Federal court ruling clears completion of Denver Water reservoir expansion

Denver Water

Denver Water said it will move ahead with the completion of a controversial reservoir project after a U.S. Appeals Court panel ruled against environmental groups seeking to block it.

A Tenth Circuit Court panel on Tuesday vacated a federal district court judge's permanent injunction last year against expanding the Gross Reservoir.

"The (U.S. Army Corps of Engineers') three determinations—which the district court found arbitrary and capricious—fall easily within that zone of discretion, and none of those determinations were arbitrary or capricious," the appeals court ruling said.

Denver Water, Colorado's largest water utility, said in a statement it will proceed with "the final stages of this critical project to ensure a safe, secure water supply for the 1.5 million people we serve."

"An expanded Gross Reservoir is vital to the future of the Denver region, giving Denver Water far greater ability to flexibly manage constrained water supplies amid the growing risks of catastrophic wildfire and weather extremes that accompany the challenges of drought and climate change already upon us," the statement said.

The $600 million project to raise the Gross Dam by 131 feet, tripling the reservoir's water capacity, was included in a $1.5 billion, five-year capital program Denver Water announced in October 2020. 

A total of $506.3 million of triple-A-rated revenue bonds were sold by Denver Water in 2021 and 2022 to finance capital improvements. The litigation was disclosed in the agency's official statements for new and refunding bonds, which are backed by the utility's net revenue, including rates and fees.

In a 2025 rating report, S&P Global Ratings said it was monitoring the litigation process and the effect on operational flexibility. 

The lawsuit was filed in 2018 by environmental groups against the heads of the U.S. Army Corps of Engineers and other federal agencies challenging permits they granted for the project and alleging recreational and scientific harm to the Colorado River. 

Gary Wockner, director of Save the Colorado, one of the plaintiffs, said it is "nonsensical" to further drain the Colorado River "at this time in history."

"That the law allows it to happen doesn't make it right, it just makes it legal," he said in a statement.

In August, the U.S. Bureau of Reclamation released 2027-28 operating guidelines that would reduce water deliveries to Lower Basin States — Arizona, California, and Nevada — by 1.25 million acre feet annually. Those states would also voluntarily conserve and store at least 700,000 acre-feet of water over the next two years to protect the Colorado River system where prolonged drought conditions have pushed the Lake Powell and Lake Mead reservoirs to record lows.

Denver Water has said it began construction on the project in 2022 under an order from the Federal Energy Regulatory Commission stipulating its completion by 2027 and that it received "all required local, state and federal permits to move ahead with the project after a regulatory oversight process stretching over nearly two decades."

The Gross Reservoir, which was completed in 1954, is a storage and regulating facility for water flowing under the Continental Divide through the Moffat Tunnel.