Controversial quarry project near Colorado Springs receives boost from state

The view from U.S. 115 shows the hill, behind the sign, where the Hitch Rack Ranch rock quarry would’ve been built.

Officials in then Gov. John Hickenlooper’s administration helped an influential Colorado Springs nonprofit privately lobby a member of the state mining board to kill plans for a granite quarry, setting up a secret briefing that legal experts described as a potential violation of state law and that proponents of the quarry believe doomed their chances at success.

In the end, the proposed quarry in southwest El Paso County was sidelined, dashing the hopes of those who argued it would deliver the county jobs, decrease construction costs across the West and generate millions of dollars in new revenue to school districts in the state.

State records show that members of the board of the Colorado Springs-based El Pomar Foundation, among the largest nonprofits in the state, relied on relationships with officials in the Hickenlooper administration to privately press their case that a permit for the quarry, at Hitch Rack Ranch south of Colorado Springs, should be denied due to environmental concerns.

Hitch Rack Ranch

A truck drives south on U.S. 115 in 2016 at Little Turkey Creek Road south of Colorado Springs. The proposed rock quarry on the Hitch Rack Ranch property by Transit Mix Concrete would have added 275 round trips by similar trucks to the highway between the site and Colorado Springs.

After the Colorado Mined Land Reclamation Board rejected the permit, lawyers for the applicant, Chicago-based Transit Mix Concrete, alleged in a private demand letter threatening a lawsuit that El Pomar’s backdoor lobbying of the Hickenlooper administration subverted the legal hearing process and exerted undue influence on deliberations. El Pomar ended up paying a confidential $15 million settlement to Transit Mix’s parent company after the demand letter was sent to the foundation’s board, according to six people familiar with the negotiations.

Among the officials in the Hickenlooper administration who listened privately, outside the view of the public, to the concerns of El Pomar, was Colorado Natural Resources Executive Director Bob Randall, a key state official who also was a member of the state board that would decide the fate of the project, records show.

Randall, a member of Hickenlooper’s Cabinet, also scheduled “policy matter” discussions on the Hitch Rack quarry with other top Hickenlooper officials, including Hickenlooper’s Chief of Staff Patrick Meyers, Hickenlooper’s chief legal counsel, Jacki Cooper Melmed, and Lt. Gov. Donna Lynne, state records show.

Randall originally expressed support for the quarry, but reversed his stance when he voted, though he denies his private discussions with an El Pomar official and Hickenlooper administration officials swayed his vote and also contends his discussions were legal. He cast the deciding vote in April 2018 when the Colorado Mined Land Reclamation Board denied, on a 3-to-2 vote, a permit for the quarry, quashing a Chicago firm’s hopes of generating hundreds of millions of dollars in quarry revenue over 40 years.

The private discussions on the quarry permit Randall held with El Pomar and officials in the Hickenlooper administration occurred despite a state law barring the state mining board from considering in its deliberations “ex parte communications,” or communications from one party to the quarry permit application without the other party being present or being notified.

El Pomar Senior Vice President and general counsel Maureen Lawrence said in the statement that the foundation’s opposition to the quarry stemmed from its “commitment to protect, enhance and promote awareness of the beautiful natural assets of the Pikes Peak region” along with the fact the foundation had been gifted land adjacent to the Hitch Rack Ranch. She did not respond to specific questions about the communications between El Pomar officials and Hickenlooper administration officials, but in her statement she said that the foundation “acted appropriately in all facets of this matter relating to the development of an open quarry on the Hitch Rack Ranch.”

There are good reasons why the law bars ex parte communications for state agency boards that must rule on divisive subjects, said Justin Pidot, a professor at the University of Arizona school of law and former deputy solicitor for land resources for the U.S. Department of Interior in the Obama administration.

“The core issue is that the parties have a right to understand the material and have a right to cross-examine proponents of information and understand the basis of an agency’s decision,” said Pidot, who from 2011 to 2019 was a professor at the University of Denver’s school of law and also is a former appellate litigator in the U.S. Justice Department on environmental issues.

He added that the state law barring ex parte communications doesn’t just ensure fairness during a state board’s proceedings. The prohibition also is meant to ensure that there’s a “record that accurately reflects the agency decision so a court can review it.”

“If an agency based a decision on something submitted ex parte then a court can’t later examine that and test it to determine if what was presented is legally adequate,” Pidot said. “You want agencies acting in a fashion that is sufficiently transparent so that if a judge later gets involved, the judge can decide what is legal and what is not legal.”

