IN THE SUPREME COURT OF THE STATE OF KANSAS
No. 93,690
MARLIN M. HAWLEY and KAREN E. HAWLEY, TRUSTEES
of the MARLIN M. HAWLEY TRUST and the
KAREN E. HAWLEY TRUST,
Appellees,
v.
KANSAS DEPARTMENT OF AGRICULTURE,
Division of Water Resources,
Appellant.
SYLLABUS BY THE COURT
1. Under K.S.A. 77-621(c)(4), a court may grant relief if an agency wrongfully interprets and applies the law.
2. An appellate court exercises the same statutorily limited review of an agency's action as does the district court, i.e., as though the appeal had been made directly to the appellate court.
3. Under K.S.A. 77-621(a)(1), the party asserting an agency's action is invalid bears the burden of proving the invalidity.
4. Interpretation of a statute is a question of law.
5. One of the basic attributes of the Kansas system of prior appropriation for water rights, K.S.A. 82a-701 et seq., is that holders of water rights who fail to use the rights lose the rights.
6. The prior appropriation doctrine in Kansas is based upon the premise that all unused water belongs to all of the people of the state.
7. The fundamental rule to which all other rules are subordinate is that the intent of the legislature governs if that intent can be ascertained, and when a statute is plain and unambiguous, the court must give effect to the intention of the legislature as expressed rather than determine what the law should or should not be.
8. The legislature is presumed to have expressed its intent through the language of the statutory scheme it enacted. This means that when a statute is clear and unambiguous, the court must give effect to the statute as written, and there is no need to resort to statutory construction.
9. As a general rule, statutes are construed to avoid unreasonable results. There is a presumption that the legislature does not intend to enact useless or meaningless legislation.
10. Under the Kansas Water Appropriation Act, K.S.A. 82a-701 et seq., a senior water right is a right with a priority date earlier than a junior right.
11. Under the facts of this case, the Division of Water Resources, Kansas Department of Agriculture, was correct in not providing a notice under K.S.A. 2005 Supp. 82a-718(b) to holders of water rights who, without due and sufficient cause, had not beneficially used the water for 31 successive years.
Appeal from Republic district court; THOMAS M. TUGGLE, judge. Opinion filed April 28, 2006. Reversed.
Brett W. Berry, of Kansas Department of Agriculture, Division of Water Resources, of Topeka, argued the cause and was on the brief for appellant.
Larry G. Michel, of Kennedy Berkley Yarnevich & Williamson Chartered, of Salina, argued the cause and was on the brief for appellees.
The opinion of the court was delivered by
NUSS, J.: The Division of Water Resources, Kansas Department of Agriculture (DWR), appeals an order of the district court setting aside DWR's termination of a water right. The sole issue is whether DWR erroneously interpreted K.S.A. 2005 Supp. 82a-718 when it concluded that one of the notice provisions of the statute, subsection (b), was not a condition precedent to termination of a water right pursuant to subsection (a). The appeal is brought pursuant to the Kansas Act for Judicial Review and Civil Enforcement of Agency Actions (KJRA), K.S.A. 77-601 et seq., and our jurisdiction is under K.S.A. 20-3018 (approval of Trustees' motion to transfer).
We reverse the district court and affirm the decision of DWR terminating the water right.
FACTS
On July 6, 1953, E.E. Conzelman applied to DWR, file number 1575, for a permit to appropriate water for beneficial use from the Republican River in Republic County, Kansas, through use of a pump and sprinkling system. On October 9, 1953, DWR's chief engineer approved the application for "irrigation purposes." After correcting the land description in the application, the chief engineer issued a certificate of appropriation on May 11, 1960. The certificate informed Conzelman that the water appropriation right "shall exist and continue only by the exercise thereof in a lawful manner. [It] shall be deemed abandoned and shall terminate when without due and sufficient cause no lawful beneficial use is made of water under this appropriation for three (3) successive years."
In November 1978, Conzelman received a letter from DWR concerning water usage between 1975 and 1977:
"If it is determined that no water has been used pursuant to this application or if it is determined that a water right has been perfected to some extent by use of water before 1975, the issue of abandonment and termination of such right or the dismissal of the application will be considered by the Chief Engineer for further action."
