After a nearly two-year inquiry, Colorado’s Energy and Carbon Management Commission (ECMC) approved deals allowing firms owned by its largest oil and gas companies to avoid the majority of assessed penalties for falsified data submitted by their contractors. Collectively, the oil firms stand to pay roughly $2 million, less than 15 percent of the original millions in proposed penalties. ECMC’s lone dissenting commissioner called the fraudulent data a “deep violation of the public trust.”

Christiaan van Woudenberg, an Erie, Colorado, resident turned anti-fracking activist who works with community groups like Erie Protectors, likewise criticized the agreements.

“If our only defense right now is the law and the regulations, and the ECMC is giving these oil and gas operators a pass on the enforcement of those rules and regulations — that is the true injustice here,” van Woudenberg said.

The steeply discounted penalty deals were negotiated under the oversight of ECMC director Julie Murphy. Just a day before the June 24 hearing finalizing those agreements, the state announced Murphy would be stepping down, just weeks after an investigation by DeSmog and the Guardian found the agency gave the same oil companies a $1 billion break on required financial assurance for cleaning up thousands of defunct oil and gas sites. The investigation revealed that cleanup at the current pace would take decades to finish. 

Some of those cleanup sites lacking financial assurance also had falsified data submitted to ECMC. The falsification found by ECMC’s inquiry enabled the oil companies to submit misleading cleanup reports to the agency, allowing firms to close polluted old oil and gas sites that were not actually cleaned up according to state standards. The data falsification scandal first came to light after legal representation for one of the contractors approached the Colorado Attorney General’s Office in July 2024.

The contractors — Eagle Environmental Consulting, Inc. and Tasman Geosciences — were hired by six oil and gas operators, which are now subsidiaries of Chevron, Civitas Resources, and Oxy, the state’s three largest oil and natural gas producers. (Civitas merged with SM Energy in January.) 

At its June 24 hearing, the oil and gas regulator’s commission voted 4-1 to approve the penalty agreements. Commissioner Brett Ackerman, who said he “remains appalled by the issue,” dissented.

“This has been a deep violation of the public trust through purposeful — not negligent, but purposeful — fraud,” Ackerman said at the meeting.

“I think this incident has also injured the oil and gas industry’s public license to do business as a whole in Colorado,” he added.

In a statement, Chevron spokesperson Allison Cook condemned the behavior of its contractor, Eagle Environmental, calling its actions “sophisticated and designed to conceal its fraudulent, unlawful acts from Chevron and the Commission.” Cook added that after an internal investigation, Chevron has strengthened its oversight with additional personnel and increased audits of reports.

Tasman spokesperson Alex Busuttil emailed a company statement saying that, upon discovering altered data in August 2024, the company “immediately self-reported the incident to the affected client,” and began its own investigation. The company assigns blame to a single, now former, employee and is pursuing legal action. In addition, Busuttil said, the company has implemented additional quality assurance protocols “to eliminate the possibility of future data manipulation.”

Civitas, Oxy, and Eagle Environmental Consulting did not respond to requests for comment.

Penalties Discounted While Cleanups Drag on

The six oil and gas operators — Noble Energy, Crestone Peak Resources, Bonanza Creek Energy, HighPoint Operating Corporation, Extraction Oil and Gas, and Kerr-McGee Oil & Gas Onshore — originally faced a combined $13.4 million in penalties. But after settlement discounts and suspended penalties, the companies will pay less than a combined $2 million. About half of that amount will support “public projects,” not all of which appear related to oil and gas cleanup.

For example, ECMC originally tallied about $8 million in penalties for Chevron subsidiary Noble Energy. Ultimately, it will pay $400,000 in fines, and put another $783,003 towards projects such as third-party review of forms submitted by Eagle Environmental and Tasman, and a university-backed Geothermal Solutions Summit. The rest of its penalties were suspended.

In addition to these payments, the operators are responsible for implementing new protocols for improving compliance and data integrity, conducting further internal audits, and finishing the job at the hundreds of cleanup projects.

As thousands of oil and gas cleanups drag on across the state, the steep discounts on the penalties add to ongoing questions from advocates and experts about whether ECMC is doing enough to hold oil and gas operators to account.

van Woudenberg has spent years analyzing ECMC data, including through his own mapping and data analytics firm. He told DeSmog that although the commission is in the habit of discounting penalties to reach a settlement, the amount “is really out of step with what ECMC has done in the past.”

Petroleum engineering consultant Dwayne Purvis said in an email that it’s easy for regulators to think of the entities they oversee as customers, while industry tends to treat regulators as service providers.

“In reality, the role of a regulator is quality control, and the customer is the public good,” said Purvis. He added that one limitation is a shortage of public funding, which can make it hard for agencies to be diligent, thorough, and independent; another is that regulators don’t want to be the subject of complaints or blame from the oil industry.

Murphy said at the June 24 commission meeting that the final penalty agreements followed negotiations between ECMC and the oil companies and their attorneys. “Maintaining the integrity of environmental data submitted to ECMC is essential to protecting public health, safety, welfare, the environment, and wildlife resources,” she said in closing, adding that the agreements “reflect the seriousness of the violations.”

