[00:00:00] Speaker 04:
We'll next hear CO2 committee versus Montezuma County, 241337.

[00:00:04] Speaker 00:
Whenever you're ready.

[00:00:10] Speaker 00:
Good morning and may it please the court.

[00:00:13] Speaker 00:
My name is Brenton Gragg and I represent the appellant in this matter, the CO2 committee incorporated.

[00:00:18] Speaker 00:
The CO2 committee's members are small share working interest owners within the McElmo Dome unit.

[00:00:25] Speaker 00:
They brought their case to

[00:00:28] Speaker 00:
to vindicate their constitutional rights when taxes were imposed on them without notice and the opportunity to be heard.

[00:00:35] Speaker 00:
Unlike a host of other tax challengers that have come before this court, the CO2 committee had actually done its legwork.

[00:00:43] Speaker 00:
It sought a remedy in state court first, only to be told that it did not have a standing to seek a remedy in state court.

[00:00:52] Speaker 00:
So it brought its claims in district court because there was no remedy to be had within the state courts.

[00:00:58] Speaker 00:
The district court dismissed the committee's complaint under Federal Rules of Civil Procedure 12b1 and 28 USC Section 1341, the Tax Injunction Act, or the TIA.

[00:01:08] Speaker 00:
It found that it had no subject matter jurisdiction under the TIA, but it never made an express finding that there was a plain, speedy, and efficient remedy available to the committee within the courts of Colorado.

[00:01:22] Speaker 00:
Instead, it assumed that because the committee had been able to file a complaint within Colorado's state courts, that a remedy must be available.

[00:01:31] Speaker 00:
This was wrong.

[00:01:32] Speaker 00:
And the district court erred for three reasons.

[00:01:35] Speaker 00:
First, the court found that the committee had failed to allege the impossibility of a plain, speedy, and efficient remedy.

[00:01:44] Speaker 00:
But the committee had both alleged it in its complaint and it had shown it with case law from Colorado's highest court.

[00:01:51] Speaker 03:
Could the committee have forced Kinder to bring its claims?

[00:01:57] Speaker 00:
Well, as an initial matter, Kinder Morgan's litigation happened years prior and the committee wasn't aware of it at the time.

[00:02:04] Speaker 03:
That seems hard to believe that sophisticated business people, working interests, this all happens with that kind of money and not a whisper is heard, but that's the position.

[00:02:19] Speaker 00:
And yes, that is the position, but more importantly for our purposes here today, on a motion to dismiss under 12b1 and a facial attack, the court was required to construe the committee's allegations as true.

[00:02:31] Speaker 03:
Well, even now, even now, and I understand Kinder had its own track and CO2 has its own track of litigation, but even now, could the committee, is the committee owed a fiduciary duty by Kinder Morgan to protect its interests since it's the in it operator?

[00:02:47] Speaker 03:
And if so,

[00:02:48] Speaker 03:
Why would that not be a plain, speedy, and efficient remedy in state court?

[00:02:52] Speaker 00:
So that will bring us to my second point, but let me address your question directly first.

[00:02:58] Speaker 00:
In order for this to be a plain, speedy, and efficient remedy, it has to be efficient, which in Roswell v. LaSalle, the Supreme Court says it can't require a bunch of ineffectual activity.

[00:03:09] Speaker 00:
Here, the committee wasn't aware the taxes were going to be an audit, and then additional taxes were going to be imposed upon it.

[00:03:16] Speaker 00:
And then requiring Kinder Morgan,

[00:03:18] Speaker 00:
to sue on the committee's behalf.

[00:03:20] Speaker 00:
This was not something Kinder Morgan had agreed to do, and so that might have required another lawsuit as well.

[00:03:25] Speaker 03:
Does it come with the territory?

[00:03:27] Speaker 03:
Obviously the Colorado Supreme Court thought that a unit operator framework had significance.

[00:03:34] Speaker 03:
If you're the one withstanding, the rest of them aren't taxpayers.

[00:03:37] Speaker 03:
Why isn't it the same thing here?

[00:03:40] Speaker 03:
In other words, there is a plain, speedy, and efficient remedy because just go tell Kinder Morgan to bring the claim.

[00:03:48] Speaker 03:
It has standing.

[00:03:49] Speaker 03:
It owes you.

[00:03:52] Speaker 03:
Can you say that there's not a fiduciary duty?

[00:03:54] Speaker 00:
Not anymore.

