On March 2, Colorado Ground Water Commission hearing officer Jody Grantham heard arguments for and against Cherokee Metropolitan District’s application for a determination of Denver Basin water rights in the Ellicott area, just southeast of Falcon.The New Falcon Herald has previously reported on the developments that led to the March 2 hearing. The following background information has been compiled from NFH articles published Oct. 6, 2007; Nov. 3, 2007; and Feb. 16, 2008.Cherokee, which provides water to the Woodmen Hills Metropolitan District, applied for the determination in 2005 based on water leases signed by several Ellicott landowners in 1954.Cherokee claims the leases cover all water under the lease area, while the property owners say the leases only pertain to alluvial water, which is water near the surface.The issue is complicated because many of the people who signed the leases have passed away. Ed Hayes, founder of the Cimarron Corp., which is now the Cherokee Metropolitan District, also passed away (according to a statement by sod farmer Wayne Booker).Some of the property owners sold their land but retained ownership of the water and continue to receive royalty payments.Many new landowners did not know about the leases until August 2007, when they received notices from the Colorado Division of Water Resources that Cherokee had applied for a determination of the Denver Basin water under their land.A year ago, attorneys for landowners objecting to Cherokee’s application moved the case to the court of Judge Larry Schwartz in District 4, using the argument that the validity of the leases needed to be determined by a judge.At the March 2 hearing, Wayne Booker testified that his father-in-law, Louis Guyer, signed a Cherokee lease in 1954 and drilled 10 alluvial wells. Booker eventually inherited the Guyer land and also signed Cherokee leases for other land he owns.Booker said in 1961, Hayes encouraged him and Guyer to have the alluvial wells adjudicated in Pueblo Water Court.”Mr. Hayes said we had to do that to protect our rights,” Booker said. “We never heard of Denver Basin water back then.”The Pueblo Water Court issued the adjudication in 1961. In 1962, the Guyers and Bookers signed supplemental lease agreements with Cimarron Corp. that refer to “the adjudicated water.”Booker said they signed the supplemental agreements so they could start selling the water to the Cimarron Corp. for use in Colorado Springs.In the 1980s, Booker said he learned about Denver Basin water and applied for an adjudication of the Denver Basin water under his land in 1986.”I knew I owned the water,” he said. “After we got going, we didn’t think we could afford it. It would cost a lot of money to drill.” So Booker withdrew his application.Kip Peterson, Cherokee’s general manager since December 2005, testified that Cherokee didn’t drill any Denver Basin wells under the leased land because his predecessor, Stuart Loosely, felt they would be too costly to drill and would result in water of poorer quality than alluvial water.When asked why Cherokee didn’t object to the drilling of a Denver Basin well at the Colorado Springs East Airport – land also subject to a Cherokee lease, Peterson said, “I think it was lax management and poor oversight by legal counsel.” He also said that well permit applications aren’t published.Peterson said that since the leases were signed, Cimarron Corp. and Cherokee have kept the leases in force by paying royalty payments to the lessors every year, for a total of $1.5 million dollars.Attorney Matt Spengler questioned Peterson about a report Cherokee wrote in 2000 showing that future water demand would increase by nearly 100 percent. The report discusses Cherokee’s options for obtaining additional water but does not mention the Denver Basin water as an option under the leases.”I don’t know why they wouldn’t have addressed it,” Peterson said.Jim Kulickia, attorney for Cherokee, said that when the Cimarron Corp. was a publicly traded company, the corporation filed reports with the Security and Exchange Commission listing Denver Basin water under the leases as an asset.The hearing ended March 3. Both sides elected to make their closing arguments in writing.Grantham said the matter is complicated and he is unlikely to render a decision soon.Marilan Luttrell owns land above the Denver Basin water claimed by a Cherokee lease and objects to Cherokee’s application. Luttrell said she expects the decision to be appealed, regardless of how Grantham decides.
