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South Dakota wetlands case before the US Supreme Court

Posted on: October 28th, 2016
by David Ganje

Congress passed the Food Security Act of 1985. Under the Swampbuster provisions of this Act the USDA may make determinations as to whether certain lands qualify as wetlands and whether wetlands which have been manipulated qualify as converted wetlands. The Act passed during the Reagan Administration was written to oppose the conversion of wetlands into cropland. The Eight Circuit Court of Appeals has previously ruled that a person found to have converted wetlands into cropland may become ineligible to receive farm program payments from the federal government. Some of these wetlands are what I call cattail swamps. I spent part of my youth hunting in them.

Faced several years ago with a wetlands designation for part of their land, South Dakota farmers Arlen and Cindy Foster challenged the USDA’s decision that certain of Foster’s acreage was a wetlands. These bureaucratic proceedings took over five years. The USDA based its decision, in part, on a comparable wetlands site some 30 miles away from the Foster’s property in Miner County. Wetland regions in the U.S. include the Prairie Potholes of both North and South Dakota as well as other states.

When the Foster case was later ruled upon by the U.S. District Court for South Dakota, the Fosters were unable to provide the court with substantial evidence that the USDA wetlands decision-making process was wrong. The District Court said that “Plaintiffs (the Fosters) have not shown, beyond a bare assertion, that the range of rainfall shared by both locations or the differences in the depth of the potholes renders the ( USDA comparison) site insufficiently “local.”” The trial judge also stated that the Fosters did not challenge the USDA expert testimony about rainfall averages on the land. The Fosters then appealed this decision to the Eighth Circuit Court of Appeals. The Court of Appeals in its decision upheld the District Court and ruled that the original USDA agency decision was a reasonable interpretation of USDA regulations and that courts should give deference to the “informed discretion of responsible federal agencies.”

The Fosters have now filed a Petition to have the case heard by the United States Supreme Court. Unfortunately for the Fosters, weak facts make bad law. The Foster case, in my view, will not be accepted by the U.S. Supreme Court. Although the Foster Petition to the Supreme Court presents important arguments about agency authority to make decisions and about a court’s deference to an agency decision, the Court will also look at the underlying facts of the case before it. The facts of the Foster case are not strong. Because the Supreme Court may not hear the case, however, this does not mean that the issues raised by the Fosters are without grounds. Overreaching by the USDA in Swampbuster and wetlands decision and rulemaking is a genuine issue. Proposed legislation filed this year in Congress is intended to address some of these challenges. The sponsors of the filed bill argue that the new law would ensure more timely decisions by the USDA; would make the appeals process more efficient for a landowner/farmer and would improve government transparency in providing information to landowners and farmers affected by the Swampbuster process. The intention behind the current Swampbuster law has merit, but I am reminded of what my father said about raising me. “David, my intentions with you were good. It is the outcome that is questionable.”

David Ganje practices law in the area of natural resources, environmental and commercial law.

Brownfield Due Diligence – Don’t Get Married, Get Engaged

Posted on: October 22nd, 2016
by David Ganje

Let’s not pretend.  We have messed up parts of mother earth.  Now let’s use the tools at hand to undo the mess and be good stewards again.  Brownfield recycling, that is the brownfields program is one means to that end. If you are looking to start a new redevelopment project don’t get married, get engaged. Do your due diligence and explore the possibilities from exposing a brownfield.

The EPA defines a brownfield as “real property, the expansion, redevelopment, or reuse of which may be complicated by the presence or potential presence of a hazardous substance, pollutant, or contaminant”. The Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) mandated that the purchasers of property are liable for any contamination on this property regardless of when they acquired a site. However, CERCLA also created a defense known as the “innocent landowner defense” that can only be used if “appropriate due diligence” was conducted prior to the acquisition of the property. Appropriate due diligence has been exercised if an environmental site assessment (ESA), a thorough investigation of a sites current and previous owners, has been prepared.

ESA’s have an average cost of about $4,000 for a small business acquisition and can vary depending on variety of factors specific to the job. The typical businesses that leave behind brownfields include gas stations, dry cleaners, railroads, oil refineries, liquid / chemical storage facilities, and steel / heavy manufacturing plants. Typical hazardous materials they leave behind include hydrocarbons, solvents, pesticides, heavy metals such as lead, and asbestos. Much of the information about previous and past owners is public.