[00:03:56] Speaker 00:
And that gets us to the chronology.

[00:03:57] Speaker 00:
So when Kinder Morgan's litigation happened and finally finished in 2017, the Colorado Supreme Court had not yet said that only Kinder Morgan could bring those claims.

[00:04:09] Speaker 00:
Instead, the statutes referred to a taxpayer and the committee thought, well, we're a taxpayer.

[00:04:13] Speaker 00:
We can bring claims on our own behalf.

[00:04:15] Speaker 00:
It was only after Kinder in the complaint also, the committee points out that when Kinder Morgan first gave the committee notice, it encouraged the committee to bring claims on its own behalf.

[00:04:25] Speaker 00:
because it wasn't a related party vis-a-vis the Cortez pipeline that was at issue in the Kinder Morgan litigation.

[00:04:33] Speaker 00:
So I believe that answered your question.

[00:04:36] Speaker 03:
Well, I guess following up, would it make sense for us to remand the district court to find out whether or not Kinder does owe a fiduciary duty, and if so, to then declare you have a plain, speedy, and efficient remedy?

[00:04:49] Speaker 00:
At this point, in the Colorado Supreme Court in CO2's litigation, completed in 2023, didn't touch the question of, it didn't exactly rule that Kinder Morgan was a fiduciary.

[00:05:03] Speaker 00:
It just said that it was the lone person withstanding.

[00:05:07] Speaker 00:
But this happened after Kinder Morgan's litigation, which according to the district court was the sole opportunity for the committee to present its constitutional claims.

[00:05:18] Speaker 00:
And so that brings me to the second point, which was Kinder Morgan's suit was not a plain, speedy, and efficient remedy, especially not at the time, because it was speculative, given that the committee didn't have notice of it.

[00:05:31] Speaker 00:
And it would have required ineffectual activity, because the committee might have been forced to sue Kinder Morgan in order to vindicate the committee's own constitutional rights.

[00:05:40] Speaker 00:
Third, the court failed to apply the facial attack standard under Rule 12B1,

[00:05:46] Speaker 00:
and examine the sufficiency of the complaint, construing its allegations as true and only the complaint.

[00:05:53] Speaker 00:
So there was no remedy available to the committee itself.

[00:05:56] Speaker 00:
There wasn't a plain, speedy, and efficient remedy through Kendra Morgan, and the district court failed to apply the facial attack standard.

[00:06:02] Speaker 02:
Counsel, can I ask about the efficiency of the remedy you're proposing?

[00:06:05] Speaker 02:
First of all, I'm not sure why this hasn't already been answered by the Colorado Supreme Court.

[00:06:11] Speaker 02:
But you're saying that Kinder Morgan, you know, Judge Phillips is asking you, well, why couldn't you have just gone to Kinder Morgan and said, bring suit to challenge this assessment?

[00:06:19] Speaker 02:
Well, I mean, Kinder Morgan actually did bring suit to challenge the assessment.

[00:06:22] Speaker 02:
So that's already been done.

[00:06:23] Speaker 02:
And so how is it more efficient then to say every interest owner of the McElmo Dome, which could be, as far as I know, thousands, now can bring the same suit to challenge the same assessments that's based upon the same values?

[00:06:37] Speaker 00:
Well, the difference is, and

[00:06:40] Speaker 00:
Getting into Kinder Morgan's litigation, what the Colorado Supreme Court dealt with was, one, whether the retroactive assessment was allowed at all.

[00:06:49] Speaker 00:
And it was.

[00:06:50] Speaker 00:
And that applies both to the committee and to Kinder Morgan, provided that the committee didn't get notice and the opportunity to be heard concerning that special assessment.

[00:06:58] Speaker 00:
But the second issue that the Supreme Court dealt with in that case

[00:07:02] Speaker 00:
was whether Kinder Morgan was a related party to the Cortez pipeline and therefore allowed to take certain deductions for its tax purposes.

[00:07:10] Speaker 00:
And that's not true of the committee.

[00:07:13] Speaker 00:
There's a relevant difference between Kinder Morgan and the committee when it comes to the relationship to the Cortez pipeline.

[00:07:20] Speaker 00:
The committee's members should be allowed to take that transportation deduction because they aren't related to the Cortez pipeline.

[00:07:26] Speaker 03:
But we don't know that, do we?

[00:07:27] Speaker 03:
Didn't the going through the state administrative channels, one of the administrators said,

[00:07:32] Speaker 03:
You never showed us that you're not a related party.

