Case No. S-04-000836

IN THE NEBRASKA SUPREME COURT

THE CENTRAL NEBRASKA PUBLIC POWER AND IRRIGATION DISTRICT,
a public corporation and political subdivision of the State of Nebraska,
Complainant and Appellant,
vs.
IRRIGATION WELL OWNERS,
Respondents.

APPEAL FROM THE DEPARTMENT OF NATURAL RESOURCES

BRIEF OF APPELLANT

Michael C. Klein #15428
Anderson, Klein, Swan & Brewster
417 East Avenue, P.O. Box 133
Holdrege, NE 68949-0133
Phone (308) 995-4458
Attorneys for Appellant

TABLE OF CONTENTS

TABLE OF AUTHORITIES
STATEMENT OF THE BASIS OF JURISDICTION OF THE COURT OF APPEALS
STATEMENT OF THE CASE
ASSIGNMENT OF ERRORS
PROPOSITIONS OF LAW
STATEMENT OF FACTS
ARGUMENT

I. THE DIRECTOR OF THE DEPARTMENT OF NATURAL RESOURCES IS CHARGED WITH RESPONSIBILITY FOR ADMINISTRATION OF ALL WATERS OF THE STATE

II. THE CONSTITUTION OF NEBRASKA PROTECTS THE APPROPRIATOR, BASED UPON PRIORITY

III. THE DEPARTMENT 'OF NATURAL RESOURCES HAS THE ADMINISTRATIVE EXPERTISE AND REGULATORY CAPACITY TO REGULATE ALL WATER USERS

IV. WITHOUT REGULATION OF ALL TRIBUTARY/SOURCES OF STREAMFLOW, THE CONSTITUTIONAL PROTECTION AFFORDED APPROPRIATORS IS MEANINGLESS

V. THE PUBLIC'S INVESTMENT IN PROJECT INFRASTRUCTURE IS LOST WITHOUT REGULATION OF ALL TRIBUTARY SOURCES OF STREAMFLOW

VI. THE STATE OF NEBRASKA HAS ARGUED PERSUASIVELY THAT TRIBUTARY GROUNDWATER IS SUBJECT TO REGULATION AS STREAMFLOW

VII. THE UNITED STATES SUPREME COURT HAS CONSISTENTLY HELD THAT TRIBUTARY GROUND WATER IS SUBJECT TO REGULATION AS STREAMFLOW

VIII. ALTHOUGH BALKANIZED, THE LAW OF MANY WESTERN STATES HOLDS THAT TRIBUTARY GROUND WATER SHOULD BE REGULATED AS STREAMFLOW

IX. THE SKY IS NOT FALLING; THAT IS, THE PROHIBITION OF UNREGULATED DIVERSIONS WHICH AFFECT STREAMFLOW WILL NOT WREAK HAVOC ON THE USE OF GROUND WATER FOR IRRIGATION IN NEBRASKA

CONCLUSION

TABLE OF AUTHORITIES
CASES

Arizona v. California, 376 U.S. 340 (1964)

Central Platte NRD v. City of Fremont, 250 Neb. 252, 549 N.W.2d 112 (1996)

Central Platte NRD v. State of Wyoming, 254 Neb. 439, 513 N.W.2d 847 (1994)

City of Emporia v. Soden, 25 Kan. 588 at 601 (1881)

Galyen v. Balka, 253 Neb. 270, 570 N.W.2d 519 (1997)

Hitchcock and Red Willow Irrigation District v. Lower Platte North Natural Resources District, 226 Neb. 146, 410 N.W.2d 101 (1987)

Huffner v. Sawday, 153 Cal. 86, 94 P. 424 (1908)

In re Application A-16642, 236 Neb. 671, 463 N.W.2d 591 (1990)

In re Application U-2, 226 Neb. 594, 413 N.W.2d 290 (1987)

In re Appropriations 442A, 461, 462 and 485, 210 Neb. 161, 313 N.W.2d 271 (1981)

In re Big Horn River System, 85 P.3d 981 (Wyo. 2003)

In re General Adjudication of All Rights to Use Water in Gila River System and Source, 201 Ariz. 307, 35 P.3d 68 (2001)

In re General Adjudication of Gila River, 857 P. 2d 1236 (Ariz. 1993)

Kansas v. Colorado, 514 U.S. 673 (1995)

Kansas v. Nebraska, 530 U. S. 1272 (2000)

McClellan v. Hurdle, 3 Colo. App. 430, 33 P. 280 (1893)

Nebraska v. Wyoming, 325 U.S. 589 (1945)

Nebraska v. Wyoming, 507 U.S. 584 (1993)

Nebraska v. Wyoming, 515 U.S. 1 (1995)

Parks v. Holy Angels Church, 160 Neb. 299, 70 N.W.2d 97 (1955)

State v. Hagerman Water Right Owners, Inc., 130 Idaho 727, 947 P.2d 400 (1997)

State ex rel Cary v. Cochran, 138 Neb. 163, 292 N.W. 239 (1940)

Texas v. New Mexico, 446 U.S. 540 (1980)

Texas v. New Mexico, 462 U.S. 554 (1983)

STATUTES

Neb. Rev. Stat. §§46-223.03

Neb. Rev. Stat. §46-226 through §46-231 (Cum. Supp. 2002)

Neb. Rev. Stat. §61-206 (Cum. Supp. 2002)

Neb. Rev. Stat. §61-206(1) (Cum. Supp. 2002)

Neb. Rev. Stat. §61-207 (Cum. Supp. 2002)

OTHER

Eighteenth Memorandum of Special Master on the State of Wyoming's Motion to Dismiss and Motion for Summary Judgment, May 7, 1999

Glennon and Maddock, The Concept of Capture: The Hydrology and Law of Stream/Aquifer Interactions, 43 Rocky Mt. Min. L. Inst. (1997)

Groundwater Management in Nebraska Without a Legislative Solution: Is There an Alternative? 57 Neb. L. Rev. 78 (1978)

Harnsberger, Oeltjen & Fischer, Groundwater: From Windmills to Comprehensive Public Management, 52 Neb. L. Rev. 179 (1973)

Stephen D. Mossman, Whiskey is for Drinkin' But Water is for Fightin' About: A First-Hand Account of Nebraska's Integrated Management of Ground and Surface Water Debate and the Passage of LB108, 30 Creighton L. Rev. 67 (1996)

Neb. Const. Art. XV, §§4, 5 and 6

Neb. Const. Art. XV, sec 5

Nebraska Department of Natural Resources, 54th Biennial Report (2001-2002)

STATEMENT OF THE BASIS OF JURISDICTION

Jurisdiction is conferred under Neb. Rev. Stat. §61-207 (Cum. Supp. 2002) and the "Order Dismissing Complaint for Lack of Jurisdiction to Grant the Relief Requested" of the Department of Natural Resources, dated July 1, 2004. (T8-10).

