LAS VEGAS (KTNV) — After six long years of litigation, the trial has finally begun regarding Coyote Springs water rights.
Back in 2020, Coyote Springs Investment LLC (CSI) and the Seeno family sued the State of Nevada for over $1.5 billion, claiming the State of Nevada changed their water rights for a proposed housing development, which effectively brought the project to a halt.
Opening statements were on Wednesday as both sides gave a brief overview of their case before Judge Mark Denton.
Attorney Mark Hutchison, who is representing CSI, said that from 2004 to 2018, the company acquired Nevada Power's permit, hired consultants, engineers, and experts, and filed development plans and agreements with the county and state, among other things needed for the project to move forward.
"To sum up, by 2018, we're ready to go. We're ready to build homes," Hutchison said. "We're being good stewards of the land. We're being good environmental citizens. We took it serious and it was a priority for us."
However, plans were stalled after a letter that was issued by the state on May 16, 2018.
"The state issues a letter that stated for the very first time, CSI, you have junior water rights and because of that, your water rights are not senior enough to fall in the pumping volume and you've got insufficient water for your project," Hutchison told the court. "The State Engineer then wrote they cannot justify approval of any subdivision maps ... unless other water resources are identified."
Hutchison then said that a settlement agreement was signed on Aug. 29, 2018, where developers thought they could continue working on the project.
"The State Engineer said they must process CSI's map in "good faith" and in the "ordinary course of business." CSI relies on that settlement agreement and completes construction of the flood detention basin," Hutchison said. "Between January 2019 and January 2020, we're moving forward with infrastructure plans. We think the state's on board because we have a settlement agreement and they approved our maps."
However, in June 2020, the state rejected CSI's large lot map.
"That's when we all knew it was over," Hutchison said.
Attorney Jeffrey Sylvester, who represented the State of Nevada, said the State Engineer has the authority to do what's best for future water use, even if that means changing water allocations.
"Nobody will say we have too much water or we have sufficient water. It's a fact that we don't and the only way to preserve the water we have is to let a state engineer regulate that water," Sylvester told the court. "The water isn't owned by the California developers in this courtroom. They're owned by you and I and the citizens of Nevada. It is only to be used for our public use. It cannot be used in a manner that diminishes or decreases the amount of water that we, as citizens, rely on."
He also said that water rights have always been conditional.
"The rights they received from 40 years ago were conditional and highly regulated. The rights they have today have the exact same conditions, restrictions, and limitations, the exact same risk for curtailment or reduction of the water permitted," Sylvester said. "It hasn't changed. It's the same. The fact they can't use that water to build homes in the desert, that's not germane to these facts."
Sylvester also pointed out prior studies that showed the full extent of the available water isn't completely known. That includes groundwater surveys by U.S. Geological Survey geologist Thomas Eakin, which were published in the 1960s, as well as documents filed in the 1980s by USGS State Office Chief Terry Katzer.
"What he says to the Carbonate Terrain Society, attached to his letter, is a recommendation for a 10 to 12-year study that needs to be conducted to better understand the availability of the water. He says it's important to understand the water in the aquifer is not well-defined," Sylvester said. "The data is sparse. The geology is complex. It will take a lot of money and time to understand the system. Unless that is reached, the development of the water is risky and the results could be disastrous on developers and future users."
Both parties will be doing a site visit at Coyote Springs this week just so they can get a lay of the land and see what the site looks like right now.
Wednesday kicked off phase one of the trial, which could take several months. Denton will make his ruling, which both sides have indicated could lead to appeals.
If he rules in favor of the developers, phase two of the trial, which would be the penalty phase where jurors could determine how much money developers could receive from the state and Nevada taxpayers, would start approximately 45 days after Denton's ruling.
Developers are suing for about $1.5 billion.
As for the next hearing, that is scheduled for July 27.
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