[00:07:35] Speaker 03:
And that's the end of the line on that.

[00:07:38] Speaker 00:
What's alleged in the complaint is that they were unable to tell.

[00:07:42] Speaker 00:
But that should not be confused with those administrative bodies providing the committee with the opportunity to be heard on that issue.

[00:07:51] Speaker 00:
That's what the committee was asking for.

[00:07:53] Speaker 00:
That's the hearing that it was denied.

[00:07:55] Speaker 00:
The ability to show that it was not a related party and it should be able to take those

[00:08:00] Speaker 00:
those transportation-related deductions.

[00:08:05] Speaker 00:
Jumping around here for a minute, going back to the district court's first error, the district court found that the committee had failed to allege insufficient remedies in state court.

[00:08:16] Speaker 00:
But in the appellate record at page 11, the third page, the sixth paragraph of the complaints, the committee had alleged unequivocally that it had no remedy available to it in state court.

[00:08:27] Speaker 00:
It had no standing to seek a remedy, no means to invoke the court's remedial function, no right to redress a wrong.

[00:08:35] Speaker 00:
This is what standing means as an element of justiciability.

[00:08:39] Speaker 00:
And the Colorado Supreme Court said that the committee lacked it.

[00:08:43] Speaker 02:
Yeah, but you also argue that the district court

[00:08:46] Speaker 02:
committed error by not accepting that as true, but that's not a fact.

[00:08:50] Speaker 02:
It's a legal conclusion.

[00:08:51] Speaker 02:
So why would the district court have had to accepted your assertion as to the legal conclusion as being true?

[00:08:58] Speaker 00:
So, Your Honor, here, this comes as close to a factual assertion as a legal conclusion can get.

[00:09:04] Speaker 00:
The Colorado Supreme Court used those words.

[00:09:07] Speaker 00:
The committee has no standing.

[00:09:09] Speaker 00:
There's at least a compelling inference that where someone has no standing, no right to seek legal redress,

[00:09:16] Speaker 00:
They have no remedy.

[00:09:18] Speaker 00:
And so perhaps it's some mixture of fact and legal allegation, but because it was memorialized in the Colorado Supreme Court's order and in those words, it was a factual allegation that the court should have construed as true.

[00:09:34] Speaker 00:
Well, why do you have standing here?

[00:09:38] Speaker 00:
So the reason that the committee has standing here is based on its constitutional rights.

[00:09:44] Speaker 00:
Turning back to the Colorado Supreme Court, it's important to look at what it did and what it didn't do.

[00:09:50] Speaker 00:
The Colorado property tax administrator intervened in that case, and it was granted cert.

[00:09:56] Speaker 00:
And the question that the court answered was whether a non-operating small share working interest owner had standing to challenge an assessment against the unit.

[00:10:06] Speaker 00:
When the Supreme Court examined that question,

[00:10:09] Speaker 00:
didn't mention the Constitution, didn't look at the committee's constitutional rights.

[00:10:13] Speaker 00:
Its analysis was confined exclusively to statutes, to Colorado statutes, and it found that the Colorado General Assembly intentionally withheld the standing from people like the committee to bring challenges under Colorado's oil and gas statutes.

[00:10:31] Speaker 00:
But there's no reference to the Constitution, only a passing reference to the committee's Section 1983 claim.

[00:10:37] Speaker 00:
I think it's in paragraph 13 of that opinion.

[00:10:40] Speaker 00:
And so the reason that the committee has standing here today is because it's owed due process.

[00:10:44] Speaker 00:
It is, as the Supreme Court, the Colorado Supreme Court acknowledged, ultimately liable for these taxes, even if Colorado only grants standing to those who are primarily liable, in this case, the unit operator.

[00:10:56] Speaker 02:
So if you prevail, then we're going to have a system wherein

[00:11:01] Speaker 02:
In Colorado, only the unit operator can challenge a tax assessment before the Colorado State Court.

[00:11:07] Speaker 02:
But the floodgates are just open for every taxpayer that has any interest in this dome unit, which again, could be thousands of taxpayers, can bring federal claims.

[00:11:17] Speaker 02:
Is that right?

[00:11:18] Speaker 00:
Well, two responses to that.

[00:11:20] Speaker 00:
First, the Colorado Supreme Court itself said that this is a unique representative system.

