Case Name: PYRAMID LAKE PAIUTE TRIBE OF INDIANS and BOARD OF SUPERVISORS, Lassen County, California, Appellants, v. WASHOE COUNTY, NORTHWEST NEVADA WATER RESOURCES LIMITED PARTNERSHIP, FISH SPRINGS RANCH LTD., and R. MICHAEL TURNIPSEED, Nevada State Engineer, Respondents
Court: Supreme Court of Nevada
Jurisdiction: Nevada
Decision Date: 1996-06-14
Citations: 112 Nev. 743
Docket Number: No. 25066
Parties: PYRAMID LAKE PAIUTE TRIBE OF INDIANS and BOARD OF SUPERVISORS, Lassen County, California, Appellants, v. WASHOE COUNTY, NORTHWEST NEVADA WATER RESOURCES LIMITED PARTNERSHIP, FISH SPRINGS RANCH LTD., and R. MICHAEL TURNIPSEED, Nevada State Engineer, Respondents.
Judges: Shearing and Rose, JJ., concur.
Reporter: Nevada Reports
Volume: 112
Pages: 743–763

Head Matter:
PYRAMID LAKE PAIUTE TRIBE OF INDIANS and BOARD OF SUPERVISORS, Lassen County, California, Appellants, v. WASHOE COUNTY, NORTHWEST NEVADA WATER RESOURCES LIMITED PARTNERSHIP, FISH SPRINGS RANCH LTD., and R. MICHAEL TURNIPSEED, Nevada State Engineer, Respondents.
No. 25066
June 14, 1996
918 P.2d 697
Benesch & Fermóile, Reno; Fredericks, Pelcyger, Hester, & White, Boulder, Colorado; Robert D. Stitser, Reno, for Appellants.
Frankie Sue Del Papa, Attorney General, and Margaret A. Twedt, Deputy Attorney General, Carson City; and Hale, Lane, Peek Dennison & Howard and Alex J. Flangas, Reno for Respondents.

Opinion:
OPINION
By the Court,
Young, J.:
FACTS
In the mid-1980s, Washoe County entered into joint ventures with Fish Springs Ranch LTD. ("FSR") and Northwest Nevada Water Resources Limited Partnership ("NNWR") for the purpose of importing groundwater from the Honey Lake Basin to the Reno and Sparks areas. FSR and NNWR filed "intra-basin" transfer applications with the Nevada State Engineer's Office to modify their existing Honey Lake Basin groundwater rights. Washoe County filed thirty-one "inter-basin" applications to transfer water from Honey Lake to the Truckee Meadows metropolitan area. Several of the applications were to change FSR's and NNWR's existing water rights to industrial and municipal use. The remaining applications by Washoe County requested the appropriation of additional water rights from the Honey Lake Basin. In total, the county was requesting permits to withdraw 28,588 acre feet of water annually from the Honey Lake Basin.
' The State Engineer conducted twelve days of public hearings to consider the intra-basin and inter-basin transfer applications. The hearings produced 136 exhibits and more than 2,800 pages of testimony from experts and lay witnesses.
Co-appellants Pyramid Lake Paiute Tribe of Indians and Board of Supervisors, Lassen County, California ("appellants") opposed the transfer permits on environmental and economic grounds. One of appellants' contentions was that Washoe County's proposal was not economically feasible or desirable in light of negotiations that were occurring over water rights in Lake Tahoe, Pyramid Lake, the Truckee River and the Carson River. At the time of the hearings, California, Nevada, and various Indian tribes (including the Pyramid Lake Paiute Tribe) were attempting to reach a settlement that would greatly impact water rights on the Truckee River ("proposed negotiated settlement"). See Truckee-Carson-Pyramid Lake Water Rights Settlement Act, Pub. L. No. 101-618, 104 Stat. 3295 (1990).
