Lingenfelter v. Lower Elkhorn Natural Res. Dist., 881 N.W.2d 892 (Neb. 2016) (holding that (i) a farmer’s uncontroverted claim that he had received approval to irrigate his land did not constitute approval by a Natural Resource District to irrigate those lands; (ii) a Natural Resources District’s cease-and-desist order against the farmer was proper because the district created a rule that prohibited farmers from irrigating undesignated land without obtaining approval; and (iii) the district’s rules of land designation were not arbitrary and capricious and did not violate the farmer’s due process or equal protection rights).

The Nebraska Ground Water Management and Protection Act (“Act”) created twelve Natural Resources Districts (“NRDs”) within the state. NRDs have authority to regulate ground water. The NRDs’ legislative purpose is to develop, manage, utilize, and conserve groundwater and surface-water. NRDs set limits on total ground water usage, require practices that promote the efficiency of ground water usage, and “limit or prevent the expansion of irrigated acres.” This authority allows NRDs to protect groundwater quantity and quality. State legislators deemed this protection as “essential to the general welfare.” Since the Act’s adoption in 1975, NRDs have gained increasingly more authority to regulate Nebraska’s groundwater. By 1996, the NRDs’ authority was extended to regulate surface water that was hydrologically connected to groundwater.

The Lower Elkhorn Natural Resources District (“District”) is the NRD that regulates groundwater in northeastern Nebraska. The District has the authority to require reports and issue cease-and-desist orders in order to “administer and enforce” the Act and its goals. The District designates two types of lands that may be irrigated. First, it designates “Historically Irrigated Acres” as lands that were irrigated for at least one year between 1999 and 2008 or that are enrolled in a conservation plan. The second designation, “New Groundwater Irrigated Acres” covers other irrigated lands. The District sets rules that govern other irrigated lands. District Rules 13 and 15, promulgated in 2009, prohibited irrigators from receiving a certification for New Groundwater Irrigated Acres without a variance. Rule 14 outlines the certification process and requires either approval by the District’s board of directors or a “look-back” acknowledgement by the District that the land was irrigated between 1999 and 2008.

Lingenfelter, a farmer, purchased Rehfeld farm, located within the District, to use its well to irrigate the nearby Dunaway Farm. Prior to purchasing the farm, Lingenfelter met with a District employee. At this meeting, Lingenfelter and the employee calculated the amount of water available at the Rehfeld Farm. After purchasing the farm, Lingenfelter used the Rehfeld Farm well to irrigate the Dunaway Farm until 2013, when he received a cease-and-desist letter from the District. The letter explained that his irrigated land, which hydrologically connected ground water from the Rehfeld well to surface water on his other land, would likely be prohibited irrigation of New Groundwater Irrigated Acres under Rules 13 and 15.

Lingenfelter requested a hearing with the District over the cease-and-desist letter and sought the District’s certification of his water use. Before the hearing, he received a preliminary decision that the District would not approve his water use and that to continue irrigating, Lingenfelter had to obtain a variance. At the hearing, Lingenfelter could not show that he irrigated that land between 1999 and 2008, nor could he show that the land was certified. The District upheld the cease-and-desist demand, and Lingenfelter appealed to a district court.

Lingenfelter appealed under two causes of action. First, he requested judicial review of the District’s cease-and-desist order. Second, Lingenfelter requested a declaratory judgment that the District’s Rule 14, as well as its rule that defined Historically Irrigated Acres, violated his rights under the Nebraska Constitution and exceeded statutory authority.

Under the APA, the district court reviewed the District’s decision de novo. Under the first cause of action, Lingenfelter argued that the cease-and-desist order was not supported by the facts Lingenfelter presented. Lingenfelter first argued that he received approval to irrigate the Dunaway Farm in the meeting with a District employee and thus the district court should estop the District’s cease-and-desist order. He also argued that the District misapplied its own rules in determining the Dunaway Farm was not “irrigated acres.” Finally, he argued that Rule 14’s look-back provision was arbitrary and capricious.

The district court rejected all of these arguments. First, it stated that Lingenfelter could not prove that the District employee approved his project beyond his subjective assumption that irrigating the Dunaway Farm was “not an issue.” Second, the district court determined that the District did not misapply its own rules when it abstained from deciding whether Lingenfelter’s land constituted irrigated acres. The district court found that this analysis was not relevant because the District issued a cease-and-desist order because Lingenfelter had failed to ask for a variance and not because he was irrigating an area without a Historic Irrigated Acres designation. Third, the district court rejected Lingenfelter’s Rule 14 argument as convoluted and misplaced and because the record was insufficient for review of an administrative rule.

Under Lingenfelter’s second cause of action, he requested that the district court issue a declaratory judgment that Rule 14 violated the Nebraska Constitution’s equal protection and due process clauses. He claimed that because the rule was arbitrary and capricious, it violated his rights to due process. The district court ruled that the District’s rules had a purpose of responding to recent drought conditions, and therefore they could not be arbitrary.

