RR Commission instituting "real" penalties for repeat offenders?

Chronic violators of Texas Railroad Commission safety rules may be looking at steeper fines if they don’t clean up their acts.

In response to the agency’s Sunset review last session, the commissioners who regulate the state’s booming oil and gas industry are expected to approve penalty hikes in six major categories, taking special aim at repeat offenders. The proposed penalty hikes – the first since 2004– will then undergo a 30-day public comment period before new rules are finalized. Repeat offenders will see their penalties enhanced.

If approved, penalties will increase for an array of safety violations in six major divisions: 1) oil and gas 2) pipeline safety 3) propane safety 4) compressed natural gas 5) liquid natural gas and 6) underground pipeline damage prevention (rules requiring such things as calling before digging).

No estimate has been made available on how much extra revenue the tougher penalties will raise, but all proceeds will be funneled into the state budget’s General Revenue Fund.

While details are not yet available on exact increases across the board, according to the Texas Energy Report, a few examples make clear that the commission means business. Take the current $2,000 penalty for failing to plug a well in a timely fashion. Once the new fees kick in, violators will pay that amount plus $1 per foot of the well’s depth. So a driller of a 6,000-foot well who fails to plug the well will pay four times as much – $8,000.

Violators of safety rules for waste pits at oil and gas sites will see their fines increasing more than double under the proposed rules. If they use the pit for the wrong type of fluid, fail to get a permit for the pit or run amok of other rules, fines are set to more than double – from $1,000 now to $2,500.

Until now, penalties at the commission have always been in the form of staff guidelines, but the new penalty guidelines will be plaed into rules. State law caps all penalties at a maximum of $10,000 per day, and commissioners will retain their power to adjust fines.

While the Railroad Commission is going above and beyond the recommendations of the Sunset Commission, environmental groups believe penalties should be above the economic benefit to the company to be effective in detering repeat offenders.