MINUTES OF THE

      SENATE COMMITTEE ON NATURAL RESOURCES

 

      Sixty-seventh Session

      June 22, 1993

 

 

 

The Senate Committee on Natural Resources was called to order by Chairman R. Hal Smith, at 8:43 a.m., on Tuesday, June 22, 1993, in Room 119 of the Legislative Building, Carson City, 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 Ernest E. Adler

Senator Thomas J. Hickey

Senator Mark A. James

Senator Joseph M. Neal, Jr.

Senator Dina Titus

 

 

STAFF MEMBERS PRESENT:

 

Caren Jenkins, Senior Research Analyst

Rayanne Francis, Senate Committee Secretary

 

 

OTHERS PRESENT:

 

Thalia Dondero, Chairman, Southern Nevada Water Authority; and

  Clark County Commissioner

Patricia Mulroy, General Manager, Southern Nevada Water

  Authority

Scott Higginson, Councilman, City of Las Vegas; and Member,

  Southern Nevada Water Authority

W. Brent Hardy, Vice Chairman, Board of Directors, Southern

  Nevada Water Authority; and Councilman, North Las Vegas

Larry Scheffler, Councilman, City of Henderson

Larry Werner, Legislative Director and Senior Policy Advisor for

  United States Senator Harry Reid

Dan Thompson, Lobbyist, Nevada State American Labor Federation

  and Congress of Industrial Organizations (AFL-CIO)

David Belding, Chairman, Nevada Resort Association (NRA)

Stan Jones, Representative, Southern Nevada Home Builders

  Association

Scott M. Craigie, Chief of Staff, Nevada Governor's Office

Joe Dahl, Elko County Commission

Fredrick J. Schmidt, Consumer Advocate, Office of the Consumer

  Advocate, Office of the Attorney General

Bob Fulkerson, Executive Director, Citizen Alert

Joe L. Johnson, Lobbyist, Sierra Club/Toiyabe Chapter

Ned Eyre, Representing Self

Thomas Dill, Lincoln County

Doug Busselman, Executive Director, Nevada Farm Bureau

Kent Bloomfield, Manager, Planning Contracts and Special

  Projects, District No. 5, Overton Power; and President, Silver

  State Power Association

Mel Close, Attorney, Silver State Power; Attorney, Valley

  Electric Association; and Former Nevada State Senator

Thomas E. Cahill, Executive Director, Colorado River Commission

Alan H. Glover, Lobbyist, Nevada Power Company; and Former

  Nevada State Senator

Karen Galatz, Chairman, Las Vegas, Colorado River Commission

Robert L. Crowell, Attorney-at-Law; and Former Chairman (Carson

  City), Colorado River Commission

 

 

ASSEMBLY BILL 618:      Relinquishes state claims to certain portions of beds and banks of Truckee River within Pyramid Lake Indian Reservation and to certain land under and surrounding Pyramid Lake.

 

Chairman Smith convened the hearing and informed members of the committee that it would be necessary to rescind the action taken on Assembly Bill (A.B.) 618 the previous day.  He continued by explaining an amend and do pass motion had been made based upon a technical change, which had been pointed out by Pete Morros, Director, Nevada Department of Conservation and Natural Resources.  Chairman Smith assured those in attendance that this technical change had been taken care of making it unnecessary for the Senate Committee on Natural Resources to amend A.B. 618.

 

      SENATOR HICKEY MOVED TO RESCIND THE PREVIOUS ACTION ON A.B. 618.

 

      SENATOR ADLER SECONDED THE MOTION.

 

      THE MOTION CARRIED.  (SENATOR TITUS WAS ABSENT FOR THE VOTE.)

 

Chairman Smith called for a motion on A.B. 618.

 

      SENATOR HICKEY MOVED TO DO PASS A.B. 618.

 

      SENATOR JAMES SECONDED THE MOTION.

 

      THE MOTION CARRIED.  (SENATOR TITUS WAS ABSENT FOR THE VOTE.)

      * * * * *

 

ASSEMBLY BILL 692:      Revises membership of Colorado River commission.

 

Before opening the hearing on A.B. 692, Chairman Smith emphasized that there are considerable differences of opinion as to the correct procedures to adopt concerning the management of the state's water resources.  He said he has very strong convictions on this subject and, due to the seriousness and significance of the matter, recommends that changes be made in stages, not all at once.  Chairman Smith said he objects to "what has been going on with this particular bill, because of the extreme pressures that have been brought to bear."

 

ASSEMBLY BILL 337:      Clarifies certain provisions of water law and ratifies past actions of state engineer.

 

Chairman Smith said he had listened very carefully to testimony provided to members of the committee at the April 22, 1993 hearing on A.B. 337.  He stressed this bill had been inaccurately labeled the "Honey Lake Bill."  He pointed out it is his impression that the public interest is not being addressed, and the public's concernsare not being met.

 

Chairman Smith said his objections to A.B. 692 are based upon conversations he recently had with parties supporting this bill.  He stated he has grave concerns about the haste associated with enacting this piece of legislation, which he feels is not needed in the first place.

 

Chairman Smith stressed the fact that he had not contacted any member of the Senate Committee on Natural Resources, prior to the day's hearing, in an attempt to sway their vote.  He emphasized the fact that this hearing would be conducted in the same fashion as all of the previous hearings.  Accordingly, he explained the normal procedure is to take a vote when any member of the committee feels a motion should be made.  Chairman Smith asserted that it is his intention to complete the hearing and take a vote on A.B. 692 before the day's end.

 

At this point, Chairman Smith opened the hearing on A.B. 692 and invited Senator James to make his presentation to the Senate Committee on Natural Resources.

 

Senator James introduced himself to those in attendance and told Chairman Smith he shared his concerns about the importance of the state's water resources, as well as addressing the public's concern on this subject.

 

Senator James said the past 2 years have marked a huge revolutionary change in the following areas: 1) the state's water situation; 2) environmental concerns; and 3) the public's perception of the state's water situation.  He continued by saying the public has come to understand the dire predicament Nevada will be in if the legislature does not address the water problems confronting both the northern and southern portions of the state.

 

SENATE BILL 327:  Establishes guidelines for determinations by state engineer of "public interest" under water law.

 

Senator James said these facts are the very reasons why he had proposed S.B. 327.  He hoped this piece of legislation would "ripen" into an extensive study into the issue of water, addressing all of the problems from water management to how the legislature should address the public's interest in the Nevada Revised Statutes.

 

Senator James explained A.B. 692 had its beginnings as just an idea he had been mulling over.  He admitted it may not have been an original idea, because a few others individuals had shared the same vision simultaneously.  He said this idea had formed in his mind as a way of dealing with the particular problem unique to southern Nevada.  If southern Nevada is going to solve its water problems, Senator James said the solution revolves around the Colorado River.

 

Senator James pointed out southern Nevada does not have a shortage of water, it has a shortage of rights to the waters of the Colorado River.  He said the State of Nevada has experienced a historical inequity where the Colorado River comprises the state's southwestern border, but only has a right to 4 percent of its waters, while the States of California and Arizona have combined rights to 96 percent of its waters.  Of all of the lower basin states, Senator James said Nevada is most effectively situated to utilize the river by diverting water from it and receiving return flow credits by returning water to the river.  Senator James said "the impediments to us utilizing the river have been legal constructs."  He said the "law of the river" prevents Nevada from doing anything that would solve the problem of only having access to 4 percent of the river's water.

 

Senator James said what has prevented the State of Nevada from utilizing the "wheeling" concepts to wheel water from the upper basin or lower basin states.  He continued by saying the state has been obstructed by the interpretation that tributary water becomes main stem water, and is subject to allocations, once it flows into the main stem of the Colorado River.  Senator James said Nevada is confronted with a very complicated and expensive pipeline process as a means of bringing water inland from the Virgin River (southern Nevada's tributary to the Colorado River).  He called attention to the fact that the "law of the river" and the resulting legal interpretation of "main stem" water has prevented the state from just taking the water once it flows into Lake Mead.

 

Senator James said one of the consequences of southern Nevada's growth is an increased demand for water.  He said this is the justification for creating a body in the state that would be an effective, unified voice for the State of Nevada.  This body would be responsible for changing the law of the river (through congressional legislation or litigation), as well as effectively negotiating for water rights in other states.

 

Senator James said Nevada's interests have been ill-defined in the law resulting in some competition between the various state and local agencies that are charged with dealing with water.  He stated that he feels A.B. 692 would give the State of Nevada a unified voice.  He continued by saying the state agency (Colorado River Commission [CRC]) to include, as part of its membership, representatives from the southern Nevada water purveyors.  Specifically, he explained the Southern Nevada Water Authority (SNWA) is directly charged with addressing the water situation in southern Nevada.

 

Senator James commented that the cost of whatever solution the Senate Committee on Natural Resources selects will, ultimately, fall to the ratepayers and water users in southern Nevada.  Due to the fact the CRC negotiates water contracts, he stressed the importance of making the CRC directly accountable to the voters in southern Nevada.  He pointed out A.B. 692 would allow the SNWA board of directors to appoint three of its members to the CRC.

 

Senator James assured members of the Senate Committee on Natural Resources that the legislature would not be abdicating its responsibility by passing A.B. 692.  He said it is the legislature's responsibility to review and administer the state's management of its water resources.  He continued by saying the legislature always has control of the constitution of the CRC, or any other agency.

 

Senator James insisted A.B. 692 would benefit the state and, particularly, the residents of southern Nevada.  He had heard that some members of the committee had received correspondence in opposition to A.B. 692, because there is a fear of giving a local government entity (that does not have the interests of the state at heart) the powers and responsibilities of a state agency.  Senator James responded to this view by calling attention to the fact that the only part of the state capable of effectively utilizing the Colorado River is southern Nevada.  He said southern Nevada is the area on which A.B. 692 really focuses.

 

Senator James pointed out the entire State of Nevada will benefit, directly or indirectly, if southern Nevada is able to solve its water problems.  He continued by saying if water is not available in the southern portion of the state, other options will have to be pursued.  These other options could include a cooperative water project with counties in the northern portion of the state and/or construction of a water pipeline.

 

With reference to the Colorado River, Senator James stated he feels southern Nevada's water problems could be solved if, in the very near future, the state makes good decisions, negotiates properly and is able to change the law of the river.  He concluded his testimony by stressing A.B. 692 is a step in the right direction to solving southern Nevada's water problems, which also solves many of the entire state's water problems.

 

Senator Hickey said he prefers to know what are the real problems, as opposed to the public perception of what are the problems.  He stressed this is his point of view and he would make his decisions based upon the real problems, not perceived problems.

 

Senator Hickey said he knows that the CRC had its beginnings in the management of the electrical power produced by Hoover Dam.  He said the issue of retaining cheap electrical rates had not been addressed in Senator James's comments to the committee.  He continued by saying he is aware of a proposed industrial complex that would need cheap electrical power.  He also knows of many smaller communities that rely heavily upon the inexpensive electrical rates the CRC is able to obtain on their behalf.  Senator Hickey asked Senator James to address this issue.

 

Senator James assured members of the committee that A.B. 692 is not an attempt to abolish the CRC as it currently exists, merely to revise its membership.  He drew attention to the fact that the CRC membership would be increased to seven members, of which four members would be appointed by the Governor and three members appointed by the SNWA board of directors.  He stressed that the four members (appointed by the Governor) could and should be adept at dealing with electrical power issues.

 

Senator James said he knows of two proposed amendments to A.B. 692, but commented that other individuals would review the content of these later in the hearing.  He merely said one of these amendments would address some of the rural power concerns.

 

Senator Adler said he, generally, supports A.B. 692, but admitted he has some fundamental problems with the bill if it does not accomplish what it has been designed to accomplish.  He used the State of California as an example.  He pointed out southern California is, essentially, an independent entity that manages its own water resources, while the central valley area is composed of ranches that manage their water resources.  Lastly, he said northern Californian's have their own concerns about the environmental impact on the delta.  Senator Adler said the problem, with the way the State of California has handled its water resource problems, has everything to do with the lack of a final arbitrator to decide where the water goes, who gets the water, etc.  He insisted that this confusion is, simultaneously, damaging the State of California's economy and environment.

 

Senator Adler explained he has grave concerns that A.B. 692 might fail to establish a unifying force responsible for making final decisions based upon the state's economic and environmental best interests.  He genuinely hopes that this legislation would not create a very powerful water authority in southern Nevada, competing with other interests throughout the state.  He stressed the importance of avoiding the kind of situation existing in the State of California.  Senator Adler asked Senator James if he feels confident that A.B. 692 is structured to avoid this from happening.

 

Senator James assured Senator Adler that A.B. 692 would not create a situation similar to the Sate of California.  He continued by saying the CRC was never intended to be a water agency to deal with water problems on a statewide basis.  He explained the CRC had been established to deal with water and power matters specific to the Colorado River.  Senator James emphasized there are other statewide agencies that should be addressing the water needs of the entire state.  He hopes the functions of some of these other state agencies, responsible for the state's water planning, would be taken under review.  He hopes to accomplish some of this work during the interim and 1995 legislative session.

 

Senator James explained that, upon passage of A.B. 692, the CRC would be imbued with the proper authority to deal with southern Nevada's water problems.  He reiterated that the rest of Nevada would be in a better position if southern Nevada is successful in negotiating for more water from the Colorado River.  He stressed the fact that southern California really began to have serious water problems when it began to look toward the northern portion of that state as a means of solving its water problems.  Senator James admitted that the State of California has done some good work in the area of looking within its own regional borders as to what would be the most effective use and management of water.  He used the example of the Metropolitan Water District project's plan of making agricultural concerns more efficient by footing the bill for the retrofit of farms and to line irrigation ditches.  He said this project allowed the district to import excess waters into the city, which is an excellent use of resources.

 

Senator Adler said he does not want to end up like the State of California, because the statewide water planning board has made some tough decisions at one point.  However, after one telephone call from the governor of California, the water planning board reversed its decision.  He did not want to set up a situation where the final decision-making board is so political that it fails to do its job.  Senator James said the CRC's current five member board has been effective in the past, however, he anticipated that A.B. 692 would strengthen the membership by adding three members from the SNWA.

