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South Dakota Underground Trespass

Posted on: January 1st, 2018
by David Ganje

South Dakota courts have not to the date of this opinion piece adopted a definition, nor have the courts ruled on the civil wrong called ‘underground trespass.’  Yet going back to 1877 South Dakota territorial real estate law holds, “The owner of land . . . has the right to the surface and to everything permanently situated beneath or above it.”  Beyond this definition of land ownership the legislature has not acted on the issue of underground trespass.  Even though South Dakota has no case law on the subject, the state supreme court has a known preference for following a particular legal treatise when deciding legal cases.  This treatise clearly defines civil trespass as a wrongful intrusion on one’s property committed on, beneath, or above the surface of the earth with an exception that relates to airspace intrusions.

I leave for another discussion whether the upstanding property-owning residents of Lead and the reputable denizens of Deadwood might, under modern law, be the victims of underground trespass because of the honeycombed labyrinth of old mining tunnels running every which way under the surface of these fine cities.  In point of fact most incidents of underground trespass occur out on the plains.

How does underground trespass occur on the plains?  Without belaboring a lot of examples, this might occur from underground pipeline leaks, leaking or corroded underground storage tanks, overzealous oil operators infringing a bit too far under unleased property, a so-called disposal well’s ‘waste fluids’ migrating beyond its permissible subsurface boundaries, and so forth.

Is a man’s subsurface his castle?  Maybe.  A Nebraska Court addressed the issue of subterranean trespass.  The court held that the operator of an injection well could be liable if the damaged party could show that fluid migration harmed the damaged party’s ability to produce oil.  The North Dakota Supreme Court has ruled that a claim in underground trespass may be trumped by a properly obtained force-pooling order from the state authority which oversees gas and oil operations.  In the North Dakota case it must be noted that the claimant property owner did not allege any actual damage to his interests. That claimant was about as smart as the guy who takes a lady out on a date without enough pocket money to buy the coffee. A West Virginia court, in a case that was finally settled and dismissed, ruled that subsurface horizontal fracturing for minerals very close to a Plaintiff’s property line was to be considered underground trespass.  The lesson is that modern society and the laws that follow it will consider the issue of trespass on more than just the surface of property.

In addition to underground trespass claims other types of legal claims based on subterranean intrusion are nuisance, negligence, or strict liability.  The question then is:  What could the actual damage be to subsurface property from such an intrusion?  Answers to this include contamination of existing water rights, wrongful taking of a property owner’s mineral rights, contamination of surface soil productivity and degradation of an owner’s foreseeable rights to mineral extraction.  I submit that these subsurface intrusions will – if they have not already – occur in the state.  There will be much work for the courts to do.

David Ganje. David Ganje of Ganje Law Offices practices in the area of natural resources, environmental and commercial law. The website is Lexenergy.net

 

 

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

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 — 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.