December 13, 2018

Colorado Supreme Court: Respondents’ Complaint Asserted Timely Claim Seeking Declaration that Ordinance Violated City Charter

The Colorado Supreme Court issued its opinion in City of Boulder v. Public Service Co. of Colorado on Monday, June 18, 2018.

Declaratory Judgment Actions—C.R.C.P. 57—C.R.C.P. 106—Municipal Ordinances—Finality.

This case arises out of respondents’ challenge to petitioner city’s attempt to create a light and power utility. Respondents assert that the ordinance establishing the utility violates the city’s charter. Respondents thus seek a declaratory judgment deeming that ordinance null and void. The city asserted that respondents’ complaint was, in reality, an untimely C.R.C.P. 106 challenge to a prior ordinance by which the city had concluded that it could meet certain prerequisites for the formation of the utility as prescribed by the city charter. The district court agreed with the city and dismissed respondents’ complaint for lack of jurisdiction. A division of the court of appeals, however, vacated the district court’s judgment, concluding that neither of the pertinent ordinances was final and therefore respondents’ complaint was premature.

The supreme court reversed the division’s decision and remanded the case for further proceedings on respondents’ declaratory judgment claim. Although the court agreed with the city that the division erred, contrary to petitioners’ position and the premises on which the courts below proceeded, the court agreed with respondents that the complaint asserted a viable and timely claim seeking a declaration that the ordinance establishing the utility violated the city charter. Accordingly, the court concluded that the district court had jurisdiction to hear respondents’ declaratory judgment claim, and the court remanded the case to allow that claim to proceed.

Summary provided courtesy of Colorado Lawyer.

Bills Requiring Elected Officials to Swear by “Everliving God,” Providing Representation to Indigent Defendants in Municipal Courts, and More Signed

On Friday, June 1, 2018, Governor Hickenlooper signed 10 bills into law and vetoed three bills. On Monday, June 4, the governor signed seven bills and vetoed two. To date, he has signed 367 bills into law, sent two to the Secretary of State without a signature, and vetoed five bills.

Some of the bills signed include a bill requiring elected officials who choose to swear their oath of office, rather than affirm, to do so by the “everliving God” while raising their hand, a bill allowing transportation services for foster children in order to improve high school graduation rates, a bill allowing independent representation for indigent defendants in municipal courts, and more. Some of the bills vetoed include a bill allowing out-of-state electors to participate in Colorado elections, a bill restricting parties able to receive autopsy reports for minors, and a bill allowing a credit for tobacco products shipped out of state. The bills signed and vetoed Friday are summarized here.

Signed

  • SB 18-003 – “Concerning the Colorado Energy Office,” by Sen. Ray Scott and Reps. Chris Hansen & Jon Becker. The bill repeals several programs providing energy grants for schools, and specifies several preferred energy methods.
  • SB 18-200 – “Concerning Modifications to the Public Employees’ Retirement Association Hybrid Defined Benefit Plan Necessary to Eliminate with a High Probability the Unfunded Liability of the Plan Within the Next Thirty Years,” by Sens. Jack Tate & Kevin Priola and Reps. KC Becker & Dan Pabon. The bill makes changes to the hybrid defined benefit plan administered by PERA with the goal of eliminating, with a high probability, the unfunded actuarial accrued liability of each of PERA’s divisions and thereby reach a 100% funded ratio for each division within the next 30 years.
  • SB 18-203 – “Concerning the Provision of Independent Counsel to Indigent Defendants in Municipal Courts, and, in Connection Therewith, Making an Appropriation,” by Sen. Vicki Marble and Rep. Susan Lontine. The bill requires each municipality, on and after January 1, 2020, to provide independent indigent defense for each indigent defendant facing a possible jail sentence for a violation of a municipal ordinance. Independent indigent defense requires, at minimum, that a nonpartisan entity independent of the municipal court and municipal officials oversee the provision of indigent defense counsel.
  • SB 18-219 – “Concerning the Rates a Motor Vehicle Dealer Charges a Motor Vehicle Manufacturer for Work Performed by the Dealer in Accordance with a Warranty Obligation,” by Sen. Jack Tate and Rep. Tracy Kraft-Tharp. The bill requires motor vehicle manufacturers to fulfill warranty obligations. A manufacturer must compensate each of its motor vehicle dealers in accordance with a set of standards designed to reflect the current market rate for labor and the profit margin on parts the dealer can expect to obtain. Dealers must submit certain repair orders to the manufacturer as required by the bill to establish compensation rates.
  • SB 18-230 – “Concerning Modification of the Laws Governing the Establishment of Drilling Units for Oil and Gas Wells, and, in Connection Therewith, Clarifying that a Drilling Unit may Include more than One Well, Providing Limited Immunity to Nonconsenting Owners Subject to Pooling Orders, Adjusting Cost Recovery from Nonconsenting Owners, and Modifying the Conditions upon which a Pooling Order may be Entered,” by Sen. Vicki Marble and Reps. Lori Saine & Matt Gray. Current law authorizes ‘forced’ or ‘statutory’ pooling, a process by which any interested person–typically an oil and gas operator–may apply to the Colorado oil and gas conservation commission for an order to pool oil and gas resources located within a particularly identified drilling unit. The bill clarifies that an order entered by the commission establishing a drilling unit may authorize more than one well.
  • SB 18-242 – “Concerning the Swearing of a Public Official Oath of Office,” by Sens. Vicki Marble and Reps. Timothy Leonard & Stephen Humphrey. The bill requires a person swearing an oath of office for a public office or position to do so by swearing by the everliving God. The bill also requires the person swearing the oath of office to do so with an uplifted hand.
  • SB 18-243 – “Concerning the Retail Sale of Alcohol Beverages, and, in Connection Therewith, Making an Appropriation,” by Sens. Chris Holbert & Lucia Guzman and Reps. Daneya Esgar & Hugh McKean. Under current law, effective January 1, 2019, the limitation on the maximum alcohol content of fermented malt beverages, also referred to as ‘3.2% beer’, is eliminated, thereby allowing grocery stores, convenience stores, and any other person currently licensed or licensed in the future to sell fermented malt beverages for consumption on or off the licensed premises to sell fermented malt beverages containing more than 3.2% alcohol by weight or 4% alcohol by volume, referred to as ‘malt liquor’. The bill modifies laws governing the retail sale of fermented malt beverages, which will be synonymous with malt liquor as of January 1, 2019.
  • SB 18-276 – “Concerning an Increase in the General Fund Reserve,” by Sens. Kevin Lundberg & Millie Hamner and Reps. Kent Lambert & Dave Young. For the fiscal year 2018-19, and each fiscal year thereafter, the bill increases the statutorily required general fund reserve from 6.5% to 7.25% of the amount appropriated for expenditure from the general fund.
  • HB 18-1006 – “Concerning Modifications to the Newborn Screening Program Administered by the Department of Public Health and Environment, and, in Connection Therewith, Making an Appropriation,” by Reps. Millie Hamner & Larry Liston and Sens. Bob Gardner & Dominick Moreno. The bill updates the current newborn screening program to require more timely newborn hearing screenings. The department of public health and environment (department) is authorized to assess a fee for newborn screening and necessary follow-up services. The bill creates the newborn hearing screening cash fund for the purpose of covering the costs of the program.
  • HB 18-1185 – “Concerning Changes to the State Income Tax Apportionment Statute Based on the Most Recent Multistate Tax Commission’s Uniform Model of the Uniform Division of Income for Tax Purposes Act,” by Reps. Tracy Kraft-Tharp & Cole Wist and Sens. Tim Neville & Dominick Moreno. For income tax years commencing on and after January 1, 2019, the bill generally replaces the method for sourcing of sales for purposes of apportioning the income of a taxpayer that has income from the sale of services or from the sale, lease, license, or rental of intangible property in both Colorado and other states from the cost-of-performance test in the case of services and the commercial domicile test in the case of intangible property to a market-based sourcing system.
  • HB 18-1187 – “Concerning the Lawful Use of a Prescription Drug that Contains Cannabidiol that is Approved by the United States Food and Drug Administration,” by Reps. Janet Buckner & Lois Landgraf and Sens. Dominick Moreno & John Cooke. The bill amends the definition of ‘marijuana’ to exclude prescription drug products approved by the federal food and drug administration and dispensed by a pharmacy or prescription drug outlet registered by the state of Colorado. The bill also specifies that the change does not restrict or otherwise affect regulation of or access to marijuana that is legal under Colorado’s statutory or constitutional scheme or industrial hemp and its derivatives.
  • HB 18-1244 – “Concerning the Creation of a Submarine Service License Plate to Honor the Service of Submarine Veterans, and, in Connection Therewith, Making an Appropriation,” by Rep. Jessie Danielson and Sens. Nancy Todd & Bob Gardner. The bill creates the submarine service license plate. In addition to the standard motor vehicle fees, the plate requires 2 one-time fees of $25. One fee is credited to the highway users tax fund and the other to a fund that provides licensing services.
  • HB 18-1270 – “Concerning Energy Storage, and, in Connection Therewith, Requiring the Public Utilities Commission to Establish Mechanisms for Investor-Owned Electric Utilities to Procure Energy Storage Systems if Certain Criteria are Satisfied,” by Reps. Chris Hansen & Jon Becker and Sen. Jack Tate. The bill directs the public utilities commission to adopt rules establishing mechanisms for the procurement of energy storage systems by investor-owned electric utilities, based on an analysis of costs and benefits as well as factors such as grid reliability and a reduction in the need for additional peak generation capacity.
  • HB 18-1271 – “Concerning the Authorization of Economic Development Rates to be Charged by Electric Utilities to Qualifying Nonresidential Customers,” by Reps. Matt Gray & Yeulin Willett and Sen. Jack Tate. The bill allows the public utilities commission to approve, and electric utilities to charge, economic development rates, which are lower rates for commercial and industrial users who locate or expand their operations in Colorado so as to increase the demand by at least 3 megawatts.
  • HB 18-1286 – “Concerning Allowing School Personnel to Give Medical Marijuana to a Student with a Medical Marijuana Registry Card while at School,” by Rep. Dylan Roberts and Sens. Irene Aguilar & Vicki Marble. Under current law, a primary caregiver may possess and administer medical marijuana in a nonsmokeable form to a student while the student is at school. The bill allows a school nurse or the school nurse’s designee, who may or may not be an employee of the school, or school personnel designated by a parent to also possess and administer medical marijuana to a student at school. The bill provides a school nurse or the school nurse’s designee or the school personnel designated by a parent protection from criminal prosecution if he or she possesses and administers medical marijuana to a student at school.
  • HB 18-1306 – “Concerning Ensuring Educational Stability for Students in Out-of-Home Placement, and, in Connection Therewith, Making an Appropriation,” by Rep. Dafna Michaelson Jenet and Sens. Don Coram & Dominick Moreno. The bill aligns state law with federal ‘Every Student Succeeds Act’ (ESSA) provisions relating to students in foster care, referred to in state statutes as ‘students in out-of-home placement’. ESSA permits students in out-of-home placement at any time during the school year to remain in their school of origin, as defined in the bill, rather than move to a different school upon placement outside of the home or changes in placement, unless the county department of human or social services determines that it is not in the child’s best interest to remain in his or her school of origin.
  • HB 18-1430 – “Concerning the Requirement that a State Agency Prepare a Long-Range Financial Plan,” by Reps. Kevin Van Winkle & Dave Young and Sen. Kevin Lundberg. The bill requires each state agency to develop a long-range financial plan on or before November 1, 2019, and to update the plan each of the next 4 years thereafter. The department of state, the department of treasury, the department of law, and the judicial branch shall each publish the required components of the plan for their respective state agencies. The office of state planning and budgeting shall publish the required components of the plan in its annual budget instructions for all other state agencies.