Conzelman replied that he had completed water use reports for the years in question, he was not irrigating during the period in question due to crop selection, and he was operating according to conservation guidelines.
Conzelman held the water right until his death on July 30, 1982. Following Conzelman's death, his son, Max, took over operation of the farmland subject to the water right.
On November 23, 1982, DWR again sent a letter concerning abandonment and termination of the water right. In response, Max asserted that use of the water right would change under his management. Based on the change in management, he asked DWR to withhold termination proceedings.
A third letter was sent from DWR in 2000 detailing the nonuse. DWR asserted that according to water use reports, the water right had only been exercised once in over 40 years.
After Max's death in December 2000, the water right passed to his daughter, Karen Hawley, and son-in-law, Marlin Hawley, as trustees of his estate (Trustees). In February 2002, the 2000 DWR letter detailing the nonuse was forwarded to Marlin Hawley with a notice of "possible abandonment."
In May 2003, six other holders of water rights on and around the Republican River sent DWR letters requesting an expedited abandonment hearing for the Trustees' water right. The letter discussed the impact that use of the Trustees' water right would have on other water right holders:
"The last reported diversion of this surface water permit was in 1970. It is known that the owner [Trustees] is using this water right in anticipation that there will be several years before a scheduled abandonment hearing. Many water right owners, from the Nebraska border down the Republican River, will be directly impacted by the [Trustees'] use of water file number 1,575 in both minimum desirable streamflow calculations and seniority concerns. We would not want this to start a trend of using water rights that have not complied with Kansas Statutes." (Emphasis added.)
Two months later, in July 2003, DWR sent a letter to the Trustees regarding abandonment and termination of their water right to provide them with "notice . . . and the opportunity to comment." DWR requested documentation of the Trustees' "due and sufficient cause" for periods of nonuse not previously provided by their annual water reports.
In a letter dated August 11, 2003, Marlin Hawley replied that he was not aware why water right No. 1575 had not been used:
"He [Max Conzelman] passed away December 1, 2000, having spent the previous four years of life in a nursing home. Prior to those years, he cared for my invalid mother in their home until her death. He had leased the ground for many years. Otherwise, I am unaware of the reasons why the water right was not used.
"I became aware of this problem in 2001 and promptly installed a pivot system in 2002 and pumped 80 hours. In December, 2002, I received notice that a waterflow meter was required before the watering season. This meter was installed and has been inspected by your Stockton Field Office. I have been irrigating all this summer of 2003."
On December 17, 2003, Scott Ross, an authorized representative of DWR's chief engineer, filed a 20-page verified report regarding permit No. 1575 pursuant to K.S.A. 82a-718. The report was prepared by G. Duane Harris, an engineering technician employed by DWR, after investigating the water use history under the permit. The report concluded that
"no lawful, beneficial use has been made under the above referenced Appropriation of Water for five or more successive years (1971 thru 2002) and . . . due and sufficient cause for non-use has not been shown. The above referenced Water Right cannot be certified as a water right based on the information herein as required in K.S.A. 82a-714(c). Therefore, I hereby recommend to the Chief Engineer that notice be given and a hearing be held in accordance with the provisions of K.S.A. 82a-718 to determine whether the above referenced Water Right, File No. 1,575 should be declared abandoned and terminated."
One week later, on December 24, DWR initiated proceedings by sending to the Trustees, via certified mail, the verified report and notice of a hearing. The notice stated that the purpose of the hearing was "to determine whether any water right that may exist under the above-referenced file number shall be deemed abandoned and terminated under the provisions of the Kansas Water Appropriation Act." It additionally advised that "[t]he hearing is the parties' opportunity to present evidence (facts) to show whether the lawful, beneficial use of water occurred during the alleged period of non-use or whether due and sufficient cause for such non-use of water existed." Among other things, DWR attached a copy of K.A.R. 5-7-1, promulgated by the chief engineer pursuant to his authority granted in K.S.A. 82a-706a, which identifies 10 different categories of "due and sufficient cause" for nonuse of water.
