Court Opinion

ID: 5155586
Source: CourtListenerOpinion
Date Created: 2022-01-02 02:17:20.594163+00
Date Added: 2024-06-11T08:25:19.050897
License: Public Domain

Justice EID,
concurring in part and dissenting in part.
The majority finds that a water court judge has the authority under C.R.C.P. 54(d) ("Rule 54(d)") to assess costs against a member of the public who protests rules proposed by the state engineer in a section 37-92-501(8)(a), C.R.S. (2009), proceeding because such a proceeding "closely resembles a contested adjudication." Maj. op. at 1103. While it may be true that a section 37-92-501(8)(a) proceeding features aspects of adjudication, it is, at bottom, a rulemaking proceeding. See § 37-92-501(1) ("The state engineer may adopt rules and regulations to assist in ... the performance of [its] duties.") (emphasis added); § 37-92-501(2) (setting forth the principles that should guide the state engineer "[iJn the adoption of such rules and regulations") (emphasis added); § 37-92-501(8)(a) (setting forth the procedures to be employed to "protest a proposed rule [or] regulation") (emphasis added); Simpson v. Cotton Creek Circles, L.L.C,, 181 P.3d 252, 258 (Colo.2008) (in which we affirmed the water court's decision to approve "rules [that are to] apply to any new withdrawals from the confined aquifer in Division Three") (emphases added). The state engineer and the Proponents of the rules thus did not "prevail" in contested litigation under Rule 54(d), as the majority holds. Maj. op. at 1104-05. Instead, the rules simply went into effect to govern future withdrawals from the aquifer. Furthermore, the majority acknowledges that the only way in which a member of the public may challenge proposed water rules is through a section 87-92-501(8)(a) proceeding, maj. op. at 1103, yet it allows Rule 54(d) costs to be assessed against any member of the public who chooses to participate (albeit unsuccessfully) in such a proceeding-thereby significantly chilling public participation in the rulemaking process. Because, in my view, the rulemaking nature of a section 37-92-501(8)(a) proceeding is entirely inconsistent with Rule 54(d)'s notion of awarding costs as a matter "of course to the prevailing party" in contested litigation, I respectfully dissent from that portion of the majority's opinion finding that costs may be awarded against a member of the public who participated in such a proceeding. I agree with the majority, however, that the cost award in this case must be recalculated, and accordingly join that part of the majority's opinion.
The majority places heavy reliance on the fact that the proceeding in this case featured expert witnesses, hearings, motions, and discovery-all hallmarks of litigation. Maj. op. at 1108. Yet these litigation aspects do not change the essential rulemaking character of the proceeding. For example, at the federal level, formal rulemaking under the federal Administrative Procedure Act ("APA")-wherein "rules are required by statute to be made on the record after opportunity for an agency hearing"-employs similar trial-like hearings. See 5 U.S.C. §§ 558(c), 556, 557 *1107(2009); Citizens For Free Enter. v. Dep't of Revenue, 649 P.2d 1054, 1063 n.7 (Colo.1982) («"Formal rulemaking pursuant to 5 U.S.C. [§§] 556, 557 (1976) requires essentially trial-type procedures. ..."). More specifically, as with the directive in section 87-92-501(8)(a) that protests to proposed water rules be addressed in a water court hearing in the same manner as water right adjudications, the federal APA explicitly directs that formal rulemaking use many of the same procedures as used in agency adjudications. Compare § 37-92-501(8)(a) (stating that protests to proposed rules be considered in the same manner as adjudications of individual water rights under section 87-92-8302) with 5 U.S.C. § 558(c) (stating that formal rulemak-ing employs the procedures outlined in see-tions 556 and 557, which are also used when an agency is engaged in adjudications under section 554). The majority's quick conclusion that the proceeding before the water court in this case "closely resemble{d] a contested adjudication" ignores the fact that trial-like procedures can be (and in this case were) used to enact rules.
