Why Big Oil Chose the Nuclear Option to 112: Amendment 74EXPAND
Jay Vollmar

Why Big Oil Chose the Nuclear Option to 112: Amendment 74

This story was co-published with the national investigative news outlet Capital & Main.

Mike Foote is prosecuting another case tonight, just as he has for more than a decade. The Indiana transplant indicted petty thieves, violent criminals and Ponzi schemers in his old day job as a deputy district attorney in Boulder — but here at a public library in Longmont, he is rhetorically indicting the perpetrator he’s been most obsessed with: the fossil fuel industry.

At this town meeting about the upcoming election, Foote is charging the industry with attempted murder — of the entire state’s economy.

“We have five oil and gas companies that want to amend our constitution, our controlling document,” says Foote, a 45-year-old father of two who has been one of the Colorado Legislature’s most outspoken critics of oil and gas companies. “They're putting a lot of money into it, millions and millions of dollars. They may win, and they may buy a portion of our constitution that controls everything that we do.”

In his gray suit, blue shirt, no tie, Foote cuts a profile that is way more office-park dad than radical anti-capitalist, which may boost his seemingly counterintuitive argument. After all, this is an area of Colorado still narrowly divided between the parties, and Foote is passionately railing against Amendment 74, which would expand property owners’ power to claim “just compensation” from the government. The initiative’s curt eleven words can, at first glance, appear to be just a simple “good government measure that makes sense for all of us,” as Dan Haley, Denver Post editorial-page editor turned Colorado Oil and Gas Association president, recently insisted.

Foote concedes that the ballot measure’s folksy artifice of frontier fairness seems compelling. On its face, it does not appear to be part of the now-familiar power grab by Texas energy barons trying to install noxious fracking rigs next to idyllic neighborhoods in Colorado’s fast-growing suburbs. Instead, the amendment taps into fever-dream fears about Gestapo government.

“The commercials typically show some salt-of-the-earth guy with a baseball cap that's driving around a tractor on his farm. Supposedly he's saying, ‘Well, if government takes your property, then they should pay you,’ which sounds good, right?” Foote says as a few heads nod and an affirmative murmur ripples through the white-haired crowd.

Legislator Mike Foote discusses Amendment 74 at a Longmont meeting.EXPAND
Legislator Mike Foote discusses Amendment 74 at a Longmont meeting.
David Sirota

But then, eminent domain folklore isn’t necessarily reality — and as its opponents tell it, Amendment 74 is not some good ol’ grassroots common sense spontaneously crafted by hardscrabble ranchers. Foote explains that strong takings laws are already on the books, and that this constitutional initiative was meticulously engineered by a team of high-powered Denver attorneys and political operatives to achieve only one objective: shielding oil and gas corporations from all public-interest regulations that may emerge as population growth and energy development collide in the Rocky Mountain West. And they are trying to achieve their goal not by passing a mere statute that the legislature can tweak, but by embedding language in the state constitution, which would make it all-powerful, non-negotiable and extremely difficult to change.

The measure’s sponsor originally admitted that the amendment was indeed meant to protect drillers’ access to oil and gas reserves. And yet despite that early moment of candor, the industry-funded issue committee pushing the measure has since insisted that it is simply a general-interest initiative needed to thwart an impending assault on Colorado’s way of life.

“Amendment 74 protects all private property owners, including those who grow and raise our food and have invested a lifetime of financial and sweat equity into their property,” says the website of Protect Colorado, which gets almost all of its funding from oil and gas corporations. “When a government action takes or devalues property, it is only fair to make sure private property owners are compensated for their losses. Denying family farmers, homeowners and other property owners the right to decide how to use their own land runs contrary to Colorado values.”

As a concept, Amendment 74 is not new — it resurrects the libertarian ballot-initiative fad from the mid-2000s, when seven Western states considered similar property-rights proposals amid the furor over a controversial Supreme Court case strengthening eminent domain powers. This time around, if the amendment passes November 6, it will radically alter the law to give oil and gas companies more power to sue state and local governments for property losses if those governments restrict or regulate fossil fuel exploration for any reason: health, safety, climate change...anything.

In the upcoming election, voters in Arizona, Nevada and Washington will consider environmental ballot measures that could reduce fossil fuel industry profits at the very moment that key parts of the industry are already facing financial turbulence. As scientists’ climate change warnings become increasingly grave, the industry is likely to confront even more such initiatives to wean America off oil and gas. But if Amendment 74 is successful in a swing state like Colorado, oil and gas companies will have birthed a new template that could be replicated in other locales. It is a model that could block all future state efforts to reduce fossil fuel extraction, carbon pollution, vehicle emissions and climate change.

“Any kind of decision a local government makes could be subject to a lawsuit,” Foote says, referring to a PowerPoint slide showing the text of the amendment. “If the lawsuit is successful, then guess who's paying? Taxpayers.”

In fact, the Colorado Legislature’s nonpartisan analysts concluded that if Amendment 74 is approved by voters, taxpayer expenditures for compensation to plaintiffs would “be significant for all branches of state government.”
In Oregon, when timber companies and developers passed a similar measure in 2004, it opened a Pandora’s box of litigation, suddenly prompting thousands of claims demanding billions of dollars’ worth of taxpayer compensation for alleged losses from the state’s land-use laws. The situation became so dire that voters repealed much of the amendment only three years later.

And yet eleven years after the Oregon measure was aborted, it is being revived in Colorado by fossil fuel money — and in a broader, more purified form than any property-rights initiative in American history.

Critics of Amendment 74 say that if it passes, it could mean anything from chemical-industry lawsuits demanding payment for losses from clean-water laws, to factory farms claiming damages from anti-pollution statutes, to strip clubs and pot shops seeking remuneration for zoning regulations that restrict their locations. Legal experts have even warned oil and gas companies that Amendment 74 could actually backfire on the fossil fuel industry itself — they say it could spur homeowners to file lawsuits claiming that nearby fracking sites reduce their property value, and those suits could then prompt regulators to simply freeze all new permits for energy development.

