BILL BARRETT CORPORATION; BONANZA CREEK ENERGY, INC.; and NOBLE ENERGY, INC. v. ROBERT LEMBKE, 70 RANCH LLC, SOUTH BEEBE DRAW METROPOLITAN DISTRICT f/k/a BROMLEY PARK METROPOLITAN DISTRICT NO. 1, and UNITED WATER AND SANITATION DISTRICT.
No. 18SC760
The Supreme Court of the State of Colorado
September 14, 2020
2020 CO 73
JUSTICE HART delivered the Opinion of the Court. JUSTICE GABRIEL dissents, and JUSTICE BOATRIGHT and JUSTICE SAMOUR join in the dissent.
Certiorari to the Colorado Court of Appeals, Court of Appeals Case No. 17CA1616
of the Colorado Supreme Court are available to the public and can be accessed through the Judicial Branch‘s homepage at http://www.courts.state.co.us. Opinions are also posted on the Colorado Bar Association‘s homepage at http://www.cobar.org.
ADVANCE SHEET HEADNOTE
September 14, 2020
2020 CO 73
No. 18SC760, Barrett Corp. v. Lembke - Statutory Interpretation - Special Districts - Land Use.
In this opinion, the supreme court determines the proper interpretation of
The Supreme Court of the State of Colorado
2 East 14th Avenue • Denver, Colorado 80203
2020 CO 73
Supreme Court Case No. 18SC760
Certiorari to the Colorado Court of Appeals
Court of Appeals Case No. 17CA1616
Petitioners:
Bill Barrett Corporation; Bonanza Creek Energy, Inc.; and Noble Energy, Inc.,
v.
Respondents:
Robert Lembke, 70 Ranch LLC, South Beebe Draw Metropolitan District f/k/a Bromley Park Metropolitan District No. 1, and United Water and Sanitation District.
Judgment Affirmed
en banc
September 14, 2020
Attorneys for Petitioners Bill Barrett Corporation and Bonanza Creek Energy, Inc.:
Davis Graham & Stubbs LLP
R. Kirk Mueller
Emily Wasserman
Denver, Colorado
Attorneys for Petitioner Noble Energy, Inc.:
Hogan Lovells US LLP
Elizabeth H. Titus
Denver, Colorado
Attorneys for Respondents Robert Lembke and 70 Ranch LLC:
Hamre, Rodriguez, Ostrander & Dingess, P.C.
Donald M. Ostrander
Richard F. Rodriguez
Paul C. Rufien
Joel M. Spector
Denver,
Attorneys for Respondent South Beebe Draw Metropolitan District:
Brown Dunning Walker PC
Douglas W. Brown
David C. Walker
Drew P. Fein
Denver, Colorado
Attorneys for Respondent United Water and Sanitation District:
Hamre, Rodriguez, Ostrander & Dingess, P.C.
Donald M. Ostrander
Richard F. Rodriguez
Paul C. Rufien
Joel M. Spector
Denver, Colorado
Attorneys for Amicus Curiae Colorado Alliance of Mineral and Royalty Owners:
Visani Bargell LLC
Cynthia L. Bargell
Dillon, Colorado
Attorneys for Amicus Curiae Special District Association of Colorado:
Butler Snow LLP
Martina Hinojosa
Dee Wisor
Denver, Colorado
JUSTICE HART delivered the Opinion of the Court.
JUSTICE GABRIEL dissents, and JUSTICE BOATRIGHT and JUSTICE SAMOUR join in the dissent.
¶ 1 In 2015, the owners of a 13,000-acre tract of land known as 70 Ranch successfully petitioned to include their tract in a special district. After 70 Ranch was incorporated into the district, the district began taxing the leaseholders of subsurface mineral rights - Bill Barrett Corporation, Bonanza Creek Energy, Inc., and Noble Energy, Inc. (collectively “Lessees“) - for the oil and gas they produced at wellheads located on 70 Ranch. Lessees, however, objected to being taxed. They argued that the mineral interests they leased could not be included in the special district because neither they nor the owners of the mineral estates consented to inclusion, which they asserted was required by
¶ 2 We granted certiorari to review two questions concerning the statutory construction of
permits the inclusion of real property covered by the statute into a special taxing district when (1) the inclusion occurred without notice to or consent by the property‘s owners and (2) that property is not capable of being served by the district.
¶ 3 The answer to this question is “no,” but that does not save Lessees here.
