CO2 Committee v. Montezuma County

The summaries of the Colorado Court of Appeals published opinions
constitute no part of the opinion of the division but have been prepared by
the division for the convenience of the reader. The summaries may not be
cited or relied upon as they are not the official language of the division.
Any discrepancy between the language in the summary and in the opinion
should be resolved in favor of the language in the opinion.
SUMMARY
March 18, 2021
2021COA36
No. 19CA1798, CO2 Committee v. Montezuma County — Energy
and Environment — Oil and Gas; Taxation — Property Tax —
Valuation of Oil and Gas Leaseholds and Lands — Valuation for
Assessment; Jurisdiction of Courts — Standing
In this oil and gas leasehold tax case, a division of the court of
appeals considers whether a nonoperating fractional interest owner
in an oil and gas unit, who pays real property taxes on its leasehold
interest, has standing to claim that its due process rights were
violated when it did not receive individual notice of or an
opportunity to challenge a retroactive assessment and increased tax
liability. The division concludes, as a matter of first impression,
that a nonoperating fractional interest owner who has been denied
the panoply of rights afforded a taxpayer under the governing
statutes and guidelines — including to receive notice of and to
protest a retroactive assessment or to seek an abatement of a
retroactively increased tax — has standing to claim a violation of
those rights. The division reverses the district court’s order
dismissing the complaint for lack of standing.
COLORADO COURT OF APPEALS 2021COA36
Court of Appeals No. 19CA1798
Montezuma County District Court No. 18CV30100
Honorable Todd Jay Plewe, Judge
CO2 Committee, Inc.,
Plaintiff-Appellant,
v.
Montezuma County, Colorado; Montezuma County Board of County
Commissioners; Montezuma County Board of Equalization; Montezuma County
Assessor; and Montezuma County Treasurer,
Defendants-Appellees.
JUDGMENT REVERSED AND CASE
REMANDED WITH DIRECTIONS
Division II
Opinion by JUDGE BROWN
Román and Welling, JJ., concur
Announced March 18, 2021
Cogswell Law Offices, John M. Cogswell, Buena Vista, Colorado, for Plaintiff-
Appellant
Dufford, Waldeck, Milburn & Krohn, L.L.P., Nathan A. Keever, Jon T. Burtard,
Grand Junction, Colorado, for Defendants-Appellees
¶1 This oil and gas leasehold tax case requires us to determine
whether a nonoperating fractional interest owner in an oil and gas
unit who pays real property taxes on its leasehold interest has
standing to claim that its due process rights were violated when it
did not receive individual notice of or an opportunity to challenge a
retroactive assessment and increased tax. We conclude, as a
matter of first impression, that a nonoperating fractional interest
owner who has been denied the panoply of rights afforded a
taxpayer under the governing statutes and guidelines — including
the rights to receive notice of and to protest a retroactive
assessment or to seek an abatement of a retroactively increased tax
— has standing to claim a violation of those rights.
¶2 The plaintiff in this case, CO2 Committee, Inc. (CO2), is a
nonprofit corporation whose members include nonoperating
fractional interest owners in the McElmo Dome Unit (the Unit) who
pay real property taxes to Montezuma County.1 Following an audit,
1 Based on the record before us, the precise composition of CO2’s
membership is unclear. Because the district court did not take
evidence or make jurisdictional findings, however, we accept as true
the allegations in the complaint. Jones v. Samora, 2016 COA 191,
¶ 21 (“When deciding whether a party has standing, ‘all averments
1
Montezuma County2 retroactively increased the assessed value of
the taxable real property in the Unit for tax year 2008, which
resulted in an increased tax liability for the Unit.
¶3 On behalf of its members, CO2 filed a complaint alleging that
Montezuma County violated its members’ due process rights by
failing to provide each member individual notice of and an
opportunity to challenge the retroactive assessment. The district
court dismissed the complaint for lack of standing.
¶4 We conclude that CO2’s members include nonoperating
fractional interest owners who are taxpayers with standing to
pursue the claims asserted in the complaint. Accordingly, we
reverse the district court’s order dismissing the complaint and
remand the case for further proceedings.
of material fact in a complaint must be accepted as true.’” (quoting
State Bd. for Cmty. Colls. & Occupational Educ. v. Olson, 687 P.2d
429, 434 (Colo. 1984))); cf. Medina v. State, 35 P.3d 443, 452 (Colo.
2001) (explaining that a trial court is authorized to conduct a
hearing and to resolve disputed jurisdictional facts).
2 Defendants are Montezuma County, Montezuma County Board of
County Commissioners, Montezuma County Board of Equalization,
Montezuma County Assessor, and Montezuma County Treasurer
(collectively, Montezuma County).
2
I. Background
¶5 An estate in minerals such as oil and gas is a form of real
property. § 24-65.5-101, C.R.S. 2020; § 39-1-102(14), C.R.S. 2020.
When the owner of a mineral estate leases the right to extract oil
and gas from the land,
the lease may create various interests, which
generally take the form of either a working
interest (the oil and gas company’s right to
extract the minerals and develop them for
profit) or a royalty interest (the estate owner’s
right to receive a share of the production or a
share of the value of the proceeds of
production).
Kinder Morgan CO2 Co., L.P. v. Montezuma Cnty. Bd. of Comm’rs,
2017 CO 72, ¶ 4 (KM II) (citing 1 Patrick H. Martin & Bruce M.
Kramer, Williams & Meyers, Oil and Gas Law §§ 201-216 (2014
ed.)).
¶6 In the oil and gas context, a “unit” is “a consolidation of
working interests that extract resources from a single geological
reservoir. Units are created for the purpose of efficiently extracting
resources from the reservoir through coordinated engineering and
operation, often by a single operator.” KM II, ¶ 12 n.4 (citing 6
Martin & Kramer, § 901); see also § 39-10-106(5), C.R.S. 2020
3
(“‘[U]nit’ means any single oil, gas, or other hydrocarbon well or field
which has multiple ownership, or any combination of oil, gas, or
other hydrocarbon wells, fields, and properties consolidated into a
single operation, whether by a formal agreement or
otherwise . . . .”). The operator is the “person responsible for the
day-to-day operation of a well by reason of contract, lease, or
operating agreement.” 3 Div. of Prop. Tax’n, Dep’t of Loc. Affs.,
Assessor’s Reference Library, at 6.25 (rev. Jan. 2008) (ARL).3
¶7 The Unit at issue here is a consolidation of working interests
in a large deposit of pure carbon dioxide in Montezuma and Dolores
Counties. KM II, ¶ 12 n.4 (citing Colorado Oil and Gas
Conservation Commission Order No. 389-1 (Nov. 17, 1982)).
