COLORADO COURT OF APPEALS 2016COA178 

Court of Appeals No. 15CA2063 

Garfield County District Court No. 14CV30180 

Honorable James B. Boyd, Judge 

Grant Brothers Ranch, LLC, 

Plaintiff-Appellant, 

v. 

Antero Resources Piceance Corporation, a withdrawn Colorado corporation, 

and Ursa Operating Company, LLC, a Delaware corporation, 

Defendants-Appellees. 

JUDGMENT AFFIRMED IN PART, REVERSED IN PART, 

AND CASE REMANDED WITH DIRECTIONS 

Division VI 

Opinion by JUDGE FOX 

Bernard and Richman, JJ., concur 

Announced December 1, 2016 

Dufford, Waldeck, Milburn & Krohn, LLP, Nathan A. Keever, Grand Junction, 

Colorado, for Plaintiff-Appellant 

Beatty & Wozniak, P.C., Michael J. Wozniak, Karen L. Spaulding, Malinda 

Morain, Denver, Colorado, for Defendants-Appellees 
1 

¶ 1 Plaintiff, Grant Brothers Ranch, LLC (Grant Brothers), sued 

defendants, Antero Resources Piceance Corporation (Antero) and 

Ursa Operating Company, LLC (Ursa) (collectively, Operators), to 

recover its share of proceeds derived from the production and sale 

of oil and gas. Concluding that Grant Brothers was required and 

failed to exhaust its administrative remedies available under the Oil 

and Gas Conservation Act, §§ 34-60-101 to -130, C.R.S. 2016 (the 

Act), the district court held that it lacked subject matter jurisdiction 

over the action and granted summary judgment in favor of 

Operators. Grant Brothers appeals the judgment dismissing its 

claims with prejudice. We affirm in part, reverse in part, and 

remand with directions to correct the judgment. 

I. Background 

¶ 2 Antero, an oil and gas exploration and production company, 

received approval from the Colorado Oil and Gas Conservation 

Commission (the Commission) to establish a drilling and spacing 

unit to produce oil and gas in Garfield County. Grant Brothers 

owned property within this unit. Antero wished to produce the oil 

and gas underlying Grant Brothers’ property, but Grant Brothers 
2 

refused Antero’s offer to lease the minerals or participate in their 

production. 

¶ 3 As a result, Antero requested that the Commission pool all 

nonconsenting interests in the unit and allow Antero to produce 

and sell the oil and gas of the nonconsenting owners. Grant 

Brothers asked the Commission to deny Antero’s request. After a 

hearing, the Commission issued an order pooling all of the 

nonconsenting interests in the unit. 

¶ 4 About a year and a half after issuing this pooling order, the 

Commission approved Antero’s request to establish another drilling 

and spacing unit within the same lands as the first unit in order to 

produce oil and gas from a deeper formation. Again, Antero asked 

Grant Brothers to lease the minerals or participate in their 

production and, again, Grant Brothers refused. Antero requested 

that the Commission pool all nonconsenting interests in the second 

unit. After a hearing, the Commission issued an order pooling all 

nonconsenting interests in the second unit. 

¶ 5 As a result of the Commission’s pooling orders, Grant Brothers 

became a nonconsenting owner pursuant to section 34-60-116(7), 

C.R.S. 2016, of the Act. In pertinent part, this meant that Grant 
3 

Brothers was entitled to receive its interest in the proceeds derived 

from the production and sale of oil and gas from wells in the units. 

However, Grant Brothers would receive payment only after these 

wells reached “payout,” in other words after Antero recovered the 

costs allowed by section 34-60-116(7). The pooling orders required 

Antero to furnish Grant Brothers with monthly statements 

containing information about its costs and its proceeds. 

¶ 6 Almost three years after the Commission issued its last 

pooling order, Grant Brothers asked Antero for permission to audit 

its books and records regarding the wells at issue. Antero refused, 

noting that it had been sending Grant Brothers the required 

monthly statements. 

