Diamond Natural Res. Prot. & Conservation Ass'n v. Diamond Valley Ranch, LLC
| Decision Date | 16 June 2022 |
| Docket Number | 81224 |
| Parties | DIAMOND NATURAL RESOURCES PROTECTION & CONSERVATION ASSOCIATION; J&T Farms, LLC; Gallagher Farms LLC; Jeff Lommori; M&C Hay; Conley Land & Livestock, LLC; James Etcheverry; Nick Etcheverry; Tim Halpin; Sandihalpin; Diamond Valley Hay Company, Inc.; Mark Moyle Farms LLC ; D.F. & E.M. Palmore Family Trust; William H. Norton; Patricia Norton ; Sestanovich Hay & Cattle, LLC; Jerry Anderson; Bill Bauman ; Darla Bauman; Adam Sullivan, P.E., Nevada State Engineer, Division of Water Resources, Department of Conservation and Natural Resources; and Eureka County, Appellants, v. DIAMOND VALLEY RANCH, LLC; American First Federal, Inc.; Berg Properties California, LLC; Blanco Ranch, LLC ; Beth Mills, Trustee of the Marshall Family Trust; Timothy Lee Bailey; Constance Marie Bailey; Fred Bailey; Carolyn Bailey ; Sadler Ranch, LLC ; Ira R. Renner; and Montira Renner, Respondents. |
| Court | Nevada Supreme Court |
Leonard Law, PC, and Debbie Leonard, Reno, for Appellants Jerry Anderson; Bill Bauman; Darla Bauman; Conley Land & Livestock, LLC; D.F. & E.M. Palmore Family Trust; Diamond Natural Resources Protection & Conservation Association; Diamond Valley Hay Company, Inc.; James Etcheverry; Nick Etcheverry; Gallagher Farms LLC; Tim Halpin ; Sandi Halpin; J&T Farms, LLC; Jeff Lommori; M&C Hay; Mark Moyle Farms LLC; William H. Norton; Patricia Norton; and Sestanovich Hay & Cattle, LLC.
Allison MacKenzie, Ltd., and Karen A. Peterson, Carson City; Theodore Beutel, District Attorney, Eureka County, for Appellant Eureka County.
Aaron D. Ford, Attorney General, and James N. Bolotin, Senior Deputy Attorney General, Carson City, for Appellant Adam Sullivan, P.E., Nevada State Engineer, Division of Water Resources, Department of Conservation and Natural Resources.
Kemp Jones, LLP, and Christopher W. Mixson and Don Springmeyer, Las Vegas, for Respondents Timothy Lee Bailey, Constance Marie Bailey, Fred Bailey, and Carolyn Bailey.
Taggart & Taggart, Ltd., and David H. Rigdon and Paul G. Taggart, Carson City, for Respondents Ira R. Renner, Montira Renner, and Sadler Ranch, LLC.
Marvel & Marvel, Ltd., and John E. Marvel, Elko, for Respondents American First Federal, Inc.; Berg Properties California, LLC; Blanco Ranch, LLC; and Diamond Valley Ranch, LLC.
Beth Mills, Eureka, in Pro Se.
Blanchard, Krasner & French and Steven M. Silva, Reno; Pacific Legal Foundation and Daniel M. Ortner, Sacramento, California, for Amicus Curiae Pacific Legal Foundation.
BEFORE THE SUPREME COURT, EN BANC.
Diamond Valley is a groundwater-dependent farming region located in Eureka County, Nevada. The Diamond Valley Hydrologic Basin is over-appropriated and over-pumped, such that groundwater withdrawals from the Basin exceed its perennial yield (i.e., more groundwater is withdrawn from the aquifer than what can be naturally replenished). To address the scarcity of groundwater in Nevada's over-appropriated basins, the Legislature enacted NRS 534.037 and NRS 534.110(7) in 2011.1 Under NRS 534.110(7), the State Engineer may designate an over-appropriated basin a Critical Management Area (CMA). Once designated a CMA, NRS 534.037 allows water permit and certificate holders (rights holders) to petition the State Engineer to approve a Groundwater Management Plan (GMP) that sets forth the necessary steps for removal of the basin's designation as a CMA. In determining whether to approve the GMP, the State Engineer is required to weigh the factors under NRS 534.037(2).
Here, Diamond Valley was designated a CMA, and its rights holders submitted a GMP to the State Engineer for approval. Although the GMP deviated somewhat from the guiding principle underlying Nevada's water law statutes—the doctrine of prior appropriation, which dictates that priority is assigned based on first in time, first in right to put the water to beneficial use—the State Engineer approved the Diamond Valley GMP. The crux of this case, then, concerns whether NRS 534.037 and NRS 534.110(7) allow the State Engineer to approve a GMP that deviates from the doctrine of prior appropriation. We hold that the Legislature unambiguously gave the State Engineer discretion to approve a GMP that departs from the doctrine of prior appropriation and other statutes in Nevada's statutory water scheme. Thus, we conclude that the State Engineer's decision to approve the GMP was not erroneous. As we further conclude that the State Engineer's factual findings in support of his decision were supported by substantial evidence, we reverse the district court's order granting respondents’ consolidated petitions for judicial review and reinstate the State Engineer's decision.
