MINUTES OF THE

      SENATE COMMITTEE ON NATURAL RESOURCES

 

      Sixty-seventh Session

      February 8, 1993

 

 

 

The Senate Committee on Natural Resources was called to order by Chairman R. Hal Smith, at 9:45 a.m., on Monday, February 8, 1993, in Room 205/206, Cashman Field Center, Las Vegas Nevada.  Exhibit A is the Meeting Agenda.  Exhibit B is the Attendance Roster.

 

 

COMMITTEE MEMBERS PRESENT:

 

Senator R. Hal Smith, Chairman

Senator Dean A. Rhoads, Vice Chairman

Senator Mark A. James

Senator Joseph M. Neal, Jr.

Senator Thomas J. Hickey

Senator Dina Titus

Senator Ernest E. Adler

 

STAFF MEMBERS PRESENT:

 

Caren Jenkins, Senior Research Analyst

Rayanne Francis, Committee Secretary

Caroline Allen, Committee Secretary

 

OTHERS PRESENT:

 

Karen M. Galatz, Chairman, Colorado River Commission

Thomas E. Cahill, Director, Colorado River Commission

Bob Crowell, Vice Chairman, Colorado River Commission

Gary Bishop, Manager, Chevron Shale Oil Company

Jack Barnett, Executive Director, Colorado River Basin Salinity     Control Forum

Dr. John Hess, Executive Director, Water Resources Center,         Desert Research Institute

Dr. Dale F. Ritter, Executive Director, Quaternary Sciences        Center, Desert Research Institute

Arlen W. Huggins, Associate Research Meteorologist, Atmospheric

   Sciences Center, Desert Research Institute

Ric Davidge, Director of Water, Department of Natural Resources,     State of Alaska

Jack Lindsey, Chairman, CEO, Sunbelt Water, Inc.

Thomas B. Maddock, Chairman, Boyle Engineering Corp.

Ian Watson

John C. Lease, Chief, Water Augmentation Group, Department of      the Interior, Bureau of Reclamation

Walt Casey, Walt Casey's Culligan

 

After introductions, Senator Smith commented he had introduced, during the 1989 session, three resolutions ... one to congress, one to the Western States Water Council and one to the legislature ... for interim studies dealing with political, social, economic, and environmental impacts of inter-basin transfers of water.  He noted the Western States Water Council had responded, but congress had yet to be heard from. 

 

He commented, " ... our interim study was divided into three geographical areas that had no particular bearing on surface water or the ground waters."

 

Senator Smith added he had introduced Senate Bill (S.B.) 124 of the Sixty-sixth Session, which in its original form started to do away with the status quo.  The bill was amended to, " ... for the first time authorize and direct Nevada agencies to pursue the water resource outside of the State of Nevada."

 

SENATE BILL 124 OF                                              THE SIXTY-SIXTH SESSION:   Clarifies and expands duties of                                 Colorado River Commission.                 

Senator Smith opined the legislation had become meaningful, and had no money attached to it, with any money necessary to be appropriated by the legislature as necessary.

 

Senator Hickey spoke about S.B.124 of the Sixty-sixth Session, and how it had been introduced by Senator Smith while Senator Hickey was chairman of the committee during the previous session.  He added he was, " ... particularly interested in how the system would be integrated with the various water districts and interested parties."

 

Senator Hickey introduced the first witness, Karen Galatz, Chairman, Colorado River Commission.

 

Ms.Galatz introduced Tom Cahill, Bob Crowell, and Commissioner Garth Winkler of the Colorado River Commission.  She preceded to read from her prepared testimony (Exhibit C).

 

Senator Rhoads inquired if the commission had decided the point of diminishing returns, and how much could one afford to pay for water.

 

Ms. Galatz replied water became too expensive when the community decided it was too expensive.  It was basically a political decision.

 

Senator Hickey inquired how the commission viewed local water entities (Henderson, North Las Vegas, the water district, etc.) as parties to negotiations.

 

Ms. Galatz answered the water authority would represent all purveyors in an umbrella group.  If the purveyors did not feel that was fair, the commission would be open to expansion.

 

Senator Hickey asked what would the present cost be for Las Vegas?  Ms. Galatz answered, " ... in essence, nothing.  The preliminary estimate on this proposal would be $200 an acre foot."

 

Senator Hickey questioned present costs for the water district.

 

Tom Cahill, Director, Colorado River Commission, answered, "If you include in that treatment costs, I think they are around $130 an acre foot."

 

Senator Hickey asked if that meant water for Las Vegas would cost $70 more than water for the water district.

 

Mr. Cahill replied:

 

      No, actually the increase would be the $200 an acre foot, because that water would still have to be treated.  The $200 an acre foot does not include the treatment cost, or the distribution cost.