Vetoed

  • SB 18-179 – “Concerning Adjustments to Total Gross Purchases for Purposes of Calculating the Excise Tax on Tobacco Products, and, in Connection Therewith, Making an Appropriation,” by Sens. Owen Hill & Angela Williams and Reps. Edie Hooten & Dan Pabon. Currently and until September 1, 2018, a distributor can claim a credit for taxes paid on tobacco products that are shipped or transported by the distributor to a consumer outside of the state. The bill would have made the credit permanent and requires the distributor to maintain certain records related to the out-of-state sales to consumers. “While the bill’s economic benefits appear minimal, the negative health effects of cheaper tobacco are both significant and compelling,” said Governor John Hickenlooper in the veto letter. “These concerns remain from when we vetoed SB 17-139.”
  • SB 18-223 – “Concerning the Circumstances Under Which an Autopsy Report Prepared in Connection with the Death of a Minor may be Released to Certain Parties,” by Sen. Bob Gardner and Reps. Matt Gray & Terri Carver. The bill specified that an autopsy report prepared in connection with the death of a minor is confidential and may be disclosed by the county coroner to any other person or entity only in accordance with certain exceptions. “Transparency can lead to enhanced government protections, greater public and private resources, and heightened public understanding and demand for change,” wrote Governor John Hickenlooper in the veto letter. He went on to say, “An informed public has societal benefits for all at-risk children, present and future.”
  • HB 18-1181 – “Concerning Measures to Expand the Ability of Nonresident Electors to Participate in the Governance of Special Districts, and, in Connection Therewith, Allowing Nonresident Electors Who Own Taxable Property Within the Special District to Vote in Special District Elections And Allowing Such Electors to Serve on Special District Boards in a Nonvoting Capacity,” by Rep. Larry Liston and Sen. Jack Tate. The bill would have expanded the definition of ‘eligible elector’, as used in reference of persons voting in special district elections, to include a natural person who owns, or whose spouse or civil union partner owns, taxable real or personal property situated within the boundaries of the special district or the area to be included in the special district and who has satisfied all other requirements in the bill for registering to vote in an election of a special district but who is not a resident of the state. “Allowing non-Coloradans to vote in Colorado elections to select our elected representatives is poor public policy,” said Governor John Hickenlooper in the veto letter. “Out-of-state landowners enjoy Colorado’s great views, activities, and economy. While we are grateful to our out-of-state neighbors and their love of Colorado, we are unpersuaded that the State should allow those who spend days or weeks in Colorado to make decisions impacting those who make it their home each and every day.”
  • HB 18-1258 – “Concerning Authorization for an Endorsement to an Existing Marijuana License to Allow for a Marijuana Accessory Consumption Establishment for the Purposes of Consumer Education, and, in Connection Therewith, Making an Appropriation,” by Reps. Jovan Melton & Jonathan Singer and Sens. Tim Neville & Stephen Fenberg. The bill would have  authorized each licensed medical marijuana center or retail marijuana store to establish one retail marijuana accessory consumption establishment that may sell marijuana, marijuana concentrate, and marijuana-infused products for consumption, other than smoking, at the establishment. “Since Colorado approved Amendment 64 in 2012, this Administration implemented a robust regulatory system to carry out the intent of this voter-initiated measure,” said Governor John Hickenlooper in the veto letter. “Amendment 64 is clear: marijuana consumption may not be conducted ‘openly’ or ‘publicly’ on ‘in a manner that endangers others’ We find that HB 18-1258 directly conflicts with this constitutional requirement.”
  • HB 18-1427 – “Concerning a Prohibition on Conflicts of Interest of Members of the Sex Offender Management Board,” by Reps. Leslie Herod & Cole Wist and Sen. Jerry Sonnenberg. The bill would have prohibited members of the sex offender management board from receiving a direct financial benefit from the standards or guidelines adopted by the board. “We all support proper handling of conflicts. We veto this bill today, however, because it is redundant and overbroad,” wrote Governor John Hickenlooper in the veto letter. He went on to say, “Despite the issues with HB 18-1427, recent media reports raise important issues as to the need for better conflict of management interests.”

For a complete list of Governor Hickenlooper’s 2018 legislative decisions, click here.

Bill Signing Ceremonies Held for Rural Broadband Deployment Bill, Rural Economic Advancement, More

On Friday, May 25, 2018, Governor Hickenlooper signed five bills into law. To date, he has signed 256 bills and sent two to the Secretary of State without a signature. The bills signed Friday are summarized here.

  • SB 18-002 – “Concerning the Financing of Broadband Deployment,” by Sens. Don Coram & Jerry Sonnenberg and Reps. KC Becker & Crisanta Duran. The bill updates definitions related to rural broadband networks, and requires the public utilities commission, in 2019, to allocate 60% of the total amount of high cost support mechanism (HCSM) money that the nonrural incumbent local exchange carrier would receive to the HCSM account dedicated to broadband deployment, and to allocate an additional 10% of the total money that the nonrural incumbent local exchange carrier would receive in each subsequent year until, in 2023, all of the money that the nonrural incumbent local exchange carrier would receive is allocated to the HCSM account dedicated to broadband deployment.
  • SB 18-005 – “Concerning Economic Assistance for Rural Communities Experiencing Certain Significant Economic Events that Lead to Substantial Job Loss in those Communities, and, in Connection Therewith, Authorizing the Department of Local Affairs to Coordinate Nonmonetary Assistance to Assist Rural Communities with Job Creation or Retention,” by Sens. Kerry Donovan & Ray Scott and Rep. Dylan Roberts. The bill authorizes the executive director of the Department of Local Affairs or the executive director’s designee to coordinate the provision of nonmonetary resources to assist with job retention or creation in a rural community experiencing a significant economic event, such as a plant closure or layoffs, including industry-wide layoffs, that has a significant, quantifiable impact on jobs within that community.
  • SB 18-167 – “Concerning Increased Enforcement of Requirements Related to the Location of Underground Facilities, and, in Connection Therewith, Making an Appropriation,” by Sens. Ray Scott & Kerry Donovan and Reps. Faith Winter & Lori Saine. The bill creates the underground damage prevention safety commission as an independent agency within the department of labor and employment. The commission has rule-making and enforcement authority regarding specified portions of the excavation damage prevention law and is required to enter into a memorandum of understanding with the notification association to facilitate implementation and administration of the law. The notification association is required to provide administrative support to the commission in performing its duties.
  • HB 18-1002 – “Concerning Teaching Fellowship Programs to Assist Rural School Districts in Hiring High-quality Teachers, and, in Connection Therewith, Creating the ‘Rural Colorado Grow Your Own Educator Act’ and Making an Appropriation,” by Reps. Millie Hamner & Bob Ranken and Sens. Nancy Todd & Don Coram. The bill directs the Department of Education to identify geographic areas within the state and specific subjects for which there is a teacher shortage. Under the bill, a rural school district, rural charter school, or rural board of cooperative services and a public or private institution of higher education may enter into an agreement to provide a teaching fellowship program for students enrolled in the fourth year of the approved educator preparation program.
  • HB 18-1366 – “Concerning a Local College District’s Authority to Manage District Property,” by Rep. Dylan Roberts and Sen. Kerry Donovan. The bill provides local college districts with the authority to sell or lease district property.

For a complete list of Governor Hickenlooper’s 2018 legislative decisions, click here.

Bills Signed Regarding Ground Water Commission Approval of Aquifer Storage and Recovery Plans, Repealing Procedures to Fill Municipal Vacancies, and More

On Monday, April 9, 2018, Governor Hickenlooper signed 12 bills into law. To date, he has signed 126 bills into law and sent one to the Secretary of State without a signature. The bills signed Monday include a bill to increase transparency in higher education statutes concerning military service, a bill repealing procedures to fill vacancies in candidate nominations for municipal elections, a bill allowing the Colorado Oil and Gas Commission to roll-over its year-end balances in order to facilitate financing, and more. The bills signed Monday are summarized here.

  • SB 18-107 – “Concerning the Repeal of Procedures to Fill Vacancies in Candidate Nominations for Elections Conducted under the ‘Colorado Municipal Code of 1965,'” by Sen. Rachel Zenzinger and Rep. Dan Thurlow. The bill repeals the process by which a vacancy in nomination may be filled for an election conducted under the ‘Colorado Municipal Code of 1965’ and makes conforming amendments.
  • HB 18-1098 – “Concerning the Expanded Ability of the Colorado Oil and Gas Conservation Commission to Finance the Remediation of Oil and Gas Locations,” by Reps. Lori Saine & Matt Gray and Sen. Vicki Marble. Under current practice, expenditures by the Colorado oil and gas conservation commission to address the mitigation of adverse environmental impacts of oil and gas operations are paid from the environmental response account of the oil and gas conservation and environmental response fund, and the year-end balance of the account transfers into the fund. The bill specifies that the year-end balance of the account remains in the account.
  • HB 18-1112 – “Concerning Covered Health Care Services Provided by a Pharmacist,” by Reps. Jon Becker & Daneya Esgar and Sen. Larry Crowder. The bill requires a health benefit plan to provide coverage for health care services provided by a pharmacist if the services are provided within a health professional shortage area and the health benefit plan provides coverage for the same services provided by a licensed physician or advanced practice nurse.
  • HB 18-1134 – “Concerning Eligibility of Kindergarten Students Funded through Early Childhood At-risk Enhancement Positions,” by Reps. Brittany Pettersen & James Wilson and Sens. Michael Merrifield & Beth Martinez Humenik. If a district chooses to use early childhood at-risk enhancement (ECARE) positions to enroll children in the district’s full-day kindergarten program, children using the ECARE positions must satisfy at least one of the eligibility requirements of the Colorado preschool program.
  • HB 18-1145 – “Concerning the Repeal of Laws Regulating Ballot Issue Petition Circulators that have been Permanently Enjoined from Enforcement,” by Rep. Edie Hooten and Sen. Dominick Moreno. The bill repeals laws ordered permanently enjoined from enforcement in Independence Inst. v. Gessler , 936 F. Supp. 2d 1256 (D. Colo. 2013).
  • HB 18-1148 – “Concerning the Prohibition Against a Carrier Requiring Step Therapy for Covered Persons with Stage Four Advanced Metastatic Cancer,” by Rep. Dafna Michaelson Jenet and Sen. Larry Crowder. The bill prohibits a carrier that issues a health benefit plan that covers treatment for stage four advanced metastatic cancer from requiring a cancer patient to undergo step therapy prior to receiving a drug approved by the United States food and drug administration if use of the approved drug is consistent with best practices for treatment of the cancer and as long as the drug is on the carrier’s prescription drug formulary.
  • HB 18-1172 – “Concerning Money Allocated from an Appropriation from the Marijuana Tax Cash Fund to a Designated Managed Service Organization to Implement its Community Action Plan,” by Rep. Dave Young and Sen. Kent Lambert. The bill amends the ‘Increasing Access to Effective Substance Use Disorder Services Act’ to clarify that a designated managed service organization (designated MSO) may use money allocated to it from the marijuana tax cash fund for expenditures for substance use disorder services and for any start-up costs or other expenses necessary to increase capacity to provide such services and may allow allocations to roll forward.
  • HB 18-1199 – “Concerning a Process for the Ground Water Commission to Use for Approving Aquifer Storage-and-Recovery Plans, and, in Connection Therewith, Requiring that the Ground Water Commission Promulgate Rules Governing its Implementation of the Process,” by Reps. Marc Catlin & Barbara McLaughlin and Sen. Don Coram. The bill authorizes a person to apply to the ground water commission (commission) for approval of an aquifer storage-and-recovery plan and requires the commission to promulgate rules governing the application process and the requirements that an aquifer storage-and-recovery plan must meet to be approved.
  • HB 18-1228 – “Concerning Increasing Transparency in Higher Education Statutes Relating to Military Service,” by Reps. Justin Everett & Dafna Michaelson Jenet and Sen. Leroy Garcia. The bill creates a new article 7.4 in title 23, Colorado Revised Statutes, with the article heading ‘Military Members, Veterans, and Dependents’, in order to locate physically within the same article, whenever practicable, higher education provisions relating to the military.
  • HB 18-1238 – “Concerning the Continuation of the Wildland-Urban Interface Training Advisory Board, and, in Connection Therewith, Implementing the Recommendations of the 2017 Sunset Report by the Department of Regulatory Agencies,” by Reps. Dominique Jackson & Marc Catlin and Sen. Vicki Marble. The bill implements the recommendation of the Department of Regulatory Agencies to sunset the wildland-urban interface training advisory board.
  • HB 18-1246 – “Concerning Updates to the “Colorado Nursery Act”, and, in Connection Therewith, Modernizing the Act and Protecting Agriculture from Pests, Diseases, and Noxious Weeds,” by Rep. Jessie Danielson and Sen. Don Coram. The bill updates the ‘Colorado Nursery Act’, last amended in 2009, to protect nursery stock.
  • HB 18-1293 – “Concerning Payment of Expenses of the Legislative Department,” by Reps. Crisanta Duran & Patrick Neville and Sens. Kevin Grantham & Lucia Guzman. The bill makes appropriations for matters related to the legislative department for the 2018-19 state fiscal year.

For a list of all of Governor Hickenlooper’s 2018 legislative decisions, click here.

Colorado Court of Appeals: Oil and Gas Commission’s Warrantless Inspections of Locations Does Not Violate Constitution

The Colorado Court of Appeals issued its opinion in Maralex Resources, Inc. v. Colorado Oil and Gas Conservation Commission on Thursday, March 22, 2018.

Administrative Law—Constitutional Law—Fourth Amendment—Search and Seizure—Warrantless Search—Administrative Search.

O’Hare was the president of Maralex, a Colorado corporation licensed to conduct oil and gas operations in the state. Maralex operated over 200 oil wells in Colorado. Maralex operated wells located on the O’Hares’ ranch. The O’Hares owned both the surface and mineral rights, but leased the mineral rights to Maralex. The Colorado Oil and Gas Conservation Commission (COGCC) obtained an administrative search warrant authorizing entry and inspection of certain Maralex locations, and after conducting inspections, COGCC issued multiple notices of alleged violations to Maralex and O’Hare. After an administrative hearing, the COGCC issued an order finding violation (OFV), concluding that Maralex had violated several rules, and Maralex was assessed a penalty of $94,000. Maralex and the O’Hares sought judicial review of COGCC’s order. The district court denied their request for injunctive and declaratory relief and affirmed the OFV in full.

On appeal, Maralex and the O’Hares contended that COGCC Rule 204 permitting unannounced, warrantless searches of oil and gas locations violated the U.S. and Colorado Constitutions. There are exceptions to the requirement that searches be conducted pursuant to a warrant issued upon probable cause. One exception is in the context of administrative searches made pursuant to a regulatory scheme of a closely regulated industry. A warrantless inspection conducted pursuant to a regulatory scheme of a closely regulated industry is reasonable if (1) the scheme is informed by a substantial government interest, (2) it is necessary to further that government interest, and (3) the scheme provides a “constitutionally adequate substitute” for a warrant. The Court of Appeals concluded that the oil and gas industry is closely regulated; the state has a substantial interest in regulating oil and gas operations; warrantless searches are necessary to further the state’s substantial interest in the safe and efficient operation of oil and gas facilities; and COGCC’s inspection regime provides a constitutionally adequate substitute for a warrant. Therefore, warrantless inspections made pursuant to Rule 204 do not violate either the Colorado or U.S. Constitution.

The O’Hares also raised constitutional challenges to Rule 204 in their capacity as surface owners of land including oil and gas locations subject to COGCC oversight. They first contended that Rule 204 is unconstitutional as applied to surface owners because, unlike operators of oil and gas locations, they have an expectation of privacy in the property searched. In this case, the O’Hares granted Maralex a very broad set of rights under the surface agreement. By granting the corporation an unlimited easement on the surface estate, the O’Hares substantially lessened any objective expectation of privacy in the property over which they willingly transferred access and control rights to Maralex. The Court also rejected the O’Hares’ broader challenge to the facial constitutionality of Rule 204 as to all surface owners, concluding that where a surface owner grants a mineral lessee a broad surface easement, warrantless entry of the surface estate would not necessarily violate the surface owner’s rights.

Maralex also challenged the COGCC’s order concluding that it violated multiple rules in relation to certain wells. The COGCC’s finding that Maralex violated Rule 204 on March 20, 2014 was arbitrary and capricious because the inspection supervisor agreed to delay the inspection until the next day. Thus, there was not substantial evidence to support COGCC’s determination that Maralex failed to provide access to its wells at all reasonable times. As to the remaining dates at issue, the evidence supports COGCC’s determination that Maralex violated Rule 204 for the duration of that six-day period.

The Court also found record support for COGCC’s determination that Maralex violated Rules 603.f, 905(a), and 907(a)(1).

The district court’s order affirming that part of the OFV concluding Maralex violated Rule 204 on March 20, 2014 and the corresponding penalty were reversed. In all other respects, the order was affirmed. The case was remanded for further proceedings.

Summary provided courtesy of Colorado Lawyer.

Bills Modernizing Statutory Language, Requiring Rent Receipts from Landlords, and More Signed

On Thursday, March 22, 2018, the governor signed 25 bills into law. He also sent one  bill to the Secretary of State without a signature on Friday. To date, he has signed 81 bills and sent one to the Secretary of State without a signature. The bills signed Thursday include several bills modernizing and clarifying statutory language, as well as a bill requiring residential landlords to issue rent receipts, a bill adding two types of protection orders, and more. The bills signed Thursday and passed on Friday are summarized here.