The hypotheticals are infinite and portend a destabilizing miasma of legal turmoil, which is why major newspaper editorial boards, public officials from both parties, business groups, real estate interests and environmental organizations have set aside age-old differences to oppose the measure. However, the official statements of opposition have not been backed up by an overpowering expenditure of political capital or resources to stop the measure — and now the highest-profile leader in national progressive politics is sounding an alarm.

“Colorado Amendment 74, pushed by the fossil fuel industry, seems to be one of the most dangerous propositions in the country,” tweeted Senator Bernie Sanders, days after visiting Colorado on a campaign swing. “It could open the floodgates for oil, gas and other corporate interests to bankrupt the state. This extremely dangerous amendment must be defeated.”

The fossil fuel industry, however, isn’t budging. Despite pleas from power players across the ideological spectrum, major petroleum corporations have dumped more than $8 million into the main group pushing the initiative.

Why? Because for oil and gas CEOs, Amendment 74 is no hypothetical. It is designed to be the industry’s dead-hand insurance policy — a constitutionally authorized nuclear weapon that automatically detonates and bankrupts the state if any public agency tries to even modestly restrict fossil fuel production.

“These measures have essentially blocked the enactment of any significant new community protections and severely undermined the protections that pre-dated the measures,” Georgetown University researchers concluded in a 2008 report that seemed to predict the oil and gas industry’s current attempt to use the initiatives to squelch fossil fuel regulations. “While the property rights agenda is generally advertised as being for and on behalf of the ‘little guy,’ the primary beneficiaries of the property rights agenda have been relatively well-to-do special interests.”

The Amendment 74 apocalypse is not some distant prospect: It could be triggered if environmental activists are successful in circumventing the Colorado Legislature and passing their own separate ballot measure this year.

“Do We Have Any Standing Whatsoever?”

To understand Amendment 74’s underlying objective, you must first understand Proposition 112, which would require new drilling operations to be set farther away from occupied buildings or water sources. If Amendment 74 is the oil and gas sector’s nuclear weapon, then Proposition 112 is the threat that prompted the industry’s Manhattan Project.

“If 112 passes and Amendment 74 passes, it makes 112 meaningless,” says Foote, as the Longmont meeting winds down. “That’s the point.”

If you watch the election-season commercials, you may think the battle over the setback measure is just another replay of the age-old conflict between environmental activists and powerful industrial interests. It certainly is that — but it is also something bigger. Beneath the billboards and direct-mail pieces and television ads, 112 is actually a brawl over who gets to make decisions: residents in their own cities and towns across Colorado, or a handful of politicians in the State Capitol, bankrolled by corporations intent on extracting every last bit of profit from the fossil fuel reserves underneath Front Range communities.

A northward journey on I-25 from the State Capitol takes a visitor through the frontlines of the power struggle that is unfolding in the Wattenberg Field, an oil- and gas-rich expanse stretching across 2,000 square miles of northeast Colorado.

Amid the blur of big-box stores and grasshopper-like oil pumpjacks, you first hit Thornton, where oil and gas lobbyists convinced a court to invalidate the town’s pipeline rules and then, in trash-talking fashion, warned other cities that they’d be next if they tried anything similar. Just to the northwest, Broomfield: a patch of suburban sprawl where an oil and gas company is running scorched-earth campaigns against local officials who are seeking to restrict new drilling sites. Then there’s Lafayette, whose voter-approved drilling ban was struck down by a state court, and where environmental activists angrily shut down a recent city council meeting.

Ultimately, you hit Weld County, home of the now-iconic Firestone — the bedroom community where in 2017 two people were killed by an explosion caused by a severed gas line from a nearby well. You’ll also find Greeley, where a major drilling site is planned right next to a school in a low-income neighborhood, and tiny, unincorporated Briggsdale, where an oil tank battery fire injured three workers in the last weeks before the election.

These are the battlefields of the “shale revolution,” where a dramatic increase in American fossil fuel production has been made possible by such technological advances as horizontal drilling and hydraulic fracturing, commonly known as fracking.

Though oil and gas have been produced in Colorado for over a century, the last decade has seen a proliferation of drilling on the fast-growing Front Range in a state that — despite its rural cowboy reputation — is now one of the country’s most urban. Since 2000, as Colorado’s population has swelled by more than 1.3 million people, natural gas production has doubled and oil production has increased more than seven-fold, with much of that extraction taking place near major population centers.

Taken together, the state is experiencing an epic clash of two American Dreams: the young family’s dream of suburban homeownership and the frontier land man’s dream of fossil fuel gushers.

So far, the latter has been winning in Colorado. Here — unlike in Pennsylvania, another political swing state where recent battles over fracking have been fought — statutes and court rulings have stripped local communities of their authority to ban, zone or in any way regulate the oil and gas operations that occur within their municipal borders. Efforts to enact so-called “local control” laws have been repeatedly thwarted by both Republicans in the state legislature and Democrats like Governor John Hickenlooper.

Modern oil and gas extraction is a complex, mechanized, heavy industrial process. It involves super-sized pad facilities that can house dozens of wells, with drilling and flowback operations that can last for months at time, afflicting surrounding areas with constant noise, odor and traffic — to say nothing of the ever-present risk of spills, explosions and other accidents. And under Colorado law, communities have virtually no authority to stop these facilities from popping up wherever a company can acquire land, obtain a state permit and decide to start drilling.

The situation has sown a sense of powerlessness — and frustration suffused an October city council meeting in Republican-leaning Loveland. That community of 76,000 recently woke up to letters informing residents of — not asking permission for — a project that will drill a dozen two-mile-long horizontal wells underneath many of their homes and schools.

An overflow crowd packed into council chambers to hear a presentation on the drilling proposal and share concerns. Most were residents of the neighborhoods under which the planned drilling would take place — retirees anxious about how it would affect their health, parents worried about their young children. As city employees briefed council members on the plans, however, it became clear just how little control Loveland would be able to assert over the situation.

“Do we have any standing whatsoever, as far as this drilling process?” asked City Councilor Steve Olson.

