On September 21, 2026, the Colorado Supreme Court issued its opinion in A.R. Wilfley & Sons, Inc. v. National Union Fire Insurance Company of Pittsburgh, PA, 2026 CO 64, answering a certified question from the United States District Court for the District of Colorado concerning whether insolvency by the primary insurer shifts an otherwise covered occurrence in the “Not covered” category, thereby requiring the umbrella/excess carrier to step into the shoes of the insolvent insurer and provide first-dollar indemnity and defense costs. The Court answered that question no, determining instead that “Not covered,” as used in those policies, speaks to the scope of coverage, not collectability of payment.

Background

A.R. Wilfley & Sons, Inc. (“Wilfley”) has manufactured pumps for mining and industrial operations for over a century. Since the 1980s, Wilfley has faced a steady stream of lawsuits concerning asbestos exposure in its products (the “Underlying Actions”). Coverage for the Underlying Actions was largely supplied by two primary insurers—Great Northern Insurance Company (“Great Northern”) and Reliance Insurance Company (“Reliance”). But eventually, Great Northern’s policy limits were depleted, and Reliance became insolvent, leaving Wilfley without any functioning source of primary coverage.

Back in the 1980s, Federal Insurance Company (“Federal”) issued at least three umbrella/excess policies (the “Federal Policies”) to Wilfley. The Federal Policies sat atop the coverage tower, above various underlying primary policies—including scheduled primary policies issued by Reliance. Under these policies, Federal was required to pay on behalf of Wilfley for covered occurrences but defend only with respect to any occurrence “not covered by the underlying policies listed in the schedule of underlying insurance, or any other underlying insurance collectible by the insured, but covered by the terms and conditions of this policy.”

After all underlying primary insurance fell away, Wilfley tendered the Underlying Actions to Federal. Federal agreed to defend under a full reservation of rights but ultimately denied coverage. Wilfley then filed suit in federal court, alleging breach of contract, seeking declaratory relief, and pursuing a claim of common law insurance bad faith. Wilfley argued that because Reliance’s coverage had become uncollectible due to insolvency, the Underlying Actions were “not covered” by Reliance’s policies, and Federal was required to drop down and supply primary coverage.

The district court initially ruled in Federal’s favor, concluding that the Federal Policies did not require Federal to step into the shoes of an insolvent primary insurer. The district court later withdrew its order and certified the dispositive question to the Colorado Supreme Court, noting both the absence of controlling precedent and the potential tension with the Colorado Court of Appeals’ decision in Deisch & Marion, P.C. v. International Insurance Co., 771 P.2d 19 (Colo. App. 1989).

The Court’s Analysis

As noted above, the Court answered the certified question no, holding that the phrase “not covered” in the Federal Policies addresses the scope of coverage—not the collectability of payment for a covered occurrence. Three provisions in the Federal Policies, as found by the Court, confirmed this distinction between “covered” (addressing whether an occurrence falls within the scope of a scheduled underlying policy) and “collectible” (addressing whether insurance is available from an unscheduled insurer):

1. Defense Provisions: Federal’s duty to defend was limited to occurrences “not covered by the underlying policies listed in the schedule of underlying insurance, or any other underlying insurance collectible by the insured.” The use of “covered” for scheduled policies and “collectible” for unscheduled policies demonstrated a deliberate distinction.
2. Underlying Limit Provision: The insured’s underlying limit was defined as “an amount equal to the limits of liability indicated beside the underlying insurance listed in the schedule of underlying insurance, plus the applicable limits of any other underlying insurance collectible by the insured.” Again, collectability applied only to unscheduled insurance.
3. Other Insurance Condition: Federal’s indemnification obligations were in excess of all “other valid and collectible insurance with any other insurer . . . available to the insured.” Collectability was tied exclusively to insurance from unscheduled carriers.

The Court reasoned that if “covered” and “collectible” were synonymous—as Wilfley urged—the distinction between scheduled and unscheduled insurers would be erased. The Court further noted that the “Maintenance of Underlying Insurance” condition required Wilfley to maintain its scheduled underlying insurance in full effect, underscoring a deliberate allocation of risk: Wilfley selected and was responsible for maintaining solvent primary carriers, whereas Federal did not bargain to be a financial guarantor of those carriers.

The Court found further support in federal and state decisions from other jurisdictions, including the Tenth Circuit’s decision in Scott’s Liquid Gold, Inc. v. Lexington Insurance Co., 293 F.3d 1180 (10th Cir. 2002), which rejected an identical argument under Colorado law and held that “not covered” plainly referred to “an event which does not meet the definition of a covered event in the underlying policies.”

Finally, the Court addressed the Colorado Court of Appeals’ decision in Deisch & Marion, P.C. v. International Insurance Co., 771 P.2d 19 (Colo. App. 1989), on which Wilfley relied upon heavily. The court distinguished Deisch on multiple grounds: Deisch involved a different type of claimant (the insured’s defense counsel, not the insured itself), arose in a different procedural posture, and was resolved on an equitable implied-contract theory—not on contractual interpretation of the umbrella/excess policy. The Court concluded that the division’s brief discussion of the policy language was dictum and, to the extent Deisch is incompatible with this opinion, expressly overruled it.

Implications

This decision resolves an open question of Colorado law and provides guidance on the interplay between umbrella/excess policies and the insolvency of scheduled primary insurers. The Court’s holding aligns Colorado with the majority of federal and state courts that have addressed this issue, confirming that the phrase “not covered” in an umbrella/excess policy speaks to the scope of coverage under the underlying policy—not the financial ability of the underlying insurer to pay.

Because umbrella/excess carriers are not obligated to drop down in the event of a scheduled primary insurer’s insolvency, policyholders may bear the risk of maintaining solvent primary carriers and may need to explore other avenues—such as state guaranty funds or direct pursuit of insolvent carriers’ receivership estates—to fill the gap left by an insolvent primary insurer.

 The decision also suggests that reliance on Deisch as authority for requiring umbrella/excess carriers to assume defense obligations when a primary insurer becomes insolvent is no longer permissible.

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For questions about this legal alert, please contact a member of the Davis Graham Appellate Group.

On September 21, 2026, the Colorado Supreme Court issued a split decision in Litterer v. Vail Summit Resorts, Inc., 2026 CO 65. The majority held that a snowboarder—while in active litigation against a resort and its employee for injuries he sustained in a past snowmobile collision—released his existing claims after executing a liability waiver as part of the online purchase of an Epic Pass for a subsequent season. The majority reasoned that because the waiver concerned a post-injury release, it was not an exculpatory agreement subject to Miller v. Crested Butte, LLC, 2024 CO 30, which governs pre-injury exculpatory agreements. Further, the court held that willful and wanton conduct is not an independent tort in Colorado. This affirmed the judgment of the court of appeals.

Background

In December 2020, John Litterer was injured while snowboarding at Breckenridge Ski Resort—which is owned by Vail Summit Resorts, Inc. (“VSRI”)—in a collision with a snowmobile operated by a VSRI employee. Litterer subsequently filed suit against VSRI and its employee, asserting several claims, including one for willful and wanton conduct, and seeking exemplary damages. While his lawsuit was in active litigation, Litterer purchased an Epic Pass for the 2022–23 ski season online. As part of the purchase, he electronically executed a “Release of Liability, Waiver of Claims, Assumption of Risks and Indemnity Agreement” (the “2022 online waiver”). The waiver stated in capitalized text that the signer would

FURTHER RELEASE AND GIVE UP ANY AND ALL CLAIMS AND RIGHTS THAT I MAY NOW HAVE AGAINST ANY RELEASED PARTY,” including “ALL CLAIMS, INCLUDING THOSE OF WHICH I AM NOT AWARE, THOSE NOT MENTIONED IN THIS RELEASE AND THOSE RESULTING FROM ANYTHING WHICH HAS HAPPENED UP TO NOW.

The definition of “Released Party” included VSRI and its employees.

