MINUTES OF THE SENATE COMMITTEE ON NATURAL RESOURCES Sixty-eighth Session June 9, 1995 The Senate Committee on Natural Resources was called to order by Chairman Dean A. Rhoads, at 2:10 p.m., on Friday, June 9, 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 GUEST LEGISLATORS PRESENT: Assemblyman Lynn C. Hettrick, Assembly District No. 39 Assemblyman Roy Neighbors, Assembly District No. 36 STAFF MEMBERS PRESENT: Fred Welden, Chief Deputy Research Analyst, Legislative Counsel Bureau Billie Brinkman, Committee Secretary OTHERS PRESENT: Brian Chally, Deputy District Attorney, Douglas County Charles W. Joerg, Lobbyist, Douglas County Disposal John Pappageorge, Lobbyist, Silver State Disposal, Reno Disposal Donald O. Williams, Chief Principal Research Analyst, Legislative Counsel Bureau Nancy Brown, Intern, Office of Senator Dina Titus DeeAnn Parsons, Chief, Nevada State Energy Office, Department of Business and Industry Dean S. Borges, P.E., Deputy Manager, State Public Works Board Peter G. Morros, Director, State Department of Conservation and Natural Resources Terry Woosley, Chief of Biological Resources, U. S. Department of the Interior/ Bureau of Land Management LeRoy Etchegaray, Member, Board of Commissioners of Eureka County Jim Baumann, Chairman, Eureka County Public Lands Advisory Commission Demar Dahl, Cattle Rancher, Elko County Pamela B. Wilcox, Administrator, Division of State Lands Mike Baughman, Lobbyist, Humboldt River Basin Water Authority Gordon DePaoli, Lobbyist, Sierra Pacific Power Company Hugh Ricci, Deputy State Engineer, Division of Water Resources Doug Busselman, Executive Vice President, Nevada Farm Bureau R. Michael Turnipseed, State Engineer, Division of Water Resources Chairman Rhoads informed the committee that Senate Bill (S.B.) 98 had been amended by the Assembly. SENATE BILL 98: Revises provisions governing approval by state engineer of application for permit to appropriate water. Chairman Rhoads explained section 1, page 1, line 12, of S.B. 98 is amended by deleting the brackets. And section 1, page 1, is amended by deleting lines 13 through 17, and inserting his financial ability and reasonable expectations actually to construct the work and apply for water to the intended beneficial use with reasonable diligence. Chairman Rhoads said these amendments strengthen the clause so that there is more protection against speculators filing for water rights without plans for beneficial use. SENATOR REGAN MOVED TO CONCUR ON THE AMENDMENTS TO S.B. 98. SENATOR McGINNESS SECONDED THE MOTION. THE MOTION CARRIED. (SENATORS JACOBSEN, ADLER AND JAMES WERE ABSENT FOR THE VOTE.) ***** Chairman Rhoads indicated the Assembly has amended Senate Bill (S.B.) 230. SENATE BILL 230: Establishes wildlife heritage trust account in state general fund. He explained that the language or the enhancement of habitat for has been added on line 6, page 1, following the words management of. Chairman Rhoads suggested this change go to a conference committee for an explanation. SENATOR REGAN MOVED NOT TO CONCUR ON AN AMENDMENT TO S.B. 230. SENATOR LEE SECONDED THE MOTION. THE MOTION CARRIED. (SENATORS JACOBSEN, ADLER AND JAMES WERE ABSENT FOR THE VOTE.) ***** Chairman Rhoads opened the hearing on Assembly Bill (A.B.) 449. ASSEMBLY BILL 449: Revises provisions governing recycling programs of counties. Assemblyman Lynn C. Hettrick, Assembly District No. 39, explained that this measure was a request by Douglas County officials to modify requirements for recycling within the various counties. He pointed out the current law says that once a county gets to a certain size, curbside recycling must be provided. He said this measure intends to raise the cap from 40,000 to 100,000 so that Douglas County can stay within the limit that allows them not to have to furnish curbside recycling. Brian Chally, Deputy District Attorney, Douglas County, explained the requested change to Nevada Revised Statutes (NRS) 444.040 in A.B. 449 by reading a prepared statement (Exhibit C). He said essentially this measure is intended to allow Douglas County to operate under a different kind of recycling program without having to do the additional curbside recycling program. Charles W. Joerg, Lobbyist, Douglas County Disposal, franchisee for the valley portion of Douglas County, reiterated the testimony given by the previous speakers in support of A.B. 449. John Pappageorge, Lobbyist, Silver State Disposal, Reno Disposals, testified A.B. 449 in its present form, does not affect any of the operations of his clients. He expressed support for this measure. Chairman Rhoads closed the hearing on A.B. 449 and opened the hearing on Assembly Bill (A.B.) 381. ASSEMBLY BILL 381: Provides for use by state agencies of money attributable to energy savings. Donald O. Williams, Chief Principal Research Analyst, Legislative Counsel Bureau (LCB), explained this measure is the result of the interim study on energy. He read a prepared statement (Exhibit D). Nancy Brown, Intern, Office of Senator Dina Titus, in a statement prepared by Senator Titus, reiterated the remarks made by Mr. Williams, and indicated that Senator Titus is in support of A.B. 381. DeeAnn Parsons, Chief, Nevada State