A Watershed Moment: Telluride, Idarado Enter Settlement Agreement
by Samantha Wright
Dec 12, 2012 | 2049 views | 0 0 comments | 5 5 recommendations | email to a friend | print

But Former Bridal Veil Hydro Operator Questions Deal’s Merits

TELLURIDE –  A decades-long legal battle over the town’s water supply appears to have been resolved this Tuesday, Dec. 11, when the Telluride Town Council unanimously approved a comprehensive settlement agreement between the town and Idarado Mining Company (whose parent company is the giant Newmont Mining Corporation) regarding the Bridal Veil Water System.

The agreement shores up Telluride’s ability to develop a new municipal water supply high above town in Bridal Veil Basin, and streamlines its path toward constructing the new Pandora Water Treatment Plant at the foot of Black Bear Pass.

Idarado, meanwhile, gets assurances that enough water from Bridal Veil Basin will continue to flow into the San Miguel River during low-flow winter months to dilute the zinc discharged by the historic Treasury Tunnel, thus enabling the mining company to adhere to strict state-imposed environmental obligations.

Council also unanimously passed on second reading a related ordinance authorizing the conveyance of certain remedial and residual water rights back to Idarado.

Witnessing the occasion were Larry Fisk, the vice president of Idarado Mining Company, and Jay Montgomery, a Boulder-based water rights attorney who for two decades has captained the town’s complicated legal skirmishes with Idarado.

Telluride obtained extensive water rights in Bridal Veil Basin from the Idarado Mining Co. in the 1992 settlement of a lawsuit arising out of the contamination of wells in Town Park. Over the course of years of legal wrangling, the town won the approval to convert those historic industrial water rights to municipal use.

Upon unveiling the pending settlement agreement in November, Telluride Town Attorney Kevin Geiger described the Bridal Veil Water System as “one of the more intensive engineering and legal efforts the town has ever undertaken.”

It is also one of the most expensive. The scheme is funded in part by a $10 million bonded debt question approved by Telluride voters in 2005. This money, mobilized in 2010, went toward improvement of complicated diversion and conveyance infrastructure over the past two years that is intended to get the water from Bridal Veil Basin to the site of the new Pandora water treatment plant. Last month, the Telluride Town Council approved an additional $2 million transfer of Real Estate Transfer Tax funds from the Capital Improvement Fund to the Water Fund to cover additional costs for the project through 2013.

“The borrowed money was not adequate to capitalize the project,” Town Manager Greg Clifton explained of the 2005 bond. “From what I understand, it was always anticipated that the town would backfill the project with RETT funds.”

The cost the town has incurred in its lengthy legal battle with Idarado has yet to be publicly tallied.

Eric Jacobson, the former operator of the Bridal Veil Hydroelectric Plant, who has himself engaged in decades of legal disputes with both the town and Idarado over water rights in Bridal Veil Basin, attended Tuesday’s council meeting to register his dismay at the new water system, describing it as an expensive and unnecessary boondoggle.

“Why as a town are we spending $20 million on this system when we have gotten by the droughts of 2002 and 2012 just fine with moderate water reductions?” he asked.

Jacobson pointed out that the scope of the Bridal Veil Water System, and the terms of the new legal agreement with Idarado, are based on projected increased water consumption in Telluride 20 years into the future.

“Why doesn’t growth pay for itself?” he asked. “Why as taxpayers are we expected to pay for it?”

Jacobson went on to question the merits of investing in “the most difficult to maintain water system in North America” when the town alternatively could be pumping water out of river alluvium in the Valley Floor to its existing Mill Creek water treatment plant. The town could meet current peak demand, Jacobson argued, by simply building more water tanks for storage.

Jacobson also raised the specter that under the terms of the settlement agreement, the town risks sucking Bridal Veil Falls dry during low-flow winter months. “If you are going to kill one of the main scenic attributes of Telluride, what the hell, we might as well build casinos here too,” he said.

“The whole environmental pitch on this is absolutely silly,” he added. “If Idarado had done its reclamation correctly in the first place, they would have kept the zinc out of the river. I think this is a bad deal for the taxpayers. I think the city is getting in bed (with Idarado) hiding environmental problems that ought to be dealt with directly, by additional remediation. It’s always cheaper to litigate than do the right thing.

“Someday, and the day is today, it’s time that you really examine the costs and benefits of this and deal with it. The river needs to be cleaned correctly. We shouldn’t be a party to it.”

Town staff rebutted Jacobson’s concerns. Geiger spelled out a laundry list of benefits to the town which the settlement agreement will provide, including:

• A healthier river;

• A two acre site for the town’s new water treatment plant, free of charge;

• The ability to install hydroelectric capacity at the new Pandora Plant;

• Capital contributions from Idarado worth over $1 million to fix components of the larger Bridal Veil Water System;

• A 20-year agreement for Idarado to maintain the system above Bridal Veil Power House subject to cost sharing agreement, at 60/40 percent;

  Provisions in place for the town to increase water draws after 10 years if there is increased demand;

  Resolution of costly outstanding active litigation between Telluride and Idarado over junior water rights.

Geiger stressed that the most important aspect of the settlement agreement is the storage component represented by Blue Lake. “What we have in this agreement is a very large reservoir, with an active capacity of 3,800 acre feet that can be used as a vessel; we have never had anything like that before,” he said.  “The purpose of storage is to regulate water over multiple years, storing it in good years and using it to supplement in bad years.”

Geiger dismissed the notion that Bridal Veil Falls would ever dry up under the terms of the settlement agreement, pointing out that the agreement has an in-stream requirement that Telluride’s draws could not bring Bridal Veil Creek down to less than one cubic foot per second.

“We have no need or desire to kill Bridal Veil Falls,” he said.

(Jacobson later retorted that one cfs is not enough to maintain a waterfall.)

Clifton, meanwhile, elaborated on the condition of the town’s current water supply, stating that last summer, in the drought conditions before the monsoons arrived, “We were just a fire away from having a crisis in town. What that translates into is that faucets would have stopped running. The truth is, we averted crisis last summer but the numbers do not lie; we did not have any margin to play with.”

Clifton stressed that with low snowpack, water levels in the river and its tributaries plummet. 

“For a town that relies entirely on tributary streamflow, to see that drop only underscores the need (for an augmented system),” he told Jacobson. “You can describe (the Bridal Veil Water System) as infrastructure for growth, but it’s also for the present, and that is frightening.”

Councilor Chris Meyers agreed.

“If we have no snowpack, we may be providing water only for the present day,” he said. “This may in hindsight be one of the best decisions we ever made, to pursue an untrammeled storage water source. What we have before us may have imperfections, but I support the settlement. There has been really incredible scrutiny of this, and it has not been taken lightly.”

Councilor Kristin Permakoff, meanwhile, turned to Fisk, asking him what Idarado is doing about the zinc problem in the San Miguel River.

Fisk responded that all of the water pouring out of the Treasury Tunnel on the Telluride side is captured and put in lagoons (which act as settling ponds), before the water makes its downward journey into the river. “Things look very good right now in terms of compliance,” he said. “We will be talking to the state about what the settlement agreement entails. Hopefully good things will come out of it.”

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