Liquid Treasure : Tranquil Colorado Valley Is Boiling Over Entrepreneurs’ Plan to Export Its Bountiful Water

The San Luis Valley is not in an alluring part of Colorado. There are no chic ski resorts or dude ranches. There is no industry to speak of, unemployment hits 25% at times and not many tourists pencil this wind-swept plateau near the New Mexico border into their itinerary.

But the San Luis Valley could have something better going for it than glitzy slopes or free-spending vacationers. Bubbling just beneath the surface is a liquid treasure, an enormous pool of underground water with a volume perhaps 70 times larger than Lake Mead, the man-made watershed on the Colorado River.

In some hands, it could be worth hundreds of millions--if not billions--of dollars.

For more than a century, that water has been the preserve of a small network of hard-working farmers and ranchers. Their fathers, grandfathers and great-grandfathers before them tapped it, along with the Rio Grande River and smaller streams, to turn an outwardly arid region into lush irrigated fields and grazing land for cattle and sheep.

But the cozy tranquillity of the valley has been shattered by a plan to develop and export the water. Typically, such grandiose schemes are laid by municipal water agencies, federal engineers or other government bodies. What makes the San Luis Valley proposal so unusual, and all the more unnerving to longtime residents, is that its instigators are entrepreneurs who plan to make some money.

“They’re going to draw the water table down and our wells are going to go dry,” charged rancher Felix Gallegos, whose family has been running cattle in the valley for four generations. “ . . . It will probably all become a desert. Some people are just trying to fatten their pockets at our expense.”

Potato farmer Lynn Kopfman, a leader of the anti-development forces, said: “We don’t want to create another Owens Valley. We don’t want trees to die and animals to leave.”

And so this remote farming center finds itself embroiled in a simmering water war whose outcome could shift the responsibility for supplying water to parched Western states from traditional government-controlled sources into private hands.

With so much at stake, charges of deceit and physical threats are flying across the once-sleepy landscape and a fierce, expensive legal battle is under way for control of the water.

“This is a real fistfight and it’s going to get worse,” said Steve Vandiver, chief state water engineer for the region.

Though the valley gets only seven inches of rain and snow in an average year, a rich snowpack runoff from the surrounding San Juan and Sangre de Cristo mountains converges beneath the valley floor into what may be the largest underground water system west of the Mississippi River. One study estimates the size of the reservoir at as much as 2 billion acre-feet, larger than the huge Ogallalla aquifer that spreads from Nebraska to Texas.

Armed with land deeds, computer models, novel legal wrinkles and a hefty bankroll, Denver-based American Water Development Inc. hopes to turn its Baca Ranch, the area’s largest landholding, into what essentially would be a massive water farm.

Part of the 100,000-acre spread, about nine times the size of Manhattan and now used largely for cattle and hay, is strategically located atop a low-lying, spongy area called “the sump.” During some months, the ground water accumulation under the sump is so great that it actually percolates above the surface and forms marshy pools.

The company plans to draw off some of that water and pipe it hundreds of miles to be sold at top dollar to growing urban areas in desperate search of new supplies. Company officials say their target market is metropolitan Denver, 200 miles to the north, but some water experts speculate that San Luis water could ultimately find its way to Southern California.

To win a new water claim under Colorado law, an applicant has to prove that the claim would not harm the existing water rights of others. That has not been easy in the San Luis Valley, where for more than 20 years the state engineer has enforced a moratorium on permits for new irrigation wells.

But in papers filed in Colorado water court, American Water Development said its project would have little or no impact on other wells. And even if it did, the company argues, it would still be entitled to exploit Baca water under property rights traceable to the original 1823 Spanish land grant for the ranch, which supersedes state law. Legal experts say such a theory is untested.

Such unorthodox legal machinations have only heightened distrust of American Water Development in the valley. A broad coalition of community leaders and agricultural interests, backed by several state and federal agencies, have gone to court to stop the project, which they claim will suck the life from irrigation systems and turn local farms into wasteland.

Critics portray the struggle as nothing less than a fight for survival against greedy robber barons out to line their pockets as they rape the valley.

“We must stop the water grab,” proclaimed a half-page advertisement placed recently by American Water Development opponents in the valley’s main newspaper. “ . . . It is time for the citizens of the San Luis Valley to throw off the cloak of gullibility and to reject the smooth talk of AWDI’s snake oil salesmen and those who would counsel compromise in order to trade off the birthright of the San Luis Valley, its water.”

Perhaps to defuse such allegations and to increase its own clout, the company has packed its corporate roster with a who’s who of environmental champions and respected, well-connected political figures. Board members include former Democratic Gov. Richard Lamm, Bob McWhinnie, until recently a top water official in suburban Denver, and William Ruckelshaus, former director of the U.S. Environmental Protection Agency.

The company also hired Buddy Whitlock, longtime supervisor of the Rio Grande National Forest, to manage the ranch.

More significantly, the entire scheme was the brainchild of American Water Development’s founder, Maurice Strong, 60, a jet-setting Canadian financier, philanthropist and United Nations diplomat who pioneered the U.N.’s environmental program and maintains close ties with international environmental groups.

