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IN RE 2007 APPROPRIATIONS OF NIOBRARA RIVER WATERS 497

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In re 2007 Administration of Appropriations

of the Waters of the Niobrara River.

Joe McClaren Ranch, L.L.C., and Weinreis Brothers

Partnership, appellants, v. Nebraska Public

Power District and Nebraska Department

of Natural Resources, appellees.

___ N.W.2d ___

Filed July 11, 2014. No. S-13-702.

1. Administrative Law: Statutes: Appeal and Error. In an appeal from the 

Department of Natural Resources, an appellate court’s review of the director’s 

factual determinations is limited to deciding whether such determinations are 

supported by competent and relevant evidence and are not arbitrary, capricious, 

or unreasonable; however, on questions of law, which include the meaning of 

statutes, a reviewing court is obligated to reach its conclusions independent of the 

legal conclusions made by the director.

2. Trial: Evidence: Appeal and Error. To constitute reversible error in a civil case, 

the wrongful admission of evidence must unfairly prejudice a substantial right of 

a litigant complaining about the evidence admitted.

Appeal from the Department of Natural Resources. 

Affirmed.

Donald G. Blankenau, Thomas R. Wilmoth, and Vanessa 

A. Silke, of Blankenau, Wilmoth & Jarecke, L.L.P., for 

appellants.

Stephen D. Mossman and Patricia L. Vannoy, of Mattson, 

Ricketts, Davies, Stewart & Calkins, for appellee Nebraska 

Public Power District.

Jon Bruning, Attorney General, Justine D. Lavene, and 

Emily K. Rose for appellee Department of Natural Resources.

Steven C. Smith and Lindsay R. Snyder, of Smith, Snyder 

& Petitt, a general partnership, for amicus curiae Nebraska 

State Irrigation Association.

Heavican, C.J., Wright, Connolly, Stephan, McCormack, 

Miller-Lerman, and Cassel, JJ.
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Heavican, C.J.

INTRODUCTION

Joe McClaren Ranch, L.L.C., and Weinreis Brothers 

Partnership, junior river water appropriators, hold appropriations to divert water from the Niobrara River (Niobrara). 

The junior appropriators petitioned for a hearing before the 

Nebraska Department of Natural Resources (Department) after 

receiving closing notices in favor of senior appropriations 

claimed by the Nebraska Public Power District (NPPD) for its 

Spencer hydropower plant. The junior appropriators challenged 

the Department’s administration of the Niobrara and sought 

to stay any future closing notices. On remand from this court, 

the Department held a hearing and issued an order denying the 

junior appropriators’ claims. The junior appropriators appeal. 

We affirm.

BACKGROUND

Joe McClaren Ranch owns real property along the Niobrara 

in Cherry County, Nebraska. Joe McClaren Ranch applied for 

an appropriation to divert water from the Niobrara in 2006. 

When this case began, Jack Bond also owned real property in 

Cherry County along the Niobrara and held five appropriation 

rights from the Niobrara for irrigation and domestic purposes, 

as well as two appropriations from tributaries to the Niobrara 

for irrigation. Bond’s appropriations had priority dates between 

1969 and 2006. In 2011, Bond sold his property and assigned 

his water appropriations to Weinreis Brothers Partnership. The 

partnership was subsequently added as a party in this case, and 

Bond was permitted to withdraw.

NPPD is the owner or lessee of three water appropriations for hydropower generation for its Spencer plant located 

near Spencer, Nebraska. NPPD’s appropriations date back to 

1896, 1923, and 1942. The Spencer plant is located approximately 145 miles downstream from Joe McClaren Ranch’s and 

Weinreis Brothers Partnership’s real property.

On March 2, 2007, NPPD sent a letter to the Department 

calling for water administration on the Niobrara for the benefit of appropriations for its Spencer plant. On May 1, the 

Department issued closing notices to approximately 400 junior 
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appropriators, including Joe McClaren Ranch and Bond, directing them to cease water diversions from the Niobrara. On May 

11, the junior appropriators filed a request for a hearing with 

the Department pursuant to Neb. Rev. Stat. § 61-206 (Reissue 

2009). The administration of the Niobrara was delayed at 

NPPD’s request, but on August 1, the Department again issued 

closing notices to the junior appropriators.

On August 17, 2007, the junior appropriators petitioned 

for a condemnation award in a separate proceeding, causing 

the Department to dismiss the junior appropriators’ request 

for a hearing as moot. The junior appropriators appealed. We 

reversed, and remanded.1

After a hearing to consider the junior appropriators’ challenges, the Department determined that the appropriation 

of the Niobrara was proper. The junior appropriators again 

appealed to this court, and we again reversed, and remanded, 

finding that the Department had improperly limited the scope 

of the proceedings to exclude the common-law issues of 

abandonment and statutory forfeiture from nonuse.2 In our 

opinion, we found that the statutory procedure for cancellation 

of appropriations provided in Neb. Rev. Stat. §§ 46-229.02 

to 46-229.05 (Reissue 2010) did not abrogate the commonlaw methods of cancellation and stated: “On remand, the 

Department is directed to determine whether NPPD’s appropriations have been abandoned or statutorily forfeited in whole 

or in part.”3

The parties stipulated that the previously admitted testimony 

and exhibits would be admitted at the new hearing, subject to 

some previous objections. The hearing officer also took notice 

of the legislative history of 1993 Neb. Laws, L.B. 302, over 

objection by the junior appropriators.