  • SB 18-005 – “Concerning Economic Assistance for Rural Communities Experiencing Certain Significant Economic Events that Lead to Substantial Job Loss in those Communities, and, in Connection Therewith, Authorizing the Department of Local Affairs to Coordinate Nonmonetary Assistance to Assist Rural Communities with Job Creation or Retention,” by Sens. Kerry Donovan & Ray Scott and Rep. Dylan Roberts. The bill authorizes the Executive Director of the Department of Local Affairs (Executive Director) or the Executive Director’s designee to coordinate the provision of nonmonetary resources to assist with job retention or creation in a rural community experiencing a significant economic event, such as a plant closure or layoffs, including industry-wide layoffs, that has a significant, quantifiable impact on jobs within that community.
  • SB 18-009 – “Concerning the Right of Consumers of Electricity to Interconnect Energy Storage Systems for Use on their Property,” by Sens. Kevin Priola & Stephen Fenberg and Reps. Faith Winter & Polly Lawrence. The bill declares that consumers of electricity have a right to install, interconnect, and use energy storage systems on their property, and that this will enhance the reliability and efficiency of the electric grid, save money, and reduce the need for additional electric generation facilities.
  • SB 18-010 – “Concerning the Requirement that a Residential Landlord Provide a Tenant with Specified Documents Relevant to the Landlord-Tenant Relationship, and, in Connection Therewith, Specifying Rent Receipts and Copies of any Written Lease Agreement as Documents that Must be Provided,” by Sens. Beth Martinez Humenik & Angela Williams and Rep. Tony Exum. The bill requires a residential landlord to provide each tenant with a copy of a written rental agreement signed by the parties and to give a tenant a contemporaneous receipt for any payment made in person with cash or a money order. For payments not made in person with cash or a money order, the landlord must provide a receipt if the tenant requests it.
  • SB 18-020 – “Concerning Mental Health Care Professionals who are Permitted to Perform Auricular Acudetox,” by Sen. Leroy Garcia and Rep. Daneya Esgar. The bill allows registered psychotherapists who have documented that they have undergone auricular acudetox training to perform auricular acudetox.
  • SB 18-046 – “Concerning Authorization to Increase the Minimum Donation Required to be Issued a Certificate that Qualifies a Person to be Issued a Group Special License Plate,” by Sen. Dominick Moreno and Reps. Dafna Michaelson Jenet & Faith Winter. The bill authorizes nonprofit organizations to increase by $10 the minimum donation for the issuance of special license plates.
  • SB 18-060 – “Concerning Protective Orders in Criminal Cases,” by Sen. Don Coram and Rep. Millie Hamner. The bill adds 2 new potential protection orders to the list of options available to the court. They are an order prohibiting the taking, transferring, concealing, harming, disposing of, or threatening to harm an animal owned, possessed, leased, kept, or held by the alleged victim or witness; and an order directing a wireless telephone service provider to transfer the financial responsibility for and rights to a wireless telephone number or numbers to the alleged victim or witness if the alleged victim or witness satisfies certain criteria.
  • SB 18-069 – “Concerning Enforcement of Statewide Degree Transfer Agreements,” by Sens. Chris Holbert & Rachel Zenzinger and Reps. Alec Garnett & Jon Becker. If an institution of higher education admits as a junior a transfer student who holds an associate of arts degree, associate of applied science degree, or an associate of science degree that is the subject of a statewide degree transfer agreement, the institution shall not require the student to complete any additional courses to fulfill general education requirements.
  • SB 18-093 – “Concerning the Repeal of Obsolete Provisions in the Colorado Medical Assistance Program Relating to the Inactive Home- and Community-Based Services Waiver for Persons Living with AIDS,” by Sen. Dominick Moreno and Rep. Jeni James Arndt. The bill repeals the inactive home- and community-based services waiver under the Colorado medical assistance program for persons with health complexes related to acquired immune deficiency syndrome (persons living with AIDS waiver).
  • SB 18-101 – “Concerning Student Admission to Colorado State University – Global Campus,” by Sens. Chris Holbert & Nancy Todd and Reps. Millie Hamner & Kevin Van Winkle. The bill removes a prohibition on admitting first-time freshman baccalaureate students who reside in Colorado and who are under 23 years of age.
  • HB 18-1005 – “Concerning Notice of Postsecondary Course Enrollment Options Available to High School Students,” by Reps. Brittany Petterson & Jon Becker and Sen. Kevin Priola. The bill requires a notice to students and parents of postsecondary course opportunities to include information regarding the local education provider’s timelines that affect student eligibility to take these courses and a statement informing students that they may significantly reduce college expenses, increase the likelihood of completing college, and earn marketable workforce skills by taking concurrent enrollment courses.
  • HB 18-1023 – “Concerning the Nonsubstantive Relocation of Laws Related to Legalized Marijuana from Title 12, Colorado Revised Statutes, as Part of the Organizational Recodification of Title 12,” by Rep. Leslie Herod and Sen. Bob Gardner. The bill creates Title 44 and relocates the statutes related to legalized marijuana from Title 12 to Title 44.
  • HB 18-1032 – “Concerning Access to Medical Records from the Department of Public Health and Environment’s EMS Agency Patient Care Database by Health Information Organization Networks,” by Reps. Chris Kennedy & Dan Thurlow and Sens. Rhonda Fields & Jack Tate. The bill requires the Department of Public Health and Environment to provide individualized patient information from the department’s EMS agency patient care database to health information organization networks for any use allowed under the federal “Health Insurance Portability and Accountability Act of 1996.”
  • HB 18-1045 – “Concerning the Application of Silver Diamine Fluoride to Dental Patients,” by Rep. Jonathan Singer and Sen. Jack Tate. The bill allows a dental hygienist to apply silver diamine fluoride under the direct or indirect supervision of a dentist.
  • HB 18-1050 – “Concerning Competency to Proceed for Juveniles Involved in the Juvenile Justice System,” by Rep. Jonathan Singer and Sen. Rhonda Fields. The bill establishes a juvenile-specific definition of ‘competent to proceed’ and ‘incompetent to proceed’ for juveniles involved in the juvenile justice system, as well as specific definitions for ‘developmental disability’, ‘mental capacity’, and ‘mental disability’ when used in this context. The bill clarifies the procedures for establishing incompetency, as well as for establishing the restoration of competency.
  • HB 18-1051 – “Concerning Statutory Provisions Enacted to Promote the Extinguishment of Unattended Fires,” by Reps. Millie Hamner & Terri Carver and Sens. Don Coram & Michael Merrifield. The bill states that any person who starts or maintains a campfire commits the offense of leaving a campfire unattended if he or she knowingly or recklessly fails to reasonably attend the campfire at all times or fails to thoroughly extinguish the campfire before leaving the site.
  • HB 18-1052 – “Concerning Local Education Providers’ Receipt of Concurrent Enrollment Courses from a Two-year Institution of Higher Education Outside of the Institution’s Approved Service Area when the Institution Approved to Serve the Local Education Provider Declines to Provide Concurrent Enrollment Courses,” by Reps. Paul Lundeen & Jeff Bridges and Sen. Nancy Todd. The bill requires the commission to establish a policy that allows a 2-year institution of higher education to provide a concurrent enrollment program or course to a local education provider that is not within its college service area if the designated 2-year institution of higher education chooses not to provide a concurrent enrollment program or course requested by the local education provider.
  • HB 18-1066 – “Concerning Clarifying that the Law Enforcement and Defense Counsel Exemption for Sexual Exploitation of a Child Crime Does Not Change the Discovery Procedures for Sexually Exploitative Material,” by Reps. Yeulin Willett & Mike Foote and Sen. John Cooke. The bill clarifies that the sexual exploitation of a child statute does not change the discovery procedure for sexually exploitative materials and that the defendant and defense counsel personnel are not allowed to receive copies of the materials.
  • HB 18-1073 – “Concerning Water Districts’ Ability to Enter into Contracts Regarding their Water-related Assets,” by Rep. Matt Gray and Sen. Bob Gardner. The bill authorizes water districts, including water activity enterprises, to enter into contracts for water and the capacity in works and allows the contracts to be based on municipalities’ authority to contract for water and sewer facilities.
  • HB 18-1095 – “Concerning Educator Licenses Issued to Military Spouses,” by Reps. Terri Carver & Jeni James Arndt and Sens. Bob Gardner & Nancy Todd. The bill exempts military spouses from a requirement that teaching or special services experience be continuous, and instead requires 3 years of experience within the previous 7 years.
  • HB 18-1117 – “Concerning Liens that Attach to Personal Property that is Stored at a Self-service Storage Facility,” by Reps. Kevin Van Winkle & James Coleman and Sen. Jack Tate. The bill modifies the law governing the statutory lien that an owner of a self-storage facility has for the occupant’s late payment of rent or other charges.
  • HB 18-1141 – “Concerning the Removal of Outdated References in Statute to ‘Early Childhood Care and Education Councils,'” by Rep. Edie Hooten and Sen. Rachel Zenzinger. The bill removes outdated references in statute to “early childhood care and education councils.” The term is no longer used. Instead, these entities are referred to as “early childhood councils.”
  • HB 18-1142 – “Concerning Modernizing Language in Statutory Sections that Refer to Paupers,” by Reps. Edie Hooten & Dan Thurlow and Sens. Beth Martinez Humenik & Rachel Zenzinger. The bill modernizes the language in statutory sections by replacing the terms ‘pauper’ and ‘paupers’ with ‘indigent’ or ‘indigent persons’.
  • HB 18-1183 – “Concerning the Continuation of the Regulation of Home Food Service Plans Pursuant to the “Sale of Meat Act”, and, in Connection Therewith, Implementing the Department of Regulatory Agencies’ Sunset Review Recommendation to Repeal the Act,” by Reps. Edie Hooten & Kim Ransom and Sen. Randy Baumgartner. The bill implements the recommendation of the Department of Regulatory Agencies, as contained in the Department’s sunset review of home food service plans, by repealing the ‘Sale of Meat Act’, thereby eliminating the regulation of home food service plans by the department of agriculture.
  • HB 18-1210 – “Concerning Peace Officer Status for the Administrator of Judicial Security in the Colorado Judicial Department,” by Rep. Mike Foote and Sen. John Cooke. The bill designates an administrator of judicial security in the Colorado judicial department as a peace officer who must be certified by the peace officer standards and training board.
  • HB 18-1249 – “Concerning the Requirement that the State Treasurer Distribute any Federal Funds Related to the Naval Oil Shale Reserve Land to Specified Counties or their Federal Mineral Lease Districts,” by Reps. Bob Rankin & Millie Hamner and Sen. Kevin Lundberg. If the state receives any federal mineral lease revenue from oil and gas production on naval oil shale reserve land that was set aside prior to January 1, 2009, and withheld by the federal government, then instead of depositing the money in the mineral leasing fund the state treasurer is required to distribute the money to certain counties or a related federal mineral lease district.

