MINUTES OF THE SENATE COMMITTEE ON NATURAL RESOURCES Sixty-eighth Session February 27, 1995 The Senate Committee on Natural Resources was called to order by Chairman Dean A. Rhoads, at 1:45 p.m., on Monday, February 27, 1995, in Room 224 of the Legislative Building, Carson City, Nevada. Exhibit A is the Agenda. Exhibit B is the Attendance Roster. COMMITTEE MEMBERS PRESENT: Senator Dean A. Rhoads, Chairman Senator Lawrence E. Jacobsen, Vice Chairman Senator Mark A. James Senator Mike McGinness Senator Ernest E. Adler Senator John B. (Jack) Regan Senator O. C. Lee STAFF MEMBERS PRESENT: Fred Welden, Chief Deputy Research Analyst, Legislative Counsel Bureau Billie Brinkman, Committee Secretary OTHERS PRESENT: Michael Turnipseed, State Engineer, Division of Water Resources, State of Nevada Pam Wilcox, Administrator, Division of State Lands Elsie Dupree, Lobbyist, Nevada Wildlife Federation Doug Busselman, Executive Vice President, Nevada Farm Bureau Federation Stephanie D. Licht, Secretary/Treasurer, Nevada Wool Growers Association Mike Baughman, Representative, Humboldt River Basin Water Authority Ned Eyre, Self Joe Guild, Lobbyist, Santa Fe Pacific Gold Corporation Rick Haddock, Counsel, Santa Fe Pacific Gold Corporation Gordon DePaoli, Self Chairman Rhoads opened the hearing on Senate Bill (S.B.) 96. SENATE BILL 96: Enacts provisions governing acquisition of water rights on public lands for purposes of watering livestock. Senator James gave an introduction of the measure which came from the interim study committee on Use, Allocation and Management of Water, chaired by himself. He said he committee's concern was the provisions in the rangeland reform that would change the way title to water is developed on federal lands. There has been a provision set forth that any water rights developed on public lands would be taken in the name of the federal government. And the federal government would be in control of those rights for purposes of any transfer, change, use, or change in the point of diversion in the future. The interim study committee heard testimony from the state engineer to the effect that traditionally in Nevada, when a water right application is perfected under the statutes, if the application is perfected by the person other than the federal government, it is in the name of that person. If it is perfected by both the federal government and the individual, then it is joint; if it is perfected separately by the federal government, then it is taken in the federal government's name. "It is kind of the Nevada plan," Senator James explained. He pointed out the federal provision would not have recognized this, but as the provision was presented to the committee in its various permutations, it came to say that unless otherwise provided in state law, title shall be taken in the name of the federal government. Senator James said that S.B. 96 would essentially enact into Nevada's law, the three-way plan which he had outlined. Senator James declared the federal government has the right to develop rights for its own use on the public lands within the state like any other person as the statute defines "person," using the same procedural manner that the state engineer has used for many years. Chairman Rhoads suggested that those thoughts should be in the Nevada Revised Statutes (NRS) because Secretary of the Interior, Bruce Babbitt, has indicated he was going to abide by Nevada law, but then he changed his mind as soon as he left the state of Nevada. Chairman Rhoads invited Mike Turnipseed, State Engineer, Division of Water Resources, State of Nevada, to comment on S.B. 96. Mr. Turnipseed came forward and confirmed the statement by Chairman Rhoads in reference to Secretary Babbitt. He said the secretary seemed to like the Nevada system, wherein a rancher could appropriate water on public lands, where the United States could appropriate water on public lands and if the two parties were going to develop the water jointly, they would have a joint application before the state engineer. Mr. Turnipseed introduced Pam Wilcox, Administrator, Division of State Lands, who has been instrumental in tracking rangeland reform language. He referred to a handout (Exhibit C) with excerpts from the Federal Register, page 73. He ask Ms. Wilcox to speak to the subject. Ms. Wilcox said over the last 2 weeks, in advance of the release of the actual final regulations, there have been verbal briefings by Governor Bob Miller and a state official from the Bureau of Land Management (BLM). She indicated the gist of the verbal comments from the BLM were that the regulation would be loosened so that virtually anything that was legal under state law would be OK with the BLM. She referred to Exhibit C and indicated the actual language is on page 73, "Water rights for the purpose of livestock grazing on public lands." She said the narrative has been changed, but when the regulations go into effect, the regulatory language will rule. She read the narrative in part: .....To the extent allowed by the law of the State within which the land is located, any such water right shall be acquired, perfected, maintained, and administered in the name of the United States. Ms. Wilcox said in the absence of S.B. 96, or something similar, all water rights for livestock grazing on federal lands will be held by the federal government. Ms. Wilcox mentioned she had received Exhibit C on February 23. Mr. Turnipseed said as he understands S.B. 96, it will codify what the policy has been in the state engineer's office since the mid 1980s. And he referred to Exhibit C where it talks