As director, Murphy oversaw the rollout of new ECMC rules adopted following the 2019 passage of Colorado’s SB-181. This landmark law aimed to alter the regulator’s relationship with the oil and gas industry, changing its purpose from “fostering” oil and gas development to “regulating” the industry to protect public health and the environment.

The penalty agreements were announced on June 3, the day after the release of the DeSmog-Guardian investigation, which reviewed thousands of documents and revealed the scale of the environmental and financial burden posed by pending cleanups of decommissioned drilling sites. The story found that Chevron, Oxy, and Civitas are together responsible for more than 6,000 active spills and about 14,600 defunct oil and gas sites with incomplete cleanups.

State law requires financial assurance from operators in the form of bonds to make sure those cleanups happen in a timely way, and that the public is not ultimately responsible. However, DeSmog’s examination revealed that ECMC twisted its own rules, granting these same companies involved in the data falsification scandal generous financial assurance agreements that have left thousands of these dirty sites lingering under Director Murphy’s watch. Murphy is directly responsible for overseeing the implementation of some of those rules.

Hidden Pollution Levels at Hundreds of Old Oil and Gas Sites

ECMC announced its data integrity investigation in 2024, after the contractors alerted the state to potential instances of falsified data. The investigation ultimately found that faked data reports affected about 400 remediation projects in Weld and Larimer counties, obscuring the true extent of pollution. Many of the falsified data points changed the levels of contaminants found in soil and water samples to show results aligned with required safety levels.

In the most drastic instance ECMC noted, one contractor reduced the amount of benzene — a carcinogen — detected in a water sample by 99 percent, placing it just below the required safety limit.

After discovering the potentially falsified data, ECMC strengthened protocols for submitting and reviewing data, examined past environmental data samples, reopened previously closed cleanup projects, and required operators to resample and further clean up affected areas.

When it comes to the ongoing cleanup projects, some of which are near homes and drinking water wells, ECMC spokesperson John Brown said by email it is difficult to provide more than a broad status update, given the diversity and complexity. “In general, the required work is progressing,” he said, adding that he couldn’t say how many locations are on track to meet the agency’s deadlines.

“ECMC expects operators to comply with cleanup requirements, deadlines, and reporting obligations,” Brown said, but when they don’t, “ECMC may use its available compliance and enforcement tools.” He pointed to the recent penalty agreements, saying that they “are consistent” with the agency’s other enforcement actions.

The agency says it has referred the matter to “appropriate prosecutors” for possible criminal investigation.

‘Aggressive Permitting and Weak Enforcement’

During public comment at the June 24 meeting, several community members and activists criticized ECMC for not doing enough to hold oil and gas operators accountable.

“How do we trust the ECMC to enforce its own rules when what communities see is a combination of aggressive permitting and weak enforcement?” asked Yvonne Yap, an Aurora, Colorado, resident. She referenced the controversial State Sunlight-Long drill pad, a project near the Aurora Reservoir that ECMC recently approved in spite of sustained pushback from community groups.

“You ask communities to trust the process and participate in good faith,” she said, “but if accountability disappears when rules are broken, people begin to question the system.”

Commissioner John Messner questioned agency staff about the amounts they ultimately discounted or suspended from the original penalties for the oil companies. ECMC Enforcement Manager Jeremy Ferrin said that settlement discounts, which accounted here for a 20 percent reduction in fines, are common in these kinds of agreements. However, he said, it’s “probably safe to say” that the penalty amounts suspended were atypical. 

Reasons that outgoing ECMC Director Murphy and Ferrin gave for the suspended penalties included a desire to encourage operators to disclose future violations, the fact that some of the corrective actions companies agreed to, like spot-checking and quality control measures, weren’t explicitly required, and the conclusion that the falsification was found to be the contractors’ fault. However, ECMC rules state that operators are still responsible for the work done by third-party contractors.

Heidi Leathwood, a climate policy analyst for nonprofit 350 Colorado, told DeSmog that the idea of incentivizing companies to self-report “misses the point.” 

“While the full penalty amount might be a deterrent for some of Colorado’s smaller operators, for these corporations with the gigantic annual profits, even the full penalty is just another cost of doing business,” she said.

“By suspending the penalties, this creates an appearance of favoring the industry over protecting people and the environment — and whether or not that’s what the commission intended, it’s a really powerful signal.”

The closure of the data falsification investigation rounds out the tenure of ECMC director Julie Murphy, whose last day is July 23.

Murphy did not respond to a request for comment about her departure. In the statement announcing the leadership change, she said, “Serving the people of Colorado and helping lead ECMC through one of the most significant transitions in the agency’s 75-year history has been the honor of my career.”

ECMC spokesperson Brown defended the director’s record.

“Julie has been fortunate to support ECMC’s work in different capacities for many years, first as a lawyer beginning in 2013 and most recently as Director since 2020,” Brown said in an email. “Having served through two gubernatorial administrations and through a period of significant growth and change for the agency, this felt like the right time for her to take on a new challenge.” He said Murphy is planning to move to the private sector to support geothermal energy development.

Jennifer Walker Graf, current assistant director for energy innovation for Colorado’s Department of Natural Resources, will serve as ECMC’s acting director.