Purgatory Resort has suffered another setback in its legal effort to access groundwater in the East Fork of Hermosa Creek for snowmaking and other uses.
The 10th U.S. Circuit Court of Appeals on Tuesday upheld a 2024 U.S. District Court decision that dismissed the resort’s claims against the U.S. Forest Service, leaving the ski area north of Durango without a court-recognized right to develop its water rights across federal land.
The case is the culmination of a three-year federal legal battle with the Forest Service that has centered on one key question: Does Purgatory have a legal right to access federal land to develop and use its water rights or whether that right was lost in a 1991 land exchange.
The original developer of Purgatory resort, Raymond Duncan, obtained conditional water rights in the 1970s and 1980s for groundwater within the Hermosa Creek watershed.
In 1991, the company and the U.S. government completed a land exchange that traded parcels on opposite sides of the resort. The land transferred to the government included potential well sites tied to the water rights.
However, the formal agreement and warranty deed made no mention of water rights or reserved access, and after the trade the land became part of the National Forest System, under Forest Service management.
Starting in 2001, the resort’s then-owner, Durango Mountain Resort, filed multiple applications and proposals for a special-use permit to drill test wells on the Forest Service land.
The Forest Service declined the proposals, citing environmental concerns that groundwater withdrawls could reduce stream flows in Hermosa Creek and threaten habitat for the Colorado River cutthroat trout, a sensitive species.
Durango Mountain Resort continued filing periodic applications in state water court to maintain its conditional water rights. In 2010 and 2012, the Forest Service opposed those filings, arguing the rights should be canceled because required land-use permits would not be issued.
A Forest Service supervisor later testified the agency would not allow “a single drop of water” to be diverted for those rights.
James Coleman, who purchased Purgatory Resort in 2014, inherited the dispute. In 2022, Purgatory sued the federal government under the Quiet Title Act and the Declaratory Judgment Act, asserting it had a legal right to access federal land to use its water rights.
The U.S. District Court for the District of Colorado dismissed both claims in 2024, ruling that the statute of limitations on the Quiet Title Act claim had expired years before the lawsuit was filed on Oct. 27, 2022. Additionally, it determined the Declaratory Judgment claim to be essentially a “quiet title” dispute and dismissed it as well.
The 10th Circuit upheld the lower court’s dismissal but provided further clarification.
The court ruled that Purgatory missed its deadline to sue under the Quiet Title Act, which has a 12-year statute of limitations. Because the Forest Service made its opposition clear by 2006, the deadline expired by 2018 – four years before the lawsuit was filed.
The judges also threw out Purgatory Resort’s other claims under the Declaratory Judgment Act.
Those claims alleged that the Forest Service violated Colorado water law, federal rules about access to private land and unlawfully took property without compensation.
The court ruled it lacked jurisdiction over the first two claims and that the third – the takings claim – was premature. Purgatory would first need to pursue compensation under the Tucker Act.
The court emphasized it was not ruling on whether Purgatory has a right to its water or whether the Forest Service acted lawfully.
“In deciding this case on statute of limitations and jurisdictional grounds, we do not address whether Purgatory would otherwise be entitled to its asserted right of access or whether Defendants have complied with applicable state and federal law,” the opinion said.
It is unclear whether Purgatory plans to pursue further legal action. A resort spokesman said he was unable to respond to questions.
jbowman@durangoherald.com
