Commentary and Analysis Regarding Colorado Law

Lyons Gaddis water lawyers have been asked by several of the firm’s clients to advise them on providing water to marijuana-related businesses cultivating marijuana in “grow operations.”  These matters are complicated by the fact that the cultivation and sale of marijuana remains illegal under federal law. Under the aiding and abetting doctrine of criminal law, persons or entities providing water to these businesses could be subject to a federal prosecution.

Lyons Gaddis attorneys Jeff Kahn and Matt Machado recently spoke to state and local bar associations regarding the legal and ethical implications of providing legal representation to water providers in negotiating sales or leases of water for grow operations.  Mr. Kahn’s presentation to the Colorado Bar Association, Water Law Section (available here) covered topics including the lack of clear direction provided by the Cole Memorandum and the Bureau of Reclamation policy regarding the use of reclaimed water for activities prohibited by the Controlled Substances Act.  Matt Machado participated in a panel at the Boulder County Bar Association Bench Bar Retreat, and discussed ethical requirements for lawyers representing marijuana-related businesses.  This is a new area of the law that continues to evolve rapidly.  If you have questions in this area of water law, please contact , Jeff Kahn or Matt Machado.

Submitted by Eve Canfield Spot is my neighbor’s dog. There are few people Spot doesn’t want to bite. Because I fostered her as a rescue puppy, I am one of the lucky and very few humans that she loves unconditionally. If anything happened to Spot’s family, she would be welcomed into my home. She knows the way quite well. For a large number of the over 2.7 million animals euthanized in the U.S. every year, there is no home to go to when their owner (or “guardian” in Boulder) dies. Apparently we can partially thank Leona Helmsley, according to an article in the UMKC Law Review, for the establishment of enforceable Pet Trusts in Colorado and 37 other states. Leona left $12 million for the care of her dog, Trouble, in trust. In a legal sense, dogs and cats are personal property and are left to heirs or beneficiaries, who may or may not want to or be able to, care for a relative’s pet. It often takes weeks to resolve issues of personal property, but you can’t just store a pet with the silver until somebody makes a decision. A Pet Trust, however, can take immediate effect upon death to provide for your pet’s care.
Trusts are typically established with designated property for specific people. Some trusts are established for a particular purpose, such as a charitable trust. Pet Trusts are often called “honorary trusts.” This is because the pet can’t enforce the provisions of a trust to take them for a walk or to give a good scratch (although many pet owners might disagree). Colorado Revised Statute § 15-11-901, provides for an enforceable trust for the care of a designated domestic animal or pet and any of the offspring in gestation. It is interesting and unusual that this statute exempts a Pet Trust from the application of the rule against perpetuities (worthy of a separate explanation) and it also specifically allows extrinsic evidence to be admitted in the event a court has to interpret a Pet Trust and determine the intent of the person who transferred property into a trust for the pet’s care. There are several options available to provide for the future care of a pet, such as a simple provision in your will for a designated person to care for your pet and with a designated amount of money. You can also set up a separate trust with a formal trust document and designate property to fund it. You can also obtain a life insurance policy to fund the trust upon your death. So if you don’t have $12 million like Leona Helmsley or a neighbor who also loves your dog, like Spot does, you can still provide for the care of your pet when you’re gone.

Submitted by John Gaddis

Even with the ups and downs of oil prices, the oil and gas boom in Colorado is continuing. However, if you own land that has an existing oil and gas lease but there is no development of the minerals on your property, what do you do? Does a landowner have any recourse to require the lease holder to explore, develop and produce the minerals? Can the landowner seek to cancel the existing lease and negotiate a new one?

Medical Payments Coverage in Colorado

In the last two newsletters (Are You Putting Yourself at Risk by Saving on Your Car Insurance – Part 1, Part 2) I wrote about how it is important to have enough liability coverage and uninsured/underinsured motorist coverage to protect you from the harm you may cause or the harm you may incur when involved in an auto collision. Both of these auto coverages protect you in the long run, but are almost never paid until medical treatment is complete. Even though you may have plenty of insurance to reimburse you for damages incurred, medical bills start coming almost immediately after the accident. If you don’t have health insurance this can create real problems.

Under Colorado law an automobile insurance company is required to offer up to $5,000 of medical payments coverage when you initially purchase your auto insurance policy. Medical payments coverage pays up to the limit of coverage for every person in your vehicle and it pays on an ongoing basis. There are no deductibles and no co-payments, and it pays regardless of who is at fault for the collision. Many carriers offer medical payments coverage up $25,000 per person and some will offer as high as $100,000 per person.