We have previously recognized that groundwater "in Diamond Valley, Nevada, is over-appropriated and has been pumped at a rate exceeding its perennial yield for over four decades." Eureka County v. Seventh Judicial Dist. Court (Sadler Ranch), 134 Nev. 275, 276, 417 P.3d 1121, 1122 (2018). Each year, roughly 76,000 acre-feet of groundwater is withdrawn from the Basin's aquifer, yet its perennial yield is only 30,000 acre-feet. Even more concerning, up to 126,000 acre-feet of water rights have been permitted in the Basin. If the State Engineer limited pumping in the Basin to its perennial yield, any appropriations made after roughly May 1960 would have junior priority and be subject to curtailment. Similarly, any water rights appropriated before that date would have seniority and would not be subject to curtailment.
As noted, in 2011, the Legislature enacted NRS 534.037 and amended NRS 534.110 to allow the State Engineer to approve a GMP that helps resolve groundwater shortages in over-appropriated basins like Diamond Valley, which was designated a CMA in 2015. In 2018, a majority of rights holders in Diamond Valley petitioned the State Engineer to approve their proposed GMP for the Basin. After holding a public hearing and allowing written comments, the State Engineer approved the GMP. State Engineer Order No. 1302 (Jan. 11, 2019). The GMP created a 35-year plan to reduce the amount of pumping from the Basin at 5-year intervals. The GMP reduced the amount of water that rights holders can use based on the priority of the holders’ rights. However, the GMP deviated from the doctrine of prior appropriation by requiring all water rights holders to reduce their withdrawals from the Basin—not just junior rights holders.
Respondents, who are senior rights holders in the Basin, filed petitions for judicial review, which the district court consolidated. Respondents sought to invalidate the GMP on the ground that its deviance from water-law principles, such as the doctrine of prior appropriation, and from Nevada's statutory water scheme made the plan legally erroneous. The district court concluded that the GMP violated (1) the doctrine of prior appropriation by forcing senior appropriators to reduce their water use; (2) the beneficial use statute, NRS 533.035, by allowing unused groundwater to be banked or transferred; and (3) two permitting statutes, NRS 533.325 and NRS 533.345, by allowing appropriators to change the point or manner of diversion without filing an application with the State Engineer. The district court concluded that NRS 534.037 and NRS 534.110(7) do not give the State Engineer discretion to approve a GMP that deviates from the foregoing principle and statutes. Because the district court decided that the State Engineer's legal conclusions were erroneous, it concluded that Order No. 1302 was arbitrary and capricious. Thus, the district court granted respondents’ consolidated petitions for judicial review and invalidated Order No. 1302. Nonetheless, the district court found that the State Engineer's analysis of the factors under NRS 534.037(2) was supported by substantial evidence.
The State Engineer and several rights holders in the Basin (collectively, appellants) now appeal. They argue that the Legislature unambiguously gave the State Engineer discretion to approve a GMP that deviates from the doctrine of prior appropriation and other provisions in Nevada's statutory water scheme, so long as the State Engineer considers the factors enumerated in NRS 534.037(2) and determines that the GMP will remove the basin's designation as a CMA. Respondents contend the district court's order should be affirmed because the GMP reduces their water rights based on an erroneous interpretation of the law.
At oral argument, we asked respondents if they presented any evidence to the State Engineer during the GMP approval process showing whether—and to what extent—their water rights were affected by the GMP. Respondents answered, "[N]o, it was not quantified." We then inquired whether respondents requested the State Engineer make those calculations before approving the GMP. Respondents conceded that "[t]hey did not raise it as an issue in their written comments." Finally, we asked respondents whether they presented any calculus to the district court showing that any of their water rights were affected by the GMP. Respondents answered, "I don't think it was raised as a specific issue."
Standard of review
"The decision of the State Engineer is prima facie correct, and the burden of proof is upon the party attacking the same." NRS 533.450(10). We perform the same review as the district court; thus, when we review a district court's order reversing the State Engineer's decision, "we determine whether the ’s decision was arbitrary or capricious." King v. St. Clair, 134 Nev. 137, 139, 414 P.3d 314, 316 (2018). A "capricious exercise of discretion is one ... ‘contrary to the evidence or established rules of law.’ " State v. Eighth Judicial Dist. Court (Armstrong), 127 Nev. 927, 931-32, 267 P.3d 777, 780 (2011) (citation omitted) (quoting Capricious, Black's Law Dictionary (9th ed. 2009)). "[W]e review purely legal questions [de novo,] without deference to the State Engineer...
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