Although several other individuals and entities own various working
3 In this opinion, we refer to Volume 2 of the ARL, the
“Administrative and Assessment Procedures Manual,” revised
December 2008, and Volume 3 of the ARL, the “Land Valuation
Manual,” revised January 2008. Volume 2 “is an aid to assessors
in valuing and assessing taxable property.” 2 ARL Preface, at ii.
Volume 3 “provide[s] a reference source for appraisal and
assessment policies and procedures for the valuation of land
according to the Colorado Constitution and statutes.” 3 ARL
Preface, at ii. Current and historical versions may be found online:
Colo. Dep’t of Loc. Affs., Assessors’ Reference Library Manuals,
https://perma.cc/AVY8-5ME7.
4
interests and royalty interests in the Unit, Kinder Morgan CO2
Company, L.P. (Kinder Morgan) is the largest working interest
owner and the sole operator of the Unit. Kinder Morgan owns a
44% fractional interest in the Unit. CO2’s members are royalty
owners, overriding royalty owners, and nonoperating working
interest owners collectively owning an 11.224% fractional interest in
the Unit.
¶8 As the Unit operator, Kinder Morgan extracts and compresses
the carbon dioxide and then transports it by pipeline to Texas
where it is sold for use in oil and gas operations. See id. at ¶¶ 12-
13. Kinder Morgan also manages the Unit’s development by paying
for the facilities and equipment and supplying labor to produce the
carbon dioxide, and then billing the other working interest owners
for its expenses in operating the Unit and arranging for
transportation of the carbon dioxide to the point of sale. Id. at ¶ 13.
¶9 As the Unit operator, Kinder Morgan also files an annual
property tax statement for and pays property taxes on behalf of all
interest owners in the Unit. Id.; see also § 39-7-101(1), C.R.S.
2020; § 39-10-106.
5
¶ 10 Oil and gas leaseholds are taxed as real property. KM II, ¶ 4;
see also Colo. Const. art. X, § 3(1)(b); § 39-7-102, C.R.S. 2020.
“Unlike most property interests, however, the value of an oil and
gas leasehold interest comes not from the physical space or land
the leasehold occupies, but rather, from the quantity and value of
oil and gas underground.” KM II, ¶ 4. That value, in turn, depends
on the “selling price of the gas or oil ‘at the wellhead,’” id. at ¶ 7; see
also §§ 39-7-101(1), -102, a term we discuss in greater detail below
in Part II.C.2.b.
¶ 11 In 2009, following an audit of the annual property tax
statement Kinder Morgan filed for the Unit for tax year 2008,
Montezuma County determined that Kinder Morgan had
underreported the selling price at the wellhead by deducting costs
that it was not allowed to deduct. KM II, ¶¶ 15-16. Consequently,
Montezuma County retroactively increased its valuation of the
leaseholds in the Unit by approximately $57 million, increasing the
Unit’s property tax liability by over $2 million. Id. at ¶ 16.
¶ 12 Kinder Morgan paid the increased taxes under protest,
petitioned for and was denied an abatement, and unsuccessfully
appealed the retroactive assessment all the way to the Colorado
6
Supreme Court. Id. at ¶¶ 17, 46; see Kinder Morgan CO2 Co., L.P. v.
Montezuma Cnty. Bd. of Comm’rs, 2015 COA 72, ¶ 44 (KM I), aff’d,
KM II. In KM II, the supreme court concluded that “the statutory
scheme governing property taxation of oil and gas leaseholds and
lands authorizes the retroactive assessment of taxes when an
operator has underreported the selling price of oil or gas,” KM II,
¶ 40, and affirmed the Board of Assessment Appeals’ conclusion
that Kinder Morgan had underreported the selling price at the
wellhead, id. at ¶ 46.
¶ 13 Ultimately, Kinder Morgan billed the nonoperating fractional
interest owners, including CO2’s members, for their proportionate
shares of the increased taxes. CO2 alleged in its complaint that
Montezuma County has since retroactively increased its valuation
of the leaseholds in the Unit and retroactively assessed taxes
against the Unit for tax years subsequent to 2008. Kinder Morgan
has paid the increased taxes and billed the fractional interest
owners, including CO2’s members, for their proportionate shares.
CO2 alleged that its members have collectively been assessed
retroactive taxes estimated at $500,000 per year.
7
¶ 14 During the audit of the 2008 tax statement, the retroactive
assessment, the petition for abatement, and the subsequent
appeals, Montezuma County communicated only with Kinder
Morgan as the operator of the Unit. It issued special notices of
valuation only to Kinder Morgan. It did not provide individual
notice to any other fractional interest owner and no other fractional
interest owner participated in the proceedings resulting in the
increased tax liability.
¶ 15 According to its complaint, after CO2 received notice from
Kinder Morgan that Kinder Morgan had paid increased taxes for the
Unit, it attempted to challenge the retroactive assessment on behalf
of its members. In substance, it argued that its members were
entitled to deduct the costs that Kinder Morgan was disallowed, so
its members did not underreport their selling price at the wellhead.
As a result, CO2 argued, Montezuma County improperly increased
the taxable value of their interests by retroactively assessing the
entire Unit without making individual proportionality computations
for each fractional interest owner.
¶ 16 CO2 filed an objection with the Montezuma County assessor
pursuant to section 39-5-122, C.R.S. 2020, claiming that
8
Montezuma County wrongfully determined that CO2’s members had
underreported their selling price at the wellhead beginning with the
2008 tax year. CO2 alleged that Montezuma County responded,
claiming it was unable to establish that CO2’s members should be
treated differently than Kinder Morgan for purposes of computing
the selling price at the wellhead, and that separate special notices
of valuation have never been provided to CO2’s members and were
not required.
¶ 17 CO2 then appealed to the board of equalization pursuant to
section 39-8-106, C.R.S. 2020, and filed a petition for abatement
with the board of county commissioners pursuant to section 39-10-
114, C.R.S. 2020. CO2 alleged that Montezuma County responded
as follows: “The Montezuma County Assessor’s office has not sent
Notices of Value [to CO2]. As [CO2] is not identified as a
Montezuma County taxpayer, we are not able to provide a hearing
at the [b]oard of [e]qualization. Thank you.”