The evidence showed that prior to 2007, no owner of the 

Spencer plant had placed a call for administration of the 

1 In re 2007 Appropriations of Niobrara River Waters, 278 Neb. 137, 768 

N.W.2d 420 (2009).

2 In re 2007 Appropriations of Niobrara River Waters, 283 Neb. 629, 820 

N.W.2d 44 (2012).

3 Id. at 658, 820 N.W.2d at 67.
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Niobrara in over 50 years. NPPD’s water resources manager placed the call for administration in 2007, after learning 

through conversations with the Department in 2006 that, unlike 

the North Platte and Platte River Basins, the Department was 

not proactively administering the portion of the Niobrara near 

Spencer on a regular basis.

NPPD and its predecessor had been maintaining and generating power at the plant, which has been in continuous operation since 1927, except when closed for maintenance or repair. 

When NPPD placed the call for administration, it was current 

on lease payments for its water rights. The Spencer plant’s 

three appropriations amount to a total water discharge of 2,035 

cubic feet per second (cfs). On approximately 30 separate 

dates in 2006, the Spencer plant took through its facilities the 

total amount of flow allotted in NPPD’s appropriations for 

the plant.

After receiving NPPD’s call, several flow measurements 

were taken near Spencer. Initially, these measurements indicated that the discharge was sufficient to meet NPPD’s appropriations. However, on April 30, 2007, a measurement was 

taken approximately 10 miles upstream of the Spencer plant, 

indicating the total discharge to be 1,993.73 cfs, which was 

insufficient for the appropriations associated with the plant. 

After this measurement, on May 1, the Department issued 

the first set of closing notices to approximately 400 junior 

appropriators. Administration of the river was delayed in June 

and July, at NPPD’s request, to allow time for NPPD to get 

subordination agreements in place. By entering into subordination agreements, junior appropriators pay a fee to continue to 

use water to which the senior appropriator would otherwise be 

entitled. Another measurement taken on July 31 indicated a 

total discharge of 902.72 cfs. As a result of this measurement, 

on August 1, the Department again issued closing notices to 

junior appropriators.

After the second hearing on remand, the Department issued 

an order denying the junior appropriators’ claims and finding 

that NPPD did not abandon or statutorily forfeit any or all of 

its appropriations. The junior appropriators appeal.
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ASSIGNMENTS OF ERROR

The junior appropriators assign the following errors of the 

Department, restated and reordered: (1) relying on evidence 

from the hearing officer, which evidence attacked this court’s 

conclusions about common-law abandonment and this court’s 

instructions on remand; (2) finding the junior appropriators 

failed to prove NPPD had abandoned its appropriations; (3) 

finding the junior appropriators failed to prove NPPD had statutorily forfeited its appropriations; (4) issuing closing notices 

without taking into account the subordination agreements and 

express limitations in NPPD’s appropriations; and (5) failing to 

conduct a futile call analysis.

STANDARD OF REVIEW

[1] In an appeal from the Department, an appellate court’s 

review of the director’s factual determinations is limited to 

deciding whether such determinations are supported by competent and relevant evidence and are not arbitrary, capricious, 

or unreasonable; however, on questions of law, which include 

the meaning of statutes, a reviewing court is obligated to reach 

its conclusions independent of the legal conclusions made by 

the director.4

ANALYSIS

Legislative History of L.B. 302.

In its first assignment of error, the junior appropriators 

assert that the Department erred by relying on evidence from 

the hearing officer, which evidence they claim collaterally 

attacked this court’s conclusions about common-law abandonment and statutory forfeiture. These alleged errors stem from 

the Department hearing officer’s taking notice of the legislative 

history of L.B. 302, which amended Neb. Rev. Stat. § 46-229 

(Reissue 2010).

4 In re Applications T-851 & T-852, 268 Neb. 620, 686 N.W.2d 360 (2004); 

In re Water Appropriation A-4924, 267 Neb. 430, 674 N.W.2d 788 (2004); 

City of Lincoln v. Central Platte NRD, 263 Neb. 141, 638 N.W.2d 839 

(2002).
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The junior appropriators suggest that the hearing officer’s 

decision to take notice of the legislative history, without 

prompting from either party, constituted improper advocacy. 

Although the junior appropriators’ brief suggests they perceive 

bias extending beyond official notice of the legislative history, 

we note that the only relevant objection appearing in the record 

is the objection to the legislative history and, therefore, this is 

the only issue preserved for our review.

The Administrative Procedure Act specifically permits an 

agency to take official notice of cognizable facts if notice is 

given to the parties, as it was here.5 Nothing in the act requires 

such notice to be requested by one of the parties.6 We have 

long held that courts may take judicial notice of legislative 

history,7 and we see no reason why agencies would not also be 

permitted to do so.

The Department’s order states the legislative history was 

admitted because it was relevant and not before the Department 

at the previous hearing, nor in the record for this court to 

review on the previous appeal.

As we stated in our prior opinion, “[S]tatutes which effect a 

change in the common law or take away a common-law right 

should be strictly construed, and a construction which restricts 

or removes a common-law right should not be adopted unless 

the plain words of the statute compel it.”8 We have also stated, 

“For a court to inquire into a statute’s legislative history, the 

statute in question must be open to construction. A statute is 

open to construction when its terms require interpretation or 

may reasonably be considered ambiguous.”9

The legislative history for L.B. 302 was not relevant to 

the hearing on remand, because this court had previously 

5 Neb. Rev. Stat. § 84-914(5) (Reissue 2008).

6 Cf. Neb. Rev. Stat. § 27-201(3) (Reissue 2008). 

7 See, e.g., Dairyland Power Co-op v. State Bd. of Equal., 238 Neb. 696, 

472 N.W.2d 363 (1991).

8 In re 2007 Appropriations of Niobrara River Waters, supra note 2, 283 

Neb. at 653, 820 N.W.2d at 64.

