N. Platte Natural Res. Dist. v. Neb. Dep't of Natural Res. (In re Application A-19594)

315 Neb. 311

995 N.W.2d 655

IN RE APPLICATION A-19594, Water Divisions 1-A, 1-B. Central Platte Natural Resources District et al., appellants,

North Platte Natural Resources District, appellee and cross-appellant, v. Nebraska Department of Natural Resources and Platte to Republican Basin High Flow Diversion Project, appellees and cross-appellees.

No. S-23-028.

Supreme Court of Nebraska.

Filed October 6, 2023

Vanessa A. Silke, Steven D. Davidson, Kenneth W. Hartman, and Hannes D. Zetzsche, of Baird Holm, L.L.P., Omaha, for appellants.

Adam A. Hoesing, Steven C. Smith, Scottsbluff, and Megan A. Dockery, of Simmons Olsen Law Firm, P.C., L.L.O., for cross-appellant North Platte Natural Resources District.

Michael T. Hilgers, Attorney General, Joshua E. Dethlefsen, and Justin D. Lavene, Lincoln, for cross-appellee Nebraska Department of Natural Resources.

Brenna M. Grasz, Paul J. Peter, Lincoln, and Remington S. Slama, of Keating, O'Gara, Nedved & Peter, P.C., L.L.O., for cross-appellee Platte to Republican Basin High Flow Diversion Project.

Cassel, Stacy, Funke, Papik, and Freudenberg, JJ.

Cassel, J.

I. INTRODUCTION

Several entities filed objections to an application seeking an interbasin transfer to divert surface water from an overappropriated Platte River reach to the Republican River Basin. The director of the Department of Natural Resources (Department) determined that each purported objector lacked standing and dismissed the objections. On appeal and cross-appeal, we conclude that Department regulations ¹ and interbasin transfer statutes ² do not confer standing where an objector does not meet common-law standing principles. Because the purported objectors fail that test, we agree with the director that they lacked standing and affirm the order of dismissal.

II. BACKGROUND

We begin by recalling basic elements of Nebraska's water regulatory regimes. Then we turn to the application at issue here, the objections interposed to it, and the procedures followed by the Department leading to the dismissal of those objections.

1. SURFACE AND GROUND WATERS

Surface water and ground water are hydrologically related. ³ Surface water includes all water found on the surface of the earth, while ground water is water found under the earth's surface. ⁴ The two types of water are connected: "Ground water pumping can cause diminished streamflows. Streamflow can support the potential for subirrigation. Seepage from surface water supplies canals, and deep percolation of applied irrigation water from surface projects can recharge ground water aquifers." ⁵

2. REGULATION OF WATER IN NEBRASKA

Although surface water and ground water are linked, ⁶ Nebraska uses separate systems regulated by different agencies to allocate each type of water. ⁷ The Department regulates surface water appropriators, while ground water users are statutorily regulated by a natural resources district (NRD). ⁸ The Nebraska Ground Water Management and Protection Act (Act) ⁹ sets forth various requirements to manage the hydrologically connected waters. ¹⁰

With certain exceptions, the Act requires the Department to annually evaluate the expected long-term availability of hydrologically connected water supplies for both existing and new surface and ground water uses in each of the state's river basins. ¹¹ For purposes of the evaluation, a river basin may be divided into two or more subbasins or reaches. ¹² Where a river basin, subbasin, or reach encompassed within an NRD has not been designated as overappropriated or has not been finally determined to be fully appropriated, the NRD "may, jointly with the department, develop an integrated management plan for such river basin, subbasin, or reach located within the district." ¹³ In other words, an NRD under those circumstances is permitted but not required to develop an integrated management plan (IMP).

The Act imposes certain duties when a river basin, subbasin, or reach is overappropriated or fully appropriated. ¹⁴ Under the Act, a river basin, subbasin, or reach is overappropriated if it is subject to an interstate cooperative agreement among three or more states and if the Department has declared a moratorium on the issuance of new surface water appropriations in such river basin, subbasin, or reach. ¹⁵ NRDs encompassing an overappropriated river basin, subbasin, or reach, or one which has been finally determined to be fully appropriated, must jointly develop an IMP for the river basin, subbasin, or reach. ¹⁶ In developing an IMP, NRDs must consider the effects of existing and potential new water uses on existing surface water appropriators and ground water users. ¹⁷ Further, when a river basin, subbasin, or reach is designated

as overappropriated and when the designated area lies within two or more NRDs, the Department and the affected NRDs must jointly develop a basin-wide plan (BWP) for the area designated as overappropriated. ¹⁸ The IMPs must be consistent with the goals of the BWPs. ¹⁹

At times, excess flows are available, even in an overappropriated basin, subbasin, or reach. An applicant wanting to apply for a new surface water appropriation within a moratorium or stay area can file a petition seeking a variance to the moratorium or stay. ²⁰ The petition must assert that "[t]he applicant has credible information that indicates there may be unappropriated water available at the proposed location at the time the depletion is likely to occur." ²¹ If the Department grants a variance, the applicant can then file an application for an appropriation under Neb. Rev. Stat. § 46-233 (Reissue 2021).

An application can also be submitted to request an interbasin transfer. Such a transfer is "the diversion of water in one river basin and the transportation of such water to another river basin for storage or utilization for a beneficial use." ²² When evaluating an application under § 46-233 that involves an interbasin transfer of water, the Department must consider a number of factors delineated by the Legislature in order to determine whether denial of such application is demanded by the public interest. ²³ "The application shall be deemed in the public interest if the overall benefits to the state and the applicant's basin are greater than or equal to the adverse impacts to the state and the basin of origin." ²⁴

3. PLATTE RIVER BASIN

In 2004, the Department declared an official moratorium on the issuance of new surface water appropriations for three river basins: the Platte River Basin above the mouth of the Loup River, the North Platte River Basin, and the South Platte River Basin. Two months later, the Department designated the Platte River Basin above the Kearney Canal Diversion, the North Platte River Basin including Pumpkinseed Creek, and the South Platte River Basin including Lodgepole Creek as overappropriated. This overappropriated area covered portions of five NRDs, including the North Platte NRD (NPNRD) and the Central Platte NRD (CPNRD). And as mentioned above, the NRDs were required to formulate IMPs and BWPs due to the overappropriated designation.

4. APPLICATION AT ISSUE

Platte to Republican Basin High Flow Diversion Project (PRD) filed an excess flow permit application with the Department. The operative application, "Amended ... Application A-19594," sought to divert up to 150 cubic feet per second of excess flows from the Platte River Basin into the Republican River Basin. The application requested the interbasin transfer for purposes of Republican River Compact ²⁵ compliance.

Because the application specified and relied upon a condition that the proposed interbasin transfer and use appropriation would be perpetually junior in status, it asserted that it would have no adverse impact on other water users. The application included a specific request that "the appropriation granted to the PRD project will never be able to exercise a call over any future junior appropriations granted for water uses of the Platte River within the Platte River Basin." The application further stated:

[A]ny final order granting this application should also be conditioned in a manner similar to Permit A-18922 ... which includes the following condition: "Only those flow's [sic] in excess of the Desired Minimum Discharge shall be considered to be available to be diverted." ... Therefore, the current beneficial uses of the unappropriated water in the basin of origin will be protected from any impacts of the PRD project.

The application requested that the interbasin transfer permit "be granted with the conditions described above, and any other deemed necessary to protect the public interest."

5. OBJECTIONS AND ORDER OF DISMISSAL

Several entities filed objections to the operative application. PRD moved to dismiss the objections, asserting that the objecting entities lacked standing. Following a hearing, the director dismissed all of those entities for lack of standing.

From that dismissal, CPNRD, Lower Loup Natural Resources District (LLNRD), Loup River Public Power District (Loup Power), and Cozad Ditch Company (Cozad Ditch) (collectively appellants) took an appeal. NPNRD filed a cross-appeal to likewise challenge the dismissal. We subsequently granted NPNRD's petition to bypass review by the Nebraska Court of Appeals. ²⁶

Facts and arguments specific to each appellant and NPNRD will be set out in more detail in the analysis.

III. ASSIGNMENTS OF ERROR

The overarching issue on appeal is whether the director erred in dismissing appellants and NPNRD for lack of standing. In connection with that issue, appellants additionally assign that the director erred in failing to recognize their rights to object, request a hearing, and initiate a contested case. And on cross-appeal, NPNRD assigns that the director erred in (1) failing to apply Department regulations regarding interested

parties; (2) broadly applying In re Application A-18503²⁷ and Central Neb. Pub. Power Dist. v. North Platte NRD²⁸ when, they a...