The bill that the governor sent to the Secretary of State without a signature was HB 18-1086, “Concerning Allowing Community Colleges to Offer a Bachelor of Science Degree in Nursing,” by Reps. Janet Buckner & Paul Lundeen and Sens. Tim Neville & Irene Aguilar.

For a complete list of the governor’s 2018 legislative actions, click here.

Tenth Circuit: Case Properly Remanded to State Court Under the Class Action Fairness Act

The Tenth Circuit Court of Appeals issued its opinion in Speed v. JMA Energy Company, LLC on Monday, October 2, 2017.

Plaintiff Speed filed a petition in the District Court of Hughes County, Oklahoma, asserting a class action against JMA Energy Company, alleging that JMA had willfully violated an Oklahoma statute that requires interest payments of revenue from oil and gas production. Speed further asserted that JMA fraudulently concealed from mineral-interest owners that JMA owed interest to the owners, intending to pay only those who requested the interest.

JMA removed the case to the United States District Court for the Eastern District of Oklahoma, asserting that the district court had jurisdiction under the Class Action Fairness Act (CAFA). Speed then filed an amended motion to remand the case to state court. The district court granted this motion, relying on an exception to CAFA that permits a district court to decline to exercise jurisdiction over a class action meeting certain prerequisites based on consideration of certain factors.

JMA appealed, challenging the district court’s remand order. The Tenth Circuit Court of Appeals found the district court properly considered the statutory factors and did not abuse its discretion by remanding to state court.

CAFA permits a class action to be brought in or removed to federal court if: (1) the proposed class includes at least 100 persons with claims; (2) the aggregate amount in controversy on all claims exceeds $5 million; (3) at least one proposed plaintiff and one defendant have diverse citizenship; and (4) the primary defendants are not governmental entities or officials against whom a federal court cannot order relief.

CAFA also recognizes three statutory exceptions. The exception at issue in this case is the discretionary exception. This exception allows a federal court to decline to exercise jurisdiction over a class action that is otherwise covered by CAFA based on six enumerated factors. The Tenth Circuit considered each factor in turn to determine if there was a legal error or other abuse of discretion by the district court.

The first factor is whether the claims asserted involve a matter of national or interstate interest. The Tenth Circuit found that JMA failed to explain how there could be a significant national interest in the mere allocation of interest between producers and royalty owners. The only thing national or interstate about this case is that some of the owners of Oklahoma property, who are basing their claims on alleged violations of an Oklahoma statute, happen to live in other states and receive their royalty checks there. The Tenth Circuit determined that was not enough to reverse the district court’s finding.

The second factor was whether the claims asserted would be governed by Oklahoma law or the laws of other states. The district court found JMA’s argument that a fraud claim against Oklahoma may be governed by the law of a different state unpersuasive and concluded that this factor weighed in favor of Speed’s motion to remand. The Tenth Circuit concluded that Oklahoma law controlled.

The third factor was whether the class action had been pleaded in order to avoid federal jurisdiction. JMA asserted that Speed attempted to avoid federal jurisdiction by excluding from the class any publicly traded companies and affiliated entities that produced, gathered, processed, or marketed oil and gas. The district court found this argument unpersuasive, reasoning that Speed had proposed a class that encompassed all the people and claims that one would expect to include in a class action. The Tenth Circuit agreed.

The fourth factor was whether the action was brought in a forum with a distinct nexus with the class members, the alleged harm, or the defendants. The Tenth Circuit found no abuse of discretion by the district court, as the factors of this case demonstrated the required nexus between Oklahoma and the class members, the alleged harms, and the defendant, including that the action was related to real-property interests in Oklahoma, the class members owned royalty interests in Oklahoma property, JMA is a citizen of Oklahoma, and the underlying alleged actions that gave rise to this suit took place in Oklahoma.

The fifth factor was whether the number of citizens of the state in which the action was originally filed is substantially larger than the number of citizens from any other state for plaintiffs in the class, and whether the citizenship of the other members of the proposed class was dispersed among a substantial number of states. The Tenth Circuit found the district court correctly determined that this factor weighed in favor of remand, as the number of Oklahoma citizens was about 2.5 times the number of citizens from any other state.

The sixth, and last, factor was whether, during the three-year period preceding the filing of the class action, one or more other class actions asserting the same or similar claims on behalf of the same or other persons had been filed. No other actions have been filed; therefore, this factor favors remand.

The Tenth Circuit determined that the district court did not abuse its discretion in ruling that each factor supported remand.

The Tenth Circuit Court of Appeals AFFIRMED the decision remanding the case to state court.

Colorado Court of Appeals: Public Utilities Commission has Exclusive Jurisdiction Over Claims for Enforcement of Tariffs

The Colorado Court of Appeals issued its opinion in Development Recovery Co., LLC v. Public Service Co. of Colorado on Thursday, June 15, 2017.

Public Utility—Subject Matter Jurisdiction—Enforcement of Tariffs—Common Law Claims.

The Public Service Company of Colorado, d/b/a Xcel Energy Co. (Xcel), is a utility company regulated by the Colorado Public Utilities Commission (PUC). Development Recovery Company, LLC (DRC) was the assignee of claims from real estate developers who entered into extension agreements (agreements) with Xcel for the construction of distribution facilities to provide gas or electric service for homes in new developments. The agreements specified that they were governed by the PUC’s rules and regulations and referred several times to Xcel’s extension policies. The extension policies on file with the PUC are referred to as tariffs and provide that extension contracts are based on the estimate of the cost to construct and install the necessary facilities to provide the requested service. The tariffs explain in detail how construction costs and payments are to be handled.

DRC filed a complaint against Xcel alleging various common law claims and violation of C.R.S. § 40-7-102, related to an unspecified number of agreements between developers and Xcel over the course of 18 years. Xcel moved to dismiss, arguing that this matter was within the exclusive jurisdiction of the PUC or, alternatively, if the PUC did not have exclusive jurisdiction, the court should nevertheless refer the matter to the PUC under the primary jurisdiction doctrine. The district court agreed with Xcel on both grounds and dismissed the complaint.

On appeal, DRC argued that the district court has exclusive subject matter jurisdiction over DRC’s common law claims, asserting that the trial court erred in concluding that the substance of its claims is merely the enforcement of tariffs. The court of appeals noted that the PUC has exclusive jurisdiction in its constituted field, including enforcement of tariffs. The court concluded that all of DRC’s claims substantively involved enforcement of the tariffs (essentially, how costs were to be calculated and paid). Further, even if DRC has a cause of action under C.R.S. § 40-7-102, exhaustion of administrative remedies before the PUC is required.

DRC also asserted that the district court must have jurisdiction because only it can award the relief sought. DRC cannot confer subject matter jurisdiction on the district court simply by requesting relief in the form of damages. Further, the PUC has authority to order reparations where excessive charges have been collected by a public utility for a product or service, which is a potential remedy in this case.

The judgment was affirmed.

Summary provided courtesy of The Colorado Lawyer.

Colorado Supreme Court: Public Utilities Commission Properly Imposed Tariff After Billing Error

The Colorado Supreme Court issued its opinion in Carestream Health, Inc. v. Colorado Public Utilities Commission on Monday, June 19, 2017.

Public Utilities—Tariffs—Standing—Injury-in-Fact.

In this appeal, the supreme court considered two issues from the district court’s review of a decision of the Colorado Public Utilities Commission. Both issues pertain to a billing error that led Public Service Company of Colorado to undercharge Carestream Health, Inc. for gas it received over the course of a three-year period. The first issue is whether the Commission properly interpreted Public Service’s tariff, specifically the requirement to “exercise all reasonable means” to prevent billing errors. The court concluded that determining what means are “reasonable,” as that term is used in the tariff, necessarily requires considering what errors are foreseeable. The court therefore held that the Commission properly interpreted the tariff and acted pursuant to its authority. The second issue is whether Carestream had standing to challenge Public Service’s use of its tariff to recover a portion of the undercharge from its general customer base. Because Carestream suffered no injury from that action, it lacks standing to challenge it. The court accordingly affirmed the district court’s judgment.

Summary provided courtesy of The Colorado Lawyer.

Bills Signed Adding Water Right for Industrial Hemp, Amending Collections of Delinquent Taxes on Mobile Homes, Changing Election Laws, and More Signed

Though the legislative session is over, the governor continues to sign bills. He signed two bills on Friday, May 19; three bills on Saturday, May 20; three bills on Sunday, May 21; six bills on Monday, May 22; six bills on Tuesday, May 23; four bills on Wednesday, May 24; 28 bills on Thursday, May 25; one bill on Friday, May 26; and one bill on Tuesday, May 30. To date, the governor has signed 285 bills and vetoed one bill this legislative session. The bills signed since May 19 are summarized here.

Friday, May 19, 2017

  • HB 17-1354“Concerning the Collection of Delinquent Taxes on Certain Mobile Homes,” by Rep. KC Becker and Sens. John Kefalas & Kevin Priola. The bill modifies the county treasurer’s duties in connection with the collection of delinquent taxes on mobile or manufactured homes that are not affixed to the ground.
  • SB 17-305“Concerning Modifications to Select Statutory Provisions Affecting Primary Elections Enacted by Voters at the 2016 Statewide General Election to Facilitate the Effective Implementation of the State’s Election Laws, and, in Connection Therewith, Making an Appropriation,” by Sens. Stephen Fenberg & Kevin Lundberg and Reps. Patrick Neville & Mike Foote.

Saturday, May 20, 2017

  • HB 17-1113“Concerning Electronic Participation in Committee Meetings During the Legislative Interim,” by Reps. Yeulin Willett & Jeni Arndt and Sen. Ray Scott. The bill gives the executive committee of the legislative council the ability to consider, recommend, and establish policies regarding electronic participation by senators or representatives in committee meetings during the legislative interim.
  • HB 17-1258“Concerning Renaming Delta-Montrose Technical College to Technical College of the Rockies,” by Reps. Millie Hamner & Yeulin Willett and Sens. Kerry Donovan & Don Coram. The bill changes the name of ‘Delta-Montrose Technical College’ to ‘Technical College of the Rockies’.
  • SB 17-280“Concerning Extending the Repeal Date of the Colorado Economic Development Commission, and, in Connection Therewith, Making an Appropriation,” by Sen. Jack Tate and Reps. Dan Thurlow & Tracy Kraft-Tharp. The bill extends the Colorado economic development commission by changing the repeal date of its organic statute to July 1, 2025.

Sunday, May 21, 2017

  • HB 17-1003“Concerning a Strategic Action Plan to Address Teacher Shortages in Colorado,” by Rep. Barbara McLaughlin and Sen. Don Coram. The bill requires the Department of Higher Education in partnership with the Department of Education to examine recruitment, preparation, and retention of teachers and to prepare a strategic plan to address teacher shortages in school districts and public schools within the state.
  • HB 17-1077“Concerning the Useful Public Service Cash Fund,” by Rep. Donald Valdez and Sen. Don Coram. The bill creates the useful public service cash fund in the judicial branch to facilitate the administration of programs that supervise the performance of useful public service by persons who are required to perform such service pursuant to a criminal sentence.
  • SB 17-117“Concerning Confirmation that Industrial Hemp is a Recognized Agricultural Product for Which a Person with a Water Right Decreed for Agricultural Use may Use the Water Subject to the Water Right for Industrial Hemp Cultivation,” by Sen. Don Coram and Reps. Donald Valdez & Marc Catlin. The bill confirms that a person with an absolute or conditional water right decreed for agricultural use may use the water subject to the water right for the growth or cultivation of industrial hemp if the person is registered by the Department of Agriculture to grow industrial hemp for commercial or research and development purposes.

Monday, May 22, 2017

  • HB 17-1104“Concerning the Exclusion from State Taxable Income of the Monetary Value of any Medal Won by an Athlete while Competing for the United States of America at the Olympic Games, so long as the Athlete’s Federal Adjusted Gross Income does not Exceed a Specified Amount,” by Rep. Clarice Navarro and Sen. Kevin Priola. The bill specifies that for the purpose of determining the state income tax liability of an individual, income earned as a direct result of winning a medal while competing for the United States of America at the olympic games is excluded from state taxable income.
  • HB 17-1283“Concerning the Creation of a Task Force to Examine Workforce Resiliency in the Child Welfare System,” by Reps. Jonathan Singer & Dan Nordberg and Sens. John Cooke & Leroy Garcia. The bill creates a task force to organize county-level versions of and guidelines for child welfare caseworker resiliency programs modeled on national resiliency programs.
  • HB 17-1289“Concerning a Requirement that the State Engineer Promulgate Rules that Establish an Optional Streamlined Approach to Calculate the Historical Consumptive Use of a Water Right,” by Reps. Donald Valdez & Chris Hansen and Sens. Larry Crowder & Don Coram. The bill directs the state engineer to promulgate rules that take into account local conditions that an applicant can use to calculate historical consumptive use.
  • SB 17-074“Concerning the Creation of a Pilot Program in Certain Areas of the State Experiencing High Levels of Opioid Addiction to Award Grants to Increase Access to Addiction Treatment, and, in Connection Therewith, Making an Appropriation,” by Sen. Leroy Garcia and Rep. Daneya Esgar. The bill reates the medication-assisted treatment (MAT) expansion pilot program, administered by the University of Colorado College of Nursing, to expand access to medication-assisted treatment to opioid-dependent patients in Pueblo and Routt counties.
  • SB 17-105“Concerning Consumers’ Right to Know their Electric Utility charges by requiring investor-owned electric utilities to provide their customers with a comprehensive breakdown of cost on their monthly bills,” by Sen. Leroy Garcia and Reps. Daneya Esgar & KC Becker. The bill requires an investor-owned electric utility to file with the public utilities commission for the commission’s review a comprehensive billing format that the investor-owned electric utility has developed for its monthly billing of customers.
  • SB 17-153“Concerning Establishment of the Southwest Chief and Front Range Passenger Rail Commission to Oversee the Preservation and Expansion of Amtrak Southwest Chief Rail Service in Colorado and Facilitate the Development and Operation of a Front Range Passenger Rail System that Provides Passenger Rail Service In and Along the Interstate 25 Corridor,” by Sens. Larry Crowder & Leroy Garcia and Rep. Daneya Esgar. The bill replaces the existing southwest chief rail line economic development, rural tourism, and infrastructure repair and maintenance commission, the current statutory authorization for which expires on July 1, 2017, with an expanded southwest chief and front range passenger rail commission.

Tuesday, May 23, 2017

  • HB 17-1248“Concerning the Funding of Colorado Water Conservation Board Projects, and, in Connection Therewith, Making Appropriations,” by Rep. Jeni Arndt and Sens. John Cooke & Jerry Sonnenberg. The bill appropriates the following amounts from the Colorado Water Conservation Board construction fund to the CWCB or the Division of Water Resources for certain projects.
  • HB 17-1279“Concerning the Requirement that a Unit Owners’ Association Obtain Approval Through a Vote of Unit Owners Before Filing a Construction Defect Action,” by Reps. Alec Garnett & Lori Saine and Sens. Lucia Guzman & Jack Tate. The bill requires that, before the executive board of a unit owners’ association (HOA) in a common interest community brings suit against a developer or builder on behalf of unit owners based on a defect in construction work not ordered by the HOA itself, the board must notify the unit owners, call a meeting of the executive board, and obtain approval of a majority of unit owners.
  • HB 17-1280“Concerning Conforming Colorado Statutory Language Related to Disability Trusts to the Federal ’21st Century Cures Act’,” by Reps. Dafna Michaelson Jenet & Dave Young and Sen. Bob Gardner. The bill conforms Colorado statutory language relating to the creation of a disability trust to conform to the language established in the federal ’21st Century Cures Act’. Specifically, it clarifies that the individual who is the beneficiary of a disability trust can also be the person who establishes such trust.
  • HB 17-1353“Concerning Implementing Medicaid Initiatives that Create Higher Value in the Medicaid Program Leading to Better Health Outcomes for Medicaid Clients, and, in Connection Therewith, Continuing the Implementation of the Accountable Care Collaborative and Authorizing Performance-based Provider Payments,” by Rep. Dave Young and Sen. Kevin Lundberg. The bill authorizes the Department of Health Care Policy and Financing to continue its implementation of the medicaid care delivery system, referred to as the accountable care collaborative (ACC).
  • SB 17-209“Concerning Access to the Ballot by Candidates,” by Sen. Kevin Priola and Rep. Mike Weissman. The bill makes various changes to the laws governing access to the ballot.
  • SB 17-232“Concerning Continuation under the Sunset Law of the Bingo-Raffle Advisory Board, and, in Connection Therewith, Implementing the Recommendations of the 2016 Sunset Report of the Department of Regulatory Agencies,” by Sen. Stephen Fenberg and Rep. Paul Rosenthal. The bill The bill implements the recommendations of the sunset review and report on the licensing of bingo and other games of chance through the Secretary of State.

Wednesday, May 24, 2017

  • HB 17-1155“Concerning the Ability to Cure Campaign Finance Reporting Deficiencies Without Penalty,” by Rep. Dan Thurlow and Sen. Bob Gardner. The bill requires the Secretary of State to give notice to the particular committee by e-mail of deficiencies alleged in a complaint pursuant to the campaign finance provisions of the state constitution or the ‘Fair Campaign Practices Act’ (FCPA).
  • HB 17-1317“Concerning the Authority of the State Historical Society to Dispose of Real Property Located on the Former Lowry Air Force Base,” by Reps. Daneya Esgar & Chris Hansen and Sens. John Kefalas & Randy Baumgardner. The bill grants the state historical society the authority to sell a vacant cold storage facility located on the former Lowry Air Force base.
  • HB 17-1342“Concerning Authorization for a County to Submit a Ballot Question for a County Public Safety Improvements Tax at a Biennial County or November Odd-year Election,” by Rep. Adrienne Benavidez and Sen. Larry Crowder. The bill authorizes a county to submit a ballot question at a biennial county election or an election held in November of an odd-numbered year.
  • HB 17-1356“Concerning the Temporary Authority of the Colorado Economic Development Commission to Allow Certain Businesses to Treat Specific Existing Income Tax Credits Differently,” by Reps. Crisanta Duran & Daneya Esgar and Sens. Leroy Garcia & Jack Tate. The bill allows the Colorado economic development commission to allow certain businesses that make a strategic capital investment in the state, subject to a maximum amount, and subject to the requirements of the specified income tax credits, to treat any of the following income tax credits allowed to the business as either carryforwardable for a five-year period or as transferable under certain circumstances.

Thursday, May 25, 2017

  • HB 17-1072: “Concerning Human Trafficking for Sexual Servitude,” by Reps. Lois Landgraf & Polly Lawrence and Sen. John Cooke. The bill amends the language defining the crime of human trafficking for sexual servitude to include that a person who knowingly advertises, offers to sell, or sells travel services that facilitate activities defined as human trafficking of a minor for sexual servitude commits the offense of human trafficking of a minor for sexual servitude. ‘Travel services’ are defined in the bill.
  • HB 17-1190“Concerning the Limited Applicability of the Colorado Supreme Court’s Decision in St. Jude’s Co. v. Roaring Fork Club, LLC, 351 P.3d 442 (Colo. 2015),” by Rep. KC Becker and Sen. Jerry Sonnenberg. The bill provides that the decision in the St. Jude’s Co. case interpreting section 37-92-103(4) does not apply to previously decreed absolute and conditional water rights or claims pending as of July 15, 2015. The interpretation of section 37-92-103 (4) in St. Jude’s Co. applies only to direct-flow appropriations, without storage, filed after July 15, 2015, for water diverted from a surface stream or tributary groundwater by a private entity for private aesthetic, recreational, and piscatorial purpose.
  • HB 17-1209“Concerning Peace Officer Designation for the Manager of the Office of Prevention and Security Within the Division of Homeland Security and Emergency Management in the Department of Public Safety,” by Reps. Jovan Melton & Terri Carver and Sens. Rhonda Fields & John Cooke. The bill designates as a peace officer the manager of the office of prevention and security within the division of homeland security and emergency management in the department of public safety.
  • HB 17-1223“Concerning the Creation of a Fraud Reporting Hotline to be Administered by the State Auditor, and, in Connection Therewith, Establishing Referral and Reporting Processes and State Auditor Investigative Authority,” by Reps. Lori Saine & Tracy Kraft-Tharp and Sens. Cheri Jahn & Tim Neville. The bill requires the state auditor to establish and administer a telephone number, fax number, email address, mailing address, or internet-based form whereby any individual may report an allegation of fraud committed by a state employee or an individual acting under a contract with a state agency. This system is referred to in the bill as the ‘fraud hotline’ or ‘hotline’ and any report to the hotline as a ‘hotline call’.
  • HB 17-1238“Concerning the Nonsubstantive Relocation of Laws Related to Debt Management and Collection Services from Title 12, Colorado Revised Statutes, as Part of the Organizational Recodification of Title 12,” by Rep. Pete Lee and Sen. Chris Holbert. The bill relocates the laws related to debt management and collection services from articles 14, 14.1, 14.3, and 14.5 of title 12.
  • HB 17-1239“Concerning the Nonsubstantive Relocation of Laws Related to Private Occupational Schools from Title 12, Colorado Revised Statutes, as Part of the Organizational Recodification of Title 12,” by Rep. Cole Wist and Sen. Lucia Guzman. The bill creates a new article 64 in title 23 of the Colorado Revised Statutes and relocates the repealed provisions of article 59 of title 12 of the Colorado Revised Statutes to that article 64 and repeals article 59 of title 12 of the Colorado Revised Statutes.
  • HB 17-1240“Concerning the Nonsubstantive Relocation of the Laws Related to the Department of Public Health and Environment from Title 12, Colorado Revised Statutes, as Part of the Organizational Recodification of Title 12,” by Rep. Cole Wist and Sen. John Cooke. The bill relocates Article 29.3 of title 12 to part 6 of article 1.5 of title 25 and Article 30 of title 12 to article 48 of title 25.
  • HB 17-1243“Concerning the Nonsubstantive Relocation of the Laws Related to Wholesale Sales Representatives from Title 12, Colorado Revised Statutes, as Part of the Organizational Recodification of Title 12,” by Rep. Yeulin Willett and Sen. Lucia Guzman. The bill relocates article 66 of title 12, which relates to wholesale sales representatives, to title 13.
  • HB 17-1244: “Concerning the Nonsubstantive Relocation of the Laws Related to Cemeteries from Title 12, Colorado Revised Statutes, as Part of the Organizational Recodification of Title 12,” by Rep. Leslie Herod and Sen. Bob Gardner. The bill relocates article 12 of title 12, which relates to cemeteries, to title 6.
  • HB 17-1245“Concerning the Nonsubstantive Relocation of the Laws Related to Public Establishments from Title 12, Colorado Revised Statutes, as Part of the Organizational Recodification of Title 12,” by Rep. Mike Foote and Sen. Daniel Kagan. The bill relocates parts 1 and 3 of article 44 of title 12, which relate to public establishments, to title 6.
  • HB 17-1251“Concerning the Scheduled Repeal of Reports by Higher Education Agencies to the General Assembly,” by Rep. Dan Nordberg and Sen. Dominick Moreno. The bill addresses the reporting requirements of higher education agencies.
  • HB 17-1255: “Concerning the Scheduled Repeal of a Report by the Board of Veterans Affairs to the General Assembly,” by Rep. Dan Nordberg and Sen. Andy Kerr. The bill continues indefinitely a reporting requirement of the board of veterans affairs.
  • HB 17-1257: “Concerning the Scheduled Repeal of Reports by the Department of Natural Resources to the General Assembly,” by Rep. Jeni Arndt and Sen. Jack Tate. The bill continues indefinitely reporting requirements of the Department of Natural Resources that were scheduled to repeal according to section 24-1-136(11)(a)(I).
  • HB 17-1265“Concerning an Increase in the Total Employer Contribution for Employers in the Judicial Division of the Public Employees’ Retirement Association,” by Reps. KC Becker & Dan Nordberg and Sens. Andy Kerr & Kevin Priola. For the calendar year beginning in 2019, for the judicial division only, the bill increases the AED to 3.40% of total payroll and requires the AED payment to increase by 0.4% of total payroll at the start of each of the following 4 calendar years through 2023.
  • HB 17-1267“Concerning the Scheduled Repeal of Reports by Educational Agencies to the General Assembly,” by Rep. Jeni Arndt and Sen. Dominick Moreno. The bill addresses the reporting requirements of educational agencies.
  • HB 17-1295“Concerning the Repeal of the Governor’s Office of Marijuana Coordination,” by Rep. Bob Rankin and Sen. Dominick Moreno. The bill repeals the office of marijuana coordination, effective July 1, 2017.
  • HB 17-1298: “Concerning the Date by Which the State Personnel Director is Required to Submit the Annual Compensation Report,” by Rep. Millie Hamner and Sen. Kevin Lundberg. The bill changes the deadline for submission of the state personnel director’s annual report to September 15 of each year beginning with the 2017 report.
  • HB 17-1346“Concerning the Sale of More Than Fifteen Acres of Land at the Colorado Mental Health Institute at Fort Logan to the United States Department of Veterans Affairs for the Expansion of Fort Logan National Cemetery,” by Rep. Susan Lontine and Sen. Owen Hill. The bill grants the Department of Human Services authority to execute a land sale, at fair market value, to sell 51 additional acres, or up to 66 acres. The bill specifies that the proceeds of the sale of the additional 51 acres to the United States department of veterans affairs must be credited to the Fort Logan land sale account in the capital construction fund.
  • SB 17-222“Concerning the Nonsubstantive Relocation of the Laws Related to Fireworks from Title 12, Colorado Revised Statutes, as Part of the Organizational Recodification of Title 12,” by Sen. John Cooke and Rep. Yeulin Willett. The bill relocates article 28 of title 12, which relates to fireworks, to a new part 20 of article 33.5 of title 24, which title pertains to the department of public safety.
  • SB 17-225“Concerning the Nonsubstantive Relocation of Laws Related to Farm Products from Title 12 of the Colorado Revised Statutes as Part of the Organizational Recodification of Title 12,” by Sen. John Cooke and Rep. Yeulin Willett. The bill relocates part 2 of article 16 of title 12, the ‘Commodity Handler Act’, to article 36 of title 35; and part 1 of article 16 of title 12, the ‘Farm Products Act’, to article 37 of title 35.
  • SB 17-228“Concerning the Nonsubstantive Relocation of the Laws Related to Licenses Granted by Local Governments from Title 12, Colorado Revised Statutes, as Part of the Organizational Recodification of Title 12,” by Sen. Bob Gardner and Rep. Cole Wist. The bill relocates article 18 of title 12, which relates to dance halls, to title 30, which pertains to counties; article 25.5 of title 12, which relates to escort services, to title 29, which relates to local governments; and relocates article 56 of title 12, which relates to pawnbrokers, to title 29.
  • SB 17-242“Concerning Modernizing Terminology in the Colorado Revised Statutes Related to Behavioral Health,” by Sen. Beth Martinez Humenik and Reps. Kim Ransom & Joann Ginal. The bill updates and modernizes terminology in the Colorado Revised Statutes related to behavioral health, mental health, alcohol abuse, and substance abuse.
  • SB 17-243“Concerning the Continuation under the Sunset Law of the Motorcycle Operator Safety Training Program by the Director of the Office of Transportation Safety in the Department of Transportation, and, in Connection Therewith, Transferring the Operation of the Program to the Chief of the State Patrol Beginning in 2018,” by Sens. Nancy Todd & Randy Baumgardner and Rep. Dominique Jackson. The bill continues the motorcycle operator safety training program for 3 years, until 2020.
  • SB 17-279“Concerning Clarification of the Applicability Provisions of Recent Legislation to Promote an Equitable Financial Contribution Among Affected Public Bodies in Connection with Urban Redevelopment Projects Allocating Tax Revenues,” by Sens. Beth Martinez Humenik & Rachel Zenzinger and Reps. Matt Gray & Susan Beckman. The bill clarifies the applicability provisions of legislation enacted in 2015 and 2016 to promote an equitable financial contribution among affected public bodies in connection with urban redevelopment projects allocating tax revenues.
  • SB 17-291“Concerning Continuation of the School Safety Resource Center Advisory Board,” by Sen. Beth Martinez Humenik and Rep. Jeff Bridges. The bill implements the recommendations of the sunset review and report on the school safety resource center advisory board by eliminating the repeal date of the board and extending the board through September 1, 2022.
  • SB 17-293“Concerning Updating the Reference to a National Standard Setting Forth Certain Specifications Applicable to the Type of Paper Used to Publish the Colorado Revised Statutes,” by Sen. Daniel Kagan and Rep. Pete Lee. The bill updates the statutory reference to the current applicable alkaline minimum reserve requirements and acidity levels for uncoated paper as established by the American national standards institute and the national information standards organization.
  • SB 17-294“Concerning the Nonsubstantive Revision of Statutes in the Colorado Revised Statutes, as Amended, and, in Connection Therewith, Amending or Repealing Obsolete, Imperfect, and Inoperative Law to Preserve the Legislative Intent, Effect, and Meaning of the Law,” by Sen. Bob Gardner and Rep. Pete Lee. The bill amends, repeals, and reconstructs various statutory provisions of law that are obsolete, imperfect, or inoperative. The specific reasons for each amendment or repeal are set forth in the appendix to the bill.
  • SB 17-304“Concerning the Authority of the Joint Technology Committee,” by Sens. Angela Williams & Beth Martinez Humenik and Reps. Dan Thurlow & Jonathan Singer. The bill adds definitions of ‘cybersecurity’ and ‘data privacy’ for the purposes of the joint technology committee. In addition, the bill modifies the definition of ‘oversee’ for the purposes of the committee to be consistent with other statutory provisions.

Friday, May 26, 2017

  • SB 17-254“Concerning the Provision for Payment of the Expenses of the Executive, Legislative, and Judicial Departments of the State of Colorado, and of its Agencies and Institutions, For and During the Fiscal Year Beginning July 1, 2017, Except as Otherwise Noted,” by Sen. Kent Lambert and Rep. Millie Hamner. The bill provides for the payment of expenses of the executive, legislative, and judicial departments of the state of Colorado, and of its agencies and institutions, for and during the fiscal year beginning July 1, 2017, except as otherwise noted.

Tuesday, May 30, 2017

  • SB 17-267“Concerning the Sustainability of Rural Colorado,” by Sens. Lucia Guzman & Jerry Sonnenberg and Reps. KC Becker & Jon Becker. The bill creates a new Colorado healthcare affordability and sustainability enterprise (CHASE) within the Department of Health Care Policy and Financing (HCPF), effective July 1, 2017, to charge and collect a healthcare affordability and sustainability fee that functions similarly to the repealed hospital provider fee. Because CHASE is an enterprise for purposes of the Taxpayer’s Bill of Rights (TABOR), its revenue does not count against the state fiscal year spending limit.

For a list of the governor’s 2017 legislative actions, click here.

Colorado Court of Appeals: Oil and Gas Commission Has Authority to Issue Rule at Petitioner’s Request

The Colorado Court of Appeals issued its opinion in Martinez v. Colorado Oil and Gas Commission on Thursday, March 23, 2017.

Oil and Gas Conservation ActColorado Oil and Gas Conservation CommissionPublic Health and Safety.

Petitioners filed a petition for rulemaking pursuant to the Colorado Oil and Gas Conservation Commission’s Rule 529(b). Petitioners proposed a rule requesting that the Commission not issue permits for drilling oil and gas wells unless certain conditions were met to demonstrate that the drilling would not have specified adverse effects. The Commission ultimately denied the petition, concluding that (1) the proposed rule mandated action that exceeded the Commission’s statutory authority; (2) the requested third-party review contradicted the Commission’s nondelegable duty to promulgate rules; and (3) the public trust doctrine, which petitioners relied on to support their request, has been expressly rejected in Colorado. The district court affirmed the Commission’s order after concluding that the Commission rationally decided to deny the petition after considering input from stakeholders on both sides of the fracking issue in accordance with the Oil and Gas Conservation Act’s requirement of a balance between the development of oil and gas resources and the protection of public health, safety, and welfare.

On appeal, petitioners contended that the district court and the Commission erred in interpreting the Act. The Colorado Court of Appeals determined that the plain meaning of the statutory language indicates that fostering balanced development, production, and use of natural resources is in the public interest when that development is completed subject to the protection of public health, safety, and welfare. Therefore, the Commission erred in interpreting C.R.S. § 34-60-102(1)(a)(I) as requiring a balance between development and public health, safety, and welfare.

The district court’s and Commission’s orders were reversed and the case was remanded for further proceedings.

Summary provided courtesy of The Colorado Lawyer.

Tenth Circuit: Summary Judgment Affirmed Where No Evidence Presented of Conspiracy to Monopolize

The Tenth Circuit Court of Appeals issued its opinion in Buccaneer Energy (USA) Inc., v. Gunnison Energy Corporation; SG Interests I, LTD.; SG Interests VII, LTD. on February 3, 2017.

Buccaneer Energy (USA) Inc. (Buccaneer) sued SG Interests I, Ltd.., SG Interests VII, Ltd. (together, SG), and Gunnison Energy Corporation (GEC) (collectively, Defendants) alleging that Defendants had conspired in restraint of trade in violation of § 1 of the Sherman Act and that Defendants had conspired to monopolize in violation of § 2 of the Sherman Act. The district court granted summary judgment for the Defendants and the Tenth Circuit affirmed due to Buccaneer’s failure to present sufficient evidence to create a genuine issue of fact on one or more elements of each of its claims.

Defendants each granted each other the option to participate equally in the construction and ownership of any pipeline initiated by the other party. GEC exercised this option to participate in the Bull Mountain Pipeline, which traveled from the Ragged Mountain Area (RM Area) located in Delta and Gunnison Counties, Colorado, to the Questar Interstate pipeline. GEC and SG also equally had ultimate control over the Ragged Mountain Gathering System (RM System), which transported natural gas from the RM Area to the Rocky Mountain natural Gas Pipeline (Rocky Mountain Pipeline).

Buccaneer acquired the Riviera Drilling and Exploration Company’s (Riviera) leases in the RM Area. Buccaneer pursued a means for transporting its expected gas production from GEC on the RM System. GEC offered a rate of $1.52 per MMBtu for interruptible service. Buccaneer countered, revising the interruptible service language but keeping the rate the same. GEC responded raising the rate to $3.92 per MMBtu, and reinserting the interruptible service provisions. Buccaneer did not counteroffer again. Buccaneer failed to secure a transportation agreement and Riviera terminated the Lease Agreement.

Buccaneer filed this case on June 21, 2012 and alleged that the “RM System was essential to effective competition for production rights and the sale of natural gas from the Ragged Mountain Area.” It further claimed that because Defendants refused to provide Buccaneer with access to the RM System, Defendants violated §§ 1 and 2 of the Sherman Act by engaging in a conspiracy in restraint of trade and a conspiracy to monopolize.

The district court granted summary judgment for Defendants on both of Buccaneer’s antitrust claims because Buccaneer did not present evidence to show that Defendants caused, or could cause, injury to competition in a defined market. Buccaneer also did not demonstrate its own preparedness to enter the market. The Tenth Court affirmed, concluding that Buccaneer failed to present sufficient evidence to survive summary judgment on either of its claims.

Section 1 of the Sherman Act prohibits “every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States.” 15 U.S.C. § 1. This provision has been construed to forbid only restraints of trade that are unreasonable. The Tenth Circuit analyzed the Defendants’ conduct under the rule of reason because Buccaneer did not allege a per se rule violation.

First, the Tenth Circuit dismissed Buccaneer’s allegation that the Defendants unreasonably denied it access to the RM System, which was Buccaneer claimed was “essential” to Buccaneer’s ability to compete. Buccaneer failed to prove the second element of the “essential facilities doctrine,” a competitor’s inability to duplicate the facility. Here, the relevant facility is the RM System, and while it may be difficult to duplicate, Buccaneer did not present any evidence on the matter. Buccaneer focused on the Bull Mountain Pipeline, which was not at issue in this case.

Next, the Tenth Circuit held that Buccaneer did not adequately establish its claim under the rule of reason. Under the rule of reason, the plaintiff has the initial burden of showing an agreement had a substantially adverse effect on competition. The burden then shifts to the defendant to show pro-competitive virtues of such conduct. Then the plaintiff must show that such conduct was not reasonably necessary to achieve the legitimate objectives.  A court must then weigh the harms and benefits of such conduct to determine if it is reasonable.

A plaintiff must show an adverse effect on competition in general, not just that the conduct adversely affected the plaintiff’s business. Buccaneer failed to meets its burden of showing that the challenged conduct had anticompetitive effects. Buccaneer did not present any evidence of actual anticompetitive effect; such as fewer production rights being acquired in the RM Area or that Defendants’ position allowed them to pay less than competitive prices.

The Tenth Circuit next addressed whether Buccaneer had shown harm to competition by Defendants’ possession of market power in the relevant market. The “relevant market” consists of both the product area and the geographic area. The product market consists of products that are sufficiently substitutable with each other based on the purpose for which they are produced, as well as their price, use, and quantities. The geographic market encompasses the area in which competition occurs. Once the relevant market has been identified, a plaintiff must show market power by demonstrating that the defendants had either the power to control price or the power to exclude competition.

Buccaneer asserted that the first relevant product was “production rights” and the relevant geographic market was the RM Area. The Tenth Circuit held that Buccaneer did not adequately define either market. Buccaneer did not offer its own definition of the product market for “production rights,” for which it bore the burden of defining. Buccaneer also failed to establish the relevant geographic market with any precision; it simply stated the area and did not define its boarders. Therefore, the Tenth Circuit held that Buccaneer failed to meet its burden of establishing either the product or the geographic market. The district court therefore did not err when it dismissed the claim for failure to allege a legally sufficient market.

Further, even if Buccaneer did define a relevant market, it did not establish that Defendants possessed market power. Market share, or size, is not enough to establish market power, and the absence of market share creates a presumption that market power does not exist. Buccaneer did not present evidence to demonstrate Defendants’ market share. It did not allege what percentage of the “production rights” market that Defendants possessed. Additionally, Buccaneer did not present evidence that that Defendants created any barriers of entry into the relevant market for competitors. Therefore, Buccaneer failed to satisfy its burden of showing market power and also failed to establish any anticompetitive effect in the alleged market for production rights.

Buccaneer next alleged that the second relevant product was natural gas, which was undisputed. The Tenth Circuit held that Buccaneer’s defined relevant market, which was “the market for downstream sales of gas,” was insufficient to address that market for considerations relevant under the rule of reason analysis. Buccaneer also failed to show that the Defendants possessed market power in any relevant market. The Tenth Circuit held that Buccaneer did not set forth facts from which a jury could find that the Defendants possessed market power in that market.

Finally, the Tenth Circuit quickly dismissed Buccaneer’s § 2 conspiracy claim because such a claim requires proof of a relevant antitrust market. As with Buccaneer’s § 1 claim, it did not establish a relevant market, so its § 2 claim fails for the same reasons as its § 1 claim.

In conclusion, the Tenth Circuit held that, because Buccaneer failed to present evidence from which a jury could conclude that Defendants’ conduct actually or potentially harmed competition in a relevant antitrust market, both its § 1 and § 2 Sherman Act claims fail. The Tenth Circuit affirmed the district court’s order granting summary judgment in favor of Defendants on that basis.