 

Senator Hickey pressed for an estimation of treatment costs.

 

Mr. Cahill said he assumed treatment costs would remain around $130 an acre foot, which brings the total to approximately $330 an acre foot.

 

Senator Hickey asked, "The additional water will cost us $330, versus the present cost of $200.  Is that correct?"

 

Ms. Galatz responded, "No, $135 to $335."

 

Senator Hickey asked who would have to pay for the increase, and Mr. Cahill responded it would be water users.

 

Mr. Cahill added water purveyors would decide the difference of costs for those who lived in the valley now as opposed to those who moved in after the arrangement was ratified.

 

Senator Adler questioned if the commission had done detailed polling in Clark County as to the type of growth people favored.

 

Ms. Galatz replied negatively, but added all of the questions were focused on growth.  She stated the commission looked to elected officials to answer those questions.

 

Senator James inquired whether Nevada would have to change the law of the river to augment the state's water supply through a leasing arrangement such as was under discussion.

 

Ms. Galatz answered at some level, legal questions would have to be addressed.

 

Senator James agreed and asked how a private party lease to Nevada could have become the vehicle to bring this water to the state.  He stated it had always been his opinion California and Arizona would have had to have gotten involved for this to have happened.

 

Ms. Galatz responded it was only one of many options under discussion. She asserted the Chevron/Getty private party lease option was intriguing as a non-governmental option because it was not speculative or a "for profit" transaction.

 

Ms. Galatz declared it was her opinion the law of the river would eventually be challenged, and there was a, "... growing appetite to look at interstate water transfers."  She felt this added to a growing momentum for a challenge to the law.

 

Senator James asked whether California would benefit from a change which would allow this type of transfer, or would the state resist such a change.

 

Ms. Galatz stated she had no answer, and deferred to Mr. Cahill who asserted there would be a potential benefit to California because,  " ... anything that pushes the river towards a more market oriented system helps them in the long run...in the short run it may not."

 

Senator James asserted it was important for parties involved to go to congress and not the courts, and he believed the Chevron/Getty private lease option would get them to court before congress.  He asked Ms. Galatz what other proposals on the river the commission was considering, especially, "... the possibility of Nevada leasing some of the CAP [Central Arizona Project] water and the legal changes that would be necessary to accomplish that."

 

Ms. Galatz commented it was not the Colorado River Commission's job to decide which option the commission would be pursuing for Nevada, "... rather the discussions that go forward now with the  water authority become the decision making process for which is the option to most aggressively pursue."

 

Mr. Cahill asserted the commission had focused on the Roan Creek proposal because it was the only project where a concrete proposal had been offered.  He added they had dealt with the Indians to get a proposal from them regarding which tribes were willing to lease water, and how much they were willing to lease.  He stated the commission was still waiting for a response.

 

Mr. Cahill declared, " ... The issues that we face from leasing from the Indians, assuming it is an upper basin tribe, are essentially the same issues, as it relates to the law of the river, that we are facing with the Roan Creek proposal."

 

Mr. Cahill added Arizona was having concerns with repayment contracts and various problems they were having with the CAP.  He concluded they were undergoing a very serious reexamination of how they were going to deal with these problems.

 

Mr. Cahill stated one of the major problems Nevada would have with Arizona would be Nevada's needs be coming to fruition at the same time Arizona would be looking towards using their full entitlement.  He added if that did not happen, Nevada might look to Arizona for interim relief.

 

Mr. Cahill commented the Las Vegas Valley Water District had entered into cooperative studies with the United States Bureau of Reclamation to determine feasibility of the Virgin River project, and the commission was also looking at this project.  He added some in the upper basin viewed that with skepticism, because they believed any new project on the river reduced the amount of water available for the rest of the river.

 

Mr. Cahill said the commission, in conjunction with the Southern Nevada Water Authority, the state engineer's office and the Department of Conservation and Natural Resources, had begun talking to Arizona and Utah, "... to enumerate the present uses and the projected needs for water out of the Virgin River and its tributaries.  Once those figures have been put together and exchanged, we hope that will then become a basis for discussions of making a permanent allocation of the Virgin River between the three states that it now flows through."

 

Regarding Alaskan water, Mr. Cahill asserted it was an option that must be considered, as well as desalting.  He added although these two options were probably easiest to do, they were also probably the costliest.

 

Mr. Cahill also mentioned the potential of weather modification as an option, and stated with such a broad array of options available, the commission had a good chance of coming up with ones that would best meet the needs of Nevada.