“We are somewhat in the same boat as the rest of the folks in the audience tonight,” replied Brett Limbaugh, Loveland’s development services director. “We are a mineral rights owner in this area. That’s why we received the notice.”

Sam Bradley, a petroleum engineer for Magpie Operating, laid out the company’s plans for the initial twelve wells to be drilled underneath Loveland, and for an additional five well pads extending south into Larimer and Weld counties, with as many as sixty wells to be drilled in total. Defending Magpie as a local, family-owned company, he took issue with a news article in which an affected resident described the situation as “un-American.”

“This is the opposite of that — this is a uniquely American situation,” said Bradley, prompting morbid laughter from the crowd.

Loveland residents who spoke during a public comment period mostly expressed fear and opposition to the drilling proposal, and many residents of the affected neighborhoods accused Magpie of failing to properly notify them of its plans. Several speakers fought back tears as they described the impacts the drilling could have on their lives.

“We don’t know the full health effects of fracking,” said Dr. Alison Cowan, a UCHealth physician and a resident of one of the impacted neighborhoods. “But the data that we do have suggest very strongly that we have grave reason to be concerned that this is happening under our homes, in our communities, to ourselves and to our children.”

Oil and gas officials have long scoffed at such concerns. In particular, they’ve faulted several studies by Dr. Lisa McKenzie, a researcher at the Colorado School of Public Health, whose findings have also been dismissed by the administration of Hickenlooper, a former petroleum geologist who has been a staunch industry ally.

“I go back to my reporter days on the Denver Post editorial page, and really looking at things with a critical eye,” said Dan Haley during a Colorado Public Television debate in September. “These studies are not what we should be basing our policy on.”

But McKenzie’s research is far from alone in its findings; there exists a vast catalogue of scientific evidence suggesting that proximity to oil and gas extraction poses serious health and environmental risks. In a 2016 analysis published in the scientific journal PLOS One, researchers evaluated 685 peer-reviewed studies on the effects of fracking and found that 84 percent of them “contain findings that indicate public health hazards, elevated risks, or adverse health outcomes.” Sixty-nine percent of water-quality studies and 87 percent of air-quality studies found evidence of fracking-related pollutants or contamination.

Meanwhile, reports prepared by Hickenlooper’s health department, which are frequently touted by the industry, have been criticized for their lack of peer review. The most comprehensive state assessment to date — an analysis of thousands of air samples collected near oil and gas operations in 2016 — was originally scheduled for release this summer, but Hickenlooper’s administration delayed its release until next year after lawmakers called for the study to be peer-reviewed. (Though the study is complete, the department rejected an open-records request to review it for this article.)

Public-health complaints pour in on a near-daily basis to the Colorado Oil & Gas Conservation Commission (COGCC), the state agency that oversees drilling. Overall, those complaints more than tripled in 2017 as Coloradans continued to report the adverse effects of the oil and gas operations encroaching on their communities: headaches, nausea, respiratory issues, nosebleeds, trouble sleeping and more.

“We started becoming aware of the oil and gas wells popping up less than a quarter-mile from our house. They were just right outside, [and] around the same time my children, my husband and myself began to get constantly sick,” Karen Maciula said at a recent anti-fracking rally in Denver. When her family lived in Erie, their blood tests indicated elevated levels of the carcinogen benzene that studies have shown can be found near fracking sites.

“Our experience living with fracking was horrific,” she added. “People should not be forced to be guinea pigs.”
At the Loveland council meeting, those same fears simmered beneath residents’ comments, which stretched on past 11 p.m. In the end, however, there was almost nothing the council could do.

“Does Loveland have any jurisdiction in the below-surface area?” Olson, the city councilor, asked.

“We don’t,” said Limbaugh. “The state is the authority on oil and gas applications.”

This scene has played out over and over again in communities along the Front Range in the last decade — and the script always seems to end the same way. Impacted residents file complaints, write their representatives, speak out at hearings and form community activist groups. They plead with Hickenlooper, with state lawmakers, with regulators and with the courts, asking for tougher restrictions on the oil and gas operations laying siege to their communities. If they’re lucky, they notch a few peripheral wins, such as when they convinced regulators to slightly increase setback requirements and tighten some air pollution rules.

But on the biggest questions of health, safety, pollution and climate change, the result has almost always been the same: Residents get steamrolled by the fossil fuel industry and its allies in state government.

Even as grassroots anger intensifies, the pace of oil and gas development along the Front Range has accelerated over the last four years. Amid a spate of explosions and an increase in leaks — 619 reportable incidents in 2017, according to state data — drillers are submitting record numbers of new permit applications to the COGCC. What’s more, the industry is increasingly seeking to drill and frack in ever more densely populated areas just outside Denver city limits, with hundreds of new wells proposed in urban municipalities like Commerce City and Aurora. And all of this is happening as the Republican state senators and the Democratic governor have worked together to block major safety proposals — indeed, even in the weeks after the deadly blast in Firestone, lawmakers voted down legislation that would merely let homeowners know if they are living near oil and gas infrastructure.

The history of American politics is the story of disenfranchisement fomenting backlashes — and Colorado in 2018 has become the latest iteration of that tale. Feeling trampled by an oil and gas industry that converts profits into massive campaign donations, a lobbying army and lavish influence-peddling conferences, local activists decided they’d had enough. They stopped waiting for political leaders to do something and started collecting petition signatures to circumvent the legislature and campaign for their own, no-holds-barred ballot measure.

Proposition 112 is a decidedly blunt-force instrument. It does not seek to broker a small compromise, negotiate nuances or accept the oil-connected political establishment’s definition of what is “realistic” or “reasonable.” Instead, it is big, brazen and bold: It would require new oil and gas wells to be almost a half-mile away from occupied buildings and other designated areas like water sources. That’s a considerable increase over current laws, which mandate setback distances of 500 feet from single-family homes and 1,000 feet from high-occupancy buildings.

“With nine out of eleven bills killed in our legislature and hundreds of heartbreaking testimonies given to the COGCC with no action, it’s time our citizens are heard with this ballot measure,” said Heidi Henkel, founder of Broomfield Moms Active Community, when activists submitted petition signatures for 112. “The state has failed to protect us, so we’ve taken it into our own hands.”

