ANGUS GAREY ET AL., APPELLEES AND CROSS-APPELLANTS, v. NEBRASKA DEPARTMENT OF NATURAL RESOURCES ET AL., APPELLANTS AND CROSS-APPELLEES
No. S-08-581
Supreme Court of Nebraska
Filed February 6, 2009
277 Neb. 149
HEAVICAN, C.J., WRIGHT, CONNOLLY, GERRARD, STEPHAN, McCORMACK, and MILLER-LERMAN, JJ.
Donald G. Blankenau and Thomas R. Wilmoth, of Husch, Blackwell & Sanders, L.L.P., for appellants Upper Republican Natural Resources District et al.
Jeanelle R. Lust, Rodney M. Confer, LeRoy S. Sievers, and Jocelyn W. Golden, of Knudsen, Berkheimer, Richardson & Endacott, L.L.P., for appellees.
MILLER-LERMAN, J.
NATURE OF THE CASE
Plaintiffs-appellees, who are residents and taxpayers of the Upper, Middle, and Lower Republican Natural Resources Districts of the state of Nebraska (NRD‘s), filed an action for declaratory and injunctive relief in the district court for Lancaster County alleging that a property tax levy authorized by § 11(1)(d) of 2007 Neb. Laws, L.B. 701, and found at
We conclude that the challenged property tax provision of L.B. 701 violates the prohibition found in
Appellees in this case are residents and taxpayers of the NRD‘s. Defendant-appellant Department of Natural Resources is an administrative department of the state and has jurisdiction over matters pertaining to water rights for irrigation, power, or other useful purposes.
The following statement of facts, for which we find support in the record, comes largely from the facts outlined in the district court‘s order granting injunctive relief and enjoining appellants. The states of Colorado, Kansas, and Nebraska and the United states are party signatories to the Republican River Compact of 1943,
provide for the most efficient use of the waters of the Republican River Basin (hereinafter referred to as the “Basin“) for multiple purposes; to provide for an equitable division of such waters; to remove all causes, present and future, which might lead to controversies; to promote interstate comity; to recognize that the most efficient utilization of the waters within the Basin is for beneficial consumptive use; and to promote joint action by the states and the United states in the efficient use of water and the control of destructive floods.
Id., art. I at 1183.
Under the terms of the Compact, each signatory state is allotted an annual number of acre-feet of water for “beneficial consumptive use.” Id., art. IV at 1184. The specific allocations and the sources of those allocations are found in article IV of the Compact and provide that Colorado is to receive 11 percent of the annual allotment, Kansas is to receive 40 percent of the annual allotment, and Nebraska is to receive 49 percent of the annual allotment. As the district court noted, by entering into the Compact, Nebraska agreed to limit its consumption of water from the Republican River Basin to ensure that downstream Kansas would receive its allotted share of the water.
In 2004, Nebraska‘s Governor and Attorney General informed the NRD‘s’ water users that to comply with the settlement agreement, water consumption would need to be reduced in dry years, and that to ensure compliance with the Compact, the State could step in if the NRD‘s failed to control usage. In 2006 and 2007, the department leased or purchased surface water rights from the Bostwick Irrigation District to assist the State in meeting its obligations under the Compact.
On May 1, 2007, the Governor signed L.B. 701 into law. Section 11 of L.B. 701, at issue in this case, amended § 2-3225(1)(d) and (2), and the statute provides as follows:
[(1)](d) In addition to the power and authority granted in subdivisions (a) through (c) of this subsection, a district with jurisdiction that includes a river subject to an interstate compact among three or more states and that also includes one or more irrigation districts within the compact river basin may annually levy a tax not to exceed ten cents per one hundred dollars of taxable valuation of all taxable property in the district for the payment of principal and interest on bonds and refunding bonds issued pursuant to section 2-3226.01. . . .
(2) The proceeds of the tax levies authorized in subdivisions (1)(a) through (c) of this section shall be used, together with any other funds which the district may receive from any source, for the operation of the district. When adopted by the board, the tax levies authorized in subdivisions (1)(a) through (d) of this section shall be certified by the secretary to the county clerk of each county which in whole or in part is included within the district. Such levy shall be handled by the counties in the same manner as other levies, and proceeds shall be remitted to the district treasurer. Such levy shall not be considered a part of the general county levy and shall not be considered in connection with any limitation on levies of such counties.
