S-03-000789

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 GROUNDWATER MANAGEMENT COALITION

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

Attorney for Amicus Curiae

TABLE OF CONTENTS

SUPPLEMENTAL BRIEF OF AMICUS CURIAE, NEBRASKA GROUNDWATER MANAGEMENT COALITION

INTRODUCTION

I. NEBRASKA LAW DOES NOT PROVIDE A COMMON LAW REMEDY FOR THE APPELLANT.
II. THE APPELLANT'S CLAIMS CAN SURVIVE ONLY IF THIS COURT REDEFINES "SURFACE WATER" TO INCLUDE HYDRAULICALLY CONNECTED GROUND WATER WITHIN THE MEANING OF THE NEBRASKA CONSTITUTION.
III. IF HC GROUND WATER IS SUBJECT TO THE PRIOR APPROPRIATION DOCTRINE, THIS COURT MUST DEFINE THE CONSTITUTIONAL LIMITATIONS OF SUCH WATER

CONCLUSION

TABLE OF AUTHORITIES

Metropolitan Utilities District of Omaha v. Merritt Beach Company 179 Neb. 783, 140 N. W. 2d 626 (1966)

Statutes

Neb. Const. Art. XV, § 6
Neb. Rev. Stat. § 46-656.01 et seq

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 GROUNDWATER MANAGEMENT COALITION

In accordance with this Court's Order of April 21, 2004, the Nebraska Groundwater Management Coalition ("Coalition") submits this Supplemental Brief. This Supplemental Brief will address two of the four issues identified by this 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 Coalition takes no position relative to the issues related to the doctrine of primary jurisdiction.

INTRODUCTION

The Appellant had no common law remedies before the passage of LB 962 and has none now. Under any theory sounding in tort, the Appellant can only prevail if its property right to use mutually claimed water is legally superior to the property rights of the Appellees. In this case, the Appellees possess property rights entitling them to the full use of the water. The Appellees exercised their rights to use ground water in full compliance with the law created by this Court and the Unicameral. Because the Appellees acted within the scope of their property rights, the only means to conclude the Appellant's right is superior to that of the Appellees, is to redefine hydraulically connected ground water ("HC ground water") as being the water of a natural stream within the context of Neb. Const. Art. XV § 6. Only by placing the Appellant and Appellees within the same property rights environment does a basis exist to determine whether the property right of one party is superior to those of the other.

Redefining HC ground water to fit within the prior appropriation doctrine is, at this time in our history, without legal support and socially destructive. Such action will render much of LB 962 unconstitutional and greatly impair the viability of the Nebraska Ground Water Management and Protection Act. LB 962 revised the Nebraska Groundwater Management and Protection Act ("Act"), Neb. Rev. Stat. § 46-656.01 et seq., allowing for more extensive and pro- active management of ground water. The Act was created by the Unicameral to manage all ground water, but most of LB 962 focuses on hydraulically connected waters. Allowing the Appellant to proceed with its case will undermine this structure by shifting the management of ground water connected to streamflow from natural resources districts under a correlative rights doctrine, to the state pursuant to the prior appropriation doctrine.

Not only would such a change in the law frustrate the efforts of the Unicameral but it would unleash an unwieldy, expensive system of water management on Nebraskans. The costs to individual water users as well as to taxpayers generally are immense and must be considered. Lending institutions, local governments, school districts and others will experience significant economic hardships in the face of such change.

I. NEBRASKA LAW DOES NOT PROVIDE A COMMON LAW REMEDY FOR THE APPELLANT.

In answer to the Court's question of "[w]hether the Nebraska Groundwater Management and Protection Act or LB 962 have abrogated any common law remedies that the appellant might have," the answer is "no." The answer is "no" because the Appellant never possessed a common law remedy and the passage of LB 962 simply reinforces that conclusion.

Although it was not so pled, the Appellant's cause of action is more accurately seen as one centering on the concept of interference. Stated more precisely, the Appellant contends that the Appellees' diversion of water from their wells has interfered with its ability to divert water from Pumpkin Creek.

