07/18/2016

Legislative Update

 

2016 Legislative Session Review

by Jeremy Schupbach


 

 

2016 Legislative Session Review

This was another successful and hard-fought year for the CBA. In an election year that saw much politicking and grandstanding, the CBA both advanced several bills to improve the practice of law and helped kill several dangerous and misguided attempts to harm various practice areas and the judicial branch. In short—it was a busy, involved, exciting, and exhausting session.

 

As was the case in 2015, the House and Senate again split political control during this session. The Democrats controlled the House of Representatives over the Republicans by 34 to 31 seats. By contrast, the Senate was in Republican hands, but with only a one-vote margin, 18 to 17. This is likely to change with the coming November elections, but at this point it is far too early to accurately forecast the results. It is certain that the presidential and U.S. Senate races and the many initiatives on the ballot will garner much attention and airtime throughout late summer and early fall.

 

This session again had fewer lawyer legislators than the historical average. This presents both an opportunity and challenge as the CBA works with legislators on complicated measures and technical concerns on matters of law and seeks to educate the legislature about who we are and what we do. This situation is not likely to change much as a result of the November election, though there may be a slight increase in the number of lawyer legislators. In 2016, there were 15 lawyers, according to the Legislative Drafting Office.

 

It is important to note that the CBA develops public policy and takes positions on legislation through its Legislative Policy Committee (LPC), a panel of 13 members appointed by the president and representatives of the sections. These 13 members—assisted by liaisons and leadership from each section—consider the merits of bills and decide whether the CBA should adopt a position, and, if so, what that position will be.

 

The 2016 Session in Brief

 

This year, 686 bills were introduced throughout the session, and 408 have been signed into law. The Governor again vetoed the bipartisan red light camera bill, which the CBA did not comment or take a position on. All bills considered during the session can be found on the Colorado General Assembly website at www.leg.state. co.us/CLICS/CLICS2016A/csl.nsf/MainBills?OpenFrameSet.

 

Special Session?

 

It’s not unusual for rumors of a special session to circulate at the end of the regular legislative session, and there were rumors again this year. The Governor has the power to call the legislature back into session to address specific issues for which he sets the agenda and defines the specific issues to be addressed. The hospital provider fee, construction defects, and full-strength beer in grocery stores were all rumored to be potential topics. The prospects for a special session don’t look any better than they did during the session, but now that the Governor has signed SB 197 (the liquor store compromise bill) it is not likely that he will call legislators back between now and the fall elections.

 

CBA Priority Bills

 

The CBA tracked and worked on 50 bills in the 2016 session. The accompanying table lists each bill by number, title, CBA position on the bill, and outcome. The CBA opposed 13 bills, supported 25 bills, monitored with no position five bills, and sought amendments to seven bills. We achieved our intended outcome on 40 bills, for an overall success rate of 80%—an outstanding overall achievement for our LPC and our agenda at the Capitol.

 

Major Legislation and Hot-Topic Bills

 

The 2016 Session was framed by big-issue bills: a construction defects “package” of five bills, the hospital provider fee, and latebreaking bills on presidential primaries. For the most part, the CBA monitored the issues and the bills addressing them without taking a position or weighing in.

 

Construction defects was again a major theme this session, with groups working on a group of five bills, including a grand compromise bill, a bill for a pilot program at the Colorado Supreme Court, and three affordable housing bills. As it did last year, the CBA did not weigh in on any of these bills. The grand compromise bill was never introduced, and the Court pilot program bill was killed in committee very quickly.

 

The hospital provider fee and the subsequent legislation (HB 1420) was hotly debated throughout the session. While the CBA took no position on the issue, the potential impact on TABOR and the state budget was enormous. The hospital provider fee bill provides for collection of revenue from hospitals and matches it with Federal Medicaid dollars. The money is counted as general fund revenue. As such, it affects how the budget and TABOR are calculated. Creating an enterprise out of the fee could generate approximately $500 to $700 million within the general fund, which is money that could be directed to other spending priorities. This would come at the expense of TABOR refunds, and many Republicans believe the move to be unconstitutional. It should come as no surprise that both sides have extensive legal analysis to back their positions. HB 1420 was killed in committee, but it is not the end of the discussion, which will take on new life next year as the overall economy remains questionable.