Energy Office, Department of Business and Industry, testified her agency is in support of A.B. 381 and urged passage of the measure. Dean S. Borges, P.E., Deputy Manager, State Public Works Board, came forward to indicate the support of that agency for A.B. 381. Chairman Rhoads inquired if there were restrictions in A.B. 381 controlling the manner in which the funds could be used through energy savings. Mr. Borges replied the way he reads the bill, the savings would go back into energy conservation measures. Chairman Rhoads closed the hearing on A.B. 381 and asked for a motion on the measure. SENATOR LEE MOVED TO DO PASS A.B. 381. SENATOR JAMES SECONDED THE MOTION. THE MOTION CARRIED. (SENATOR JACOBSEN WAS ABSENT FOR THE VOTE.) ***** Chairman Rhoads asked for a motion on A.B. 449. SENATOR REGAN MOVED TO DO PASS A.B. 449. SENATOR LEE SECONDED THE MOTION. Senator Adler asked for discussion. He indicated he drafted the original language in this measure and that he is opposed to this bill the way it is written with the 100,000 cap. He said that means that the only counties that will have a full fledged recycling program will be Clark and Washoe. He commented he would like to see the cap moved down to a more reasonable number, such as 50,000 or 60,000. Chairman Rhoads announced A.B. 449 will be held for the present time. He did not call for the vote. Chairman Rhoads opened the work session outlined on the Agenda. Chairman Rhoads announced that there would be no discussion or action during this meeting on Senate Bill (S.B.) 191, even though it is listed on the Agenda. SENATE BILL 191: Revises provisions governing forfeiture of right to use ground water. The chairman said anyone who has additional information on S.B. 191 that has not been heard before the committee in the past, is invited to impart that information today. Chairman Rhoads opened the work session on Senate Bill (S.B.) 95. SENATE BILL 95: Requires state engineer to establish system of credit for conservation of water. Fred Welden, Chief Deputy Research Analyst, Legislative Counsel Bureau, referred to a work sheet (Exhibit E) prepared by himself for the work session this date, and deferred the review of the subcommittee report on S.B. 95, Attachment "A", of Exhibit E to Senator McGinness, chairman. Senator McGinness walked the committee through Attachment "A". Senator McGinness said all those who testified in the subcommittee on S.B. 95 questioned the need for this measure and the inherent problems with it. He said the recommended approach was the bill was found to be unworkable and he suggested that it not be processed at this time. Senator McGinness noted on the positive side, the subcommittee had a very good work session. And he thanked Naomi Duerr, State Water Planner, for offering to provide technical assistance and perhaps design a pilot project for the future. Chairman Rhoads said he preferred to keep S.B. 95 in the committee rather than to "kill" it. Senator James said, for the record, he wanted to register his opposition to not processing S.B. 95. He said he recommended this measure out of a subcommittee he chaired and he wanted it on the record that he disagreed with the decision of not processing it. Chairman Rhoads opened the work session on Senate Bill (S.B.) 96. SENATE BILL 96: Enacts provisions governing acquisition of water rights on public lands for purposes of watering livestock. Peter G. Morros, Director, State Department of Conservation and Natural Resources, came forward to discuss S.B. 96. He was accompanied by Terry Woosley, Chief of Biological Resources, U. S. Department of the Interior/Bureau of Land Management (DOI/BLM). Mr. Morros said that for sometime his agency has been involved with negotiations with the DOI/BLM. He said they have been primarily meeting with Patty Benneke, who is with the solicitor's office, DOI/BLM [Washington, D.C.]. He indicated that Ms. Benneke has recently been designated the acting assistant secretary of the U. S. Department of the Interior for water and science, a high position in the agency. Mr. Morros said, however, Ms. Benneke has indicated she will continue to take an active roll in the ongoing negotiations with himself and the Department of Interior related to the issues contained in S.B. 96. Mr. Morros continued his testimony: I think we have made substantial progress in these negotiations in dealing with some of the issues associated with primarily water right ownership in the State of Nevada, and again related to ownership with the federal agencies, primarily the BLM and the U. S. Forest Service, and private interests out on the public lands for stock watering purposes. Mr. Morris referred to a printed handout (Exhibit F) which he indicated summarizes the present state of negotiations between his department representing the State of Nevada, and the DOI/BLM. Mr. Morros said: Recent regulations adopted by the Department of Interior related to water right ownership have caused some real concerns among the agricultural community, the ranchers and farmers, that depend so heavily on these public lands for range purposes.... We hope that again, we have resolved some of these concerns. The BLM's concerns, I think... have