Federal judge issues mixed ruling for Denver Water's dam and reservoir project

Denver Water

A federal judge is allowing construction to continue on Denver Water's Gross Dam, but kept in place a permanent injunction against a reservoir expansion. 

Citing safety concerns, U.S. District Court Judge Christine Arguello on Thursday vacated her preliminary ruling in April that put dam construction on hold.  

"Given the court's finding that completion of the dam structure, at this point, poses no imminent threat of environmental injury, the court finds that the public interest in the continued construction of the dam is strong and outweighs halting the project," her ruling stated.

Denver Water, Colorado's largest water utility, said completing the dam project "on the current and mandated timeline by the Federal Energy Regulatory Commission is the safest path forward." It also plans to fight the injunction stopping Gross Reservoir's expansion.

"This added storage is of enormous importance to the 1.5 million people we serve, as well to our West Slope partners who support the environmental benefits to streams and fish habitat associated with the expansion," a statement from the utility said. "Denver Water will continue to work through the appellate court to resolve remaining issues and ensure this long-awaited project reaches completion."

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

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

Following the judge's permanent injunction in April, a Denver Water spokesperson said the agency did not believe it impacts security for the outstanding bonds, noting the utility's board can "modify rates at any time" without oversight.  

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."

Environmental groups filed the lawsuit in 2018 against the heads of the U.S. Corps of Engineers and other federal agencies challenging permits they granted for the project. 

Save the Colorado, one of the plaintiffs, said it understands the safety concerns "given the risk Denver Water created with their half-built dam," while vowing to defend the judge's order enjoining the reservoir expansion and vacating its Clean Water Act permit.