¶ 7 About two years after Antero refused the request for an audit, 

Grant Brothers sued Operators in district court.1 Grant Brothers’ 

complaint requested an equitable accounting and alleged that the 

wells had reached payout, but Operators had yet to pay Grant 

Brothers. Operators filed a motion for summary judgment, 

asserting that Grant Brothers was required to exhaust its 

 

1 Antero drilled and operated the wells within the units until 

December of 2012, when Ursa assumed operation of the wells. 
4 

administrative remedies available under the Act and had failed to 

do so before filing its complaint. Operators argued that the district 

court lacked subject matter jurisdiction over the action and should 

dismiss it with prejudice. The court agreed and granted summary 

judgment, dismissing the action with prejudice. 

II. Summary Judgment 

¶ 8 Grant Brothers first contends that the district court 

improperly granted summary judgment because Grant Brothers 

was not required to exhaust its administrative remedies, and, thus, 

the court had subject matter jurisdiction over the action. We 

disagree. Second, Grant Brothers argues that it was inappropriate 

for the district court to dismiss the action with prejudice on the 

basis that the court lacked subject matter jurisdiction over the 

action. We agree that dismissal with prejudice was error. 

A. Administrative Exhaustion 

¶ 9 Grant Brothers argues that the Act does not contain a clear 

manifestation of legislative intent requiring an involuntarily pooled 

mineral rights owner to exhaust administrative remedies before 

seeking an equitable accounting in district court regarding the 

amount of proceeds owed after the wells at issue reach payout. 
5 

Grant Brothers asserts that the Act’s language and legislative 

history — including the 1998 amendments to the Act and related 

testimony from Senator Tilman Bishop, the sponsor of the 

amendments2 — and the Commission’s rules support this position. 

1. Preservation 

¶ 10 The parties agree that Grant Brothers properly preserved this 

argument, except to the extent that Grant Brothers uses Senator 

Bishop’s testimony to support its contention. 

¶ 11 We do not consider “arguments never presented to, considered 

or ruled upon by” the district court. Core-Mark Midcontinent Inc. 

v. Sonitrol Corp., 2016 COA 22, ¶ 24 (citation omitted). All that is 

needed to preserve an issue for appeal is for the issue to be brought 

to the district court’s attention so that the court has an opportunity 

to rule on it. Berra v. Springer & Steinberg, P.C., 251 P.3d 567, 570 

(Colo. App. 2010). 

¶ 12 Responding to the motion for summary judgment, Grant 

Brothers argued that the legislature did not intend for the 

 

2 In 1998, Senator Bishop sponsored a bill, S.B. 98-159, that 

amended several parts of the Act, including provisions in section 

34-60-118.5, C.R.S. 2016, concerning the Commission’s 

jurisdiction over certain disputes. See Ch. 186, sec. 1, 

§ 34-60-118.5, 1998 Colo. Sess. Laws 636. 
6 

Commission’s jurisdiction over disputes like the one at issue to be 

exclusive or, relatedly, to require administrative exhaustion. Grant 

Brothers supported this argument by discussing the Act’s 1998 

amendments. On appeal, Grant Brothers merely presents relevant 

legal research — Senator Bishop’s testimony — to further support 

the argument previously made to the district court.3 Therefore, we 

conclude that Grant Brothers’ argument was properly preserved. 

2. Review Standard 

¶ 13 Although Operators moved for summary judgment, their 

motion argued that the district court lacked subject matter 

jurisdiction over the action. The district court granted Operators’ 

motion solely on this basis. The district court’s order left 

unresolved significant factual disputes, such as whether payout 

had occurred. Given these facts, Operators’ motion was effectively a 

 

3 Although Senator Bishop’s testimony was not specifically 

presented to the district court, the arguments regarding legislative 

intent and related legislative history were brought to the court’s 

attention such that it had an opportunity to rule on this issue. See 

Berra v. Springer & Steinberg, P.C., 251 P.3d 567, 570 (Colo. App. 

