Salmon River Canal Co., Ltd. v. Bell Brand Ranches, Inc.

• Decision Date: 21 November 1977
• Docket Number: No. 75-2462,75-2462
• Citation: 564 F.2d 1244
• Parties: 8 Envtl. L. Rep. 20,067 SALMON RIVER CANAL CO., LTD., a corporation, Plaintiff-Appellant, v. BELL BRAND RANCHES, INC., a Nevada Corporation, and J. K. Wheeler, an Individual, and Wheeler Machinery Company, a corporation, a co-partnership, dba W. D. Ranching Co., Defendants- Appellees.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 1244

564 F.2d 1244

8 Envtl. L. Rep. 20,067

SALMON RIVER CANAL CO., LTD., a corporation, Plaintiff-Appellant, v. BELL BRAND RANCHES, INC., a Nevada Corporation, and J. K Wheeler, an Individual, and Wheeler Machinery Company, a corporation, a co-partnership, dba W. D Ranching Co. Defendants- Appellees.

No. 75-2462.

United States Court of Appeals Ninth Circuit.

Nov. 21, 1977.

Lloyd J. Webb (argued), of Pike, Burton & Carlson, Twin Falls, Idaho, for plaintiff-appellant.

Irwin Aarons (argued), Milton Manoukian (argued), Carson City, Nev., John C. Miller (argued), Elko, Nev., for defendants-appellees.

Appeal from the United States District Court for the District of Nevada.

Before KILKENNY and ANDERSON, Circuit Judges, and SCHWARZER, ^* District Judge.

J. BLAINE ANDERSON, Circuit Judge:

Appellant, the Salmon River Canal Co., an Idaho corporation owning ranch land in Nevada, brought a diversity action in the federal district court in Nevada seeking to enjoin appellees, Bell Brand Ranches, Inc. and J. K. Wheeler and Wheeler Machinery Company, from pumping water from wells located on neighboring lands. The district court granted appellees' summary judgment motions and appellant timely filed this appeal. Our jurisdiction rests upon 28 U.S.C. § 1291.

Roland D. Westergard, the Nevada State Engineer, was permitted intervention by the District Court and urges affirmance of the District Court judgment.

The essential facts are not disputed and disclose that appellant, during the 1940's, acquired several ranches in the Salmon River drainage in Nevada. In an effort to settle years of bickering over water rights, appellant brought an action in 1950 in the federal district court in Nevada against the other ranchers in the area, including the predecessors in interest of appellees. In 1953, a judgment was entered embodying the terms of a settlement agreement the parties had reached apportioning the water of the Salmon River and its tributaries.

The judgment provided that the predecessors in interest of J. K. Wheeler and Wheeler Machinery Co. could divert as much water from Shoshone Creek, a tributary of the Salmon River, as they needed for household purposes and for irrigation of 424 acres specifically described in the judgment. The judgment, an unusual one in Western water law, permitted the use of as much water as desired as long as it was confined to the specified acreage. Similar provisions were made with respect to the appropriation of water to irrigate a certain specified acreage owned by the predecessors in interest of Bell Brand Ranches. The judgment also adopted an Opinion and Order of the State Engineer of Nevada to the effect that "the waters of the Salmon River (sometimes referred to as Salmon Creek or Salmon Falls Creek) and its tributaries in Elko County, Nevada, are fully appropriated and that no further permits will be granted for irrigation use on the stream system within the State of Nevada." The judgment also, by its terms bound the successors in interest of the lands described in the judgment and, finally, the judgment decreed "31. This Court shall retain jurisdiction over matters of interpretation of this decree and matters relating to the administration and enforcement thereof."

In 1966, J. K. Wheeler and Wheeler Machinery Co. applied to the State Engineer of Nevada for permission to pump water from a well to irrigate 240 acres. In 1967, J. K. Wheeler and Wheeler Machinery Co. filed a second application to pump water from a second well to irrigate 400 acres. The land to be irrigated under both applications did not lie within the specified acreage described in the 1953 judgment. In 1967, the predecessor in interest of Bell Brand Ranches likewise applied for permission to use well water to irrigate lands outside the specified acreage described in the 1953 judgment. Notice of all three applications, including a general description of the lands to be irrigated and a listing of the source as underground, were published in a local newspaper. No timely protests were filed to any of the three applications and the State Engineer granted the permits "subject to all existing rights on the source."

