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In re Waters of Niobrara River

Supreme Court of Nebraska

July 11, 2014

IN RE 2007 ADMINISTRATION OF APPROPRIATIONS OF THE WATERS OF THE NIOBRARA RIVER. JOE MCCLAREN RANCH, L.L.C., AND WEINREIS BROTHERS PARTNERSHIP, APPELLANTS,
v.
NEBRASKA PUBLIC POWER DISTRICT AND NEBRASKA DEPARTMENT OF NATURAL RESOURCES, APPELLEES

As Corrected July 14, 2014.

Page 641

[Copyrighted Material Omitted]

Page 642

Appeal from the Department of Natural Resources.

AFFIRMED.

Donald G. Blankenau, Thomas R. Wilmoth, and Vanessa A. Silke, of Blankenau, Wilmoth & Jarecke, L.L.P., for appellants.

Stephen D. Mossman and Patricia L. Vannoy, of Mattson, Ricketts, Davies, Stewart & Calkins, for appellee Nebraska Public Power District.

Jon Bruning, Attorney General, Justin D. Lavene, and Emily K. Rose for appellee Department of Natural Resources.

Steven C. Smith and Lindsay R. Snyder, of Smith, Snyder & Petitt, a general partnership, for amicus curiae Nebraska State Irrigation Association.

HEAVICAN, C.J., WRIGHT, CONNOLLY, STEPHAN, MCCORMACK, MILLER-LERMAN, and CASSEL, JJ. CONNOLLY, J., dissenting.

OPINION

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[288 Neb. 498] Heavican, C.J.

INTRODUCTION

Joe McClaren Ranch, L.L.C., and Weinreis Brothers Partnership, junior river water appropriators, hold appropriations to divert water from the Niobrara River (Niobrara). The junior appropriators petitioned for a hearing before the Nebraska Department of Natural Resources (Department) after receiving closing notices in favor of senior appropriations claimed by the Nebraska Public Power District (NPPD) for its Spencer hydropower plant. The junior appropriators challenged the Department's administration of the Niobrara and sought to stay any future closing notices. On remand from this court, the Department held a hearing and issued an order denying the junior appropriators' claims. The junior appropriators appeal. We affirm.

BACKGROUND

Joe McClaren Ranch owns real property along the Niobrara in Cherry County, Nebraska. Joe McClaren Ranch applied for an appropriation to divert water from the Niobrara in 2006. When this case began, Jack Bond also owned real property in Cherry County along the Niobrara and held five appropriation rights from the Niobrara for irrigation and domestic purposes, as well as two appropriations from tributaries to the Niobrara for irrigation. Bond's appropriations had priority dates between 1969 and 2006. In 2011, Bond sold his property and assigned his water appropriations to Weinreis Brothers Partnership. The partnership was subsequently added as a party in this case, and Bond was permitted to withdraw.

NPPD is the owner or lessee of three water appropriations for hydropower generation for its Spencer plant located near Spencer, Nebraska. NPPD's appropriations date back to 1896, 1923, and 1942. The Spencer plant is located approximately 145 miles downstream from Joe McClaren Ranch's and Weinreis Brothers Partnership's real property.

On March 2, 2007, NPPD sent a letter to the Department calling for water administration on the Niobrara for the benefit of appropriations for its Spencer plant. On May 1, the Department issued closing notices to approximately 400 junior [288 Neb. 499] appropriators, including Joe McClaren Ranch and Bond, directing them to cease water diversions from the Niobrara. On May 11, the junior appropriators filed a request for a hearing with the Department pursuant to Neb. Rev. Stat. § 61-206 (Reissue 2009). The administration of the Niobrara was delayed at NPPD's request, but on August 1, the Department again issued closing notices to the junior appropriators.

