Corp. v. Lembke

of the Colorado Supreme Court are available to the
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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 section

32-1-401(1)(a), C.R.S. (2019), of the Special District Act. The supreme court holds that to

include new territory in a special district through the procedure set out in the statute, all

owners of the surface property to be included must assent, and inclusion is only

appropriate if that surface property can be served by the district. The assent of the owners

or lessees of subsurface mineral rights is not required. Accordingly, the supreme court

affirms the decision of the division below and remands the case for consideration of any

outstanding questions.
 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, Colorado

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.

2
¶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 section 32-1-401(1)(a), C.R.S.

(2019), of the Special District Act.

¶2 We granted certiorari to review two questions concerning the statutory

construction of section 32-1-401(1)(a),1 but our answer to one obviates the need to

answer the other. We therefore consider only whether subsection 401(1)(a)

1 We granted certiorari to review the following issues:
1. Whether the court of appeals erred in concluding that, for
purposes of section 32-l-401(1)(a), C.R.S. (2019), only an owner,
and not a lessee, of a severed mineral estate qualifies as a “fee
owner.”
2. Whether section 32-l-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.

3
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.

Section 32-1-401 sets out the processes for “[i]nclusion of territory” within the

boundaries of a special district—i.e., an expansion of the surface area of the

district. Therefore, section 32-1-401(1)(a) requires the assent of all of the surface

property owners to an inclusion under that provision, and inclusion is only

appropriate if the surface property can be served by the district. Section

32-1-401(1)(a) does not require assent from owners of subsurface mineral estates

because those mineral estates, while they are real property, are not territory. Thus,

Lessees’ consent was not required for the inclusion of 70 Ranch in the special

district. We therefore affirm the holding of the court of appeals, albeit on other

grounds.

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

4
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 section 32-1-401(1)(b),

Lembke and 70 Ranch LLC published notice of the inclusion petition and

information about the public hearing on inclusion in a local newspaper. The

published notice included a legal description of the property; the place, time, and

date of the public hearing; the names and addresses of the petitioners; and notice

that anyone who opposed the inclusion of the territory into the special district

should appear at the hearing and should show cause in writing why the petition

should not be granted. See § 32-1-401(1)(b) (setting out the notice requirements for

this process).

¶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 section 32-1-1101(1)(a), C.R.S. (2019). See

§ 32-1-1101(1)(a) (giving special districts authority to impose ad valorem taxes on

all taxable property located within the district).

5
¶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) section 32-1-401(1)(a) requires the assent of “the fee

owner or owners of one hundred percent of any real property” to be included in a

special district. Because neither the owners of the severed mineral interests nor

Lessees had given their assent to inclusion within South Beebe, and because

mineral rights are “real property,” Lessees asserted that the inclusion of 70 Ranch

did not comply with the Special District Act. The district court rejected this

argument, concluding that only surface estate fee owners are statutorily required

to consent to inclusion under this provision of the Act because “a severed mineral

estate is not real property ‘capable of being served with facilities of the special

district’” and section 32-1-401(1)(a) only requires consent from owners of property

that can be served by the district. Order Den. Mot. Prelim. Inj., 17. The court

entered final judgment pursuant to C.R.C.P. 54(b) and 56(h) with regard to this

holding so that this question of statutory interpretation could be resolved on

appeal.

6
¶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 section 32-1-401(1)(a).3

II. Analysis

¶11 After setting forth the standard of review, we turn to the Special District Act,

sections 32-1-101 to -1807, C.R.S. (2019). Specifically, we look to subsection

401(1)(a) within the context of Part 4 of the Act to determine whether Lessees were

2 Separately, the division held that Lessees had established a reasonable likelihood
of success regarding their claim that South Beebe did not obtain proper approval
from the Adams County Board of Commissioners before materially changing its
service plan, and it vacated and remanded to the district court to make further
findings. Id. at ¶¶ 90, 125–26. This issue, however, is not before us.
3 We decline to address the constitutional claims Lessees raise in their briefs,
especially in light of the fact that we denied Lessees’ petition for certiorari review
as to their due process claim. Also, as the division noted, Lessees did not preserve
these constitutional issues below. Id. at ¶ 43.

