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Be wary of future manure pipeline legislation

Posted on: April 4th, 2018
by David Ganje

In this opinion piece I discuss the legislature’s animal waste pipeline bill. The bill as written was untouched by human thought. During my short-lived career as a juvenile delinquent in Aberdeen my father had more than one occasion to tell me, “David we are seriously disappointed in you.” My dad was not familiar, one should assume, with the work of the South Dakota legislature. Otherwise he might have correctly used this reprimand to describe the legislature’s best law-drafting work.

When in high school I did not do my homework. The excuse was that I was not writing the laws of the state. The legislature (or the various special interests that influence them) write the laws of the state. With HB 1184 we have a case of no one doing his or her homework. The bill was about as substantive as a cheap 3.2 beer one might purchase at one of the old bars in Aberdeen.

HB 1184 was fortunately killed in committee. Be assured however another animal waste pipeline bill will return in the next legislative session dressed in different garb. One legislator has publically stated he will craft another bill with the same goal. If history is a guide, I suggest the promised new animal waste pipeline bill will have a good number of the same failings as the killed bill.

Label me naïve. But I shall never cease to be amazed how quickly property rights are cast into the dust bin of irrelevance when the American dollar makes its appearance. South Dakota’s economy needs livestock production. It is not the nature of CAFOS that is discussed in this piece. It is rather the extent to which legislators and others will go to tip the scales in favor of CAFO operations while disregarding both private property rights and the environmental impact of waste pipelines.

In the bill pipelines would be allowed on or under a road right-of-way which property is often private property. A property owner’s land may be taken, under proper circumstances, by the government for county or township purposes to make a road. When these rights-of-way are created other supplemental public rights may arise such as the right to hunt or fish on the right of way, but the property itself is still owned by the property owner. Creating a right-of-way does not take away the abutting owner’s title to the land. He pays taxes on that land, can hay it and so forth. This continued ownership is significant enough to be secured by the state constitution which provides that title to land taken for highways remains with the landowner. SD Const Art VI, § 13. Yet the bill would have a neighbor’s property available as a ‘public highway’ for another neighbor’s private business purposes all without compensation. Confined animal feedlot operations are not a public utility. A legislature should not convert a private business without any public benefit into a pseudo public utility.

What should interested parties look for in a future iteration of the animal waste pipeline bill? Let me further elaborate by looking at the bill that was not approved.

1. The language of the bill is short and incorporates itself by reference to another set of South Dakota laws. This is what I call a piggybacking law. The bill piggybacks onto the “UTILITY LINES ALONG AND ACROSS HIGHWAYS” law. This utility lines law is intended to apply to public utilities – not to apply to for-profit, private CAFOs. The bill would have allowed for condemnation proceedings without following the condemnation rules.

2. The “UTILITY LINES ALONG AND ACROSS HIGHWAYS” law does not provide by any stretch of the imagination a legal roadmap for overseeing aboveground or underground animal waste pipelines. This utility law is intended for use by electric utilities, telephone companies and the like. By way of illustration the law requires that any rule passed per its terms must comply with ‘applicable National Electrical Safety Code standards.’ What in the world does that have to do with overseeing animal waste pipelines? It should further be noted that any violation of this existing utility law is nothing more than a ‘petty offense.’

3. How can a private for-profit CAFO meet the definition of a public utility as described by the South Dakota Supreme Court?: A public utility is, “Any agency, instrumentality, business industry or service which is used or conducted in such manner as to affect the community at large, that is which is not limited or restricted to any particular class of the community.”

4. The law to which the bill piggybacks has never been challenged in court. It should be. It is unconstitutional. The South Dakota Supreme Court has previously ruled that a road, irrigation pipeline and electric cable laid across private property is a trespass because the operator failed to follow statutory procedures to acquire its easement. The Court said the action by the operator constituted a taking of private property without due process of law or just compensation. U.S. Const. amend. XIV, § 1; S.D. Const. art. VI, §§ 2, and 13.