Another legal expert on administrative state agencies agreed with Pidot’s analysis, though he asked to not be identified.

Pidot said Randall’s discussion with Kyle Hybl, then El Pomar’s president and chief operating officer and a vocal opponent, appeared to be a clear violation of the prohibition on ex parte communication, but discussions Randall had with other officials in the governor’s office about the quarry permit application are murkier. Case law is less settled on whether such discussions with the governor’s staff would be allowed because the governor has executive authority to allow Cabinet-level discussions with a voting board member, Pidot said.

Randall, in an interview, said he recalled that at the time he took the private briefing on the quarry from Hybl, the permit application had not yet been scheduled for a hearing before the board. The technical team at his agency still was reviewing the merits of the application, giving him the ability to hear an opponent’s concerns despite the law barring ex parte communications, he said.

“It’s not a ripe matter for the board at that point,” Randall said. “As an executive member of the department I would meet with proponents and opponents not infrequently. That is part of the business of state department heads. That’s part of the business to resolve matters.”

Records show that Transit Mix had filed its application for a permit in November 2017, nearly three months before Kyle Hybl privately briefed Randall. By February 2018, the issue had become so divisive that the department he heads had received more than 567 comment letters. In April, the department’s technical team recommended approval of the quarry permit.

Randall said nobody in the Hickenlooper administration, including the governor, directed his vote against the permit for the quarry.

“I based my vote in opposition on the information presented at the hearing,” said Randall, who is now a lawyer in private practice.

The Colorado Supreme Court has found violations of the law barring state boards from ex parte communications serious enough to set aside a state board’s orders and require a new board hearing.

In 1975, the Colorado Supreme Court set aside the Colorado Unemployment Commission’s denial of unemployment benefits for an employee of Anheuser-Busch after finding that a commissioner held a private phone call with the employer on the merits of the case.

In another case, in 1981, involving a gas provider’s challenge of a ruling from the Colorado Utility Commission, the Colorado Supreme Court issued an opinion stating, “we have no doubt that questionable ex parte exchanges between an advocate and an adjudicatory tribunal may not arbitrarily be screened from appellate scrutiny.”

Details of Randall’s private discussion with Kyle Hybl weren’t revealed at the time of the hearing and weren’t discovered and documented by Transit Mix and its lawyers until months after the state board’s official vote.

Key players who ruled on the permit said they weren’t aware of the private briefing at the time. Karin Utterback-Norman, a member of the state mining board who voted in favor of the quarry permit, said in an interview this month that she never knew that Randall had been briefed by the opposition prior to the board hearing and vote.

Although El Pomar’s opposition was widely known, officials with the foundation did not testify during the hearing, choosing instead to submit written comments against the quarry permit.

The discussion Randall had with Hybl and several other discussions between Randall and other high-ranking officials in the Hickenlooper administration were revealed in a stream of emails lawyers for the quarry applicant, Transit Mix Concrete, obtained through a Colorado Open Records Act request after the denial of the permit.

Six sources have confirmed that the lawyer for Transit Mix used the details contained in the state emails to press El Pomar for a multimillion dollar payment, threatening litigation on behalf of Transit Mix. The firm’s lawyers alleged the secret meetings and communications by El Pomar with the Hickenlooper administration amounted to undue influence restricting the free flow of commerce.

The lawyers for Transit Mix contended in a private demand, contained in a thumb drive and sent to El Pomar board members, that top officials at the nonprofit foundation should not have asked officials in the Hickenlooper administration to help in the attempt to kill efforts to obtain a permit for the quarry. The demand for a settlement included details about El Pomar’s lobbying campaign of the Hickenlooper administration as detailed in the emails, according to people familiar with the demand.

One individual familiar with the negotiations said Transit Mix’s lawyer, John Cook, sought $40 million from El Pomar to head off litigation over the matter.

Randall, the head of the department of natural resources and a member of the board that denied the permit, was seen in the lobby refreshment area at the Colorado Springs hotel where the hearing on the permit was held, talking with an El Pomar official and a developer moments before the final day of the hearing began, according to notes detailing concerns a Transit Mix lawyer later raised.

The notes, which were reviewed by The Gazette, state that Cook later told Transit Mix officials he had evidence that Randall conversed in the hotel lobby area moments before the final day of the hearing with R. Thayer Tutt Jr., the chief investment officer for El Pomar, and developer Warren Dean, who hired a consultant to fight the quarry who spent more than two decades working for the state mining division. In a split vote, the mining board rejected the permit later that day after meeting twice in executive session for board members to discuss matters outside the view of the public. Those voting against the permit said they were swayed by concerns the quarry would harm groundwater quality in the area.

