MINUTES OF THE meeting
of the
ASSEMBLY Committee on Natural Resources, Agriculture, and Mining
Seventy-Second Session
March 3, 2003
The Committee on Natural Resources, Agriculture, and Miningwas called to order at 1:27 p.m., on Monday, March 3, 2003. Chairman Tom Collins presided in Room 3161 of the Legislative Building, Carson City, Nevada. Exhibit A is the Agenda. Exhibit B is the Guest List. All exhibits are available and on file at the Research Library of the Legislative Counsel Bureau.
COMMITTEE MEMBERS PRESENT:
Mr. Tom Collins, Chairman
Mr. Jerry D. Claborn, Vice Chairman
Mr. Kelvin Atkinson
Mr. John C. Carpenter
Mr. Chad Christensen
Mr. Marcus Conklin
Mr. Jason Geddes
Mr. Pete Goicoechea
Mr. John Marvel
Mr. Bob McCleary
Mr. Harry Mortenson
COMMITTEE MEMBERS ABSENT:
Ms. Genie Ohrenschall (excused)
GUEST LEGISLATORS PRESENT:
None
STAFF MEMBERS PRESENT:
Linda Eissmann, Committee Policy Analyst
Erin Channell, Committee Secretary
OTHERS PRESENT:
Marcia de Braga, Private Citizen
Ed James, General Manager, Carson Water Subconservancy District
Steve Walker, Truckee Meadows Water Authority
Hugh Ricci, State Engineer, Division of Water Resources, Nevada State Engineer’s Office
Chairman Collins called the Assembly Committee on Natural Resources, Agriculture, and Mining to order. Roll was called. All members were present except for Ms. Ohrenschall who was noted as excused. He opened the hearing on A.B. 82, sponsored by Assemblyman Mortenson, and asked Ms. de Braga to begin her testimony.
Assembly Bill 82: Extends date of expiration of Newlands Project Water Rights Fund and related program for acquisition of certain surface water rights. (BDR S-346)
Marcia de Braga, private citizen, spoke on behalf of A.B. 82 that sought to extend, for two years, the time period for the Newlands Water Right Purchase Program. The Program was a component of A.B. 380 of the Seventieth Legislative Session that significantly changed Nevada surface water law. It addressed several points (Exhibit C), including:
The Program was designed to prevent government takings of water rights and was established for a period of five years. Contributors to the fund were: Nevada, the federal government, and Sierra Pacific Power Company. All participants involved agreed that if 6500 acres of water were returned to the system through the Program, unresolved protests and lawsuits would be withdrawn. Signatories to the agreement were: Truckee Carson Irrigation District, Pyramid Lake Paiute Tribe, City of Fallon, Churchill County, and Sierra Pacific Power Company, with other interested parties participating in the formation of the agreement.
Ms. de Braga said the Carson Water Subconservancy District managed the fund. Due to technical problems over release of title, the program started late, and was not near the 6500-acre goal. An important consideration was Nevada’s role; due to budget constraints, the state only contributed $3.3 million rather than the agreed amount of $4 million. The hope was that earned interest would make up the difference; but it had not, partially due to low interest rates, as well as the use of $1.6 million for startup costs.
Ms. de Braga said they were asking for a two-year extension to accomplish the 6500-acre goal and increase earned interest on the account.
Before continuing the hearing, Chairman Collins asked Vice Chairman Claborn to conduct the meeting.
Ms. de Braga said she was willing to answer any questions.
Vice Chairman Claborn asked if there were questions from the Committee.
Assemblyman Marvel inquired about the amount of money left in the fund.
Ms. de Braga replied that the state had contributed $3.3 million to be used over the time frame; the state had allowed them to use $1.6 million for startup expenses, leaving the difference to earn interest.
Assemblyman Marvel asked how much more funding they would need.
Ms. de Braga answered that they did not want to make any changes at present because the acquisition of water rights was not progressing as rapidly as anticipated. The current plan was to leave the state’s contribution alone, and just request the two-year extension. She added that they had conferred with the original signatories to the agreement who agreed with the extension.