The Trustees filed an answer and motion to dismiss, asserting that due and sufficient cause for nonuse existed and that DWR's compliance with the notice provision of K.S.A. 2005 Supp. 82a-718(b) is a condition precedent to an abandonment action. DWR filed an objection to the motion, arguing that the notice provisions of K.S.A. 2005 Supp. 82a-718(b) only apply to the limited class of water rights where the water right has been unused for 3 successive years but for less than 5 successive years; under the circumstances of the case, only the notice of hearing under subsection (a) was necessary.
The two notices in K.S.A. 2005 Supp. 82a-718 state in relevant part:
"(a) All appropriations of water must be for some beneficial purpose. Every water right of every kind shall be deemed abandoned and shall terminate when without due and sufficient cause no lawful, beneficial use is henceforth made of water under such right for five successive years. Before any water right shall be declared abandoned and terminated the chief engineer shall conduct a hearing thereon. Notice shall be served on the user at least 30 days before the date of the hearing . . . .
. . . .
"(b) When no lawful, beneficial use of water under a water right has been reported for three successive years, the chief engineer shall notify the user, by certified mail, return receipt requested, that: (1) No lawful, beneficial use of the water has been reported for three successive years; (2) if no lawful, beneficial use is made of the water for five successive years, the right may be terminated; and (3) the right will not be terminated if the user shows that for one or more of the five consecutive years the beneficial use of the water was prevented or made unnecessary by circumstances that are due and sufficient cause for nonuse, which circumstances shall be included in the notice." (Emphasis added.)
The Trustees' motion to dismiss was denied by the hearing officer in a prehearing order dated February 4, 2004. In the order, she gave several reasons for her holding.
First, she examined the plain language of the statute.
"Because the issues raised require interpretation of a statutory provision, the fundamental rule is to give the statute the effect intended by the legislature. Respondents' argument asserts that, in this case, legislative intent must be determined based on principles of statutory construction. However, statutory construction is only made necessary where the statute at issue is ambiguous. In re HCA Health Services Inc., 30 Kan. App. 2d 910, 51 P.3d 1119 (2002). If a statutory provision is clear from its plain language, then that language is to be applied as expressed. The first inquiry, then is whether the plain language of the statute informs us of its intended application.
. . . .
"This language [subsection (b)(1)] imposes a duty upon the chief engineer to provide a specific type of notice to a distinct subgroup of water right users at a distinct point in time. The notice is to be provided to those users who have reported three successive years of non-use, at the point in time when three successive years of non-use have been reported. In other words, at the point when a water user has reported exactly three years of non-use, the chief engineer should provide the notice described in the provision.
. . . .
"This part [subsection (b)(2)] indicates the notice shall warn the notified user of the potential for termination due to abandonment, which can only occur after five successive years of non-use. It further describes a notice to inform the user of the existence of circumstances that could avoid termination for abandonment.
"The plain language of the statute indicates notice shall be sent to those who have reported exactly three years of non-use, such notice to be sent at the point at which only three years of non-use have been reported, so that the user may avoid termination for abandonment in the future, for five years of non-use without due and sufficient cause. In the present case, it is uncontroverted that non-use has occurred for 32 consecutive years. In 1999, when this provision was adopted by the Legislature, there had been 29 consecutive years of non-use. Therefore, [Trustees'] argument that K.S.A. 82a-718(b) applies in this case is not persuasive."
Second, she acknowledged the doctrine of operative construction, stating, "It should also be noted that judicial deference is due to an agency's interpretation of statutes applicable to that agency."
Finally, she looked at rules of statutory construction.
"Assuming, solely for the sake of argument, that the language of K.S.A. 82a-718(b) is ambiguous, and the rules of statutory construction must be applied, those principles lead to the same conclusion. As [Trustees] have cited in their motion, in construing unclear statutes, a court should avoid unreasonable results and make different provisions consistent, harmonious and sensible. Here, it would be unreasonable to interpret K.S.A. 82a-718(b) as requiring notice to be sent to the owner of a water right after the expiration of five consecutive years of non-use. According to subsection (a), abandonment occurs by operation of law upon the occurrence of two facts, [1] a five-year period of non-use and [2] the lack of due and sufficient cause for that non-use. (The 1999 amendments did not change the content of this pre-existing provision, other than to extend the period of non-use from three years to five.) By the time the five-year period has expired, the controlling facts are set. Either water was used or not, and there was either due and sufficient cause or not. After the five-year period has passed, there is no opportunity to alter those facts. The notice described in subsection (b) could not help an owner whose five-year period was already over. It cannot have been the legislature's intent to adopt a provision of law that can have no purpose or effect.
