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Surface Water Rights & Surface Water Drainage, A Modern Problem

Posted on: November 11th, 2015
by David Ganje

Surface Water Rights and Surface Water Drainage, A Modern Problem

Surface Water drainage issues are longstanding issues in agricultural production areas, and have a significant effect on the agricultural economy of a state.  South Dakota, by way of example, has been plagued by surface water drainage problems for decades.  Surprisingly, there is little coherent or efficient planning to meet the challenge.  Instead, property owners and government agencies have witnessed debates, numerous court cases, and the failure of new legislation capable of addressing the issue.  The state has experimented and over the years implemented a smorgasbord of agencies with authority over water issues including the State Water Management Board, County Drainage Commission statutes, irrigation districts, water user districts, water project districts, water development districts, conservation districts, and watershed districts. The results are less than successful when one considers the state’s drainage problems.  There are benefits to water drainage, both environmentally and economically.  However, the road to effective water drainage law and policy remains elusive in South Dakota, partly due to the unwillingness of those in authority to exercise existing rights given to the state’s leaders.

 

Surface water drainage is defined as the depletion of water from a water-logged piece of land.  By draining off excess water, soil goes from saturated to unsaturated, allowing air to better move through the soil, making it healthier.  This can result in a decreased amount of runoff and topsoil loss with water drainage, also improving soil quality.  By making the soil healthier, crops are healthier, more abundant, and typically generate better profits.

 

Water drainage is beneficial environmentally as well as economically.  Studies done by North Dakota State University indicate that there is a 30-50% yield increase in fields that have added tile drainage systems.  This yield change increases revenue, as well as the quality of the land in general.

 

Despite the evidence that supports water drainage systems, dispute about the benefits remain, including the questions: How does one drain the water?  Where should it go?  And how much is too much?

 

A few Water Rights concepts, such as the Civil Law Rule, should be considered. The Civil Law Rule states that a lower estate is responsible for the water that naturally drains across it, and whatever trouble that may come with it – however, an upper estate cannot lawfully do anything to increase this burden.  This means that an upper landowner cannot add to the natural volume of water the lower landowner would naturally receive, or change the course of the water’s flow.  These principles have been demonstrated and applied in numerous court cases.

 

For example, in the 1909 South Dakota case of Boll v. Ostroot, in which the defendant dug a ditch to drain water onto the plaintiff’s lower lands, the court ruled that the defendant could not lawfully discharge water onto another’s land through an artificial channel.  In addition, it was also ruled that one could not change the natural course of the water’s natural drainage path.

 

More recently, the 1985 case of Gross v. Connecticut Mutual Life Insurance Co. held that discharge is allowed over, but not onto another’s land.  The principle is that drainage can flow but not in such a manner as to create a new water depository. The precedents and general guidelines set by these court cases are not enough to combat all of South Dakota’s water drainage issues.

 

Part of the problem lies in South Dakota’s 1985 water drainage statutes which offer guidelines such as when permits are needed, the application process, coordinating precise drainage areas, and so on. The law allows for both creating drainage plans and managing drainage controls.  While this may have been effective in theory, in practice it falls short.  For example, the manpower, data, and resources necessary to carry out all that the ordinance calls for are not widely available and are often given as the reasons for the failure of counties to administer the law.  The more accurate reason is that political leaders at the county level are reluctant to take the bull by the horns and ‘domesticate’ the water drainage issues. In addition, as of July 2012, only 18 out of 66 counties in South Dakota had a drainage ordinance in place, making it nearly impossible for the state as a whole to deal with all the complications that can arise.

 

With all the problems that water drainage and water drainage laws have brought up, what can be done to remedy and alleviate the situation?  Fortunately, there are many options for South Dakota.  To start, a minimum criteria needs to be established for drainage applications to act as a baseline for what is lawful.  Following that, more definitive criteria to evaluate these applications need to be made in order to best protect all parties involved.  Finally, a level of cooperation and consideration among all parties involved needs to be more actively employed.

 

It is evident that water drainage laws have caused hardships and issues in South Dakota for many generations.  However, by employing new standards and better understanding water drainage rights and tactics, South Dakota has the ability to overcome these hardships and improve the land.

Local Commentary: All sides should comment on proposed NED Pipeline

Posted on: October 27th, 2015
by David Ganje

NED Pipeline
ContributedThis map from Kinder Morgan shows the Pennsylvania and New York portions of the route for the company’s proposed Northeast Energy Direct pipeline.