1. The date of entry of the Order sought to be reviewed is July 1, 2004.

2. There is no motion which is claimed to have tolled the time within which to appeal.

3. The dates of filing of the Notice of Appeal, and of depositing the docket fee are July 15, 2004 and July 15, 2004, respectively.

4. The order sought to be reviewed adjudicates all of the claims, rights and liabilities of the Appellant, which is the only party.

STATEMENT OF THE CASE

I. NATURE OF THE CASE

The Central Nebraska Public Power and Irrigation District (Central) owns and operates Lake McConaughy and, the hydro-power and irrigation facilities associated with it. (T2-7) Central holds water rights for storage, storage use and direct flow. (T2- 7). Uses include hydro-power production, irrigation, recreation and environmental enhancement. (T2-7). Central is the largest irrigation district in Nebraska, providing irrigation water to Central's customers for about 112,000 acres. (T2-7).

Unpermitted diversions of streamflow are depleting the supply available for Central's permitted uses. (T2-7). Central's Amended Complaint, filed in the Department of Natural Resources (DNR), seeks an order directing unpermitted diversions to end. (T2-7). The DNR has jurisdiction pursuant to Neb. Rev. Stat. §61-206(1) (Cum. Supp. 2002).

The DNR summarily dismissed Central's Amended Complaint, finding that it is without jurisdiction to grant the relief Central seeks. (T8-10).

II. ISSUES ACTUALLY TRIED BELOW

A. Whether the DNR has jurisdiction to order that unpermitted diversions of streamflow must cease.

B. Whether Chapter 46, Article 2 and Chapter 46, Article 6 of the Nebraska Revised Statutes control with respect to the DNR's jurisdiction over this controversy.

C. Whether the DNR has regulatory authority over unpermitted diversions of streamflow.

III. DISPOSITION OF THE ISSUES

A. The DNR found that it does not have jurisdiction to order an end to unpermitted diversions of streamflow.

B. The DNR found that specific sections of Chapter 46, Article 2 and of Chapter 46, Article 6 create a statutory scheme by which unpermitted diversions of streamflow, when made through use of ground water, may not be regulated by the DNR.

C. The DNR found that it has no regulatory authority over unpermitted diversions of streamflow when the diversions are made by use of ground water.

IV. SCOPE OF REVIEW

On questions of law, which include the meaning of statutes, a reviewing court is obligated to reach its conclusions independent of the legal determinations made by the director of the Department of Water Resources. Central Platte NRD v. City of Fremont, 250 Neb. 252, 549 N.W.2d 112 (1996); Central Platte NRD v. State of Wyoming, 254 Neb. 439, 513 N.W.2d 847 (1994).

ASSIGNMENT OF ERRORS

1. The DNR erred in finding that it is without jurisdiction to grant the relief requested.

2. The DNR erred in finding that specific sections of Chapter 46, Article 2 and of Chapter 46, Article 6 are the only sources of statutory authority upon which have application to the regulation of unpermitted diversions.

3. The DNR erred in failing to follow Neb. Rev. Stat. §61- 206(1) (Cum. Supp. 2002), which authorizes the DNR to regulate unpermitted diversions.

4. The DNR erred in failing to find that Neb. Rev. Stat.. §§46~226 through 46-231 (Cum. Supp. 2002) authorize the DNR to adjudicate competing uses, including unpermitted diversions.

PROPOSITIONS OF LAW

I. On questions of law, which include the meaning of statutes, a reviewing court is obligated to reach its conclusions independent of the legal determinations made by the Director of the Department of Water Resources. Central Platte NRD v. City of Fremont, 250 Neb. 252, 549 N.W.2d 112 (1996); Central Platte NRD v. State of Wyoming, 254 Neb. 439, 513 N.W.2d 847 (1994).

II. The right to divert unappropriated waters of every natural stream for beneficial use shall never be denied except when such denial is demanded by the public interest. Priority of appropriation shall give the better right as between those using the water for the same purpose. Neb. Const. Art. XV, sec. 6.

III. The Department of Natural Resources is given jurisdiction over all matters pertaining to water rights for irrigation. Neb. Rev. Stat. §61-206 (Cum. Supp. 2002).

IV. The Department of Natural Resources shall make proper arrangements for the determination of priorities of right to use the public waters of the state and determine the same. The method of determining the priority and amount of appropriation shall be fixed by the DNR. Neb. Rev. Stat. §46-226 (Cum. Supp. 2002).

V. Upon summary dismissal of a complaint for lack of jurisdiction, well pleaded facts must be taken as true. Parks v. Holy Angels Church, 160 Neb. 299, 70 N.W.2d 97 (1955); Galyen v. Balka, 253 Neb. 270, 570 N.W. 2d 519 (1997).

VI. All waters of the state are dedicated to the public. Neb. Const. Art. XV, sec 5; In re Appropriations 442A, 461, 462 and 485, 210 Neb. 161, 313 N.W.2d 271 (1981).

VII. The process of adjudication is not limited to appropriations of surface water or of ground water. Neb. Rev. Stat. §§46-229.02 et seq. (Cum. Supp. 2002).

