By Debbie Leonard

On September 17, 2020, the Nevada Supreme Court issued an eagerly awaited ruling regarding the public trust doctrine in the long-running Walker River litigation. Answering a certified question from the Ninth Circuit Court of Appeals, the court held that the public trust doctrine, as implemented through Nevada’s comprehensive water statutes, does not permit a court to reallocate water rights that were adjudicated and settled under the prior appropriation doctrine. In reaffirming that the public trust doctrine applies in Nevada, the Court recognized it to include all waters of the state, not just those that were navigable at statehood. A dissenting opinion by two of the seven justices took issue with both of these conclusions. [Mineral County, et al. v. Lyon County, et al., Case No. 75917, 136 Nev.Adv.Op. 58 (Sept. 17, 2020).]

The Walker River

The Walker River runs from the Sierra Nevada mountains in California into the Great Basin of Nevada, where it terminates in Walker Lake. The majority of precipitation and surface water flow into the Walker River Basin occurs in California, but most of the water is consumed by irrigators in Nevada. Since agricultural appropriations from the river and its tributaries first commenced in the mid-nineteenth century, the size and volume of Walker Lake have shrunk significantly, and the concentrations of total dissolved solids have risen to the point where the lake can no longer sustain a fishery. Disagreement exists as to the causes of these changes, but there is general consensus that upstream diversions play at least some part.

Litigation over the Walker River

Litigation over the Walker River commenced in 1902 as a trans-border dispute in the U.S. District Court for Nevada between two ranching operations, one in California and one in Nevada. The case ended in 1919, but five years later, the United States commenced a new action in the same federal court seeking to establish a federally reserved water right for the Walker River Paiute Tribe (Tribe). The court issued a decree in 1936 (subsequently amended in 1940) that distributed water rights to the Tribe and various other claimants and that retained jurisdiction in the decree court for future modification.

In 1991, the Walker River Irrigation District filed a petition with the decree court to enforce its decreed rights in response to regulatory action by the California Water Resources Control Board to prevent the District from dewatering portions of the river. The Tribe and the United States filed counterclaims, asserting new rights for a reservoir built on the tribal land. In 1994, Mineral County—in which Walker Lake it located—moved to intervene, requesting that the court reopen and modify the decree “to recognize the rights of Mineral County … and the public to have minimum [water] levels to maintain the viability of Walker Lake.” Invoking the public trust doctrine, Mineral County requested that the court require at least 127,000 acre-feet annually to reach Walker Lake.

In 2015, the decree court dismissed Mineral County’s complaint in intervention for lack of standing but nevertheless proceeded to address, in detail, the applicability of the public trust doctrine. The court concluded that the public trust doctrine could not be used to reallocate decreed rights without constituting a taking for which just compensation must be paid. Mineral County appealed.

Certified Questions from the Ninth Circuit Court of Appeals

The Ninth Circuit held the District Court erred by dismissing Mineral County’s complaint in intervention for lack of standing and certified two questions to the Nevada Supreme Court:

Does the public trust doctrine apply to rights already adjudicated and settled under the doctrine of prior appropriation and, if so, to what extent?

If the public trust doctrine applies and allows for reallocation of rights settled under the doctrine of prior appropriation, does the abrogation of such adjudicated or vested rights constitute a “taking” under the Nevada Constitution requiring payment of just compensation?

The Nevada Supreme Court accepted both certified questions and ordered briefing. Nearly 30 interested parties filed amicus briefs, including the Nevada State Engineer, municipal water purveyors, environmental groups, farmers, ranchers, the Pacific Legal Foundation, the Nevada Mining Association, and a group of law professors. Also participating as an amicus was the State of California, which discussed its own implementation of its public trust responsibility to the Walker River based on the groundbreaking National Audubon Society v. Superior Court case related to Mono Lake. 33 Cal.3d 419, 452 (1983).

The Nevada Supreme Court’s Majority Opinion

The court’s analysis went through the origins of public trust doctrine jurisprudence, from the seminal Illinois Central Railroad case issued by the United States Supreme Court to its own decision in Lawrence v. Clark County, which was the first to expressly adopt the public trust doctrine in Nevada. 127 Nev. 390, 406, 254 P.3d 606, 617 (2011). The Court cited the sources of Nevada’s public trust doctrine as the common law, the state’s constitution and statutes and the inherent limitations on state sovereignty. As to water, the Court noted that the Nevada Legislature “effectively codified” public trust principles when declaring that all waters within the state, whether above or beneath the surface, belong to the public. NRS 533.025.

Acknowledging that this precedent makes clear that the public trust doctrine applies to the waters of the state, the Supreme Court rephrased the first certified question to ask:

Does the public trust doctrine permit reallocating rights already adjudicated and settled under the doctrine of prior appropriation and, if so, to what extent?

Although the Court “explicitly recognize[d] that the public trust doctrine applies to rights already adjudicated and settled under the doctrine of prior appropriation, such that the doctrine has always inhered in the water law of Nevada as a qualification or constraint in every appropriated right,” the Court nevertheless answered the first certified question (as rephrased) “no.”