5. Will new animal waste pipeline legislation address the environmental impacts of an operating pipeline? The bill did not. Why should environmental impacts be considered? For starters, a neighbor’s private property includes the land, the air above it and the earth below. Consider the fact that CAFOs often carry a commercial general liability policy. But since 1970 such policies do not include pollution or environmental spill coverage. For a discussion on the failures to properly insure for pollution events see: http://www.lexenergy.net/landfill-liability-re-contamination/ Without question an operator whose waste pipeline leaked damaging material onto another property owner’s land could be liable under the law of trespass or the law of nuisance. I submit nevertheless that if a county commission is going to grant by law a special business easement over another’s private property there should be environmental safeguards. Should not the statute require the maintenance of environmental pollution insurance? While there will be some unhappy clients to learn this — almost all CAFOs are uninsured for pollution losses.

South Dakota’s Approach To Condemnation

Posted on: December 2nd, 2016
by David Ganje

The use of eminent domain (condemnation) is a modern legal problem. Condemnation is the taking of property for a public and in some cases a private interest. Condemnation is a legally sanctioned sword. My argument in this article is not that eminent domain as a concept is wrong. My argument is that in its present state, as a legal vehicle attempting to provide fairness, eminent domain is a lemon in need of repair on both sides. This law allows a governmental body – and a private business – to convert privately owned land to another use, often over the objections of the landowner. Traditionally in a legal taking a landowner receives “market value” for the land taken. This often includes money for reduction in agriculture output or for the loss of other productive use of the land.

While eminent domain makes sense under a public utility easement paradigm, how does this process apply when a pipeline easement on a 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? Candidate Trump said, “I want the Keystone pipeline, but the people of the United States should be given a piece, a significant piece of the profits.” South Dakota law does not take this into consideration. Condemnation of one’s land involves forced negotiation required by law, and sometimes involuntary litigation. Is a one-time payment for an easement fair compensation? Is the condemnor (developer or government agency) required to provide its plan of work and operations to the condemnee (property owner) so the owner can evaluate this information? This would create a fairer playing field in negotiations. South Dakota law does not provide for this. Should the landowner be granted his expenses and attorney’s fees in a trial and for an appeal if the final award given is greater than the last ‘offer’ made by the condemnor? Or if a mistrial is called which is not the fault of the landowner? South Dakota law does not provide for this. Is the condemnor required to provide written disclosure of its calculations and basis for a proposed offer for the property? South Dakota law does not provide for this. In a federal condemnation, even if a landowner does not formally answer the condemnation lawsuit the landowner may still present evidence of the value of his land and may participate in the distribution of awarded monies. South Dakota law does not provide for this.

The law of condemnation brings out a curious inconsistency in the character of the state. South Dakota is a strong property-rights and individual-rights state. Aside from the important and unique relationships of Indian reservations to the state and to the federal government, private property in South Dakota is a hallowed right. State laws are vigilant in protecting one’s real estate and other property from intrusion, reduction in value as well as protecting the right to use the property for any lawful purposes. The state Constitution, like the federal, directs that, “Private property shall not be taken for public use, or damaged, without just compensation. . .”

Thus we get to my puzzlement. South Dakota has done very little to modernize eminent domain laws. This is not a case of the emperor having no clothes. This is a case of the emperor having no vision. The takeaway is that state leaders have no appetite for changing the status quo.

In modern vernacular ‘trending’ means that which is currently popular in social media, however in common English it means that which is changing or developing in a certain direction. The word ‘trending’ applies to the painfully slow but observable changes in the law of eminent domain. Unfortunately these changes are not coming from South Dakota political leaders. The state’s recent passage of a voluntary mediation statute for condemnation cases does nothing to address the substantive changes needed.A national trend has started toward balancing the sacrifices a property owner makes when business or government does its eminent domain dance. Courts, and over time other state legislatures, will continue to correct the ills of eminent domain when it is used as a legal sword. South Dakota must cultivate a fairer system for the taking of property.

