Gov. John Hickenlooper on Wednesday morning ended months of anticipation and anxiety over a possible special session to address oil and gas regulation in the face of looming ballot initiatives, announcing that he was unable to strike a grand bargain.
The Democratic governor and former geologist had hoped to stave off a series of ballot proposals by U.S. Rep. Jared Polis, a fellow Democrat from CD 2, that aim to expand regulations over oil and gas development.
At the heart of the drive behind Coloradans for Local Control is a push to offer local governments the authority to regulate oil and gas activities, including potentially banning the controversial process of hydraulic fracturing.
The group, acting under the issue committee Coloradans for Safe and Clean Energy, is only focused on two initiatives, narrowing down a long list that was close to 20 proposals. They must collect 86,105 valid signatures for each of the efforts. Each of the initiatives already has over 65,000 signatures.
Initiative 88 would mandate setbacks of 2,000 feet between wells and inhabited structures; and Initiative 89 would assert a right to clean air, water and scenic values.
Also tied to Initiative 89 is local control language, in which local governments would have the power to enact regulations that are more restrictive than regulations enacted by the state.
“If any local law or regulation enacted or adopted… conflicts with a state law or regulation, the more restrictive and protective law or regulation governs,” states the ballot proposal for Initiative 89.
Hickenlooper tried for at least three months to strike a compromise that would avert the ballot process. He gained support from prominent oil and gas companies, including Anadarko Petroleum and Noble Energy, which had been involved in discussions since the beginning. At least five other major producers had joined in signaling their support for a compromise.
The governor also earned support from business interests, including Colorado Concern and the Denver Metro Chamber of Commerce, which both called for a compromise over a ballot effort. Even the Colorado Association of Home Builders supported the effort, though the move split its board and essentially dissolved the association.
Hickenlooper appeared to be making significant progress when he produced a draft bill that went through a couple of iterations and seemingly struck a balance that would have rendered a special session needless.
But there were too many roadblocks to overcome. The Colorado Oil and Gas Association, or COGA, expressed concerns, as did the Colorado Petroleum Association, which remained vehemently against the compromise.
Republican legislators appeared skeptical form the beginning, suggesting that Hickenlooper was simply trying to appease Polis who held the legislature hostage.
Even Democrats appeared concerned. At least three moderate Senate Democrats were resistant to the bill because they felt Polis was extending an over-bearing hand. Over in the House a handful of liberal-leaning Democrats worried about caving to the oil and gas industry’s demands.
With Democrats holding only a one-seat majority in the Senate, it didn’t appear that Hickenlooper had the votes to pass the compromise bill.
The governor on Thursday joined a large coalition of ballot opponents at the Metro Denver Chamber of Commerce office in lower downtown Denver. The bipartisan gathering included prominent Democrats such as former Denver Mayor Wellington Webb and former U.S. Interior Secretary and senator Ken Salazar, as well as Republicans such as Assistant Senate Minority Leader Mark Scheffel of Parker. The coalition is also largely made up of business and oil and gas interests. Roger Hutson, president/CEO at HRM Resources and former head of the Colorado Oil and Gas Association, was also in attendance.
“Over the last several months, we’ve worked with a great coalition… to try and find a legislative solution to address the concerns of communities about the level of local control regarding oil and gas development,” said Hickenlooper. “Not everyone agreed with this approach, and the compromise we came to was pretty difficult, but we all agreed that putting a 2,000-foot setback in the state constitution, or attempting to resolve these issues on the November ballot, is a bad idea for Colorado.
“With November’s election fast approaching, we all agree we now must turn our full attention to defeating these ballot measures, and I know that the industry, the business community, the vast majority of elected officials — both Republican and Democrat across the state of Colorado — are united in opposition because they know that these measures risk literally thousands and thousands of jobs, billions of dollars of investment and hundreds of millions of dollars in state and local tax revenue,” Hickenlooper continued.
The governor pointed to recent steps the state has taken to address environmental concerns related to oil and gas activities, including becoming the first state to regulate detection and reduction of methane emissions, and another rule that requires the disclosure of ingredients used in fracking solutions.
The governor acknowledged the emotionally charged nature of the debate, but he believes that education and outreach can deflate some of those fears.