"The only way subsection (b) can be read to be consistent and harmonious with the pre-existing (and materially unchanged) first provision is that it allows a user who has reported exactly three years of non-use an opportunity, at that very point in time, to knowingly act to avoid abandonment, while that goal can still be accomplished.
"In light of the above findings and discussion, Respondent's assertion that K.S.A. 82-718(b) should be applied retroactively becomes moot." (Emphasis added.)
The termination hearing occurred a week after the denial of the Trustees' motion to dismiss. Harris was called by DWR to explain his analysis in the verified report. Marlin Hawley, who appeared pro se with Dennis Erkenback, his tenant, offered testimony that use had occurred in 2002:
"[W]e went ahead and put in a pivot and you know . . . we took out a shelter belt. In all total, probably $70,000 worth of work. And then again, we pumped for 2002, I think it was 180 hours, the 2003 [sic] the 73 plus acre-feet. During all this time, you know we thought we was doing what we were supposed to be doing and it seems that you know everything was riding along real well."
Hawley acknowledged, however, that he did not have rebuttal evidence for the years of nonuse prior to 2002.
Following the hearing, the DWR hearing officer issued written recommendations to the chief engineer containing proposed findings of fact and conclusions of law. She found no due and sufficient cause for the nonuse for 31 successive years (1971 through 2001) and for 11 successive years (1959-1969). She found that the earlier 11-year period did not count toward abandonment and termination per subsection (c) of K.S.A. 2005 Supp. 82a-718. Her recommendations, including the proposed order of termination of the water right under 82a-718, were adopted by the chief engineer on April 19, 2004.
The Trustees timely petitioned the Secretary of Agriculture for administrative review based on lack of notice under 82a-718(b). The Secretary issued an order denying administrative review, making the chief engineer's order the final agency action. In denying review, the Secretary stated:
"The provisions of K.S.A. 2003 Supp. 82a-718(b) are clear and unambiguous; the Chief Engineer was not required to give notice to the holders of water rights for which five or more successive years of non-use had occurred prior to July 1, 1999, the effective date of the statute. Therefore, the Secretary can find no basis, under the uncontested facts of this case, on which to review the Pre-Hearing Order."
The Trustees timely filed a petition for judicial review in the Republic County District Court. The district court heard arguments and on November 19, 2004, entered judgment in favor of the Trustees. It found that compliance with the notice provision of subsection (b) was a condition precedent to an abandonment and termination proceeding, that the DWR had failed to provide the Trustees with the required notice, and that the DWR's termination of the Trustees' water right should be set aside. In so finding, the district court stated that K.S.A. 2005 Supp. 82a-718 is both substantive in extending the nonuse period from 3 to 5 years and procedural in requiring notice after 3 successive years of nonuse.
DWR timely appeals.
ANALYSIS
Issue: Is notice under K.S.A. 2005 Supp. 82a-718(b) a condition precedent to termination of a water right pursuant to K.S.A. 2005 Supp. 82a-718(a)?
Standard of Review
Proceedings initiated by the chief engineer to declare abandonment and termination of water rights pursuant to K.S.A. 2005 Supp. 82a-718 are subject to review in accordance with the provisions of the Kansas Administrative Procedure Act. See K.S.A. 2005 Supp. 82a-1901(a). A resultant order of the Secretary of Agriculture is subject to review in accordance with the KJRA. See K.S.A. 2005 Supp. 82a-1901(b). Our standard of review is statutorily defined by the KJRA. Blue Cross & Blue Shield of Kansas, Inc. v. Praeger, 276 Kan. 232, 245, 75 P.3d 226 (2003). Under K.S.A. 77-621(c)(4), a court may grant relief if an agency wrongfully interprets and applies the law.
On appeal, we exercise the same statutorily limited review of the agency's action as does the district court, i.e., "'as though the appeal had been made directly to this court.'" 276 Kan. at 245. The party asserting the agency's action is invalid bears the burden of proving the invalidity. 276 Kan. at 245 (citing K.S.A. 77-621[a][1]). As a result, the Trustees, as the petitioners for review to the district court, retain the burden of proving DWR's statutory interpretation was erroneous.