Randall said he did talk to Tutt and Dean, two avowed opponents of the quarry, on the day of the hearing, but not about the merits of the quarry. He said the discussions were merely small talk, including about mountain biking. He said he received no communication from the governor about the quarry the day of the hearing. Tutt and Dean did not return telephone messages seeking comment.

Five individuals familiar with the matters confirmed that the board of directors of El Pomar eventually approved a confidential $15 million payment in 2019. Transit Mix agreed as part of the settlement to not renew its efforts for a permit for the Hitch Rack Ranch quarry, one person familiar with the negotiations said. The people familiar with the deliberations asked that their names not be revealed due to the sensitivity of the matters involved.

Asked about the payment by The Gazette, El Pomar issued a statement that didn’t acknowledge or deny the payment and said it would not comment about any alleged agreement with Transit Mix. Lawrence, the El Pomar general counsel, added these additional comments: “The mining permit matter related to the Hitch Rack Ranch was decided over two years ago, after the state of Colorado rejected the permit application for a second time because it failed to protect groundwater quantity and the ‘hydrologic balance’ in the area. El Pomar Foundation was one of hundreds of individuals and organizations from the community to publicly oppose the development of an open quarry mine on the historic ranch which features abundant wildlife, beautiful pasture land, ponderosa forest and several ponds and creeks.”

Hickenlooper, who no longer is governor and is running for the seat held by U.S. Sen. Cory Gardner, denied through a campaign spokesman having a role in influencing the board vote.

“Gov. Hickenlooper did not weigh in on the decision made by the independent Mined Land Reclamation Board, and that insinuation is another unfounded attack,” said Mellissa Miller, the communications director for the Hickenlooper campaign.

The Gazette learned about the private discussions and the El Pomar payment through individuals familiar with the details. The newspaper also obtained 81 pages of the state email communications and calendars and agendas for some of the meetings the Hickenlooper administration held with El Pomar officials by filing its own open records requests with the Colorado Department of Natural Resources and the governor’s office, though the records obtained were not a comprehensive account.

Additional records, more than 120 pages, released from the governor’s office to Transit Mix in 2018, were purged in the transition from the Hickenlooper administration to the incoming administration of Gov. Jared Polis, according to an official who worked in both administrations. The records were destroyed in violation of the state’s records management manual, which requires state agencies to keep for two years documents provided in response to an open records request.

The proposed quarry was one of the most hotly debated issues in El Paso County in recent years. On one side was Transit Mix Concrete, a Chicago firm that had angered Colorado Springs residents who said the company had left unsightly scars in the Pikes Peak foothills at gravel mines it owned.

Supporting Transit Mix’s case for a new granite quarry were key Republicans who agreed to lobby on the firm’s behalf, and also Cindi Allmendinger, a retired school teacher who had agreed to lease her land south of Colorado Springs to Transit Mix for a new granite mining operation.

Transit Mix and Allmendinger pointed out the quarry wouldn’t generate just a stream of revenue for them. The quarry also would yield millions of dollars in mineral royalties for public schools and ensure low-cost aggregate and concrete for roads and other construction in Colorado, they said. They hoped to mine the quarry for 40 years, with the quarry generating as much as $750,000 annually in royalty revenue for school districts in the state, according to one state analysis.

Their plans drew the opposition of several environmental groups as well as El Pomar, which had been gifted about 150 acres adjacent to the Hitch Rack Ranch for an eventual nature preserve from property owned by Harold “Buck” Ingersoll, who died in 2015, and his wife, Barbara. Also opposed were some wealthy homeowners, 13 of whom lived within a mile of the proposed quarry. El Pomar’s statement noted the gift of the land and said the foundation’s “commitment to protect the environmental integrity of the Ingersoll Ranch and fulfill the donor’s wishes drove our decision to oppose the quarry mine, which we felt was incompatible with those goals.” The statement further added that the foundation remains “heartened that there is no mining operation on the site today, and we are not aware of any proposals to do so in the future.”

El Pomar is among the largest nonprofit foundations in the state. It was established by Spencer Penrose, who died in 1939 after making a fortune in the mining business and contributing to many Colorado Springs landmarks, including his construction of The Broadmoor hotel. In 2019, El Pomar reported assets in excess of $560 million and reported handing out in 2018 more than $17.2 million in charitable grants and contributions to organizations throughout Colorado.

Bill Hybl

Bill Hybl

Members of the El Pomar board are politically active. Bill Hybl, who stepped down as CEO of El Pomar Foundation in February 2019 but remains chairman of the board, contributed $1,050 in 2010 and $1,100 in 2012 to Hickenlooper’s gubernatorial campaigns, though he has much more often financed the political campaigns of Republican candidates. His son, Kyle Hybl, who replaced his father as CEO of the foundation, was an elected member of the Board of Regents for the University of Colorado system from 2007 through 2018, serving two stints as chairman. That board is responsible for hiring the university’s president, setting tuition rates and approving the system’s nearly $5 billion budget.

Allmendinger said she found El Pomar’s opposition to the quarry cynical, saying that the foundation acted as if it’s a solid do-gooder in the community while it took a stance that in the end blocked her private property rights.

“I feel that’s business as usual in Colorado Springs,” Allmendinger said. “It’s not fair. There’s a good old boys club here, and if you’re out, there’s no business that happens. It’s strange that a property owner of just 150 acres was able to block something that was such a benefit to everyone in Colorado Springs and maintain so much control over the process.”

She said she believes the private communications El Pomar held with Hickenlooper officials tilted the playing field in El Pomar’s favor.

“Before this I expected the system to play by the rules,” said Allmendinger, who said she didn’t receive money from the settlement between Transit Mix and El Pomar, but was aware of the negotiations. “I expected a fair game. It feels wrong to learn this process might have been tainted by what appears to be backdoor dealings.”

James Gidwitz, a Chicago resident and the owner of Transit Mix, declined comment, saying he did not want to revisit what he considered a painful episode that impacted his business.

Transit Mix was owned by Chicago-based Continental Materials, which reported in a government filing with the Securities and Exchange Commission that the company had reached a settlement agreement in January 2019 to resolve a “business dispute.” Under the terms of the settlement, Continental Materials was paid $15 million, with no admission of wrongdoing from either party, the filing states.

El Pomar has not yet submitted its IRS form 990 for that particular year.

Continental Materials has since sold Transit Mix to Aggregate Industries-WCR, a Colorado company, and the efforts to seek another permit to mine Hitch Rack Ranch quarry have not been pursued.

Back in 2018, Transit Mix’s permit application to mine Hitch Rack Ranch quarry won the support of the staff at the Colorado Division of Reclamation, Mining and Safety in the Department of Natural Resources, which recommended that the state mining board approve the permit. But Randall, the member of that board and the executive director at the Department of Natural Resources, would end up, when the matter came up for a board vote, bucking the recommendation of his staff.

Emails show that months before he voted, Randall agreed to hear from an El Pomar official about El Pomar’s concerns over the quarry.

Jamie Van Leeuwen, at that time Hickenlooper’s senior adviser, on Dec. 23, 2017, sent an email to Randall, thanking him for “a great conversation yesterday about Hitch Rack Ranch.” Van Leeuwen also states in the email, that “per our conversation I am looping you in with my two dear friends,” identifying both Kyle and Bill Hybl, and copying them on the email.

HitchTear1.jpg

“Any wise advice or consult you could offer would be most appreciated!” Van Leeuwen’s email to Randall reads. “I will turn over to you all and let’s go take it from there.”

After that introduction, Kyle Hybl reached out by email four days later to Randall asking for a call, or, if preferable, an in-person meeting on January 8, 2018. Randall replied back to Kyle Hybl in an email, copied to others, including Bill Hybl, that “hopefully we can find a time that works.”

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On New Year’s Day, Randall sent an email to Kyle Hybl, setting up a meeting by telephone for later that week, stating that he would ask Ginny Brannon, the Department of Natural Resource’s director of the Division of Reclamation, Mining and Safety, to attend. Also copied on that email was Bill Hybl and Van Leeuwen.

In April of that year, Randall cast the deciding vote as a member of the Colorado Mined Land Reclamation Board denying Transit Mix’s permit application.

The communications between Hybl and Randall weren’t the only El Pomar communications tracked in the state emails obtained by The Gazette.

Other email communications provided to The Gazette show that Kyle Hybl also asked Meyers, Hickenlooper’s chief of staff, and Melmed, Hickenlooper’s chief legal counsel, to hear his concerns, and that those two Hickenlooper staffers met with Hybl and R. Thayer Tutt Jr. Melmed then relayed Hybl’s concerns to Randall, alerting him of arguments from an opponent of the quarry without the company seeking the permit having a chance to review or rebut those arguments.