Submitted by Jeff Kahn

On November 19th, Longmont’s Sean Cronin testified before the Senate Committee on Finance, Subcommittee on Taxation and IRS Oversight’s hearing entitled “Tax Relief after Disaster: How Individuals, Small Businesses, and Communities Recover.”  Mr. Cronin is the Executive Director for the St. Vrain and Left Hand Water Conservancy District.  (Watch Mr. Cronin’s testimony) He spoke to the challenges faced by farmers and mutual ditch companies as they work to rebuild important water infrastructure damaged by the 2013 flooding and the benefits that would be offered by adoption of the National Disaster Tax Relief Act of 2014., currently under review in the House and Senate. The full text of Mr. Cronin’s testimony is available here.

Submitted by Adele L. Reester

Has your local government received requests for access to and copies of public records? Have you wondered whether it is legal to charge a research fee for the time that it takes your staff to locate the records? Legislation signed by Governor Hickenlooper on May 2, 2014 provided clarification in response to recent court decisions holding that “reasonable” fees could be charged for research and retrieval time spent in response to an open records request. While the courts stated that such fees are permissible, they had not defined the amount of a “reasonable” fee. This new law, which became effective July 1, 2014, requires that if a local government (including school districts and special districts) is going to charge a fee for research and retrieval time it must have adopted a public records policy and posted it to the records custodian’s website or otherwise published it prior to receiving the request. This policy must contain the procedures for requesting and obtaining public records and it must specify the amount of the research and retrieval fee which the legislature determined should not be greater than $30.00 per hour. Every five years this maximum charge will be adjusted for inflation. Additionally, local governments may not charge at all for the first hour of time devoted to research and retrieval of records

Submitted by Blair M. Dickhoner

Many special districts take a “set it and forget it” approach to their insurance policies. In an environment where the legal landscape, exposure to risk and policies are changing regularly, this approach can create a great deal of exposure for special districts.

The Firm is excited about our new branch office in Louisville. Located at 363 Centennial Parkway, Suite 110, our Louisville office will provide greater flexibility for current and new clients from Louisville, Superior, Erie, Lafayette, Broomfield and surrounding communities near the Highway 36 corridor, as well as those from the Boulder and Denver metropolitan areas.

We are also excited that our three attorneys who live in Louisville, Steve Jeffers, Matt Machado and Madoline Wallace-Gross, will work on a regular basis in the Louisville office, allowing them to be more active in their hometown community. Steve has lived in Boulder County since 1977 and called Louisville home for the past 28 years. Matt and Madoline have also lived in Louisville for a number of years. All three attorneys look forward to new opportunities to be involved in the Louisville community. The Firm’s Louisville branch office will include office space for resident attorneys Steve, Matt, and Madoline, and additional office and conference space for other attorneys to work and to meet with clients, expert witnesses and consultants. All of the Firm’s attorneys are available to meet by appointment in either the Longmont office at 515 Kimbark Street, 303-776-9900 or in the Louisville office at 363 Centennial Parkway, 720-726-3670.

In a world where we are permanently connected to our “devices” and frequent “status” updates are the norm, special districts often struggle to define the appropriate role social media can play in their organizations.  Issues such as ensuring that employees are posting appropriate material, maintaining consistent messaging, addressing vulgar, offensive or harassing comments, protecting private information and using social media to provide better services to the public can overwhelm a special district.

At this year’s SDA Conference, on Friday, September 12, 2014 at 10:15 am in Torreys Peak II, Catherine Tallerico will discuss these topics and many others.  Catherine’s discussion will present the Top Ten Legal Issues with Social Media.  This enlightening session will explore the potential legal issues that may arise as social media is integrated into special districts.  Catherine will provide recommendations on the best policies and procedures districts can implement to maximize the benefits and avoid the unwanted pitfalls of social media.

Submitted by Adele L. Reester

Do you have questions about open meetings and public records?  Are you knowledgeable about recent changes in the law?

Submitted by Chad A. Kupper

If so, your District may need to determine whether a lease-purchase agreement is necessary. Under TABOR, Districts are precluded from incurring any form of multiyear indebtedness absent voter approval, including federal loans. However, a District can take a loan and use those funds to partially purchase equipment using a lease-purchase agreement. The Colorado Supreme Court has approved lease-purchase agreements as not being “debt” under TABOR because the annual payments are subject to appropriation by the Board each year.  In other words, if the District can’t afford the payment in any year, the Board doesn’t make an appropriation for that payment the next budget year, and the bank simply repossesses the equipment but can’t sue the District for any deficiency in the amount owed. A lease-purchase agreement must contain the magic TABOR provision making the yearly payment obligations subject to Board appropriation of funds for that payment each year.  If your District needs help purchasing equipment, don’t hesitate to contact our office to make sure the lease-purchase documents are in order.

