25CA1249 Kauffman v Oil and Gas 06-04-2026
COLORADO COURT OF APPEALS
Court of Appeals No. 25CA1249 City and County of Denver District Court No. 23CV30680 Honorable Ian J. Kellogg, Judge
K.P. Kauffman Company, Inc.,
Plaintiff-Appellant,
v.
Oil and Gas Conservation Commission of the State of Colorado n/k/a Colorado Energy and Carbon Management Commission,
Defendant-Appellee.
JUDGMENT AFFIRMED
Division I Opinion by JUDGE J. JONES Fox and Dunn, JJ., concur
NOT PUBLISHED PURSUANT TO C.A.R. 35(e) Announced June 4, 2026
Davis Graham & Stubbs LLP, John R. Jacus, R. Kirk Mueller, Aditi Kulkarni- Knight, Denver, Colorado, for Plaintiff-Appellant
Philip J. Weiser, Attorney General, Kyle W. Davenport, Senior Assistant Attorney General, Caitlin M. Stafford, Senior Assistant Attorney General, Denver, Colorado, for Defendant-Appellee ¶1 Defendant, the Energy and Carbon Management Commission
(ECMC),1 a part of the Colorado Department of Natural Resources,
issued an order (1) terminating a “Compliance Plan Agreement” with
plaintiff, oil and gas operator K.P. Kauffman Company, Inc.
(Kauffman), that had been incorporated into a previous ECMC
order; (2) assessing an administrative penalty of $1,935,030 against
Kauffman for numerous violations of ECMC’s rules enforcing the
Energy and Carbon Management Act (the Act), sections 34-60-101
to -144, C.R.S. 2025;2 and (3) suspending all of Kauffman’s
certificates of clearance to transport and sell product.3 Kauffman
sought judicial review of the ECMC’s order in the district court
under section 24-4-106, C.R.S. 2025, of the State Administrative
Procedure Act (APA); sections 13-51-101 to -115, C.R.S. 2025, the
1 In 2023, the General Assembly renamed the Oil and Gas
Conservation Commission the Energy and Carbon Management Commission. Ch. 235, sec. 1, § 34-60-104.3, 2023 Colo. Sess. Laws 1231. 2 The Act was previously known as the Oil and Gas Conservation
Act. The General Assembly renamed the Act in 2025. Ch. 257, sec. 2, § 34-60-101, 2025 Colo. Sess. Laws 1290. 3 A certificate of clearance “constitutes authorization to the Pipeline
or other transporter to transport the authorized Fluid from the Well named” in the certificate. Dep’t of Nat. Res. Rule 219.a, 2 Code Colo. Regs. 404-1.
1 Uniform Declaratory Judgments Law; and C.R.C.P. 57, which
concerns the court’s power to issue declaratory relief. The court
entered orders granting the ECMC’s motion for partial summary
judgment and affirming the ECMC’s order. Kauffman now appeals
the district court’s judgment. We affirm.
I. Regulatory Framework
¶2 The Act “established the [ECMC] to provide for the responsible
development of the state’s oil and gas resources.” Chase v. Colo. Oil
& Gas Conservation Comm’n, 2012 COA 94, ¶ 25; see
§ 34-60-102(1), C.R.S. 2025. The ECMC has the authority to
“[r]egulate the development and production of the natural resources
of oil and gas in the state of Colorado in a manner that protects
public health, safety, and welfare, including protection of the
environment and wildlife resources.” § 34-60-102(1)(a)(I).
¶3 The ECMC comprises a commission and staff. The
commission enforces provisions of the Act, makes rules to enforce
the Act, and “do[es] whatever may reasonably be necessary to carry
out the provisions of the [A]ct.” Voss v. Lundvall Bros., Inc., 830
P.2d 1061, 1065 (Colo. 1992) (citing § 34-60-105(1), C.R.S. 1984).
