August 23, 2019

Colorado Court of Appeals: Natural Gas Pipelines and Fittings Exempt from Sales Tax

The Colorado Court of Appeals issued its opinion in Pioneer Natural Resources USA, Inc. v. Colorado Department of Revenue on Thursday, August 14, 2014.

Sales Tax—Pipelines—Fittings—Enterprise Zone—Natural Gas.

In this sales tax case, the district court concluded that the pipelines and fittings at issue, which are located in one of Colorado’s enterprise zones and are used to gather and deliver natural gas from plaintiff’s wells to its processing facilities, qualify for Colorado’s sales tax exemption because they “are in direct use in the manufacturing of natural gas,” as defined in CRS §§ 39-26-709 and 39-30-106. The Colorado Department of Revenue (DOR) appealed, contending that the district court erred in finding that plaintiff’s purchases qualify for this tax exemption.

The parties agreed that plaintiff’s wells and gas-gathering system are located within an enterprise zone. Under the enterprise zone sales and use tax exemption statute, purchases of “machinery or machine tools” in excess of $500 are exempt from sales tax if they are “used solely and exclusively in an enterprise zone in manufacturing tangible personal property, for sale or profit. . . .” Here, the pipelines are used to “move material from one direct production step to another in a continuous flow,” and the enterprise zone exemption statute considers both “extracting” and “processing” as manufacturing. Thus, plaintiff’s pipelines and fittings that move natural gas from the wells—a direct production step of extracting natural gas—to the processing facilities in a continuous flow qualify for Colorado’s sales tax exemption because they “are in direct use in the manufacturing of natural gas.” Therefore, the district court did not err in finding that plaintiff’s purchases qualified for Colorado’s sales tax exemption. The judgment was affirmed.

Summary and full case available here, courtesy of The Colorado Lawyer.

Colorado Adopts Tougher Air Rules for the Oil and Gas Industry—The First in the Nation

BillRitterColorado air quality control commissioners voted 8-1 on Sunday to pass tougher air pollution rules for the oil and gas industry. The rules are the first in the nation designed to detect and reduce methane emissions, a gas linked to climate change. The impetus for the change was the failure of Front Range air to meet federal health standards.

Trying to satisfy environmental needs with those of the oil and gas industry can by difficult, as evidenced by the objections of the Colorado Oil and Gas Association and the Colorado Petroleum Association. The rule changes did, though, have the support of leading oil and gas companies including Anadarko Petroleum, Noble Energy, and Encana.  The impact of these new rules could be tremendous for environmental lawyers and those practicing in the area of Natural Resources & Energy.

This Friday, Feb. 28, the CBA Environmental Law Section is co-sponsoring a program with Colorado Bar Association CLE, “Oil & Gas Development in Colorado: Balancing Energy and the Environment.” Will Allison, the director for the Air Pollution Division, Colorado Department of Public Health and Environment, will review the new pollution rules and the potential effects in Colorado. Bill Ritter, former governor and now director for the Center for the New Energy Economy, is the keynote speaker and will address the challenges of balancing energy production and new environmental regulation in Colorado.

Other energy and environmental experts are speaking at the program including leaders from the Colorado Oil & Gas Commission, the Colorado Department of Natural Resources, and Colorado energy companies and law firms.

Scott Clark, chair for the program and attorney with Burns, Figa, & Will said, “This program will provide a balanced and focused look at key issues raised by the explosion of oil and gas development in Colorado.”

CLE Program: Oil & Gas Development in Colorado – Balancing Energy and the Environment

This CLE presentation will take place on February 28, 2014. Click here to register for the live program, and click here to register for the webcast. You may also call (303) 860-0608 to register.

Can’t make the live program? Order the homestudy here — MP3 audio downloadVideo OnDemandCD homestudy

HB 14-1002: Creating a Natural Disaster Grant Fund to Repair Water Infrastructure

On January 8, 2014, Rep. Dave Young and Sen. Matt Jones introduced HB 14-1002: Concerning the Establishment of a Grant Program Under the “Colorado Water Quality Control Act” to Repair Water Infrastructure Impacted by a Natural Disaster, and, in Connection Therewith, Making an AppropriationThis summary is published here courtesy of the Colorado Bar Association’s e-Legislative Report.

The bill creates a natural disaster grant fund and directs the division of administration in the department of public health and environment (division) to award grants from the fund to local governments, including local governments accepting grants on behalf of and in coordination with not-for-profit public water systems, under rules promulgated by the water quality control commission for the planning, design, construction, improvement, renovation, or reconstruction of domestic wastewater treatment works and public drinking water systems that have been impacted, damaged, or destroyed in connection with a natural disaster. The division may only award grants to be used in counties for which the governor has declared a disaster emergency by executive order or proclamation under section 24-33.5-704, C.R.S.

The division is required to award grants for the 2014–15 fiscal year and, as needed, for the 2015–16 fiscal year, to eligible local governments that have domestic wastewater treatment works, public drinking water systems, or on-site wastewater treatment systems impacted, damaged, or destroyed in connection with the flood of September 2013.

The bill appropriates $12,000,000 to the fund. On Sept. 1, 2015, the state treasurer is directed to transfer any unencumbered moneys remaining in the fund to the nutrients grant fund. The bill is assigned to the Agriculture, Livestock, & Natural Resources Committee.

HB 13-1316: Requiring Colorado Oil and Gas Conservation Commission to Adopt Uniform Groundwater Sampling Rules

On April 18, 2013, Rep. Dickey Lee Hullinghorst introduced HB 13-1316 – Concerning the Colorado Oil and Gas Conservation Commission’s Adoption of Uniform Statewide Groundwater Sampling Rules. This summary is published here courtesy of the Colorado Bar Association’s e-Legislative Report.

The Colorado oil and gas conservation commission recently adopted rules that require oil and gas operators to conduct groundwater sampling but specify less rigorous standards for particular areas of the state. The bill requires the commission to adopt uniform statewide groundwater sampling rules that obligate operators to sample groundwater sources at specified intervals before and after drilling of a well.

On April 26 the Appropriations Committee amended the bill and sent it to the House for consideration on 2nd Reading.

Since this summary, the bill passed Second Reading in the House with amendments, and passed Third Reading in the House as well. It was introduced in the Senate and assigned to the State, Veterans, & Military Affairs Committee.

Colorado Court of Appeals: Colorado Governmental Immunity Act Does Not Provide Waiver for Unimproved Areas of State Park

The Colorado Court of Appeals issued its opinion in Burnett v. State of Colorado, Department of Natural Resources, Division of Parks and Outdoor Recreation on Thursday, March 28, 2013.

Negligence—Camping—Immunity—Waiver—Colorado Governmental Immunity Act—Public Facility—Injuries—Dangerous Conditions.

Sara Burnett appealed the trial court’s judgment dismissing her negligence claim against the Colorado Department of Natural Resources (CDNR). The judgment was affirmed.

Burnett was injured while camping in a designated campground in Cherry Creek State Park, which is operated by the CDNR, when she was struck by a falling tree branch while sleeping in her tent. Burnett contended that the trial court erred in determining that the CDNR did not waive immunity for her injuries under the Colorado Governmental Immunity Act (CGIA). Although the campsite and campground were public facilities under the CGIA, the tree itself was not a public facility and the state retained immunity for injuries resulting from branches falling from trees in unimproved parts of a state park. Because there is no waiver of immunity under the CGIA for dangerous conditions in an unimproved area within a state park, the trial court did not err in dismissing Burnett’s negligence claim.

Summary and full case available here.