I. Facts and Procedural History
¶ 4 Robert Lembke and 70 Ranch LLC collectively own the entirety of the 13,000-acre tract of land known as 70 Ranch, which is located in unincorporated Weld County. The subsurface mineral estates underlying 70 Ranch have been severed from the surface estate and are owned in part by 70 Ranch LLC and in part
by various nonparties to this case. These mineral interests are leased by Lessees, who produce oil and gas at wellheads located on 70 Ranch.
¶ 5 In 2015, Lembke and 70 Ranch LLC petitioned to include 70 Ranch within the boundaries of South Beebe Draw Metropolitan District (“South Beebe“), a special district that provides sanitation, sewer, water, and storm drainage infrastructure in Adams and Weld counties. As required by
¶ 6 In April 2015, after the public hearing, South Beebe approved the inclusion petition. Thereafter, South Beebe began imposing ad valorem taxes on Lessees’ oil and gas production pursuant to
¶ 7 Lessees sued, and the district court issued a temporary restraining order enjoining disbursement of taxes already collected by South Beebe and collection of any further taxes.
¶ 8 Lessees then moved for a preliminary injunction. They argued, as relevant here, that (1) lessees of mineral estates should be considered fee owners of those real property interests, and (2)
¶ 9 A division of the court of appeals affirmed in relevant part. Barrett Corp. v. Lembke, 2018 COA 134, ¶¶ 49, 125, P.3d __. Like the trial court, the division concluded that the owners of the severed mineral estate underlying 70 Ranch did not have to consent to its inclusion in South Beebe because “a mineral estate . . . is not ‘real property capable of being served with facilities of the special district.‘” Id. at ¶ 47.2
¶ 10 Lessees petitioned this court for certiorari, and we granted the petition in order to determine the proper construction of
II. Analysis
¶ 11 After setting forth the standard of review, we turn to the Special District Act,
required to assent to the inclusion of 70 Ranch in South Beebe. We conclude that the statute does not require their assent.
¶ 12 The interpretive question before us is straightforward. By its plain language,
A. Applicable Law
1. Standard of Review
¶ 13 We review de novo a district court‘s order deciding a question of law pursuant to
¶ 14 Questions of statutory interpretation are also subject to de novo review. Meagher, ¶ 22, 465 P.3d at 559. Our primary goal when interpreting a statute is “to effectuate the legislature‘s intent.” Blooming Terrace No. 1, LLC v. KH Blake St., LLC, 2019 CO 58, ¶ 11, 444 P.3d 749, 752. To accomplish this “we look to the entire statutory scheme in order to give consistent, harmonious, and sensible effect to all of its parts, and we apply words and phrases in accordance with their plain and ordinary meanings.” Id.; see also McCulley v. People, 2020 CO 40, ¶ 10, 463 P.3d 254, 257 (“We must interpret the statute as a whole and in the context of the entire statutory scheme . . . .“). “If the statutory language is clear and unambiguous, we apply it as written - venturing no further.” Blooming Terrace No. 1, LLC, ¶ 11, 444 P.3d at 752.
2. The Special District Act
¶ 15 In enacting the Special District Act, the General Assembly intended that special districts would “serve a public use” and “promote the health, safety, prosperity, security, and general welfare of the inhabitants of such districts and of the people of the state of Colorado.”
¶ 16 The plain language of Part 4 of the Special District Act demonstrates that it concerns the expansion of the surface area of a special district. At the outset, Part 4 is titled “Inclusion of Territory,” and
¶ 17 In addition to these titles,
The boundaries of a special district may be altered by the inclusion of additional real property by the fee owner or owners of one hundred percent of any real property capable of being served with facilities of the special district filing with the board a petition in writing requesting that such property be included in the special district. The petition shall set forth a legal description of the property, shall state that assent to the inclusion of such property in the special district is given by the fee owner or owners thereof, and shall be acknowledged by the fee owner or owners in the same manner as required for conveyance of land.
¶ 18 Similarly,
inclusion “shall be taken as an assent to the inclusion of the area described in the notice.”