2010). We will not address the remainder of the arguments that 

Grant Brothers raised for the first time either on appeal or in its 

reply brief. See Core-Mark Midcontinent Inc. v. Sonitrol Corp., 2016 

COA 22, ¶ 24; see also People v. Czemerynski, 786 P.2d 1100, 1107 

(Colo. 1990) (refusing to address issues not raised in an appellant’s 

original brief but raised for the first time in the reply brief).
7 

motion to dismiss for lack of subject matter jurisdiction more 

properly brought under C.R.C.P. 12(b)(1) than C.R.C.P. 56. See

Trinity Broad. of Denver, Inc. v. City of Westminster, 848 P.2d 916, 

925 (Colo. 1993) (reasoning that a court’s determination under Rule 

12(b)(1) reveals whether it has power to hear the case, while its 

determination under Rule 56 results in an adjudication on the 

merits); cf. Winslow v. Walters, 815 F.2d 1114, 1116 (7th Cir. 1987) 

(“Seeking summary judgment on a jurisdictional issue . . . is the 

equivalent of asking a court to hold that because it has no 

jurisdiction the plaintiff has lost on the merits. This is a 

nonsequitur.”). 

¶ 14 Because the record contains all necesary information, we 

apply Rule 12(b)(1) to the record before us and resolve these issues 

as a matter of law. See Trinity Broad. of Denver, Inc., 848 P.2d at 

925; W.O. Brisben Cos. v. Krystkowiak, 66 P.3d 133, 137 (Colo. 

App. 2002) (citing Norsby v. Jensen, 916 P.2d 555, 559 (Colo. App. 

1995)), aff’d on other grounds, 90 P.3d 859 (Colo. 2004). 

¶ 15 We employ a mixed standard of review to motions to dismiss 

for lack of subject matter jurisdiction. Hanson v. Colo. Dep’t of 

Revenue, 140 P.3d 256, 257-58 (Colo. App. 2006). We review 
8 

factual findings for clear error, and such findings will be upheld 

unless they have no support in the record. Id. However, we review 

legal conclusions de novo. Id. We also review a district court’s 

interpretation of a statute de novo. Anderson v. Vail Corp., 251 P.3d 

1125, 1127-28 (Colo. App. 2010). In construing legislation, we look 

first to the plain language of the statute, reading it as a whole. 

Young v. Brighton Sch. Dist. 27J, 2014 CO 32, ¶ 11. Then, if the 

language is ambiguous, we “construe the statute in light of the 

General Assembly’s objective,” presuming “that the legislature 

intended a consistent, harmonious, and sensible effect.” Anderson, 

251 P.3d at 1127-28. 

3. Applicable Law 

¶ 16 In the Act, the Colorado Legislature granted the Commission 

“the authority to regulate: . . . the drilling, producing, and plugging 

of wells and all other operations for the production of oil or 

gas . . . .” § 34-60-106(2)(a), C.R.S. 2016.4 The Act’s declaration 

 

4 The Commission also regulates “[t]he spacing of wells . . . and 

. . . [l]imit[s] the production of oil or gas, or both, from any pool 

or field for the prevention of waste, and [limits] and [allocates] the 

production from such pool or field among or between tracts of 

land having separate ownership therein, on a fair and equitable 

basis so that each such tract will be permitted to produce no 
9 

gives the Commission a broad grant of jurisdiction. See

§ 34-60-105(1), C.R.S. 2016 (“The commission has jurisdiction over 

all persons and property, public and private, necessary to enforce 

the provisions of this article, and has the power to make and 

enforce rules, regulations, and orders pursuant to this article, and 

to do whatever may reasonably be necessary to carry out the 

provisions of this article.”); see also Oborne v. Cty. Comm’rs, 764 

P.2d 397, 401 (Colo. App. 1988) (stating that the Act is a 

comprehensive statute intended to regulate development, 

production, and utilization of gas and oil). 

¶ 17 The Act further provides that “[a]bsent a bona fide dispute 

over the interpretation of a contract for payment, the oil and gas 

conservation commission shall have jurisdiction to determine . . . 

[ t]he date on which payment of proceeds is due” and any “amount 

of proceeds” or interest due. § 34-60-118.5(5)(a) and (c), C.R.S. 

