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Harsher Fines For Oil And Gas Companies

Bill Ellsworth, USGS

There’s been a big shift on the fines that companies pay when they’re in violation of regulations. 

Right now, if there’s an oil pad that is threatening the environment or the community around it, it would get a maximum fine of $1,000 a day.  Thanks to efforts from the legislature and Governor Hickenlooper, the Colorado Oil and Gas Conservation Commission just approved changes that would make the maximum fine $15,000 a day.

“It is quite substantial,” says Matt Lepore, the Director of COGCC.  “The $1,000 penalty had been in the statute for many, many years and the general assembly clearly deciced it was past due time for a change.  Interestingly, the largest industry trade association, the Colorado Oil and Gas Association (COGA), actually supported the increase in statutory limits.

“Very fundamentally, I think they realized our statutory authority was behind the times.  I think that as a general principle, industry understands that a strong regulatory regime is part of the social license to operate,” says Lepore. 

There is also now no cap on the amount an operator can get fined.  There had been some protest from companies saying that these fines could shut them down.

“We’re not in the business of putting operators out of business,” says Lepore, “we’re also not in the business of allowing operators to thwart the rules or violate the rules or impact the environment because they can’t afford to do business properly.”

The Commission does have discretion in how they apply the fines, and only the more serious violations would receive the harshest penalties.  They also will now be able to shut an operation down completely for egregious violations.  The new policy will go into effect in the next few weeks.

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