Lingenfelter appealed all of the district court’s decisions to the Nebraska Supreme Court, arguing the district court failed to estop the District’s cease-and-desist order, erroneously found his land to not be irrigated acres, and misunderstood his arbitrary and capricious argument, among other procedural complaints.

Lingenfelter argued to the Court that under the APA, the district court should have viewed the evidence in favor of the plaintiff and estopped the District’s cease-and-desist order.   To this point, Lingenfelter stated that if the district court had viewed the evidence in his favor then it would have understood his meeting with a District staff member as a confirmation that he could irrigate the Dunaway Farm with water from the Rehfeld Farm.

The Court disagreed and stated that because this was an administrative appeal, rather than a complaint to a district court, that the APA did not require the district court to view evidence in favor of the plaintiff. The Court also found that because Lingenfelter’s belief that he could irrigate the Dunaway Farm using water from Rehfeld Farm was contradicted, the district court properly abstained from finding in his favor under Nebraska case law.

The Court also upheld the District’s decision not to apply one of the two irrigation classifications, Historically Irrigated Acres and New Groundwater Irrigated Acres, to Lingenfelter’s land. The Court concluded that because the District chose to not apply one of the designations to the land, it was likely forcing irrigators to seek certification so that it could ensure the water would be used properly. Furthermore, Lingenfelter never offered any evidence that his land had been irrigated between 1999 and 2008. Therefore, the District’s decision was consistent with rules that prohibited New Groundwater Irrigated Acres and prevented any land that was not certified or Historically Irrigated from being irrigated.

The Court also addressed Lingenfelter’s request under the APA for a declaratory judgment that Rule 14 was arbitrary and capricious, and therefore unconstitutional. The Court first noted that causes of action under the APA’s declaratory judgment provision only apply to agencies. The APA’s declaratory judgment provision was inapplicable here because NRDs were not agencies, but rather statutorily created as political subdivisions. Therefore, Lingenfelter could not use the APA to request a declaratory judgment against the District.

Instead of opining on constitutional issues through Lingenfelter’s declaratory judgment, the Court reviewed the district court’s summary judgment on constitutional issues in favor of the District. The Court first reviewed Lingenfelter’s argument that Rule 14 violated his substantive due process rights.

Under the Nebraska Constitution, substantive due process inquiries require a determination of “whether a right in which the plaintiff has a legitimate property interest” was unconstitutionally taken from the plaintiff. A property interest is unconstitutionally taken if the government acted in a way that has no substantial relation to the general welfare. Lingenfelter argued that using water to irrigate the Dunaway Farm was a legitimate property interest and that Rule 14 arbitrarily and capriciously took that interest away. The Court rejected this argument, finding that Rule 14 was reasonably related to ensuring adequate groundwater supplies in Nebraska.

Lingenfelter’s next constitutional argument stated that violated his right to equal protection because it “divides landowners ‘into winners and losers based upon an arbitrary calendar date.’” Nebraska’s equal protection provision is identical to the United States Constitution’s provision. The Court approached this claim under a rational basis test because no suspect class was involved. The Court found Rule 14 was rational because it was driven by a policy that established a baseline of acres historically irrigated in order to conserve groundwater. Accordingly, the Court rejected both of Lingenfelter’s constitutional arguments.

Finally, the Court rejected Lingenfelter’s last three arguments that the District’s authority to make rules was “fundamentally unfair,” that there was insufficient evidence to determine whether Rule 14 was rationally related to the availability of groundwater, and that the district court misunderstood his arguments against the District’s adoption of Rule 14. The Court rejected the first argument because NRDs are statutorily authorized to make such rules. It rejected the second argument because it Act specifically refers to preventing droughts and because the Court properly reviewed the question de novo. The Court rejected the third argument because Lingenfelter did not explain how this error prejudiced the result.

Accordingly, the Court affirmed the district court’s decision and allowed the District to issue its cease-and-desist order without resistance.

Travis Parker

Image: A field in Nebraska. Flickr user Richard Hurd, Creative Commons.

In re 2007 Administration of Appropriations of the Waters of the Niobrara River, 820 N.W.2d 44 (Neb. 2012) (holding (i) the law-of-the-case doctrine did not prevent junior rights holders from objecting to issues pertaining to the burden of proof and the Department of Natural Resources alignment as a party litigant; (ii) the alignment of the Department of Natural Resources as an adverse party was proper in a case where plaintiffs challenge their administrative methods; (iii) the burden of proof was on objecting junior rights holders when challenging closing notices; (iv) denial of a request to amend a complaint was not an abuse of discretion when the requested amendment is meritless; and (v) parties appropriately raised the issue of abandonment and forfeiture of appropriation rights through statutory and common-law methods).