The staff carries out the ECMC’s day-to-day operations and alerts
2 the commission to any alleged violations. See § 34-60-104.5(2)(d)(I),
C.R.S. 2025.
¶4 Any operator that violates the Act or the ECMC’s rules may be
subject to monetary penalties. § 34-60-121(1)(a), C.R.S. 2025. The
commission may impose a penalty on an operator through an order
finding violation (OFV) after an adjudicatory hearing or through an
administrative order by consent (AOC). § 34-60-121(1)(b).
Penalties are calculated based on the “severity of the potential
consequences of a violation of a specific rule combined with an
assessment of the degree of actual or threatened adverse impacts to
public health, safety, welfare, the environment, and wildlife
resources.” Dep’t of Nat. Res. Rule 525.c, 2 Code Colo. Regs. 404-1.
¶5 In addition to monetary penalties, the commission may order
an operator to take corrective actions and may include a plan or
schedule for completion of those actions in its final administrative
order. See § 34-60-121(1)(c)(I)(C); see also Dep’t of Nat. Res. Rule
523.f, 2 Code Colo. Regs. 404-1. The commission may also impose
penalties, such as prohibiting the issuance of new permits,
suspending certificates of clearance, and suspending the operator’s
license to conduct oil and gas operations, if it finds that the
3 operator committed a pattern of violations. § 34-60-121(7)(a)(II), (b).
The commission defines a pattern of violations as “a history of
violations of the Act, Commission Rules, orders, and/or permits
that demonstrates an operator’s disregard for those legal
requirements.” Colo. Oil & Gas Conservation Comm’n, Statement of
Basis, Specific Statutory Authority, and Purpose: New Rules and
Amendments to Current Rules of the Colorado Oil and Gas
Conservation Commission, 2 CCR 404-1 (Jan. 5, 2015),
https://perma.cc/FNF4-NLE9.
¶6 If staff believes that an operator has violated an ECMC rule,
staff may issue a notice of alleged violation (NAV). Dep’t of Nat. Res.
Rule 523.c, 2 Code Colo. Regs. 404-1. If staff also alleges that the
operator has engaged in a pattern of violations, the commission
must hold an OFV hearing before it may impose penalties. Id. at
Rule 523.d.(2). At an OFV hearing, staff and the operator may
present witnesses and evidence before a hearing officer. Id. at Rule
510; see id. at Rule 521. The commission then issues a written
order with its decision and, if applicable, a penalty assessment. Id.
at Rule 521. Once the commission’s order is finalized, the operator
can seek judicial review. Id.
4 II. Factual Background
¶7 From October 2019 to January 2021, staff issued eight NAVs
to Kauffman for various violations, including failing to report spills,
maintain equipment properly, and prevent soil and water
contamination. The commission set a hearing to consider all eight
NAVs.
¶8 Following the hearing, the commission concluded that
Kauffman had committed twenty-two violations across seven of its
drilling locations. The commission also heard arguments about
whether Kauffman had committed a pattern of violations and
concluded that it had. The commission assessed a monetary
penalty of $2,014,530. Kauffman told the commission that it was
unable to pay a monetary penalty greater than $795,000 without
going bankrupt.
¶9 After the hearing, the commission directed staff and Kauffman
to create a plan intended to bring Kauffman into compliance with
the Act for the commission’s consideration. The commission
authorized the commission’s chair to oversee the plan’s creation.
Staff and Kauffman met and came up with a “Compliance Plan
Agreement” (CPA).
5 ¶ 10 The CPA discussed Kauffman’s violations, as well as its
claimed inability to pay a fine greater than $795,000. It said that
the commission would suspend part of the monetary penalty if
Kauffman complied with the CPA’s corrective actions. Section IV of
the CPA set out the corrective actions, including requirements and
deadlines for remediation plans; creation of a “Global Remediation
Implementation Plan”; and submission of a “Flowline System
Integration Plan,” a “Comprehensive Waste Management Plan,” and
a “Spill/Release Reporting and Training Plan.” Each remediation
plan had an attached penalty that the commission would impose
should Kauffman fail to complete the respective corrective actions.
¶ 11 The CPA also contained a terms and conditions section. As
now relevant, the terms and conditions said that, should Kauffman
fail to substantially comply with Section IV’s requirements as a
whole, the commission retained the right to terminate the CPA and
reinstate the suspended penalties.
¶ 12 Staff and Kauffman presented the CPA to the commission for
its consideration. The commission approved the CPA and
simultaneously directed that it be incorporated into its final order
6 — Order 1V-772 (Order 772). Order 772 was finalized on November
23, 2021.
¶ 13 Soon after the commission issued Order 772, staff reported
that Kauffman was failing to meet Order 772’s requirements. The
commission held a hearing in June 2022 to determine whether
Kauffman was substantially complying with the order. The
commission found that Kauffman hadn’t substantially complied
with the order’s requirements. But instead of requiring immediate
payment of the penalties, the commission required Kauffman to
provide two quarterly updates, one in October 2022 and one in
January 2023, to demonstrate its compliance.
¶ 14 At the October 2022 hearing, both Kauffman and staff
presented information about Kauffman’s progress. At the end of the
hearing, the commission “reiterated its intent to convene a hearing”
in January 2023 to determine Kauffman’s compliance.
¶ 15 At the January 2023 hearing, staff and Kauffman presented
their positions on Kauffman’s progress. Following that hearing, the
commission issued Order 1V-863 (Order 863). Order 863 states
that “the evidence at [the] hearing demonstrated [Kauffman] did not
make progress toward remediation at most CPA Sites, which is
7 inexcusable,” and “[t]his matter presents a rare case of an operator
with wide-spread, systemic, repeated violations of [ECMC] Rules,
that the same operator refuses to correct in a timely or successful
manner.” The order terminated the CPA, reinstated the suspended
penalties, suspended Kauffman’s certificates of clearance, and
required Kauffman to bring all of its facilities into compliance with
the Act.
¶ 16 Kauffman sought judicial review of Order 863 in the district
court. Kauffman’s complaint asserted that the CPA constitutes an
enforceable contract, that the commission had breached that
contract, and that the commission had breached the contract’s
covenant of good faith and fair dealing. Kauffman also asserted
that Order 863 violates its rights under the APA and violates its
Eighth Amendments rights.
¶ 17 The ECMC filed a motion for partial summary judgment
regarding Kauffman’s contract claims. After argument on the
motion, the court granted the ECMC’s motion for partial summary
judgment. The court found that the CPA isn’t a contract, but
instead “the CPA is an agency action memorialized in Order 772.”
Thus, Kauffman could only seek relief from the CPA under the APA.
8 And because the CPA isn’t a contract, Kauffman’s other contract
claims failed.
¶ 18 In a separate order, the court affirmed Order 863. It found
that Order 863 isn’t arbitrary and capricious and thus doesn’t
violate the APA. It also found that Order 863 doesn’t violate
Kauffman’s Eighth Amendment rights.
III. Discussion
¶ 19 With respect to the ECMC’s motion for partial summary
judgment, Kauffman contends that the district court erred because
the CPA is an enforceable contract apart from Order 772. With
respect to the court’s order affirming Order 863, Kauffman
contends that the court erred because the penalties imposed by the
ECMC are arbitrary and capricious and violate the Eighth
Amendment. We address and reject each of these contentions in
turn.
A. The CPA Isn’t a Contract
¶ 20 Kauffman contends that the district court erred by granting
partial summary judgment in the ECMC’s favor because the CPA is
an enforceable contract and the commission breached that
contract. We conclude that the CPA isn’t an enforceable contract
9 independent of Order 772, and therefore we don’t need to address
Kauffman’s other contract-based contentions.
1. Standard of Review
¶ 21 We review a district court’s summary judgment order de novo.
