Cappel v. State
905 N.W.2d 38
Neb.2017Background
- The Cappels (landowners/irrigators in the Republican River Basin) received surface-water closing notices from the Nebraska Department of Natural Resources (DNR) for 2013–2015 after DNR declared "Compact Call Years" to preserve Nebraska’s allocation under the Republican River Compact.
- The closing notices prevented use of surface water for irrigation; the Cappels continued to irrigate with groundwater and remained liable for taxes/assessments on irrigated acres.
- The Cappels sued in Hitchcock County (did not use the statutory administrative challenge procedure), asserting claims under 42 U.S.C. § 1983, federal and state due process, inverse condemnation (federal and state takings), and restitution/refund of occupation/water taxes.
- DNR moved to dismiss for lack of subject matter jurisdiction (sovereign immunity) and for failure to state a claim; the district court dismissed the amended complaint under Neb. Ct. R. Pldg. § 6-1112(b)(6) without leave to amend, but declined to dismiss on sovereign immunity grounds.
- The Nebraska Supreme Court affirmed dismissal of the inverse-condemnation claim (no compensable vested property right taken) but held the § 1983, due process, and restitution claims were barred by sovereign immunity and must be dismissed for lack of subject matter jurisdiction.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether § 1983 claim may proceed against DNR/its director | Cappels: § 1983 provides remedy for deprivation of constitutional rights | DNR: State sovereign immunity bars § 1983 suit against the State/agency | Dismissed for lack of subject-matter jurisdiction (sovereign immunity) |
| Whether closing notices/Compact administration constituted inverse condemnation (physical or regulatory taking) | Cappels: closing notices and DNR regulation deprived them of water rights/ economic use | DNR: Actions implemented to secure Compact compliance; water appropriations are public-use privileges subject to limitation | Dismissed for failure to state a takings claim—no compensable vested property interest taken |
| Whether Cappels stated federal/state due process claims for money damages | Cappels: deprivation without due process warrants damages | DNR: money damages against the State barred by sovereign immunity; federal due-process damages are recoverable only via § 1983 | Federal due-process damages are limited to § 1983 (which is barred here); state constitutional money-judgment claim barred by sovereign immunity; dismiss for lack of jurisdiction |
| Whether restitution/refund of occupation/water taxes may be claimed against the State | Cappels: seek reimbursement for taxes/assessments paid during closed years | DNR: sovereign immunity bars money judgment; statutory refund procedures exist and were not followed | Dismissed for lack of subject-matter jurisdiction; plaintiffs must use statutory refund procedures |
Key Cases Cited
- Hill v. State, 296 Neb. 10 (Neb. 2017) (held no compensable vested water-right interest when rights are limited to ensure Compact compliance)
- Scofield v. State, 276 Neb. 215 (Neb. 2008) (summarized regulatory‑takings categories and applied Penn Central framework)
- Penn Central Transp. Co. v. New York City, 438 U.S. 104 (U.S. 1978) (multi-factor test for non-categorical regulatory takings)
- Lingle v. Chevron U.S.A. Inc., 544 U.S. 528 (U.S. 2005) (clarified regulatory takings doctrine and two categorical rules)
- Will v. Michigan Dep’t of State Police, 491 U.S. 58 (U.S. 1989) (official‑capacity suits against state officials are treated as suits against the State for Eleventh Amendment/sovereign immunity purposes)
- FDIC v. Meyer, 510 U.S. 471 (U.S. 1994) (Eleventh Amendment bars certain suits against states and state agencies)
- Davis v. State, 297 Neb. 955 (Neb. 2017) (sovereign immunity is jurisdictional; appellate courts must address jurisdiction)
- Keating v. Nebraska Public Power Dist., 660 F.3d 1014 (8th Cir. 2011) (when watershed cannot supply all permit holders, permit holders lack entitlement to use surface water)
- Village of Memphis v. Frahm, 287 Neb. 427 (Neb. 2014) (definition and elements of inverse condemnation)