Assemblyman Marvel verified the existence of the funding and clarified the extension.
Ms. de Braga replied the money was currently available, unless near the end of the project they ran out of funds.
Assemblyman Marvel said he just wanted to ensure they would not need an additional appropriation.
Ms. de Braga stated they would not, and said the state committed to $4 million, but contributed $3.3 million hoping earned interest would make up the difference.
Assemblyman Carpenter asked how many acre-feet had been purchased.
Ms. de Braga said Mr. James would have those figures.
Ed James, General Manager, Carson Water Subconservancy District, said he would provide more complete answers to questions previously asked. He said they were not asking for more money, only more time. With the state‑contributed funds, they had approximately $3.4 million in the investment pool. They used federal funds first to purchase water rights because they were not allowed to earn interest on those funds, and then they were reimbursed. They were trying to save the state specific funds through the investment pool to maximize earned interest.
Assemblyman Marvel asked how much total was in the fund.
Mr. James responded that the initial total funds were $9 million from federal sources; $4 million from the state; TMWA (Truckee Meadows Water Authority) marked $2.5 million; other funds as contributed, such as $100,000 from the “Carson Water Conservancy District”; and earned interest to date of nearly a quarter of a million. He commented they were trying to maximize the amount of interest earned, but interest rates were declining. He said he had projections of available state funds, held in a separate account, if there were questions. Water rights purchased were, to date, 1174.66 acres; they measured in acres, not acre-feet, with a goal to purchase 6500 acres of water.
Assemblyman Goicoechea commented the bench ground had 4 acre-feet of water attached to an acre, and asked about adjusting the amount.
Mr. James said they made no adjustments, and the legislation dealt strictly with acres. He continued by saying, “If we purchase a water right that has associated with it a duty of 4½, then that is what comes with it; if it is 3½, that is associated with it.” He said the only time they dealt with the acre-foot per acre was when they were participating in a matching program, where a purchased water right that was not challenged. He said the goal was to purchase water rights not available for use.
Mr. James said:
If someone has a water right that was caught in litigation, but he wants to continue farm, and we have someone who sold his water rights that are not involved in litigation, we match those. So the person who wants to continue to farm can take that water, match, and basically get out of litigation and farm with it. So any water that we purchase – at the end – we do not buy any wet water.
Assemblyman Goicoechea followed up, asking what the average cost was of the approximate 1175 acres.
Mr. James replied they had had an appraisal made, creating a set price in 1999. The cost in the Carson Division, which was the Fallon area, was $1600 per acre; the Truckee Division was $3200 per acre. The prices were set and had not increased because, with the funds provided at the outset, they wanted prices set. Since they were purchasing challenged water rights, they did not want people waiting until the end of the program in hopes of market value changing.
Assemblyman Goicoechea clarified that the price would not change, and Mr. James indicated that was correct.
Assemblyman Mortenson asked for an elaboration on acres of land and acre-feet of water and their relationship.
Ms. de Braga said the average for the majority of land dealt with by the project was 3.5 acre-feet per acre. The bench ground, higher ground that was more difficult to supply with water, was 4.5 acre-feet per acre. Because the program dealt with acres, regardless of the water acre-feet attached to a piece of land, the only price difference was based on location above or below the dam.
Assemblyman Mortenson asked if the acre-feet attached to land was set by the State Engineer or by rule.
Ms. de Braga answered that it was set up by the project from its inception; she said it also had a relationship to the ability to irrigate for farming purposes.
Assemblyman Marvel asked who retained title to the acres.
Mr. James replied that the Carson Water Subconservancy District would take title of the acres, and then retire them with the State Engineer; any water rights they acquired would be retired. Mr. James asked if he should present the time line. Vice Chairman Claborn asked if he wanted to testify on A.B. 82, and Mr. James replied that he did.
