Sometimes it’s worth checking in on other oil and gas producing states to see what trends may eventually bring political change to Montana. Today we’ll look at Colorado, where conflict over oil and gas development is front and center on the November ballot.

Colorado background
Colorado is a huge oil and gas producing state. It ranks fourth in the US in natural gas production behind Texas, Pennsylvania, and Oklahoma, and  seventh in crude oil production behind Texas, North Dakota, California, Alaska, Oklahoma, and New Mexico. It dwarfs Montana in production. Gas production is 40 times larger than Montana’s, and oil production is five times larger.

Over time, Colorado production has migrated from the sparsely populated Western Slope of Colorado to the rich Wattenberg Gas Field on Colorado’s Front Range, a much more heavily populated area near Denver. As production has moved to densely populated areas, there has been a predictable clash between the oil and gas industry and those concerned about the quality of water, air, and public health.

As this has occurred, Colorado has tried to adopt more balance in regulation than we see in Montana, where regulation heavily favors the oil and gas industry. A couple of examples:

• Colorado requires a minimum 500 foot setback from occupied buildings, which extends to 1000 feet from high density buildings like schools and hospitals. Montana has no minimum setback rules.
• Colorado has relatively strict rules requiring oil and gas companies to publicly disclose the chemical composition of fluids used in fracking. Disclosure includes the volume of water used, the chemicals used and their concentrations. Within 60 days of drilling, all chemicals must be posted on the fracfocus.com web site. Montana’s Board of Oil and Gas is currently revising the state’s chemical disclosure rules, but the final rules will be a far cry from Colorado’s in terms of transparency.

Colorado’s more stringent rules have not satisfied the public however. Voters in Wattenberg Field cities Longmont and Fort Collins passed fracking bans several years ago, but the state supreme court ruled these bans unconstitutional.

A gas well looms over homes in Erie, Colorado, along the Front Range. A titanic clash between oil and gas interests and local communities is on the November ballot in Colorado. (Helen H. Richardson/The Denver Post)

Two competing ballot initiatives
On November 6, this conflict will reach a head as voters will decide on two opposing oil and gas measures, Proposition 112 and Amendment 74. Both could have major conflicting implications on future oil and gas development in the state.

Proposition 112 would establish a minimum setback of 2,500 feet between wellheads and homes, schools, hospitals, and “vulnerable areas,” such as school playgrounds.

The oil and gas industry has attacked Proposition 112 with the full fury of an industry that claims the measure will cut 80% of the state’s future energy development on nonfederal lands, causing 150,000 job losses statewide, and decreasing tax revenues by $1 billion. These figures need to be taken with a huge grain of salt, because they fail to take into account advanced horizontal drilling technology, which enables drilling from as far away as a mile from a target, and they include workers who would allegedly lose their jobs because of a shortfall in state revenue. Proponents of Proposition 112 believe the measure is necessary to protect the health and safety of residents in the Front Range Area where the population is booming and the industry continues to grow.

To date the industry is outspending advocates of Proposition 112 by 20-1. The industry has contributed $19.4 million; proponents have raised $945,985. This is typical of this kind of ballot initiative, and in many places they have prevailed even when the industry has far outspent advocates. In 2014 in San Benito, California, a fracking ban passed 57%-43% even though the industry outspent local advocates 15-1.

The competing initiative is Amendment 74, which would amend the Colorado Constitution’s to read: “Private property shall not be taken or damaged, or reduced in fair market value by government law or regulation for public or private use, without just compensation.”

The oil and gas industry is attempting to use this language all over the country to thwart  voter-imposed oil and gas regulation. The industry doesn’t try to hide it. Chad Vorthmann, Amendment 74’s sponsor and Vice President of Colorado Farm Bureau, says the measure is about “protecting Colorado’s farmers and ranchers from extremist attempts to enforce random setback requirements for oil and natural gas development . . . and strip away Colorado landowners’ right to use their land the way they wish.”

In practice, what these “takings” initiatives do is invite a flood of lawsuits and bankrupt small municipalities. Because oil and gas rights are private property, local governments will be paralyzed if it passes. If they reject oil and gas developments they could face takings claims from mineral owners. But if the government approves the development, it could be faced with a takings claim from property owners. It would be a full employment act for attorneys.

The worst case scenario for Colorado would be if both initiatives pass. Proposition 112 would invite legal challenges under Amendment 74. Eric Sondermann, and independent political analyst, calls Amendment 74 an “insurance policy” against Proposition 112.

Stay tuned. We’ll let you know what happens.