Brownfields: A Calculated Risk Missed by Tribes and South Dakota

Posted on: December 2nd, 2016
by David Ganje

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 site’s 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.

What is so dangerous about leaving these brownfields alone? Many of these brownfields are abandoned 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 tenants and their neighbors.

Once a brownfield has been identified, the EPA provides two options for cleanup, revolving loan fund grants and cleanup grants. The purpose of revolving loan fund grants is to enable states, political subdivisions, and Native American tribes to make low interest loans to carryout cleanup activities at brownfields properties. Cleanup grants provide funding for a grant recipient to carry out cleanup activities at brownfields sites.

Since the cost of cleanup is considerable, the grants 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, by at least 20 percent, and the brownfield site must be cleaned up within a three-year period.

Entities eligible for the EPA’s brownfield grants and loans include state, local and tribal governments; general purpose units of local government, land clearance authorities or other quasi-governmental entities; regional council or redevelopment agencies; states or legislatures; or nonprofit organizations. If you are not an eligible entity, you may still be able to receive assistance through your state or city.

In South Dakota, the agency that provides statewide brownfield assistance is the Department of Environment & Natural Resources (DENR). DENR receives funding from the EPA for assessments and cleanup and have discretion in how to allocate those funds. For example, a national hotel chain looking to redevelop a brownfield site in South Dakota would not be eligible to apply for assistance through the EPA directly. However, the hotel chain could contact DENR for assistance and DENR could use their funds to perform an ESA or help with the cleanup.

In 2015, Sioux Falls received an assessment grant for $400,000 from the EPA. In addition to performing site assessments, they plan to use the money to update the city’s brownfields site inventory, prioritize sites, plan for cleanups at priority sites, and perform community outreach activities. They, like DENR, also have discretion in performing assessments and have made assessments available to entities who would not be eligible to apply for grants from the EPA.

With these options available to assist with brownfield redevelopment, why do so many brownfields remain untouched in South Dakota? In the last 5 years the EPA only awarded four grants in South Dakota. They gave an assessment grant to Sioux Falls and cleanup grants to Standing Rock Sioux Tribe, Cheyenne River Sioux Tribe, and Lower Brule Sioux Tribe. This suggests that other entities are not aware of the grants available to them, they are dissuaded from applying, or they do not have the structure to run a brownfields program.

Since South Dakota is not small Rhode Island, which is about the size of Brown County, businesses and other eligible entities find it is more economical to buy available land than it is to redevelop a brownfield site. This misses the mark. A brownfield site is many times in an attractive location. A brownfield site is often close to business activity and transportation or the prior owner would not have developed it.

Although the grants and other forms of assistance are “competitive,” grants are awarded based on guidelines. The deadlines for applying for assessment and cleanup grants from the EPA is December 20, 2016, so it’s not too late.

View the original article at FarmForum.net

Tribal Water Rights – The Road to Securing Water

Posted on: September 8th, 2016
by David Ganje

Tribal Water Rights – The Road to Securing Water
By David L Ganje

“Water is perhaps the most valuable tribal resource remaining and is one of the most significant potential forces of change. The potential size of tribal water rights should not be underestimated.” – Western Water Policy Review Advisory Commission

A Canadian Judge – in making a legal decision — recently recited two important principals of British law, both of which are found in US law. The Judge stated there are two legal maxims, one at common law and the other at the law of equity: First, the law comes to the aid of those who are vigilant, not those who sleep on their rights. Second the legal principle of equity comes to the aid of those who are vigilant, not those who sleep on their rights. Upper Great Plains tribes today must be vigilant in obtaining reserved but yet undetermined water rights. This involves two choices. Litigation or negotiation. In this article I argue that the Upper Great Plains tribes should undertake first, active, public and aggressive negotiation, and then if unsuccessful, litigation to recover water rights. But for the current water rights negotiation by the Standing Rock Sioux tribe, reserve language found in the successful Mni Wiconi Rural Water Supply Project and language found in some tribal water codes, Upper Great Plains tribes have not taken an official position with the BIA claiming reserved water rights. This silence is a mistake. My argument is this: treaties and case law have given Upper Great Plains tribes a property right, which is a right to use and access groundwater and surface water. However Upper Great Plains tribes have not fully sought and claimed that right. Both groundwater and surface water reserved rights must be championed by Upper Great Plains tribes.

