Articles

Water Law: Conflicting Rights of Users of Ground and Surface Water

By John F. Simmons

Subsurface water, legally referred to as "ground water," and the water in streams and ditches, legally referred to as "surface water," are very closely connected. One of the leading Nebraska commentators on the subject has made the statement that if ground water were red, all surface water would be various shades of pink. Because of the hydrological connection between ground and surface water, the rights of irrigators from streams and ditches are beginning to come into conflict with the rights of the users of center pivot irrigation techniques. This conflict has been long predicted by commentators but Nebraska’s wealth of groundwater resources postponed the collision much longer than was the case in many other western states. Because the hydrological connection between ground and surface water was not well understood in the late 1800's and early 1900's, different, and quite inconsistent, doctrines evolved regarding their use. In a 1994 decision, the Nebraska Supreme Court expressly stated that "the relative rights of those using ground water and those using surface water are often unclear." In a 1966 decision, the court made this statement:

"While the rights of appropriators to the use of water from rivers and streams have been protected over the years, rights in the use of ground water have not been determined nor protected, nor the public policy with reference to the use of such underground water is legislatively declared. The difficulties in administrating dual conflicting principles, and fixing the rights of users thereunder, are readily apparent."

Rights to Stream Flows: First-in-time Appropriation

The Nebraska Constitution characterizes water as a "natural want" and dedicates the water "in every natural stream within the State of Nebraska" to the people for beneficial purposes. The right to appropriate that water for beneficial use is also constitutionally recognized. Since the waters in a stream are dedicated to the people an appropriator has only the right to use the water (called a `usufructuary right’) and does not become the owner of the water. First-in-time-first-in-right is the statutory rule, subject to the limitation that the appropriator cannot take more than he can beneficially use and that his rights may be lost by three consecutive years of non-use.

While the rules applicable to the appropriation of surface water have some relative clarity, it has long been recognized that they are not applicable to groundwater. Subterranean water is unappropriated, even where its extraction reduces the amount of water in a stream.

Groundwater has its own set of rules, sort of.

Groundwater: Reasonable Use

In marked contrast to the appropriation system, which was the subject of comprehensive statutory enactments dating from the 1800's, the Legislature passed no laws dealing with groundwater until 1957. These early statutes were characterized by the Supreme Court as "mere beginnings in the exercise of possible control and regulation of groundwater."

In the absence of legislative action, the judiciary was occasionally compelled to step into the breach. In a 1933 decision, a plaintiff claimed that a city’s wells exhausted the water at the bottom of plaintiff’s gravel pit and made it worthless. The case, therefore, was a dispute between competing groundwater users, not between a groundwater and a surface water user. The Supreme Court rejected the so-called English rule which characterized groundwater as belonging to the owner of the freehold who, in the absence of malice, may appropriate it without limitation. Instead, it adopted what it characterized as the American rule:

The American rule is that the owner of land is entitled to appropriate subterranean waters found under his land, but he cannot extract and appropriate them in excess of a reasonable and beneficial use upon the land which he owns, especially if such use is injurious to others who have substantial rights to the waters, and if the natural underground supply is insufficient for all owners, each is entitled to a reasonable proportion of the whole....

The Basic Problem: Two Inconsistent Bodies of Law

These bodies of law can be fitted together only with great difficulty, if at all. Among other problems, the doctrines are aimed at carrying out different social policies. The purpose of an appropriation system is to encourage development of water for economic uses by assuring rights to a stable supply, and to discourage the hoarding of unused rights. But the American rule of `reasonable use’ of groundwater, whether or not accompanied by allocation of the supply in time of shortage under the doctrine of correlative rights, is based upon a desire for equality of present effect without regard to protecting establishing investment. It allows a landowner to sit on his rights while his neighbors are investing in water supply works and then assert rights equal to theirs even if it be to their detriment. The commentators have noted that this dual system flies in the face of hydrological reality. There are not two, but rather one source of water with a constant interchange between ground and surface water. The existence of these inconsistent bodies of law is a historical function of the wealth of Nebraska’s groundwater resources. While in most western states the scarcity of water resources has forced the evolution of a rather complete body of law, in Nebraska the relative abundance of groundwater has postponed conflicts between users and hence inhibited the evolution of judicial and statutory rules. Commentators suggest that a lack of knowledge of groundwater made the formulation of rules difficult:

Subterranean water was considered so secret and unknowable that legal rules could not be formulated to regulate its use. Thus a separate system of institutional control evolved.

Legislative and Judicial Efforts to Resolve the Conflict

Surely there can be no question about the importance of this issue. Nebraska’s water supply, be it groundwater or surface water, is a crucial natural resource whose importance has only been highlighted by the recent drought. How it is to be managed, who is entitled to use it, on what terms it may be used, and how it should be allocated in times of shortage, are all public policy questions of the utmost importance. There can be no doubt that it is the Legislature and not the courts that declares the public policy of this state. There can be no doubt this rule, which of course is nothing more than an application of the principle of separation of powers, is applicable to policy decisions involving the use of groundwater, and the Supreme Court has expressly said so in a 2001 decision:

The Legislature has the power to determine public policy with regard to groundwater. . . .

Commentators have stated that the Legislature not only has the power, but the Legislature, rather than a court, is clearly the appropriate body to address this issue:

It is generally recognized that neither local management nor a workable long-term state water plan can be evolved by the process of private litigation which offers only a narrow perspective of problems throughout an area. Courts have neither the staff nor the expertise to formulate a scientifically sound water plan, and the have relatively few methods of initiating procedures to assure effective development or management. Courts can only react to cases before them. In short, the matter has passed beyond the competence of courts, and future guidance must come from legislative leadership.

The Supreme Court has said exactly the same thing in a 1994 decision:

This anticipated conflict [between the relative rights of those using ground and surface water] is best resolved by the policy-based decision making process that is the province of our Legislature...It is the Legislature, and not the courts, which can paint a water rights picture with broad strokes and bold colors. It is to the Legislature that Wyoming must direct its argument regarding future groundwater depletion.

LB108

In 1996, the Legislature significantly amended the Nebraska Groundwater and Protection Act by passing LB108. The Legislature made an unequivocal acknowledgment of the relationship between ground and surface water:

The Legislature further finds: (1) The management, conservation, and beneficial use of hydrologically connected ground water and surface water are essential to the continued economic prosperity and well-being of the State, including the present and future development of agriculture in the State; (2) Hydrologically connected ground water and surface water may need to be managed differently from unconnected ground water and surface water in order to permit equity among water users and to optimize the beneficial use of interrelated ground water and surface water supplies;....

This section goes on to declare that natural resource districts are the preferred entities to regulate groundwater activities which may contribute to conflicts between the users of ground and surface water and that the Department of Natural Resources should also be given such power if the NRD’s fail to act.

Natural Resource Districts are now armed with an arsenal of weapons for the regulation of water. The present shortage has forced the districts to begin to use these weapons.

LB962

On April 13, 2004, the legislature adopted LB962. One of the express purposes of the new law is "to make the a state and the natural resource districts more proactive in anticipating and addressing conflict between groundwater and surface water users." LB962 maintains the preexisting body of law under which different rule apply to ground and surface water. The Supreme Court has said that LB962, "contains procedures meant to identify areas where water issues exist and to create general regulations to address these issues." LB962 requires the natural resource districts to set out their groundwater supplies and needs and to submit the plan for approval by the Department of Natural Resources. Upon approval, the natural resource districts may create a management area and appropriately regulate groundwater. The Supreme Court held that this statute was not tailored to adjudicate conflicts and did not abrogate a private party’s right to sue. Spear T. Ranch, Inc. v. Knaub, 269 Neb. 177, 691 N.W.2d 116 (2005).

The Spear T and Related Litigation

In 2003, Spear T Ranch, Inc., filed two suits. One was a claim for damages against the Nebraska Department of Natural Resources. Spear T said that the Department was negligent in failing to protect its surface water appropriations from the unlawful use by groundwater users. The Supreme Court held that the Department had neither a statutory nor a common law duty to protect surface water users and upheld the dismissal of the case. Spear T Ranch, Inc. v. Nebraska Department of Natural Resources, 270 Neb. 130, 699 N.W.2d 379 (2005).

Spear T’s second suit was filed in the District Court of Morrill County, Nebraska, in which it sought injunctive and monetary relief against groundwater users in the Pumpkin Creek watershed. Spear T claimed that the use of groundwater had caused the stream to run dry to Spear T’s damage, that Spear T had a superior right to the water, and that the groundwater users had unlawfully converted Spear T’s water. In short, Spear T claimed that its surface water appropriation from Pumpkin Creek was superior to the rights of the groundwater users. The Supreme Court expressly rejected these claims:

"Finally, the prior appropriation rule that Spear T advocates would give first-in-time surface water appropriators the right to use whatever water they want to the exclusion of later-in-town groundwater users. This could have the effect of shutting down all wells in any area where surface water appropriators are hydrologically connected to groundwater...This would unreasonably deprive many groundwater users. Accordingly, we decline to apply the statutory water surface appropriation rules to conflicts between surface and groundwater users...Because Spear T does not have a property interest in its surface water appropriation it only has a right to use, it cannot state a claim for conversion or trespass." Spear T. Ranch, Inc. v. Knaub, 269 Neb. 177, 185-186, 691 N.W.2d 116, 126-127.

The Supreme Court held, however, that the trial court erred in dismissing Spear T’s claim at a preliminary stage because Spear T did not state a cause of action under the Restatement of Torts 2d, §858. That section was adopted as the Nebraska rule in resolving conflicts between surface and groundwater users. It provides as follows:

(1)(a) A proprietor of land or his grantee who withdraws ground water from land and uses it for a beneficial purpose is not subject to liability for interference with the use of water by another unless (a) the withdrawal of ground water unreasonably causes harm to a proprietor of neighboring land through lowering the water table or reducing artesian pressure, (b) the withdrawal of ground water exceeds the proprietor’s reasonable share of the annual supply or total store of ground water, or (c) the withdrawal of ground water has a direct and substantial effect upon a water course or lake and unreasonably causes harm to a person entitled to the use of its water.

Whether a ground water user has unreasonably caused harm is to be decided in a case by case basis. There are some guidelines for the test of reasonableness:

The determination of the reasonableness of a use of water depends upon a consideration of the interests of the riparian proprietor making the use, of any riparian proprietor harmed by it and of society as a whole. Factors that affect the determination include the following:

The court noted, however, that the test was flexible and "a trial court should consider any factors it deems relevant."

While the nature of any remedy was not before the court, the Supreme Court took the unusual step of suggesting that injunctive relief was not likely to be an appropriate remedy:

We digress momentarily to offer a word of caution. Although the issue of available remedies is not yet before us, courts should be cautious when considering remedies for interference with surface water. For example, because the recharge of a stream that has dried up because of well pumping could take years, an injunction against pumping might only serve to deprive everyone in a water basin. Such a remedy would be unreasonable and inequitable. Spear T. Ranch, Inc. v. Knaub, 269 Neb. 177, 194, 691 N.W.2d 116, 132.

As notes, the court further held that recent Nebraska legislation does not preempt a civil suit for damages.

The Spear T case was remanded for further action. Before it went to trial, Central Nebraska Public Power and Irrigation District sought leave to intervene. Permission was denied in the early summer of 2005, and the case is presently pending upon Central’s appeal from that decision. A decision is not expected before early 2006 and there will be no further activity in the Spear T litigation until resolution of Central’s appeal.

Central had also filed an action in the Department of Natural Resources alleging that groundwater users, which include the Spear T defendants and many others, were unlawfully diverting water to Central’s damage. The Supreme Court upheld a decision that the Department of Natural Resources lacked jurisdiction to consider the claim. In re Central Nebraska Public Power and Irrigation District, 270 Neb. 108, 699 N.W.2d 372 (2005).

Needless to say, uncounted millions of dollars are riding on the outcome of these actions. Nebraska’s combined supplies of ground and surface water are apparently no longer sufficient to allow usage to continue as before. It is certainly to be hoped that some means will be found to accommodate the legitimate rights of all users but exactly how this is to be accomplished remains an unanswered question.