Resolution of the present issue necessitates interpretation of K.S.A. 2005 Supp. 82a-718, part of the Kansas Water Appropriation Act, K.S.A. 82a-701 et seq. As we stated in Blue Cross & Blue Shield of Kansas, Inc. v. Praeger, 276 Kan. at 247:
"'Interpretation of a statute is a question of law. [Citation omitted.] Special rules apply, however, when considering whether an administrative agency "erroneously interpreted or applied the law":
'"The interpretation of a statute by an administrative agency charged with the responsibility of enforcing that statute is entitled to judicial deference. This deference is sometimes called the doctrine of operative construction . . . [I]f there is a rational basis for the agency's interpretation, it should be upheld on judicial review. . . . [However,] [t]he determination of an administrative body as to questions of law is not conclusive and, while persuasive, is not binding on the courts." [Citation omitted.]'
Deference to an agency's interpretation is especially appropriate when "the agency is one of special competence and experience." [Citation omitted.] However, the final construction of a statute always rests with the courts. [Citations omitted.]'"
Discussion
DWR argues that based upon the plain language of the statute, notice of the permit holder's opportunity to avoid loss of his or her water right under subsection (b) is only necessary after 3 successive years of reported nonuse, but before 5 successive years of nonuse. Accordingly, where, as here, 31 successive years of nonuse occurred, no notice need be given except, under subsection (a), of the abandonment and termination hearing. Because the statutory language is clear, there is no need to apply the rules of construction. DWR contends in the alternative that if ambiguity exists and rules of statutory construction are used, then retroactive application of subsection (b) is improper.
The Trustees respond that application of the rules of statutory construction to subsection (b) demonstrates that the notice is required for all abandonment and termination proceedings undertaken after (b) was passed by the legislature in 1999. Moreover, the notice requirements are substantive and remedial, requiring that they be applied retroactively.
Our analysis starts with the statutory language. For a number of years prior to 1999, K.S.A. 82a-718 stated:
"All appropriations of water must be for some beneficial purpose. Every water right of every kind shall be deemed abandoned and shall terminate when without due and sufficient cause no lawful, beneficial use is henceforth made of water under such right for three successive years. Before any water right shall be declared abandoned and terminated the chief engineer shall conduct a hearing thereon in accordance with the provisions of the Kansas administrative procedure act. Notice shall be served on the user at least 30 days before the date of the hearing.
"The verified report of the chief engineer or such engineer's authorized representative shall be prima facie evidence of the abandonment and termination of any water right." (Emphasis added.) K.S.A. 82a-718 (Furse).
In 1999, 4 years before DWR initiated abandonment and termination proceedings against the Trustees' permit No. 1575, several revisions were made to K.S.A. 82a-718. L. 1999, ch. 122, sec. 1. First, the former statute was labeled subsection (a), the statutory period of nonuse before termination was extended from 3 to 5 successive years, and a change was made not relevant to the issues in this case. Second, the revision added a notice to the user (holder of the water right) warning of his or her reported nonuse for 3 successive years, and advising of his or her opportunity to avoid termination of the right by either establishing use within 5 successive years or demonstrating why certain of these years of nonuse were because of "due and sufficient cause." These provisions were labeled subsection (b) and, as previously set forth, provide as follows:
"(b) When no lawful, beneficial use of water under a water right has been reported for three successive years, the chief engineer shall notify the user, by certified mail, return receipt requested, that: (1) No lawful, beneficial use of the water has been reported for three successive years; (2) if no lawful, beneficial use is made of the water for five successive years, the right may be terminated; and (3) the right will not be terminated if the user shows that for one or more of the five consecutive years the beneficial use of the water was prevented or made unnecessary by circumstances that are due and sufficient cause for nonuse, which circumstances shall be included in the notice." (Emphasis added.) K.S.A. 2005 Supp. 82a-718(b).
