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Colorado drilling company behind leaks, spills will pay a fraction of the massive fine it initially faced

KP Kauffman has also agreed to a comprehensive clean-up of spills and releases from wells, tanks, and flowlines at 74 sites under a “global” remediation plan

Front Range oil and gas company KP Kauffman has agreed to a comprehensive clean-up of spills and releases from wells, tanks, and flowlines at 74 sites under a “global” remediation plan and to pay a $795,000 fine – just about a fifth of what state regulators initially sought.

The compliance agreement was approved by the Colorado Oil and Gas Conservation Commission Friday, after weeks of negotiation between the company and the commission staff.

The plan calls for the company, also known as KPK, to undertake a comprehensive inspection of its flow line system, remediate sites, and improve staff training. It has five years to complete the plan and pay the fine.

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The company must keep $150,000 in an account dedicated to spills and site remediation and replenish the account monthly.

State Assistant Attorney General Caitlin Stafford, who represented the commission, called the settlement “a detailed and comprehensive action plan” that is “tough but fair.”

John Jacus, the attorney for KPK, said the agreement gives the company “enough flexibility to meet their obligations.”

The commission staff had brought a sweeping enforcement action against KPK, as a chronic polluter, in a 70-page litany of 20 alleged operating violations at seven sites, including improperly storing wastes and falling to report and clean-up spills.

The independent oil and gas company KP Kauffman has been ordered to shut in shut 87 of its wells and clean up 29 sites in Adams and Weld counties. (Colorado Oil and Gas Conservation Commission)

The commission staff sought a $3.7 million fine and raised the prospect of KPK losing its ability to operate in Colorado.

The staff action followed an April order for KPK to shut 87 wells and clean-up 29 sites with violations ranging from fouling farm fields to covering the road in front of a high school with oil wastes.

In hearings that spread over several weeks, the commission upheld most of the alleged violations, but trimmed the fine to just shy of $2.02 million, the second largest penalty ever assessed by the COGCC.

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The commission staff and KPK then began negotiations, with Commission Chairman Jeff Robbins serving as hearing officer.

Robbins said that the priority was getting KPK back into compliance rather than levying a hefty fine.

In a confidential hearing, a KPK forensic accountant offered testimony that the company could not afford to pay more than $795,000 in fines. In January, the company settled a case with state and federal regulators involving air emission violations, paying a $1 million fine and agreeing to spend $2.5 million on emission controls.

“Our resources are limited [but]we want to do as much as we can,” Jacus said.

KPK, however, isn’t getting a free pass on the remaining $1.2 million in fines. That money will be vacated in increments as the oil and gas company fulfills parts of the remediation plan dealing with elements such as flowlines, spill response and comprehensive waste management.

Commissioner Priya Nanjappa expressed concerns about the five-year span of the plan and the fact that KPK won’t pay any of the fine for another year.

“There is a little bit of concern there was some trust broken” by KPK, Nanjappa said. “COGCC doesn’t receive any deposit in good faith,” she said. “KPK could walk away and we have no compliance, no funds.”

Jacus said that KPK, a family company, has been operating for 38 years and that company CEO Kevin Kauffman is “a pillar of the community.” Jacus said, “this is not a flight risk.”


CORRECTION: This story was updated Nov. 5, 2021, at 9:13 p.m. to correct the number of locations covered by the settlement agreement. There are 74 sites covered.


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