7
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, section 32-1-401 addresses the “[i]nclusion of territory” encompassed by

a special district. Thus, the assent subsection 401(1)(a) requires is the assent of all

owners of surface property whose inclusion would expand the boundaries of a

special district, and inclusion is only appropriate if the surface property can be

served by the district. Accordingly, we agree with the district court’s entry of

summary judgment and affirm the decision of the court of appeals, though on

different grounds.

A. Applicable Law

1. Standard of Review

¶13 We review de novo a district court’s order deciding a question of law

pursuant to Rule 56(h). Coffman v. Williamson, 2015 CO 35, ¶ 12, 348 P.3d 929, 934.

“The summary judgment standard applies: an order is proper under Rule 56(h) ‘if

there is no genuine issue of any material fact necessary for the determination of

the question of law.’” Id. (quoting C.R.C.P. 56(h)); cf. People ex rel. Rein v. Meagher,

2020 CO 56, ¶ 19, 465 P.3d 554, 559 (noting that summary judgment is proper

under C.R.C.P. 56(c) when “there is no genuine issue as to any material fact” and

“the moving party is entitled to a judgment as a matter of law”).

8
¶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.” § 32-1-102(1), C.R.S. (2019). Moreover, the

legislature provided that, because the Act is “necessary to secure the public health,

safety, convenience, and welfare, [it] shall be liberally construed to effect its

purposes.” § 32-1-113, C.R.S. (2019); see also SDI, Inc. v. Pivotal Parker Commercial,

LLC, 2014 CO 80, ¶ 16, 339 P.3d 672, 676.

9
¶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 section 32-1-401 is also titled “Inclusion of

territory—procedure.” These titles alone make it clear that the General Assembly

enacted Part 4 of the Special District Act to create procedures for inclusion of

territory in a special district. Cf. In re Black Forest Fire/Rescue Prot. Dist., 85 P.3d 591,

593 (Colo. 2003) (“Section 32-1-501, et seq., C.R.S. 2002, sets forth the provisions for

exclusion of territory from a special district.”).

¶17 In addition to these titles, subsection 401(1)(a)—the subsection at the heart

of this dispute—references the “boundaries of a special district” and analogizes

the inclusion petition to a “conveyance of land”:

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.

§ 32-1-401(1)(a) (emphases added).

¶18 Similarly, subsection 401(1)(b), which sets out the notice and public hearing

requirements for including new territory within a special district, explains that the

failure of any other municipality or county to file an objection to the petition for

10
inclusion “shall be taken as an assent to the inclusion of the area described in the

notice.” § 32-1-401(1)(b) (emphasis added).

¶19 Subsection 401(2), which provides alternative methods for inclusion of new

territory in a special district, also repeatedly uses the terms “boundaries” and

“area.” For example, one method by which “the boundaries of a special district may

be altered” pursuant to subsection 401(2) requires a certain number “of the

taxpaying electors of an area which contains twenty-five thousand or more square

feet of land [to file] a petition with the board in writing requesting that such area be

included within the special district.” § 32-1-401(2)(a)(I) (emphases added).

Another provides that the board of a special district may adopt a resolution to

include the “specifically described area; but no single tract or parcel of property

constituting more than fifty percent of the total area to be included may be included in

any special district without the consent of the owner thereof.” § 32-1-401(2)(a)(II)

(emphases added).

¶20 The use of these terms—territory, area, boundaries, tract, parcel, and square

feet—demonstrates that section 32-1-401 sets forth procedures for expanding the

surface area of a special district. Black’s Law Dictionary (11th ed. 2019) defines

territory as “[a] geographical area included within a particular government’s

jurisdiction; the portion of the earth’s surface that is in a state’s exclusive possession

and control.” (Emphases added.) Merriam-Webster Dictionary similarly defines

11
territory as “a geographic area belonging to or under the jurisdiction of a

governmental authority.” https://www.merriam-webster.com/dictionary/terri

tory; [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 subsection 401(1)(a) is therefore the assent of all owners of surface

property whose inclusion will expand the boundaries of the district.

