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The long, strange saga of Jason Halek comes to an end

by Jim Fuglie | .(JavaScript must be enabled to view this email address) | News | April 13th, 2017

Well, it looks like Jason Halek is finally going to the pokey.

Remember Jason? He’s the fellow who dumped more than 800,000 gallons of salty, oilfield wastewater into an abandoned oil well southwest of Dickinson in Stark County, and then attempted to cover it up.

And his partner in crime, Nathan Garber, might be sitting in the cell next to him after they are sentenced this summer by U.S. District Judge Daniel Hovland in Bismarck, putting an end to a case that has dragged on for more than five years. They’re both scheduled to be sentenced on July 31, and then off to jail.

Guilty

Jason Halek has pleaded guilty in a plea agreement signed February 21, 2017, to three counts of violating the U.S. Safe Drinking Water Act. In return for the guilty plea on those three charges, ten other charges against him have been dropped.

Garber pleaded guilty a couple of years ago to 11 federal charges, similar to Halek’s, and is still facing up to 50 years in prison. He has not yet been sentenced because his willingness to testify against Halek would help determine how harshly the government wanted to treat him.

Now that Halek has copped a plea, Garber’s lawyers will have to bargain with a judge and federal prosecutors for a lenient sentence, since he was the big hammer in getting Halek to plead guilty. I’d be surprised if his sentence is any stiffer than Halek’s. Both men also face substantial fines for their actions.

A $1.5 million headline

So that’s what’s happened lately. Everything’s done but the sentencing. Let’s go back and review a little bit.

What first got me interested in these guys was a big black headline screaming off the front page of the Bismarck Tribune in July of 2012 with news of the “largest environmental violation fine ever” in North Dakota -- $1.5 million -- against a company called Halek Operating.

The owner, Jason Halek, and his manager, Garber, who was in the process of buying him out, dumped the salt water from a failed drilling operation down an abandoned oil well in December of 2011. North Dakota’s oilfield investigations team found out about it and busted them both.

Halek threw his hands in the air and said “Garber did it. I didn’t know anything about it.”

“Bullshit,” said Garber, “I’m not taking the rap for this. Halek told me to do it.”

Or something like that. We’ll come back to that in a minute.

Well, Lynn Helms, director of the Oil and Gas Division, which is charged with enforcing oilfield environmental violations, took his charges against Halek Operating—civil, not criminal, and against the company, not the men—to the ND Industrial Commission and they levied the $1.5 million fine. And they puffed up their chests, and strutted around the Governor’s Conference Room like peacocks on a mating binge.

Governor Jack Dalrymple huffed and puffed and said, “There will not be any exceptions or leniency when these things happen.”

"The key thing is this guy is not doing business again in North Dakota and that's a good thing," said Attorney General Stenehjem. "We are not going to tolerate this."

And Oil and Gas Division Director Lynn Helms chimed in, “It’s a very serious violation and it needs to be dealt with in a very serious manner. They’ve tripled the risk of contaminating a drinking water zone with this well. It takes many, many years to clean it up, if it can be done at all.”

Well, la de da.

Second chance policy

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.”

Halek’s company, of course, didn’t have any money. Its only asset was an abandoned oil well full of poisonous water. To date, five years later, the state has collected just $140,000 from the bond Halek had posted when he got into the oil business. A new definition of “immediately.”

Stenehjem told the Associated Press two years later, in August of 2014, that it's doubtful the state will ever collect the entire fine assessed to Halek Operating. Of course, he and the Governor knew that going in. That did not stop them from making big headlines though.

The thing is, this didn’t need to happen. Just a year earlier, the Industrial Commission had cited Halek for improperly cleaning up an oil spill, also near Dickinson. Halek faced more than $588,000 in potential fines, but was ordered to pay less than 10 percent of that with the rest suspended, under North Dakota’s “second chance” policy. Perhaps if he had been made to pay the full fine, he would have been a little more careful in the future.

And Jason Halek had a checkered past. “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,” according to a story in The Dickinson Press.

The Press cautioned that “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.”