In a way, the initiative flips the script on the oil and gas industry and its political allies: After years of well-heeled fossil fuel attorneys marching into court and citing state law to eviscerate local fracking restrictions, the initiative aims to use that same state-level authority to impose what would be the strictest setbacks law in the country.

In years past, Colorado environmental groups had failed to successfully force a statewide vote on fracking. This time around, activists finally got the clear, easy-to-understand ballot showdown over fracking and drilling that they had long sought. But in doing so, they also prompted one of the wealthiest and most politically powerful  industries in the world to construct a doomsday device.

Erie could soon have more wells...and more developments.EXPAND
Erie could soon have more wells...and more developments.
David Sirota

“You Need to Stand Up for Your Rights”

The effort by Colorado Rising, a newly formed activist group, to place a setbacks measure on the 2018 ballot was by no means a sure thing. This year’s succeeded where similar previous attempts fell short, thanks in large part to volunteers like the ones who spent a warm Friday afternoon in mid-October knocking on doors in Greeley to turn out the vote for Proposition 112.

“This is kind of the belly of the beast,” said Carol St. Jean, looking over her assigned list of houses with fellow canvasser Cheryl Beseler. Located on the northern edge of the Wattenberg Field, Greeley is home to many of the smaller operators, contractors and rig workers who comprise the fossil fuel industry’s labor force. Yard signs lining streets read “I Am Colorado Oil & Gas” and “Jobs Matter — Vote No on 112.”

St. Jean, a middle-aged academic counselor, estimated that there are between forty and fifty oil and gas wells within a half-mile of her property. Like so many others, she has familiar stories about the impact that drilling, pipeline construction, constant truck traffic and other industry operations have had on her and her neighbors.
“When I moved to Greeley, that’s the first time I ever got asthma,” said St. Jean, who lives on a small farm east of town and works at the University of Northern Colorado. “It wasn’t that bad until they started fracking. When it started out, I had to sometimes use an emergency inhaler. Now I carry it with me everywhere.”

As the sun began to set over the Rockies, the two canvassers crisscrossed through a sleepy neighborhood in central Greeley, knocking on about fifty doors to spread the word about 112 — and even in the heart of fracking country, in a county that President Donald Trump won by over twenty points, they mostly encountered friendly curiosity and quiet support. Only one resident, a woman who icily told the canvassers that her husband worked in the oil fields, was anything less than cordial. Several said they were undecided but leaning yes.

Such responses are why the industry and its allies have fought so hard to keep tougher fracking restrictions off the ballot: In short, such measures seem to be inherently popular.

Before a pair of anti-fracking ballot initiatives were withdrawn in a controversial deal brokered by Hickenlooper in 2014, polling showed both leading by huge margins. Last month, Axios reported that an unreleased poll commissioned by the industry showed that 112 was “likely to pass with around 60 percent support.”

The energy industry’s Plan A is to overcome the measure’s appeal by spending staggering, unprecedented sums to defeat it — $38 million, at last count, with the vast majority of it from fossil fuel giants like Texas-based Anadarko Petroleum and Noble Energy. That’s over forty times the figure raised by Colorado Rising in support of 112.

The full-court press against 112 has dominated local media for months. In direct mail, television ads, newspaper op-eds, public debates and social-media posts, the industry and its allies have employed an everything-but-the-kitchen-sink messaging strategy.

As COGA president Haley insists natural gas is “cleaning our air and improving health,” Amendment 74 proponents allege the measure will harm schools, punish teachers, hurt children, kill hundreds of thousands jobs, decimate property values, jack up utility rates, harm retirees and devastate local government budgets. Proposition 112 opponents have cited COGCC data to insist the measure would amount to a de facto ban on all new extraction.

Those assertions have been undermined by both academics and the oil and gas industry.

Earlier this month, an analysis by a Colorado School of Mines researcher concluded that the increased setbacks would still leave around 42 percent of non-federal sub-surface area accessible by modern drilling technology. Now, a week before the election, a leaked fossil fuel industry report obtained by Colorado Rising appears to further contradict claims by opponents of 112. The analysis by RS Energy Group found that with existing fracking technology, a full 61 percent of the Denver-Julesburg Basin — and 43 percent of the Wattenberg Field — “remains accessible if Proposition 112 is affirmed.” (The analysis by RS Energy Group that was released by Colorado Rising said it is “intended only for individuals in the anadarko.com organization” — a reference to Anadarko Petroleum, one of the major funders of the campaign against 112. However, RS Energy Group is an independent firm that said the report was "intended for all of its clients” and not specifically or exclusively for Anadarko.)

All of the criticism has succeeded in convincing almost all of Colorado’s political establishment — Republican and Democrat — to line up against the measure, including both Republican gubernatorial candidate Walker Stapleton and Democratic gubernatorial candidate Jared Polis. But even with all the money and power aligned against 112’s grassroots volunteer army, there is no way to know if it will be enough. And so, long before any mailers were printed or any TV commercials aired, supporters of the oil and gas industry quietly hatched Plan B: Amendment 74.

“The oil and gas folks had a knife fight on their hands with Proposition 112, and so they decided to bring a nuclear weapon in as a backup, and now the entire state is under threat,” says Ian Silverii, executive director of the progressive group ProgressNow Colorado, which opposes Amendment 74.

That threat revolves around private-property law. Colorado’s constitution currently stipulates that “private property shall not be taken or damaged, for public or private use, without just compensation.” If passed next week, Amendment 74 would insert into this sentence a seemingly innocuous eleven words, declaring that private property cannot be taken, damaged, “or reduced in fair market value by government law or regulation” without taxpayers forking over that compensation.

Earlier this year, Republican state lawmakers were unsuccessful in their efforts to create a narrower version of Amendment 74 that would have manufactured a special takings protection just for oil and gas. Amendment 74 proponents now cast their far broader measure as a simple matter of equity, not tailored to any one specific issue or industry. In pro-74 TV ads, farmers and ranchers champion the amendment in language that is equal parts folksy and vague.

