Water officials rush to craft bill in response to court ruling

When lawmakers return to Carson City this month to wrestle with the state's $881 million budget deficit, water officials want them to take on another bit of business: the recent Supreme Court ruling that could doom the Southern Nevada Water Authority's multibillion-dollar pipeline project.

Allen Biaggi, director of the Nevada Department of Conservation and Natural Resources, confirmed Wednesday that he is crafting a bill for state lawmakers to consider during the special session set to start Feb. 23.

The measure is described as a quick legislative fix for the Jan. 28 Nevada Supreme Court ruling that could cloud thousands of pumping rights and jeopardize plans to supply Las Vegas with water siphoned from across eastern Nevada.

It will be up to Gov. Jim Gibbons to decide whether to add the proposed bill to the agenda for the special session.

"We're certainly considering it," said Lynn Hettrick, Gibbons' deputy chief of staff. "This has a huge impact to the state of Nevada and not just the Southern Nevada Water Authority."

The state's chief water regulator, acting State Engineer Jason King, has said the high court's decision could cause "chaos" for the entire water rights system in Nevada.

Water authority General Manager Pat Mulroy said the ruling needs to be addressed quickly by the Legislature or through some other method "because of the havoc it is creating."

At issue is the Supreme Court's interpretation of a 2003 law that sought to exempt pending water rights applications from a rule requiring the state engineer to act on them within one year.

The justices ruled that the 2003 law did not apply to pending applications filed before July 1, 2002, including the Las Vegas Valley Water District's 1989 filing for groundwater rights across rural Clark, Lincoln and White Pine counties.

Those water applications are now in the hands of the water authority. If they are nullified, that could delay the authority's proposed pipeline project or halt it altogether.

Mulroy said the 2003 law was meant to be retroactive and cover all pending applications, so the goal of the new measure being written will be to make that original intent clear.

Biaggi said what he is "spooked about" are the hundreds of pending water applications and thousands of water rights across Nevada that could be called into question by the justices' interpretation.

He said he and King are working on the language for the proposed fix. They hope to have it written and in the governor's hands within the next few days.

"I think it's important to have as simple a fix as possible," he said.

The fix might be simple, but the stakes could not be higher, according to Mulroy and a team of Nevada business leaders expected to back the measure.

The authority has spent tens of millions of dollars on studies, preliminary designs and legal work for the pipeline project, which is expected to supply enough water for more than 250,000 homes and reduce the community's almost total reliance on the drought-stricken and overdrawn Colorado River.

Mulroy said Southern Nevada cannot guarantee its long-term water supply without the pipeline project. If the drought continues , "we have a hole in our resource plan in 2023," she said.

And even a hint of uncertainty about the water supply could scare off the lenders and investors that valley businesses need to help them climb out of the recession, said Jeremy Aguero, a principal at the economics research firm Applied Analysis.

"Water is a material risk in any conversation with an investor. From an economic aspect, I don't see any industry that doesn't get impacted," he said.

The uncertainty could keep people from selling their homes because potential buyers won't be able to find anyone willing to finance them over 30 years, said Irene Porter, executive director of the Southern Nevada Home Builders Association.

"This potentially is the end of the world," added Danny Thompson, secretary-treasurer of the state AFL-CIO, which represents some of the labor sectors hardest hit by the recession. "This potentially will turn us upside down, and I don't know how you recover from that."

But one opponent of the pipeline project dismissed the warnings of economic apocalypse as "fear mongering" and "profoundly disingenuous."

New Mexico-based environmental attorney Simeon Herskovits represents the group of conservationists and rural Nevada residents who sued for the right to participate in state hearings on the authority's applications. That 2006 lawsuit triggered last month's Supreme Court ruling.

Herskovits said the water authority and its friends in the gaming and development industries are just trying to scare lawmakers into doing whatever it takes to clear the way for the pipeline.

"I just feel like these people don't have any credibility at this point," he said.

Herskovits also doesn't buy the argument that the court decision will uproot the state's water rights system. The ruling, he said, is narrow and specific.

As for the proposed legislative fix, he said it "reeks of present-day politics" and might not truly reflect what previous lawmakers were trying to do when they passed the law in 2003.

"It's unwarranted and unwise for the Legislature to wade back in and try to undo what the Supreme Court has done," Herskovits said.

Mulroy insists something has to be done to get the pipeline project - and state water law - back on track.

"That project absolutely has to be part of our portfolio. If this state wants to economically recover, it has to have a healthy water resource plan," she said. "This has nothing to do with growth. It has to do with the ability to recover from the economic downturn."

Actually, growth has a little something to do with it. When Mulroy talks about a "hole" opening in the valley's water supply picture, she is basing that on the assumption the population will hold steady for the next three years, then start to climb again.

The real mistake, Herskovits said, is if state and local leaders don't learn from this financial crisis. He said it's time for leaders to take a hard look at what has proved to be an unsustainable economic model .

The water authority and state engineer have until Tuesday to ask the Supreme Court to reconsider its unanimous ruling.

Biaggi said the state engineer's office will file its petition for rehearing within the next few days. On Wednesday afternoon, lawyers for the water authority requested a 30-day extension from the high court so they can prepare their petition.

Hettrick said a decision on whether to allow the proposed bill into the special session should come before the end of the week.

Contact reporter Henry Brean at hbrean@reviewjournal.com or 702-383-0350.