VIII. Statutes should be interpreted in a manner consistent with the Constitution. In re Application U-2, 226 Neb. 594, 413 N.W.2d 290 (1987).

STATEMENT OF FACTS

Lake McConaughy is in dire condition.

When the original Complaint in this case was filed with the DNR, on June 9, 2003, Lake McConaughy held 807,000 acre feet, about 46% of its capacity. When the DNR's order summarily dismissing the Amended Complaint was entered on July 1, 2004, Lake McConaughy held 552,000 acre feet, 32% of capacity.

The reservoir, at this writing, holds 354,000 acre feet, about 20% of its capacity. Unpermitted diversions continue to withdraw perhaps as much as 100,000 acre feet, on an average annual basis, from the reservoir. The lowest level ever, prior to 2004, was on October 17 through 19, 1956, at 383,600 acre feet. The new record low is now 341,400, set on September 13 and 14, 2004.

Until the current drought, the calendar year 1956 was the worst year for water supply for Lake McConaughy. As measured at the Lewellen gauge, the lake received 576,000 acre feet of inflow in that year. A new record low was recorded in 2002, 450,700 acre feet. The record was again broken in 2003, with a total of 437,300 acre feet of inflow for that year. Through July, 2004, 218,600 acre feet of inflow was recorded. Projected for the calendar year, this will again be a new record low, a total of about 375,000 acre feet of inflow.

Certainly, drought is the major cause of the precipitous decline in storage water in Lake McConaughy. However, the loss of 100,000 acre feet per year from the supply, and perhaps more, is of great significance.

What does the future hold? No one can predict. However, storage in a reservoir is a means by which the people of Nebraska, through their Constitution, have facilitated the continuation of irrigation through periods of drought. Without protection of appropriative rights assured by the Constitution, reservoir storage, and all the uses dependent upon it, is at grave risk.

ARGUMENT

I. THE DIRECTOR OF THE DEPARTMENT OF NATURAL RESOURCES IS CHARGED WITH RESPONSIBILITY FOR ADMINISTRATION OF ALL WATERS OF THE STATE.

Article XV, section 6 of the Constitution of the State of Nebraska provides, in relevant part: “The right to divert unappropriated waters of every natural stream for beneficial use shall never be denied except when such denial is demanded by the public interest. Priority of appropriation shall give the better right as between those using the water for the same purpose. . ."

Neb. Rev. Stat. §61-206 (Cum. Supp. 2002) provides, in relevant part: "(1) The Department of Natural Resources is given jurisdiction over all matters pertaining to water rights for irrigation . . .”.

Neb. Rev. Stat. §46-226 (Cum. Supp. 2002) provides as follows: "The Department shall make proper arrangements for the determination of priorities of right to use the public waters of the state and determine the same. The method of determining the priority and amount of appropriation shall be fixed by the Department."

At this writing, Lake McConaughy, the state's largest reservoir, the "crown jewel" of Nebraska's lakes, is at about 20% of its capacity. Central's irrigators will receive less than half of the normal water supply for irrigation during the 2005 irrigation season. The lack of water in Lake McConaughy is caused, in part, by unpermitted diversions of streamflow resulting from unrestrained ground water pumping upstream of Central's reservoir, and upstream of Central's Tri-County diversion dam, at North Platte. These allegations of Central's Amended Complaint must be taken as true. Parks v. Holy Angels Church, 160 Neb. 299, 70 N.W.2d 97 (1955); Galyen v. Balka, 253 Neb. 270, 570 N.W.2d 519 (1997). The Director of the DNR concluded, in the DNR's order dismissing Central's Amended Complaint, that the legislative distinction between surface water and ground water, included in various places in the myriad statutes governing water in Nebraska, prevents the Director from exercising jurisdiction over Central's Amended Complaint.

However, the statutory authority by which the Department of Natural Resources acts includes the explicit authority necessary for the DNR to grant the specific relief requested in Central's Amended Complaint.

Chapter 61, Article 2 is the enabling legislation creating, and delegating authority to the DNR. Section 202 authorizes the Director to employ personnel; Section 203 directs that the Director adopt a seal, and provides for its use; Section 204 authorizes the adoption of rules and regulations, and provides for a continuation of rules of the former Department of Water Resources until the DNR changes or eliminates them; Section 205 governs the transition of the former Department of Water Resources to the DNR, and authorizes the Director and his or her assistants to have access at all reasonable times to all "devices for diverting water"; Section 206 specifically grants jurisdiction to the DNR over "all matters pertaining to water rights for irrigation", among other things; Section 207 provides for appeals from the DNR's decisions; Section 208 provides for surveys; Section 209 provides for data collection; Section 210 provides for funding the DNR; Section 211 provides for the installation of measuring devices on interstate ditches; Section 212 divides the state into two water divisions; Section 213 defines water division number 1; Section 214 defines water division number 2; Section 215 provides for the appointment of division supervisors; Section 216 prescribes the duties of division supervisors; Section 217 creates the Interstate Water Rights Cash Fund.

Nowhere in Chapter 61, Article 2 is there any distinction drawn between "surface water appropriators" and "ground water users" as is described in the DNR's order. On the contrary, Section 61-206(1) is a broad, general grant of jurisdiction relating to "all matters" concerning "water rights for irrigation, power or other useful purposes". There is no specific limitation on jurisdiction; the delegation is general in character, and provides the authority to protect the constitutional mandate.

Similarly, Sections 46-226 through 46-231 provide for no limitation on the authority of the DNR to conduct adjudications. Section 46-226 refers to the use of "the public waters of the state." All waters of the state are dedicated to the public. Neb. Const. Art. XV, sec 5; In re Appropriations 442A, 461, 462 and 485, 210 Neb. 161, 313 N.W.2d 271 (1981). The process of adjudication provided for in Sections 46-229.02, 46-229.03 and 46-229.04 is not limited to appropriations of "surface water" or of "ground water", but is a general legislative directive and grant of authority to the DNR to conduct proceedings to assure that water is put to beneficial use, protecting the rights o£ all appropriators.

