A state law passed in 2014 raised the fines Colorado can impose on gas and oil producers found to be in violation of health, safety and environment regulations. By and large, it would seem the industry has found it can avoid many fines by playing by the rules.
This is how this was supposed to work. And it explains why an industry group, the Colorado Oil and Gas Association, supported increasing the fines.
In a study reported Wednesday, the Associated Press looked at records for the first 12 months the higher fines were in place. It found that from April 2015 through March 2016, regulators imposed 74 fines for a total of $5.3 million. Both numbers were greater than for any 12-month period in the last 20 years.
Included was what might be the largest Colorado gas and oil fine ever. Benchmark Energy was fined $1.3 million for a series of leaks, which was almost three times what it would likely have been fined under the old regime.
The 2014 changes raised the maximum daily fine from $1,000 to $15,000 and did away with a per-violation cap. State Rep. Mike Foote, D-Lafayette, who helped enact the changes, told the AP that they were the first alterations to the fine structure since the Eisenhower administration.
Matt Lepore, director of the Colorado Oil and Gas Conservation Commission, the regulatory body overseeing the industry, told the AP that to avoid the fines, energy companies are policing themselves.
“I would surmise that operators are being more careful for fear of a substantial fine,” Lepore said. “We aren’t seeing sort of careless mistakes and careless noncompliance.”
Some of the increase in fines may reflect the fact that the COGCC has increased its legal staff and added field inspectors. But the industry is hardly howling.
As Dan Haley, president of the Colorado Oil and Gas Association, told the AP, “Only an industry that knows it works in a safe and compliant manner would have worked to increase penalties and enforcement on itself.”
That sentiment makes perfect sense, especially for an industry that is also politically astute.
