Energy, Utilities & Water  December 19, 2014

Lawmakers frustrated over oil and gas violation rulemaking

DENVER – Lawmakers expressed frustration following postponement of a decision this week by the state oil commission on enforcement of violations committed by oil and natural-gas companies.

The Colorado Oil and Gas Conservation Commission was expected to decide on rulemaking related to violations this week. Industry representatives pressured regulators at the hearing to relax enforcement of violations.

Stan Dempsey, president of the Colorado Petroleum Association, said the industry group had concerns about the high fines and wanted more details about how the state planned to resolve violations.

SPONSORED CONTENT

Solar Operations and Maintenance for Commercial Properties

One key qualification to consider when selecting a solar partner to install your system is whether they have an Operations and Maintenance (O&M) or service department. Since solar is a long-term asset with an expected lifecycle of 30 plus years, ongoing O&M should be considered up front. A trusted O&M partner will maximize your system’s energy output and therefor the return on your investment.

“There’s no authority for the commission to adopt penalties that are the highest in the country,” he said.

Companies also want the ability to discuss violations with state oil commission staff members before they issue fines, Dempsey said.

No date was set to revisit the rulemaking, said Todd Hartman, spokesman for the Department of Natural Resources, which oversees the state oil commission.

“They simply needed more time,” Hartman said.

Sen. John Kefalas, D-Fort Collins, noted the state oil commission’s dual mission: to protect public health and the environment and to work with the oil and gas industry and others to implement state law.

“I am disappointed that the COGCC decided to postpone rulemaking concerning fines for violations of laws that are intended to protect public health, property rights and environment,” he said.

Rep. Mike Foote, D-Lafayette, who sponsored a bill this year to raise maximum fines for violations, expressed dismay over the delay, as well.

“It sounds to me like what the industry is saying is, ‘We promise we’ll follow the rules, but just in case, please don’t penalize us to much,’” he said. “The bottom line is, if they follow the rules, there won’t be any fines.”

Foote’s bill, signed into law by Gov. John Hickenlooper earlier this year, raises fines to as much as $15,000 per violation per day from the previous maximum fine of $1,000. The state previously had not raised fines since 1955, Foote said.

The law will go into effect when regulators complete the rulemaking, which will outline how regulators will enforce the law related to violations, he said.

Foote noted that regulators do not have to impose the maximum fine on oil and gas producers.

“There’s going be quite a bit of discretion vested with the COGCC, as there should be,” he said.

Between 2009 and 2013, COGCC imposed $5.7 million in penalties in a total of 91 cases. The average penalty was $62,700.

 

The industry is no stranger to fines for air quality violations, for which they also face fines of up to $15,000 per violation per day from the state Department of Public Health and Environment. Foote’s bill applies to other kinds of oil and gas violations enforced by the state oil commission.

 

“I have trouble finding why they suddenly feel like a $15,000 fine per violation per day is going to be so onerous,” he said.

DENVER – Lawmakers expressed frustration following postponement of a decision this week by the state oil commission on enforcement of violations committed by oil and natural-gas companies.

The Colorado Oil and Gas Conservation Commission was expected to decide on rulemaking related to violations this week. Industry representatives pressured regulators at the hearing to relax enforcement of violations.

Stan Dempsey, president of the Colorado Petroleum Association, said the industry group had concerns about the high fines and wanted more details about how the state planned to resolve violations.

“There’s no authority for the commission to adopt penalties that are the highest in the country,”…

Sign up for BizWest Daily Alerts