County sells Montello water system amid feud between companies
ELKO — Elko County is selling the old water system that served the town of Montello to the Winecup Gamble Ranches, but before commissioners voted to sell they heard protests from the attorney for Pilot Peak Land LLC.
The county has a pending lawsuit against Pilot Peak Land in a land and water-rights ownership dispute over the South Line water system.
Elko County commissioners voted on Wednesday to transfer the South Line system to the county's name and then sell the old springs and spring boxes system to the million-acre Winecup Gamble Ranches for $10,000. That's the appraised value of the water system that was replaced with a new system years ago.
The South Line title has been in Montello's name, but the town is the governing body and can transfer ownership to the county because the South Line no longer provides water to the town since the replacement went into service.
The county first filed a lawsuit in U.S. District Court in August 2023 against Utah-based Pilot Peak Land LLC alleging "Elko County owns, operates and maintains the North and South Springs water system commonly known as the South Line water system." The federal court sent the case to Elko County District Court in December.
The claim that the county maintains the South Line was a bone of contention for Pilot Peak, with the Utah-based company's attorney, Tammy Thiel of Taggart & Taggart in Carson City, who also told commissioners on Wednesday morning she would "be filing an injunction immediately if that is what it takes to prevent the sale."
She said Pilot Peak is "not the enemy here," accusing Winecup Gamble of causing problems.
Thiel wrote Pilot Peak is the only one "maintaining the spring diversion system, removing dead rats, removing blockage from the spring boxes and trying to make it where all the water right holders can have access to the water."
In public comment, she said the system was "in such poor repair, and some of the spring boxes still can't be found," and she reiterated Pilot Peak's offer of $20,000 for the water rights and system, double the county's $10,000 sale price.
Thiel also said Pilot Peak is delivering water to Winecup, and she asked the county to consider a 50-50 split sale to Winecup Gamble Ranch and Pilot Peak Ranch that would allow a water sharing rotation.
The attorney additionally told commissioners Pilot Peak and the county are in an "active lawsuit," and Pilot Peak doesn't believe the county owns the water system and it would be premature to sell the South Line to Winecup Gamble Ranches until the court adjudicates the lawsuit.
"I disagree," said the Chairman Wilde Brough.
The county stated in court documents the South Line stretched roughly 5 miles from Montello to several water collection boxes located in the Pilot Mountain Range on the border of Nevada and Utah, and this system was first owned by the former Southern Pacific Railroad before the railroad deeded the system to the Montello Citizens Committee in 1977.
The South Line was turned over to the town a couple of years later, but Elko County Chief Civil Deputy District Attorney Rand Greenburg said the South Line hasn't been used by the town since the 1980s.
Greenburg said all parties are aware of the lawsuit, and there is no injunction against the sale. He also said Winecup Gamble "will step into our shoes with the lawsuit" once the sale is final. He said the sale could end the lawsuit, too, but Thiel said the sale won't stop the lawsuit.
Commissioner Delmo Andreozzi said he believes it was in the best interest of the county to sell to Winecup Gamble, citing the ranch's contributions to economic development.
Thiel said Pilot Peak has a hunting operation that also provides economic development, hires Elko County people and is improving the land.
In written comment, the attorney disputed the way the county's agenda item on the proposed sale was phrased, stating the Nevada Division of Water Resources "did not find us in violation and only sent a 'warning letter' so they could close the file and allow the court to proceed with determine of rights."
She said the letter was issued at Elko County's demand.
According to the warning notice, Pilot Peak was potentially violating the law by modifying spring boxes that belong to Elko County and was diverting water from the spring boxes for such uses as ponds. The notice also said staff visited Pilot Creek Valley in June 2023 for a field investigation and found there were modifications to the spring boxes.
Thiel claims Pilot Peak owns superior water rights to the system, "vested rights which are not to be impaired."
According to the acquisition agreement with Winecup Gamble Ranches, the county water system provided stock water along the pipeline, and the ranch has senior water rights to the springs for 26,000 cattle, 1,000 horses and 17,000 sheep.
Elko County stated in the agenda that "within the past five years, disputes over the water have decreased water flow in the line and significantly limited Elko County's access to water. The South Line is nearly 100 years old and is expensive to maintain and repair."
According to the agenda, Elko County staff recommended commissioners sell the South Line water system to Winecup Gamble instead of Pilot Peak Ranch.
The historic Winecup Gamble Ranch is now called Winecup Gamble Ranches and divided into three divisions. They are the Winecup Division, the Independence Valley Farm and Ranch Division, and the Gamble Division, where the headquarters are located, according to the website.
