Court Opinion

ID: 3046494
Source: CourtListenerOpinion
Date Created: 2015-10-13 23:19:08.043839+00
Date Added: 2024-06-11T11:49:10.326927
License: Public Domain

United States Court of Appeals
                           FOR THE EIGHTH CIRCUIT
                                      ___________

                                      No. 07-3056
                                      ___________

Gerard J. Keating, individually and on      *
behalf of all persons similarly situated;   *
Janet A. Keating, individually and on       *
behalf of all persons similarly situated,   *
                                            *
             Plaintiffs-Appellants,         *
                                            *
Frank R. Krejci, individually and on        *
behalf of all persons similarly situated;   *
Jane Krejci, individually and on            *
behalf of all persons similarly situated;   *
Timothy Peterson, individually and on       *
behalf of all persons similarly situated;   *
Linda Peterson, individually and on         *
behalf of all persons similarly situated,   *
                                            *
             Plaintiffs,                    *
                                            *
Daryl Butterfield, individually and on      *
behalf of all persons similarly situated;   *
Makala Butterfield, individually and on     *
behalf of all persons similarly situated,   *
                                            *   Appeal from the United States
             Plaintiff-Appellants,          *   District Court for the
                                            *   District of Nebraska.
      v.                                    *
                                            *
Nebraska Public Power District,             *
in Their Official Capacities;               *
Nebraska Department of Natural              *
Resources, in Their Official Capacities;    *
Dennis L. Rasmussen, in Their Official      *
Capacities; Mary A. Harding, in Their *
Official Capacities; Ronald W. Larsen,*
in Their Official Capacities; Larry A.*
Linstrom, in Their Official Capacities;
                                      *
Darrell J. Nelson, in Their Official  *
Capacities; Edward J. Schrock, in Their
                                      *
Official Capacities; Ken L. Schmieding,
                                      *
in Their Official Capacities; Gary G. *
Thompson, in Their Official Capacities;
                                      *
Larry G. Kuncl, in Their Official     *
Capacities; Virgil L. Froehlich, in Their
                                      *
Official Capacities; Wayne E. Boyd, in*
Their Official Capacities; Ann Saloman*
Bleed, in Their Official Capacities;  *
Does, 1-100,                          *
                                      *
             Defendants-Appellees.    *
                                 ___________

                             Submitted: March 13, 2008
                                Filed: April 13, 2009
                                 ___________

Before RILEY, GRUENDER, and SHEPHERD, Circuit Judges.
                            ___________

SHEPHERD, Circuit Judge.

       Appellants, Nebraska farmers and ranchers who draw water from the Niobrara
Watershed, appeal the district court’s dismissal of their suit brought under 42 U.S.C.
§ 1983. In this suit, appellants alleged that state officials deprived them of their
procedural due process rights when those officials ordered them to cease drawing
water from the Niobrara Watershed without providing prior notice or a hearing. For
the reasons set forth below, we reverse the district court’s dismissal and remand this
matter for further consideration.

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                                          I.

       Since 1895, Nebraska has operated a water appropriation system to manage
surface water rights in the state. The Nebraska Department of Natural Resources,
which is lead by Director Ann Bleed1 (collectively, “DNR”), is the agency responsible
for administering this system. The Nebraska Public Power District (“NPPD”) is a
political subdivision that owns and operates the Spencer Dam on the Niobrara River.
The Spencer Dam is a hydroelectric dam that produces electricity and grosses
approximately $700,000 annually.

       The NPPD owns three surface water appropriation permits. Permit A-359 is
dated September 12, 1896, and was originally issued for Minnechaduze Creek but was
transferred to the Spencer Dam in 1996. It permits the use of 35 cubic feet of water
per second. Permit A-1725 was approved in 1925 prior to the 1927 construction of
the first Spencer Dam, which was later destroyed by ice in 1935 and reconstructed
around 1940. It permits the use of 1450 cubic feet of water per second. The third
permit, A-3574, was approved on June 8, 1942, and allows for the use of 550 cubic
feet of water per second from the Niobrara River. Both the A-1725 and A-3574
permits state that the grants are made subject to Nebraska irrigation laws which give
preference to water appropriators who use the water for domestic and agricultural uses
over those who use the water for manufacturing and power purposes.

       Under Nebraska statutory law, “[a]s between [surface water] appropriators, the
one first in time is first in right.” Neb. Rev. Stat. § 46-203. However,

      [p]riority of appropriation shall give the better right as between those
      using the water for the same purposes, but when the waters of any
      natural stream are not sufficient for the use of all those desiring the use
      of the same, those using the water for domestic purposes shall have the

      1
       We note that the current director of the DNR is Brian Dunnigan.

                                          -3-
      preference over those claiming it for any other purpose, and those using
      the water for agricultural purposes shall have the preference over those
      using the same for manufacturing purposes.