 

 

Presidential primaries became a hot topic at the legislature as a result of the caucus and assembly process. Both political parties struggled with how the caucuses were held and how delegates were calculated and awarded. HB 1454 and SB 216 were drafted in response to constituent concerns, but neither bill survived the session. HB 1454 was killed in committee and SB 216 was laid over until after the end of the session, effectively killing it.

 

CBA Priority Bills

 

This year, the Legislature passed all of the bills sponsored or generated by CBA sections this year. We worked with a very supportive legislature and several new legislators to achieve bills that were a priority for our sections. In addition, we worked with several other stakeholder groups and leadership from both parties to promote and achieve our legislative agenda.

 

The first four bills discussed below were proposed and written by members of the Business Law Section as a means of cleaning up and clarifying the Colorado corporate codes. They are simple but important bills for businesses and how they operate.

 

Security Interest Owner’s Interest in Business Entity (HB 1270). Under current law, the Uniform Commercial Code invalidates contractual limits on the transferability of some assets that can be subject to a security interest. In 2006, the Colorado Corporations and Associations Act was amended to clearly and broadly exempt an owner’s interest in a business entity from these code provisions to effectuate the “pick your partner” principle that allows small businesses to control their ownership. This bill narrows the exemption in the Act to that necessary for “pick your partner” and codifies this narrowed exemption in the code.

 

Limited Liabilities Companies Governing Law (HB 1329). This bill deletes the requirement that a partner’s contribution to a limited liability company is a prerequisite to becoming a member of the company; clarifies that the tax status of a limited liability company does not affect the immunity of a member of the company from liability for the company’s acts; and limits the applicability of the statute of frauds, which requires certain contracts to be written to be enforceable, to operating agreements for limited liability companies. Section 4 reconciles the various partnership and limited liability company acts regarding compensation of a partner for services performed during the windup of the entity’s affairs.

 

Correction Statement Secretary of State Erroneous Filed Document (HB 1330). This bill allows a person to file a statement of correction with the secretary of state if a document previously filed was delivered to the secretary of state for filing in error.

 

Partnership Statute of Frauds Governing Law (HB 1333). This bill limits the applicability of the statute of frauds, which requires certain contracts to be written to be enforceable, to partnership agreements, and specifies which of several potentially applicable laws govern limited partnerships.The CBA’s Elder Law and Trust and Estate Sections also proposed and championed legislation to improve aspects of the Colorado Probate Code. The following two bills represented an “omnibus” effort to clean up various aspects of the code. A great deal of effort was invested in working with legislators, stakeholders, and interested individuals to ensure that the changes made to the code were clear and understandable improvements to existing law.

 

Overseeing Fiduciaries Management of Assets (SB 131). This bill clarifies statutory language concerning the removal of a fiduciary to ensure that a fiduciary’s authority is suspended as soon as a petition to remove the fiduciary is filed. The bill adds a provision to the conservatorship statutes stating that an adult ward or protected person has a right to be represented by a lawyer of his or her choosing unless the trial court finds the person lacks sufficient capacity to provide informed consent for representation by a lawyer. The bill states that after a fiduciary receives notice of proceedings for the fiduciary’s removal, the fiduciary cannot pay compensation or attorney fees and costs from the estate without a court order.

 

Transfer of Property Rights at Death (SB 133). Under current law, a certificate of death, a verification of death document, or a certified copy thereof, of a person who is a joint tenant may be placed of record with the county clerk and recorder of the county in which the real property affected by the joint tenancy is located, together with a supplementary affidavit. The bill removes the requirement that the person who swears to and affirms the supplementary affidavit has no record interest in the real property. The bill includes inherited individual retirement accounts and inherited Roth individual retirement accounts as property exempt from levy and sale under writ of attachment or writ of execution. The bill amends provisions concerning determination-of-heirship proceedings by: clarifying the definition of “interested person,” so that anyone affected by the ownership of property may commence a proceeding; describing when an unprobated will may be used as part of a proceeding; clarifying notice requirements; and ensuring that a judgment and decree will convey legal, as opposed to equitable, title. The bill enacts portions of section 5 of the Uniform Power of Appointment Act, with amendments.