“It’s emotional on both sides, and at least in my experience, it’s difficult when emotions get to such a pitch, but the best way is to listen harder… and make sure that you’re trying to find ways to address what their needs are as best you can,” he said.
Oil and gas executives and business leaders who have grown furious with Polis surrounded Hickenlooper, but he did not want to take a jab at his fellow Democrat.
“The point now is not to point fingers, I think that we want to make sure to get information out there and really focus on making sure that this doesn’t get passed and that… the vast majority of the state gets unified against this,” said Hickenlooper.
Polis and proponents react
Polis, the self-made millionaire who has pledged to fund the ballot initiatives, blamed “special interests and out-of-state organizations, worried only about politics and partisanship.” He became involved in the debate after a well was drilled near his country home just outside Loveland.
Polis has faced several attacks from the oil and gas industry and right-leaning groups, including Log Cabin Republicans, a GOP group dedicated to gay interests. Polis is openly gay himself. He said those groups turned this into a “battle of personal attacks and scare tactics.
“Now, as it has become clear that the path to passing a legislative compromise has been obstructed, we must turn to the people of Colorado to solve this problem,” explained Polis.
“I have said from the beginning of this debate that my one goal is to find a solution that will allow my constituents to live safely in their homes, free from the fear of declining property values or unnecessary health risks, but also that will allow our state to continue to benefit from the oil and gas boom that brings jobs and increased energy security,” Polis continued. “I stand by this goal, I am confident that the majority of Coloradans share this goal, and I am committed to continuing to work to protect our Colorado values.”
Proponents, operating as Coloradans for Safe and Clean Energy, said following the opposition kickoff on Thursday that they are simply offering voters a choice.
“The voters will now have the opportunity to do what the legislature couldn’t and pass commonsense protections for our children and communities,” said Mara Sheldon, the new spokeswoman for the campaign. “Daily spills, earthquakes, gas fumes and loud noise will continue to directly affect all Coloradans without the protections Initiatives 88 and 89 offer.”
Proponents are confident that the measures will pass, pointing to recent polling from Benenson Strategy Group that revealed that the two initiatives had 64 percent approval. For Initiative 88, dealing with setbacks, registered Republicans supported the initiative by 62 percent, according to Sheldon.
She said proponents are focusing on only the two initiatives because they feel it is the best way to address all issues, including setbacks, local control and setting an environmental declaration.
Sheldon added, “These are not fracking bans at all,” though she acknowledged that local governments could impose bans if the questions passed.
“I can’t tell you what local government is going to decide,” she said.
The ballot measures grew out of initiatives in five municipalities that have already banned fracking, beginning with Longmont in 2012, and then spilling over into other communities along the Front Range. Broomfield, Fort Collins and Boulder passed five-year moratoriums last year, and Lafayette passed a ban on new oil and gas activities. Loveland voters on June 24, however, rejected a two-year moratorium on fracking.
The local bans have resulted in ongoing lawsuits. Industry leaders and Hickenlooper believe that the ordinances overstep the state’s authority. Colorado currently promulgates oil and gas rules through the Colorado Oil and Gas Conservation Commission.
Concerns around fracking have intensified as the controversial exploratory process has made its way to the Front Range. Fracking is used in wells by utilizing chemicals, sand and water to create small fractures under the ground in order to stimulate production of new and existing oil and gas wells.
Fears exist that water can become contaminated and air polluted. There are also nuisance concerns, such as noise and congestion.
Democratic leaders in the legislature who had been close to the talks said they would not give up on finding a solution, but acknowledged that a special session was not a reality.
“It would be a waste of taxpayers’ money to hold a special session that likely would not achieve a legislative solution,” explained House Majority Leader Dickey Lee Hullinghorst of Boulder, citing the estimated cost of $23,500 a day.
“However, I am not giving up on finding the bipartisan legislative solution that I am sure Coloradans want — one that balances responsible oil and gas development, including fracking, with the valid needs and concerns of local communities and adjacent property owners,” she continued. “We are not there yet, but I plan to continue to work with the stakeholders who came together in good faith in the last few months to work on a legislative solution.”
Republicans, however, immediately called on Polis to “end his bullying tactics and withdraw his energy ban initiatives.”