Though his legal residence is in Canada, Strong maintains a home on the Baca property. There, along with his wife, Hanna, he has encouraged the development of New Age-style spiritual enclaves for Eastern and alternative religious groups.

In a telephone interview from Vancouver, Strong said he sympathized with concerns about the project but was stung by suggestions that he would do anything to harm the valley. To the contrary, he insisted, it would be better to have an environmental champion like him involved with such a project than someone less well-intentioned. “I can understand them being skeptical,” he said of critics. “(But) if that water’s there, a development of it in some manner is inevitable.”

To a layman, American Water Development’s plan may sound deceptively simple and practical. As spelled out in court documents, the company said it plans to dig dozens of wells on the Baca ranch and draw up to 200,000 acre-feet of water a year, roughly 65 million gallons, or about half the present annual water demand in the Denver area.

An acre-foot, a yardstick for the amount of water a typical family of four consumes in a year, is an acre of water one foot in depth. Each acre-foot contains about 326,000 gallons.

Based on its own computer projections, the company claims that the project would have minimal impact on the subterranean water table, river levels or irrigation wells. Most of the water, the firm says, would simply be captured before it was lost to evaporation either through the soil or the leafy surfaces of scrub plants that dot the landscape.

If any outside wells are affected, American Water Development promises to make up the loss from Baca water. The company acknowledges that the project would cut into the production of the so-called “Closed-Basin Project,” a federally mandated recovery system that already transfers water from the sump into the Rio Grande River to enhance downstream water levels. But company officials have also vowed to replenish the Closed Basin. The project is vital to agricultural interests. Without it, farmers and ranchers would probably be required to reduce the irrigation water they take from the Rio Grande and its tributaries.

Simply put, opponents don’t believe American Water Development’s reassurances. When Strong first filed the water claim three years ago, it was a vaguely worded document that made no mention of water marketing. Initially, Strong talked about dedicating most of the Baca water to a new brewery he hoped to lure to the valley. Nothing ever came of the idea, though he insists it is not dead.

Even now, the company has promised to earmark a share of the water for local economic development. But the firm has been deliberately short on specifics. Company officials say they don’t want to tip their hand until critics agree to drop legal objections and negotiate a settlement of the water claim.

Faced with mounting criticism, Strong seems to be trying to hedge his bets on the project, gradually distancing himself on paper while insisting that his initial vision is still a good one. He gave his stock in American Water Development to a Michigan-based charity he is connected with. Later, the foundation resold the stock to outside investors.

Though he remains on the company’s board, Strong now contends that he is not totally comfortable with the firm’s new controlling interests. “I’m no longer involved in it,” he said. “ . . . When I made those commitments to the valley, I had every reason to believe I had the power to carry them through. . . . But recent changes made in the company put me in a position where I can’t make that stick.”

Still, he remains defensive about his role in developing it. Subpoenaed to give a deposition in the water case, Strong prefaced his testimony last October by asserting that his United Nations status gave him diplomatic immunity. If he didn’t like the tone of the questions, Strong claimed, he was free to leave. He never did, however.

American Water Development officials admit that efforts to sell the Baca plan to valley residents have so far bombed. But they blame that failure on misinformation and a mulish resistance to change.

“It’s the most disgusting and discouraging thing to me to say it’s going to dry up the valley,” said Whitlock, the former Forest Service chief who now doubles as the company’s vice president and manager of the Baca ranch. “Where do they get their figures? They’re frightened and all they can say is, ‘You’re going to dry up the valley.’ But they don’t have any hard evidence to show that at all.”

Outside analysts say the impact of a Baca development probably lies somewhere between the company’s rosy projections and the doomsaying of opponents.

“You would see some local, small-scale tragedies,” predicted state engineer Jeris Danielson, the chief water official in Colorado government. “But if you back off and look at the valley as a whole, I don’t see (American Water Development) as having a major impact. Clearly, there would be some injuries, but it’s not the death knell for agriculture.”

Even so, Danielson is hardly enthusiastic about the project, which he dismisses as “just one more scam that the San Luis Valley has to put up with.” And he predicted that if American Water Development does get the go-ahead, the company might eventually try to market its water in San Diego, which is desperately searching for new supplies.

Such a diversion, using the Colorado River as a conduit, would actually prove technologically easier and more profitable than building a pipeline to Denver, Danielson said. Company officials say they have no plans to ship water out of Colorado.

Critics see no room for compromise. “They made a totally asinine plan,” said Kopfman, the opposition leader. “Why should we negotiate? It’s like admitting you’re a whore and all you’re going to do is sit down and negotiate the price. . . . If I was to try and negotiate anything, I’d be run out of town on a rail.”

“We’re just not going to allow it,” agreed Bob Robins, who raises cattle and grows potatoes near Antonido. “They might just as well go home and save their money. I live here and my kids live here and we got to make a living. If they take out all the water they say they’re going to take out, there’s a real danger we won’t be able to do that anymore.”

Times researcher Ann Rovin in Denver contributed to this story.