Respondents moved for summary judgment, arguing that Litterer released all claims against them when he executed the 2022 online waiver. The district court agreed, characterizing the waiver as a release rather than an exculpatory agreement and concluding that adequate consideration supported the waiver. The court of appeals affirmed, and Litterer petitioned for certiorari review.

The Court’s Analysis

The majority of the Court—Justice Berkenkotter, Chief Justice Marquez, Justice Boatright, and Justice Blanco—made the following three holdings.

1. The 2022 Online Waiver Operated as a Release, Not an Exculpatory Agreement.

The Court distinguished between a release—which is the relinquishment of a vested right or claim—and an exculpatory agreement, which attempts to insulate a party from liability for its own future negligence. Because Litterer executed the 2022 online waiver after his injury, after filing suit, and while litigation was ongoing, the Court concluded that it operated as a release of his existing claims, not as a forward-looking exculpatory agreement. The Court applied traditional rules of contract interpretation and found that Litterer demonstrated mutual assent through his conduct: Litterer electronically signed the waiver, purchased the pass, and used it to snowboard at Breckenridge. Litterer’s subjective, unexpressed intent not to release his claims was irrelevant when determining “the requisite meeting of the minds.”   

The Court also rejected Litterer’s argument that the waiver was overly broad and unenforceable, declining to adopt the reasoning of Farina v. Mt. Bachelor, Inc., 66 F.3d 233 (9th Cir. 1995) (finding that release clause for “any and all claims that an injury skier might bring” violated Oregon public policy). Farina involved a pre-injury waiver and did not address whether a post-injury waiver of claims was an unenforceable exculpatory agreement.

2. Miller v. Crested Butte Does Not Apply.

The Court held that Miller v. Crested Butte, LLC, 2024 CO 30, which prohibits ski resorts from using exculpatory agreements to bar negligence per se claims based on certain statutory duties, was inapplicable because Miller governs pre-injury exculpatory agreements, not post-injury releases.

3. Willful and Wanton Conduct and Exemplary Damages Claims Were Properly Dismissed.

The Court held that “willful and wanton conduct” is not an independent tort in Colorado, but rather a descriptive standard used in the context of assessing exemplary damages under § 13-21-102, C.R.S. Because all of Litterer’s underlying claims were validly released when he purchased the Epic pass and electronically signed the waiver, there was no independent civil action to which exemplary damages could attach. Therefore, the Court affirmed the district court’s dismissal of those claims.

The Dissent

Justice Gabriel, joined by Justices Hood and Samour, dissented. The dissent found that the Release was predominantly an exculpatory agreement based on its actual language—which was largely forward-looking—regardless of when it was signed. Analyzing the fourth factor set forth in Jones v. Dressel, 623 P.2d 370, 376 (Colo. 1981), the dissent concluded that the Release failed to express the parties’ intent in clear and unambiguous language due to its excessive legal jargon, length, complexity, and the likelihood that a reasonable purchaser would not recognize the scope of the Epic Pass’s release provisions.

The dissent further reasoned that the exculpatory provisions were void as against public policy because they facially purported to release claims for willful and wanton negligence and negligence per se in violation of Jones and Miller. The dissent would have held that the void exculpatory provisions could not be severed from the release provisions, rendering the entire Release unenforceable.

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For questions about this legal alert, please contact a member of the Davis Graham Appellate Group.

On July 23, 2026, a division of the Colorado Court of Appeals issued its opinion in Myrick v. Colorado Energy & Carbon Management Commission, 2026 COA 61, addressing a matter of first impression in Colorado oil and gas law: whether overriding royalty interests (ORRIs) derived from nonconsenting working interests in and to a well must be paid immediately upon production of such well, or only after consenting working interest owners have recovered the nonconsenting owners’ share of the costs of drilling, completing, equipping, and operating such well plus statutory penalties detailed in C.R.S. § 34-60-116(7)(b) (the “Pooling Statute”), also known as when a well reaches “Payout”. In a unanimous opinion authored by Judge Freyre, the division held that ORRIs derived from a nonconsenting working interest owner’s share are not payable until consenting working interest owners have recovered the costs and penalties detailed in the Pooling Statute. 

Background 

Several foundational concepts in oil and gas law are necessary to understand the division’s decision. 

In Colorado, operators of oil and gas wells can seek to combine, or pool, mineral interests underlying multiple tracts into a single drilling and spacing unit (DSU) so that one well (or a set of wells) can produce collectively from the pooled lands.  That pooled DSU may contain lands covered by multiple different leases, which may in turn grant working interests, which include the rights to develop minerals, to multiple different parties. One way to accomplish such pooling is to request that a pooling order be issued by the Colorado Energy & Carbon Management Commission (“ECMC”).  That pooling order designates an operator (generally the party with the highest percentage of working interest in the DSU).  

When an operator proposes the drilling of a new well in a DSU, it must send out election letters to any other parties who own a working interest in the lands included within the DSU.  The other working interest owners must then decide whether or not they wish to participate in the well.  If a working interest owner participates, or consents, then they are required to bear their share of the costs of drilling, completing, equipping, and operating such well, and are entitled to receive their share of the production from such well.  If a working interest owner does not participate, or nonconsents, then they are not required to bear their share of the costs of drilling, completing, equipping, and operating such well until Payout, but they may not receive their share of the production until Payout. 

The question addressed by the court in Myrick is whether these cost recovery provisions apply not only to working interest owners, but also to owners of ORRIs.   

An ORRI is a right to payment from production carved out of the working interest granted in an oil and gas lease.  ORRIs are generally non-cost bearing, meaning they entitle the holder to a portion of production revenue without regard to the costs incurred to generate that production.  In Myrick, the court considered whether a holder of an ORRI carved out of nonconsenting working interest should be subject to the cost recovery provisions imposed on nonconsenting working interests since the ORRI is derivative of that nonconsenting interest, or whether the ORRI is immune from the cost recovery provision since the interest is non-cost bearing.  As detailed below, the court found that the derivative nature of the interest was dispositive and that holders of an ORRI are subject to the same cost recovery provisions as the working interest owners from which that particular ORRI is derived.  

The ECMC and District Court Orders 

The Myricks owned a 1.25% ORRI in oil and gas leases within the Sonic Star Drilling and Spacing Unit, a 1,920-acre DSU in Weld County operated by Verdad Resources LLC. For seven of Verdad’s eight wells in the DSU, Verdad was the sole consenting working interest owner, and three other working interest owners declined to participate; on the other well, two working interest owners joined Verdad as consenting owners. In 2022, Verdad sent division orders to the Myricks reflecting that no ORRI revenue would be paid from the nonconsenting working interest owners’ interests until those interests reached Payout. The Myricks challenged this before the ECMC, which ruled in Verdad’s favor. On appeal, the district court affirmed, and the Myricks appealed again to the Colorado Court of Appeals. 

Colorado Law 

The primary statutory provision at issue is section 34-60-116(7), which governs the rights and obligations of consenting and nonconsenting working interest owners under forced pooling orders. 

Subsection (7)(a)(I) requires pooling orders to provide for reimbursement to consenting working interest owners from the nonconsenting working interest owners’ share of production, “excluding royalty or other interest not obligated to pay any part of the cost thereof,” provided the royalty is “consistent with the lease terms prevailing in the area and is not designed to avoid the recovery of costs.” Subsection (7)(a)(II) provides that nonconsenting working interest owners are not entitled to receive their share of production until “the consenting owners have recovered the nonconsenting owner’s share of the costs out of production.” Subsection (7)(b) establishes a penalty structure: consenting owners may recover 100% of the nonconsenting owners’ share of surface equipment and operation costs, and 200% of certain other costs—including drilling, completion, and testing—as a statutory penalty for nonconsent. 

In 2017, the ECMC issued Order No. 1-202 (the “Catamount Order”), which addressed the same ORRI payment issue. In that order, the ECMC concluded that ORRIs are not among the interests to be paid during the cost recovery period because they are carved from the interests of nonconsenting working interest owners who are obligated to reimburse consenting working interest owners. The ECMC also noted that the legislature specifically names ORRIs in other sections of the statute but chose not to include them in the “excluding” language of subsection (7)(a)(I). Order No. 1-202 was not appealed. 