Submitted by Blair M. Dickhoner

Authorities can be formed in accordance with Section 18, Article XIV of the Colorado Constitution and Sections 29-1-201, et seq. CRS. These cooperative entities provide a variety of functions and are one way to pool resources and maximize governmental services. Many types of special districts and local governments across the state have entered into partnerships to form a broad range of authorities, including water authorities, wastewater authorities, power authorities, 911 authorities, transportation authorities and many others.

Submitted by Bradley A. Hall

Last quarter, I wrote about how you are able to protect yourself and your family members from injuries caused by uninsured and underinsured negligent drivers. But what if the shoe is on the other foot? What if you are now the defendant who ran the stop sign, looked down at the wrong time, or committed some other act which injured another driver, pedestrian, or even one of your own passengers? Do you have enough liability insurance to cover the injured parties’ damages? If not, your personal assets, including your ongoing income, may be at risk.

Submitted by Cameron A. Grant

Recently the Denver Post reported that Boulder County could be liable for $1 billion in petro “takings” if local governments adopt and enforce bans on the drilling practice called fracking.  On June 24th, voters in the City of Loveland rejected a measure that would have extended a moratorium on drilling in the city limits.  Clearly, the issues surrounding oil and gas development in Colorado are heating up.  Sensational claims continue to be made during this energetic election season.  The potential threat of petro takings is one such claim.

Submitted by Anton V. Dworak

After more than 10 years of tax chaos, the American Tax Relief Act (ATRA) of 2012 ended the uncertainty that swirled around estate and gift taxes. ATRA made permanent the $5,000,000 estate tax exclusion, generation skipping tax exemption and gift tax exclusion with all indexed for inflation ($5,340,000 in 2014). While this change should be heralded as excluding the vast majority of Americans from worrying about Federal estate and gift taxes, this change could make many wills and trusts executed before ATRA more difficult to administer or in some cases have a result that that decedent did not desire for their beneficiaries.

The problem is that when the estate tax exemptions were as low as $600,000, it was standard practice to create wills with formula clauses. These clauses employed a mathematical formula to determine marital and family bequests. Here’s an example: John and Jane are married, but John has 2 children from a prior marriage and Jane has none. John’s estate is $1,200,000 and Jane’s is smaller. John has a will done in 1990 that has a formula that says put the estate tax exclusion in effect in year of his death into a trust for the benefit of his children and put the rest into a marital trust for Jane for income only and some principal distributions, with the remainder passing to John’s children upon her death. In 1990 when the estate tax exclusion was $600,000, if John died this might have worked perfectly. $600,000 would go into a trust for John’s kids with the remaining $600,000 for Jane for her use during her life. If using those same numbers in 2014, the entire estate of $1,200,000 would go to the children in their trust and none to Jane because only assets over the $5,340,000 exclusion would go into Jane’s trust. Jane would get nothing from John’s estate and she would have to rely on her own estate to provide for herself or use some complicated legal proceedings to see if she could get more from John’s estate depending on how long they were married.

Submitted by Blair M. Dickhoner

On May 2, 2014, Governor Hickenlooper signed HB 14-1193 into law.  This legislation was passed in response to recent court decisions holding that “reasonable” fees could be charged for research and retrieval time spent in response to an open records request.  While the courts stated that such fees are permissible, they did not define the amount of a “reasonable” fee.  This new law, which becomes effective July 1, 2014, requires that if a special district is going to charge a fee for research and retrieval time it must have an open records policy in place that has been posted to the records custodian’s website or otherwise published prior to receiving the request.  This policy must contain the procedures for requesting and obtaining open records and it must specify the amount of the research and retrieval fee which the legislature determined should not be greater than $30.00 per hour.  Additionally, special districts may not charge at all for the first hour devoted to research and retrieval of records.