2016. Relatedly, the very next provision, subsection 5.5, provides: 

Before hearing the merits of any proceeding 

regarding payment of proceeds pursuant to 

this section, the oil and gas conservation 

commission shall determine whether a bona 

 

more than its just and equitable share from the pool . . . .” 

§ 34-60-106(2)(c) and (3)(a), C.R.S. 2016. 
10 

fide dispute exists regarding the interpretation 

of a contract defining the rights and 

obligations of the payer and payee. If the 

commission finds that such a dispute exists, 

the commission shall decline jurisdiction over 

the dispute and the parties may seek 

resolution of the matter in district court. 

§ 34-60-118.5(5.5). 

¶ 18 In relation to whether payout has occurred, the Act states 

that, “[i]n the event of any dispute” as to the costs allowed to be 

recovered before having to pay the nonconsenting owners, “the 

[C]ommission shall determine the proper costs[.]” § 34-60-116(7)(a). 

It also states that, during the period of cost recovery occurring 

before the wells reach payout, “the [C]ommission shall retain 

jurisdiction to determine the reasonableness” of such costs. 

§ 34-60-116(7)(d). 

¶ 19 An exception to the Commission’s jurisdiction concerns 

disputes over the interpretation of a payment contract. The 

Commission shall “decline jurisdiction over the dispute,” and the 

parties can “seek resolution of the matter in district court,” if the 
11 

dispute involves a contract. § 34-60-118.5(5.5) (emphasis 

added).5 

¶ 20 If “complete, adequate, and speedy” administrative remedies 

are available, a party generally must exhaust these remedies before 

filing suit in district court.6 City & Cty. of Denver v. United Air 

Lines, Inc., 8 P.3d 1206, 1212 (Colo. 2000). The administrative 

exhaustion doctrine “enables the agency to make initial 

determinations on matters within its expertise and to compile a 

record that is adequate for judicial review” so as to “prevent 

piecemeal application of judicial relief and to conserve judicial 

resources.” State v. Golden’s Concrete Co., 962 P.2d 919, 923 (Colo. 

1998); accord Great W. Sugar Co. v. N. Nat. Gas Co., 661 P.2d 684, 

690 (Colo. App. 1982) (explaining that primary jurisdiction allows 

an agency to decide “in the first instance . . . technical questions of 

fact uniquely within the agency’s expertise and experience”) 

(citation omitted). 

 

5 The legislature limited the Commission’s jurisdiction over lawsuits 

for damages or injunctive relief, but this is not at issue in this case. 

See § 34-60-114, C.R.S. 2016. 

6 There are exceptions to administrative exhaustion, but none was 

invoked here. 
12 

¶ 21 However, when the administrative agency does not have the 

authority to grant the relief requested by the party seeking judicial 

action, and the available administrative remedies are “ill-suited” for 

providing the relief requested, administrative exhaustion is not 

required. Brooke v. Rest. Servs., Inc., 906 P.2d 66, 71 (Colo. 1995) 

(citation omitted). In determining whether a court has subject 

matter jurisdiction over a claim where a party did not exhaust 

administrative remedies available to it, courts examine whether: (1) 

the claim was filed pursuant to the relevant statute; (2) this statute 

provides a remedy for the claim asserted; and (3) the legislature 

intended this statute to provide a “comprehensive scheme” 

addressing the issues underlying the claim. Id. at 68-71; see 

Pfenninger v. Exempla, Inc., 17 P.3d 841, 843-44 (Colo. App. 2000). 

4. Analysis 

¶ 22 We conclude that the district court was right to dismiss the 

action for the reasons stated below. 

¶ 23 First, in determining whether the claim at issue was filed 

pursuant to the relevant statute, Brooke, 906 P.2d at 68-71, we 

understand Grant Brothers’ claim as one for payment of proceeds 

arising under sections 34-60-116 and -118.5 of the Act. At issue is: 
13 

(1) whether payout has been reached; (2) if so, the date on which 

payment proceeds became due; and (3) the amount owed (plus 

interest) to Grant Brothers. § 34-60-118.5(5) and (5.5). It is 

undisputed that Grant Brothers is a nonconsenting owner seeking 

payment of funds acquired by Operators by extracting and selling 

natural gas from the wells at issue. Consequently, Grant Brothers 

qualifies as a “payee” entitled to payment of proceeds from 

Operators, the “payers.” See §§ 34-60-116(7), -118.5(1)(a) and (b). 

