June 05, 2001 11:00 pm

By Gary Fletcher

Observer Staff Writer

JOSEPH After 2 1/2 years, a judges ruling is allowing The Hydrant tavern in Joseph to continue operating, but the bad publicity has cost the owner.

Im really glad the truth finally came out, said Mike Holmes, owner of the tavern that was recently exonerated of allegations made against it.

The issue goes back to Sept. 7, 1999, when the City of Joseph recommended that The Hydrants renewal application with the Oregon Liquor Control Commission be refused because of alleged disturbances.

On May 25, Administrative Law Judge Cheryl Ho, in a 51-page decision, concluded the OLCC failed to prove by a preponderance of evidence that 26 alleged incidents from 1995 to 1999 were related to the sale of liquor at The Hydrant.

Somebody behind the scenes with a lot of clout apparently has something against us and applied the pressure to make all this happen, Holmes said.

This should not have gone this far, gone on this long and cost us so much money. It should have been stopped at the local OLCC level. The judges position shows that the facts didnt support the accusations.

Hos ruling was issued in response to a seven-day trial in November where the OLCC claimed 26 incidents constituted a history of serious and persistent problems.

The judge found only 10 incidents to be supported by any evidence, and only two of them warranted action: a reprimand and a fine for serving a visibly intoxicated person. Holmes thinks thats a pretty good record from when he bought the bar in March 1994. The other 16 allegations had no merit, the judge ruled.

The more serious of the allegations related to the early morning hours of Jan. 19, 1997, when two Hydrant customers were murdered outside the bar.

The judge concluded that The Hydrant bartender acted appropriately by ordering the assailant to leave the premises earlier, then locking the door.

No one was intoxicated or showed signs of visible intoxication, Ho stated. The record showed that both victims had only three beers apiece and Ron Edgeman only had a blood alcohol content of .02 when arrested that night.

Holmes is upset that this information is just now being published.

The Hydrant isnt the reason the double-murder happened. Theres no connection other than the fact that it happened outside there, Holmes said. Yet we have been wrongly blamed.

The judge also dismissed any connection between The Hydrant and Ed Knutsons death in a hospital Sept. 13. 1998, after an alleged fight in Joseph.

The evidence fails to establish how Knutson was injured or who injured him or whether that person was a patron of The Hydrant, the judge said. Holmes said that Knutson was not a patron that night.

Knutsons estranged wife, Mary Knutson, in December 2000 filed a $1 million wrongful death lawsuit against Holmes and the Wallowa County Sheriffs Department.

Like the other allegations, Holmes doesnt see how the suit can go anywhere.

Holmes and his wife have been hurt, he said, by unfounded accusations and outright lies giving the wrong impression of The Hydrant.

Anyone who walks in and sees the glass table tops, stained glass decor and our beautiful beer garden knows we have a nice, clean, comfortable atmosphere where people can relax, Holmes said.

Visitors say we have the best hamburgers in Wallowa County.