[00:11:26] Speaker 02:
There isn't a reason to think that there's going to be one.

[00:11:27] Speaker 02:
But I'm asking you about this representative system.

[00:11:30] Speaker 02:
I mean, the Galmo Dome Unit, again, my understanding is, has a lot of interest owners.

[00:11:36] Speaker 02:
So it may be a unique sort of system of unit operators when it comes to these different types of rights.

[00:11:43] Speaker 02:
But within the realm of this dome unit, would every interest owner, if you prevail, be able to come to federal court to challenge a state tax

[00:11:57] Speaker 02:
assessment because they can't do it in state court.

[00:12:02] Speaker 00:
Not necessarily.

[00:12:03] Speaker 00:
And in part that's because of the Colorado Supreme Court's decision in 2023.

[00:12:08] Speaker 00:
Now, prospectively, these small share working interest owners understand that only the unit operator can bring these claims and they can contract for that purpose.

[00:12:18] Speaker 00:
They can protect their interests.

[00:12:20] Speaker 00:
But here we're talking about a situation where the committee found out afterwards, once it was too late,

[00:12:25] Speaker 00:
that it wouldn't have notice and the opportunity to be heard.

[00:12:28] Speaker 03:
Who owed the notice?

[00:12:30] Speaker 03:
You say due process, we didn't get notice, the committee members.

[00:12:33] Speaker 03:
Who owed them the notice?

[00:12:35] Speaker 03:
Defendants, Montezuma County.

[00:12:37] Speaker 03:
So the assessor with a limited staff in this Colorado scheme with the unit operator for ease, for efficiency, is now required to track down every working interest owner and advise them, here's what's going on with the tax audit.

[00:12:55] Speaker 00:
And that's an important word there, with the audit.

[00:12:58] Speaker 00:
In the normal scheme of things and how things had happened historically with the committee, there was no reason to give notice to all the committee's members because both the unit operator and the committee's members were treated the same.

[00:13:09] Speaker 00:
They took the same transportation deductions.

[00:13:12] Speaker 00:
Once there was an audit, there was an additional tax imposed, additional liability that affected the committee's members and affected them differently than the unit operator.

[00:13:21] Speaker 00:
That's a situation.

[00:13:22] Speaker 03:
So what's the answer?

[00:13:23] Speaker 03:
Yes, the assessor has to track everybody down and give them that kind of notice?

[00:13:28] Speaker 03:
Yes.

[00:13:29] Speaker 03:
Why isn't it a much more efficient system for the unit operator to do that?

[00:13:35] Speaker 00:
In general, it is.

[00:13:37] Speaker 00:
In general, it does operate more efficiently.

[00:13:39] Speaker 00:
What we're talking about is the exception, the audit, not the year-to-year proceedings when there is the normal statements that are submitted, only when there's this special occasion.

[00:13:51] Speaker 00:
I'd like to reserve the rest of my time for a bottle.

[00:13:56] Speaker 01:
May it please the court, Nathan Keever from Montezuma County.

[00:14:01] Speaker 01:
Excuse me.

[00:14:06] Speaker 01:
I'd like to step back us to the beginning of the tax challenge.

[00:14:11] Speaker 01:
That's when Kinder Morgan brought the tax challenge.

[00:14:14] Speaker 01:
They had been caught in an audit over deducting.

[00:14:18] Speaker 01:
It wasn't that they couldn't get

[00:14:20] Speaker 01:
deduction to net back for their price.

[00:14:23] Speaker 01:
It was that they had calculated it incorrectly.

[00:14:27] Speaker 01:
The auditor saw that.

[00:14:28] Speaker 01:
They reassessed it.

[00:14:30] Speaker 01:
Kinder Morgan paid the entire amount for the entire unit.

[00:14:35] Speaker 01:
It then filed for an abatement.

[00:14:38] Speaker 01:
In other words, it said, we overpaid.

[00:14:41] Speaker 01:
We overpaid for the whole unit, including CO2 committee.

[00:14:46] Speaker 01:
It went to the Board of Equalization before the counting.

[00:14:50] Speaker 01:
and argue that it went before and got a de novo hearing in front of the Board of Assessment Appeals.

[00:14:59] Speaker 01:
It then appealed to the Colorado Court of Appeals and then the Supreme Court.

[00:15:03] Speaker 03:
Why did it lose in the state administrative agencies?

[00:15:07] Speaker 03:
If the committee members were not related parties, they shouldn't have paid the tax.

