ORDER OF REVERSAL AND REMAND 

These consolidated appeals challenge the district court's 

orders denying judicial review of the State Water Engineer's decisions 

affecting water rights. Seventh Judicial District Court, Eureka County; 

Dan L. Papez, Judge. Under NRS 533.370(2), the State Engineer "shall 

reject" an application for a proposed use of water or change of existing 

water rights where that "proposed use or change conflicts with existing 

rights." The parties ask this court to determine whether this section 

allows for the State Engineer to take into account the applicant's ability to 

mitigate the drying up of existing rights holders' water sources when 

determining if a proposed use or change will conflict with existing rights. 

However, even assuming that under NRS 533.370(2) the State Engineer 

has authority to grant an application that conflicts with existing rights 

based upon a determination that the applicant will be able to mitigate, the 

State Engineer's decision to approve the applications and issue the 

permits at issue here is not supported by sufficient evidence that 

successful mitigation efforts may be undertaken so as to dispel the threat 

to the existing rights holders. We thus reverse the district court's decision 

denying judicial review of the State Engineer's decisions and remand. 

I. 

At the heart of this appeal is the Mount Hope Mine, a large 

proposed molybdenum mine that General Moly, Inc. seeks to establish in 

Eureka County. The mine's contemplated life is 44 years, and will require 

an estimated total of 11,300 acre feet of water per year (afa). To provide 

the water for the mine, General Moly seeks to pump groundwater by well 

from the Kobeh Valley and Diamond Valley groundwater basins, basins 

that already source many existing water rights, which will cause a 

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drawdown of the water table throughout the two valleys. According to a 

water resources monitoring plan created by Eureka Moly, LLC, a 

subsidiary of General Moly, the vast majority of this water for the Mount 

Hope Mine "will be consumptively used in processing activities of the 

[mining] Project (i.e.[,] no water will be returned to the aquifer)." 

General Moly created respondent Kobeh Valley Ranch, LLC 

(KVR) to hold and control the water rights for the project. Water rights 

already appropriated by a predecessor entity associated with the mining 

project were transferred to KVR, as were existing applications to 

appropriate water that the predecessor had filed in 2005. Throughout 

2006 to 2010 KVR also filed numerous applications to change the point of 

diversion, the place of use, and the manner of use of other of its existing 

water rights. Appellant Eureka County protested KVR's applications on 

numerous grounds, including that KVR's groundwater appropriations 

would conflict with existing rights under NRS 533.370(2). A number of 

holders of senior water rights sourced in Kobeh Valley and Diamond 

Valley also protested on those, and other, grounds. The State Engineer 

originally held a hearing on the applications, then pending, in 2008, after 

which he approved some of KVR's applications over these objections, but 

upon review the district court vacated the ruling and remanded the matter 

back to the State Engineer for a new hearing. 

The State Engineer held another hearing in 2010, in which he 

accepted the evidence presented at the first hearing and allowed 

additional evidence to be presented regarding specific water usage at the 

proposed mining project. The State Engineer ultimately granted all of 

KVR's applications in his Ruling Number 6127. 

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Pertinent to this appeal, the State Engineer recognized that 

certain springs located on the Kobeh Valley floor that are in hydrologic 

connection with the underlying water table and that source existing, 

senior water rights would be "impacted" by KVR's pumping. However, the 

State Engineer found that KVR could fully mitigate any impact, and to 

that end required KVR to prepare, with the assistance of Eureka County, 

a monitoring, management, and mitigation plan (3M Plan) for approval by 

the State Engineer before KVR diverted any water. The State Engineer 

then issued KVR the various requested use and change permits requested 

by KVR. 

