WaterClaim

What are the consequences of the District Court ruling parts of LB701 unconstitutional? In the short term – not much.

The State has already loaned the NRDs the money to pay for the 2007 water purchase, with repayment due when the Court approves the law.

The NRDs have no water purchases in mind nor any public augmentation plans in place for 2008. As a result, there is no immediate need for money. Because of the large rains in 2007, the State expects that it will be in compliance for 2008, even if it doesn’t do anything. That happens because the rains of 2007 will not be credited to Nebraska until the water is released from the reservoirs in 2008.

The 2009 Legislature can easily solve the constitutional problem by permitting all NRDs in the State to levy taxes for resolving water issues. This will solve two problems at the same time. It will provide funding for the Republican River Basin, and it will provide funding for the Platte River Cooperative Agreement requirements that will soon kick in.

Under LB701, the NRDs were to collect about $9.7 million to pay an $8.5 million bill. The judge’s ruling specifically said that it was unconstitutional to collect the $2.5 million that came from the property taxes, but he did not address the money that was to come from the occupation tax (the per irrigated acre tax). If the Court upholds the ban on the property tax but permits the occupation tax, then the current law allowing up to $11 million a year to be collected from the irrigated acre fee is about double what the State and NRDs anticipate needing.

The State and NRDs plan on using the money to comply via two different methods. They hope to use a combination of surface water purchases and stream augmentation. The State recently gave the NRDs a $500,000 grant to engineer an augmentation plan that will put water in the river near Guide Rock.

The matter is likely to be tied up in Court for at least another year, which means that the Legislature will need to act to address the issue. As the Court bluntly stated, this is a State obligation. While that State can force the local community to help pay for the solution, it is still the obligation of the State to honor the Compact and there are multiple ways it can do that.

In short, because the State doesn’t feel that it needs to purchase water for 2008, the State will have time to take Legislative action in the 2009 session to address the Court’s ruling.

Posted by Steve Smith at 11:52 PM | Permalink | Comments (0)

On May 20, Judge Merritt ruled LB 701 unconstitutional. He ruled that the provision that caused the tax to apply only to three of the Republican River Basin NRDs violated the closed class section of the Nebraska Constitution. He also imposed an injunction on the collection of the property tax portion of the bill. The occupational tax, which is the bulk of the money, remains in place.

There were three primary questions the Court addressed.

The first dealt with - is the tax a State obligation that the State should fund and not the tax payers of the Republican River Basin? The Court ruled that it was acceptable to place the tax on the property tax payers of the Basin because it was of primary benefit to the local people while at the same time it happened to help the State in its obligation.
The second dealt with - is the transfer of tax obligation from the State to the local district legal? The Court ruled that it is legal.

The third dealt with - is the limit on who can be taxed constitutional? The tax was only placed on the property tax payers and the irrigated land of three NRDs to the exclusion of all others. The Court ruled that this was unconstitutional as it unfairly targeted one segment of the population.

The Court has ruled that the tax on the irrigated land is acceptable but any tax on non-irrigated property in the Basin is not acceptable.

Court Order

PDF File

Posted by Steve Smith at 01:06 PM | Permalink | Comments (0)

Kansas has initiated the legal procedures as allowed under the Final Settlement Agreement. These procedures are outlined in Section VII of the Final Settlement.

An arbitrator will be chosen by CDR Associates of Boulder. One of the CDR associates is Jonathan Bartsch, who currently acts as facilitator for the Nebraska Water Policy Task Force.

Once the arbitrator is selected, then the arbitrator will set a schedule for submission and resolution. The schedule will not exceed six months unless agreed to by all parties.

The arbitrator(s) will issue a decision within sixty days of the final submission by a State.

Within thirty days of the issuance of the arbitrator's decision, the States shall be given written notice as to whether they will accept, accept and reject in part, or reject the arbitrator's decision.

If the arbitrator's decision is rejected in whole or part by any State, then the matter may be taken to the US Supreme Court for resolution.

