Aubrey Trinnaman / New York Times
The sun sets over the Humboldt River on Feb. 1, 2019, in Elko, Nev.
Monday, March 11, 2024 | 2 a.m.
“Mark Twain said that in Nevada, whiskey is for drinkin’ and water is for fightin’,” said Ira Wines, president and general manager of Ellison Ranching Company.
The company, founded in 1910 and remaining in business through two world wars and the Great Depression, today owns approximately 150,000 acres of land; its livestock is permitted to graze on 3 million acres of public land.
Managing that large chunk of land in northeastern Nevada for more than 100 years has revolved largely around one point: water.
The fight for the precious resource in the arid West has become so dire that Ellison Ranching is willing to forfeit the right to groundwater used to grow alfalfa hay at part of its 500-acre tract in the Antelope Valley, 50 miles south of Wells. It is one of about a dozen landowners throughout Northern Nevada offering to sell water rights to either the Central Nevada Regional Water Authority or Humboldt River Basin Water Authority so those privileges can be retired.
If the company’s application is picked in September for the program, Wines said the company would shift to using an alternative seed mix that would survive off seasonal rainfall to farm a different feed for cattle not requiring groundwater. If the seed mix strategy isn’t fruitful, the company would then no longer farm that land.
“Like any industry, it’s a challenge, but in this part of the world, it’s a good challenge I guess,” Wines said. “But this water issue … water has always been an issue in this part of the world just because there’s not much of it.”
The water authorities received $15 million in state funding from the federal American Rescue Plan Act to buy back groundwater rights from private landowners. The landowners would retain their land, but the water rights would be retired, meaning groundwater there could never again be pumped or allocated to private landowners.
The program is prioritizing rights on overpumped basins, which will be purchased at the higher rate of $900 per acre-foot, compared with the rate of $350 per acre-foot for rights on overappropriated basins, officials said. An overpumped basin is one that is pumped at a greater rate than it is replenished. Overappropriated basins are those with more claims on the water than is available.
The program is for landowners in Churchill, Elko, Esmeralda, Eureka, Humboldt, Lander, Nye, Pershing and White Pine counties.
“We’re seeing in some of these basins significant subsidence, and you know — once those aquifers collapse, you can’t rebuild them,” state Sen. Pete Goicoechea, R-Eureka, told the Sun in December. “So it’s time we face the issue: the fact that we’ve got more water on the books than we’ve got water, and so it’s time to deal with it.”
Goicoechea was the lead sponsor of Senate Bill 176 in the 2023 Legislature. The bill was supported by conservation groups and would have allowed the state to buy water rights and retire them. But the legislation never made it to a floor vote.
Instead, the program using federal dollars is in play.
Officials are expected to announce the groups picked for the program in September. Selected landowners will receive an offer that they could accept or decline.
Ellison Ranching’s proposal is to sell 2,404 acre-feet of groundwater rights for $2,163,950, Wines said.
“In the Antelope Valley, where we have two farms, the wells are getting deeper and deeper and deeper,” said Peter Ellison, the great grandson of the company’s founder, E.P. Ellison. “The water table is going down every year. And unfortunately the state, over the years, has overallocated that water. So you might have a water permit, but there isn’t any water.”
Ellison doesn’t see a great future for Antelope Valley, which is drying up. He speaks favorably of the buyback program, but ultimately the decision will be made by each individual landowner after weighing the pros and cons.
The buyback program could be attractive to smaller farms whose owners are looking to sell, downsize or retire from farming entirely. But this doesn’t apply to Ellison Ranching, Ellison said.
It raises cattle and sheep and touts itself as Nevada’s largest ranching operation.
If it sells back its Antelope Valley groundwater rights, it will no longer be able to grow alfalfa hay, which is used to feed cattle, on the property.
Pete Ellison also says the company is considering purchasing land elsewhere with a better water source.
In addition to finding a new winter cattle feed, Wines says tax woes are another potential downside to selling water rights.
“I guess if we sell those water rights, that’s considered real property,” he said.
The difference in value from over a century ago means the company would have to pay a capital gains tax, unless it could find a way to reinvest the money using an IRS 1031 exchange, Wines said. The exchange authorizes real estate owners to swap one property for another and delay capital gains if IRS rules are met.
But Wines also knows that the water rights issues in Nevada aren’t going anywhere.
He believes the problem could get worse, leading to tension between landowners and water officials.
“Because if that aquifer continues to dry up and the next time the state shows up to reduce water rights, you know, reduce the use of that aquifer, there might not be any money involved,” Wines says. “They might just be taking things, and that would not be good.”
Wines says Antelope Valley’s water issues began with a government program in the 1950s called desert land entry, in which farmers would receive a deed by proving they could “improve a piece of ground” and produce a crop there. This led to overallocation of the aquifers’ available water, he said..
Wines says ranching in the high desert is a give-and-take — some years the livestock do better than the crops, or vice versa. He is most proud of Ellison Ranching for surviving the many challenges and providing a protein source to thousands of people.
“We work hard on our cattle genetics and we raise good cattle and good sheep, and ... we are the food source for quite a few people,” Wines says. “I mean, that’s something to be proud of.”
Inevitably, the scarcity of water will continue to be a challenge Nevada ranchers face. Pete Ellison says with a laugh that there is “plenty to worry about.”
