City of Boulder v. Public Service Company of Colorado

          Certiorari to the Colorado Court of Appeals Court of Appeals Case No. 15CA1371

          Attorneys for Petitioners: Boulder City Attorney's Office Thomas A. Carr, City Attorney David J. Gehr, Deputy City Attorney Kathleen Haddock, Senior Assistant City Attorney Boulder, Colorado

          Holland & Hart LLP Marcy G. Glenn Denver, Colorado

          Hamre, Rodriguez, Ostrander & Dingess, PC James Birch Denver, Colorado

          Attorneys for Respondent: Faegre Baker Daniels, LLP John R. Sperber Denver, Colorado Faegre Baker Daniels, LLP Matthew D. Clark Boulder, Colorado

          Attorney for Amicus Curiae Colorado Municipal League: Dianne M. Criswell Denver, Colorado

          OPINION

          GABRIEL JUSTICE

         ¶1 This case arises out of respondent Public Service Company of Colorado's ("Xcel's") challenge to the City of Boulder's attempt to create a light and power utility. Xcel asserts that the ordinance establishing the utility, Ordinance No. 7969 (the "Utility Ordinance"), violates article XIII, section 178 of Boulder's City Charter. Xcel thus seeks a declaratory judgment deeming the Utility Ordinance "ultra vires, null, void, and of no effect." Petitioners, the City of Boulder, its mayor, mayor pro tem, and city council members (collectively, "Boulder"), assert that Xcel's complaint is, in reality, a C.R.C.P. 106 challenge to a prior ordinance, Ordinance No. 7917 (the "Metrics Ordinance"), by which Boulder had concluded that it could meet certain metrics regarding the costs, efficiency, and reliability of such a utility. Boulder contends that this challenge was untimely and thereby deprived the district court of jurisdiction to hear Xcel's complaint.

         ¶2 The district court agreed with Boulder and dismissed Xcel's complaint. Xcel appealed, and in a unanimous, published decision, a division of the court of appeals vacated the district court's judgment. Pub. Serv. Co. v. City of Boulder, 2016 COA 138, ¶ 22, 410 P.3d 680, 684. As pertinent here, the division, like the district court, presumed that Xcel was principally proceeding under C.R.C.P. 106. See id. at ¶¶ 10-18, 410 P.3d at 683-84. The division concluded, however, that neither the Metrics Ordinance nor the Utility Ordinance was final, and therefore, Xcel's complaint was premature. Id. at ¶ 18, 410 P.3d at 684. The division thus vacated the district court's judgment. Id. at ¶ 22, 410 P.3d at 684.

         ¶3 Boulder petitioned for certiorari, principally arguing that the division erred in concluding that the Metrics Ordinance and the Utility Ordinance were not final for purposes of judicial review under C.R.C.P. 106. We granted that petition and now reverse.^[1]

         ¶4 Although we agree with Boulder that the division erred, contrary to Boulder's position and the premises on which the courts below proceeded, we agree with Xcel that its complaint asserted a viable and timely claim seeking a declaration that the Utility Ordinance violated Boulder's City Charter. Accordingly, we conclude that the district court had jurisdiction to hear Xcel's declaratory judgment claim challenging the Utility Ordinance, and we remand this case to allow that claim to proceed.

         I. Facts and Procedural History

         ¶5 Several years ago, Boulder's citizens voted to add a section to the City Charter that would permit the City Council to establish a public power utility if certain conditions were satisfied. See Boulder, Colo., Charter art. XIII, § 178 (2018). That section provides, in pertinent part:

The city council, at such time as it deems appropriate, subject to the conditions herein, is authorized to establish, by ordinance, a public utility under the authority in the state constitution and the city charter to create light plants, power plants, and any other public utilities or works or ways local in use and extent for the provision of electric power. The city council shall establish a light and power utility only if it can demonstrate, with verification by a third-party independent expert, that the utility can acquire the electrical distribution system in Boulder and charge rates that do not exceed those rates charged by Xcel Energy at the time of acquisition and that such rates will produce revenues sufficient to pay for operating expenses and debt payments, plus an amount equal to twenty-five percent (25%) of the debt payments, and with reliability comparable to Xcel Energy and a plan for reduced greenhouse gas emissions and other pollutants and increased renewable energy . . . .

Boulder, Colo., Charter art. XIII, § 178(a).

         ¶6 Pursuant to this provision, Boulder began to explore its ability to satisfy the metrics set forth in the Charter (the "Charter Metrics"). To this end, Boulder city employees and consultants presented the Boulder City Council with an analysis that demonstrated that various modeled scenarios would satisfy the Charter Metrics. The city employees and consultants thereafter provided additional information requested by the Council (the "Base Materials"). The Council then directed the city manager to select a third-party independent expert to verify that the Base Materials demonstrated that Boulder could meet the Charter Metrics. The manager did so, and the independent expert reviewed the Base Materials and subsequently verified that the Base Materials demonstrated that Boulder could meet these requirements.

         ¶7 Based on the independent expert's report, the City Council passed the Metrics Ordinance, accepting the expert's findings and concluding that the Charter Metrics had been satisfied. On the same day it passed the Metrics Ordinance, the City Council also passed an ordinance authorizing the city manager to negotiate for the acquisition of various pieces of real property and equipment that would be needed to construct the utility. The City Council authorized the city manager to acquire these interests and assets through the exercise of the power of eminent domain and to initiate condemnation proceedings to do so. Xcel did not challenge either of these ordinances.

         ¶8 Approximately eight months later, the City Council passed the Utility Ordinance, amending the Boulder Revised Code to "establish and define the light and power utility" of the city of Boulder. Less than one month later, Xcel filed the present action, in which it principally sought a declaration, pursuant to C.R.C.P. 57, that the Utility Ordinance violated the City Charter. Specifically, Xcel alleged that the City Council had exceeded the limits on its authority as set forth in section 178 of Title XIII of the Charter because the models on which Boulder had relied incorrectly assumed that (1) Boulder could unilaterally decide to serve and receive revenue from more than 7, 000 Xcel electricity customers located outside the city limits and (2) as a result, costs to separate and reconnect the Xcel electric system after formation of the utility would be minimal. In fact, Xcel asserted, after Boulder passed the Metrics Ordinance, the Public Utilities Commission ("PUC") had concluded that Boulder did not have the right to act unilaterally to serve customers outside Boulder's city limits. Xcel alleged that because all of the models on which Boulder had relied depended on assumptions regarding service rights and separation costs that were inconsistent with the PUC's orders, Boulder could not then determine whether it could meet the Charter Metrics. Xcel thus sought a declaration that "as a matter of law, the Utility Ordinance, being in violation of the Charter, is ultra vires, null, void, and of no effect." In the alternative, Xcel asserted a claim for judicial review of the Utility Ordinance under C.R.C.P. 106(a)(4). Xcel made clear, however, that it asserted this claim only in the event that the district court determined declaratory relief to be unavailable.

         ¶9 Boulder moved to dismiss Xcel's complaint, arguing that (1) in substance, Xcel's complaint was a C.R.C.P. 106 challenge to the Metrics Ordinance; (2) this challenge was untimely; and (3) because the timing requirement was jurisdictional, the ...