The cost of no ERCB penalties is too high in Alberta, Oil and gas violations could be costlier, Legislative committees approve raise in fines in Colorado

Oil and gas violations could be costlier, Legislative committees approve raise in fines by Peter Marcus, March 25, 2013, The Colorado Statesman
House Bill 1267, sponsored by Rep. Mike Foote, D-Lafayette, would increase industry maximum fines from $1,000 per day to $15,000 per day, and set a minimum fine of $5,000 per violation per day. The measure would also repeal the current maximum total fine cap of $10,000. The House Transportation and Energy Committee sent the measure to finance on a party-line vote of 8-5. It is significant that the measures come from two Front Range lawmakers representing the Boulder County area, where an increase in oil and gas activity, and fears around the controversial drilling process known as hydraulic fracturing, or fracking, have set off a relative panic. … Both Jones and Foote pointed to a 2006 test of groundwater at the abandoned Rider No. 1 gas well, operated by TOP, near Longmont’s Trail Ridge Middle School. The site tested for benzene levels nearly 100 times the state limit. “There was a plan put in place to cleanup the mess, and the bottom line was the operator that was responsible for the mess didn’t clean up the mess for two years,” Foote pointed out in stating his case for increasing fines. “At the end of the two-year period, COGCC finally put a fine of $10,000 for two years of not cleaning up the mess.” Supporters of increasing fines argue that if penalties are too low, oil and gas companies won’t have enough incentive to take environmental and health precautions. [Emphasis added]

The cost of no ERCB penalties is too high by Licia Corbella, February 27, 2013, Calgary Herald 
The timing couldn’t be worse or more ironic. Premier Alison Redford goes to Washington. She spends the weekend rightly lobbying U.S. lawmakers about the importance of TransCanada’s Keystone XL pipeline that, if approved by President Barack Obama, will ship 830,000 barrels per day of Alberta crude down to Texas for upgrading. By all accounts, things go well for Redford in the U.S. Capital. She even gets a column published in USA Today on Tuesday, boasting about how environmentally rigorous Alberta is. Then, on the same day, the Energy Resources Conservation Board (ERCB) brings down three rulings about serious oil spills that, on the surface anyway, look like little more than a scolding. No fines are levied, just “high-risk enforcement actions.”

The most serious of the oil spills took place in April 2011 about 95 km northeast of Peace River and just 12 km southeast of the Woodland Cree Reserve. A Plains Midstream Canada pipeline, called the Rainbow pipeline, leaked 28,000 barrels of sweet crude oil into a muskeg before the leak was stopped – making it one of the largest oil spills in Alberta history. Even though leak detector alarms had sounded at 6: 35 p.m. on April 28, 2011, the company did not shut down the pipeline until 3 a.m. – or eight and a half hours later – according to the ERCB report. The ERCB found four areas in which Plains Midstream failed to comply with regulatory requirements, including: inadequate backfill procedures, improper operation and maintenance, inadequate leak detection and response, and failing to test its emergency response plan. To repeat, despite all that, no fines were levied, just a long to-do list was established with tight deadlines. How do you buy social licence for Alberta’s oilpatch if it appears that Alberta’s regulator doesn’t treat spills and the like with punitive treatment?

Besides being forced to implement risk assessment procedures, conduct a major emergency response exercise by March 31 and demonstrate enhanced backfill procedures, Plains Midstream has been directed to hire a third party to audit the company’s ability to manage communications. But no fine. Wildrose environment critic, Joe Anglin, says the ERCB needs more teeth, not more spin doctors. Besides Plains Midstream, Pembina Pipeline and Pengrowth Energy also were cited for spills. “The ERCB identified six areas where the three companies failed to comply with the regulations. However, the ‘High Risk Enforcement Actions’ offered little more than public censure, increased inspections and in the case of Plains Midstream Canada, a third-party audit to assess “crisis communications,” said Anglin in a news release Tuesday night. “Enforcement action on companies needs to be more meaningful than a news release and a tougher hand needs to be shown to companies for failing to follow existing regulations,” added Anglin. Darin Barter, a spokesperson for the ERCB, said the regulatory body does not have the authority to levy significant fines.

“That’s a legislative gaffe,” said Barter. “Our legislation that we operate within doesn’t allow us to fine more than several hundred dollars.” However, Barter points out, the ERCB carries a much bigger stick. “Not being able to issue a significant fine is more of an optics problem. When you issue a fine, it’s subject to appeals in the courts but when you can walk onto a site and shut it in for 122 days, like we did with Plains Midstream, that has an immediate economic impact,” adds Barter. … But isn’t getting shut down the natural consequence of not complying with environmental laws? Shouldn’t there be a punitive measure as well?

Here’s what Redford, wrote in part, in USA Today: “Through our policies and our actions past, present and future, Americans should feel confident that Alberta is the safest, most secure and responsible energy supplier to the U.S. The same cannot be said for the other foreign countries and regimes that currently feed U.S. energy demand.” [Emphasis added]

This entry was posted in Case Related. Bookmark the permalink.