Colorado Supreme Court to Revisit Standing of Counties to Sue the State

Opinion

By Bennett Cohen, Colin Deihl and Gina Tincher
Polsinelli


When a county actively participates in agency rulemaking with other counties, cities, individuals, interest groups and stakeholders, may it challenge alleged procedural flaws under the state’s Administrative Procedure Act? That is the question the Colorado Supreme Court has agreed to revisit in Board of County Commissioners of Weld County v. Ryan et al.

Background

The case stems from 2019 rulemaking by the State Air Quality Control Commission to revise standards governing emissions of volatile organic compounds at oil and gas well sites. Weld County, Colorado’s largest oil and gas producer, participated in the rulemaking process and hired experts to opine on the effects of the proposed changes to the commission’s rules. So too did other counties and stakeholders who supported the proposed changes. When the rulemaking resulted in new standards Weld County didn’t support, Weld County brought an action for judicial review of the rulemaking under the Colorado Air Pollution Prevention Control Act[i] and the APA. The trial court dismissed the action under a judicially created rule of standing (called the Rule of Martin) that was devised to keep the judicial branch out of purely internecine executive branch disputes. The Colorado Court of Appeals affirmed the dismissal on this basis. On Nov. 21, the Colorado Supreme Court granted Weld County’s petition for certiorari to review the Rule of Martin’s evolution as a judicially created tool to prevent lower-level government entities (like counties) from suing the state.

History of the Rule of Martin

To understand this issue, one must wade through more than 50 years of Colorado jurisprudence dating back to the 1970 decision in Board of County Commissioners v. Love,[ii] in which the Court held that counties lacked standing to sue because the APA’s definition of “persons” didn’t include counties. The General Assembly legislatively overruled Love by amending the APA[iii] to include counties in the list of persons entitled to challenge agency action through the APA. That should have settled the matter of counties’ standing to challenge state actions (like state agency rulemaking) under the APA.

However, this clear status of counties and other local governments to challenge state actions became muddled in a series of cases addressing when one part of a government entity has standing to sue the agency itself. First, in Martin v. District Court,[iv] the Supreme Court ruled that because the statute at issue specified that counties act as “agents” of the State Department of Social Services in administering programs like Medicaid, counties lacked standing to challenge the state agency’s actions.[v] The Supreme Court, however, didn’t announce a formal rule for this situation in Martin or any of the similar cases that followed.

Then in 1989, the court decided to formalize the Rule of Martin in a case with unique facts. In Maurer v. Young Life,[vi] the State Property Tax Assessment Board overruled its director in order to grant tax exempt status to church-affiliated camp property. The tax board then directed the board’s director to file an action for judicial review of the tax board’s own decision, which the tax board was statutorily authorized to do in matters of statewide concern. There was no true adversity in Maurer, but the General Assembly had essentially authorized the tax board to sue itself — an unusual (and possibly unique) situation. The Supreme Court nonetheless chose Maurer as the case to formulate a general rule of prudential standing, which the court did based on the unique aspects before it. The court held that Martin “precludes standing when two conditions are met: (1) the agency seeking judicial review is subordinate to the agency whose decision is sought to be reviewed, and (2) no statutory provision confers a right on the subordinate agency to seek judicial review of the superior agency’s decision.”[vii]

The Rule of Martin has caused much confusion in subsequent cases. Lawsuits with government entities on both sides of the “v” are common. However, government is naturally hierarchical, so many state agencies and all local government entities are in some sense “subordinate” to the state. And the General Assembly generally does not specify who does or does not have standing to sue under the myriad statutes it enacts. As a result, lawsuits between government entities with differing interests can easily get tripped up by the Rule of Martin. Courts have sometimes applied the Rule of Martin to dismiss these cases based on the “subordinate” government entity’s lack of standing. More often, courts manage to figure out a way around the Rule of Martin in order to address a clearly justiciable government dispute.

The Rule of Martin Impacts Many Different Stakeholders

This Weld County action is the latest misapplication of the Rule of Martin. Weld County was one of many stakeholders in a state agency rulemaking. All participants in the rulemaking have standing to seek judicial review under the APA, especially counties, which get special consideration in air quality rulemakings under the Air Act. But the Court of Appeals effectively held that, under the Rule of Martin, any participant in an Air Act rulemaking could seek judicial review except for counties because counties are supposedly “subordinate” to the State Air Quality Control Commission, and the Air Act does not expressly state that counties can sue for review of rulemakings.

This standing analysis could apply to any local government in just about any case where different government entities have a dispute that requires judicial resolution: one of the government entities is bound to be “subordinate” to the other (e.g., local governments can always be deemed subordinate to the state); and the General Assembly does not include a list of government entities with standing to sue in every statute it enacts. Courts properly use the doctrine of preemption as the way to resolve otherwise intractable disputes between local and state government, not standing. Wrongly depriving a government entity standing to sue short-circuits the judicial process and sometimes the political process as well.

Conclusion

Cases like Martin are designed to ensure that when government entities are on both sides of the “v” they have differing interests and thus present an adverse and justiciable dispute that is appropriate for judicial resolution. Maurer was a one-off exception where the General Assembly authorized an agency to sue itself. By formulating the Rule of Martin based on the unique facts of the Maurer case, the Supreme Court created a standing rule that could potentially put almost any local government out of court, as it did here for Weld County.

Counties, cities, special districts and all other local governments in particular have a stake in how the Supreme Court reviews and hopefully clarifies its Rule of Martin in this case.

Bennett L. Cohen focuses on litigation that’s on appeal, might involve an appeal or needs to be managed to avoid an appeal. He can be reached at [email protected] or 720.931.8155. Colin C. Deihl handles complex business disputes at all stages of litigation, representing a wide range clients. He can be reached at [email protected] or 303.256.2711. Gina L. Tincher focuses on complex commercial contract disputes, environmental claims and challenges to agency actions. She can be reached at [email protected] or 303.256.1967.

[i] C.R.S. § 25-7-101, et seq.

[ii] 470 P.2d 861, 862 (Colo. 1970).

[iii] See C.R.S. §§ 24-4-106(4), 24-4-102(12), and 24-4-106(4.5).

[iv] 550 P.2d 864 (Colo. 1976).

[v] Id. at 865-66.

[vi] 779 P.2d 1317 (Colo. 1989).

[vii] Id. at 1320.

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