fine and to repay ‘ill-gotten gains.’”

Jason Halek, by the way, says “I feel like I’ve been majorly wronged by several organizations. I’m trying to drill for oil as cheaply as possible and as environmentally friendly as possible. That’s my deal.” He added, “I hope to get through this red tape and drill some really awesome wells.” You can read the whole Dickinson Press story here, including the part about Jason Halek still being on the hook for $26 million in those “ill-gotten gains” in Texas, and Halek’s bankruptcy filing. Yep, bankruptcy. Uh-oh.

So the Attorney General has his work cut out for him. I wonder how long it will take for him to assign this case to an attorney in his office, and for that attorney to write the complaint, and get it filed in Stark County District Court? And then how long will the defendant get to respond to the complaint? And then how long will it take an overworked Oil Patch judge to review the documents and determine what to do next? I’d say we’re looking at years here.

Meanwhile, the Industrial Commission continues to bask in the glow of having levied the largest fine ever against an oilfield company. I sure hope they collect it. With interest.

Oh, yeah, there’s one more element to this story. The fellow who was actually charged with the crime—something like dumping contaminated water down a well in the middle of the night—was scheduled to stand trial in Dickinson last week. That didn’t happen either. Nathan Garber was apparently working for Jason Halek and in the process of buying him out during the time all these things were going on, and was actually responsible, according to court filings, for dumping the water. He was charged with a felony and faces prison time. His trial was scheduled for last Wednesday.

I couldn’t make it out to Dickinson last week (fishing) but I called the Stark County Clerk of Court today and they told me the trial was canceled and instead, a “change of plea” hearing has been scheduled for September 23. Well, so far, Garber has pleaded “not guilty.” So if he’;s going to change it to something, I guess that can only mean one thing–“guilty”–but probably to some lesser charge. I called Garber’s attorney, but he declined to give me any details, saying it will all become public on the 23rd. Can’t wait.