“Government should not get a free pass to destroy the value of a family farm — it’s only fair,” says one ad, featuring Republican Mesa County Commissioner John Justman striding through green cropland as a John Deere tractor rolls by in the background.

“You need to stand up for your rights,” says another ad. “Vote yes on 74 — it’s only fair.”

None of the ads say anything about oil and gas extraction. That must seem odd to Chad Vorthmann, executive vice president of the Colorado Farm Bureau and one of the amendment’s sponsors. After all, he told the agricultural newspaper The Fence Post that “these measures are about protecting Colorado's farmers and ranchers from extremist attempts to enforce random setback requirements for oil and natural gas development.” (Vorthmann and other Colorado Farm Bureau officials did not respond to repeated requests for comment.)

That mission is made particularly clear by the Committee for Colorado’s Shared Heritage, the issue committee behind the pro-74 ads. According to the group’s campaign-finance filings, 99.8 percent of the organization’s money — more than $8 million in both cash and in-kind contributions — has come from Protect Colorado, the anti-112 committee funded almost exclusively by the oil and gas industry. While Haley told KMGH that COGA has “not taken a position” on Amendment 74, Protect Colorado’s big funders include more than a dozen COGA member companies, including Anadarko, Noble and Extraction — each of which is represented on COGA’s board.

Haley has lately asserted that unto itself, Proposition 112 “would probably open the state up to some legal challenges should it pass.” But if that’s the case, why would the industry then need Amendment 74? Because, according to University of Denver associate law professor Kevin Lynch, existing takings laws have never awarded the fossil fuel industry damages for strict environmental, health and safety laws — even in places like gas-rich New York, where fracking was banned.

Amendment 74 would change that by empowering mineral-rights owners to sue the state for untold billions in compensation if any new regulation like Proposition 112 restricts their ability to reap royalties from those resources.

That sounds like a great idea to Bob and Cristy Koeneke of Arvada, whose families have owned mineral rights in Adams and Garfield counties for generations. At a rally against 112 on the steps of the State Capitol in October, they rejected the notion that any new drilling regulations were necessary, and strongly endorsed Amendment 74.

“If you own a home, if you own any property, is it okay with you if the government comes in and steals it from you?” asked Bob.

Cristy, who sits on the board of the Colorado Alliance of Mineral and Royalty Owners (CAMRO), said that her family’s mineral rights date back to the 1880s, when her great-grandfather was one of the early settlers of the Western Slope’s Piceance Basin.

“They were looking for gold and silver; they had no idea about oil and gas,” she said, noting that advances in shale-drilling technology have been a boon to mineral owners like her. “After five generations, we’re finally being able to develop those resources.”

An analysis by CAMRO says that in the Wattenberg Field alone, those undeveloped resources may be worth up to $179 billion. It’s impossible to know exactly how much that value would be diminished by 112’s increased setbacks. But if both Amendment 74 and Proposition 112 pass, the mere threat of billion-dollar claims could be enough to convince the state legislature to immediately overturn the will of the voters and repeal 112. That course of action has already been endorsed by Stapleton, whose campaign is being supported by a super PAC that has received hundreds of thousands of dollars in campaign cash from oil and gas donors.

Proponent 112 supporters campaigned at the State Capitol.EXPAND
Proponent 112 supporters campaigned at the State Capitol.
David Sirota

“These Eleven Words Were Deliberately Chosen”

Despite its origins as an insurance policy against Proposition 112, the full scope of Amendment 74’s implications extends far beyond oil and gas regulation and the interests of one specific industry. Because of how broadly it is written, experts say, the amendment could ignite an explosion of costly litigation across myriad economic sectors and targeting every level of government in Colorado.

“These eleven words were deliberately chosen,” says veteran Colorado political attorney Mark Grueskin. “There’s nothing in 74 that requires that it be a future law. They crafted it so that it would apply no matter when the [law] was adopted.

“They could have said, ‘By regulation adopted by an agency on or after January 1, 2019,’” he adds. “They didn't. They used a passive phrase in order to provide license to go back and say, ‘We're immune from any sort of regulatory act that reduces our property value, unless you want to pay us.’”

In an October op-ed for Colorado Politics — which is owned by oil magnate Phil Anschutz — Centennial Institute scholar Kelly Sloan berated “fanatical environmentalists and other left-wingers” for opposing the measure, and argued that Amendment 74 would merely fix an old court ruling from La Plata County that he said limited redress rights unless the entire value of a property is fully destroyed.

"At issue is the gradation of taking — whether the government ought to compensate a property owner when an imposed regulation reduces a certain amount of a property’s real value,” wrote Sloan, whose op-ed did not disclose that he is a registered lobbyist for an oil and gas exploration company and a landowners’ group.

That legalistic argument has not placated Amendment 74 opponents, who say it would be the most extreme private-property-rights law in the country.

“It's the single worst measure I've seen in forty years, and we've had some stinkers,” says Sam Mamet, executive director of the Colorado Municipal League. “It's also one of the singularly most disingenuous, dishonest measures I've ever seen. There are people behind the black curtain that won't come out and say what's going on here.”

Among those behind that curtain are attorneys from powerhouse law firm Brownstein Hyatt Farber Schreck, which helped shepherd the measure through the ballot process, and preserved a short description of the measure that Mamet and others say is deceptive. Brownstein’s Jason Dunn — who last week was sworn in as President Trump’s U.S. Attorney for Colorado — successfully defended that language before the Colorado Supreme Court, which allowed the amendment to be placed on the ballot mentioning only “just compensation” for property owners. The language on voters’ ballots does not make any reference to the wide array of claims that one top real estate expert said could be made against state or local governments if Amendment 74 passes.

“Amendment 74 does not exempt fire or building codes, or other public safety regulations,” wrote Colorado land-use attorney Tom Ragonetti in a memo sent to business leaders. “Because fire and building codes (as well as storm drainage regulations and utility requirements) necessarily reduce properties’ fair market value, local governments will face incalculable liability for these necessary public safety regulations.”