In June 2007, the NRD‘s entered into an interlocal cooperation agreement creating the Republican River Basin Coalition (RRBC). The purpose of the RRBC is to
provide the authority, resources, services, studies, and facilities needed for the representation of the interests of the [NRD‘s] in proceedings before all agencies, tribunals, courts, and any administrative, legislative, executive, or judicial bodies concerning or affecting the NRDs’ actions, decisions, and policies to regulate/manage water to ensure the state of Nebraska remains in compliance with the . . . Compact . . . .
The agreement stated, “The RRBC shall specifically act within the authorities granted by LB 701 . . . .” The RRBC has entered into various agreements to lease water.
On september 13, 2007, letters were sent on behalf of appellees to each of the NRD‘s, formally requesting that the NRD‘s “vote not to levy any property taxes . . . sanctioned by the Nebraska Legislature in L.B. 701, as a means of meeting Nebraska‘s commitment to comply with the . . . Compact.” Nevertheless, in September 2007, the NRD‘s each adopted property tax levies authorized by L.B. 701.
In response to the levies, appellees filed this action seeking a declaratory judgment and alleging that the property tax levy found in L.B. 701 is unconstitutional and unenforceable. Appellees claim that the property tax levy in § 11(1)(d) of L.B. 701 represents a property tax levy for state purposes, in violation of
After a trial on stipulated facts, the district court entered an order granting declaratory judgment and injunctive relief to appellees, concluding that although § 11(1)(d) of L.B. 701 does not violate
Appellants appeal the decision of the district court which concluded that § 11(1)(d) of L.B. 701 is unconstitutional and granted declaratory and injunctive relief, and appellees cross-appeal, claiming that the district court erred when it concluded that L.B. 701 did not violate
STANDARD OF REVIEW
[1] Whether a statute is constitutional is a question of law; accordingly, the Nebraska supreme Court is obligated to reach a conclusion independent of the decision reached by the trial court. Stenger v. Dept. of Motor Vehicles, 274 Neb. 819, 743 N.W.2d 758 (2008).
ANALYSIS
In this case, the district court entered an order granting declaratory judgment and injunctive relief to appellees, concluding that although § 11(1)(d) of L.B. 701 does not violate
Under §§ 6(1) and 9 of L.B. 701, the NRD‘s are given the power to issue bonds for the purpose of acquiring ground water rights, surface water rights, or surface water storage rights to pay for the acquisition of canals and other works or for vegetation management. (L.B. 701, § 6(1), is codified at
[4] With respect to our determination of whether a property tax is levied by the State, we have noted that where the Legislature has provided that a local political subdivision is authorized to levy property taxes for state purposes, it should not conclusively be considered as a local property tax levy merely because the levy is enforced by local authorities. See State ex rel. Western Nebraska Technical Com. Col. Area v. Tallon, 192 Neb. 201, 219 N.W.2d 454 (1974). In Tallon, we stated that “[t]o construe the constitutional amendment [at art. VIII, § 1A,] to prohibit only a direct statewide property tax levy by the State itself would emasculate the amendment and render it virtually meaningless and wholly ineffective.” 192 Neb. at 212, 219 N.W.2d at 460.
[5,6] We have also explained that the State cannot circumvent the constitutional mandate of
In assessing § 11(1)(d) of L.B. 701 for constitutional analysis, we look to the legislative history, as did the district court. See Craig v. Board of Equalization, 183 Neb. 779, 164 N.W.2d 445 (1969) (looking to legislative history of constitutional section when determining whether special levies imposed by statute serve state or local purpose). We have recently stated in the context of a special legislation analysis that “[g]enerally, outside of the plain language used in legislation, a legislative body‘s purpose or intent in enacting legislation is determined through an examination of the legislative history of a particular enactment.” Hug v. City of Omaha, 275 Neb. 820, 824, 749 N.W.2d 884, 888 (2008).