Mr. James said the reason for the request for a time extension was initially to be completed in 2004. He said movement on the project was slow, for a variety of reasons. He then provided a basic time line (Exhibit D), beginning June 7, 1999, with A.B. 380 being signed by the Governor; the following day a meeting was held with interested parties to develop policies and procedures. They had over 35 participants, representing different agencies and interests.
In October of 1999, an appraisal report was accepted for water rights, requiring payment of not more than fair market value for the water rights. They were prepared to move forward with procedures and participants, who were in agreement. In late 1999, the Bureau of Reclamation realized they needed an environmental assessment in order to provide federal funding. They indicated to the participants on the Newlands Project that they could move forward with the project and purchase water rights. He stated that the Carson Water Subconservancy District Board was uncomfortable with that process because of the possibility of federal funding not occurring. It was possible that nearly $9 million would not be available to the project, thus the water rights would have been purchased with state and local funds without the program being successful. He said the Board would not purchase any water rights without federal funding being available.
Mr. James stated that in August of 2000, the environmental assessment was finalized; in September of 2000, the Carson Water Subconservancy District Board approved purchase procedures and authorized staff to begin the process. Contact was made with those interested, and November 22, 2000, was when they received the signed contract from the Bureau of Reclamation for funding. December of 2000 was the first purchase of water rights using federal funding.
With a long-term perspective on the program, they believed they would be short several thousands of dollars of funding, even hundreds of thousands. Depending on the amounts of water rights purchased in the Truckee Division, the more purchased, the more funds were expended. Interest rates also played a role in the uncertainty; he predicted that if they were successful, they would be close to utilizing all available funds. They were attempting to be cautious with expenditures, using funds from the federal government, except for administrative purposes, since they could not be placed in an interest bearing account.
Mr. James reiterated the fact that all participants approved the 2-year extension, and it was thought to be a benefit to the community. The Pyramid Lake Paiute Tribe indicated they would withdraw litigation in that area; those wanting to farm could, and others would not have legal fees.
He said the program was slow because many people did not know they owned water rights. Many of the rights they were purchasing were small, virtually unusable, and the owners were paying a $150 assessment per year. The program benefited everyone in the community. It provided that the Carson‑Truckee Irrigation District would administer the program, with a fee paid to them to handle the operation and maintenance costs. With 6500 acres removed, the cost would need to be redistributed to a smaller group of people, with those continuing to irrigate having a higher cost. The program would provide a lump sum fee to remove them from the record and not affect the remaining people.
He concluded saying the program had many benefits, including the Pyramid Lake Paiute Tribe support because it provided an opportunity to keep water in Pyramid Lake. He said he could provide more detailed information but limited his comments to keep his presentation short.
Assemblyman Marvel asked how the determination of 6500 acres needed was made; Mr. James responded that the number was negotiated between the participants.
Ms. de Braga added that the number was based on water available at the time and that all interests were represented in the negotiating group. The 6500 acres were based on an optimistic view of water rights available, but not being used, that could be acquired. Most water used for the evaluation were rights owned but not in use by the owner because they were located under roads, canals, or homes, and they could not be sold. Those water rights were accumulated; she thought the 6500-acre amount was optimistic.
She said that if they had the ability to offer more money, which they did not want to do, they would reach their goal more quickly. She stated that would not be fair, and the group decided differently. The decision made was based on the available water purchased but not in use. They thought they could purchase from, what would have been prior to the bill, forfeited or abandoned water rights.
Assemblyman Marvel inquired if it had an adverse impact on ad valorem.
Ms. de Braga replied that she did not see how it could – the only adverse effect was to TCID (Truckee-Carson Irrigation District) because of the need for operation and maintenance costs (O and M). A lien release of $100 per acre was added to every sale to prevent an increase in O and M costs to other water users.
Assemblyman Carpenter said some of his questions had been answered, such as use of small acreage water rights. He asked if there were large acreages available and what would happen if the water was taken from large acreage areas.
