Water rights question dominates Legislative hearing

Marvin Knoll, who farms near the Nebraska Cooperative Republican Platte Enhancement Project site north and east of Dickens, testifies Thursday during a public hearing of the Legislature’s Natural Resources Committee at McCook Community College. State Sen. Steve Halloran of Hastings, a committee member, listens at far left.

McCOOK — The key remaining question in Lincoln County’s NCORPE controversy was easy enough to understand at a legislative hearing here Thursday:

If one can sell a piece of land while retaining its underground mineral rights, can one do likewise if the precious resource is groundwater instead?

Yes, and saying so in state law would make it crystal-clear, state Sen. Mike Groene of North Platte and other Lincoln County residents told the Unicameral’s Natural Resources Committee.

Probably not, and the stakes are too high to find out, replied leaders of NCORPE’s partner natural resources districts and southwest Nebraska farmers whose wells would be shut down first in a water crisis.

“Why are we even considering selling the land and changing water law if it risks the investments us and thousands of other farmers have made?” said rural Benkelman farmer-feeder Kelly Raichart.

But even without changing the law, if NCORPE “wanted to come in and put a well” on land owned by someone else, “they could do it,” Groene countered. “They could do it now by eminent domain.”

Venango Sen. Dan Hughes, the committee chairman, and four of his seven colleagues heard testimony from nearly half the 50 people during the “interim study” hearing at McCook Community College.

Most testimony related to Groene’s ongoing effort to ensure Nebraska’s two “water augmentation” projects — NCORPE and the Rock Creek project in Dundy County — can sell their land without jeopardizing their ability to fulfill their missions.

His most recent bill, Legislative Bill 606, stalled in Hughes’ committee last spring but officially remains alive for the 2020 session.

Groene said he plans to introduce a simpler new bill, using language worked out with Attorney General Doug Peterson and the Nebraska Department of Natural Resources to guard against possible lawsuits.

It says water augmentation project owners “may later sell such real property and continue to pump groundwater” — subject to other legal limits on its use — “without regard to land area or acres owned.”

NCORPE and Rock Creek both send groundwater into the Republican River basin to help supply Kansas’ legal share of Republican water under a 1943 compact with Nebraska and Colorado.

Nebraska paid Kansas $5 million for its farmers’ past overuse of Republican groundwater under a 2015 U.S. Supreme Court ruling.

Kansas, which also prevailed in a 2003 Supreme Court challenge, had sought $80 million plus a shutdown of half of the basin’s Nebraska wells in the 2015 case.

NCORPE, between Wallace and U.S. Highway 83, also can send water to the Platte basin to meet the state’s river-flow requirements there. That will be needed for the first time in 2020, said Kent Miller, general manager of the Twin Platte Natural Resources District.

Miller’s NRD, based in North Platte, owns and operates NCORPE with the Republican basin’s three NRDs (Upper, Middle and Lower). The Upper Republican NRD owns and operates Rock Creek.

Some Lincoln County residents have complained about the loss of valuable irrigated ground and the property taxes it generated since NCORPE was launched in 2012. The project controls about 19,500 acres.

The lost tax revenue sparked a 2018 law sponsored by Hughes (LB 758) saying water augmentation projects can — but aren’t required to — pay “in-lieu-of-taxes” based on their current agricultural land classification.

NCORPE and Rock Creek have made such payments since before LB 758, though some of Rock Creek’s have been tied up by state-level lawsuits, said Upper Republican NRD General Manager Jasper Fanning.

The payments draw on a $10-per-acre “occupation tax” levied on agricultural landowners in the affected NRDs to operate the augmentation projects, he added.

But NCORPE’s in-lieu-of-tax payments are lower because they’re based on the site’s current grassland status, Lincoln County Assessor Julie Stenger said after testifying at Thursday’s hearing.

Others noted that NCORPE and Rock Creek still aren’t required to make the payments. “I can’t see any risk in returning those properties to private ownership where (property) taxes are compelled,” said Lincoln County Commissioner Kent Weems of rural Maxwell.

Witnesses differed on whether Groene’s proposed remedy would override or run afoul of past Nebraska Supreme Court rulings.

In a June 2018 ruling involving Rock Creek, the state high court ruled that “use of the groundwater is a derivative right immediately dependent on ownership of the surface over it.”

NCORPE’s partners say they can’t sell their land in any case because it’s collateral against the $88 million they still owe from buying it. Groene has disputed that.

If NCORPE and Rock Creek were to sell their land and try to keep pumping, a judge might use that to invalidate the projects entirely, said Fanning and Lower Republican NRD General Manager Todd Siel.

If that happened, they added, Kansas might respond with a fresh lawsuit — and losing it could cut off the majority of farmers in the Republican basin from irrigation for good.

Since the 2015 Supreme Court ruling, Fanning said, Nebraska and Kansas have worked out an arrangement which relies more on NCORPE and Rock Creek to regulate the timing of Kansas’ Republican water calls.

“They wanted all the water they were entitled to under the compact, and that’s a huge volume of water,” he said. “But what they don’t have is the ability to store it so they can use it.”

Coupled with the recent wet conditions in both states, Fanning said, “we’ve actually given Kansas less water than what they’re entitled to.”

Miller and Middle Republican NRD board member Dan Estermann were slightly more open to exploring selling the land and keeping the water rights if it wouldn’t jeopardize NCORPE’s ability to operate.

Any such effort Miller said, should use a statewide “collaborative process” similar to one that developed the 2004 state law tasking NRDs with managing groundwater use in their areas.

Hughes, the Natural Resources Committee chairman, opened Thursday’s hearing by flatly declaring himself against changing the status quo.

After talking to interested parties during the summer, “I’ve reached the conclusion that there is no statutory language that would provide the NRDs with the assurances they need,” he said.

But Kansas officials have said “they don’t want to get involved in Nebraska’s water law or our water rights ... as long as the compact is complied with,” Groene said.

The North Platte senator and other backers of separating the land from its water rights pointed to a Tuesday opinion by Lincoln lawyer Steve Mossman.

Based on a 2017 Nebraska Supreme Court opinion, Mossman wrote, NCORPE could sell all its land without jeopardizing its pumping operations, except for “the specific limited portions of land where the wells and pipeline are located.”

Groene also echoed Mossman’s opinion in saying the compromise language he worked out would bolster NCORPE’s and Rock Creek’s authority to operate.

It would declare water augmentation projects to be a “public use” of groundwater. The Legislature has recognized a “public use” for cities and villages so they can pump and store water for their residents’ use while owning only their tower sites, Groene said.

“I’m trying to protect the augmentation projects,” he said. “So are my farmers. They appreciate that augmentation project. We need to protect it in statute.”

Stenger said NCORPE already separated real estate and groundwater rights when it sold two of its original quarter sections southeast of the U.S. 83-Nebraska Highway 23 junction in May 2014.

On that site, NCORPE “shall have the sole and exclusive right to the use of such groundwater and may convey, sell or assign the right to the use of such groundwater at its sole discretion,” says the sale deed in the Lincoln County Register of Deeds’ office.

The intent in that case was to prevent the land from being irrigated again, Fanning told the Unicameral committee.

Because NCORPE isn’t pumping there, Miller said later Thursday, its partners are enabled to pump more water in the main wellfield north of Nebraska 23.

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