Sep 12 - McClatchy-Tribune Business News Formerly Knight Ridder/Tribune Business News - Chris Woodka The Pueblo Chieftain, Colo.

A 25-year legal battle over water rights in the Upper Gunnison basin came to an end onday when the Colorado Supreme Court upheld a Gunnison water court ruling denying a water right for power generation at the proposed Union Park Reservoir.

The court upheld a ruling earlier this year that threw out Natural Energy Resources Co.'s 1982 conditional use application for 325,000 acre-feet of water saying the company was unlikely to ever get federal approval to use nearby Taylor Park Reservoir.

It marks the third time the project has lost in Colorado Supreme Court. Arapahoe County bought the project from NECO in the late 1980s, but returned ownership to NECO after losing the cases. The Supreme Court earlier ruled there were only 20,000 acre-feet of water available for the project, not the 900,000 acre-feet NECO once sought to store.

"We're disappointed. This is harmful to Colorado and the western region. A federal reservoir should be more useful to the citizens of the United States," said Dave Miller, who runs NECO from his home in Palmer Lake. "This sets a dangerous precedent that restricts the use of federal reservoirs for multiple purposes."

By comparison, the mood was jubilant at the Upper Gunnison River Water Conservancy District, which has led opposition to Union Park throughout its history.

"Union Park was a pie-in-the-sky idea for sucker investors," said Dennis Steckel, vice-president of the district. "With the interstate compact and downstream obligations, there is no available water. And with the drought, I doubt even the 20,000 acre-feet (from the earlier Supreme Court decision) are available."

Miller's concept for Union Park went beyond power generation.

The power would be used for pumped-back storage in Union Park, a natural valley above Taylor Park Reservoir. From there, water could be transported by tunnels to any of Colorado's five major river basins, Miller argued.

The project had occasionally gotten support from a few state lawmakers, but not many, as Miller peddled it relentlessly. In recent months, he was still trying to promote it with the state Interbasin Compact Committee, without any apparent success.

"That high-altitude storage is a way to save the farms and green valleys of Colorado and to provide more efficient use of water," Miller insisted on Monday.

The Colorado Supreme Court, in upholding the Gunnison water court decision, said NECO was unlikely to ever obtain federal permission to use Taylor Park Reservoir and its use of it as a forebay or afterbay for power generation would be harmful to its current uses.

Taylor Park Reservoir was completed in 1937 and primarily provides irrigation storage for farmers in the Montrose and Delta areas, through the Gunnison-Uncompahgre Tunnel. It is operated by the Bureau of Reclamation, and also has secondary recreational benefits.

Unlike the two earlier rulings against Arapahoe County, the Colorado Supreme Court said there are no more remaining issues in the case, a decision which apparently has killed the Union Park project.

"We'll decide eventually what we should do," Miller said. "This is a setback and now we have to analyze our options."

Miller's basis for supporting the project stretches back to Reclamation's vision of a Gunnison-Arkansas transmountain project developed in the 1930s, which saw up to 600,000 acre-feet available. In the 1950s, under Colorado River Compact negotiations, Colorado's share of the Gunnison River for future development was seen as 300,000 acre-feet.

Some interpret that as 240,000 acre-feet available for transmountain diversions, after satisfying needs of 60,000 acre-feet for the Upper Gunnison Valley. But Reclamation insists that some is needed to preserve endangered species of fish.

The Upper Gunnison district says all of the water should remain in the valley.

Steckel said he understands Miller's commitment to the project, even though he totally disagrees with its feasibility and design.

"Like so many of us, (Miller) chose to look only at the facts he wanted to," Steckel said.

Colorado Supreme Court negates Gunnison River water plan