 

Senator Adler asked if Senator James envisions the electrical portion of the Colorado River competing with the water portion of the Colorado River.  He continued by hoping this kind of competition would not result in trading water for higher electrical rates for the consumers, manufacturers or casinos.  Senator James responded by saying he does not feel that these public officials, charged with dealing with the various functions of the CRC, would conduct themselves in this manner.

 

Senator Rhoads commented that A.B. 692 is the most heavily lobbied piece of legislation he has encountered this session.  He admitted that he opposes this legislation and described some of the reasons for his decision.  He did express hope that A.B. 692 would result in the elimination of the cooperative water project, which would reduce the amount of water available to rural areas in Nevada.

 

Senator Rhoads then read from a letter he had received from a constituent, whom he refused to name.  He quoted a portion of the letter, which read:

 

      Placing three elected local officials on the Colorado River Commission is akin to putting the fox in the henhouse.  As presently structured, the decision-making process for southern Nevada's water resources retain some degree of checks and balances.  If elected local government officials are placed on the Colorado River Commission, these checks and balances will be fatally corroded.

 

Senator Rhoads asked for Senator James's response to this statement.  Senator James replied that he strongly disagrees with this notion.  Instead, he feels the CRC is going to have to make decisions on matters that will have the greatest effect on southern Nevada's water supply.  He stated he does not understand how it would be a conflict of interest to allow elected local officials, who are directly accountable to people of southern Nevada, to have a voice in a process that will have the most profound effect on that area's growth and development of its economy.  Senator James said there is absolutely no correlation between a fox in the henhouse and accountable local elected officials.  He said misconceptions of this bill are rampant.

 

Senator James said A.B. 692 is attempting to construct a unified voice within Nevada.  He explained the people who are charged with dealing with water issues are vitally interested in decisions which affect the way they conduct themselves.  These same people feel compelled to involve themselves in the decisions that are made, and the negotiating and law of the river process.  He called attention to the fact that A.B. 692 gives this element an opportunity to be heard and unifies the effort to obtain additional water resources in southern Nevada.

 

Senator Rhoads asked if the water belongs to the state and not the local officials.  Senator James admitted the water does belong to the state, but there is the fundamental question of who could most effectively use those water supplies.  He reiterated the fact that if southern Nevada can more fully utilize the Colorado River, it would no longer have to look to the northern counties.  With this in mind, he thought the rural communities would be very pleased with the prospect of enacting A.B. 692.

 

Senator Rhoads asked if Senator James would object to placing A.B. 692 in an interim study status.  Senator James stated he feels he does not have a problem with looking at this issue over a 2-year period.  He continued by saying the Senate Committee on Natural Resources has spent a considerable amount of time discussing water issues this session.  However, he said he would rather enact this legislation now and keep in mind that an interim study may suggest to a future legislature that some aspects may need to be revised.

 

Senator Rhoads asked if Senator James is asking that the legislation be enacted now before an interim study is conducted.  Senator James said this is correct and stressed there is a limited "window of opportunity" for effectively dealing with the states of California and Arizona, as well as the United States (U.S.) Congress.  He stated he feels that prolonging this process by placing this issue into an interim study status would hurt the State of Nevada.

 

Senator Neal recalled that Senator Adler had mentioned that a unified voice should be present in the CRC.  Based upon this statement, he asked Senator James if he feels that the CRC should be responsible for jurisdiction of the Truckee, Carson and Walker Rivers.  Senator James responded by saying he does not think this should be the case.  Senator Adler interrupted by saying he does not object to having county commissioners appointed to the CRC, because he has always pushed for county commissioners to become more involved in the allocation of water resources.  Senator Adler stated he really feels that A.B. 692 should fit into the overall state water planning process.  Senator James stated he feels confident that A.B. 692 will fit into the state's scheme of water planning.  He said it is important to analyze what the statewide water agencies do regarding networking with various other entities across Nevada that deal with water.  He insisted the CRC should be included in this network process.

 

Senator Hickey said he feels the argument is now centered around the subject of "expediency."  He continued by saying he is looking forward to hearing further testimony on the subject of a more reflective interim study vs. the immediate restructuring of the CRC membership with passage of A.B. 692. 

 

Chairman Smith said he is old enough to believe in institutions.  He continued by saying the power of the Governor and local governments flows from the state constitution through the legislative process.  He said the Nevada State Legislature created the CRC, some years back, to fulfill a specific need in the state.  He said the Governor is accountable for that action and performs a function that is strictly permitted by the state legislature.  Based upon the advice and consent of many interested individuals (some of whom are presently in the audience at the day's hearing), Chairman Smith pointed out the Governor appointed various individuals to serve on the CRC board.  He emphasized that this membership represents the State of Nevada in negotiations with other states, the federal government and in the international arena.  He presumed that A.B. 692 had not been introduced based upon the premise that the Governor appointed individuals to the CRC who are incapable of representing the State of Nevada and Clark County.  He also presumed that A.B. 692 is implying that these appointed individuals would be able to proceed in an more expeditious fashion if three new appointees are added to the CRC membership.

 

Chairman Smith assumed the funding, provided to the CRC, will be used for legal fees to establish changes in the law of the river.  He assumed the citizens who contribute to the CRC fund would also be the users of the power and water.  Again, he presumed that this entire process is at a standstill, because the three appointees are not currently part of the membership.  He stated he feels that Senator James is inferring that he (Chairman Smith) does not represent the districts and the State of Nevada, to which he was elected.  He stressed that Senator James is also inferring that other members of the Senate Committee on Natural Resources do not represent the areas to which they were elected (including Senator James), and are incapable of proceeding in an orderly fashion to perform the duties to which they were elected.  He said these duties including providing the citizens of the state with the resources they need.  Chairman Smith said he feels Senator James is implying that all of these things could be remedied with the addition of three members to the CRC board.

 

Senator James responded by saying he does not agree with all of Chairman Smith's earlier comments on the representation issue.  He assured members of the Senate Committee on Natural Resources that he believes each member represents the citizens in their districts.  He agreed the Governor is responsible for appointing people to the existing CRC membership who are able to do a good job for the State of Nevada.

 

Senator James said A.B. 692 is designed to take a bifurcated process, that has split Nevada's voice in the negotiation process with other states, and form a unified voice.  He stressed that in accomplishing this goal, it is only right to give a voice to the people of southern Nevada who are peculiarly interested in this process.  He said he does not know of any other way to accomplish this goal.  Senator James said the SNWA looks out for the interests of the constituents and industries located in southern Nevada; for instance, casinos, resorts, homebuilders, etc.  He called attention to the fact that it has been projected that southern Nevada water supplies will run out in the year 2006.  The SNWA is responsible for seeing that this does not happen.

 

Senator James said the SNWA does not currently have a voice in the CRC.  Prior to the introduction of A.B. 692, he said the SNWA's only option has been to function as an advisory group to the CRC.  However, this process has prevented the SNWA from becoming an effective part of the operation.  Senator James stressed the CRC usurps the SNWA's ability to improve the water situation in southern Nevada.  He also pointed out that the CRC does not have to answer to a direct constituency, similar to the SNWA.

 

Senator James stressed A.B. 692, essentially, keeps the CRC membership intact.  The only notable change would be the addition of direct representation from individuals who already deal with these problems.  He commented that A.B. 692 would have the effect of unifying the CRC and allows Nevada to be more effective when looking for future water supplies.

 

Senator James stated he admired Chairman Smith for the experience and work he has accomplished in the realm of water issues and respects Chairman Smith's concerns.  However, Senator James commented that he does not feel that some of Chairman Smith's concerns are going to come to pass.  Senator James stated he feels confident that A.B. 692 would have a very positive effect on southern Nevada.  He admitted that if there are problems with the legislation and it becomes apparent that changes are necessary, Senator James assured Chairman Smith that he would not be the least bit reticent in considering these changes. 

 

Thalia Dondero, Chairman, Southern Nevada Water Authority; and Clark County Commissioner, introduced herself to members of the committee.  Ms. Dondero's testimony to the Senate Committee on Natural Resources is contained in Exhibit C.

 

Senator Titus asked what is the selection process for the board members of the SNWA.  Ms. Dondero responded by saying each of their individual boards selects each member.  Senator Titus inquired what the length of each term is for each SNWA board member.  Ms. Dondero replied each member serves a 2-year term.

 

Senator Adler asked what is the legal status of the SNWA.  Ms. Dondero said she would prefer that Patricia Mulroy, General Manager, Southern Nevada Water Authority, respond to this question during her presentation to the Senate Committee on Natural Resources.  Senator Adler pointed out A.B. 692 makes reference to the SNWA, but he has doubts that there is any reference to it in the Nevada Revised Statutes (NRS).  He wondered if it would be advisable to make some kind of reference in statute to the SNWA's existence.

 

Ms. Mulroy said NRS 278 allows local entities to come together and create a new jurisdiction.  She continued by saying the SNWA was constituted under NRS 278, is recognized as a legal entity by the State of Nevada through the Attorney General's Office and the Colorado River Commission.  Ms. Mulroy called attention to the fact that statute allows the SNWA to enter into a contract for Colorado River water.  She commented the U.S. Secretary of the Interior recognizes the SNWA as a legal entity.  Ms. Mulroy concluded by saying the SNWA was formed under this enabling legislation.  Senator Adler wondered if it would not be wiser to reference this fact in NRS.

 

Senator Neal asserted the mission of the CRC is triangular in nature (water, land and electrical power).  He said the people who are concerned with these particular interests are present at the day's hearing in an attempt to protect these interests.  He pointed out Ms. Dondero had stated that the CRC had relegated itself to that of an arbitrator over disputes over contracts.  Senator Neal stated that he does not remember this to be the sole function of the CRC.  He admitted that this may be one of its duties, but the overall mission of the CRC is to deliver electrical power, deliver water and protect those resources as they relate to land.  He asked Ms. Dondero if she views the new CRC, as set forth by A.B. 692, as a threat to the CRC's original mission.  Ms. Dondero said she does not anticipate any problems.  She stressed that the SNWA is seeking new sources of water and is attempting to ensure that water is properly allocated to the entities it serves.  She stated she did not expect that the addition of three SNWA members would upset that portion of the duties of the CRC.  Senator Neal stated he hopes that some member of the SNWA would address this question in more detail, because he feels it is a very important consideration in the scheme of things.  Ms. Dondero assured Senator Neal that other members of the SNWA would cover this matter if further detail.  She concluded her comments by lending her support to passage of A.B. 692, and stated she hopes the SNWA and CRC can unite in the effort to increase the water resources of southern Nevada.

 

Senator Hickey asked why is there such a rush to enact A.B. 692.  He also questioned section 6 of A.B. 692, which refers to the expiration of CRC members' terms.  He wondered why this language had been included, rather than just let the normal process of term expiration take place.

 

Scott Higginson, Councilman, City of Las Vegas; and member of the Southern Nevada Water Authority, introduced himself to members of the committee.  Mr. Higginson's testimony to the committee is contained in Exhibit D.

 

If A.B. 692 is enacted, Senator Rhoads stated he assumes that the SNWA will continue.  Mr. Higginson said the SNWA must continue due to the fact that it is responsible for contracting for and bringing water to southern Nevada.  He said the SNWA would also be responsible for determining what percentage each of the water purveyors in southern Nevada will receive of any new water source.

 

Senator Rhoads stated it appears to him that if three members of the SNWA are incorporated into the CRC, the SNWA would stand a much better chance of controlling this organization.  Mr. Higginson stated he disagrees with this statement and commented that adding three SNWA members to the CRC would instill cooperation.  He continued by saying local entities would then have representation in the state agency (CRC).

 

Senator Rhoads said he had heard Mr. Higginson make reference to the fact that A.B. 692 was a compromise.  He stressed that he saw two completely different opinions: 1) to leave the makeup of the CRC alone; and 2) to allow the SNWA access to the membership and "take it over."  Mr. Higginson said his statement that A.B. 692 is a compromise is based upon the fact that a lot of alternatives and options were being considered at one point.  These alternatives included disbanding the CRC altogether to adding only one member of the SNWA to the CRC membership.  Under the compromise agreement, he emphasized the fact that A.B. 692 will not allow the SNWA to constitute a majority of the CRC.

 

Senator Hickey said he was interested in the use of some of the terms being bandied back and forth.  He asked what kind of compromise was reached in the language contained in section 6 of A.B. 692.  Mr. Higginson said he understands that a portion of the existing CRC membership will expire on July 1, 1993 in any case.  Senator Hickey asked why this verbiage had been put into statute.  Mr. Higginson said he could not answer this question and admitted that he had not been involved in the drafting of the language in section 6.

 

Senator Hickey said the district he represents has its own water company.  If A.B. 692 is passed, he asked Mr. Higginson if someone from this water company would be guaranteed a position on the CRC board.  If A.B. 692 is enacted, Mr. Higginson responded by saying the decision has not yet been made as to the identities of the three SNWA members who will serve on the CRC.  Senator Hickey said he had received a memorandum that indicated otherwise.  He promised to provide Mr. Higginson with a copy of this memorandum before the conclusion of the day's hearing on A.B. 692.  Mr. Higginson said some discussions between various entities have, probably, taken place but no official action by the SNWA has yet taken place.

 

Senator Adler pointed out that section 2 of A.B. 692 set forth that if an SNWA appointee to the CRC ceases to be a member of the SNWA, automatic removal from the CRC also takes place.  He said this could result in some very short terms by SNWA appointees.  He stated he feels it would be a much better idea to establish 4-year terms for appointees in order to have an informed membership that is familiar with the operation.  Mr. Higginson replied he said the reason for involving the SNWA in the CRC is to ensure cooperation and coordination between the two entities.

 

Senator Adler asked how the SNWA intend to ensure that their members, appointed to the CRC, remain with the commission long enough to gain expertise and experience.  Mr. Higginson would rely upon the common sense of the SNWA board of directors to appoint members to the CRC who have just be re-elected or re-established to a new term.  This is a relatively simple indication that these individuals would be around for at least 4 years.  Senator Adler stressed the complexity of water issues and wanted to avoid any kind of "revolving door" situation in the CRC membership.