What is so dangerous about leaving these brownfields alone? Many of these brownfields are abandon commercial properties and tend to be an eyesore in the community. Not only can this lead to decreased property values in surrounding neighborhoods but the property can also pose serious health risks for new tenant and their neighbors. For example, the Love Canal disaster in Niagara Falls, in the late 70’s. Hooker Chemical Co. dumped over 20,000 tons of chemical waste in the unfinished and abandoned Love Canal. The canal was later paved over and sold to the city. The city then developed residential neighborhoods and schools on top of the contaminated land. About 25 years later, after an unusual amount of rain, a large amount water absorbed by the land upwelled the “entombed” chemical waste. Residents complained of chemical burns, organ failures, mental disabilities, and congenital birth defects. Eventually local families were relocated and the land was cleaned up. However, in recent years, residents on the rebuilt lands have complained of health issues similar to the ones originally reported 35 years earlier and have filed lawsuits against Hooker Chemical Co.’s parent company.

Once you suspect that the land you are planning to purchase could be a brownfield in need of cleanup what can you do? If you have not purchased the land yet you could include provisions in the purchase agreement that can indemnify you from liability for claims associated with existing contamination.

If you have done your due diligence and you know what you are getting into then you should already know that the Environmental Protection Agency (EPA) has set up the Brownfield Cleanup Program (BCP) “to encourage private-sector cleanups of brownfields and to promote their redevelopment as a means to revitalize economically blighted communities.” The BCP provides incentives through, grants, loans, training, and tax benefits to aid with the cleanup. Since the cost of cleanup is considerable the BCP may provide several hundred thousand dollars towards the cost of cleanup. This money comes with strings attached of course. Among other things, the costs are shared with the property owner, up to 20%, and the brownfield site must be cleaned up within a three-year period. In addition to tax incentives and financial assistance provided through the various governmental programs the land developer should be comforted by the fact that his contributions have also helped the environment. Furthermore, awards are given out by the NYC Brownfield Partnership providing public recognition for the most successful brownfield redevelopment projects.

Additionally, taking on a new brownfield project in NYC grants access to special municipal assistance programs through the NYC Office of Environmental Remediation (OER). The OER was established in 2009 to “design, build, and operate a set of world class municipal programs to advance cleanup and redevelopment of brownfield sites.” Since then they have developed over thirty new programs that take some of the most blighted properties in some of the most disadvantaged neighborhoods, cleans them up, makes them safer, and enables new development that brings new jobs and affordable housing.

The OER also distributes a variety of letters to aid sellers, lenders, and prospective buyers of brownfield properties. An “environmental review and assessment letter” is issued after the OER conducts an ESA on the property in question. It is used to provide assurances against liability. A “standstill letter” contains a preapproved remedy plan developed by a seller and the OER. The letter can be used to enroll the property in a brownfield cleanup program so that a prospective purchaser might receive financial assistance. This letter is intended to provide comfort to a prospective purchaser and its lender since the purchaser will be able to better estimate the cleanup costs.

If you have already started a construction on a new project and just learned of contamination, you may still be able to request a “look back letter” from the OER which would grant liability protection. Although a developer can gain liability protection after a project has started, they will not be eligible for brownfield funding incentives.

Many prime redevelopment sites are located on brownfields, don’t get married. Get engaged first and do your due diligence.

David Ganje practices law in the area of natural resources, environmental and commercial law.

Free Land – South Dakota Style

Posted on: October 22nd, 2016
by David Ganje

Water and land do not mix well in South Dakota. In the last few days South Dakota gave up on its disputed claim to a 500 acre three-mile-long island known as Goat Island located in the Missouri River.  The state conceded jurisdiction over the claimed island giving control to the federal government. The lack of media coverage analyzing the pros and cons of this recent withdrawal of South Dakota’s disputed Goat Island land claim is disappointing. The state had argued that Goat Island was on the South Dakota side of the river when Lewis and Clark mapped the river in 1804. This is a public matter involving a state claim to land on the Missouri River. What were the reasons for the settlement of the claim? How is it good for South Dakota? The media did not ask. The government press releases did not say. Now the island is in the hands of the feds. The hand of government did this deal, but we know not the reasons for the decision.

Property boundaries matter when your land is next to a river or a body of water.  If the river deposits land onto your riverfront by “accretion”, then who owns it?   Accretion is the gradual increase to land, notably riparian land, stemming from the movement of water.  A meandering river has no master.  Certainly man-made law has not corralled a meandering river with anything close to perfection, or to some landowners, with any degree of satisfaction. Questions come up when riverfront boundaries naturally shift due to erosion or accretion.