By David Ganje Local Commentary

As demand for natural gas has increased, so too has the need to overhaul the region’s delivery infrastructure. One proposed development is the Northeast Energy Development Pipeline, which will connect the natural gas fields of Pennsylvania to the New York Capital Region, before continuing on to connect with Boston and other parts of New England.

The proposed NED Pipeline is currently under review by the Federal Energy Regulatory Commission. As part of the review process, FERC considers a variety of factors, including public commentary. Originally, the NED deadline for accepting public commentary was scheduled to expire on Aug. 31. However, after urging from several sources, including U.S. Senators Charles Schumer and Kirsten Gillibrand, the public commentary period was extended and remains open.

As part of the review process, both FERC and Kinder Morgan have hosted town hall-style meetings where members of the public are able to pose questions directly to officials and various experts. Further, the public is able to submit their commentary directly to FERC through the agency’s website athttps://ferconline.ferc.gov/QuickComment.aspx under docket number PF 14-22-000.

As of Oct. 13, nearly 6,000 comments had been submitted to FERC via the online tool. Comment sources range from civic groups, businesses, and school districts, to various special interest groups, and perhaps most importantly from private citizens.

Public commentary is an important part of FERC’s review process because it allows private citizens and groups to raise individualized concerns. During review, FERC reviews a variety of sources such as professionally prepared environmental or economic impact assessment reports. However, public commentary also plays a crucial role in the review process.

FERC itself states that public commentary raises issues that might otherwise escape notice by the agency, such as:

• “Environmental and socioeconomic resources that are important and should be examined by FERC,”

• “Other alternatives to the proposed project that should be evaluated,”

•  or even “Mitigative measures that they want the FERC to include in any approvals issued.”

Of course, FERC must consider a plurality of interests when reviewing a proposed project, including natural gas pipelines. Private interests and concerns are just one piece of the puzzle, as FERC also owes a duty to serve the broader public interest. However, legitimate and well-presented concerns raised during public commentary have the potential to bring about significant results. This can vary from delaying or extending the review process, to changing a pipeline projects route altogether to avoid sensitive areas that had previously escaped notice.

Public commentary is also the first step toward becoming an “intervener.” During the public commentary phase private citizens with legitimate questions about the NED’s potential impact can seek to have those questions addressed. After raising a question during public commentary, a citizen with lingering questions can go through a more formal process and become an “intervener.” 

To become an intervener, one must prepare and file a Motion to Intervene with FERC. After acceptance by FERC, an official “intervener” may actually appeal a FERC decision in Federal Court should they feel the situation warrants such action. Due to the formal nature of becoming an “intervener,” it is probably wise to seek assistance of counsel.

Public participation is a cornerstone of the democratic process. Public commentary periods are a classic example of empowering the public voice. No matter what one’s personal politics or feelings toward energy development are, participation in the process is always important.

David Ganje, of Ganje Law Offices in Albany, practices in the area of natural resources, environmental and commercial law in New York.

Termination of Oil & Gas Leases

Posted on: October 22nd, 2015
by David Ganje

David L. Ganje, of Ganje Law Offices, has been invited to speak on November 11th at a professional legal education program sponsored by Strafford Publications, Inc. Ganje’s presentation will discuss Termination of Oil & Gas Leases based upon Lack of Production.

Pipeline Easements – A Fair Deal?


Posted on: October 19th, 2015
by David Ganje

As natural gas exploration and production has increased, so too has the need to overhaul and expand the natural gas transportation system. In this article, I discuss pipelines running over private land, and will leave the important issues of pipelines on state and federal land for another day.

The proposed Northeast Energy Direct (“NED”) and Constitution Pipelines will ultimately connect the gas shale fields of Pennsylvania to the Northeast. Building a pipeline means crossing privately-held land. In the case of the NED and Constitution Pipelines, scores of privately-owned parcels will have to be crossed along the pipelines route through New York State. In order to facilitate construction of the pipeline, the operators behind the NED and Constitution Pipelines will negotiate easements with the owners of these parcels.

The relationship between public utilities and negotiated easements is nothing new. Easements may be granted to private businesses, such as a public utility company, to cross a land parcel in order to provide common services such as sewer access or electricity. Natural gas pipeline easements present a different situation. Setting aside for the moment the issue of whether the pipelines are a good thing economically and environmentally for the state, affected landowners should tread carefully.

