Broken Bar Nine Living Trust v. Neb. Dep't of Natural Res. (In re A)

• Decision Date: 21 August 2015
• Docket Number: No. S-14-906.,S-14-906.
• Citation: 291 Neb. 678
• Court: Nebraska Supreme Court
• Parties: IN RE APPROPRIATION A-7603, WATER DIVISION 2-A. BROKEN BAR NINE LIVING TRUST, APPELLANT, v. NEBRASKA DEPARTMENT OF NATURAL RESOURCES, APPELLEE.

291 Neb. 678

IN RE APPROPRIATION A-7603, WATER DIVISION 2-A.BROKEN BAR NINE LIVING TRUST, APPELLANT, v. NEBRASKA DEPARTMENT OF NATURAL RESOURCES, APPELLEE.

No. S-14-906.

SUPREME COURT OF NEBRASKA

August 21, 2015

1. Administrative Law: Statutes: Appeal and Error. In an appeal from the Department of Natural Resources, an appellate court's review of the director's factual determinations is limited to deciding whether such determinations are supported by competent and relevant evidence and are not arbitrary, capricious, or unreasonable; however, on questions of law, which include the meaning of statutes, a reviewing court is obligated to reach its conclusions independent of the legal conclusions made by the director.

2. Irrigation: Statutes: Intent: Appeal and Error. Statutory law on the subject of irrigation and the decisions of the appellate courts dealing therewith show a clear intention to enforce and maintain a rigid economy in the use of the public waters of the state.

3. Waters: Irrigation: Administrative Law. Concerning the administration of public waters, one purpose of the State is to avoid waste and to secure the greatest benefit possible from the waters available for appropriation for irrigation purposes.

4. Waters. It is the policy of statutory law to require a continued beneficial use of appropriated waters.

5. ___. An appropriator will not be permitted to retain an interest in public waters, to which he has a valid appropriation, which is not put to a beneficial use.

6. Waters: Irrigation: Property: Words and Phrases. In the context of an appropriation for irrigation, beneficial use requires actual application of the water to the land for the purpose of irrigation.

7. Waters: Irrigation: Abandonment. At common law, an appropriation of water for irrigation purposes may be lost by nonuse or abandonment.

8. Administrative Law: Words and Phrases. A decision is arbitrary when it is made in disregard of the facts or circumstances and without some basis which would lead a reasonable person to the same conclusion.

9. Words and Phrases. A capricious decision is one guided by fancy rather than by judgment or settled purpose.

10. Administrative Law: Words and Phrases. The term "unreasonable" can be applied to an administrative decision only if the evidence presented leaves no room for differences of opinion among reasonable minds.

Appeal from the Department of Natural Resources. Affirmed.

Jovan W. Lausterer, of Bromm, Lindahl, Freeman-Caddy & Lausterer, for appellant.

Douglas J. Peterson, Attorney General, Justin D. Lavene, and Emily K. Rose for appellee.

HEAVICAN, C.J., WRIGHT, CONNOLLY, MCCORMACK, MILLER-LERMAN, and CASSEL, JJ.

MILLER-LERMAN, J.

NATURE OF CASE

Water appropriation A-7603, "Water Division 2-A" (Appropriation), was a surface water right to divert a specified volume of water from the North Loup River to "be used for irrigation purposes only." The Broken Bar Nine Living Trust (Trust), the appellant, held the Appropriation and the lands covered by it. The Nebraska Department of Natural Resources (Department), the appellee, issued a "Notice of Preliminary Determination of Nonuse of [the Appropriation]" to the Trust. After a hearing, the Department concluded that the lands designated under the Appropriation had not been irrigated for more than 5 consecutive years and that the Trust had failed to establish sufficient cause for nonuse under Neb. Rev. Stat. § 46-229.04(4) (Reissue 2010). The Department issued an order canceling the Appropriation in its entirety on September 9, 2014. The Trust appeals. We affirm.

STATEMENT OF FACTS

The parties generally do not dispute the underlying facts of this case. In its "Order of Cancellation" dated September 9, 2014, the Department made the following findings of fact, which are supported by the record:

1. [The Appropriation] is a permit currently shown in the Department's records in the name of the . . . Trust with a priority date of May 27, 1955, to divert 1.15 cubic feet per second (cfs) of water from the North Loup River at points of diversion located in the S½ of Section 10 and the NE¼NE¼ of Section 15, Township 22 North, Range 20 West of the 6^th P.M. in Loup County, for irrigation of the following described lands (Exhibit 10):

Township 22 North, Range 20 West of the 6th P.M. in Loup County

Acres

Section 10:

Lot 5

24.8

Lot 6 (E½SW¼)

32.6

Lot 7 (SW¼SE¼)

16.1

Section 15:

NE¼NW¼

3.9

NW¼NE¼

33.8

NE¼NE¼

12.5

SE¼NE¼

2.4

TOTAL

126.1

2. Based upon a verified field investigation report, a Notice of Preliminary Determination was issued on July 26, 2013, in accordance with Neb. Rev. Stat. §§ 46-229.02 and 46-229.03 [(Reissue 2010)] stating that it appeared that all of the water appropriation for irrigation of lands described above had not been used for more than five consecutive years and that the Department knew of no reason that constitutes sufficient cause as provided in . . . § 46-229.04.

