A company that operates over 1,200 oil wells northeast of Denver has lost its license to pump and sell oil and gas after it failed to follow a state-ordered cleanup plan for dozens of its hazardous spills.
K.P. Kauffman now has six months to come back into compliance with the 2021 order or it will lose all remaining rights to function as a business in the state, according to a decision made by the state’s top oil regulator on Wednesday. The company must also pay a $1.9 million fine for its 68 spills and other ongoing environmental violations.
“Many of these sites are near homes, schools and other sensitive areas,” said Michael Cross, a commissioner with the Colorado Oil and Gas Conservation Commission, ahead of the ruling. “Many of these sites could be quickly remediated, but instead they’ve been open for hundreds of days.”
The decision is the first time the commission has terminated a compliance plan agreement with a Colorado oil company. Other similar companies have been shut down due to environmental violations, but K.P. Kauffman is likely the largest, according to a COGCC spokeswoman.
The closure will likely have devastating impacts for the company, which is one of the largest operating oil and gas producers in Weld County. The company said in a statement that its inability to sell oil will make it impossible to continue cleanup efforts and satisfy the state’s demands.
“Rather than protecting public health and the environment, as required by COGCC’s mission, today’s decision puts them at risk,” the company said. “It is loaded with unintended consequences.”
How K.P. Kauffman first ran into trouble with the state
The company brokered the 2021 compliance plan with the state after racking up years of violations, including an oil spill near a Frederick elementary school. Inspectors with the commission also accused the company of improperly disposing tens of thousands of tons of contaminated dirt on open fields in Weld County, among other illegal practices.
After the 5-year plan was approved, the company hired an outside contractor and began mitigation efforts, according to testimony from company representatives during a hearing this week.
By January 2023, at least nine of its sites in violation were close to cleanup, company representatives testified. Close to 50 percent were on track to be cleaned up by the end of the year.
The company contributed to 5 percent of all spills in the state last year, said Levi Kirk, project manager at MarCom, K.P. Kauffman’s contractor tasked with meeting state standards, during a cross-examination.
“As soon as things are identified, they’re fixed,” Kirk said. “I think things have progressed and gotten better.”
Shoddy and slow repair work
But repair work has been shoddy and much slower to complete than other oil companies operating in Colorado, COGCC inspectors testified.
COGCC photos from K.P. Kauffman site visits in Weld County in recent weeks showed sagging fences, large ditches filled with standing water and other environmental hazards at the company’s work sites. One photo shows an uncovered pile of contaminated soil in a field near where cattle graze and crops grow.
“These plans are not working and need maintenance,” said Greg Deranleau, a COGCC environmental manager. “Under the Clean Water Act, sedimentation is contamination that contaminates waterways.”
COGCC staff also testified that K.P. Kauffman’s status reports of its cleanups were often incomplete and inaccurate. Company representatives often failed to include backup documentation of completed projects, forcing state staff to constantly follow up.
“I think it really burdens staff,” Deranleau said.
K.P. Kauffman representatives blamed the oil industry downturn in 2020 during the height of the pandemic and overburdensome regulations as factors slowing down the cleanup of its facilities. COGCC staff also inaccurately documented cleanup work progress at many sites during its inspections, said Kirk, the MarCom contractor.
“I think with anything there’s professional disagreements in opinion,” Kirk said.
After three days of hearings commissioners unanimously voted to terminate their cleanup plan with K.P. Kauffman. Several described the company’s slow progress as "disturbing."
“Unfortunately this is a case of fool me once, shame on you, fool me twice, shame on me," said John Messner, a commissioner. "This commission will not be fooled twice.”
Could K.P. Kauffman operate in Colorado again?
If K.P. Kauffman comes back into compliance with the state’s environmental rules in the next six months, it will be allowed to pump and sell oil again, per Wednesday’s decision. That would save the jobs of roughly 150 employees that work for the company.
That would also prevent the company from having to sell off its assets to other oil companies or forfeit them to the state, which would move the timeline for necessary repairs back even more, the company said.
“It’s far too early to give up on the plan, especially given the substantial progress being made,” the company said. “KPK will consider all options resulting from COGCC’s decision, including the possibility of appealing it to Denver District Court.”
Commissioners expressed concerns about potential job losses, but said the company’s violations of its cleanup plan outweighed the cuts.
“Such consequences are not taken lightly,” said Cross, a COGCC commissioner. “But we cannot ignore continued, serious violations that have ongoing environmental impacts.”
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