The SNWA: Groundwater Development Project": Creating New Water Law
by Gregory J. Walch and Stacy D. Harrop

The Applications are located in Spring Valley, Delamar Valley, Dry Lake Valley, Cave Valley, and Snake Valley. The State Engineer issued Ruling 5726 (April 17, 2007) on the nineteen applications in Spring Valley and Ruling 5875 (July 9, 2008) on the six applications in Delamar, Dry Lake, and Cave Valleys. The Snake Valley hearing is scheduled for the Fall of 2009 and is expected to be the most hotly contested of the hearings because the Snake Valley basin lies in both Nevada and Utah and encompasses the Great Basin National Park.

The Applications and subsequent hearings have raised many important water and administrative law issues. This article will discuss two of those issues.

The State Engineer did not allow "new" protestants to participate in the hearings
Although the Applications were filed in 1989, the State Engineer did not take action on the Applications until some sixteen years later when, on January 5, 2006, the State Engineer held a prehearing conference. Because the Applications were filed in October 1989, the thirty-day protest period on the Applications all closed by early 1990. NRS 533.360. In the sixteen-year interim, several protestants died or sold their property or water rights, and "new" property owners, water rights holders, and business owners arrived (or became adults) in the affected basins. The State Engineer has denied all requests to allow new protests or to allow heirs or purchasers of land or water from protestants to participate as successors in interest to the filed protests. Specifically, the State Engineer ruled that he did not have authority to reopen the protest period and that "protests are specific to an individual protestant" and therefore "do not run to any successor." Intermediate Order and Hearing Notice (March 8, 2006), p. 7; see also Intermediate Order No. 3 (July 27, 2006). The refusal of the State Engineer to recognize successor in interests in 2006 is currently on appeal before the Nevada Supreme Court and is being challenged both on due process and equal protection grounds. A similar denial of the State Engineer in 2007 to recognize as a protestant a land owner who purchased effected land and water rights in 2005 is also currently on appeal before the Court.

In 2007, the Nevada State Legislature amended NRS 533.370, adding sections (8) and (10). Section (8) provides that if an application has not been decided within seven years after the closing of a protest period, "the State Engineer shall notice a new period of 45 days in which a person who is a successor in interest to a protestant or an affected water right owner may file with the State Engineer a written protest against the granting of the application." NRS 533.370(8). Although section (8) appears to resolve the above issues, it does not. The Legislature specifically exempted from section (8) any application filed before July 1, 2007, which exempts all of SNWA’s 1989 applications. And because SNWA seeks to withdraw all of the unappropriated water in the application basins, the Legislature also made section (8) virtually meaningless as to each of the targeted basins. What’s not clear from the legislative history is why.

The Legislature also added section (10), which allows for certain successors in interest to pursue a previously filed protest. Unlike section (8), section (10) applies to all pending or new applications. However, the application of section (10) is limited to those instances where a person succeeds to both an existing protest and an affected water right or land on which a domestic well has been drilled. The provision might not be of service to bridge the gap between a protestant not owning an affected water right or a domestic well, and its successor.

In determining whether a protest is indeed a personal right as the State Engineer has concluded, or whether instead it runs with the land (like the water and other property attributes it was designed to protect), the Nevada Supreme Court will be asked to weigh the State Engineer’s (and SNWA’s) interest in quasi-judicial economy against the risk that excluding certain protest successors from the hearings may result in the erroneous deprivation of property rights. How the Court resolves the matter (and crafts any applicable remedy for excluding successor property owners from the hearings) will provide direction for parties in the future.

The interbasin transfer shall not unduly limit future growth and development
NRS 533.370 governs the granting of applications to appropriate water. Section (6) sets forth the criteria the State Engineer must consider before approving an interbasin transfer of groundwater, such as that proposed by SNWA’s Applications. That statutory section provides in full:

In determining whether an application for an inter-basin transfer of groundwater must be rejected pursuant to this section, the State Engineer shall consider:

(a) Whether the applicant has justified the need to import the water from another basin;

(b) If the State Engineer determines that a plan for conservation of water is advisable for the basin into which the water is to be imported, whether the applicant has demonstrated that such a plan has been adopted and is being effectively carried out;

(c) Whether the proposed action is environmentally sound as it relates to the basin from which the water is exported;

(d) Whether the proposed action is an appropriate long-term use which will not unduly limit the future growth and development in the basin from which the water is exported; and

(e) Any other factor the State Engineer determines to be relevant.

NRS 533.370(6). Section (6) was adopted by the 1999 Legislature after attempts in several prior sessions to address the issue and in direct response to SNWA’s Applications. Summ of Legisl., 1999 Leg., 70^th Sess. 11, 22 (Nev. 1999).

