In the lead-up to the 2021 legislative session, Blockchains Inc. planned to present a proposition to Nevada lawmakers, a bid to establish a self-contained municipality, or Innovation Zone, within Storey County.
Holding an extensive landholdings portfolio, including approximately 67,000 acres in the Tahoe Reno Industrial Center (TRIC,) the company’s vision for a city in the high desert faced a significant hurdle in securing access to water.
To address this, Blockchains made a discreet acquisition of water rights, valued at approximately $35 million, hundreds of miles from its designated land.
However, implementing a pipeline to transport the water across a region encompassing the Pyramid Lake Paiute Tribal reservation and the Black Rock Desert presented formidable permitting challenges, including opposition from environmental groups and rural communities.
Amid these complexities, a title dispute emerged in 2021, ultimately leading the company to file a lawsuit against Nevada for non-recognition of its water rights ownership. By September 2021, Blockchains formally withdrew its “smart city” proposal—a project initially endorsed by then-Governor Steve Sisolak in his State of the State address.
Undeterred by the setback to its city plans, Blockchains focused on persuading state water regulators to acknowledge its ownership of the water purchased from Sonterra Development Company in 2020. However, in December 2021, the Division of Water Resources rejected Blockchains’ attempt to officially transfer the water into its name due to objections from another stakeholder, Granite Investment Group LLC.
Granite Investment Group LLC placed an encumbrance on the water rights, highlighting a conflict in the chain of title, leading to the Division of Water Resources’ intervention and eventual rejection of Blockchains’ ownership transfer. Former Deputy State Engineer Micheline Fairbank said he would take no further action until a “final resolution of the conflict has occurred,” meaning that, despite the substantial investment in water rights, Blockchains could not utilize the resource.
Subsequently, Blockchains took legal action against Nevada to address the impasse. Last month, Washoe County District Court Judge Kathleen Drakulich affirmed the rejection, underscoring the need for Blockchains to secure approval of the conveyance documents for official ownership status.
Drakulich’s ruling affirmed Nevada’s role in flagging conflicts in the chain of title, thereby upholding the rejection of Blockchains’ request for ownership recognition, concluding that the state engineer’s actions were within appropriate bounds.
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