been related primarily to water being made available for wildlife use out on the public lands and also severing the water from the public lands for uses other than stock watering, wildlife and those recreation uses associated with recreational developments by the federal agencies on those lands. I think we have come a considerable ways in resolving a lot of those issues. We would like to continue on with this effort. However, I think that if S.B. 96 in its present form, or even with the proposed amendments submitted by the Humboldt River Basin Water Authority, becomes law, it will for all practical purposes scuttle that effort. I guess what we are requesting at this time is that in view of the progress that we have made and in view of the commitment that the Department of Interior has made to reach agreement on this issue, that S.B. 96 not be considered any further. Chairman Rhoads said he has a problem with MOUs [Memorandum of Understanding] or resolutions or letters of intent because Bruce Babbitt, Secretary of the U. S. Department of Interior, on at least three occasions, in the presence of the Governor, has said time and again that he would abide by Nevada's law. Chairman Rhoads commented Mr. Turnipseed (R. Michael Turnipseed, State Engineer, Division of Water Resources) explained the law to Mr. Babbitt and Mr. Babbitt, in turn, said he would "abide by your law." Chairman Rhoads said: And yet when the February 22 final rangeland proposal came out, it is in the regulation, as you well know, that all future livestock water rights on federal lands will go in the name of the United States...that bothers me and it bothers a lot of people that are here today....I have had more phone calls the last few weeks and letters on this issue than any other issue. Mr. Morros said he understands the concerns of the chairman and he took exception to what Mr. Babbitt represented at the meetings referenced and what finally came out in the regulations. Chairman Rhoads declared, "If we can't trust him after he told us three times he would not do this to us, what good is an MOU?" Chairman Rhoads recognized that unless "we" can be successful in Congress and get the Livestock Grazing Act passed, the law will be set on August 21, 1995, with language giving the federal government all "our" water for livestock grazing on public lands. Mr. Woosley stated he was before this committee to support the BLM efforts that have been ongoing in dealing with Mr. Morros and his staff. He said that Ms. Benneke was assigned to Mr. Morros and his staff in order to reach some sort of a resolution. He pointed out that Mr. Morros and Ms. Benneke are about to reach a level of an agreement and from that point on it would be handed down to the Reno BLM office to work with Mr. Morros to further develop and define processes and agreements. Chairman Rhoads inquired what the contents would be of an MOU. Mr. Morros said Exhibit F summarizes the discussions up to this point. He said a working draft would be completed shortly, but he wanted to caution the committee that action on S.B. 96 at this point will probably scuttle the efforts in process. Senator Adler asked why this measure would scuttle this effort. Mr. Morros explained that S.B. 96 is restricting the federal government ownership of water rights. He said it is a subject his agency has been dealing with for years. He emphasized his position has been, and will continue to be, that the federal government and the federal agencies have to be treated the same as any other water user in the State of Nevada. Further comments were added to the discussion. Chairman Rhoads asked about the amendment proposed by the Humboldt River Basin Water Authority (Exhibit E) Attachment "B". Mr. Morros said he believed the proposed amendment did not change the thrust of S.B. 96. Chairman Rhoads asked why Mr. Morros was going to start working on an MOU? Mr. Morros replied he was not going to ignore statutory direction. He stressed that if S.B. 96 passes, basically the law tells him what he has to do. He commented he did not believe this bill would hold up constitutionally under challenge and that eventually it will be an embarrassment to the State of Nevada. Further discussion between Chairman Rhoads and Mr. Morros. Chairman Rhoads asked how strong an MOU can be. Mr. Morros, said in effect, an agreement. And that a MOU is stronger than a resolution and will stand up in court. Mr. Morros maintained he understands the concern of the chairman regarding the issue under discussion and that his agency is sensitive to the protection of the nongovernmental rights, but, "I really think the course we are on right now is the best way to deal with this problem." Chairman Rhoads asked how the court decided in the case, Nevada v. Morros (State of Nevada, Board of Agriculture v. Morros, Supreme Court Decision December 21, 1988, chapter 533 of Nevada Revised Statutes). He inquired if the decision handed down concerned not treating the federal government as a person? And asked if such treatment was violating the state constitution of Nevada or the state statutes or the Constitution of the United States? Mr. Morros explained specifically the Supreme Court's decision went to the issue of whether the federal government should be treated the same as any person, and the federal government was included under the definition of "person" in the (Nevada) statute. The Supreme Court's decision spelled out that the federal government had to be treated the same as anyone else and they did not necessarily have to own the cattle or the wildlife in order to show beneficial use. Mr. Morros and Chairman Rhoads indulged in further discussion concerning the federal government. Senator Adler asked if a MOU is in progress. Mr. Morros replied there was no way he could guarantee that a final conclusion would be reached before the end of this Legislative session. Senator Adler suggested S.B. 96 could be processed with language added that the federal portion could be supplanted by an MOU negotiated between Mr. Morros and the BLM. He added that if the MOU falls through that at least S.B. 96 would be intact. He suggested language could be added to the affect that S.B. 96 is the standard for the federal government, but it could be modified by a subsequent agreement between the department (State Department of Conservation and Natural Resources) and BLM. He said he was concerned that the state is going to get "snookered" in this deal. Mr. Morros commented there is a lot of paranoia on both sides. It was thought that when the case, Nevada v. Morros came out, the problems had been settled. He said: We had a three-tiered system. We had a system that allowed for the BLM to hold water rights. We had a system that allowed for joint holdings and we had a system that allowed for the individual to hold water rights. And it has worked fine. We have not had any problems with it until they decided to take up these regulations. I don't know that in the absence of the MOU...I still have to be convinced that we are going to gain something and that we are going to avoid prolonged litigation over the issue if [S.B.] 96 is approved. Because we are going to run headlong into the problem of the regulation which states that the rancher is not going to be able to hold the stock watering right out on the federal lands, that it has to be in the BLM's name... they are not going to issue section 4 permits for development of windmills or stock watering sources out there. And we are going to be up against a brick wall. [S.B.] 96 is going to be a real obstruction. Senator Rhoads referred to the last paragraph of Exhibit F and noted it does not contain language that indicates the federal government will be given water. He inquired if the government would get water under that paragraph. Mr. Morros stated the federal government would apply and compete for the water just like anyone else. Mr. Morros said: What a lot of people missed in the ruling...Nevada v. Morros, there were applications in there that were denied that had been filed by the federal agencies and they were denied on the basis that there was no unappropriated water in the source, or they would adversely affect existing rights, which were private water rights. The federal government didn't challenge those rulings. They accepted them. Chairman Rhoads inquired when Mr. Morros expected to have the MOU completed. Mr. Morros deferred to Mr. Woosley for the reply. Mr. Woosley stated his agency has been working indirectly with the solicitor's office for roughly the last 2 months. He said the statement in the regulations, as written, indicates that state law will be followed when drafting the MOU. He said that is the emphasis behind the way Ms. Benneke has been directed to work with Mr. Morros in trying to develop an agreement. Senator McGinness said he echoed the concerns of Senator Adler and Senator Rhoads. He fears the session will be ending soon and if this matter is not solved, then if someone "twists the sword a little bit" it will be 18 months before it can be taken care of. Mr. Morros responded to Senator McGinness' concern by saying he did not think S.B. 96 is going to solve anything, but rather it will create more problems than it solves in the absence of the MOU. He said if there is no MOU, this measure will create nothing but litigation. Chairman Rhoads asked Mr. Morros, for the record, to expound on his previous statement. Mr. Morros said: ...In using the example of the BLM refusing to give a rancher... suppose we issue a permit to a rancher that applies for a stock watering right, he wants to put a windmill in out on the public lands within his range. We issue him a permit. And the BLM says `No we are not going to issue you a section 4 permit until ownership of that right is in the name of the federal government.' Now the only way you get around that is initiate a lawsuit. Chairman Rhoads asked, "If we process this bill, you think the federal government would file a lawsuit against the State of Nevada?" Mr. Morros replied he thought eventually there would be a situation where a lawsuit will be the only way to settle the issue. Chairman Rhoads inquired, "If you don't get your MOU done, and we don't process this bill, what is the State of Nevada going to do on August 21st to protect our water rights?" Mr. Morros replied, "We will do what we have always done. We will follow the