A Denver oil and gas company accused of multiple violations of state rules, including failing to report spills and address problems in a timely manner, could face a fine of $3.7 million and lose its right to operate in Colorado.
The Colorado Oil and Gas Conservation Commission wrapped up a hearing Friday on five of eight violations filed against K.P. Kauffman Co. .The commission will start deliberations Monday and is expected to issue a preliminary decision.
The hearing on the remaining three alleged violations is scheduled to start Aug. 18.
The hearing was split up when COGCC Chairman Jeff Robins recused himself from considering the three complaints. Lawyers for K.P. Kauffman argued there was a conflict of interest because Robbins was the agency’s director when the three complaints were filed.
A prehearing statement by the COGCC staff cast K.P. Kauffman, also called KPK, as unable or unwilling “to operate its facilities and equipment in a manner consistent with COGCC rules.” Allegations include problems with leaking flowlines, which are connected to the wellhead and carry gas or liquids to other parts of the site.
Another complaint says in May and April 2020, the company dumped several loads of soil contaminated with oil and gas waste on a field with a nearby pond and wetlands. John Jacus, a lawyer representing K.P. Kauffman, said the company believed the soil didn’t pose any threats and the field belonged to the company.
In January 2020, the COGCC received a complaint that a KPK flowline was leaking in a corn field after the farmer said he had talked to the company for nine weeks and nothing happened. The company violated state rules requiring companies to report leaks within a certain time period and detail the actions needed, the staff said.
In another case, the state didn’t learn about a leaking flowline for two months, said Caitlin Stafford,an assistant attorney general representing the COGCC staff.
“No notice from KPK. No heads up from KPK. No questions from KPK to staff to begin a dialogue to seek direction,” Stafford said in her closing statement. “Just KPK substituting its own unreliable and poor judgement for that of the agency in deciding what to report and when to report it.”
Stafford said the staff isn’t focused on imposing the maximum penalty on the company. “Instead, we want you to order KPK to live up to its obligation to the people of Colorado because they have clearly stopped listening to staff.”
Most of K.P. Kauffman’s roughly 1,200 wells are in Weld County. Kevin P. Kauffman is the founder, chairman and CEO of the business that started in 1984.
In 2020, K.P. Kauffman agreed to pay $3.5 million in fines and improvements to settle allegations by state and federal regulators of air quality violations.
Jacus said in his closing statement to the commissioners that the staff had not met its burden to establish that his client violated state oil and gas regulations. He said the staff exaggerated the impacts, conflating missed filing deadlines with “actual impacts to the environment, public health, safety welfare and wildlife resources.”
K.P. Kauffman acknowledges that it has made mistakes, Jacus said. The company has made changes, adopting new policies and practices, he added.
“If the point of these proceedings is to return KPK to compliance, as we believe it should be, be rest assured the commission has captured its full attention,” Jacus said.
Considering whether the company can pay the $3.7 million fine recommended by the staff would be in the commission’s interest and is called for by its policy, Jacus said.
“The commission is discouraged from imposing penalties that might jeopardize an operator’s ability to conduct necessary environmental remediation,” Jacus added.
The recommended penalty is based on the calculated fees for each violation.
After deciding whether K.P. Kauffman committed the alleged violations, the commission will look at whether the company is guilty of a pattern of violations. If yes, the company could lose its license to operate in Colorado.
The state has revoked companies’ licenses in the past.
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