Hickenlooper, Democrats still at odds on bill to increase oil and gas fines

Posted on: 6:41 pm, May 2, 2013, by , updated on: 09:59am, May 3, 2013

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DENVER — A legislative session dominated by Democrats and a bevy of far-reaching progressive legislation may cost Colorado Gov. John Hickenlooper politically to some degree, but it cannot be said that the moderate Democratic governor is giving his party everything it wants.

And nowhere is there more daylight between Hickenlooper and his party than on oil and gas issues.

On Thursday afternoon, Democratic Sen. Matt Jones failed to put the teeth back into a bill aimed at increasing fines for oil and gas spills — teeth that Hickenlooper’s administration successfully removed last week.

House Bill 1267 increases the maximum daily fine that can be imposed for environmental mishaps to $15,000 a day; but the proposed minimum $5,000 daily fine that was included in the bill that passed the House last month was struck from the bill last week during a hearing before the Senate Appropriations Committee after Hickenlooper’s lobbying team swayed two Democrats on the panel to do so.

On Thursday, when the bill hit the Senate floor, Jones put forth an amendment to restore the minimum fine — but he didn’t get anywhere close to the 18 votes needed to pass it.

Seven Democratic senators sided with Hickenlooper, the oil and gas industry and the entire GOP caucus: Sens. Pat Steadman of Denver, Mary Hodge of Brighton, Lois Tochtrop of Thornton, Gail Schwartz of Snowmass, John Kefalas of Fort Collins, Nancy Todd of Aurora and Cheri Jahn of Wheat Ridge.

When H.B. 1267 passes the Senate on third reading, Hickenlooper will be close to getting exactly the bill he wanted: one he can use to say that he’s increasing fines on the oil and gas industry that will not on its own subject the industry to higher fines.

Currently, Colorado’s fines set the maximum of $1,000 per day and caps the total fine at $10,000 — they’re the lowest in the country and haven’t been updated for decades.

The sponsors did succeed in removing that cap on total fines, something that Hickenlooper supported.

It’ll be up to the state’s Oil and Gas Conservation Commission to impose fines, just as it is now; but the Democrats ran this legislation with mandatory minimums to force the COGCC to impose bigger fines, something environmentalists believe doesn’t happen very often.

“Coloradans expect transparency and to hold those who cause damage to our environment and public health be held accountable for their actions,” said Conservation Colorado’s Pete Maysmith Thursday following the Senate vote. “Without minimum fines this legislation falls short of Coloradans’ expectations.”

Hickenlooper administration:  bill still has “pretty sharp teeth”

But the governor’s office believes that mandatory minimum fines might have the opposite effect of what the sponsor’s intend.

The COGCC fines aren’t used to deter spills but to incentivize oil and gas companies to address them quickly and properly once they occur, according to Doug Young, Hickenlooper’s policy director on energy issues.

“Spills are going to occur,” Young told FOX31 Denver Friday. “And the mere fact that they’ve had a spill doesn’t merit a [COGCC] fine; they’re already going to have to face the music under their other [Clean Air Act and Clean Water Act] permits.

“The COGCC fines allow us to send a message based on how the company responds. You won’t incentive them to be good actors after a mishap if they think they’re going to still be fined $5K per day even if they do everything right. Without the minimum, the enforcement has the flexibility to sock them $15,000 a day in fines if they’re not cooperating and the company has more incentive to act responsibly to avoid these fines altogether.

“It’s not about punitively fining these companies,” Young said. “But we can still make an example out of any company that doesn’t do the right thing.

“And we think upping the [maximum daily] fine to $15,000 isn’t a toothless bill. Those are pretty sharp teeth.”

So what happens now?

When H.B. 1267 passes the full Senate, which could happen Friday, it’ll have to go back to the House, where lawmakers must sign off on the Senate’s removal of the mandatory minimum fine.

That’s no guarantee, with the bill’s House sponsor, Rep. Mike Foote, D-Lafayette, and House Majority Leader Dickey Lee Hullinghorst, D-Boulder, both annoyed with the governor’s office for opposing and working to soften other pieces of their oil and gas regulation package.

If Foote does what Jones could not and puts the mandatory minimum back into the bill, Hickenlooper won’t get the bill he wants — and he’ll have a difficult decision as to whether it’s riskier to sign it or to veto it and be left without any additional accountability measures for the oil and gas industry.