In 2018, after the ECMC issued Order No. 1-202, the General Assembly amended section 34-60-116(7)(a)(I). Notably, the legislature did not add “overriding royalties” to the list of interests excluded from the cost recovery scheme. Instead, it added qualifying language requiring that any excluded royalty be “consistent with the lease terms prevailing in the area” and “not designed to avoid the recovery of costs.” This legislative silence regarding ORRIs is significant to the division’s statutory interpretation. 

The Division’s Opinion 

In this case, a division of the Court of Appeals affirmed the ECMC’s order and the district court’s judgment, holding that the Pooling Statute unambiguously provides that ORRIs derived from nonconsenting owners’ working interests are subject to the cost recovery scheme and are not payable until the consenting working interest owners reach payout. 

The division began by finding that the Pooling Statute is unambiguous. The central interpretive question was whether the phrase “or other interest not obligated to pay any part of the cost thereof” in section 34-60-116(7)(a)(I) encompasses ORRIs derived from nonconsenting working interest owners’ interests. The division concluded it does not. 

The division’s reasoning centered on the derivative nature of an ORRI. While ORRIs are themselves non-cost bearing, they are carved from a working interest—an interest obligated to pay costs. The division cited Grynberg v. Waltman, 946 P.2d 473, 476 (Colo. App. 1997), for the foundational principle that an ORRI “cannot be greater than the interest from which it is derived.” Because a nonconsenting owner’s working interest is subject to the statutory cost recovery scheme, an ORRI carved from that interest is subject to that same scheme. 

The division held the phrase “other interest[s] not obligated to pay any part of the cost” captures “interests granted or reserved from the landowners’ interest” such as an interest created from the landowners’ “fee simple before executing a lease or from its share of the royalty after executing the lease.” Myrick v. Colo. Energy, 2026 COA 61, ¶ 29. This reading harmonizes with the statutory structure and purpose: the exclusion protects landowner-created interests that are fundamentally separate from the cost-bearing working interest, not lessee-created burdens on that working interest. 

The division found significant the legislature’s failure to add “overriding royalties” to the exclusion in section 34-60-116(7)(a)(I) after the Catamount Order. The legislature amended this very provision in 2018—after the Catamount Order was issued—and yet did not add ORRIs to the protected interests, despite naming ORRIs explicitly in other parts of the statute. The division treated this as a signal of legislative approval of the ECMC’s interpretation. 

Finally, the division noted that allowing private contracts creating ORRIs to trump the statutory cost recovery scheme would subvert the rights of consenting working interest owners who are not parties to those contracts. Permitting ORRI holders to extract payments from the nonconsenting working interest owners’ share of production before payout would undermine the incentive structure the Pooling Statute creates. 

Key Takeaways 

The Myrick decision provides important clarity on a question that has significant practical consequences for oil and gas operations in Colorado. For the first time, an appellate court has confirmed the ECMC’s interpretation that ORRIs derived from nonconsenting owners’ working interests are subject to the Pooling Statute’s cost recovery scheme and are not payable until after the consenting working interest owners reach Payout. 

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For questions about this legal alert, please contact a member of the Davis Graham Appellate Group.

On August 18, 2026, the U.S. Court of Appeals for the District of Columbia Circuit issued its decision in Chamber of Commerce, et al. v. EPA, No. 24-1193, denying industry petitions to overturn EPA’s 2024 designation of perfluorooctanesulfonic acid (PFOS) and perfluorooctanoic acid (PFOA) as hazardous substances under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA). PFOS and PFOA are two prevalent per- and polyfluoroalkyl substances (PFAS), synthetic compounds known colloquially as “forever chemicals” because their chemical composition is highly resistant to breaking down in the environment. The rule designating the compounds as hazardous substances has been effective since July 2024, but the D.C. Circuit’s landmark ruling confirms EPA’s broad statutory authority to expand the universe of CERCLA hazardous substances, cements PFAS as a significant potential liability, and promises to increase scrutiny on entities that have used PFAS in their operations, own legacy operations involving PFAS, or engage in transactions involving legacy use and impacts.

CERCLA in Brief

CERCLA, commonly known as the “Superfund” law, imposes liability on parties responsible for the presence of hazardous substances at a contaminated site. Pub. L. No. 96-510, 94 Stat. 2767 (1980) (codified as amended at 42 U.S.C. §§ 9601–9675). There are four categories of potentially responsible parties (PRPs): (1) current owners and operators of a contaminated facility; (2) past owners and operators at the time hazardous substances were disposed of; (3) generators and persons who arranged for the disposal or transport of hazardous substances; and (4) transporters of hazardous substances that selected the disposal site. 42 U.S.C. § 9607(a)(1)–(4). CERCLA liability is strict, joint and several, and retroactive, and defenses to liability are narrow and difficult to establish.

The designation of PFOS and PFOA as “hazardous substances” under the statute has several key implications. The rule further empowered EPA enforcement actions to force cleanups at contaminated sites. It also confirmed that parties—including government or private entities—who perform response actions to clean up PFOS and PFOA can seek cost recovery from PRPs. From an ongoing compliance perspective, the rule also required reporting for releases of PFOA or PFOS that exceed one pound. It created additional environmental due diligence implications on the front end of property transactions. And finally, the D.C. Circuit decision closes the door, absent U.S. Supreme Court review, on skepticism that the PFOS and PFOA designation would be rolled back by the courts.

The D.C. Circuit’s Core Holding: Confirming EPA’s CERCLA Section 102(a) Authority

Although the Petitioners raised several issues, the central question before the court in Chamber of Commerce was whether EPA had statutory authority under CERCLA section 102(a), 42 U.S.C. § 9602(a), to designate PFOS and PFOA as hazardous substances. That statutory section authorizes EPA to promulgate regulations that designate “elements, compounds, mixtures, solutions, and substances which, when released into the environment may present substantial danger to the public health or welfare or the environment” as hazardous substances under CERCLA. EPA used that authority to promulgate just such a rule in 2024. The 2024 rulemaking represented a novel regulatory approach because it was the first time EPA had exercised its standalone Section 102(a) designation authority in the more than four decades since CERCLA’s enactment.

Petitioners, led by the Chamber of Commerce and several industry trade groups, argued that EPA had to demonstrate that substantial danger will occur upon a release to the environment of PFOS or PFOA, not merely that it may occur. The court rejected that argument, holding that “may” carries its ordinary meaning of possibility and contingency, and that Congress deliberately chose probabilistic language suited to a regulatory framework built on evolving scientific evidence. The court also held that the “substantial danger” qualifier provides meaningful limits in that the risk must be “serious and real, not hypothesized,” but that PFOS and PFOA clearly satisfy that standard given the volume of peer-reviewed research linking them to serious health harms.

The bottom line is unambiguous: EPA’s designation of PFOS and PFOA as hazardous substances under CERCLA stands. The court also paved the way for future exercise of EPA’s Section 102(a) authority to add other emerging contaminants (including other PFAS compounds) to the list of CERCLA hazardous substances.

High-Risk Sectors: When to Pay Attention

Under the now-confirmed rule, PFOS and PFOA must be approached with the same gravity and care as other conventional legacy contamination issues. There is no one-size-fits-all approach and a broad cross-section of industries are potentially impacted by the regulatory listing.

Real estate and commercial lending professionals across all sectors should understand and adapt standard protocols for evaluating PFAS because the hazardous substance designation may change the environmental risk profile of commercial and industrial properties and could require updated environmental site assessments.

