The Nevada Attorney General's Office on Wednesday threw a major roadblock in front of Lincoln County's partnership with a private company to develop and sell the county's water resources.
The nine-page opinion by Wayne Howle, a supervising deputy attorney general, says the two agreements between Lincoln County and Vidler Water Co. are designed to develop and sell water resources for profit.
"Because this purpose is not a predominantly public purpose and the Legislature has not expressly authorized counties to engage in such an undertaking, we conclude that Lincoln County lacks authority to enter into the agreements and acted in excess of its authority when it did so," the opinion concludes.
Lincoln County officials had signed a deal with Vidler Water to acquire all the unappropriated water rights in the county, develop them and market them for profit -- primarily to developers in Clark County.
They followed the deal by filing a number of water rights applications with the state engineer's office, along with applications to dismiss competing applications filed by the Las Vegas Valley Water District.
Under terms of the deal, Lincoln and Vidler were to split any profits from selling the water.
The combination of events prompted Clark County District Attorney Stewart Bell to ask the Attorney General's Office for a legal opinion, which prompted Lincoln County and Vidler to try block the attorney general from issuing any opinion.
The opinion issued Wednesday said one part of the agreement is clearly contrary to Nevada law: "By agreeing not to undertake other water-related development without Vidler's consent, the county improperly gave veto authority to its partner. A county may not agree to limit its governmental functions."
But the opinion says a review of Nevada law also fails to support the deal between Lincoln and Vidler.
"We are aware of no provision of Nevada law that, either expressly or by implication, permits the county to form a partnership with a private corporation and to share in a for-profit enterprise of this nature," the opinion states.
In order to qualify under any Nevada law, it says, the arrangement must serve a public, not private, purpose. Revenue generation, it says, doesn't fit the definition of a public purpose.
"If profit-making were sufficient to satisfy the public purpose requirement, it would justify the county's involvement in any legal business," the opinion states.
It says existing Nevada laws "are not intended to authorize a county's partnering in a project for purveying county resources for profit, especially when the venture expressly plans export of resources from the county."
The opinion specifically stops short of concluding the Legislature lacks authority to confer the power on the counties. It says lawmakers haven't given counties the power to enter profit-motivated contracts with private business.