September 22, 2014

Ms. Fanning

briefly explained the current revenue and expenditures for the Water District. There were no questions from Board Members. 6. (00:05:30) For Possible Action – Approval of the Minutes for August 25, 2014. Dave Hall made a motion to approve the Minutes for August 25, 2014. Michael Lach seconded the motion. The motion was approved with a vote of 7-0 in favor. 7. (00:06:21) Correspondence and Announcements There was presentation of a plaque to Midge Carver, former Water Board Member from 2009-2014, to honor her for years of commitment, service and dedication to the citizens of Nye County. John MacLaughlin read a brief statement addressing all of Ms. Carver’s many contributions and thanked her for her efforts. It was announced that following adjournment of the meeting there would be a field trip to the Round Mountain Gold mine to be hosted by Jay Dixon, Water Board Member. There might be a quorum of Water Board Members present but no deliberation or action would be taken on any item discussed 2 Nye County Water District Governing Board September 22, 2014 8. (00:08:44) Ex Parte Communications and Conflict of Interest Disclosure Statements Jay Dixon disclosed that he would be presenting information regarding Agenda Item 10 as well as voting upon this item. He would not benefit financially should this item be approved. Oz Wichman disclosed that he shows up on the tax rolls for a piece of property in Shoshone Estates as he is co-signatory on a loan for family members that purchased property there. The property will be signed over to the owners as soon as all financial obligations are met. Mr. Wichman has already relinquished his voting rights in the co-op to the family members. There is no financial benefit to be gained by Mr. Wichman should this Item be approved. Dave Hall noted that with regards to Agenda Item 13, he is a former employee of Rockview Dairies. 10. (00:11:08) For Possible Action - Discussion, deliberation, possible revisions and possible decision regarding the attached funding request not to exceed $11,000 from the Shoshone Estates Water Company Inc. Darrell Lacy related that he, Jay Dixon and Oz Wichman have been working together on this item. It was now time for the Water Board to provide comment and direction to Staff on the next steps to be taken in finding a solution to a serious problem. Jay Dixon presented a PowerPoint overview of the Shoshone Estates water system and explained that the co-op was a non-profit water utility that is regulated by the Bureau of Safe Drinking Water (NDEP) as a public water system. The system has been non- compliant with regards to Arsenic levels for approximately13 years. The deadline for compliance was January 24, 2011. There is the potential for fines and penalties due to lack of compliance. The co-op does not generate enough income from utility customers to finance changes that must be implemented in order to meet the safe drinking water standards. They are currently seeking outside assistance in order to correct the situation. Funding is needed to purchase and install “point of use” reverse osmosis systems where water is used for drinking. The Town of Round Mountain and the Round Mountain Gold Corporation have already donated time and equipment to help SEWC with maintenance of their water system. Mr. Dixon related that RMGC will provide $11,000 towards the Scope of Work provided by Day Engineering to complete the point of use BSDW application process. The Water District would like to match that amount in the form of a grant to SEWC. This is the amount required to complete the project. Oz Wichman explained that the Funding Agreement presented today was thoroughly reviewed by Marla Zlotek from the DA’s office. He related that the project will not move forward without 100% customer participation. The minimum expense to the Water District would be $2500 (matched by RMGC) to complete Task 1 in the Scope of work provided by Day Engineering. Darrell Lacy gave a brief history on the evolution of the SEWC and explained some of the costs for individual units. Greg Dann had concerns about entering homes in order to monitor each unit. Mr. Wichman explained that the units will probably be installed under the kitchen sink where most water is drawn for household consumption. Again,

Mr. Wichman

stressed that the EPA will not accept anything less than 100% customer participation. 3 Nye County Water District Governing Board September 22, 2014 There was discussion among board members questioning whether the amount of funding requested would be sufficient to complete the project; potential issues with freezing of the units; and setting a dangerous precedent that may encourage more requests for funding by other entities. It was noted that a full blown Professional Engineering Report is not required if federal funding is not pursued. That could be costly, plus it would require many months of preparation. In this situation, time is of the essence. Jim Weeks was in favor of extending a loan to the SEWC so as not to set a precedent for the water district to become a grant funding agency. After discussion the board agreed that funding should be extended to the SEWC in the form of a 0% loan. Mr. Wichman emphasized that the board needs to move forward immediately on this issue. Jay Dixon reiterated that RMGC will be making its cash contribution right away so that the project can begin immediately. Greg Dann made a motion to approve funding for the SEWC under the following conditions: The agreement is reworded to reflect that $11,000 will be made available in the form of a 0% loan for 5 years; the agreement shall reflect a yearly repayment schedule with the first payment commencing one year from acceptance of the agreement or on July 1, 2015, whichever comes first; and signatory authority for this agreement shall be granted to the Chair of the Nye County Water District Governing Board. James Eason seconded the motion. The motion was approved with a vote of 7-0 in favor. John Bosta, public member, expressed concerns that there were no public comments taken before the vote. He questioned the Water District’s legal authority to extend a loan. He did agree that the Water District was correct in trying to assist the Shoshone Estates Community. 11. (01:08:23) For Possible Action – Presentation, discussion, deliberation and possible decision regarding changes to the Nye County Water District Personnel Policy Manual from the Pool/Pact annual update for Small Organization Personnel Policies (less than 15 employees) dated July 1, 2014. There was a presentation and explanation of changes that are being made to the Nye County Water District Personnel Policy Manual as per Pool/Pact direction. Greg Dann had questions about modifications in the Drug Policy that relates to work performed by volunteers. Oz Wichman suggested that there should be follow-up with Wayne Carlson from Pool/Pact to discuss this matter. James Eason felt this could be an important issue if it involved a workman’s comp injury claim. There was no public comment. James Eason made a motion to accept the changes as presented. Michael Lach seconded the motion. The motion was approved with a unanimous vote of 7-0. 12. (01:18:33) For Possible Action – 1. Presentation by Jena Huntington (US Geological Survey) regarding a proposed study to characterize groundwater resources in Smoky Valley before hydraulic fracturing associated with recent oil & gas lease sales occurs. 2. Discussion, deliberation, possible decision and/or direction to staff regarding approval, rejection, or modification of the proposal. Jena Huntington from the USGS presented an informational slide show to the Water Board regarding a proposed study of water resources in the Big Smoky Valley where fracking is being considered. She briefly described what hydraulic fracking was all about and discussed some of the Nevada State regulations. Borehole and casing integrity at the fracking site were major areas of concern by the state as well as water supply 4 Nye County Water District Governing Board September 22, 2014 integrity in the shallow aquifer within a one mile radius of the well. Approximately 49,000 acres in the valley have been leased for possible oil and gas exploration.

