Senate Bill 307 oil and gas penalties act needs support

SB 307:  Oil and Gas Powers and Penalties Bill

The problem:  The civil penalties imposed on violators of the Oil and Gas Act have not been increased since 1935. 

Moreover, the agency responsible for enforcement does not have the authority to impose a penalty but instead has to rely on the attorney general to file a lawsuit.

Sen. Richard Martinez is sponsoring SB 307 to make sure that the Oil Conservation Division and the Commission can impose civil penalties on violators of the act, its rules, orders or permits. 

According to Legislative Finance Committee performance reports, the number of spills has increased in recent years.  Yet, according to numerous sources no penaltieshave been reported.

What the bill does:

It clarifies that the civil penalty is not more than $1,000for each day of violation.  

It adds new language authorizing civil penalties of up to $10,000 if the violation is due to an unauthorized discharge of contaminants that pollutes or threatens to pollute water (in accordance with state and federal water quality standards).

It gives the Oil Conservation Division and the Oil Conservation Commission the authority to impose civil penalties after a hearing has taken place. (The current law requires the division to ask the Attorney General to bring a lawsuit against the violator.)

The bill is addressing problems created by bad actors, not the good actors.

In addition:

Criminal section: The bill clarifies the criminal penalty section by making it a third degree felony if the person knowingly violates the Act, its rules, orders or permits, which includes making false statements, omitting,destroying or mutilating information on forms, records, accounts or memorandums. (Similar provisions are in the NM Mining Act.)

Annual Reporting requirement: The bill also requires the division to make an annual report to the legislature and the governor, and be made available to the public, regarding the number of violations, the names of the violators, the amount of penalties assessed and collected, the justification for the penalty amount, whether the company is a repeat violator and other related information.

In sum, granting the division the authority to impose penalties, increasing the penalties and requiring an annual report are important steps to achieving the goals of the Compliance Bureau as described in the 2016 Energy, Minerals and Natural Resources annual report.

The Compliance Bureau ensures that activities comply with regulations and do not result in the waste of oil and gas resources and to protect human health and the environment. 

Selected States Comparison of Maximum Civil Penalties for Violations of Oil and Gas Acts

State	Maximum Civil Penalty	When Maximum Civil Penalty Applied
Colorado	Max $15,000/day that violation continues	Maximum total fine for violations vary by degree of impact and the type of rule violated, with heightened severity for health and safety rules.
New Mexico	Max $1,000 for each day of continuing violation	Applies to anyone who knowingly or willfully violates the Oil and Gas Act.
New York	Max $8,000 per violation plus up to $2,000 for each day violation continues.	Applies to violation of Article 23 (Mineral Resources) or any regulation, order or permit condition.
North Dakota	Max $12,000 for each offense and for each day of violation	Applies to any violation of any provision of Chapter 38-08 or any rule, regulation or order of the commission.
Ohio	Max $2,500-$20,000 per each continuing day of violation	Amount depends on which section of code, rules, permit certificate is violated.  Largest penalty primarily applies to rules to prevent pollution from extraction, storage and injection of brine, oil, natural gas or other fluids that cause damage to public health, safety and environment (water and land).
Pennsylvania	$25,000 per violation plus $1,000 for each day violation continues (conventional wells) and $75,000 per violation plus $5,000 for each day (unconventional well)	Applies to violations of Title 58 Oil and Gas. In determining the amount, the department shall consider willfulness of the violation, damage or injury to natural resources of this Commonwealth or their uses, endangerment of safety of others, the cost of remedying the harm, savings resulting to the violator as a result of the violation and any other relevant factor.
Texas	Max $10,000 for each day violation continues($200,000/day if pipeline safety)	Amount depends on rule that is violated.  Largest penalty depends on seriousness of violation of the provision, rule, order, permit, license, including hazards to health and safety of public.

The Oil and Gas Powers and Penalties bill is going to be heard on Tuesday.

Attached is an information flyer for SB 307 and a chart comparing selected states' civil penalties for oil and gas act violations.

The hearing is scheduled 3rd on the agenda for Tuesday in Senate Conservation.  The committee begins at 8:30 but there is a wildlife bill scheduled first on the agenda that is expected to draw a large crowd and take a lot of time.

Earthwork’s Oil and Gas Accountability Project  Contact: Mary Feldblum- 505-897-1803