MINUTES OF THE

      SENATE COMMITTEE ON NATURAL RESOURCES

 

      Sixty-seventh Session

      June 25, 1993

 

 

 

The Senate Committee on Natural Resources was called to order by Chairman R. Hal Smith, at 8:43 a.m., on Friday, June 25, 1993, in Room 224 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

 

 

GUEST LEGISLATORS PRESENT:

 

Assemblyman Vivian L. Freeman, Assembly District 24

 

 

STAFF MEMBERS PRESENT:

 

Caren Jenkins, Senior Research Analyst

Fred Welden, Chief Deputy Research Director

Rayanne Francis, Senate Committee Secretary

 

 

OTHERS PRESENT:

 

Mike Turnipseed, State Engineer, Division of Water Resources,       Department of Conservation and Natural Resources

Joe Johnson, Lobbyist, Sierra Club

Jim Weisaupt, Manager, Walker River Irrigation District

 

 

Chairman Smith called the meeting to order.  The first item of business was Assembly Bill (A.B.) 624.

 

ASSEMBLY BILL 624:      Revises procedures concerning applications for water rights.

 

Assemblyman Vivian L. Freeman, Assembly District 24, testified in support of the bill.  She stated she has a major concern with the speculation of water.  The bill was designed and drafted with the cooperation of the state water engineer.  Mrs. Freeman submitted written testimony (Exhibit C) and explained the bill primarily addresses the topic of reasonable diligence as it relates to water permits. 

 

Senator Rhoads questioned the origin of the term "reasonable diligence."  Fred Welden, Chief Deputy Research Director, Legislative Counsel Bureau, answered the term is already in Nevada's statutes.  Senator Rhoads ascertained there will be a definition of the term in the bill.  Mr. Welden explained the definition came from Colorado statute.  He said Colorado also has several court cases which further specify examples of reasonable diligence.  Senator James pointed out Nevada has cases dealing with the concept, also.  Mr. Welden acknowledged there are two cases in Nevada which speak to the subject, but neither address the term itself. 

 

Senator James asked if it is Mr. Welden's understanding that the state engineer does not currently have the authority to cancel a permit for failure to proceed with reasonable diligence.  Mr. Welden said the state engineer does currently have that ability.  The bill will, in some instances, require him to cancel permits.

 

Senator Hickey questioned the need for the bill if the state engineer presently has the discretionary power to cancel permits.  Mrs. Freeman responded the bill will give the state engineer additional tools to prevent any speculation on water. 

Senator Hickey wondered if there will be additional costs associated with those tools.  Mrs. Freeman said it is her understanding there will not be additional costs.  She invited the state engineer to speak to the subject. 

 

Mike Turnipseed, State Engineer, Division of Water Resources,   Department of Conservation and Natural Resources, submitted a copy of the department's Application For Extension of Time (Exhibit D).  He expressed some concern over the fees mandated in the bill.  Mr. Turnipseed explained he does not think the fee structure would accomplish the purpose of the bill.  Senator Hickey asked whether the fees are adequate to deter speculation.  Mr. Turnipseed said a fee of $500 would not deter the person sitting on a $1 million water right.  Senator Hickey suggested indexing the fees differently to deter the people guilty of speculating. 

 

Senator Adler pointed out that during the sixty-sixth session the legislature had passed a $6 per acre foot fee for transfers between counties, which must be paid back to the county of origin. 

 

Mr. Turnipseed said there has been speculation in water throughout the history of the state.  In the 1970s and 1980s, when the Desert Land Entry Program was "going great guns" they were taking thousands of applications for desert land entries.  The Department of Conservation and Natural Resources approved a few and denied a lot.  They were sued many times, but won those lawsuits. 

 

Senator Hickey said, "I don't think we're going to stop speculation.  The question is, should the speculator pay for his speculation?"

 

Senator Neal asked what effect the term reasonable diligence would have on the person with an approved application for water rights.  Mr. Turnipseed explained the term would not affect the time frame. 

 

Senator James stated:

 

      I really get concerned when we try to say that we should discourage all speculation in water rights.  I think it's kind of, you know, if it's real property that you're dealing with you call it investment.  If somebody then tries to do the same thing, investing in water rights, you call it speculation and now it's suddenly nefarious.  In my experience I have run into very few people where that's the situation, but the people who need to use these things, they're trying to hold water rights so they can develop a project that takes many years, over several phases to develop, or they're trying to develop their farms, or they're moving their water rights around to try to get the most beneficial use out of them when they are perfected.  I think it's very dangerous for us to consider all types of holding on to a permit before it ripens into a certificate, consider that speculation and try to prevent that from occurring.  That's one problem I have with the fees because we're, in those fees, we're exempting out the federal government and the public utilities.  What about the little guy who is trying to develop the water who might have more of a problem with paying the additional fees?  He's the one who may need more assistance and deference in developing his water.  It may take a while to place water to beneficial use.

 

Mr. Turnipseed agreed and called the committee's attention to page 3 of the bill which states, "...work on one feature of the project or system may be considered in finding that reasonable diligence has been shown in the development of water rights for all features of the entire project or system."  He said if it were a multi-million dollar project, but only a small portion of it was for water, that language seemed to be counter to the intent of the bill.      