¶ 20 The use of these terms - territory, area, boundaries, tract, parcel, and square feet - demonstrates that
territory as “a geographic area belonging to or under the jurisdiction of a governmental authority.” https://www.merriam-webster.com/dictionary/territory; [https://perma.cc/9RTE-8WHU] (emphasis added). And it defines area as “the surface included within a set of lines” and “a particular extent of space or surface or one serving a special function: such as . . . a geographic region.” https://www.merriam-webster.com/dictionary/area; [https://perma.cc/S372-WHNQ] (emphases added). The language of Part 4 of the Special District Act could not be more plain - it establishes mechanisms for the expansion of the surface territory included within and served by a special district. The assent required in
¶ 21 The courts below reached the same conclusion. However, in construing
(noting that the purpose of special districts is to benefit the landowners within a district). But, even if the subsurface estates could in some way be served by the districts, they are not the “real property” contemplated by the procedural mechanism that the Special District Act creates for “inclusion of territory” within a special district.
¶ 22 After a special district‘s boundaries are expanded in conformity with
B. Application
¶ 24 Here, Lembke and 70 Ranch LLC‘s inclusion petition satisfied the requirements of
petitioned for inclusion within South Beebe, and the surface property of 70 Ranch could be served by the district. The surface estate owners properly published notice of the inclusion petition and public hearing in a local newspaper, following the notice process as required by
¶ 25 Despite the plain language of the statute, it is apparent from arguments made by Lessees and CAMRO that the oil and gas industry does not like the fact that the Special District Act subjects them to taxation by special districts without their consent to inclusion within those districts. On rebuttal at oral argument, Lessees conceded that the statute has been interpreted as we read it today for decades. But they asserted that, because of the number of special districts in Colorado and the booming oil and gas industry, the Act should now be interpreted differently. Similarly, in its amicus brief, CAMRO emphasized the “phenomenal growth” of special districts in Colorado and their reliance on oil and gas tax revenue as a reason to revise longstanding interpretation of the Special District Act. CAMRO Br. 15-17. These policy concerns, however, are better directed to
the General Assembly than to this court. We are not free to ignore the plain language of the statute as written.
III. Conclusion
¶ 26 To include new territory in a special district through the procedure set out in
JUSTICE GABRIEL dissents, and JUSTICE BOATRIGHT and JUSTICE SAMOUR join in the dissent.
JUSTICE GABRIEL, dissenting.
¶ 27 The majority concludes that under
¶ 28 Because the party presentation principle requires us to address the issues that the parties have presented to us and not one of our own derivation, I would answer only the questions on which we granted certiorari, reverse the judgment of the division below, and save the issue that the majority chooses to address for a case in which it is properly presented.
¶ 29 Accordingly, I respectfully dissent.
I. Analysis
¶ 30 I agree with the majority‘s recitation of the factual and procedural background of this case, and I need not repeat that background information here. I thus begin by discussing the party presentation principle on which my view of this case is premised. Next, I address the standard of review and the principles of statutory construction that apply here. I then turn to the first issue on which we granted certiorari, and I conclude that the division correctly determined that a lessee of a severed mineral interest is not a “fee owner” within the meaning of
A. The Party Presentation Principle
¶ 31 In our adversarial system of justice, we follow the party presentation principle, which relies on the parties to frame the issues to be decided and assigns to the courts the role of neutral arbiter of the matters that the parties present. United States v. Sineneng-Smith, 140 S. Ct. 1575, 1579 (2020); Lucero v. People, 2017 CO 49, ¶ 26, 394 P.3d 1128, 1134. This principle reflects the fact that “[o]ur adversary system is designed around the premise that the parties know what is best for them, and are responsible for advancing the facts and arguments entitling them to relief.” Greenlaw v. United States, 554 U.S. 237, 244 (2008) (quoting Castro v. United States, 540 U.S. 375, 386 (2003) (Scalia, J., concurring in part and concurring in the judgment)). Thus, in deciding a case, courts should not look for wrongs to right but should decide only the questions presented by the parties. Sineneng-Smith, 140 S. Ct. at 1579.
¶ 32 Here, we granted certiorari on two precise legal questions that, although reframed, fairly captured the issues as Lessees had articulated them in their petition for a writ of certiorari. Moreover, I believe that these issues were well tailored to address two issues of statutory construction that the division below addressed as matters of first impression and in a published opinion.
¶ 33 Notwithstanding the foregoing, the majority does not address either of these questions. Instead, it apparently asks and answers its own question, namely,
whether
¶ 34 Accordingly, I do not believe that the issue on which the majority rules today is properly before us, nor do I believe that it affords us a basis on which to affirm the judgment below. Rather, I would address only the issues on which we granted certiorari. I turn to those issues next, beginning with the pertinent standard of review and principles of statutory construction.
