Nebraska still liable for $5.5 million settlement
By Russ Pankonin
The Imperial Republican
“This is a huge win for Nebraska.”
That’s how Upper Republican Natural Resources District (URNRD) Manager Jasper Fanning described the opinion released by the U.S. Supreme Court Tuesday morning.
In a split decision, the justices adopted the recommendations of Special Master William Kayatta, Jr., in the dispute.
While Nebraska still has to pay $5.5 million in damages and disgorgement, Nebraska will get credit for imported water that comes into the Republican River Basin from the Platte River Basin.
The imported water amounts to 8,000 to 10,000 acre feet (AF) per year, Fanning said.
Based on what Kansas thought they were entitled to in damages for Nebraska’s non-compliance in 2005-06, that puts the value of the imported water at $15-18 million, Fanning said.
And now that the Supreme Court has ruled on how to account for that water, that benefit will occur on an annual basis forever, Fanning noted.
AG’s office pleased
Deputy Attorney General Justin Levine agreed with Fanning on just how big of a win this decision is for the State of Nebraska and its water users in the Republican Basin.
The case started in 2007 but Levine has been working on the issue for nearly the last 10 years of his career in the Attorney General’s office.
He said he and his colleagues feel really good about the win, especially after all the effort they’ve put into it over the years.
More recently, he said Kansas has come to the table to discuss and reach agreement on compliance issues dealing with Nebraska and Colorado’s augmentation pumping.
Levine said now that this case is finally over, he’s hopeful the states can put it behind them and work more closely together.
He noted they’ve made good progress with short-term agreements with Kansas and feels those agreements can become long-term solutions.
Levine said Governor Ricketts has already included the $5.5 million in damages into this year’s state budget.
Justice Kagan writes opinion
In her opinion for the majority, Justice Elena Kagan said the current compact accounting charges Nebraska for that water use, which reduces the amount of Republican River water Nebraska can consume.
“Suppose the Compact grants 100 units of Republican River water to Nebraska and Kansas alike; and further assume that the Accounting Procedures count 10 units of Platte River water toward Nebraska’s allotment.
“That means Nebraska may now consume only 90 units of Republican River water (or else pay Kansas damages). The Procedures thus change the States’ shares of Basin water, to Nebraska’s detriment: Nebraska now has less, and Kansas relatively more, than the Compact allows. That, too, lies outside what the States can do,” she wrote.
Justice Kagan was joined in her opinion by Justices Anthony M. Kennedy, Ruth Bader Ginsburg, Stephen G. Breyer and Sonia Sotomayor. Chief Justice John G. Roberts, Jr., sided with the majority on the disgorgement but dissented on the accounting change.
Dispute dates back to 2007
Tuesday’s ruling brings an end to a dispute that started clear back in 2007.
That’s when Kansas protested that Nebraska substantially exceeded its allocation for 2005-06.
Nebraska countered that it was being unfairly charged in the accounting procedures for the imported water supply.
According to the 2002 final compact settlement, both states took their complaints to the Republican River Compact Administration (RRCA). Each state was represented on the RRCA.
With no agreement there, the states entered non-binding arbitration. Still with no resolution, Kansas filed with the Supreme Court for monetary and injunctive relief.
The Supreme Court appointed Kayatta as special master to investigate the claims made by the state. After another two years of hearings, proceedings and a trial, he issued his finding in November 2013.
Both states filed exceptions to his findings with the Supreme Court.
Kansas sought more damages and an injunction against Nebraska to ensure compact compliance. They also disputed Kayatta’s finding on imported water.
Nebraska took exception to the damages of $5.5 million and the request for an injunction.
Both states argued their case in front of the justices in October 2014, with the ruling coming down Tuesday.
In the majority opinion, Justice Kagan agreed with Kayatta that Nebraska exceeded its allocation in 2005-06 by more than 70,000 AF.
She also agreed Kansas was entitled to $3.7 million in damages for the loss Kansas experienced due to Nebraska’s overuse.
She said Nebraska’s efforts to stay in compliance came at a “snail-like pace,” that were too little, too late.
She also approved Kayatta’s finding of disgorgement in the amount of $1.8 million. Disgorgement is a court-ordered remedy compelling one party to pay back unwarranted gains to prevent unjust enrichment.
Justice Kagan said the $1.8 million disgorgement sends a strong message to Nebraska to stay in compliance with the 2002 compact settlement.
Kansas had originally sought $80 million in damages and the permanent shutdown of 302,000 irrigated acres in the basin. Kayatta recommended against those requests, which was upheld Tuesday.
Justice Clarence Thomas wrote the dissenting brief for the court. He cited the principles of contract law for his dissent.
He said he would not have ordered disgorgement or any changes in the accounting for imported water supply.
He was joined in his opinion by Justices Antonin Scalia and Samuel Anthony Alito, Jr. Roberts joined him in dissent on the accounting change.