On August 17, 2007, the junior appropriators petitioned for a condemnation award in a separate proceeding, causing the Department to dismiss the junior appropriators' request for a hearing as moot. The junior appropriators appealed. We reversed, and remanded.[1]

After a hearing to consider the junior appropriators' challenges, the Department determined that the appropriation of the Niobrara was proper. The junior appropriators again appealed to this court, and

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we again reversed, and remanded, finding that the Department had improperly limited the scope of the proceedings to exclude the common-law issues of abandonment and statutory forfeiture from nonuse.[2] In our opinion, we found that the statutory procedure for cancellation of appropriations provided in Neb. Rev. Stat. § § 46-229.02 to 46-229.05 (Reissue 2010) did not abrogate the common-law methods of cancellation and stated: " On remand, the Department is directed to determine whether NPPD's appropriations have been abandoned or statutorily forfeited in whole or in part." [3]

The parties stipulated that the previously admitted testimony and exhibits would be admitted at the new hearing, subject to some previous objections. The hearing officer also took notice of the legislative history of 1993 Neb. Laws, L.B. 302, over objection by the junior appropriators.

The evidence showed that prior to 2007, no owner of the Spencer plant had placed a call for administration of the [288 Neb. 500] Niobrara in over 50 years. NPPD's water resources manager placed the call for administration in 2007, after learning through conversations with the Department in 2006 that, unlike the North Platte and Platte River Basins, the Department was not proactively administering the portion of the Niobrara near Spencer on a regular basis.

NPPD and its predecessor had been maintaining and generating power at the plant, which has been in continuous operation since 1927, except when closed for maintenance or repair. When NPPD placed the call for administration, it was current on lease payments for its water rights. The Spencer plant's three appropriations amount to a total water discharge of 2,035 cubic feet per second (cfs). On approximately 30 separate dates in 2006, the Spencer plant took through its facilities the total amount of flow allotted in NPPD's appropriations for the plant.

After receiving NPPD's call, several flow measurements were taken near Spencer. Initially, these measurements indicated that the discharge was sufficient to meet NPPD's appropriations. However, on April 30, 2007, a measurement was taken approximately 10 miles upstream of the Spencer plant, indicating the total discharge to be 1,993.73 cfs, which was insufficient for the appropriations associated with the plant. After this measurement, on May 1, the Department issued the first set of closing notices to approximately 400 junior appropriators. Administration of the river was delayed in June and July, at NPPD's request, to allow time for NPPD to get subordination agreements in place. By entering into subordination agreements, junior appropriators pay a fee to continue to use water to which the senior appropriator would otherwise be entitled. Another measurement taken on July 31 indicated a total discharge of 902.72 cfs. As a result of this measurement, on August 1, the Department again issued closing notices to junior appropriators.

After the second hearing on remand, the Department issued an order denying the junior appropriators' claims and finding that NPPD did not abandon or statutorily forfeit any or all of its appropriations. The junior appropriators appeal.

[288 Neb. 501] ASSIGNMENTS OF ERROR

The junior appropriators assign the following errors of the Department, restated and reordered: (1) relying on evidence from the hearing officer, which evidence attacked this court's conclusions about

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common-law abandonment and this court's instructions on remand; (2) finding the junior appropriators failed to prove NPPD had abandoned its appropriations; (3) finding the junior appropriators failed to prove NPPD had statutorily forfeited its appropriations; (4) issuing closing notices without taking into account the subordination agreements and express limitations in NPPD's appropriations; and (5) failing to conduct a futile call analysis.

STANDARD OF REVIEW

In an appeal from the Department, an appellate court's review of the director's factual determinations is limited to deciding whether such determinations are supported by competent and relevant evidence and are not arbitrary, capricious, or unreasonable; however, on questions of law, which include the meaning of statutes, a reviewing court is obligated to reach its conclusions independent of the legal conclusions made by the director.[4]

ANALYSIS

Legislative History of L.B. 302.

In its first assignment of error, the junior appropriators assert that the Department erred by relying on evidence from the hearing officer, which evidence they claim collaterally attacked this court's conclusions about common-law abandonment and statutory forfeiture. These alleged errors stem from the Department hearing officer's taking notice of the legislative history of L.B. 302, which amended Neb. Rev. Stat. § 46-229 (Reissue 2010).

[288 Neb. 502] The junior appropriators suggest that the hearing officer's decision to take notice of the legislative history, without prompting from either party, constituted improper advocacy. Although the junior appropriators' brief suggests they perceive bias extending beyond official notice of the legislative history, we note that the only relevant objection appearing in the record is ...


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