Nebraska Legislature Adopts Key Laws for Perkins County Canal, Ethanol, and Liquor

The First Regular Session of the 108th Nebraska Legislature adjourned sine die on June 1, 2023.  In our update during bill introduction (available here), we identified 58 bills relating to agricultural, environmental, natural-resources, and regulated-substances law.  This chart  provides the status of those bills.  Below are summaries of the 25 bills of interest that passed this session.

Perkins County Canal

As we analyzed last session, the Legislature adopted the Perkins County Canal Project Act, codified at Neb. Rev. Stat. § 61-301 et seq.  It directed the Department of Natural Resources to develop, construct, and operate a canal in Perkins County consistent with the South Platte River Compact. Signed in 1923 and ratified by Congress in 1926, that Compact allocates the South Platte River’s water between Colorado, private appropriators, and Nebraska.  The Act specifically authorized the Department to acquire land using eminent domain.

The Department provided a report in December 2022 that justified the canal’s financial impact.  Fueled by that report, the Legislature adopted two bills this session that aim to help the Department to construct the Perkins County Canal:

LB 723 (Bostelman, at the request of the Governor) adopts the Public Water and Natural Resources Project Contracting Act.  The Act provides the Department of Natural Resources with alternative methods of contracting for public water and natural resources projects, including the Perkins County Canal.  The Department may, for instance, solicit and execute design build contracts, progressive design-build contracts or construction manager-general contractor contracts.  The Department may also hire an engineering or architectural consultant to assist with various project performance criteria and requests for proposals.  Public letting must comply with Act-specified guidelines. 

The Natural Resources Committee adopted AM 1240, which amended LB 723 into LB 565.  LB 565 passed on May 30, 2023.  Governor Pillen signed it into law on May 23, 2023 with an emergency clause.  The bill took immediate effect.

LB 818 (Speaker Arch, at the request of the Governor) directly amends the Perkins County Canal Project Act.  The bill permits the Department of Natural Resources to use the Perkins County Canal Fund to identify and purchase the land then develop, construct, manage, and operate the canal.  Additionally, the bill transfers $574.5 million to the fund.  Combined with 2022 funding, the Perkins County Canal Fund now has received a total of $628 million in appropriations.

The Appropriations Committee referred this bill to the General File with amendments.  LB 818 passed on May 18, 2023.  Governor Pillen signed it into law on May 23, 2023 with an emergency clause.  The bill took immediate effect.

E-15 Fuel

LB 562 (Dorn) adopts the E-15 Access Standard Act.  E-15 gasoline contains 10.5 to 15 percent ethanol, and proponents claim it is a cleaner gasoline form.  The Act aims to boost ethanol sales in two ways.  First, the Act requires retail fueling stations constructed after January 1, 2024, and existing sites that replace more than 80 percent of their motor fuel storage and infrastructure, to advertise and sell E-15 gasoline from at least 50 percent of their fuel dispensers.  Second, in 2027, if the average percentage of ethanol contained in each gallon of motor fuel sold in Nebraska is below 14 percent, then beginning January 1, 2028, retail dealers must advertise and sell E-15 gasoline from at least one qualifying motor-fuel dispenser. 

Fuel sites with inadequate infrastructure to support the gasoline’s sale may apply for an exemption from the Department of Agriculture.  The Governor may also suspend the Act if the E-15 supply is inadequate or the gasoline’s market price would cause economic harm to consumers.  Finally, the bill amends the Nebraska Higher Blend Tax Credit to include tax credits for taxpayers that sell E-15 gasoline. 

The Agriculture Committee referred this bill to the General File with amendments.  LB 562 passed on May 30, 2023 and Governor Pillen signed it into law on June 2, 2023.  The bill becomes operative on September 1, 2023.

Alcohol Production

As we detailed midway through this session, Baird Holm lobbying efforts led to several legislative improvements for Nebraska alcohol producers.  Specifically, the following bills were each amended into one omnibus bill, LB 376, which passed on April 17, 2023. Because Governor Pillen signed LB 376 into law on April 21, 2023 with an emergency clause, the bill took immediate effect:

LB 259 (Lowe) permits farm winery licensees to sell beer and other liquor on site so long as the licensee also holds the appropriate retail license for such sales.

LB 376 (Lowe) requires licensed manufacturers, wholesalers, and shippers, before selling or shipping alcoholic liquor into the state, to remit certain forms and fees to the Liquor Control Commission.  The forms must disclose information about the licensee, the product, compliance with federal laws and the name of the primary source of supply in the United States.   

LB 377 (Lowe) doubles the number of special designated licenses that the Nebraska Craft Brewers Guild and other non-profit entities may obtain for fundraising events each year. Such entities could previously only hold six per year.  The bill, however, permits 12.