Parties to real estate and corporate transactions should consult with knowledgeable environmental counsel on how best to evaluate and address PFOS and PFOA in the transactional context. Potential considerations include:

• Due diligence: Updating due diligence protocols, including Phase I environmental site assessment practices, to include PFAS-specific evaluations as warranted by the context
• Contracting: Addressing PFAS liability through various means including indemnification provisions, environmental representations and warranties, and purchase price adjustment mechanisms
• Insurance: Evaluating existing and available insurance coverage to address historical liabilities and protect against potential future claims

Releases of PFOS or PFOA may trigger regulatory obligations with federal, state, and local implications.

Parties should proceed carefully to evaluate whether or how to elevate potential liabilities associated with the broader set of PFAS, but especially PFOS and PFOA. Because PFAS are ubiquitous in the environment from decades of use and intentional or inadvertent disposal, if you go looking for them, you may just find them—and not every context will warrant, for example, intrusive sampling such as in a Phase II environmental site assessment.

While the list of impacted sites and potential contributors of PFAS in the environment is ever-growing, the following sectors and business contexts may carry elevated risk and may therefore warrant heightened attention:

• Properties near airports, military bases, and fire training facilities where aqueous film-forming foam (AFFF) has historically been used in firefighting and emergency response training
• Companies that have manufactured, used, or stored AFFF, including industrial facilities, petroleum terminals, and chemical plants
• Wastewater treatment facilities and landfills that have received PFAS-laden influent or accepted PFAS-containing waste streams (EPA did acknowledge in the rulemaking process that existing liability limitations, including protections for de minimis and de micromis contributors, may temper exposure for passive receivers)
• Mining operations utilizing PFAS-based surfactants
• Winter sporting facilities where PFAS compounds may be present through wax, fabric treatments, and onsite AFFF systems
• Properties where AFFF has been used for conventional firefighting
• Car washes
• Land application of biosolids
• Building fire suppression systems containing AFFF

The Patchwork of State PFAS Restrictions

The D.C. Circuit’s decision upholding the PFOS and PFOA CERCLA designation does not exist in a vacuum. A growing number of states have enacted their own bans or restrictions on PFAS in consumer products, firefighting foam, and industrial applications. Colorado, for example, has prohibited the sale of products containing intentionally added PFAS across a wide range of categories, including food packaging, carpets, cosmetics, cookware, ski wax, and textile furnishings, with additional product categories phasing in through 2028. Colo. Rev. Stat. §§ 25-15-601 to -606. Maine’s near-total ban on intentionally added PFAS in consumer products takes effect January 1, 2030. Me. Rev. Stat. Ann. tit. 38, § 1614. Minnesota’s “Amara’s Law” extends to all products by January 1, 2032, unless the use is deemed “currently unavoidable.” Minn. Stat. § 116.943. Several other states have adopted or are considering similar restrictions, and most states have banned or restricted PFAS-containing Class B firefighting foam.

However, there is no uniform federal ban on PFAS in products, and many states have no restrictions at all. The result is a patchwork in which PFAS-containing products remain widely available in commerce even as the CERCLA designation imposes potential cleanup liability for the most prevalent of those substances. The gap between permissible product use and environmental liability exposure is narrowing.

Looking Ahead

Following the D.C. Circuit’s decision, there will be an increase in EPA enforcement and private cost-recovery actions related to PFOS and PFOA. Companies across affected sectors should not wait for site-specific enforcement or other legal action to begin evaluating potential exposure. Proactive steps, including environmental audits, contractual protections in transactions, and insurance coverage review may be advisable to help manage evolving PFAS liabilities.

Parties should contact experienced environmental legal advisors and consultants knowledgeable about PFAS to determine the proper path for addressing sites that are suspected of potential contamination. Anyone with questions about how this new ruling affects their operations or pending transactions is welcome to contact the authors.

Theresa Wardon Benz, Molly Kokesh, Makenna Johnson, Logan Venclauskas

On June 23, 2026, in In re Arrowhead Colorado Metropolitan District v. Roxborough Park Foundation, 2026 CO 54, the Colorado Supreme Court held that trial courts have discretion to order discovery before immediate possession hearings in eminent domain proceedings.

Background

Eminent domain proceedings generally require resolution of three questions:

• whether the condemnor has the right to take the property;
• how much just compensation the condemnor must pay for the taking; and
• if necessary, how to apportion the just compensation award among those who own interests in the property being condemned.

When a condemnor requests immediate possession, the court must resolve all issues bearing on the right to condemn before granting that request—requiring a full evidentiary hearing early in the case, much like a proceeding on a preliminary injunction.

In In re Arrowhead Colorado Metropolitan District v. Roxborough Park Foundation, Arrowhead Colorado Metropolitan District (“Arrowhead”), a quasi-municipal corporation and political subdivision, filed a petition to condemn easements over private roads owned by the Roxborough Park Foundation (the “Foundation”) in Roxborough Park, Douglas County. Upon filing the Petition, Arrowhead moved to set a hearing on its request for immediate possession under section 38-1-105(6)(a), C.R.S., and the trial court set the hearing as required by statute and Colorado case law.

With an immediate possession hearing set, the Foundation moved for limited, expedited discovery, arguing it was necessary to prepare for issues it planned to raise at the hearing. The trial court denied the motion, concluding that neither Colorado’s eminent domain statutes (sections 38-1-101 to -122, C.R.S.) nor the Colorado Rules of Civil Procedure permitted such discovery. The trial court reasoned that the Rules allow discovery only after entry of a case management order, which itself requires the case to be “at issue” under C.R.C.P. 16(b)(1). Because condemnation proceedings do not require responsive pleadings, the court concluded such cases can never be “at issue,” making discovery categorically unavailable. The Foundation sought relief under C.A.R. 21, and the Colorado Supreme Court granted the petition.

The Court’s Analysis

In its decision, the Colorado Supreme Court acknowledged that the condemnation statutes (sections 38-1-101 to -122, C.R.S.) are silent on discovery but held that this silence does not eliminate discovery rights. Citing section 38-1-121(3), C.R.S., which expressly preserves “the discovery rights of parties to eminent domain proceedings,” the Court found that the legislature intended to maintain those rights. Because the statutes are silent on procedure, however, the Court then turned to the Rules of Civil Procedure.

The Court identified three provisions in Colorado’s Rules that authorize trial courts to order discovery, when appropriate, even if a case is not “at issue.”

First, the Court noted that Rule 26(d)’s statement that “a party may not seek discovery from any source before [] service of the Case Management Order pursuant to C.R.C.P. 16(b)” is preceded by the qualifier “[e]xcept when authorized by these Rules, by order, or by agreement of the parties.” Under this plain language, the Court held that a trial court may allow discovery before a case management order is served—and that the trial court here could have authorized discovery on that basis alone.

Second, the Court held that trial courts’ discretion under Rule 26(b)(2) to limit discovery for “good cause shown,” based on the factors in C.R.C.P. 26(b)(2)(F), also allows a court to permit discovery before an immediate possession hearing in a condemnation proceeding where good cause exists.

Third, the Court determined that Rule 16(b)(1) establishes two alternative paths for deeming a case “at issue”: (1) when all parties have been served and all required pleadings have been filed, or (2) “at such other time as the court may direct.” The Court reasoned that the second path allows trial courts to order prehearing discovery in condemnation proceedings by deeming the case “at issue” despite the absence of responsive pleadings.

Practical Implications

Arrowhead clarifies that although condemnation cases are strict statutory proceedings, trial courts retain flexibility to apply the Colorado Rules of Civil Procedure to discovery requests just as they would in any other civil proceeding. Specifically, upon a showing of good cause, either party may ask the court for leave to conduct discovery that may not otherwise be automatic.

Because courts may grant possession as early as thirty days after service of a condemnation petition, a party who believes there is good cause for expedited discovery ahead of an immediate possession hearing should seek leave from the court to conduct such discovery early in the proceedings.

The Court reversed and remanded for the trial court to exercise its discretion on the discovery motion.

The unanimous opinion was authored by Justice Blanco.

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For questions about this legal alert, please contact a member of the Davis Graham Appellate Group.

