Judge: U.S. lawsuit seeking $25M against Durango railroad over 2018 wildfire should proceed

In this June 13, 2018 file photo, smoke rises from the 416 Fire near Durango, Colo., as the sun sets. The U.S. Attorney’s Office filed a lawsuit on Tuesday, July 2, 2019, alleging that the fire was sparked by the Durango & Silverton Narrow Gauge Railroad. The fire burned about 85 square miles making it the sixth largest in state history. (Jerry McBride/The Durango Herald via AP, File)

DURANGO (AP) — In what could be a major blow to the Durango & Silverton Narrow Gauge Railroad, a federal judge has recommended that a district court throw out the train’s motion to dismiss a lawsuit in which the U.S. government is seeking $25 million for fighting the 416 Fire.

In July, the U.S. government named the D&SNG as the cause of the 416 Fire, which started along the train’s tracks north of Durango in summer 2018 and went on to burn more than 54,000 acres of mostly national forest lands in the Hermosa Creek watershed.

After eyewitness accounts and months of speculation, federal investigators determined a cinder emitted from a smokestack from a D&SNG coal-burning locomotive, which was running at a time of extreme drought in Southwest Colorado, sparked the fire.

At the same time, U.S. officials said the D&SNG denied starting the fire, prompting a lawsuit that seeks $25 million from the railroad for damages and fire-suppression costs.

In September, the D&SNG filed a motion to dismiss the lawsuit, saying there is no federal law that allows claims to recover fire suppression costs, and the only Colorado law on the issue allows for recovering actual damages from a fire on property – but not firefighting costs.

The Durango Herald reports that the judge overseeing the case – U.S. District Court Judge Robert E. Blackburn – asked for a recommendation from U.S. Magistrate Judge N. Reid Neureiter on interpreting the law and on whether to dismiss the case.

On Friday, Neureiter filed his recommendation, which supported the U.S. government.

“First, I reject the (D&SNG’s) argument that, as a public entity providing a civic service by fighting a forest fire, the United States is not entitled to recover fire suppression costs,” he wrote.

“The United States was protecting its own property, the National Forest, and acting like a property owner in fighting and attempting to suppress the fire … the United States is entitled to whatever protection is afforded to other landowners in Colorado – including entitlement to recovery of fire suppression costs.”

Attorneys for both the D&SNG and the U.S. government declined to comment for this story. Both have the opportunity to challenge Neureiter’s recommendation. It’s unclear when Judge Blackburn will make an actual final decision.

Neureiter, however, said previous decisions by the 10th Circuit Court, which Colorado falls under, have already made clear an entity can sue to recover firefighting costs.

As to the D&SNG’s claim that an entity can recoup costs only for damaged property, but not firefighting costs, Neureiter wrote, “The 10th Circuit drew no distinction between fire damage to physical property and the expenses incurred in fighting the fire.”

“I conclude that fire suppression costs are damages that may be recovered … because they are directly related to, inextricably intertwined with, and indeed an integral element of damages to property by fires.”

Neureiter, in his recommendation, shot down each of the D&SNG’s reasons why the case should be dismissed.

The D&SNG, for instance, said allowing the U.S. government’s lawsuit to proceed would open the door to unlimited claims for damages from fires, like “a person hundreds of miles from a fire who suffers health effects due to smoke.”

“(The D&SNG’s) depiction is an exaggeration,” Neureiter wrote. “It is nonsensical to say that the law cannot compensate a plaintiff who has expended money on fire suppression to protect property out of fear that someone a hundred miles away might later complain about respiratory problems.”

And, if the D&SNG’s interpretation of the law on the matter were true, it “would lead to perverse incentives,” he wrote, because a property owner, if confronted by a fire started by a train, would have little economic incentive to extinguish the fire because suppression costs are not recoverable.

“By contrast, allowing property to be completely consumed would ensure full recovery from the railroad for the value of the burned property. Interpreting a statute that is intended to protect property from fire to instead create incentives to allow property to burn makes little sense.”

Ultimately, it appears Neureiter found little merit in the D&SNG’s attempt to throw out the case.

“The entire purpose of this strict liability statute was to shift the unavoidable cost of fires started by coal-burning trains to the railroads who run the trains,” he wrote. “It would be nonsensical … to not include the expense of fire suppression as part of the damages for which a railroad is strictly liable.”

It’s unclear how Neureiter’s recommendation may affect a lawsuit filed in September 2018 by more than 50 residents and business owners against the D&SNG, which accuses the train of starting the fire and looks for compensation for damages suffered. Attorneys for that case did not return requests seeking comment.