MINUTES OF THE ASSEMBLY COMMITTEE ON NATURAL RESOURCES, AGRICULTURE AND MINING Sixty-eighth Session February 20, 1995 The Committee on Natural Resources, Agriculture and Mining was called to order at 1:15 p.m., on Monday, February 20, 1995, Chairman Marcia de Braga presiding in Room 321 of the Legislative Building, Carson City, Nevada. Exhibit A is the Agenda. Exhibit B is the Attendance Roster. COMMITTEE MEMBERS PRESENT: Mr. John C. Carpenter, Chairman Mrs. Marcia de Braga, Chairman Mr. Max Bennett, Vice Chairman Mrs. Genie Ohrenschall, Vice Chairman Mr. Douglas A. Bache Mr. Thomas A. Fettic Mr. David E. Humke Mr. P.M. Roy Neighbors Mr. Brian Sandoval Mrs. Gene Wines Segerblom COMMITTEE MEMBERS ABSENT: None GUEST LEGISLATORS PRESENT: None STAFF MEMBERS PRESENT: David S. Ziegler, Senior Research Analyst OTHERS PRESENT: Joe Johnson, Sierra Club. Chairman de Braga called the meeting to order and roll was taken. A presentation by Colorado River Commission personnel on issues effecting Nevada was lead by Janet Rogers, Chairman of the Commission. Ms. Rogers introduced herself and staff members, Douglas Beatty, Acting Deputy Director and Chief Accountant; Gerald Edwards, Chief Engineer; and David Luttrell, Consultant, Resource Planning, Inc., representing CRC Power Issues. She informed the committee the new CRC was reconstituted by the 1993 Legislative Session. Three members of the Commission plus the chairman were appointed by the Governor and three members were appointed from the Southern Nevada Water Authority. The responsibilities of the Commission are threefold, encompassing the areas of water, power, and to a lesser degree land. It has been the statutory mandate of CRC to manage and hold in trust for the people of the state of Nevada the Colorado River and tributaries. The Commission does not deal with ground water or intrust state transfers by statutory mandate. CRC must deal with the "Law of the River" and the other six Colorado River basin states. Ms. Rogers described the Colorado River as being 14,000 miles long and a water shed area of 246 thousand square feet. The river has served a population for both municipal and industrial users of drinking water for 25 million people and 1.8 million acres of irrigation. Ms. Rogers stated, at the turn of the century when people eyed the development of the Southwest they looked at the Colorado River as their life blood. A series of arguments and compromise regarding the use of the Colorado River started at the turn of the century and continued to the present. In 1922 the first document was passed with the Colorado River Compact. Many meetings were held with the states to divide the water, but a compromise could not be made. They did decide there would be an upper Colorado River Basin and a lower Colorado River Basin and the water could be divided up between themselves. Seven and a half million acre feet were given to the upper basin and 7 « million acre feet to the lower basin plus 1 « million acre feet to Mexico where the river dumps out. In 1928 the upper basin had agreed to form an Upper Basin Commission and the water was divided by percentages. Chairman Rogers informed the committee, the lower basin continued to argue until the Federal Government in 1928 said if Hoover Dam was to be built the lower basin was to come to an agreement or the Federal Government would divide the water, and they did. The population and the number of irrigatable acres of farmland in 1928 were the criteria used. California received 4.4 million acre feet, Arizona 2.8 million acre feet and Nevada received 300 thousand acre feet. Arizona sued California in a lawsuit which lasted over 20 years and went to the United States Supreme Court. Arizona vs California was the last document which created the "Law of the River" and decided tributary water would not count against the states' allocation of water. It was also decided the Secretary of the Interior would be the "Law of the River" for the lower basin and the interpretation of, "you can't wheel water." The three documents which had become the "Law of the River" supposedly said states would be limited to the allocations received in 1928, water could not be marketed if the Colorado River would carry the water to a state, and if water would be bought it would be deducted from the 300 thousand acre feet entitlement. The "Law of the River" was the first legislative mandate to be dealt with by the CRC, said Ms. Rogers. The commission felt it needed to be flexible with the interpretation of the "Law of the River" and allow wheeling and marketing. The first step was to identify the opportunities offered to Nevada to receive supplemental water. Ms. Rogers said a Nevada Water Summit was held November 4, 1993 and referred the committee to (Exhibit C) which gave information on the proposals. Mr. Carpenter questioned where Nevada groundwater would come from and if it would be imported from rural Nevada. Ms. Rogers referred to (Exhibit C) Water Categories/Proposals Matrix. Chairman de Braga asked what kind of research or documentation had been done verifying amounts and quantities of water for each proposal. Ms. Rogers remarked the proposals were to identify the