Id. § 46-204.

       The appellants also own surface water appropriation permits: A-14604, with
a priority date of December 22, 1976, and A-16012, with a priority date of October
26, 1981. These permits are used to pump water from a tributary of the Niobrara
River for farming and ranching purposes. Both permits contain a statement that the
there may be times when the supply of water is insufficient to meet all of the
appropriations and that the applicants are “hereby given notice that [they] may be
denied the use of water during times of scarcity.” These permits also contain a clause
referencing Nebraska law2 and stating “that waters previously appropriated for power
purposes may be taken and appropriated for irrigation purposes, upon due and fair
compensation therefor; and inversely they cannot be appropriated arbitrarily for
irrigation purposes without just compensation.”

      2
          “In applying the provisions of law relating to the appropriation of water,
priority of appropriation shall give the better right as between those using the water
for the same purpose, but when the waters of any natural stream are not sufficient for
the use of all those desiring to use the same, those using the water for domestic
purposes shall have preference over those claiming it for any other purpose. Those
using the water for agricultural purposes shall have the preference over those using
the same for manufacturing purposes, and those using the water for agricultural
purposes shall have the preference over those using the same for power purposes,
where turbine or impulse water wheels are installed.” Neb. Rev. Stat. § 70-668.

       “No inferior right to the use of the waters of this state shall be acquired by a
superior right without just compensation therefor to the inferior user. The just
compensation paid to those using water for power purposes shall not be greater than
the cost of replacing the power which would be generated in the plant or plants of the
power user by the water so acquired.” Neb. Rev. Stat. § 70-669.

                                          -4-
       In the fall of 2006, the NPPD filed a complaint with the DNR contending that
surface water levels in the Niobrara Watershed were insufficient to enable the NPPD
to operate Spencer Dam. No notice of this complaint was given to the farmers and
ranchers in the area. On May 1, 2007, the DNR issued Closing Notices to hundreds
of farmers and ranchers ordering them to immediately stop irrigation and threatening
criminal penalties in the event of a violation. Within a week, the notices were
rescinded, but the Opening Notices warned that “[f]uture closing orders may be
necessary in the future for the benefit of senior permits.”

      On May 10, 2007, appellants and two other families filed suit asserting claims
for damages and injunctive relief for violations of due process rights under 42 U.S.C.
§ 1983. They also sought a declaratory judgment that the nature of the Closing
Notices were ultra vires of the DNR and the DNR Director’s authority under Nebraska
law. Appellants later amended their complaint to remove the damages claims.

        The district court granted appellees’ motion to dismiss, holding that the dispute
as to the due process claim was not ripe because (1) there were no Closing Notices in
effect at the time and (2) appellants had failed to exhaust their administrative remedies
prior to filing the complaint. The district court noted that there are two processes of
which appellants could have availed themselves. Appellants could have filed a
request for a hearing within 15 days after the Closing Notices were issued, or prior to
the issuance of the Closing Notices, appellants could have sought a declaratory order
under the administrative procedures provided by the DNR. Because appellants did
neither, the district court determined that it lacked jurisdiction to hear the due process
claim. The district court declined to retain jurisdiction over the state-law ultra vires
claim and dismissed that claim without prejudice. On the date the district court
dismissed the complaint, the Closing Notices were reinstated. This appeal follows.

      The appellants argue that due process requires that they be given notice and a
predeprivation opportunity to be heard before the DNR may issue Closing Notices.

                                           -5-
Appellants also contend that the district court erred in determining the dispute was not
ripe and administrative remedies had not been exhausted. Appellants request that we
reverse the order of dismissal and remand this matter to the district court with
directions that they be given notice and a predeprivation hearing before the DNR may
issue future Closing Notices.

                                             II.

       We review a grant of a motion to dismiss de novo. McAuley v. Fed. Ins. Co.,
500 F.3d 784, 787 (8th Cir. 2007). As did the district court, we accept the factual
allegations of the complaint as true. Id.

       First, we address the district court’s holding that the claim is not ripe because
the Closing Notices that had been issued on May 1, 2007, had been lifted by the time
the complaint was filed and there were no Closing Notices in effect at that time. At
best, this would raise a question of mootness, not ripeness. “A case that no longer
presents a live case or controversy is moot, and a federal court lacks jurisdiction to
hear the action.” Minn. Humane Soc’y v. Clark, 184 F.3d 795, 797 (8th Cir. 1999).
We hold, however, that this claim would fall under the “capable-of-repetition-yet-
evading-review” exception to the mootness bar. This exception “applies only in
exceptional situations, where the following two circumstances [are] simultaneously
present: (1) the challenged action [is] in its duration too short to be fully litigated prior
to cessation or expiration, and (2) there [is] a reasonable expectation that the same
complaining party [will] be subject to the same action again[.]” Spencer v. Kemna,
523 U.S. 1, 17 (1998) (quotation and citation omitted). The initial Closing Notice was
only in effect for one week, and additional Closing Notices were issued and threatened
following the lifting of the May 1 Closing Notices. In fact, Closing Notices were
reissued to the appellants on the day the district court issued its order of dismissal.
Accordingly, the fact that there were no Closing Notices in effect at the time the
complaint was filed does not render this action moot.

                                            -6-
        Underlying the ruling on ripeness is the district court’s finding that the
appellants’ claim was barred because they failed to exhaust administrative remedies
that were available to them. See Neb. Rev. Stat. § 61-206(1) (Cum. Supp. 2006) (“If
a final decision is made without a hearing, a hearing shall be held at the request of any
party to the proceeding if the request is made within 15 days after the decision is
rendered.”).3 Specifically, the district court determined the appellants could have
requested a hearing within 15 days after the Closing Notices were issued or availed
themselves of the administrative procedure of seeking a declaratory order from the
DNR prior to the issuance of the Closing Notices. On appeal, appellants contend that
they are not required to exhaust any administrative remedy prior to bringing their
action under 42 U.S.C. § 1983. See Patsy v. Bd. of Regents, 457 U.S. 496, 516 (1982)
(“[W]e conclude that exhaustion of state administrative remedies should not be
required as a prerequisite to bringing an action pursuant to § 1983.”).

       In order to establish a procedural due process violation, a plaintiff must prove
that he or she was deprived of “an opportunity . . . granted at a meaningful time and
in a meaningful manner for [a] hearing appropriate to the nature of the case.” Boddie
v. Connecticut, 401 U.S. 371, 378 (1971) (quotation and citation omitted). Generally,
where “deprivations of property [are] authorized by an established state
procedure . . . due process [is] held to require predeprivation notice and hearing in
order to serve as a check on the possibility that a wrongful deprivation would occur.”
Parratt v. Taylor, 451 U.S. 527, 538 (1981), overruled on other grounds, Daniels v.
Williams, 474 U.S. 327, 330-31 (1986); see also Mullane v. Cent. Hanover Bank &
Trust Co., 339 U.S. 306, 313 (1950) (“Many controversies have raged about the
cryptic and abstract words of the Due Process Clause but there can be no doubt that
at a minimum they require that deprivation of . . . property . . . be preceded by notice
and opportunity for hearing appropriate to the nature of the case.”).

      3
       Nebraska Revised Statute section 61-206(1) was amended in 2008 to expand
the time for filing the request to 30 days.

                                           -7-
      “Due process is a flexible concept, however, and calls only for such procedural
protection as the particular situation demands.” Moore v. Warwick Pub. Sch. Dist.
No. 29, 794 F.2d 322, 327 (8th Cir. 1986). As the Supreme Court explained in
Mathews v. Eldridge, 424 U.S. 319 (1976):

      [I]dentification of the specific dictates of due process generally requires
      consideration of three distinct factors: First, the private interest that will
      be affected by the official action; second, the risk of an erroneous
      deprivation of such interest through the procedures used, and the
      probable value, if any, of additional or substitute procedural safeguards;
      and finally, the Government’s interest, including the function involved
      and the fiscal and administrative burdens that the additional or substitute
      procedural requirement would entail.

Id. at 335. Under the Mathews framework, the Supreme Court has recognized two
notable exceptions to the general rule that predeprivation notice and hearing are
required. The first exception applies where there is a need for “quick action by the
State when there is a compelling or overriding state interest in a summary
adjudication.” Moore, 794 F.2d at 327; see also Mackey v. Montrym, 443 U.S. 1
(1979) (upholding statute mandating prehearing suspension of a driver’s license for
refusing to take a breath analysis test upon arrest for operating a motor vehicle while
under the influence of alcohol); Memphis Light, Gas & Water Div. v. Craft, 436 U.S.
1, 19 (1978) (“[W]here the potential length or severity of the deprivation does not
indicate a likelihood of serious loss and where the procedures . . . are sufficiently
reliable to minimize the risk of erroneous determination,” a prior hearing may not be
required.); N. Am. Cold Storage Co. v. City of Chicago, 211 U.S. 306 (1908)
(upholding a State’s right to seize and destroy contaminated food without a prior
hearing). The second exception applies where the deprivation results from a “random
and unauthorized” act by a state actor. See Parratt, 451 U.S. at 541 (holding that it
would be “not only impracticable, but impossible” for State to provide predeprivation
procedures where prisoner’s property is taken through “random and unauthorized act”

                                           -8-
of prison employee). The record is unclear as to whether either exception applies in
this case.

        We have recognized an exception to Patsy’s general rule that exhaustion of state
remedies prior to bringing a section 1983 claim is not required. “Under federal law,
a litigant asserting a deprivation of procedural due process must exhaust state
remedies before such an allegation states a claim under § 1983.” Wax’n Works v.
City of St. Paul, 213 F.3d 1016, 1019 (8th Cir. 2000) (emphasis added).4 However,
it is not necessary for a litigant to have exhausted available postdeprivation remedies
when the litigant contends that he was entitled to predeprivation process. See
Zinermon v. Burch, 494 U.S. 113, 132 (1990) (“In situations where the State feasibly
can provide a predeprivation hearing before taking property, it generally must do so
regardless of the adequacy of a postdeprivation tort remedy to compensate for the
taking.”); Westborough Mall, Inc. v. City of Cape Girardeau, 794 F.2d 330, 337 (8th
Cir. 1986) (concluding that “[t]he availability of post-deprivation remedies is not a
defense to the denial of procedural due process where predeprivation process is
practicable” and district court erred in instructing jury otherwise). Accordingly,
appellants’ failure to exhaust postdeprivation remedies does not affect their
entitlement to predeprivation process, and the district court should not have
considered this failure in dismissing the claim.

      The district court also determined that appellants could have sought a
declaratory order from the DNR prior to the issuance of the Closing Notices. Under
the Nebraska Administrative Code, “[a]ny person may petition the [DNR] for issuance

      4
        In Wax’n Works, the plaintiff sought only postdeprivation relief in the form
of relocation expenses after moving to another location in response to an exercise of
eminent domain by the city of St. Paul, Minnesota. 213 F.3d at 1018. The city did
not respond in what Wax’n Works believed was a timely manner, so it brought a claim
alleging, in part, that the failure of the city to respond constituted a deprivation of
property without due process of law. Id.

                                          -9-
of a declaratory order as to the applicability to specified circumstances of a statute,
rule, regulation, or order which is within the primary jurisdiction of the agency.” 454
Neb. Admin. Code § 6-003.02. Within 30 days after the petition is filed, the DNR
must either (1) “[i]ssue an order declaring the applicability of the statute, regulation,
rule, or order in question to the specified circumstances;” (2) “[a]gree to issue an order
by a specified time . . . ;” (3) “[s]et the matter for specified proceedings,” including
the possibility of setting a hearing; or (4) “[d]ecline to issue a declaratory ruling,
stating the reasons for the agency’s decision.” Id. § 6-005.02. The procedures also
provide that an appeal of a declaratory order may be taken to the Nebraska Court of
Appeals as though the order came from a Nebraska District Court. Id. § 6-010.01.

       It is unclear on the record before us if this predeprivation declaratory order
process is constitutionally adequate to protect the property rights of the appellants.
See Zinermon, 494 U.S. at 126 (“[T]o determine whether a constitutional violation has
occurred, it is necessary to ask what process the State provided, and whether it was
constitutionally adequate.”). Nothing in the record demonstrates that the declaratory
judgment procedure would have addressed the specific issues raised in the underlying
claim or that it would have provided a meaningful predeprivation opportunity for the
appellants to present their claim. In fact, the essence of appellants’ action is that the
State of Nebraska does not afford constitutionally adequate predeprivation process in
this circumstance.

       Thus, we reverse the district court’s dismissal of appellants’ complaint and
remand this matter to the district court. On remand, the district court must determine
if a deprivation of a property right has occurred,5 and if so, whether that right is
subject to an exception to the general rule that a predeprivation process is required.
If the court should find that predeprivation process is required, then it must consider

      5
       See generally Spear T. Ranch, Inc. v. Neb. Dep’t of Nat. Res., 699 N.W.2d
379, 386 (Neb. 2005) and Spear T Ranch v. Knaub, 691 N.W.2d 116, 127 (Neb.
2005).

                                          -10-
whether the DNR’s declaratory order procedures are constitutionally adequate. After
addressing these issues, the district court should proceed, if necessary, with the case.
In light of this result, we reinstate the pendent state-law ultra vires claim.

                                          III.

      Accordingly, we reverse and remand the district court’s dismissal. We deny
appellants’ pending motions to supplement the record.

                        ______________________________

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