The Nebraska Public Power District (“NPPD”) operates a hydropower facility on the Niobrara River near Spencer, Nebraska.  NPPD owns three appropriation rights for the facility.  Jack Bond and Joe McClaren Ranch (“junior appropriators”) own property upstream of the Spencer facility with surface water appropriation rights for agricultural use.  On March 7, 2007 NPPD called for the Nebraska Department of Natural Resources (“Department”) to curtail upstream junior users, asserting the Niobrara River flow was insufficient to satisfy the Spencer facility appropriation rights.  After repeated measurements of the Niobrara River, the Department determined that the flow was insufficient to satisfy the Spencer facility appropriation rights. Accordingly, the Department issued closing notices to the junior appropriators and approximately 400 other junior rights holders.

The junior appropriators filed an administrative hearing request before the Department alleging that NPPD abandoned its appropriation rights and that they were not subject to the closing notices under the futile call doctrine.  The Department appointed an independent attorney to act as the hearing office.  During the hearing, the junior appropriators objected to the Department appearing as a party.  The hearing officer determined that the Department was a proper party.

The junior appropriators filed a petition for condemnation of NPPD’s water rights in Boyd County Court (“county court”).  The county court granted a condemnation award to the junior appropriators with a 20-year compensation award for NPPD.  NPPD filed to dismiss the administrative proceedings because the condemnation award rendered moot the proceedings. Accordingly, the Department dismissed the administrative proceedings for lack of subject matter jurisdiction.  On appeal to the Nebraska Supreme Court (“Court”), the junior appropriators argued that the proceedings were not moot because a determination on the status of NPPD appropriation rights could benefit them since they would not need to pay NPPD for water if NPPD’s appropriation rights were void.  The Court held the proceedings were not moot and remanded for further proceedings.

On remand back to the Department, the junior appropriators sought to amend their complaint by adding a claim based on estoppel.  They also wished to add information asserting that NPPD had not called for administration of water in 50 years and the Department never previously issued closing notices on NPPD’s behalf. The Department appointed a different independent attorney to be the hearing officer.  This hearing officer refused to allow the junior appropriators to amend their complaint.  NPPD next filed a motion to impose Nebraska’s rules of evidence and to exclude evidence that the Spencer facility had wasted water through leakage. The hearing officer granted NPPD’s motion.

The hearing officer allowed several exhibits over the objections of NPPD because the exhibits were not relevant to the proceedings.  The Director of the Department soon issued his final order based on the hearing.  He overruled the hearing officer concerning the exhibits.  Additionally, he determined that the junior appropriators initiated the action under Neb. Rev. Stat. § 61-206; which places the burden of proof on the junior appropriators.  Further, the Department’s status as a party was proper because the junior appropriators were challenging the Department’s methods for water administration.

The director also determined that the dispute over whether NPPD had abandoned its water rights was irrelevant for an action brought under § 61-206 because the junior appropriators did not properly challenge NPPD’s water rights under Neb. Rev. Stat. §§ 46-229 to 46-229.05.  The director also noted that the junior appropriators did not provide any evidence that NPPD had abandoned its water rights.  The director then ruled that the junior appropriators failed to meet the burden of proof to dispute the futile call analysis and denied their claims regarding the propriety of the closing notices.

The junior appropriators appealed to the Nebraska Supreme Court (“Court”) claiming that the director erred in (i) aligning the Department as a party litigant; (ii) assigning burden of proof to the junior appropriators; (iii) excluding evidence that the Spencer facility had wasted water through leakage; (iv) declining to allow the junior appropriators to amend their complaint; (v) rejecting evidence after the hearing officer had admitted the evidence; (vi) determining that the claims against NPPD’s water rights were excluded from the proceedings; (vii) determining that NPPD had not abandoned a portion of its rights; (viii) concluding that NPPD could call for the full amount of its water rights; and (ix) determining that the Department conducted a proper futile call analysis.

First, the Court held that the junior appropriators were not prevented from objecting to the assignment of the Department as a party litigant based on the law-of-the-case doctrine.  The Court reasoned that the original appeal of this case did not address the issue of the Department’s status and the junior appropriators were not bound by the hearing officer’s original decision that the Department was a proper party.  The Court then ruled since the junior appropriators challenged the administration of the Departments enforcement of water rights, it is appropriate for the Department to defend its methods of administration.  The junior appropriators then argued that the Departments alignment as a party violated due process.  The Court held some mixing of judicial and prosecutorial functions is acceptable and that the functions were not improperly combined.

Next the Court held the burden of proof was on the junior appropriators to prove NPPD had abandoned its water rights because they raised questions outside the scope of the call for administration.  Additionally, the court held the junior appropriators request for hearing was more akin to a petition.  The Court then held the denial of the junior appropriators request to amend their complaint was appropriate and not an abuse of discretion.  The hearing officer sustained NPPD’s objections to the junior appropriators’ request to amend because the Department does not have general equitable jurisdiction and cannot be estopped from its legal duties.

Finally, the court held the director erred in refusing to address whether NPPD abandoned its water rights.  The Court held Neb. Rev. Stat. § 46-229 only specified a procedure the Department must follow when cancelling appropriations.  The statute did not remove common-law methods for challenging appropriations.

Accordingly, the Court again remanded that case back to the Department with direction to determine if NPPD’s appropriations were abandoned or forfeited.