 

Senator Titus said she thought Ms. Dondero had indicated that the SNWA members only served 2-year terms.  Mr. Higginson said the members of the SNWA do serve for 2-year terms.  However, he said there are situations where individuals are not re-elected or re-appointed.  Senator Titus said the maximum term on the SNWA would be 2 years, unless the member was re-appointed.  Mr. Higginson said this is correct and stressed that the real reason for appointing SNWA members to the CRC is to instill cooperation and coordination between the entities.

 

Senator Titus asked if SNWA decisions went back to the local government for ratification or approval.  Mr. Higginson said he knew of some decisions that went back to the local government, but admitted that he did not know of any decisions that had to go back for approval.  Senator Titus stated she assumed that the SNWA's decision to support passage of A.B. 692 had not been sent back to the city council of any of the county commissions for their approval.  Mr. Higginson said he believes some commissions took action on this matter through resolution, but is not aware that the SNWA had taken a vote of the local government entities.

 

Senator Hickey used Mr. Higginson's earlier arguments about representation on the CRC, he said he was in receipt of a memorandum on this subject.  He noted the existence of one of the small water districts in North Las Vegas.  He stressed that this water district deserved to have representation on the CRC and encouraged Mr. Higginson to take his request back to the full membership of the SNWA for consideration.  Mr. Higginson complimented Senator Hickey on the excellent job he has done in representing the constituents in his district.  He assured Senator Hickey he would give the Senator's request all the consideration it deserves.

 

Senator Neal said it was suggested that the need for A.B. 692 is not necessarily apparent and the questions being asked during the hearing could be better dealt with during an interim study.  He asked Mr. Higginson to respond to this statement.  Mr. Higginson said he has been a Las Vegas City Councilman for a period of 4 years.  He continued by saying one of the most critical issues during this time has been water.  He said the demand for water in southern Nevada is much too critical to delay passage of A.B. 692.  He said the next 2 years will be better utilized by enacting this legislation so that the CRC can begin to initiate the serious negotiations that must take place with upper and lower basin states, particularly the State of Arizona.  Mr. Higginson stressed that southern Nevada does not have 2 years to wait until decisive action is taken.

 

Mr. Higginson agreed with Senator Neal's previous analogy that the CRC is triangular in nature.  At this time, he said it is obvious that the most critical point on this triangle is pointing toward water.  He drew attention to the fact that "it is not (Mr. Higginson's) position, nor any other member of the SNWA who may be appointed to the CRC, that it is the sole and singular responsibility of the CRC."  Mr. Higginson stressed that any appointed SNWA member to the CRC would be just as diligent in their responsibilities when dealing with power and land as any other individual whom the Governor might appoint if A.B. 692 is not enacted.

 

Chairman Smith said he would like to address a few questions to several representatives of cities across the State of Nevada.  He pointed out that he has worked closely with the City of Henderson and was very familiar with the divisions of water to this city in 1989 and 1990.  He asserted the formation of the SNWA was an extremely well thought out and well done undertaking.

 

Chairman Smith said the intent of A.B. 692 is, basically, good and the creation of one agency that would be responsible for handling the resource in a region is quite appropriate.  However, he admitted that he is not entirely sure that the various cities (that have demanded their independence) actually realize that return flow credits will be managed by this single agency.  Chairman Smith said A.B. 692 is accomplishing something that had, originally, been visualized as a function the county would perform.  In other words, a new agency is being created to do exactly what several individuals had hoped to accomplish 25 years ago by appointing the county commission as a board of trustees for the Las Vegas Valley Water District (LVVWD).

 

Chairman Smith remarked he had heard SNWA representatives make two points.  The first, he said, related to his aforementioned comment.  The other point is in relation to an earlier comment made by Ms. Mulroy that indicated the SNWA has the authority to negotiate with the Secretary of the Interior.  If this is the case, what is the purpose in pursuing access to the CRC?  He continued by saying if the SNWA is just after water, why not remove the CRC's ability to deal with water and just it make it the electrical power agency of the state?  This way the SNWA could continue to address the water issues in southern Nevada.

 

Mr. Higginson responded to Chairman Smith's comments by saying he understands that the SNWA has the authority to contract for the water.  However, the SNWA is restricted from contacting other states and other entities for negotiation purposes, this responsibility still rests with the state, through the CRC.  Based upon this response, Chairman Smith asked if the SNWA is after a "hunting license."  Mr. Higginson denied this and explained the SNWA is seeking coordination and cooperation.  Chairman Smith inquired if the SNWA does not currently have the ability to communicate with the CRC.  Mr. Higginson replied by saying passage of A.B. 692 would enhance this communication if the SNWA is allowed to serve on the CRC.

 

Senator Hickey asked if the SNWA would object to reserving particular "slots" on the CRC for representatives of the water authorities of North Las Vegas, Henderson, etc.  Mr. Higginson replied by saying the members of the SNWA are all "grown-ups" and can work out these differences amongst themselves.  Senator Hickey said he represents North Las Vegas and stressed that it is his concern that the constituents in his district would be represented by the SNWA and CRC.  He emphasized the fact that the chairman of the Senate Committee on Natural Resources is from the City of Henderson and would also like to have representation in the agency created by A.B. 692.

 

Senator Hickey stressed the North Las Vegas area is the largest potential quadrant in the State of Nevada for future development.  He said the development of this region would be dependent upon the availability of water.  Due to this very fact, he pointed out that he has absolutely no problem with reserving slots for representatives from particular areas.  Senator Hickey admitted that Mr. Higginson, and the SNWA, may have problems with "slotting," but he (Senator Hickey) certainly did not have a problem with it at all.

 

Mr. Higginson said he did not want to have a debate over some of Senator Hickey's comments, but pointed out that vacant land existed in other areas of southern Nevada as well.  Senator Hickey stressed that he knows of no other area, with the exception of Summerlin (a 22,000-acre planned community on the northwest edge of Las Vegas) that has the availability of large acreage for development purposes.  Mr. Higginson agreed, but pointed out Summerlin is within the city limits of Las Vegas, as well as North Las Vegas.  Senator Hickey concluded his remarks by saying he does not object to representation from the cities of Las Vegas or Henderson, and certainly supports representation from the North Las Vegas area.  Mr. Higginson pointed out that he anticipated that Clark County would want to ensure that they have representation as well.  He assured members of the committee that the SNWA will work with each other in a cooperative spirit to ensure that the interests of all entities receive due consideration, as appointees to the CRC.  Mr. Higginson said he does not feel certain slots needed to be allocated to specific entities, because he feels confident that everyone involved could work together to reach a consensus.

 

Chairman Smith hoped the agency created by A.B. 692 would be constitutionally established so it is "one man, one vote."  Mr. Higginson said the SNWA looks at it in this fashion.

 

Chairman Smith pointed out he intended to complete the hearing on A.B. 692 before the day was through.  He noted the time was drawing near for members of the Senate Committee on Natural Resources to report to the senate floor.  It was his intention to temporarily end the hearing and reconvene in the afternoon at the earliest possible moment.

 

W. Brent Hardy, Vice Chairman, Board of Directors, Southern Nevada Water Authority; and North Las Vegas Councilman, intro-duced himself to members of the committee.  In response to earlier questions concerning how the SNWA intends to make appointments to the CRC, he spoke of similar problems the SNWA experienced right after it had been formed.  He pointed out that he hopes all entities will act in a responsible manner and provide representatives with a continuity of expertise that will not disrupt operations.

 

Mr. Hardy also responded to earlier comments regarding the haste with which A.B. 692 is being pursued.  He explained his grandfather had tunneled 800 feet through a mountain to construct a canal in order to transport water from the Virgin River to his home town.  Mr. Hardy said he has been exposed to water issues his entire life, as he also grew up on the Virgin River.  Based upon his life experiences on this subject, he said he knows that time is running out for southern Nevada.  He said he does not object to conducting an interim study, however, he said this "window of opportunity" is not very large and would not last forever.

 

Looking into the future, Senator Hickey said he feels there will be an adequate water supply for the population.  However, he said he has serious doubts about whether there would be adequate water for the mega-resorts currently being constructed.  He said he saw two quadrants of large potential growth: 1) Summerlin; 2) North Las Vegas; and 3) mega-resorts.  He reiterated the fact that he feels very strongly about the fact that North Las Vegas needs representation on the CRC.  Mr. Hardy responded by saying he is sure that all of the members of the Senate Committee on Natural Resources realized that North Las Vegas does not just supply water to its own boundaries.

 

Chairman Smith requested that SNWA representatives address the term "window of opportunity" in more detail.  Mr. Hardy said there are huge infrastructure requirements in the water business.  He explained quite a bit of lead time would be needed when anticipating increasing water usage.  He mentioned one of the great needs that needed to addressed soon is the construction of a second water pumping station at Lake Mead.  Mr. Hardy explained considerable lead time will be needed for the engineering of this project, in addition to adequate consideration of the project's impact upon the environment.  He anticipated a project of this size would need, at the least, a 10-year lead time.  Mr. Hardy reiterated that the current projection is that southern Nevada will run out of water in the year 2006.  If it takes 10 years to engineer and construct a water project, he stressed that immediate action must take place within the next 3 years.

 

Chairman Smith stated he seemed to remember the SNWA had agreed to a Southern Nevada Water System Work Group concept as a means of making some headway in improving southern Nevada's water outlook.  Mr. Hardy replied by saying the SNWA has already begun this process.  Chairman Smith said he had heard that the SNWA recently abandoned this concept and is planning to conduct its own study.  Mr. Hardy asked if Chairman Smith was referring to the third stage.  Chairman Smith said he was referring to the development of the means to transport the new water.

 

Ms. Mulroy responded to Chairman Smith's question by saying the SNWA board of directors has authorized staff to issue an Request For Proposal (RFP) to consultants to build the next stage of the treatment plant.  Chairman Smith explained that he is operating under the belief that this RFP process had already been conducted at an earlier point in time.  Ms. Mulroy emphasized that there are two pieces to the treatment plant analysis.  She said the first stage is a reliability study, being conducted by the CRC, on the existing treatment plant.  The results of this study will determine how large the new facility will need to be.  Ms. Mulroy explained three entities need additional capacity: 1) North Las Vegas; 2) Henderson; and 3) the Las Vegas Valley Water District.  She said these entities will build their own new treatment facility, the size of which will based upon the results of the CRC study.

 

Chairman Smith asked Ms. Mulroy if the SNWA had asked the CRC to "get out of the plumbing business," because the SNWA wanted to do the job.  Ms. Mulroy responded by saying there have been ongoing discussions over the whole issue of who will be responsible for the plumbing.  She said this is bifurcated, because the water district runs the treatment plant and the CRC has a custodial role.  She explained the CRC used to protect one entity from another so that one did not overuse its turnout to the disadvantage of another.  Ms. Mulroy explained that there is no state or federal monies for the construction of a new water treatment facility and money will have to be generated through water rates.  She explained the whole issue of plumbing is relative to this issue.

 

Larry Scheffler, Councilman, City of Henderson, introduced himself to members of the committee.  He commented on the fact that southern Nevada local governments are in unison with the SNWA with regard to supporting passage of A.B. 692.  He explained one of the key points of this bill is fiscal responsibility, sensitivity and responsiveness to the Nevada rate payers by requiring accountability to all constituents by publicly elected officials.

 

Mr. Scheffler said he represents the City of Henderson on the SNWA and asserted this city also supports passage of A.B. 692.  He mentioned that he respects the concerns voiced by Chairman Smith and Senator Hickey with regard to the representation of smaller cities and communities.

 

Mr. Scheffler explained that one of the key issues discussed by the SNWA was the possibility of enacting a two-thirds vote requirement.  He said the justification for this discussion was to ensure that the LVVWD would not out vote the smaller entities.  Another item briefly discussed by the SNWA board of directors had been 2-year terms for the representatives to the CRC.  He emphasized, of course, these items of discussion have yet to be voted on by the SNWA board members.

 

Mr. Scheffler asserted that if two SNWA representatives come from the LVVWD and only one from a small city, perhaps it would be advisable to appoint another SNWA representative (from a small city) to the chairmanship of the SNWA.  He continued by pointing out that when the terms rotated, the chairmanship could rotate to another representative of the SNWA.  For instance, if one representative is from the LVVWD and two from small cities, perhaps the SNWA chairman should be from the LVVWD.

 

Chairman Smith called attention to the fact that Mr. Scheffler was speaking to the subject matter more realistically and openly than he had thought possible.  He called attention to the fact that he has been involved in water issues for over 30 years.  He knew of the concerns of the City of Henderson, and other cities in that area, which are interested in maintaining their autonomy.  He complimented the SNWA on the extremely valuable work they have accomplished to date on reaching agreement on the division of the waters available in southern Nevada.

 

Larry Werner, Legislative Director and Senior Policy Advisor for U.S. Senator Harry Reid, introduced himself to members of the committee.  Mr. Werner's testimony is contained in Exhibit E.

 

Mr. Werner made a statement that it is difficult for proposals to be taken seriously by the administration or the congressional authorizing committees when there are divisions within a state over water policy.  Chairman Smith asked Mr. Werner to be more specific about exactly "whom" in the State of Nevada is divided over water policy.  Mr. Werner responded by saying, from a federal viewpoint, the problems stem from various proposals which are diverse.  Chairman Smith interrupted by asking Mr. Werner if he was implying that Nevada's representatives do not know the state's problems.  Mr. Werner replied by saying the federal government has received a variety of very diverse proposals, some of which would be unworkable to the authorizing committees of congress and to the administration.  Chairman Smith asked if the federal government notifies the agency submitting the proposal of the problem(s).  Mr. Werner pointed out the federal government has received conflicting signals.  He continued by saying some of the proposals submitted by the SNWA have been workable.  More specifically, acceptable proposals submitted by the SNWA deal with the long-term leasing of water from the State of Arizona and the potential purchase of water supplies from other lower basin states.  Chairman Smith asked Mr. Werner if the federal government was listening to different people and that there was not divisiveness.  Mr. Werner replied by saying, perhaps, he should have used the term "divergent."

 

Senator Hickey said he noticed a statement in Exhibit E indicating that the Secretary of the Interior has given permission to the SNWA to go out and negotiate water contracts.  He asked if he was interpreting this properly.  Mr. Werner replied by saying he believes a more accurate accounting of this statement would be that the Interior Department recognizes the SNWA as a legal entity.  Senator Hickey asked how A.B. 692 would change that viewpoint.  Mr. Werner explained A.B. 692 is an enhancement of the CRC by bringing additional expertise to the CRC, as well as providing the local communities with input into the CRC's activities.