 

Senator Neal said his understanding of the bill was such that the engineer would be given the right to cancel the permit after a permit had been in force for a period of time.  Senator Neal wondered what would happen if a person bought land and obtained a permit, then did not develop the property immediately.  Mr. Turnipseed agreed he would, under A.B. 624, be required to cancel the permit in absence of proof of reasonable diligence to

perfect the water right. 

 

Senator Hickey suggested addressing the speculation problem with a graduated scale.  Mr. Turnipseed said he does not necessarily disagree with the idea.  Senator Hickey asked Mr. Turnipseed to come up with a formula to present to the committee.  Mr. Turnipseed agreed.

 

Mrs. Freeman stated:

 

      I find it fascinating that the state water engineer did not speak to any of these concerns in the assembly, in the committee, or in the subcommittee.  Actually, I sort of resent that.  I don't mind the bill being amended in a way that could accomplish what it is we are trying to do.  That's fine with me.  If you can find a better way to do it, I'm all for that.  I would ask for your cooperation, but I do resent the fact that he didn't express these concerns to us.  We drafted the bill in good faith that we would have his support.  He seems to be making the assumption that he'll always be the state water engineer.  Now, I think we need to think in terms of the future for our state.  There will be other state water engineers.   There will be other heads of our various departments.  That's what we are trying to do here today, and I would ask that you try to keep that in mind.  I would be very happy to work with you in any way that I can, and the state water engineer.  But, I again say that I wish he would have brought these concerns up in the assembly.

 

Mr. Turnipseed replied:

 

      I didn't mean to imply that I was opposed to the bill.  I told Senator Hickey that I have no problem with the first section of the bill, nor section 2 of the bill.  The only part that's going to cause me any heartburn

     

      is the fees, and we've explored that.  The good parts of the bill are probably going to uphold a decision of the cancellation of a permit.  On that side, it's good.  I have been fairly successful in defending cancellations, but that doesn't mean I always will be.  I could just as easily get beat in the supreme court or district court on a cancellation.  So, the language here, being much stronger as far as defining reasonable diligence, requiring that financial statements, both at the application stage and the extension of time stage, those are all good parts.  They have no impact on my agency.  I did not mean to imply that was all bad language. 

 

Senator Smith said he thinks the committee all understands that.

 

Joe Johnson, Lobbyist, Sierra Club, testified in favor of the bill, and agreed with Senator Hickey that the fees should be graduated. 

 

Senator Adler suggested continuing the $100 fee, no matter who it is, up to 5 acre feet, then prorating amounts above that. 

 

Mr. Johnson stated that would address his organization's area of concern. 

 

Jim Weisaupt, Manager, Walker River Irrigation District, said his only opposition to the language is in what would happen to the expenses involved in providing the proof and evidence of reasonable diligence.  He stated his organization has a pending permit to construct a 200,00 acre foot reservoir at Hoyt Canyon on the West Walker River.  To show good cause in the past had been relatively inexpensive.  His concern is that it would not remain so.

 

Senator Neal asked Mr. Turnipseed to address Mr. Weisaupt's concerns.  Mr. Turnipseed said the reasonable diligence clause would certainly put a heavier burden on them to show why the permit should be extended. 

 

Senator Neal questioned the reasoning behind requiring the proof when Mr. Turnipseed already knows why the project needs a permit extension.  Mr. Turnipseed explained there is currently a protest against granting the next extension for the reservoir, so he will be holding hearings at which the irrigation district will defend their need.

 

Senator Adler asked if the current statute is more or less stringent than the proposed language.  Mr. Turnipseed stated reasonable diligence had not, in the past, been defined in statute. 

 

Senator Smith closed the hearing on A.B. 624 and opened the hearing on A.B. 314.

 

ASSEMBLY BILL 314:      Makes various changes regarding appropriation of public waters and increasing certain fees assessed by state engineer.

 

Senator Smith reminded the committee they had amended A.B. 314 at the request of Senator Neal to strengthen the administrative procedures portion of the bill. 

 

Senator James stated he did not think the committee needed to amend the bill to deal with the Administrative Procedure Act (APA) now because they had dealt with it in Senate Bill (S.B.) 370.

 

SENATE BILL 370:  Makes various changes relating to Administrative Procedure Act.

 

Senator Neal explained the committee had placed the state engineer under the APA so he would not be hampered by the litigation on the Walker River.

 

Mrs. Freeman said there are provisions in A.B. 314 which would address most of the concerns of the committee regarding the APA without putting the state engineer back under the code.

 

      SENATOR HICKEY MOVED TO RESCIND THE PREVIOUS ACTION ON A.B. 314.

 

      SENATOR NEAL SECONDED THE MOTION.

 

      THE MOTION CARRIED UNANIMOUSLY.

 

      * * * * *

 

      SENATOR HICKEY MOVED TO DO PASS A.B. 314.

 

      SENATOR NEAL SECONDED THE MOTION.

 

      THE MOTION CARRIED UNANIMOUSLY.

 

      * * * * *

 

Senator Smith stated there is a conflict notice on A.B. 314, but it is merely a mechanical conflict and would be resolved.

 

There being no further business before the Senate Committee on Natural Resources, Chairman Smith adjourned the hearing at 9:44 a.m.

 

 

 

            RESPECTFULLY SUBMITTED:

 

 

                                    

            Denise Pinnock

            Committee Secretary

 

 

 

APPROVED BY:

 

 

                                

Senator R. Hal Smith, Chairman

 

 

DATE:                           

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Senate Committee on Natural Resources

June 25, 1993

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