Water ruling

Gov. Jim Gibbons and lawmakers are hyperfocused on the fiscal woes of state government. The governor has called a special session of the Legislature for Feb. 23 to address a projected $871 million budget deficit, and the deal-making on how to balance the 2009-11 spending plan is well under way.

But legislators and the governor have been presented with another state issue that demands their immediate attention: a complex water rights ruling from the Nevada Supreme Court that could quickly boil into a second economic crisis should elected officials choose to ignore it.

On Jan. 28, the court threw thousands of pumping claims into a void of uncertainty. It ruled that pending water rights applications filed before July 1, 2002, are not exempt from a rule that requires the state engineer to act on them within a year. A law enacted in 2003 was supposed to grant a retroactive exemption to those applications, but the court said it was not clear such an intent existed.

The ruling has affected Nevadans of all kinds, from rural ranchers to NV Energy. They've had to rush to re-file their applications -- some decades old because of the overburdened state engineer's inability to meet the one-year standard, established in 1947. In some cases, applicants couldn't re-file fast enough, with other parties using the opportunity of the court's ruling to jump to the front of the line.

However, the most significant result of the court's decision was the plug it effectively put in the Southern Nevada Water Authority's planned pipeline to White Pine County. Applications for those groundwater rights across rural, eastern Nevada were filed in 1989. Needless to say, they weren't settled within a year.

The water authority might very well have to start the process over again. And because it will take at least 10 years to construct the pipeline, it's hard to imagine the project being completed anytime before 2025, if at all.

That's not sitting well with the financial industry.

The pipeline, conceived long ago as way to ensure an adequate water supply for the Las Vegas Valley and its ever-growing population, is now simply an insurance policy against continued drought on the Colorado River. If the drought persists -- or, heaven forbid, worsens -- the valley will confront dire long-term shortages as soon as next decade.

Investors want assurances that Las Vegas will have enough water to grow its economy, once it recovers. The pipeline is an essential part of the authority's resource plan, which is included as supporting documentation for banks in big business deals. Because of the ruling, that resource plan now has a huge hole. And that hole could scare away the institutions that are being counted upon to refinance the debt of bankrupt casino companies and other ailing Nevada businesses.

A bill being crafted by Allen Biaggi, director of the Nevada Department of Conservation and Natural Resources, would clarify the intent of the 2003 law. If Gov. Gibbons includes the bill on the agenda for the Feb. 23 special session, and lawmakers pass it, the water authority could take it to the Supreme Court at a reconsideration hearing. The court, then, could do the right thing and restore all the pumping claims it threw into chaos last month.

But first, the governor has to bring the issue to the Legislature. Because the goal of the special session is to complete the state's business as quickly as possible, lawmakers need to agree to support the bill before they get to Carson City.

The Legislature can't play games with this issue. Their primary concern is the state's budget, but they'll soon be making even deeper cuts than the ones they're now considering if they turn a blind eye to the court's ruling.