Submitted by Eve I. Canfield

After the famous case in Boulder District Court, McLean v DK Trust, Colorado‘s legislature revised the statute on adverse possession. (C.R.S. § 38-41-101). In addition to making it a little more difficult to prove all of the elements of adverse possession for the party claiming ownership against the record owner, the revised statue allowed for some compensation to the losing party at the discretion of the judge. Compensation for the property itself is based upon the actual value by the county assessor for the most recent property tax valuation. Compensation may also be in the way of an equitable apportionment of the actual tax value of the property being lost if that parcel was not already taxed separately from the losing party’s property. A losing party can also be reimbursed for all or part of the property taxes and other assessments that were paid by the losing party for the last eighteen years before the entry of a final order giving title to the adverse possessor. This revision provides some relief to property owners losing title to a portion of land that has been proven to be adversely possessed by another. The only problem that remains, is that this revision allowing for compensation is only applicable in actions in which title vests with the adverse possessor on or after July 1, 2008, meaning the full 18 year requirement for adverse possession has been fulfilled before July 1, 2008. If title is shown to vest in the adverse party before July 1, 2008, this compensation provision is not available to you if your land if taken through an adverse possession action.

Submitted by Adele L. Reester

Have a liquor license or thinking about getting one for your business: knowing the ins and outs can make all the difference.Liquor licensing of restaurants, taverns, stores, and other establishments is governed by a variety of state laws and regulations, legal decisions, and local rules established by individual Local Licensing Authority (“LLA”). Each municipality or county establishes its own LLA, which may be its judge, a hearing officer, the city council, the county commissioners, or even an appointed citizen board like the one used by the City of Boulder. In Longmont, the City utilizes its municipal judge, while outside city limits Boulder County’s Board of County Commissioners has appointed a hearing officer.

Starting the liquor license process, the applicant will need to complete the state application forms and also comply with any locally established rules. While there are uniform requirements that apply across the board to all applicants throughout the state, having knowledge of the local rules is essential for a smooth application route from start to finish. Longmont is a prime example where local rules create additional burdens on an applicant; some of the City’s local rules include: completion of a City application and other financial release forms; submission of three letters of reference that address the applicant’s (and perhaps registered manager’s) moral character and financial abilities; and deadlines for submitting neighborhood survey results and other evidence prior to the public hearing. Applicants need to assure that applications are complete or they will be rejected.

Submitted by Matthew Machado

The EPA has proposed a rule that will expand the need for federal permits under the federal Clean Water Act (CWA) for discharges or other impacts to waters of the U.S. The activities requiring such permits include discharges of “dredged or fill material” (Section 404 Permits) and permits for point source discharges of pollutants the Colorado Department of Health and Environment (CDPS Permit). Typical examples of activities requiring a 404 permit include replacement of a ditch headgate for a municipally owned ditch or digging in a wetland. Examples of activities requiring a CDPS permit include municipal stormwater discharges, CAFOs, and industrial discharges. Depending on the activity involved, obtaining a permit could take hours or take years and millions of dollars.

I. Proposed Rule Redefining Waters of the U.S.The EPA and the Army Corp of Engineer are currently considering adoption of a Proposed Rule intended to expand and/or clarify (depending on who you talk to) the types of streams and wetlands that are considered to be “waters of the U.S.,” and therefore subject to the CWA. Comments on the proposed rule may be submitted to the EPA and Corps until October 20, 2014.The proposed rule will expand the definition of waters of the U.S. to lands that have more marginal water attributes, and result in more projects requiring CWA permits. Under the current rule, the term “wetlands” generally includes those areas normally inundated sufficient to support wetlands vegetations, including swamps, marshes, bogs, and similar areas. Under the proposed rule, the focus would be less on the degree of inundation and more on the connection to a larger water body that is clearly a water of the U.S. For the most part, unless exempt (see below), tributaries and wetlands in the watershed of a stream or river will definitely be deemed waters of the U.S. Furthermore, land with more marginal water attributes in the watershed not currently considered water of the U.S. (e.g. dry gulches and drainage ditches common in Colorado) could be deemed on a case by case basis water of the U.S based on the connection and other factors (“significant nexus” test).

According to statistics compiled by the Center for Disease Control, the number one cause of death due to unintentional injury is motor vehicle accidents.  Likewise, motor vehicle accidents are the fourth leading for emergency room visits resulting from unintentional accidents.

Across the United States, 1 in 7 drivers are uninsured.  Colorado falls in line with that statistic.  In addition, Colorado requires only that a driver purchase $25,000 in liability coverage.  The odds are good in Colorado that, if you are involved in an auto accident, the at-fault driver is going to be uninsured or have the minimum limits of coverage.  Even a moderately serious accident can result in well in excess of $25,000 in damages.  An ambulance ride to the emergency room, follow-up care with your physician, lost wages and other expenses can add up quickly.