Eureka County, as well as appellants Kenneth F. Benson, 

Diamond Cattle Company, LLC, and Michel and Margaret Ann 

Etcheverry Family, LP, (collectively referred to as Benson-Etcheverry), all 

of whom hold existing, senior rights in the valleys, petitioned the district 

court for judicial review of Ruling 6127. The district court denied the 

petition, finding that substantial evidence supported the State Engineer's 

decision that KVR would be able to mitigate any adverse impacts to 

existing water rights. The district court further held that NRS 533.370(2) 

"does not prevent the State Engineer from granting applications that may 

impact existing rights if the existing right can be protected through 

mitigation, thus avoiding a conflict with existing rights." 

While Ruling 6127 was before the district court, KVR 

developed a 3M Plan in coordination with Eureka County. Though the 

State Engineer approved the 3M Plan, he retained ultimate authority over 

it, stating that the 3M Plan was approved with the "understanding that 

components of the Plan are subject to modification based on need, prior 

monitoring results, or changes in the approved water rights." BensonSUPREME COURT 

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Etcheverry petitioned the district court for judicial review of this decision, 

but the district court denied that petition as well. 

Eureka County and the appellant senior right's holders appeal 

the district court's order denying judicial review of Ruling 6127. The 

appellant senior right's holders also appeal the district court's subsequent 

order denying judicial review of the State Engineer's approval of the 3M 

Plan. 

A. 

The State Engineer, who is charged with administering the 

water rights in this state, Desert Irrigation, Ltd. v. State, 113 Nev. 1049, 

1061, 944 P.2d 835, 843 (1997), is required to approve applications to 

appropriate new water rights or to change the place, manner, or use of 

existing water rights if the applicant meets certain statutory 

requirements. NRS 533.370(1). However: 

Except as otherwise provided in subsection 10 

[which excepts applications for environmental or 

temporary permits], where there is no 

unappropriated water in the proposed source of 

supply, or where its proposed use or change 

conflicts with existing rights or with protectable 

interests in existing domestic wells as set forth in 

NRS 533.024, or threatens to prove detrimental to 

the public interest, the State Engineer shall reject 

the application and refuse to issue the requested 

permit. 

NRS 533.370(2) (emphases added). 

The State Engineer and KVR submit that the State Engineer 

may conditionally grant proposed use or change applications on the basis 

of future successful mitigation, thereby ensuring that the new or changed 

appropriation does not conflict with existing rights, in accordance with 

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NRS 533.370(2). This court has never addressed whether the statute may 

be read in this manner, and we need not do so at this time. Even 

assuming that the State Engineer may grant a proposed use or change 

application on the basis of the appropriator's ability to successfully 

mitigate and bring the existing water rights back to their full beneficial 

use, substantial evidence does not support the State Engineer's decision 

that this is the case here. Town of Eureka v. Office of State Eng'r of State 

of Nev., Div. of Water Res., 108 Nev. 163, 165, 826 P.2d 948, 949 (1992) 

("With questions of fact, the reviewing court must limit itself to a 

determination of whether substantial evidence in the record supports the 

State Engineer's decision."). 

B. 

The State Engineer in his Ruling 6127 recognized that there 

would be extensive" drawdown of the water table in Kobeh Valley near 

KVR's main well field area due to KVR's groundwater pumping, which 

could "impact" existing "rights on springs and streams in hydrologic 

connection with the water table ... includ[ing] valley floor springs." He 

also recognized that: 

Water rights that could potentially be impacted 

are those rights on the valley floor where there is 

predicted drawdown of the water table due to 

mine pumping. The Applicant recognizes that 

certain water rights on springs in Kobeh Valley 

are likely to be impacted by the proposed 

pumping. These springs produce less than one 

gallon per minute and provide water for livestock 

purposes. 

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(Footnotes omitted)} But the evidence to which the State Engineer cited 

demonstrates that more than just an "impact" to these low-flow springs 

would occur. For instance, the State Engineer cited to KVR's 

hydrogeology expert Terry Katzer's testimony at the 2010 hearing that 

KVR's pumping would dry up certain springs and stock watering wells: 

Q: Okay. Will the pumping over time cause 

impacts to springs in direct stock watering wells 

in the floor of Kobeh Valley? 