After the hearings, the State Engineer issued Ruling 3786, granting the "intra-basin" applications, and Ruling 3787, granting the "inter-basin" applications. Appellants petitioned for judicial review, claiming that the State Engineer did not enter adequate findings in compliance with-NRS 533.370(3). The district court granted judicial review and remanded the decision to the State Engineer. The district court concluded that the State Engineer did not specifically determine whether the applications were detrimental to the public interest.
On remand, the State Engineer determined that additional hearings were not necessary. Instead, his office issued Supplemental Rulings 3786A and 3787A. The forty-page supplemental rulings responded to the order of remand by reviewing the consideration of the public interest and making additional findings. The State Engineer identified the following policy considerations contained in Nevada water statutes to help define the public interest:
1. An appropriation must be for a beneficial use.
2. The applicant must demonstrate the amount, source and purpose of the appropriation.
3. If the appropriation is for municipal supply, the applicant must demonstrate the approximate number of persons to be served and the approximate future requirements.
4. The right to divert ceases when the necessity for the use of water does not exist.
5. The applicant must demonstrate the magnitude of the use of water, such as the number of acres irrigated, the use to which generated hydroelectric power will be applied, or the number of animals to be watered.
6. In considering extensions of time to apply water to beneficial use, the State Engineer must determine the number of parcels and commercial or residential units which are contained or planned in the area to be developed, economic conditions which affect the availability of the developer to complete application of the water to beneficial use, and the period contemplated for completion in a development project approved by local governments or in a planned unit development.
7. For large appropriations, the State Engineer must consider whether the applicant has the financial capability to develop the water and place it to beneficial use.
8. The State Engineer may also cooperate with federal authorities in monitoring the development and use of the water resources of the State.
9. [The State Engineer] may cooperate with California authorities in monitoring the future needs and uses of water in the Lake Tahoe area and to study ways of developing water supplies so that the development of the area will not be impeded.
10.Rotation in use is authorized to bring about a more economical use of supplies.
11. The State Engineer may determine whether there is over pumping of groundwater and refuse to issue permits if there is no unappropriated water available.
12. [The State Engineer] may determine what is a reasonable lowering of the static water level in an area after taking into account the economics of pumping water for the general type of crops growing and the effect of water use on the economy of the area in general.
13. Within an area that has been designated, the State Engineer may monitor and regulate the water supply.
After reviewing these guidelines, the State Engineer determined that substantial evidence indicated the Honey Lake importation project served the public interest. With respect to appellants' contentions that an agreement under the proposed negotiated settlement was a more attractive alternative to water importation, the State Engineer ruled as follows:
The State Engineer cannot evaluate all possible alternatives to any particular water project. The applicant, Washoe County, presumably already looked at the various alternatives. The State Engineer finds that he must act on the applications before him and is not in a position to interfere with the decisions and responsibilities of Washoe County. The State Engineer can only look at the applicant's ability to finance the project and finds [sic] it has the capability to put the water to beneficial use.
(Emphasis added.)
Appellants filed a second petition for judicial review, arguing that the State Engineer's public interest review was insufficient. The same district judge who issued the initial remand order disagreed. Appellants renew their contentions in this appeal.
DISCUSSION
This appeal presents two issues for review: whether the State Engineer properly defined the meaning of "the public interest" and whether the Honey Lake importation project is detrimental to the public interest.
Meaning of the public interest
The appropriation of water in Nevada is governed by statute, and the State Engineer is authorized to regulate such appropriations. NRS 533.030(1); see NRS 533.370(3). "An agency charged with the duty of administrating an act is impliedly clothed with power to construe it as a necessary precedent to administrative action.'" State v. State Engineer, 104 Nev. 709, 713, 766 P.2d 263, 266 (1988) (citations omitted). Further, '"great deference should be given to the [administrative] agency's interpretation when it is within the language of the statute.' " Id. (citations omitted). While the agency's interpretation is not controlling, it is persuasive. State Engineer v. Morris, 107 Nev. 699, 701, 819 P.2d 203, 205 (1991).
