DENVER–Democrats moved to put the squeeze the energy sector Thursday by approving bills that would increase penalties and inspections on drilling facilities.
The Senate Agriculture, Natural Resources and Energy Committee passed on an 3-2 vote a bill to require annual inspections on drilling facilities. Meanwhile, the House Transportation and Energy Committee voted 8-5 in favor of a bill to raise the maximum daily fine for drilling violations from $1,000 to $15,000, with no cap.
The bills, which advanced without Republican support, come as the first wave of Democratic proposals targeting fossil-fuel drilling operations. Environmental groups are pushing for tighter regulations on the industry, which has boomed in recent years thanks to hydraulic fracturing and other advances in exploration technology.
“It’s important we have domestic energy sources. However, this rapid expansion can also lead to increased public health risks for Coloradans,” said state Sen. Matt Jones (D-Louisville), who sponsored the Senate bill. “This bill contains commonsense policy ensuring companies are operating responsibly and safely. We must get this right.”
Republicans balked at the legislation, saying it would discourage business expansion and job creation at a time when the state’s economy is struggling to overcome the effects of the national economic downturn.
Colorado’s economic prospects took a hit earlier this week after Magpul Industries in Erie announced it would leave the state following Gov. John Hickenlooper’s signing of three Democratic gun-control bills.
“Most people in Colorado want the General Assembly to focus on jobs and improving the economy,” said Sen. Greg Brophy (R-Wray). “They want us to work together to create jobs in Colorado, not over-regulate and outsource them. The Democrats’ decision to attack one of the most promising job sectors is troubling.”
State Rep. Ray Scott (R-Grand Junction) recalled that Democratic legislators, who hold comfortable majorities in both houses, described job creation their top priority at the start of the legislative session.
“For a caucus that listed jobs as their ‘number-one priority,’ increasing a fine by 1,400 percent overnight for one of our economy’s best economic engines is irresponsible,” said Scott in a statement.
Hickenlooper, a former geologist, has championed the state’s natural-gas industry, leading to speculation over whether the bills are advancing with or without his approval.
Colorado Republican Party chair Ryan Call said Thursday in a statement that “[t]he threat of these bills alone makes potential job creators think twice before coming into the state.”
“Gov. Hickenlooper must come out against these job killing measures and promise to veto them if they hit his desk,” said Call. “He cannot hope that that the extreme fringe of his party, which controls the legislature and supports these bills, will do anything to protect the families who depend on these jobs.”
Democrats argued that energy companies need to be held accountable.
The legislation “will bring Colorado’s schedule of fines into this century and make operators think twice about cutting corners at the expense of local jobs and public health,” said the House Democrats in a statement.
State Rep. Mike Foote (D-Lafayette) argued that Colorado has one of the lowest fine schedules in the nation. In the Texas legislature, he said, a bill has been introduced to increase fines to $200,000 per violation with no cap.
The bills come despite new rules by the Colorado Oil and Gas Conservation Commission requiring companies to pay for additional inspectors. The fiscal analysis says the inspections bill will require another 65 commission employees at a cost of $8.2 million.
The oil and gas industry supports more than 100,000 jobs and contributes nearly $32 billion into the state economy, accounting for 95 percent of the state’s severance-tax revenue, according to the industry.
City councils in Longmont and Fort Collins have passed bans on hydraulic fracturing within their municipality limits. The state has filed a lawsuit against Longmont to overturn the ban and is considering taking legal action against Fort Collins.
Hickenlooper has called for the commission to implement statewide rules on the industry, saying that allowing localities to impose their own rules would create an unwieldy regulatory patchwork.