¶ 18 Consequently, CO2 commenced the underlying district court
litigation against Montezuma County, asserting claims for
(1) violation of its members’ civil rights, under 42 U.S.C. § 1983;
and (2) an injunction requiring Montezuma County to calculate and
9
refund its members’ alleged overpayment of taxes and precluding
Montezuma County from levying retroactive taxes against its
members without delivering actual notice to each member. The
thrust of CO2’s complaint was that Montezuma County had denied
its members due process of law by retroactively increasing their
taxes without providing them individual notice of and an
opportunity to challenge the retroactive assessment or the
opportunity to seek a tax abatement.
¶ 19 Montezuma County filed a motion to dismiss, arguing, among
other things, that CO2 was not the real party in interest and that it
lacked standing.4 The district court granted the motion.
¶ 20 On appeal, CO2 contends that the district court erred by
(1) dismissing its complaint for lack of standing; (2) concluding that
it was not the real party in interest; and (3) denying its post-
dismissal motion to amend the complaint. Because we conclude
that CO2’s members have standing to bring the asserted claims, we
4Montezuma County also argued that the complaint should be
dismissed on the basis of claim and issue preclusion because
Kinder Morgan made the same substantive argument when it
challenged the retroactive assessment as CO2 makes now. The
district court denied the motion to dismiss on these bases.
10
reverse the court’s order dismissing the complaint and remand for
further proceedings.
II. Standing
¶ 21 CO2 contends that the district court erred in dismissing its
complaint for lack of standing by concluding that (1) CO2’s
members were not entitled to due process related to the retroactive
assessment proceedings; and (2) CO2’s members “were not real
parties in interest with standing” and, thus, CO2 was “not a real
party in interest [with] standing” to maintain this lawsuit against
Montezuma County. We agree.
A. Standard of Review and Applicable Law
¶ 22 For a court to have jurisdiction over a dispute, the plaintiff
must have standing to bring the case. Ainscough v. Owens, 90 P.3d
851, 855 (Colo. 2004). Standing is a threshold issue that must be
satisfied for a court to decide a case on the merits. Barber v. Ritter,
196 P.3d 238, 245 (Colo. 2008).
¶ 23 Whether a party has standing is a question of law that we
review de novo. Id. And when deciding whether a party has
standing, we must accept as true all averments of material fact in a
complaint. Jones v. Samora, 2016 COA 191, ¶ 21 (citing State Bd.
11
for Cmty. Colls. & Occupational Educ. v. Olson, 687 P.2d 429, 434
(Colo. 1984)).
¶ 24 In Colorado, plaintiffs benefit from a relatively broad definition
of standing. Ainscough, 90 P.3d at 855. To establish standing, a
plaintiff must have (1) suffered injury in fact (2) to a legally
protected interest. Id. (citing Wimberly v. Ettenberg, 194 Colo. 163,
168, 570 P.2d 535, 539 (1977)).
¶ 25 “Injury in fact exists if ‘the action complained of has caused or
has threatened to cause injury.’” Kreft v. Adolph Coors Co., 170
P.3d 854, 857 (Colo. App. 2007) (quoting Romer v. Colo. Gen.
Assembly, 810 P.2d 215, 218 (Colo. 1991)). An injury in fact may
be tangible, such as physical damage or economic harm, or
intangible, such as aesthetic issues or the deprivation of civil
liberties. Ainscough, 90 P.3d at 856. A remote possibility of future
injury or an injury that is overly indirect or incidental is
insufficient. Barber, 196 P.3d at 246.
¶ 26 If the plaintiff establishes an injury in fact, “the court must
then determine whether this injury is to a legal interest which
entitles the plaintiff to judicial redress.” Olson, 687 P.2d at 435.
“Resolution of this second prong of standing basically rests on a
12
normative judgment that the injury is or is not actionable.” Id. The
question is whether the plaintiff has a claim for relief under the
constitution, the common law, a statute, or a rule or
regulation. Ainscough, 90 P.3d at 856; see also Kreft, 170 P.3d at
858 (“A legally protected interest must emanate ‘from a
constitutional, statutory, or judicially created rule of law that
entitles the plaintiff to some form of judicial relief.’” (quoting Bd. of
Cnty. Comm’rs v. Bowen/Edwards Assocs., Inc., 830 P.2d 1045,
1053 (Colo. 1992))).
¶ 27 An organization may have standing to assert claims on behalf
of its members if it shows that (1) its members would otherwise
have standing to sue in their own right; (2) the interests it seeks to
protect are germane to the organization’s purpose; and (3) neither
the claim asserted nor the relief requested requires the participation
of individual members in the lawsuit. Jones, ¶ 29.
B. Additional Background
¶ 28 In its motion to dismiss, Montezuma County argued that CO2
lacked standing because its members lacked standing, and that its
members lacked standing because Kinder Morgan, as the Unit
13
operator, is the sole entity responsible for paying taxes for the Unit
and seeking abatement of those taxes.
¶ 29 In response, CO2 acknowledged that Kinder Morgan, as the
Unit operator, was exclusively obligated to submit the annual
property tax statement and to pay taxes on behalf of all
nonoperating fractional interest owners in the Unit, but it
contended that nothing in the governing statutes or guidelines
authorized Montezuma County “to deal only with the operator when
a retroactive assessment is in process.” Instead, it argued that
Montezuma County was required to provide notice to each of its
members, as taxpayers, and that each member should be able to
challenge the assessment or to seek an abatement.
¶ 30 The district court concluded that CO2 “is not a real party in
interest and lacks standing to maintain this lawsuit — because the
members of [CO2] are not real parties in interest with standing to
bring this suit against Montezuma County.” It concluded that the
members’ alleged injury was not “to a legally protected or cognizable
interest” because the statutory scheme governing oil and gas
taxation “vests all legal and constitutional rights to contest the tax
14
assessed and levied with the unit operator” and “require[s]
Montezuma County to interact only with the unit operator.”
C. Analysis
¶ 31 To determine whether CO2 has standing as an organization,
we must first determine whether CO2’s members would have
standing to sue in their own right. Jones, ¶ 29. Thus, we must
determine whether CO2 sufficiently alleged that its members
suffered an injury in fact to a legally protected interest emanating
from the constitution, a statute, a rule, a regulation, or the common
law. Kreft, 170 P.3d at 858.
1. Injury in Fact
¶ 32 To satisfy the actual injury requirement for standing, CO2
must demonstrate that the challenged action caused or threatened
to cause actual injury to its members. Kreft, 170 P.3d at 858.