Yeah, with his record, perhaps Jason Halek should not have been given another permit to drill for oil in North Dakota. There’s 800,000 gallons of poisonous water under the ground threatening Dickinson’s water supply. Who knows what the outcome of that is going to be?

Bring in the feds

Well, none of this sat well with North Dakota’s US Attorney at the time, Tim Purdon. Because North Dakota wouldn’t file criminal charges against Halek, Purdon called in an investigative team from the Environmental Protection Agency and they went to work on the case.

In the fall of 2015, a federal grand jury, convened by Purdon, acting on behalf of the US Government because North Dakota wouldn’t prosecute, returned a 28-page indictment against Halek. The indictment contained 13 felony charges, including one charge for conspiring with Garber to dump the water.

But the other 12 charges were far more interesting.

There were four counts of violating the US Government’s Safe Drinking Water Act. The dumping of 800,000 gallons of toxic saltwater put Dickinson’s drinking water at risk. That’s what brought the EPA team to North Dakota. And those are the charges Halek has now pleaded guilty to, and will be sentenced for, in July.

There were also four counts of obstructing grand jury proceedings—essentially lying to the grand jury or hiding evidence from them, and four counts of “providing false statements to the North Dakota Industrial Commission.”

Those last four were crimes against the state of North Dakota, but the state chose not to prosecute, with Stenehjem claiming he didn't feel he had enough proof against Halek personally. The state did file some criminal charges against Garber, and he pleaded guilty and got a suspended sentence and a $2,500 fine. And that was the end of that, as far as the state was concerned.

But the EPA and Purdon did what the North Dakota Industrial Commission and our own Attorney General would not do: they pored through Industrial Commission documents from the Oil and Gas Division, and interviewed staff and found out what Helms, Dalrymple, and Stenehjem didn’t want us to know: that Jason Halek had indeed committed crimes against the State of North Dakota.

It took a federal investigation to charge Halek with crimes against the State of North Dakota because North Dakota’s Attorney General, Wayne Stenehjem, wouldn’t act, despite having said earlier “the case will be pursued vigorously in court.”

Well, eventually it was, but by the US Department of Justice, not North Dakota’s Attorney General. In Halek’s just-signed plea agreement, the government dropped the crimes committed against the state in return for a conviction on the federal crime, violations of the Federal Safe Drinking Water Act.

The bottom line here is, if Tim Purdon and the EPA hadn’t stepped in, Halek would be free today and the state would have an uncollected fine on its books of $1.4 million, and the case would be history.

Still free -- for now

Actually, Halek and Garber remain free today, awaiting sentencing. Halek has been running a used car lot in Texas. I don’t know about Garber. He last lived in Kalispell, Montana.

An attorney with the Justice Department in Washington told me shortly after Halek pleaded guilty that in white collar crime cases like this, it is not unusual for defendants to remain free until they are sentenced. Well, at least they won’t be free on August 1. Halek anyway.

I’m not sure about Garber. Halek pleaded guilty because Garber had agreed to cooperate with the government in his prosecution. That threat was what likely prompted Halek’s guilty plea on the three Safe Drinking Water charges. We’ll see how good a deal Garber’s attorney can negotiate in return.

Based on the federal charges filed, Garber could have faced up to 50 years in prison, but his plea deal calls for 30-37 months. It was Halek, after all, who was the big target, and the Department of Justice was able to get him because of Garber’s agreement to testify.

Halek’s plea agreement calls for a 24-30 month prison sentence, if the judge accepts it. Environmental attorneys tell me that’s a pretty stiff sentence for an environmental case.

The State of North Dakota got nothing except about $200,000 from bond forfeitures in the two violations. Halek will get a free ride to a federal prison, his new home, without paying the $530,000 fine from his first violation, or about $1.4 million from this violation.

But thanks to the much-beleaguered Environmental Protection Agency, and a US Attorney who really cares about the North Dakota Badlands, the man behind what the Justice Department calls “the biggest injection well safe drinking water case ever” will at least serve time in jail.

What becomes of the 800,000 gallons of poisonous waste water remains to be seen. It’s still down there.

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