LB 452 (Murman) Nebraska-licensed microdistilleries, for the first time, to sell up to 500 gallons of their products per year directly to licensed retailers.  This is a significant step in expanding market access for small producers.  Microdistilleries could previously only reach the other retailers by engaging a licensed distributor.  The bill also empowers microdistillery licensees to store their products in a secure, offsite facility if they: receive authorization from the Liquor Control Commission, share the location with the commission, and maintain a separate inventory for the product at both the microdistillery and storage facility.

LB 596 (Hardin) allows manufacturers and wholesalers to form sponsorship and advertising agreements with holders of special designated licenses, political subdivisions of the state and operators of property owned by political subdivisions.

LB 667 (Hughes) permits wholesalers to engage in “channel pricing.”  The Act defines channel pricing as a pricing strategy that differentiates the price charged for a product based on the particular distribution channel used to sell such product.

Other Bills of Interest

LB 100 (Erdman) amends the ImagiNE Nebraska Act by adding “Waste Water Treatment and Disposal” to the business activities set forth in the definition of “qualified location” under the Act.  This change entitles such activities to certain tax-advantaged programs.  On January 10, 2023, the Legislature referred this bill to the Revenue Committee.  The Revenue Committee adopted AM 1152, which amended LB 100 into LB 727.  LB 727 passed on June 1, 2023.  Governor Pillen signed it into law on June 6, 2023 with an emergency clause and the bill took immediate effect.

LB 118 (Brandt) decreases the minimum investment amount for livestock modernization or expansion that qualifies for the refundable credit under the Nebraska Advantage Rural Development Act.  Under the bill, the minimum investment amount decreases from $50,000 to $10,000 for all applications filed on or after January 1, 2024.  The Revenue Committee adopted AM 1152, which amended LB 118 into LB 727.  LB 727 passed on June 1, 2023.  Governor Pillen signed it into law on June 6, 2023 with an emergency clause and the bill took immediate effect.

LB 125 (Bostelman) permits the Department of Natural Resources to yield investment earnings on its Surface Water Irrigation Infrastructure Fund and return such earnings to the Fund.  The Revenue Committee adopted AM 1172, which amended LB 125 into LB 818. LB 818 passed on May 18, 2023.  Governor Pillen signed it into law on May 23, 2023 with an emergency clause and the bill took immediate effect.

LB 180 (Brandt) adopts the Nebraska Biodiesel Tax Credit Act.  The Act provides a tax credit to retail dealers of biodiesel.  Those dealers receive a credit of 14 cents multiplied by the total gallons of biodiesel they produce annually.  They may refund the credit against any state income tax.  The Revenue Committee adopted AM 1152, which amended LB 180 into LB 727.  LB 727 passed on June 1, 2023.  Governor Pillen signed it into law on June 6, 2023 with an emergency clause and the bill took immediate effect.

LB 361 (Dorn) appropriates $2,000,000 to the Public Service Commission to implement the Precision Agriculture Infrastructure Grant Program.  The Appropriations Committee adopted AM 915, which amended LB 361 into LB 814. LB 814 passed on May 18, 2023.  Governor Pillen signed it into law on May 24, 2023 with an emergency clause and the bill took immediate effect.

LB 395 (Erdman) increases the compensation of the Oil and Gas Conservation Commission members from $400 to $500 per day and continues updating that compensation every two years according to changes in the Consumer Price Index.  The Natural Resources Committee adopted AM 1314, which amended LB 395 into LB 565. LB 565 passed on May 30, 2023.  Governor Pillen signed it into law on May 23, 2023 with an emergency clause and the bill took immediate effect.

LB 400 (Brewer) adopts the Pheasant Restoration Act.  This Act authorizes the Game and Parks Commission to pay up to 50,000 nest predator bounties to hunters who hunt or trap a badger, coyote, opossum, raccoon, red fox, or striped skunk.  The Natural Resources Committee adopted AM 1314, which amended LB 400 into LB 565. LB 565 passed on May 30, 2023.  Governor Pillen signed it into law on May 23, 2023 with an emergency clause and the bill took immediate effect.

LB 425 (Bostelman) increases the costs for certain Game and Parks Commission hunting permits.  The Natural Resources Committee adopted AM 1314, which amended LB 425 into LB 565. LB 565 passed on May 30, 2023.  Governor Pillen signed it into law on May 23, 2023 with an emergency clause and the bill took immediate effect.

