AGO Opinion 97048
Legality of Leasing State Right of Way Space Above Interstate 80 for Development of an Archway
DATE: September 16, 1997
SUBJECT: Legality of Leasing State Right of Way Space Above Interstate 80 for Development of an Archway
REQUESTED BY: Allan L. Abbott
State Engineer/Director of Department of Roads
WRITTEN BY: Don Stenberg, Attorney General
Steve Grasz, Deputy Attorney General
You have requested an Attorney General's Opinion "as to the
legality of the State of Nebraska Department of Roads permitting .
. . [an] archway to be constructed in the airspace above Interstate
The Great Platte River Road Memorial Foundation has requested
that the State of Nebraska Department of Roads permit construction
of an archway in the airspace above the Interstate 80 right-of-way
near Kearney. In 1973, an opinion from former Attorney General
Clarence Meyer concluded the legality of a similar proposed project
over Interstate 80 was "very doubtful" and that "the State may not
lease or permit for use a part of the highway right-of-way for the
construction of the Pioneer Monument, as proposed." 1973-74 Rep.
Att'y Gen. 8, 11 (Jan. 22, 1973).
This opinion will examine current Nebraska statutes governing
state right-of-way, and will reexamine the constitutional issue
addressed in the 1973 opinion.
Nebraska law prohibits physical encroachments and structures
within the state's right-of-way, except by written consent: "The
rights-of-way acquired by the department shall be held inviolate
for state highway and departmental purposes and no physical or
functional encroachments, structures, or uses shall be permitted
within such right-of-way limits, except by written consent of the
department." Neb. Rev. Stat. Ann. § 39-1359 (Michie 1995).
Nebraska law also authorizes the Department of Roads to lease,
rent, or permit for use any area or land acquired for highway
The Department of Roads, subject to the approval of
the Governor, and the United States Department of
Transportation if such department has a financial
interest, is authorized to lease, rent, or permit for
use, any area, or land and the buildings thereon, which
area or land was acquired for highway purposes. The
Director-State Engineer, for the department, and in the
name of the State of Nebraska, may execute all leases,
permits, and other instruments necessary to accomplish
the foregoing. Such instruments may contain any
conditions, covenants, exceptions, and reservations which
the department deems to be in the public interest,
including, but not limited to, the provision that upon
notice that such property is needed for highway purposes
the use and occupancy thereof shall cease. If so leased,
rented, or permitted to be used by a municipality, the
property may be used for such governmental or proprietary
purpose as the governing body of the municipality shall
determine, and such governing body may let the property
to bid by private operators for proprietary uses. All
money received as rent shall be deposited in the state
treasury and by the State Treasurer placed in the Highway
Cash Fund, subject to reimbursement, if requested, to the
United States Department of Transportation for its
proportionate financial contribution.
Neb. Rev. Stat. Ann. § 39-1323.01 (Michie 1995).
As used in the statute above, "any area, or land" would
include the air space above the right of way pursuant to common
law. See United Masonry, Inc. v. Jefferson Mew, Inc., 237 S.E.2d
171, 181 (Va. 1977).
Therefore, under these Nebraska statutes and the applicable
common law, the Department of Roads owns the airspace above land it
has acquired for highway purposes and may lease, rent, or permit
for use such airspace to others except insofar as such lease or use
would be prohibited by some other provision of law.
In 1973-74 Rep. Att'y Gen. 8 (Jan. 22, 1973), a previous
Attorney General examined the same statutes set forth above and
concluded they would, if constitutional, "authorize the transaction
contemplated in connection with the Pioneer Monument." Id. at 10.
However, the opinion went on to discuss Neb. Const. art. XIII, § 3
which provides "The credit of the State shall never be given or
loaned in aid of any individual, association, or corporation." The
opinion quoted State ex rel. Beck v. City of York, 164 Neb. 223, 82
N.W.2d 269 (1957) and the court's discussion therein of the "credit
of the state" provision as well as the prohibition against the
expenditure of public funds for private purposes. Id. at 11.