9 In re Interest of Destiny A. et al., 274 Neb. 713, 720, 742 N.W.2d 758, 764 

(2007).
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held, “The plain and unambiguous language of §§ 46-229 

to 46-229.05 merely provides the procedure by which the 

Department must abide when terminating an owner’s or a 

successor’s appropriation right. This language does not explicitly address the common-law theories of abandonment and 

nonuse.”10 Our prior holding indicates that we did not need to 

look at the statute’s legislative history for intent because the 

language of the statute is unambiguous. Furthermore, as we 

also noted in our previous opinion, “Under the law-of-the-case 

doctrine, an appellate court’s holdings on questions presented 

to it in reviewing the trial court’s proceedings become the law 

of the case; those holdings conclusively settle, for purposes of 

that litigation, all matters ruled upon, either expressly or by 

necessary implication.”11

Our holding on the issue of whether the statute abrogated the 

common law is the law of the case. Thus, the legislative history 

of L.B. 302 was not relevant and the Department clearly erred 

in admitting it.

[2] We have held that to constitute reversible error in a 

civil case, the wrongful admission of evidence must unfairly 

prejudice a substantial right of a litigant complaining about 

the evidence admitted.12 After reviewing the record, it does 

not appear that any relevant evidence was excluded as a result 

of the Department’s decision to admit the legislative history. 

Additionally, the Department made findings of fact, supported 

by other relevant evidence, including expert testimony and 

numerous exhibits, related to both abandonment and statutory 

forfeiture. We conclude the decision to admit the legislative 

history was harmless error that did not unfairly prejudice 

a substantial right of the junior appropriators, and we are 

able to consider the junior appropriators’ other assignments 

of error.

10 In re 2007 Appropriations of Niobrara River Waters, supra note 2, 283 

Neb. at 653, 820 N.W.2d at 64.

11 Id. at 641, 820 N.W.2d at 56.

12 Kvamme v. State Farm Mut. Auto. Ins. Co., 267 Neb. 703, 677 N.W.2d 122 

(2004).
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Abandonment.

In its second assignment of error, the junior appropriators 

assert that the Department erred in finding the junior appropriators failed to prove NPPD had abandoned its appropriations in whole or in part. The junior appropriators primarily 

argue that NPPD’s failure to call for administration of the 

river or enter into more subordination agreements with junior 

appropriators prior to 2007 demonstrates an intent to abandon 

its appropriations.

Abandonment is a common-law principle. In State v. 

Nielsen,

13 which we discussed in our prior opinion in this case, 

we stated that “‘“‘[a]bandonment’ is the relinquishment of a 

right by the owner thereof, without any regard to future possession by himself or any other person, but with the intention 

to forsake or desert the right.”’”

The junior appropriators cite Mader v. Mettenbrink,

14 an 

easement case, for the proposition that acquiescence in adverse 

acts may evidence abandonment. The junior appropriators do 

not, however, point to any case law which holds that the failure to place a call for administration, while continuing to use 

water, may demonstrate an intent to abandon. We also find it 

persuasive that the Supreme Court of Colorado, in considering 

the validity of a no-call agreement, held, “There is no requirement that a senior water right holder place a call on the river to 

effectuate its water rights . . . .”15

In finding NPPD did not intend to abandon all or part of its 

appropriations, the Department noted that the Spencer plant 

had been in operation, generating power since 1927. NPPD 

had expended significant funds to staff, operate, and maintain 

its facility. NPPD was current on lease payments for its appropriations and had, at various points, used the full amount of 

flow granted in its three appropriations. The Department also 

noted that NPPD’s water resources manager had been under 

13 State v. Nielsen, 163 Neb. 372, 381, 79 N.W.2d 721, 728 (1956) (quoting 

State v. Oliver Bros., 119 Neb. 302, 228 N.W. 864 (1930)).

14 Mader v. Mettenbrink, 159 Neb. 118, 65 N.W.2d 334 (1954).

15 City of Englewood v. Burlington Ditch, 235 P.3d 1061, 1069 (Colo. 2010) 

(en banc).
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the mistaken assumption that the Niobrara was proactively 

administered by the Department, like the North Platte and 

Platte River Basins. These facts refute any presumption that 

NPPD’s failure to place a call prior to 2007 was evidence that 

it intended to abandon its appropriations.

The dissent argues that NPPD has “never protected” its 

1942 appropriation. However, we emphasize that our focus 

is on what evidence in the record demonstrates that NPPD 

intended to abandon its rights, rather than what evidence 

there is that NPPD acted to preserve its rights. Furthermore, 

although the dissent suggests that NPPD should have protested 

the roughly 400 applications for new appropriations that followed NPPD’s 1942 appropriation, we have recently reiterated 

that the “threatened” injury of a new appropriation does not 

confer standing to challenge an application for an appropriation.16 Finally, if we were to find that NPPD was required to 

protect its appropriations, which were public record, by objecting to new applications, we see no reason why the roughly 400 

junior appropriators that followed would not also have been 

required to protect theirs.

