The Nebraska Supreme Court on June 22 rejected arguments that property ownership and groundwater access can be decoupled when ruling that most of the Rock Creek Augmentation Project property in Dundy County is exempt from property taxes.

“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,” said the opinion from the state high court released Friday.

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.

Dundy County officials, similar to their counterparts in Lincoln County where the NCORPE augmentation project is located, have argued that only the surface use of land, not groundwater use, should be considered when deciding whether to levy property taxes. The Upper Republican NRD purchased the property to access groundwater to operate the project, which then serves the public purpose of maintaining Republican River Compact compliance and is therefore exempt from 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.