 

With regard to provisions in the law that would have to be changed, Mr. Cahill commented changes would best be made with cooperation of other water users on the river.  He attested one of the objectives of the Roan Creek proposal was that it gave concrete proposals to take to the other states to show how it would benefit them.  He declared the project had great benefits to Colorado, because it allowed them, "... to make use of their entitlement, in return for letting us use the water in the interim."

 

Mr. Cahill called attention to the fact the Secretary of the Interior would have to be dealt with, either through regulatory changes or legislative changes.

 

Regarding litigation, Mr. Cahill emphasized the commission was not willing to buy into a lawsuit due to excessive lengths of time these cases would take to settle.  He asserted agreements with all of the states involved would have to be made before continuing with the project to avoid such litigation.

 

Senator James mentioned he was concerned California might see this as an opportunity to reopen California v. Arizona, and drag Nevada into the case.  He questioned what was in it for California to make them agree to the project and not litigate.

 

Mr. Cahill asserted there were potential ways to recruit California over to Nevada's side.  He claimed California, Arizona, and the other states along the river were:

 

       ... willing to examine this as a concrete proposal in the face of the dynamics of the river ... If you look to the original intent of both the 1922 compact and the 1948 compact, the `22 compact was enacted to allow the upper basin and the lower basin to develop the water rights that they had for their own benefits.  When you get to the 1948 compact, that made the allocation among the upper basin states, as to what they were able to do.  The stated purpose of the `48 compact is to facilitate the development of the water resources in the upper basin.

 

      I started in Wyoming in 1965, when the central Arizona project legislation was then before congress.  It was my determination at that time that the only way Wyoming was going to be able to develop its full allocation was that if it had a source of capital to build the projects necessary to do that.  They did not have it at that time.

 

      The state of Colorado is now essentially in the same predicament.  The development process there ... the funds for development are very limited.  And by allowing the State of Nevada or Southern Nevada to use a portion of their allocation for an interim, in return for the use of the water that would be stored there, gives them an opportunity for future development that they might not have without it.  And that I see as a benefit to Colorado.

 

      Again, if you then translate to the potential in the other basin states, they may well have an opportunity to do the same thing ... not necessarily with Southern Nevada, but certainly, possibly with California.  It's been a long time that California has been quite willing to do nothing and let the water run down the creek, because they know that they are at the end of it, and they have the opportunity to do that.  But as things are changing, they certainly are the sophisticated entity at the end of the ditch, and they see the recognition and the ability to do some things there that may be to their benefit.  And I think that I'm at least optimistic that we can convince them of that.

 

Ms. Galatz added at least California and Colorado were willing to do corridor water transfers, and that had never happened before.

 

Senator James inquired whether the project augmented, " ... main stem water that's not going in the river now that doesn't come down to California through an application for a surplus?"

 

Mr. Cahill answered water rights in question were now flowing down river, and permits would allow them to take the waters from the Colorado and store them on a tributary, and release them later.

 

Ms. Galatz commented parties involved realized they had moved from a time of plenty to a time of scarcity, and new answers, and new "give and take" would become essential.

 

Senator Adler inquired after a consensus among the states was made, what the next step would be ... work through the Secretary of the Interior, or go through congress.

 

Mr. Cahill responded three major efforts had to go on concurrently:  1) Get Colorado to support the project. 2) Get the other states to agree not to oppose the project. 3) Have the Secretary of the Interior agree to a proposal that would allow water to flow from Colorado to Nevada without any legislative changes.

 

Mr. Cahill displayed a slide depicting the Colorado River and its tributaries, and proceeded to read from his prepared text (Exhibit D).

 

Senator Neal stated in the past, secret deals had been made along the river that had embarrassed Nevada, and he implied that had made many people in the state suspicious of any deals.

 

Senator Neal inquired, referring to the Roan Creek project, what Colorado had agreed to accept.

 

Mr. Cahill asserted Colorado had not agreed to accept anything yet, but no officials in the state had opposed the project.

 

Senator Neal asked:

 

      I thought I understood you say that you had a talk with this ... attorney friend of yours, Jack Ross.  And he wanted you to discuss this project, which you could not because you didn't feel that you could give the confidentiality that was necessary for him to proceed.  And I gather from your comments, that he then turned to the discussion with Colorado to see if whether or not such a project would be feasible.

 

Mr. Cahill replied that was his understanding and, " ... I was not privy to those contacts, but that he did ... the oil companies did make contacts throughout Colorado to determine whether or not they felt ... they could get the necessary approvals."

 

Senator Neal inquired what the oil companies were interested with the various main stream and tributary waters.

 

Mr. Cahill answered a representative was present from Chevron who would give the oil companies' point of view.