 

Senator Hickey asked Mr. Werner if the federal government would prefer that the CRC be the only authority in the State of Nevada to contact on water issues.  Mr. Werner explained Congressman Reid's position is that he would support this bill or an improved version of it, if possible.  Senator Hickey reiterated the question by pointing out that passage of A.B. 692 would place the SNWA under the CRC.  He continued by saying the CRC is responsible for negotiating for water outside of the State of Nevada.  He asked Mr. Werner if the federal government would recognize this as a directive from this legislative body.  Mr. Werner asked for further clarification by asking if Senator Hickey was referring to giving the SNWA the power to negotiate separate and apart from the CRC, or by including it in the CRC.  Senator Hickey said A.B. 692 would include the appointment of members of the SNWA to the CRC.  He said Mr. Werner had made comments about the divisiveness of Nevada's water policy.  If the Nevada State Legislature addressed this issue specifically in A.B. 692, would this be acceptable.  Mr. Werner replied that A.B. 692, as written, will enhance the CRC's ability to end the divisiveness regarding the state's water policy.  He said this will certainly assist the federal government.  Senator Hickey asked Mr. Werner if he would approve of an amendment to A.B. 692, which would name the CRC as the one and only authority to conduct negotiations for water rights in other states.  Mr. Werner agreed with Senator Hickey's statement and stressed this approval is based upon the fact that the CRC would include the added membership of three SNWA representatives.

 

Chairman Smith asked Mr. Werner who speaks for the CRC.  Mr. Werner said Senator Reid's office has received communications from the CRC executive director, as well as the chairman.  Chairman Smith asked if the Nevada State Governor was also a spokesperson.  Mr. Werner replied by saying Senator Reid's office has had conversations with Governor Bob Miller about water supplies.  Chairman Smith asked if the Governor's appointees to the CRC are his appointees and respond to him.  Mr. Werner agreed this is his understanding.  Chairman Smith continued by saying whatever the Governor or CRC appointees say to the Nevada State Congressmen should be considered as the voice of the people.  He stressed this voice should be the only true voice, so there should not be any divisiveness.  Mr. Werner replied by saying he would not agree with this proposition.

 

Dan Thompson, Lobbyist, Nevada State American Labor Federation

and Congress of Industrial Organizations (AFL-CIO), introduced himself to members of the committee.  He said the AFL-CIO's interest in A.B. 692 is based upon the continued growth in southern Nevada.

 

Mr. Thompson complimented Chairman Smith on his extensive experience and many accomplishments in the field of water.  However, he stressed the importance of giving Nevada the chance to develop a unified voice when negotiating for additional water resources.  He pointed out it is a sad commentary on the state of water affairs when Nevada receives the lowest allocation of Colorado River water, but has the highest growth rate in the nation.

 

Mr. Thompson briefly spoke of the many accomplishments of the Southern Nevada Regional Flood Control Board since its inception in 1983.  He said this is a perfect example of how a unified body can solve the problems before them.  He asserted this was the basis for introducing A.B. 692 and hoped it will result in the continued growth of southern Nevada's economy.

 

David Belding, Chairman, Nevada Resort Association (NRA), introduced himself to members of the committee.  He pointed out the NRA represents the number one industry in the State of Nevada and Clark County.  He said the association is vitally concerned with the long-term economic health of the community.

 

Mr. Belding said the NRA strongly supports A.B. 692, because it would allow one group to speak with one voice on the water issues vital to southern Nevada.  He concluded his testimony by pointing out this one group could formulate common goals and policies for the pursuit of additional water sources for the southern Nevada communities.

 

Chairman Smith emphasized members of the Senate Committee on Natural Resources share Mr. Thompson and Mr. Belding's concerns and are seeking to find an equitable solution.

 

Stan Jones, Representative, Southern Nevada Home Builders Association, introduced himself to members of the committee.  He said the home building industry is a major employer in southern Nevada.  These employees earn a living due to the area's high growth rate, spend their paychecks in the area, pay property taxes and vote.

 

Mr. Jones stressed the home building industry is dependent upon adequate water resources.  He commented on the fact that the Southern Nevada Home Builders Association supports passage of A.B. 692 and that the bill will provide a unified force that will look to the future and plan for adequate water resources.

 

Mr. Jones spoke of the disastrous effect the federal Endangered Species Act had upon the building industry, in southern Nevada, when the Desert Tortoise was added to the Endangered Species List.  He stressed that no one entity has been able to rectify this situation, until all of the interested parties unified their efforts.  Mr. Jones stressed the same success can be achieved by passage of A.B. 692 and encouraged members of the committee to support its passage.

 

Ms. Mulroy pointed out that the most succinct way to describe what the SNWA is would be to recognize that when southern Nevada comes close to running out of water, it would be able to survive and maximize its resources by working together.  She stressed the importance of acknowledging the fact that no one entity can solve the problems by itself and each entity has the ability to stop another from pursuing whatever efforts it intended to pursue.

 

Ms. Mulroy pointed out that when a consultant was hired to study what were the actual water resources in the region, jurisdictional boundaries were set aside in order to get the job done.  She said the consultant provided clear and concise numbers with which no one could argue.  She said the negotiations were very simple, because the study dealt with facts, "not smoke screens."  She said one of the key points of this study was the clear recognition that a new agency needed to be created that would consolidate all of the interests.  Ms. Mulroy asserted this new agency would give everyone a voice and prevent one entity from rolling over another.  In other words, the SNWA was not created to obtain a majority vote on the major issues by rolling over the small entities.

 

Ms. Mulroy emphasized the fact that the SNWA is able to perform certain functions that the CRC cannot.  She continued by saying the CRC cannot make a commitment for either the Clark County Sanitation District or the Las Vegas treatment plant to put the return flows back into the Colorado River.  The CRC cannot dictate conservation standards or how shortages will be allocated amongst members of the SNWA.  Ms. Mulroy insisted that these duties can only be performed by the SNWA, because it has been assigned these responsibilities and holds the contracts with the federal government.  She emphasized the fact that it makes very good sense to combine the forces of the SNWA and CRC. 

Ms. Mulroy said there are two solutions to solving southern Nevada's water problems: 1) by pursuing the cooperative water project; or 2) by changing the makeup of the CRC in an attempt to increase Nevada's allocation to Colorado River water.

 

During the course of the hearing, Ms. Mulroy said she had heard comments about a "check and balance" process.  She continued by insisting this process no longer existed, but reviewed who the checks and balances were levied against.  She stressed the interests of North Las Vegas were being protected against the water districts and Henderson.  The interests of Boulder City were being protected, as well.  She said the area where the check and balance occurred was between the competing contract holders for Colorado River water.  Ms. Mulroy pointed out many of these entities have not come together to form their own check and balance system through on-going dialogues, water budgeting mechanisms and by consensus-building.  She said the world of the Colorado River, as it was 10 or 15 years ago, is no longer the same.

 

Ms. Mulroy said the "window of opportunity," referred to previously in the hearing, exists today.  She continued by saying, during a speech, Secretary of the Interior Bruce Babbitt  had indicated that the Colorado River is the solution for southern Nevada.  However, he emphasized the fact that it will require that Nevada maximize every bit of strength and willpower in order to survive water rights negotiations.

 

Ms. Mulroy said quite a few states are developing various mechanisms in anticipation of this negotiating process.  She explained the governor of the State of Arizona has gathered together the business community, water purveyors and the contract holders in order to build a strong case for its approach to this negotiation process.  She said the Colorado River Commission of California is made up of many of the major contract holders in that state.  In order to have any kind of success at all in this negotiation process, Ms. Mulroy stressed that the State of Nevada must bring together the best the private and public sector has to offer (at both the local and state level).

 

Ms. Mulroy said the current presidential administration only has approximately 2 1/2 years to make an effective change on the Colorado River.  She asserted that this was the maximum time frame when referring to a "window of opportunity."  Ms. Mulroy said she is very familiar with how the Colorado River water is being used and how quickly it is being used.  She said the State of Nevada is rapidly running out of time.  She said it is not simply a matter of running out of water to build on, but it is a matter of running out of water against which the state can commit.  She said there will be serious economic ramifications if Nevada does not move quickly and is forced to "shut doors."

 

Ms. Mulroy said if Nevada is going to have the ability to negotiate for Colorado River water and make the best deal for southern Nevada, it has to bring the very best the state has to offer to the negotiating process.  She said it would be a travesty to "shackle" this opportunity for the next 2 years by creating a battlefield of ideas within the boundaries of the state.  Ms. Mulroy emphasized that Nevada cannot afford to become embroiled in such deliberations, when the issue is Nevada's position on the Colorado River.  She concluded her comments by stressing that the bottom-line solution will be to bring together those that have to pay the price and those that bear the state's responsibilities.

 

Senator Rhoads said the district he represents is, probably, quite different than any of the other members of the Senate Committee on Natural Resources.  He continued by saying

his constituents depend upon water for agriculture.  He proceeded to read from a magazine, which quoted Ms. Mulroy as saying:

 

      Nevada is not an agricultural state, never was one really.  We can find better uses for our water than cattle and alfalfa.

 

Senator Rhoads said the change of membership in the CRC bothers him quite a bit and he asked Ms. Mulroy to comment on this matter.  Ms. Mulroy explained her comments were made in the context of the cooperative water project.  She said this comment had been made as a defense mechanism.  When the cooperative water project began to develop, southern Nevada was blasted for "wasting" its water.  She said when the subject of wasting water is broached, the economic reality of water must also be considered.

 

Ms. Mulroy emphasized that she has spent approximately 4 years defending The Mirage Hotel and Casino, in Las Vegas, Nevada.  She said agricultural interests have declared the Mirage to be a huge waste of water.  Ms. Mulroy told Senator Rhoads that her quoted response was based solely upon the raw economics of water.  She said it was not a judgement based upon the quality of life or what type of community people wish to have, or not to have.  Ms. Mulroy said her comment was based upon the difference on the raw economic return between agriculture and tourism.

 

Senator Hickey pointed out the CRC was an agency representative of the Governor.  He said A.B. 692 would not prevent the SNWA from presenting different ideas to congress in Washington, D.C.  He continued by saying this bill would not prevent other entities from going to congress with differing ideas on what direction the CRC is taking.  Accordingly, Senator Hickey advised that it may be a very good idea to make it very clear that the Nevada State Legislature's intent was to set forth that, upon passage of A.B. 692, the CRC would be the state's lead authority in the negotiation process and in Washington, D.C.

 

Ms. Mulroy disagreed with Senator Hickey's recommendation based upon the fact that the SNWA will only have three members appointed to the CRC.  She pointed out that these SNWA appointees will continue to have dialogue with other members of the authority, because that is who they are representing.  She said she could not, nor could anyone else on the authority, go against the vote of these appointees.

 

Senator Hickey said he does not disagree with her viewpoint, but asked why A.B. 692 was then necessary.  He admitted that, currently, there is not a unified approach to the solutions to Nevada's water problem.  He asked if Ms. Mulroy would object, and why, to having the Nevada State Legislature set forth that the CRC is the only true voice for Nevada and its citizens.  Ms. Mulroy responded by saying NRS already states that the CRC is the single agency representing the interests of the state.  However, it is also every citizen's right to contact their congressman to express their personal viewpoint on any subject.  If A.B. 692 is enacted, Ms. Mulroy said the SNWA would lose credibility if it had membership on the CRC and still went to Washington, D.C. to disagree on a particular direction the CRC was taking.  Senator Hickey pointed out that, currently, nothing will prevent representatives of North Las Vegas, Summerlin and the resort industry from going to Washington, D.C. to oppose CRC decisions.

 

Senator Adler asked Ms. Mulroy if he correctly understands how the process of water negotiations currently works.  He surmised that the SNWA, occasionally, makes policy decisions that are similar to the CRC's.  However, the CRC is the entity, through the direction of their policy board, responsible for negotiating on behalf of the state.  Ms. Mulroy replied by pointing out the fact that negotiations always take place as a team.  In other words, when entering into multi-state negotiations, the State of Nevada sends several representatives.  Senator Adler asked if this team is comprised of members of the CRC.  Ms. Mulroy responded by saying there are a number of ways this could work.  She continued by saying the team could be made up of representatives from the CRC, or could be a combination of CRC and SNWA representatives.

 

Senator Adler commented that others providing testimony had mentioned statewide water planning and water policy, as well as SNWA policy.  He stated he feels these are separate issues.  However, he asked Ms. Mulroy if she was saying that A.B. 692 would give southern Nevada the ability to negotiate, rather than the State of Nevada as a whole.  Ms. Mulroy agreed Senator Adler's observation is correct and stressed the fact that "statewide water planning" is a separate function, altogether.  She continued by saying, realistically, the Colorado River only serves Clark County.  She said the Nevada Department of Conservation and Natural Resources Division of Water Resources will address the entire state's water planning needs.

 

Senator Neal said he was under the impression that the CRC is a state agency that is responsible for meeting the needs of southern Nevada.  He also assumed the CRC no longer served any kind of purpose as soon as northern Nevada's water needs came into the picture.  He asked Ms. Mulroy who would be responsible for paying the bill if the CRC, as it currently stands, made any kind of commitment.  Ms. Mulroy responded by saying the ratepayers in southern Nevada will pay for any commitments made by the CRC.  Senator Neal asked if this would be true, even in the case where the local government entity had concerns about the CRC decision(s).  Ms. Mulroy replied this is correct.  Senator Neal remembered what had taken place when the news had been released concerning the Roan Creek proposal.  At that time, the citizens of the state had been informed that this was not related to any type of negotiation process, but news in the State of Colorado differed and claimed this was entry into a negotiation process.

 

Senator Neal said Ms. Mulroy had indicated that this was all a matter in which the water has to be committed.  Ms. Mulroy replied by explaining when a developer needs water, he/she is required to obtain a commitment (from the water district) that water is available for the project.  She stressed that the water district's approval must be obtained in advance of the developer ever breaking ground (5 to 6 years of lead time).  She said the SNWA is required to project that "water is in the tank" before the developer can secure financing to build the project.  Ms. Mulroy said the SNWA shut the doors to committing any more water when the "tank" still had 80,000 gallons of water.  However, all of this water was also committed to building projects.

