Nevada Supreme Court restores water rights priority dates for Happy Creek ranch

Agreeing with a district judge that the application of a 1981 law would unfairly impact Happy Creek Ranch, the Nevada Supreme Court ruled 7-2 this week to restore the ranch’s water rights back to their original priority more than 50 years old.

Priority is critical in years when drought causes groundwater supplies to fall short of need. Those water rights holders with long-standing senior priority continue to get what they need while those with much newer water rights can see their water reduced or cut off.

The opinion says Happy Creek in Humboldt County managed its 3,063 acre feet of water rights for decades with no problems. Owners decided in 2007 to convert from flood irrigation to a center pivot irrigation system to improve efficiency. That change required them to get the state engineer’s permission to change the manner and place of use. Ranch owners spent nearly $1 million making the upgrades and were granted permission for the change.

Everything went well until John Milton, a water rights professional, missed a deadline for proving beneficial use of the new system. Milton said he lost the email informing him of the requirement in changing over his computer to a new email system. He filed a petition asking a review and won restoration of the water rights.

But the state engineer told him that, under state law, that changed their priority from the 1950s to July 2016.

Happy Creek appealed and the district court agreed that the punishment of losing senior priority dates because of simple human error, “does not fit the crime.”

The state engineer appealed arguing the statute requires the priority date be changed in cases like this.

The Supreme Court this week disagreed, saying the statute, “does not affect the power of the district court to grant equitable relief to a permittee when warranted.”

The opinion by Justice Kris Pickering says in this case, relief is warranted. The opinion points to Happy Creek’s investment of nearly $1 million to improve the efficiency and sustainability of the water system and the ranch’s decades-long compliance with state water laws.

Supporting the state engineer’s cancellation of those priority dates, the opinion states, could discourage water users from upgrading systems and improving efficiency.

“Reinstating Happy Creek’s original priority dates preserves the proper incentives, better serving Nevada’s joint interests of efficiency and sustainability in water usage,” the opinion states.

In contrast, it states that rigid application of the law in this case, “would result in manifest injustice and this court cannot agree that the Legislature intended any such effect.”

Pickering was joined in the opinion by Justices Mark Gibbons, Ron Parraguirre, Elissa Cadish and Abbi Silver.

But two justices, Jim Hardesty and Lidia Stiglich, dissented arguing the decision to restore priority dates directly violates the statute and ignores the fact that Happy Creek continues to use those water rights to this day.

“No evidence showed that Happy Creek was presently prevented from using its groundwater permits with the new priority date.”

The dissent also argues that since the state engineer can’t grant equitable relief in such cases, the district court had to consider evidence outside of the record, a violation of water law statutes.