Diamond Natural Resources Protection & Conservation Association v. Diamond Valley Ranch, LLC

Many of Nevada’s water basins were overappropriated, meaning more water was pumped out each year than could be replenished naturally. The Nevada legislature enacted a statute allowing the state engineer (defendant) to designate an overappropriated basin as a critical management area (CMA). If a basin was designated as a CMA, its current water-rights holders could create a groundwater-management plan (GMP) to return the basin to sustainable usage and submit it to the state engineer for approval. The statute allowed approval if, after considering seven mandatory factors, the engineer found the plan would lead to removal of the CMA designation. The seven factors were: (1) hydrology, (2) physical characteristics, (3) location of withdrawals, (4) water quality, (5) wells, (6) existence of any GMP, and (7) any other relevant factor. The statute further provided that if a basin remained designated as a CMA for 10 years, the state engineer was then required to restrict withdrawals based on the users’ priority rights. Diamond Valley, a farm area, relied on groundwater. Diamond Valley’s basin had been significantly overappropriated for 40 years and was designated as a CMA. A majority of the basin’s users (defendants) created a GMP designed to lead to sustainable usage in 35 years. This GMP required all rights holders to reduce usage, even senior users. However, these reductions were scaled so senior users could withdraw more water than junior users. The state engineer approved the GMP. Diamond Valley Ranch, LLC, and other senior users (plaintiffs) challenged the plan’s approval in state court. These senior users argued the engineer could not lawfully approve the GMP because Nevada followed the prior-appropriation doctrine and the GMP did not comply with this doctrine. The trial court invalidated the GMP. The state engineer and some of the GMP’s supporters appealed to the Nevada Supreme Court.