We said as much in the seminal decision of Simpson v. Bijou Irrigation Co., 69 P.3d 50 (Colo.2003). In Bijou, the court all but explicitly acknowledged that a section 37-92-501(8)(a) proceeding is just such an instance where a rulemaking process brings proposed rules into a trial-like setting for analysis and evaluation. Evaluating whether it was necessary for the water court to resolve all protests filed under section 37-92-501(8)(a) before the state engineer could make proposed rules effective, this court noted that the General Assembly adopted unique procedural safeguards to limit the discretion of the state engineer in exercising his water rule power. Bijou, 69 P.3d at 71-72. We explained that, although these safeguards take the form of informal notice and comment proceedings in other rulemaking contexts, with respect to water rulemaking the General Assembly provided the specific, alternative procedures under sections 87-92-501(2)(g) and 37-92-501(8). Id. Focusing on the fact that a section 87-92-501(8)(a) proceeding provides "the only meaningful opportunity for interested parties to protest potential infringements on their water rights created by the rules," we concluded that these proceedings must be completed before any rules may become effective. Id. at 72. Bijou highlights the fact that while the process of having a trial-like hearing before the water court is not the typical form that rulemaking takes, it nonetheless is the process chosen by the General Assembly for rulemaking by the state engineer. In other words, although the section 87-92-501(8)(a) process employs many features of litigation, such conduct is merely the final process in water rulemaking.
Perhaps more enlightening, however, than an examination of how a section 37-92-501(8)(a) proceeding is conducted is an examination of its substance, as measured in terms of its purpose and effect. See Home Builders Ass'n of Metro. Denver v. Public Utils. Comm'n, 720 P.2d 552, 560 (Colo.1986) (stressing that the court must look to the substance of a commission's actions to resolve the issue of whether it was acting in an adjudicative or rulemaking capacity). We have repeatedly explained that if the proceeding was meant to, or in effect does, determine policies of general applicability for the future, then it is deemed to be rulemak-ing. Colo. Office of Consumer Counsel v. Mountain States Tel. & Tel. Co., 816 P.2d 278, 284 (Colo.1991); see also Colo. Ground Water Comm'n v. Eagle Peak Farms, Ltd., 919 P.2d 212, 217 (Colo.1996); City of Aurora v. Public Utils Comm'n, 785 P.2d 1280, 1286-87 (Colo.1990); Home Builders, 720 P.2d at 560. In contrast, proceedings that resolve issues affecting a specific party by applying previously determined rules or policies to the cireumstances of a particular case are found to be adjudicatory proceedings. E.q., Mountain States, 816 P.2d at 284.
An examination into the purpose and effect of the proceeding in this case establishes that it was designed to, and did in fact, determine policies of general applicability consistent with a rulemaking procedure. To begin with, the General Assembly describes a section 37-92-501(8)(a) proceeding as a rulemaking proceeding. See § 37-92-501(1) ("The state engineer may adopt rules and regulations to assist in ... the performance of [its] duties.") (emphasis added); § 87-92-501(2) (setting forth the principles that should guide the *1108state engineer "[iln the adoption of such rules and regulations") (emphasis added); § 8T-92-501(8)(a) (setting forth the procedures to be employed to "protest a proposed rule [or] regulation ") (emphasis added). In this case, the section 87-92-501(8)(a) proceeding was the final step in a process that first began with legislative directives to the state engineer requiring a comprehensive study of the confined aquifer system in Division Three and, later, the promulgation of rules governing the use of water in that division. Cotton Creek Circles, 181 P.8d at 257-58. Subsequent proceedings undertaken pursuant to the state engineer's water rule power, including the hearing of protests to proposed rules by the water court, were informed by this broad purpose of promulgating such rules generally applicable to the future use of water in Division Three. Moreover, the end result of the proceedings before the water court was the adoption of generally applicable and prospective rules. Indeed, in our earlier consideration of this case, we noted that the water court confirmed the proposed rules that were to apply "to any new withdrawals from the confined aquifer in Division Three that affect the rate or direction of movement of water in that aquifer system." Cotton Creek Circles, 181 P.3d at 258. We also recognized that "the [water] court denied the protests and approved the rules, making them effective upon the entry of its judgment." Id. at 260. In sum, a section 87-92-501(8)(a) proceeding is a rule-making proceeding because it adopts prospective, generally applicable rules. See Bijou, 69 P.8d at 72 (stating that the role of the water court in a section 37-92-501(8)(a) proceeding is to evaluate the protests and proposed rules and decide whether to confirm, modify, or reverse the rules).