 

Senator Neal asked if Ms. Mulroy recalled any instance when the CRC has been able to commit local government to a project and the local government ended up paying the bill.  Ms. Mulroy admitted that in order to answer this question she would have to go too far back in history.  Senator Neal said he could not remember any instance when this had happened, but was merely trying to make the point that this water process is still too new.  He said the people of southern Nevada, at some point in time, are going to have to pay for additional water resources.  He stated he feels strongly that the people of southern Nevada should be involved in the process, particularly local government.  Ms. Mulroy said part of the reason this issue has never arisen is due to the fact the allocation has always been there.

 

Chairman Smith pointed out, in 1983, the CRC had created a water budget that indicated the State of Nevada would run out of water in the year 2008.  He said the legislature later appropriated funds to conduct a water budget study, which indicated that southern Nevada will run out of water in 2006.  He said no one was too concerned about the results of the 1983 study.  However, within the last 2 years, it was apparent that commitments had been made for water that did not exist.

 

Chairman Smith explained the time was drawing near for the members of the Senate Committee on Natural Resources to report to the senate floor.  He temporarily recessed the meeting at 10:55 a.m. and informed those in attendance that the meeting would be reconvened later that afternoon.

 

      * * * * *

 

Chairman Smith reconvened the Senate Committee on Natural Resources hearing on A.B. 692 at 2:14 p.m. in Room 119.

 

Ms. Mulroy explained that she had one final point to make regarding Amendment No. 919 to A.B. 692 (Exhibit F).  She explained this amendment had originated from discussions the SNWA had conducted in conjunction with rural power interests receiving hydropower from the Colorado River.  This amendment would give these interests the first right of refusal on power contracts.  She commented that the concerns were based upon the fact that the water utilities might usurp the power contracts and take the power away.  Ms. Mulroy emphasized this had never been the intent of the SNWA and readily supports Amendment No. 919.

 

Chairman Smith asked Ms. Mulroy if she would object to separating the water resource and electrical power resource.  Ms. Mulroy replied by stating this was clearly a decision to be made by Governor Bob Miller.  She explained the SNWA only represents one side of the issue.  Chairman Smith stated he understands her dilemma, because all she is interested in is water.  Ms. Mulroy replied this observation is correct.

 

Scott M. Craigie, Chief of Staff, Nevada Governor's Office, introduced himself to members of the committee.  Prior to this session, he pointed out Governor Bob Miller had threatened to veto any bill that might change the makeup of the CRC.  However, several events took place since the 1991 legislative session that changed the Governor's perspective.  The first event involved the formulation of the SNWA and, particularly, its accomplishments since its inception.

 

Mr. Craigie said southern Nevada has experienced "water wars" between the various municipal entities.  He said "will serve" letters were issued, for which there was no adequate water supply, so competition has been fierce.

 

With the development of the SNWA, Mr. Craigie said all of these entities were consolidated into the authority and share owner-ship in the process.  He emphasized that giving responsibility to the members involved in the process has ended the war and resulted in mutually agreeable solutions.

 

Mr. Craigie asserted that the second event affecting the Governor's opinion related to the very bitter rivalry between the CRC and the entities forming the SNWA.  He said this situation has not only split the voice of the state, but it has resulted in the sabotage of the efforts of one entity who may be getting slightly ahead of the other.  He pointed out southern Nevada is experiencing the fastest population growth in the nation, but the water needs of the area are being pushed aside by the bickering and rivalry.  Mr. Craigie remarked Governor Miller feels A.B. 692 provides an opportunity to experience the same type of success demonstrated by the inception of the SNWA.

 

Mr. Craigie drew attention to the fact that it is extremely important that the entities involved in transformation of the CRC have ownership in the selection process.  He stated he recognizes Senator Hickey's concerns that a representative from the North Las Vegas area should be appointed to the CRC.  He proceeded to point out that any representative from the SNWA, and appointed to the CRC, will be dependent upon the support of the network of southern Nevada communities.

 

Senator Rhoads asked if the new and improved CRC could be unconstitutional, because the three members of the SNWA might be delegating water contracts to themselves.  Mr. Craigie replied by saying the membership change to the CRC is believed to be fully constitutional.

 

Mr. Craigie said one of the concerns he has with the day's discussions was relative to the fact that the focus has been on the issue of use and distribution.  He agreed this is a major issue, but he drew attention to the fact that the Senate Committee on Natural Resources is losing sight of the "search" issue.  He emphasized that the most important function of the CRC is the search for new water sources.

 

Mr. Craigie mentioned that Senator Rhoads is a very good spokesman for rural Nevada.  He said he disagreed with an earlier statement made by Pat Mulroy who had suggested that there are only two solutions (out-of-state solutions and in-state solutions).  He continued by stressing the point that a third solution exists, that being the reduction of the demand for additional water through conservation measures and other efforts.  Mr. Craigie stated he recognizes the SNWA has done an excellent job in the water conservation area.

 

Mr. Craigie remarked if Nevada does not develop the water resource outside of the state, it will have to look to the three rural counties in northern Nevada (via water importation).  He continued by saying Governor Miller is extremely concerned about this issue.

 

Mr. Craigie commented on the concerns raised by various individuals that passage of A.B. 692 be delayed until an interim study can be conducted.  He said the Governor does not feel that there is enough time left to wait another 2 years before taking some decisive action.  Mr. Craigie drew attention to the fact that North Las Vegas has 30,000 residential properties that are approved by the city council and, with the exception of funding and water issues, are ready to go forward.  He said the City of Henderson is one of the fastest growing communities in the Western United States.  Mr. Craigie stressed the water resources need to be secure if the growth patterns in these communities are to move forward.  If growth is arrested, due to a lack of water, the economy would be severely impacted by the loss of jobs and employment.  He complimented Senator Neal on his fine efforts in encouraging southern Nevada hotels and casinos to employ disadvantaged youth.  Mr. Craigie stressed the importance of finding new water resources in southern Nevada and pointed out this water problem will affect the economy, because jobs will be lost if the growth is inhibited. 

 

Mr. Craigie mentioned he had recently met with some of the rural, cooperative power representatives.  He said these individuals endorse Amendment No. 919 (Exhibit F) and hope it will be amended into A.B. 692.

 

Mr. Craigie said the Governor is committed to the need for the appointment of a rural representative to the CRC.  He said he is a little wary of recommending Amendment No. 920 (Exhibit G) to members of the committee due to the fact it requires that the rural representative have some expertise in matters relating to the generation of electric power.  He said this could lead to competition between individuals associated with the Nevada Power Company and some of the rural cooperatives.

 

Mr. Craigie also responded to earlier comments intimating that the SNWA appointees might be less qualified or less able to represent the general public interest than the individuals appointed by the Governor.  In spite of the fact that Governor Miller will adhere to an extremely good selection process, Mr. Craigie stressed that all of these appointees are elected representatives.  These individuals are answerable to the voters and possess a very good understanding of public policy issues.

 

Mr. Craigie reiterated that the Governor is extremely concerned about the current rivalry that has split the state's voice.  He continued by saying this bickering is preventing the CRC and the SNWA from making any headway toward solutions to southern Nevada's water problem.  He stressed how critical it will be for the State of Nevada to win the respect of those at the federal and state level.  Mr. Craigie concluded his testimony by emphasizing the present situation is giving everyone in the water arena the wrong impression.

 

Senator Neal assumed the Governor is in support of A.B. 692 and Amendment No. 920.  Mr. Craigie responded by saying this is correct.  Senator Neal wondered why the CRC opposes passage of A.B. 692.  Mr. Craigie said the Governor is very good at appointing people who are independent thinkers with their own perspective and position.  He continued by saying that he does not believe the Governor has ever called any of his appointees to give them any kind of instruction.  Mr. Craigie said that everybody involved in this battle (from the CRC, SNWA and elected and appointed officials) are all too consumed in the battles inside of the state.  Due to this fact, all parties are losing the ability to focus on the issues outside of Nevada.  He does not blame anyone, in particular, for this dilemma due to the fact the real culprit is the structure established by local and state government.  He concluded his comments by saying A.B. 692 will change this structure and correct the problem.

 

Senator Hickey reiterated an earlier question by inquiring why section 6 of A.B. 692, changes the term expirations of CRC appointees.  Mr. Craigie explained the Governor's Office had not been involved in the drafting of the language contained in section 6.  However, after reviewing the amended language the Governor found it to be very appropriate.  He continued by saying the Governor had anticipated that the issue of rural representatives would come up, as well as the fact that the character and nature of the Governor's appointees might shift.

 

Mr. Craigie agreed with Senator Adler's previous comment on the importance of making sure that appointed members to the CRC remain with the commission long enough to gain expertise and experience.  He continued by saying the Governor feels that it is imperative to retain some of the CRC members to ensure that institutional memory and experience remain within the board.

 

Senator Hickey asked why the Governor does not also elect to appoint the members who will represent the SNWA.  Mr. Craigie admitted that quite a bit of discussion had taken place on this very subject.  However, he said the Governor has chosen to allow the SNWA to appoint its own representatives to the CRC.  This decision is based upon two points.  The first reason relates to the fact that the SNWA had reached an agreeable solution when deciding upon a single method for distribution of the water that is transferred to the SNWA at its inception.  Mr. Craigie said the Governor is an avid believer that ownership and responsibility will help to develop consensus where division existed.

 

Senator Hickey asked how the Governor's Office proposes to deal with representation of some of the smaller communities that have very large growth potential.  Mr. Craigie said he believes the record of the existing members of the SNWA answers this question.  He said these individuals have been able to take care of the "smaller players" amongst the "big, power players."  Senator Hickey said he worries about some of the smaller communities that could be muzzled or stymied by the representatives of the larger communities.  He continued by saying the influence on the distribution of water should not be overlooked.  Mr. Craigie responded by saying the current makeup of the SNWA and CRC is probably subject to more of these kinds of influences than will exist after A.B. 692 is enacted.  He stressed the three SNWA appointees will have to answer to the voters, while the CRC members could buy into a special interest and not ever worry about the consequences to their careers.

 

Senator Hickey differed with Mr. Craigie's comment by insisting that the CRC has always been reflective of the power and water interests of the districts they serve.  He said he has never heard any complaints indicating otherwise.

 

Ms. Mulroy responded to Senator Hickey's earlier question about water distribution and one of the entities being rolled over.  She said the SNWA agreement requires that any distribution the authority board approves must be ratified by the city councils of each one of the entities that are water purveyors.  In this instance, if one city objects, the entire process stops.  Senator Hickey asked why the SNWA had not requested approval of A.B. 692 from the city councils and the CRC.  Ms. Mulroy explained that only certain processes require concurrence; such as, capital expenditures, further conservation measures, future distribution formulas, etc.

 

Chairman Smith said he was elected to the Senate in 1989 and had introduced three resolutions, one of which Senator Adler inherited.  He commended Senator Adler for the effort he expended on that bill.  In 1989, Chairman Smith remembered the City of Henderson had three attorneys who were looking for water, because they were concerned about the division of the last water in the area.  Shortly thereafter, the SNWA had been formed to perform a very important function.  He stressed the fact that the SNWA has now become a "new government."

 

Chairman Smith said he had approached Governor Miller during the 1991 session with the suggestion that the CRC, or an agency of the state, be named as the one and only entity responsible for going out and getting new water.  He said the Governor embraced this theory and no mention had been made that any other agency would be included in achieving this goal.

 

In 1989, the City of Henderson was bypassing the SNWA and looking for new water on their own.  Chairman Smith tried to remember when the bickering began and wondered if A.B. 692 would really be able to stop it once and for all.  As recent as earlier this year, the Governor felt the CRC was the more appropriate agency to negotiate for new water for the State of Nevada.  He recalled recent meetings, between the Governor's Office and the CRC,  discussing the need to re-address the CRC and, possibly, restructure the appointment process.  However, before this idea was even "dry behind the ears," Chairman Smith asserted it had been abandoned for unknown and unproven reasons.  He stated that he felt this way very inconsistent if the intent is to look toward the continuation of policy.

 

Chairman Smith said he has been very supportive of Governor Miller, because he is one of the first that displayed a significant interest in developing the state's water resources.  He commended Ms. Mulroy on the fine work she has accomplished at the SNWA and applauded her capabilities.  He said she is a valuable and integral part of the SNWA and should be allowed to do the work she was hired to perform.  However, she has been forced to become embroiled in a skirmish with the CRC, and unnecessarily so.  Chairman Smith insisted that everyone already knows the machinery is in place for the Governor to lead the State of Nevada into the future in the water resource arena.  However, very loud complaints were heard regarding secrets and inappropriation.  Chairman Smith commented it was not the Governor, Mr. Craigie or the CRC who was "screaming the loudest."  He asked Mr. Craigie to confirm the fact that two governors were going to announce jointly.  Mr. Craigie said this was correct.

 

Chairman Smith said he has recently spent a considerable amount of time with representatives from other states, specifically, the State of Colorado.  He said the Roan Creek issue is not dead.  He was aware that Ms. Mulroy knew of offers to investigate trade-offs for the desalinization of water with Mexico for water from the Colorado River.  Chairman Smith said he has possession of a letter, written in Spanish and translated into English, that had been delivered to the SNWA.  He also referred to a file full of letters sent to Ms. Mulroy, from agents in the State of Arizona, regarding the sale of 22,112 acre feet of water.  He said there have been ongoing negotiations concerning the Virgin River.  Chairman Smith did not deny that all of these things are appropriate.  However, as much as Chairman Smith admires Ms. Mulroy, he stressed the importance of retaining the CRC and its functions.  He voiced concern about proceeding with such haste in this very delicate and sensitive area.

 

Chairman Smith stated that at least 90 percent of the water consumed by the western United States is utilized for agricultural purposes.  He recognized that this figure could be reduced, but the collection and distribution of this water will be difficult and expensive.  Additionally, Nevada's agricultural communities are incensed by the legislature's indelicate approach to this subject.