The memo also declared that “if a local government rezoned property in order to attract a major employer, neighbors could file a claim that their properties were devalued,” which would create a “serious disincentive to rezone property for economic development purposes.”

When it comes to climate change, the consequences could be just as dire. Not only could Amendment 74 effectively create a guarantee of unregulated extraction across the entire state, it could also financially punish taxpayers if Colorado officials continue efforts to reduce emissions. “Car manufacturers could be entitled to the cost of required emissions equipment,” Ragonetti’s memo suggested.

What’s more, Amendment 74 could result in significant additional taxpayer costs if it ends up lowering state and municipal credit ratings, which help determine interest rates when governments borrow money. Those ratings can decline, and interest rates can rise, when governments are facing general uncertainty about their budgets, as well as specific new spending mandates that threaten their ability to pay back debts.

Amendment 74 could be a double whammy of uncertainty and constitutionally required spending on compensation to property owners. Recent Colorado bond offerings are already warning investors and credit agencies that the amendment would create “significant liabilities to the state,” thus potentially making it more difficult for Colorado governments to pay their bills.

“Having an uncertainty about what your liabilities are going to be, but knowing they could be massive — that could very well start impacting our credit rating from the day this thing passes,” says State Representative Matt Gray, a Broomfield Democrat who is a bond attorney for local governments.

Once the amendment is on the books, Gray adds, “People [will sue] the state for its policies…and therefore [governments] are not going to be as creditworthy, because they're going to have more expenses with no new revenue sources.”

112 opponents took their message to an overpass.
112 opponents took their message to an overpass.
David Sirota

The Oregon Experiment: “It Was a Disaster”

Colorado state and local officials were only beginning to panic about all the hypothetical downsides of Amendment 74 when, in early autumn, its proponents made their final decision to place the measure on the ballot. To try to assuage policymakers’ fears, the measure’s most prominent booster, the Colorado Farm Bureau, sent a memo to municipal leaders across the state arguing that the hypothetical doomsday scenarios are being overblown.

“Amendment 74 will not affect a municipality’s home rule authority to enact local regulations to protect its citizens,” said the memo authored by Brownstein Farber oil and gas attorney Mark Matthews. “If Amendment 74 becomes law, Colorado courts would interpret these other requirements strictly to limit the number of successful takings claims.”

Those assertions and legal theories seem reassuring, except for one little detail: They are undermined by the real-world experience of Oregon, a state that voted similar private-property language into its legal code.
“It was a disaster,” says former Oregon governor Ted Kulongoski, the Democrat who was in office when Oregon’s Measure 37 passed in 2004. “The only way the local governments can pay for it is they have to tax the people. It's going to end up costing more money and destroy the livability of Colorado.”

Whereas Colorado’s oil and gas industry is using Amendment 74 to try to preemptively block future fracking regulations, Measure 37 was backed by timber interests and commercial developers seeking to dismantle Oregon’s longstanding land-use laws. In Colorado, the Colorado Farm Bureau is the public face of the measure, but in Oregon, the Farm Bureau backed the effort to rescind parts of the property-rights initiative once it was on the books.

Despite those key differences, the two measures and the two campaigns to pass them are nearly identical — and their practical effects could be, too.

"Big monied special interests are running the same deceptive campaign that we faced in Oregon, and it will create the same huge problems,” says Ron Ruggiero, who was a labor organizer in Oregon when Measure 37 passed and is now president of the Colorado chapter of the Service Employees International Union. “They are once again trying to rig the system against regular working people and make it sound like some great populist idea for the little guy.”

Much like Amendment 74, Measure 37 required governments to pay residents when “regulations reduce owners' property value.” The idea wasn’t exactly new — a similar concept had already been baked into America’s trade deals that give foreign corporations standing to sue for damages if state or local laws reduce those corporations’ profits.

Also like today’s Colorado campaign, the Oregon effort managed to develop a grassroots brand. It was launched in the lead-up to the now-famous Kelo case, in which the Supreme Court strengthened eminent domain powers. Measure 37’s pitchforks-and-torches tenor was amplified in ads resembling the ones now airing in Colorado — the ones that never mention oil and gas and that incessantly depict commonfolk getting screwed by Big Government.

Likewise, TV spots promoting Measure 37 did not focus on how the proposed law would enrich powerful logging interests or developers; they spotlighted regular workaday Oregonians complaining about how environmental and zoning laws were impinging on their daily lives.

One ad featured a young woman who said she was fined thousands of dollars for trimming bushes in her back yard. The most famous spots revolved around ninety-year-old Dorothy English lamenting how state laws were preventing her from subdividing her suburban Portland property and using the proceeds to subsist in retirement.

“Oregon's land-use system has destroyed my retirement,” she wrote in a newspaper op-ed that led to the spots. “My property has been stolen from me. And since my land can't be used for anything, the community doesn't generate any added tax revenue to pay for schools, parks and other services. My land has become worthless to everyone except those zealots who think Oregon should shut its borders and stop all growth.”

On election day 2004, Measure 37 won more than 60 percent of the vote — a huge margin that spurred similar ballot measures in six other Western states. The libertarian Reason Foundation issued a euphoric report detailing ways of “exporting Measure 37 to other states” — a potential preview of how the fossil fuel industry might try to capitalize on an Amendment 74 victory in Colorado.

“[Colorado’s] is a very similar title to what we had in Oregon, and we really couldn't overcome the title, because it's hard to get people to vote no on a principle like that, because everybody would say, ‘Well, yeah, that's a fair principle,’” says Tim Nesbitt, a former Oregon AFL-CIO president and top aide to two Democratic governors. “It’s a very compelling statement to most people. That's what was so clever about it.”

Over the next two years, Oregon’s legal system descended into chaos. As powerful as stories like English’s were in helping to pass the measure, new horror stories about Measure 37’s real-world consequences soon became an equally forceful counter-narrative challenging all the fairness rhetoric that had dominated the original ballot campaign.

There was the developer who used the initiative to demand up to $35 million for alleged damages over a land-use law that had prevented him from converting 850 acres of forest into housing plots, according to a report from the nonpartisan Sightline Institute. There was also the $18 million claim from a landowner outside of Salem who wanted to turn farmland into a new development, even though such a plan threatened to “severely draw down the streams,” a nearby lake and neighbors’ wells.