While the DNR's order asserts that its "legal authority over ground water users" is limited by a series of statutes cited by the order, no such limitation is found in Chapter 61, Article 2, or the provisions for adjudication codified as Sections 46-226 through 46-231. In fact, the recitation of the purportedly limited authority referred to in paragraph 4 of the DNR's order is incomplete. The order omits those additional specific and narrow authorities relating to induced ground water recharge in §§46-226.03, 46-228, 46-233, 46-235, 46-235.01, 46-235.02, 46-235.03, 46-235.04, 46-237 and 46-238. Neb. Rev. Stat. §§46-226.03 et seq. (Cum. Supp. 2002).

The DNR's authority is not limited to the statutes enumerated in the DNR's order. Quite the contrary, the DNR's authority is a general grant of authority as described above, contained in Chapter 61, Article 2. The DNR was established in order to provide for a means of regulating the waters of the state, to protect the constitutionally mandated priority of appropriation as being determinative of the right of use of those claiming water for the same purpose. See, e.g., In re Appropriations 442A, 461, 462 and 485, supra.

Statutes should be interpreted in a manner consistent with the constitution. In re Application U-2, 226 Neb. 594, 413 N.W.2d 290 (1987). The constitution protects the appropriator based on priority; the statute creating and enabling the work of the regulatory agency responsible for protecting the prior appropriation system should be construed consistently with the constitutional protection. As the court said in In re Application A-16642, 236 Neb. 671, 463 N.W.2d 591 (1990): "We have long recognized that §§4, 5 and 6 [Neb. Const. Art. XV, §§4, 5 and 6] grant constitutional protection to the doctrine of prior appropriation." Id., 236 Neb. at 683, 463 N.W.2d at 601.

II. THE CONSTITUTION OF NEBRASKA PROTECTS THE APPROPRIATOR, BASED UPON PRIORITY.

Prior to the enactment of the statutory basis for the priority system of water rights administration, it would not have been possible to construct Kingsley Dam and impound Lake McConaughy. The inability to quantify uses represented by a riparian system made construction of significant works of public improvement impossible. See, Glennon and Maddock, The Concept of Capture: The Hydrology and Law of Stream/Aquifer Interactions, (Glennon and Maddock) 43 Rocky Mt. Min. L. Inst. (1997); Stephen D. Mossman, Whiskey is for Drinkin' But Water is for Fightin' About: A First-Hand Account of Nebraska's Integrated Management of Ground and Surface Water Debate and the Passage of LB1OB (Mossman), 30 Creighton L. Rev. 67 (1996); Harnsberger, Oeltjen & Fischer, Groundwater: From Windmills to Comprehensive Public Management, (Groundwater) 52 Neb. L. Rev. 179 (1973). By adopting a system of prior appropriation, the legislature made it possible to analyze available water supply, so that the utility o£ a project could be accurately evaluated. See, Hitchcock and Red Willow Irrigation District v. Lower Platte North Natural Resources District, 226 Neb. 146, 410 N.W.2d 101 (1987}. In 1920, the people of the state then chose to incorporate the essential provisions of the prior appropriation system into the Constitution, so that protection of appropriators was assured. See, In re Application A-16642, supra, Groundwater, supra.

As this court said in In re Application A-16642, supra:

Prior to the adoption of the appropriation system, water rights in Nebraska were governed by the common-law system of riparian rights. Under the riparian system, only those landowners whose property is adjacent to a body of water have a right to use that water. The rights of all riparians along the given body of water are equal, regardless of when they began using the water. Riparian proprietors could not divert significant flows out of the natural channel of a stream without returning that water to the channel, nor could they apply that water to non'-riparian lands. (citations omitted) While this doctrine was suited to 'England's green and pleasant land,' where ample rains watered crops and most uses were non-consumptive, it soon became apparent to settlers that pure riparianism would hinder development in the more arid regions of the American West. (citations omitted) Nebraska responded to this 'natural want' of water by adopting the doctrine of prior appropriation.

The attributes of the appropriative doctrine which distinguish it from riparianism are its focus on the application of the water to a beneficial use, rather than on the ownership of riparian land, and its use of a first-in-time, first-in-right approach to conflicts between users, as opposed to the riparian system's equality among riparians. The appropriative system permits water use on lands where the riparian system would deny it and protects senior, more established water uses in times of shortage. Adoption of the appropriative system permitted the acquisition of a right to the beneficial use of water based on the seniority of the use, independent of the riparian or non-riparian nature of the land.
Id. 236 Neb. at 683-684; 463 N.W.2d at 601.

Now, withdrawals by unpermitted diversions are defeating the constitutional protection. The DNR's order reflects the insidious nature of the means by which the prior appropriation system has, and is, being defeated. The DNR looked at the statutes in determining the extent of its authority; however, the statutory framework which the DNR reviewed preserves a distinction between ground water and surface water; a distinction which is irrelevant, insofar as the constitutional protection is concerned. The Constitution makes no distinction between diversion methods. Physical diversions, in fact, may take place either with a pump in a stream, or with a pump located in gravel, hydrologically connected to the stream. Regardless of the method of diversion, each is a depletion of streamflow. If an unpermitted diversion occurred through the use of a pump in the stream, the DNR would immediately conclude that it could take appropriate action to prevent the continuing unpermitted diversion. However, simply because the method of diversion happens to be in a different location, the DNR has read the statutes to require that it allow the unpermitted diversion to continue, simply by ignoring it, as being outside the DNR's jurisdiction.

The essential fact is this: even though the legislature may have ignored the Constitution in enacting a series of statutes which were intended to protect ground water quality and provide for methods of allocation among well users in times of reduced quantity, the legislature's ignorance provides no excuse for the DNR to ignore the effect of unpermitted diversions on streamflow. Should this court allow the unpermitted diversions to continue, the constitutional protection is rendered meaningless.

III. THE DEPARTMENT OF NATURAL RESOURCES HAS THE ADMINISTRATIVE EXPERTISE AND REGULATORY CAPACITY TO REGULATE ALL WATER USERS.

