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Battle Over Drainage Permit Heats Up

Posted on: September 16th, 2020
by David Ganje

Mount Vernon farmer files second lawsuit to stop drainage project, while first permit could go to South Dakota’s high court

Written By: Marcus Traxler | Sep 14th 2020 – 6pm.

The matters of a Davison County drainage permit have become more entangled in the court system, with the results of the first decision being appealed to the South Dakota Supreme Court and a second permit for the same landowner drawing a new lawsuit.

John Millan filed a second permit for a drainage permit in Beulah Township on Aug. 6, which was shortly after his first permit was voided by a First Circuit Court ruling. That permit has drawn a second lawsuit from neighbor Kenneth Hostler, who filed a new suit on Aug. 31 against Millan and Davison County asking for a permanent injunction and declaratory judgment to void the new permit.

In the first court matter over the drainage permit that was initially approved in March, Judge Patrick Smith sided Hostler, writing in his decision that Millan’s initial application was missing key information in order for the Davison County Drainage Commission to make a decision. Millan and the county have appealed the first decision to the South Dakota Supreme Court, according to court documents filed Sept. 4.

In the appeal, Millan’s attorney, Gary Lestico, of the Rinke Noonan law firm in St. Cloud, Minnesota, claims among other items, that the trial court improperly considered matters outside of applicable South Dakota state law for permissible drainage of water and had erred in deciding that Millan didn’t meet his burden of proof in the permit application and erred deciding that the Davison County Drainage Commission had abused its discretion in initially granting the permit in March.

When Millan applied for another permit in early August, he sought administrative approval through Davison County Planning and Zoning Administrator Jeff Bathke, who oversees the county’s drainage processes. Bathke approved the permit on Aug. 10.

Drainage permits in Davison County can be approved by the administrator without going to the county’s Drainage Commission if they meet specific criteria. That criteria includes drainage projects that involve the county’s major creeks and rivers, such as Firesteel Creek, Enemy Creek, the James River or Dry Run Creek. The criteria also allows for approval if signed waivers are received for upstream landowners within a half-mile, downstream landowners within 1 mile and landowners within a quarter-mile of the center of the drain area. Six signed waivers, including one from Millan, were included with the permit, and based on the county’s criteria and mapping, Hostler was not a landowner who had to sign a waiver to allow the permit to proceed.

In his most recently filed lawsuit, Hostler alleges the new project application was “illegally approved.” He says the project will drain water onto his property in southeast corner of Section 19 in Beulah Township, which is located immediately to the north of Section 30, where Millan’s drainage project is planned in the southern half of the section.

“The method and place for discharging surface waters onto Plaintiff’s land in the new project is the same method and place for discharging surface waters onto Plaintiff’s land under a drainage permit voided by the Circuit Court in related litigation,” wrote Hostler’s attorney, David Ganje, of Sun City, Arizona.

The land in question is about 5 miles east of Mount Vernon and about 8 miles west of Mitchell near Interstate 90. Millan’s permit calls for 157,277 feet of drainage tile on his land, draining 320 acres of property, with the water eventually draining into Dry Run Creek.

The Davison County Commissioners decided earlier this month to retain James Davies, of Alexandria, as the county’s attorney in the matter due to conflicts involving Davison County’s staff attorneys.

Property Rights and Water Rights

Posted on: April 9th, 2020
by David Ganje

Website: lexenergy.net
Phone: 605-385-0330
Fax: 605-385-0330
davidganje@ganjelaw.com

DAVID L. GANJE
ATTORNEY AT LAW
GANJE LAW OFFICES
17220 N Boswell Blvd
Suite 130L
Sun City, AZ 85372

______________________________________________________________________________

March 27^th, 2020

Via Mail and Email

Chairperson
Davison County Drainage Board
200 E. 4th Ave.
Mitchell, SD 57301-2631

Davison County Planning and Zoning Administrator (via email)

Davison County Auditor (via email for distribution to parties in interest)

RE: John Millan Permit (Parcel) Number: 03000-10361-301-00, 03000-10361-292-00, 03000-10361-303-00, and 03000-10361-304-00

Dear Chairperson, members of the Davison County Drainage Board and other interested parties:

By way of introduction I represent Kenneth Hostler of 39872 252nd St, Mt. Vernon, SD 57363 with regard to a pending drain tile permit application filed with Davison County by an applicant described in the permit application as follows “Name: Millan, John Address: 25563 406^th Ave. Mitchell, SD 57301” with a date of February 27^th, 2020. My client owns affected land described as the southeast Quarter of Section 19 Range 61 West in Davison County South Dakota. The Drainage Board held a hearing on the application on March 17th, 2020. Upon information received, the Board made a tentative, non-final decision to grant the permit. As of now, the Board’s informal decision to grant the permit has not been formalized.
My client’s property and legal rights are prejudiced by the described drainage project application. I respectfully report to the Drainage Board and Davison County that the formal granting of this drain tile permit application would be an error of law. The permit should not be granted.
The Board and interested parties should be aware of legal problems and issues with the permit application and the Board’s process regarding the application and hearing, even though I have yet to be favored with information that I requested from the county on this matter. This letter is not intended as an exhaustive discussion of the problems and legal issues.
The hearing on the Millan drainage project, including its process, denied my client due process under the South Dakota and United States Constitutions.
The applicant did not provide information, data, analysis and facts on the matters listed below, which are all legally required by both due process of law and by the plain language of the Davison County Drainage Ordinance.
The below requirements at a. through h. were not in the application and were not discussed at the hearing by the applicant and the Board. Further, the Board’s findings and decision did not consider the following relevant, required information, analysis, data and facts:

a. Flood hazard zones
b. Erosion potential
c. Water quality and supply
d. Agricultural production
e. Environmental quality
f. Aesthetics
g. Fish and Wildlife values
h. Considerations of downstream landowners and the potential for adverse effect thereon including consideration of the following criteria:

i. Uncontrolled drainage into receiving watercourses which do not have sufficient capacity to handle the additional flow and quantity of water shall be considered to have an adverse effect.
ii. Whether drainage is accomplished by reasonably improving and aiding the normal and natural system of drainage according to its reasonable carrying capacity, or in the absence of a practical natural drain, a reasonable artificial drain system is adopted.
iii. The amount of water proposed to be drained.
iv. The design and other physical aspects of the drain.
v. The impact of sustained flows.

The project, as planned, will cause surface water to flow in unnatural quantities over and onto my client’s property to reach Dry Run Creek. The application states the outlet distributes collected water from lengthy drain tile, which then “flows into Dry Run Creek.” The proposal is to have the water flow over and onto my client’s property and then into the described creek, Dry Run Creek, which is on my client’s real property.
The location of the outlet just south of my client’s real property will result in excessive and unnatural distributions of surface water onto my client’s agricultural lands, which are used for crop production, given the total linear feet of drain tile proposed in the application.
The application provides the following representations regarding the project: Length of Solid Drain (Feet) is I5,000; the Length of Perforated Drain (Feet) is 300,000 and with a Total Length of all Drain (Feet) of 315,000. The application contains no adequate disclosure of the amount of water to be drained. The applicant’s response to the county’s required “Explanation of Drain Design” states that it is to “Improve farm ground to increase yields.” These limited representations do not provide enough information from which a reasonable person could make a decision concerning the drain tile permit application. And among other deficiencies, the application does not explain how the applicant’s project would comply with drain tile industry standards.
County officials considering granting a permit for land-use under the Davison County Comprehensive Plan are to rely upon scientific and technical sources in evaluating the proposed use. That was not done in this matter.
The ambiguity of the project as described by the applicant prevented the Board from analyzing its potential impact. For example, the project has an “outlet into [1] unnamed intermittent stream which goes into SD DOT ROW and north across interstate into [2] unnamed intermittent stream which outlets in NE ¼ of Sec 30[.]” This can be read as to mean the first unnamed intermittent stream carries surface water directly into the second intermittent stream. Or it can be read to mean the first intermittent stream goes through the interstate and into the SD ROW, which then channelizes water towards and into the second intermittent stream. A reasonable person cannot make an informed decision from this information.
Upon information and belief the named applicant, John Millan, is not the legal owner of the real properties proposed to be tiled in the application. An approval of a permit under these circumstances indicates a failure of due diligence in analyzing the tile drainage project and the pending application. It also indicates that an incomplete and inadequate application has been submitted the Board.
The Board acted arbitrarily in preliminarily granting the permit before considering the factors it was required by law to review. The project if approved will cast unreasonable quantities of water onto my client’s property.
The comments and discussion contained in this letter should not be construed as a waiver of any additional claims or issues of my client not stated. Nothing in this letter operates as a waiver or release of my client’s legal rights, remedies, powers or privileges including the right to assert other claims. My client reserves all legal and equitable rights in full with respect to this matter.

Sincerely,

David L Ganje

Cc: to applicant

A Wildcatter’s Collapsed Dream is Now the State’s Problem

Posted on: March 31st, 2019
by David Ganje

In this opinion piece I write about public waters and a wildcatter’s abandoned oil well. The matter did not pan out well for the wildcatter or the state.

South Dakota relies on groundwater as one of its main sources of freshwater for domestic, municipal and agricultural purposes. Groundwater is found in porous subsurface rocks called aquifers. Aquifers are usually close to the surface. In contrast, oil and gas deposits are usually deeper and are often found several thousand feet below the earth’s surface. Because of this difference in location, oil and gas exploration and production can involve drilling through aquifers to access potential oil and gas production zones.

Oil and gas wells might contaminate groundwater in different ways. One is an event in which an exploration or production well causes separate aquifers to connect; this is particularly challenging where one aquifer may contain useable, potable water and the other contains bad water. An improperly plugged and non-operating oil and gas well could act as a pathway. A connection between different aquifers is sometimes called communication in hydrological terms. A well borehole drilled through a layer separating two confined aquifers represents a possible conduit for the migration of contaminants between the aquifers – if that borehole is not properly plugged.

The public trust doctrine holds that groundwater and surface water within the state’s jurisdiction must be preserved in perpetuity for the public. The government of South Dakota through its various departments and boards serves as the trustee of this natural resource to maintain waters for the benefit of current and future generations. Neither public nor private interests are allowed to harm waters held in public trust.

The South Dakota Supreme Court in 1964 held that legislation was justified in determining that the public welfare requires protection of the state’s water supply. In a 2004 decision the Supreme Court found the public trust doctrine manifested in the state’s Environmental Protection Act authorizes the state to protect the air, water and other natural resources from pollution impairment or destruction. In that 2004 case the Court ruled, “In conclusion, the public trust doctrine imposes an obligation on the State to preserve water for public use. It provides that the people of the State own the waters themselves, and that the State, not as a proprietor, but as a trustee, controls the water for the benefit of the public.”

A public trustee is not a business ‘proprietor.’ The public trustee is required to manage, oversee, preserve and protect a natural resource put under its control. The public trustee may be any of several different state departments or boards concerning a range of situations. In a public trust the government’s obligation is protecting waters for the benefit and use of the public. A trustee’s duty is to preserve and to not abdicate or delegate legal responsibilities. A public trustee may delegate certain tasks, but not its obligation to protect the resource. I define a public trustee as a natural resource manager exercising a public conscience guided by equity and the law. Equity as a principle will not suffer a wrong to be without a remedy.

I present here background in order to discuss the Wasta well issue. The first matter was described: the state is trustee of the waters held under the public trust doctrine. What are relevant supporting statutes and rules which provide a public trustee with remedies? I will list. These remedies place financial responsibility on the permit holder, not the state. The state’s Environmental Protection Act is discussed in my prior comments. In addition the Board of Minerals and Environment (Board) may enforce violations of state oil and gas law, of state oil and gas rules and of its own issued orders. On the issue of plugging unused or abandoned wells, the operator of a well is civilly liable, if in violation, and is further responsible for plugging a well. The Board also sets certain statutory performance bonds required of a permit holder. And by statute “The Board may require additional bond [sic] if the circumstances require.” The Board has further authority to declare penalties, as well as civilly prosecute a party for money damages and for harm caused to the environment. This authority is broad and covers all persons and property whether public or private. And in addition state government, through the DENR, can prosecute an oil and gas permit holder for public nuisance. The remedies available for a public nuisance are a 1.) a civil money judgment; 2.) a judgment requiring an abatement of the nuisance; 3.) and a criminal prosecution. The reader will please observe which remedies the state used (and did not use) in addressing the problem under discussion.

A few years ago a wildcatter received its oil and gas exploratory permit. The company started drilling the exploratory well near Wasta. The target was the Precambrian formation which lies about 9700 feet below where the deer and antelope play. In this piece I also refer to the permitted well as the Wasta well. The DENR and the Board were required to scrutinize the applicant’s papers and its background information before considering approval of the permit. A permit applicant’s competency and the bonding amount are factors the state is obliged to consider. From the beginning of the process there are questions about the trustee’s due diligence and the applicant’s qualifications. Two bonds were required for the Wasta well all totaling $130,000. In early papers considering permit approval the DENR stated 1.) the wildcatter submitted no documentation or information substantiating that oil or gas was likely to exist in economic quantities in the locations proposed; 2.) the applicant submitted invalid mineral leases and incomplete application paperwork; 3.) the applicant had no experience drilling oil and gas wells; 4.) the applicant had no experience producing oil or gas; 5.) the applicant did not disclose the identity of a well drilling contractor; 6.) the applicant refused to disclose that oil or gas exists in its target area; 7.) and the state determined the Precambrian formation is a formation from which neither oil nor gas has been found in economic quantities. This wildcatter was walking on a thin line from the get-go.