law, whatever it is." The federal law says that all future livestock grazing water rights will be in the name of the federal government, according to Chairman Rhoads, and the federal government is supreme over the state law. Mr. Morros agreed to that statement. Senator Adler stated he did not see the harm in processing S.B. 96 with a sunset clause taking effect when the MOU is signed. Mr. Morros said: Let's assume for the sake of discussion, that S.B. 96 doesn't pass. We go ahead...and reach an agreement on a MOU and we sign it. And then somewhere down the line it is violated by the federal government or they declare that they no longer want to abide by the terms of the MOU. Then I think that puts them in a vulnerable position in terms of coming back.... And the Legislature adopting legislation like this in response to their reneging on the MOU... would certainly put us in a much better position if we ended up in court litigating the issue. Chairman Rhoads asked: What if we amended this bill with...language in there that if the MOU is not finalized and accepted in favorable fashion by August 21st, then S.B. 96 will go into affect. If you get it signed off...then S.B. 96 will go away. Mr. Morros said that would be asking him to "make a call" on the federal bureaucracy being able to push the MOU along. He said, speaking for himself, his agency could negotiate it by August 21. Mr. Woosley interjected that "they would give it our best shot." In reply to Chairman Rhoads' remark that an MOU could possibly be signed that "we could not live with," Mr. Morros said: I don't intend for that to happen. Our intent is to protect those private [water] rights out there, and also protect the right of the rancher to go out there and develop a water source at his expense and be able to hold a water right on the public lands for stock watering purposes. I think you know that commitment is firm and in place. LeRoy Etchegaray, Member, Board of Commissioners of Eureka County, and Jim Baumann, Chairman, Eureka County Public Lands Advisory Commission, came forward to talk on S.B. 96. Mr. Etchegaray read a prepared statement (Exhibit G) generally in support of S.B. 96 with the amendment suggested by Humboldt River Basin Water Authority in Exhibit E, Attachment "B". Mr. Etchegarary stated that in reference to MOUs, "they mean nothing." He added Eureka County has a complete lack of trust with anything the BLM or the [U.S.] Forest Service does, and that they do not honor the MOUs from Eureka County. Chairman Rhoads expressed the concern that the committee has to be careful about anything it passes so that the state is not liable. He said that according to Mr. Morros, the courts ruled in Nevada v. Morros that the federal government must be treated like an individual. The concern is attempting to get around that. Mr. Baumann talked on the concern over the MOU. He stated his agency has MOUs signed with the (Eureka) county and the BLM and "they don't live by them." He added the MOUs are not "worth the paper they are written on." Demar Dahl, Cattle Rancher, Elko County, remarked he is interested in the statements by Mr. Morros and the proposed MOU. Mr. Dahl commented to his knowledge, no one in the livestock industry has been consulted about the proposed MOU. He said: I don't think that anybody out there even knows that it exists or that any of the negotiations he [Mr. Morros] talked about are going on. And I can tell you I think fairly speaking for the livestock industry, we are not happy about the outcome of the case, Nevada v. Morros. So I think we are...a little nervous about Morros and [Interior Secretary] Bruce Babbitt working out a Memorandum of Understanding to determine how our water is going to be used on the public land. If any of you have been in the livestock business and had a lot of management plans signed with the Bureau of Land Management, I know of very few of those that have not been changed and been changed arbitrarily. And in nearly every instance the livestock operator is required to comply with the terms of the written and signed agreement, but the BLM very seldom ever does.... ...It is difficult enough for the industry to survive and do well when the land is owned by the government. When they own the water also, then it puts us in a particularly difficult position. The Livestock Grazing Act that we are hoping is going to make it through Congress and get out in time to preempt rangeland reform, says...that the federal government will comply with state law when it comes to filing on waters. And I think that is an invitation for us to do what is best for us and our industries and our people here in Nevada. I think where the Legislature has taken the position of...wanting to repeal the Enabling Act where we have the Sagebrush Rebellion bill, I think in order to be consistent, we also have to take a position to protect the waters of the State of Nevada for the State of Nevada. Mr. Dahl concluded his statements by urging the committee to adopt S.B. 96 with the amendments. Pamela B. Wilcox, Administrator, Division of State Lands, reminded the committee she had testified in support of the concept of S.B. 96 during the first committee hearing on