¶21 The courts below reached the same conclusion. However, in construing

section 32-1-401(1)(a), they focused on the meaning of the phrase “real property

capable of being served” in section 32-1-401(1)(a) and concluded that the reason

the consent of the owners (or lessees) of the mineral estates was not required was

that the mineral estates could not be “served” by the special district. In doing so,

both courts below—as well as the parties—lost sight of the language and purpose

of Part 4 of the Special District Act. Of course, it is also true that the surface

property is generally the property that can be served by the facilities of a special

district. See Schlarb v. N. Suburban Sanitation Dist., 357 P.2d 647, 648 (Colo. 1960)

12
(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 section

32-1-401, the Special District Act provides that “all taxable property” within those

boundaries is subject to ad valorem taxation by the district. § 32-1-1101(1)(a).

Section 32-1-1101(1)(a) gives special districts the power “[t]o levy and collect ad

valorem taxes on and against all taxable property within the special district.” This

includes oil and gas leaseholds if the wellheads are located within the special

district’s boundaries. See Kinder Morgan CO2 Co. v. Montezuma Cty. Bd. of Comm’rs,

2017 CO 72, ¶ 4, 396 P.3d 657, 660 (citing § 39-7-102, C.R.S. (2019); Colo. Const. art.

X, § 3(1)(b)) (“Oil and gas leaseholds are subject to taxation as real property.”); see

also § 39-7-101(1), C.R.S. (2019) (“[I]rrespective of the physical location of the

producing leaseholds or lands, the point of taxation is the same as the point of

valuation, which is the wellhead.”). And, of course, it is this aspect of the Special

District Act to which Lessees most object, but this section of the Act has not been

challenged here and we therefore do not opine on it.

13
¶23 Lessees and amicus curiae, the Colorado Alliance of Mineral and Royalty

Owners (“CAMRO”), suggest that our construction of the statute allows for

surface estate owners to include subsurface mineral property in a special district

and for the district to tax that property without any notice to the subsurface

mineral owners or leaseholders and without giving them an opportunity to object.

We decline to address Lessees’ due process argument as it is not properly before

us. But we also note that subsection 401(1)(b) does set out notice and public hearing

requirements for expanding a special district by the consent of the surface property

owners. It requires “publication of notice of the filing of such petition, the place,

time, and date of [the public board] meeting, the names and addresses of the

petitioners, and notice that all persons interested shall appear at such time and

place and show cause in writing why the petition should not be granted.”

§ 32-1-401(1)(b). Thus, owners of subsurface mineral estates whose wellheads are

located on a surface estate will receive notice in the form of a newspaper

publication and will be given an opportunity to object to the expansion of the

boundaries of a special district when the surface estate owners petition for

inclusion in a special district.

B. Application

¶24 Here, Lembke and 70 Ranch LLC’s inclusion petition satisfied the

requirements of section 32-1-401. All of the surface estate owners of 70 Ranch

14
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 section 32-1-401(1)(b). Neither the consent of the

owners nor that of the lessees of subsurface mineral rights was required for

inclusion of 70 Ranch within the South Beebe special district. Accordingly, the

district court properly entered summary judgment against Lessees as to their

section 32-1-401(1)(a) claim, and the division properly affirmed the order.

¶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

15
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 section 32-1-401(1)(a), all of the owners of the surface property to be included

must assent, and inclusion is only appropriate if that surface property can be

served by the district. The assent of the owners or lessees of subsurface mineral

estates underlying that property is not required. We therefore affirm the decision

of the court of appeals and remand the case for consideration of any outstanding

questions.

JUSTICE GABRIEL dissents, and JUSTICE BOATRIGHT and JUSTICE
SAMOUR join in the dissent.