Very shortly after drilling began the driller lost drilling fluid circulation in the well, and a drill stem got stuck in the borehole. In efforts to fix the problem the well borehole collapsed in on itself. The wildcatter was then unable to access the stuck drill stem. All efforts came to a standstill, but some surface reclamation was completed. The well was not plugged following permit requirements and no casing was in place protecting two major aquifers. Several years later the state began the process of revoking the permit and forfeiting the bonds which totaled $130,000. Just a few months after the state’s case closed, a remaining investor legally dissolved the wildcatter company. The original principal investors of the wildcatter company, after the project turned sour, vacated or chose not to appear in the jurisdiction. For those not familiar with legal terms – the original principal investors got the hell out of Dodge before the sheriff showed up.

In the state’s contested case hearing South Dakota presented two state employees as witnesses. One was a state hydrologist and the other the state geologist. No outside experts or specialists were called. The testimony showed that the Wasta well had not been plugged according to permit requirements, and that no casing was put in place protecting two major aquifers. The hydrologist testified that the upper of the two aquifer is good quality water currently used by well water permit holders. The hydrologist stated the potential impact of any pollutants or mineralized water going into the upper aquifer was limited. The witness forthrightly acknowledged that the department did not know exactly what was happening underground at the well site. The hydrologist also testified there was no baseline water quality data for the area near the well or specifically for the well itself.

The geologist testified that the state does not have any pre-drilling water quality information and does not have post-drilling water quality information for the well site. The geologist stated, “We have really no ability to make an opinion on pre-drilling versus post-drilling water quality at that site.” The witness testified the cost of a single new water monitoring well would be about $126,000. The geologist also indicated because of the slowness of water movement in the good aquifer and because of a dilution effect from any bad water which might be introduced into the good aquifer, the risk to the water-using public was minimal. And the geologist opined, “We would be ill-advised to spend the money to put in one well which is all the well we have the money for when we don’t know the best depth or best location to put that well.”

After the hearing the permit was revoked and the bond money forfeited. And the Board decided that: 1.) the cost of an operation to plug the penetrated aquifers would be in excess of 2 million dollars; 2.) the Board did not have sufficient data regarding the lower aquifer to make a precise estimation of water quality; 3.) the well borehole provides a potential pathway for upward flow of water to the good upper aquifer; 4.) it was unknown whether communication “is or may occur” between the two aquifers but that the flow of effected water would be minimal; 5.) and that failure to properly plug the well “still presents a danger of communication” between the aquifers.

Since the hearing the state has not used the bond money or taken other legal or administrative action. What other remedies listed above were available but not used? The obligation of the state as trustee is to protect public waters. Should a demand for perfection in science subvert the trustee’s obligation for oversight and resource preservation? Should a water monitoring well be drilled only if contamination has been proven? Should other DENR funds be used besides the forfeited bonds to protect and monitor public waters? Is a public trustee relieved of taking action – except when an established harm is proven? South Dakota, its leaders and courts over the years since statehood have each spent sweat equity creating a fair system for the use and protection of the waters of the state. In the Wasta well case the state is sacrificing the good for the perfect. A public trustee does not fulfill its job by acting only on mathematic principles, or by waiting for scientific guarantees before taking action to protect a natural resource.

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

Naked In The Wind

Posted on: March 12th, 2019
by David Ganje

Wind energy development is known as green energy. Green energy is sexy. Everybody wants to jump on the bandwagon but few want to pay for the ride. A wind farm produces green energy. A wind farm itself is not green. It is steel, wires, underground cabling, electrical components and concrete. This describes the infrastructure of a government-permitted wind farm. Larger wind farm projects in South Dakota are subject to PUC jurisdiction regarding the permit application process and wind farm project oversight. This opinion piece focuses on projects under the jurisdiction of the PUC. Discussion of projects under the jurisdiction of the various wayward counties is left for another day.

In the eyes of a lawyer, which is not very romantic, when a wind farm contains steel, wires, underground cabling, electrical components and concrete we have potential legal liability. Wind farm infrastructure is not owned by the landowner. It is owned by the wind farm operator. A landowner has no right to control or interfere with a wind farm. Who may be liable and to what extent is always an interesting legal question. A court calls this the allocation of liability. It is best not to become involved in a question on the allocation of liability. General liability insurance coverage is one way in which liability risks are reduced.

The natural desire of a wind farm operator to protect its investment as well as a property owner’s natural desire to protect his land from liability are compatible ideas. Alas, the state of South Dakota is negligent; it does not require liability insurance coverage by wind farms. The conflicting and coexisting state policy of both encouraging green energy development and practicing laissez-faire wind farm oversight is dead wrong. A landowner, farmer or rancher on whose land a wind farm sits is the odd-man-out under the state’s current wind farm permitting process.

A government-permitted wind energy project creating electrical power is the definition of a wind farm. A wind farm is a public project permitted and overseen by the PUC because of its significant impact on the state and its people. Wind farm projects have a beginning, a middle and an end. The beginning is the development and construction stage, the middle is the operational phase and the end is the end. (The end of wind farm operations, whether by abandonment of the turbines, bankruptcy, or shut down by an operator is ‘The funeral’ of the operating project.) All three stages offer potential risks arising from claims or accidents related to wind turbines, wind farm operations and wind farm infrastructure. Importantly, these risks exist whether the wind farm is operating or not.

While I note the chief financial beneficiary of a newly written liability insurance policy is at first glance the insurance agent who wrote the policy, all the same – insurance should have an important role in PUC permitting and in the PUC’s project oversight. South Dakota law does not require that a wind farm carry general liability insurance. Wisconsin and North Dakota law require this. General liability insurance provides two areas of coverage for an insured party, that is, for the wind farm operator. A general liability policy covers bodily injury and property damage. Now to be clear, wind farm operators often have some insurance coverage. For example, a wind farm’s lender might require insurance. Yet when a loan is paid off such a lender’s insurance requirement would end.

I am now obliged to make my case for project-wide wind farm general liability insurance. If there are one or two sceptics out there among my numerous followers, my honorable readers should know I am not a lobbyist for and do not represent insurance companies. I propose a correction in the deficient and inequitable policy and practice of the PUC. The PUC should by law and or policy require project-wide general liability insurance. In my discussion in favor of insurance coverage I will: a.) first report the current lay of the land; b.) and then report the lay of the land as it should be.

The current lay of the land: Is an operator uninsured, underinsured or inadequately insured? Does the wind farm maintain a level of insurance providing for the type of loss or claims common to an operation? The PUC has no answer. South Dakota does not require that a wind farm maintain project-wide general liability insurance coverage. Both North Dakota and Wisconsin do. A recent wind farm permit approved in 2019 by the PUC will be used as an illustration. This wind farm development and operation was approved with 42 permit conditions to be met by the operator. These conditions were placed on it by the PUC. None of the 42 conditions required project-wide general liability insurance. The lengthy official application and approval file shows no indication of such insurance coverage. Naked in the wind.

The lay of the land as it should be: A wind farm operator should maintain general liability insurance relating to claims for property damage and/or bodily injury which may arise out of the development, construction, operation and closure of the wind energy project. A wind farm operator should maintain the required insurance coverage until such time as the PUC authorizes the termination of the coverage. The amount of coverage and required terms of the insurance should be set by the PUC in the course of its public process when considering a permit application. The amount of insurance coverage and required terms of insurance coverage should be described in an order granting a permit. Cancellation by an operator of the required insurance coverage should be prohibited. Property owners on whose land a permitted wind turbine or turbines are located should be named as additional insureds on the required insurance policy. The insurance policy should contain an endorsement obligating the insurance company to provide the PUC with at least 30 days prior written notice of any cancellation. No more than 15 days after the granting of a permit but before construction is started the permit holder should deliver a full and complete copy of the required insurance policy to the PUC. An insurance policy received by the PUC under these provisions should remain a part of the public record, not be sealed, and not be subject to proprietary or confidential claims by an operator.

Conclusion: The reasoning of government is a most uncertain thing. Will the state demonstrate leadership as well as equity and decide to change the law and its current practice of not requiring general liability insurance? Come see me in two years and we will cry together.

David Ganje of Ganje Law Offices practices 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.