A: I believe it will. And I can't name the springs 

because I am not that familiar with them. Mud 

Springs, for instance, I know where that is. I've 

been there. It will probably dry that up with time. 

And other springs that are in close proximity to 

the well field. 

Q: Stock watering wells? 

A: Stock watering wells, yes, probably. 

Flow modeling reports by KVR's hydrogeology and groundwater modeling 

expert, Dwight Smith, to which the State Engineer also cited, confirmed 

this assessment: 

Springs located in lower altitudes in the Roberts 

Mountains. . . are more likely to be impacted due 

to closer proximity to the KVCWF[ Kobeh Valley 

Central Well Field], resulting in larger predicted 

drawdown at these locations. Discharge at Mud 

Spring (Site 721) and Lone Mountain Spring (Site 

742), located near the southeast edge of the 

KVCWF near proposed well 226, are predicted to 

be impacted and will likely cease to flow based on 

'Eureka County challenges the "less than a gallon per minute" 

finding, but KVR's 2010 flow modeling report indicates that these springs 

produced less than a gallon per minute. And, while the inventory KVR 

prepared in 2011 shows an estimated less than five gallon flow for Mud 

Spring, this is not inconsistent with a less than one gallon flow finding. 

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predicted drawdowns of 40 to 50 feet. Both of 

these springs discharge less than approximately 

one gallon per minute. 

Smith also testified that Mud Springs and another spring called Lone 

Mountain Spring would cease to flow fairly soon after KVR begins 

pumping. 

The federal Bureau of Land Management (BLM) claims 

unadjudicated reserved rights sourced from Lone Mountain Springs. And 

respondent Etcheverry Family, LP, holds permitted existing rights in Mud 

Springs, rights consisting of 10.86 afa to use for stock watering purposes. 

Therefore, contrary to the State Engineer's, KVR's, and amici's 

assertions, 2KVR's pumping would not merely impact existing water 

rights; the very evidence upon which the State Engineer relied 

demonstrates that KVR's appropriation would cause the complete 

depletion of the source of existing water rights. The Legislature did not 

define exactly what it meant by the phrase "conflicts with" as used in NRS 

533.370(2), but if an appropriation that would completely deplete the 

source of existing water rights does not "conflict with" those existing 

rights, then it is unclear what appropriation ever could. Furthermore, 

dictionary definitions from around the time a statute is enacted can aid 

this court in deciphering that statute's meaning, Douglas v. State, 130 

Nev., Adv. Op. 31, 327 P.3d 492, 494 (2014), and contemporaneous 

reference material with the Legislature's adoption of the "conflicts with" 

aspect of NRS 533.370(2), defines "conflict," in verb form, as "No be in 

2This court authorized two amicus briefs, one filed on behalf of 

several municipal water purveyors and one filed on behalf of Nevada 

Energy. 

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opposition; be contrary or at variance." See 2 THE CENTURY 

DICTIONARY AND CYCLOPEDIA, WITH A NEW ATLAS OF THE WORLD, at 

1186 (rev. enl. ed. 1911); 1913 Nev. Stat., ch. 140, § 63. To the extent that 

KVR's proposed appropriations would deplete the water available to 

satisfy existing rights at issue, they are undeniably "in opposition" thereto, 

and thus "conflict with" the existing rights under NRS 533.370(2). 3 

C. 

Considered separate and apart from any potential mitigation 

techniques, the appropriations in question are in conflict with existing 

water rights in the valleys. But the State Engineer found KVR could 

implement mitigation techniques that would ameliorate the depletion of 

Mud Springs: "The State Engineer finds that this flow loss can be 

adequately and fully mitigated by the Applicant should predicted impacts 

occur." Furthermore, because "the only way to fully ensure that existing 

water rights are protected is by closely monitoring hydrologic conditions 

while groundwater pumping occurs," the State Engineer found that "a 

monitoring, management and mitigation plan prepared with input from 

Eureka County must be approved by the State Engineer prior to pumping 

groundwater for the project." The State Engineer thus concluded that: 

