By Russ Pankonin
    The Imperial Republican
     Natural resource districts in the Republican Basin continue to work with state officials on ways to pay for 2007 surface water leases.
     Ultimately, it could take legislation in the next session of the Nebraska Legislature to clear the way for getting the surface irrigators paid.
     Earlier this year, lawmakers passed LB 701, a comprehensive water bill that gave NRDs new revenue sources to help pay for surface water leases and other drought mitigation efforts.
     These measures could also help Nebraska stay in compliance with a settlement with Kansas over water use in the basin.
     LB 701 gave the NRDs the authority to levy an additional 10 cents per $100 of valuation to pay for surface water purchases.
     In addition, authority was also granted to add an occupation tax of up to $10 per irrigated acre in the basin.
     However, a lawsuit filed this fall by a McCook-based group called "Friends of the River" challenged the constitutionality of LB 701.
     As a result, the NRDs have been unable to issue bonds to pay for the surface water purchases. The additional property tax levy and per-acre fee would fund the bond payoff.
    Bit of a pickle
     Right now, the basin NRDs find themselves "in a bit of a pickle," said Upper Republican NRD manager Jasper Fanning, because of the lawsuit.
     Fanning said they have been working with the state on different angles in order to get the surface water irrigators paid this year.
     However, he said the most likely option at this point is legislation in the upcoming legislative session in January, 2008.
     Fanning said the NRDs have been talking with senators and the governor on the issue.
     He believes there's support in the Legislature to get the surface water irrigators paid as promised.
     A spokesperson with the governor's office said the governor realizes the bond sale has been stopped by the lawsuit. This has become a complex issue and the governor is reviewing the situation to identify possible options.
     Some have suggested the state purchase the bonds or provide the necessary backing for their issuance.
     Fanning said the governor appears cautious about that approach, fearing it may set a precedent.
     "It's looking less and less likely to find sources of funds prior to the end of the year," Fanning said.
     As a result, funding legislation may provide the best and most timely option.
    Constitutional challenge
     Plaintiffs originally asked the Nebraska Supreme Court to hear the case but they refused.
     Plaintiffs then filed the case in Lancaster District Court.
     They challenge the constitutionality of the law, contending it is closed class legislation. Their argument is that legislation cannot be enacted for one specific group.
     Fanning said the law was written for any NRDs with surface water irrigation districts within its boundaries, with the basin subject to a three-state compact.
     Fanning said the plaintiffs contend this law only applies to the Republican Basin. The plaintiffs believe the state should be liable for paying these payments rather than individual taxpayers and those assessed per-acre fees.
     When lobbying for LB 701, Fanning said they tried to sell the idea that the situation is a statewide problem and should be paid for by the state. But that didn't fly in the Legislature, he added.
     State officials helped draft LB 701 with the intent that it would withstand a constitutional challenge.
     The earliest a judge could render a decision will probably be late January or February, Fanning speculated.
     Regardless of the district court decision, both sides have said they will appeal the decision to the Supreme Court if it goes against them.
     That means this issue could be tied up for possibly a year. However, efforts will be made to ask the high court to expedite the case.
    Impact significant
     Fanning said the economic impact of losing the case would be astronomical.
     If the court rules that LB 701 funds can't be used to buy additional surface water in dry years or augment water supplies to help with compliance, impact would be significant.
     He said a "purely regulatory scheme" would have to be implemented to control groundwater pumping.
     Studies show groundwater irrigators would face reductions in allocations of at least three inches under this type of scenario.
     He estimated the direct economic impact at more than $100 million, which doesn't even include the related losses that would be secondary.
     It would also be difficult for the NRDs to carry out their integrated management plans.
     The management group of the basin NRDs and the coalition comprised of the same NRDs will meet today (Thursday).
     Fanning said the meetings will give surface water irrigators the opportunity for updates on the payment process.
     But without any money coming their way before the first of the year, Fanning said he would be surprised if the irrigation districts file suit to protect their interests.