The 10th Circuit federal appeals court based in Denver cleared a key obstacle on Friday, April 19, to the construction of a resort village in the Rio Grande National Forest that has been planned for nearly four decades but has run into a steady stream of legal and logistical hurdles.

Conservation groups have repeatedly challenged the proposed Village at Wolf Creek, which envisions more than 1,700 housing and hotel units and 221,000 square feet of commercial space in Mineral County. Twice in recent years, federal judges have overturned the U.S. Forest Service's authorizations to connect the privately owned parcel to existing roadways, amid concerns about the quality of the government's environmental analysis.

However, a three-judge panel for the U.S. Court of Appeals for the 10th Circuit agreed not only that the government's latest process satisfied the legal requirements, but a trial judge incorrectly told the Forest Service to start over in 2022. Specifically, there was a misunderstanding about whether the faulty first choice of swapping federal land for private land necessarily rendered the second option — an access road across federal land — faulty, too.

It did not, wrote Judge Carolyn B. McHugh.

"We first hold that the Agencies approved a significantly different action alternative here in the form of a right-of-way, rather than a land exchange," she explained in the April 18 opinion. "Our independent review of the record indicates that the USFS carefully considered the potential effects of developing the (land) into a resort village."

The plan and the alternatives

The land for the intended village is owned by the Leavell-McCombs Joint Venture, named for the late Charles H. Leavell and industrialist Billy Joe “Red” McCombs. Attorneys for the joint venture did not respond to emails seeking comment on the 10th Circuit's decision.

Mark Pearson of the San Juan Citizens Alliance, one of the environmental groups that challenged the approval of an access road, said the developers still have other steps to complete before they can begin work, and a "concerned local citizenry will be actively engaged."

"It's hard to understand why the Forest Service continues to champion this Texas development project in the heart of Colorado's high country," he said. "The direction must be coming from the highest levels of the Forest Service, but it seems entirely at odds with the Biden administration's stated interest in landscape conservation and protecting wildlife habitat."

In 1986, Leavell-McCombs proposed swapping more than 1,600 acres of its privately owned land in Saguache County for a couple of hundred acres of Forest Service land in the national forest, with the idea of building a resort at the Wolf Creek Ski Area. The subsequent federal litigation did not explain why, but the land exchange resulted in Leavell-McCombs' parcel entirely surrounded by government land with no highway access. Subsequently, the parties attempted for years to surmount the access hurdle. In 2007, the state Court of Appeals ruled Mineral County lacked the authority to approve the resort village without highway access. Three years later, Leavell-McCombs proposed another land swap that would give it a connection to the roadway or, alternatively, asking the government to authorize a 1,600-foot access road across its land.

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The government agreed with the first suggestion and in 2015 issued a decision authorizing the swap. Conservation groups sued and in 2017, then-U.S. District Court Senior Judge Richard P. Matsch threw out the government's analysis, believing there was a "predictive bias" toward facilitating the ski resort.

"The Forest Service entirely failed to consider an important aspect of the problem, offered explanations for its decision that run counter to the evidence before the agency, failed to base its decision on consideration of all relevant factors, and was wrong as a matter of law," he wrote.

The government and Leavell-McCombs appealed to the 10th Circuit, but while the case was pending, they opted to pursue the second option of an access road. The 10th Circuit dismissed the appeal, but simultaneously warned a federal law, the Alaska National Interest Lands Conservation Act, required the Forest Service to give Leavell-McCombs access to its land.

"Whether USFS ultimately completes the land exchange, builds an access road across USFS land, or takes some other alternative, it is not free to 'do nothing at all'; it must take some action," wrote McHugh, the only judge to sit on both appellate panels reviewing the case.

Take two

After a new analysis, the government found the access road itself would not likely jeopardize the threatened Canada lynx — even though the ski village itself would. It approved the access road and once again, the conservation groups challenged the decision.

U.S. District Court Senior Judge Christine M. Arguello, who had taken over the case following Matsch's death, similarly found flaws in the latest round of decision-making. Chiefly, she concluded Matsch's previous decision was the "law of the case," and there was no significant enough change to overcome the original defects Matsch identified.

"For the same reasons the court in the Land Exchange Lawsuit set aside agency action, the law of the case doctrine dictates setting aside agency action in this case as well," Arguello wrote.

The 10th Circuit disagreed with her. McHugh wrote that the government engaged in further analysis on a completely different alternative, meaning Matsch's original order could not be the "law of the case."

The panel concluded the government "extensively analyzed the environmental impacts" of the development and rejected the conservation groups' allegations of impropriety.

Judge Allison H. Eid wrote separately to voice her curiosity about a potentially important phrase in the Alaska National Interest Lands Conservation Act, which requires the federal government to allow access to privately owned land "notwithstanding any other provision of law." Because the parties did not raise that caveat, she suggested a future case may need to address whether the government has broader authority to grant access than the parties assumed.

The case is Rocky Mountain Wild et al. v. Dallas et al.