[00:15:12] Speaker 03:
Is that true?

[00:15:13] Speaker 01:
That is not true.

[00:15:15] Speaker 01:
Again, this is a deduction and it's how you calculate the deduction in the way the tax rule states or provides is that if you are dealing in a third party, in other words, the operator is paying a third party arms length vendor to transport the gas downstream, you can count that third party arms length price as your deduction.

[00:15:42] Speaker 01:
But if the operator is a related party to that transportation, we're not going to allow you to use that third party price, which is just an arbitrary price that the BAA found actually can to Morgan get some of it back because it's a member

[00:16:02] Speaker 01:
that related party we're not going to let you use that methodology you have to use a different methodology which is what is the actual amount it costs to you to move the gas not only for Ken or Morgan but for all of the operating

[00:16:17] Speaker 04:
of working interest owners.

[00:16:19] Speaker 01:
And royalty owners.

[00:16:20] Speaker 01:
Everyone has to pay ad valorem tax in the unit.

[00:16:25] Speaker 04:
So that might be a very good argument on the merits, but how does that pertain to the issue under the exception of the Tax Injunction Act?

[00:16:36] Speaker 04:
The non-operator interest owners either had a plain, speedy, and efficient remedy, or they didn't.

[00:16:46] Speaker 04:
Kenner Morgan was related to the owner of the Cortez pipeline.

[00:16:51] Speaker 04:
The others were not.

[00:16:53] Speaker 04:
Now, you say maybe on the merits, it wouldn't have made any difference.

[00:16:56] Speaker 04:
They wouldn't have gotten any different treatment than Kenner Morgan under the county's tax law.

[00:17:03] Speaker 04:
But that seems an argument on the merits.

[00:17:05] Speaker 04:
I still don't understand where these other interest owners had a plain, speedy, and efficient remedy when their situation was 100% different than Kenner Morgan's.

[00:17:16] Speaker 04:
They were not related to the Cortez pipeline.

[00:17:19] Speaker 01:
It's two different issues.

[00:17:20] Speaker 01:
The question Judge Phillips asked me was, why did they win on the merits, or why did Ken and Morgan lose on the merits at the BAA hearing?

[00:17:28] Speaker 01:
I understand that.

[00:17:31] Speaker 01:
The question, though, would be the same for everybody in the unit, which is,

[00:17:38] Speaker 01:
whether the operator was related or not.

[00:17:42] Speaker 01:
So the question doesn't come down to whether or not each royalty owner is related to the transportation company or each working interest company.

[00:17:50] Speaker 04:
But you're saying, I don't understand your answer.

[00:17:53] Speaker 04:
That is an argument on the merits.

[00:17:57] Speaker 04:
So if I'm wrong, explain to me, how does the argument that these other interest owners would have the same tax treatment as Kinder Morgan

[00:18:07] Speaker 04:
Because of Kenne Morgan's relationship to the owner of the Cortez pipeline, how would that bear on whether those other entities have a plain, speedy, and efficient remedy when they didn't have notice, when they argue, according to the complaint, that they were not related parties to the Cortez pipeline?

[00:18:26] Speaker 04:
So where is their plain, speedy, and efficient remedy when they didn't get notice?

[00:18:31] Speaker 04:
Kenne Morgan didn't provide them notice, according to the complaint.

[00:18:35] Speaker 04:
Where is their remedy that they have?

[00:18:38] Speaker 01:
Their remedy is set up in the Colorado statutes, which provides that the operator is going to handle the tax basis for this.

[00:18:47] Speaker 04:
So Colorado can say, OK, you don't have a remedy, fellas.

[00:18:55] Speaker 04:
Only Kenner Morgan has a remedy.

[00:18:57] Speaker 04:
And so this statute under the Tax Injunction Act

[00:19:04] Speaker 04:
State law trumps federal law.

[00:19:07] Speaker 04:
You can't, I mean, that's the opposite of what we do.

[00:19:11] Speaker 01:
No, the question then when you get to the federal court under the Tax Injunction Act is whether or not there is this minimal procedural criteria that's set up by the state to look and whether or not, and it has found, Tim Circuit's found that these representative type situations, because of the efficiency,

[00:19:30] Speaker 01:
because it's a plain and simple way to handle taxing situations in very complex tax scenarios, it is appropriate and does meet the due process.

[00:19:41] Speaker 04:
And we're not at due process.

