The fight over a beloved, partially drained reservoir may be resolved in Congress, as the city of Ouray has requested help from U.S. Sen. Michael Bennet to try to acquire Crystal Reservoir, the Full Moon Dam and associated water rights from the U.S. Forest Service.

City officials are just now pursuing ownership of the reservoir to eliminate the possibility of the federal agency draining it and restoring the area to wetlands, despite knowing about a possible drawdown since 2020 and being offered the chance to own the reservoir several times.

The move to try to acquire the reservoir on Red Mountain Pass comes after a years-long conflict between the city and the federal agency over whether Ouray has water storage rights in the reservoir. It also comes after the Forest Service drew down the reservoir in April, citing concerns about a crack identified in the dam during an inspection in May 2023.

In a letter sent to Bennet’s office on Sept. 19, Interim City Administrator Joe Coleman asked the Democratic legislator for his help in drafting a conveyance bill, which was supported in a letter from Ouray County. The city wants the Forest Service to provide the reservoir and its water rights, the dam and 45 acres for free, according to Coleman’s letter.

The request to transfer ownership of the reservoir from the federal government to the city comes four years after the Forest Service first asked the city if it was interested in purchasing or swapping land with the agency in exchange for Crystal Reservoir.

The federal agency invited the city to negotiate with it on at least four separate occasions since 2020, documented in letters to former Mayor Greg Nelson and current Mayor Ethan Funk. These letters went unanswered, according to the Forest Service.

Hearing nothing, the federal agency moved on with plans to drain the reservoir.

The Forest Service is now considering three options that could decide the reservoir’s long-term future: Repair the Full Moon Dam and continue to maintain the reservoir, tear down the dam and return the area to wetlands or offload the reservoir to another owner to remove its liability of owning a high-hazard dam without hydropower.

This overhead drone photo of Crystal Reservoir shows the current status of the partially drained water body – with its southern edge dried up and little inflow to the reservoir. The U.S. Forest Service has said its preference is to drain the reservoir and restore the area to wetlands, since it has received direction to limit its liability of owning high-hazard dams without hydropower. Photo by Mike Boruta – Ouraybyflight.com

Public records show the Forest Service had been meeting with the city about the ongoing dispute over an operations and maintenance agreement for Red Mountain Ditch — which included an agreement to let the city store water Crystal Reservoir — developed in 2015.

In 2018, the Forest Service contacted the city about using a special-use permit to remedy the issue, which would have authorized the city to lease water from the Forest Service while the agency continued to operate and maintain the dam. But after a series of meetings with the city, the Forest Service’s attorneys decided it wasn’t possible.

After a meeting in March 2020 with city officials to discuss options other than a special-use permit, the Forest Service followed up with a letter informing the city of two possible choices: It could purchase Crystal Reservoir, its dam and water rights or seek a land exchange. The agency noted it preferred a third alternative.

“From the agency’s perspective, breaching the dam and restoring the wetlands would best serve the public’s interest,” wrote Chad Stewart, the forest supervisor for the Grand Mesa, Uncompahgre and Gunnison national forests.

More than three years after that meeting, in May 2023, an inspection documented a 71-foot-long crack in the Full Moon Dam’s crest. Though that crack has not been documented since, subsequent inspections have noted seepage and other signs of possible structural problems.

Federal inspectors had also classified it as a “high hazard dam” in 2016, citing concerns about potential damage to downstream structures if a flood or dam breach occurred. The classification wasn’t related to the structural integrity or quality of the dam – it was based on modeling with potential scenarios of destruction, including dam breaches and 100-year flood events. These are called inundation reports.

The dam was previously classified as a “significant hazard” in 2011, due to the potential for economic losses downstream if the dam breached during a flood event.

***

A state dam safety engineer performed the most recent inspection on the dam on June 5 during a visit with city and county representatives, Forest Service personnel and employees from the Bureau of Reclamation.

According to documents from that visit, participants tried to locate the 71-foot crack in the middle of the dam but could not find it.

They scratched into the surface of the soil but the crack was elusive, and they determined the crest of the dam “appeared in acceptable condition.”

But Colorado Division of Water Resources Dam Safety Engineer Jason Ward documented other concerns that led him to concur with the Forest Service that storing water in Crystal right now “creates an unsafe condition.” Those concerns included seepage and possible areas of slope instability.

Ward wrote a letter to the Forest Service indicating he agreed the reservoir should be kept at zero storage.

