John Colson

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February 27, 2013
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CMC says SourceGas lease was never a legally valid document

GLENWOOD SPRINGS, Colorado - The battle continued this week over whether or not a lease for five acres of Colorado Mountain College (CMC) property was ever actually a valid document.

SourceGas, a natural gas delivery company that wants the lease enforced, maintains that the lease was valid because the CMC board of trustees knew about it and did nothing to prevent it from being signed by CMC officials.

But in a motion filed on Feb. 25, CMC's attorneys argued that the lease was never valid because the CMC board did not make a formal "finding" that the lease was acceptable, which the college's attorneys say is required by state law.

The issue is whether or not SourceGas can build a compressor station attached to a natural gas delivery line that crosses CMC's property on the way from the city of Rifle to Avon in Eagle County.

The compressor is needed, according to SourceGas, to maintain sufficient pressure for the gas to make it to Eagle County customers.

SourceGas thought it had a valid 20-year lease for the property, signed in 2011 by CMC official Steve Boyd.

But the CMC trustees, in May 2012, formally declined to recognize the lease after the entire deal was condemned by neighboring ranchers, students and some faculty members at the college.

SourceGas and its partner, Rocky Mountain Natural Gas, filed suit later that same month.

The company lost the first round when District Judge James Boyd ruled last August that the courts could not force the six-county college district to honor the lease, because the district is protected from such actions by its status as a quasi-governmental entity.

The two sides now are striving to convince District Judge James Boyd to rule either that the lease is void, as CMC wishes, or that is valid, which is the position of SourceGas and Rocky Mountain Natural Gas.

If the lease is ruled valid, the company could then petition for damages to recover money spent in engineering and planning for the compressor station.

But CMC argues that the company is not eligible for such damages, because it is the company's responsibility to be sure its dealings with governmental entities comply with applicable laws.

By failing to ensure that the CMC trustees made a formal finding in favor of the lease, the college's argument goes, the company did not perform its due diligence and is entitled to no damages.

SourceGas has argued that the board knew of the lease and its purpose as early as May 2011, when former College President Stan Jensen told the trustees about it at a board retreat, Jensen testified in a deposition.

This, SourceGas has maintained, amounted to the trustees' making the statutorily required finding.

But in its countermotion this week, CMC contended that "The CMC Board of Trustees made no findings regarding the lease ... because the only time the matter was brought to the board's attention was ... in May 2011 before a draft of the lease even existed."

The motion by CMC asks that Judge Boyd grant a request by the college to dismiss the SourceGas claims and award the college all costs and attorneys' fees incurred in the case.

The case currently is set for trial starting June 26.">class="NormalParagraphStyle">

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The Post Independent Updated Feb 27, 2013 01:10AM Published Feb 27, 2013 01:09AM Copyright 2013 The Post Independent. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.