¶ 33 In its complaint, CO2 alleged that Montezuma County violated
its members’ due process rights, guaranteed by the Fifth and
Fourteenth Amendments, by retroactively increasing the assessed
value of their property without providing the members notice and
an opportunity to challenge the assessment. It further alleged that
15
its members actually paid increased taxes as a result of the
retroactive assessment.
¶ 34 We agree with the district court that CO2 sufficiently alleged
that its members suffered an injury in fact — both the denial of due
process and an economic loss. See Morgan v. McCotter, 365 F.3d
882, 888-89 (10th Cir. 2004) (where due process protections would
have alleviated harm, the plaintiff has alleged an injury in fact
(citing Rector v. City & Cnty. of Denver, 348 F.3d 935, 943-44 (10th
Cir. 2003))); Hughey v. Jefferson Cnty. Bd. of Comm’rs, 921 P.2d 76,
78 (Colo. App. 1996) (Allegations that plaintiff paid taxes assessed
on property “supply sufficient evidence of an economic injury to
satisfy the requirement for an injury in fact.”).
2. Legally Protected Interest
¶ 35 To satisfy the second criterion for standing, CO2 must
demonstrate that the injury allegedly suffered by its members is to
a legally protected interest. Ainscough, 90 P.3d at 856.
¶ 36 “Generally, the one who bears the financial burden of a tax is
a party aggrieved and thus has standing to challenge an
assessment.” Hughey, 921 P.2d at 78. But here, the district court
concluded that “the statutory scheme promulgated vests all legal
16
and constitutional rights to contest the tax assessed and levied with
the unit operator” and that the “Colorado legislature does not grant
the non-operating interest owners any right or recourse to request
an audit or to contest the tax levied by the county.”
¶ 37 To resolve this issue, we must look to the Colorado statutes
and guidelines governing the assessment and taxation of oil and gas
leaseholds and land and determine whether CO2’s members have
the right to notice and an opportunity to challenge the retroactive
assessment or to seek an abatement of the increased tax. We
conclude that each nonoperating fractional interest owner who pays
taxes is entitled to the panoply of rights afforded a “property
owner,” “person,” or “taxpayer” under the review, audit, protest,
abatement, and appeal procedures detailed in the statutes and
guidelines. Thus, we conclude that the injury allegedly suffered by
CO2’s members is to a legally protected interest.
a. Rules of Statutory Interpretation
¶ 38 We review questions of statutory interpretation de novo. Traer
Creek-EXWMT LLC v. Eagle Cnty. Bd. of Equalization, 2017 COA 16,
¶ 8. Our primary goals in interpreting a statute are to discern and
give effect to the General Assembly’s intent. Id. at ¶ 9. When
17
construing an administrative regulation, we apply the same rules of
construction that we would when interpreting a statute. Williams v.
Colo. Dep’t of Corr., 926 P.2d 110, 112 (Colo. App. 1996).
¶ 39 We first look to the ordinary and common meaning of the
language used, giving effect to every word whenever possible.
Cendant Corp. & Subsidiaries v. Dep’t of Revenue, 226 P.3d 1102,
1106 (Colo. 2009). We read words and phrases in context and
construe them according to the rules of grammar and common
usage. § 2-4-101, C.R.S. 2020; Gagne v. Gagne, 2014 COA 127,
¶ 25. And we read and consider the statutory and regulatory
scheme as a whole, giving consistent, harmonious, and sensible
effect to all its parts. Cendant Corp., 226 P.3d at 1106.
b. Oil and Gas Property Taxation Law
i. Valuing Oil and Gas Leaseholds
¶ 40 To ensure uniform taxation premised on uniform assessment
of property values, the General Assembly enacted article 7 of title
39, which governs the valuation of oil and gas leaseholds and lands
18
for the purpose of property taxation.5 Yuma Cnty. Bd. of
Equalization v. Cabot Petroleum Corp., 856 P.2d 844, 848 (Colo.
1993); see also § 39-3-103(2), C.R.S. 2020. The General Assembly
also delegated certain authority to the Property Tax Administrator
as the head of the Division of Property Taxation in the Department
of Local Affairs. See §§ 39-2-101, -109, C.R.S. 2020.
¶ 41 As relevant here, the Property Tax Administrator has the
authority to prepare and publish manuals, appraisal procedures,
and instructions concerning methods of appraising and valuing
land, and to prepare and publish guidelines concerning the audit
and compliance review of oil and gas leasehold properties for
property tax purposes. § 39-2-109(1)(e), (k). To this end, the
Property Tax Administrator prepares and publishes the ARL, a
series of manuals addressing Colorado property assessment. See 2
ARL Preface, at ii; 3 ARL Preface, at ii. The manuals, procedures,
instructions, and guidelines published by the Property Tax
Administrator must be used by assessors in valuing taxable
5 For real property classification, “oil and gas leaseholds and lands
includes all drilled wells producing any kind of petroleum or natural
gas product, such as oil, gas, or helium and carbon dioxide.” 3 ARL
at 6.21.
19
property. § 39-2-109(1)(e), (k); Huddleston v. Grand Cnty. Bd. of
Equalization, 913 P.2d 15, 17 (Colo. 1996) (“[T]he manuals are
binding on the county assessors.”).
¶ 42 Under this statutory and regulatory scheme, oil and gas
leaseholds and lands are valued based on the selling price of the oil
or gas “at the wellhead” during the preceding calendar year. §§ 39-
7-101(1)(d), -102(1)(a). The “selling price at the wellhead” means
the “net taxable revenues realized by the taxpayer for sale of the oil
or gas, whether such sale occurs at the wellhead or after gathering,
transportation, manufacturing, and processing of the product.”
§ 39-7-101(1)(d); see also 3 ARL at 6.25. And “net taxable
revenues” are “equal to the gross lease revenues, minus deductions
for gathering, transportation, manufacturing, and processing costs
borne by the taxpayer pursuant to guidelines established by the
[Property Tax Administrator].” § 39-7-101(1)(d); see also 3 ARL at
6.25. The guidelines regarding what may be deducted from gross
lease revenues are set forth in the ARL. See, e.g., 3 ARL at 6.35-
6.47.