Whether a common law remedy exists for such interference, depends upon the respective property rights to divert water held by each party. Under any theory of common law, the Appellant can prevail only if its property right to use water creates an entitlement to receive the water vis-a-vis competitors. Only if the Appellant's property right to the water is superior to the property rights held by the Appellees, can the Appellant proceed with this case.

As explained in the Coalition's earlier brief, this Court and the Unicameral have never indicated that the right to use surface water is superior to the right to use ground water. See Brief of Amicus Curiae, Nebraska Ground Water Management Coalition at 3-10. Prior to the adoption of the Nebraska Ground Water Management and Protection Act, the Court considered the ground/surface water jurisprudential dichotomy relative to HC ground water in Metropolitan Utilities District of Omaha v. Merritt Beach Company, 179 Neb. 783, 140 N.W. 2d 626 (1966). In that case, the court unambiguously stated: "In situations whereby the right of the riparian landowner to take percolating [ground] waters which interfere with the prior appropriation rights of persons on a nearby stream, the law of this state is silent." Id. 795, 634. Merritt Beach illustrates that ground and surface water property rights exist in two entirely distinct jurisprudential worlds.

Since Merritt Beach, the Unicameral has steadfastly maintained the separate and distinct systems of water law. The Act represents the most significant effort by the Unicameral to manage ground water within the scope of the correlative rights doctrine. That doctrine does not distinguish between ground water in hydraulic connection to stream flow and other ground water. Over time, the Unicameral modified the Act to allow for the integrated management of ground and surface waters while still honoring the property rights associated with each. The Unicameral's adoption of LB 962 during the 2004 Legislative Session evidences the continuation of this policy and the intent of the Unicameral to manage ground and surface waters in a conjunctive manner without a preference for either. Legislative Bill 962 specifically addresses the management of HC ground water within the correlative rights doctrine to manage for streamflow. The Bill did not elevate the right to use surface water appropriations above the right to use ground water.

Because the Unicameral continues to maintain that surface water rights are not superior to ground water rights, the Appellant's claims cannot survive under any common law theory.

II. THE APPELLANT'S CLAIMS CAN SURVIVE ONLY IF THIS COURT REDEFINES "SURFACE WATER" TO INCLUDE HC GROUND WATER WITHIN THE MEANING OF THE NEBRASKA CONSTITUTION.

At oral argument, the Appellant hinted that HC ground water should be redefined as being the water of a natural stream, within the meaning of Neb. Const. Art. XV, § 6. Defining HC ground water in this way would move it from the correlative rights doctrine and into the regulatory sphere of the prior appropriation doctrine. Fundamentally, this move would render most of LB 962 unconstitutional since it regulates such water without regard for the prior appropriation doctrine.

In addition, if HC ground water is legally viewed as surface water, the Appellees' pumping of ground water would constitute an illegal diversion - one occurring without a permit from the Nebraska Department of Natural Resources ("DNR"). Such unpermitted diversions of surface water would allow downstream surface water permit holders to: (1) require the DNR to take regulatory or criminal proceedings to prohibit the pumping of ground water; and (2) pursue common law remedies because the unpermitted users hold no property rights.

The 107-year history of how Article XV, § 6 has been administered by the state, the prior rulings of this Court and the statutes adopted by the Unicameral governing HC ground water, combine to show the Appellant's theory is without merit. Moreover, the Appellant's theory requires the Court to exponentially expand the regulatory authority of the DNR and to substantially narrow the regulatory authority of Nebraska's natural resources districts. Again, as explained in the Coalition's initial brief, the DNR itself has never sought to apply the prior appropriation doctrine to ground water diversions beyond 50 feet of the banks of a stream. See Brief of Amicus Curiae, Nebraska Ground Water Management Coalition at 3. Perhaps of greatest significance, the economic and social consequences of such a legal shift are staggering.

