Idarado and Telluride find their way to a settlement agreement


From The Telluride Watch (Samantha Wright):

If council approves the settlement agreement, which it anticipates doing at its next meeting on Tuesday, Dec. 11, it will put an end to a decades-long legal battle between the town and Idarado (Idarado’s parent company is the Newmont Mining Corporation) over the town’s water supply, and streamline the path toward constructing the new Pandora Water Treatment Plant, ensuring Telluride a plentiful municipal water supply well into the future…

Telluride Town Attorney Kevin Geiger described the process of reaching the settlement agreement as “one of the more intensive engineering and legal efforts the town has ever undertaken…

The agreement addresses ways in which the Bridal Veil Water System can be improved and enhanced so that yield can be increased for the benefit of the Town of Telluride and Idarado.

One of the key issues it resolves is the timing of how the town can operate its projected Pandora Water Treatment Plant to meet the its demands and still be sensitive to environmental concerns Idarado continues to address with the State of Colorado, including keeping zinc levels in the San Miguel River at acceptable levels.

Basically, the town has agreed to take less water (.8 cubic feet per second, or about a half-million gallons per day) from Bridal Veil Basin in the winter months. This amount of water can be supplemented with water from its current municipal water treatment plant at Mill Creek, which has a maximum capacity of 1.5 cfs.

If the town’s demand is still not met, it retains the right to go back to Bridal Veil Basin to satisfy the rest of its demand. In the winter months, peak demand in Telluride currently spikes at about 1.1 cfs so the town would still be drawing 70 to 80 percent of its water out of Bridal Veil Basin…

Idarado, meanwhile, has given the town greater flexibility to draw basically as much water as it needs out of Bridal Veil Basin to meet its summer demand which currently peaks at 1.9 cfs.

One of the benefits Idarado is offering the town in exchange for the timing restrictions is a million dollars’ worth of infrastructure improvements to maximize the efficiency of the historic Bridal Veil Water System, some components of which date back to the 1880s. Idarado has also agreed to assume full responsibility for maintenance of upper reaches of the system above the Bridal Veil Powerhouse.

Idarado is also allowing the town to incorporate a hydroelectric element into its new Pandora Water Treatment Project. Previously, the company did not consent to the proposed hydro design. Now, under the terms of the settlement agreement, Idarado has given a thumbs-up to hydro as a permitted use, and has also given authorization to combine its own water with the town’s, to double the amount of water going through the system and generate more electricity at no cost to the town.

The term of the agreement is 20 years, but after year 10, there are mechanisms in the settlement agreement to increase the town’s draw on water if it experiences a spike in demand. These mechanisms are not tied to Idarado’s zinc compliance issues…

The crown jewel of the Bridal Veil Water System is Blue Lake, a pristine mountain lake that is 330 feet deep and holds 6,000 acre feet of water. The water flows into the Bridal Veil Hydroelectric Plant via a network of historic pipelines, diversion and conveyance structures associated with the senior water rights that Idarado and the town now share at a ratio of about 60/40.

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 a decade of legal wrangling, the town won the approval to convert these historic industrial water rights to municipal use. These senior water rights, which include a portion of the tremendous water storage capacity of Blue Lake, enabled Telluride to eventually develop the Pandora Water Treatment System now under construction which is capable of delivering pristine mountain water to its citizenry.

More coverage from Katie Klingsporn writing for The Telluride Daily Planet. Here’s and excerpt:

The water dispute is rooted in a long history of settlements, environmental mandates, water rights and expansion plans.

In the late ‘80s, the state of Colorado brought a lawsuit against Idarado related to environmental issues left from its past mining activities. In a settlement reached in that case, Idarado was required to perform certain environmental remediation activities and keep the water in the San Miguel River to certain standards.

Around the same time, the town noticed pollution in Town Park wells and also asserted claims against Idarado. In 1992, the town and Idarado entered into a settlement agreement. In an effort to put to bed the potential town lawsuit and to seek the town’s approval of the settlement with the state, Idarado offered to provide the town water rights and water structures in Bridal Veil basin as an alternative municipal water supply.

In 2005, the two parties entered into another agreement. This time, Idarado offered to convey a two-acre site near the Pandora Mill to the town, which the town is planning to use for the site of its new water treatment plant. The plant is part of a years-long plan to ensure that the town has a enough water to meet its future needs.

But around 2007, Idarado began expressing concerns about how the town’s proposed water draws for the treatment plant would impact its ability to comply with the state’s water quality standards. The water draw, according to Idarado, could adversely impact its compliance, triggering significant and costly obligations for the company.

That issue has been at the center of the town’s negotiations with Idarado. And after two years of extensive talks, the two parties have chiseled out a settlement…

“It basically sets up a priority system,” [Town Attorney Kevin Geiger] said.

More San Miguel River Watershed coverage here.

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