"Based upon substantial evidence and testimony, and the monitoring, 

management and mitigation plan requirement, the State Engineer 

3The State Engineer's ruling states that though the BLM originally 

protested KVR's appropriations, it withdrew its protests "after reaching a 

stipulation on monitoring, management and mitigation" with KVR. It 

seems the State Engineer assumed this was sufficient to dispense with the 

conflict under NRS 533.370(2), but this is a less than clear conclusion. In 

any event, Etcheverry Family, LP, has not withdrawn its protest of KVR's 

applications. 

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concludes that the approval of the applications will not conflict with 

existing water rights . . . ." 

Nowhere in the ruling, however, does the State Engineer 

articulate what mitigation will encompass, even in the most general sense. 

And evidence of what that mitigation would entail and whether it would 

indeed fully restore the senior water rights at issue is lacking: there was 

no mitigation plan in the record before the district court or in existence 

when KVR's applications were granted. Indeed, KVR's representative 

Patrick Rogers acknowledged that he didn't "know what we [General 

Moly] would propose in a mitigation plan. A mitigation plan hasn't been 

developed yet. It would be speculative to say what we would or would not 

propose." 

The State Engineer and KVR point to KVR's experts' 

testimony as evidence that mitigation could occur and would be successful. 

But Katzer testified only that there were a variety of [mitigation] 

techniques. You could increase the well if it's being fed by a well or you 

could run a pipeline to it from part of the distribution system." Smith 

similarly testified that if predicted water table drawdown were to occur 

due to KVR's pumping, "certainly there can be mitigation measures taken, 

many of which could include shifting[] pumping around the well field as an 

easy example." While KVR's experts testified as to the existence of a few 

possible mitigation techniques, they did not specify what techniques would 

work, much less techniques that could be implemented to mitigate the 

conflict with the existing rights in this particular case. And concerns over 

precisely how KVR, or its parent company Eureka Moly, would mitigate 

these conflicts are not without cause: Martin Etcheverry testified that 

after KVR did some experimental pumping, one of his springs, Nichols 

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Springs, was noticeably lower than before the pumping and that it had not 

yet returned to its pre-pumping levels. And according to Eureka County's 

natural resource manager, the Nichols Springs lowering was brought to 

Eureka Moly's attention multiple times, including at a meeting at the 

BLM's Battle Mountain office, but that neither KVR nor Eureka Moly had 

done anything to address the lowering of that spring. 

The State Engineer and KVR alternatively assert the existing 

rights holders conceded that mitigation could be accomplished. But the 

existing rights holders, including Martin Etcheverry, merely recognized in 

their 2010 hearing testimony that they would be satisfied if KVR could 

completely and successfully mitigate the interference with their rights. 

The State Engineer implies on appeal that KVR's mitigation 

could encompass providing substitute water to the senior rights holders by 

arguing that said holders are entitled only to the beneficial use of the 

amount of their water rights, and have no right to the historical source of 

their water rights. See Desert Irrigation, Ltd. v. State, 113 Nev. 1049, 

1059, 944 P.2d 835, 842 (1997) ("[E]ven those holding certificated, vested, 

or perfected water rights do not own or acquire title to water. They merely 

enjoy the right to beneficial use."). But to the extent KVR's mitigation 

would involve substitute water sources—which is not reflected in the State 

Engineer's decision or the evidence that was presented to him—there was 

no evidence before the State Engineer that KVR applied for or committed 

certain of its already obtained water rights to mitigation or where the 

substituted water would otherwise come from. And, using the State 

Engineer's numbers regarding the amount of water in the basin, there 

may not be any water left to use for mitigation after KVR's appropriation. 

The State Engineer found Kobeh Valley had 15,000 afa total. KVR's 

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appropriation is 11,300 afa, and the other committed rights had 1,100 afa, 

which left 2,600 afa for future appropriation. However, there is 5,530 afa 

in nonadjudicated claims to vested or reserved rights on file in the State 

Engineer's office. 

