IN THE NEBRASKA SUPREME COURT

SPEAR T RANCH, INC.,

APPELLANT,
v.
MELVIN G. KNAUB, ET AL.,

APPELLEES

APPEAL FROM THE DISTRICT COURT OF MORRILL COUNTY, NEBRASKA BEFORE THE HONORABLE PAUL D. EMPSON
SUPPLEMENTAL BRIEF OF AMICUS CURIAE
NEBRASKA FARM BUREAU FEDERATION

Prepared and Submitted by:

Donald G. Blankenau, NSBA #18528
1221 N Street, Suite 801
Lincoln, Nebraska 68508-2028
(402) 323-6200 - telephone
(402) 323-6210 - facsimile
dblankenau@fclaw.com
Attorney for Amicus Curiae

TABLE OF CONTENTS

SUPPLEMENTAL BRIEF OF AMICUS CURIAE, NEBRASKA FARM BUREAU FEDERATION

INTRODUCTION

I. NEBRASKA'S DUALISTIC SYSTEM OF WATER RIGHTS PRECLUDE COMMON LAW REMEDIES.

A. Surface Water Appropriations Are Not Inherently Superior.
B. HC Ground Water Is Not And Should Not Be Subject To The Prior Appropriation Doctrine.
C. Adverse Economic and Social Consequences Will Follow A New Interpretation Of Article XV, § 6.

II. LB 962 PROVIDES AN APPROPRIATE REMEDY

CONCLUSION

TABLE OF AUTHORITIES

Cases

Metropolitan Utilities District v. Merritt Beach Co., 179 Neb. 783, 140 N. W. 2d 626 (1966)
Olson v. City of Wahoo, 124 Neb. 802,248 N. W. 304 (1933)
Vulcraft v. Karnes, 229 Neb. 676, 428 N. W. 2d 505 (1988)

Statutes

Neb. Rev. Stat. § 46-254 6
Neb. Rev. Stat. § 46-656.01 4
Neb. Rev. Stat. § 46-656.02

Other Authorities

In Search of Subflow: Arizona's Futile Effort to Separate Groundwater From Surface Water, 36 Ariz. L. Rev. 567, 569 (1994)

SUPPLEMENTAL BRIEF OF AMICUS CURIAE,
NEBRASKA FARM BUREAU FEDERATION

In accordance with this Court's Order of April 21, 2004, the Nebraska Farm Bureau Federation ("NFBF") submits this Supplemental Brief. This Supplemental Brief will address two of the four issues identified by the Court for additional briefing: (1) "The effect, if any, of the adoption of LB 962 on this appeal," and (2) "Whether the Nebraska Groundwater Management Protection Act or LB 962 have abrogated any common law remedies that the appellant might have, or provides an adequate remedy at law." The NFBF takes no position relative to the issues related to the doctrine of primary jurisdiction.

INTRODUCTION

Nebraska law precludes any common law remedies in this case. All common law remedies require the plaintiff possess a legal entitlement to receive the water vis-a-vis competitors. While the NFBF is not unsympathetic to the Appellant's situation, the fact remains that Nebraska created ground and surface water property rights within two jurisprudential constructs that are wholly separate from one another. In this case, neither party holds a property right that entitles them to the water vis-a-vis the other.

The Appellant's claim can only proceed by a constitutional redefinition of ground water that places the right to use ground water within the same legal construct that governs the use of surface water. Only through the integration of ground and surface water property rights can there be a basis for determining which water user has a superior claim to the water at issue. In this case, the Appellant seeks to have the meaning of "surface water" redefined to include ground water in hydraulic connection to streamflow ("HC ground water"). No legal basis exists for this redefinition and so doing will render LB 962 unconstitutional. Such a redefinition will also result in extreme economic and social dislocation across Nebraska.

The Unicameral heard the concerns of those in the Appellant's position and created a structure for the integrated management of ground and surface waters while at the same time preserving the essential elements of both water rights systems. With the passage of the Nebraska Ground Water Management and Protection Act ("Act"), Neb. Rev. Stat. § 46-656.01 et seq. and LB 962, Nebraska's natural resources districts ("NRDs") and the Nebraska Department of Natural Resources ("DNR") are charged with developing management plans to protect rivers and streams that are fully and over appropriated. These plans are to be designed with input from local stakeholders to protect existing local economies. Legislative Bill 962 further allows for the management plans to attempt to restore certain streams that have been depleted, while at the same time maintaining the viability of existing surface water rights. To the extent the Appellant seeks regulation to protect streamflow, LB 962 provides for that opportunity.

I. NEBRASKA'S DUALISTIC SYSTEM OF WATER RIGHTS PRECLUDE COMMON LAW REMEDIES.

At oral argument, the Appellant appeared to argue that surface water use is either inherently superior to ground water use OR that users of HC ground water are subject to the prior appropriation doctrine. The Appellant is wrong on both counts.

A. Surface Water Appropriations Are Not Inherently Superior.

With respect to the inherent superiority of surface water use, no case law or statute supports the Appellant's proposition. Indeed, the concept of a property right that is somehow inherently superior to a competing right is without precedent or reason. As explained in the NFBF's initial brief, Nebraska law evolved in such a way that neither user holds an inherently superior claim to the water at issue. See Brief of Amicus Curiae, Nebraska Farm Bureau Federation at 4-5. Nebraska law requires that the two systems of water rights be treated as separate and disconnected with respect to the other. Because the Appellees acted within the scope of their property rights, their use of HC ground water was legal and the Appellant's claim to water cannot be judged as inherently superior. Absent a superior legal basis for the claims to such water, no common law theory can support the Appellant's claim. For this reason alone, the decision of the lower court should be upheld.

It is helpful to note, however, that both the Appellant and Appellees use the water for agricultural production. Both parties intend to divert water in reasonable amounts for irrigation purposes. Qualitatively, their uses are identical. Whether the water is withdrawn from the ground or taken from a stream is a factual distinction without a moral or social difference. Accordingly, there is no "moral imperative" that might require the establishment of some preference to the method of water withdrawal.

B. HC Ground Water Is Not And Should Not Be Subject To The Prior Appropriation Doctrine.

The Nebraska Constitution, Article XV, § 6 established the prior appropriation doctrine with respect to Nebraska's natural streams. At oral argument, the Appellant suggested that, to the extent HC ground water is being withdrawn, the Appellees should be constitutionally subject to the prior appropriation doctrine. Placing HC ground water within the prior appropriation doctrine would indeed integrate the two legal doctrines and create the rational basis for determining which user is entitled to the water at issue. In concluding that HC ground water is
within the prior appropriation doctrine, however, this Court will fundamentally change Nebraska's water law.

The agency responsible for administration of the prior appropriation doctrine is the DNR. In the entire course of its 107-year existence, the DNR and its predecessor agencies have never judged HC ground water to be subject to the prior appropriation doctrine, nor have they ever sought to regulate ground water users on that basis. A state agency's implementation of statutes to which it holds enforcement authority is given weight. Vulcraft v. Karnes, 229 Neb. 676, 678, 428 N.W. 2d 505, 507 (1988) ("There is a general rule of statutory construction that the interpretation of a statute given by an administrative agency to which the statute is directed is entitled to weight.").

More importantly, this Court has never interpreted Article XV, § 6 to extend to HC ground water. Since this Court established the correlative rights doctrine for ground water over 70 years ago in Olson v. City of Wahoo, 124 Neb. 802,248 N.W. 304 (1933), it has consistently viewed ground water as being outside the jurisprudential scope of Article XV, § 6, even when the facts clearly showed the ground water at issue was in hydrologic connection to streamflow. See Metropolitan Utilities District v. Merritt Beach Co., 179 Neb. 783, 140 N.W. 2d 626 (1966). This Court should not, at this late date, be tempted to read new meaning into Article XV, § 6.

Following the lead of this Court, the Unicameral views Article XV, § 6 as being limited to the waters actually flowing in a stream. In addressing changes to the Act, the Unicameral reaffirmed the applicability of the correlative rights doctrine to HC ground water as recently as the 2004 Session. In the 2004 Session, the Legislature adopted LB 962 which amended the Act to specifically deal with HC ground water. If HC ground water is actually surface water within the meaning of Article XV, § 6, then the Unicameral was without authority to require such waters be administered in accordance with the correlative rights doctrine - yet that is precisely what the Unicameral did. As amended by LB 962, Neb. Rev. Stat. § 46-656.02 states, in pertinent part: "Every landowner shall be entitled to a reasonable and beneficial use of the ground water underlying his or her land subject to the provisions of Chapter 46, article 6, and the [Act] and the correlative rights of other landowners when the ground water supply is insufficient for all users." The Unicameral has required, and continues to require, HC ground water to be regulated outside of the prior appropriation doctrine. If HC ground water is judged to be constitutionally subject to the prior appropriation doctrine, then LB 962 must be unconstitutional. Because LB 962 and the Act itself were written by the Unicameral with the Court's prior rulings in mind, that cannot be so.

C. Adverse Economic and Social Consequences Will Follow A New Interpretation Of Article XV, § 6.

At this stage in the development of water resources in Nebraska, the Unicameral's decision to retain the dualistic system of rights by adopting LB 962 was wise and insightful. If HC ground water is to fall within the prior appropriation doctrine, the DNR will be required to: (1) order all existing ground water users who do not hold a surface water appropriation, to immediately cease pumping; (2) seek criminal prosecution of those who refuse to cease pumping; and (3) begin the process of adjudicating all ground water diversions to determine a rate of allowable pumping, lands upon which such water may be used and establish a priority date for each diversion. Within the context of western water law, this last action is referred to as a general stream adjudication.

Ordering existing ground water users to cease pumping would be required because unpermitted surface water diversions are illegal. See Neb. Rev. Stat. § 46-254. Diverting surface water without authority from the DNR is a Class II misdemeanor. Id. With over 150,000 registered wells (97,000 registered as irrigation) in Nebraska, such regulatory action would meet with overwhelming opposition. Moreover, if compliance with such an order were even possible, the economic impact on local economies would be devastating with literally millions of acres of land going, at least temporarily, from irrigation to dryland.

Land now valued and taxed as irrigated land would have to be re-assessed as dryland. This change would reduce tax revenues and cripple local governments and school districts now largely dependant upon property tax revenues. Moreover, agricultural lending institutions would face uncertain repayment on loans made for land purchases, irrigation equipment and general operations. Finally, municipal well field development and operation, already greatly restricted, would face enormous issues associated with existing operations and future funding. Clearly rural Nebraska would be especially hard hit.

The process of adjudicating ground water rights within the prior appropriation doctrine will also require an extraordinary effort by the DNR. With thousands of claimants, the process will take decades to complete and will cost Nebraska taxpayers millions of dollars in administrative expenses. In Arizona, for instance, alluvial ground water users have been the focus of the general stream adjudications to quantify water rights (Arizona law does not view all HC ground water as being within the prior appropriation doctrine). Between 1974 and 1994, "six large parties and one state agency have spent approximately $52 million on the litigation." In Search of Sub flow: Arizona's Futile Effort to Separate Groundwater From Surface Water, 36 Ariz. L. Rev. 567, 569 (1994).

While adjudicating ground water rights could have occurred 40 years ago when ground water resources in Nebraska were first being tapped, beginning that process now would simply be unworkable and devastating to rural Nebraska. The Unicameral studied these issues at great length when it considered LB 962. As a matter of public policy, the Unicameral wisely decided to honor the existing system of water rights. Accordingly, the Appellant's invitation to redefine hydraulically connected ground water as "surface water" within the meaning of the Nebraska Constitution, should be declined.

II. LB 962 PROVIDES AN APPROPRIATE REMEDY.

Legislative Bill 962 specifically focuses on hydraulically connected ground water. The Bill requires the Director of DNR to designate any "over appropriated" basins, subbasins or stream reaches on or before September 15, 2004. LB 962 § 53 (4)(a) and (4)(b). The Platte River basin upstream of Elm Creek, Nebraska - including the Pumpkin Creek basin - has already been declared "over appropriated" by DNR. When that designation occurs, an immediate stay on new uses of ground water and surface water will be instituted. LB 962 § 54 (1) and (2). The stays will remain in effect until an integrated management plan ("IMP") for the basin has been completed and implemented, except that an NRD can lift the stays during the planning process after a public hearing. LB 962 § 54 (5), (6), (8), (11), and (12).

The North Platte NRD voted to implement a temporary moratorium on new ground water wells, effective November 1, 2002. This moratorium included the Pumpkin Creek basin. The stays mandated by LB 962 will supersede the temporary moratorium imposed by the North Platte NRD. The stays in the Pumpkin Creek basin will remain in place until at least September 16, 2007 unless an IMP is developed first or the NRD lifts the stay after a public hearing. The stays could be extended up to 2009 upon agreement by the North Platte NRD and the DNR. Thus, further development in the Pumpkin Creek basin is unlikely to continue and has not occurred since November 1, 2002.

Legislative Bill 962 required the affected NRDs and DNR to jointly develop the IMP. In developing the IMP, the DNR and NRDs must consult and collaborate with irrigation districts, reclamation districts, public power and irrigation districts, mutual irrigation districts, canal companies and municipalities that rely on water from the affected areas in the development of the IMP. The goal of the IMP is to manage hydraulically connected ground and surface waters for the purpose of sustaining a balance between water uses and water supplies so that the economic viability, social and environmental health, safety and welfare of the basin can be achieved and maintained over the near and long term. LB 962 § 55 (2)(a).

The first incremental goal of the IMP will be to address the impact of streamflow depletions to surface water appropriations from water use initiated after July 1, 1997. To address those impacts, NRDs are empowered to use a wide array of controls. The NRD and DNR may also pursue voluntary efforts to offset stream flow depletive effects caused by ground water uses initiated before July 1, 1997. Thus LB 962 requires the DNR and NRD to address the impact of streamflow depletions due to ground water use and take voluntary measures to reduce those depletions.

When viewed as a whole, LB 962 addresses the overarching concerns raised by the Appellant - the integrated management of HC ground water relative to its impacts on streamflow. The Unicameral, however, did not make ground water users subservient to surface water appropriators, nor did it do the opposite. Instead, the Unicameral purposely chose to keep the two separate and distinct systems of water rights intact. LB 962 does not, however, create a property rights environment that will allow for tort claims as desired by the Appellant. To that extent, LB 962 does not provide the monetary remedy desired by the Appellant.

CONCLUSION

The Appellant does not have, nor did it ever have, a common law remedy. The Unicameral's recent enactment of LB 962 demonstrates a clear water management policy that will be circumvented if the Appellant is allowed to proceed with this case. The economic and social consequences of allowing the Appellant to proceed with its claim under any theory of law are harsh and must be avoided. The decision of the lower court should be upheld.

Respectfully submitted this 29th day of July, 2004.

NEBRASKA FARM BUREAU FEDERATION
Donald G. Blankenau
Nebraska Bar # 18528
FENNEMORE CRAIG, P.C.
1221 N Street, Suite 801
Lincoln, Nebraska 68508-2028
(402) 323-6200 - telephone
(402) 323-6210 - facsimile
dblankenau@fclaw.com

IN THE NEBRASKA SUPREME COURT
CASE NUMBER: S-03-000789

SPEAR T RANCH, INC.,

Appellant,

v.

MELVIN G. KNAUB, et al.,

Appellees.

The undersigned hereby certifies that the original and 16 copies of SUPPLEMENTAL BRIEF OF AMICUS CURIAE NEBRASKA FARM BUREAU FEDERATION and this CERTIFICATE OF SERVICE were filed with the Court this 29th day of July 2004. The undersigned further certifies that he caused to be served upon the following two copies of the aforementioned documents via first class mail, postage prepaid on this 29th day of July, 2004:

NEBRASKA FARM BUREAU FEDERATION

Donald G. Blankenau
Nebraska Bar # 18528
FENNEMORE CRAIG, P.C.
1221 N Street, Suite 801
Lincoln, Nebraska 68508-2028
(402) 323-6200 - telephone
(402) 323-6210 - facsimile
dblankenau@fclaw.com