Pursuant to NRS 533.370(3), the State Engineer must determine whether a proposed appropriation is detrimental to the public interest before issuing a water appropriation permit. Appellants argue that Nevada should follow the lead of the Idaho Supreme Court in Shokal v. Dunn, 707 P.2d 441 (Idaho 1985), where the Idaho Supreme Court defined the public interest using not only language from Idaho statutes, but also statutory criteria from Alaska.
Idaho's water law allows the Water Resources Director to deny a water permit if the requested appropriation conflicts with the local public interest. Id. at 447 (citing Idaho Code § 42-203A(5)(e)). In defining the term, the public interest, the Shokal court noted that instructive public policy considerations were contained throughout Idaho's water appropriation statutes. Id. at 448. Referencing those statutes, the court developed guidelines defining the public interest. Id. at 449.
We conclude that the State Engineer's thirteen guidelines adequately defined the public interest in this case. As in Shokal, the State Engineer reviewed Nevada's water appropriation statutes to develop guidelines for defining the public interest. See Morris, 107 Nev. at 701, 819 P.2d at 205; State Engineer, 104 Nev. at 713, 766 P.2d at 266.
Appellants contend, however, that the State Engineer's failure to include economic considerations or an analysis of alternatives in the public interest guidelines was a dereliction of duty. The Shokal court included such factors in the definition of the public interest for Idaho, incorporating statutory criteria that were enacted by Alaska. Shokal, 707 P.2d at 449 n.3 (citing Alaska Stat. § 46.15.080).
Despite appellants' assertions regarding the definition of the public interest by the Idaho Court, we can find no indication that Nevada's legislature intended that the State Engineer determine public policy in Nevada by incorporating another state's statutes and vesting the state with the authority to reevaluate the political and economic decisions made by local government.
1. Legislative intent
We conclude that the Shokal Court's decision to judicially adopt statutes relating to water allocation in other western states would be contrary to the long-standing policy of this state. "The Legislature has the power to decide what the policy of the law shall be, and if it has intimated its will, however indirectly, that will should be recognized and obeyed." Johnson v. United States, 163 F. 30, 32 (1st Cir. 1908) (Holmes, J.). The Nevada Legislature, presumably aware of the broad definition of the public interest enacted by other states (particularly Alaska and Nebraska), demonstrated through its silence that Nevada's water law statutes should remain as they have been for over forty-five years. We recognize that some people may argue that the prior appropriation doctrine is not well suited to solve the modern demands for water across our arid state. However, the legislature — not this court — must signal a departure from such a long-recognized Nevada water policy.
2. Power of Washoe County's elected officials
Nevada water law statutes define separate roles for the State Engineer and Washoe County. We conclude that at the time this dispute arose, the legislature placed the burden of choosing between water use alternatives on the officials of Washoe County, not the State Engineer. In 1991, the legislature directed Washoe County to choose among competing methods of water augmentation and to develop a master plan for the preservation, distribution, and development of water resources. This legislative mandate necessarily empowered Washoe County's local officials to conduct economic and cost-effectiveness analyses of competing water projects, and to determine which alternative was optimal. In contrast, NRS 533.370(3), which has remained essentially unchanged for decades, limits the role of the State Engineer. The State Engineer has no express authority to engage in a comparative economic analysis of water delivery alternatives.
Our conclusion is supported by the ruling in Helms v. State Environmental Protection Division, 109 Nev. 310, 849 P.2d 279 (1993). In Helms, this court concluded that the Nevada Division of Environmental Protection ("NDEP") did not have a duty to independently review a function that was statutorily reserved to county government, thereby allowing the NDEP to presume the county's approval was valid. Helms, 109 Nev. at 314, 849 P.2d at 282.
This decision is also consistent with our recent ruling in Serpa v. County of Washoe, 111 Nev. 1081, 901 P.2d 690 (1995). In Serpa, we considered Washoe County's power as a local government to make water use decisions, and we approved of Washoe County's denial of a developmental permit that was previously approved by the State Engineer. Id. at 1085, 901 P.2d at 693.
