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Archive for the ‘Management of Water Systems’ Category

Landfill liability re: Contamination

Posted on: July 3rd, 2016
by David Ganje

The operation of a municipal landfill, also known as a solid waste facility, involves significant legal risks, such as damage caused from a landfill leaking or 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 this protection, in 2003 the U.S. Geological Survey (citing the EPA) opined that “all landfills eventually will leak into the environment.” Many landfills in South Dakota are not insured for pollution losses that may occur while the landfill is operating. Rapid City carries landfill pollution insurance. By way of example, Belle Fourche, Sioux Falls, Brookings and Brown County do not have landfill pollution insurance. The state is currently monitoring a situation at the Brown County landfill related to a ground water underdrain collection system.

A state system of financial planning is in place for current operating contingencies, as well as closure and post-closure costs of landfills. Municipalities by rule are required to show their financial ability to take any corrective action. North Dakota has similar rules. These are the so-called unexpected contingencies, such as a leak into an aquifer.

South Dakota’s rules allow a municipality to keep a separate fund (money deposited in a bank account) to protect against the costs of a leaking landfill, or alternatively for coverage of such a leak by purchasing pollution insurance. To maintain a separate fund large enough to cover a landfill leak is beyond the financial capability of municipalities. Brown County, the third largest county in the state, maintains this 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 insurance. To put this 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 – yet few municipalities seem inclined to carry the insurance. This is akin to riding a motorcycle without a helmet. Landfills in the state are, in most cases, owned and run by cities and counties. These municipalities hold title to their landfills. 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.

The state is required by law to maintain a program of technical and financial assistance to encourage solid waste management. But the legislature has in reality foisted legal responsibly onto municipalities, and in doing so has eliminated any possible governmental immunity for local municipalities. The statutory language of this ‘dodge’ is extraordinary and absolute: “The owner or operator of a solid waste disposal facility … is responsible in perpetuity for the solid waste and liable in perpetuity for any pollution or other detrimental effect caused by the solid waste.” The state permit application for a party operating a landfill also requires the applicant acknowledge that the applicant (usually a city or county) is “liable in perpetuity.” Legal responsibility in perpetuity leaves no room for doubt. For a municipality it’s forever.

Despite the clarity of the law, and the significant costs that could come from an environmental cleanup, many municipalities remain unprotected against the kind of damages that could result from a leaking landfill.

David Ganje practices law in the area of natural resources, environmental and commercial law in South Dakota and North Dakota. His website is Lexenergy.net

Original Article at Argus Leader – My Voice

Leaky Laws – The Keystone 1 Leak and Oil Spill Liability in South Dakota

Posted on: April 29th, 2016
by David Ganje

Pipelines, even privately owned, are a publically regulated transportation and operating system. The question is not whether pipelines are “essential to our society.”  Pipelines are already integral to the country. The US had over 1,700,000 miles of oil and gas pipelines in 2014. The fairness of pipeline easements to landowners is a separate matter. I have addressed that in blog articles on my website. When a pipeline leak occurs, it only deflects from the problem at hand to discuss a pipeline’s place in modern society. The media puts its attention on the statements of politicians after a pipeline leak has occurred.  Such media attention does address the question of how to manage the risk.  Operating systems will malfunction. The process for legally authorizing operating systems should not. To paraphrase Norman Vincent Peale, the problem with most publically regulated systems is that they would rather be ruined by praise than saved by criticism.

On April 2nd, 2016 TransCanada announced that its Keystone 1 pipeline was leaking crude oil. Whatever leak detection system was in place on the pipeline failed, as the leak was discovered and reported by a local South Dakota landowner. On April 5th the operator shut down the pipeline. TransCanada initially reported that 187 gallons had been spilled. Days later they reported that over 18,600 gallons of oil had already leaked from the pipeline. This leak is one of the largest in the history of the State. The relevant question should be how regulated pipeline leaks will be cleaned up, and who will pay for them.

Under both Federal and state laws, the party responsible for a leak is the one responsible for cleanup. Usually a company like TransCanada prefers to take care of the cleanup itself. Not only does this help soothe public relations problems resulting from a leak, but it helps the operator control the costs. While South Dakota’s Department of Environmental and Natural Resources is supervising of the cleanup, TransCanada is currently managing the cleanup and hiring the contractors for the job. But a pipeline operator causing a spill may not always be willing or able to clean up a spill. The liable operator could be bankrupt, dissolved, or perhaps not have the money. In these cases, clean up cannot wait for years of court cases or bureaucratic lethargy. The money for a cleanup needs to be there, ready to be used.

The state tells us that ‘them what operates a car must financially assure the public against the risk of its operation.’ Thus, the state has mandatory car insurance.  Alas, no such state mandatory insurance law protects the public against the risk of a pipeline spill. The last time a bill was introduced to create financial assurances like this was 2008 (Senate Bill 138 from the 2008 session). This proposed law was a good start. The bill stated in part:

“…financial assurance, in a reasonable and proper amount for the remediation of potential damage to the environment that could be caused by the activity . . . may include insurance, a surety bond, escrow account, letter of credit, trust, guarantee, or cash deposit.”

Of course, special interest killed this bill.

South Dakota has in place a trust fund, created through taxes, which is available to pay for emergency response to spills, and ideally to cover for situations where the operator does not or cannot pay. According to the state, these would be the funds used for cleanup operations if TransCanada was not paying.

The problem is that this fund is not bottomless. DENR’s FY 2015 budget request reports that the 2013 end-of-year balance on the fund was $2.93 million. When a big spill happens, the fund could be strained. For example, the fund spent $1,750,000 in 2008. DENR estimates that the fund may have to manage as many as 200 to 250 spills every year, because this fund doesn’t just cover oil spills – it also has to cover spills of pesticides, fertilizers, and any other hazardous substances and pollutants. Bills have been introduced to create a special fund to cover just pipeline leaks in the SD legislature in 2009, 2010, and 2011. The proposals were shot down every time. It is only a matter of time before there is a large spill that does not have a company around to pay for the cleanup. And the damages from such a spill could be significant, especially if the leaked substance enters groundwater and spreads. When that happens, the remaining funds in the SDRSR are not going to make a dent. The legislature needs to create a modern statute addressing financial assurances for pipeline leaks.

David Ganje practices law in the area of natural resources, environmental and commercial law in South Dakota and North Dakota. His website is Lexenergy.net

Disclosure of Mineral Interests in North Dakota

Posted on: October 2nd, 2014
by David Ganje

Full property disclosure laws are needed in North Dakota.  Current law does not require that the seller disclose information regarding mineral rights ownership at the time of a closing when selling real property.

Mineral rights affect the sale of real estate and affect its value.  These often go unaddressed when selling property.  The consequences of a failure to address these rights are not pretty. Surprises when doing a real estate deal should not occur.  The era of “let the buyer beware” is long gone. I suggest that putting everything material on the table when doing a real estate sale is the best policy.

The need to protect purchasers through honest and full disclosure of mineral rights has also been borne out in the experiences of other states.  Four years ago, Wyoming adopted a statute which requires sellers of property to disclose whether any mineral rights have been severed prior to a sale.  The reason for the new law, according to the President of the Wyoming Realtor’s Association, was to avoid the unpleasant surprise encountered by people who bought property thinking that they owned the rights to minerals only to find that a third party would appear on their land, and start digging on the property.  By making the buyer aware of the severance of mineral rights, Wyoming’s new disclosure law allows a prospective purchaser to make a more informed decision when purchasing. Recently in Florida a large home builder announced that it will stop severing mineral rights when selling property – after a local newspaper wrote a series of articles investigating the practice of selling property to people who learned of the practice only at the closing table where they felt pressured to consent.

Mineral rights can be severed from surface property rights on the same piece of property in North Dakota and do not automatically pass with title to the land in a sale. A third party can own the mineral rights to land. Title insurance is not the answer to this issue. Title insurance does not insure mineral rights on a property, nor does title insurance cover such things as water permit rights. When doing a real estate deal a purchaser should not assume that the title insurance policy will offer coverage.

            “Full disclosure,” makes for a complete sale in a real estate deal.   Full disclosure is the act of a seller of providing all the facts which the other party should know before the other party decides to buy. Full disclosure is not something I would always do on a first date when I was a young man – but that is another matter.  Full disclosure is akin to the term used by contemporary politicians and pundits known as “transparency.” North Dakota’s property disclosure law should require a seller to disclose mineral associated with a piece of property.