Ms. de Braga said it was a terrible problem and she had recently written a letter to the state and federal wildlife agencies commenting on stripped land and the great problems it created for her personal property. They had prepared the land for crops and did not provide any water, causing problems when the winds came through. She said legislation had been proposed requiring revegetation, but it had not passed. They were still hoping for a requirement saying water rights remained with the land until a native crop could be established.
Mr. James added that the program purchased water rights that currently did not receive water. The rights were involved in litigation, so the rights purchased were not “wet water”; instead they were water rights owned but had not received water because of litigation. Several people had been involved in litigation since 1984. They were not purchasing wet water, and the wet water they had purchased, they returned to the system.
He said they were not adding to the impact, and many people did not even know they owned water rights. When they received phone calls saying they did not own water rights, and he would tell them to check their tax records for a bill from TCID. He would then have to tell them it meant they owned a water right, even though they were not able to use it. Mr. James said he had a conversation with one gentleman who insisted he did not own any water rights. When the gentleman saw the records, he wanted to know how long he had been paying for it; Mr. James then told him there was a program for him to participate in. Mr. James commented it was an education problem and that affected the time frame.
Ms. de Braga said they had purchased several large acreage blocks, but they were water rights which were not in use or there was no delivery system. There were wet water rights for sale, but the owners wanted the water to remain with the Newlands Project, so purchasing wet water rights was difficult.
Assemblyman Goicoechea asked how realistic the acquisition of the additional 5300 acres was without getting into wet water.
Mr. James replied that a study had been made of how much water could not be served, finding approximately 13,000 acres. Some water rights they were not able to touch, and others belonged to tribes. There was enough water, on paper; it was just a matter of contacting the individuals. He thought they would be successful, with attempts to purchase some large water acreage, as well as some naval water rights; the large acreage he mentioned included 800 acres and 550 acres belonging to Fish and Wildlife.
Some of the acreage they were not able to purchase, like the Fish and Wildlife acreage, but they did not have the authority to sell it because it required an act of Congress for a sale/purchase to be made. Mr. James said there were a lot of water rights they could purchase, but he thought many were waiting, trying to hang on to their water rights or wanting an increased price. He reiterated the education concept and that the time extension would allow them that opportunity. He said they did not realize the smaller size of the entities; they thought they would be dealing with a couple hundred acreage sales. Instead, for example, they purchased a water right of .04 acres.
Because they were property rights, there was associated paperwork, making the transaction similar to purchasing a house, even for just that small amount. There were some items that could be donated, like water, to cut out some paperwork; since they were legal documents, however, it took time to complete the process.
Assemblyman Goicoechea asked if the 2006 extension was a long enough time frame.
Mr. James said staffing for the time frame had a small role; but he did not want an extension for too long because if the program was not successful they needed to be able to eliminate it. If there was a delay, they could come back for another extension; he thought that if they could not accomplish it by 2006, they would need to take a closer look at why it was not successful and possibly ending it permanently.
Ms. de Braga added that their goal was 6500 acres, but even if that was not reached they would have solved a problem for ranchers and other owners. They had made some effective changes in Nevada water law, beneficial statewide. The 6500-acre goal would eliminate litigation problems; there was a choice for owners to sell their water right to the program or remain in litigation. One problem with litigation was that if the owner lost, then the Paiute Tribe would be paid for the water rights out of the fund. A choice was available, and even if they never reached the stated goal, they still would have accomplished some good.
Assemblyman Goicoechea asked for an explanation of how the fund paid the Paiute Tribe for acreage lost through litigation.
Ms. de Braga replied that if someone chose to remain in litigation, due to a protest from the Paiute Tribe over ownership and use of a water right and lost, then the fund paid the Tribe for the water rights to remain in the system.
Assemblyman Goicoechea inquired if the payout was at the same rate of $3200 above the dam. Ms. de Braga indicated that was correct. He stated that there was still litigation, and Ms. de Braga said there were some people winning and others losing. She said that was a problem because it could continue indefinitely because of appeals. Assemblyman Goicoechea thanked her and Vice Chairman Claborn.
