In re 2007 Appropriations of Niobrara River Waters
288 Neb. 497 (2014)
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Rule of Law:
To establish abandonment of a water appropriation right, there must be clear evidence of relinquishment by the owner with an intent to forsake or desert the right; statutory forfeiture for nonuse, often termed common-law nonuse, occurs only with a continuous lack of beneficial use for more than 10 years, governed by the statutory limitations for real estate.
Facts:
- Joe McClaren Ranch, L.L.C., applied for an appropriation to divert water from the Niobrara River in 2006.
- Jack Bond owned real property and held five appropriation rights from the Niobrara with priority dates between 1969 and 2006, which he later sold and assigned to Weinreis Brothers Partnership in 2011.
- Nebraska Public Power District (NPPD) owned three senior water appropriations for its Spencer hydropower plant, located approximately 145 miles downstream from the junior appropriators' properties, with priority dates of 1896, 1923, and 1942, totaling 2,035 cubic feet per second (cfs).
- NPPD's Spencer plant had been in continuous operation since 1927, except for maintenance or repair, and NPPD was current on lease payments for its water rights.
- Prior to 2007, no owner of the Spencer plant had placed a call for administration of the Niobrara River in over 50 years, as NPPD's water resources manager had mistakenly assumed the Department of Natural Resources proactively administered that portion of the river.
- On approximately 30 separate dates in 2006, the Spencer plant utilized the total amount of flow allotted in NPPD’s appropriations (2,035 cfs).
- On March 2, 2007, NPPD sent a letter to the Department of Natural Resources calling for water administration on the Niobrara for the benefit of its Spencer plant appropriations.
- On April 30, 2007, a flow measurement approximately 10 miles upstream of the Spencer plant indicated a total discharge of 1,993.73 cfs, which was insufficient for NPPD's appropriations, leading to the Department issuing closing notices to approximately 400 junior appropriators, including Joe McClaren Ranch and Bond, on May 1, 2007, and again on August 1, 2007, after another insufficient measurement on July 31, 2007.
Procedural Posture:
- On May 11, 2007, Joe McClaren Ranch and Jack Bond (junior appropriators) filed a request for a hearing with the Nebraska Department of Natural Resources (Department) pursuant to Neb. Rev. Stat. § 61-206.
- On August 17, 2007, the junior appropriators petitioned for a condemnation award in a separate proceeding, causing the Department to dismiss their request for a hearing as moot.
- The junior appropriators appealed the Department's dismissal to the Nebraska Supreme Court, which reversed the dismissal and remanded the case for a hearing on the merits (In re 2007 Appropriations of Niobrara River Waters, 278 Neb. 137, 768 N.W.2d 420 (2009)).
- After a hearing, the Department determined the appropriation of the Niobrara was proper, and the junior appropriators again appealed to the Nebraska Supreme Court.
- The Nebraska Supreme Court again reversed the Department's decision and remanded the case, finding the Department had improperly limited the scope of proceedings by excluding common-law issues of abandonment and statutory forfeiture (In re 2007 Appropriations of Niobrara River Waters, 283 Neb. 629, 820 N.W.2d 44 (2012)).
- Following the second remand, the Department held another hearing, issued an order denying the junior appropriators’ claims, and found that NPPD did not abandon or statutorily forfeit any of its appropriations.
- The junior appropriators appealed this Department order to the Nebraska Supreme Court.
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Issue:
Did the Nebraska Department of Natural Resources err in finding that Nebraska Public Power District (NPPD) had not abandoned or statutorily forfeited its senior water appropriations for its Spencer hydropower plant, and was its administration of closing notices to junior appropriators, including its treatment of subordination agreements and futile call analyses, proper?
Opinions:
Majority - Heavican, C.J.
No, the Nebraska Department of Natural Resources did not err in finding that Nebraska Public Power District (NPPD) had not abandoned or statutorily forfeited its senior water appropriations, and its administration of closing notices was proper. The court affirmed the Department’s findings, emphasizing that abandonment requires a clear intention to forsake or desert the right, which was not demonstrated by NPPD’s actions. NPPD continuously operated its Spencer plant, incurred maintenance and staffing costs, paid lease payments, and at various points, utilized its full appropriation, thus refuting any presumption of intent to abandon. The court clarified that statutory forfeiture for nonuse is governed by Neb. Rev. Stat. § 25-202, which requires a lack of beneficial use for a continuous 10-year period, and found no such period of nonuse given NPPD’s documented use of its full appropriation in 2006. The Department’s policy regarding subordination agreements, allowing junior appropriators to continue use by paying a fee to NPPD, was deemed reasonable because NPPD then does not receive the water it would otherwise be entitled to. The court also upheld the Department’s decision not to conduct a futile call analysis on the Niobrara’s main stem, a "wet river," deferring to the Department’s technical expertise. Although the Department erred in admitting legislative history for a statute previously found unambiguous, this error was deemed harmless as it did not unfairly prejudice the junior appropriators' substantial rights given other supporting evidence.
Dissenting - Connolly, J.
Yes, the Department erred in its administration of the Niobrara River waters by relying on NPPD's senior appropriations without properly considering their conditional nature, NPPD's historical inaction, or the impact of its subordination agreements. Justice Connolly argued that the Department’s method is fundamentally flawed, as NPPD’s appropriations are so large that the river’s flow is often insufficient, and NPPD has failed to protect its purported full rights for decades. Specifically, the dissent contended that NPPD's 1942 appropriation for 550 cfs was conditional and issued when the river was already known to be over-appropriated. NPPD’s acquiescence to the approval of over 400 new junior appropriations since 1942, despite monitoring applications, should constitute a forfeiture of its right to demand the 550 cfs. Furthermore, Justice Connolly asserted that the majority’s reasoning on subordination agreements violates the election of remedies doctrine, arguing that a senior appropriator should not be able to accept compensation (money) for lost water and simultaneously demand the same water from other junior appropriators. The dissent called for a remand to determine the effect of the subordination agreements on NPPD’s right to demand water from other junior appropriators.
Analysis:
This case significantly clarifies the stringent requirements for proving abandonment or statutory forfeiture of water rights in Nebraska, emphasizing that mere inaction or mistaken assumptions by a senior appropriator are insufficient without clear intent to forsake the right or a continuous 10-year period of nonuse. It also reinforces the Nebraska Supreme Court's strong deference to the Department of Natural Resources' administrative policies and technical expertise in water management, including its discretion in determining the necessity of futile call analyses. The majority's stance on subordination agreements allows senior appropriators flexibility to manage their water rights and generate revenue without necessarily losing their priority, potentially encouraging market-based solutions. However, the dissenting opinion highlights potential inequities and the need for a more holistic consideration of historical context and the election of remedies doctrine in water rights administration, which could influence future legislative or administrative reforms concerning water scarcity.