[00:19:44] Speaker 04:
We're not at the merits.

[00:19:45] Speaker 04:
We're not at whether it's appropriate.

[00:19:49] Speaker 04:
We're at the Tax Injunction Act.

[00:19:52] Speaker 04:
They either have a plain, speedy, and efficient remedy for, let's say you're right, for this meritless argument that is going to get rejected

[00:20:01] Speaker 04:
on the merits on their due process claim.

[00:20:04] Speaker 04:
But I still don't understand if it's a frivolous argument on the merits, whether there was due process provided.

[00:20:12] Speaker 04:
I still don't get where their remedy was.

[00:20:17] Speaker 01:
The remedy derives from that representative function that the Colorado legislature has set up in these taxing situations.

[00:20:26] Speaker 01:
That's the remedy.

[00:20:27] Speaker 01:
Now, would they have a potential remedy that Kinder Morgan didn't do what it was supposed to, either under fiduciary duty or under the Joint Operating Agreement, so a contract right under the Joint Operating Agreement is the agreement that working interest owners function under and in which they identify who is going to be the operator in this scenario?

[00:20:47] Speaker 01:
They certainly, they could go back and say, look, you didn't, you could have made this argument, you could have made this argument.

[00:20:53] Speaker 04:
Have you argued in your briefing that their ability

[00:20:57] Speaker 04:
to after the fact go after a Kinder Morgan in a state tort claim was the existence of a plain speeding and efficient remedy that would have justified them not being able to contest their tax assessment based on the relationship between Kinder Morgan and the Cortez pipeline?

[00:21:17] Speaker 01:
No, I think it would be an additional grounds for it, but I don't think that's our main argument.

[00:21:22] Speaker 01:
I would agree with that.

[00:21:23] Speaker 01:
The main argument is that

[00:21:26] Speaker 01:
that Colorado has set up a representative system that meets that minimum procedural criteria that is required under Rosewell.

[00:21:36] Speaker 01:
I see.

[00:21:36] Speaker 01:
And because of that, their options then were to, if they felt that wasn't sufficient, they filed their own action.

[00:21:46] Speaker 01:
They were found to not have standing and took that to the Colorado Supreme Court as well.

[00:21:52] Speaker 04:
Why is that relevant?

[00:21:54] Speaker 04:
They didn't have standing because of state tax law.

[00:22:00] Speaker 04:
Correct.

[00:22:00] Speaker 04:
That's not Article III standing.

[00:22:02] Speaker 04:
That's just the appellant's point.

[00:22:08] Speaker 04:
Because they didn't have standing under the state tax law, they didn't have a plain, speedy, and efficient remedy.

[00:22:14] Speaker 04:
They couldn't have prosecuted the claim based on the inhibitions

[00:22:21] Speaker 04:
under state law that they didn't have standing under state law.

[00:22:25] Speaker 01:
And they argued that.

[00:22:26] Speaker 01:
And in their Supreme, in the CO2 committee's Supreme Court ruling, the court said they did have due process through that representative.

[00:22:36] Speaker 01:
And they could have appealed that to the US Supreme Court.

[00:22:39] Speaker 01:
That would have been an appropriate procedure to move next under Rooker Feldman.

[00:22:47] Speaker 01:
them not to file this collateral action that Kinder Morgan then for whatever reason said, why don't you file a collateral action and see whether or not we can fight it in a different way.

[00:22:58] Speaker 01:
And so that's what they did.

[00:23:00] Speaker 01:
They come into federal court then and say, oh, we want a hearing just for us now.

[00:23:06] Speaker 01:
Well, no, not only if they had done that originally, they would have been barred by the Tax Injunction Act.

[00:23:13] Speaker 01:
Because the Tax Injunction Act, the court would have looked at it and said, no, state court's where you need to be.

[00:23:18] Speaker 01:
And it isn't as my opponent set up as if this is an exhaustion of remedies.

[00:23:24] Speaker 01:
You go to state court, and then after you're done, you go to federal court.

[00:23:27] Speaker 01:
No, you appeal from the state Supreme Court to the US Supreme Court if you have that constitutional claim.

[00:23:34] Speaker 01:
The original jurisdiction is over in state court.

[00:23:38] Speaker 04:
It doesn't mean you then... Even if you... So you have to go to state court even though... Let's say the Oklahoma Tax Commission assesses taxes against Bob Baccarat, against me.

[00:23:51] Speaker 04:
I don't have any notice, but Judge Federico, who's my lawyer,

[00:23:57] Speaker 04:
And he has noticed, I don't.

[00:24:01] Speaker 04:
And you're saying that because I didn't go to the Oklahoma Tax Commission to contest my tax assessment, even though I didn't know about it, I had a plain, speedy, and efficient remedy.

[00:24:12] Speaker 04:
Because if I had known about it, I could have prosecuted a claim for relief.

[00:24:18] Speaker 04:
Is that the argument?

[00:24:19] Speaker 01:
Well, the situation's a little different here, because did you have a representative that was actually designed through that Oklahoma legislature

[00:24:27] Speaker 01:
to say they're going to represent your interest in tax.

[00:24:30] Speaker 04:
So you're saying, OK.

[00:24:32] Speaker 04:
And so because Kinder Morgan is their representative, that even though their situation is different, they had an obligation to assert arguments on behalf of the working interest owners, even though those arguments wouldn't have pertained to Kinder Morgan.

[00:24:56] Speaker 04:
Because Kenner Morgan was a related party to the Cortez pipeline.

[00:24:59] Speaker 04:
Correct.

[00:25:00] Speaker 04:
The working interest owners whole argument is, well, they were not.

[00:25:04] Speaker 04:
Correct.

[00:25:04] Speaker 04:
So that's the argument.

[00:25:06] Speaker 01:
And they could bring that argument.

[00:25:07] Speaker 01:
Kenner Martin could have brought that argument.

[00:25:09] Speaker 01:
That's our Maristio de Cotta claim preclusion argument is that Kenner and Morgan, it's not just what they did bring, it's what they could have brought.

[00:25:16] Speaker 01:
They could have said, hey, there are other necessary and indispensable parties that should be in this case.

[00:25:20] Speaker 04:
Why would they have been necessary and indispensable parties?

[00:25:25] Speaker 04:
Well, I know, but we take your word seriously.

[00:25:29] Speaker 04:
So you're saying that they could have asserted that they were a necessary and indispensable party to Kinder Morgan's argument.

[00:25:36] Speaker 04:
Why?

[00:25:37] Speaker 04:
They had nothing to do with Kinder Morgan's argument.

[00:25:40] Speaker 04:
Kinder Morgan was a losing party because it was clearly related, according to the findings, to the Cortez pipeline.

[00:25:46] Speaker 04:
That was not true with the others.

[00:25:48] Speaker 01:
And they weren't taking the position that anybody else should be there, but they could have, is my point.

[00:25:54] Speaker 01:
And so they're barred now to say, hey, this plaintiff is barred from saying, hey, Kinder Morgan is only barred from what it did argue.

[00:26:04] Speaker 01:
No, it also asks for an abatement of the entire amount.

[00:26:07] Speaker 01:
It wasn't standing before the BAA saying, just give us our 44% back, because we're only 44% related.

[00:26:14] Speaker 01:
It was saying, give us 100% back of that $2 million that you caught us not over-deducting for.

[00:26:20] Speaker 01:
Did you make that argument before today?

[00:26:24] Speaker 01:
That they over-deducted $2 million.

[00:26:26] Speaker 04:
I've been making that argument for... That's not what I asked you.

[00:26:30] Speaker 04:
Because they paid the assessment for the entirety of the unit.

[00:26:35] Speaker 04:
that that constituted a plain, speedy, and efficient remedy under the Tax Injunction Act.

[00:26:40] Speaker 04:
I thought that's what you're arguing now.

[00:26:43] Speaker 01:
Well, that is the argument, that they were the representative party.

[00:26:46] Speaker 01:
And they did show up there as the representative party.

[00:26:51] Speaker 01:
That is why we're not even here in a hypothetical where we're questioning whether the Tax Injunction Act applies.

[00:26:58] Speaker 01:
to this party that's before the district court.

[00:27:01] Speaker 01:
We actually had the representative party go and go through the whole thing.

[00:27:05] Speaker 01:
And then we had the claiming party also go all the way through the Colorado court system.

[00:27:12] Speaker 01:
So we're better.

[00:27:14] Speaker 01:
Then we have claim preclusion as well.

[00:27:16] Speaker 01:
We have issue preclusion as well.

[00:27:18] Speaker 01:
In their case, the court said they got due process.

[00:27:26] Speaker 01:
And the court didn't just say that in passing.