about going back to regulations prior to the 1980s. Mr. Turnipseed said that is the most unacceptable because prior to 1980, the BLM did not recognize state law at all. That they developed water rights at will and actually never complied with the state process. Mr. Turnipseed commented that apparently now, the BLM will comply with the state process, but at least the strict reading of the language on all the development of water on public lands would be in the name of the United States. Mr. Turnipseed stressed the operative word in S.B. 96 is "perfected," which means there is a two-step process in perfecting a water right and the only purpose for mentioning it is to make it a part of the record. He declared when a permit is issued a certain amount of time is given to file proof of completion of work. The final document to be filed is proof of beneficial use, and a certificate is issued based on that affidavit. He testified "perfected" means that if the water is developed by the private range user and filed for beneficial use, then it will be in the name of the range user. If the water is developed and proof of completion and proof of beneficial use is filed by the United States, then it would be in their name and likewise if it were perfected jointly that the certificate would be issued in both of their names. Mr. Turnipseed continued his remarks. He said when an application is received by the state engineer for livestock watering in anyone's name except the United States, a copy is submitted to the BLM for a check on the range user. If it is filed in the name of the United States, then the BLM notifies the state engineer the identity of the range user, so when it comes time to perfect the water right the state engineer could comply with the law and issue a certificate in joint ownership if it is developed jointly or in the name of the United States or in the name of the range user. Chairman Rhoads said he understands that the forest service has applied for 90 water rights in Ruby Valley for recreation purposes. He queried if the permittee is required to appear jointly on those water rights. Mr. Turnipseed replied those water rights are in the name of the U.S. Fish and Wildlife Service. He said he surmised those permits were filed as a "backup" in case they cannot prevail in the adjudication in and around the Ruby Marsh with a priority dated back to 1905. There was further conversation on water right filings between Chairman Rhoads and Mr. Turnipseed. Chairman Rhoads ask Mr. Turnipseed if he has any suggested changes in S.B.96. Mr. Turnipseed answered in the negative. Ms. Wilcox said she is attempting to get clarification from the solicitor's office concerning the intent of the language in S.B. 96, but she said the language seems clear and unambiguous. Senator Adler said in BLM public hearings, he had pointed out the draft regulation is ambiguous, and he said the BLM claimed it is not. He said the BLM comment states the regulation will provide consistent direction within the BLM and makes BLM practice consistent with the forest service. Senator Adler questioned that action. Mr. Turnipseed explained the BLM districts in Nevada have worked fairly autonomously without much direction from the state office. He said the language prior to page 73, Exhibit C, seemed more instructional to BLM administrators and district managers and it gives them some guidance. Elsie Dupree, Lobbyist, Nevada Wildlife Federation, read a prepared statement (Exhibit D) in opposition to S.B. 96. Senator James explained the "federal rule making" was occurring with respect to livestock watering and change of policy there, and it invited the state to enshrine in its law the procedure by which water rights for the purpose of livestock would be acquired. He expressed the public should understand water on federal public lands will continue to be treated the same as it always has. S.B. 96 does not change anything, it codifies the existing procedure. Senator James said the federal government indicated it is going to change policy and start taking everything in the title of the United States and the interim study committee thought that would be a bad portent in the future for the control of water rights in Nevada. Ms. Dupree said her organization is concerned the wildlife will suffer if there is not enough water. Senator James explained S.B. 96 does not change the prior appropriation doctrine. . Doug Busselman, Executive Vice President, Nevada Farm Bureau Federation, read a prepared statement (Exhibit E) in support of S.B. 96. Chairman Rhoads inquired if the Nevada Farm Bureau is aware that the new regulations prepared by Secretary Babbitt are identical to previous regulations and are contrary to Nevada's interest. Mr. Busselman said his office has received a copy of the rules and regulations and has reviewed them. He indicated his office is going to follow state law which is agreed upon, but he informed the committee that as they work toward the direction that the forest service is moving, it does not necessarily bode well in terms of the practical day-to-day operations of whether a livestock permittee can acquire and perfect a water right. He said he expected suggested changes in S.B. 96 which the Nevada Farm Bureau will support if they move toward a Wyoming approach. He indicated that in Wyoming, if the federal government was to apply for water rights, the application would need to be accompanied by the livestock permittee in order to prove beneficial use for livestock watering and involving the permittee in a joint ownership of the water rights. Mr. Busselman