In short, the dissent asserts that the Department’s method 

of administering the waters of the Niobrara River Basin is 

fundamentally flawed and suggests that we impose additional 

burdens on NPPD as a result. To do so would uproot nearly a 

century of water law in this state and, further, would stray from 

the specific issues of this case.

The Department’s determination that NPPD did not intend 

to abandon any or all of its appropriations was supported 

by competent and relevant evidence and was not arbitrary, 

capricious, or unreasonable. Therefore, we conclude that the 

Department did not err in finding the junior appropriators 

failed to prove NPPD abandoned its appropriations in whole 

or in part.

Statutory Forfeiture.

In its third assignment of error, the junior appropriators assert that the Department erred in finding the junior 

16 In re Application A-18503, 286 Neb. 611, 838 N.W.2d 242 (2013).
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appropriators failed to prove NPPD had statutorily forfeited its 

appropriations in whole or in part.

The Department’s order attempts to address forfeiture from 

nonuse, but begins that section by stating that “[s]tatutory 

forfeiture is governed by Neb. Rev. Stat. §§ 46-229 through 

46.229.05.” This is contrary to our holdings in Nielsen and our 

prior opinion in this case that statutory forfeiture is independent of the cancellation proceedings provided for in §§ 46-229 

to 46-229.05. We note that the dissent also addresses statutory 

forfeiture and cites to chapter 46 of the Nebraska Revised 

Statutes for the proposition that an appropriation may be forfeited “in whole or in part.” However, what is at issue in this 

appeal is common-law nonuse, which is governed by Neb. Rev. 

Stat. § 25-202 (Reissue 2008).

In Nielsen, we found that in addition to loss through abandonment, an appropriation right could be lost through nonuse 

for the period of statutory limitations relating to real estate.17

Under § 25-202, “An action for the recovery of the title or 

possession of lands, tenements, or hereditaments . . . can only 

be brought within ten years after the cause of action accrues.” 

In other words, a lack of beneficial use for more than 10 years 

may result in the loss of an appropriation.

In finding nonuse in Nielsen, we noted that the predecessor in title did not do any work on the irrigation system of the 

premises, did not irrigate the farm for the 11-year period of 

possession, and ignored a cancellation proceeding notice.18 In 

Kersenbrock v. Boyes,

19 we found nonuse of an appropriation 

where, for more than 10 years, the claimant’s dam was not in 

a condition to generate power to pump water for irrigation or 

run a gristmill.

The Department’s order improperly focuses on a finding 

that there was not sufficient evidence to justify a cancellation 

proceeding under §§ 46-229 to 46-229.05. Despite reliance on 

the incorrect statutes, the Department made factual findings 

17 Nielsen, supra note 13.

18 Id.

19 Kersenbrock v. Boyes, 95 Neb. 407, 145 N.W. 837 (1914).
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based on the evidence in this case that do not support a finding 

of nonuse. NPPD’s Spencer plant was operating by using water 

from the Niobrara to generate power and had been doing so for 

more than the past 10 years.

The junior appropriators suggest that NPPD was not using 

all of its 2,035 cfs for the past 10 years. Even assuming, as 

do the junior appropriators and the dissent, that it is possible 

to lose part of an appropriation, the evidence showed that at 

numerous points in 2006, NPPD was utilizing the full 2,035 

cfs. As such, it is clear that any partial nonuse of the water did 

not continue for a 10-year period.

Because the Department’s factual findings demonstrate there 

was no 10-year period of nonuse, we conclude NPPD did not 

statutorily forfeit its appropriations under § 25-202.

Limitations on NPPD’s Appropriations.

In its fourth assignment of error, the junior appropriators 

assert that the Department erred in issuing closing notices 

without taking into account the subordination agreements and 

express limitations in NPPD’s appropriations.

A field office supervisor for the Department testified that the 

subordination agreements with NPPD were taken into consideration by the Department. He testified that the Department’s 

policy was to not send closing notices to junior appropriators 

who have a subordination agreement with the senior appropriator. The junior appropriators suggest the Department’s policy 

of allowing the senior appropriator to place a call for the full 

amount of its appropriations despite the existence of subordination agreements permits the senior appropriator to collect both 

money and water.

However, if the junior appropriator is allowed to use water 

because of a subordination agreement, the senior appropriator is not receiving that to which it is otherwise entitled. It is 

possible that there are times when the flow of the river might 

be such that NPPD receives its full 2,035 cfs, despite continued use of water by junior appropriators with subordination 

agreements. However, if this were always the case, we assume 

that junior appropriators would not enter into voluntary subordination agreements. Instead, as is clear from the record in 
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this case, the flow of the river often is not sufficient for all 

potential users. At these times, NPPD collects a fee from the 

junior appropriators with subordination agreements, but it does 

not receive the water that it otherwise would receive, because 

the junior appropriators with subordination agreements do not 

receive closing notices. We disagree with the dissent that the 

election of remedies doctrine is applicable to this case. An 

appropriator is not permitted to simultaneously enforce its right 

against, and collect compensation from, the same junior appropriator. The Department’s policy is not arbitrary, capricious, or 

unreasonable, and the Department is entitled to deference for 

its technical expertise in this area.20

There was evidence that because one of NPPD’s appropriations—for 35 cfs—had, at one time, been relocated to a 

different point on the river, it was subject to a limitation that 

NPPD could only call for administration of permits upstream 

on Minnechaduza Creek and its tributaries. However, the evidence showed that even without considering that appropriation, 

the flow on April 30, 2007, fell below the amount allotted in 

NPPD’s other two appropriations.