Criteria (d) is of particular interest in the SNWA hearings. SNWA expressly seeks to remove all unappropriated water in each of the basins. By the very nature of the Applications, an approval of the requested amount would prohibit any future growth and development requiring a new appropriation of water. In both the Spring Valley Ruling and the Delamar, Dry Lake, and Cave Valleys Ruling, the State Engineer has narrowly construed criteria (d).

In the Spring Valley Ruling, the State Engineer focused on whether the protestants presented evidence of future growth and development that would require a specific quantity of water. Ruling 5726, p. 52. In doing so, the State Engineer effectively placed a burden of proof on the protestants that is not expressed in the statute. However, the State Engineer did find a reservation was necessary and reserved two acre-feet for every five acres of undeveloped land and an additional ten percent of the perennial yield of the basin for future growth.

In the Delamar, Dry Lake, and Cave Valleys Ruling, the State Engineer’s interpretation of criteria (d) perceptively narrowed. In that matter, evidence regarding the potential for both agricultural and residential development in Cave Valley was presented, along with estimates of the water needed to realize that potential. In the Ruling, the State Engineer rejected that evidence as speculative and not currently economically feasible. Ruling 5875, pp. 33-35. In so doing, the State Engineer effectively interpreted the statue to require that he only consider currently planned and currently feasible growth and development. The State Engineer reserved 275 afa of water for Cave Valley, and 50 afa each in Delamar and Dry Lake Valleys.

The State Engineer’s application and interpretation of the statutory criteria faces some resistance from the plain language of the statute and its legislative history. During the debate of the Bill, the highlighted concerns for basins of origin included "potential losses of taxable income, social stability or the ability to economically develop in the future." Summ of Legisl., 1999 Leg., 70^th Sess. 11, 41 (Nev. 1999) (remarks of Naomi Duerr). The concerns for the well-being of the basins of origin in a large-scale transfer of water were paramount in enacting criteria (d), which, along with the broad language adopted, indicates that a broad view of "future growth and development" was to be used by the State Engineer to protect basins of origin. As this has not been the approach in the State Engineer’s rulings, we would anticipate that appeals of the Delmar, Dry Lake, and Cave Valleys Ruling will delve into the State Engineer’s interpretation of NRS 533.370(6).

The current status of SNWA’s applications
The Spring Valley hearing addressed nineteen of the Applications, which sought a total of 91,224 afa of groundwater in Spring Valley. On April 17, 2007, the State Engineer issued Ruling 5726, granting 60,000 afa to SNWA. An interim order in that hearing precluding certain persons from participating is currently on appeal before the Nevada Supreme Court.

The Delamar, Dry Lake, and Cave Valleys hearing addressed six of the Applications, which sought 11,584 afa in each valley for a total of 34,752 afa. On July 9, 2008, the State Engineer issued Ruling 5875, granting SNWA 2,493 afa in Delmar Valley, 11,584 afa in Dry Lake Valley, and 4,678 afa in Cave Valley. An interim order in that hearing precluding a landowner from participating in the hearing as a protestant is currently on appeal before the Nevada Supreme Court. The appeal period on Ruling 5875 has not yet expired; however, we anticipate that a petition for judicial review to the district court will have been filed by the time this article is published.

The final major hearing for SNWA’s project will be for Snake Valley, where nine of the Applications are pending seeking 50,680 afa of groundwater. The State Engineer held a pre-hearing conference on July 15, 2008, and the hearing will be scheduled for Fall of 2009 to allow time for additional water modeling. The Snake Valley hearing will likely raise new and unique issues because the Snake Valley basin straddles the border of Nevada and Utah and encompasses the Great Basin Nation Park, both of which circumstances implicate broader legal, social and political issues than the prior two hearings.

Whatever the ultimate outcome of the hearings and their appeals, the issues implicated by SNWA’s Applications and the project itself will have a significant impact on the future of Nevada water law and Nevada’s water resources.

Drought, Nine Years and Counting
by Mary Madden

The year 1999 saw the beginnings of what would turn out to be the worst drought on record for the Colorado River System, the source of water that the Las Vegas Valley relies on for 90 percent of its supply. In the years since, and especially now in 2008, this Valley is faced with the tough reality of desert living and the need to reduce water consumption through conservation. Although conservation alone will not solve the Valley’s water problems given the severity of this drought, reducing the amount of water consumed will help extend the use of our current water source.

As a result of the drought, the two primary storage reservoirs on the Lower Colorado River, Lake Mead and Lake Powell, declined from a near-full condition in 1999, to levels not observed since Lake Powell began filling in the early sixties. The reduction of inflows into Lake Powell caused a significant decrease in water levels in Lake Mead. The accumulation of a white mineral "bathtub ring" on the landscape surrounding the lake served as an ominous reminder of the potential water shortage to southern Nevada residents. According to the U.S. Department of the Interior, Bureau of Reclamation, Final Draft Annual Operating Plan for Colorado River Reservoirs 2008, beginning in 2000, annual inflows to Lake Powell experienced drastic declines to rates as low as 25 percent of normal. As the drought persisted throughout 2003 and 2004, the result was the lowest five-year average runoff in recorded history with 50 percent of average inflow into the two reservoirs.