On July 24, 2026, the Advisory Council on Historic Preservation (“ACHP”) voted to advance a draft Notice of Proposed Rulemaking (“NPRM”) that would make sweeping amendments to its regulations implementing Section 106 of the National Historic Preservation Act (“NHPA”). If finalized, they would be the most significant rewrite of the Section 106 process since ACHP’s last major revisions in 2000. Framed as implementing Executive Order 14192’s deregulatory mandate and responding to Section 106 reviews that can stretch nearly seven years, the proposal touches nearly every stage of the process: what counts as a historic property, what effects agencies must weigh, who has a seat at the table, and how fast a project can move.

The draft NPRM has not yet been published in the Federal Register. It must first undergo review by the Office of Information and Regulatory Affairs (“OIRA”) within the White House Office of Management and Budget. OIRA review and Federal Register publication could occur as early as August or September 2026, with the 30-day comment period closing roughly 30 days thereafter. Given the scope of the changes and ACHP’s explicit invitation for data-driven feedback, project proponents would benefit by beginning to prepare comments now so they are ready to submit as soon as the comment window opens.

Background: The Leaked Draft & How We Got Here

The path to the July 24 vote was unusually compressed—and controversial. In January 2026, ACHP Vice Chairman Travis Voyles announced an intent to revisit the Section 106 regulations, emphasizing collaboration with Council members and the broader preservation community. In February 2026, ACHP established a working group and invited member participation. On June 4, 2026, the full Council adopted a resolution directing staff to develop a regulatory timeline within 30 days and providing members 60 days to submit additional comments before any proposed rule was formulated.

That timeline never materialized. Instead, on July 17, 2026, Vice Chairman Voyles circulated a nearly complete draft rewrite of 36 C.F.R. part 800 to Council members and called for an unassembled (email) vote within one week—bypassing the previously outlined deliberative process. Although the draft was stamped “Not Public,” it leaked almost immediately and was widely shared on social media and among preservation and industry stakeholders. Several Council members and organizations—including the National Conference of State Historic Preservation Officers and the National Association of Tribal Historic Preservation Officers—voted no or publicly objected to the truncated process, arguing that Tribal Nations and other stakeholders were denied a meaningful opportunity to review changes of this magnitude. Nonetheless, on July 24 the draft NPRM was approved by a vote of 16 in favor, 5 opposed, and 2 abstentions.

The draft NPRM has now proceeded to OIRA for interagency review, a required step before Federal Register publication. ACHP has not published a confirmed schedule for any step after OIRA review. On an accelerated timeline, project Federal Register publication could occur in August 2026, with the 30-day comment period closing in September 2026, a final rule potentially published by late 2026 or early 2027, and the rule taking effect 30 days after that. Under a more standard timeline, a final, effective rule would more realistically be expected in mid-to-late 2027 or later. Legal challenges after a final rule is published could further extend the period before the rule is settled.

The following summarizes the key substantive changes in the leaked draft. Given the scope of the changes and ACHP’s explicit invitation for data-driven feedback, the leaked NPRM presents a real opportunity for project proponents to shape the final rule—not just react to it. Because the public comment window may be short and open on relatively brief notice, proponents can use the time before publication to prepare. Importantly, however, because the draft NPRM could be revised during OIRA review, the draft described below should not be assumed to reflect the published version if and when it is released.

1. Narrower Definitions Shrink What Counts as a “Historic Property” or an “Effect”
   
   The draft NPRM would sharply narrow the effects agencies must consider. Most notably, it would revise the criteria for “adverse effect” by removing references to indirect and cumulative effects, instead limiting “adverse effects” to “only those reasonably foreseeable effects that have a reasonably close causal relationship to the undertaking.” These potential modifications track recent changes to federal environmental reviews that stem from the Supreme Court’s decision in Seven County Infrastructure Coalition v. Eagle County, 605 U.S. 168 (2025) and corresponding changes to National Environmental Policy Act (“NEPA”) guidance.
   
   The draft would also delete two current examples of adverse effects: “[c]hange of the character of the property’s use or of physical features within the property’s setting that contribute to its historic significance,” and “[i]ntroduction of visual, atmospheric or audible elements that diminish the integrity of the property’s significant historic features.” In parallel, the draft NPRM would narrow the definition of “area of potential effects” to encompass only direct effects. Those potential deletions would walk back a 2019 ACHP memo that clarified that direct effects could also include visual, auditory, or atmospheric impacts.
   
   The proposed definition of “historic property” would also be narrower. It would require a property, including a Tribal historic property, to include or have included tangible human improvements, or to have been the location of specific human activities, and to be geographically compact. Read literally, that could exclude the broad traditional cultural properties (“TCPs”), sacred landscapes, mountains, and rivers that many Tribes rely on Section 106 to protect.
   
   
2. The Agency Official Gets the Pen, Public & Tribal Participation Become Discretionary, and Applicants Become Consulting Parties
   
   The draft NPRM would strip out most of the regulatory detail on Tribal consultation, leaving the agency’s underlying statutory duty intact but far less defined in the text agencies actually follow day to day. Specifically, Tribal Historic Preservation Officers (“THPOs”) and State Historic Preservation Officers (“SHPOs”) would no longer play a role in identifying historic properties, assessing impacts, and recommending avoidance or mitigation measures as an initial matter. Instead, the agency official would prepare a “Section 106 report” that identifies historic properties, assesses impacts, and makes a determination on next steps. This Section 106 report would then be circulated to SHPOs, THPOs, and all relevant consulting parties—including project proponents—who would have an opportunity to comment on the findings. The agency official must review those comments but has no obligation to respond to or incorporate any before issuing the final memorandum of decision (“MOD”). That MOD would largely replace today’s negotiated “memorandum of agreement” (“MOA”) process, shifting Section 106 from a consensus-seeking exercise to one where the agency official simply decides. Notably, in the draft NPRM, the ACHP proposes to ask the public whether the MOA process should survive as an alternative path—a question that may prompt significant public response.
   
   Similarly, public comment would shift from mandatory to optional, on the theory that Section 106 itself only guarantees comment rights to the ACHP, not the public at large. That said, ACHP would ask potential commenters whether public participation may still be useful where it can surface community concerns early and reduce litigation risk.
   
   And finally, applicants for federal funding or permits subject to Section 106 consultation would now be invited to become consulting parties.
   
   
3. More Off-Ramps, Exemptions & NEPA Alignment
   
   The proposal would also borrow from the NEPA playbook. It would encourage procedures that function like NEPA categorical exclusions, create clearer on- and off-ramps for Section 106 review, and provide an expedited path where no historic properties are present. The draft would also narrow the definition of “undertaking” to exclude state, Tribal, and local permits issued under delegated federal authority—potentially removing a meaningful category of projects from Section 106 review entirely. Program alternatives are narrowed as well, dropping underused options (like “standard treatments”) while streamlining the ones that remain.
   
   
4. Other Notable Changes
   • Economic impacts and cost considerations would be added to the calculus for avoidance, minimization, and mitigation measures.
   • A new “address adverse effects” definition would introduce a term of art for avoidance, minimization, and mitigation measures.
     
     
5. ACHP May Ask Pointed Questions – Worth Answering
   
   Beyond the standard request for comment, ACHP would pose specific questions that signal where the rule could still move: whether the MOA process should remain available alongside the new MOD; whether public comment should stay optional or be restored as a requirement; whether more (not less) Tribal consultation detail belongs in the regulatory text; and—notably—for data and statistics quantifying how the current process delays projects. Proponents with real timeline and cost data have a genuine chance to influence the final rule on this last point.
   
   
6. Bottom Line for Energy and Mining Projects
   
   If finalized, the draft NPRM would affect projects on federal public lands, projects receiving federal funding such as Department of Energy grants, and projects requiring federal permits such as Army Corps of Engineers Section 404 permits. The upside for project proponents is real: narrower definitions, expanded exemptions, and a decision-maker no longer bound to negotiate an MOA could mean faster, more predictable reviews.
   
