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Colorado Bill Would Increase Fines on Oil/Gas Industry

With support from the oil/gas industry, Colorado lawmakers are recrafting a bill (HB 1356) this session to increase maximum fines that can be assessed against oil and natural gas operators for "significant waste of oil/gas resources." Similar legislation was defeated last year (see Daily GPI, May 10, 2013).

HB 1356 would raise the maximum daily penalty from $1,000 to $15,000 in cases where the violation doesn't result in a "significant waste of oil and gas resources," or damage correlative rights, resulting in a significant adverse impact on public health, safety and welfare. This would be Colorado's first increase since 1955.

The legislation would direct the state Oil/Gas Conservation Commission (OGCC) to create a process for determining when violations start and end, assessing the fines for the number of days involved. OGCC would also have to publish quarterly reports on the fines assessed.

The Colorado Oil and Gas Association (COGA) has supported legislation to raise maximum fines for the past two years, but it has opposed the provision calling for a minimum daily fine for producers that have spills. HB 1356 currently has no minimum fine requirements.

Doug Flanders, COGA director of policy and external affairs, told NGI that HB 1356 "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.

"No industry wants to increase fines on itself, and we are no different," Flanders said. "This bill is simply the right thing to do."

Flanders said COGA thinks it is time to modernize and increase the state's role in penalizing operators that violate the rules. "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. We hope this serves as a model for future discussions."

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