The Department’s determination that it had properly determined the flow demand for NPPD’s appropriations was supported by competent and relevant evidence and was not arbitrary, capricious, or unreasonable.

Futile Call Analysis.

In its fifth assignment of error, the junior appropriators 

assert that the Department erred in failing to conduct a futile 

call analysis.

The junior appropriators cite State, ex rel. Cary, v. Cochran21

for the proposition that it “is the duty of the administrative 

officers of the state to determine from all available means . . . 

whether or not a usable quantity of water can be delivered.” In 

20 See In re Application A-15738, 226 Neb. 146, 410 N.W.2d 101 (1987).

21 State, ex rel. Cary, v. Cochran, 138 Neb. 163, 173-74, 292 N.W. 239, 246 

(1940).
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that case, we addressed the duty of the administrative officers 

after noting that “[w]hether a definite quantity of water passing a given point on the stream would, if not diverted or interrupted in its course, reach [the senior appropriator] in a usable 

quantity creates a very complicated question of fact.”22 We 

went on to say, “It necessarily follows that this finding of fact 

must be determined in the first instance by the officers charged 

with the administration of the stream. The finding of fact thus 

made is final unless it appears that it was unreasonable or arbitrarily made.”23

The evidence showed that a futile call analysis was not done 

on the main stem of the Niobrara because it is a “wet river,” 

meaning it always contains flowing water, and the Department 

determined water from the junior appropriators could therefore 

reach the Spencer plant. When requested by junior appropriators, futile call analyses were done on tributaries to the river 

with dry patches.

The Department is entitled to deference in this technical 

area, and the Department’s determination that it had conducted 

a futile call analysis where appropriate was supported by competent and relevant evidence and was not arbitrary, capricious, 

or unreasonable.

CONCLUSION

For the foregoing reasons, the decision of the Department is 

affirmed.

Affirmed.

22 Id. at 173, 292 N.W. at 246.

23 Id. at 174, 292 N.W. at 246.

Connolly, J., dissenting.

The Department’s method of administering the waters of the 

Niobrara River Basin is fundamentally flawed. The problem 

was caused by too many appropriations for surface water or 

ground water in the Niobrara River Basin. As we have previously pointed out, under the Department’s regulations, it is free 

to designate the basin or its subparts fully appropriated based 
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on streamflow data and diversion records.1 But since March 

2007, the Department has instead relied on NPPD’s unsatisfied total allotment to declare that the basin fully appropriated and to restrict or to close the water rights of upstream 

junior appropriators.

The Department’s reliance on NPPD’s appropriations is 

flawed because since 1942, NPPD has held appropriations so 

large that the river’s flow at Spencer Dam was insufficient 

to satisfy NPPD’s total allotment most of time. This record 

contains the recorded flow rates of water passing through 

Spencer Dam for 68 years—from 1942 to 2009. It shows that 

on average, Spencer Dam has received its full allotment of 

2,035 cubic feet per second (cfs) for 59.7 days a year. More 

specifically, for 7 months of the year, from July to January, 

NPPD receives a flow that meets or exceeds 2,035 cfs only 

2.4 percent of the time. During the remaining months, from 

February to June, when the river’s flow is greater, it still 

receives a flow that meets or exceeds 2,035 cfs only 13.2 

percent of the time. Yet during all these decades, NPPD has 

failed to protect its purported right to receive the full amount 

of its allotment.

Significantly, the Department treats NPPD’s 2007 call as 

a continuing demand for its full allotment of 2,035 cfs. The 

record does not contain the Department’s estimate of the 

Niobrara’s average flow rate. But for this appeal, I will assume 

that the water flowing through Spencer Dam constitutes a close 

approximation of the river’s average flow rate at the eastern 

end of the river. According to those recorded flows, from July 

to January of any given year, the Department will be able to 

shut down upstream junior appropriators for almost 97 percent 

of the time, and almost 87 percent of the time from February to 

June. These junior appropriators have made investments to use 

their appropriations. To permit NPPD to cause this economic 

harm in 2007 after acquiescing in the Department’s actions for 

over 60 years is both unjust and contrary to the nature of its 

permits and the Department’s actions. I believe a review of the 

1 See Middle Niobrara NRD v. Department of Nat. Resources, 281 Neb. 

634, 799 N.W.2d 305 (2011).
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historical record, which the majority opinion largely ignores, 

makes these conclusions clear.

Historical Background

The record shows that NPPD holds three appropriations 

which make up its total allotment of 2,035 cfs. These appropriations have priority dates of 1896, 1923, and 1942, and 

they were acquired by private companies and a different public 

power district that are NPPD’s predecessors in interest. In 1896, 

the State granted an appropriation for 35 cfs for a flour mill 

dam on the Minnechaduza Creek, north of Valentine, Nebraska, 

in the northwestern part of the state. The Minnechaduza Creek 

is a tributary stream to the Niobrara.

In 1923, NPPD’s first hydropower predecessor requested an 

appropriation of 1,450 cfs to generate electricity at what would 

become Spencer Dam. The application provided the following 

average flow rates in this part of the Niobrara: At low water 

stage, the river supplied 1,100 cfs; at medium water stage, 

1,450 cfs; and at high water stage, 3,300 cfs. The application 

was approved for 1,450 cfs “subject to the provisions of the 

Nebraska Irrigation Laws, which gives preference to appropriators using the water for domestic and agricultural uses, over 

those using it for manufacturing and power purposes.” The 

dam was originally built in 1927.