B. Standard of Review and Principles of Statutory Construction
¶ 35 We review questions of statutory interpretation de novo. Dep‘t of Revenue v. Agilent Techs., Inc., 2019 CO 41, ¶ 16, 441 P.3d 1012, 1016. In construing a statute, our goal is to effectuate the legislature‘s intent. Id. In seeking to do so, “we look to the entire statutory scheme in order to give consistent, harmonious, and sensible effect to all of its parts, and we apply words and phrases in accordance with their plain and ordinary meanings.” UMB Bank, N.A. v. Landmark Towers Ass‘n, 2017 CO 107, ¶ 22, 408 P.3d 836, 840. We must avoid constructions that would render any words or phrases superfluous or that would lead to illogical or absurd results. Agilent Techs., Inc., ¶ 16, 441 P.3d at 1016. In addition, we must respect the legislature‘s choice of language, and we will not add words to a statute or subtract words from it. Id.
¶ 36 If the statutory language is clear, then we apply it as written and need not resort to other rules of statutory construction. Id. If, however, the statutory language is ambiguous, then we may examine the legislative intent, the circumstances surrounding the statute‘s adoption, and the possible consequences of different interpretations to discern the proper construction of that statute. Colo. Oil & Gas Conservation Comm‘n v. Martinez, 2019 CO 3, ¶ 19, 433 P.3d 22, 28. A statute is ambiguous when it is reasonably susceptible of multiple interpretations. Id.
C. “Fee Owner” Under Section 32-1-401(1)(a)
¶ 37 Lessees contend that the division below erred in concluding that a mineral lessee is not a fee owner for purposes of
¶ 38
The boundaries of a special district may be altered by the inclusion of additional real property by the fee owner or owners of one hundred percent of any real property capable of being served with facilities of the special district filing with the board a petition in writing requesting that such property be included in the special district. The petition shall set forth a legal description of the property, shall state that assent to the inclusion of such property in the special district is given by the fee owner or owners thereof, and shall be acknowledged by the fee owner or owners in the same manner as required for conveyance of land.
¶ 39 Lessees assert that the phrase “fee owner” in the first sentence of this statute refers to any owner of a fee interest in property, including owners of interests in fee simple determinable, which Lessees maintain describes their interests. A fee simple determinable is typically defined as “[a]n estate that will automatically end and revert to the grantor if some specified event occurs[.]” Fee Simple Determinable, Black‘s Law Dictionary (11th ed. 2019). And, as Lessees assert, although we have not opined on the issue, a number of other courts have concluded that an oil and gas lease conveys such an interest. See, e.g., Somont Oil Co. v. A & G Drilling, Inc., 49 P.3d 598, 604 (Mont. 2002) (“[O]il and gas leases transfer to the lessee a fee simple determinable estate with the lessor retaining a possibility of reverter.“); Maralex Res., Inc. v. Gilbreath, 76 P.3d 626, 630 (N.M. 2003) (“The typical oil and gas lease grants the lessee a fee simple determinable interest in the subsurface minerals within a designated area.“); Anadarko Petrol. Corp. v. Thompson, 94 S.W.3d 550, 554 (Tex. 2002) (“A Texas mineral lease grants a fee simple determinable to the lessee.“).
¶ 40 Respondents Robert Lembke, 70 Ranch LLC, the District, and United Water and Sanitation District, in contrast, contend that by using the phrase “fee owner,” the legislature intended to cover only those owners
¶ 41 In my view, the phrase “fee owner” is reasonably susceptible of both of these interpretations. Accordingly, I believe that the phrase is ambiguous, and thus I turn to other tools of construction. Colo. Oil & Gas Conservation Comm‘n, ¶ 19, 433 P.3d at 28. Doing so persuades me that for purposes here, “fee owner” does not subsume lessees of severed mineral interests. I reach this conclusion for two reasons.
