Friday, May 16, 2003 | 6:26 a.m.
A controversial water company is poised to make Nevada's ground water "an instrument of profit," and the bill that would allow it could cause a fundamental change in the way Nevada doles out rights to the state's most important natural resource.
The legislative effort is the latest chapter in Vidler Water Co.'s decadelong effort to provide water to cities in the West for profit, a commerce that Vidler and other companies have successfully pursued in other parts of the nation but have, so far, had limited success within Nevada.
Senate Bill 487, which appears to be headed for Assembly approval, would provide legal sanction to Vidler Water Co.'s unusual partnership with Lincoln County, Clark County's neighbor to the north. The Lincoln County government and the water company have a deal to develop water resources and divide any profits between them.
The bill would legalize the arrangement. Vidler and Lincoln need the legislation because an attorney general's opinion last year said the partnership was illegal. Critics and other observers say the bill could go a long way toward turning what had been a government-controlled resource essential for life in the desert into a for-profit commodity throughout the state.
The bill would allow similar partnerships in the wide-open, windswept mountains and valleys throughout nearly all of the state -- in every county except Clark.
The bill passed 15-6 in the Senate, despite an impassioned appeal against the measure from Sen. Warren Hardy, R-Henderson, who also represents Mesquite. Hardy is concerned that Vidler and Lincoln County's plans for development of water north of Mesquite could endanger his small town's access to water later.
Hardy, Mesquite's senator, has worked for the water district as a consultant. He said he doesn't oppose Lincoln County's economic development, the stated goal of the legislation, but the development should not cost the area its water.
"I've done everything in my career to help Lincoln County develop, but water has been a natural resource owned by Nevada for 150 years of law and precedence," Hardy said. "It will now be an instrument of commerce."
He said water ultimately will cost more for all consumers, including those he represents in Mesquite.
"When a company like Vidler is involved, it's going to drive up the cost," Hardy said.
The bill passed out of the Assembly Government Affairs Committee 10-3 Friday, with Vidler agreeing to several key amendments. One would prohibit out-of-state sales of water that the company or its government partners control.
Another amendment specifies that Vidler's deals in partnership with local governments have to be open to the public and open to inspection, a concern of some opponents.
A third amendment would grant the State Engineer, Nevada's statutory arbitrator of who gets how much water from what source, the ability -- though not the obligation -- to deny water applications that are deemed "speculative."
The bill still needs to pass the Assembly and be signed by the governor.
Vidler's business model has for years envisioned taking rural water rights and selling them to urban areas, in particular to thirsty Las Vegas. It is not a new concept. The Southern Nevada Water Authority, the government wholesaler to public distributors in Clark County, has staked out rights throughout the eastern and central parts of the state to slake water needs in the future.
The difference is that the water authority is a not-for-profit agency operating under the direction of elected officials, who are charged with bringing Clark County's 1.8 million residents with clean and affordable water.
Assemblywoman Peggy Pierce, D-Las Vegas, a former Sierra Club activist, warned that Vidler could manipulate the market for its own profit. She said the electricity crisis of two years ago could be repeated, but with what may be an even more important resource.
"I don't think that essentials like water should be in the hands of private owners," Pierce said. "The water of Nevada belongs to the people of Nevada and it should be controlled by elected officials, not by people whom we have no control over and who have no obligation toward us.
"This is not just going to affect Lincoln County. It would affect the entire state."
Hal Rothman, University of Nevada, Las Vegas, history professor, said people should not be surprised that companies are looking to make money on water in Nevada.
A commodity
"It's a commodity now," Rothman said. "There are plenty of cases where private or personal water rights supercede public water rights."
But SB487, he said, "could open the floodgates" to a move toward selling rural water rights to urban areas such as Las Vegas.
"Anybody could do it. It continues the longstanding Nevada practice of blurring the line between public and private."
Rothman noted that 80 percent of the water used in Nevada still goes to agriculture and ranching. He said if more water goes to urban consumers, the way of life in those rural areas is likely to change.