Redefining HC ground water as the water of a natural stream, within the meaning of Neb. Const. Art. XV, § 6, will require the DNR to: (1) order most ground water diversions across the state to cease; and (2) begin the process of adjudicating all such diversions in an effort to provide an allocation and affix a priority date to each user. The first action will result in immense economic hardships to irrigators and agricultural lending institutions. Lands now irrigated would go out of production, impacting not only the individual farmer by reducing his/her income, but causing a significant decline to their real property values. Lands now assessed as "irrigated" would need to be revalued as "dryland." Property revaluation will result in diminished tax revenues causing collateral harm to local governments and schools dependant upon property tax revenues.

Ordering existing ground water users to cease diversion would also, in theory, make it impossible for many municipal and public water suppliers to provide necessary water to their consumers. Although some accommodation would need to be made for these supplies, public water suppliers and cities would face serious issues related to the existing and future funding of their projects. Public water suppliers routinely fund the construction of water supply infrastructure construction through public and private bond initiatives. The fate of existing bonds and future development would be uncertain at best.

The second action will result in a lengthy, complex and immensely expensive legal process that will encompass the entire state. Not only will the Legislature be forced to appropriate funds for an extended period of time for this process to be completed but individuals will incur substantial legal costs to advance their claims. In western water jurisprudence, the process of quantifying and establishing priority dates for existing water uses is referred to as "general stream adjudications." In other states, where general stream adjudications have been initiated, decades of litigation have followed, at a staggering cost to water uses and taxpayers. In Arizona, for example, general stream adjudications have focused on water users who draw ground water from alluvial deposits next to streams (HC ground water beyond the alluvium is not subject to the prior appropriation doctrine and is not subject to the adjudication). Between 1974 and 1994, "six parties and one state agency have spent approximately $52 million on the litigation." In Search of Subflow: Arizona's Futile Effort to Separate Groundwater From Surface Water, 36 Ariz. L. Rev. 567, 569 (1994). Other states attempting to integrate HC ground water to the prior appropriation doctrine have met with similar results.

III. IF HC GROUND WATER IS SUBJECT TO THE PRIOR APPROPRIATION DOCTRINE, THIS COURT MUST DEFINE THE CONSTITUTIONAL LIMITATIONS OF SUCH WATER.

The Appellant's theory forces this Court to confront the practical question of: To what degree of hydraulic connectivity is ground water subject to the prior appropriation doctrine? That is, if HC ground water is constitutionally the water of a natural stream, the hydrologic scope of that constitutional definition must be established. Delineating the scope of constitutional surface water is essential before the DNR can engage in a general stream adjudication or other regulatory efforts.

For instance, if after 10 years of pumping a well, 10% of the water withdrawn is or could have been stream flow, is there an appropriate degree of connectivity to subject that well owner to the prior appropriation doctrine? If, after 100 years of pumping, only 1 % of the water is or could have been from stream flow, would this be the appropriate standard? The Appellant's theory suggests an answer closer to the latter. Whatever the answer to this question, it would need to come from this Court for the DNR to implement the newly articulated Constitutional standard. Clearly this was not intended, or even contemplated, when Article XV, § 6 was adopted by the people of Nebraska. This very practical issue illustrates the folly of permitting the Appellant to proceed with its claim.

CONCLUSION

The Appellant does not have, nor did it ever have, a common law remedy to the problem it faces. The fact is, ground water and surface water are legally isolated from one another. The Unicameral desires this legal isolation to continue and the history of Nebraska water law allows this Court to so do. Accordingly, this Court should decline the Appellant's invitation to redefine surface water within the meaning of Nebraska's Constitution and uphold the decision of the lower court.

Respectfully submitted this 29th day of July, 2004.

NEBRASKA GROUNDWATER MANAGEMENT COALITION
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

IN THE NEBRASKA SUPREME COURT
SPEAR T RANCH, INC.,
Appellant,
v.
MELVIN G. KNAUB, et al.,
Appellees.
CASE NUMBER: S-03-000789

The undersigned hereby certifies that the original and 16 copies of SUPPLEMENTAL BRIEF OF AMICUS CURIAE NEBRASKA GROUNDWATER MANAGEMENT COALITION 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: