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The hydraulic fracturing dispute continues in one of the U.S. battleground states

Colorado has played host to numerous standoffs involving hydraulic fracturing and its practices. Even though ballot initiatives were dropped in August, the debate of fracing continues on a smaller level in the many communities throughout the state.

The political environment has begun to sway in favor of the oil and gas industry in recent months after five communities imposed moratoriums or outright bans on fracing beginning in 2012. The town of Loveland, CO voted against a fracing moratorium in June 2014, avoiding joining five other communities (Boulder, Broomfield, Fort Collins, Lafayette and Longmont) who have already enacted various measures preventing oil and gas development.

Some of the measures were no match for court rulings, however, as frac bans in Fort Collins, Longmont and Lafayette were all overturned in a one month span in the summer. Two initiatives aimed at preventing statewide oil and gas development were pulled in the same time frame, thus failing to make the November ballot. Instead, a 21-person oil and gas task force was assembled to find common ground in the divisive debate. The panel, consisting of industry veterans, environmentalists and “respected Coloradans,” has met intermittently since the announcement in August.

The county of Broomfield now has its turn on the stage, following a formal complaint filed by the Colorado Oil & Gas Association (COGA) on November 23, 2014. In a statement, Tisha Schuller, President of COGA, said the ban is “clearly a violation of state law regulating oil and gas.” The group reminded readers that the measure passed by only 20 votes and “Three other court decisions have ruled that bans are illegal and invalidated those bans.”

Fort Collins and Longmont are both appealing the court’s decision but COGA is confident the rulings will stand due to private property rights. In a blog post, Schuller says: “The bans would ‘take’ the property owned by mineral rights owners and businesses, as well as the investments made by operators, without just compensation. This ‘taking’ of property makes worthless our private property and business investments, and could cost local governments millions of dollars if a takings claim is filed under the 5th Amendment to the U.S. Constitution. Third, they create a business and regulatory environment where every kind of private property and business interest is suddenly uncertain.  If the voters can invalidate more than a hundred years of private property rights and decades of business investment, what’s next?”

One developer, Sovereign Oil & Gas, already won a court decision to continue operations in the area, citing its previous operating history in the area exempts the company from the fracing ban.

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Important disclosures: The information provided herein is believed to be reliable; however, EnerCom, Inc. makes no representation or warranty as to its completeness or accuracy. EnerCom’s conclusions are based upon information gathered from sources deemed to be reliable. This note is not intended as an offer or solicitation for the purchase or sale of any security or financial instrument of any company mentioned in this note. This note was prepared for general circulation and does not provide investment recommendations specific to individual investors. All readers of the note must make their own investment decisions based upon their specific investment objectives and financial situation utilizing their own financial advisors as they deem necessary. Investors should consider a company’s entire financial and operational structure in making any investment decisions. Past performance of any company discussed in this note should not be taken as an indication or guarantee of future results. EnerCom is a multi-disciplined management consulting services firm that regularly intends to seek business, or currently may be undertaking business, with companies covered on Oil & Gas 360®, and thereby seeks to receive compensation from these companies for its services. In addition, EnerCom, or its principals or employees, may have an economic interest in any of these companies. As a result, readers of EnerCom’s Oil & Gas 360® should be aware that the firm may have a conflict of interest that could affect the objectivity of this note. EnerCom, or its principals or employees, may have an economic interest in any of the companies covered in this report or on Oil & Gas 360®. As a result, readers of EnerCom’s reports or Oil & Gas 360® should be aware that the firm may have a conflict of interest that could affect the objectivity of this report.