3. A contest was filed on August 23, 2013, by [the] legal representative for [the] Trust.

4. Department staff reviewed the contest and on June 12, 2014, filed a motion for hearing.

5. Notice of a hearing was issued on June 26, 2014, and a corrected notice was mailed on July 1, 2014, in accordance with . . . §§ 46-229.02(5) and 46-229.03.

6. A hearing was held in Lincoln, Nebraska, on July 31, 2014, as provided by . . . § 46-229.04.

7. The Department . . . appeared and was represented by its attorney. [A] Department staff member . . . was called as a witness. The Department entered several exhibits, including a verified field investigation report which was entered into evidence as Exhibit 1. The field report indicates that all of the lands included under [the Appropriation] have not been irrigated for more than five consecutive years. [The Department staff member's] testimony showed that there was sufficient water in the North Loup River for [the] Appropriation.

8. [The] attorney . . . for [the] Trust [appeared]. In his opening statement, [the attorney] stated, "I would concur in that I think it's important for the Director and the Department to know that the . . . Trust is not arguing that there was agricultural beneficial use of the [A]ppropriation in question during the relevant five-year time span."

[The Trust] called . . . one of the trustees . . . as a witness. [The trustee's] testimony described the purpose of the [T]rust, which included providing income to support his grandmother during her lifetime. [The trustee] also described the rental agreement the [T]rust had with its tenant, and the poor shape that the existing irrigation equipment was in.

[The Trust] entered several exhibits, including: pictures of the irrigation equipment; lease agreements; an unsigned copy of a trust; and the death certificate of . . . the recipient of the trust.

Under examination and cross examination, [the trustee] marked on Exhibit 9 several areas of land thatare included under [the A]ppropriation . . . and that he knew had been irrigated in the past. His testimony indicated that two of these areas were last irrigated in 1993, and one in 1997 or 1998, and two areas were irrigated approximately eight years ago. He stated that the rest of the lands under the [Appropriation had probably not been irrigated. . . .

9. In his opening statement, [the attorney for the Trust] stated that the owners were arguing that they met the exceptions for nonirrigation under . . . § 46-229.04[(4)](a), (b), (c) and (d). In his closing argument, he again reiterated these four subsections and described how the Trust had provided testimony or evidence relating to the four. [The attorney for the Department] also provided his argument in closing relative to the exceptions.

Attached to the original Contest filed by [the Trust] was a document marked Exhibit "A" in which the Trust asserted that Neb. Rev. Stat. § 46-229 [(Reissue 2010)] is legally unenforceable as against the Trust and the property as a three year non-use rule was originally added to the statutory scheme in 1983 and later amended to a five year rule in 2004. The Trust asserts that the use restriction did not exist when the Department issued its [A]ppropriation in 1956 and thus it would be unconstitutional for the Department to retroactively apply this rule against the Trust's vested water right. [The Trust] also entered a copy of this document as part of Exhibit 10.

In its analysis, the Department first determined that Neb. Rev. Stat. § 46-229 (Reissue 2010) is legally enforceable as it relates to the Appropriation. The Department quoted In re Water Appropriation Nos. 442A, 461, 462, and 485, 210 Neb. 161, 164, 313 N.W.2d 271, 274 (1981), which case states, "'The [Department of Water Resources] is expresslyauthorized by statute, after notice and hearing, to forfeit a water right where it appears that the water appropriation has not been used for some beneficial or useful purpose . . . for more than three years. . . .'" The Department stated that it must follow the statutes. The Trust does not directly challenge this ruling on appeal.

The Department referred to the controlling statutes in its order. Section 46-229.04 provides for the cancellation of an appropriation after 5 consecutive years of nonuse. Section 46-229.04(1) states:

(1) At a hearing held pursuant to section 46-229.03, the verified field investigation report of an employee of the [D]epartment, or such other report or information that is relied upon by the [D]epartment to reach the preliminary determination of nonuse, shall be prima facie evidence for the forfeiture and annulment of such water appropriation. If no person appears at the hearing, such water appropriation or unused part thereof shall be declared forfeited and annulled. If an interested person appears and contests the same, the [D]epartment shall hear evidence, and if it appears that such water has not been put to a beneficial use or has ceased to be used for such purpose for more than five consecutive years, the same shall be declared canceled and annulled unless the [D]epartment

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