this measure. She stressed the amendment offered by the Humboldt River Basin Water Authority, (Exhibit E) Attachment "B", would make S.B. 96 unconstitutional. She said S.B. 96 as drafted, quite probably would not pass constitutional muster because it does, in fact, single out the federal government and a portion of the law that speaks only to the federal government and to no one else. Ms. Wilcox said, in referring to a new amendment, that it would make it clear that her agency has to resume a disagreement with the BLM, because they could not see a statutory fix that would pass constitutional muster. Ms. Wilcox indicated her agency agrees with all the previous testimony heard at this meeting. But her agency believes that the water law which has been a protection for the past years, is still the best defense. Ms. Wilcox said she thought the federal government would be obligated to sue the State of Nevada if S.B. 96 is passed. Senator Adler said suppose the language of S.B. 96 was changed by deleting "federal government" and replacing it with "governmental entity." Ms. Wilcox said during discussions she had with several of the attorneys for her agency, there cannot be a classification that singles out one type of person, and government entities are a person, and that different rules apply to them than apply to anyone else. Further discussion ensued between Ms. Wilcox and Senator Adler concerning the change proposed by Senator Adler. Senator James said he believes that sufficient questions have been raised concerning S.B. 96, therefore, he requested the chairman hold the bill for further work prior to taking a vote on it. Chairman Rhoads invited some of the attorneys in the audience, along with Senator James and Senator Adler, to assist with work on S.B. 96. The committee concurred on the request. Ms. Wilcox stated that if a proposed amendment affects state land as well as federal land, she has a unique interest and would like to have the time to develop further testimony. Senator Regan addressed Ms. Wilcox by expressing the concern of the committee which is not with the state, but with the untruthfulness heard from the federal government, both in Rangeland Reform 1994, and (Interior Secretary) Babbitt's statement. Senator Regan said that, as opposed to coming in as a state agency and taking almost the same position as the BLM, she should join the committee who is saying we "just want a level playing field." Ms. Wilcox replied she thought the language in S.B. 96 did not provide good land management for the State of Nevada. Senator Regan said he did not think this bill would change the contractual situation in her office with permitees. Senator Jacobsen asked if case law has any precedent, in other words, the laws that have been in effect for years. Chairman Rhoads replied the lawsuit, State v. Morros states that the federal government has to be recognized as a person. Senator Jacobsen than asked who owns the water after an earthquake literally moves the springs from BLM property to private lands. Ms. Wilcox said that is a particularly good example of some of the problems her agency deals with in translating the 14th Amendment Protection that everyone is entitled to the equal protection of the laws under the federal constitution into fairness from day to day. She remarked that fairness is very hard to determine. Mike Baughman, Lobbyist, Humboldt River Basin Water Authority, provided the committee with a printed handout, "Arguments in Support of Amendment and Passage of SB96" (Exhibit H). Mr. Baughman talked on new issues. After discussion, Mr. Baughman said Nevada may find itself having to pursue the issue in court if it cannot be resolved. He suggested that Nevada needs to assert itself, given the opportunity that the federal government has given the state through Rangeland Reform `94 Regulations, and also what appears to be some congressional intent. In regards to new information, Mr. Baughman referred to Exhibit H and asked that the committee peruse it at their leisure. On a final note with regards to the issue of the problems which may be faced by the state under one of the versions of the amendments Mr. Baughman has provided to address singling out the federal government on the governmental entity side, it has been suggested that it may create some problems for the state agencies. Mr. Baughman said his office has done some analysis of the water rights holdings of the various state agencies in Nevada, and "I can tell you that if there is going to be an administrative problem, it will be very, very small." He said there may be some administrative problems of changing the language to governmental entity, but he wondered how significant it is. Mr. Baughman told the committee there may be some questions, but he did not think there were any fatal flaws. He remarked, "I think we clearly have the opportunity to express the initiative and gain control of how we want to administer state water in this state." Mr. Baughman said he encourages the committee to pass S.B. 96 with the amendments. Senator Jacobsen voiced the concern that this state will end up suing itself. Mr. Morros said the state ends up being the defendant in the majority of the