DENVER — After more than three months of trying to find support for a legislative compromise to resolve local control issues around oil and gas drilling in an effort to avoid a nasty fight over local control ballot measures this fall, Gov. John Hickenlooper is pulling the plug on a special legislative session this summer, FOX31 Denver was first to report Tuesday night.

Hickenlooper and many Democrats had hoped to avoid a ballot measure fight that could hurt the party’s chances this fall.

Colorado Sen. Mark Udall, the Democrat most likely to be impacted by that fight, quickly issued a statement Wednesday morning that he opposes the ballot proposals.

“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,” Udall said. “That’s the Colorado way.”

SIDEBAR: Udall comes out against Polis’ ballot measures after legislative compromise falls apart

Although tweaks to the draft legislation had won broader support for the proposed compromise from the state’s business community and some oil and gas operators, Republicans were locked down in opposition to the proposal and the special session that would have to be called to pass it.

Hickenlooper issued a formal statement Wednesday morning that talks have hit a brick wall and that there will be no special session because he’s been unable to find the votes to get the proposal through the state senate, where Democrats hold a tenuous 18-17 advantage.

“Over the past several months, we have worked with a bipartisan coalition to explore a legislative compromise that would avoid a series of expensive and divisive ballot initiatives surrounding oil and gas development in Colorado,” Hickenlooper said. “Despite our best efforts and those of other willing partners, we have not been able to secure the broader stakeholder support necessary to pass bipartisan legislation in a special session.”

Two Democrats, Sens. Lois Tochtrop of Thornton and Cheri Jahn of Wheat Ridge, have said they oppose any local control measure that doesn’t have bipartisan support, leaving the measure short of the necessary votes to survive the senate.

Other Boulder County Democrats from the more liberal side of the senate caucus who represent some of the communities that have already voted to ban fracking also had reservations about supporting the compromise.

“Although we will not be calling a special session on oil and gas local control legislation, we will continue to work on the underlying issue, building on progress made,” Hickenlooper said.

Compromise won broad support

The proposal, originally agreed to by Hickenlooper, Noble Energy and Anadarko Petroleum, and Democratic Boulder Congressman Jared Polis, who is funding the ballot initiatives, aimed to give cities and counties the ability to adopt additional regulations for oil and gas operations related to zoning and longer setbacks, but it stopped short of allowing municipalities to prevent drilling altogether.

After input from trade groups, the bill was tweaked to better protect home builders who have invested in projects from being adversely impacted by local regulations restricting oil and gas drilling.

The draft bill also garnered support from mainstream environmental groups and from 65 percent of Colorado’s oil and gas producers; the Colorado Oil and Gas Association, which had voted to oppose Hickenlooper’s initial proposal, hasn’t taken an official position on the revised bill.

Under the agreement, Polis agreed not to pursue any ballot initiatives related to oil and gas drilling through the 2018 election cycle.

“Our thanks to all of those who supported the compromise,” Hickenlooper also said Wednesday. “We continue to believe that the right way to solve complex issues like these is through the legislative process and through transparent rule making.”

Following Wednesday’s announcement, the business organizations and oil and gas companies that had supported a deal issued a joint statement committing to working to defeat Polis’s ballot 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,” their statement said.

“We believe Colorado voters, when given the facts, will understand the impacts of these ill-conceived ballot proposals and will vote against them.”

Tisha Schuller, the CEO of the Colorado Oil and Gas Association, also weighed in, calling on Polis to stand down.

“It is time for Congressman Polis to think of more than himself,” Schuller said. “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. For all of us that use energy, are excited about energy independence, and are willing to take responsibility for our collective energy and environmental future, these ballot initiatives are an absurd game of roulette.

“Colorado already has the toughest energy regulations in the nation and 150 years of collaborative community and industry engagement. We appreciate Governor Hickenlooper’s significant leadership in working to strike a compromise and now urge Coloradans to not sign these petitions. It is time for Congressman Polis to do the right thing, and park his self-serving anti-energy crusade.”

Republicans didn’t trust Polis

Polis had been supporting negotiations and was pushing hard for a legislative compromise, but Republicans didn’t trust him and viewed his tactics — forcing the industry to the bargaining table with the threat of ballot initiatives — as extortion.

“Jared Polis tried to blackmail the legislature into passing God-awful, anti-oil and gas legislation and both Republicans and a goodly number of Democrats weren’t about to relent to Polis’s beligerence,” state Sen. Greg Brophy, R-Wray, told FOX31 Denver Wednesday.

“Gov. Hickenlooper wanted us all to cave to Polis but we didn’t — and voters won’t either.”

Polis issued a statement Wednesday morning thanking those who pursued a compromise and indicating that he plans to proceed with the ballot measures.

“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 said.

“I stand by this goal, I am confident that the majority of Coloradoans share this goal, and I am committed to continuing to work to protect our Colorado values.”

Some advocates for a deal are not pleased that Hickenlooper is pulling the plug on a special session, given the wide support for a compromise outside the building; and they’re especially miffed the announcement is being made as the governor’s chief of staff, Roxane White, is on vacation.

But nothing could break the absolute Republican opposition within the Capitol, given the conventional wisdom that Democrats mostly wanted a compromise out of fear that the campaign against the ballot measures will help the GOP in a top-tier U.S. Senate race this November and the pressure from the American Petroleum Institute and the country’s biggest oil companies not to cede ground based on the threat of the ballot measures passing.

Primary election results, API polling hardened GOP opposition to compromise

One GOP lawmaker, Rep. Frank McNulty, came out publicly in support of a compromise in the closing days of the legislative session and reportedly worked to find additional Republican support for the deal up until the June 24 primary election.

After Bob Beauprez won the GOP’s gubernatorial nomination, Republican opposition to the compromise hardened.

McNulty sure didn’t sound like someone who’d been open to a deal in a statement sent out by House Republicans Wednesday.

“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 said. “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.”

Sources also tell FOX31 Denver that recent polling by API, which is prepared to spend $20 million to defeat the ballot measures, shows that the initiatives can be defeated more easily than first anticipated — if voters believe the measures will cost jobs — a development that further solidified opposition to the compromise and threatened to break up the coalition of business and industry groups that had formed in support of the compromise legislation.

Industry campaigning hard against ballot measures

The industry and a coalition of business groups are already in the midst of a campaign to defeat the ballot measures being funded by Polis, the millionaire who is the primary force behind the two initiatives that still have a chance to make the November ballot (17 others have now fallen by the wayside).

Should voters approve the measures, the industry stands to lose hundreds of millions in revenue in a state that’s in the early stages of a natural gas boom; and the state would also suffer from a drop in severance taxes should the industry see drilling slow.

Polis now has until Aug. 4 to get the 86,000 signatures needed to put Initiatives 88 and 89 on the November ballot.

Initiative 88 would quadruple the state’s minimum setbacks between oil and gas wells and occupied structures to a mandatory 2,000 feet.

Initiative 89 would assert Coloradans’ right to clean air, water and scenic values.

Polis, who is campaigning to be appointed the next chairman of the Democratic Congressional Campaign Committee, has isolated himself from many of his fellow Democrats by pushing the initiatives and potentially jeopardizing the reelection of Hickenlooper and Sen. Mark Udall — and, by extension, Democratic control of the senate.

Following Hickenlooper’s announcement, many Democrats are strongly urging Polis to walk away from the ballot measures with an eye on pursuing an agreement in the 2015 legislative session.

Based on his statement, that appears unlikely.