20
ii. Annual Property Tax Statement
¶ 43 Every operator of any producing oil or gas unit must file an
annual property tax statement for the unit by April 15 of each year.6
§ 39-7-101(1)(d); § 39-7-102(1)(a), C.R.S. 2020; 3 ARL at 6.25; see
also 3 ARL at 6.21 (specifying that the statement required to be filed
by April 15 of each year is an “Oil and Gas Real and Personal
Property Declaration Schedule”). The annual statement or
declaration schedule must include, among other things,
(a) The wellhead location thereof and the name
thereof, if there is a name;
(b) The name, address, and fractional interest
of the operator thereof;
(c) . . . [T]he quantity of gas measured in
thousands of cubic feet, sold or transported
from the wellhead during the calendar year
immediately preceding . . . ;
(d) The selling price at the wellhead . . . [; and]
(e) The name, address, and fractional interest
of each interest owner taking production in
kind and the proportionate share of total unit
revenue attributable to each interest owner
who is taking production in kind[.]
6 If there is no operator, every person owning any producing oil or
gas leasehold or lands is required to file the annual statement.
§ 39-7-101(1), C.R.S. 2020.
21
§ 39-7-101(1); see also 3 ARL at 6.21.7
iii. Assessor Valuation
¶ 44 Based on the annual statement filed by the operator, rather
than on its own independent verification of the volume and value of
the oil and gas produced, the county assessor determines the value
of the leaseholds and lands in the unit for assessment. § 39-7-
102(1)(a); KM II, ¶ 30 (“[T]he assessor relies on information that is
self-reported by the operator, typically without the means to
independently verify the volume and value of oil and gas produced
at the leasehold.”).
¶ 45 “[F]or taxable personal property on oil and gas leaseholds or
lands for which the operator has filed the statement required by
section 39-7-101(1),” the assessor must send a notice of valuation
7 By March 15 of each year, each nonoperating interest owner may
submit to the operator a report of the actual net taxable revenues
received at the wellhead by such owner for production taken in
kind. § 39-7-101(1.5). If the nonoperating interest owner timely
submits this information, the operator must use it to determine the
selling price at the wellhead to be reported in the annual statement.
Id. But, if the nonoperating interest owner does not timely submit
this information, “the amount of tax for which such nonreporting,
nonoperating interest owner is liable shall be calculated based on
the selling price at the wellhead reported by the operator.” Id.; see
also 3 ARL at 6.22-6.23.
22
of the property “only to the operator, who shall accept it.” § 39-5-
121(1.5)(b), C.R.S. 2020; see also § 39-7-102.5, C.R.S. 2020
(indicating that oil and gas leaseholds and lands valued pursuant to
article 7 follow the schedule for personal property regarding notices
of valuation and appeals of valuation). Even though the operator is
obligated to accept the notice of valuation, that acceptance “shall
not be construed as an indication that the operator agrees with the
amount of the actual value of the property stated in the notice or as
obligating the operator to pay the tax attributable to property in
which the operator has no ownership.” § 39-5-121(1.5)(b).
iv. Protest and Appeal of Valuation
¶ 46 Pursuant to section 39-5-122(2), “[i]f any person is of the
opinion that [their] property has been valued too high” by the
assessor, they may file a written “letter of objection and protest”
with the assessor’s office and be heard. If the protest is denied, the
assessor must mail a notice of determination to the “person
presenting the objection and protest so denied,” stating the reasons
for declining to change the valuation. § 39-5-122(2); see also 2 ARL
23
at 5.3.8 Any person whose objection and protest has been denied
may appeal to the county board of equalization. § 39-5-122(3); see
also § 39-8-106(1), (3); 2 ARL at 5.3. If the board of equalization
denies the petition, the petitioner may appeal. See §§ 39-8-108(1)-
(3), -107(1), C.R.S. 2020; see also § 24-4-106(9), (11), C.R.S. 2020;
2 ARL at 5.6.
v. Payment of Taxes on Fractional Interests in Lands
¶ 47 When oil and gas wells are owned by multiple owners and
operated as a unit, “the owner of each fractional interest in such
units shall be liable for the same proportion of the tax levied against
the total unit that his net taxable revenues received therefrom bears
to the total net taxable revenues received from such unit.” § 39-10-
106(1). Once taxes are levied, the unit operator is obligated to
collect a proportionate share from each fractional interest owner
8Although ARL Volume 3 is the manual specific to land valuation, it
provides that “[v]aluation and/or assessment issues not pertaining
directly to the valuation of land may be referenced to one of the
other ARL manuals, as appropriate.” 3 ARL Preface, at ii. The
mechanisms for protesting an assessment or seeking an abatement
of a levied tax are general valuation and/or assessment issues,
which are addressed in ARL Volume 2.
24
and remit the tax levied against the entire unit to the treasurer of
the county in which the unit is located. § 39-10-106(2).
¶ 48 If the unit operator collects tax from the fractional interest
owner as provided by statute, but fails to remit the amounts
collected, it becomes liable for such tax, and the fractional interest
owner “shall not be subject to any collection and enforcement
remedies” for such tax. § 39-10-106(2), (4)(b)(III). Failure of the
unit operator to collect tax from the fractional interest owner,
however, does not preclude the treasurer from employing “lawful
collection and enforcement remedies and procedures against the
owner of any fractional interest to collect the tax owed by such
owner.” § 39-10-106(4)(a).
vi. Abatement of Taxes Levied
¶ 49 Within two years after taxes are levied, a taxpayer may file a
petition with the board of county commissioners to request an
abatement of taxes due or a refund of taxes paid. 2 ARL at 5.12;
see also §§ 39-1-113, 39-10-114, C.R.S. 2020. If the petition for
abatement is denied, the petitioner may appeal. See § 39-10-
114.5(1), C.R.S. 2020; see also § 24-4-106(11); 2 ARL at 5.14.
25
vii. Audit and Post-Audit Procedures
¶ 50 Two statutory provisions authorize an assessor to retroactively
assess taxes on “omitted property”: sections 39-5-125(1) and 39-10-
101(2)(a)(I), C.R.S. 2020. KM II, ¶ 25. The question before the
Colorado Supreme Court in KM II was whether underreporting of
the value of oil and gas produced at a leasehold constitutes
“omitted property” subject to corrective assessment under these two
provisions. Id. It concluded that “the statutory scheme governing
property taxation of oil and gas leaseholds and lands authorizes the
retroactive assessment of property taxes when an operator
underreports the volume or selling price of the oil and gas it
produces.” Id. at ¶ 34.