The prospective and generally applicable nature of the rules adopted in a section 87-92-501(8)(a) proceeding stands in stark contrast to situations in which a decision has been issued that directly affects the interests of particular parties or applies past policy decisions to a specific set of facts. See AviComm, Inc. v. Colo. Public Utils Comm'n, 955 P.2d 1023, 1080 (Colo.1998) (finding that commission proceeding was adjudicatory where commission applied existing law to the facts of the case and to identifiable parties); City & County of Denver v. Eggert, 647 P.2d 216, 222-23 (Colo.1982) (concluding that a resolution by commissioners ordering the cease and desist of some landfill operations was not of general applicability but rather concerned the immediate parties to the landfill operations and thus was quasi-judicial in nature). A comparison to the underlying water rights proceeding in Fort Morgan Reservoir & Irrigation Co. v. Groundwater Appropriators of the South Platte River Basin, Inc., 85 P.3d 536 (Colo.2004), highlights this difference. There, the decision of the water court did directly affect the interests of the particular parties involved; the court's specific task was to either grant or deny one party's application for a "water storage right," which the other party claimed would "adversely affect its vested water rights." Id. at 588. In contrast, the proceedings before the water court here resulted in the promulgation of prospective and generally applicable rules, not a decision affecting any particular interests or rights specifically before the water court. The majority's repeated reliance on Fort Morgan, maj. op. at 1102-08, is thus entirely misplaced.
Based on the fact that a section 37-92-501(8)(a) proceeding features aspects of litigation, the majority leaps to the conclusion that Rule 54(d) cost awards are appropriate. Maj. op. at 1103 (implying that the General Assembly sanctioned such awards). But again, simply because the General Assembly chose to employ many features of litigation in the rulemaking process does not change the fundamental purpose of that process-namely, the adoption of generally applicable and prospective rules.
The disconnect between the rulemaking nature of a section 37-92-501(8)(a) proceeding and an award of costs under Rule 54(d) becomes even more evident in the majority's holding that the state engineer and the Proponents received a "benefit" from the "litigation" in this case. Maj. op. at 1104. As the majority properly recognizes, a party "prevails" under Rule 54(d) if it prevails on a significant issue in the litigation and derives some of the benefits sought by the litigation. Id.; see also Archer v. Farmer Bros. Co., 90 *1109P.3d 228, 230 (Colo.2004). Here, the state engineer and the Proponents of the proposed rules received no "benefit" from the section 37-92-501(8)(a) proceeding as that notion is traditionally understood under Rule 54(d). Indeed, the goal in a section 37-92-501(8)(a) proceeding is not to resolve issues in the state engineer's or the Proponents' favor or to award them "benefits" they may have sought in the proceeding. Rather, the goal is to provide a forum for public participation 1 in the rulemaking process with the result that the public benefits from a more robust consideration of the proposed rules. See Bijou, 69 P.3d at 72 ("[The hearing procedures set forth in section 37-92-8304 [pursuant to section 87-92-501(8)(a)] provide the only meaningful opportunity for interested parties to protest potential infringements on their water rights created by the rules."); ¢f. § 24-4-101.5, C.R.S. (2009) (requiring that rules be promulgated pursuant to the Colorado Administrative Procedure Act only after an agency "finds, after a full consideration of the effects of the agency action, that the action would benefit the public interest"); Charnes v. Robinson, 772 P.2d 62, 67 (Colo. 1989) (discussing the requirements for public participation and input in ageney policy cere-ation through rulemaking).
Here, the majority acknowledges that the only way in which a member of the public may challenge proposed water rules is through a section 37-92-501(8)(a) proceeding, maj. op. at 1103, yet it allows Rule 54(d) costs to be assessed against any member of the public who chooses to participate (albeit unsuccessfully) in such a proceeding-thereby significantly chilling public participation in the rulemaking process. Such robust consideration of the proposed rules is further chilled by the fact that a member of the public who successfully challenges proposed rules in a section 37-92-501(8)(a) proceeding cannot recover costs as a prevailing party under Rule 54(d) because no statute permits such recovery. See C.R.C.P. 54(d);, Cont. Colo. Water Conservancy Dist. v. Simpson, 877 P.2d 385, 349 (Colo.1994). In sum, the majority's decision today frustrates the goal of a section 37-92-501(8)(a) proceeding as envisioned by the General Assembly-that is, to act as a "safeguard[ ] against the unreasonable exercise of administrative discretion by the State Engineer." Bijou, 69 P.3d at 72. Accordingly, I respectfully dissent from that portion of the majority's opinion finding that costs may be assessed under Rule 54(d) against a member of the public who participates in a section 37-92-501(8)(a) proceeding.
I am authorized to state that Justice HOBBS joins this concurrence in part and dissent in part.

. This goal of broad public participation and input is apparent from the proceeding itself. Instead of having the limited participation typical of litigation, a section 37-92-501(3)(a) hearing is open to all "interested parties," including both those who oppose the state engineer's proposed rules and those who support them. See Bijou, 69 P.3d at 72; maj. op. at 1104.