This is setting aside the further, specious assumption that 

water from a different source would be a sufficient replacement. Take, for 

example, the testimony given by an existing rights holder before the State 

Engineer that he had seen problems before with piping in water for 

animals because the pipes can freeze and interfere with the flow in the 

extreme winter cold. Given these, seemingly supported, concerns over 

such potential problems, it is therefore unclear that substitution water, if 

available, would be sufficient. See, e.g., Weibert v. Rothe Bros., Inc., 618 

P.2d 1367, 1373 (Colo. 1980) ("In order to determine the adequacy of the 

[augmentation] plan to accomplish its intended purpose, it is necessary to 

consider the adequacy of the replacement water rights."); see also Rocky 

Ford Irrigation Co. v. Kents Lake Reservoir Co., 135 P.2d 108, 114 (Utah 

1943) (examining whether the exchange of water deteriorates water 

quality or quantity to such a degree as to "materially impair[ ] the use."). 

Added to this, a surface water rights holder may be found to 

have abandoned its right if it no longer delivers the water or maintains 

the source of diversion. NRS 533.060(4)(a)-(d). Requiring that existing 

right holders use water other than from the source that they currently 

have rights in might mean the existing right holder would need to obtain a 

new permit to appropriate that new water. See NRS 533.060(5) ("Any 

such right to appropriate any of the water must be initiated by applying to 

the State Engineer for a permit to appropriate the water as provided in 

this chapter."). KVR did not address before the State Engineer this 

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potential obstacle to providing water from an alternate source to mitigate, 

and neither did the State Engineer's ruling. 

Finally, KVR asserts that the State Engineer's determination 

that "it is readily feasible to avoid conflicts when mitigating impacts to 

water sources that produce relatively minor amounts of water" merely 

reflects the State Engineer's "experience and common sense." But this is 

precisely the problem with the State Engineer's ruling: though the State 

Engineer certainly may use his experience to inform his decision making, 

his decisions must be supported by substantial evidence in the record 

before him, which is not the case here. Town of Eureka, 108 Nev. at 165, 

826 P.2d at 949. 

D. 

Essentially, and with all other arguments aside, the State 

Engineer and KVR's position is that the State Engineer may leave for a 

later day, namely the day the 3M Plan is put before him, the 

determination of exactly what KVR's mitigation would entail. But the 

State Engineer's decision to grant an application, which requires a 

determination that the proposed use or change would not conflict with 

existing rights, NRS 533.370(2), must be made upon presently known 

substantial evidence, rather than information to be determined in the 

future, for important reasons. 

First, those who protest an application to appropriate or 

change existing water rights must have a full opportunity to be heard, a 

right that includes the ability to challenge the evidenceS upon which the 

State Engineer's decision may be based. Revert v. Ray, 95 Nev. 782, 787, 

603 P.2d 262, 264 (1979); see also NRS 533.365(5) ("Each applicant and 

each protestant shall. . . provide to the State Engineer and to each 

protestant and each applicant information required by the State Engineer 

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relating to the application or protest."). Cf. Bowman Transp., Inc. v. 

Arkansas-Best Freight Sys., Inc., 419 U.S. 281, 288 n.4 (1974) ("[T]he Due 

Process Clause forbids an agency to use evidence in a way that forecloses 

an opportunity to offer a contrary presentation."). This necessarily means 

that the opportunity to challenge the• evidence must be given before the 

State Engineer grants proposed use or change applications. Those who 

protest an application's grant cannot be forced to wait and challenge a 

future 3M Plan because, as Benson-Etcheverry note: "The appeal as to 

Ruling No. 6127 can result in vacating the Ruling, among other remedies. 

