Eureka Cty. v. Seventh Judicial Dist. Court, 407 P.3d 755 (Nev. 2017)

Eureka Cty. v. Seventh Judicial Dist. Court, 407 P.3d 755 (Nev. 2017) (holding: (i) that hearing a petition for writ mandamus was proper because addressing a due process issue promptly would favor judicial economy by clarifying notice requirements in a water rights curtailment action; (ii) that Nevada’s Constitution requires procedural due process for a show cause hearing that could determine curtailment of an individual’s junior water rights; and (iii) that others cannot adequately represent junior water rights holders because water rights are unique real property interests).

In September of 2011, Sadler Ranch purchased real property and water rights in Diamond Valley—an over appropriated area of Nevada.  Sadler Ranch claimed that because the ranch was established in the middle of the 19th century, its Diamond Valley water rights are pre-statutory, vested, and senior.  However, of the two springs on the ranch, one’s flow had diminished substantially, and the other’s flow had disappeared completely.  In 2014, Sadler Ranch petitioned for replacement water to compensate for the loss from its springs, but the State Engineer only awarded a small portion of the amount requested.  In April 2015, Sadler Ranch responded by petitioning the Seventh Judicial District to order that the State Engineer begin the proceedings for curtailment of junior water rights in the valley.  The State Engineer proposed making Diamond Valley a critical management area (“CMA”), and Sadler Ranch agreed to stay the proceedings until the area was officially designated a CMA.

However, upon realizing that the CMA designation would not alleviate its water dispute, Sadler Ranch reinstated proceedings by filing an amended petition.  The ranch requested an order either: (1) requiring the State Engineer to initiate curtailment; or (2) curtailing pumping because the State Engineer intentionally and knowingly refused to follow Nevada law.  The State Engineer filed a motion to dismiss.  The district court granted the motion to dismiss in part, but denied in part, holding that Sadler Ranch pleaded sufficient facts to conclude that the State Engineer abused his discretion in refusing to initiate curtailment.  The district court entered a writ mandamus requiring the State Engineer to the either initiate curtailment proceedings or, in the alternative, show cause as to why he had refused.

Subsequently, in a motion filed August 2016, the State Engineer argued that Sadler Ranch must give notice to all Diamond Valley water rights holders who may suffer the effects of the show cause hearing, and Eureka County joined the motion.  Sadler Ranch argued against the motion because a final order of curtailment, which requires notice, could not result from the show cause hearing, and that upon a final order of curtailment, the State Engineer, who keeps the appropriators records, must properly provide notice.  In October 2016, the district court denied the State Engineer’s motion.  The court concluded that the Constitution did not require due process until future proceedings that would determine the curtailment’s details, like “how” and “who.”  Furthermore, the district court concluded that the dozens of interveners in the initial proceedings adequately represented any parties in interest who did not receive notice.  Eureka County and the State Engineer filed a motion for reconsideration, and upon denial by the district court, Eureka County filed a writ petition to the Nevada Supreme Court.

The Court entertained the writ petition on the basis of its original jurisdiction.  The Court described how judicial economy favored addressing the due process issue early in proceedings and clarifying notice requirements regarding curtailment of water rights.  To compel an act required by law, the Court may use a writ of mandamus where the lower court used discretion arbitrarily or capriciously.  The Court chose to approach the writ as one of mandamus because it concluded that the district court exercised discretion in an arbitrary and capricious manner when it denied the State Engineer’s motion to compel notice.

The Court addressed the due process question de novo and determined that the Nevada Constitution required that all junior water rights holders receive notice prior to the show cause hearing.  The Court reasoned that the language in the order for the show cause hearing indicated that the result could immediately order the initiation of curtailment proceedings.  Upon such an order, the junior holders would only have the option to argue about a cut-off date, but no option to argue for no curtailment at all.  The Court held that the junior holders needed notice at a meaningful time in order to meet due process requirements.

Finally, the Court addressed the question of representation.  The district court held that Sadler Ranch need not provide notice to junior holders because those individuals would have adequate representation by the multiple interveners who already entered the proceedings.  The Supreme Court concluded that water rights are real property rights.  Because others cannot adequately represent individuals with ownership interest in unique forms of property and because real property rights are unique, the interveners could not represent the junior holders.  The Court concluded that due process required proper notification of the junior water rights holders so that they could adequately represent their own interests.

Accordingly, the Court ordered a writ mandamus to vacate the decision of the district court and directed the district court to order appropriate notice to all junior water rights holders before conducting the show cause hearing.

Sydney Donovan