And there was the landowner whose property lay within one of the state’s natural wonders, the Newberry National Volcanic Monument. He demanded up to $200 million in compensation unless the county government allowed him “to build a large-scale mine, a geothermal power plant and 100 homes” along scenic East Lake, according to the Bend Bulletin.

Color-coded cartograms of Measure 37 claims in northwest Oregon resembled Centers for Disease Control maps of a viral epidemic. Red flecks showing properties subject to remuneration or zoning waivers soon blanketed the area, bleeding into rural regions where there was little infrastructure or services to support development. The county adjacent to Portland saw owners of more than 115 square miles of property — or a full 15 percent of the entire county — filing Measure 37 claims, with the cases coming from a mix of individuals and corporate interests.

“When 37 passed, it nullified the farm and forest zoning, so owners worked to cash in,” says Liz Kaufman, who ran the campaign to repeal parts of the constitutional amendment. “They filed ‘claims’ with the state stating their intended developments. It not only would have wiped out our whole land-use planning system, it would have run over substantial swaths of farm and forest land and placed developments where there is no fire service, much less all the other basics.”

Just two years after the passage of Measure 37, nearly 7,000 claims were filed for a total of $17 billion worth of taxpayer compensation, according to the Oregon Department of Land Conservation and Development. The measure wreaked such havoc that in the next election, Oregon voters passed another initiative repealing much of the original amendment. That same year, voters in neighboring Washington State overwhelmingly rejected a separate version of the property-rights initiative after opponents there ran ads casting Oregon as a cautionary tale.

Colorado is now the newest political petri dish for the same experiment — only the 2018 version is designed to go even further. Unlike Oregon’s measure, Amendment 74 includes no exceptions for laws dealing with health or safety, and it was deliberately written in a passive tense, which could allow it to be retroactively applied to existing laws. Also unlike Oregon’s measure, Colorado’s initiative is constitutional, not statutory, meaning it governs all laws and cannot be tweaked by the legislature.

“That’s a key difference this time: In Colorado, they're using our constitution to try to crush workers,” says SEIU’s Ruggiero, who asserted that corporations could use the amendment to file lawsuits arguing that labor laws reduce the profitability and value of businesses and therefore require such laws to be rescinded, or taxpayers to pay damages.

In an effort to evade comparisons with Oregon’s apocalypse, proponents of Amendment 74 have lately insisted that their initiative is fundamentally different.

“Colorado Amendment 74 would maintain existing legal standards and procedures for establishing a takings claim,” wrote Republican attorney Jonathan Anderson in a letter demanding that a local television station remove anti-74 ads from the airwaves. “In sharp contrast, Oregon Measure 37 applied a completely different legal standard.”

Still, the general thrust of the two policies are the same — and according to strategist Rick Ridder, the overall similarities between the Measure 37 and Amendment 74 campaigns are no coincidence. He notes that the consulting firm overseeing the campaign for Amendment 74 and against Proposition 112 is not a Colorado company, but the Portland-area firm Pac/West, which has been given $26 million by the oil and gas industry’s issue committees. Pac/West is run by Oregon's former Assistant Senate GOP leader Paul Phillips. (He did not respond to requests for comment for this story.)

“I think the right wing realized a while back that these initiatives weren’t necessarily a great move, but then along comes the setbacks initiative here in Colorado, and the oil and gas industry has been working with Paul Phillips for a long time,” says Ridder, who is advising the issue committee opposing 74. “Paul Phillips is from Oregon. He very likely knew about Measure 37 and how deceptive and effective it could be for oil and gas here in Colorado.”

Former Oregon governor Kulongoski says that his state’s experience is an instructive parable about private property initiatives — and about complacency. “For a while I think Oregonians fell asleep on this measure thinking it wasn’t going to pass, and it passed,” he says. “I was strongly criticized by the land-use groups because they thought that I didn't make a big enough effort to get it defeated, and the fact was that we all can share the blame for that. I think even the land-use groups were not putting money into the measure because they didn't think it was going to pass.”

Erika Deakin didn’t know she was moving close to drilling sites in Erie.EXPAND
Erika Deakin didn’t know she was moving close to drilling sites in Erie.
David Sirota

“I Am Really Worried This Is Our Generation’s TABOR”

Unlike Oregon officials a decade ago, Colorado’s current government and civic leaders cannot claim to be surprised by the prospect of radical constitutional change, because the state has famously been at this precipice before.

In a 1992 election overshadowed by a presidential campaign, a ballot fight over LGBT rights and a sales-tax proposal, Coloradans approved a simple-sounding constitutional measure called the Taxpayer’s Bill of Rights, which severely restricted the state’s authority to fund public services. Despite its clear and unprecedented radicalism, TABOR blindsided a distracted political establishment.

“Lots of people in state government and in politics did not fully know how impactful it would really be,” says Henry Sobanet, who served as budget director for both Hickenlooper and Republican Governor Bill Owens.
Though some of its most disruptive provisions have been repealed over the last quarter-century, TABOR forever altered the course of Colorado history, setting the state on a path toward many problems that still plague it today, including underfunded schools, crumbling roads and a regressive fee-based revenue system that disproportionately hurts its poorest residents.

Colorado’s current generation of political elites has risen to power in TABOR’s shadow. But the battle over Amendment 74 — or rather the lack thereof — raises questions about whether they’ve taken any of its lessons to heart.

“I am really worried this is our generation’s TABOR,” says State Representative Jonathan Singer, a Democrat who represents towns in the Wattenberg Field. “Everyone has been so focused on the big races for governor and Congress, but this is one of the biggest things on the entire ballot, and I feel like lots of people don’t even know that.”

While Amendment 74 has been nominally criticized by political figures on both sides of the aisle, talk is just talk — and resources to fight the measure have been limited and late in coming. The issue committee formed to oppose the initiative, Save Our Neighborhoods, was only registered in August and has raised less than $3 million, most of it from environmental organizations like Conservation Colorado and the League of Conservation Voters.