Given this comment and others not repeated here, we conclude that the purposes of the property tax provisions found at § 11(1)(d) of L.B. 701 are intermingled state and local purposes. As we have done in previous cases in this area, our analysis and determination of whether the primary purpose of the property tax provisions in L.B. 701 is a state purpose or a local purpose address both aspects in the constitutional amendment at issue: i.e., whether the property tax was levied by the state and whether it was levied for a state purpose. See, Rock Cty. v. Spire, supra; State ex rel. Western Nebraska Technical Com. Col. Area v. Tallon, supra.
In its order, the district court concluded that L.B. 701 does not violate
In determining that the property tax at issue is primarily for state purposes, we note that the legislative history, some of which is quoted by the district court in its order, is replete with testimony that the predominant purpose of the property tax provision of L.B. 701 is for the purpose of maintaining the State‘s compliance with the Compact. The following are certain examples of comments from the legislative hearing on L.B. 701 which inform our decision and lead us to conclude that § 11(1)(d) of L.B. 701 had as its controlling purpose compliance with the Compact:
DAN SMITH manager of the Middle Republican Natural Resources District: . . . [W]ith the funds proposed for [the department, w]e have the opportunity to purchase water from four different irrigation districts and help Nebraska achieve its first year of compliance since the settlement was approved. This new authority to generate fund[s] from bonds for a variety of groundwater management activities and some actions that will be relevant to [C]ompact compliance . . . can only be good for Nebraska. . . .
. . . . MIKE CLEMENTS manager of the Lower Republican [Natural Resources District:] . . . There is no simple fix for the issues facing the Republican Basin. LB701 does, however, provide additional tools that can be coupled with our existing controls that can be used to help us work towards [C]ompact compliance. . . .
. . . .
JASPER FANNING manager of the Upper Republican Natural Resources District: . . . But at the end of the day, we have a plan that we feel can get us and keep us in compliance with this compact so that we can continue to irrigate in the basin. . . . But at the end of the day, we need enough total funds available to pay the cost that it‘s going to take to keep us in compliance so that we can minimize the economic impact of the [C]ompact on the basin. . . .
. . . .
ANN BLEED director of the [d]epartment: . . . I believe that passage of this bill will be extremely helpful in allowing the state and the natural resources districts to do what is necessary to comply with the . . . Compact. . . . The bill, in providing authority for the natural resources districts to issue bonds, fees, or property tax levies, will provide valuable and, I believe, necessary tools to natural resources districts so that they can fairly share responsibility for [C]ompact compliance.
Committee on Natural Resources Hearing, L.B. 701, 100th Leg., 1st Sess. 397-434 (Apr. 4, 2007).
The plain language of
The language of § 11(1)(d) of L.B. 701 grants property taxing authority only to those districts with a jurisdiction which includes “a river subject to an interstate compact among three or more states and that also includes one or more irrigation districts within the compact river basin.” (Emphasis omitted.) See
The Compact was signed by the state, and the special master overseeing the settlement agreement stated:
[T]he Compact is self-executing. . . . [A] state has an enforceable legal obligation to comply with the Compact, which constitutes the law of the United states as well as of all three compacting states. If a state fails to meet that obligation, it is subject to liability for breach of the Compact.
Kansas v. Nebraska, No. 126 Original, second Report of the special Master, appx. D3 at D3-26 to D3-27 (2003), http:// www. supremecourtus.gov/specMastRpt/ORG126_4162003.pdf (last visited Feb. 2, 2009).
[8] The state has acknowledged that compliance with the Compact is the State‘s responsibility by entering into the final settlement stipulation resolving the litigation which was initiated by the state of Kansas in 1998. Further, prior to the enactment of L.B. 701, it was the state rather than local entities which leased or purchased surface water rights from the Bostwick Irrigation District to further compliance with the Compact. Neither the department nor the individual NRD‘s were parties or signatories to the Compact or the settlement. The State is obligated to comply with the Compact, and a property tax in furtherance of compliance is, for purposes of analysis under
CONCLUSION
We conclude that L.B. 701(1)(d) violates the prohibition against levying a property tax for state purposes found in