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A company operating an oil and gas wastewater disposal facility in Grand County has agreed to pay a $50,000 fine to resolve allegations that it built and operated evaporation ponds without getting permits from the Utah Division of Air Quality.

Danish Flats Environmental Services' Cisco Evaporation Ponds were at the center of a controversy five years ago when Grand County authorities fined the company for expanding its operations without county approval.

The Air Quality Board on Wednesday approved the "early settlement" with the Colorado-based firm, after state regulators put the firm on notice it had ignored permitting requirements under the federal Clean Air Act and state law.

The company operates north of Cisco, a few miles from the Colorado state line on Interstate 70. It takes hydrocarbon-laced, brackish water produced from oil and gas wells.

A phone message left with Justin Spaeth, Danish Flats' operations manager, was not immediately returned Thursday.

Oil and gas wells often yield more water than hydrocarbons, resulting a large wastewater stream. Such water cannot be put onto fields or into streams because it typically holds salt, chemicals and volatile organic compounds. It also contains valuable light-weight hydrocarbons like propane or butane, which can be recovered.

Most of the time, this water is injected back into the formation it came from or is used to stimulate oil and gas production from other wells. But some of it has to be processed and that's where companies like Danish Flats play a vital role.

The amount of water a well produces varies widely.

"It depends on the formation that they are producing out of and age of field. Some may produce little initially but as they get old they produce more water. For every barrel of oil, some might produce 50 barrels of water," said Dan Jarvis, a field operations manager with the Utah Division of Oil, Gas and Mining.

Although there are about 15 evaporation pond complexes in the booming Uinta Basin, Danish Flats is the only one in the southern part of Utah. The Cisco facility began operations with eight ponds in 2008 and expanded to 14 the next year as it struggled to handle a deluge of water, 5.3 million barrels in 2009.

But in 2010, it accepted only 2 million barrels and the volume has been declining ever since, according to Jarvis. Last year, it processed 1 million barrels.

Last fall, five years after Danish Flats began operating, Utah regulators notified the firm that it should have filed papers seeking approval to construct the facility. They also told the firm it had failed to apply for a Title V operating permit within the time frame specified under the Clean Air Act, and proposed an $84,000 penalty.

But after reviewing Danish Flats' financial status, the agency determined the company could not afford to pay that much. The state offered to settle for $50,000 to be paid in four installments over a year.

Danish Flats' acceptance of the offer avoids a formal notice of violation and resolves the matter with no admission of guilt, according to settlement documents. On Monday, the DAQ issued the company an approval order for its operations, but the Title V permit has yet to be secured.