Days ahead of a scheduled courtroom clash between Denver Water and Boulder County, the dispute over the enlargement of Gross Reservoir appeared to fizzle on Tuesday amid a flurry of new developments, including the county’s begrudging approval of an agreement between the parties.

Earlier in the day, U.S. District Court Senior Judge R. Brooke Jackson, who was scheduled to preside over a hearing in the case on Thursday, abruptly recused himself and caused the cancelation of arguments scheduled for Nov. 4. The county’s Board of County Commissioners was scheduled to consider a $10 million settlement agreement with Denver Water during a public meeting that same day, and spent more than an hour behind closed doors receiving legal advice.

But commissioners ultimately heard an assessment from their attorneys that despite the change of circumstances, the time to approve a settlement and receive money to offset the impacts of construction was now.

“We even asked Denver Water, ‘Why can’t we have just one additional week on this so we can have some more discussion before the board reaches a decision?’” said Deputy County Attorney David Hughes. “Denver Water made it very clear that this settlement offer will be off the table should the board decide to even ask for additional time.”

“Our attorneys have advised us that our case is extremely weak,” acknowledged Commissioner Claire Levy. “The question for us at this point is whether to reject this settlement and continue to litigate with very little chance of success, or push for the best settlement offer we could get.”

The Colorado Sun reported that the settlement will mandate that Boulder County process all permits for the project. In exchange, the jurisdiction will receive $2.5 million to mitigate construction impacts for those directly affected by construction, $5.1 million to acquire new open space, $1.5 million to mitigate greenhouse gas emissions and a transfer of 70 acres to add to the county’s open space.

Hughes indicated on Tuesday that Denver Water staff was amenable to an additional $2.5 million for mitigation ahead of Denver Water’s Wednesday board meeting. The board approved the settlement.

“We appreciate the County’s effort to work through the issues and come to an agreement that will help ease concerns about the project’s impact on nearby residents, bring benefits to Boulder County residents through enhancements to its trails and open spaces and allow Denver Water to proceed on an undertaking critical to the water security of 1.5 million people in the Denver region,” said Denver Water CEO/Manager Jim Lochhead in a statement Wednesday. “Denver Water and Boulder County have shared values. We both believe deeply in the need to address climate change, conserve our water resources and protect the region’s precious environment. This agreement reflects those values through dedicated funding and actions on the ground.”

The expansion of the reservoir on federal land in Boulder County, nearly two decades in planning, is meant to provide additional water storage, particularly during droughts. Denver Water, which serves nearly one-quarter of the state’s residents, plans to raise by 131 feet the height of the 1954 facility. The result would be the ability to serve an estimated 72,000 households annually.

Last July, the Federal Energy Regulatory Commission, which granted the hydropower license for the reservoir and dam, gave Denver Water the go-ahead for the project. In court filings, Denver Water anticipated construction to last between 2022 and 2027 based on deadlines in the FERC approval.

“Denver Water has attempted to be a good citizen of the County by making good-faith efforts to obtain County permits that would ordinarily be required for such a water development project,” the utility wrote. But Boulder County, it asserted, has used its land use authority in a way that “jeopardized Denver Water’s ability to timely commence the work necessary to comply with FERC’s Order.”

Denver Water filed suit in July of this year, arguing that the county’s permitting process is preempted by FERC’s authorization of the project. The utility asked for an injunction to bar Boulder County from flexing its authority to halt progress. Boulder County responded by requesting dismissal of the lawsuit on procedural grounds.

“A Boulder District Court Judge has determined that Denver Water is required to go through the county’s process and we have said all along that because of the substantial impacts to Boulder County residents from any expansion of the dam, we should have local review authority,” the county said in a statement following FERC’s 2020 approval.

Jackson, the federal judge, threw a wrench into the proceedings when he notified the parties on Nov. 1 that he may have a financial interest in the case because his wife owned a “Denver City and County Board of Water Bond.” Jackson solicited the input of both parties as to whether the water bond constituted a conflict of interest for which he should recuse himself.

Save the Colorado and The Environmental Group, both of which oppose the project and intervened in the lawsuit, filed a response advocating for Jackson’s recusal. The organizations wrote that the judge’s recusal “must occur as expeditiously as possible to provide the parties with more time to attempt to reach a reasonable settlement in this matter.”

Jackson subsequently issued a notice that he would drop off of the case, while arguing the notion that his wife’s ownership of the bond “might have influenced my prior handling of this case in any way is absolutely false. Even had I known of her bond at the time, it would never have influenced my handling of the case in any way.”

Jackson was one of the two Colorado judges named in a major Wall Street Journal report from September, which found 131 federal judges nationwide who ended up presiding over cases in which they had an undeclared financial stake in one of the parties. Jackson acknowledged his mistake, and explained that he simply had not paid attention to his investments, as his wife oversaw their financial disclosures.

Shortly after the judge issued his decision, Denver Water indicated it did not believe Jackson had an obligation to recuse because the value of a water bond would remain unaffected whether or not the Gross Reservoir project proceeded. Denver Water asked Jackson to reconsider his decision to remove himself from the case.

The lawsuit was ultimately reassigned to U.S. District Court Judge Daniel D. Domenico and U.S. Magistrate Judge Kristen L. Mix.

At the Tuesday public meeting, Hughes advised commissioners that Boulder County would face long odds against Denver Water’s argument that federal preemption should override the county — regardless of who the judge is.

“We don’t have the ability to stop the dam,” said Commissioner Marta Loachamin, who added that Boulder County would not have the opportunity to receive the same concessions through a judge that it was receiving through the settlement.

Earlier this year, another federal judge in Colorado dismissed a separate lawsuit filed by several environmental organizations arguing that Denver Water’s projections for future water demand were “vastly overstated,” and that the construction would create health and safety hazards.

That decision is on appeal to the U.S. Court of Appeals for the 10th Circuit.