State Supreme Court affirms NRD land ownership for augmentation as a public use
In a June ruling, the Nebraska Supreme Court affirmed a decision by the state’s Tax Equalization and Review Commission (TERC) declaring government-owned property used for augmentation is tax exempt.
The case arose from action dating back to 2013 by the Dundy County Board of Equalization when they deemed the Rock Creek augmentation project land was not tax exempt.
Conversely, the Upper Republican Natural Resources District, which purchased more than 6,000 acres to develop the project, contended the land was being used for a public purpose.
They cited that augmentation pumping to keep Nebraska in compact compliance represented a public purpose. In their ruling, the supreme court agreed.
Lincoln County, site of the NCORPE augmentation project, also ruled that this land was not exempt from property taxes.
In evaluating the augmentation use as a public purpose, the court said, “We observed that the failure to comply with the compact could expose the state of Nebraska to significant liability.
“Likewise here, the water management use of the property is significant not only in its physical scope, but also in its benefit to the public.”
Groundwater, land linked
Perhaps the most significant language in the ruling came on the subject of land ownership and the right to use the groundwater underneath it.
“We find no reason to treat underground uses—in this case the use of the aquifer, wells and pipeline system—differently from any other use of the property. As the NRD points out, use of the groundwater is a derivative right immediately dependent on ownership of the surface over it,” the high court said.
State Sen. Mike Groene of North Platte and others have argued that it isn’t necessary for NRDs to own land where the augmentation projects are located. The Supreme Court cited its own, previous rulings, when explaining the link between groundwater access and property ownership.
“The right to use the groundwater ‘does not float in a vacuum of abstraction but exists only in reference to and results from ownership of the overlying land,” the high court said, repeating part of a previous ruling.
In answering NRD appeals to TERC, Dundy County officials, similar to their counterparts in Lincoln County, have argued only the surface use of land, not groundwater use, should be considered when deciding whether to levy property taxes.
While the URNRD has not been opposed to mitigating any tax impacts the project has had on Dundy County, it has disagreed with paying property taxes illegally.
A new law ushered through the Legislature by state Sen. Dan Hughes of Venango gives NRDs the option of paying counties amounts up to what would have been levied in property taxes on land used for augmentation projects if the land was taxable.
The surface use of the land by the URNRD also serves the public purposes of soil erosion prevention, soil conservation, development of wildlife habitat and range management.
Dundy County had argued that the surface use was for strictly private uses, but those claims also were not supported by the Supreme Court.
Some of the Rock Creek project land and improvements have been leased out by the URNRD. The high court said these tracts of land are not tax-exempt from property taxes.