“Many of us hoped that we could help millionaire Congressman Jared Polis understand that families and communities will be devastated by his aggressive anti-energy agenda. In the end, Polis’ immature ‘take it or leave it’ approach to negotiating a solution left us out in the cold,” opined Rep. Frank McNulty of Highlands Ranch, who had indicated early on that he would be open to a compromise.
“Now Polis’ only option to avoid hurting families and devastating our communities is to withdraw his energy ban ballot initiatives and end his bullying tactics,” he continued.
“Why did the special session fail? The Polis proposal was a half-baked political fix that would have tied in knots energy production outside of Weld County, and many of the key insiders clamoring for the special session were partisan liberals more interested in saving Democratic political hides than making good public policy,” McNulty added. “Those of us who have gone to the trouble of running for election and earning voters’ trust aren’t interested in a take-it-or-leave-it, head-over-heels capitulation to blackmail by politician Polis.
“There is one and only one person responsible for putting Colorado families and communities at risk, and that person is the millionaire congressman from Boulder,” McNulty concluded. “It’s his turn to clean it up, this mess is a wholly-owned subsidiary of millionaire Jared Polis.”
Readying the war chests
Opposition had already been mounting a campaign, but now they’re ready for war. Protecting Colorado’s Environment, Economy and Energy Independence, or Protect Colorado, has raised more than $6 million to fight the initiatives. Coloradans for Responsible Reform, a business group that is opposing the initiatives, has raised more than $3.1 million.
Protect Colorado has launched two TV ads demonstrating bipartisan support for the oil and gas industry. Coloradans for Responsible Reform reserved nearly $8 million worth of ad time in preparation for the campaign.
On the other side, proponents have raised about $1.5 million. They have reserved $1.3 million for television this fall, and made a digital ad buy of $100,000.
Coloradans for Responsible Reform had filed a campaign finance complaint against Coloradans for Local Control and its issue committee, Coloradans for Safe and Clean Energy, alleging that the two organizations are really one in the same, both subject to financial disclosures.
But Administrative Law Judge Matthew Norwood ruled on Monday that no violation had been proven.
“The Complaint alleges that Local Control failed to report the contributions it presumably received to fund the transfer,” Norwood wrote in his ruling, citing a $1.4 million contribution by Coloradans for Local Control to its own issue committee, Coloradans for Safe and Clean Energy.
“But there was no evidence that Local Control received any contributions subsequent to a time it was required to report them…” Norwood added. “No violation has been proven.”
The state’s leading oil and gas companies said they must now turn their attention to defeating the measures.
“If approved by voters, they would become constitutional amendments that leave no room for accommodating unique community needs or special situations and risk tens of thousands of jobs, billions of dollars of investments and hundreds of millions of dollars in local and state tax revenues,” read a joint statement from seven leading energy companies, along with the business interest Colorado Concern.
“We are fully committed to informing Colorado voters on the need to defeat these destructive ballot measures,” the statement continued. “We believe Colorado voters, when given the facts, will understand the impacts of these ill-conceived ballot proposals and will vote against them.
“We stand together with our bipartisan elected leaders, the oil and natural gas industry, agriculture, organized labor, business and civic organizations committed and resolved to defeat these measures in November,” the group added. “Rejecting these measures will enable Coloradans to continue working together to develop solutions that enable us to have the energy we need, the economy we want and the environment we value.”
Tisha Schuller, president and chief executive of COGA, was highly critical of Polis.
“With a special session no longer a possibility, I encourage Colorado’s energy users to tell Congressman Polis what they think of his extreme proposals that would cripple a Colorado industry,” said Schuller. “It is time for Congressman Polis to think of more than himself.
“While a backdoor energy ban may not harm his personal fortune, Polis’ proposed constitutional changes most certainly will harm the economic prospects of tens of thousands of Colorado families…” she continued. “These ballot initiatives are an absurd game of roulette… It is time for Congressman Polis to do the right thing and park his self-serving anti-energy crusade.”
The Denver Metro Chamber of Commerce has also pledged to work to defeat the initiatives.
“Our preference is always to solve issues by working together to find solutions — it’s the way we like to do business here in Colorado, and this situation is no exception,” explained Kelly Brough, president and chief executive of the Chamber. “We regret that consensus couldn’t be reached to resolve this without having to face an expensive fight at the ballot.
