Colorado oil regulators warn of ‘final opportunity’ for well operator to clean up its sites and avoid millions in fines

Hart Van Denburg/CPR News
Regulators with the Colorado Oil and Gas Conservation Commission have issued their second-largest ever fine to the KP Kauffman company, for failing to clean up dozens of flow line spills in Adams and Weld counties. This is the company’s Grand Tank Battery site near Legacy Elementary School in Frederick, Weld County.

A major well operator in Colorado is under renewed scrutiny by state regulators for what they say could be a “global failure” by the company to uphold its agreement to clean up dozens of spills at its sites.

The Colorado Oil and Gas Conservation Commission last year found operator K.P. Kauffman responsible for a “pattern of violations” at its well sites, including contaminated soil and groundwater and poorly fenced ditches that inspectors and residents said were untouched for months. The company agreed on a plan to clean its sites to avoid a $2 million fine, the second-largest issued by the state.

At a progress report on the cleanup agreement in front of commissioners this week, state Assistant Attorney General Caitlin Stafford said the commission “is really seeing no improvement in operations or compliance” by the company.

“Staff expected to see meaningful changes, even six months into the [compliance agreement],” Stafford said. “What staff has instead seen is business as usual, a lack of commitment to right the ship.”

Commissioners voted to hold a formal hearing to determine whether K.P. Kauffman was able to fulfill the agreement and comply with state environmental rules.

In a statement, the company said it was “surprised and disappointed” by regulators’ concern and move to re-examine the agreement, blaming the cleanup delays on COVID-19 outbreaks among workers, problems with soil sample testing and “bad weather” at the beginning of the year.

John Jacus, an attorney for K.P. Kauffman, asked commissioners for more time to show progress, citing the delays and preliminary work to enact the agreement.

“It felt like we haven’t really given this [agreement a] chance for success, a full chance for success,” he told commissioners. 

While Jacus said the company had so far spent about $3 million on the compliance agreement, assistant AG Stafford said there was little proof to show for it. State inspectors recently found several sites with open excavations, no soil sampling and improperly managed waste.

There were 16 new spills reported at K.P. Kauffman locations since the agreement went into place last year, only one of which was cleaned up, according to the state. The company also had errors and other problems with its spill reports, which regulators said showed a poor understanding of environmental rules.

Oil and gas commissioner John Messner called for the upcoming hearing. “Even with all the chances that this operator has received to address their systematic deficiencies … I think there's still a real possibility that KPK fundamentally is either unwilling or unable to comply with this [agreement],” he said.

Commissioner Karin McGowan agreed, adding that she wanted the commission to offer the company as much help as possible to fall into compliance. Commissioner Bill Gonzalez said the upcoming hearing “might be the last opportunity” for the company to show progress.

The hearing is likely to happen before the end of June, commissioners said.