universe and not to develop any proposal at this time. The proposal was taken at face value and whatever the proponent told CRC was placed in the proposal. Ms. Rogers continued with her background information and informed the committee of what was learned from the Nevada Water Summit. Management and conservation were essential for the amount of water to be saved for Nevada as well as other states knowing Nevada was serious about conservation. The out of state efforts of the commission needed to be concentrated on the "Lower Basin." She informed the committee the Commission was concentrating on three forms. The three forms would be the "Lower Basin," sister states, Arizona and California to create flexibility in the "Law of the River." The flexibility was needed for any unused entitlement water the states might have and could be persuaded to share with Nevada. The second form stated Ms. Rogers would be the seven, ten process. All seven Colorado River basin states and ten Colorado Indian Tribes. The final or ultimate solution would be basin wide, said Ms. Rogers. Colorado River tributary water was also being dealt with by the CRC, primarily the Virgin River. The Virgin River runs through Utah touching on Arizona and eventually into Nevada. Colorado River Commission proposed a sharing of the Spring thaw water, 100 to 125 thousand acre feet a year, to be stored in the Colorado River and used as needed. She stated each proposal needed marketing and wheeling and felt the "Law of the River" did not need to be broken or an extended lawsuit required. Meetings with the other states have been held consistently and a technical committee had been appointed to speak of specifics. Mrs. Ohrenschall asked if Ms. Rogers would clarify the concept of "wheeling" for her. To "wheel" would be to allow the Colorado River to carry her own water to a destination. An example was given by Ms. Rogers which stated if Nevada bought water from Colorado, which was part of Colorado's entitlement, and let the water flow in the river without encumbrance, it would be "wheeling." She also stated any water used by the Federal Government or any other source would come off Nevada's allocation of 300 thousand acre feet. Mr. Fettic questioned if water rights were bought on the Green River, a tributary of the Colorado, the Colorado River could not be used as a pipeline. A pipeline would have to built over land to transport the water. Ms. Rogers agreed with the analogy but would try to convince the sister states to find flexibility in the "Law of the River." She felt CRC had convinced the Department of the Interior of the flexibility and the Bureau of Reclamation had come forward and informed Arizona and California to deal with Nevada or they would interpret the "Law of the River." Mr. Bennett asked how did the conservation and reuse plan fit into Nevada's allotment from the Colorado River. He stated 471 thousand acre feet were treated and returned to the Colorado River. Mexico received 1.5 million acre feet of water by allocation and asked if the acre feet were all Nevada released to Mexico each year. Are all of the allocations used by the states each year. Ms. Rogers said Nevada would be the only state to effectively make use of reverse flow credit because of location. The treated water returned as effluent and returned to the lake would be measured and Nevada would be given credit for the return flow. Nevada's return flow measures approximately 60 percent of actual diversions. The acre feet of allocation would go from 300 thousand acre feet to 470 thousand acre feet. The Mexican delivery becomes salty and agreements had been made for desalinization and eliminate dumping salty water into the Colorado. She stated the CRC had become good friends with Mexico until the political upheaval. Mrs. Segerblom asked if the Southern Nevada Water Authority had given up "wheeling" from the Virgin River. Ms. Rogers said CRC had another proposal likely to produce an immediate answer. Mr. Neighbors inquired if the 300 thousand acre feet of water was being used. Mr. Gerald Edwards, Chief Engineer, Colorado River Commission addressed Mr. Neighbors' question. He said CRC had been diverting on a state basis 330 thousand acre feet. Nevada had consumptively used 220 to 230 thousand acre feet and had not fully utilized Nevada's consumptive use apportionment at this time. Mr. Bennett asked if "thou shalt not wheel" had been the problem which caused consideration of a desalinization plant for the Virgin River water, if Nevada could use it. Mr. Edwards said the problem would be to move the water over land from the Virgin River to the Las Vegas Valley. It would need to be desalted or commingled with another water supply. Would credit be given for the acre feet of water Nevada did not use in a year, asked Ms. Segerblom. The answer would be no. Mr. Neighbors stated Amargosa Resources came into the district and ended up with 28 thousand acre feet of water on forfeiture. He asked if Clark County wanted the water. Ms. Rogers said CRC had been inundated with people who wanted to sell water. Colorado River Commission asked for anyone with an interest in supplying water to Southern Nevada to send in