LB 505 (Bostar) reduces the standard vehicle registration fee for plug-in hybrid vehicles and adjusts certain excise taxes for vehicle fuels.  For gas, diesel and ethanol power vehicles, the excise tax equals $.09 per gallon, and for electric-powered vehicles, the excise tax equals $.03 per kilowatt hour used for charging.  The bill also permits commercial electric vehicle charging stations to offtake energy directly from renewable energy generators.  The Revenue Committee adopted AM 1396, which amended LB 505 into LB 727.  LB 727 passed on June 1, 2023.  Governor Pillen signed it into law on June 6, 2023 with an emergency clause and the bill took immediate effect.

LB 506 (Bostar) appropriates $200,000,000 of federal funds to the Department of Natural Resources so that it may award the City of Lincoln a grant for the costs to acquire, permit and construct new facilities and pipelines for its supply of potable water.  The City has contemplated installing a municipal wellfield along the Missouri River between Omaha and Nebraska City as a second drinking-water source.  This bill additionally appropriates $20,000,000 of federal funds to the Department of Environment and Energy to provide grants for small and rural communities to install reverse osmosis systems in community water systems.  The Appropriations Committee adopted AM 915, which amended LB 506 into LB 814. LB 814 passed on May 18, 2023.  Governor Pillen signed it into law on May 24, 2023 with an emergency clause and the bill took immediate effect.

LB 565 (Bostelman) appropriates $250,000 in each of the next two years to the Department of Economic Development to award grants for Nebraska Public Power District to apply for a regional clean hydrogen hub designation and associated federal funding.  This follows from Nebraska Revised Statute section 66-2301, which the Legislature adopted last year.  The Natural Resources Committee referred this bill to the General File with amendments.  LB 565 passed on May 30, 2023.  Governor Pillen signed it into law on May 23, 2023 with an emergency clause and, the bill took immediate effect.

LB 567 (Bostelman) redefines “reliable or reliability” under Nebraska Revised Statutes section 70‑1001.01 to mean the ability of an electric supplier to supply the aggregate electric power and energy requirements of its electricity consumers at all times under normal operating conditions.  This is ultimately a way to make it more difficult for the Power Review Board to approve renewable energy projects, should those return to its jurisdiction.  The Natural Resources Committee adopted AM 1242, which amended LB 567 into LB 565.  LB 565 passed on May 30, 2023.  Governor Pillen signed it into law on May 23, 2023 with an emergency clause and the bill took immediate effect.

LB 568 (Bostelman) adopts the Nuclear and Hydrogen Development Act. The Act requires the Department of Economic Development to create a Nuclear and Hydrogen Industry Work Group, with representatives from the community colleges, state universities, nuclear and hydrogen industries, public power districts and Legislature.  The Group must determine the workforce training needs of the nuclear and hydrogen industries and establish grant criteria for supporting those needs.  The Natural Resources Committee adopted AM 1241, which amended LB 568 into LB 565.  LB 565 passed on May 30, 2023.  Governor Pillen signed it into law on May 23, 2023 with an emergency clause and the bill took immediate effect.

LB 571 (Lippincott) appropriates $750,000 in each of the next two years to the Department of Environment and Energy to aid in carrying out the provisions of the Water Well Standards and Contractors’ Practice Act.  The Appropriations Committee adopted AM 1730, which amended LB 571 into LB 814. LB 814 passed on May 18, 2023.  Governor Pillen signed it into law on May 24, 2023 with an emergency clause and the bill took immediate effect.

LB 613 (McDonnell) appropriates $22,500,000 in each of the next two years to the Department of Environment and Energy to provide grants to utilities districts that expedite the replacement of homeowner-owned lead service lines.  The Appropriations Committee adopted AM 915, which amended LB 613 into LB 814. LB 814 passed on May 18, 2023.  Governor Pillen signed it into law on May 24, 2023 with an emergency clause and the bill took immediate effect.

LB 785 (McKinney) create the North and South Omaha Recovery Grant Program, which will provide funding to public and private entities to respond to the negative impact of the COVID-19 public health emergency and build resilient communities.  The bill appropriates $250,000,000 of federal funds to the Department of Natural Resources and $350,000,000 to the Department of Economic Development, each to administer the Program and issue grants thereunder.  The Appropriations Committee adopted AM 915, which amended LB 785 into LB 814. LB 814 passed on May 18, 2023.  Governor Pillen signed it into law on May 24, 2023 with an emergency clause and the bill took immediate effect.

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Baird Holm attorneys specialize in all aspects of agricultural, environmental, natural-resources, and regulated-substances law.  In addition, Vanessa Silke and Hannes Zetzsche are registered lobbyists.  Please contact us if you have any questions.

Vanessa A. Silke
Hannes D. Zetzsche
Vasili F. Sgourakis, Summer Associate