lawsuits. Chairman Rhoads announced S.B. 96 will be revisited by the committee on Monday (June 12). Chairman Rhoads opened the work session on Assembly Bill (A.B.) 10. ASSEMBLY BILL 10: Revises provisions prohibiting herding or grazing of livestock on land near municipal water supply. Gordon DePaoli, Lobbyist, Sierra Pacific Power Company, indicated he was requested to review A.B. 10 for the Sierra Pacific Power Company because it applies only to counties, cities or municipalities or unincorporated towns, and not to other entities such as public utilities, who are water purveyors. He said he drafted the amendment, page 13, Exhibit E, which gives county commissioners the authority to establish an area of protection "based upon scientific evidence and shall be by ordinance adopted after consultation with affected persons and state agencies." Mr. DePaoli explained there is an additional amendment to A.B. 10 that adds subsection (c) which states "this bill must not be construed to apply to persons driving livestock on their own lands." Senator Jacobsen voiced his concern about Marlette Lake. Mr. DePaoli said this measure, with the amendment, would protect the state. Chairman Rhoads asked for a motion on A.B. 10. SENATOR REGAN MOVED TO AMEND AND DO PASS A.B. 10. SENATOR LEE SECONDED THE MOTION THE MOTION CARRIED UNANIMOUSLY. ***** Chairman Rhoads opened the work session on Assembly Bill (A.B.) 435. ASSEMBLY BILL 435: Revises provisions governing forfeiture of certain water rights. Mr. Welden referred to Exhibit E, Attachment "E", that contains an amendment to A.B. 435 which was proposed by the state engineer and agreed to by representatives of the Nevada Farm Bureau. Chairman Rhoads explained A.B. 435 is a forfeiture bill which addresses the good contents of the companion bill, Senate Bill (S.B.) 191. SENATE BILL 191: Revises provisions governing forfeiture of right to use ground water. Chairman Rhoads noted Senator McGinness had been working on S.B. 191, and that it will not be needed if A.B. 435 is processed. Senator McGinness indicated the state engineer had signed off on A.B. 435 with the amendments. Hugh Ricci, Deputy State Engineer, Division of Water Resources, came forward to answer questions which Senator James posed concerning this measure because he had been absent for the prior hearing by this committee on A.B. 435. Following discussion with Mr. Ricci, Senator James expressed his concern that A.B. 435 creates an ambiguity as to who gets notice of forfeiture and who does not. Chairman Rhoads informed the committee the vote on A.B. 435 would be held at this time. Senator McGinness noted Assemblyman Roy Neighbors, sponsor of A.B. 435, had just entered the committee room and that he should be made aware of the concern with the language in this measure. Chairman Rhoads asked Senator James to explain his concern to Mr. Neighbors, which he did. He said that he is concerned because there is no duty on the part of the state engineer to research the files and send out notices to everyone who has 4 years of nonuse of their water permit. Doug Busselman, Executive Vice President, Nevada Farm Bureau, responded to Senator James' remark by saying one does not have to worry about curing a water right until it has been subject to the forfeiture process after 5 years. Consequently, by giving a notice after 4 years of nonuse, there is no forfeiture until after 5 years of nonuse. Senator James said the point is there is no mechanism in place in A.B. 435 to tell who is going to get a notice, or who is not going to get notice, after 4 years of nonuse. He believes that not all water permitees will be privileged with a notice at the end of 4 years of nonuse, therefore some water users will not be noticed until the 5-year forfeiture notice. Mr. Busselman said his agency thinks that all people should receive notice. Senator James replied, "That is a totally different bill. That is not in this bill. That is the problem." Assemblyman Roy Neighbors, Assembly District No. 36, replied that he thinks A.B. 435 does provide such a notice as being discussed by Senator James and Mr. Busselman. Mr. Neighbors said he has a simple permit for looking for water, and that he gets a certified notice at the end of the year, and a backup notice if he does not comply. He remarked if a notice can be mailed for a simple permit, then why cannot other water users be notified. He said if a water right has not been put to beneficial use within the 5-year limit, then the holder should lose the water right. Chairman Rhoads asked Mr. Neighbors if he believes A.B. 435 states that the state engineer will send out notices annually to those people who have held a water right for 4 years without beneficial use, notifying them of a potential forfeiture at the end of 5 years. Mr. Neighbors answered, yes, that is what he believes. Senator James said he does not dispute with the policy that a notice should be mailed, but that "if Mike Turnipseed thought this bill said that, he would be shocked." Chairman Rhoads called R. Michael Turnipseed, State Engineer, Division of Water Resources, to testify. He asked Mr. Turnipseed if A.B. 435 puts into place that a notice would be sent to everybody that has not used their water permit for 4 years. Mr. Turnipseed said his office is a lot more computerized now than they were 20 to 30 years ago, and if the pumpage inventories are put on a database, then those permits which have not been used for 4 years should come up. Then a notice would be sent to those people. Mr. Turnipseed said they would do that every year and he believed there would not be many notices to be mailed. Senator James said he believes the intention of this bill is that if a notice is not sent to a person, then the water right cannot be forfeited. Mr. Neighbors indicated the reference in the bill is to the areas where there are pumpage records. Senator James said the language in the bill does not say that. He indicated his problem is with the fact that a person who happens to be in a pumpage area gets a 4-year notice, but the person who is unfortunate enough to be in a non-pumpage area, does not get that same notice. Mr. Turnipseed said his agency could not bring a forfeiture action where there are no records, however, a third party presumably could. He said the law will be the same as it always has, that the burden of proof is on the permitee. Senator James stated this bill implies that this is a protection that a 4-year notice will be sent if that is possible. He said: "What you are building in here is a right of all those water right holders out there to get a notice before you forfeiture their water rights." He said he thought that was a real problem. Mr. Turnipseed said: I suppose you could view this as treating those people in basins where we do pumpage inventories differently than those people who have gallon water permits in basins where we do not have pumpage inventories. But this is a step toward the notice in those basins where we do. Whereas, today it is a surprise for everybody. Mr. Neighbors added that when that surprise letter is received, that is it. Someone else has your water right. He asked if there is an amendment that Senator James would be comfortable with. Senator James remarked the law has to say what will happen if someone does not get a notice. He asked if a person in a basin with pumpage inventories does not get a 4-year notice, then is it the intention of the state engineer to not have the ability to forfeit those rights? Mr. Turnipseed said no, the law is clear that the right is forfeited. Senator James said the bill says that if a person does not get a notice, the state engineer can still forfeit the water right. Further discussion ensued between Senator Adler and Mr. Turnipseed. Chairman Rhoads announced A.B. 435 will be held over for further review. Mr. Neighbors commented that attorneys can look at any law and find something they did not agree with. But, he added, he thought the language in A.B. 435 is clear. Chairman Rhoads said the Assembly has amended Senate Bill (S.B.) 141. SENATE BILL 141: Revises provisions governing eligibility of certain purveyors of water to receive grants for making capital improvements to publicly owned water systems. Chairman Rhoads asked Senator Adler to explain why the committee should concur on the amendment. Senator Adler related the history of this subject goes back to 1989 when a grant fund and a loan fund were created for the availability of small water systems. And at that time an exclusion was placed in the law stating that when a small water system got a loan from the state, then they could not apply for a grant and visa versa. Both funds were not available to the same water system. Senator Adler said when S.B. 141 got to the Assembly the federal department of agriculture officials and others pointed out that if the person was eligible for both a grant and a loan, then that money could be leveraged to get more money from the federal government to fix a broken municipal water system. So the language in S.B. 141 was amended by the Assembly to state that if a water system gets grant money that does not preclude them from getting a state loan to fix the same system. Chairman Rhoads asked for a motion to concur on S.B. 141. SENATOR REGAN MOVED TO CONCUR ON S.B. 141. SENATOR ADLER SECONDED THE MOTION. THE MOTION CARRIED UNANIMOUSLY. ***** Chairman Rhoads said he had appointed Senators James, Adler and McGinness to serve on a conference committee for Senate Joint Resolution (S.J.R.) 12. SENATE JOINT RESOLUTION 12: Urges Federal Government to adhere to states' laws governing use, allocation, management and protection of water. Senator James withdrew from the conference committee due to a conflict with the legal issue. Chairman Rhoads said in the first reprint of S.J.R.12, line 20, the words and court decrees were deleted by the Assembly and the Colorado River Commission had some concern with the level of court degrees. SENATOR McGINNESS MOVED TO CONCUR ON S.J.R. 12. SENATOR REGAN SECONDED THE MOTION. THE MOTION CARRIED. (SENATOR JAMES ABSTAINED FROM THE VOTE.) ***** There being no further business to come before the committee, Chairman Rhoads adjourned the meeting at 3:55 p.m. RESPECTFULLY SUBMITTED: Billie Brinkman, Committee Secretary APPROVED BY: Senator Dean A. Rhoads, Chairman DATE: Senate Committee on Natural Resources June 9, 1995 Page