Without explaining exactly how the proposed archway violated these
provisions, the opinion concluded, "The language in the Beck and
Meyer cases is quite broad, and leads to the conclusion that the
State may not lease or permit for use a part of the highway right-
of-way for the construction of the Pioneer Monument, as proposed."
Id. at 11.
Whatever the validity of the 1973 opinion at the time, it is
clearly not valid today. In 1991, the Nebraska Supreme Court
clarified the test for addressing alleged violations of Article
XIII, § 3, and the Court ended the confusion between the
prohibition against loaning the credit of the state and the
prohibition against expending state funds for private purposes.
The Court held that to establish a violation of Article XIII, § 3,
three elements must be proved: (1) the credit of the state (2) was
given or loaned (3) in aid of any individual, association, or
corporation. Haman v. Marsh, 237 Neb. 699, 719, 467 N.W.2d 836
(1991). See also Callan v. Balka, 248 Neb. 469, 536 N.W.2d 47
The first determination to be made, then, is whether leasing
state right-of-way to private entities would involve the credit of
the State. "There is a distinction between the loaning of state
funds and the loaning of the State's credit. When a state loans
funds, it is in the position of creditor, whereas the state is in
the position of debtor upon a loan of credit." Haman v. Marsh, 237
Neb. at 719-729. In short, the "credit of the state" provision in
Article XIII, § 3 was "designed to prohibit the state from acting
as a surety or guarantor of the debt of another." Id. at 718; id.
In Haman, the Court found that under the legislation under
review in that case "the state would be forever liable for the
losses of industrial company depositors. . . ." Id. at 720. "The
stated purpose of the act is redemption of the guarantees of a
private corporation to depositors by obligating present and future
taxes from the state's general fund." Id. In contrast, the
leasing of state right-of-way pursuant to Neb. Rev. Stat. § 39-
1323.01 in no way involves the credit of the state. The State is
not in the position of a debtor nor in the position of a surety or
guarantor of the debt of another. Consequently, the credit of the
state is not being given or loaned under a lease of state right of
The constitutional analysis does not end here, however.
"Closely related to the prohibition against the giving or lending
of the state's credit . . . is the principle of law that public
funds cannot be expended for private purposes." Haman v. Marsh,
237 Neb. 699 at 721-22. This constitutional principal involves the
expenditure of state funds in contrast to the extension of credit.
Id. at 722.
It is a longstanding principle of constitutional law in
Nebraska that public funds cannot be expended for private purposes.
Haman v. Marsh, 237 Neb. 699, 722 (1991); State ex rel. Douglas v.
Nebraska Mortgage Finance Fund, 204 Neb. 445 (1979); State ex rel.
Douglas v. Thone, 204 Neb. 836 (1979); State ex rel. Beck v. City
of York, 164 Neb. 223 (1957); Oxnard Beet Sugar Co. v. State, 73
Neb. 66 (1905). The Constitution of Nebraska contains no express
provision against expending funds for essentially private purposes.
This principal "is grounded on the `fundamental concepts of our
constitutional system.'" Douglas v. Thone, 204 Neb. at 842
(quoting Beck v. City of York, 164 Neb. 223). The Nebraska Supreme
Court has said this principal "emanates" from Article XIII, § 3.
Haman v. Marsh, 237 Neb. at 722.
A lease of state right-of-way to a private entity would not
involve an expenditure of public funds for a private purpose unless
the lease was for less than fair value. The Department of Roads
cannot give away property acquired for highway purposes. See Op.
Att'y Gen. 91056 (June 18, 1991). However, the contemplated
transaction is a lease, and not a transfer of title. Furthermore,
the area in question is simply airspace.
In sum, the proposed transaction does not involve the "credit
of the state" as it does not place the State in the position of a
debtor. Furthermore, provided the lease is for fair market value,
there is no expenditure of public funds for a private purpose.
Consequently, the proposed use of Interstate 80 right-of-way
airspace for an archway is both statutorily authorized and
Deputy Attorney General