South Dakota has enacted several laws regarding accretion rights.  The first important section states that when land forms from natural causes gradually over time next to a stream or river such land belongs to the owner of the bank, and it does not matter whether the water is navigable or not.  The second concerns avulsion, or the violent or sudden carrying away of land by a river or stream to another part of the river or opposite bank. Under the statute the owner of the original land may reclaim the land within one year of the new owner taking possession.  And the US Supreme Court has gotten into the act by ruling in the 1970s that the doctrine of accretion applies to changes in the river caused by both artificial as well as natural causes.

One lesson to learn from old man river is:  Don’t use fuzzy boundaries for the legal description in your deeds and contracts.  That is, do not let your lawyer describe the boundaries of your land by reference to a body of water. 

It must be wonderful to be the state.  South Dakota can give land away, and it can receive control of newly formed lakes for free. In a recent law case involving a dispute over the ownership of three newly-formed lakes in the state, the state Supreme Court ruled that effective ownership of these three newly formed lakes, all on privately owned land, should be held in the name of the state.  The Parks case ruling stated the lakebeds would continue to be owned by the private landowners but the lakes and water of the lakes are to be controlled by the state for the benefit of the people of the state.  The result:  more than two thousand surface acres of land, now in the form of lakes, would be controlled and supervised by the state and not the landowners.  Surprisingly, no mention of compensation to the landowners was made for this taking. The state taketh and the state giveth away. It is wonderful to be the state.

David Ganje practices law in the area of natural resources, environmental and commercial law.

Free Land — If You Can Keep It

Posted on: October 12th, 2016
by David Ganje

Free Land – If You Can Keep It

It seems everyone is looking for newfound money whether in the form of land or the lottery. Let us look at the miracle of “new land” obtained by accretion along a riverbank as a phenomena of newfound money. Property boundaries matter when your land is next to a river. If the river deposits land onto your riverfront by “accretion”, then who owns it? Accretion is the gradual increase to land, notably riparian land, stemming from the movement of water. A meandering river has no master. Certainly man-made law has not corralled a meandering river with anything close to perfection, or to some landowners, with any degree of satisfaction. Questions come up when riverfront boundaries naturally shift due to erosion or accretion.

In Norby v. Estate of Kuykendall, 2015 ND 232, 869 N.W.2d 405, Norby owned land adjacent to the Kuykendalls along the North Dakota-Montana border. Norby’s land was on the eastern Montana side and Kuykendal was on the western North Dakota side, with the Yellowstone River separating the properties. But, importantly, neither party’s deed history described the legal boundaries by reference to the Yellowstone River. Gradually the Yellowstone River moved eastward, eroding land from its eastern bank and accreting it on to the western bank. This “new land” on the North Dakota side made up 96 acres.

Norby brought suit to eject the Kuykendalls from the disputed property and to quiet title on the theory that the disputed land were his “riparian accretions.”

Typically riparian and ownership rights of a riverbank shift as the river moves without considering other fixed boundaries. Nevertheless, since Norby’s deed never mentioned the Yellowstone River as the property line, his argument sank.

Perhaps an even more relevant case is the older case of Perry v. Erling, 132 N.W.2d 889 (N.D. 1965). Mrs. Perry argued that she was entitled to “new land” formed by accretion. She owned land directly east of the Big Muddy originally as a non-riparian owner (i.e. landlocked). Since the original land survey in 1872, the river had shifted eastward eroding other intervening riparian lots and eventually turning Mrs. Perry’s lot into riparian land. Over time the river built up “new land” by accretion over the intervening lots. The Court rejected Mrs. Perry’s arguments by making clear that non-riparian owners, such as Mrs. Perry, are only entitled to the land that falls within their original property lines when their property boundaries were not set with reference to a body of water. The original riparian lot owners however would be entitled to the accreted lands.

These cases raise several important points for landowners who hold title to land near bodies of water. For instance, if your land now has additional riverbank or land because of how the river shifted over time, you may still not have ownership over any of the “new land” if your property description was not acquired with legal reference to a river. Laws that normally give rights to riverbank landowners will not help you in this case. However, if your original property boundary was set by descriptive reference to a river, then you may be able to claim the newly formed land as your own. The law of man does not direct the flow of a river.  So be specific in your land deed descriptions or be at the mercy of the river. A good scrivener (lawyer) is worth a thousand words.

Article Also Available at Bismark Tribute

David Ganje practices law in the area of natural resources, environmental and commercial law.

Solid Waste Management In The Dakotas

Posted on: September 26th, 2016
by David Ganje

Municipal Landfills in North Dakota

The operation of a municipal landfill, also known as a solid waste facility, involves legal risk, such as damage caused from a landfill leaking or by landfill contamination of groundwater. Modern landfills are created with liners and other collection systems designed to prevent contamination of the ground, groundwater and the air. Despite good practices, in 2003 the U.S. Geological Survey (citing the EPA) opined that “all landfills eventually will leak into the environment.”