"If water becomes more of a commodity, there will be more pressure on rural places to sell it."
Rural and desert water sources already are being sold to feed the nearly insatiable hunger for urban growth throughout the mountains and deserts of the West, Rothman and other academic observers note.
It is already happening in Southern Nevada. Sometimes the Southern Nevada Water Authority buys annual rights to groundwater a few hundred acre-feet at a time from long-established property owners in Clark County. One acre-foot is enough for a typical family for one year.
Sometimes the sales are bigger. In 1998, lobbyist Harvey Whittemore sold rights to the water authority to draw 7,500 acre-feet of water annually from his proposed development in Coyote Springs, on the Lincoln County-Clark County line, for $25 million.
Whittemore held onto rights for another 6,000 acre-feet, enough to start building the controversial development that the lobbyist hopes will one day have 50,000 homes.
Although much of the project is in Lincoln County, the project does not have a direct tie to the county's partnership with Vidler Water, principals from all three sides say.
The trend is not new in the West, said Vidler lobbyist and attorney Mark Fiorentino.
"This is not a new concept, especially in the Western states," Fiorentino said. "Public entities are working with public-private partnerships to develop groundwater."
For smaller, cash-strapped governments, working with a company with deep pockets is the only way to build the infrastructure to get the job done, he said.
Fiorentino said it has not been generally the way that the process has worked in Nevada, however.
"Our growth has not gotten to a point where we had to focus on groundwater resources, and they are very expensive to develop," Fiorentino said.
The public-private connection is meat-and-potatoes to Vidler, which says on its website that it intends to sell water to metropolitan areas throughout the West, including Albuquerque, Denver, Los Angeles, Phoenix and, of course, Las Vegas.
Financial analysts consider the company well-placed for the business. Vidler's sister company, Nevada Land and Resource Co., is the state's largest private landowner. It owns more than 1.2 million acres in Nevada, land that is on a lot of water, potential profits for the company.
Based in Reno, the company is not restricting its interests to Nevada. Vidler also operates water systems and barters water in Utah, Colorado, Arizona and California.
Controversy has followed the company's efforts in the Silver State, which have included a partially successful effort to control water rights in southern Clark County. The company in 1999 asked the State Engineer to approve rights to 1,400 acre-feet of water from nearby the small town of Sandy Valley.
Residents fought the application, and State Engineer Hugh Ricci ultimately approved a little more than 400 acre-feet per year in 2002, which would go to support development in nearby Primm. Neither the Sandy Valley residents nor Vidler officials were happy with the State Engineer's Solomon-like decision, and they have appealed it.
Other setbacks
Vidler, despite its tough reputation, also has had other setbacks.
Last year Deputy Attorney General C. Wayne Howle issued an opinion that the company's relationship with Lincoln County was illegal because nothing in state law permits any county to form a partnership and share the profits without a public purpose.
Supported by Vidler's 18 lobbyists -- including some of the most influential in Carson City -- SB487 attempts to resolve that issue and open the door for the rest of Nevada to enter similar pacts.
Other counties in the sparsely settled and cash-strapped center of the state are interested in the concept.
"We're kind of in the same boat Lincoln is," White Pine County Commissioner Paul Johnson said. "We're a rural entity. We're cash-strapped and in need of economic development."
If SB487 could provide a way for White Pine County to get compensation for the resources it has, Johnson is "completely in favor of that."
He said the county has created a water commission to explore policy options and is moving to hire a consultant to work on the issues. Johnson said Vidler specifically has not been warmly received in White Pine County, where residents don't automatically trust outsiders eyeing their water resources.
He predicted that his county would likely handle any water development deal differently than Lincoln County. But while the ultimate form that development would take is an open question, his constituents would like to use the resource to provide economic opportunities and fund essential government services.
"Let's face it, if we don't, we'll be dependent on external entities," Johnson said.