Kyle Hybl, in a series of emails in December 2017 and January 2018 to Meyers and Van Leeuwen, asked them to “address a matter of potential interest to the governor,” and detailed for them El Pomar’s objections to the quarry. The emails included a draft video he said had been prepared in opposition to the quarry.

In one email to Hybl in late February, Meyers wrote: “Kyle, we never spoke on this. Given that the permit is pending, we’re pretty limited but happy to talk if you’d like.” In previous emails sent before that one, Meyers had agreed to review material Hybl had sent by email and also agreed to get back to him.

In a March 2018 email, Meyers agreed to set up a meeting between himself, Tutt, Kyle Hybl and Melmed to discuss the quarry. In a March 9 email, Kyle Hybl thanked Meyers and Melmed for meeting with him and Tutt to go over their concerns. Hybl went on to detail in the email a host of El Pomar concerns about the quarry.

“We would respectfully request the governor’s various agencies make a full and complete examination of the proposed quarry and its impacts,” Hybl asked in that email.

“A clear and transparent review by the governor and the governor’s agencies will reveal how disturbing and damaging Transit Mix’s application is,” he further said in the email.

Melmed on March 18, 2018, forwarded to Randall an email from Kyle Hybl, detailing Hybl’s concerns, and asked Randall in her own email to review the material and let her know his thoughts. “Please keep this email between us for now, but you can discuss the position he takes below with anyone you think is necessary,” Melmed wrote to Randall. “I’m mostly interested in the way he characterizes process here.”

Randall replied by email a little over a week later to Melmed, telling her he was a voting member of the board that would decide the quarry permit and telling her that his staff, including five environmental protection specialists, who reviewed the permit, would recommend approval of the permit during the hearing.

“I take issue with Mr. Hybl’s assertion that agencies within DNR have failed to perform a sufficient examination of the proposed quarry,” Randall wrote in the email to Melmed.

The governor’s office, when it responded in 2018 to Transit Mix’s open records request, redacted the emails between Melmed and Randall but eventually relented and released those emails after Transit Mix threatened to go to court for their release, records show. Melmed, who declined comment for this article, has continued as chief legal counsel in the Polis administration. Meyers could not be reached for comment.

“There’s nothing untoward about her asking me to answer questions she’s received,” Randall said in an interview. “She was just saying, ‘Help me understand this.’”

On April 12, Randall was scheduled to hold a meeting with top officials in Hickenlooper’s office, the records show. The agenda for the meeting states those expected to attend the meeting with Randall were Lt. Gov. Donna Lynne; her chief of staff, David Padrino; Hickenlooper’s chief of staff, Meyers and Hickenlooper’s deputy chief of staff, Amy Venturi.

The draft agenda for the meeting states the fourth item that will be discussed will be “policy matters,” regarding Hitch Rack quarry, which was identified as the only policy matter to be discussed.

Randall, in an interview, said he recalled scheduling that meeting as a courtesy to Hickenlooper’s staff to give them a heads up that the quarry vote was coming up in a couple of weeks. He denied that Hickenlooper officials pressured him during the meeting to vote against the quarry permit.

“It was a significant public debate,” he recalled. “You don’t want the governor’s office blindsided.”

Randall said in an interview that his eventual vote against the permit for the quarry was based solely on what was presented during the board’s hearing and was not based on what was discussed in the meeting with Lynne and Hickenlooper’s staff or earlier discussion with El Pomar officials or state officials.

Since the rejection of the quarry permit, the producer price of mined granite, the type of material the quarry would have produced, has increased by more than 10%. Allmendinger and supporters of the permit say that price would be significantly less if the quarry permit had been approved.

“The quality of material elsewhere, as I understand it, is not as good a quality as we would have produced,” Allmendinger said. “And there also is not as much material on the market now as there would have been.”

As the price of granite has shot up, El Pomar has approached Allmendinger and asked if she has interest in selling her family’s ranch to the foundation. She said that after the mining board rejected the permit, an El Pomar official toured the ranch and offered to have the foundation buy her out for what she considered a low-ball offer. She said that when she has pushed back for a higher price, El Pomar officials and their lawyer have told her that the land isn’t very valuable because they’ve successfully blocked her efforts to have it mined.

Gazette writer and editor Tom Roeder contributed to this report.

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