"I am directing -- sharply suggesting, short of requiring -- that the parties get together seriously and reasonably," Hunt said after announcing his decision without hearing arguments.

Later, he said, "The court could craft an agreement that neither one of you are going to like."

Hunt said neither party can claim they won this case, yet.

Nor does the case deal with the larger issue of preempting Nevada's stance that it's not in the state's interest to grant permanent water rights for construction and operation of a repository. That would be premature, Hunt has said, because no license has yet been granted by the Nuclear Regulatory Commission to build one and the Environmental Protection Agency has not issued a final radiation safety standard for the site.

Hunt left in place his denial on Aug. 31 of an emergency motion by Energy Department lawyers who wanted him to block State Engineer Tracy Taylor's June 1 order for DOE to stop using Nevada's water for the second phase of its bore hole drilling operations near the mountain, 100 miles northwest of Las Vegas.

Department of Energy officials later agreed to stop using the water for the second phase but said they would continue with the first phase until it is completed at the end of this month.

"I expect the Department of Energy to keep its promise that it had stopped the Phase 2 ... and that it will end its unauthorized water use for bore holes," Hunt said.

Court papers filed by Department of Justice attorneys this week in response to the state's motions say the Department of Energy "is in the process of drilling the very last bore hole," or the 35th one, under the first phase.

Work on both phases was being conducted simultaneously with an objective to drill more than 80 bore holes to collect data about potential earthquakes and floods where surface facilities for handling and short-term storage of spent nuclear fuel are planned.

Water from nearby wells is used to cool and lubricate drill bits and to create mud for extracting rock core samples. The samples are needed to support data required for a license application to show regulators how safe the site is for handling and storing nuclear waste.

Project officials had said they needed to continue collecting samples through November, but it remains to be seen if they will seek to use more of the state's water.

At Thursday's hearing, Hunt said the state "has at least given tacit authorization for use of that water" and that he didn't interpret Taylor's cease-and-desist order as going beyond the second phase, meaning the order doesn't cover the first phase.

Taylor issued the cease-and-desist order on June 1 after deciding it was not in the state's interest to use the water for the second phase of bore hole work on the nuclear waste project. He lifted it temporarily until June 12 while his staff reviewed the drill work, only to reinstate it on July 20 when the Department of Energy turned down his offer to allow the second phase drilling to continue through mid-August.

In the meantime, DOE continued using Nevada's water for the first phase. State attorneys filed motions for Hunt to compel DOE to stop using the state's water for all bore hole work.

Bob Loux, executive director of the Nevada Agency for Nuclear Projects who opposed the drilling operations, said after Thursday's hearing that if DOE officials want more water they must negotiate in good faith with the state. They can't just proceed as they have in the past regardless of a court-approved agreement that bans use of Nevada's water for that purpose, he said.

"If they have more data needs, then I guess they'll schedule something to talk. If not, I guess we won't be talking," Loux said.

Nevada Senior Deputy Attorney General Marta Adams, who represents Loux, said, "I think the judge is speaking loud an clear about urging us to have a meeting of the minds."

Senior Deputy Attorney General Michael Wolz, who represents Taylor, said he was disappointed that his motion was denied. "However, I don't think it changes the original outcome of Phase 2 cease-and-desist order."

Whether the DOE will need to use more water for bore hole drilling after September, Wolz said, "We're going to have to see."