A number of bills aimed at tightening oversight of oil and gas development in Colorado that were opposed by the industry went down to defeat last week in the closing days of the General Assembly’s legislative session, with a few Democrats joining Senate Republicans in opposing the measures.

On the last day the energy industry blamed environmental groups for the failure of a bill that would have raised the fines for infractions of drilling rules, saying they were disappointed the two sides could not find a middle ground on the issue. Spokesman Doug Flanders of the Colorado Oil and Gas Association (COGA) said members were shocked by the defeat of HB 1267.

“COGA was supportive of the increase and thought this was an obvious area for collaboration and compromise. Despite multiple offers to find common ground, all were rejected. There seemed to be more interest in a punitive message than a good bill.”

The House had passed the original bill, which provided a $5,000/day minimum penalty and a maximum penalty of $15,000/day. The Senate voted to keep the maximum penalty, but it removed the minimum, which the House rejected.

Gov. John Hickenlooper had opposed the provision to set a minimum daily fine for oil and gas violations, now at zero, but he and COGA had backed raising the daily maximum penalties to $15,000 from the current maximum of $1,000.

The industry is “dumbfounded that the proponents of the bill would rather see no increase in oil and gas fines than to lose their minimum fine, which not one state agency in Colorado has, nor even the U.S. Environmental Protection Agency. Instead of agreeing to a 1,500% increase in fining authority, we now have nothing,” Flanders said.

The “lack of communication between some legislators and industry has been the most disappointing aspect of this legislative session,” said Flanders. “Confrontation is easy; however, successful collaboration takes effort and diligence.”

On the bill’s defeat, Hickenlooper Wednesday directed the Colorado Oil and Gas Conservation Commission (COGCC) through an executive order to reevaluate enforcement and fines policies. The order directs commissioners to apply the statutory maximum fines as needed and to establish fines in cases with egregious or aggravating factors.

The state Senate also defeated HB 1269 by a vote of 25-20. Several Democrats crossed over and joined Republicans in the vote. The legislation, which the industry worked hard to defeat, would have changed the mission of the COGCC, prioritizing health, safety and environmental issues over regulating oil and gas resource extraction. It also would have barred oil and gas industry representation on the commission.

COGA said Colorado couldn’t stay competitive if it kept changing the rules and regulations every five years. Current regulations call for three oil and gas representatives to serve on the nine-member commission. In 2008 as part of a complete overhaul of the COGCC, industry representation was reduced at the same time the panel was enlarged, going from five members out of seven to the three out of nine.

The bill included a redefinition of “waste” or the unnecessary loss of the resource through inefficient operating practices, which would subordinate the COGCC’s historic charge to prevent waste and protect correlative rights to the protection of public health, safety and welfare, the environment and wildlife.

Also going down in defeat was HB 1361, legislation that would have required more stringent groundwater testing in the Greater Wattenberg Field in Weld County and neighboring counties. Three Democrats who had been for the groundwater bill changed their votes Monday night and sided with Republicans, sending the bill to defeat by one vote.

The state now requires drillers to conduct groundwater testing, but in Weld County and the surrounding area, more flexibility is allowed under current regulations because of the amount of drilling ongoing. Hickenlooper, COGCC staff and industry groups had argued that the bill’s passage would undermine regulators.

Also defeated was HB 1273 to create more funding for local government oil and gas oversight activities, as well as HB 1275, to study Front Range oil and gas health.

SB 202, which would have added about 30 more oil and gas inspectors and required all oil and gas facilities to be inspected annually, was amended. The annual inspection requirements were removed, and as part of the budget appropriation, 14 new inspectors are to be added to COGCC staff.

The one bill regarding oil and gas issues that was passed during the session will increase spill reporting. The bill lowers the amount of the spill that has to be reported to authorities to one barrel from five barrels.

“The most disturbing aspect of this session’s tone was the vilification of Coloradoans who provide the oil and gas that we all require,” said COGA CEO Tisha Schuller. “By not discussing these bills and how they affect the industry, it dismisses the over 40,000 Coloradoans who work, live and raise our families in this state. We hope that we’ll have a better conversation next year.”

The legislative session was equal parts disappointment and success, she said. “The final result was a rejection of making legislative changes based on the political winds and instead focused on pursuing reasonable oil and gas solutions that balanced environmental stewardship and business certainty.”

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