Bill that would increase oil and gas fines passes Colorado House
May 2, 2014
A bill that would increase penalties to Colorado oil and gas companies that violate regulations made it through the state's House on Monday, but only one of four Weld County state representatives voted to move it onto the Senate.
Dave Young, D-Greeley, voted in favor of House Bill 1356, which was sponsored by state Rep. Mike Foote, D-Lafayette. Three Republican state representatives from Weld — Perry Buck of Windsor, Steve Humphrey of Severance and Lori Saine of Dacono — voted against the bill in a 40-22 vote that saw five Republicans voting for it.
"I think Rep. Foote worked closely with the industry and my understanding is COGA (Colorado Oil & Gas Association) supported the bill," Young said. "If that's the case, it seems like a good, working thing. I think the environmentalists were involved, but I think more importantly the industry supported it so that's why I voted in favor of it."
Young said Foote ran a similar bill last year, but it was not supported by the oil and gas industry.
"He had sought some other issues in the bill, and it didn't go through," Young said. "I appreciated the fact that he worked diligently with the industry to come up with an acceptable bill."
Buck didn't like how the bill targets the industry.
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"I guess the sentiment I'm feeling down here is that oil and gas is under attack, and they've added so many more inspectors," Buck said. "I'm feeling that oil and gas is being unfairly attacked."
Current law specifies that a violation of the Oil and Gas Conservation Act is punishable by a maximum daily penalty of $1,000, subject to a penalty schedule announced by the Colorado Oil and Gas Conservation Commission that considers aggravating and mitigating circumstances.
The maximum total penalty is capped at $10,000 for violations that do not result in significant waste of oil and gas resources, do not damage correlative rights, and do not result in a significant adverse impact on public health, safety, or welfare.
The new bill would increase the maximum daily penalty to $15,000. It would direct the commission to:
» Adopt rules that specify a process for determining the dates on which a violation begins and ends.
» Publish a quarterly report on its website that specifies certain information about each penalty assessed in the previous quarter and discuss these reports at the department of natural resources' SMART Act hearings.
» Repeal the cap on the maximum total penalty.
The commission must hold a hearing if an operator is responsible for gross negligence or knowing and willful misconduct that results in an egregious violation or a pattern of violations. The commission may issue an order that prohibits the issuance of any new permits to the operator, suspends any or all of the operator's certificates of clearance, or both. The commission may vacate the order after the operator has come back into compliance and paid all penalties.
Doug Flanders, director of policy and external affairs for the Colorado Oil & Gas Association, which is the trade association that represents Colorado drilling companies, was pleased with the vote.
"This bill is a testament to the ability of Coloradans of diverse interests to work together, and we are very pleased to have reached this important compromise," Flanders said. "No industry wants to increase fines on itself, and we are no different — but this bill modernizes and increases the state's role in fining operators who violate the rules."
Flanders said the process took some time to get it right.
"This negotiation process took months to achieve, but it was done right — people sitting down, working through issues — to find a real solution rather than a quick fix with emotional appeal,' Flanders said. "We hope this serves as a model for future discussions."
Reps. Humphrey and Saine did not return phone calls.