Vice Chairman Claborn thanked Ms. de Braga and Mr. James for their testimony. He then asked the audience if anyone else wanted to speak on A.B. 82. He then asked Mr. Walker to come forward.
Steve Walker, Truckee Meadows Water Authority and Walker and Associates, said it was simple matter of extending a positive program benefiting Churchill County. He said it solved regional issues for a project begun in 1907 – he said Truckee Meadows Water Authority was supportive of the bill and would ask for the Committee to pass it.
Vice Chairman Claborn asked if there were questions, then asked if there was anyone to speak in opposition; hearing none he closed the hearing on A.B. 82 and moved to A.B. 90.
Assembly Bill 90: Increases limit on assessment for water distribution expenses incurred by State Engineer. (BDR 48-520)
Hugh Ricci, State Engineer, Division of Water Resources, Nevada State Engineer’s Office, said he was present to speak in favor A.B. 90 which he had drafted. He said there was only one change that increased the assessment from $.25 to $.30 per acre-foot on any stream system irrigating more than 200,000 acres (Exhibit E). The reasoning for the change was that it was the only legislatively capped assessment on any stream system statewide; the only system irrigating more than 200,000 acres was the Humboldt River System.
Currently, they assessed $.24 per acre-foot, meaning only $.01 was left for any increasing assessment. Not making the change at the present time and waiting until 2005 for bill passage meant the actual funds would not be available until July 1, 2006. The practical implication was that for three years he would have only $.01 with which to work. Each penny increased in the increase generated approximately $6600.
In past years, expenses had increased annually, but they had attempted to minimize the changes. Mr. Ricci said there would be some impact, indicating the fiscal note for impact to local and state government. The state agencies that would be affected were Division of State Parks, Department of Transportation, and the Division of State Lands. County and city agencies affected were the City of Carlin, City of Elko, Lander County Commissioners, and Pershing County Board of Education (Exhibit E). They would feel an impact because they owned some water rights under the Humboldt River Decree. Current assessment was $.24, and he could provide information about how each would be impacted by each $.01 increase, and what the additional $.06 would be with the $.30 cap from the $.24 currently.
Mr. Ricci said he had addressed the largest water agency on the Humboldt River System, Pershing County Water Conservation District on June 5. It was difficult for them to endorse an increase in the assessment, but they voted not to oppose the proposed increase. They provided one caveat, indicating they wanted a gradual increase; Mr. Ricci said they would not be asking for any increase that was unnecessary. He spoke to the Humboldt River Basin Water Authority on July 12, who unanimously voted to support the bill. He said he had nothing further to add but would answer any questions the Committee had.
Assemblyman Marvel commented that he had been a user along the Humboldt System; he said one reason Pershing County would be supportive was that it kept others from “stealing their water through the river delivered to Rye Patch. I am sure with a water year like this, your duties are going to be threefold from what they are when you have a lot of water.”
Mr. Ricci said the upcoming year would be difficult on the Water Commissioners.
Assemblyman Marvel then asked if the funds were transferred to other river systems, because he had had the complaint that the funds did not remain in the system.
Mr. Ricci responded that any funds collected as an assessment through the budget account remained strictly within any distribution or administration of the Humboldt River Decree.
Assemblyman Carpenter said that had been his question, if work was done outside, then payment was from a different fund.
Mr. Ricci said he was correct and based on a 1997 Legislative Audit, any stream system with a Water Commissioner where water users were assessed, the funds collected were only used for those purposes.
Assemblyman Marvel said that since he was on the Audit Subcommittee he needed to ask the question.
Assemblyman Goicoechea said he was a water right holder on the Humboldt Distribution System, and he wanted it on record as being in support of increasing the cap.
Vice Chairman Claborn asked for any further questions, and seeing none, thanked Mr. Ricci for his testimony. He asked if there were others wishing to speak on A.B. 90. He then asked about unfinished business before the Committee.