Shelter Mut. Ins. Co. v. Mid-Century Ins. Co., 246 P.3d 651, 657
(Colo. 2011). “Summary judgment is only proper where there is no
genuine issue of material fact in dispute, entitling the moving party
to summary judgment as a matter of law.” Id. The party moving for
summary judgment bears the burden of showing that there is no
genuine issue of material fact. Univ. of Denv. v. Doe, 2024 CO 27,
¶ 8. The court must draw all reasonable inferences from the facts
in the nonmoving party’s favor. Id.
2. Applicable Law
¶ 22 To prove a breach of contract, a party must first prove the
existence of a contract. Tuscany Custom Homes, LLC v. Westover,
2020 COA 178, ¶ 52. “An enforceable contract requires mutual
assent to an exchange, between competent parties, with regard to a
certain subject matter, for legal consideration.” Indus. Prods. Int’l,
Inc. v. Emo Trans, Inc., 962 P.2d 983, 988 (Colo. App. 1997) (citing
Denv. Truck Exch. v. Perryman, 307 P.2d 805 (Colo. 1957)). “An
10 offer is a manifestation by one party of a willingness to enter into a
bargain.” Id. (citing Restatement (Second) of Contracts 24 (A.L.I.
1979)).
3. Analysis
¶ 23 As noted above, the commission has the authority to order an
operator to take corrective actions. We agree with the district court
that the CPA, as incorporated into Order 772, was intended only as
“a form of agency action” to direct Kauffman’s compliance with its
legal obligations — that is, to take corrective actions. The relevant
undisputed facts show that it wasn’t intended — at least by the
commission — to be an independently enforceable contract.
¶ 24 The commission authorized its chair to oversee the creation of
a compliance plan — one that the commission would consider and,
if approved subject to the commission’s revisions, would be
incorporated into an agency order. But the commission retained
the sole authority to determine the terms of the plan and expressly
contemplated incorporating the plan into an agency order. During
a hearing regarding Kauffman’s violations before Order 772, one
commissioner said, “[W]e’re providing a compliance plan and there
should be some opportunity for input . . . from other parties. But
11 ultimately, it is this Commission that is determining that
compliance plan.” Other commissioners expressed a similar intent.
¶ 25 The commission also had the ultimate authority to accept,
reject, or change the CPA, without any input from Kauffman. The
CPA reflected this authority, stating that “[t]he Commission
considered whether any additional terms and conditions are
necessary to attain compliance with the violations cited in the
[Kauffman NAVs] or with the finding of a pattern of violations.”
Ultimately, the commission simultaneously approved the CPA and
ordered it incorporated into its final agency order — Order 772.
Kauffman doesn’t point to anything in the record indicating that
anyone contemplated that the CPA would thereafter retain any force
independent of Order 772.
¶ 26 We also observe that the ECMC’s statutory and regulatory
framework doesn’t provide for any process pursuant to which the
commission may contract with the operator separately with respect
to the operator’s obligation to comply with the law. See Dep’t of
12 Nat. Res. Rules, 2 Code Colo. Regs. 404-1.4 But the framework
does allow the commission to include corrective actions in its final
orders, as it did in this case. See § 34-60-121(6) (the ECMC has the
authority to take necessary action to bring the operator into
compliance; the operator must “bring the affected operations into
compliance under the supervision of the commission”).
¶ 27 We therefore conclude that the undisputed facts establish as a
matter of law that the CPA, though superficially bearing some of the
formal indicia of a contract, isn’t an independently enforceable
contract because there was no mutual assent to a bargained-for
exchange — no offer or acceptance. See Indus. Prods. Int’l, 962
P.2d at 988. It follows that the district court didn’t err by granting
the ECMC’s motion for partial summary judgment.5
4 Kauffman argues that the “ECMC and other governmental
agencies are authorized to enter into private party contracts for various purposes including . . . to resolve litigation and other disputes.” But even if the ECMC has such authority, it wasn’t used in this case. 5 Kauffman also argues that the CPA retained its contractual status
when it became part of Order 772. But because we have concluded that the CPA wasn’t a contract in the first instance, this argument necessarily fails.
13 B. Order 863’s Penalties Aren’t Arbitrary and Capricious
¶ 28 Next, Kauffman contends that the penalties imposed by Order
863 are arbitrary and capricious in violation of the APA because the
commission continually shifted the meaning of “substantial
compliance,” didn’t give Kauffman sufficient time to comply, and
imposed the most severe sanctions available. We disagree.
1. Standard of Review and Applicable Law
¶ 29 “Our review of a district court’s decision in a proceeding under
the [APA] is de novo. We sit in the same position as the district
court and review the agency’s decision for [an] abuse of discretion.”
Farmer v. Colo. Parks & Wildlife Comm’n, 2016 COA 120, ¶ 12;
accord Weld Air & Water v. Colo. Oil & Gas Conservation Comm’n,
2019 COA 86, ¶ 32.
¶ 30 “[The ECMC] rules, regulations, or final orders are subject to
judicial review in accordance with the APA.” Chase, ¶ 20 (citing
§ 34-60-111, C.R.S. 2025). A “reviewing court may overturn an
administrative agency’s determination only if the court finds the
agency acted in an arbitrary and capricious manner, made a
determination that is unsupported by the record, erroneously
interpreted the law, or exceeded its constitutional or statutory
14 authority.” Id. (quoting Sapp v. El Paso Cnty. Dep’t of Hum. Servs.,
181 P.3d 1179, 1182 (Colo. App. 2008)). An agency acted
arbitrarily and capriciously if “no substantial evidence exists in the
record to support the agency’s decision.” Gessler v. Grossman,
2015 COA 62, ¶ 39, aff’d, 2018 CO 48. “An agency decision is not
arbitrary or capricious if it reflects a ‘conscientious effort to
reasonably apply legislative standards to particular administrative
proceedings.’” Id. (quoting Moya v. Colo. Ltd. Gaming Control
Comm’n, 870 P.2d 620, 624 (Colo. App. 1994)).
¶ 31 In determining whether the agency acted arbitrarily and
capriciously, “[w]e examine the record in the light most favorable to
the agency decision.” Chase, ¶ 21 (quoting Sapp, 181 P.3d at
1182); accord Weld Air & Water, ¶ 33. And “we may not substitute
our judgment for that of the agency.” Gessler, ¶ 39.
2. The Meaning of “Substantially Comply”
¶ 32 Order 772 said that if Kauffman “fails to substantially comply
with the requirements of Section IV of the Plan,” the commission
could “terminate the Plan, impose any remaining outstanding
portions of the Penalty Amount, suspend any or all of [Kauffman’s]
Certificates of Clearance, or refuse to issue [Kauffman] new Oil and
15 Gas Development Plans.” It also put the burden on Kauffman “of
demonstrating compliance with this Plan.” The term “substantially
comply” isn’t defined in Order 772 or the Act.
¶ 33 In its prehearing statement submitted in advance of the June
2022 hearing, Kauffman asserted that substantial compliance “does
not require [Kauffman] to demonstrate exact compliance with
Section IV requirements, but rather ‘compliance with the essential
requirements’ of the agreement.”
¶ 34 At the June 2022 hearing, the commission’s chair said that
substantial noncompliance meant “where there is a sort of total
failure to comply . . . with the CPA,” and it was “not intended to
be . . . more of a sort of technical noncompliance . . . with the little
things.”
¶ 35 During the January 2023 hearing, Kauffman argued that the
term “substantial compliance” was ambiguous. The commission
indicated that “substantial compliance” meant “compliance with the
essential requirements and purpose of Section IV. These essential
requirements include not only Kauffman’s timely submittal of the
forms and plans required by Section IV, but also successful
implementation of those forms and plans.” As noted, at the end of
16 the hearing, the commission concluded that Kauffman hadn’t
substantially complied with Order 772.
¶ 36 In its appeal to the district court, Kauffman argued that the
commission’s interpretation of substantial compliance had
continually shifted and that the commission had failed to properly
notify it of the proper standard. The court ruled that the
commission didn’t act arbitrarily or capriciously by terminating the
CPA because its decision was supported by substantial evidence in
the record.
¶ 37 Kauffman cites no authority, and we have found none, holding
that minimal compliance, coupled with evidence of substantial
noncompliance (discussed below), is sufficient to meet a
“substantial compliance” requirement. See, e.g., Brighton
Pharmacy, Inc. v. Colo. State Pharmacy Bd., 160 P.3d 412, 415
(Colo. App. 2007) (“Substantial compliance is more than minimal
compliance, but less than strict or absolute compliance.”); see also
Grp., Inc. v. Spanier, 940 P.2d 1120, 1122 (Colo. App. 1997)
(“Substantial compliance is less than absolute, but still requires a
significant level of conformity.”). As for Kauffman’s assertion that
the commission treated substantial compliance as a moving target
17 by articulating that requirement in different ways, we aren’t
persuaded that the statements on which Kauffman relies either
differed materially from each other or deviated from the generally
accepted meaning of the term. And, in any event, as discussed
below, Kauffman’s conduct failed any reasonable articulation of the
standard.
3. The Timing of Order 863
¶ 38 Kauffman also argues that the commission arbitrarily and
capriciously terminated the CPA because it did so just fifteen
months into the five-year compliance term. Kauffman argues that,
though it didn’t meet many of Order 772’s requirements, it spent
millions of dollars attempting to do so. But Order 772 didn’t
require that Kauffman spend a certain amount of money. Nor did
Order 772 prohibit the commission from evaluating Kauffman’s
performance thereunder until the end of the five-year term. As well,
the staff presented evidence, on which the commission relied, that
Kauffman had failed to complete remediation projects that had been
ongoing for years, that Kauffman was failing to meet various
deadlines, and that Kauffman was inadequately protecting the
public from its open excavations. From this evidence, the
18 commission could reasonably have concluded that Kauffman wasn’t
substantially complying with its obligations from the get-go.
¶ 39 Kauffman argues nevertheless that the record doesn’t support
a conclusion that it failed to substantially follow Order 772 because
the commission emphasized minor deficiencies such as “inadequate
fencing” and “significant weeds.” But the commission also found
major deficiencies, such as open excavations and failure to
implement the Waste Management Plan.
4. Most Severe Penalties
¶ 40 Kauffman contends that the commission acted arbitrarily and
capriciously by imposing the most severe sanctions available rather
than pursuing other remedial options. But nothing in Order 772
required the commission to impose the lesser sanctions provided for
in Section IV because those sanctions were intended to apply only if
Kauffman failed to comply with specific subsections of Section IV.
And Order 772 provided that, should Kauffman fail to comply with
Section IV as a whole, the commission could terminate the CPA and
impose the original sanctions.
19 5. The Commission Didn’t Act Arbitrarily and Capriciously by Imposing the Penalties
¶ 41 The commission didn’t act arbitrarily or capriciously by
imposing the penalties because there is evidence in the record
showing that Kauffman didn’t substantially comply with Order
772’s requirements. For example, at the commission’s October
2022 hearing, staff presented evidence that Kauffman continuously
showed problems with properly reporting spills and meeting
deadlines for satisfying CPA requirements. Kauffman missed sixty-
eight Global Remediation Implementation Plan project milestones,
closed only two of fifty-eight remediation projects, and failed to
adequately describe spill reports as required by ECMC Rule
912.b.(2). See Dep’t of Nat. Res. Rule 912.b.(2), 2 Code Colo. Regs.
404-1.
¶ 42 We therefore conclude that Kauffman failed to establish that
the commission’s decision to terminate the CPA and impose the
sanctions permitted under Order 772 was arbitrary and capricious.
C. The Penalties Don’t Violate the Eighth Amendment
¶ 43 Lastly, Kauffman contends that penalties imposed by the
commission under Order 863 — suspension of Kauffman’s
20 certificates of clearance and a fine of almost $2 million — violate its
rights under the Eighth Amendment because they are grossly
disproportional to the violations and will cause Kauffman to file for
bankruptcy. We conclude that the penalties don’t violate the Eighth
Amendment.
1. Applicable Law and Standard of Review
¶ 44 The Eighth Amendment provides that “[e]xcessive bail shall
not be required, nor excessive fines imposed, nor cruel and unusual
punishments inflicted.” U.S. Const. amend. VIII. The Excessive
Fines Clause isn’t limited in its application to natural persons.
Colo. Dep’t of Lab. & Emp. v. Dami Hosp., LLC, 2019 CO 47M, ¶ 23.6
¶ 45 To determine whether a fine is excessive, we examine whether
the fine is “grossly disproportional to the gravity of the subject
offense.” Id. at ¶ 18 (citing United States v. Bajakajian, 524 U.S.
321, 334 (1998)). To determine proportionality, we consider the
nature of the offense, whether the offense is related to other illegal
activities, and the extent of the harm caused by the offense.
6 The Eighth Amendment doesn’t only apply to monetary fines. See Austin v. United States, 509 U.S. 602, 615, 622 (1993) (civil forfeiture punishments are subject to the Excessive Fines Clause).
21 Bajakajian, 524 U.S. at 337-39. We may also consider a party’s
ability to pay the fine, though this isn’t dispositive. Dami Hosp.,
¶ 31. A fine that bankrupts a party may be considered excessive,
but it may also be proportional to the gravity of the party’s offense.
See id.
¶ 46 We review an excessive fine challenge de novo. See People v.
Cardenas, 262 P.3d 913, 914 (Colo. App. 2011).7
2. Analysis
¶ 47 Kauffman argues that the penalties violate the Eighth
Amendment because Order 863 suspends all of Kauffman’s
certificates of clearance and imposes a monetary penalty of
company-wide consequence “based on issues arising at a limited
number of sites.”
¶ 48 But Order 863 is based on Kauffman’s violations of several of
the commission’s regulations numerous times and the
commission’s finding of a pattern of company-wide violations. The
7 The ECMC argues that Kauffman is precluded from challenging
the penalty amount on appeal because the deadline to challenge Order 772 has passed. But Kauffman is challenging Order 863, which terminated the CPA and reinstated the commission’s original penalties.
22 commission found that “[Kauffman’s] current practices present
threatened and actual adverse impacts to public health, safety, and
welfare, the environment, and wildlife resources.” And after Order
772, Kauffman continued to violate provisions of the Act regulations
and ECMC rules. While specific violations may not have occurred
at every Kauffman site, the gravity of the offenses, the continuing
nature of the violations, and the pattern of company-wide violations
support the commission’s decision to impose the subject penalties.
¶ 49 Kauffman also argues that the monetary penalty is grossly
disproportional because it may cause the company to file for
bankruptcy and go out of business.
¶ 50 The fact that a company may go out of business doesn’t alone
render a penalty grossly disproportional. Rather, it is one factor to
be considered. Dami Hosp., ¶ 31 (“For some types of criminal or
regulatory infractions, a penalty that would have that kind of grave
consequence might be warranted . . . .”). The commission
considered Kauffman’s potential bankruptcy when it approved the
CPA and incorporated it into Order 772, thereby suspending most
of the monetary penalty. But when Kauffman failed to substantially
comply with Order 772, the commission found it necessary to
23 impose its original penalties. On this record, we can’t say that the
commission’s determination violates Kauffman’s Eighth Amendment
rights.
IV. Disposition
¶ 51 We affirm the judgment.
JUDGE FOX and JUDGE DUNN concur.