A Colorado oil and natural gas industry-backed initiative has made the November ballot that, if enacted, would allow financial claims to be made on private property devalued by government action.
The “takings claims” Initiative 108, which would appear on the ballot as Amendment 74, was qualified by the Colorado secretary of state with 208,000-plus signatures submitted by the Colorado Farm Bureau (CFB). I approved, it would protect water and mineral rights in addition to physical property. Today, compensation from a direct government action may only be received when a landowner is deprived of nearly all property.
The initiative is endorsed by Protect Colorado, an energy industry-funded group. The Colorado Municipal League is opposed, arguing it could prevent future regulatory efforts by local governments.
"Property rights are important to all Coloradans," said CFB Executive Vice President Chad Vorthmann. "We saw that support as we worked around the state to gather more than 208,000 signatures. This measure will protect Coloradans and hold government accountable for its actions. We're excited to take it to the ballot in November."
The state constitution provides protection for when a government action takes or devalues property. Proponents of the amendment said it would “ensure citizens have a fair opportunity to be compensated for their potential losses due to punitive government action.”
The initiative would protect “all private property owners, including homeowners, businesses, farmers and ranchers, urbanites and suburbanites from state or local governments taking their property by reducing its value without compensation,” according to the CFB.
"This is a good government measure that will hold policy makers accountable and give voice to citizens who may be negatively impacted by government action,” Vorthmann said. “ We believe that Coloradans have a right to hold their governments accountable and deserve to be compensated when a government does something to reduce the value of their property. It's only fair."
The Colorado Oil and Gas Association (COGA) also weighed in early Wednesday.
“We are happy to see the Colorado Farm Bureau pushing Initiative 108 to strengthen private property rights in our state,” COGA CEO Dan Haley told NGI’s Shale Daily. “If a state or local government steamrolls their constituents and conducts actions that negatively impacts an individual’s private property value, then those individuals should be compensated, plain and simple. Initiative 108 is a good government measure that makes sense for all of us.”
Another Initiative 97, opposed by the state’s oil and gas industry, also qualified for the ballot. Organizers had submitted close to 173,000 signatures; the secretary of state’s office said it qualified with an estimated 123,195.
If it were to be approved by voters, new oil and gas drilling setback requirements would increase to 2,500 feet from 500 feet.
Under Initiative 97, wells would have to be 2,500 feet from homes, high occupancy structures (now 1,000 feet) and "vulnerable areas."
The Colorado Oil and Gas Conservation Commission has estimated that up to 85% of state land would be off limits to new energy development under the 2,500-foot requirement.
Tudor, Pickering, Holt & Co. analysts on Wednesday said it had been “less discussed in recent conversations,” but Initiative 108 making the ballot “is a solid positive” for the oil and gas industry because the voter education campaign, launched in response to Initiative 97, “can now more confidently include figures indicating the degree to which the state economy would be negatively impacted if both 97 and 108 were to become law.”
Height Capital Markets analysts also weighed in on the implications for Colorado producers if Initiative 97 was affirmed. As a statutory amendment it must receive more than 50% of the vote to become law.
“We put the odds at 30% that Initiative 97 gets over 50% of the vote,” Heights Capital Market analysts said.
Both gubernatorial candidates, Democrat Jared Polis and Republican Walker Stapleton, oppose the setback rule “and, to put it bluntly, we think the measure is too extreme to garner a majority of votes.”
Colorado voters are to receive the 2018 election blue book in early October, detailing the negative financial impacts to the state should Initiative 97 pass. Those potential impacts, which could drive many exploration and production companies to other states, may deter some would-be “yes” voters, said analysts.