Assemblyman Geddes made a disclosure regarding A.B. 74 and brownfields, stating that he needed to change his vote from an “aye” to an “abstention” because of his employment with the University of Nevada, Reno (UNR). He said UNR had an application with the Division of Environmental Protection on behalf of the Fire Academy. This created a potential conflict because of his possible involvement in the brownfield remediation of that project. He asked the Committee to allow his vote change from an “aye” to “abstain.”
Vice Chairman Claborn noted the change and asked about any other unfinished business.
Vice Chairman Claborn returned the chair to Chairman Collins, who thanked Assemblyman Claborn for conducting the meeting and hearings of the bills.
Chairman Collins recognized Assemblyman Geddes’ request to change his vote, saying the minutes would record the change because of the potential conflict. He said the Chair would recognize his request to change his vote. He then reopened A.B. 4.
Assembly Bill 4: Revises provisions governing licenses to hunt, fish, or hunt and fish. (BDR 45-129)
Chairman Collins reminded the Committee that they were not a “money committee” but an “issue committee” and dealt with issues regarding natural resources, agriculture, and mining. It was not their issue about loss of funds between departments. He said he would accept consideration from the Committee for a motion to pass and rerefer it to the Ways and Means Committee, if the Committee was so inclined.
ASSEMBLYMAN MARVEL MOVED TO DO PASS AND REREFER A.B. 4 TO WAYS AND MEANS.
ASSEMBLYMAN CONKLIN SECONDED THE MOTION.
Chairman Collins asked for discussion on the motion and recognized Assemblyman Goicoechea.
Assemblyman Goicoechea said he agreed with the 6-month residency, but he thought there was a bill from the Division of Wildlife that would set the fees. He did not think they should do that with this particular bill, and he would prefer to see that language amended out.
Chairman Collins explained that his consideration of the motion was because they were a “policy committee” and the “money committees” would examine the fee issues. He said the Ways and Means Committee held bills related by subject so they could examine them all together. He thought that addressed several Committee members’ concerns, saying anything related with that issue would be dealt with collectively.
Assemblyman Goicoechea clarified that Ways and Means would address the issue.
Assemblyman Marvel asked if Chairman Collins had seen the bill presented by the Division of Wildlife, and Chairman Collins said he had not seen it. Assemblyman Marvel wondered whether this was addressed in their bill.
Chairman Collins said they would leave it up to Ways and Means. He asked if there was any other discussion, then restated the motion on the floor to pass and rerefer A.B. 4 to Ways and Means.
THE MOTION CARRIED. (Ms. Ohrenschall was absent for the vote.)
Chairman Collins asked if anyone needed to abstain because of a potential conflict. He then discussed the March 10 tour of Douglas County, asked for an indication of those planning on attending, and said all but two of the senior members would be participating. Chairman Collins commented on the planned events, including ranching, agriculture, and dairy facilities, some environmental and recycling issues, and that they had been invited to spend the evening with some sponsors. The two state vans would leave at 12:30 on Monday from the parking lot. He asked if there was anything else to be dealt with and asked if there were any problems with voting on them. He said he would accept a motion on A.B. 82.
ASSEMBLYMAN GOICOECHEA MOVED TO DO PASS A.B. 82.
ASSEMBLYMAN MARVEL SECONDED THE MOTION.
THE MOTION CARRIED. (Ms. Ohrenschall was absent for the vote.)
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ASSEMBLYMAN GEDDES MOVED TO DO PASS A.B. 90.
ASSEMBLYMAN ATKINSON SECONDED THE MOTION.
Chairman Collins commented that he had asked if either bill needed to be presented to Ways and Means and he had not been told.
THE MOTION CARRIED. (Ms. Ohrenschall was absent for the vote.)
Chairman Collins inquired if there was any further business. He thanked Assemblyman Claborn again for conducting the meeting.
Chairman Collins adjourned the meeting at 2:17 p.m.
RESPECTFULLY SUBMITTED:
Erin Channell
Committee Secretary
APPROVED BY:
Assemblyman Tom Collins, Chairman
DATE: