IN THE SUPREME COURT FOR THE STATE OF NEBRASKA

SPEAR T RANCH, INC.,

APPELLANT,

vs.

MELVIN G. KNAUB, ET AL.,

APPELLEES

APPEAL FROM THE DISTRICT COURT OF MORRILL COUNTY, NEBRASKA

BEFORE THE HONORABLE PAUL D. EMPSON

ADDITIONAL BRIEF OF AMICUS CURIAE

NEBRASKA STATE IRRIGATION ASSOCIATION

LeRoy W. Sievers - #15577
KNUDSEN, BERKHEIMER, RICHARDSON & ENDACOTT
1248 "O" Street, Suite 1000
Lincoln, Nebraska 68508
(402) 475-7011-telephone
(402) 475-8912 – facsimile
E-mail: lsievers@knudsenlaw.com
Attorney for Amicus Curiae

TABLE OF CONTENTS

TABLE OF CONTENTS
TABLE OF AUTHORITIES
ARGUMENT

I. INTRODUCTION
II. DOCIRINE OF PRIMARY JURISDICTION DOES NOT APPLY TO THIS CASE
III. ADOPTION OF THE GROUND WATER MANAGEMENT AND PROTECTION ACT AND THE ADOPTION OF LB962 DO NOT AFFECT THE RIGHT OF SPEAR T RANCH TO PURSUE ITS CLAIMS
IV. THE ADOPTION OF LB962 HAS NO EFFECT ON THIS APPEAL
V. NEITHER THE GROUND WATER MANAGEMENT AND PROTECTION ACT NOR LB962 ABROGATED ANY COMMON LAW REMEDIES NOR PROVIDE AN ADEQUATE REMEDY AT LAW

CONCLUSION

PROOF OF SERVICE

TABLE OF AUTHORITIES

CASES

Abboud v. Papio-Missouri River Natural Resources District, 253 Neb. 514, 571 N.W. 2d 302 (1997)

Bamford v. Upper Republican Natural Resources District, 245 Neb. 299, 512 N. W.2d 64 (1994)

Central Platte Natural Resources District v. State of Wyoming, 245 Neb. 439, 513 N. W .2d 847 (1994)

Hornig v. Martel Lift Systems. Inc., 258 Neb. 764, 774, 606 N.W. 2d 764, 772 (2000)

In re: Clifford M, 261 Neb. 862, 626 N.W. 2d 549 2001)

In re: Battiato, 259 Neb. 829, 613 N.W.2d 12 (2000).

Olson v. City of Wahoo, 124 Neb. 802, 248 N.W.2d 304 (1933)

Paulsen v. Courtney, 202 Neb. 791, 277 N.W. 2d 233 (1979)

CONSTITUTIONAL PROVISIONS CITED

Article I, Section 21, Constitution of Nebraska

ARGUMENT

I. INTRODUTION

The Court in its Order of April 21, 2004, sustained Appellee's Motion for Additional Argument Further, the Court in its Order requested that four issues be addressed Briefs have been submitted by the Appellant and a Consolidated Supplemental Brief was submitted by the Appellees. To some extent, the four issues identified by the Court have been addressed by the parties and to some extent they have been ignored. This Amicus respectfully argues that for the reasons set forth in this brief, the doctrine of primary jurisdiction does not apply in this case. Further, in light of the adoption of the Ground Water Management and Protection Act and the adoption of LB962, primary jurisdiction is still inapplicable to the issues in this case. Also, the adoption ofLB962 has no effect on the appeal in this case. Finally, the Nebraska Ground Water Management and Protection Act and LB962 have not abrogated any common law remedies that the Appellant may have had and does not provide an adequate remedy at law. Each of the issues identified by the Court will be briefly addressed in turn.

II. THE DOCTRINE OF PRIMARY JURISDICTION DOES NOT APPLY IN THIS CASE.

As noted in both the brief of the Appellant and the Appellees, the doctrine of primary jurisdiction was addressed by this Court in the case In Re: Battiato, 259 Neb. 829,613 N.W. 2d 12 (2000). As noted by the Court:

The primary jurisdiction doctrine applies whenever enforcement of a claim, originally cognizable in the courts, requires the resolution of issues that have been placed within the special competence of an administrative body in accordance with the purposes of a regulatory scheme. Whether the purposes of the administrative act require that the administrative agency should first pass on a question depends on whether the question raises issues of policy that should be considered by the administrative agency in the interest of uniformity and administrative expertise …

The nature of the controverted question and the nature of the inquiry necessary for its solution are the determining factors in regard to application of the doctrine of primary jurisdiction.
Id. at 837

From the foregoing, it is important to recognize that several inquiries have to occur. First, is the issue that is to be decided one that should go before an administrative body? In this case, the argument presented by the Appellees is that the request by the Appellant for damages and an injunction should have first been considered by the North Platte Natural Resources District. However, the North Platte Natural Resources District is not an administrative body but instead is a political subdivision of the State. Secondly, for purposes of the administrative act, the NRD does not need to review the action in the interest of uniformity and administrative expertise. The reason it does not is that the relief sought by the Appellant, i.e. damages and an injunction, are not the type of relief that is capable of being granted under the statutes providing authority to the natural resources district. Thus, there is no administrative act that allows, let alone requires, the NRD to pass upon the question of damages and injunction. Finally, the nature of the controverted question and the nature of the inquiry in this instance require a determination of whether or not damages were allegedly sustained by the Appellant. The nature of the question of whether or not damages were sustained and how that should be calculated are not topics that an NRD has any particular expertise in determining. Thus, the issue of primary jurisdiction should be resolved on the premise that it does not apply to the issues raised by the Appellant in the District Court

III. THE ISSUE OF PRIMARY JURISDICTION, AS IT RELATES TO THE ISSUES RAISED IN THIS CASE, IS NOT RESOLVED ANY DIFFERENTLY IN LIGHT OF THE GROUND WATER MANAGEMENT AND PROTECTION ACT OR THE RECENT ADOPTION OF LB962.

The adoption of the Ground Water Management and Protection Act and LB962 have given explicit authority to the state's natural resources districts that they did not previously possess. It is possible to catalog all the additional authorities granted to the natural resources districts but in doing so, it is apparent that no where have the natural resources districts been granted the authority to award damages to individuals who have been harmed as a result of the alleged actions of other water users. The awarding of damages and the granting of injunctions is reserved to the courts. In large measure, it bas been suggested that one of the purposes of the Ground Water Management and Protection Act and LB962 includes granting the natural resources districts authority to manage the use of both interrelated and non-interrelated ground water in Nebraska. Unquestionably that is true. One would hope that if the NRDs are able to use the authority granted to them that in the future conflicts over the use of the state's interrelated ground water and surface water resources would be reduced. However, whether they are reduced or not, the courts still are the means for determining whether or not an individual has been damaged by the actions of another individual in relation to the use of water.

More significantly, in the case before this Court, the Appellant is requesting to be compensated for damages that have already occurred The issue is not whether or not in the future, as a result of changed water management due to actions by the natural resources district, will the Appellant receive the surface water that it historically received undiminished by the actions of the Defendants. Rather, the question is whether the Appellant will be compensated for actions that have already occurred and damages that have already allegedly resulted from those actions. The issue is not whether or not in allocating a certain number of acre inches to all ground water users which results in no water for the Appellant, has the NRD acted fairly and appropriately. The issue before the court is whether or not the Appellant was damaged by the actions of the Defendants. As a consequence, whether or not the North Platte Natural Resources District has adopted a ground water management plan or what it contains is irrelevant. Neither the Ground Water Management and Protection Act nor LB962 affords any means for the Appellant to obtain the relief that it sought before the District Court in this case. As a consequence, the issue of primary jurisdiction is unaffected by the adoption of the Ground Water Management and Protection Act and LB962

IV. THE RECENT ADOPTION OF LB962 HAS NO EFFECT ON THE APPEAL IN THIS CASE.

In considering the possible effect of the adoption of LB962, there are several categories of information to consider. Both the legislative history and case law demonstrate that in this instance, LB962 has no effect on the appeal of this case.

The Legislative history of LB962 is quite instructive. First, the Statement of Intent for LB962 dated January 21, 2004 includes, "I believe this is the first step in the evolution of developing good water policy for the State of Nebraska. "Committee Records LB962 Year 2004 Introducer's Statement of Intent. This same language is repeated in the testimony of Senator Schrock, Chairman of the Natural Resources Committee and the introducer of the bill. Transcript of Committee on Natural Resources, January 21, 2004, page 30 (hereinafter "Committee Transcript" or "C.T”). Many of those who appeared at the committee hearing and testified in favor of the bill also noted that it represented only a first step. See for example, testimony of Clayton Lukow, Water Policy Task Force member: "If LB962 is enacted have we solved all of our water resources problems? Certainly not. It is not a panacea; it is not a cure-all, nor should we expect that future conflicts will forever evaporate. . . What I do believe that it will do is provide a foundation upon which to build future water legislation C.T. p. 73) Dick Mercer, Water Policy Task Force member: "Is LB962 perfect? No. Will it be the complete answer to all water problems in the state? No. But it is an excellent good start." (C.T. p. 84) Gary Mader, Water Policy Task Force member employed by the City of Grand Island: "So I think the bill is a start. It is not the end-all. I would anticipate that there will be years of discussions, programs, plans, and probably future legislation to continue to carry this process forward." (C.T. p. 89) Don Kraus, Water Policy Task Force member and Manager of Central Nebraska Public Power and Irrigation District: "Today, Central's water supply is fairly jeopardized as a consequence of existing ground water development and use in the central and western Platte River Basin and the ongoing drought. Central's own estimate that ground water use deprives Central of at least 100,000 acre-feet of water each year. Work by others suggest the impact could be larger. Without these depletions from ground water development it is possible that Lake McConaughy would be considerably higher. At Central, we believe that the proposed legislation is a step in the right direction, but does not go far enough. There is little, if anything, in the near-term that would address impact to the water supply for McConaughy and Central's customers. Furthermore, the legislation does not specifically protect the rights of senior appropriators based on the doctrine of prior appropriation as required by the Constitution of the State of Nebraska.” (C.T. p. 107) Duane Hovorka, Executive Director of the Nebraska Wildlife Federation: "We (the Nebraska Wildlife Federation) believe the legislation is a good first step, but not the only step needed to modernize Nebraska’s water laws, and to better protect Nebraska’s natural resources." (C.T. p. 124) It was thus recognized by Water Policy Task Force members and supporters of LB962 that it is only the start of needed legislation.

It is also critical to note that support for LB962 was conditioned by the Water Policy Task Force upon the bill receiving full funding and funding from a dedicated source. How critical was full funding? Roger Patterson, Director of the Department of Natural Resources, stated: "Funding will be necessary and essential for the proposed program if we are to be successful in avoiding future conflicts, as well as dealing with current inequities between ground water and surface water users." (C.T. p. 35) Also, Patterson said: "The Task Force was very adamant that water is so essential to agriculture and the environment, in the industry, and human health and well-being, and just the overall viability in the state that we think some sort of dedicated funding is appropriate." (C.T. p. 39) Others who testified in support of the bill echoed those same sentiments. See Jim Meismer (C.T. p. 80); Dave Sands (C.T. p. 87); Gary Mader (C.T. pp. 89-90); Don Kraus (C.T. p. 106); Duane Hovorka (C.T. pp. 125-6). Some were quite explicit in their comments. For instance, AI Schmidt, a member of the Water Policy Task Force and current president of the Nebraska State Irrigation Association, stated: “In closing, I guess I would reiterate what everyone else has said. I think it's imperative that we have the adequate funding for this ... to enact this legislation and the integrated management plans involved in it without it … passage of the bill without funding it accomplishes actually nothing I am afraid … “ (C.T. 13) Tom Schwarz, another member of the Water Policy Task Force, testified: "I would say with regard to the Task Force legislation, specifically, I stated at the next to last Task Force meeting that if the legislation was not going to be fully funded with dedicated funding, that I would vote to oppose the bill going forward to block consensus, and I still feel that way. I would prefer if the bill is not going to be funded that we didn't pass it because it is very dependent on that funding. The Task Force looked at regulation to fix the problem and it looked at funding and we opted to go the funding route … " (C.T. p. 169)

From testimony before the committee, support for the bill was premised upon it receiving dedicated and full funding because the legislation is premised upon spending money rather than regulation to assure equity among water users. Thus, unless LB962 received dedicated and full funding, it would be insufficient from a regulatory standpoint to adequately address existing problems solely on a regulatory basis.

When LB962 went to the floor of the Legislature, several things happened. First, dedicated funding through sales tax proceeds going into a trust fund was defeated. See Floor Debate (hereinafter F.D.), LB962, 2004 Legislative Records pp. 10643-10644. Senator Friend also acknowledged on the floor of the Legislature that the funding provided was not adequate based upon what was said by the Governor, the Natural Resources Committee and most of the Water Policy Task Force members. (See F.D. pp. 10720-10721) Certainly Senator Schrock believed that full funding was necessary. As he said: "And if it doesn't have funding, it's not going to work ... If it isn't there, it doesn't work ... The task force wanted $4.8 million the first year and there was quite a discussion about whether we should continue with the provision of the task force if only $2.5 million was going to be allotted, because after the hearings in the Revenue Committee about the dedicated sales tax source, I told them I says this isn't going to happen." (F.D. pp. 10686-7) Also, Senator Wehrbein, chairman of the Appropriations Committee, said: "The task force believes that adequate funding is essential if the proposed program is to be successful both in avoiding such conflicts and in addressing current inequities between surface water and ground water." (F .D. p. 10688) So what happened? The Legislature appropriated one million dollars from the Nebraska Environmental Trust Fund and 2.5 million dollars was transferred from the Petroleum Release Fund for one year's funding. (See F.D., LB962, p. 7R) As a consequence of the foregoing, support for the bill, which was premised upon dedicated and full funding was effectively eliminated as a result of the failure to provide the funding requested by the Water Policy Task Force and the failure to provide a dedicated source of funding. Although LB962 may be a step in providing more explicit directions in how water management plans could be developed, it was not envisioned as a complete solution to the problems. Moreover, without what was termed as required funding, many expressed a lack of support and a belief that it would fail to adequately address existing problems.

It is also interesting to note that relative to the possible effect of the adoption of LB962 on the current litigation, David Cookson, Assistant Attorney General, was asked by Senator Jones his opinion on whether or not the adoption of the bill would help on the litigation on Pumpkin Creek. His response: "It's not going to help us specifically on that litigation. That litigation is already on a path that is going to be resolved by the courts one way or the other." (C.T. p. 183) This Amicus has not seen the Attorney General's brief that may be submitted at this point, but assuredly it cannot take a position inconsistent with the testimony of one of its Assistant Attorney Generals. From all of the foregoing, neither the law, the supporters and sponsors of LB962, nor counsel for the State believed that LB962 as adopted would address the problems at the core of this litigation.

V. NEITHER THE NEBRASKA GROUND WATER MANAGEMENT AND PROTECTION ACT NOR LB962 HAVE ABROGATED ANY COMMON LAW REMEDIES NOR DO THEY PROVE AN ADEQUATE REMEDY AT LAW FOR THE APPELLANT.

Essentially, Appellees have responded to the Court's inquiry regarding the abrogation of common law remedies by saying that the Appellant had no such rights and consequently, they did not respond substantively to the Court's inquiry. (Consolidated Supplemental Brief of Defendant-Appellees, pp. 44-48) The case law is clear and unequivocal, however. As this Court has consistently held: "It is, however, a recognized rule of construction that statutes which effect a change in the common law or take away a common law right should be strictly construed, and a construction which restricts or removes a common law right should not be adopted unless the plain words of the act compel it." Paulsen v. Courtney, 202 Neb. 791, 794, 277 N.W.2d 233, 235 (1979). No where in LB962 is there language which states that it is seeking to eliminate the right of surface water users to obtain compensation from ground water users that are taking water that otherwise would be available to an earlier or "senior" surface water appropriator. Perhaps one of the reasons that such language is absent is the recognition by the drafters of LB962 that had such language been included in the act it would either have had to be declared unconstitutional or else the State would have been legally obligated to pay compensation to the surface water right appropriators whose property was taken from them through the enactment of LB962. See Nebraska Constitution, Article I, Section 21.

In addition, in this instance, the Appellant is arguing that under the common law it had the right to pursue its claims against the Appellees. Under the circumstances of this case, if Appellees' argument is correct, to suggest that LB962 has eliminated the common law right of conversion or nuisance, would result in a substantive change in the law. As this Court has previously noted, substantive changes are generally not given retroactive effect unless the Legislature has clearly expressed an intention that the new statute be applied retroactively. See In re Clifford M, 261 Neb. 862, 868, 626 N.W.2d 549, 556 (2001) and Abboud v. Papio-Missouri River Natural Resources District, 253 Neb. 514, 519, 571 N.W. 2d 302, 306 (1997). As a consequence, absent an explicit statement that the statutes were to operate retroactively, LB962 can only have a prospective application.

In this case, the Appellant has asserted that the Appellees should be liable in damages in essence because they allegedly used water that was historically used by the Appellant under its surface water right. Appellant's contention is that the more recent in time or "junior" ground water users have taken water and used it for their own benefit instead of allowing that water to come to the Appellant and be used as it has historically. As this court noted in Central Platte Natural Resources District v. State of Wyoming, 245 Neb. 439, 451, 513 N.W. 2d 847, 857-8 (1994) ".. .the relative rights of those using ground water and those using surface water are often unclear. The courts can begin to give outlines and shape to these rights, but only in a case-by- case, piecemeal fashion, and only when those rights are brought into direct conflict." This is a case that brings those rights into direct conflict. Now is the time for this Court to clearly define the scope of surface water rights.

If the Court declines the Appellant's request for a recognition of protection of its state granted water right, the consequences will be far reaching. For instance, the Appellant has asserted that it has been substantially damaged as a result of the use of water that previously came to it pursuant to its state granted surface water right. Appellant asserts that the ground water users are now using that water and that they are in water law terminology “junior" or more recent in time and, thus, have an "inferior" right to the earlier granted surface water right. As noted earlier in this brief, Central Nebraska Public Power and Irrigation District has presented testimony to the Natural Resources Committee that by its analysis, it is loosing more than 100,000 acre feet per year in inflows to Lake McConaughy as a result of junior upstream ground water users taking water that historically was made available to Lake McConaughy.

The consequences of not recognizing and protecting the validity of surface water appropriations, however is more far reaching than either the consequences to the Appellant or Central Nebraska Public Power and Irrigation District. In 2001, the irrigation districts supplied with storage water from the reservoirs in the Republican River Basin in Nebraska and Kansas signed new 40-year contracts with the U.S. Bureau of Reclamation. The contracts were approved by the District Courts in Nebraska, as well as District Courts in Kansas where the Kansas Bostwick and Almena Irrigation Districts exist. Under the contracts, the irrigation districts have obligations to repay the Federal Government for their share of the cost of construction of the Federal Reservoirs including Harlan County Reservoir, Swanson Reservoir, Enders Reservoir, Lovewell Reservoir, Sebelius Reservoir, Harry Strunk Lake and Hugh Butler Lake. It is inconceivable that these irrigation districts will be able to repay the Federal Government without the ability to deliver water to their irrigators. In the last several years, however, H&RW Irrigation District, Frenchman Valley Irrigation District, Frenchman-Cambridge Irrigation District, and most recently, Nebraska Bostwick Irrigation District have seen their ability to deliver water to members of their irrigation districts either eliminated (all except Frenchman-Cambridge Irrigation District) or reduced to a minimal delivery to only a portion of the district (Frenchman-Cambridge Irrigation District). Although inflows to the reservoirs are certainly affected by the drought, they are also adversely affected by ground water pumping as has been recognized by the Special Master in Kansas v. Nebraska and as recognized by the State of Nebraska in its settlement of that lawsuit. Thus, the recognition that ground water use is affecting surface water flows is indisputable in the Republican River Basin. Some of the irrigation districts in the Republican Basin have had to layoff staff. Others are under increasing pressure to do the same. The prospect of financial ruin for the districts themselves is real and the landowners would still be left with the obligation to pay the Federal Government.

The State of Nebraska has denied that it has any obligation to surface water right holders in the companion Spear T case that is now before this Court. (Case No. S-04-000639, Spear T Ranch, Inc. v. Nebraska Department of Natural Resources) Clearly surface water right permit holders are faced with a daunting problem of having to pay, in some cases, hundreds of thousands of dollars of obligations to the Federal Government with a lack of water to generate the revenue to pay the obligations and no recourse to either obtain the water or receive compensation for the loss of water. This problem is not limited to a few irrigation districts. The possibility of similar problems face irrigation districts in other river basins in Nebraska.

Under the common law, protection of the surface water right could exist in the explicit fact situation presented in this case. As explained in our earlier brief, ground water users under the common law are required to account for the "substantial rights (of others) to the waters." Olson v. City of Wahoo, 124 Neb. 802, 811, 248 N.W. 2d, 304 (1933). See also Bamford v. Upper Republican Natural Resources District, 245 Neb. 299, 512 N.W. 2d 64 (1994) and Brief of Amicus Nebraska State Irrigation Association, pp. 8-10. Expressly recognizing the "substantial right" of surface water irrigators is appropriate in the context of this case. Professor David Aiken has written an article to be published in a special water issue of the Nebraska Law Review honoring the late Professor Norm Thorson. An advance copy of the article provides an historical analysis of case law across the west in which tributary ground water is considered a part of the surface water supply as case law has evolved. Having been presented squarely with the issue in this case, this is an appropriate time for the Court to declare that the common law in Nebraska provides protection to surface water permit holders.

Lastly, the Court has also asked the parties to address the issue of whether LB962 provides an adequate remedy at law. This Court has said: "The term "adequate remedy at law" refers to a remedy which is plain and complete, and as practical and efficient to the ends of justice as is the equitable remedy." Hornig v. Martel Lift Systems. Inc., 258 Neb. 764, 774, 606 N. W. 2d 764, 772 (2000). In this case, LB962 cannot constitute an adequate remedy at law because it cannot make the plaintiff whole. LB962 contains no provisions to right the alleged wrong that has already occurred. Instead, LB962 provides a mechanism which allows water management plans to be developed and implemented which could prevent damages from occurring at some point in the future. Moreover, as noted previously in this brief, LB962 is not the end of legislation but the beginning. Also, because it was not adequately funded, it cannot do what was intended. For all these reasons and others, LB962 does not constitute an adequate remedy at law.

CONCLUSION

The court has requested briefs on issues set forth in its Order of April 21, 2004. The resolution of those issues, as well as the issues presented in the original briefs, has the potential to either provide real protection to the property interests of surface water right holders or to leave such rights in very real peril. For the reasons set forth in this brief, the Amicus Nebraska State Irrigation Association respectfully requests that the Court recognize the value and integrity of surface water rights and to give them the ability to assure their continued viability into the future.

DATED this 29th day of July, 2004

Respectfully submitted,

NEBRASKA STATE IRRIGATION ASSOCIATION, Amicus Curiae

By: KNUDSEN, BERKHEIMER, RICHARDSON & ENDACOTT, LLP
1248 "0" Street, Suite 1000
Lincoln, Nebraska 68508-1474
(402) 475-7011
By: LeRoy W. Sievers, #15577

PROOF OF SERVICE

STATE OF NEBRASKA
COUNTY OF LANCASTER

LEROY W. SIEVERS, being first duly sworn upon his oath, deposes and states as follows:
1. I am one of the attorneys for Amicus Curiae in the above matter.
2. On July 29,2004, I caused to be mailed two copies of the Brief of Amicus Curiae to the following:

FURTHER AFFIANT SAYETH NOT.

Leroy W. Sievers, #15577

SUBSCRIBED and sworn to before me this 29th day of July, 2004.

Cheryl Griffith, Notary Public