Pending in this court is Spear T Ranch, Inc. vs. Melvin G. Knaub, et al, Case No. S-03-000789 (Spear T). The Spear T case represents, to some degree, a microcosm of the issue presented by Central's Amended Complaint. However, a reversal of the District Court's decision in Spear T will result in a remand to a District Judge who must then decide, in accordance with whatever legal framework this court should choose, as among about 15 to 25 competing users. An individual District Judge in Morrill County probably has adequate resources to decide among such a group. However, as is indicated by the transcript there are about 2,200 unpermitted diversions upstream of the Tri-County Dam, the diversions of which Central complains. In each of the counties upstream of the Tri-County Dam, there are at least several hundred unpermitted diversions. If Central's Amended Complaint had been modified to fit and filed in the District Court of a given county, a remand to a District Judge for adjudication and determination of the respective rights of at least several hundred claimants, and perhaps several thousand, would present a formidable task. At best, the District Judge would be mired in a determination of the respective rights of the parties for many years. See, e.g., In re Big Horn River System, 85 P.3d 981 (Wyo. 2003); In re General Adjudication of All Rights to Use Water in Gila River System and Source, 201 Ariz. 307, 35 P.3d 68 (2001); State v. Hagerman Water Right Owners, Inc., 130 Idaho 727, 947 P.2d 400 (1997). A determination of rights must, of necessity, also include a determination of quantity. If bifurcated, the quantity determination aspect could also occupy a District Judge for years.

The DNR, on the other hand, has the administrative and scientific expertise necessary to perform such a function. Certainly, one would expect, that there would need to be an increase in the DNR budget, in order to provide the additional staff necessary to accomplish the adjudication. However, the DNR has shown, and continues to show, the ability to provide essentially continuous adjudication of all of the competing claims in the state. This is, perhaps, the best administrative agency of its type in the nation. The case law is replete with examples of ongoing adjudications, lasting decades. See, In re Big Horn River System, supra; In re General Adjudication of All Rights to Use Water in Gila River System and Source, supra; State v. Hagerman Water Right Owners, Inc., supra. Administrative agencies, "water courts", and Special Masters have toiled in endless disputes of this nature. Strikingly, the DNR's Biennial Report depicts a water rights system in Nebraska in which essentially all permitted diversions have been subject to adjudication, are accurately quantified, and are regularly administered. Unpermitted diversions are enjoined. Nebraska Department of Natural Resources, 54th Biennial Report (2001- 2002). The DNR is the appropriate forum to resolve the controversy presented by Central's Amended Complaint, because the DNR has the capability and expertise necessary to adjudicate and regulate the unpermitted diversions of which Central complains.

IV. WITHOUT REGULATION OF ALL TRIBUTARY SOURCES OF STREAMFLOW, THE CONSTITUTIONAL PROTECTION AFFORDED APPROPRIATORS IS MEANINGLESS.

The scope of review, as indicated above, assumes that the allegations of Central's Amended Complaint are true. Parks v. Holy Angels Church, supra; Galyen v. Balka, supra. The Amended Complaint alleges that the unpermitted diversions are diverting the waters of the Platte River and its tributaries by pumping registered, but unpermitted, irrigation wells located in the Platte River watershed upstream of the Tri-County Dam which is located in the Northwest Quarter (NW1/4) of Section 8, Township 13 North, Range 29, West of the 6th P.M. in Lincoln County. Complaints by appropriators against persons diverting streamflow without a permit are common in western water law, and have resulted i.n a significant body of case law recognizing the hydrologic relationship between streamflow and ground water. See cases cited, infra.

The Nebraska legislature has simply ignored the inevitable controversy which has now found its way to this court. The legislature has not provided a remedy for the appropriator, by which the appropriator may seek a means of preventing depletions of streamflow caused by unpermitted diversions of ground water. See, Groundwater Management in Nebraska Without a Legislative Solution: Is There an Alternative? 57 Neb. L. Rev. 78 (1978); Mossman, supra; Harnsberger, supra. LB962, recently enacted, LB108, enacted in 1996, see Mossman, supra, and the Nebraska Groundwater Management and Protection Act, enacted in 1975 and modified by LB108 and LB962, all provide nothing more than a means of seeking a political solution, through a natural resources district or districts, without consideration of the Constitution, and the protection it affords the appropriator.

LB962, the most recent change, is certainly a significant improvement over prior efforts. It has mandated that over-appropriated basins be identified, and that continuing expansions of use be ended in over-appropriated systems. It has had the effect of almost bringing the speeding train of unregulated ground water use to a halt. However, by ignoring the constitutional protection afforded appropriators, it leaves the unregulated ground water uses, which had expanded without limitation prior to the enactment of LB962, intact.

V. THE PUBLIC'S INVESTMENT IN PROJECT INFRASTRUCTURE IS LOST WITHOUT REGULATION OF ALL TRIBUTARY SOURCES OF STREAMFLOW.

The failure to integrate the legal rules involving ground and surface water has unfortunate consequences. First, the rivers or streams that are fully or almost fully appropriated have or will have diminished surface flows. This deprives more senior surface water prior appropriation rights holders of their vested rights. Unless the pump is deemed to be pumping 'subflow,' 'underflow,' or from a 'subterranean stream,' the groundwater pumper is immune from liability from the harm that occurs to the senior surface water diverter. Generations of westerners have touted the prior appropriation doctrine for its predictability and security of legal rights to surface water. However, this dual system completely undermines that security as it allows more junior groundwater pumpers to use water that had been legally guaranteed to senior surface water appropriators. Second, it harms any gaining streams by reducing base flow, the only available stream water during dry seasons or droughts.
Glennon and Maddock, Section 22.3(2) (c).

The public's investment in the creation, operation, maintenance and improvement of Central's water storage and delivery system is at least hundreds of millions of dollars.
This investment is at great risk for the very reasons enumerated in Glennon and Maddock. Failure to regulate tributary groundwater creates essentially the same condition as if each tributary stream were not regulated for purposes of protection of appropriations on the mainstem. A river is a combination of the sources of tributary inflow, whether from streams or groundwater. As Harnsberger put it: " . . . all water is interrelated and interdependent. If ground water were red, most streams would be various shades of pink; if ground water were poisoned, the streams would also be poisoned." Groundwater, 52 Neb. L. Rev. at 183.

VI. THE STATE OF NEBRASKA HAS ARGUED PERSUASIVELY THAT TRIBUTARY GROUND WATER IS SUBJECT TO REGULATION AS STREAMFLOW.

Nebraska v. Wyoming, 325 U.S. 589 (1945) began with Nebraska's Complaint, filed in the United States Supreme Court in 1934, seeking an equitable apportionment of the North Platte River. Following eleven years of litigation, the court accepted the Special Master's recommendations, and entered a Decree apportioning the supply among Nebraska, Colorado and Wyoming. Nebraska sought to "reopen" the case in 1986.

After the Special Master had filed interim reports, and made a recommendation concerning partial summary judgment, the court took the matter up on exceptions. Nebraska v. Wyoming, 507 U.S. 584 (1993).

Following the court's decision in 1993, Nebraska filed a Motion for Leave to File an Amended Petition (Motion for Leave). The Motion for Leave, with respect to the requested apportionment of flow of the Laramie River, argues:

Significant development of ground water resources has occurred within the lower Laramie River Basin since 1945.21 [footnote 21: The conjunctive management of surface and ground water lies within the federal common law of equitable apportionment. See Hinderlider v. La Plata River and Cherry Creek Ditch Company, 304 U.S. 92 (1938).] The exercise of these rights will cause depletions to the surface flows of the Laramie River and its tributaries. After enough time has elapsed and the aquifer system has reached a new steady-state, virtually 100% of the consumptive ground water withdrawals in the area between Cottonwood Creek and the Laramie River will be reflected in the streamflow depletions.

The Amended Petition which Nebraska sought leave to file also alleged that Wyoming had permitted, and was then continuing to permit, ground water withdrawals which were depleting, and which would deplete, flow of the North Platte River and it's tributaries.

Nebraska's proposed Amended Petition, including her ground water claims, was referred to the Special Master by the Court, for the Special Master's recommendation. Ultimately, the issue of whether to permit amendment was resolved by the Court. Nebraska v. Wyoming, 515 U.S. 1 (1995). The Court described the amendments which Nebraska sought leave to file, and reported that the Master had recommended that Nebraska be permitted to amend her Petition substantially as requested. In response to Nebraska's request to amend to allege claims concerning depletions of streamflow caused by ground water pumping, the Court observed:

In counts I and III of -its Amended Petition, Nebraska alleges that increased ground water pumping within Wyoming threatens substantial depletion of the natural flow of the river. This allegation is obviously one of a change in conditions posing a threat of significant injury, and Wyoming concedes that 'ground water pumping in Wyoming can and does in fact deplete surface water flows in the North Platte River' Third Interim Report, 38. . . . Wyoming raises Nebraska's failure to regulate ground water pumping within it's own borders, which is said to preclude Nebraska as a matter of equity from seeking the limitations on pumping within Wyoming. .. ., [B]ut that is question for trial, and does not stop Nebraska from amending its claims at this stage.
Id. 515 U.S. at 14.

Following the Court's 1995 opinion, Wyoming filed a motion to dismiss pursuant to Federal Rules of Civil Procedure 12(b) (1) and 12(b) (6), and a motion for summary judgment, pursuant to Federal Rule 56(c). The Special Master ordered briefing concerning Wyoming's motions, and Nebraska filed a "Response". The Response speaks to ground water issues in considerable detail. Nebraska's argument, relative to the 12(b) (1) motion includes the following: "... Nebraska's amended petition seeks to prevent past and future ground water depletions in Wyoming because they capture natural flows that were apportioned to Nebraska in the original litigation."

Nebraska then discussed the United States' reply to Nebraska's allegations concerning depletions of ground water as affecting the apportionment provided for in the Decree. Nebraska characterized the United States' position as follows: "Implicit in the argument is the United Sates' recognition of the direct relationship between surface flows and hydrologically connected ground water." Nebraska concluded: "In other words, it is the same water, separated only in time and space."

Nebraska included a discussion of Wyoming's response to Nebraska's ground water claims. Wyoming contended that ground water was not apportioned in the original litigation. Nebraska responded as follows:

First, Wyoming argues that the effect of ground water depletions should not be included in these proceedings because '[t]he existing Decree does not limit the use of ground water in any of the three states; it apportions only the surface flows of the North Platte.' In asserting that ground water was not apportioned, Wyoming ignores physics and the applicable interstate law. The issue was addressed in Texas v. New Mexico, 446 U.S. 540 (1980). While the term 'ground water' does not appear in the Pecos River Compact, 63 Stat. 159 (1949), the principal dispute in II the case involves the meaning of 'the 1947 condition' in Article III(a) of the Compact, the term that described the nature and extent of the surface and ground water apportionment quantitatively. The Special Master defined the 1947 condition as that 'situation in the Pecos River basin which produced in New Mexico the manmade depletions resulting from the state of development existing at the beginning of the year 1947 . . .' 446 U.S. at 542, note 2. The effect of the decision which was adopted by the Court was to make New Mexico liable for the depletions of surface flow caused by all post-1947 ground water diversions. In other words, the Court recognized that the Compact apportioned ground water hydrologically related to the surface flows of the Pecos River, notwithstanding that ground water was not explicitly addressed in the Compact. Contrary to Wyoming's argument in this case, the Court has taken a realistic view of the matter in construing an interstate compact ratified in 1948.