Finally, another new subsection–(c)–was added, which essentially removed from DWR's consideration a water right holder's successive years of nonuse provided they all occurred before 1990. It also established, however, that successive years of nonuse were considered if they began before 1990 and continued thereafter. Subsection (c) states as follows:
"The provisions of subsection (a) shall not apply to a water right that has not been declared abandoned and terminated before the effective date of this act if the five years of successive nonuse occurred exclusively and entirely before January 1, 1990. However, the provisions of subsection (a) shall apply if the period of five successive years of nonuse began before January 1, 1990, and continued after that date." K.S.A. 2005 Supp. 82a-718(c).
Background on Kansas water use
Before analyzing the statute and the parties' arguments, some background is helpful. Kansas started as a riparian doctrine state for surface water and as an absolute ownership doctrine state for groundwater. Under these doctrines, both of which are based on land ownership next to the water source, water rights are generally not lost solely by failure to use the water. Peck and Owen, Loss of Kansas Water Rights for Non-Use, 43 Kan. L. Rev. 801, 802 (1995).
Although Kansas had several statutes dealing with "prior appropriation" for water rights before the Kansas Water Appropriation Act, since the Act's adoption in 1945 the state has clearly followed that doctrine. While the Act acknowledged vested rights, i.e., those in existence at the time the Act became effective, it also created a permit system for acquiring water appropriation rights based upon "first in time, first in right." 43 Kan. L. Rev. at 805. Pursuant to the Act, water rights are considered real property. See K.S.A. 2005 Supp. 82a-701(g). However, the appropriation does not constitute absolute ownership of the water; the right remains subject to the principle of beneficial use. Hutchins, The Kansas Law of Water Rights 55 (1957). "One of the basic attributes of the prior appropriation system of the Western states, where water is scarce, is that holders of water rights who fail to use the rights lose the rights." 43 Kan. L. Rev. at 801.
This court addressed the Act in F. Arthur Stone & Sons v. Gibson, 230 Kan. 224, 630 P.2d 1164 (1981):
"The appropriation doctrine is based upon the premises [sic] that all unused water belongs to all of the people of the state. The first person to divert water from any source and use it for beneficial purposes has prior right thereto. In other words, first in time, first in right. This doctrine is said to reward development by giving the early appropriator the fruits of his industry. The rule gives greater certainty of rights while affording a more flexible administration of the law and encourages free enterprise by protecting a developer's investment. It discourages waste of a valuable resource and distributes the resource in response to demonstrated need." (Emphasis added.) 230 Kan. at 229.
The Stone court elaborated upon the Act's purpose and the legislature's fundamental change in its approach to water law rights:
"'"All water within the state of Kansas is hereby dedicated to the use of the people of the state, subject to the control and regulation of the state in the manner herein provided." This is the heart of the statute [K.S.A. 82a-701 et seq.] . . . . It forms the basis for a different approach to the solution of questions concerning water rights than we have had in some of our opinions. Heretofore we have approached the questions largely on the basis of individual interest alone. Under this declaration and other provisions of the act we now approach them upon the basis of the interest of the people of the state without losing sight of the beneficial use the individual is making or has the right to make of the water.'" (Emphasis added.) 230 Kan. at 231 (quoting State, ex rel. v. Knapp, 167 Kan. 546, 555, 207 P.2d 440 [1949]).
See also Williams v. City of Wichita, 190 Kan. 317, 339, 374 P.2d 578 (1962) (unused water should not be held in perpetuity for a common-law owner who may never have use for it).
Although Kansas has had a significant water use permit system since 1945, Peck and Owen opine that a question exists whether the Act makes Kansas an "abandonment" or a "forfeiture" state. Their article presents arguments on both sides of the issue but offers no ultimate conclusion. 43 Kan. L. Rev. at 820-828. They do, however, state the two concepts' fundamental differences: "Under Western water law, water rights abandonment differs from water rights forfeiture in one main regard: abandonment requires that the holder have intent to lose the water right for non-use, while forfeiture can result even when the holder does not intend to give up the right." 43 Kan. L. Rev. at 820; see also Tarlock, Law of Water Rights and Resources § 5:87, p. 5-154 (2005 Supp.) ("Abandonment is defined as the intentional relinquishment of a known right in contrast to forfeiture which is defined as the involuntary loss of a right due to the failure to comply with statutory conditions for the enjoyment of a right."