their proposal and a public hearing would be held. Chairman de Braga inquired if the proposals being considered had private property rights connected with the proposals, If so, where would the funding come from and how would the price be established for the water rights. Ms. Rogers said the proposals being concentrated on were state to state marketing. Private water rights at the moment were not being considered without regard for the state of origin. Ms. de Braga said she was more interested in the reverse, people being forced to give up water rights who did not want to. She asked if anyone in Southern Nevada ever talks about slowing growth or curtailing growth in regard to water problems. Ms. Rogers felt property rights cannot be forced away from owners. She said the issue of growth and water for growth in Southern Nevada was not the mandate the Legislature gave to the CRC. The Colorado river, tributaries, the "Law of the River", and sisters on the Colorado River were the mandate given to the Commission, not to divide water in Nevada or deal with groundwater. Mr. Fettic questioned Ms. Rogers on the matrix concerning ground water. He wanted to know if it included all the underground groundwater. Ms. Rogers said it includes the proposals which fit into the Nevada groundwater category proposed at the Southern Nevada Water Summit. She explained the criteria for the analysis of the matrix on groundwater in Nevada. Mr. Gerald L. Edwards, Chief Engineer, Colorado River Commission, presented information to the committee on the involvement of CRC on the technical committee. The Southern Nevada water purveyors informed the committee additional supplies would be needed within 15 to 20 years. Changing the "Law of the River" might happen in the future but not right away. The CRC has been trying to arrive at a negotiated settlement which would be suitable for all the states. A set of principles had to be developed to work within to address the needs of the three lower basin states. Ideas needed to be laid on the table, and he was encouraged to have them come forward. Nevada needs enough water supply, a mechanism or institution to promote longevity to any process established today, and a reasonably priced water supply. He said, the technical committee had identified opportunities for modeling the river to incorporate some of the ideas and see if they would fit. A commitment had been made for a reasonable solution which all three states, the lower basin Colorado River Indian Tribes, and the Bureau of Reclamation or the Secretary of Interior can subscribe to. Mr. Edwards advised the committee progress reports could be viewed in the manual (Exhibit C), which would show a positive effort. Mrs. Segerblom asked if the Simple Arizona Project was too expensive for them to use, and did Arizona not want to sell it to Nevada. Mr. Edwards said Arizona was willing to "forebear" the use of a portion of the 2.8 million acre feet water supply. He said through "forbearance" it could be identified as water which was not used and could be allocated for use by another state. Mr. Edwards agreed the way it was done would not be called "Wheeling." Mr. Carpenter referred to the purchase of Utah water and was confused by the term "Wheeling." Ms. Rogers said Utah entails their upper basin Colorado River water which they would like to sell to Nevada for 200 dollars an acre foot. She suggested the CRC was grateful for the offer from Utah. The Utah offer would be an annual payment of 20 million dollars. The Utah offer was significant but would require "Wheeling." Ms. Rogers stated we needed a three part answer to the water problems. Nevada needed to find a very cheap source of 100 thousand acre feet of water. An ongoing dialog formalized to the greatest extent possible would be needed. Basin wide marketing for water available in other states would be needed. Mr. Carpenter asked what the availability was of obtaining cheap water from Arizona. Ms. Rogers felt it was not a sure thing until the first gallon was pumped. He also asked where rural Nevada fit into the plan of finding water. She said she could not speak for the Southern Nevada Water Authority, but did not see it as part of the CRC mission. Mrs. Ohrenschall asked for an explanation of "forbearance." Mr. Edwards stated what Arizona was offering at the technical committee level was to forego the use of part of their water supply. The water would be identified by the Secretary of Interior as an unused apportionment on the Colorado River. The "Law of the River" provides, unused apportionments could be utilized by other states. An exception would be made in this case. Water would be used by another state but would be earmarked for use by another state, attesting the flow of water would be from Arizona to Nevada. Mrs. Ohrenschall asked if it would not be deducted from Nevada's normal allotment. Mr. Edwards said no, any unused apportionments could be used. California has been using Nevada's unused apportionments. Mrs. Segerblom asked how long the water would be guaranteed to Nevada. Mr. Edwards said the guarantee would be for 70 to 90 years. Mr. Sandoval said, because of the amounts of water California and Arizona