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Lawsuit Pushes Water Board To The Limit.

On May 15, 2018, Paradise Canyon Paradise Canyon LLC, (Wolf Creek golf course) filed a civil suit (A-18-774539-B) against the Virgin Valley Water District Board (VVWB) seeking to halt the Districts restrictive pricing practices.

The suit, filed in the Eighth Judicial District Court, Las Vegas, NV, is the latest in a series of pricing battles between the Mesquite, NV based water district and that communities premier golf course.

Since the District was created in 1993 as a subdivision of the State of Nevada, their board has spent $12 (plus) million dollars for 550 shares (3,000 AFA) of highly contaminated Virgin River water held by members of the Mesquite Irrigation Company (MIC) and the Bunkerville Irrigation Company (BIC)

In addition to earning $12 (plus) million in cash, MIC and BIC shareholders also earn money by annually leasing their shares to the Southern Nevada Water Authority (SNWA). For example, in 2011 MIC shareholders earned $1,160,459.46 in lease revenue from SNWA. About the same time, BIC shareholders earned $706,424 in lease revenue from SNWA.

The VVWB recently cut a deal with The Conestoga golf course. That agreement requires VVWB to lease 100 shares (718 Acre Feet Annually AFA) of the MIC permits they hold at the current rate of $34.82 per AFA until January 1, 2020. On New Year’s Day, the lease rate rises to $90.53 per AFA ($650 per share). The rate increases gradually to $109.84 per AFA by 2036. In Nevada, the average purchase of off-Farm Surface Water for 2008 was $7.20 per AFA. By 2013 it has raised to $13.60 per AFA. Overpricing water is the leading cause of golf course closures.

Unlike the Wolf Creek owners, who wish to continue providing golfing services for the community, the Conestoga is up for sale. Therefore, they have an incentive to make whatever deal the VVWB demands.

The VVWB claims an absolute right to set the price on water shares it holds without regard for public comments. Yet, all sources of water within the boundaries of the state, above and below ground, belong to the public (Nevada Revised Statute (NRS) 533.025 and 534.020).  If that were literally true, a responsible VVWB would take public views and the public trust doctrine into consideration when pricing. They don’t.

When the Nevada Legislative Committee on Natural Resources considered a Bill to allow appeals of area water more than five percent or more Board Member Rich Bowler said: “I will never vote for outside oversight.” “Voters are our oversight,” he said. Board member Barbara Ellestad joined Bowler in suggesting that voters are the last decisions makers of the board’s actions.[i]

The VVWB has a monopolistic economic relationship both the SNWA and shareholders of Virgin River water. They have cash in the bank and a continued source of cash from rate-payers and bond funds. With money in the bank and collaborative agreements with the SNWA, the VVWB can set purchase prices and set lease rates regardless of the economic impact on the community.

Their monopolistic behavior is not in the best interest of the public and appears to violate the public spirit and intent of the public trust doctrine. The Public trust doctrine holds that water, among other things, must be considered a benefit for all the people, not the selected few.

The public trust doctrine includes a collection of federal and state government laws that regulates the conduct and organization of business corporations, generally to promote fair competition for the benefit of consumers.

In 1983 The California Supreme Court ruled that reasonable and beneficial uses of water must be interpreted according to public trust needs. Water resources protected under the public trust doctrine may not be monopolized by private or public entities.[ii]

On Tuesday, May 22, The United States Court of Appeals for the Ninth Circuit requested the Nevada Supreme Court to rule on a major issue of Nevada water law and its application to the state’s public trust doctrine. The Question for the Nevada court:

“Does the public trust doctrine apply to rights already adjudicated and settled under the doctrine of prior appropriation and, if so, to what extent?”

It is unknown how far the civil suit by Paradise Canyon (Wolf Creek) will delve into the practices of the VVWB, but there appears to be plenty of VVWB policy issues worth testing.

Endnotes:

[ii]  Click the bottom of the document to read: Restoring the Trust: Water Resources & The Public Trust Doctrine, A Manual for Advocates.

restoring the public trust

About Author

Michael McGreer Mesquite, Nevada
Dr. Michael Manford McGreer is managing editor of Nevada-today.com and writes on issues that impact public policy.

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