¶ 51 To this end, the ARL authorizes assessors to conduct reviews
or audits of “taxpayer oil and gas declarations” and request
additional information related to the wells owned or operated by
“the taxpayer.” 3 ARL at 6.52. It also authorizes counties to
establish reasonable audit procedures “to fairly and accurately
determine the actual value of oil and gas leaseholds and lands.” 3
ARL at 6.55. And it specifies what procedures a county’s audit
program must include and what rights a county must provide to “all
26
taxpayers” subject to an audit. 3 ARL at 6.56; see also 2 ARL at
9.79-9.82.
c. The Injury CO2 Alleged Is to a Legally Protected Interest
¶ 52 The General Assembly has established a unique representative
structure under which the unit operator is responsible for reporting
and paying property taxes levied against oil and gas leaseholds and
lands that are operated as a unit. But it has not expressly provided
a similar representative structure for protesting and appealing a
retroactive assessment or for petitioning for abatement of an
increased tax liability.
¶ 53 As set forth below, notwithstanding the fact that the operator
is obligated to report, collect, and remit taxes for the unit, the
nonoperating fractional interest owner remains liable for and must
pay its proportionate share of the taxes. And the governing statutes
and ARL vest audit, protest, abatement, and appeal rights in a
“taxpayer,” “property owner,” and “person,” terms that include a
nonoperating fractional interest owner who pays taxes. In the
absence of clear statutory language vesting all such rights in the
unit operator, we must conclude that nonoperating fractional
27
interest owners who pay taxes maintain such rights and have
standing to sue to enforce them.
¶ 54 When oil and gas wells are operated as a unit, the operator
alone is obligated to file an annual property tax statement for the
unit. § 39-7-101; 3 ARL at 6.21 (the property tax statement is also
called a declaration schedule or an oil and gas declaration under
the ARL). Based on that annual statement, the county assessor
determines the value of the oil and gas leaseholds and lands in the
unit and issues a notice of valuation. §§ 39-7-102(1)(a), -102.5;
§ 39-5-121(1.5).
¶ 55 Typically, the assessor is required to mail the notice of
valuation to “each person who owns land.” § 39-5-121(1)(a)(I). But
the parties appear to agree (so we will assume without deciding it is
so) that the legislature has relieved assessors of the obligation to
provide a notice of valuation to each nonoperating fractional
interest owner in a unit by specifying that the assessor must
28
provide the notice of valuation “only to the operator, who shall
accept it.” § 39-5-121(1.5)(b).9
¶ 56 By accepting the notice of valuation, however, the operator
does not acquiesce to the valuation or otherwise become liable for
any tax attributable to property owned by others. Id. That is
because, even though taxes are levied against the “total unit,” each
fractional interest owner in the unit is liable for its proportionate
share of the taxes. § 39-10-106(1).
9 The parties assert that section 39-5-121(1.5)(b), C.R.S. 2020,
authorizes an assessor to issue an initial notice of real property
valuation for all the oil and gas leaseholds and lands in a unit only
to the unit operator. We are not so sure. That section provides, in
relevant part, that “for taxable personal property on oil and gas
leaseholds or lands” for which the operator has filed an annual
statement, “the assessor shall send the notice of valuation only to
the operator.” Id. (emphasis added). Both real and personal
property on oil and gas leaseholds and lands are taxed. See §§ 39-
1-104, 39-7-102, C.R.S. 2020. And although real property
assessments for oil and gas leaseholds and lands “shall follow the
schedule for personal property . . . regarding notices of valuation,”
§ 39-7-102.5, C.R.S. 2020 (emphasis added), we see nothing in the
statutes requiring that real property assessments follow the same
procedure as personal property assessments. Further, the ARL
specifies that different notices of valuation are to be used for
“reporting oil and gas production” and for reporting “[p]ersonal
property used in the production of oil and gas.” 2 ARL at 9.55.
However, because neither party raised this concern, and because it
does not affect our disposition, we assume without deciding that
the parties are correct, and that the assessor is authorized to send
an initial notice of real property valuation only to the unit operator.
29
¶ 57 Similarly, although the unit operator is obligated to collect
taxes from the nonoperating fractional interest owners and to remit
to the treasurer the full amount of the tax levied against the unit,
the operator’s failure to collect a proportionate share of the tax from
the nonoperating fractional interest owner does not preclude the
treasurer from pursuing collection remedies against that owner to
collect the tax. § 39-10-106(1), (4)(a); see also § 39-7-108, C.R.S.
2020.
¶ 58 Thus, although the operator alone is obligated to report,
collect, and remit taxes for the unit, the nonoperating fractional
interest owner is ultimately liable for and must pay its
proportionate share of the taxes levied against the unit.
¶ 59 The retroactive tax liability in this case arose after an audit.
The governing statutes do not provide specific audit procedures;
instead, they authorize the Property Tax Administrator to prepare
and publish audit guidelines that bind county assessors. § 39-2-
109(1)(k); Huddleston, 913 P.2d at 17. Thus, the ARL provides the
audit procedures applicable to Montezuma County’s audit of the
2008 tax statement filed by Kinder Morgan.
30
¶ 60 Under the ARL, the assessor is required to provide a letter to
“the taxpayer” indicating that an audit of “that taxpayer’s oil and
gas declaration” will soon commence. See 3 ARL at 6.55. Upon
completion of the audit, the county must mail its preliminary audit
findings to “the taxpayer at the address recorded on the annual
declaration,” and give “the taxpayer” thirty days to provide
additional information. Id. at 6.56.
¶ 61 Notably, the nonoperating fractional interest owners’ names
and addresses must be included in the annual tax statement. § 39-
7-101(1)(e). So, the assessor should have access to each fractional
interest owner’s address based on the annual statement to provide
that owner with the letter and preliminary audit findings required
by the ARL audit procedures.
¶ 62 If, as a result of the audit, a change in valuation is
determined, the county must issue a special notice of valuation. 3
ARL at 6.56. In contrast to section 39-5-121(1.5)(b), the ARL does
not specify to whom the special notice of valuation must be sent.
But the ARL requires the county to provide certain rights to “all
taxpayers” subject to an audit — including the right to protest the
indicated value within thirty days — which rights could not be
31
exercised if the taxpayer did not receive the special notice of
valuation from the county. See 3 ARL at 6.56.
¶ 63 The county must include with each special notice of valuation
a special protest form to be completed by “the property owner” to
initiate a protest of the valuation of the property. 2 ARL at 9.55.