***

The agency sent letters to stakeholders in January – including Ouray County and city of Ouray officials — notifying them of the crack and concerns about the dam’s condition.

Forest Service Ouray District Ranger Dana Gardunio told them the agency was considering its options.

“We are considering actions in accordance with current Forest Service direction, which identifies the need to remove non-hydropower Federal dams or provide dam technical assistance to mitigate public safety concerns and provide ecosystem restoration,” she wrote in the letter.

She asked for input from these stakeholders by March 1.

At a meeting with county commissioners in February, Lindsey Binder, a lands and minerals specialist with the Forest Service, said the agency doesn’t want the liability of a high-hazard dam and planned to start an environmental analysis with a goal of implementing changes by 2027.

Commissioners said they wanted to find a way to keep the reservoir, which holds roughly 30 acre-feet of water, and wrote a letter to the Forest Service with a comprehensive list of requests. Among those requests, they asked for an environmental impact study with alternatives to a drawdown including protection of the city’s disputed water rights, transferring ownership of the reservoir and dam repair or improvement.

In April, the Forest Service announced its decision to partially drain Crystal Reservoir, citing concerns about safety and the crack in the dam. The agency said it would launch a full environmental analysis to study options for the reservoir, which could take years.

In the meantime, Crystal Reservoir would remain partially drained, a stagnant swamp where the once-clear water attracted anglers and photographers on the side of U.S. Highway 550 on Red Mountain Pass.

Gardunio said the Forest Service did not hear from the city until after the announcement about the plans to drain the reservoir.

The partially drained Crystal Reservoir is pictured here on Oct. 5. The reservoir is at the center of a years-long argument between the city of Ouray and the U.S. Forest Service over water rights, and the federal agency decided to drain it this spring, citing safety concerns after a crack was found in the dam in 2023. The Forest Service says it offered the city several chances to trade property for the reservoir or purchase it, but didn’t receive a response. Now, the city is asking U.S. Sen. Michael Bennet to draft a bill for Congress to convey the reservoir, its water rights and property to the city of Ouray for free. Photo by Mike Boruta – Ouraybyflight.com

The city and the Forest Service have clashed over an agreement dating back to 2015, which the city says allows it to store water in Crystal Reservoir.

The city maintains it obtained water storage rights in the reservoir from the operations and management plan for Red Mountain Ditch, the rights to which the Alexander family transferred to the city in 2014.

The city claims it agreed to reduce its diversion from Mineral Creek to the Red Mountain Ditch as a trade-off, which the Forest Service agreed to in exchange for the city’s ability to store up to 32 acre-feet of water in the reservoir for domestic water needs. The city used this detail in its plans for a drought scenario.

But Forest Service documents show the agency doesn’t agree with the city’s position — and the federal agency does not think the city has the right to store water in the reservoir.

Internal briefings also show the Forest Service took issue with numerous other terms of the 2015 agreement, from 2016 to 2019.

***

In March 2020, Stewart, the GMUG supervisor, revisited the issue around the city’s water storage rights in a letter to then-Mayor Nelson after a meeting between Forest Service officials and city officials. In the letter, Stewart informed the city the special-use permit wasn’t viable and he had concerns “about committing the Forest Service to long-term operations of a high-hazard dam for the City.”

He broached the agency’s desire to offload Crystal Reservoir, the dam and its water rights via two options that would uphold the city’s water augmentation plan: a direct sale of the property or a land exchange. But he also made clear the agency’s preference to breach the dam and restore the area to wetlands.

Stewart never received a response. He sent three follow-up letters to Funk between April 2022 and October 2023, referencing the 2020 letter to Nelson. Funk became mayor after the November 2021 election.

Funk said the April 2022 letter was the first he heard of the issue and acknowledged he did not reply. He said the city decided to wait and see how serious the Forest Service was about its proposal.

“So we probably made a mistake by not taking it seriously sooner,” Funk told the Plaindealer this week. “Or maybe you can blame it on the transition between staff and the election, I don’t know. But it didn’t get taken seriously initially, and then when we started to take it seriously, we understood the legal repercussions and that’s why we were quiet about it.”

Funk declined to say when the city entered negotiations with the Forest Service over the water-rights dispute.

City officials told the Plaindealer in May they learned of the Forest Service’s new stance on the 2015 agreement in December 2023 — after the agency issued a revised operations and maintenance plan for Red Mountain Ditch that didn’t mention the city’s water-storage right in the reservoir, while still limiting the city’s water diversion from Mineral Creek to Red Mountain Ditch.