   The trade-off is added litigation risk. Narrower “historic property” and “effect” definitions, along with discretionary Tribal and public consultation, may draw legal challenges from Tribes and environmental groups once a final rule is published or as applied to individual projects. Several organizations have already issued statements and advocacy alerts, signaling that they are monitoring developments closely and may be considering legal challenges. A strong administrative record—and continued voluntary engagement with affected Tribes regardless of what the regulations require—remains the best hedge against that risk. Additionally, the draft NPRM indicates that ACHP may request project-level data from commenters, and while the formal 30-day comment window has not started to run, that window will move fast once it does. Accordingly, project proponents should start developing their comments and supporting timeline and cost data now, so they are ready to submit as soon as the draft NPRM is published.

For questions about this legal alert, please contact a member of Davis Graham’s Energy & Mining Group.

Colorado employers will face new requirements under a law that affects how they handle government-issued identification documents during the hiring and employment eligibility verification process. HB26-1283, which goes into effect on August 12, 2026,  restricts how employers handle workers’ and applicants’ identification documents and creates new notice and acknowledgment requirements that employers must incorporate into their onboarding procedures.

The law will have particular significance for multi-state employers. Processes that employers previously standardized across their workforces will now require a Colorado-specific component.

New Requirements in the Form I-9 Process

The law generally prohibits employers and their agents from requiring workers or applicants to surrender government-issued identification documents or from confiscating or retaining those documents, subject to limited exceptions. Employers may continue to examine identification documents for Form I-9 purposes and make copies when permitted, but they may not retain the documents for more than ten hours.

Employers also must provide individuals with written notice describing the law’s protections and obtain an acknowledgment during the I-9 process. Employers must retain the acknowledgment in their employment records.

The Operational Challenge

Employers often use a combination of electronic Form I-9 providers, HRIS systems, and applicant tracking platforms. These systems may not currently accommodate a Colorado-specific notice and acknowledgment requirement. Employers should evaluate whether their existing technology can incorporate the new requirements or whether they need to implement another process.

Consequences for Noncompliance

The law provides criminal penalties for knowing violations of the prohibition against confiscating identification documents, including Class 2 misdemeanor treatment and enhanced penalties for certain bias-motivated conduct.

The law does not appear to establish a specific criminal penalty for failing to provide the required notice or obtain an acknowledgment. Nevertheless, the absence of a specified penalty does not eliminate potential enforcement or litigation risks if an employer’s document-handling practices later come under scrutiny.

Action Items for Employers

Employers with employees in Colorado should begin preparing for the new requirements by:

• Reviewing onboarding procedures. Identify where to incorporate the required notice and acknowledgment into the hiring process.
• Evaluating technology. Determine whether existing Form I-9, HRIS, applicant tracking, or onboarding systems can deliver the notice, and capture the acknowledgment, and retain the same.
• Establishing recordkeeping procedures. Determine where to store acknowledgments and ensure that employers can readily locate them to demonstrate compliance.
• Training responsible personnel. Ensure that HR and onboarding personnel understand the new requirements and the distinction between reviewing identification documents and retaining original documents.
• Reviewing vendor capabilities. Employers that rely on third-party Form I-9 or onboarding providers should determine whether those providers will offer functionality that addresses the new Colorado requirements.

Employers should work with their HR teams and technology providers now to establish a practical process that documents compliance with HB26-1283.

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For questions about this legal alert, please contact a member of Davis Graham’s Employment Group.

Effective August 12, 2026, Colorado’s new retainage bond law (HB26-1311) will significantly change payment dynamics on private construction projects. The law allows contractors on projects exceeding $150,000 to tender a retainage bond in place of cash retainage and requires property owners to accept any bond meeting the statutory standards. This change carries important implications for lenders, property owners, developers, contractors, and subcontractors – all of whom should review their construction documentation, agreements, and procedures. Below is a breakdown of the new law’s requirements, what it means for your organization, and steps you can take now to prepare.

Background

HB26-1311 represents the latest reform to Colorado’s payment and retainage framework in C.R.S. § 38-46-101, et seq. In 2021, the state enacted legislation capping retainage withholdings at 5% of the contract price. With competitive bidding and slim profit margins, contractors have often relied on loans or lines of credit to cover expenses until final payment is released.

Even with the 5% ceiling, property owners and developers can withhold millions on larger projects through the retainage mechanism. HB26-1311 allows contractors to eliminate retainage withholding at their option by tendering a retainage bond, while still providing owners with security through surety bond coverage.

Changes to the Payment Process

Under the new law, tendering a retainage bond is optional for contractors. However, when a general contractor tenders a qualifying retainage bond in lieu of retainage, the property owner must accept it and release the retainage covered by the bond. The general contractor must then accept qualifying like bonds from all subcontractors and release the retainage those bonds cover. For projects exceeding $150,000 where the general contractor has tendered a qualifying bond, general contractors must accept like bonds from downstream subcontractors and suppliers regardless of the subcontract value. These bond acceptance requirements do not apply to contracts for individual single-family homes, multi-family dwellings of four units or fewer, or property owned by a public entity (including contracts resulting from public-private partnerships).

To qualify, a bond must secure both (1) faithful and complete contract performance and (2) full payment to all subcontractors, suppliers, and laborers. Property owners and principal contractors may require the surety to carry a minimum A.M. Best rating, but that minimum cannot exceed “A-.” The surety must also be licensed to issue bonds in Colorado. If a contractor must obtain a bond to secure the release of funds for a subcontractor who has tendered a bond, the contractor may deduct the proportional bond premium from that subcontractor’s final payment. Importantly, the law does not affect an upstream party’s ability to withhold funds or deduct from any payment for backcharges or other amounts authorized by contract.

Considerations

Property owners, developers, lenders, and contractors will need to adjust their contracts and processes to comply with HB26-1311 and to understand the implications of shifting from traditional retainage to bond-based security. The law does not affect existing contracts, but any contract entered into after August 12, 2026, must account for the possibility that a contractor may tender a retainage bond in lieu of cash retainage.

The law leaves several enforcement mechanisms unaddressed, including the claims process and cure procedures. Interparty agreements will need to fill these gaps. Until courts have an opportunity to interpret the statute, questions remain about implementation and whether parties can waive or contract around the right to substitute a retainage bond for traditional retainage.

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For questions about HB26-1311, please contact a member of the Davis Graham Real Estate Group.

On July 9, 2026, a division of the Colorado Court of Appeals issued its opinion in Dreifus v. Glenarm Dining Services, Inc., 2026 COA 59, holding that the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021 (EFAA), 9 U.S.C. §§ 401–402, applies to an entire “case” rather than to discrete claims, and that retaliation claims arising from the filing of a sexual harassment lawsuit are “related to” the underlying sexual harassment dispute within the meaning of the statute and, therefore, not arbitrable.

The division also held that an employer seeking to compel arbitration under Colorado Rule of Civil Procedure 12(b)(1) must identify specific disputed facts and request an evidentiary hearing—arguments of counsel alone do not create a factual dispute.

Background

Plaintiff signed a broad arbitration agreement as a condition of her employment. After allegedly receiving harassing social media messages from one of her supervisors, she sued her employer, asserting claims under the Colorado Anti-Discrimination Act for sexual harassment, sex discrimination, and retaliation as well as several common-law tort claims.

Her employer did not seek to compel arbitration of the original complaint, conceding those claims involved sexual harassment allegations excused from arbitration under the EFAA. The EFAA provides,

at the election of the person alleging conduct constituting a sexual harassment dispute or sexual assault dispute . . . no predispute arbitration agreement . . . shall be valid or enforceable with respect to a case filed under Federal, Tribal, or State law and relates to the sexual assault dispute or the sexual harassment dispute.

Mid-suit, Plaintiff amended her complaint to add allegations that, after she filed the original complaint, she was placed on administrative leave and terminated in retaliation for filing the sexual harassment lawsuit and for participating as a witness in an unrelated wage-theft investigation. The amended complaint did not add any new claims or alter the original claims.