By the time the 1923 application was approved, Nebraska 

had adopted the 1920 constitution, which included the statutory 

preferences for water use in times of scarcity. Additionally, 

however, article XV, § 6, of the Nebraska Constitution explicitly requires a user with a higher priority for the water to 

compensate an appropriator with a senior appropriation. So the 

1923 permit’s reference to Nebraska’s preference laws acted as 

a notice that water users with higher priorities were entitled to 

use the water appropriated to NPPD’s predecessor if they paid 

compensation for the water.

In 1941, the U.S. government applied for a permit to divert 

and store 47,670 acre-feet of water from the Niobrara River 

in the Box Butte Reservoir near Chadron, Nebraska. This 

application was part of the Bureau of Reclamation’s Mirage 

Flats project to build a dam and irrigation canal. The dam and 
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reservoir operate to send stored water from the Niobrara to 

the Mirage Flats Canal for irrigation and domestic use. The 

hydropower company that is NPPD’s predecessor in interest 

for the Spencer hydropower facility protested the government’s 

application and the assignment of other appropriations to the 

government for water storage.

In 1942, while the government’s application was pending, the 

hydropower company applied for 550 cfs, in addition to 1,450 

cfs that it received under the 1923 application, to increase the 

river’s head at the Spencer Dam. In 1943, while the company’s 

application was pending, the hydropower company executed a 

subordination agreement with the government. For the agreedupon amount of $25,000 in damages, the company subordinated to the government its 1923 appropriation for 1,450 cfs 

and, if approved, its 1942 application for an additional 550 cfs. 

The company specifically agreed that despite its priority date, 

its water rights would be subordinate and inferior to the government’s rights to the extent that it diverted the water to the 

Mirage Flats Canal. The company further recognized the government’s intent to use waste, seepage, and return-flow waters 

for irrigation. But the agreement did not apply to any waters 

“when and after they have become a part of the measureable 

flow of the main Niobrara River in the section below the diversion dam of the Project.”

In September 1943, the chief of the Bureau of Irrigation, 

Water Power, and Drainage wrote the state engineer for the 

Department’s predecessor that the Niobrara was over appropriated; he recommended a clause providing that the water 

granted under the 1942 application could be denied in times of 

scarcity. That recommendation was incorporated into the permit. Like the 1923 permit, the 1942 permit approved the application “subject to the provisions of Section 46-504 Complied 

Statutes of Nebraska 1929, which gives preference to appropriators using water for domestic and agricultural uses over 

those using it for manufacturing purposes.” But unlike the 

previous permit, the 1942 permit explicitly stated the appropriation was subject to the following limitation: “[T]he records 

show the normal supply of water of the Niobrara River is overappropriated, and the applicant under this permit is hereby 
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given notice that it may be denied the use of water during 

times of scarcity.”

This second limitation is more than a notification that other 

users with a higher preference right could condemn NPPD’s 

water rights. It operated as a conditional water right, with the 

Department’s reserving the right to deny 550 cfs to NPPD in 

times of scarcity, regardless of whether other users have condemned its rights. And the record shows that this is how the 

Department has treated the appropriation. That is, before 2007, 

when considering applications with a higher use priority, the 

Department has treated NPPD’s use of the water to produce 

electricity as an incidental benefit of the river’s waters.

By 1964, the appropriations for hydropower at Spencer 

Dam were owned by the Consumers Public Power District 

(Consumers), which also held appropriations for a hydropower facility in Valentine. Much earlier, the Bureau of 

Reclamation had planned to build the Merritt Reservoir near 

Valentine on the Snake River, a tributary of the Niobrara. 

The Merritt Reservoir was intended to supply irrigation water 

for about 34,000 acres through a planned Ainsworth irrigation canal.

But the government recognized that the project would interfere with Consumers’ power production at its Valentine and 

Spencer facilities. So a 10-year study was conducted to determine how much of Consumers’ power production capacity 

would be lost from 1964, when water storage at the Merritt 

Reservoir began, until 1975, when the Valentine facility was 

estimated to reach the end of its useful life and the Spencer 

facility’s lease would expire. In March 1964, the Bureau of 

Reclamation and Consumers executed a permanent subordination contract. The bureau agreed to provide a specified number 

of replacement kilowatt hours until January 1975 as compensation for its interference with Consumers’ rights. Consumers 

agreed the replacement energy would constitute full compensation for its “loss of water and generating capacity.” Consumers 

subordinated its appropriations to the government and the 

Ainsworth Irrigation District for the irrigation of 33,960 acres 

of land in the Ainsworth unit. The contract was specifically 

made binding on the parties’ successors.
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Finally, in 1996, NPPD successfully applied to change the 

point of diversion for the 1896 appropriation of 35 cfs to the 

Spencer hydropower facility. But the Department approved 

the transfer on the condition that NPPD could not demand 

this water except from the holders of specified junior appropriations that were upstream of the original mill dam on the 

Minnechaduza Creek.