While Standing Rock has taken the first step in opening negotiations with the State of South Dakota and North Dakota on the matter of water rights, the US Department of Interior has yet failed to assign a representative from its Indian water rights division to participate in these negotiations. Standing Rock is taking the right action; it is putting on the table the reservation’s water claims and doing it in a serious forum. Standing Rock has not by these negotiations abrogated its claims, and will preserve the tribe’s water rights throughout the negotiations without prejudice to its right to refuse any proposed terms or accept any proposed settlement terms. Having recognized this strategically proper first step by the tribe it is important to disclose the failure of the Department of Interior to participate in the negotiations. The DOI’s failure to participate in the ongoing talks is wrong and contradicts that department’s statutory duties regarding Indian tribes in the US. Interior Secretary Sally Jewell, who has publicly stated the administration’s commitment to resolving water rights, should immediately direct a staff person to actively participate in these water talks.

Some tribes have not yet adopted tribal water codes – legal guides for the tribal community for the management and use of water. Tribes should consider the creation of an official water code as a relevant step to securing water rights. Some tribes may have to amend the tribal constitution in order to properly pass a tribal water code. But it is worth the effort.

Tribal rights to water is a treaty right. It cannot be lost through non-assertion. Indian reserved water rights may be asserted at any time, cannot be lost by nonuse, and are assigned priority dates based on the date for the establishment of reservation. In legal theory the loss of water rights would require abrogation by a tribe or the federal government before the rights could be extinguished. Such an abrogation is in reality irrelevant because this has not and will not happen. Abrogation is not therefore the issue at hand.

It is a mistake to assume that any non-Indian interest group or government agency will make efforts to preserve, advocate for or even address these reserved yet undetermined tribal water rights. The US Army Corps of Engineers (Corps), for example, recognized in congressional testimony in 2004 that the tribes have claims to reserve water rights. Having taken that position, the Corps nevertheless in 2012 proposed a new program to produce revenue for the US government by selling what it called “surplus water” from Missouri River reservoirs. In proposing this new program for the sale of so-called surplus water the Corps created a 204-page report to support its argument for the proposed project. The Corp’s report provided statistics, projections and data but ignored and failed to discuss the existing water rights of tribes. Indian tribes are not subject to the Corps’ general authority to create or impose surplus water regulations.

It has not proven so historically, and it is not to be expected that non-tribal government agencies, whether trust-based or regulatory, have any strong reason to advance tribal water rights. No politician or bureaucrat will seriously address tribal water rights as long as the institution he represents have unchallenged bureaucratic control over water management. The only change preferred by a bureaucracy-in-charge is a change resulting in an expansion of the bureaucracy’s own power. That has been the case, for example, with the slow accretion of non-Indian interests and water demands placed on existing water in the Missouri River. As time goes on there will be less and less water to claim.

The Corp’s recent surplus money project is an example of an agency asserting itself over available water. It matters not whether the available water is called surplus water, water behind a damn, groundwater, or instream flows. A claim was made to the water. The claim did not exist before the Corps did the study and asserted the claim. Had the Corp’s project been successful, that water would have been that much more water taken away and earmarked for management and control by a bureaucracy.
Litigation of reserved water rights is one of the two alternative means to secure water rights discussed in this article. Water rights litigation is a complex, time consuming legal playing field. Much can be achieved, but the time, well known litigation risks and money involved must be kept in mind.