However, appeal of the 3M Plan can only result in vacating the Plan." In 

other words, challenging the sufficiency of a later developed mitigation 

plan cannot undo a decision to grant applications for a proposed use or 

change that may have been erroneous. And allowing the State Engineer 

to grant applications conditioned upon development of a future 3M Plan 

when the resulting appropriations would otherwise conflict with existing 

rights, could potentially violate protestants' rights to a full and fair 

hearing on the matter, a rule rooted in due process. Revert, 95 Nev. at 

787, 603 P.2d at 264. 

Furthermore, the State Engineer's decision to grant an 

application must be sufficiently explained and supported to allow for 

judicial review. Revert, 95 Nev. at 787, 603 P.2d at 265; see also Port of 

Jacksonville Mar. Ad Hoc Comm., Inc. v. U.S. Coast Guard, 788 F.2d 705, 

708 (11th Cir. 1986) (even under deferential substantial evidence review, 

courts must not merely "rubber stamp" agency action: they must 

determine that the 'agency articulated a rational connection between the 

facts presented" and the decision) (citation omitted). The State Engineer 

thus may not defer the determination of what mitigation would encompass 

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to a later date: even if he may grant applications where the resulting 

appropriations would conflict with existing rights based upon the finding 

that the applicant would be able to successfully mitigate that deleterious 

effect, an assumption we do not adopt today, the finding must be based 

upon evidence in the record to support that mitigation would be successful 

and adequate to fully protect those existing rights. See City of Reno v. 

Citizens for Cold Springs, 126 Nev., Adv. Op. 27, 236 P.3d 10, 18-19 (2010) 

(law requiring local governments to make a finding about plans for 

adequate services and infrastructure prior to amending a master plan to 

allow further development "require[d] something more than the deferral of 

the issue or broad, evasive conclusions about how officials can build or 

expand utilities if necessary"). 

In sum, substantial evidence does not support the State 

Engineer's finding that KVR would be able to "adequately and fully" 

mitigate the fact that its groundwater appropriations will cause Kobeh 

Valley springs that sources existing rights to cease to flow. The State 

Engineer's decision to grant KVR's applications, when the result of the 

appropriations would conflict with existing rights, and based upon 

unsupported findings that mitigation would be sufficient to rectify the 

conflict, violates the Legislature's directive that the State Engineer must 

deny use or change applications when the use or change would conflict 

with existing rights. NRS 533.370(2). As appellants have met their 

burden to show the State Engineer's decision was incorrect, NRS 

533.450(10), the State Engineer's decision to grant KVR's applications 

cannot stand. Therefore, we 

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Cherry 

Sa 

REVERSE AND REMAND this matter to the district court for 

proceedings consistent with this order. 4Because we reverse and remand 

on this basis, we do not reach the remaining issues raised in these 

consolidated appeals. 

, CA. 

Hardesty 

Parraguirre Qia°4C6sar 

Gibbons 

° 

Pickering \ 

4From the record and Ruling 6127, it is unclear which of KVR's 

applications for proposed use or change in Kobeh Valley, if it can be 

pinpointed, is the appropriation that will cause the springs to dry up. 

Therefore, we must overturn the entire decision. 

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J. 

J. 

J. 

J. 

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cc: Seventh Judicial District Court Dept. 2 

William E. Nork, Settlement Judge 

Allison, MacKenzie, Ltd. 

Schroeder Law Offices, P.C. 

Eureka County District Attorney 

Attorney General/Carson City 

Parsons Behle & Latimer/Salt Lake City 

Parsons Behle & Latimer/Reno 

Las Vegas City Attorney 

Brownstein Hyatt Farber Schreck, LLP/Las Vegas 

Dana R. Walsh 

Lewis Roca Rothgerber LLP/Las Vegas 

McDonald Carano Wilson LLP/Reno 

Dyer, Lawrence, Penrose, Flaherty, Donaldson & Prunty 

Gregory J. Walch 

Carson City District Attorney 

Henderson City Attorney 

Rowe Hales Yturbide, LLP 

Taggart & Taggart, Ltd. 

Eureka County Clerk 

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