¶ 42 First, like the division below, see Bill Barrett Corp. v. Lembke, 2018 COA 134, ¶¶ 33-38, ___ P.3d ___, I agree that the rationale in Coquina Oil Corp. v. Harry Kourlis Ranch, 643 P.2d 519, 522 (Colo. 1982), applies here. In Coquina Oil, 643 P.2d at 520-23, we considered whether two federal oil and gas lessees could assert the power to condemn private property for private use (there, a private way of necessity) under
¶ 43 Here, as in Coquina Oil, because Lessees’ interest is not necessarily of unlimited duration, treating a lessee as a fee owner for purposes of
¶ 44 Second, I am persuaded by the position taken at oral argument by counsel for Lembke and 70 Ranch LLC that if the phrase “fee owner,” as that phrase is used in
¶ 45 For these reasons, I would conclude that a lessee of a mineral estate is not a “fee owner” for purposes of
D. Process For Including Real Property Into A Special District
¶ 46 Lessees further assert that the division erred in concluding that, because the severed mineral estates at issue are not “real property capable of being served with facilities of the special district” under
¶ 47 As noted above,
¶ 48 The division began its analysis of these provisions by opining that “capable of being served with facilities of the special district” modifies “fee owner or owners of one hundred percent of any real property” and thus tells special districts which owners must petition. Bill Barrett Corp., ¶ 41. I agree with that determination.
¶ 49 The division went on to state, however, that the phrase “capable of being served with facilities of the special district” does not limit what property may be included, and because a severed mineral estate is not property capable of being served with facilities of the special district, owners of such estates need not petition for inclusion, or consent to being included, in the district. Id. at ¶¶ 41, 47. From this premise, the division opined that the failure of the 70 Ranch owners to show in their petition for inclusion the consent of all severed mineral estate owners did not invalidate 70 Ranch‘s inclusion within the boundaries of the District here and did not invalidate the District‘s taxing authority. Id. at ¶ 49. The division thus affirmed the district court‘s grant of summary judgment for respondents, in which that court had concluded that the severed mineral estates under 70 Ranch could be included within the District, notwithstanding the fact that the owners and lessees of those estates did not petition for or consent to inclusion. Id. In addition, the division determined that the lack of consent of the mineral estate owners did not preclude the District from taxing Lessees. Id. at ¶ 23.
¶ 50 In reaching these conclusions, the division appears to have determined that a fee owner can join to a special district the interests of either a non-fee owner or of certain other real property owners whose properties are not capable of being served by the facilities of the district, without notice or consent, merely by filing a petition. With respect, I do not agree with that construction of
¶ 51 Unlike the division, I perceive nothing in
¶ 52 In my view,
¶ 53 In short, I understand
¶ 54 To conclude otherwise and to allow one property owner to include the property of
¶ 55 In this regard, I am not convinced by the 70 Ranch owners’ assertion (which the majority implicitly accepts, see maj. op. ¶ 23) that Lessees’ due process rights were protected because the owners provided appropriate notice by publication. As the owners conceded at oral argument, they gave notice of their petition to include their own property within the District. Their petition said nothing about including Lessees’ property in the District. Accordingly, even if Lessees were aware of the 70 Ranch owners’ notice by publication, I do not believe that this notice necessarily apprised Lessees that their own property interests were at issue.
¶ 56 For these reasons, answering the second question on which we granted certiorari in this case, I would conclude that
¶ 57 The question thus becomes whether, once 70 Ranch is included in the District, the District has the authority to impose ad valorem taxes on Lessees’ severed mineral interests, which lie beneath 70 Ranch and are therefore within the District‘s geographic boundaries. This is an interesting question and one that is of substantial consequence to all of the parties now before us (and, more generally, to all persons and entities holding interests in severed mineral estates and to special districts throughout Colorado). This also seems to be the question that the majority ultimately answers in this case, although it does not say so directly and suggests that it is not opining on the issue. Compare maj. op. ¶¶ 25 with id. at ¶ 22. But the division below did not address this question, Lessees’ petition for a writ of certiorari did not ask us to consider it, we did not grant certiorari on it, and no party was given a full and fair opportunity to brief or argue it. Accordingly, I would leave this admittedly significant issue for another day, when the question is properly before us and the parties have had a full and fair opportunity to address it.
II. Conclusion
¶ 58 For these reasons, addressing the two questions on which we granted certiorari, I would conclude that (1) a lessee of a severed mineral estate is not a “fee owner” within the meaning of
¶ 59 Accordingly, I respectfully dissent.
I am authorized to state that JUSTICE BOATRIGHT and JUSTICE SAMOUR join in this dissent.
Notes
- Whether the court of appeals erred in concluding that, for purposes of section 32-1-401(1)(a), C.R.S. (2019), only an owner, and not a lessee, of a severed mineral estate qualifies as a “fee owner.”
- Whether section 32-1-401(1)(a), C.R.S. (2019), permits the inclusion of real property into a special taxing district, when (1) the inclusion occurred without notice to or consent by the property‘s owners and (2) that property is not capable of being served by the district.