The “specific requirements” set forth in the ARL for the special
protest form indicate that “[p]ursuant to §§ 39-5-121(1) and 39-5-
122(2), C.R.S., every [special notice of valuation] must be sent along
with a form that, if completed by the property owner, allows the
property owner to explain the basis for the protest of the property’s
valuation or classification.” 2 ARL at 9.70.
¶ 64 Indeed, the ARL plainly states: “The Division recommends that
assessors require letters of agency from persons who are not the
owner of record but are filing a protest on behalf of the property
owner. The owner is the only person recognized by law to have
‘standing’ to file a protest.” 2 ARL at 5.2. And the Property Tax
Administrator’s “interpretations of the taxation statutes as
embodied in the ARL are entitled to judicial deference.” Manor Vail
Condo. Ass’n v. Bd. of Equalization, 956 P.2d 654, 659 (Colo. App.
1998).
32
¶ 65 Under section 39-5-122(2), to which the special protest form
refers, any “person” who believes their property “has been valued
too high” has the right to object and protest an assessment.
“Person” means “natural persons, corporations, partnerships,
limited liability companies, associations, and other legal entities
which are or may become taxpayers by reason of the ownership of
taxable real or personal property.” § 39-1-102(9); see also 2 ARL at
5.1 (“If a taxpayer disagrees with the value assigned by the
assessor, the taxpayer may file a protest during the statutory
protest period.”).
¶ 66 If a taxpayer files a protest, the county must issue a special
notice of determination, which must include a written explanation
“regarding the basis for the omitted property and the county’s
decision” and an advisement of the taxpayer’s right to file an
abatement petition. 3 ARL at 6.56. Again citing section 39-5-
122(2), the ARL requires that the special notice of determination be
mailed to “each property owner who filed a protest with the
[a]ssessor.” 2 ARL at 9.79.
¶ 67 The special notice of determination itself advises the recipient
of the right to “continue your appeal” by filing a petition for
33
abatement with the county. 2 ARL at 9.82. It then refers to
sections 39-1-113 and 39-10-114 and advises the recipient of the
right to appeal any unsatisfactory decision of the board of county
commissioners to the board of assessment appeals. Id. Under the
statutes and the ARL, the “taxpayer” is the one vested with the right
to file a petition for abatement. See § 39-1-113; 2 ARL at 5.13-5.14.
Again, the ARL confirms: “As with taxpayers filing protests, a
taxpayer must have proper standing to file an abatement petition.
The first criterion is ownership.” 2 ARL at 5.15.
¶ 68 “Taxpayer” is not defined in the ARL, but its plain meaning
and dictionary definition is “[s]omeone who pays or is subject to a
tax.” Black’s Law Dictionary (11th ed. 2019); accord Merriam-
Webster Dictionary, https://perma.cc/D429-STMG (defining
“taxpayer” as “one that pays or is liable for a tax”); see also People v.
Allman, 2019 CO 78, ¶ 15 (“Because the statute does not
specifically define the word . . . , we look to the plain and ordinary
meaning of the word, aided by the dictionary definition.”).
¶ 69 Thus, based on the plain language of the statutes and the ARL
— which we are required to interpret together, to give consistent,
harmonious, and sensible effect to all the provisions, see Cendant
34
Corp., 226 P.3d at 1106 — we conclude that each nonoperating
fractional interest owner who pays taxes is a “property owner,” a
“person,” and a “taxpayer” entitled to the panoply of rights afforded
such “property owner,” “person,” or “taxpayer” under the review,
audit, protest, abatement, and appeal procedures detailed in the
ARL and related statutes. See 3 ARL at 6.52-6.56.
¶ 70 Nothing in the statutes or the ARL indicates that a unit
operator is the only “property owner” to whom a special notice of
valuation and special protest form need be sent, see 2 ARL at 9.55,
9.70, 9.79, or who has standing to file a protest, see 2 ARL at 5.2.
Nothing in the statutes or the ARL indicates that a unit operator is
the only “person” who may protest the valuation of the leaseholds
and lands in an oil and gas unit as reflected in a notice of valuation
or special notice of valuation. See § 39-5-122(2). Nothing in the
statutes or the ARL indicates that a unit operator is the only
“taxpayer” who is entitled to be notified of an audit, receive
preliminary audit findings from the assessor, or protest the
assessment, see 3 ARL at 6.56, or who has standing to file a
petition for abatement of taxes levied against the unit, see § 39-1-
113; 2 ARL at 5.13-5.15. Nothing in the statutes or ARL vests these
35
rights exclusively in the unit operator or appoints the unit operator
as the statutory agent or representative of all nonoperating
fractional interest owners when oil and gas wells are operated as a
unit. And nothing in the ARL audit guidelines mandates a different
procedure when the property is retroactively assessed or when taxes
are increased retroactively.
¶ 71 We acknowledge that our holding today may upset settled
practices regarding how counties review, audit, and retroactively
assess the value of oil and gas leaseholds and lands and how they
handle protests and petitions for abatement resulting from such
retroactive assessments. It may also contravene the expectations of
many nonoperating fractional interest owners, who may presume
that the unit operator will handle such matters on their behalf. To
be sure, this may be a case of “be careful what you wish for”
because if an individual nonoperating fractional interest owner is
entitled to receive notice of and challenge the retroactive assessment
of its property, then it is equally obligated to raise such a challenge
on its own behalf or designate an agent to protest for it. See 2 ARL
at 5.2.
36
¶ 72 But our primary objective when interpreting the governing
statutes and the ARL is to effectuate the General Assembly’s intent
“by looking to the plain meaning of the language used, considered
within the context of the statute as a whole.” Hogan v. Bd. of Cnty.
Comm’rs, 2018 COA 86, ¶ 11 (citation omitted), aff’d sub nom. Mook
v. Bd. of Cnty. Comm’rs, 2020 CO 12. We cannot insert words into
a statute. See id. at ¶ 23 (declining to “judicially rewrite” statutes to
support government’s interpretation of term in ARL) (citation
omitted). Absent clear language authorizing the unit operator to
represent all tax-paying nonoperating fractional interest owners in
the review, audit, protest, and abatement procedures, each such
taxpayer has standing to assert that its rights in such procedures
have been violated.
¶ 73 CO2 alleged that its members have suffered an injury in fact
— the deprivation of due process and an economic loss — to a
legally cognizable interest as contemplated by statutory and
constitutional provisions. Thus, we conclude that CO2’s members
have standing to bring the claims asserted in the complaint against
Montezuma County.
