A federal judge has sided with the U.S. Forest Service and dismissed a lawsuit filed by Purgatory Resort over the resort’s access to water in the East Fork of Hermosa Creek.
Purgatory is seeking to access federal land so that it may capture water from Hermosa Creek for snowmaking and other municipal purposes. San Juan Nation Forest has objected to the access on the basis that the diversion could detrimentally impact the native cutthroat trout population.
The ruling, issued Monday by Senior Judge William Martinez in the U.S. District Court for the District of Colorado, passed judgment on the application of the Quiet Title Act and found that the statue of limitations had expired years before the lawsuit was filed on Oct. 27, 2022.
The decision did not address the substantive questions around the resort’s access to Hermosa Creek water, and it does not put the entire issue to bed, San Juan National Forest Supervisor Dave Neely said.
For over two decades, SJNF officials have expressed concern about Purgatory’s attempts to divert 4.54 cubic feet per second of water from Hermosa Creek via an in-stream diversion and ground wells.
A water court decreed two water rights in 1972 and 1982, respectively. The water is to be diverted from the East Fork of Hermosa Creek and its alluvial groundwater on land on the back side of the resort area.
In a 1991 agreement, the SJNF made a trade with Purgatory’s corporate predecessors and acquired that land. In exchange, the resort acquired land on the front of the mountain.
The core of the case is whether Purgatory retained a right to an easement on the backside on National Forest land – a necessity to access and divert the water in question – when it conveyed the land in an agreement stating it was “free from all encumbrances.”
Purgatory sought a quiet claims action that would have definitively affirmed its rights to the water and an easement or right of way necessary to access it under the federal Quiet Title Act.
According to the law, claimants have 12 years to seek relief in court under the QTA, beginning when they “knew or should have known” of the government’s position.
The question: When did the clock start ticking?
“Purgatory’s predecessors first knew or should have known that the United States was taking a position adverse to its interests when the USFS indicated that it would never allow any access or diversion of water for the Hermosa Creek Water Rights,” the resort argued in its complaint. “The earliest such statement was made on October 30, 2010.”
Based on that statement, the resort filed the lawsuit just three days before the statute of limitations would have expired.
But the Forest Service disagreed. In a motion to dismiss the lawsuit, it argued that terms of the land exchange included no mention of an easement, and that the clock started far sooner.
“From the time the land exchange was completed in 1991, Plaintiff’s predecessors knew or should have known the United States did not, and would not, recognize an easement to access the Exchange Land to develop the Hermosa Creek Water Rights.”
The court ultimately agreed.
Purgatory operates primarily on federally owned land according to the terms of a special use permit. As far back as 2001, the resort submitted proposals for permits that included the drilling of test wells related to using the water in the East Fork of Hermosa Creek. In response, SJNF officials voiced concerns about important issues,” related to the cutthroat trout population.
Those issues escalated over time, culminating in the 2010 objection to Purgatory’s filing in water court, when the Forest Service stated definitively for the first time that it would not grant land use authorization.
The ruling noted that in a similar case, a federal appeals court held that “’knowledge of the claim’s full contours is not required’ for there to be sufficient notice of a claim.”
Responses from SJNF officials in the mid-2000s “put Purgatory on notice well before 2010 that the Forest Service believed it had the authority and right to deny access to the water rights at issue,” the judge wrote.
“We are disappointed with the ruling handed down by the US District Court of Colorado (Monday)” Purgatory General Manager Dave Rathbun said in a text message sent through a spokeswoman. “We are currently reviewing the ruling and assessing our options.”
Rathbun was not available to answer questions about the ruling.
Because the case was dismissed without prejudice on the basis that the statue of limitations had expired, Forest Supervisor Neely said it still leaves unanswered questions about Purgatory’s water rights.
“Ultimately, it really doesn’t change all that much in terms of the current situation and in the issue at play regarding Purgatory’s conditional water rights, and how or whether they might be able to develop those in the Upper Hermosa drainage,” he said.
Seemingly, the resort has not changed its position that the water rights are “imperative to the resort’s success,” as stated in its June 2023 response to the motion to dismiss.
“We appreciate the need for Purgatory to have water for adequate snowmaking and domestic uses. Skiing is an important recreational activity on National Forests and certainly for the region and for the state of Colorado,” Neely said. “Our role is trying to figure out how to balance those interests with the strong and, I think, shared interests that Purgatory shares also in terms of protecting habitat for the cutthroat trout and the Upper Hermosa.”
rschafir@durangoherald.com