“We have not veered from our commitment to ensure that we protect both our economy and our environment by defeating these harmful ballot issues,” Brough continued. “We know that Colorado is home to some of the strongest energy regulations in the country. We feel confident that Coloradans will keep these extreme, crippling and divisive ballot issues out of our constitution in favor of working together to develop responsible, safe and smart solutions in the future.”
Meanwhile, the debate comes with its own unique politics behind it. For one thing, Polis has put his fellow Democrats Hickenlooper and U.S. Sen. Mark Udall in a difficult situation.
Both Hickenlooper and Udall are running for re-election in tight races. The oil and gas issue is a fracturing one for Democrats, who often count on an environmental base. Opposition to the initiatives could put them at odds with other Democrats.
Some observers, however, say the ballot questions could be a boost for Democrats. If left-leaning voters are motivated to the polls over the issue, they are likely to vote for Democrats over Republicans.
But there could be backlash since the issue is tied to the emotionally charged subject of fracking. If certain voters grow frustrated with Democrats for opposing the initiatives, they may vote for a third-party candidate, such as Harry Hempy, who is running for governor on the Green Party ticket.
Hempy pointed out that 28 percent of the executive committee of the Boulder County Democratic party voted not to support Hickenlooper, citing the lawsuits against local governments for enacting their own oil and gas regulations.
“Hickenlooper’s 28 percent non-support among Boulder County Democrats is a shot in the arm…” said Hempy.
A recent Quinnipiac University poll placed former U.S. Rep. Bob Beauprez, the Republican gubernatorial challenger, one point ahead of Hickenlooper. Beauprez on July 9 called on Hickenlooper to oppose the initiatives and cancel efforts for a special session. He said on Wednesday that Hickenlooper “threw in the towel” and heeded his advice.
“Gov. Hickenlooper was poised to let Jared Polis impose his radical anti-energy development agenda on the people of this state, and send our economy right back into the depths of recession. That is not leadership. That is why I asked him to think about what he was doing, and to join me in doing what is right for the people of this state,” Beauprez said in a statement.
Polling also indicates that Udall is in a toss-up against U.S. Rep. Cory Gardner, the Republican challenger in that race.
Gardner was fast to pressure Udall to take a stand on the issue and oppose the initiatives, issuing a news release with the title, “Special session dead, Udall silent (still…)” That news release was received by The Colorado Statesman at 10:04 a.m. on Wednesday.
“Now that a special session is no longer a possibility, Senator Udall’s refusal to stand against an energy ban is more concerning than ever,” Gardner said in the release. “If Senator Udall truly cared about protecting Colorado’s economy, he would oppose these harmful ballot measures.”
Just 37 minutes later, The Statesman received an email from the Udall campaign, clearly stating opposition to the initiatives with the heading, “One-size-fits-all measures fail to find the right balance.”
There was no indication that Udall issued the news release in response to Gardner. The campaign said that they were simply waiting to see how the special session talks would first play out.
“As a native Westerner, I know it is critically important that we safeguard Colorado’s land, water and air for future generations,” Udall said. “Our energy industry contributes to our special way of life by strengthening our economy, creating good-paying jobs and helping our nation achieve true energy self-reliance.
“Fracking can be done safely and responsibly, and new technology has allowed us access to large sources of clean burning natural gas. But for many Coloradans who are seeing drilling rigs pop up near their homes, schools and parks, fracking is more than an abstract process — it’s an industrial activity that is increasingly being conducted in urban and suburban areas,” he continued.
“Colorado has served as a model for the nation on finding the right balance between protecting our clean air and water, the health of our communities, and safely developing our abundant energy resources. In my view, these proposed ballot initiatives do not strike that balance,” Udall added.
“I believe that Colorado can and must do better, which is why I oppose these one-size-fits-all restrictions and will continue working with all parties — including property owners, energy producers, and lawmakers — to find common ground. That’s the Colorado way,” he concluded.
But the statement did not sit well with the Colorado Republican Party. Owen Loftus, spokesman for the state party, said Udall has found himself in a precarious situation.
“It’s not enough for Mark Udall to offer lip service,” said Loftus. “He must turn his back on the radical environmentalists who are financing his reelection bid, and campaign vigorously against Jared Polis’s anti-energy measures that will cost our state thousands of jobs, millions of dollars and destroy our economy.”