The San Juan Water Conservancy District (SJWCD) Board of Directors heard an update on the litigation the district is involved in, including its lawsuit with the Pagosa Area Water and Sanitation District (PAWSD), at its April 14 meeting.
SJWCD legal counsel Jeffrey Kane opened the update by explaining that the deadline for initial disclosures in its litigation with PAWSD over the sale of the Running Iron Ranch has passed.
Initial disclosures are a step in the discovery process in civil lawsuits where parties voluntarily disclose information without waiting for requests from the other party.
Kane stated that the SJWCD and PAWSD exchanged documents and lists of potential witnesses.
He explained that he had briefly examined the information provided by PAWSD, which included some board meeting minutes prior to 2011 that provided further context on how PAWSD, the SJWCD and the Colorado Water Conservation Board (CWCB) reached the three-way agreement for managing the property in 2015.
He noted that the parties largely agree on the case management order for the lawsuit, which governs the discovery process and other issues, but that one issue that PAWSD’s counsel raised is that the SJWCD did not provide a quantification of the damages it claims PAWSD inflicted in its attempts to sell the ranch in its filings in the case.
He stated that these impacts are difficult to quantify, but that intends to disclose the board’s decisions to reallocate funds from project planning to legal expenses.
However, he noted that these issues are highly speculative and that it is typical for such damages to not be quantified at this stage in litigation.
“PAWSD is signaling … that they look a little skeptically at the claimed damages and are going to hold our feet to fire there at some point, and we’ll be prepared to justify them at that time,” Kane said.
He added that a breach-of-contract claim, such as the SJWCD has made, would be justified by nominal damages.
Kane explained that the CWCB has not responded to the appraisal of Running Iron Ranch completed by PAWSD and that a response was due by April 17.
Kane then updated the district on its five sets of water rights cases.
He explained that the Treasure Pass Ditch case, which involves the Bureau of Land Management (BLM) attempting to expand diversion of water through a ditch on Wolf Creek Pass, is progressing, with the BLM potentially agreeing to subordinate this diversion to the SJWCD’s reservoir project and the Southwestern Water Conservation District negotiating a “fairly restrictive” set of conditions concerning historical use of water, which would limit the amount diverted.
The board then discussed the details of the BLM subordinating this right to the SJWCD’s water rights for the reservoir, with Kane explaining that this agreement would obligate the BLM to not divert water to maintain water levels in the San Juan River and allow the district to divert water for its reservoir.
“I would characterize it as about as good as we could have expected through negotiation in a water rights case, and I think it shows BLM acting in good faith as well,” Kane said.
Kane then discussed the district’s case opposing water right changes in the Piedra Pass Ditch, located in the Weminuche Wilderness.
He explained that the ditch is owned by Colorado Parks and Wildlife (CPW) and that CPW proposes to divert water from the Piedra River to the San Luis Valley.
He stated that he has received revised proposed decrees for these water rights and that CPW characterized the revisions as limiting its water use to historic levels, although he had not examined them in detail.
Kane indicated that he would submit comments on these cases, but that the case is a significant way from resolution.
He then discussed the district’s case involving Hidden Valley Ranch, which had filed for diligence for its current reservoir and to make their right absolute for a portion of the evaporation that occurs when the reservoir is full.
Kane noted that the Colorado Division of Water Resources engineer recommended approving the request, but that there are several opposers in the case and that Hidden Valley is working on drafting a proposed decree.
He then discussed a case involving a pond at Bootjack Ranch, explaining that the ranch is making progress on meeting the SJWCD’s and CWCB’s concerns, but that there are still questions outstanding.
He concluded this discussion by updating the board on the status of its recent lawsuit filed against River Ridge LLC, which is attempting to create an irrigation water right that the SJWCD has raised concerns about being excessively large for the area irrigated, among other issues.
Kane stated that this case is in its “infancy” and that he had little further information on the case.
In response to a question from SJWCD board member Joe Tedder, Kane stated that he had confirmed with River Ridge’s lawyer that the amount of water requested in the application was not a typo, as the board had contemplated, and that she was unwilling to reconsider the size of the right.
Kane closed the discussion by noting he recently received a link to the CWCB’s archive of the loan documents for the district’s reservoir project, which included a 2007 appraisal of Running Iron Ranch that valued the ranch at more than $10 million and opinion letters from attorneys stating that PAWSD is solvent and that issuing loans for the property was safe to do.
He added that these documents all support the SJWCD’s understanding of the 2015 Running Iron Ranch agreement and its meaning.
During a brief discussion on if the board should enter an executive session to discuss the litigation, Kane commented, “Sometimes the best solution to a legal dispute is political. PAWSD elections are coming up.”
“Yes they are, soon. The ballots should be going out soon, as I understand it,” Jones said.
josh@pagosasun.com
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