The Crow Creek Reservation recently started water rights litigation in the United States Court of Federal Claims asking for both money damages as well as a request for a ruling quantifying the tribe’s reserved surface water rights to the Missouri River. The Crow Creek complaint calls for money damages, as mentioned, and for a judgment that the tribe is ‘entitled to declaratory and injunctive relief including judgment requiring Defendant (the United States) to establish and measure the reserved water rights held by the tribe, and to quantify the reserved water rights held by the tribe, and to assert water rights on behalf of the tribe and to record legal title to water held in trust for the benefit of the tribe.’

The complaint lists the type of relief that should be requested in reserved water rights litigation. The complaint filed by Crow Creek, however, has problems:

The court in which the complaint was filed does not have full jurisdiction to award the complete relief requested in the complaint. By the reorganization statutes of the Court of Federal Claims is has authority to render declaratory judgments only in matters regarding contract or procurement disputes.
The court is unlikely to get into its main jurisdictional issue: money damages in favor of the tribe. It is unlikely to do this because there is no existing water rights determination or quantification by statute, final decree, or water agreement from which the court could calculate a money damages amount. And, further, the important matter of Indian water rights under the Winter’s doctrine is beyond the general expertise of the Court of Claims.
One of the important requests in the complaint is for injunctive relief. This is also beyond the jurisdiction of the Court of Claims. Bowen v. Massachusetts, 487 U.S. 879, 905 (1988) (“[W]e have stated categorically that ‘the Court of Claims has no power to grant equitable relief.’’
The relevant requests in the Crow Creek complaint are requests for an injunction, for a declaration of rights, for the establishment of water rights and for quantification of water rights. The Court of Claims however has only incidental or collateral jurisdiction over these requests making it unlikely that the court would take on such important, significant and historical remedies.
The complaint does not include a necessary party if it is attempting to finalize tribal surface water rights. The state of South Dakota also has water rights to the river. The state is not named in the lawsuit. The Court of Claims cannot impose duties or obligations regarding water rights or the allocation of the tribe’s claim when a relevant party is not included in the suit.
Any adjudication against or settlement with the United States under the pending complaint would be incomplete as stated in the complaint. Groundwater is an integral part of all Indian reserved water claims. The majority of courts in the United States addressing Indian reserved water rights have acknowledged that Indian reserved water rights also apply to groundwater. The reserved water claims of the Crow Creek reservation, one must assume, also include groundwater. However, the Crow Creek complaint for damages for loss of water resources makes no claim for reserved tribal groundwater rights.

Tribes in the US have found success through water rights negotiations with State and Federal bodies. With an appreciation for the uncertainty of litigation, negotiating is the best first step. Negotiations should be pursued in the following fashion. The master water rights Settlement Agreement should include: an agreement setting forth rights to use and administer waters; and an agreement quantifying reserved water rights for historic and current as well as planned uses; and if there is a specific project planned by a tribe, then that project is to be negotiated and drafted as a separate agreement but integrated as a part of the master Settlement Agreement. Any Settlement Agreement would become effective if the Congress passes a Settlement Act and the President signs the act into law. Once the Settlement Act becomes law, the Secretary of the Interior must execute the Settlement Agreement and the Settlement Contract.

An advantage of multiple party negotiations: actual representatives are present sitting across the table. These face to face negotiations bring out the real differences between the parties without hiding behind silence, animosity or evasive politics. If the negotiated terms do not satisfy the rights of tribes, they are not bound to accept the terms. The final outcome of the negotiations is to be decided by the tribe.