Governing Principles

The Nebraska Constitution dedicates the “use of the water 

of every natural stream within the State of Nebraska . . . to 

the people of the state for beneficial purposes.”2 It further provides that the “right to divert unappropriated waters of every 

natural stream for beneficial use shall never be denied except 

when such denial is demanded by the public interest.”3 Under 

these constitutional provisions, a water appropriator has the 

right to use the public’s water for a beneficial purpose, but 

does not have ownership of the water.4 The requirement that 

the water be applied to a beneficial use operates as a condition subsequent on the right acquired and defines the limits of 

the holder’s water rights.5 So, actively applying appropriated 

water to a beneficial use is an ongoing requirement to maintain 

appropriative water rights.

To avoid waste of this resource, we have recognized 

common-law claims of abandonment and nonuse, in addition 

to the statutory cancellation procedures for nonuse.6 We have 

also held that a landowner can invoke the statutory cancellation 

2 Neb. Const. art. XV, § 5.

3 Id., § 6.

4 See In re Application of A-15738, 226 Neb. 146, 410 N.W.2d 101 (1987).

5 See, Central Platte NRD v. State of Wyoming, 245 Neb. 439, 513 N.W.2d 

847 (1994). In re Application of A-15738, supra note 4; State v. Nielsen, 

163 Neb. 372, 79 N.W.2d 721 (1956). See, also, Neb. Rev. Stat. § 46-229 

(Reissue 2010).

6 See, In re 2007 Appropriations of Niobrara River Waters, 283 Neb. 

629, 820 N.W.2d 44 (2012); In re Application of A-15738, supra note 4; 

Nielsen, supra note 5. See, also, In re Applications T-61 and T-62, 232 

Neb. 316, 440 N.W.2d 466 (1989).
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procedures in a petition to the Department.7 Here, the issues 

are common-law abandonment and forfeiture under the statutory cancellation procedures. For statutory cancellation, the 

Department must find that an appropriator has not beneficially 

used the water for more than 5 consecutive years.8 But a proponent is not required to show that an appropriator has abandoned 

or forfeited its entire allotment. Because an appropriator must 

use Nebraska’s waters for a beneficial purpose and to avoid 

waste, an appropriator’s water rights can be lost in whole or 

in part.9

NPPD’S Investments Should Not

Preclude a Finding of Partial

Abandonment or Forfeiture

Under these principles, the Department should treat NPPD’s 

appropriations as a bundle of rights, not an all or nothing 

proposition. I disagree with the majority’s conclusion that no 

abandonment has occurred because NPPD was current on its 

lease payments, had spent money on its operations and staff, 

and had used its full allotment on occasion. NPPD is required 

to invest in its facility and personnel to protect the public and 

make use of the water it receives at Spencer Dam, even if the 

evidence shows that it had abandoned or forfeited part of its 

appropriations or accompanying rights.

NPPD’s investments are particularly required here because 

Spencer Dam is a run-of-the-river dam. That means NPPD 

does not divert water through a canal or ditch and store it in a 

reservoir behind a dam. It has no permit for storage capacity 

to ensure that enough water flows through the dam to generate electricity even when the river’s flow is low. Instead, the 

dam increases the height of the river’s flow enough to create 

hydraulic “head,” or pressure. As the water falls through the 

dam, this hydraulic pressure spins the turbines, which turn 

the generators that produce current. But because Spencer 

7 See In re 2007 Appropriations of Niobrara River Waters, supra note 6.

8 See § 46-229.

9 Neb. Rev. Stat. § 46-229.02(1) (Reissue 2010). See A. Dan Tarlock, Law 

of Water Rights and Resources § 5:88 & n.1 (2013).
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516 288 NEBRASKA REPORTS

Dam spans the Niobrara, NPPD must maintain it in a manner to safely handle high flow periods and floods.10 It is true 

that NPPD has made investments to handle these periods. 

But because NPPD must do this regardless of the size of its 

appropriations, I disagree that its maintenance or operating 

costs alone can show that it has not abandoned any part of its 

bundle of rights.

More important, the majority can only affirm this order 

by ignoring the nature of the separate appropriations held by 

NPPD, the scarcity of days that NPPD has actually received its 

full allotment, and the Department’s implicit determination that 

other uses of the Niobrara’s waters are more beneficial than 

NPPD’s ability to produce electricity.

NPPD Has Never Protected Its Conditional

Right to Demand 550 CFS Under

Its 1942 Appropriation

Initially, I clarify that under its 1896 appropriation, there 

is no question that NPPD never had a right to demand 35 cfs 

from upstream junior appropriators on the Niobrara itself. 

The limitation in the approval of its transfer of this appropriation to Spencer Dam clearly stated that it could only 

demand this water from specified junior appropriators on the 

Minnechaduza Creek.

Moreover, I would hold that NPPD has forfeited the right to 

demand 500 cfs under its 1942 appropriation. The record shows 

that the Department specifically closed the rights of upstream 

junior appropriators to satisfy this appropriation. Yet, a field 

supervisor acknowledged that NPPD’s appropriations are large 

enough to claim the river’s entire flow for some parts of the 

year. And the parties stipulated that since 1942, the Department 

has approved more than 400 surface water appropriation applications. The Department approved these applications despite its 

acknowledgment in NPPD’s 1942 permit that the Niobrara was 

over appropriated and its imputed knowledge that the flow rate 

at the eastern end of the Niobrara was not sufficient to satisfy 

NPPD’s total allotment most of the year.

10 See Neb. Rev. Stat. §§ 46-1663 and 46-1664 (Reissue 2010).
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The record shows that NPPD regularly monitors new applications for appropriations and has protested applications in 

the past. Clearly, it could have protested all of these 400 

applications, yet it apparently did not contest the majority of 

them. Additionally, in December 2005 and December 2006, 

the Department issued reports that the Niobrara River Basin 

was not fully appropriated. These reports were effectively 

a public statement that the river still contained water for 

new appropriations.