The Court also considered the matter when Texas v. New Mexico was heard the second time, Texas v. New Mexico, 462 U.S. 554 (1983). In that case, the Court described the impact of ground water diversions on the surface flows of the Pecos, stating: 'due in large part to many natural difficulties, the Pecos , barely, supports a level of development reached In the first third of this century. If development in New Mexico were not restricted, especially the ground water pumping near Roswell, no water at all might reach Texas in many years.' Id. at 557. Following the determination of liability, New Mexico was left with the choice of retiring surface and ground water rights by purchase or enforcing priority of appropriation, the latter of which would have curtailed as much as 100,000 acres of ground water irrigation.

The issue has also been addressed in other cases. In Arizona v. California, 376 U.S. 340 (1964), the Court defined consumptive use from the mainstem within a state to include 'all consumptive uses of water of the mainstream, including water drawn from the mainstream by underground pumping . . .' Id. at 340. More recently, in Kansas v. Colorado, No. 105, Original, the Court extended its original jurisdiction to a controversy brought by Kansas alleging violations of the Arkansas River Compact from the depletive effects of unregulated ground water pumping in Colorado on surface flows apportioned under the Compact.4

[footnote 4: See Arkansas River Compact, 63 Stat. 145 (1949).] Kansas v. Colorado, 475 U.S. 1079 (1986). In its first amended complaint, Kansas alleged: 'in spite of its duties and obligations under the Compact, since 1949 the State of Colorado has allowed and permitted substantial increases in the diversion and use in Colorado of the surface and hydrologically related ground waters of the Arkansas River, without the concomitant regulatory or conservation measures that the Compact requires to protect the states against material depletions in usable state-line flows.' First amended complaint at paragraph 8, Kansas v. Colorado, No. 105, Original. The Special Master agreed. The Master's report recommended that the Court grant Kansas' relief, acknowledging depletions of surface flows by ground water pumping upstream, notwithstanding that 'ground water' was not expressly apportioned by the Compact.

As the Court has held, it is impossible to separate surface water from hydrologically connected ground water. In most river systems, surface water and ground water are one and the same, separated only in time. Typically, the surface flow of an interstate river consists of tributary inflow and ground water accretions, with the latter most often providing the more significant contribution. Wyoming's argument that the ground water portion of the North Platte River was not apportioned is, in a word, absurd (italics added).

Following the "dauntingly long and repetitive briefs" filed by Nebraska and Wyoming, the Master issued his 18th Memorandum, overruling Wyoming's motions, and describing a "Map of the Case". Eighteenth Memorandum of Special Master on the State of Wyoming's Motion to Dismiss and Motion for Summary Judgment, May 7, 1999, at 32. (18th Memorandum). The "Map of the Case" includes a section the master entitled "ground water", in which he discusses the substance of Nebraska's ground water claims, and his conclusions regarding the law applicable to those claims. The discussion includes the following:

The Court, . . . has taken jurisdiction over a ground water claim under the changed conditions reopener, and Nebraska has the potential in this proceeding, depending on the evidence it presents, to obtain relief that expressly covers ground water as well as surface flows, a plausible result under the modern understanding of surface water and hydrologically connected ground water. . . . Ground water pumping that is shown to have diverted the very natural flow divided 25%-75% within the pivotal reach arguably should be accounted the same as surface diversions depleting the same flow. Current thought on conjunctive resource management of surface waters and hydrologically connected ground water does not support different legal treatment based solely on differences in diversion methods. Thus, the Court in Kansas v. Colorado138 [footnote 138: 514 U.S. 673 (1995).] concluded that Colorado ground water pumping violated the Arkansas River Compact even though the Compact's language made no mention of ground water wells. The pertinent Compact provisions constraining future water development of the Arkansas River Basin spoke only of 'dams, reservoir[s], and other works for the purposes of water utilization.'139 [footnote 139: Id. at 690]. But the absence of express limitations on pumping hydrologically connected ground water gave the Court no pause. Although it is premature to determine the precise remedies to which Nebraska might be entitled, Kansas v. Colorado suggests the possibility of damages as well as injunctive relief if Nebraska can establish substantial injury by clear and convincing evidence from past ground water pumping that directly depleted the apportioned natural flow in the pivotal reach.
18th Memorandum (italics added).

Certainly, the State's position in the litigation does not represent current Nebraska law on the subject of conflicts among appropriators of streamflow and ground water users. However, the State's position in the litigation is illustrative of current thought on the subject, and was accepted by the Special Master.

VII. THE UNITED STATES SUPREME COURT HAS CONSISTENTLY HELD THAT TRIBUTARY GROUND WATER IS SUBJECT TO REGULATION AS STREAMFLOW.

In Kansas v. Nebraska, 530 U.S. 1272 (2000) the United States Supreme Court effectively invited Nebraska to file a motion to dismiss that part of Kansas' complaint which alleged that Nebraska was diverting ground water, tributary to the Republican River, in violation of the Compact allocation among Nebraska, Kansas and Colorado. In response to the court's invitation, Nebraska filed her motion to dismiss, and the Special Master decided that the motion should be overruled. The Master concluded that any use of ground water in Nebraska which effects streamflow is a use of part of Nebraska's allocation pursuant to the Compact. Nebraska took exception to the Master's decision. The United States Supreme Court paid little attention to Nebraska's exception; the Court overruled Nebraska's exceptions to the Master's report, and remanded the case to the Master for further proceedings, without opinion. Kansas v. Nebraska, 530 U.S. 1272 (2000).

Similarly, in Texas vs. New Mexico, 446 U.S. 540 (1980), and see Texas v. New Mexico, 462 U.S. 554 (1983) the court concluded that ground water uses in New Mexico which reduced the available supply in the Pecos River from the "1947 condition" were uses subject to regulation pursuant to the Pecos River Compact. The Court recognized that ground water hydrologically related to surface water is a common resource, and that the law governing it's use, whether compact or decree is meaningless without such recognition. Texas v. New Mexico, 446 U.S. 540 (1980). The Court concluded that unpermitted diversions of ground water in New Mexico must be treated as if the diversions were of surface water, and enjoined the ground water depletions. Texas vs. New Mexico, 462 U.S. 554 (1983).