The city retained Denver water attorney Steve Bushong in March to work on several water rights-related issues, including Crystal Reservoir, Funk said.

Bushong approached the Forest Service about water rights outlined in the 2015 agreement in a letter in April, saying although the city supported necessary short-term safety measures, a permanent or prolonged drawdown would put the city’s storage right at risk.

The Forest Service countered Bushong’s letter with an answer that denied the city’s claim to water rights within the 2015 agreement, arguing that the ranger who authorized the agreement didn’t have jurisdiction to do so. The agency also argued even if the agreement was done correctly, it would have expired in five years and was now null.

Coleman’s September letter to Bennet requesting a conveyance is the first step the city has taken publicly since then.

***

Ouray County commissioners became involved in the Crystal Reservoir issue after receiving the letter to stakeholders in January.

Commissioner Lynn Padgett has championed saving Crystal Reservoir and used it in her campaign for reelection. She said she came up with the idea in August to get the reservoir transferred to local control through a congressional conveyance bill. She called Bennet’s senior advisor, John Whitney, to ask if it would be something the senator would consider sponsoring.

Bennet visited Crystal Reservoir on Wednesday afternoon.

Ouray County Commissioner Lynn Padgett and Ouray Mayor Ethan Funk talk with U.S. Sen. Michael Bennet about a proposal to transfer ownership of Crystal Reservoir from the U.S. Forest Service to the city of Ouray. Bennet visited the reservoir Wednesday afternoon and talked with stakeholders, including the Forest Service, the city, the county and the Uncompahgre Watershed Partnership. Erin McIntyre – Ouray County Plaindealer

Coleman told the Plaindealer on Tuesday he didn’t know when city officials began considering the possibility of pursuing a conveyance through federal legislation. But he said previous City Administrator Silas Clarke spoke with someone from Bennet’s office on the topic in early September. Clarke, who left his job with the city Sept. 5, could not be reached for comment Tuesday.

It’s not clear how long a conveyance could take, whether it would cost local governments, or if it would still require an environmental analysis. Gardunio said an appraisal estimating the value of Crystal Reservoir and the dam would have been done when the Forest Service acquired them in a 2003 land exchange. She said she’s not aware of a more recent appraisal.

Over the summer, Ouray County hired its own consultant to independently study the hydrology of the area in case it needed to challenge the Forest Service’s environmental findings with its own information. Commissioners have cited the reservoir’s aesthetic value, its draw for tourists and recreationists as well as habitat for wildlife including moose.

But during an August meeting, County Attorney Leo Caselli said the county doesn’t want to get involved in the city’s water-rights dispute.

If the conveyance isn’t successful, the city will pursue other other options, Funk said. He declined to disclose what those options might be, citing negotiations with the Forest Service.

The next step is for federal agencies to complete a pair of assessments. One will be done by the Forest Service to update the hazard rating for Full Moon Dam based on the potential impacts to people and structures downstream of the reservoir in the event of a breach or various potential flood situations. The other will be done by the Bureau of Reclamation to analyze the scenarios under which the dam could fail and the probability that might happen, then consider the consequences of each potential failure.

Gardunio said she expects those assessments to be finished by the end of this year.

After that, the Forest Service will conduct a feasibility study of dam repairs and recommend a range of repairs that could be performed. The study will also consider the removal of the dam.

The agency has prioritized limiting its ownership of high-liability dams that don’t generate electricity, an idea rooted in a 2016 audit on Forest Service dams conducted by the U.S. Department of Agriculture’s Office of Inspector General. Gardunio said the agency’s response to that audit was to minimize dams it can’t handle and reduce liability at facilities with potential hazards.

Gardunio said she has $120,000 in funding to develop preliminary drawings of alternatives for the dam, create a draft hydraulic analysis and develop draft cost estimates.

The Forest Service received $10 million in funding last year to be spent over four years to plan the removal of non-hydropower dams. The funding can be used for environmental analysis, design alternatives and dam removal, but not for repairs.

More than 20 years after acquiring the reservoir, Gardunio said the idea behind the land exchange was to preserve the landscape and public access. But that came with other issues.

“The intent was great. … I can tell you 20 years later we would not be acquiring something like Crystal Reservoir,” she said.

Lia Salvatierra is a journalist with Report for America, a national service program that boosts resources in local newsrooms.