16
JUSTICE GABRIEL, dissenting.

¶27 The majority concludes that under section 32-1-401(1)(a), C.R.S. (2019), the

consent of petitioners Bill Barrett Corporation, Bonanza Creek Energy, Inc., and

Noble Energy, Inc. (“Lessees”) was not required for the inclusion of a property

known as 70 Ranch in the South Beebe Draw Metropolitan District (the “District”).

Maj. op. ¶ 3. In reaching this conclusion, the majority purports to be answering

the second question on which we granted certiorari, but in my view, the majority

misinterprets that question. The question does not ask us to decide whether the

surface owner’s real property may be joined into a special district without notice to

and the consent of those with interests in subsurface severed mineral estates. No

one contests that point. The question asks us to consider whether the subsurface

estates may be joined into a special taxing district without notice and consent (i.e.,

the reference to “real property” in the second question on which we granted

certiorari is to the subsurface interests, not the surface interests). The majority,

however, does not answer this question. Rather, answering a question of its own

derivation, it concludes that the owners of 70 Ranch could, by joining their own

surface interests into the District, effectively join the interests of the owners of the

severed mineral interests, thereby subjecting those interests to taxation by the

District.

1
¶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

section 32-1-401(1)(a). Last, I address the second issue on which we granted

certiorari, and I conclude that the division erroneously construed section

32-1-401(1)(a) to permit a fee owner to join into a special taxing district, without

notice or consent, the interests of either a non-fee owner or of certain other

property owners whose property interests are not capable of being served by the

facilities of a special district merely by filing a petition.

2
 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,

3
whether section 32-1-401(1)(a) permits the inclusion of a surface owner’s real

property into a special taxing district without notice to or consent of owners of

subsurface severed mineral interests, such that when the interest of the surface

owner is included in a special district, the subsurface severed mineral estate is

likewise included in the district and subject to taxation. This, however, is not an

issue on which the division below opined, and, in my view, the parties were not

given a full and fair opportunity to brief this question.

¶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

4
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 section 32-1-401(1)(a). I disagree.

¶38 Section 32-1-401(1)(a) provides:

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
5
 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 who hold a fee simple

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absolute, or “[a]n estate of indefinite or potentially infinite duration.” Fee Simple

Absolute, Black’s Law Dictionary (11th ed. 2019).

¶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 article II, section 14 of the Colorado Constitution and under

section 38-1-102(3), C.R.S. (2019). We concluded that the lessees could not do so

because, among other things, giving the lessees such condemnation powers

“creates the possibility that the [property owner whose land was to be condemned

for purposes of the private right-of-way] will be subjected repeatedly to the

disruptive effect and expense of litigation as successive lessees attempt to secure a

temporary right-of-way.” Coquina Oil, 643 P.2d at 522. Condemnation of a

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right-of-way by a fee owner of a landlocked estate, in contrast, “does not create

the same potential for a multiplicity of lawsuits. If the fee owner condemns the

right-of-way, the taking is permanent and the appropriate compensation for the

interests condemned is established in one proceeding.” Id.

¶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 section

32-1-401(1)(a) could result in a succession of mineral lessees petitioning to be

included in a special district, thereby creating potential instability and uncertainty

in the organization and administration of that district. Absent an express

indication of such an intent, I am unwilling to presume that this is what the

legislature intended.

¶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 section 32-1-401(1)(a), is deemed to include lessees of severed mineral estates

holding fee simple determinable interests, then deciding whether such owners are

“fee owners” within the meaning of the statute could require a lengthy series of

steps. For example, one might be required to pull the title (assuming the lease at

issue is even recorded), review the lease to decide whether it intended to grant a

fee simple determinable interest (as opposed to a mere leasehold), see whether the

lease contains a reverter provision, interpret that provision, and, possibly, confer

8
with the lessor and lessee to decide whether the reverter provision has been

triggered. Given that section 32-1-401(1)(a) appears to reflect a legislative goal of

establishing a simple and expeditious process for certain property owners to

include their properties in a special district, I am unwilling, without a clearer

indication of legislative intent, to presume that the legislature intended the

complex process that Lessees’ position could necessitate. Cf. §§ 32-1-102(2), (4),

C.R.S. (2019) (providing that the procedures contained in part 2 of the Special

District Act were necessary for the “coordinated and orderly creation of special

districts and for the logical extension of special district services throughout the

state,” and noting that “it is the policy of this state to provide for and encourage

the consolidation of special districts and to provide the means therefor by simple

procedures”).