The Department’s actions are inconsistent with a determination that NPPD is entitled to demand its full allotment. 

Knowing since 1942 that the river’s normal flow was already 

over appropriated and was insufficient to satisfy NPPD’s total 

allotment, the Department could not have approved further 

appropriations unless it had concluded that NPPD did not use 

or was not entitled to demand its full allotment for power generation. And the record contains support for this conclusion.

While the Niobrara’s flow rate has varied over the years, 

its flow pattern is not that different from 1923. As stated, the 

1923 application for 1,450 cfs showed that Niobrara’s flow 

would not satisfy the applicant’s full request for 1,450 cfs 

during much of the year and would normally equal or exceed 

2,035 cfs only during its high stage period. Yet before 2007, 

NPPD had never requested the Department to administer other 

water rights for NPPD’s benefit, even during earlier periods 

of drought in the 1950’s and 1970’s. The record shows that 

NPPD has simply accepted whatever amount of water flowed 

to its dam.

We do not know why the Department approved 400 appropriation applications since 1942. But we know it is charged 

with knowledge of streamflow data and diversion records. 

And we cannot assume that the Department issued this many 

permits for diversions knowing that no unappropriated water 

was available.

Moreover, I disagree that NPPD had no duty to protect its rights under the 1942 appropriation. It is true that 

senior appropriators normally are unaffected by the initial 

approval of a junior appropriation. But the 1942 appropriation 

is different because it is a conditional right and the permit 
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518 288 NEBRASKA REPORTS

specifically stated that the river was over appropriated. So 

NPPD knew that every additional appropriation would create 

a greater scarcity of resources that could result in a denial of 

its right to use 550 cfs. That is, the Department’s approvals 

of other appropriations were contrary to NPPD’s purported 

right to demand 550 cfs—and NPPD knew that. I do not 

dispute NPPD’s right to use the water when it is available. 

But under these circumstances, NPPD’s acquiescence to the 

Department’s actions should constitute a forfeiture of its right 

to demand 550 cfs under its 1942 appropriation.

The Department Should Determine the Effect of

NPPD’s Subordination Agreements on

Its Right to Demand Water From

Upstream Junior Appropriators

Of course, even if NPPD cannot demand 35 cfs under its 

1896 appropriation or 550 cfs under its 1942 appropriation, 

that conclusion would not resolve every issue in this case. Its 

largest appropriation was granted in 1923 for 1,450 cfs. This 

single appropriation was satisfied for only an average 208 

days (57 percent) of the year during the 68 recorded years in 

this record. The question is why NPPD or its predecessors did 

not demand water under the 1923 appropriation in all these 

decades. The answer may lie in the subordination agreements 

with the government for the Bureau of Reclamation’s irrigation projects.

A field supervisor testified that irrigation at the Ainsworth 

irrigation canal is known to affect the flow rate at Spencer 

Dam. As noted, under the 1943 and 1964 subordination agreements with the government, NPPD’s predecessors subordinated its right to water for its 1923 and 1942 appropriations. 

So the Bureau of Reclamation was allowed to keep pumping water when the Department issued closing notices. The 

Department administered NPPD’s 2007 call only against junior 

appropriators who did not have a subordination agreement 

with NPPD. But the junior appropriators argued that a senior 

appropriator could not accept compensation to take its allotted 

water out of the river and then demand the water from other 

junior appropriators. On appeal, the Department argues that 
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NPPD’s subordination agreements did not affect NPPD’s right 

to demand the water from other users.

The majority opinion rejects the junior appropriators’ argument that permitting NPPD to demand the water from them 

constituted a recovery of both money and water for loss of the 

same appropriation right. It reasons that if a “junior appropriator is allowed to use water because of a subordination agreement, the senior appropriator is not receiving that to which it 

is otherwise entitled.” I disagree. This reasoning is contrary to 

the election of remedies doctrine. An appropriator can enforce 

an appropriation right or a contract to compensate it for the use 

of its water, but it is not entitled to a double recovery for the 

same loss.11

Clearly, a senior appropriator cannot demand water from 

a junior appropriator which has paid compensation for the 

water’s use.12 But application of the election of remedies doctrine may require other considerations in the context of water 

law. Because the director did not decide this issue, I would 

remand the cause for further consideration of the evidence 

to determine the effect of the subordination agreements on 

NPPD’s right to demand water from the junior appropriators.

11 See Genetti v. Caterpillar, Inc., 261 Neb. 98, 621 N.W.2d 529 (2001).

12 See Clear Springs Foods, Inc. v. Spackman, 150 Idaho 790, 252 P.3d 71 

(2011).

In re Application of Loretta D. Collins for

Admission to the Nebraska State Bar.

___ N.W.2d ___

Filed July 11, 2014. No. S-13-1020.

1. Rules of the Supreme Court: Attorneys at Law: Appeal and Error. Under 

Neb. Ct. R. § 3-126 (rev. 2013), the Nebraska Supreme Court considers the 

appeal of an applicant from a final ruling of the Nebraska State Bar Commission 

de novo on the record made at the hearing before the commission.

2. Rules of the Supreme Court: Attorneys at Law. The Nebraska Supreme Court 

is vested with the sole power to admit persons to the practice of law in this state 

and to fix qualifications for admission to the Nebraska bar.