Johnson, a native White Pine County resident who has lived in Las Vegas, said the push to bring in private companies to the water business statewide could profoundly change the way water is handled in Nevada. He said that will be an issue that the residents of his county will consider carefully.
"If you open it up to the market, the market is going to drive prices," Johnson said. "It could affect consumers. It's a double-edged sword.
"Sure, it could help with economic gain in the immediate future, but it could hurt in the long term," he said.
Ranchers and environmentalists have joined a rising chorus in questioning the bill.
The Nevada Conservation League is asking its members to oppose the bill. Kaitlin Backlund, the league's lobbyist in Carson City, said Hardy's opposition sparked her group's position.
"That was a turning point for us," Backlund said. "What Sen. Hardy was able to bring to light -- water becoming a tool of commerce. That sets a dangerous precedent."
Environmentalists are concerned that scarce water resources throughout the rural areas of the state could be drained, affecting nature and the lifestyles of rural residents, Backlund said.
"There is a general concern for many of the people in rural areas of water being removed from the place they live in and going somewhere else," she said. "You can't remove the people who reside in rural Nevada from this, because they are the biggest part of the picture.
"You don't preserve the environment without the help of local folks."
Paul Brown, Southern Nevada director of the Progessive Leadership Alliance of Nevada, said his group and associated environmental groups will be looking more closely at the bill.
The bill, he said, "stinks as bad as sulfuric acid in water."
He said giving private companies, Vidler or otherwise, a hold on "an essential substance" would be bad for both the environment and consumers and would open the door for future water-wars throughout the state.
Fiorentino said the concerns are misplaced.
Any use of groundwater in the state must be approved by the Nevada State Engineer, who has generally been conservative about approving wells and volumes from untested sources, Fiorentino said.
"Their issue is with the state engineer," he said. "I don't think that's a legitimate concern."
The overuse of water, however, has been the source of continuing strife among the water agency serving Mesquite -- the Virgin Valley Water District -- and the Lincoln-Vidler team.
Virgin Valley Water District officials worry that their wells in northeast Clark County could be hurt by Vidler's plans to build a water-cooled power plant a few miles north.
Doug Carriger, Lincoln County manager, said that prediction is bogus.
No impact
"What we are doing here in Lincoln County has no impact on the ability of Virgin Valley Water District to deliver water services whatsoever," Carriger said. "Zero. Nada."
Hardy charged during the Senate debate that Vidler and Lincoln County would be able to avoid the state's open meeting law, and would use that loophole to make development and water deals behind closed doors.
It is a charge that the environmental groups, including the conservation league, have picked up and distributed to their members.
Fiorentino said the allegation was completely unfounded. Lobbyists for Vidler told Hardy that an amendment would be offered in the Assembly to deal with the concern, he said, and Hardy agreed not to battle the issue.
"He's making stuff up," he said. "What he's doing is not right."
Although considered a state hero by many environmentalists, Sen. Dina Titus, D-Las Vegas, voted for SB487. She said Lincoln County needed the development impetus that county leadership hopes the bill would provide. But Titus said she wanted to ensure any deals are open to public scrutiny.
The Southern Nevada Water Authority, the wholesaler that brings water to agencies throughout Clark County, has long been an opponent to Vidler and Lincoln County's plans.
But the water authority is absent in the debate on the issue in this session. Pat Mulroy, water authority general manager, said her agency agreed not to oppose SB487 in return for a sweeping deal that ended more than a decade of battle between the water authority and Lincoln County over water rights in the rural area. The deal could provide long-term rights for enough water for perhaps a half-million people.
The deal required the water authority to back off from fighting the partnership's appeal of the attorney general's opinion and to refrain from lobbying against the bill. The agency has honored that agreement, Mulroy said.
"We have stayed out of it," Mulroy said. "We were caught in a very difficult situation. We had an opportunity to settle a 13-year fight between ourselves and Lincoln County."
Mulroy said that does not mean the water authority won't fight Vidler or Lincoln County in the future.
The agreement not to oppose SB487 "was a very finite limitation," she said.
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