¶45 For these reasons, I would conclude that a lessee of a mineral estate is not a

“fee owner” for purposes of section 32-1-401(1)(a).

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 section 32-1-401(1)(a), the owners of

70 Ranch could, by petition, join those severed mineral estates to the special

district without giving notice to or obtaining the consent of the owners of those

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interests. Bill Barrett Corp., ¶¶ 47, 49. I agree that the division misconstrued the

statute in this regard.

¶47 As noted above, section 32-1-401(1)(a) provides, in pertinent part, that a

special district’s boundaries “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 a written

petition requesting such inclusion. The statute further provides that this petition

shall state, among other things, “that assent to the inclusion of such property in

the special district is given by the fee owner or owners thereof.” Id.

¶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

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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 section

32-1-401(1)(a).

¶51 Unlike the division, I perceive nothing in section 32-1-401(1)(a) that would

allow a fee owner of a surface estate to petition to include a third-party’s property

interest in a special district. Nor do I read that statute as addressing how and

when consent must be sought from third parties.

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¶52 In my view, section 32-1-401(1)(a) plainly states that the fee owner or owners

of one hundred percent of any real property capable of being served with the

facilities of a special district can petition to have their own properties included

within the district. Thus, the statute speaks of such owners’ filing a petition in

writing requesting that “such property” (i.e., their own property that is the subject

of their petitions) be included. § 32-1-401(1)(a). The statute then goes on to require

that the owners’ petition state that “assent to the inclusion of such property” is

given by the petitioning owners. Id. To me, this means merely that the petitioning

owners must verify in their petitions that they are consenting to the inclusion of

their own properties, not the properties of others, in the special district.

¶53 In short, I understand section 32-1-401(1)(a) as establishing a simple and

expeditious means by which certain real property owners can include their own

properties, not the properties of others, in a special district. Indeed, a different

subsection—subsection 32-1-401(2)—provides the means by which certain real

property owners may petition for the inclusion of someone else’s property in a

special district.

¶54 To conclude otherwise and to allow one property owner to include the

property of another within a special district—without notice to or consent of that

owner and when that owner’s property is not capable of being served by the

facilities of the district—would, as Lessees contend, implicate significant due

12
process concerns. This is because the effect of such inclusion would be to tax one

property owner in order to fund facilities to be provided to other property owners.

See Landmark Towers Ass’n v. UMB Bank, N.A., 2018 COA 100, ¶ 28, 436 P.3d 1139,

1147 (concluding that the inclusion of certain properties in a special district for the

sole purpose of taxing those properties to fund improvements on completely

separate properties violated the included property owners’ rights to due process).

¶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 section 32-1-401(1)(a) did not permit

the owners of 70 Ranch to join, by petition, Lessees’ real property interests into the

District, without notice or consent, merely because either Lessees were not fee

owners or their interests were not capable of being served by the District. To the

13
contrary, I believe that the statute speaks only to the inclusion of the 70 Ranch

owners’ own property interests here.

¶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

14
“fee owner” within the meaning of section 32-1-401(1)(a) and (2) that statute did

not permit the owners of 70 Ranch to join, by petition, Lessees’ real property

interests into the District, without notice or consent, merely because either the

Lessees were not fee owners or their interests were not capable of being served by

the District. I would leave for a case in which the question is properly presented

the issue of whether a special district may tax a severed mineral estate lying

beneath a surface estate that is included within, and that is within the geographical

boundaries of, the special district.

¶59 Accordingly, I respectfully dissent.

I am authorized to state that JUSTICE BOATRIGHT and JUSTICE
SAMOUR join in this dissent.

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