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Do I Really Need a Water Use Permit?

Posted on: May 10th, 2022
by David Ganje

Yes, you probably do. Under South Dakota law, with the important exception of water rights in Indian Country and on certain federal lands, all water within the state is the property of the people of the state. The right to the use of water may be acquired by ‘appropriation’ as provided by law. A water appropriation is authorized by the state Water Management Board granting the legal right to secure a private, beneficial use of the state’s water resources. Approval by the Water Management Board authorizes the use of either ground water or surface water. A water right, often called a permit or a license, is then issued either as a new legal water right.

A permit to use water is required for all water uses in South Dakota save for certain limited domestic and agricultural uses of water. However, this limited use of water requires a permit if water use exceeds either 25,920 gallon per day or a peak pump rate of 25 gallons per minute. The following types of water use require a water right permit.

Commercial uses such as tourist attractions, truck stops, restaurants, campgrounds, motels, or any other type of business.
Industrial uses where water is to be used for processing, cooling, dewatering, etc.
Institutional uses such as churches, prisons, etc.
Irrigation use
Municipal use (water distribution systems using 18 gallons per minute or less do not need to get a water right permit)
Rural water system use (water distribution systems using 18 gallons per minute or less do not need to get a water right permit)
Suburban housing development use (in excess of 18 gallons per minute)
Recreation use
Fish and wildlife propagation

By way of illustration, if one is interested in constructing an irrigation project a water right permit is needed. And, importantly, this water permitting system and rules remain in place even in a drought year.

The fine points of the application process and procedure will not be discussed in this piece. But let the water permit applicant beware – the devil is in the details. Upon approval of an application a water right permit is issued by the Chief Engineer on behalf of the Water Management Board. In some instances the Water Management Board directly controls the decision. The permit includes information supplied on the application as well as any qualifications, meaning operating conditions, attached or required by the Chief Engineer or Water Management Board. A permit is not forever if it the water project is not started. The law and sometimes the state place time periods during which a water use project must be completed and the water placed to use.

An application could be filed to amend an existing permit or license. An existing permit or license may be amended for a change in use, a change in point of diversion or for other changes if the change does not: (1) unlawfully impair other party’s existing rights; (2) continues to be for a beneficial use as determined by the state definition of that term; and (3) continues to be in the public interest again as determined by the state definition of that term.

A water permit could be cancelled for the following reasons: The project is not constructed within the authorized construction period; a failure to place water to timely use may result in either forfeiture or abandonment. Water must be placed in use at least once every 3 years. If not, all or any part of the water that is not used is subject to cancellation. Indifference to water rights and water law is a fool’s game but some have played it.

Reply for Petition to Appeal

Posted on: December 24th, 2020
by David Ganje

Reply-to-Petition-for-Appeal-11-23-2020

Water and mineral rights workshop

Posted on: May 30th, 2018
by David Ganje

I was invited last week to speak at a workshop sponsored by the Capital Journal newspaper. The purpose of the workshop was to promote a better understanding of water rights and mineral rights in South Dakota. The Journal should be justly recognized for presenting these statewide issues to the public. More than a couple in the audience came forward afterward and asked me to thank the Capital Journal as the sponsor. Over the last few years the legislature has addressed some of the natural resource matters discussed in the workshop, but many issues remain.

The workshop audience consisted of farmers, water officials and professionals. The questions and comments were telling. A number of questions showed an understanding of some of the rules of the road on water rights and mineral interests. Yet a number of questions reflected a public laboring under ever present and always-circulating urban myths which compel us to do things we shouldn’t. Two subjects of note were discussed in the talk which were of particular interest to the audience based on several comments and follow-up questions.