[00:27:29] Speaker 01:
The court specifically says that the non-fractional interest owners lack standing to challenge these assessments, that they assert they deprive them of due process.

[00:27:42] Speaker 01:
We disagree for two reasons.

[00:27:44] Speaker 01:
And then the court went into why they were not deprived for two reasons.

[00:27:49] Speaker 01:
And it's hard to imagine the scenario

[00:27:56] Speaker 01:
of if the law was different and didn't allow this representative, it would create the situation where these parties couldn't file in state court, but they somehow all thousands could come into federal court and try to chip away at the rulings that have already been made.

[00:28:15] Speaker 01:
And we'd ask that you affirm the court's decision.

[00:28:18] Speaker 03:
Before you step down, just one question.

[00:28:21] Speaker 03:
My understanding is Kinder Morgan in the Colorado Supreme Court did try

[00:28:26] Speaker 03:
to argue that the individual interest owners in the McElmo Dome unit were not related parties?

[00:28:34] Speaker 01:
They tried to argue that they weren't related parties.

[00:28:37] Speaker 01:
They argued that other working interests weren't related parties.

[00:28:41] Speaker 01:
Exxon Mobil was another party in that case.

[00:28:45] Speaker 01:
And they tried to say that there were these other people out here.

[00:28:51] Speaker 01:
And we should take that into consideration.

[00:28:53] Speaker 03:
And Colorado Supreme Court didn't rule on that.

[00:28:57] Speaker 03:
What's the effect of that?

[00:28:59] Speaker 03:
It was before the court, the court didn't rule on it.

[00:29:03] Speaker 01:
I think the court recognized that this was a representative system.

[00:29:07] Speaker 01:
And are you terminating the original case?

[00:29:09] Speaker 03:
Well, what I'm reading from is the order granting motion to dismiss in Montezuma County, June 11, 2019.

[00:29:18] Speaker 03:
And the court says, it must be noted, Kinder Morgan Arted

[00:29:21] Speaker 03:
argued repeatedly in the opening brief that filed with Colorado Supreme Court and Kinder Morgan CO2 LP that the individual interest owners in the McElmo Dome unit were not related parties with the Cortez pipeline company.

[00:29:36] Speaker 03:
So Kinder Morgan tried.

[00:29:38] Speaker 01:
I would agree that they're at different levels.

[00:29:45] Speaker 01:
They tried different arguments and that was an argument that they make.

[00:29:48] Speaker 01:
I think it's still

[00:29:49] Speaker 01:
It sort of goes to our claim-perclusion argument of they certainly could have argued that.

[00:29:54] Speaker 01:
It sounds like they did argue it, at least in that scenario.

[00:29:58] Speaker 00:
Thank you.

[00:29:59] Speaker 00:
Briefly, it's important to note that the committee is not making an exhaustion of remedies argument.

[00:30:05] Speaker 00:
That is not what the Tax Injunction Act requires.

[00:30:08] Speaker 00:
Nevertheless, when you look through the case law, what courts do in each instance is they look to see if there's any case law saying there's no remedy available to you or the statutes don't provide such a remedy.

[00:30:19] Speaker 00:
And so when the committee argues that it worked its way through the Colorado Supreme Court, that's only to show that seeking a remedy is futile in Colorado's Supreme Court or in Colorado's courts generally.

[00:30:30] Speaker 00:
Now, again, prospectively, since the Colorado Supreme Court's decision in 2023, small share working interest owners know that the unit operator is responsible for protecting them, and they can make contracts to secure that kind of protection for that kind of remedy through a unit operator within a representative system.

[00:30:51] Speaker 00:
However, they did not know at the time, the Colorado Supreme Court had not decided at the time, at the time of Kinder Morgan's litigation,

[00:30:57] Speaker 00:
that that was the case, and only the unit operator would be able to protect those interests.

[00:31:02] Speaker 00:
For that reason, the preclusion argument just doesn't work, because there wasn't a full and fair opportunity to litigate without the incentive or without the knowledge of preclusive effects.

[00:31:12] Speaker 00:
And so the committee would ask that this court reverse the district court's order, find that the court had subject matter jurisdiction, and remand.

[00:31:19] Speaker 00:
Thank you.

[00:31:21] Speaker 04:
Thank you.

[00:31:23] Speaker 04:
Very well presented by both sides.

[00:31:25] Speaker 04:
We appreciate your excellent advocacy to both counsel.

[00:31:29] Speaker 04:
This is submitted.