In re 2007 Appropriations of Niobrara River Waters, 288 Neb. 497

Background

Joe McClaren Ranch, L.L.C. and Weinreis Brothers (junior appropriators) hold relatively recent Niobrara River water rights and received 2007 closing notices after Nebraska Public Power District (NPPD) (senior appropriator) called for administration to supply its Spencer hydropower plant.
NPPD’s three Spencer appropriations date from 1896, 1923, and 1942 and together amount to 2,035 cfs; Spencer is ~145 miles downstream of the juniors’ diversions.
The Department of Natural Resources issued closing notices in May and August 2007 after streamflow measurements showed insufficient flow to satisfy NPPD’s total allotment; some junior users had subordination agreements with NPPD.
This litigation returned to the agency and appellate court multiple times; the Supreme Court previously remanded directing the Department to consider common-law abandonment and statutory forfeiture/nonuse claims.
On remand the Department admitted legislative history over objection, held hearings, found NPPD did not abandon or forfeit its rights (in whole or part), accounted for subordination agreements in practice, and did not perform futile-call analyses on the mainstem because it treated the Niobrara as a “wet river.”
The Supreme Court affirms the Department: (1) admitting legislative history was error but harmless; (2) Department findings that NPPD did not abandon or statutorily forfeit rights were supported by competent evidence; (3) Department’s handling of subordination agreements and futile-call practice was not arbitrary.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Admissibility of legislative history	Department improperly took notice and used legislative history to undercut this Court’s prior law-of-the-case rulings	Agency may take official notice of legislative history; material was relevant to remand	Taking notice was error because statute previously held unambiguous, but error was harmless (no prejudice)
Abandonment (common law)	NPPD’s long failure to call for administration or to protest many junior permits shows intent to abandon part or all rights	NPPD continuously operated Spencer, incurred expenses, paid leases, used full allotment on multiple dates; lack of prior calls reflects Department practice	Department’s factual finding that NPPD did not intend to abandon was supported by competent evidence and not arbitrary
Statutory forfeiture / nonuse (common-law nonuse under §25-202)	NPPD failed to beneficially use parts of its appropriations for >10 years, so partial forfeiture occurred	Evidence shows Spencer used water to generate power within the 10-year period; where full allotment was used on numerous dates, no 10-year nonuse	Department’s findings show no 10-year period of nonuse; no forfeiture under §25-202
Subordination agreements & futile-call analysis	Department ignored limits/conditions and allowed NPPD to collect fees while also calling for full allotment; also failed to do futile-call analysis on mainstem	Department considered subordination agreements (juniors with agreements were not sent closing notices); mainstem is a “wet river” so futile-call analysis not required there	Department’s policy and technical determinations were reasonable and supported by evidence; not arbitrary or capricious

Key Cases Cited

In re 2007 Appropriations of Niobrara River Waters, 278 Neb. 137 (prior appeal addressing remand scope)
In re 2007 Appropriations of Niobrara River Waters, 283 Neb. 629 (prior appeal holding statutory cancellation did not abrogate common-law claims)
State v. Nielsen, 163 Neb. 372 (establishing abandonment and nonuse principles for water rights)
Kersenbrock v. Boyes, 95 Neb. 407 (forfeiture/nonuse precedent)
Kvamme v. State Farm Mut. Auto. Ins. Co., 267 Neb. 703 (wrongful admission of evidence requires showing of prejudice)
State, ex rel. Cary v. Cochran, 138 Neb. 163 (agency factfinding re: deliverability and futile-call considerations)