 

Chairman Smith said the balance on the Colorado River will be won in the courts and in the U.S. Congress.  Fortunately, there are some sensitive and understanding members in congress.  He asked those in attendance who could more aptly address this subject than the Governor.  Chairman Smith pointed out the Governor's power flows from the legislature, whose power flows from the constitution.  He stressed the fact that this hearing merely addresses governmental entities.

 

Chairman Smith admitted this is the longest speech he ever delivered in a Senate Committee on Natural Resources hearing during the 1993 legislative session.  He complimented each member of the committee for the valuable contribution they were making to the legislative process.

 

Senator Adler said he has several differing viewpoints about the negotiation process.  He asked Mr. Higginson if the SNWA will be responsible for negotiating for new water or will it be the job of the newly formed CRC (upon passage of A.B. 692), or both.  Mr. Higginson said the CRC must be responsible for water negotiations, and rightly so.  He continued by expressing his admiration and respect for Chairman Smith's understanding of the water issues in the State of Nevada.  He stressed that the goal Chairman Smith had previously stated is indeed the very same goal Governor Miller believes is embodied in A.B. 692.

 

Mr. Higginson said Governor Miller believes A.B. 692 will transform all of the concerned entities into a team.  He emphasized A.B. 692 will give the state a single voice, recognizable by the U.S. Department of the Interior and the states of Arizona and Colorado, etc.

 

Senator Adler said this brought up another question he had, that being the terms SNWA and CRC had been brought up throughout the course of the hearing as being the voice of Nevada.  He continued by saying Ms. Mulroy indicated earlier that she envisions A.B. 692 as creating a voice for only Clark County and southern Nevada.  Senator Adler asked if this bill would speak for the entire State of Nevada or just southern Nevada.  Mr. Higginson said A.B. 692:

 

      Will speak for Nevada, all of Nevada, and it will speak for the State of Nevada as we deal with Colorado River issues, and as we search for out-of-state resources for water in that region.  In addition, that will not only be the policy, but the law when this bill passes.  What it will do is bring divergent voices, as well as many resources, together and focus them in one policy direction.

 

Mr. Higginson said he understands the confusion and why the question is being asked.  Senator Adler said he has heard several different answers to this same question.  Ms. Mulroy whispered in Mr. Higginson's ear, and he again stated that he had made it very clear that "A.B. 692 relates to the Colorado River and out-of-state resources for that region."

 

Joe Dahl, Representative, Elko County Board of Commissioners and Esmeralda County Board of Commissioners, commented that he felt like a distant and, perhaps, weak voice on this issue.  He admitted that he had attended the assembly hearing on this bill purely by accident.  However, he said he quickly became aware of the fact that A.B. 692 was on the "fast-track."

 

Mr. Dahl said the Elko County Board of Commissioners does not support passage of A.B. 692, based upon concerns previously voiced during the day's hearing.  He summarized their concerns by using the term "water grabbing."

 

Mr. Dahl said he continually heard references to the "window of opportunity."  He asked, if this window is going to close soon, just how long has it been open in the first place.  He pointed out the bill draft request for A.B. 692 had been submitted on April 28, 1993.  He also stressed today's date was June 22, 1993, and the legislature has been in session since January 18, 1993.  Mr. Dahl wondered why there was such a hurry on this bill so late in the session.

 

Mr. Dahl concluded his remarks by stressing the importance of not moving too quickly and encouraged members of the Senate Committee on Natural Resources to study this matter further.

 

Fredrick J. Schmidt, Consumer Advocate, Office of the Consumer Advocate, Office of the Attorney General, introduced himself to members of the committee.  He said, prior to this hearing, he had discussed his proposed testimony with Frankie Sue Del Papa, Nevada Attorney General.  He stressed that he would not be speaking to or taking a position on the water issues or the function of the CRC.

 

Mr. Schmidt admitted that he has some very strong personal interests on this subject, based upon his background.  He continued by saying, prior to being named as the state's Consumer Advocate, he was a Public Service Commissioner for nearly two terms.  Additionally, from 1980 to 1983, he had also worked as the legal counsel for the CRC.

 

Mr. Schmidt stressed the importance of the power marketing function of the CRC.  He continued by saying it is the third largest electric utility in the State of Nevada, and is larger than all of the rural cooperatives in the state combined together.  Mr. Schmidt proceeded to summarize many facts and figures to support this fact.

 

Mr. Schmidt said the power supplied through the CRC is some of the cheapest in the United States and is supplied, primarily, by hydroelectric resources located on the Colorado River.  He said this is a major reason why power in southern Nevada is very affordable and is a significant factor to why this area is so attractive to prospective companies looking to relocate.

 

Mr. Schmidt admitted that it is difficult for him to understand why the proposed changes to the CRC would not have the effect of diminishing the CRC's power marketing interest and its related activities.  He is aware of the fact that SNWA members have publicly argued that their member water utilities should be receiving that low-cost hydropower.  Mr. Schmidt strongly urged that this not be allowed to continue.  He commented that Amendment No. 919 would provide some protection but stressed this amendment could be much stronger.

 

Mr. Schmidt stressed the importance of allowing the CRC to efficiently perform the power marketing function.  He hoped existing CRC resources and personnel would be allowed to continue to do so with power marketing as their primary function and goal.  He voiced serious concerns that restructuring the CRC would result in conflicting power and water interests.  Mr. Schmidt remarked, presently, the CRC balances those interests very well.

 

Mr. Schmidt said it is extremely important to have the agency continue to honor the contracts the CRC agreed to prior to A.B. 692.  He pointed out Amendment No. 919 proposes to give each contract holder the right to renew the contract.  He said this is an answer to the problem, but not a very good or appropriate answer.  He stressed that there might be a better or more economically efficient use for allocation of this power.  However, he admitted Amendment No. 919 is a fairly good compromise in terms of ensuring that the Nevada Power Company (and its ratepayers and rural electric cooperatives) can continue to count on this low-cost power.

 

Mr. Schmidt encouraged members of the committee to conduct an interim study which will consider to what extent water and power agencies should be mixed together.  He pointed out the State of Arizona has an arrangement where the Arizona Power Authority represents all of the state's Colorado River hydroelectric interests and the Arizona Governor represents the state's water interests.  He said the State of California also has a Colorado River Commission which handles only water matters, not power marketing.  He wondered if the State of Nevada would not be better off if it looked to these types of solutions, rather than combining these two functions and risking the possible conflict.  He suggested that power marketing is something that should be done on a broad state agency level to ensure that the allocations of electricity make economic sense for Nevada's future.

 

Senator Hickey asked Mr. Schmidt if he supports Amendment No. 919.  Mr. Schmidt said this amendment is acceptable and satisfies most of the concerns he has regarding A.B. 692.  Senator Hickey asked if Mr. Schmidt is recommending that further study be done looking at the mix of electric vs. water.  Mr. Schmidt agreed and pointed out that there is an inherent cost as water agencies look to develop new water resources.  He said pressure will be exerted upon the water representatives to keep the costs as low as possible.  Based upon this scenario, Mr. Schmidt explained the easiest way to keep their costs down would be to utilize the cheapest electric power when operating their water pumps.

 

Bob Fulkerson, Executive Director, Citizen Alert, introduced himself to members of the committee.  He said Citizen Alert was founded in 1975 and has 3,000 members (80 percent of whom reside in the State of Nevada).  He said Citizen Alert is a watchdog for governmental accountability and public participation.  Mr. Fulkerson drew attention to the fact that its membership was opposed to passage of A.B. 692.

 

Mr. Fulkerson said this bill compromises the independence of the CRC, because restructuring the agency would give the SNWA enormous power and influence.  He continued by saying this restructuring would also have the effect of centralizing the control of water inside the SNWA.  Mr. Fulkerson said he has been hearing constant testimony that A.B. 692 is needed in order to establish a unified voice on issues related to the Colorado River.  He remarked that the appointment of three SNWA members to the CRC is not going to achieve that goal and may, actually, have the opposite effect.

 

Mr. Fulkerson asserted that Citizen Alert is, primarily, concerned about the "Las Vegas water grab."  He said the CRC does not even have this item on their "short list" of possible alternatives.  However, he stressed it is very clear that the SNWA wants to pursue this water grab.

 

Mr. Fulkerson also pointed out the SNWA would be much more susceptible to local political forces in southern Nevada if A.B. 692 is enacted.  He said this situation could have a disastrous effect on the rest of the State of Nevada.  Additionally, restructuring the CRC would constitute a conflict of interest.  He continued by saying the CRC currently performs water audits of local government water systems.  He stressed the fact that allowing the SNWA access to the CRC would result in local government membership.  Mr. Fulkerson said this is akin to allowing the Sierra Pacific Power Company appoint three of its members to the Nevada Public Service Commission.

 

Mr. Fulkerson expressed his concern about the haste with which A.B. 692 had been introduced and is being rushed through the legislative process.  He said the term "window of opportunity" is being used as a smoke screen in order to rush this bill through, which is very bad public policy.  Mr. Fulkerson concluded his remarks by suggesting that members of the committee defeat A.B. 692, or clear the way for an interim study to look at the issue in more depth.

 

Senator James wondered what kind of statutory authority the CRC would have for pursuing something like the cooperative water project.  Mr. Fulkerson said the CRC does not have any statutory authority in this regard, but stressed that it is no secret that institutions favoring the water grab are not too happy with the CRC's position on this matter.  Senator James said he is very surprised with Citizen Alert's position on A.B. 692.  He continued by saying the pursuit of existing water supplies on the Colorado River is a more favorable alternative, financially and environmentally, than the cooperative water project.  Mr. Fulkerson said Citizen Alert fully agrees with this statement.  Senator James said A.B. 692 is merely attempting to restructure the CRC in order to meet the goal of receiving a larger allocation of Colorado River water.

 

Senator James said he was under the assumption that Citizen Alert is dedicated to seeing that the public has a strong voice in water management decision in the State of Nevada.  He continued by wondering why Citizen Alert would object to infusion of one of the most important water management and development groups to the CRC.  He stressed that the members of the SNWA are directly accountable to people.  Mr. Fulkerson said Citizen Alert objected to A.B. 692, because the SNWA has made it very clear that they support pursuit of the water grab.  Due to this fact, Citizen Alert does not want to further empower the SNWA by allowing it access to the CRC.  He agreed that the CRC needs to be as effective as possible when considering other water resources than just what is in the State of Nevada.  However, giving the SNWA access to the CRC will not accomplish this goal.  He continued by saying he also understood that Governor Miller and Senator Harry Reid want to proceed in other directions than the water importation project.

 

Mr. Fulkerson said Citizen Alert is very concerned about the conflict of interest established by A.B. 692.  He said this would allow local governments to make proposals to the SNWA, having these proposals accepted by the SNWA and pushing them through the CRC.  He said this process leaves no room for debate, because proposals have already been ratified by the local governments and the SNWA.

 

Senator James said he would agree with this statement, but only if the membership of the SNWA appointees to the CRC had any other duty or obligation to their constituents than to contract for that water once it gets to Nevada.  He said this is the only ministerial task involved.  Senator James stressed that the only discretion any appointee to the CRC has is to decide which project should be pursued when bringing additional water to Nevada.  He stressed the common objective of the SNWA appointees and the CRC appointees is to increase the unfair allocation to the waters of the Colorado River.  Mr. Fulkerson said he is similarly confused by Senator James's support of A.B. 692.

 

Senator Adler admitted he shares some of same concerns Citizen Alert's has concerning the conflict of interest.  However, he said whenever elected officials, whether county commissioners or city council members, are made responsible for water resources the water policy becomes more responsible.  He said Carson City is a perfect example of this and said this city is responsible for its total water supply.  Senator Adler also pointed out Carson City was the first entity in the State of Nevada to develop a comprehensive water conservation plan.

 

Senator Adler said the Nevada State Legislature has never been able to develop any serious measures on water conservation until the SNWA was development in 1989.  At that time, all of the entities in southern Nevada were involved in the SNWA and engaged in the process of water conservation.  Senator Adler insisted that appointing elected officials from Clark County to the CRC is not a negative point at all.  He said he did not see that this would be a conflict of interest.

 

Mr. Fulkerson said he has heard several times during the course of the hearing comments which referred to the infallibility of the SNWA.  Senator Adler said the situation is much improved over what it was before.  Mr. Fulkerson said he did not believe the track record of the SNWA indicated that they deserve more power than they already have.  He insisted that the record suggests just the opposite.  Senator Adler said he did not agree with Mr. Fulkerson's observation.  He said he remembered what the water consumption numbers had been prior to development of the SNWA, and what the numbers are now.  Senator Adler said the SNWA has been able to elicit cooperation and teamwork from the local governments in southern Nevada.  He said the SNWA looks at the water resource in a much more realistic manner and has been able to conserve much more water through responsible water usage.

 

Senator James asked if one of the objectives of Citizen Alert is to restrict the amount that is available to southern Nevada in order to reduce growth and development.  Mr. Fulkerson responded by saying this is not true.  Senator James continued by saying he seemed to recall that Citizen Alert had requested an Environmental Impact Study (EIS) be conducted for the U.S. Secretary of the Interior's action in contracting for the additional return flow credits.  Mr. Fulkerson asked Senator James to repeat his question.  Senator James asked if Citizen Alert had indeed requested that the Secretary of the Interior perform an environmental impact analysis, not just the environmental assessment, when the SNWA was seeking to contract with the Secretary of the Interior for the additional 58,000 acre feet of water.  Mr. Fulkerson responded by saying Citizen Alert has been pursuing this course of action.  Senator James asked what is the basis for this environmental impact statement.  Mr. Fulkerson replied by saying he would have to talk to a staff person in order to answer this question.  Senator James said his understanding has been that Citizen Alert is requesting that an EIS be conducted to take into account the environmental impact this course of action would have upon growth in southern Nevada, rather than the environmental impact of bringing the water from the Colorado River.  Mr. Fulkerson asked what is wrong with this request.  Senator James said he is not asking what is wrong with this request.  However, he said he is merely attempting to make it known that Citizen Alert has other objectives, specifically, to restrict growth through limited water supplies.  Mr. Fulkerson said this is not Citizen Alert's objective at all.  Senator James stressed that it made more sense to go out and get what the State of Nevada is entitled to and then make the incremental environmental decisions on a basis of confronting them separately.  He said it is wrong to allow artificially created, congressional created and court decision created restrictions on Nevada's ability to obtain Colorado River water.

 

Joe L. Johnson, Lobbyist, Sierra Club/Toiyabe Chapter, introduced himself to members of the committee.  Mr. Johnson pointed out Mr. Schmidt's earlier comments, "had alleviated his concerns regarding the impact of Amendment No. 919 in the severance of part of the pressure of the regulation of the consumption of water upon the impact of rural power and the centralization effect of the control passing to the members of the SNWA would have."

 

Mr. Johnson stated that he hoped to alleviate any fears relating to a comment made by Senator James earlier in the hearing.  He explained it is a formal policy of the Toiyabe Chapter of the Sierra Club to not use water as a means of limiting growth.  He said the Sierra Club's only interest in the areas of water and growth is based upon the quality of life.

 

Mr. Johnson said he viewed previous testimony as surrogate in the sense that the discussion has centered on the establishment of policy by changing the players, rather than just discussing the policy issues.  He said he heard very little testimony indicating that the present CRC is an inept or weak negotiator.  Mr. Johnson said he had heard several comments referencing independent action by the SNWA, and the divisiveness due to the fact there are multiple players.

 

Mr. Johnson said he has carefully reviewed A.B. 692 and has discovered that there is nothing that will prevent the SNWA from pursuing or continuing to negotiate on water projects.  He hoped the bill could be improved in such a manner that a statutory definition be included to specify that all water negotiations be conducted by the CRC.

 

Mr. Johnson said the Sierra Club is not opposed to the appointment of SNWA members to the CRC, however, there should be a severance of electrical versus water interests.  He agreed there should be coordination and interaction between the SNWA and the CRC but did not see that A.B. 692 provided any kind of solution to any kind of imagined problems.  He summarized his impression of what the SNWA has so far communicated during the hearing as being, "We (the SNWA) want part of the action."  Mr. Johnson said he does not believe that the problem stems from the existing CRC.

 

Mr. Johnson said he does not object to the development of a uniform, precise and energetic approach to obtaining Nevada's fair share of the Colorado River water.  He said he is hearing testimony that the justification for passing A.B. 692 is to correct an ineffective, inefficient and poor negotiation from the existing CRC.  He said he does not know if this accusation is true, but if it is he wondered what the problem would be to delegating the authority in order to achieve a common goal.

 

Mr. Johnson concluded his remarks by saying A.B. 692 appears to be changing policy by changing the players.

 

Senator Hickey said it is his understanding that the CRC already has the authority to negotiate.  He said it is his view that the problem existed when taking into consideration the CRC's ability to negotiate and the right of other entities to circumvent the process by negotiating their own deals.  Senator Hickey explained that it is anticipated that A.B. 692 can solve this particular problem.

 

Senator Hickey said he has spoken with Mr. Werner, U.S. Senator Harry Reid's representative, who indicated that passage of A.B. 692 would set forth that the CRC would be the voice of the State of Nevada.

 

In principle, Mr. Johnson agrees and supports the fact that all of the players should work together.  He said the Sierra Club's partial objection to A.B. 692 is not based upon the desire to see divisiveness.  He also appreciated the fact the appointment of three SNWA members to the CRC would stimulate the process and tend to remove the incentive for any faction to continue on in their separate directions.  However, he objected to earlier comments that A.B. 692 would solve this problem, because he did not see that the bill contained any kind of guarantee.

 

Ned Eyre, Representing Self, introduced himself to members of the committee.  He encouraged members of the committee to defeat efforts to enact A.B. 692, based upon the fact that he believes in the long-term prosperity of the State of Nevada.  He mentioned that as the day's hearing progressed, he has become progressively troubled.  He finally realized what has been bothering him was the fact that proponents of the bill spoke to the issue as if they were addicted to growth.  Mr. Eyre said he has spent much of his adult life addicted to alcohol, thus he is more attuned to readily spotting similar types of behavior.

 

Mr. Eyre said he has never heard the words "sustained growth."  He insisted this kind of growth would ensure a strong economy and allow our children and grandchildren to prosper.  He cautioned that by turning over the control to the state's water resource during the current climate may have the effect of encouraging unwise and addictive decisions to be made.

 

Mr. Eyre said he understood that it was important to establish a single voice for the State of Nevada.  However, he said he is extremely apprehensive about giving southern Nevada all of the control over the state's water resources.

 

Thomas Dill, District Attorney, Lincoln County, introduced himself to members of the committee.  He pointed out he is also representing the Lincoln County Board of Commissioners and their opposition to A.B. 692.

 

Mr. Dill responded to an earlier statement by Senator Rhoads concerning the possible unconstitutional nature of A.B. 692.  He explained A.B. 692, as written, would allow members of the SNWA (including members of the LVVWD) to contract, through the CRC, with themselves.  He anticipated the members' re-election would be premised upon their success in obtaining these contracts for the LVVWD.  Mr. Dill viewed this matter as being a violation of the separation of powers.  On the other hand, he stressed he was very concerned about further delaying the solution to the problem currently experienced by southern Nevada.

 

Mr. Dill pointed out that some other state is going to lose water when a reallocation takes place.  He anticipated this other state will attempt to challenge the basis for the decisions and the contracts entered into by the CRC of Nevada.  He was disturbed by the fact that A.B. 692 may further delay a solution to the water problem in souther Nevada.

 

Mr. Dill said the conflict of interest set forth by A.B. 692, which Senator James fails to recognize, is very plain to see in another aspect.  He continued by pointing out local government officials in Clark County would have a great deal of input on the rates charged for electrical energy.  Mr. Dill said the main focus has been on water, while the potential effect A.B. 692 will have on power rates is very real.  He asserted this effect will not be limited to Clark County, but felt in Lincoln County as well.  Specifically, the ability to affect the charging rate for hydroelectric energy would be in the hands of local government officials and not the state's representative (CRC).

 

Mr. Dill stated he felt much more comfortable with continuing to allow the Governor the discretion to appoint members to the CRC, rather than "give it away" to the SNWA.  He said the analogy of the fox in the henhouse is as appropriate as putting the fox in charge of feeding and watering the hens.

 

Mr. Dill said the Lincoln County Board of Commissioners supported an increase to the state's allocation of Colorado River water.  He said the pursuit of this goal is in the best interests of every citizen of Nevada.  He explained the board's concerns are centered upon giving too much discretion to the local government interests in Clark County.  Mr. Dill explained this will have the effect of overshadowing the interests of Lincoln County and other rural areas where water applications have been filed.

 

Mr. Dill shared the concerns voiced by Senators Titus, Adler and Neal earlier in the hearing regarding the structure of the SNWA and term arrangement of appointees to the SNWA.  He said the point he is trying to make is that if the basic mechanics are unclear, how can the policy objectives of how the CRC would function possibly be clear.

 

Mr. Dill concluded his remarks by requesting that the members of the Senate Committee on Natural Resources conduct a detailed interim study before any action is taken on A.B. 692.

 

Senator James asked Mr. Dill what restrictions are placed upon the Governor when making appointments to the CRC.  Mr. Dill said he is not certain what exact restrictions are placed upon the Governor, but said his point is "if it's not broken, don't fix it."  Senator James said Mr. Dill has raised the notion of a conflict of interest based upon the fact that some of the representatives are not from Lincoln County.  He continued by saying he supposed the Governor is able to appoint any person he felt is qualified; for instance: one member from the state at-large, and one member from a county who has power served by the CRC.  He said he does not anticipate that A.B. 692 would change anything at all in this regard.  Mr. Dill reiterated a statement made by Chairman Smith earlier in the hearing where he had pointed out the Governor is accountable to the legislative body and to the constitution.  Senator James asked if the Governor has appointed a representative from Lincoln County or from a rural area in Clark County.  Mr. Dill responded by admitting that Lincoln County does not currently have representation on the CRC, but stressed this does not justify giving additional representation to a local government with interests adverse to other rural areas.  He pointed out the fact that the Lincoln County Board of Commissioners supports Amendment No. 920 (Exhibit G), which would guarantee rural county representation on the CRC.  He noted the board also supports Amendment No. 919.  Senator James asked if these amendments would satisfy Lincoln County's concerns.  Mr. Dill replied by saying Amendment No. 919 would guarantee that rural counties would have representation on the CRC.

 

Upon passage of A.B. 692, Senator Hickey pointed out one of the CRC's primary duties will be to provide a mechanism for negotiating outside of the state, with the unified involvement of the SNWA.  He asked how this would threaten Lincoln County.  Mr. Dill said the CRC's existing ability to negotiate does not directly threaten Lincoln County.  Senator Hickey said the primary interests of the CRC will be water.  He recognized the point Mr. Dill had made earlier regarding the separation of water and electric interests.  He also pointed out A.B. 692 would work to Lincoln County's advantage due to the fact the main thrust would be to look at out-of-state water resources, rather than pursuit of the cooperative water project.  Mr. Dill said the overlap of power and water issues concerns the irrigators in Lincoln County, because these people operate on a limited amount of money and resource.  Mr. Dill stressed they will suffer extreme hardship if a "trade-off" occurs and electric rates are raised.  Senator Hickey asked Mr. Dill if his concerns were focused on power.  Mr. Dill replied by saying this is correct, but continued by saying he viewed the issues as being one and the same.

 

When county commissioners sit ex-officio on boards of governmental and quasi-governmental bodies, Senator James asked if these individuals are involved in making decisions and going back to contract with themselves as the county.  Mr. Dill replied by saying the commissioners can enter contracts on behalf of the county.  Senator James said this situation set precedent in other situations; such as, a hospital, the airport, the water district, etc.  He continued by saying individuals representing these entities sit ex-officio on the board of trustees, make decisions and then attempt to contract to provide services to the people through the county.  Mr. Dill said he does know how other counties might be structured with the commissioners sitting as ex-officio members of boards for hospitals, etc.  However, he stated the contracts these individuals enter into are on behalf of the county.  Mr. Dill said the situation set forth by A.B. 692 is distinct, because representatives would be coming from the five different areas of the SNWA.  He continued by saying some of the representatives would be benefitting financially from contracts entered into by the CRC.  He stated he felt this is where the conflict of interest lies.

 

Doug Busselman, Executive Director, Nevada Farm Bureau (NFB), introduced himself to members of the committee.  Mr. Busselman's testimony to the committee is contained in Exhibit H.  He continued by saying he does not believe it would be possible for the CRC, as set forth by A.B. 692, to negotiate for Colorado River water without being "tainted" with the view that the CRC is actually a "community interest project."

 

Senator Hickey asked Mr. Busselman why he felt the CRC should not be a "community interest project."  Mr. Busselman replied by saying he has heard one proposal that indicated that if the CRC (under A.B. 692) is successful in obtaining all of the water it needs from the Colorado River, the CRC will cease to look to the rural areas of the state for water.  Senator Hickey said he has not heard this point but continued by saying the rural communities do not represent the State of Nevada.  He asked Mr. Busselman why the Senate Committee on Natural Resources should not be interested in the "community interest."  Mr. Busselman said the NFB is not objecting to the fact that three members of the SNWA would be appointed to the CRC.  He insisted the NFB's point deals with the fact that there should be other representatives from other areas of the state, as well.  Senator Hickey said the community interest and population lies in southern Nevada.  If the discussion of breaking the representation into counties would address the community interest in different areas, why not address community interest by population and to the area affected by A.B. 692.  Mr. Busselman responded by saying he could not answer this question.

 

Chairman Smith noted he intends to vote on this issue before the day is over.  He wondered if this would now be possible, because other members have to leave in order to meet their commitments in other senate committees.  Senator Hickey interrupted by pointing out Senator Neal would not be able to attend the rest of the hearing due to the fact there had been a death in his family.

 

Kent Bloomfield, Manager, Planning Contracts and Special Projects, District No. 5, Overton Power; and President, Silver State Power Association, introduced himself to members of the committee.  He said it appeared he is one of a very few individuals who is not going to direct his comments to the water issue, but to the power interests.

 

Mr. Bloomfield proceeded to review a handout provided to members of the committee (Exhibit I).  He concluded his remarks by agreeing with Senator Rhoads' earlier observation that A.B. 692 should be monitored very closely and emphasized this legislation should represent both water and power interests.  He encouraged members of the committee to place this into a study committee during the interim as a means of ensuring the bill does what it has been designed to accomplish.

 

Mel Close, Attorney, Silver State Power; Attorney, Valley Electric Association; and Former Nevada State Senator, introduced himself to members of the committee.  Mr. Close pointed out the area represented by Valley Electric Association on page 1 of Exhibit I.  He then drew attention to the significant number of water contractors represented by the SNWA (page 3 of Exhibit I).

 

Mr. Close recognized the importance of water to southern Nevada and acknowledged the need to have one voice representing the state when negotiating for Nevada and southern Nevada.  He pointed out the individuals who spoke to the committee in the morning had voiced concerns about water.  He said it was not until this afternoon that the issue of power has finally been broached.

 

Mr. Close then spoke at some length of the importance of power and how A.B. 692 could affect the balance and affordability of the CRC's ability to deliver cheap hydropower.  He stressed the negotiating skill and expertise required to negotiate with the federal government is extreme and wondered whether the SNWA appointees would have the appropriate expertise required to protect the state's power interests.

 

Mr. Close stated the Silver State Power Association (SSPA) feels it should be entitled to having one member appointed to the CRC, possibly more.  He pointed out it is absurd to think that an elected official from North Las Vegas, appointed to the CRC, would be representative of Nye or Lincoln counties' interests.

 

Mr. Close also voiced considerable concern over the fact that once the SSPA's power contracts expire that they may not be renewed.  He said a concern has been expressed that the water interests in southern Nevada may attempt to utilize the less expensive power to pump water.  He said this is a legitimate concern of the state's power interests.

 

Mr. Close voiced appreciation for Mr. Craigie's and Ms. Mulroy's support of Amendment No. 919.  Nevertheless, Mr. Close recognized that this amendment to A.B. 692 could be removed during one of the upcoming legislative sessions.  He said it comforts the power suppliers to know that the members of the Senate Committee on Natural Resources recognize their concern.  However, they found little comfort in the knowledge that this amendment can be deleted in the year 2003 when Ms. Mulroy and Mr. Craigie are no longer there to uphold the agreement.  Mr. Close said the only guarantee for the power suppliers would be to incorporate Amendment No. 920 (Exhibit G) into A.B. 692.  He drew attention to the fact this amendment would place in statute the requirement that one member of the CRC (appointed by the Governor) "have expertise in matters relating to the generation of electric power."  He stressed the industry placed its trust in the Governor to appoint a qualified, competent individual to the CRC.

 

Mr. Close concluded his testimony by recommending that A.B. 692 be studied in further detail during the interim and requested that the appointment of a rural electric power representative be seriously considered in this study.

 

Senator Hickey said he is particularly interested in the present makeup of the CRC.  He asked Mr. Close if he was comfortable with the present structure of the CRC.  Mr. Close said he is not totally comfortable, because the electric companies have had problems in the past.  However, he pointed out the statewide agency (CRC) has protected their interests in spite of requests from the electric companies that the CRC spend more time on power matters.

 

Senator Hickey asked if Mr. Close feels the current membership of the CRC has enough expertise to deal with the power issues.  Mr. Close responded by saying there are several CRC members who have the ability to understand the power industry's concerns, and several of these individuals have been responsive.

 

Senator Hickey asked Mr. Close if he is concerned about how the elected officials from the SNWA will be appointed.  Mr. Close replied by saying, if A.B. 692 is enacted, the water interests will have three out of the seven votes on the CRC.  He continued by emphasizing the fact that the Silver State Power Association currently generates approximately 37 percent of the revenue for the CRC.  Mr. Close stressed that "power" is a big business, and the industry has always felt strongly that it deserved to have representation within the CRC.  He stressed A.B. 692 would not improve the situation, because it does not specify that a power representative be appointed to the CRC.  He stated that he feels it is not unreasonable to ask for just one position on the CRC.  Mr. Close drew attention to the fact that he would not mind if the legislature completely revamped the entire system by creating separate water and power authorities.

 

Senator Rhoads said he intended to make a brief statement to members of the committee, then make a motion.  He admitted that he knew the motion would fail but wished to have the matter addressed for the record.  Chairman Smith asked Senator Rhoads if he would like to wait until the CRC has finished its presentation.  Senator Rhoads agreed to this suggestion.

 

Mr. Close drew attention to a letter, dated June 11, 1993, from Benjamin L. Smith, President, Board of Directors, Valley Electric Association (Exhibit J).

 

Thomas E. Cahill, Executive Director, Colorado River Commission, introduced himself to members of the committee.  He then read from a handout consisting of the prepared testimony from Garth R. Winckler, Las Vegas Commissioner, Colorado River Commission (Exhibit K).

 

Chairman Smith left the temporarily and Vice Chairman Rhoads took charge of the meeting.  Vice Chairman Rhoads said he had asked a question earlier but was not satisfied with the answer that had been provided.  He asked Mr. Cahill for his opinion on the possible unconstitutional nature of A.B. 692.  He explained A.B. 692, as written, would allow members of the SNWA to delegate water contracts, through the CRC, to themselves.  Mr. Cahill replied he had previously requested answers to these very questions from the attorney general.  However, he explained he had yet to receive an answer from Attorney General Frankie Sue Del Papa.

 

Senator Adler said a similar situation has arisen with the Carson Subconservancy District in Carson City.  He continued by saying there have been concerns regarding the district's ability to contract with the counties due to fact county commissioners are members of the district.  Senator Adler asserted the Legislative Counsel Bureau Legal Division had asserted that this is not a conflict of interest. 

 

Senator Hickey informed those in attendance that it is important to note the fact that the State of Nevada owes a debt of gratitude to the CRC.  He said he has not been critical of entering into negotiations and he understands that the negotiation process must sometimes be conducted privately.  Senator Hickey told Mr. Cahill that when criticism comes, it is often not personal in nature, but a matter of "positioning."  Mr. Cahill responded by saying he appreciated Senator Hickey's comment and mentioned that he was not taking this matter personally at all.

 

Alan H. Glover, Lobbyist, Nevada Power Company; and Former Nevada State Senator, introduced himself to members of the committee.  Mr. Glover said he would not be able to articulate the power industry's position as well as Mr. Close had already done.

 

Mr. Glover pointed out Charles A. Lenzie, Chairman of the Board and Chief Executive Officer, Nevada Power Company, authorized him (Mr. Glover) to relay a couple of points to the members of the Senate Committee on Natural Resources.  Mr. Glover commented that the first point that needed to be addressed is the industry's hope that Amendment No. 919 be adopted and protect the existing contracts for power.

 

After listening to the testimony provided at the day's hearing, he said this issue appears to be even more confused than originally thought.  Under these circumstances, he said the second point he was relaying from Mr. Lenzie is the sincere hope that members of the committee will support an interim study of the matter.

 

Karen Galatz, Chairman, Las Vegas, Colorado River Commission, introduced herself to members of the committee.  Ms. Galatz's testimony is contained in Exhibit L.

 

Senator Hickey said he is interested in the continuity of the CRC and inquired how many board members are there, currently.  Ms. Galatz responded by saying the board consists of five members: one member from the northern region and four members from southern Nevada.  Senator Hickey asked how long are their terms.  Ms. Galatz responded by saying these individuals serve 3-year terms, the expirations of which are staggered.  Senator Hickey asked what is the time frame for these terms to expire.  With Mr. Cahill's assistance, Ms. Galatz explained: two members' terms expire the end of June 1993; one member's term expires in 1994; and the two remaining members' terms expire in 1995.

 

Senator Hickey said he noticed that A.B. 692 would require all of the current CRC members' terms to expire all at once.  He asked what expertise will be lost to the CRC when this takes place.  Ms. Galatz replied by saying these individuals represent a broad range of experience and proficiency.  Senator Hickey asked why would not the CRC start all over if A.B. 692 were passed out of the Senate Committee on Natural Resources.  Ms. Galatz stated she felt this question could be better addressed by Robert L. Crowell, Attorney-at-Law; and Former Chairman (Carson City), Colorado River Commission.

 

Mr. Crowell introduced himself to members of the committee.  Senator Hickey explained his understanding of how the CRC worked is an issue is raised, the staff develops the arguments and a determination is made by members of the board.  Mr. Crowell said this is an accurate summarization of the CRC's function.

 

Senator Hickey said A.B. 692 is proposing that the makeup of the CRC be changed.  He admitted that some of the members may or may not be reappointed to the CRC, probably, based upon some of the past bickering.  Senator Hickey asked Mr. Crowell to summarize the expertise of the current CRC members.  Mr. Crowell responded by saying there are no statutory requirements (other than geographical) for the appointment of commissioners and their political affiliation.  Speaking from the standpoint of experience, he said the chair should have a broad understanding of the issues and possess the ability to rationally work out and resolve problems.  With regard to the remaining members of the CRC, he said it would be difficult to identify any kind of specific expertise in a particular area.

 

Senator Hickey asked Mr. Crowell to describe how the addition of three SNWA members would affect the CRC's current operation.  He continued by stating A.B. 692 would, undoubtedly, involve individuals with more interests in water issues.  He also said it was hoped that A.B. 692 would reduce and/or eliminate the bickering, and develop a community interest group by combining the efforts of the CRC and SNWA.  Mr. Crowell pointed out that he and Ms. Galatz have known each other for a long period of time.  He admitted that they have not always seen eye-to-eye on every issue and he said he does not agree with portions of Ms. Galatz's testimony.

 

Mr. Crowell said Senator Hickey had asked a specific question and supposed he also wanted a specific answer.  Senator Hickey said this was correct.  Mr. Crowell explained he had not prepared any kind of testimony but spoke about a conversation on this subject he had recently with Senator James.  He continued by saying a fairly accurate summarization of this discussion is based upon the premise that the greatest possible negotiating clout would result if all of the entities, that have provided testimony at the day's hearing, could be aligned into a single, unified body.  He said he has no doubt that this would be a valuable asset to the State of Nevada.

 

Mr. Crowell said the intent of A.B. 692 is to unite all of the different factions in an attempt to resolve southern Nevada's water problems.  He explained that he approached this issue from the philosophical standpoint that water is a state resource.  He asserted that if A.B. 692 could preserve this state resource, then the fundamental criteria of what the CRC should do has been met.

 

Mr. Crowell stressed the fact that the Governor and the Nevada State Legislature are charged with making policy.  He said the only policy decision he could recommend to the Senate Committee on Natural Resources would be:

 

      As long as you are convinced, in my mind, that the state does not lose its authority or control over this resource, or the power resource, then that is the deciding factor you should make your decision on.  That would be where I would cut the line.

 

Ms. Galatz said the only point she wanted to make is based upon the fact that, at this time, all of the players do have the opportunity to talk.  She continued by saying the CRC sets forth in its mission statement that the pace, acquisition and specific negotiations for water would be done following a time frame determined by local governments.  Mr. Galatz said this is an example of the communication process but admitted that there could be better communications if there was a goodwill and good faith effort to do so.  She concluded by assuring members of the committee that there are avenues open to all interested parties.

 

After Chairman Smith returned to the hearing, Senator Rhoads informed him that the CRC representatives had completed their presentations.  Chairman Smith advised members of the Senate Committee on Natural Resources that he would call a brief recess until all of the members of the committee could be present for a vote (with the exception of Senator Neal).

 

Chairman Smith reconvened the hearing and invited Senator Rhoads to make a brief statement to the committee.  Senator Rhoads drew attention to the fact that he is the only legislator on the Senate Committee on Natural Resources from rural Nevada.  He said his district is threatened by the prospect of Ecovision, as well as other water acquisition plans.  He said he is very apprehensive about changing the CRC, which has represented the entire state, into a commission that will only address the needs of southern Nevada.

 

SENATE BILL 327:  Creates legislative committee to study use, allocation and management of water.

 

      SENATOR RHOADS MOVED TO CONDUCT AN INTERIM STUDY OF MODIFYING THE MEMBERSHIP OF THE COLORADO RIVER COMMISSION (AS SET FORTH BY S.B. 327), AND TO INDEFINITELY POSTPONE A.B. 692.

 

Chairman Smith asked if any member of the committee wished to second the motion.  There was no second.  Chairman Smith asked if any other member of the committee was prepared to make another motion.

 

      SENATOR JAMES MOVED TO AMEND AND DO PASS A.B. 692 WITH AMENDMENT NO. 919.

 

      SENATOR TITUS SECONDED THE MOTION.

 

Chairman Smith asked if Amendment No. 920 would be amended into A.B. 692.

 

      SENATOR ADLER MOVED TO AMEND AND DO PASS A.B. 692 WITH AMENDMENT NO. 920, AS WELL AS ADD A PROVISION CONTAINED WITHIN NRS CHAPTER 277 AUTHORIZING ENTITIES ENTERING INTO COOPERATIVE AGREEMENTS TO APPOINT MEMBERS TO COMMISSIONS.

 

Senator James said he did not understand Senator Adler's motion.  Senator Adler offered to withdraw his motion concerning the NRS.

 

      SENATOR ADLER MOVED TO AMEND AND DO PASS A.B. 692 WITH AMENDMENT NO. 920.

 

There was no second.

 

Senator Hickey said he recalled that the power industry supported Amendment No. 919 but could not recall who had submitted Amendment No. 920.  Senator Adler replied by saying the rural power cooperatives had supported inclusion of Amendment No. 920.

 

Senator Hickey said he wanted to state, for the record, that the small water entities in southern Nevada (especially, North Las Vegas) be fully represented when the CRC is restructured by A.B. 692.

 

Senator Titus apologized for missing portions of the hearing, and asked if Mr. Craigie had actually made a commitment that Governor Miller would ensure that one of his appointees would address rural interests.  Chairman Smith said he had the understanding that these agreements had already been reached by both houses of the legislature and all parties.  He continued by saying he was a little surprised that Amendment No. 920 is being ignored.  Senator Hickey said he would have seconded the motion to incorporate Amendment No. 920 into A.B. 692 if he did not already have the understanding that North Las Vegas was not recognized by the Governor.

 

Senator Rhoads said the problem with not incorporating Amendment No. 920 in A.B. 692 now was the fact that Governor Miller and Mr. Craigie may be gone in 2 years.  He said it is difficult to enforce a promise.  Senator Hickey said he supposed every once in a while you had to rely on someone's word.  He also pointed out passage of A.B. 692 would take effect on July 1, 1993.

 

Chairman Smith called for a vote of the committee on Senator James's motion to amend and do pass A.B. 692 with Amendment No. 919.

 

      THE MOTION CARRIED.  (SENATOR NEAL WAS ABSENT FOR THE VOTE.  SENATORS SMITH AND RHOADS VOTED NO.)

 

      * * * * *

 

Chairman Smith provided Rayanne Francis, Committee Secretary, with copies of several letters and handouts.  He asked that these items be incorporated into the permanent record of the hearing on A.B. 692.

 

Accordingly, Exhibit M is comprised of 10 separate letters from individuals concerned about and/or opposed to passage of A.B. 692 (originals are on file in the Research Library).

 

Exhibit N is comprised of letters regarding the SNWA's efforts to appropriate waters from Muddy Creek and the Virgin River (originals are on file in the Research Library).

 

Exhibit O consists of a handout describing the anticipated effect passage of A.B. 692 may have upon the State of Nevada and the CRC's ability to negotiate for additional water resources.

 

Exhibit P includes a handout listing a suggested amendment to A.B. 692 and the justification for this amendment.

 

Exhibit Q is comprised of a handout detailing the conferred functions and limitations of the SNWA.

 

Exhibit R consists of a letter and several enclosures that were provided to Chairman Smith by Theodore M. Thompson (original is on file in the Research Library).

 

      * * * * *

 

There being no further business before the Senate Committee on Natural Resources, Chairman Smith adjourned the hearing at 4:47 p.m.

 

 

 

            RESPECTFULLY SUBMITTED:

 

 

                                    

            Rayanne J. Francis,

            Committee Secretary

 

 

 

APPROVED BY:

 

 

                                

Senator R. Hal Smith, Chairman

 

DATE:                           

??

 

 

 

 

 

 

 

Senate Committee on Natural Resources

June 22, 1993

Page 1