The employer moved under C.R.C.P. 12(b)(1) to dismiss those claims and compel arbitration of those claims. The employer argued the new allegations were not sufficiently “related to” the sexual harassment claim and therefore fell outside the EFAA’s protections. The district court denied the motion, concluding the EFAA applied to the entire case. The employer filed this interlocutory appeal.

The Division’s Analysis

1. The EFAA Applies to the Entire “Case,” Where Some, But Not All, of the Allegations Underlying the Claims Involve Sexual Harassment.

The primary issue on appeal was whether the EFAA applies to a case where some, but not all, of a plaintiff’s allegations underlying the claims involve sexual harassment. The division determined, yes, “the EFAA applies to an entire case, rather than to individual claims, provided the claims are ‘relate[d] to’ allegations of sexual harassment.”

The division found the reasoning of Johnson v. Everyrealm, Inc., 657 F. Supp. 3d 535 (S.D.N.Y. 2023), and Olivieri v. Stifel, Nicolaus & Co., 112 F.4th 74 (2d Cir. 2024), persuasive. Johnson held that the EFAA’s reference to “a case” in 9 U.S.C. § 402(a) “captures the legal proceeding as an undivided whole” and “does not differentiate among causes of action within it.” The division agreed, holding that under the EFAA, “a case” “encompasses all of the claims brought in a single action rather than individual allegations or claims.”

Plaintiff’s post-filing termination allegations were “related to” her sexual harassment claims because she alleged her termination was based, at least in part, on having filed the sexual harassment lawsuit.

The division distinguished these facts from a different case where a wage-and-hour claim resting on an “entirely independent basis” was held outside the EFAA’s scope because it had “nothing to do with the alleged sexual harassment.” Here, Plaintiff expressly alleged her termination was based in part on filing the sexual harassment lawsuit, linking those claims to the underlying harassment dispute.

2. Acknowledged but Undefined “Outer Limit” of Relatedness

The division acknowledged that there may be some “outer limit” at which a claim becomes so attenuated from the sexual harassment allegations that it falls outside the EFAA’s “related to” requirement. However, the division concluded that boundary “was not approached—much less crossed” on these facts and therefore declined to define it.

3. Rule 12(b)(1) Procedural Standard

The employer argued the district court erred by applying the Rule 12(b)(5) “failure to state a claim” standard (accepting allegations as true and viewing them in the light most favorable to the plaintiff) rather than the Rule 12(b)(1) subject-matter-jurisdiction standard, and that disputed facts regarding the arbitrability of plaintiff’s claims required an evidentiary hearing. The division found no reversible error: the employer never requested an evidentiary hearing below, never identified specific disputed facts through affidavits, deposition testimony, or other evidence, and attached only the arbitration agreement and the plaintiff’s sworn discrimination charge, which supported the plaintiff’s position.

Because no genuinely disputed jurisdictional facts existed, the district court was entitled to accept the complaint’s well-pleaded facts as true and rule without a hearing. The division held that arguments of counsel alone do not create a factual dispute.

Practical Implications

This ruling is the first published appellate opinion in Colorado to interpret the scope of the EFAA. Under the division’s holding, the EFAA applies to “a case” “relates to . . . the sexual harassment dispute.” 9 U.S.C. § 402(a). And a claim of retaliation that is based at least in part on the assertion of a claim of sexual harassment is “relate[d] to” a sexual harassment dispute sufficient for the EFAA to apply, even if the claim is also based on other allegations that do not involve sexual harassment. Therefore, an otherwise valid arbitration clause is not enforceable against a claim based on multiple factual allegations if one of the allegations relates to sexual harassment.

Retaliation and termination claims arising after a sexual harassment lawsuit is filed are particularly likely to be treated as “related to” the underlying dispute and therefore also exempt from arbitration, even if the retaliation is also nominally tied to a separate investigation (here, a wage-theft investigation).

There may be an outer limit where an unrelated claim is genuinely independent of the sexual harassment allegations (e.g., where a wage-and-hour claim arising from an entirely separate factual basis was sent to arbitration), but Colorado courts have not yet defined precisely where the line falls. Parties seeking to enforce an arbitration provision should expect a fact-intensive, case-by-case inquiry into “relatedness” going forward.

In the employment context, employers should consult with their lawyers about the potential benefits and drawbacks of requiring employees to sign arbitration agreements and whether the employers’ goals can be achieved through alternate approaches.

The division of the Court of Appeals affirmed the district court’s order denying the motion to dismiss and compel arbitration.

The opinion was authored by Judge Schutz, with Judges Lipinsky and Yun concurring.

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For questions about this legal alert, please contact a member of the Davis Graham Appellate Group.

Under the Mining Law of 1872 (the “Mining Law”)[2] lode claimants may, in certain circumstances, follow a vein’s downward course beneath neighboring claims.[3] This is known as the “Apex Rule” (herein, the “Rule”) and the rights it bestows upon a claimant are powerful since it (i) entitles miners to extract minerals that stray onto adjoining claims or other public land (and in some cases onto patented mining claims) that the miner does not own and (ii) provides a potential avenue to invalidate a rival claimant’s adjoining locations. However, the Rule’s applicability is also very narrow since many currently exploited and newly discovered deposits are widely diffused and lack an apex, and proving that extralateral rights exist—or have been violated—is a highly fact-dependent and technical exercise, making it costly to litigate disputes arising under the Rule.

What are Extralateral Rights and the Apex Rule?

At its most basic, the Apex Rule provides the holder of a valid lode claim with “extralateral rights” if the uppermost edge or point of the mineral vein (known as the “apex”) is located within his claim (whether at or below the surface). These extralateral rights then generally permit the miner to follow the vein onto all mining lands, whether unpatented or patented (including land previously located by others under the Mining Law) outside of his claim’s borders.[4] These extralateral rights are “purely statutory”—there is no supporting common law—and may also be referred to as the “right of lateral pursuit.”[5]

Establishing Extralateral Rights

The party claiming extralateral rights has the burden of proof to establish certain required elements, which typically requires having or developing extensive geological information about the claim(s) from which the claiming party argues the extralateral rights flow, as well as with respect to the adjacent claims:

1. Valid Lode Location: The claim must be a properly located lode mining claim (extralateral rights do not attach to placer, mill site, or tunnel site claims), patented or unpatented.[6]
2. Apex Within Claim Boundaries: The vein must have an apex that lies within the claim. While limited “legal/judicial apex” doctrines exist, they provide limited exceptions to this requirement.[7]
3. Downward Course (Dip) Into Certain Categories of Adjacent Lands: The vein must dip downward from the apex (i.e., there are no extralateral rights in a horizontal vein because it has no downward course) into land not previously appropriated or patented as non-mining land and not conflict with a prior apex right.[8]
4. Continuity of Vein: The vein must be continuous between the apex and the portion of the vein being pursued extralaterally; since veins frequently twist and turn, continuity can be difficult to prove without detailed mapping, drilling, expert analysis, and sometimes workings along the vein.[9]
5. Parallel End Lines: Since a vein cannot be pursued on its strike beyond the ends of its location (i.e., it can only be pursued beyond the side lines—not the end lines, see Diagrams 1 and 2 below), generally, the claim must have parallel end lines defining the lateral limits of the extralateral right; courts may recharacterize lines for the discovery vein, but parallelism still governs.[10]