In Kansas v. Colorado, 514 U.S. 673 (1995) Kansas complained that ground water use in Colorado was depleting the apportioned flow of the Arkansas River in violation of the states' compact. The Special Master, in a series of reports to the court, has concluded that ground water is a part of the source of supply which the compact allocates as between the parties, and ordered reductions in use in Colorado to protect Kansas' allocation. The Court has affirmed the Master's recommendations in this respect. Kansas v. Colorado, 514 U.S. 673 (1995).

In Arizona v. California, 376 U.S. 340 (1964), the court defined consumptive use of streamflow to include "all consumptive uses of water of the mainstream, including water drawn from the mainstream by underground pumping. . ." Id. at 340.

In Kansas v. Colorado, 514 U.S. 673 (1995), the court overruled exceptions to the Special Master's report, and permitted Kansas to proceed with her cause of action against Colorado for violating the Arkansas River Compact by depleting the river as a result of unregulated ground water pumping in Colorado, even though the Compact's language made no mention of ground water wells.

The common law of the United States is clear: surface water and hydrologically connected ground water are one resource.

VIII. ALTHOUGH BALKANIZED, THE LAW OF MANY WESTERN STATES HOLDS THAT TRIBUTARY GROUND WATER SHOULD BE REGULATED AS STREAMFLOW.

In 1881, the Kansas Supreme Court decided a case involving withdrawal from a well which depleted a stream supplying the plaintiff's mill pond. The court's opinion summarizes the essence of Central's Amended Complaint: "a man may not do indirectly what he may not do directly." City of Emporia v. Soden, 25 Kan. 588 at 601 (1881). The court held that the diversion, although in the gravel rather than on the surface, could not take from the appropriator. Id. at 608-13.

California's separate universe is the subject of an excellent discussion in Professor Aiken's unpublished article concerning tributary ground water law, copies of which were provided to the court as a part of the amicus briefing in the Spear T case. However, for our purposes here, Huffner v. Sawday, 153 Cal. 86, 94 P. 424 (1908) includes this important language, also quoted by Professor Aiken:

It is true that there is evidence to the effect that during the summer months, when the stream is dry in the San Pasqual Valley, there is some water running at the defendant's [upstream] point of diversion. It does not follow, however, that the taking of this water would not injure the [riparian] respondents. There are long stretches of sandy bottom between the defendants' proposed works and the [riparian] lands of the plaintiffs. Water flowing over the rocky bed above sinks into the sand, which must become saturated before there can be a flow over its surface. To so fill this sand requires, as witness testifies, several weeks. The [trial] court was justified in drawing from this testimony the inference that an interruption to the flow of this water would materially postpone the time when a surface flow would come to plaintiffs' lands. Such postponement would be a clear injury to the plaintiffs, whose interest in the waters of the stream included the right to have the river bed continue to hold sufficient water to supply and support the surface stream in its natural state.

This is the identical situation identified by the Nebraska Supreme Court in State ex rel Cary v. Cochran, 138 Neb. 163, 292 N.W. 239 (1940): "It is also shown that the water table has been affected materially by pump irrigation. It was estimated that there are 500 irrigation pumps in Dawson County alone, which pump as much as 40,000 acre feet of water in a single season." Id. 138 Neb. at 171, 292 N.W. at 245.

Arizona clings tenaciously to its nonsensical "subflow" doctrine. In re General Adjudication of Gila River, 857 P. 2d 1236 (Ariz. 1993).

Colorado long ago recognized the science of hydrology as being conclusive with regard to the relationship between ground water and surface water. As a result, Colorado eliminated any legal fiction distinguishing the two, and treats them as one resource. See, McClellan v. Hurdle, 3 Colo. App. 430, 33 P. 280 (1893).

Professor Aiken's article also includes an excellent discussion of the Colorado and Utah cases regarding the relationship between streams and ground water.

The article also explores the regulatory frameworks which may be applied in deciding the relative rights of all users. The choice of regulatory methodology should be left to the expertise of the administrative agency best equipped to conduct adjudications, in this case the DNR.

IX. THE SKY IS NOT FALLING; THAT IS, THE PROHIBITION OF UNREGULATED DIVERSIONS WHICH EFFECT STREAMFLOW, WILL NOT WREAK HAVOC ON THE USE OF GROUND WATER FOR IRRIGATION IN NEBRASKA.

Certainly the court must consider, as a matter of policy, the effect this case will have as precedent. One amicus has suggested, in a brief filed in the Spear T case, that granting the type of relief sought in Central's Amended Complaint will sound the death knell for all those in rural Nebraska dependent upon ground water for irrigation. Businesses in rural communities will suffer irreparable harm; the tax base for political subdivisions will not just be eroded, but washed away; roads will deteriorate, schools will close, government services will end, goes this argument. If the court decides that unpermitted diversions have to be adjudicated, the social and political upheaval will trigger a revolution, the amicus argues.

The reality is somewhat different.

Only about 9% of ground water irrigation in Nebraska occurs in the Platte River watershed upstream of the Tri-County diversion dam. The only other watersheds to be declared "fully appropriated" by the DNR are the Republican and the Niobrara-White. The Republican will be subject to significant control as a result of the settlement of Kansas' suit.

While adjudication to protect the constitutional mandate will undoubtedly result in a significant change in the relative priorities of use, such adjudication does not necessarily mean that all uses upstream of the Tri-County Dam will be ended. The adjudication process is broad enough to consider all beneficial uses, and to permit, in priority, those which meet necessary regulatory standards. A remand to DNR will result in consideration of existing uses in light of the constitutional requirement.

CONCLUSION

For the foregoing reasons, the decision of the DNR should be reversed, and the cause remanded for further proceeding.

DATED this 1st day of October, 2004.

Respectfully submitted,
THE CENTRAL NEBRASKA PUBLIC POWER AND IRRIGATION DISTRICT, Appellant

By Michael C. Klein #15428
Anderson, Klein, Swan & Brewster
417 East Avenue, P.O. Box 133
Holdrege, NE 68949-0133
Phone (308)995-4458
Attorneys for Appellant