¶ 24 Grant Brothers’ entitlement, however, is subject to a condition 

precedent. Where, as here, an operator and a nonconsenting owner 

have no contract addressing the issue, “[t]he date on which 

payment of proceeds is due” is the date the wells reach payout. § 

34-60-118.5(5). Grant Brothers receives payment only if and when 

payout occurs. 

¶ 25 Reading subsections -118.5(5) and -118.5(5.5) together, as we 

must, and applying the statutory language, Young, ¶ 11, we 

conclude that the Act’s comprehensive scheme means that primary 

jurisdiction for the present dispute remains with the Commission. 

See Great W. Sugar Co., 661 P.2d at 690. If one party is dissatisfied 

with the results of the administrative process, that party can then 
14 

seek judicial review. See § 34-60-111, C.R.S. 2016 (providing that 

any final order of the “[C]ommission shall be subject to judicial 

review”); see also Dep’t of Nat. Res. Reg. 501(c), 2 Code Colo. 

Regs. 404-1 (adopting the State Administrative Procedure Act 

(APA), sections 24-4-101 to -108, C.R.S. 2016); Dep’t of Nat. Res. 

Reg. 503(b)(8), 2 Code Colo. Regs. 404-1 (allowing a mineral interest 

owner to file an application to the Commission for the purpose of 

seeking a hearing on provisions related to measurement); Dep’t of 

Nat. Res. Reg. 503(b)(10), 2 Code Colo. Regs. 404-1 (allowing an 

aggrieved interest owner to file an application for relief for any 

other matter not described in the regulation); Dep’t of Nat. Res. 

Reg. 522, 2 Code Colo. Regs. 404-1 (allowing a mineral owner to 

file a complaint requesting the issuance of a violation notice 

directing an operator to voluntarily remedy the violation). 

¶ 26 Second, as to whether the relevant statute provides a remedy 

for the claim asserted, Brooke, 906 P.2d at 68-71, the Act provides 

a remedy for claims for the payment of proceeds where the parties 

have no contract addressing the issue. 

¶ 27 Here, there is no contract; thus, there is no contract dispute. 

See, e.g., Atl. Richfield Co. v. Farm Credit Bank of Wichita, 226 F.3d 
15 

1138, 1157 (10th Cir. 2000) (applying Colorado law); Anderson 

Living Trust v. ConocoPhillips Co., LLC, 952 F. Supp. 2d 979, 1054 

(D.N.M. 2013) (applying Colorado law); Grynberg v. Colo. Oil & Gas 

Conservation Comm’n, 7 P.3d 1060, 1062-63 (Colo. App. 1999) 

(finding the Commission had jurisdiction to calculate the amount of 

proceeds due to a payee and to enforce timely payment, but lacked 

jurisdiction to resolve a contractual dispute over whether operators 

were entitled under a lease to deduct post-production expenses in 

computing royalties due to owners). 

¶ 28 A payee contesting the payment (or nonpayment) of proceeds 

must first submit a written request, such as Commission Form 37, 

to the payer(s) requesting certain information regarding the costs of 

installing and operating the well. § 34-60-118.5(2.5); Dep’t of Nat. 

Res. Reg. 329, 2 Code Colo. Regs. 404-1. After submitting Form 37, 

if the dispute remains unresolved, the payee may then submit Form 

38 to request a hearing before the Commission. Any final order 

resulting from such a hearing is subject to judicial review pursuant 

to the APA, sections 24-4-101 to -108. See § 34-60-111; see also 

Dep’t of Nat. Res. Reg. 501, 2 Code Colo. Regs. 404-1. 
16 

¶ 29 Third, with regard to whether the legislature intended the 

statutory remedy to be the primary remedy for the claim asserted, 

Brooke, 906 P.2d at 68-71, the legislature has said, by the Act’s 

language and structure, that a proceeding before the Commission, 

as described above, is the primary remedy for nonconsenting 

owners’s claims for the payment of proceeds where there is no 

germane contract between the parties. See §§ 34-60-

118.5(5), -118.5(5.5), and -116(7). The comprehensive statutory 

scheme detailed above — addressing when payout has occurred, 

the date when payment of proceeds is due, and the amount of 

proceeds due where the parties have no contract regarding the 

payment of proceeds — evidences this intent. See Brooke, 906 P.2d 

at 68-71; Egle v. City & Cty. of Denver, 93 P.3d 609, 612 (Colo. App. 

