Purgatory Resort filed a lawsuit in Colorado District Court on Oct. 27 against the U.S. Forest Service in a dispute over its right to divert water from Hermosa Creek. The suit alleges that “the USFS is seeking to force Purgatory to forfeit its entire water rights to the stream.”

Purgatory has held two separate water rights to the East Fork of Hermosa Creek, one since 1972 and the other since 1986.

The crux of the contention is whether the resort’s decision to divert its rightfully decreed amount of water will negatively impact the Colorado River cutthroat trout population that is native to the watershed. The species of trout has been the target of extensive conservation efforts dating back to 1992. In 2006, agencies from Colorado, Utah and Wyoming entered into an agreement to secure, restore and enhance the population of the fish.

The history of the dispute extends back to 2010 and stems from an exchange of lands between Purgatory’s founder and former owner, Raymond Duncan, and the United States that took place in 1990. As a result of the exchange, the resort gained real estate on the front side of the mountain and the USFS gained land on the back side.

The water rights in question – a total of 4.54 cubic feet per second – are to be diverted from land that Purgatory had owned but traded with the government. The resort maintains that the water rights were not mentioned in the exchange and were not transferred with the land deed.

Now, the resort would like to exercise the water rights and begin diverting water from the creek via one surface diversion and several groundwater wells.

“We believe we have rights that are still in force and we are being denied our ability to exercise them,” said Purgatory’s General Manager Dave Rathbun. “... Until recently there were no issues, and then since about 12 years ago, that’s when things started to change.”

Purgatory operates under a special use permit on primarily federally owned land, meaning new development or infrastructure must be approved by the USFS.

The filing indicates that between 2002 and 2007, Purgatory engaged in conversations with USFS personnel in the process of applying for a special use permit to drill test wells in the East Fork of Hermosa Creek Watershed. Purgatory says that both parties “generally agreed” that the resort should research how to develop the water rights without impacting the trout population.

Purgatory also claims in the lawsuit that when it developed a water master plan in 2003, which included a commitment to not impact the trout population, the USFS “never questioned the reliance upon the Hermosa Creek Water Rights.”

The first sign that Purgatory might face serious opposition arose in 2010, when the resort filed a legally mandated application to the water court to demonstrate that it had taken reasonable steps toward developing the water rights. The document must be filed every six years and all but one of the prior applications had been submitted without objection from the Forest Service.

The Forest Service objected to the application on the basis that Purgatory “has not maintained the necessary land use authorization for the structure and such an authorization will not be granted by the Forest Service.”

Depositions taken in 2013 from USFS personnel indicated that the Forest Service’s position had evolved, and it would not allow the resort to divert water from the East Fork.

“Despite the ongoing, good settlement communications, in our mind there’s a big difference between a reasonable special use permit that allows Purgatory to exercise its property rights yet protects the Forest Service, and ‘No, we’re not going to give you a permit’ – there’s a big difference between those two,” said Steve Bushong, the attorney representing the resort.

The Forest Service declined to comment for this story, saying it doesn’t comment on active litigation.

Purgatory claims it has a right to access USFS land so that it can enjoy its water rights under both the Alaska National Interest Lands Conservation Act or Federal Land Policy and Management Act. Denying the easement, the resort claims, would constitute an illegal takings under the 5th Amendment of the U.S. Constitution – which includes a takings clause – as well as the Colorado Constitution.

“We’re talking about water rights that we need to realize the vision that the Duncans and each of their successors has had for Purgatory,” Rathbun said. “You need water to achieve those visions, those objectives that they put together for the resort.”

Despite ongoing conversations, Purgatory felt the USFS declaration that it would not approve any diversion of water may have started the clock ticking on the 12-year statute of limitations for a “quiet title action” that would affirm the resort’s right to the water.

“Time went on and we felt like we had to reserve our rights because that statute of limitations was coming up at the end of October,” Bushong said.

Bushong said the Forest Service has also prevented Purgatory from drilling a test well to collect information on how water could be diverted to avoid impacting the trout population. He said the two parties have engaged in conversation over potential agreements regarding how to offset the impact, such as drilling deeper wells to push the impact downstream or restrictions on water use to ensure that fish habitat is preserved during low-flow periods in the creek.

“We have tried a multitude of different remedies for it,” Rathbun said. “Our position is that you can’t deny the water right. What we’re trying to do is show that there are ways that are acceptable that can be proven scientifically to not negatively impact the stream flows of the Hermosa Creek and thus imperil the cutthroat trout population. We are as concerned about that as anyone, we want to see that that fishery is maintained.”

Local conservationists are not so sure that is possible.

“These wells are within the alluvial system, in other words they would be drawing water from the groundwater immediately in the vicinity of the East Fork of Hermosa,” said Ty Churchwell, the San Juan Mountains Coordinator for Trout Unlimited. “... We would be quite concerned that pumping of water from the alluvial area from around east fork would in fact dewater that creek.”

Churchwell said it would be difficult to determine whether limiting water use to snow-making would return sufficient water to the creek to prevent a negative impact on the trout.

“We would be willing to entertain any and all options that might help the ski area meet its water needs while being protective of the cutthroat population in the East Fork,” Churchwell said.

Over 100,000 acres of the Hermosa Creek watershed were protected under a 2014 bill introduced by Sen. Michael Bennet and signed into law by former President Barack Obama. Conservationists lauded the bill as a significant step toward protecting the cutthroat trout population.

rschafir@durangoherald.com