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State issues cease and desist order for Prospect Energy Krause site

Released on Friday, August 26, 2022
Contact Information
  • Cassie Archuleta, Environmental Sustainability Manager, 970-416-2648,

The Colorado Department of Public Health and Environment’s Air Pollution Control Division is ordering Prospect Energy to immediately cease operations at its Krause site north of Fort Collins because of repeated violations that endanger public welfare.

The division’s decision comes after it exhausted other options to correct those violations, including initiating several enforcement actions. Colorado statute gives the state the authority to shut down a source of pollution if it creates an unhealthy or disruptive environment for nearby residences or businesses. If Prospect Energy can demonstrate that it has identified and addressed all concerns, it may resume operations at the Krause site.

“This is an exceptional and rare course of action, and we do not take it lightly,” said Michael Ogletree, director of the Air Pollution Control Division. “This is a unique situation that calls for extraordinary measures to ensure we are protecting public welfare.”

Prospect Energy’s Krause site is close to at least one home and two other businesses. The division has conducted several inspections at the Krause site since 2021. Many of these inspections stemmed from odor complaints the division received from nearby residents. Division inspectors have found several violations at the Krause site, including emissions of volatile organic compounds from storage tanks. The division found that some of the illegal tank emissions at the Krause site happened because Prospect Energy failed to properly maintain its vapor lines. Prospect Energy had informed the division that it intended to follow Vapor Control System Guidelines. However, the division has found Prospect Energy has failed to do this because emissions violations have continued. During a June visit, a division inspector’s monitor sounded an alarm for hydrogen sulfide, indicating potentially dangerous levels of the gas. This is a very rare occurrence for division inspectors. Hydrogen sulfide is a common colorless gas that naturally occurs in oil and gas. It smells like rotten eggs. Short-term exposure to high levels of hydrogen sulfide can cause eye irritation, breathing difficulties, dizziness, and headaches.

Through repeat inspections, the division has found that Prospect Energy has not taken the necessary steps to fix violations related to its tanks and reduce odors related to hydrogen sulfide.

The division has initiated four total enforcement actions with Prospect Energy since December 2021, showing a pattern of violations within the company. In response to enforcement actions, Prospect Energy submitted information to the division that indicates the Krause site is not properly designed, operated, or maintained. The division inspected the Krause site again on August 11 and found that illegal emissions have continued.

The cease-and-desist order only applies to Prospect Energy’s Krause site. The division followed standard procedures to hold Prospect Energy accountable for its violations by undertaking formal enforcement actions. This process has previously worked to correct violations at other sources. However, Prospect Energy has not made meaningful or successful efforts to correct issues that lead to compliance violations. Prospect Energy has failed to fully establish proper design, operation, and maintenance elements to prevent illegal emissions, as required during the formal enforcement process. The appropriate Prospect Energy representatives have also failed to attend compliance advisory meetings. The division cited all of these reasons and those above as to why the Krause site poses a unique risk to public welfare. The division will continue to monitor the Krause site to ensure compliance with the cease-and-desist order.