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What’s next for D&SNG in $25 million federal lawsuit?

Case could take years to settle or go to trial, experts say
It could take years for a federal lawsuit seeking $25 million from the Durango & Silverton Narrow Gauge Railroad for starting the 416 Fire to play out in the courts, experts say.

It took more than a year for the U.S. Forest Service to announce the Durango & Silverton Narrow Gauge Railroad was the cause of the 416 Fire and on the hook for $25 million for firefighting costs, but it appears now the true waiting game has begun.

The 416 Fire broke out June 1, 2018, on a small hillside about 10 miles north of Durango and went on to become Colorado’s sixth largest wildfire, consuming an estimated 54,000 acres of mostly national forest land in the Hermosa Creek watershed.

This week, the Forest Service announced that a cinder emitted from a smokestack from one of the D&SNG’s coal-burning locomotives, which was running at a time of extreme drought in Southwest Colorado, sparked the fire north of Durango.

The U.S. Attorney’s Office, serving as the legal arm of the Forest Service, filed a lawsuit Tuesday against the train that seeks $25 million for putting out the fire, as well as rehabilitation costs that have yet to be determined.

So what’s next?

Durango attorney Michael McLachlan, who is not involved in the 416 Fire case but in the past has served as counsel for the D&SNG, said there are several ways the lawsuit could play out.

Because the D&SNG did not intentionally or maliciously start the 416 Fire, federal prosecutors did not pursue criminal charges, opting instead to file the lawsuit as a civil matter.

“The only interest the government has is to collect their money,” McLachlan said. “They don’t want the train to go to jail. They just want the train to pay the damages.”

The D&SNG now has about 20 days to file a response to the federal lawsuit. The two sides have their first court appearance scheduled for Sept. 17 at the U.S. Courthouse in Denver. The case has been assigned to Senior U.S. District Judge Richard Blackburn.

Over the ensuing months, the U.S. Attorney’s Office and the D&SNG will lay out all their evidence, name key witnesses and navigate all the required court proceedings, McLachlan said. Because of the complexity and magnitude of the case, this process alone could take a year or two, he said.

Ultimately, there are two ways the lawsuit could be resolved: a settlement through negotiation or a jury trial.

McLachlan said parties are not allowed to go to trial without first exhausting all attempts at reaching a settlement. He said an estimated 95% of civil cases filed in federal court reach a settlement and never go to trial.

William Derr worked for the Forest Service in California for 38 years, serving much of that time as the special agent in charge of investigations. He estimated he has investigated hundreds of wildland fires, both criminally and civilly, in his nearly four-decade tenure.

After investigators determine a cause of a fire, the Forest Service typically sends a bill for firefighting costs and any damages to a responsible party, Derr said in an interview with The Durango Herald on Friday from his home in California. If the suspected culprit denies being the cause or takes issue with the amount, that’s when the U.S. Attorney’s Office gets involved and files a lawsuit, he said.

In the case of the 416 Fire, the D&SNG has denied it started the blaze, a move that’s not all that unusual, Derr said.

“It allows them more time for negotiating,” he said. “And there’s a slight edge by not admitting liability.”

It’s a process that has played out several times in the past when the D&SNG starts a wildland fire.

Documents obtained in an open records request last year showed that in two decades’ worth of investigations into fires started by the D&SNG, it took years of negotiations to reach a settlement. In almost every case, the D&SNG hit back with a lower counteroffer, often denying it started the fire.

Between 1994 and 2013, the Forest Service billed the D&SNG nearly $1.2 million for putting out fires. Ultimately, the train ended up paying about half that amount.

The cost of fighting the 416 Fire has been estimated at around $40 million. The U.S. Attorney’s Office, however, is seeking only $25 million in its lawsuit. U.S. Attorney Jason Dunn was not available Friday, but he said earlier this week that dollar amount might change as negotiations proceed.

Still, Derr thought it odd federal prosecutors are not seeking the full amount.

“With any negotiation, you typically start at the top,” he said.

Another complicating factor is that another lawsuit filed by private individuals and businesses also seeks compensation from the D&SNG for damages suffered in the 416 Fire. In his experience, Derr said he’s seen the government and private parties combine their lawsuits in these sorts of circumstances.

“The concern is if the government gets all the insurance money, what’s left for us?” Derr said. “I’d expect the attorneys would be in consultation with each other so they can come up with a fair way to deal with it.”

Bobby Duthie, the Durango lawyer representing local residents in the lawsuit, did not return a call Friday afternoon seeking comment.

Christian Robbins, spokesman for the D&SNG, said the train has no comment at this time.

However, for the past year, owner Al Harper has said the D&SNG would take full responsibility should the railroad be determined the cause of the 416 Fire.

“Frankly, we need to be quiet until the Forest Service comes and answers what they feel needs to be done,” Harper said in June 2018 in an interview with the Herald. “Then I’m going to respond and be open about it. There’s no question I’m going to work hard to make sure this doesn’t happen again.”

He added: “We always want to do what’s right by the community.”

McLachlan said just because the D&SNG failed to negotiate, necessitating a civil lawsuit, doesn’t mean Harper is reneging on his promise.

“He’s exercising his right for (the federal government) to prove the case by the weight of the evidence,” he said. “They have the right to require them to prove every damage and every element of the case.”

jromeo@durangoherald.com

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