had been allocated what did they have to gain by negotiating with Nevada. Ms. Rogers stated California had to keep their aqueducts full and were using 5.8 million acre feet. Arizona would gain by paying for the Central Arizona Project which their farmers were not going to do. Arizona would be the first entitlement shorted in times of a shortage and were concerned about another prolonged drought and need for help dealing with shortages and surpluses. Mr. Sandoval asked what incentives do the other states have to deal in good faith. Ms. Rogers said the incentives other states have were to keep state water law primacy and do not want interference by the Federal Government. Mr. Sandoval asked if they would be stringing the CRC along until their bluff was called. Ms. Rogers felt at this time Arizona and California were seriously considering the issue. Mrs. de Braga asked if some of the proposals would not help the lower states with banking and upstream storage possibilities. Mr. Edwards agreed and talked of the importance of the committees represented on the technical committee. Mrs. Ohrenschall asked what California would have to gain by coming to the table to talk. Ms. Rogers said California was using 5.8 million acre feet of water and had agreed to reduce their usage to 4.4 million acre feet. California also needed a surplus shortage sharing agreement which would be to everyone's advantage. Mrs. Ohrenschall questioned if California needed water also. Mr. Edwards stated California was using 5.3 million acre feet, about 800 thousand acre feet beyond their apportionment at 25 cents an acre foot. The challenge of the "Endangered Species Act" was discussed by Ms. Rogers. She said the U.S. Bureau of Reclamation was beginning a biological assessment of all the lower Colorado River regarding the operations and facilities. The U.S. Bureau of Reclamation had identified 47 candidate species for possible endangerment. She stated there were two ways to deal with the situation. The first being to ignore the problem and hope the Fish and Wildlife Service and the Federal Government and the Bureau of Reclamation would work it out. The Fish and Wildlife Service and the Bureau of Reclamation would issue a reasonable and prudent alternatives list. The bureaus would dictate to the states how they would recover the critters and flora. The second alternative would be for the states to participate in consultation and develop their own Habitat Conservation Plan. Regardless of which plan would be used there would be changes in the lower Colorado River which would ultimately effect our water and power delivery to the CRC to the people of Nevada. The Fish and Wildlife Services' goal would be species conservation. Recovery must be the main concern of any plan for conservation not simply status quo. By the time the water flows to Nevada there would not be critters to recover. Mr. Carpenter asked what the state could do to help out. Ms. Rogers said they should first become knowledgeable about the issues CRC would be facing. Secondly, meet with the other states via the steering committee to put together the habitat conservation plan. The Federal Government would do all the planning and negotiating without consultation with the states and then present a recovery action plan. The second way would be for the states to do a consultation, but the government and the states do not communicate. Ms. Rogers felt the best way would be for the CRC, U.S. Bureau of Reclamation and Fish and Wildlife Services to work together and balance the needs. Mr. Carpenter asked if CRC would come up with a plan and tell the Federal Government Nevada would act on the plan, don't interfere. He felt the state needed to take a very strong stand. Ms. Rogers introduced David Luttrell, Consultant, representing CRC power issues. She said part of the mandate of the CRC would be to manage and hold in trust the power generated off the projects on the Colorado River and its tributaries. Those projects include Hoover Dam, Parker Dam, Davis Dam, and Glenn Canyon Dam. Hoover Dam alone in 1991 generated 11.7 trillion kilowatt hours of power. Mr. David Luttrell said the issue he wished to discuss was the sale of federal power marketing facilities by the U.S. Congress. The Colorado River Commission purchased the hydroelectric power for the state of Nevada. CRC was the states' agency which receives, distributes and protects the states allocation of hydro- electric power, provided to us under federal law, regulations and contracts. He stated approximately 8 percent of Nevada's hydroelectric power comes from the Glenn Canyon Dam. Power purchased from Hoover Dam equals 74 percent and 18 percent of the hydroelectric power for Nevada comes from Davis Dam and Parker Dam. The Federal Interconnective Power System moves power to customers in Nevada and was owned by the Federal Government. Western Area Power Administration was formed in 1977 under the Department of Energy Organization Act. Their purpose was to market federal power produced at the hydroelectric dams, set rates for the power, and have ownership of the transmission lines to the centers throughout the region. Mr. Luttrell referred the committee