Ms. Huntington

related that the study would encompass 2 distinct phases, that being pre-fracking and post-fracking. In Phase 1 the hydrogeology of the surrounding alluvium will be studied to define constraints in the aquifer, as well as measuring water levels of existing wells in the area. The baseline chemistry of the aquifer will also be defined to determine if any changes are taking place as a result of fracking. Data will be collected from 12 existing water wells in the basin. She discussed funding by the USGS. The amount of matching funds available cannot be determined until the next fiscal year begins which is after the first of October 2014. Greg Dann asked whether any of these studies are required to be performed by the oil companies under state law. Ms. Huntington noted that the state requires a minimum of 4 wells to be sampled that are on a downward gradient from the fracking operation. She noted that the minimum testing required by law may not be adequate. Darrell Lacy stressed the importance of having a “baseline” picture of the basin before fracking begins. He also discussed the possibility of Nye County requiring oil companies to go through a Special Use Permit process before obtaining approval for fracking. Mr. Dann questioned why the county should be financially responsible for doing any of these studies.

Mr. Kryder

stressed the importance of not duplicating any of the work that the USGS is already doing. This proposal should be an extension of that work. Ms. Huntington is ready to begin work after the first of October, which is the beginning of the first quarter of the new federal fiscal year.

Mr. Dann

continued to have concerns about financing for the study. Michael Lach thought that money might be better spent lobbying state legislators for changes in the regulations regarding fracking. Ms. Huntington felt that the state had no desire to pursue this issue any further. Mr. Lacy again stressed the need to obtain more detailed information about the basin prior to fracking. The county itself can also set up regulations. Jay Dixon felt that too much regulation could drive the oil and gas industry away from Nye County. There was discussion about other areas in Nye County that currently have oil and gas exploration. Ms. Huntington suggested that the oil companies be required to share with Nye County the data that they obtain as they drill their “deep” wells. Michael Lach felt that it was premature at this point to spend money on this project since no one has actually submitted plans to start exploration in the Big Smoky Valley. Darrell Lacy noted he does not expect the board to make any decisions today about this study and staff will continue gathering information to present at a future date. Horace Carlyle, public attendee, said that money should be no object when it comes to protecting water resources and quality of life. James Eason made a motion noting that the Water Board agrees with the general concept presented today, but the item will be tabled until staff can come back with more details relating to funding and a clearer plan. Jay Dixon seconded the motion. The motion was approved with a vote 7- 0 in favor. 13. (02:03:00) For Possible Action – Discussion, deliberation, and possible decision to authorize GM to protest or comment on select water right applications in order to protect the groundwater in Nye County as per guidelines from the Nye County Water District. 5 Nye County Water District Governing Board September 22, 2014 Darrell Lacy related that he did not have enough time to thoroughly study the current applications. Dave Hall, former Rockview Dairies staff member, related that their current applications concern redistribution of water rights in one specific area which the dairy owns. There are no new or additional water rights being considered. 14. (02:06:19) District Member, Staff and Liaison Reports/Comments b. Board Reports I. LVVWD/SNWA – Darrell Lacy

Mr. Lacy

related that at a recent CNRWA meeting the SNWA gave a presentation about the ongoing drought and noted if this situation continues they will begin to pursue their plan to import water from northern parts of Nevada. They are also discussing desalinization as an alternative. c. Staff Reports: I. Darrell Lacy

Mr. Lacy

also learned at the CNRWA meeting that the drought situation in the Humboldt River Basin is becoming serious. James Eason noted that the Reece River in Nye County feeds into the Humboldt River. II. Oz Wichman

Mr. Wichman

related that he has been in conversation with Pete Goicoechea who noted that there has not been any progress made on a Diamond Valley Groundwater Management Plan. Darrell Lacy noted that the Diamond Valley is over-pumped and not over-allocated like the Pahrump Valley. Many springs are going dry in that area. III. Levi Kryder

Mr. Kryder

related that he has begun the process of figuring out a plan to capture and measure stream flow from the Trout Canyon Spring. He will be coming back to the Board at a later date to request funding for equipment and materials. He noted that the engineering company doing the EA will not be taking stream flow measurements. The Board requested that Mr. Kryder get a signed document from Clark County stating that they approve of a plan for Nye County to import of water from Trout Canyon. IV. John Klenke None d. Project Status Report None e. Board Liaison Report I. Frank Carbone None f. Report from other individuals, groups and or agencies regarding water-related issues: (For informational purposes only.)