The Snake River Water Settlement Act is a recent example of successful Indian water right’s negotiations. Although the US Senate is not an owíčhota of wisdom and justice, the Senate report discussing the Snake River Water Settlement Act addresses the issue of litigation of water rights versus negotiated water agreements:

“The shortcomings of the general stream adjudication process [this is a fancy phrase for litigation] as a device for water rights dispute resolution have led to an increasing number of agreed-to water rights settlements on streams in the western States where the parties, including Indian tribes, negotiate and compromise among themselves as to quantity, priority dates and other issues, and where the Federal government contributes money to the settlement in order to achieve various goals that could not otherwise be achieved within the confines of a general stream adjudication.”
Sen. Rep. 108-389, at 2-3

The Snake River water agreements provided, among other terms, designated water for a variety of tribal uses on the reservation; recognition of allotment water rights and a due process requirement for tribal regulation of such rights; a right to access and use of springs and fountains on federal lands in off-reservation areas; and instream flow minimums at over two hundred locations. When protecting a people’s rights, it is good to hesitate and think. However, it is not good to hesitate and think and then not act.

Water rights granted to tribes are the most important example in American law of treaty-based reserved rights. Tribes do not however dwell alone in the world of water rights. Tribes should abandon silence on the subject, stick their elbows in the table now and publicly assert their water rights. A tribe cannot secure what it does not itself assert.

Leaky Laws – Oil Spill Liability in New York

Posted on: May 26th, 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. 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 September 2, 1978 the U.S. Coast Guard discovered evidence of an oil spill entering Newton Creek in Brooklyn. After launching an investigation, the government found over 17 million gallons of petroleum products that had leaked over a period of decades beneath the Greenpoint area, contaminating more than 50 acres of land. Today, new studies put the spill volume up to 30 million gallons. Cleanup began in 1979, but by 2006 only 9 million gallons had been cleaned up – less than a third of the known spill size. Cleanup continues today, with the aid of the federal government. The spill was designated a Superfund site. No one knows how long the leak existed before it was discovered
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 the operator responsible prefers to take care of the cleanup themselves. Not only does this help soothe public relations problems resulting from a leak, but it helps the operator control the costs. However, 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 simply not have the money. The operator responsible for the Greenpoint spill was still in business and capable of footing the bill for their mistakes. This will not always be the case. Not all spills are flashy and obvious. Cleanup should not wait for years of court cases or bureaucratic lethargy. The money for a cleanup must be there, ready to be used.

New York has the NY Environmental Protection and Spill Compensation Fund (“Spill Fund”), established in 1977 to protect the state against petroleum spills. The fund is financed with a tax on petroleum products moving through the state, and any disbursements from the fund to pay for spill remediation is ideally recovered through penalties assigned to the responsible party. Third parties who are damaged by the spill can also file a claim with the Spill Fund and get their damages paid through the Fund, allowing the Fund to add those damages to the remediation it seeks from the responsible party.

This kind of fund is a good start. However, the fund is simply not large enough to handle the kind of oil spills that are possible in this era of pipelines and oil trains. For the 2014-2015 fiscal year, the Spill Fund spent over five million dollars more than it collected, bringing the fund’s total down to twenty-two million dollars. The fund spent thirty-two million that year. The 2015 state budget raised the cap on the Spill Fund from $25 million to $40 million. But even $40 million is not enough to handle the large spills when a company is not around to pay – in fact, $40 million is not even what the fund would be at if the cap had kept pace with inflation.

This is not to say that New York would be alone in a crisis. Both the Coast Guard and the EPA have trust funds in place to help states and the federal government. The Coast Guard’s fund only applies to spills into navigable waters, and cannot apply to cleaning up spills on land. But it would be there to help if the real disaster happened: a lengthy, voluminous spill into one of the many bodies of water in New York State, like the 2013 Enbridge spill in Michigan that cost more than a billion dollars to clean up. EPA maintains their Leaking Underground Storage Tank Fund for spills on land, but that fund is financed with a tax on motor fuel – a tax paid by private citizens, not the companies causing the damages in the first place.

Petroleum spills are not going away. The New York State Spill Hotline receives approximately 16,000 reports of spills each year, and the NY Dept. of Environmental Conservation estimates that approximately 90% of those reports involve petroleum products. Financial assurances for spills must be required before the damage happens, in amounts sufficient to cover the thousands of spills that happen every year. The legislature needs to create a modern statute addressing financial assurances by the operators for pipeline leaks.