said the main concern and interest of the Nevada Farm Bureau is preserving the right of an individual to own and establish a water right on public lands; that under rangeland reform, that ability could go away. Mr. Busselman informed the committee Stephanie D. Licht, Secretary/Treasurer, Nevada Wool Growers Association, had asked that he express the support of that association for S.B. 96. Mike Baughman, Representative, Humboldt River Basin Water Authority, read a prepared statement (Exhibit F) in support of S.B. 96 with offered amendments. Senator James pointed out that his understanding is that perfection of the right is the operative word in S.B. 96. He added that whomever files for the right is not pertinent...but the pertinent issue is whomever is involved in the perfection to cause the placement of the water to beneficial use. He stressed that is perfection. In outlining a scenario, Senator James said if the federal government files for everything in its own name and the state has authorized it, then that would not be the operative issue. But if a person was running cattle on the land and was utilizing the water for stock, and had participated in the development of the right and in the placing of it to beneficial use, then that is actually using it for its supposed purpose which is stock-watering. Then Senator James added, perfection would have been accomplished by the government and the rancher. He stressed it would not matter what they tried or what they intended to do, it would be taken jointly, whether the language in S.B. 96 is amended or not. Senator James said if the federal government owned cows which were being watered on their land, then they could get water rights solely in the name of the federal government. He said it seems the government could never get water rights in their name unless they have livestock. Mr. Turnipseed said there is an appropriation for livestock watering at two or three different places where wild horses are corralled and fed. He said generally when the federal government makes an application it is for livestock watering and wildlife. That if they develop the water source jointly and it goes to beneficial use jointly, then the water right should be held jointly. Senator James said he understood this measure when it came out of the interim study committee that if it pertained to running cattle on the open federal range, then water rights were always going to be in the name of either the rancher or the rancher and federal government jointly. But if it was for wildlife or something else, then that is when (b) (Exhibit F) would apply because one could conceivably get a federal permit that would be only in the federal government's name. Senator James pointed out there is a bit of a gray area if the permit is for wildlife and stock watering which could include wild horses, then the issue is muddied even more. Maybe in such a scenario there is some question whether it should be issued jointly or it should just be issued to the rancher. Mr. Turnipseed said such a scenario could be worked through. He pointed out there are not very many areas where there would be livestock purely held by the BLM. But when the BLM makes an application, it is for a definite number of cattle, or deer, etc. Chairman Rhoads asked if the word "perfected" is defined in the statutes. Mr. Turnipseed said it is not. But the word is used frequently so that it is a familiar term. Senator McGinness commented he thought the definition of "perfected" should be put in the statutes. Senator James said the word "perfected" is adequately defined in the case law. That the term perfected interest versus a non- perfected interest is very clear. Senator James acknowledged it is a term of art that is being used in this statute and the courts understand the term as it is used in the statutes. Senator Adler said he does not support amending S.B. 93. He said the measure reflects a pattern of practice by the state engineer over a period of years and an amendment could change that pattern. Mr. Turnipseed replied that if the United States is absolutely forbidden from holding water rights in Nevada or on public lands in Nevada, then it is likely to initiate some kind of legislation in Congress and Nevada will not have the flexibility that is now enjoyed. Mr. Turnipseed pointed out the federal government has water rights for Yucca Mountain, Nellis Air Force Base, all the national parks and national wildlife refuges in the state, and they have the ability to put that water to beneficial use. Mr.Turnipseed said he prefers that Nevada legislature does not incense the national Congress so that the western congressmen pass some kind of legislation that would take Nevada out of the process altogether. Mr. Baughman pointed out the subject is livestock water and about responding to a very clear federal policy which has now been stated and regulations which have now been promulgated that have changed the rules. He said the federal government has made it very clear their intent is to file in their name only and the Nevada statute generally has been silent on that issue, however, the administrative system allows them to file. He stated they have been granted water rights and that S.B. 96 inadvertently facilitates that by putting it into state law. Mr. Baughman said he did not think that is the intent. He indicated the federal government will welcome S.B. 96 as written, because it does exactly what they had hoped. Mr. Baughman stated he hoped that this committee would not lose sight of the fact that S.B. 96 simply responds to what the federal government