Unlike a public utility easement, a natural gas pipeline moves product for profit across land rather than providing a direct benefit to the land. At peak capacity, millions of dollars worth of natural gas will be moving through these pipelines every day. Are affected landowners receiving fair compensation?
Traditionally in these situations, landowners receive “market value” of the land affected by an easement, which often includes money for reduction in agriculture output or other productive use of the land.
While this system makes sense under the common public utility easement paradigm, how does this process apply when the landowner’s property is the “transportation vehicle” for a commodity? How does one calculate “fair market value” when millions of dollars worth of product are flowing across privately-held land? Is a one time payment for an easement fair compensation?
Kinder-Morgan, the Texas-based company behind the NED Pipeline states that “Our goal, our practice and our overwhelming experience is to arrive at mutually beneficial terms and conditions with landowners.” However, what is to prevent a landowner from refusing to take the deal presented to them? The developer goes on to explain that, “[W]e always view eminent domain as a last resort only to be used if extensive consultation and negotiations with an individual landowner is unsuccessful.”

The term eminent domain should raise a red flag with any landowner along a pipeline’s proposed route. Eminent domain means “forced taking” though litigation. Under the doctrine of eminent domain, private property may be seized so long as the seizure is for a public purpose, and fair compensation is provided.

The concept of “public purpose” is liberally construed under the law. So, a seizure of property for a pipeline could be for a public purpose even when the direct benefactor is a private company. “Fair compensation” typically means that the taking party must provide market rate for the seized or affected land. In such cases, the focus is on production loss to the landowner rather than benefit provided to the operator.

The stage has already been set to allow for eminent domain seizures. Under existing federal law, the Federal Energy Regulatory Commission (“FERC”) must first approve the project. As part of this process, pipeline operators are required to apply to and receive from the FERC a certificate under the Federal Natural Gas Act. Part of the certificate application process requires the pipeline operator to show that their project is a “public convenience and necessity.” Should FERC find that such a showing has been made (which it almost always does), then case precedent will allow eminent domain proceedings to commence. So, if the easements are coming, for what terms should New York property owners be on the lookout?

When landowners are approached about an easement they are presented with a standard agreement. These agreements will not refer to any individualized needs or considerations. But they do contain many important legal terms.

Some examples of common terminology:

-“Temporary periods” are often mentioned. How long is temporary?

-Many agreements give an operator the right to conduct several activities (reconstructing, modifying etc.) at any time. However, the Landowner does not retain the right to renegotiate the type of access allowed. These activities could cause future disturbances to the Landowner’s use and enjoyment of their land. Is the landowner left without any recourse?

-Some agreements allow for the installation of “any appurtenant facilities.” What are these appurtenant facilities? Are they going to impact the Landowner’s use and enjoyment of the land?

While Landowners may feel pressure to sign, that does not mean that they must be left with a bad deal. Any proposed agreement should be reviewed with the help of experienced advisors. A landowner should always carefully consider the circumstances of his land and, importantly the future of his land.


 

State Senator Jeff Monroe has publicly criticized my article on the fairness of easement payments to landowners. Public discussion of public issues is a duty for all of us. It is not a privilege. A discussion of pipelines as a commodity transportation vehicle is the first premise of the argument in my article on pipeline easement payments. From this I ask the question of fairness-of-payment to landowners whose lands are used to transport a business commodity. My argument of fairness is fair game for criticism but I see nothing in Senator Monroe’s critique of my article going to the heart of my point: what is a fair price for using one’s land to send a private company’s inventory to market. Railroads charge a handsome price for such transportation. And those prices change with economic conditions. Should not the same concept of participation in the economic system apply to an individual’s land which is to be used as the vehicle of transportation? The position stated by state Senator Monroe or his speech writers criticizes my concerns about the fairness of allowing a private company to use the land in an ongoing for-profit enterprise and calls it legal hooey. Forty-two states have enacted new legislation or passed ballot measures since 2006 concerning problems with eminent domain as a taking of private property. Compensation to landowners in eminent domain proceedings has been notoriously small in amount. Five states have recently enacted legislation increasing the compensation amount. These state efforts must all be a bunch of political and legal hooey according to the Senator.
-David Ganje

WIND POWER WORKSHOP, Spearfish

Posted on: August 28th, 2015
by David Ganje

The Black Hills Pioneer presents
WIND POWER WORKSHOP
Friday, Oct. 2, 2015
8:30 a.m. to Noon
High Plains Western Heritage Center
Exit 14, Spearfish

WIND POWER WORKSHOP Friday, Oct. 2, 2015 8:30 a.m. to Noon High Plains Western Heritage Center Exit 14, Spearfish

Speakers Include:

David Ganje
Ganje Law Offices, Rapid City
•    Reviewing Wind Easements – The Good, The Bad, The Ugly

Scott Minos
US Department of Energy
Senior Policy and
Communications Specialist
for the office of Energy Efficiency
and Renewable Energy (EERE)
•    Perspectives of Wind Energy Potential for South Dakota