In North Dakota municipalities are required, in the event of a spill or leak, to show their financial ability to take corrective action, but only after the event has already occurred. North Dakota does not require municipal landfills to maintain environmental or pollution liability insurance. Consider a landfill just west of Watford City, which was recently found storing thousands of pounds of illegal radioactive material. The costs to clean up a landfill leak can be beyond the financial capability of a municipality if adequate preparations are not made. An operating landfill is not the only party who might be on the hook to pay for leaks. By way of illustration, Grand Forks has promised to indemnify the operator of their landfill from any and all claims, suits or causes of action that arise from the landfill.

To put this liability issue in financial perspective, the cost to clean up a leaking 150-acre landfill next to a drinking water supply in Burnsville, Minn., was recently estimated by the state at $64 million. These clean up events are the type addressed by landfill pollution insurance, but few municipalities seem inclined to carry the insurance. I am not aware of any North Dakota municipal landfill that carries pollution liability insurance. This is akin to riding a motorcycle without a helmet. Landfills in the state are, in many cases, owned and run by cities and counties. Understand that municipal landfills are dutiful in complying with state and federal environmental regulations. State regulators and municipalities are following relevant statutes and rules. That is not the issue. The challenge is the risk of pollution liability, also called environmental liability – no small matter in today’s world, with costs that can reach into the millions.

Municipalities in North Dakota are not necessarily alone when a leak occurs. North Dakota maintains the Municipal Waste Landfill Release Compensation Fund, which would reimburse municipalities for reasonable corrective costs, including labor, testing, machinery, and consulting fees. However, the owner or operator must pay the first $100,000 for corrective action. Moreover, the Fund will not protect owners and operators who are negligent, or who caused the leak through misconduct, at the sole determination of the State. The Fund will not even reimburse for costs incurred through bodily injury or property damage. It is not a catch-all for landfill environmental liability.

If the Municipal Waste Landfill Release Compensation Fund cannot handle the issue, the release might be enough to trigger the State Disaster Relief Fund, which is there to help deal with a variety of issues, including widespread and severe water or air contamination. A problem on the scale experienced in Burnsville could be met with this State fund to help. A $64 million cleanup would however reduce the Disaster Relief Fund to near-empty, as North Dakota has just over $70 million currently in the fund.

Unfortunately for municipalities, when a serious landfill leak that cannot be handled at the city level occurs, the Environmental Protection Agency may become involved, triggering a Federal cleanup. Once the EPA gets involved, costs can skyrocket for everyone, and the EPA will bring suit against every party, including a negligent municipality, involved in the leak to pay for the cleanup costs. Facing off against the EPA in a million-dollar suit is the last place a municipality wants to be. It would be better to be able to handle landfill leaks with insurance, rather than involving other bureaucratic organizations who will use money inefficiently and then demand repayment.

This fund or ‘security account’ held by the state is not a complete answer, but it is a good start.  Compare this with South Dakota which leaves municipalities buck naked to the law. South Dakota leaves municipalities at great legal risk.  The South Dakota delegating law states that owners or operators of landfills are forever responsible for any pollution or legal problems caused by stored solid waste. The state has no special fund to deal with this issue. South Dakota’s rules allow a municipality to keep a separate fund (money deposited in a bank account, for example) to protect against the costs of a leaking landfill, or alternatively for coverage of such a leak by purchasing pollution insurance. Nevertheless, to maintain a separate fund large enough to cover a landfill leak is beyond the financial capability of municipalities in both states. Brown County, the third largest county in South Dakota, maintains a separate fund in the amount of $240,000. That is not enough money to cover a possible leak. Brown County is one of the municipalities that does not carry landfill pollution liability insurance. This is a problem, especially considering that the Brown County landfill makes a profit for the county. Yet Brown County will not consider pollution liability insurance to protect the landfill.

Just because the North Dakota has some financial support for landfills does not mean that preventative measures should be ignored. Government operated enterprises should not be so callous.  The old concept of sovereign immunity (“the king can do no wrong”) is quickly becoming old law. The growing need for landfills is not going away. To the contrary, solid waste is increasing yearly. While North Dakota is more prepared than its neighbor to the south, there are still things that should be done. The State should protect municipal landfills by requiring landfills to hold insurance covering operating pollution events, and municipal landfills should choose to do so whenever possible.