 

Senator Neal queried if it was the commission's belief these projects could be negotiated without involvement of the Southern Nevada Water Authority.

 

Ms. Galatz responded it had to be a shared consensus including the water authority.  She declared:

 

       ... going into the discussions, there was this agreement, and then the specifics were that Mr. Cahill, through his personal contacts, was approached ... even he did not know the names of the oil companies until the Friday before the announcement was made, and the only thing ... that has happened was that Southern Nevada has an opportunity now to sit down and examine a specific proposal, put specific dollar amounts to it, to examine term, etc., and again ... I had written a letter to Commissioner Dondero, who chairs the water authority asking for her designated person to go forward in these discussions with us.

 

Senator Neal asked when the letter had gone out to the commission, and Ms. Galatz replied it was dated February 3.

 

Mr. Cahill added it was important to reiterate, " ... the terms and conditions of any agreement must be acceptable to the Southern Nevada Water Authority and its members, who will actually deliver the water to the consumers."

 

Senator Neal stated if Southern Nevada could get water from other states at a reasonable cost, it was a course that should be pursued.  He added the Roan Creek project might cause some problems downstream, thus causing a long delay.

 

Mr. Cahill agreed it was possible but there might be the same problems with other sources, such as the Indians.

 

Senator Neal inquired what Indian tribes were involved, and what their locations were along the river.

 

Mr. Cahill responded there were 10 Indian tribes, all of which have water rights either on the Colorado itself, or on tributaries. 

 

Senator Neal wondered if the rights were contained in treaty agreements.

 

Mr. Cahill asserted some of them were contained in treaty agreements, while others were unquantified and still other allocations were made through federal projects.  All of them, however, went back to a basic treaty right.

 

Senator Neal asked if others would have to be bargained with if the Indians agreed to lease their water.

 

Mr. Cahill opined an agreement could be made directly with the Indians, but first, they would have to have congressional authorization to enter into such an agreement.  The same problems being faced with Roan Creek would be faced, he said; i.e., getting water where it was needed from where it was.

 

Senator Adler asked if it were true the Indians could not sign a lease without prior approval from the Secretary of the Interior.

 

Mr. Cahill agreed the secretary would have to be involved, plus it might require congressional authorization for the tribes to be able to enter into agreements.

 

Senator Titus stated all of the problems previously enumerated would occur no matter what project was decided upon, not just the Chevron/Getty proposal.

 

Mr. Cahill noted, " ... None of the proposals are either cheap or easy, but I don't think that should rule them out."

 

Senator Hickey queried who owned the "managed return flow" in this kind of system.

 

Mr. Cahill declared the return flow was used to determine the amount of water actually consumed.

 

Senator Hickey emphasized he knew what the term meant in general, but he wanted to know what it meant with regard to the current proposal.

 

Mr. Cahill asserted, " ... It's my opinion that we would have the right to return flow credits from the additional ... from the Roan Creek project also.  And that's why I say if you take the 175 thousand available there and then apply a reasonable factor of return flow credits ... and I think we get to the 230 thousand diversion needs in 2050."

 

Senator Hickey commented the managed return flow, therefore, made it worth 40 percent more.  Mr. Cahill agreed.

 

Senator James declared his only concern was " ... not who negotiates for the water, or what project it is, it's just that Nevada selects the most prudent course."  He then asked if the Roan Creek water was going directly into the Colorado, and was California already using this water, " ... if there's water in the Colorado that's above and beyond the 4.4 million that's allocated to California, how do they get that?  Do they have to make application for a surplus to the Secretary of the Interior ... and do they do that on an annual basis?"

 

Mr. Cahill replied it was his understanding that was the procedure.

 

Senator James queried if there were anything to prevent Nevada from getting into the process for surpluses in the lower basin.

 

Mr. Cahill answered there was not, but it would become an annual exercise and it was not a very dependable supply.

 

Senator James asked if that was something the commission planned to pursue.

 

Mr. Cahill asserted first, Nevada would have to be using its full allocation.  Then, the state would be in position to make the same annual applications as California.  He added he hoped a more permanent supply would be available so these annual applications would not have to be made, but if not, he agreed that was the way to go.

 

Senator James questioned when the Roan Creek project would first reach the Southern Nevada Water System (SNWS).

 

Mr. Cahill said it was difficult to estimate, but once all legal ramifications were overcome he believed it could be completed by the turn of the century, at the earliest.

 

Senator James mentioned the commission would have to construct a facility in Colorado to facilitate the project, and then queried, " ... do you anticipate having to augment the SNWS in any way to be able to take this water out, or will the existing system suffice?"

 

Mr. Cahill responded the existing system would probably have to be expanded, whether water came from Roan Creek or somewhere else.

 

Senator James asked if the 175 thousand Nevada took under this lease would be an additional "consumptive use", and Mr. Cahill said it would.

 

Senator James claimed the 230 thousand would then have to be changed because part of the law would have to allow Nevada to take additional return flow off of that.

 

Mr. Cahill declared the system now in place would allow the state to take additional return flow credits.

 

Senator James noted with a permanent allocation they could take the return flow, but he wondered if the same would be true with a lease allocation.

 

Mr. Cahill noted he believed it would be possible.

 

Bob Crowell, Vice Chairman, Colorado River Commission, agreed and stated, " ... that's how I would understand [it].  The lease issue would also define the use as consumptive use, not diversion.  So ... we would get ... by definition of the water that we would get ... as consumptive use water, it entitles you to the return flow credit."

 

Senator Smith called the Roan Creek representatives to testify, and the first was Gary Bishop, Manager, Chevron Shale Oil Company.

 

Mr. Bishop asserted his company believed the parties had a "gentleman's agreement" which would eventually lead to a more formal agreement allowing Nevada to lease oil shale water rights for a period of 30 - 50 years.

 

Mr. Bishop emphasized Chevron and Getty had been, " ... concerned for some time about our ability to protect our conditional oil shale water rights in Colorado, and our ability to provide a water supply in the future for our shale projects."  He noted it was partially due to the stringent diligence requirements as well as concerns over continued use in the lower basin of the water flowing out of the state.

 

Mr. Bishop continued Chevron had asked Jack Ross, their water lawyer, to look for opportunities along the entire river where they might lease their water rights for a period of time, get some benefits out of it, and then bring the water back to Colorado when needed for oil shale projects. 

 

Mr. Bishop mentioned they were the ones that had originally insisted on confidentiality because of the political nature of water in Colorado, and the fact that if their plans had come out prematurely, there would have been no chance of it being approved. 

 

Mr. Bishop displayed a map of the western two-thirds of the State of Colorado (Exhibit E) describing where along the Colorado River the project was located.

 

Mr. Bishop proceeded to give a history of Chevron and Getty's oil shale and oil shale water rights development.

 

Based on computer studies, Mr. Bishop declared their water rights package could produce a firm supply of about 175 thousand acre feet per year.  However, in extreme drought conditions, the water rights might be out of priority for up to nine consecutive months or more due to more senior rights.  He emphasized because of that, storage was necessary to provide a firm supply of water.

 

Mr. Bishop displayed a map (Exhibit F) showing details of the Roan Creek project.  He declared all preliminary engineering work and permitting had been completed and the project was ready to go to final design.  He added the Corps of Engineers had issued a "404 permit", which was the federal permit required to construct the facility.

 

Mr. Bishop pointed out the project was a non-profit one for the oil companies.  All they would be getting out of it was construction of the water project for their future shale oil uses.  He added one of Colorado's benefits was conjunctive uses of water within the state, enhanced recreation areas with the reservoir, and perhaps additional recreational benefits from releases of water into the Colorado River.  He stated these releases would be done on a timed basis to benefit threatened and endangered fish that occupy that part of the river.  In addition, if this water could be used to protect and recover those fish, other states would also benefit, which made this a "win-win" proposition.

 

Senator Neal asked if the oil companies would have gone ahead with the project if there had been no state involvement.

 

Mr. Bishop replied they would not have gone forward until their oil shale projects became more economically feasible, and presently, they did not know when they would be feasible.

 

Senator James inquired if water rights in Colorado were forfeited if not put to beneficial use.

 

Mr. Bishop maintained in Colorado there was a special type of water right called a "conditional" water right.  This right was a right to develop a water right, which was not being used at the present time.  He added, " ... a conditional water right comes with a requirement to diligently develop the water right, over time, so the water is ultimately put to the beneficial uses it was decreed for."  He claimed every 6 years, the owner of such a right was required to appear before a special water court to explain what development had been done.  If the court determined water was being used diligently, it would continue the right for another 6 years, if not, the right would be cancelled.

 

Senator James asked if the Roan Creek project were cancelled, would the oil companies be able to maintain the rights indefinitely, on the basis that some time in the future oil shale would be developed.

 

Mr. Bishop replied water rights could not be maintained indefinitely.  Some type of beneficial use had to be found for the water and constant engineering studies would not qualify as diligent use.  He claimed putting water to beneficial use would get them off the "diligence treadmill", and have the water rights perfected.

 

Senator James inquired if Colorado courts had a precedent for such a lease arrangement.

 

Mr. Bishop replied:

 

      Colorado statutes contemplate the export of water outside the state ... there are certain criteria that have to be followed, and in addition to that, there is a $50 export fee that's provided in the statute.  In addition to that, we do have to go through the water court to make a change in the place of use of these water rights ... they are already decreed for multiple uses, including municipal uses, but they are decreed so they can only be used in Colorado ... so we do have to go through a water court proceeding that assures that the change will not adversely affect other water rights in Colorado.

 

Senator James wondered if the oil companies would consider a longer lease than the one discussed.

 

Mr. Bishop said it would be part of negotiations.

 

Senator James asked if the length of the lease would rely solely on when the oil companies could begin to develop oil shale.

 

Mr. Bishop answered that was correct, and the 30 to 50 year time period was what they were presently comfortable with.

 

Senator Hickey asked if there were higher priorities than "conditional" water rights.

 

Mr. Bishop explained conditional water rights allowed them to keep their place in line, and the only projects that could affect these rights were large irrigation projects located around Grand Junction.

 

Senator Hickey asked if a court would have to determine which right would take priority.

 

Mr. Bishop pointed out the special water court would only deal with issues regarding other vested water rights in the system.

 

Senator Hickey inquired if a dispute over water in the reservoir would require a court to decide who got the water.

 

Mr. Bishop replied the legally binding contract required Nevada be able to use the water for the period of the lease.

 

Senator Hickey stated the contract was between state and company, and if there was a dispute, would not the state of Colorado have a prior claim.

 

Mr. Bishop emphasized in Colorado, water rights were treated as real property.  The oil companies owned the water rights.

 

Senator Smith interjected that a water attorney should be questioned on this issue to get the true legal opinion.

 

Senator Neal inquired as to the source of water in Roan Creek.

 

Mr. Bishop responded it was primarily from winter snow melts, but the water they were discussing did not come from Roan Creek, but from the Colorado River.  A dam would be built across Roan Creek to form the reservoir.

 

Senator Neal asked what period of time the companies had to pump water.

 

Mr. Bishop declared it varied with the amount of water flowing in the river.

 

Senator Neal queried if there were a limitation in terms of acre feet.

 

Mr. Bishop answered there was a limitation on the flow rate which totalled out to 400 cubic feet-per-second.

 

Senator Neal asked what type of assurance Nevada had they would get their water due to other rights involved.

 

Mr. Bishop stressed his engineering studies proved the supply was a "firm supply".

 

Senator Adler asked how Colorado's $50 export fee was computed.

 

Mr. Bishop replied it was, " ... $50 per-acre-foot imposed upon the transfer of each acre-foot put back into the river out of the dam."

 

Senator Adler asked if that amount was considered in original cost estimates given earlier by Mr. Cahill, and was answered with a positive reply.  He also opined the amount of water in the reservoir seemed a large amount, and more than production of oil shale would require.

 

Mr. Bishop noted oil shale uses approximately 20 to 30 thousand acre-feet per year per 100,000 barrels of capacity.

 

Senator Adler asked what their capacity would be.

 

Mr. Bishop responded somewhere between 400 and 600 thousand barrels.

 

Senator Adler queried if there would be any excess water once oil shale production was begun.

 

Mr. Bishop maintained if they could produce at those levels, there would be no excess water.

 

Senator Adler inquired if water became part of the product during production stage.

 

Mr. Bishop said some of the water evaporated, and other left over water went to returning spent shale back into the ground.

 

Senator Adler stated when it was time to produce oil shale, the companies would have to decide if they would be making more money off the lease or oil shale.

 

Mr. Bishop replied they would not be making any money off Nevada, they would only be getting facilities built in exchange for the lease.  The State of Colorado would be the one getting money ($50 per acre-foot).

 

Senator James queried whether the oil companies would still be interested in the lease agreement if Nevada did not build the reservoir in Colorado, but changed the law to bank water in lakes Powell or Mead.

 

Mr. Bishop replied in the negative, because they wanted their water facilities built, plus, he noted the State of Colorado would lose interest because they, also, wanted water facilities built.

 

There being no further questions from the committee, the chairman recessed the meeting at 11:55 a.m.

 

      * * * * *

 

Senator Smith called the meeting back to order at 1:35 p.m., and Tom Cahill introduced Jack Barnett, Executive Director, Colorado River Basin Salinity Control Forum.

 

Mr. Barnett referred to the Salinity Update handbook (Exhibit G, original in research library.) while expounding on the history of how present water quality was obtained for the Colorado River.      

 

Senator Neal asked whether users would pay for the salinity control.

 

Mr. Barnett replied to some extent, yes.

 

Senator Neal inquired if the shale project would cause a problem as to added salinity.

 

Mr. Barnett answered it depended on the type of shale, but the program was designed to offset any added salinity.