Kansas contends that Nebraska has not complied with the requirements for multiple years and that Nebraska has failed to provide any plan that will assure future compliance. Nebraska's last letter to Kansas simply said that it was working on a plan that it would submit in the future. Kansas contends that five years is more than enough time to come up with a plan.

Nebraska and Colorado contend that if no surface irrigation is used in a crop year, all of the evaporation off of the reservoirs should be charged against Kansas. Kansas disagrees with this interpretation and believes that the evaporation should be charged to each State. This is a significant number with important ramifications.

Colorado is seeking arbitration approval of its plan to meet its requirements with a pipeline delivering water to the Nebraska / Colorado border on the North Fork of the Republican River. The 1943 agreement requires that Colorado deliver a certain amount of water to both the South Fork and the North Fork. Colorado prefers to deliver all water to the North Fork. Delivery to just the North Fork makes it more difficult for Nebraska to comply.

It is likely the arbitrator will issue a ruling by the spring of 2009. If the ruling is rejected by any State, then the matter could be taken to the US Supreme Court in early 2009. If it takes this path, then it is likely that the US Supreme Court would appoint a Special Master to assist with the case. This would not be a new trial but rather a dispute resolution of an existing case.

Kansas has suggested that Nebraska turn off all groundwater irrigation wells within 2.5 miles of either side of the River or its tributaries as well as all irrigation wells drilled after the year 2000. There are approximately 333,967 acres within the 2.5 miles. There are approximately 170,000 acres that the Nebraska DNR says started irrigation after the year 2000.

The Nebraska Natural Resource Districts, which regulate groundwater use, prefer to comply by either purchasing surface water rights on an annual basis and putting that water in the stream in the years necessary or to pump water into the stream as necessary. The State of Nebraska basically tells the NRDs it is their problem to solve but, until 2007, denied them any means of doing so.

In the spring of 2007, the Nebraska Legislature permitted the NRDs to collect a $10 per irrigated acre tax that could be used to pay back bonds the NRDs took out for the purchase of surface water or for the augmentation of the stream. The first money under this program was collected May 2008.

To date, neither Nebraska nor the NRDs have in place any program that will assure compliance on an annual basis. Nebraska and the NRDs argue that they should be trusted to comply each year now that there is a funding mechanism for something. However, Kansas points out that there is no reason for trust when Nebraska has failed for five years running and also points out that the plans each NRD has imposed on themselves fail to actually reduce depletions to the stream. Kansas disputes Nebraska's claim that Nebraska was in compliance in 2007. Who wins the evaporation argument determines who is correct on the 2007 compliance question.

For Nebraska to assure compliance on an annual basis, it will need to:

1. Control Nebraska surface water usage. To do that, it must be able to purchase that water or restrict its use. Right now, there is no mechanism in place to assure that the water can be purchased. If the surface irrigation districts refuse to sell the water for a price the buyer can pay, then Nebraska will fail to comply with its Agreement with Kansas in some years.

2. Controlling surface water alone is not enough to assurance compliance every year. Nebraska will also need to augment the stream. That can be done with water from within or from outside of the Republican River Basin. Even though the NRDs and the State are studying such augmentation ideas, there are no plans in place and what has been studied has been rejected as too expensive, insufficient, impractical or just undesired.

Nebraska has the physical ability to comply with the Republican River Compact without shutting down all of the acres that Kansas is asking for. However, for political reasons, Nebraska seems to prefer to let the Courts decide what will be done.

Right now, Nebraska seems to be trusting that the surface irrigation districts will always agree to sell enough water to make things work and that the multi-year averaging of three to five years will cover for when it is not enough. Nebraska is trusting that there will not be a string of low allocations again like there was in 2003 through 2007. If there is, then the Nebraska plan will certainly fail.

The question is, will the arbitrators or the Court find such a nebulous plan acceptable?

Posted by Steve Smith at 01:54 PM | Permalink | Comments (0)