 

Uniform Laws

 

The Uniform Law Commission introduced a number of bills this past session, including the Uniform Trust Decanting Act, the Uniform Voidable Transactions Act, the Revised Uniform Fiduciary Access to Digital Assets Act, the Uniform Substitute Decision Making Documents Act, and the Canadian Domestic Violence Protection Order Enforcement Act. Of these bills, the CBA worked with the sponsors to ensure the passage of the Uniform Trust Decanting Act and the Revised Uniform Fiduciary Access to Digital Assets Act. The CBA had significant concerns with aspects of the other proposed acts and worked to have them postponed for further work or consideration in future sessions.

 

Other Interesting Bills

 

The CBA worked on a number of other interesting pieces of legislation throughout the session. A brief synopsis of these bills, the CBA’s position on them, and the outcomes follows.

 

Recreate Statutory Revision Committee (HB 1077). The Statutory Revision Committee (committee), created in 1977 and repealed in 1985, was a standing body tasked with making an ongoing investigation into statutory defects and anachronisms. This bill recreates the committee. The recreated committee comprises 8 voting members, with the majority and minority party leaders of each chamber of the General Assembly appointing two members from those bodies and the Committee on Legal Services appointing two nonvoting, non-legislative members who are attorneys-at-law. The committee is staffed by the Office of Legislative Legal Services and is charged with: making an ongoing examination of the state’s common law and statutes and current judicial decisions, for the purpose of discovering defects and anachronisms in the law and recommending needed reforms; receiving, soliciting, and considering proposed changes to the law from legal organizations, public officials, lawyers, and the public generally as to defects and anachronisms in the law; annually recommending legislation, from time to time, upon an affirmative vote by at least five legislative members of the committee, to effect such changes in the law as it deems necessary to modify or eliminate antiquated, redundant, or contradictory laws; and reporting its findings and recommendations from time to time to the Committee on Legal Services and annually to the General Assembly.

 

The CBA was successful in amending this bill to include nonvoting attorneys on the committee to advise the legislators. The CBA is currently seeking nominations for these positions from interested attorneys.1 The bill was signed by the Governor on June 10, 2016.

 

Simplified Name Change After Divorce (HB 1085). Under current law, a party to a divorce or legal separation may request in the petition that the party’s prior name be restored as part of the decree of dissolution or legal separation. This process to restore a prior name does not involve a background check or publication of the name. However, if the party does include a name change at the time the decree of dissolution or legal separation is entered, the party must follow the procedures for a name change under civil law, which include a fingerprint-based background check and publication of the name. Subject to certain conditions, the bill permits a party to a dissolution or legal separation action to request the restoration of the party’s prior full name by filing a motion in the court that granted the divorce or legal separation. The ex-parte motion does not require notice to the other party to the divorce or legal separation. The bill includes the requirements for filing the motion and the conditions under which the court must grant the motion. The bill also clarifies that the provisions of the adult name change statute do not apply to a party to a dissolution or legal separation action who requests restoration of a prior name pursuant to the new statute.

 

The CBA worked to amend this bill to require that notice be given to the other party to the divorce or legal separation, but these efforts were not successful. The bill was adopted and signed by the Governor on March 31, 2016 and takes effect in September.

 

Commissions Evaluating Judicial Performance (HB 1235). This bill makes revisions to various functions of the state commission on judicial performance (state commission) and the district commissions on judicial performance (district commissions), referred to collectively as the “commissions.” The revisions include: changing the makeup of the state commission to include one representative from each judicial district to ensure representation from the entire state; establishing guidelines for when attorneys and non-attorneys are appointed to the state commission by a district commission; not allowing the chief justice to select individuals for the state commission, which reviews the chief justice’s performance; mandating annual public meetings at which the public is invited to attend and confidentially comment on justices and judges; requiring the state commission to obtain and verify required financial disclosures, criminal histories, and driving histories for each justice or judge reviewed by the commissions; requiring judicial evaluations to take place every two years and to be made public at that time; mandating that the commissions make a “do not retain” recommendation when a majority of commissioners determines that it is more probable than not that a justice or judge knowingly committed a dishonest act during the performance of judicial duties, knowingly made inaccurate or insufficient public financial disclosures, or was improperly influenced by a conflict of interest in performing a judicial act; and mandating that the commissions make a “do not retain” recommendation when twothirds of the attorneys who complete a questionnaire or survey for the commission recommend that the justice or judge is not retained. The bill is funded from fees and cost recoveries for electronic filings, network access and searches of court databases, electronic searches of court records, and any other information technology services performed pursuant to statute.

 

The CBA opposed this bill but plans to work with the sponsors and stakeholders going forward because it considers judicial performance evaluations a critical element in the integrity of Colorado’s merit selection process and the integrity of the judicial branch overall. The bill was killed in committee on April 4, 2016.

 

Operators Liable for Oil And Gas Operations (HB 1310). Under current law governing relations between surface owners and oil and gas operators, to prevail on a claim the surface owner must present evidence that the operator’s use of the surface materially interfered with the surface owner’s use of the surface of the land. This bill amends this to require the operator to exercise reasonable care to avoid causing bodily injury and to allow proof that the operator’s oil and gas operations harmed the surface owner’s use of the surface of the land, caused bodily injury to the surface owner or any person residing on the property of the surface owner, or damaged the surface owner’s property. The bill also requires operators to exercise the highest degree of care in conducting operations so as to avoid causing an earthquake. Operators that breach this duty are held strictly liable for their conduct if oil and gas operations, including a hydraulic fracturing treatment, or reinjection operation, cause an earthquake that damages property or injures an individual. A plaintiff establishes a prima facie case of causation by showing that: an earthquake has occurred; the earthquake damaged the plaintiff’s property or injured the plaintiff; the operator breached the duty of care; and the oil and gas operations occurred within an area that has been determined to have experienced induced seismicity by a study of induced seismicity that has been independently peer-reviewed. Plaintiffs have five years after discovery of the damages or injury to file an action. It is an affirmative defense if the operator has conducted oil and gas operations in accordance with a regulatory requirement or land use plan provision that applies specifically to the alleged intrusion or damage.

 

The CBA opposed this bill because of the way it would have changed the legal rules and principles governing the law. The CBA joined several stakeholder and interest groups to oppose the bill, which was killed in committee on April 28, 2016.

 

Open Records Subject to Inspection Denial (HB 1346). This bill allows a custodian to deny access to confidential personal information records and employee personal email addresses in records subject to the Colorado Open Records Act (CORA). The provisions of CORA that relate to civil or administrative investigations and trade secrets and other privileged and confidential information apply to the judicial branch.

 

The CBA opposed this bill as an unnecessary breach of the separation of powers in the Constitution. The concerns outlined by the proponents of the bill were addressed by the Public Access to Information and Records Role (PAIRR), and the CBA supports the branch’s effort to mirror CORA in this manner. The bill was killed in committee on April 6, 2016.

 

Personal Rights of Protected Persons (SB 026). This bill provides that a guardian must not restrict a protected person’s right of communication, visitation, or interaction with other persons, including the right to receive visitors, telephone calls, or personal mail, unless such restrictions are authorized by a court order. A court may issue an order restricting the communications, visitations, or interactions that a person may have with a protected person upon a showing of good cause by a guardian. In determining whether to issue such an order, the court must consider certain factors. Any interested person, including the protected person, who reasonably believes that a guardian has violated a court order or abused the guardian’s discretion in restricting a protected person’s right of communication, visitation, or interaction with other persons may move the court to: require the guardian to grant a person access to the protected person; restrict, or further restrict, a person’s access to the protected person; modify the guardian’s duties; or remove the guardian. A guardian who knowingly isolates a protected person in violation of law or a court order is subject to removal. With certain exceptions, a guardian or conservator must promptly notify a protected person’s closest known family members and any person designated by the protected person to be notified in the event that the protected person changes his residence, resides at a location other than the protected person’s residence for more than seven days, is admitted to a medical facility for acute care or emergency care, or dies.

 

The CBA opposed this bill as written as an upending of the probate protections and procedures that have served to protect the best interests of the ward and protected persons. The structure of SB 26 would have made it unnecessarily costly, time consuming, and burdensome on the ward or protected person’s estate and the guardian charged by the court with overseeing and protecting the ward. The bill was killed in committee on May 5, 2016.

 

Electronic Recording Technology Board (SB 115). This bill creates the Electronic Recording Technology Board (board) in the Department of State. The board, which is authorized to issue revenue bonds, is established as an enterprise. As long as it constitutes an enterprise, the board is not subject to any provisions of article X, § 20 of the Colorado Constitution. The board sunsets in six years, but prior to that sunset, it is subject to a sunset review. The board is authorized to impose a surcharge of up to $2 on all documents that a clerk and recorder receives for recording or filing. If imposed, counties are required to collect the surcharge on behalf of the board and transmit it to the state treasurer for deposit in the newly created electronic recording technology fund (fund). The board is required to: develop a strategic plan incorporating the core goals of security, accuracy, sequencing, online public access, standardization, and preservation of public records; determine functionality standards for an electronic filing system that support the core goals; issue a request for proposal for electronic filing system equipment and software that will be available to counties on an optional basis; develop best practices for an electronic filing system; provide training to clerks and recorders related to electronic filing systems; and make grants to counties to establish, maintain, improve, or replace electronic filing systems for documents that are recorded with a clerk and recorder. In awarding grants, the board is required to give priority for grants to counties that do not have sufficient revenue from the surcharge proceeds to maintain their existing electronic filing systems. The money in the fund is continuously appropriated to the board to be used for these purposes. The bill repeals the secretary of state’s powers to ensure uniformity related to electronic filing systems, which powers become the board’s responsibility, and requires the board to prepare an annual report that is published online about the grants that the board made in the prior fiscal year. The bill also extends the $1 surcharge that a county clerk and recorder is currently required to collect and use for the county’s core or electronic filing system for nine and a half years. The definition of “electronic filing system” is expanded to include elements of the “core filing system,” which term is repealed.

 

The CBA supported this bill as a necessary improvement in the recording and real estate record infrastructure across Colorado counties. Along with other stakeholders, including the clerk’s association and mortgage lenders association, we promoted this bill at the legislature, and after an unsuccessful 2015 bill, succeeded in passing the bill this year. The bill was signed into law on June 10, 2016 and becomes effective immediately, though it will take a while to implement.

Marriages by Individuals in Civil Unions (SB 150). This bill includes a non-statutory legislative declaration regarding the effect of the bill, which states that the General Assembly finds a legal conflict between the Colorado Constitution and the manner in which Obergefell v. Hodges2 has altered the issuance of marriage licenses in Colorado. The legislative declaration states that the intent of the bill is to remedy the complicated legal process of dissolving a civil union and a marriage for the same couple. It also states that the ultimate question of the U.S. Supreme Court’s constitutional jurisdiction and authority to redefine marriage in Colorado’s Constitution through a ruling in certain individual cases in other states is a matter the General Assembly may take up at a different time, but the bill does not address nor settle that concern. The bill addresses issues that have arisen in Colorado regarding marriages by individuals who are in a civil union or who entered or who will enter into a civil union after the passage of the bill. The bill amends the statute on prohibited marriages to disallow a marriage entered into prior to the dissolution of an earlier civil union of one of the parties, except a currently valid civil union between the same two parties. The executive director of the Department of Public Health and Environment is directed to revise the marriage license application to include questions regarding prior civil unions. The bill repeals a statute in the Colorado Civil Union Act that states that a relationship between two persons that does not comply with article II, § 31 of the Colorado Constitution but that was legally entered into in another jurisdiction is deemed to be a civil union. The bill states that a civil union license and a civil union certificate do not constitute evidence of the parties’ intent to create a common law marriage. When parties who have entered into a civil union subsequently marry, the effect is a merger of the two relationship statuses. Once merged, the civil union terminates as of the date of the solemnization of the marriage or determination of a common law marriage, and no separate dissolution of a civil union is required. If one or both of the parties to a marriage that has been merged with a civil union subsequently desire to dissolve the marriage, legally separate, or have the marriage declared invalid, one or both of the parties must file a petition in accordance with the procedures specified in the Uniform Dissolution of Marriage Act. If a civil union and marriage were merged, any calculation of the duration of the marriage includes the time period during which the parties were in a civil union. The criminal statute on bigamy is amended, effective July 1, 2016, to include a person who, while married, marries, enters into a civil union, or cohabits in the state with another person not his or her spouse and to include a person who, while still legally in a civil union, marries, enters into a civil union, or cohabits in the state with another person not his or her civil union partner.

 

The CBA supported this legislation as a valuable clean up and clarification to the statutes in the wake of the Supreme Court’s actions. The Family Law Section provided testimony in support, and the bill was passed and was signed on June 8, 2016. The bill became effective immediately.

 

DOC Program for Juvenile Offenders (SB 180). This bill requires the Department of Corrections (department) to develop and implement a program for offenders who were sentenced to an adult prison for a felony offense committed while the offender was less than 18 years of age and who are determined to be appropriate for placement in the program. An offender serving a sentence for a felony committed while the offender was a juvenile may apply for placement in the program if the offender has served 20 calendar years of the sentence, has not been released on parole, and has satisfied several other eligibility criteria. Upon receiving a petition from an eligible offender, the executive director of the department or his designee must review the petition. In determining whether to place an offender in the program, the executive director or the executive director’s designee must consider certain criteria. An offender who successfully completes the program may apply to the governor for early parole. The governor may grant early parole to such an offender if, in the governor’s opinion, extraordinary mitigating circumstances exist and the offender’s release from custody is compatible with the safety and welfare of society. The State Board of Parole must make a recommendation to the governor concerning whether early parole should be granted to such an offender.

 

Sentencing Juveniles Convicted of Class 1 Felonies (SB 181). In Miller v. Alabama,3 the U.S. Supreme Court held that imposing a mandatory life sentence without the possibility of parole on a juvenile is a cruel and unusual punishment prohibited by the Eighth Amendment to the U.S. Constitution. In Colorado, a juvenile sentenced for a class 1 felony committed on or after July 1, 1990, and before July 1, 2006, was sentenced to a mandatory life sentence without the possibility of parole. The bill provides a procedure for resentencing these offenders as follows: If the felony for which the person was convicted is first-degree murder where the death of a person was caused in the course of or in furtherance of any one of several described offenses, then the district court, after holding a hearing, may sentence the person to a determinate sentence within the range of 30 to 50 years in prison, less any earned time granted, if, after considering certain factors, the district court finds extraordinary mitigating circumstances. Alternatively, the court may sentence the person to a term of life imprisonment with the possibility of parole after serving 40 years, less any earned time granted. If the felony for which the person was convicted is not first-degree murder where the death of a person was caused in the course of or in furtherance of any one of several described offenses, then the district court must sentence the person to a term of life imprisonment with the possibility of parole after serving 40 years, less any earned time granted.

 

The CBA supported SB 180 and SB 181 because they provide a path forward and guidelines for resentencing those juvenile offenders who had their mandatory life sentences declared unconstitutional by the U.S. Supreme Court. The bill was signed into law on June 10, 2016 and becomes effective on August 10, 2016.

 

Conclusion

 

This was my second session representing you at the Capitol. Our success is the result of hard work by a great many people who volunteer their time and expertise to advance and defend the practice of law and our agenda. It is a tremendous privilege to work with these CBA members, and I look forward to many more years of leadership and success under the Gold Dome.

 


 

Notes

 1. To apply to the Statutory Revision Committee, go to www.cobar. org/Portals/COBAR/Repository/Sections/SRC/SRC-form-final.pdf?ver =2016-06-21-132358-370&timestamp=1466537042312.

2. Obergefell v. Hodges, 576 U.S. ___ (2015). 3. Miller v. Alabama, 132 S.Ct. 2455 (2012)

3. Miller v. Alabama, 132 S.Ct. 2455 (2012).


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