Estermann v. Bose
892 N.W.2d 857, 296 Neb. 228 (2017)
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Rule of Law:
A joint entity formed by public agencies under the Interlocal Cooperation Act may exercise the eminent domain powers individually held by its constituent agencies, provided the condemnation serves a public purpose such as compliance with an interstate water compact, and such projects may be statutorily exempt from common law groundwater transfer prohibitions and specific state permit requirements if their purpose is not to protect a specific quantity or transfer water out of state.
Facts:
- The Nebraska Cooperative Republican Platte Enhancement Project (N-CORPE) was created under the Interlocal Cooperation Act (ICA) by four natural resources districts (NRDs) as a political subdivision of Nebraska.
- N-CORPE's purpose is to regulate and manage water to assist Nebraska in complying with the Republican River Compact (Compact), an agreement between Nebraska, Kansas, Colorado, and the United States of America for apportioning water in the Republican River Basin.
- The Compact was modified in 2002 by a Final Settlement Stipulation (FSS), approved by the U.S. Supreme Court, which established detailed mechanisms for compliance, including calculating annual virgin water supply and determining each state's water usage.
- N-CORPE developed a 'stream flow augmentation project' in Lincoln County to manage groundwater and surface water in the Republican River Basin to comply with the Compact, in response to Kansas's claim of not receiving its allocated share of water.
- N-CORPE sought a permanent 'Flowage and Right-of-Way Easement' over J. Daniel Estermann’s real estate in Lincoln County to augment waterflow into Medicine Creek, a tributary of the Republican River.
- Estermann alleged that N-CORPE’s water augmentation project caused his real estate to flood, resulting in increasing and irreparable damage to his land and crops, and threatening to lower the water table under his fields.
Procedural Posture:
- N-CORPE filed an amended petition to condemn a permanent 'Flowage and Right-of-Way Easement' over J. Daniel Estermann’s real estate in the county court for Lincoln County (case No. CI 14-496).
- Estermann filed a complaint for injunction in the district court for Lincoln County against N-CORPE and its board members, seeking to enjoin the condemnation proceedings and the discharge of water into Medicine Creek.
- Estermann filed an application for a temporary restraining order, which the district court denied.
- Estermann filed a motion for temporary injunction, which the district court denied, concluding that N-CORPE possessed the power of eminent domain.
- N-CORPE (appellees) filed a motion for summary judgment.
- Estermann filed a motion for leave to file an amended complaint, proposing to add a claim that N-CORPE needed approval from the Republican River Compact Administration (RRCA).
- The district court denied Estermann’s motion for leave to amend, stating that the proposed amendment was futile.
- The district court granted N-CORPE’s motion for summary judgment and dismissed Estermann’s complaint with prejudice.
- Estermann (appellant) appealed the district court's decision to the Nebraska Supreme Court.
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Issue:
Does a joint entity formed under the Interlocal Cooperation Act possess the power of eminent domain when its constituent natural resources districts individually possess such power, and is the condemnation of an easement for a water augmentation project aimed at fulfilling an interstate compact obligation considered a public use, and thus exempt from certain state permit requirements and common law groundwater transfer prohibitions?
Opinions:
Majority - Miller-Lerman, J.
Yes, a joint entity formed under the Interlocal Cooperation Act (ICA) can exercise the power of eminent domain when its constituent natural resources districts (NRDs) individually possess such power, and the condemnation of an easement for a water augmentation project to fulfill an interstate compact obligation is a public use, and in this case, N-CORPE was not required to obtain the permits Estermann alleged nor was it prohibited by common law from transferring groundwater. The court reasoned that the Legislature delegated eminent domain power to NRDs under Neb. Rev. Stat. § 2-3234. The ICA (§ 13-804(1)) expressly allows public agencies to jointly exercise their individually held powers through a joint entity, and N-CORPE, being such an entity, could therefore exercise the eminent domain power of its founding NRDs. This interpretation is supported by § 13-825, which states the ICA's provisions are supplemental and do not derogate powers already conferred, meaning NRDs' powers were retained and could be exercised jointly. The court found N-CORPE was not required to obtain a 'conduct water permit' under § 46-252 because its project aimed simply to add water to offset depletion, not to guarantee a specific quantity reaches a certain point for beneficial use. Similarly, a 'ground water transfer permit' under § 46-613.01 was unnecessary as the project’s purpose was not to explicitly transport water for use in another state, but to increase water in the Republican River Basin generally for Compact compliance. The court also held that the individual NRDs, by voting for the N-CORPE project as its creators, implicitly waived any requirement for N-CORPE to obtain permits from them. Regarding Estermann's motion to amend his complaint, the court affirmed its denial, applying a standard that proposed amendments after discovery and a summary judgment motion must be 'not only theoretically viable but also solidly grounded in the record and supported by substantial evidence sufficient to give rise to a triable issue of fact.' The proposed amendment, alleging a need for Republican River Compact Administration (RRCA) approval for the physical project, was deemed futile because the FSS only requires RRCA approval for accounting procedures related to augmentation credit, not for the project's construction or operation. Further, while common law generally prohibits transferring water off overlying land, the Legislature can create exceptions. Neb. Rev. Stat. §§ 2-3238 and 46-715 (read in pari materia) authorize NRDs to transport water and use augmentation projects as part of integrated management plans, thereby creating a statutory exception for N-CORPE's groundwater transfer. Finally, the court concluded that N-CORPE's condemnation was for a public use because its overriding purpose was to achieve compliance with the Republican River Compact, protecting the State from significant liability, with any benefit to private irrigators being incidental. This distinguished it from cases where condemnation primarily served private interests.
Analysis:
This case significantly clarifies the scope of eminent domain powers for interlocal joint entities created under Nebraska's Interlocal Cooperation Act, affirming they can inherit and exercise powers delegated to their constituent public agencies. It provides important judicial interpretation on the applicability of state water permits (conduct and groundwater transfer) for water augmentation projects aimed at interstate compact compliance, distinguishing between general water management and specific water protection or out-of-state transfer. The decision also reinforces the Legislature's authority to create statutory exceptions to common law principles, specifically regarding groundwater transfer, when such actions serve a compelling public purpose. Furthermore, it refines the standard for assessing the futility of motions to amend complaints filed late in litigation, providing a stricter test for amendments sought after discovery and summary judgment filings.