2004). The scheme establishes a typical administrative process 

allowing for rulemaking, hearings, and eventual judicial review of 

disputes within the Commission’s area of expertise. 

¶ 30 Contrary to Grant Brothers’ suggestion, the 1998 amendments 

do not evidence a change in the legislature’s intent regarding the 

primacy of the Commission’s jurisdiction over disputes like this 

one. Before the amendments, the Act stated that the Commission 
17 

“shall have exclusive jurisdiction to determine . . . [t]he date on 

which payment of proceeds is due a payee[;] . . . [t]he existence or 

nonexistence of an occurrence . . . [justifying] a delay in payment; 

and . . . [t]he amount of proceeds plus interest, if any, due a payee 

by a payor.” § 34-60-118.5(5), C.R.S. 1997 (emphasis added). After 

the amendments, the Act states that, “[a]bsent a bona fide dispute 

over the interpretation of a contract for payment, [the Commission] 

shall have jurisdiction to determine” the same three issues outlined 

in the older version of the Act. § 34-60-118.5(5), C.R.S. 2016. The 

1998 amendments did not change the Commission’s primary 

jurisdiction over disputes for the payment of proceeds such as the 

one before us. Rather, they clarified that disputes involving a “bona 

fide dispute over the interpretation of a contract for payment” 

should be brought in the district court. See §§ 34-60-118.5(5) 

and -118.5(5.5). The history of the 1998 amendments to the Act, 

implemented through Senate Bill 98-159,7 reveals the following: 

 

7 Although we conclude that the Act’s language evidences its 

underlying legislative purpose, we examine the legislative history of 

the 1998 amendments in order to fully address the issues Grant 

Brothers raises on appeal. See Kisselman v. Am. Family Mut. Ins. 

Co., 292 P.3d 964, 969 (Colo. App. 2011) (“[W]e may consider 

legislative history when there is substantial legislative discussion 
18 

 Senator Bishop repeatedly stated that the thrust of the bill 

was to ensure that royalty owners received more information 

regarding the payments from operators so that they could 

ensure the sufficiency of the payments of proceeds. See

Hearings on S.B. 98-159 before the Conf. Comm., 61st Gen. 

Assemb., 2nd Sess. (Apr. 16, 1998) (comments of Senator 

Bishop); Hearings on S.B. 98-159 before the S. Agricultural 

Comm., 61st Gen. Assemb., 2nd Sess. (Feb. 4, 1998) 

(comments of Senator Bishop). Bishop, along with the 

Member of the House who worked with him on the bill, also 

stressed multiple times that the bill was not meant to change 

any substantive contractual rights established by oil and gas 

leases, but it would change some procedural rights (such as 

how payments should be made and what information should 

be disclosed regarding such payments). Hearings on S.B. 

98-159 before the Conf. Comm., 61st Gen. Assemb., 2nd Sess. 

(Apr. 16, 1998) (comments of Senator Bishop). Bishop also 

emphasized that the Commission should not be asked to 

 

surrounding the passage of a statute, and the plain language 

interpretation of a statute is consistent with legislative intent.”). 
19 

resolve disputes that are better addressed by courts (e.g., 

interpretation of contract provisions). Id.

 Walter Fees, who worked with Bishop on the bill, authored a 

letter discussing changes to section 34-60-118.5, which 

states, “[a]fter my talk with [Senator] Bishop[,] he feels the 

[Commission] should have exclusive jurisdiction over the 

payment of proceeds.” See Hearings on S.B. 98-159 before the 

S. Agricultural Comm., 61st Gen. Assemb., 2nd Sess. (Feb. 4, 

1998) (letter to Richard Griebling, referenced at the hearing). 