“Amendment 74 has the potential to be the most consequential change to Colorado’s constitution since TABOR,” says Rob Witwer, a former Republican state legislator. “It’s fraught with unintended consequences that won’t be sorted out, or even fully understood, before a decade of litigation. In light of that, the absence of well-funded opposition is shocking. It’s almost as if everybody expected somebody else to fight it.”

Key leaders have also been largely absent from the fight — and among the most glaring absences is Hickenlooper, whose two terms in office will come to an end in January.

The Democratic governor has voiced opposition to the amendment, calling it “one of the worst initiatives that I have seen” at a press conference outside the Capitol in October. But despite his long history of high-profile advocacy on behalf of major ballot measures — as mayor of Denver in 2005, he famously jumped out of a plane in a TV ad supporting Referendums C and D — he hasn’t done much public campaigning against Amendment 74.

After eight years of siding largely with the oil and gas industry in the state’s bitter war over fracking, Hickenlooper is now casting himself as a conflict-averse moderate who believes “there is no margin in having enemies,” as he recently told the New York Times. And so rather than barnstorm the state to genuinely confront and challenge the powerful forces behind Amendment 74, he has spent much of the election season stumping for a less controversial redistricting-reform effort and a sales-tax increase for transportation funding — and traveling out of state to help Democratic candidates in Georgia and Florida as he raises money for his 2020 presidential exploratory committee.

Hickenlooper is hardly alone. United States senators Michael Bennet and Cory Gardner — who, like Hickenlooper, are not tied up campaigning for reelection — have not used their platforms to aggressively campaign against Amendment 74. Similarly, while experts warn of the amendment’s catastrophic consequences for business, the Colorado Association of Commerce and Industry has kept a low profile on the measure — and its chairman, Jonathan Anderson, was the lawyer who pressured a local television station to remove negative ads against the amendment.

“I've pleaded, and cajoled, and yelled, and screamed, and cried, and done everything with all kinds of people in town here over the last six months,” says the Colorado Municipal League’s Mamet. “I won't get into names, but I had some hot shots in town just pat me on the head and say, ‘Oh, Sam, don't worry about it.’ The more people were telling me that, the more concerned I got.”

Opponents fear that the amendment’s terse ballot language could lead voters to approve it without fully understanding its colossal implications. And they are right to be worried: An online survey conducted by the University of Colorado Boulder’s American Political Research Lab in October showed Amendment 74 with 63 percent support, comfortably ahead of the 55 percent that, as a constitutional measure, it needs to pass.
If it does pass — if the oil and gas industry successfully detonates its economic nuclear weapon — communities across Colorado will be ground zero in a blast that could reverberate at every level of society.

At a global level, Colorado is a major oil- and gas-producing state at a moment when scientists are warning that if substantial reserves of oil and gas are not left in the ground, hundreds of millions of people around the world will face the threat of devastating droughts, floods and poverty. Already struggling with all of those, Colorado would face its share of consequences should the state — and the larger world — be forced by Amendment 74 to continue supporting the current rate of fossil fuel extraction and use.

On a national level, a victory for Amendment 74 in a bellwether state could inspire oil and gas companies to finance copycat measures in other states — and especially in those Western fossil fuel states such as California and Montana, where private-property initiatives were already tried in the mid-2000s.

And then there’s the local level, in communities like Erie, where Erika Deakin and her family live just across the way from multiple oil and gas production facilities.

The town’s nearby highway interchange offers an almost too-on-the-nose visual of the conflict at the heart of Amendment 74: There’s a towering white scaffolding of a fracking rig, fronted by a billboard advertising a Toll Brothers home development down the road.

When Deakin and her husband, Geoff, moved here in 2002, they were coming for the good life that those new-home billboards promise: open spaces, running trails, excellent schools and an easy commute to her job as the editorial-page editor of the Boulder Daily Camera. They were not coming for the Wattenberg Field or its pitched fights over fracking regulations — and they had no idea that two small well sites would blossom into thirteen right behind their home, or that thirteen would soon become 45.

Over coffee, Deakin recounts how in 2014 and 2015, Encana Corporation’s original fracking operations blasted out the neighborhood with 24-hour noise pollution — a loud revving at all hours of the night. She also describes the notorious odor that wafted into the neighborhoods from drilling mud and diesel lubricants at the well pads.

“We couldn't open our windows for weeks because of the stench from the sites, and then they used this green-apple chemical to try to mask the smell,” says Deakin, a 45-year-old Colorado native whose husband is now an Erie town trustee. “It was like if somebody used Axe Body Spray to cover up their chain-smoking habit. It was so smelly and so disgusting.”

But that was just the start. “I have a daughter who has massive bloody noses all the time,” says Deakin, who left the Daily Camera in 2014 and is now in marketing. “I’m not going to say, ‘Oh, it’s definitely fracking,’ but when you are faced with that and then you open your window and you smell this really potent smell, like it smells like you're at a truck stop, you're like, ‘Why won't they disclose their chemicals?’”

Deakin and her family are not private property; if it passes, Amendment 74 would not empower them to file a lawsuit seeking compensation for the fair-market value of their health. But if Erie officials took action against oil and gas companies to protect her and her family, those companies could weaponize the amendment. The language would allow the fossil fuel industry to threaten the town with bankruptcy unless it backed off and left the Deakins to continue wondering whether they are being poisoned.

“There's a ton of women in this neighborhood who tell you that their children’s noses bleed — they call them gushers,” Deakin says, her voice cracking. “When you do smell something or you see all of this industrial activity, you do start to think, all of our bodies react to industrial activities differently. You start to wonder, What am I breathing? I've had skin cancer, and a ton of my friends didn't. Am I more prone to it because I'm living in such a heavy industrialized area? I don't know.”

Update, October 31: The original version of this article noted that the RS Energy Group report released by Colorado Rising said it was “intended only for individuals in the anadarko.com organization.” However, RS Energy Group is an independent industry research firm, and the report was available to all of its clients and not conducted for any one client. The story has been updated to reflect this additional context.

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