In the instant case, the legislature specifically empowered Washoe County to choose among competing methods of water augmentation projects. This necessarily demands an economic and cost-effectiveness analysis of competing water delivery alternatives within Washoe County. If Washoe County's proposed water project would unreasonably lower water tables, prove financially unworkable or result in harm to wildlife or existing water users, the State Engineer is authorized to reject the application. However, Washoe County — and not the State Engineer — is required by statute to conduct the political and economic decision-making required to determine which water allocation alternative is appropriate.
3. The State Engineer's lack of resources
Furthermore, the legislature's failure to increase funding for the State Engineer's staff impliedly reinforces the conclusion that the legislature placed the burden of evaluating economic considerations and project alternatives on local government. See United Plainsmen Ass'n v. North Dakota State Water Conservation Comm., 247 N.W.2d 457, 464 (N.D. 1976) (acknowledging that the appropriation of funds to conduct water use planning indicates an intent to include an agency in such planning).
The State Engineer employs a relatively small staff: clerical workers, a hearing officer, and a number of engineers familiar with principles of hydrology. At the present time, the State Engineer struggles under a backlog of 4,200 applications for water appropriation. Senate Committee on Finance; Joint Subcommittee on Public Safety, Natural Resources and Transportation Budget Closing Action; April 17, 1995, at 1 (1995). Of these applications, 1,468 are contested, requiring a hearing and possible judicial review. Id. The State Engineer estimates that he will continue to receive over 1,200 applications per year, 200 of which will be contested. Id. Consequently, as the State Engineer acknowledges, some applications have been awaiting processing since 1978 or 1979. Minutes of the Joint Subcommittee Meeting of Senate Committee on Finance and Assembly Committee on Ways and Means: Sixty-eighth Session, April 28, 1995, at 21 (statement of R. Michael Turnipseed, State Engineer). In the present case, the State Engineer recognized his office does not have the resources or personnel to weigh the social and political factors inherent in an economic analysis of competing water projects.
Accordingly, we conclude that the State Engineer did not commit a dereliction of duty by not including a review of economic considerations and alternative projects as part of the guidelines defining the public interest. Morris, 107 Nev. at 701, 819 P.2d at 205; State Engineer, 104 Nev. at 713, 766 P.2d at 266.
Detriment to the public interest
Appellants contend that the State Engineer's findings regarding the public interest were not supported by substantial evidence. When reviewing the State Engineer's findings, factual determinations will not be disturbed on appeal if supported by substantial evidence. Morris, 107 Nev. at 701, 819 P.2d at 205. Moreover, as a general rule, a decision of an administrative agency will not be disturbed unless it is arbitrary and capricious. Shetakis Dist. v. State, Dep't Taxation, 108 Nev. 901, 903, 839 P.2d 1315, 1317 (1992).
The State Engineer's findings of fact in Supplemental Rulings 3786A and 3787A cite specific testimony taken in twelve days of public hearings amassed in over 2,800 pages of transcripts. The State Engineer found that "it is in the public interest to facilitate augmentation of the Reno-Sparks water supply as well as to augment the supply in some of the valleys north of Reno-Sparks that have declining water tables."
The State Engineer determined that other public interest values would not be compromised, specifically finding that the county had the ability to finance the project and "the capability to put the water to beneficial use." The State Engineer also found that no evidence suggested pumping groundwater would result in an impairment of other water rights. Additionally, the State Engineer found that pumping groundwater would not unreasonably lower water tables. With respect to environmental impact, the State Engineer found that "there was substantial evidence presented to indicate that wildlife would not be impacted as a result of these proposed changes [pumping water from the basin]." Specifically, the State Engineer reported that
[tjestimony was received that showed the high mountain springs used by wildlife to the south and east of the proposed well field were not connected to the alluvial aquifer system. Any lowering of the water table and resulting impact or dying out of phreatophytes, such as greasewood, would result in xerophytic species, such as rabbitbrush and sagebrush taking the vacated space. Testimony was received that large game animals rely on xerophytes and not phreatophytes for forage.
The State Engineer found that a minimal loss of wetlands would occur and that alkali flats would not "be substantially enlarged," resulting in no increase in dust hazards proving "detrimental to the public interest."
With regard to the proposed negotiated settlement, the State Engineer found "no evidence that the approval of the intra-basin changes affects the [ongoing] Truckee River settlement negotiations." In addition, the State Engineer also found that "there is no evidence in the record that the water pumped from Honey Lake Valley could not or will not be coordinated and integrated with the negotiated settlement on the Truckee River."
At the hearings conducted by the State Engineer, Washoe County presented expert testimony indicating that even if the proposed negotiated settlement were finalized, the county would still need water from the Honey Lake project. Washoe County's experts claimed that the proposed negotiated settlement would not adequately improve groundwater conditions for development areas north of Reno. Experts also testified that the importation project was more cost-effective than the proposed negotiated settlement would be. Based on this testimony and the speculative nature of the negotiated settlement when this dispute arose, we conclude that the State Engineer properly presumed that Washoe County already reviewed available alternatives to the Honey Lake project. See Helms, 109 Nev. at 314, 849 P.2d at 282.
Accordingly, we conclude that the State Engineer's findings of fact regarding the proposed negotiated settlement were supported by substantial evidence. Shetakis Dist., 108 Nev. at 903, 839 P.2d at 1317; Morris, 107 Nev. at 701, 819 P.2d at 205.
CONCLUSION
We conclude that the State Engineer adequately defined the public interest in this case and based his findings upon substantial evidence.
Shearing and Rose, JJ., concur.
Honey Lake Basin is a 2,200 square mile basin located on the California/ Nevada border approximately thirty-five miles northwest of Reno. The portion of the Honey Lake Basin impacted by this dispute is located within Washoe County.
When briefs were filed with this court in 1994, the proposed negotiated settlement was still not an operative water solution for Washoe County's needs. The county indicated that the agreement was not finalized, the Environmental Impact Statement was not completed, and various conservation measures were not implemented.
NRS 533.370(3) provides:
Except as otherwise provided in subsection 5, where there is no unappropriated water in the proposed source of supply, or where its proposed use or change conflicts with existing rights, or threatens, to prove detrimental to the public interest, the state engineer shall reject the application and refuse to issue the requested permit. . . .
(Emphasis added.)
Appellants also cite related cases and statutory schemes from other states. See Stempel v. Department of Water Resources, 508 P.2d 166, 172 (Wash. 1973); Neb. Rev. Stat. § 46-289 (1988). However, the Nevada Legislature has not adopted any water appropriation or environmental protection statute requiring or permitting the State Engineer to evaluate alternatives before granting permits.
In accordance with Nevada law, a board of county commissioners has the power to "acquire, construct, reconstruct, improve, extend or better a works, system or facilities for the supply, storage and distribution of water for private and public purposes." NRS 318.144 (working in conjunction with NRS 244.157). In 1991, the legislature amended specific legislation for Washoe County and provided that the members of the Washoe Board of County Commissioners were ex officio members of the Washoe County Regional Planning and Advisory Board. 1991 Nev. Stat., ch. 548, § 1 at 1727. In accordance with this change, the Board was vested with the power to "[d]evelop and revise, as necessary, plans for regional facilities for the present and future use of water resources within the region . . .[;] [ijdentify potential supplies of water and determine the extent of those supplies and the nature of the problems involved in their development and management!;] [and] [d]evelop efficient methods for the collection, storage, management, treatment and delivery of water in order to increase the yield of existing supplies within the region." Id., § 6 at 1729. Finally, the legislation granted the board the authority to "[m]ake recommendations concerning the management and use of water within the region to: . . . [among others] [t]he state engineer." Id.