has made clear to be their policy and that policy is not in the best interest of Nevada. Fred Welden, Chief Deputy Research Analyst, Legislative Counsel Bureau, presented a scenario for the purpose of clearing up perfected language. He said if the federal government were to apply for a water right for livestock and were to pay for all the development of that water right, but the stock that actually drank the water happened to be owned by a permittee and the federal government filed a proof of completion and a proof of beneficial use because the water was being drunk, would S.B. 96 in that case have the certificate in the name of both parties or just the federal government? Mr. Turnipseed said if he understands Senator James' intent in S.B. 96, the certificate would have to be issued in both names and if that is the wish of the Legislature, then that is what he would do. Senator Adler said that is the way he understands S.B. 96 and that is why he sees no problem with the way it is written. Mr. Baughman said that if that is clearly this committee's intent, then why not amend S.B. 96. Senator Adler said in the amendment (Exhibit F) it speaks of there being an existing permittee other than the federal government. But there is a possibility that there could be a corral with only wild horses in it. He ask who else would be included in that application? Senator James said there are technical problems which could arise. He continued: The interim study committee did consider a bill which would say the federal government cannot take water in its name in the future. The broader policy question which they were trying to avoid by doing that was directly confronting the government saying, look we are not going to allow you to be like anybody else....our case law has already recognized you as like any other permittee or appropriator of water. But your concern that they will always do this in the federal government's name now, that all water rights on federal land will be developed by the federal government in its own name, is addressed by the language of this bill because that is how it is perfected. That is why the choice of that word is so important. And perfection is the actual act of applying the water to beneficial use. That is what it is. So the things that constitute applying the water to beneficial use are the things that will be looked to by the state engineer. The federal government can stamp its name all over the permit if it wants to, that is not going to help it. The fact is what is that water being used for and if it is being used for private purpose on federal land, that private individual is going to have an interest in that water. And if everything having to do with perfection was accomplished by the individual, the federal government will not have any name on there. The federal government will be required to adhere to the exact program that has been outlined under existing policy. I don't know how legislative intent could be any more clear. And I hope the courts never even get to have to look at these comments in committee, but if they do that is what we intend. Ned Eyre, representing himself, asked "who owns the public lands." He asked if Nevada claimed title to the public lands. Chairman Rhoads replied it is in the statutes, but until it goes to court the laws have to be followed that everyone lives with every day. Mr. Eyre made a few more comments on S.B. 96 and indicated he is not opposed to the measure. Chairman Rhoads closed the hearing on S.B. 96. ***** Chairman Rhoads opened the hearing on Senate Bill (S.B.) 97. SENATE BILL 97: Defines "subsisting right" to water livestock. Chairman Rhoads declared that he is a rancher, that he does have water permits and possibly will be applying for water permits in the future. He added he does not feel either S.B. 96 or S.B. 97 gives him any more favoritism than anyone else that would ask for a permit. He declared that he will be voting on both measures. Chairman Rhoads said S.B. 97 was requested by Walt Leberski, Elko, who could not be at the meeting today, but sent his support for the measure. Mr. Turnipseed declared the old 1925 stock watering act was amended in 1993. He outlined background which led to the passage of the 1925 stock watering act, and pointed out in that act the term "subsisting right" was used. The term "subsisting right" is still used to water livestock in the adjudication process wherein the state engineer is trying to bring in some kind of a quantification scheme, a determination of the rights in a drainage basin. When trying to determine all the water rights put to use prior to the administrative process being set out in 1905 in the case of surface water, and find out who the owners are, to what extent they are owned, where the points of diversion are, how much water is used, etc. Mr. Turnipseed said during the last session (1993) the Legislature made it easier for proving these kinds of water rights as they pertained to livestock watering. That since 1993, there have been inquiries by people thinking that a "subsisting right" is some other kind of a right.... a vested right or a permitted right. That it is somehow an inherent right without any kind of administrative process being developed by the state engineer. Therefore, his agency asks that "subsisting right" be defined as an "existing right." He said basically a subsisting right is not a new right, that it is a right which is particular to livestock and if the rancher, through that process, in an attempt to quantify his water rights, can state the number and kinds of livestock and where they watered