37
¶ 74 This conclusion, however, does not end the inquiry because
CO2 must also have organizational standing to bring the asserted
claims on behalf of its members. Jones, ¶ 29. We have already
concluded that CO2’s members would have standing to sue in their
own right. But for CO2 to have organizational standing, the
interests it seeks to protect must be germane to the organization’s
purpose and the claims asserted and the relief requested must not
require participation by individual members in the lawsuit. Id.
¶ 75 Because the district court determined that CO2’s members
lacked standing in their own right, it did not determine whether
CO2 met the remaining criteria to have organizational standing.
Neither party has argued that we should determine this question for
the first time on appeal. Accordingly, the district court must
address this issue on remand.
¶ 76 In reaching our conclusion today, we express no opinion as to
the merits of CO2’s arguments. The district court disposed of this
case on standing. Standing is a threshold issue separate from
resolution of the merits. Barber, 196 P.3d at 245. We have
concluded that CO2’s members have standing. Thus, we remand to
the district court for further proceedings.
38
III. Real Party in Interest
¶ 77 CO2 contends on appeal that the district court erred by
concluding it was not “the real party in interest” with standing to
maintain the action. But the court’s order in this regard appears to
contradict itself. The court first concluded that CO2 was the real
party in interest under C.R.C.P. 17(a), finding that CO2 was “a
party with whom or in whose name a contract has been made for
the benefit of another.” But then, as part of its standing analysis,
the court found that CO2 “is not a real party in interest and lacks
standing to maintain this lawsuit.”
¶ 78 Colorado Rule of Civil Procedure 17(a) provides that “[e]very
action shall be prosecuted in the name of the real party in interest.”
The purpose of the rule is “to protect defendants from the
harassment of lawsuits by persons who do not have the power or
right to make final and binding decisions concerning prosecution,
compromise, and settlement.” Williams v. Genesee Dev. Co. No. 2,
759 P.2d 823, 825 (Colo. App. 1988). “The real party in interest is
that party who, by virtue of substantive law, has the right to invoke
the aid of the court in order to vindicate the legal interest in
question.” Goodwin v. Dist. Ct., 779 P.2d 837, 843 (Colo. 1989).
39
¶ 79 The concepts of “real party in interest” and “standing” are
often confused. 5A Stephen A. Hess, Colorado Practice Series:
Handbook On Civil Litigation § 4:2, Westlaw (2020 ed. database
updated Oct. 2020). “The distinctions between these categories are
not always clear, and sometimes the inquiries overlap.” Id. Our
courts have, on occasion, analyzed standing and real party in
interest together. See, e.g., Miller v. Accelerated Bureau of
Collections, Inc., 932 P.2d 824, 825 (Colo. App. 1996); Summers v.
Perkins, 81 P.3d 1141, 1142 (Colo. App. 2003).
¶ 80 Standing “is the broadest and most substantive idea, which
insures that plaintiffs assert only those claims demonstrating a
legally cognizable injury so that the jurisdiction of the courts is
exercised only when an actual controversy exists.” Hess, § 4.2.
When the real party in interest is in issue, however, “there is
usually no question about whether a legally cognizable claim has
been stated. Instead, the question is to determine who possesses
the right to assert the claim . . . .” Id. Thus, even if a plaintiff has
standing to bring a claim, they may not be the real party in interest
if, for example, they have assigned that claim to a third party. See
40
Platte Valley Mortg. Corp. v. Bickett, 916 P.2d 631, 633 (Colo. App.
1996) (“An assignee of a claim is a real party in interest.”).
¶ 81 We have already concluded, as part of our standing analysis,
that CO2’s members have the right to invoke the aid of the court to
vindicate their rights under the constitution, statutes, and ARL
guidelines. CO2’s members are real parties in interest. But CO2’s
members are not the plaintiffs; CO2 is the plaintiff.
¶ 82 Rule 17(a) provides that “a party with whom or in whose name
a contract has been made for the benefit of another . . . may sue in
his own name without joining with him the party for whose benefit
the action is brought.” The district court found that CO2 was such
a party. Neither party appeals that finding and we see no reason to
disturb it.10
IV. Attorney Fees
¶ 83 CO2 contends that it is entitled to attorney fees pursuant to
C.A.R. 38(b) and 39.1 because Montezuma County’s defense of the
district court’s order was frivolous and groundless under section
10Because of our disposition, we need not address CO2’s remaining
contention that the district court erred by denying its post-
dismissal motion to amend its complaint.
41
13-17-102(4), C.R.S. 2020. CO2 does not appeal the district court’s
ruling that the parties are to bear their own attorney fees and costs
incurred at the trial court level. Instead, it seeks attorney fees for
Montezuma County’s defense of the district court orders on appeal.
We conclude that CO2 is not entitled to appellate attorney fees.
¶ 84 A court must award attorney fees against a party who
“brought or defended a civil action, either in whole or in part, that
the court determines lacked substantial justification.” § 13-17-
102(2); see also § 13-17-102(4). An action lacks substantial
justification if it is “substantially frivolous, substantially
groundless, or substantially vexatious.” § 13-17-102(4); see also
Castillo v. Koppes-Conway, 148 P.3d 289, 292 (Colo. App. 2006).
¶ 85 An appeal should be considered frivolous only “if the
proponent can present no rational argument based on the evidence
or law in support of a proponent’s claim or defense, or the appeal is
prosecuted for the sole purpose of harassment or delay.” Mission
Denver Co. v. Pierson, 674 P.2d 363, 366 (Colo. 1984). And we
should award attorney fees on appeal as a sanction under C.A.R.
38(b) only in “clear and unequivocal cases” of “egregious conduct.”
Wood Bros. Homes, Inc. v. Howard, 862 P.2d 925, 935 (Colo. 1993).
42
¶ 86 We do not find that Montezuma County’s defense of the
district court’s order lacks substantial justification. Even though it
was ultimately unsuccessful, Montezuma County presented rational
arguments based on the evidence and the law — a particularly
complicated scaffold of statutes and guidelines — in support of its
claims. See Mission Denver Co., 674 P.2d at 366 (finding that
appeal was not frivolous “merely because [it was] ultimately
unsuccessful). Therefore, we decline to award CO2 its appellate
attorney fees.
V. Conclusion
¶ 87 We reverse the district court’s order dismissing the complaint
for lack of standing and remand for further proceedings consistent
with this opinion.
JUDGE ROMÁN and JUDGE WELLING concur.
43