Heartland v. CDPHE

Colorado Court of Appeals·Decided May 22, 2025·No. 23CA993·Unpublished

Opinion

23CA0993 Heartland v CDPHE 05-22-2025 COLORADO COURT OF APPEALS

Court of Appeals No. 23CA0993 City and County of Denver District Court No. 17CV32604 Honorable Jill D. Dorancy, Judge

Heartland Biogas, LLC, Plaintiff-Appellant, v.

Colorado Department of Public Health and Environment and Weld County Board of County Commissioners,

Defendants-Appellees.

JUDGMENT AFFIRMED

Division II

Opinion by JUDGE JOHNSON

Fox and Schock, JJ., concur

NOT PUBLISHED PURSUANT TO C.A.R. 35(e)

Announced May 22, 2025

Holland & Hart LLP, Stephen G. Masciocchi, Jessica J. Smith, Denver, Colorado, for Plaintiff-Appellant

Philip J. Weiser, Attorney General, Fredrick C. Haines, Senior Litigation Counsel & Assistant Solicitor General, Allison R. Ailer, Senior Assistant Attorney General, Joseph G. Michaels, Assistant Solicitor General, Denver, Colorado, for Defendant-Appellee Colorado Department of Public Health and Environment

Hall & Evans, L.L.C., Mathew J. Hegarty, Alexandria L. Bell, Denver, Colorado, for Defendant-Appellee Weld County Board of County Commissioners

¶1 Plaintiff, Heartland Biogas, LLC (Heartland), appeals the district court’s judgment finding in favor of defendants, Colorado Department of Public Health and Environment (CDPHE) and Weld County Board of County Commissioners (BOCC). Heartland sued CDPHE and BOCC contending that both entities took without just compensation its Certificate of Designation (Designation), and by extension, its Use by Special Review Permit 1704 (Permit 1704), as well as its Certificate of Registration 9931 (Registration 9931),1 causing Heartland to close its facility so that those entities also took without just compensation Heartland’s property interest in its land improvements.

¶2 Although Heartland requested a jury trial, CDPHE and BOCC asked the court to hold a bench trial because Heartland’s remaining claims at the time of trial concerned regulatory takings. The court agreed. Also before trial, CDPHE and BOCC disclosed new witnesses to testify at trial, and the court allowed those witnesses to

1 The parties used a variety of acronyms to refer to various terms.

To avoid an opinion of alphabet soup, we may use different abbreviations.

testify even though Heartland argued that the disclosures were untimely.

¶3 Following a multiple-day bench trial, the district court issued a lengthy order finding that (1) Heartland did not have a designation; (2) CDPHE’s and BOCC’s actions were not regulatory takings per se or takings under the factual inquiry in Palazzolo v. Rhode Island, 533 U.S. 606 (2001); and (3) BOCC validly exercised its police power by indefinitely suspending Permit 1704.

¶4 On appeal, Heartland contends that the district court erred because (1) Heartland was entitled to a jury trial; (2) Heartland had a designation and, thus, a protected property interest; (3) CDPHE’s and BOCC’s actions forcing Heartland’s facility to close constituted regulatory takings; (4) BOCC’s exercise of its police power had no bearing on Heartland’s takings claims, and regardless, the BOCC invalidly exercised its police power by shutting down the facility; and (5) the court abused its discretion by allowing some of the late- disclosed witnesses to testify at trial. We affirm.

I. Background

¶5 In 2009, Shelton Land and Cattle, Ltd. (Shelton) owned property in Weld County and leased it to Heartland Renewable

Energy, LLC (Heartland Renewable), which has no relationship to Heartland. In April 2009, Heartland Renewable applied for a designation with CDPHE and BOCC to operate a solid waste disposal site and facility on the property. Heartland Renewable hired AGProfessionals, LLC, an engineering development company (consulting firm), to assist with the regulatory process. As part of its application, Heartland Renewable, through its consulting firm, submitted a proposed Engineering, Design, and Operations Plan (the 2010 EDOP) to CDPHE for that agency’s review. The 2010 EDOP governs operation of the facility.

¶6 Heartland Renewable’s facility proposed to use manure and food waste — also referred to as substrates — to create three products: renewable natural gas (through an anaerobic digestion process),2 compost (from the facility’s digested solids), and liquid soil amendment or LSA (from the facility’s effluent, which is the

2 “Anaerobic digestion is a process through which bacteria break

down organic matter — such as animal manure, wastewater biosolids, and food wastes — in the absence of oxygen.” Lambland, Inc. v. Heartland Biogas, LLC, No. 22-1184, 2023 WL 8276140, at *1 n.1 (10th Cir. Nov. 30, 2023) (unpublished opinion) (quoting U.S. Env’t Prot. Agency, How Does Anaerobic Digestion Work?, https://perma.cc/T3ZZ-XFUM).

liquid portion of the digestate and, thus, is also referred to as digestate liquor). CDPHE approved the 2010 EDOP, authorizing the facility to convert the substrates into renewable natural gas.

¶7 Following CDPHE’s approval, BOCC issued a resolution on July 21, 2010 (2010 Resolution), approving Permit 1704, a document that also included Heartland Renewable and Shelton’s Designation and identified forty-two development standards, which were site-specific conditions that the facility agreed to abide by to protect the health and welfare of the community. The 2010 Resolution stated, “Noncompliance with any of the foregoing development standards may be reason for revocation of [Permit 1704] by [BOCC].”

¶8 In November 2012, the consulting firm began discussions with CDPHE regarding the permit for processing compost and LSA. Fertilizer (i.e., compost or LSA, the latter being a conditioner to help improve the condition of the soil) is regulated by the Colorado Department of Agriculture (CDA). The regulated entity must submit a label to CDA if the entity seeks to distribute a fertilizer made from solid waste. Once the CDA approves the label, it issues a registration that allows the company to distribute the product.

Although Heartland intended to use the facility for compost, it never applied to CDA for a registration of its “digested solids.”

¶9 Part of the parties’ dispute revolves around whether the LSA is regulated exclusively by the CDA or whether CDPHE shares in the review process. In January 2013, the consulting firm’s internal emails indicated that, to obtain CDPHE’s approval of an updated EDOP, Heartland Renewable would need to obtain a “beneficial use determination” (BUD) from CDPHE before the facility distributed LSA for any land application. But in March 2013, CDPHE, Weld County, and representatives from AGEnergy USA, LLC (AGEnergy) — a consulting business associated with Heartland Renewable — had a meeting about regulating the LSA. AGEnergy representatives left the meeting believing that if Heartland Renewable obtained a registration from CDA for the LSA, no BUD from CDPHE would be required.

¶ 10 On June 6, 2013, CDA issued to Heartland Renewable Registration 9931 for its LSA, which authorized the facility to distribute its LSA as a soil amendment until June 30, 2014. Heartland Renewable submitted an updated EDOP (2013 EDOP) to

CDPHE, which indicated the facility’s intended production of another output — the LSA.

¶ 11 Beginning in June 2013, EDF Renewables, Inc. — the parent company to Heartland (parent company) — began due diligence to investigate purchase of the facility from Heartland Renewable. In August 2013, Heartland acquired the facility. Heartland notified BOCC and CDPHE of the transfer of ownership; specifically, Heartland sent to CDPHE an updated EDOP in October 2013 requesting that the facility’s name be updated from Heartland Renewable to Heartland. Heartland continued to use the consulting firm and hired legal counsel to assist Heartland in navigating the various laws and regulations pertaining to operating the facility.

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