 Jack Rigg, associated with Amoco and the Rocky Mountain Oil 

and Gas Association, also testified that the Commission 

should not be involved in private contract disputes and that 

one of the main purposes of the amendment was to clarify that 

the Commission was not to interpret contract terms in place of 

a court. See id. (comments of Jack Rigg). He never suggested 

that the Commission should not continue to have primary 

jurisdiction over noncontractual disputes over the payment of 

proceeds. Id. 

We are thus unpersuaded by Grant Brothers’ arguments to the 

contrary. 
20 

¶ 31 While section 34-60-118.5 alone does not create an 

entitlement to proceeds, Grynberg, 7 P.3d at 1063, a final order 

from the Commission recognizing one’s status as a nonconsenting 

owner pursuant to section 34-60-116 does. Grant Brothers’ 

entitlement to payment is not at issue; the issues are if and when 

Grant Brothers is to receive payment and in what amount. 

¶ 32 To allow parallel judicial proceedings on these same issues, 

rather than giving the Commission the first opportunity to decide 

them, see Great W. Sugar Co., 661 P.2d at 690, would go against 

the legislative intent revealed by the Act’s declaration (§ 34-60-

105(1)), language (§ 34-60-118.5), and administrative processes (see 

Dep’t of Nat. Res. Regs. 501, 503(b)(8), 503(b)(10), 522, 2 Code 

Colo. Regs. 404-1). And, requiring Grant Brothers and similarly 

situated claimants to exhaust administrative remedies promotes the 

policy objectives at the heart of the doctrine of administrative 

exhaustion. See Golden’s Concrete Co., 962 P.2d at 923 

(expounding on the doctrine’s policy objectives, including the 

conservation of judicial resources). The determination Grant 

Brothers seeks concerning key details of the oil and gas production 

process is well within the expertise of the Commission, and allowing 
21 

the Commission to develop a record in resolving this dispute will 

conserve judicial resources and result in a more optimal application 

of judicial relief, should the claim undergo later judicial review. See 

id. 

¶ 33 We therefore conclude that Grant Brothers was required to 

exhaust its administrative remedies and did not do so before filing 

suit in the district court. As a result, we conclude that the district 

court properly dismissed the action. 

B. Dismissal With Prejudice 

¶ 34 Grant Brothers contends that the district court erred in 

dismissing its claim with prejudice solely on the basis that the court 

lacked subject matter jurisdiction. We agree. 

¶ 35 A dismissal under C.R.C.P. 12(b)(1) is not an adjudication on 

the merits, but rather is the result of a court lacking the power to 

hear the claims asserted. See Trinity Broad. of Denver, Inc., 848 

P.2d at 925. Because we have determined that the issue of subject 

matter jurisdiction raised by Operators’ motion should have been 

addressed pursuant to Rule 12(b)(1), the dismissal we affirm is 

necessarily without prejudice, which the district court shall correct 

upon remand. Grant Brothers therefore retains the ability to seek 
22 

further relief from the Commission, whose orders are then subject 

to judicial review. See Dep’t of Nat. Res. Reg. 501, 2 Code Colo. 

Regs. 404-1. 

III. Operators’ Request for Costs 

¶ 36 Operators requested their costs pursuant to C.A.R. 39. 

Because we affirm in part and reverse in part, we conclude that the 

trial court should determine what amount of appellate costs, if any, 

to award upon remand. See C.A.R. 39(a)(4) (“[I]f a judgment is 

affirmed in part, . . . costs are taxed only as ordered by the trial 

court.”) (emphasis added). 

IV. Conclusion 

¶ 37 The judgment is affirmed in part and reversed in part, and the 

case is remanded to the district court with directions to correct the 

judgment to clarify that the dismissal is without prejudice and to 

make a determination regarding Operators’ request for costs 

pursuant to C.A.R. 39. 

JUDGE BERNARD and JUDGE RICHMAN concur.