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— "We presented an opening brief as well," says Mills. "It was based on the fact that the state engineer ignored the evidence that was presented at the administrative hearing. Sandy Valley sits on the border of California and Nevada, and the California side is two counties, Inyo and San Bernardino. Both counties ended up becoming interested parties and testifying at the hearing."

(The California counties side with Sandy Valley in not wanting Vidler to pump any water out of the basin they share.)

"The majority of the farming in this little basin takes place on the California side," Mills continues. "And, in his decision, the state engineer acknowledged that the California side uses about 8000 acre-feet, and the Nevada side, obviously, a lot less than that. He then determined, however, that the recharge, the water coming into the basin, is 2200 acre-feet. And even though he acknowledges that this shows a huge deficit in the water, he said, 'I'm not even going to pay attention to the California side,' and granted Vidler the 415 acre-feet.

"We feel that it was an abuse of his discretion to ignore the use on the California side. It's all coming out of this tiny basin. To allow more water to leave the basin, in my opinion, is irresponsible and can result in severe damage to these residents. They have no other source of water but from this little basin and from their wells, and if these wells are dried up or polluted -- a big area of saltwater is there, too; that could flow in if the water table drops too low -- what's going to be the value of their homes when they have no water?"

In addition, Mills says, "Prior to an interbasin transfer, one of our statutes requires that they prove need for that water. Our allegation is that they did not prove there was a need for water. At the time of the hearing, they had over 300 acre-feet unused water in the Primm Valley already. All they did is claim that in the future they have these big projects planned. They're just projections of things that may or may never happen. Also, the Las Vegas Water District has a plan eventually to bring water down to Primm Valley, so they may never need additional water."

Joy Hyde Fiore is a resident of Sandy Valley. She complains that, in its appeal, Vidler protests the state engineer's "allowing water to be set aside for our future growth. I think that's mean-spirited. The state engineer would be required by law to do that. I guess what they're telling us is that we don't matter, and all that matters is that they make the money from sending water over the hill to Primm for its future development.

"Some of us believe that, in the law, the idea of beneficial use should not be applied to somebody making money off of selling water. They take public waters, they privatize them, and they sell them back to the public. They're public waters. I would like personally to see that no public water is awarded to a company or individual whose sole intention is to sell it for profit and not put it to beneficial use, such as irrigation or taking care of housing. I personally do not think a theme park on I-15 on the way into town is a truly beneficial use. It will make money for the person who owns it, but it's not a beneficial use of water in the desert."

In its own dispute with Imperial Valley, San Diego's large population constitutes a much stronger case for beneficial use. "The whole theory of water law," says Vidler's Hartmann, "particularly in the West, was to try to encourage the use of that water and put it to beneficial use for developing the economic base of the West as it grew. That theory is still the same today. You don't see much difference in any of the western states as to that."

Hartmann acknowledges the strong feelings many people have today against the "commodification" of water. "But the issue ultimately becomes the question of risk. Do you have the public government take the risk, or do you push that onto the private sector that then wants a return on their investment in finding and developing resources?

"Vidler Water Company is a resource-development company. We don't go out and speculate on water. We develop resources for folks that come to us and have a need."

Byron Mills is skeptical. "Water in our state is gold. What Vidler is trying to do is obtain these water rights and then sell them right back to Las Vegas Water District at a premium price. They have been doing that all over the state. They're obtaining water everywhere they can, any way they can, hoping to hold it and resell it, because Las Vegas is growing incredibly and will need way more water."

The water issues in tiny Sandy Valley and behemoth San Diego both remain unresolved. But for PICO Holdings, business looks promising. On its website, the company brags in reference to another deal, saying, "On March 19, 2001, Vidler announced its first major water transaction...in the Harquahala ground water basin in Arizona.... This transaction added $9.4 million to revenues and $2.4 million to segment income in the first quarter of 2001; however, we paid only $4.4 million in cash for the assets which were sold, resulting in a $5 million cash surplus.... The cash pre-tax internal rate of return on the investment was almost 140 percent."

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