to the map in (Exhibit C). He explained Congress had introduced a bill which was included in the President's budget to sell the power marketing administration, including the one which served Nevada. The reason for selling would be to reduce federal employment by 4,000 jobs and reduce the federal deficit. The Federal Government by selling the marketing facilities would gain 3.6 billion dollars, which could be applied to the federal deficit. If the facilities were sold it would be an impact on the state of Nevada. Nevada needs the transmission lines to get power from remote facilities into Southern Nevada. Profit making organizations could purchase the facilities and raise the cost of power to the rural areas of Nevada. The state of Nevada needed to be prepared to respond to the change. CRC has been working with other organizations for the best way to respond. The interest to this committee would be if the facilities were sold and if CRC on behalf of the state of Nevada was to be a player in the purchase, CRC would need to come before this committee and others for bonding authority. Mr. Luttrell said he had wanted to give the committee some history of the problem. CRC could be back after March 16 with a detailed financial proposal. Mrs. Sergerblom stated the power user would be the one paying for the facilities. If a profit making organization bought the facilities Nevada would see a great increase in cost. CRC has been working with others to oppose the sale of the facilities. If opposition to the sale of the facilities failed, the alternative would be to position into the law the first right of refusal to buy the facilities by people like the CRC. Ms. Rogers said they were concerned about capacity and particularly costs and rates. After being lethargic regarding the lack of say so on how Hoover Dam was run, hard working negotiations resulted in an Implementation Agreement due to Mr. Luttrell's efforts. The Implementation Agreement provided for four things, one it provided for a coordinating committee which would act as a board of directors and meet at least annually to set policy for the dam. The second area provided for an engineering and operations committee. Thirdly,a ten year plan would be implemented for spending which would be updated before the funds are spent. Nevada would be the chief contracting officer for an audit and Mr. Luttrell would be the lead in the audit. The Ffederal Government had proposed a rate hike on Hoover at the rate of 1million 300 thousand dollars for this year. CRC said, we do not need the rate hike if the properties were managed. The Federal Government was convinced and the rate hike was not put into effect. Ms. Rogers remarked, land takes less of the CRC's time and interest. A park was being planned outside Boulder City on 170 acres for recreation and also 92 acres outside of Laughlin to integrate into their town plan. Mr. Doug Beatty, Chief Accountant and Acting Deputy Director was introduced. He referred the committee to (Exhibit C) and the organization charts. He said the old organizational chart was simplistic, bureaucratic and inadequate for the new mandate of the Colorado River Commission. Mr. Beatty said they were in the process of a internal organization which was not complete. Within each of the functional divisions there would be an operations segment and engineering section. The environmental department would not answer to either water or power but directly to the director and then the Commission. He reiterated Ms. Rogers statement regarding the accomplishment of the 22 positions and the amount of work generated. Ms. Rogers said the CRC would like to be proactive and take seriously the mandate given to protect and hold in trust the waters and power of the Colorado River and tributaries. Major projects in progress were to find new sources of water, take as much control as possible of the hydro electric plants on the water systems, deal with the future of the "Law of the River", deal with environmental concerns and the future of the power marketing administrations. She said CRC was very proud of the past and enthusiastic regarding the future. Ms. Rogers introduced Bob Crowell a member of the Commission who was in attendance. Chairman de Braga thanked the presenters from the Colorado River Commission for their presentation. The chairman read a summary of a Bill Draft Request for committee introduction. ASSEMBLYMAN BENNETT MOVED TO INTRODUCE BILL DRAFT REQUEST 45-554. ASSEMBLYMAN CARPENTER SECONDED THE MOTION. THE MOTION PASSED UNANIMOUSLY BY ALL PRESENT. Chairman de Braga informed the committee a Bill Draft Request was being prepared for a one time "Wild Turkey Hunt" in Southern Nevada and the proceeds will go for replenishing wild turkeys throughout the state. She also reminded the committee of the joint meeting with the Senate Natural Resource Committee on Landfill Issues, Wednesday, February 22 at 1:30 p.m. The meeting was adjourned at 3:15 p.m. RESPECTFULLY SUBMITTED: Pat Menath, Committee Secretary APPROVED BY: Assemblyman John C. Carpenter, Chairman Assemblyman Marcia de Braga, Chairman Assembly Committee on Natural Resources, Agriculture and Mining February 20, 1995 Page