 

Senator Smith queried of any progress on the Moapa Valley project.

 

Mr. Barnett noted there was a lot of progress, and just last month the environmental impact statement and final report had been released.  He noted funding at the national level was at issue.

 

Senator Hickey asked for an estimate of cost of canals in the project.

 

Mr. Barnett estimated approximately $12 million.

 

Senator Hickey asked if farmers would pay 30 percent and the federal government 70 percent.  Mr. Barnett replied that was correct.

 

Senator Hickey inquired as to any state involvement.  Mr. Barnett answered, " ... the upper and lower basin states then reimburse the federal cost by 30 percent."  He added funds were raised through basin power funds ... from the total power coming from Hoover Dam.

 

Senator Hickey questioned the estimated cost for the Virgin River project.

 

Mr. Barnett stated the study was in the process of being formulated, so it was premature to guess at the numbers.

 

Senator Hickey asked if it was paid any different than the Moapa Valley project.

 

Mr. Barnett pointed out it was different ... in the Virgin River project, salinity would pay part, and water users would pay part.

 

Senator Hickey queried if that figure was negotiable, and Mr. Barnett said the number was not firm.

 

Senator Neal wondered what was the current state of desalinization technology.

 

Mr. Barnett answered plants were built directly along streams, and the only questions were cost.

 

Tom Cahill introduced Dr. John Hess, Executive Director, Water Resources Center, Desert Research Institute.

 

Dr. Hess proceeded with an overview of the Desert Research Institute (DRI) and their research regarding water resources performed by the Water Resources Center.  He made use of the overhead slide projector during his presentation.

 

Senator Rhoads inquired if the Desert Research Institute had any involvement with the adjudication involving the confluence of the Snake and Owyhee rivers.  Dr. Hess replied in the negative.

 

Senator Rhoads asked if they would get involved.  Dr. Hess said they would if the money could be found.

 

Senator Neal queried if they maintained any scientific contacts with the MX wells that were drilled earlier.  Dr. Hess replied not since the project ended.

 

Dr. Dale Ritter, Executive Director, Quaternary Sciences Center, Desert Research Institute, proceeded with his overview of the research being performed by the Desert Research Institute's Quaternary Sciences Center.  He, too, made use of the slide projector.

 

Senator Rhoads asked how they determined a drought year for the entire state.  Did they take the rainfall amounts for the southern and northern parts of the state, add them up, and take an average.

 

Dr. Ritter stated the two parts of the state were considered separately, and southern Nevada could be in a drought while northern Nevada was not.

 

Senator Hickey asked for time frames for the next projected drought.

 

Mr. Ritter said it was not possible to estimate a time frame, only guesses were possible based on past history.

 

Senator James asked if Nevada's drought figures correlated with the upper Colorado River Basin.

 

Mr. Ritter replied it had not been studied, thus no one knew for sure; but, he declared such studies should be undertaken.

 

Senator Rhoads inquired whether research had been done regarding moving clouds to where rain was needed.

 

Mr. Ritter knew of no such studies, but opined it was not his subject.

 

Senator Smith queried if studies had been done comparing levels of water on the west coast versus the Colorado River Basin.

 

Mr. Ritter answered, to his knowledge, none had been done.

 

Senator Adler asked if Nevada's plans to import water from rural areas were advisable since the rural areas would be subject to the same drought possibilities as the rest of the state.

 

Mr. Ritter replied a cost benefit study had to be performed to decide feasibility.  He declared since the water was not being replaced, eventually it would all be gone.

 

Senator Adler questioned if Reno's droughts were caused by the same conditions that caused droughts in the Elko region.

 

Mr. Ritter said they had no studies ongoing in the Elko region.

 

Arlen W. Huggins, Associate Research Meteorologist, Atmospheric Sciences Center, Desert Research Institute, gave his overview of the research performed by  the Desert Research Institute's Atmospheric Sciences Center.  He, too, used the overhead projector.

 

Tom Cahill introduced Ric Davidge, Director of Water, Department of Natural Resources, State of Alaska.

 

Mr. Davidge spoke from the handbook, Alaska ... 40% of Our Nation's Freshwater Resources ... Water Exports (Exhibit H, original in research library.), and used the overhead slide projector to assist his presentation.

 

Senator Smith asked for cost estimates of bottled water, and Mr. Davidge replied it could be upwards of $5 million per acre-foot.

 

Senator Hickey inquired what happened with the tankers that went back to Alaska empty.

 

Mr. Davidge replied they were looking to fill them with oranges or something, but nothing concrete had been decided upon, to find cargo.

 

Senator Hickey queried what the time frame was for the trip from Alaska and back.  Mr. Davidge answered about 10-11 days.

