Kauffman v. Oil and Gas

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.

24