Fines set to rise for drilling violations

Bill would increase firms' maximum daily penalty from $1,000 to $15,000

DENVER — Fines appear set to increase for oil and gas companies that violate Colorado law or rules established by the state agency that oversees the industry.

Under HB1356, which cleared the House Transportation & Energy Committee on a 9-4 vote on Wednesday, the maximum daily per-violation fine that a driller could receive would increase from $1,000 to $15,000.

The measure also removes a $10,000 cap on violations that do not result in significant adverse impacts.

But unlike a similar measure to increase fines last year, this year’s bill does not attempt to establish a minimum daily fine.

“A lot of the stuff we were talking about last year, we just couldn’t get there, but this fine increase will help deter violations,” said Rep. Mike Foote, D-Lafayette, who introduced the measure. “The industry is OK with this because they don’t want bad actors on this. Nobody wants that.”

According to a fiscal analysis of Foote’s measure, from 2009 to 2013 the Colorado Oil & Gas Conservation Commission imposed about $5.7 million in penalties over that five-year period.

But of the 91 cases that came before the commission, 80 were settled administratively. Only 11 led to full hearings before the commission, resulting in an average total fine of more than $173,000.

Last year, Gov. John Hickenlooper issued an executive order directing the commission to adjust the fines it imposes based on aggravating and mitigating factors, which resulted in the higher penalties.

The analysis predicts this session’s measure would increase annual fines by about $400,000 a year.

Foote said Colorado’s fine schedule is among the lowest in the nation. He said Hickenlooper’s order helped urge the commission to take violations more seriously, but Foote said he still wanted to have it in law to keep the panel that way.

“I’d rather all this be in statute rather than just an executive order and rules,” Foote said. “But I do think that after the executive order, (the commission) started changing direction on how they look at these incidents, and have been less accommodating.”

Next week, the measure will be debated in the House Finance Committee and the House Appropriations Committee, but Foote said he is confident it will clear those panels because the expected increase in fines will more than fund the additional workers that will be needed to handle increased scrutiny of violations.


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