January 29, 2020 03:17 PM UTC

Please Stop Calling Big Oil "Good Corporate Citizens"

• 2 Comments
• by: Colorado Pols

With all eyes squarely focused on the slow-motion train wreck playing out in Washington, D.C., we wanted to be sure a new report from the office of Colorado State Auditor Dianne Ray got a mention. It’s the latest shining example of “good corporate citizenship” from the oil and gas industry, whose attempt to apocalyptically upend basic land use regulations in Colorado on the 2018 ballot Amendment 74 was thankfully defeated. Colorado Public Radio reports:

Colorado could be losing millions in tax revenues. A new state audit finds that oil and gas companies operating in Colorado have failed to submit thousands of monthly reports used to track how much energy they produce.

In turn, those reports help the state determine if the companies have paid the right amount of taxes.

The audit also says regulators aren’t imposing penalties or tracking the missing or incomplete production reports.

“Based on these assumptions, we estimate that operators would have been subject to about $308 million in penalties for delinquent reports for the 30-day period, none of which the [Colorado Oil and Gas Conservation] Commission actually imposed,” according to the audit.

To be clear, there are a couple of problems at work here. The biggest problem is that energy companies are failing to file reports to the state used to calculate their severance tax liability. There seems to be an attempt by Republican members of the Legislative Audit Committee to lay the blame on the Colorado Oil and Gas Conservation Commission, but it’s the producers who have the obvious financial motive to not file these reports in the first place.

In 2016 alone the audit said one company failed to submit as many as 1,123 monthly well reports. That potentially totals an additional $2.6 million in severance taxes that the operator would have owed the state. [Pols emphasis]

“It was distressing to see that there was a culture of acceptance of not filing forms,” said Rep. Dafna Michaelsen Jenet, the Democratic vice chair of the committee. “And the top producers are the biggest violators and we’re talking about thousands upon thousands of forms not filed. ”

We don’t think there’s a question whether regulators failing to adequately monitor compliance or producers conveniently “forgetting” to file their paperwork are at fault here. Certainly the COGCC needs to tighten their procedures make sure no one can just fail to file their production reports to avoid paying severance taxes. But the odds that the producers themselves were not aware of their own production in order to correctly report it are extremely remote.

If the oil and gas industry had not proven itself to be a predacious neighbor by spending millions trying to pass Amendment 74 in 2018, which would have either bankrupted local governments across the state or disrupted the most basic zoning and land-use authority everyone in Colorado takes for granted whether they know it or not, perhaps we’d be more inclined to let bygones be bygones–with a bill for all past due severance taxes, interest, and penalties. But that doesn’t seem like enough.

This politically vindictive industry deserves to be shamed. By every Colorado taxpayer.