To reach this conclusion, the Supreme Court looked to the state’s comprehensive water statutes. Although the Legislature has declared that all water belongs to the public, it also embraced the prior appropriation doctrine, which makes all appropriations subject to existing rights. The state’s water statutes also incorporate the concept of beneficial use as a fundamental principle governing water appropriations. To that end, the statutes allow a multitude of uses, including not only traditional uses such as irrigation, stockwater, mining, municipal, commercial and industrial, but also recreation and wildlife.

When considering an application to appropriate or change the use of water, the State Engineer must follow numerous legislatively established guidelines. Among those guidelines are whether the proposed use is environmentally sound, is appropriate for the long term without unduly limiting future growth and development, or threatens to prove detrimental to the public interest. The court deemed these statutory guardrails as “consistent with the public trust doctrine” and, therefore, as fulfilling the state’s responsibility to protect the public trust.

Although water rights are usufructuary, the Court concluded that:

. . .this does not necessarily mean that water rights can be reallocated under the public trust doctrine. Rather, it means that rights holders must continually use water beneficially or lose those rights.

As a result, although recognizing the “tragic decline of Walker Lake” and the “resulting negative impacts on the wildlife, resources and economy of Mineral County,” the Court determined that it could not, under the public trust doctrine, “uproot an entire water system, particularly where finality is firmly rooted in our statutes.”

The Court deemed this a matter of policy for the Legislature, not the courts, to address. It is in that important respect that the court reached the opposite conclusion than the California Supreme Court reached nearly 40 years ago in theAudubon case.

Because the Court answered the first certified question in the negative, it did not need to reach the second.

Clarification of the Public Trust Doctrine as to Nonnavigable Tributaries

In an interesting turn, the Court:

. . .clarif[ied] that the public trust doctrine applies to all waters of the state, whether navigable or nonnavigable, and to the lands underneath navigable waters.

In reaching this result, the Court expanded the public trust beyond how it was originally envisioned in Illinois Centraland its progeny. In explaining its interpretation, the Court relied on the Legislature’s recognition of all water sources as belonging to the public. For that reason, the Court concluded that nonnavigable tributaries are within the scope of the public trust doctrine. Although not expressly mentioned, the decision leads to the conclusion that groundwater is also within the public trust doctrine’s reach.

The Dissent

Two Justices concurred in part and dissented in part, taking issue with the manner in which the majority both reframed and then answered the certified question. Citing the Audubon case, the dissent complained:

As revised, the question suggests an all-or-nothing approach that is fundamentally inconsistent with the public trust doctrine. Nevada’s appropriative water rights system and the public trust doctrine developed independently of each other. The goal is to balance them and their competing values, not set them on a collision course.

By reframing the certified question, the dissent protested, the majority “misdirects the analysis, because it excludes the balancing that lies at the heart of the public trust doctrine.” The dissent disagreed that Nevada’s water statutes, as implemented by the State Engineer’s discretionary decision making, is the exclusive means by which the state carries out its public trust responsibilities “This view fundamentally misapprehends the public trust doctrine and its constitutional and sovereign dimensions.”

Even if the State Engineer might conclude that an appropriation is in the public interest, the dissent noted, it still might harm public trust values.

As emphasized by the dissent, to the extent the public trust doctrine is enshrined in Nevada’s water statutes, there must still be a “judicial check” on how the Legislature implements it:

[T]he public trust doctrine, enforced by a separate and independent judiciary, is one intentionally endowed with flexibility—to consider a multitude of needs and impacts, to encompass more and different protections over this state’s water sources, to check the actions by legislative and executive actors for absolute compliance with their fiduciary obligations—that those limited statutory sections cited lack.

This conclusion derives from two sources: 1) the Court’s constitutional responsibility to provide judicial oversight over legislative actions that purport to convey property held in trust for the public; and 2) separation of powers principles. As summarized by the dissent:

. . .it cannot be that with the enactment of [the water statutes], the Legislature effectively delegated to an administrative officer its own public trust obligations and the judiciary’s responsibility to police constitutional and sovereign limits on the Legislature’s own authority.

The desire for finality does not abdicate this oversight role particularly when, the dissent noted, Mineral County identified several potential remedies that would not disturb vested rights or impinge on principles of finality. In any event, the dissent observed, finality would be one piece of what the trial court would take into account when reexamining existing rights within the framework of the public trust doctrine. Because even vested water rights are subject to the public trust, the dissent concluded, the trial court’s enforcement of the public trust doctrine would not affect a reallocation of rights and therefore would not “divest anyone of legal title previously held.”

Interestingly, while decrying what it deemed the majority’s abandonment of the judiciary’s role in enforcing the public trust doctrine, the dissent also criticized the majority for expanding the public trust doctrine to include nonnavigable waters. Although the dissent recognized this as consistent with how the public trust doctrine is evolving in various jurisdictions, the dissent deemed this conclusion to be outside the ambit of the certified questions and beyond the scope of facts presented in the case.

Conclusion and Implications

Although the members of the court disagreed as to how the public trust doctrine should be implemented in stressed river systems such as the Walker River, they agreed that it is enshrined in Nevada law. Ultimately, the Supreme Court’s holding was narrowly tailored to address the question of reallocation of vested water rights. It left open the potential use of other remedial strategies, such as those urged by Mineral County, to protect public trust values. That will be the task for the federal decree court on remand.