On July 16, 1971, appellant brought the present action, contending that the underground waters were tributary to the Salmon River and that the use of such waters on lands other than those specifically described in the 1953 judgment interferes with appellant's water supply and is a violation of the 1953 judgment.

As stated, the district court granted appellees' summary judgment motions. Essentially, the basis of the district court's ruling was that when appellees filed their applications for permits to appropriate water, and when notices of these applications were published the appellees gave notice of two claims: first, that there were unappropriated waters available for appropriation ¹ and, second, that the appellant intended to use these waters to irrigate lands other than those described in the 1953 judgment. Further, that when the State Engineer, pursuant to N.R.S. § 533.370(4) (see infra p. ----), issued the permits to appellees he "necessarily had to find that the underground source was not tributary to the stream system because he knew, and, in fact, had specially declared in 1952 that the waters of the Salmon River and its tributaries are fully appropriated." The court ruled that since appellants had failed to protest the applications or to appeal from the State Engineer's determination, that the present suit constituted a collateral attack upon the State Engineer's determination and that said determination was res judicata and not subject to collateral attack.

We believe that the district court erred in giving conclusive effect to the permit granted by the State Engineer. Our review of Nevada's statutory scheme and the relevant general principles of water law of the Western States convinces us that a water permit is an administrative tool only for the use of the State Engineer in administering the State's water. We do not believe that as an administrative tool it can be binding or conclusive on any party where it is asserted that pre-existing rights and subsequent appropriations conflict. In reaching this conclusion we bear prominently in mind this Circuit's rule that we pay great deference to the district court's determination of state law and do not reverse unless convinced that the decision below was clearly erroneous. d'Hedouville v. Pioneer Hotel Co., 552 F.2d 886, 895 (9th Cir. 1977). In this case we have an abiding conviction that the district court was wrong in its conclusion. Our review of the record discloses that many of the statutory sections and cases discussed in this opinion were never called to the attention of the district court.

We start our analysis with a review of the Nevada statutory scheme regarding water rights. We initially note that the provisions relative to permit application proceedings are found under a different subchapter heading from those dealing with the adjudication of vested water rights. Compare N.R.S. § 533.325 et seq. with N.R.S. § 533.090 to § 533.320, inclusive. Although this fact is by no means conclusive of the issues before us, it is some evidence that the drafters felt that the two proceedings were distinct.

Turning first to the permit application provisions (N.R.S. § 533.325, et seq.), we believe that the approval of an application for an appropriative permit, although involving some discretion under statutory criteria, is largely ministerial. By N.R.S. § 533.370.1 the Nevada Legislature has directed, in pertinent part, that:

"1. Except as provided in subsection 2, (not relevant to our discussions) the state engineer shall approve all applications made in proper form where all fees, as provided in this chapter, have been paid which contemplate the application of water to beneficial use, and where the proposed use or change does not tend to impair the value of existing rights, or to be otherwise detrimental to the public welfare." (emphasis added)

This provision contemplates that the only determination made by the State Engineer, other than proper form and payment of fees, is one of a "tendency" only not to impair existing rights. A mere "tendency" could not be a final determination in the res judicata or collateral estoppel sense as applied in judicial and administrative adversarial proceedings. The determination of whether or not there is an actual conflict in existing rights is left open to future determinations of relative rights as provided for by other provisions of the statutory scheme.

The explicit condition of the permits granted in this case, that it is "subject to existing rights on the source," also convinces us that the permits granted were not intended to be conclusive. This language is mandated by N.R.S. § 533.430(1) which states in pertinent part:

"1. Every permit to appropriate water, and every certificate of appropriation granted under any permit by the state engineer upon any stream or stream system which shall have been adjudicated under the provisions of NRS 533.090 to 533.525, inclusive, shall be, and the same is hereby declared to be, subject to existing rights and to the decree and modifications thereof entered in such adjudication proceedings, and the same shall be subject to regulation and control by the state engineer and the water commissioners in the same manner and to the same extent as rights which have been adjudicated and decreed under the provisions of this chapter. . . . "

This section is further evidence that the permit application proceeding was not considered to be an adjudication of the relative water rights but rather only for the administrative use of the State Engineer to aid in his supervision of the state's waters.

We are mindful of the language in N.R.S. § 533.370(4) which states:

"4. Where there is no unappropriated water in the proposed source of supply, or where its proposed use or change...