The severe and persistent drought conditions in the Colorado River basin left the seven states that rely on the mighty river with increased concerns over the potential consequences of a shortage and the resulting threat to their communities. In addition to actively pursuing their in-state water resources, the states were left to work together towards more dynamic solutions against the increasingly severe drought conditions affecting the river.

Conservation
Changing the way in which the Valley had used water in the past was difficult and did not come without some resistance, but the results were significant. In 2003, SNWA began their efforts to significantly reduce water consumption by updating their already successful conservation program with more aggressive measures and also created a comprehensive drought response plan. Despite having an already nationally recognized conservation program, the SNWA took a more aggressive approach to conservation. Among other changes, citizens of the Valley would now face landscape watering restrictions with harsh penalties for violating those restrictions, a tiered water rate structure that penalized the highest water users, and a restriction on front yard turf for new development.

In addition to stepping up conservation efforts, the SNWA developed a comprehensive Drought Plan. This plan included information and guidelines regarding water demands and conservation goals, water supply, drought, and drought response measures. The ultimate goal of the initial Drought Plan was to define appropriate steps to meet drought challenges in a coordinated, regional fashion, while preserving local control and oversight by each affected community.

These conservation initiatives and the development of the Drought Plan would be guidelines for living in the Las Vegas area, a desert community that relies on the Colorado River for 90 percent of its water source, and a community where severe drought is an everyday reality.

Challenges
Although these conservation initiatives and the Drought Plan have been instrumental in changing the culture of the Valley’s water use, implementation of some of these initiatives was not achieved without resistance. One particular area of concern has been the conflict between these drought restrictions and conservation efforts, and the Covenants, Conditions, and Restrictions (CC&R) of Homeowner’s Associations (HOA).

For instance, many HOAs challenged those homeowners within their community who wished to conserve water by converting their turf to desert landscaping. These HOAs perceived these types of conservation efforts as potentially harmful to the property value of their communities because the communities would lack uniformity. Because some homeowners would have turf and some homeowners would have desert landscaping, the HOA feared that the aesthetics of the communities would suffer.

In challenging these homeowners, the HOAs used the argument that the contract terms of the CC&R’s should override the proposed conservation efforts of the homeowner, as provisions of a contract are given deference in court and should be upheld above a homeowner’s wish to convert their turf to desert landscaping. On the other side of the argument was the importance of conserving water within this Valley. Although the Nevada Legislature decided this argument by passing SB 325 in 2005, which states that HOAs may not prohibit homeowners from converting turf to desert landscaping, the battle between homeowners and HOAs over conservation measures still exists.

Today, nine years later
Today, the culture of the Valley’s water use has changed for the better. The so-called "restrictions" implemented in the past have now become the standard. With Lake Powell at 63 percent of capacity and Lake Mead at 46 percent capacity, the effects of the drought have been overwhelming for the Las Vegas Valley and will continue for many years. Although no amount of conservation will secure our future water supply because of the length and severity of this drought, this community has responded to the need to conserve our current water source with great resolve. Many citizens have joined the conservation effort and have taken advantage of some of the incentive programs offered by SNWA, such as the Water Smart Landscape Program, the Smart Irrigation Controller Rebate Coupon, the Rain Sensor Instant Rebate Coupon, the Pool Cover Instant Rebate Coupon, as well as the Water Smart Car Wash. The results of the community involvement in these programs have been dramatic. For example, since the inception of the Water Smart Landscape Program, over 109 million square feet of turf has been converted to desert landscaping, which equates to roughly the amount of turf to cover 1,897 football fields. The Water Smart Landscape Program alone saves the community over 6 billion gallons of water per year.

With the Las Vegas Valley currently reliant on the Colorado River for approximately 90 percent of its water needs, conservation is an important element of ensuring a reliable water source for Southern Nevada. Conservation alone will not ensure a reliable water source and for this reason, SNWA is diligently working to secure additional water resources. Securing a reliable and safe water source requires all citizens of this Valley, including residents, businesses, and HOAs to make it a priority to conserve our water resources and continue to battle the effects of this, thus far, nine year drought. Only through coordinated efforts to secure additional water resources and conserve our current resources, will residents and businesses alike continue a quality of life that makes Southern Nevada a unique place to live and work.

Mary Madden is Deputy Counsel in the General Counsel’s office of the Southern Nevada Water Authority and Las Vegas Valley Water District. She is a graduate of the University of Denver Sturm College of Law.