 

Senator Hickey asked whether the bag held as much water as the tanker.  Mr. Davidge answered in the affirmative, and the bag could eventually hold much more than a tanker.

 

Senator Hickey questioned whether the bag had to be towed, or could it be placed on a ship for the trip back.

 

Mr. Davidge answered it would be placed back onto its spool on the tow barge.

 

Senator Hickey asked about Alaska's plans for pipelines.  Mr. Davidge replied the plans were on the back burner.

 

Senator Hickey queried the status of bringing the water down through the "arid states," i.e. Idaho, and Montana.

 

Mr. Davidge stated it had not been discussed.

 

Senator Adler asked how Nevada and California would transfer this water.                                                                                                                     Mr. Davidge replied Nevada would buy the water from Alaska, California would receive the water and exchange it for Nevada's upriver allocation. 

 

Senator Neal asked why Mr. Davidge argued against desalinization.

 

Mr. Davidge answered, " ... water from Alaska, by tanker or bag, is not only economically viable, but environmentally far more responsible.  You don't have the waste problem you have with de-salt, you don't have the energy dependence problems you have with de-salt, and you don't have the cost exposures you have with de-salt ..."

 

Jack Lindsay, Chairman, C.E.O, Sunbelt Water Inc., stated it had been confirmed that Santa Barbara had decided getting water by tanker was more cost-efficient than desalinization. 

 

Thomas Maddock, Chairman, Boyle Engineering, introduced Ian Watson, Boyle's Director of Desalting Technology.

 

Mr. Watson proceeded with his presentation on Boyle's desalting

 

process.  He used the overhead slide projector, and referred to his handbook, Desalting Processes For Municipal Water Supplies (Exhibit I, original in research library.)

 

Senator Smith thanked Mr. Maddock and Mr. Watson, and Tom Cahill introduced John Lease, Chief, Water Augmentation Group, Deaprtment of the Interior, Bureau of Reclamation.

 

Mr. Lease presented the committee with a broad overview of weather modification.  He used the overhead slide projector.

 

Senator Neal inquired whether the cloud seeding techniques would be useful down in the valley, since most of the seeding was done up in the mountains.

 

Mr. Lease replied the most effective seeding was done in the high mountain areas, and a way would be needed to transfer the water down to the valley.

 

Mr. Cahill added no matter what means of obtaining water from other areas was decided upon, the valley, and the entire southwest, would have to come up with a permanent source it could rely upon.

 

Walt Casey, President, Walt Casey's Culligan, based on his many years in the water business, gave the committee his ideas on water.  He agreed with Mr. Cahill with regard to the state needing a permanent supply of water.  He added the water had to be priced right, because if it were overpriced, it would lose its usefulness.

 

Senator James inquired of what percentage of the water California got from the Colorado River, was used for irrigation purposes.

 

Mr. Cahill answered out of the 5.2 million acre-feet they received, 3.895 million acre-feet were dedicated to agriculture.

 

Senator James asked what percentage of California's contracts had been paid.

 

Mr. Cahill replied some had been paid, some had been re-financed, and some had not been paid, but he was not sure which was which.

 

Senator James wondered if there were any monies available in the Federal Reclamation Projects for these long-term water projects.

 

Mr. Cahill commented the agricultural uses made on the Colorado River were largely subsidized through the reclamation projects. He stated the municipal and industrial uses made through the Metropolitan Water District were not.

 

Senator Titus mentioned there was the possibility of a deal with the federal government to take the Yucca Mountain waste in excange for some water.

 

Mr. Cahill answered it wasn't in their purview to bargain Nevada's rights away and they would just report any offers to the Governor's Office.

 

Senator Hickey noted the statements were moot because negotiations involving Yucca Mountain were reserved by statute to the Governor.

 

Senator Hickey inquired whether any power generated through municipal or industrial uses was subsidized.

 

Mr. Cahill replied the power costs were at cost-plus.  The rates at which power was sold from a federal facility were not  subsidized rates, although they might be lower than standard rates.

 

Senator Hickey maintained we should not give up on getting federal support to subsidize Nevada's water costs.  Mr. Cahill said they would not.

 

      * * * * *

 

Senator Smith thanked all of the witnesses and there being no further business, recessed the meeting at 4:32 p.m.

 

 

 

            RESPECTFULLY SUBMITTED:

 

 

                                    

            P. K. Fredericks,      

            Committee Secretary

 

 

APPROVED BY:

 

 

                                

Senator R. Hal Smith, Chairman

 

DATE:                           

    

??

 

 

 

 

 

 

 

Senate Committee on Natural Resources

February 8, 1993

Page 1