The Practical Limits of the Apex Rule

• Surface Use Not Included. Extralateral rights do not authorize entry on a neighboring property; any underground pursuit of the vein must originate from workings within your own surface estate or be obtained by separate access rights under applicable state law.[11]
• Geological Realities Can Be Limiting. Because the extent of a claimant’s right to exercise his extralateral rights is limited to the length of the apex that lies within his claim, factors such as the location of the vein within the location, the length of the apex, and the point of entry and exit of the vein within the location can operate to limit a claimant’s extralateral rights.[12]
• Deposit Type Matters. “Blanket veins” or broadly horizontal mineralized zones typically do not have a qualifying apex and therefore do not support extralateral rights.[13]
• Modern Mining Realities. The Mining Law was enacted at a time when the only known method of locating lode deposits was by surface, visual geological observation. Because early miners did not recognize at that time that veins could be susceptible to folding or faulting or that several apexes might represent one vein, it was logical that surface discoveries would form the basis for locating claims. Notably, the United States is the only mining jurisdiction that still adheres to the rule and modern courts and commentators have questioned the rule’s fit with geological reality as now understood as well as modern mining methods.[14]
• High Burden / Lack of Modern Precedent. The burden of proof on establishing extralateral rights (and the extent thereof) lies with the extralateral claimant. Courts have not established a uniform evidentiary standard, but the burden is typically “substantial”—requiring things such as geological mapping, expert opinion, and drilling results. Further, Apex Rule litigation has been very uncommon since the first part of the 21^st century as modern operators instead frequently seek to avoid such costly, fact-intensive, and uncertain litigation by negotiating joint development or boundary agreements or purchasing adjacent claims.[15]

Competitive Positioning and Inter-Claim Conflict Considerations

• The Role of Seniority. The exercise of extralateral rights does not depend upon seniority. However, when two or more veins intersect, the senior locator takes the ore within the space of intersection, while junior claimants retain rights to their claim and a right of way for convenient working. And when two veins unite, the older or prior location takes the combined vein below the point of union, including all forks and splits below that junction.[16]
• Challenging Junior Locations. Historic Interior Department decisions support arguments that a junior claimant’s location based solely on a vein already validly appropriated (i.e., based on a vein whose apex lies within a senior locator’s claim) may be invalid for lack of discovery. While context-specific, this line of authority remains cited.[17]

Action Items for Claimants Seeking to Exercise Extralateral Rights

• Assess the Deposit. Confirm whether your mineralization is a true lode or vein with an apex (versus a blanket-style deposit), which is often dispositive for extralateral analysis.
• Map the Apex and End Lines with Precision. Delineate the apex’s location, length, width, and the claim’s end-line geometry to understand the true scope of any extralateral right.
• Build the Geological Record. Collect geologic evidence to support vein type, continuity, and path (e.g., geologic mapping, oriented drilling, structural interpretation).
• Plan Access. If extralateral pursuit is feasible, secure underground access from your surface estate or obtain easements/rights-of-way under state law.
• Consider Commercial Solutions. Given the cost, uncertainty, and fact intensity involved in an Apex Rule dispute, consider mitigating risk through boundary agreements, joint development agreements, or strategic acquisitions instead of litigation.

Bottom Line

Extralateral rights can offer strategic subsurface reach and a potential avenue to invalidate a rival junior claimant’s adjoining claims. However, establishing one’s entitlement to these rights in a dispute can be a costly, technical, and evidence-driven endeavor. Early, targeted geological work and careful claim location procedures and documentation are essential to establish the presence or extent of one’s extralateral rights. Nevertheless, in most cases where the nature and extent of a claimant’s extralateral rights are at issue, and a neighboring claimant is disputing the same, business solutions are likely to deliver more certainty than litigation.

Diagram 1: Side Lines, End Lines, the Apex, the Dip, and “Lateral Pursuit”[18]

DIAGRAM KEY:

• The side lines of a claim (yellow highlight) cannot exceed 1500 feet. In an ideal location, the side line should parallel the vein as closely as possible to maximize the extent of the lode included within the boundaries of a claim.
• The end lines (green highlight) of a claim cannot exceed 600 feet. Extralateral rights do not extend beyond the end lines. 
• The “apex” of a vein, lode, or ledge is the top or highest point of the vein proper, whether at or below the surface and the terminal edge from which the vein extends downward to form a dip (blue highlight).
• Extralateral rights, or the “right to lateral pursuit” entitle a senior claimant to follow the dipping vein (pink highlight). The area of vein intersection or “bonanza” belongs to the senior claimant, and he may continue to follow the vein originating at his apex beyond the intersection (dotted pink) to the maximum length permitted.

Diagram 2: The Strike and Dip of the Vein[19]

DIAGRAM KEY:

• The “strike” of a vein is its horizontal course (yellow highlight).
• The “dip” is the downward course of the vein at a right angle to the strike (green highlight).

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[1] As indicated by the footnotes that follow, we have relied heavily on the American Law of Mining, published jointly by the Foundation for Natural Resources Law and Matthew Bender—an invaluable resource for information on the Mining Law of 1872—for this analysis.

[2] 30 U.S.C. § 26.

[3] Am. Law of Mining, 2d Ed. § 37.01[1]; Silver Surprize v. Sunshine Mining Co., 15 Wash. App. 1, 6, 547 P.2d 1240, 1244 (1976).

[4] See 30 U.S.C. § 26 (providing that a lode locator “shall have the exclusive right of possession and enjoyment of all veins, lodes, and ledges throughout their entire depth, the top or apex of which lies inside of such surface lines extended downward vertically, although such veins . . . may so far depart from a perpendicular in their course downward as to extend outside the vertical side lines of such surface locations.”); supra, note 2, §§ 37.02[5], 37.05[1].

[5] Supra, note 2, § 37.01[1] n.1, [3].

[6] Supra, note 2,§ 37.02[1].

[7] Supra, note 2, §§ 37.01[4], 37.02[2].

[8] Supra, note 2, § 37.02[5].

[9] Supra, note 2, §§ 37.02[3]; 37.02[5], 37.01[2]; Silver Surprize, 15 Wash. App. at 8, 547 P.2d at 1246.

[10] Supra, note 2, §§ 37.02[4], 37.03[2].

[11] See 30 U.S.C. § 26 (Nothing in this section shall authorize the locator or possessor of a vein or lode which extends in its downward course beyond the vertical lines of his claim to enter upon the surface of a claim owned or possessed by another); supra, note 2, § 37.01[3].

[12] Supra, note 2,§ 37.02[1].

[13] Supra, note 2, § 37.01[4]. As noted in the introduction, the Apex Rule would not apply to a number of currently mined and recently discovered deposits, including in-situ uranium, lithium brine, and diffuse gold and silver, because these are broadly mineralized rather than vein- or lode-style deposits. Further, even if a mineral deposit meets the definition of a “vein” or “lode” under 30 U.S.C. § 26 (i.e., a mineral body within defined boundaries), it may not have an apex, in which case extralateral rights do not attach.

[14] Robert Leclerc, Perspectives Du Nord: A Canadian View of Problems and Opportunities in International Business Transactions, 32 Rocky Mtn. Min. L. Inst. 6 (1986), 6-6; Harry Macdonell, Comparative Analysis of American and Canadian Hard Mineral Laws, 10 Rocky Mtn. Min. L. Inst. 13 (1965), 439; Silver Surprize, 15 Wash. App. at 16, 547 P.2d at 1250 (“Modern mining practice seems to require amendment of the act of 1872 to deal specifically with the problems that arise from deep underground discoveries.”).

[15] See Supra, note 3,.

[16] Supra, note 3, § 37.05[3].

[17] M-36955, “Apex and Extralateral Rights Issues Raised by the Stillwater Mineral Patent,” 93 Interior Dec. 369, 382, 1986 I.D. LEXIS 34, *34; Bunker Hill & Co. v. Shoshone Mining Co., 1904 I.D. LEXIS 157, *9, 1904 I.D. LEXIS 157 (1904); Golden Link Mining, Leasing & Bonding Co., 1899 I.D. LEXIS 78, *5, 1899 I.D. LEXIS 78 (1899).

[18] Diagram taken from the Digest of Mining Claim Laws (Fifth Edition, 1996), published by the Rocky Mountain Mineral Law Foundation (now known as the Foundation for Natural Resources and Energy Law).

[19] Diagram taken from Research Gate, https://www.researchgate.net/figure/Diagram-illustrating-strike-and-dip-After-you-cross-the-bridge-walk-east-to-your-left_fig10_239604084.