and how much they drank, etc., that it can be used for the basis to prove a vested right or a pre-statutory right. Mr. Turnipseed explained in reply to an inquiry by Chairman Rhoads, that when land is transferred to new ownership, the water rights go with the land, even though it may be made to the federal government. There was further discussion by committee members. Joe Guild, Lobbyist, Santa Fe Pacific Gold Corporation, and Rich Haddock, General Counsel, Santa Fe Pacific Gold Corporation, in Nevada, proposed an amendment to S.B. 97. Mr. Haddock said the idea of this measure is simply to get a clear definition of subsisting right. He said it was concluded that it is an existing water right. And he further stated that language has been codified into section 1. He said as he understands the language it says that if a person can prove they had a water right during the past, by submitting the appropriate documentation that was submitted to the Taylor Grazing Service, then that person has, by this language, an existing water right without regard to what may have happened between 1928 and the present. Mr. Haddock's proposed amendment deletes the word "existing", page 1, line 2, and adds at the end of section 1, something to the effect that the word "existing" be deleted. It adds at the end of section 1, something to the effect that "the subsisting right is valid only to the extent that it has not been forfeited, abandoned or otherwise lost in accordance with applicable law between the priority date and the date it is approved in accordance with the section." Mr. Haddock continued, saying the idea is that in quantifying right waters to a spring there may be very valid claims that date back to 1928, but there may also be claims to water rights that have been forfeited or otherwise lost in that period. Chairman Rhoads asked that the suggested language be provided to the committee secretary. Senator James said such an amendment would not change the intent of S.B. 97. In commenting on the suggested amendment, Mr. Turnipseed said the pure purpose of defining subsisting right is so the public does not think it is some other kind of water right and the only word suitable is that it is an existing right developed according to common law appropriation before 1905 or developed through the administrative processes after 1905. Senator James suggested that the word "existing" be left in section 1, but add the other language suggested by Mr. Haddock. Chairman Rhoads closed the hearing on S.B. 97. ***** Chairman Rhoads opened the hearing on Senate Bill (S.B.) 99. SENATE BILL 99: Revises definition of "domestic use" for purposes of statutes governing underground water and wells. Mr. Turnipseed explained there has been a permitting process in place, The Comprehensive Ground Water Law, has been in effect since 1939, however domestic wells have been exempt. The present definition of domestic use refers to a single family dwelling and the exemption for a domestic well states use should not exceed 1800 gallons per day. Mr. Turnipseed said the language in S.B. 99 is an attempt to broaden the definition of domestic purposes to include the shop and outbuildings of a private dwelling. He said the intent is to prevent a single family property from becoming a split property into two domestic units. The attempt of the measure is to encourage people who have a single well serving two families in two separate homes to come into compliance. Mr. Turnipseed indicated there are some exemptions for cases that existed before 1981. If a well use is incidental with domestic use, then it should be exempt under the law, and that is the intent of S.B. 99. Senator James inquired how the language is going to be interpreted. He ask if it will be seen as a two-part process: first to determine the use to be incidental, and secondary to the single family dwelling. Senator James continued, pointing out there is a list in section 1, lines 3 through 8, yet the language "including, but not limited to" is not included in the measure. Mr. Turnipseed said the language is designed to cover uses incidental to a single family home. He said the health department has some concerns that the language in S.B. 99 will interfere with their designs for septic systems in certain areas. Mr. Turnipseed indicated he had not held discussions with the health department concerning any suggested amendments they may have in order to accomplish their concerns. For the purposes of the state engineer, the measure includes all incidental uses associated with a single family dwelling. Senator James reconfirmed the listing in section 1 of the measure is non- exclusive. Gordon DePaoli representing himself, came forward to explain the language in S.B. 99 is not intended to be an exclusive listing. He said the intent of the measure is to give the state engineer the discretion to determine what are incidental uses and basically the list evolved from present uses. Senator James suggested the language, "including, but not limited to" be added to S.B. 99. Senator Jacobsen indicated there is no reference to a free flowing well. Mr. Turnipseed said there are free flowing wells as well as wells which have to be pumped, and the ground water code does not differentiate between those. Chairman Rhoads closed the hearing on S.B. 99. ***** There being no further business to come before the committee, Chairman Rhoads adjourned the meeting at 2:55 p.m. RESPECTFULLY SUBMITTED: Billie Brinkman, Committee Secretary APPROVED BY: Senator Dean A. Rhoads, Chairman DATE: Senate Committee on Natural Resources February 27, 1995 Page