AGO Opinion 81063

Constitutionality of LB 243
Opinion 81063

Senator Rex Haberman
Iii0 State Capitol
Lincoln, Nebraska 68509

Re: Constitutionality of LB 243

Dear Senator Haberman:

We are responding to your request that we review the constitutionality of LB 243, and specifically address the question of whether Section 2 of that bill violates the provisions of Article I, Section 16 of the Nebraska Constitution.

Proposed LB 243 is an act to amend Neb. Rev. Stat. § 2-3234 (Reissue 1977) relating to Natural Resource Districts by restricting their power of eminent domain. Neb. Rev. Stat. § 2-3234 (Reissue 1977) grants eminent domain to Natural Resource Districts when necessary to carry out their purposes. LB 243 would restrict the power of eminent domain to prevent its use "to acquire property for a project of which 50 percent or more of the benefits are recreational." Section 2 of LB 243 reads as follows: "The restriction on the use of eminent domain provided in subsection (2) of section 2-3234 shall apply to all proceedings which have not reached final adjudication prior to the effective date of this act." The question to be determined is whether Section 2 of LB 243 is an ex post facto law, or law impairing the obligation of contracts violating Article I, Section 16 of the Nebraska Constitution.

It has long been recognized in this state that a statute may not operate retroactively where it would impair the obligation of a contract or interfere with a vested right. State ex rel. Douglas v. Nebraska Mortgage Finance Fund, 204 Neb. 445, 464, 283 N.W.2d 12 (1979). A statute will not be applied retroactively, even where such legislative intent is clear, where the effect would be to impair vested rights or contracts. Mooney v. Drainage District No. 1 of Richardson County, 134 Neb. 192, 278 N.W. 368 (1938); Karer v. Karer, 190 Neb. 610, 211 N.W.2d 116 (1973). Where its effect would be unconstitutional, its application would be limited to be prospective.

However, vested rights and obligations held by the state may be treated differently than rights held by private persons. In Mooney v. Drainage District No. 1 of Richardson County, supra, our court stated:

The state by an amendatory or repealing legislative act, operating retroactively . . . may release penalties imposed by the protection or benefit of the state under a former statute. By the same method the state may abandon its own claims and rights, if not forbidden by the Constitution. But private property rights acquired under statutes and established by valid judgments of courts are not subject to legislative invasion by means of new statutes.

Id. at 134 Neb. 199.

It has been recognized by our Supreme Court in Ritter v. Drainage District No. 1 of Otoe and Johnson Counties, 137 Neb.866, 291 N.W. 718 (1940), that a legislative act and the proceedings thereunder may lead to and create contracts between the state and individuals or corporations which will therefore become protected pursuant to Article I, Section 16. In this case, the court found that the act, the proceedings thereunder, and the payments by the landowners for drainage created contracts protected under the Constitution. Id. at 870.

Proposed LB 243 restricts use of eminent domain to "acquire property," and seeks to apply to "all proceedings which have not reached final adjudication prior to the effective date of this act." Acquisition of property is essentially accomplished when the Petition for Condemnation is filed in the county court. Chaloupka v. State Department of Roads, 176 Neb. 746, 127 N.W.2d 291, 297 (1964). The right of the condemner to the property has been determined by the act of filing the Petition, and the only issue remaining is the compensation of the condemnee for the damages he has suffered. The only exception is challenge by the condemnee's Answer to the Petition of the condemner's right to take this property. If such a challenge is made, then the right of acquisition is not determined until after a final judgment to which no appeal is taken. Krauter v. Lower Big Blue Natural Resource District, 199 Neb. 431, 259 N.W.2d 472 (1977). In the ordinary case described first above, the final adjudication of the propriety of the taking by eminent domain has been accomplished by the filing of the Petition in county court. However, where the condemnee challenges the authority for condemnation of his property, this is not complete until the litigation finally terminates without further appeal.

In conclusion, we do not know whether any contracts or other vested interests have been created for private persons in "proceedings which have not reached final adjudication prior to the effective date of this act." The act could extinguish vested rights and obligations which exist benefiting the state or its political subdivisions. Should the act affect private vested rights and contracts, it would not be declared unconstitutional, but only applied prospectively. The act is therefore valid.

Very truly yours,

Attorney General