One of the topics discussed was transferring gravel rights and mineral rights. I submitted that many transfers and sales I have observed often do not follow the proper procedure or use the correct language needed to make a good transfer. And the matter of reserving mineral rights reflects even more mistakes. I noted actual transactions in west river deals and east river deals. The standard sales contract provided by the South Dakota Real Estate Commission compounds the problem. The language in this standard agreement leaves the grantor at risk because mineral interests are not addressed. It’s one thing to be a free-trade state but when the state by its own recommended paperwork misleads the residents of the state it is quite a different matter. When one gives a warranty deed in South Dakota he is giving a ‘warranty’ of his ownership of the surface and all that lies below it. That’s a pretty powerful guarantee. Homework should be done before giving such a guarantee, but as I stated in the talk, it is not. This is further compounded by the fact that title insurance does not cover mineral interests, and indeed some title companies will not search or report mineral interests on a written title policy. The audience by their responses in the workshop acknowledged this was a concern. Wyoming, Colorado and Montana have addressed the problem. South Dakota has not. The purpose of Wyoming’s mineral disclosure 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 disclosure law allows a prospective purchaser to make a more informed decision when purchasing.

The second problem raised by the audience surprised me. I spent some time advocating the negotiation and compromise of water drainage disputes. These are the common neighbor versus neighbor as well as property owner versus township or county disputes that often occur. I was espousing Lincoln’s admonition to lawyers that it is a better thing to compromise than litigate whenever possible. I discussed water disputes and the use of mutual written easements. An easement is the right to use another property owner’s property for a specific purpose whether that be for a pipeline, for a right of way or for the drainage of surface waters. Another easement use might be granting a landlocked owner access to a public road. There are two general advantages to entering into an easement. The first is the property remains with the owner – title is not transferred. The second is a bundle of rights that together I call time, purpose and boundaries. Of these, ‘time’ was a surprise to me. The audience was misinformed on the question of a time limit on easements. The vast majority of mutual easements in South Dakota may be limited in time. This issue is overlooked or perhaps glossed over in the course of negotiating an easement. Surface drainage problems are a natural reason for considering the use of an easement. The upper landowner may be able to enter into a drainage easement with the lower landowner if the upper owner’s activity does not fall within the specific limits South Dakota has placed on surface drainage acts. Because the placement of a time limit is not well known, a fewer number of people may consider the use of a mutual easement on a drainage issue. To the point, even with a longer term problem such as surface drainage, a lower landowner need not become married to an agreement to allow drainage over his propery. He can place time limits within the terms and conditions of a mutual easement. A time limit will allow the parties to each review the fairness of the deal 3 or 5 years down the road. This makes it a short term courtship rather than a long term marriage. Nevertheless, by the comments in the audience it was apparent that not all knew such limits could be placed in an easement.

Such information shows the value and purpose of a workshop. I appreciated the opportunity to speak on these subjects. The Capital Journal water and mineral rights workshop was an excellent resource for the community and its readers.

Two proposals for managing water sources

Posted on: May 14th, 2018
by David Ganje

The state Water Management Board (WMB) was created in 1955. The legislature gave authority to the WMB with supervision of the waters of the state, including measurement, appropriation, and distribution of waters. The WMB consists of seven members appointed by the governor.

In this column I argue that the exercise of good water management choices is absent on the two subjects I discuss. I do not challenge the professionalism or commitment of the staff of the Department of Environment and Natural Resources (DENR). Nor do I criticize the good faith of the WMB whose members consist of volunteer citizens of the state appointed with the legal authority to decide who should have and who should be denied a permit to appropriate the waters of the state. I discuss two issues under which the WMB is given leadership with the assistance of the DENR.

Waters of the state are held in trust for the benefit of all the residents of the state, making members of the WMB legal trustees acting on behalf of the citizens of the state. Board members are charged with protecting and managing the state’s water supply for both surface and groundwater.

The following are the two issues reviewed in this opinion piece as well as my proposals. On the first issue the Board should require a permit applicant’s disclosure of past violations or bad acts. On the second issue the Board should require that large-quantity water use applicants provide a report showing that a permit, if granted, will not harm the recharge of the particular aquifer that is to be permitted.

The first problem: Water use permit applications do not require disclosure of past bad acts or of an applicant’s business relationship with other operations that may have had violations of the law. A properly drafted “bad actor” rule would allow the WMB to deny permits to applicants with a record of law violations or who have had poor compliance with other agency directives or rules. The state DENR enforces a law in another area of permitting (concentrated animal feedlot operations, with the acronym CAFO). Under this law an applicant must disclose material information on their permit paperwork. Bad actors cannot hide when making a CAFO permit application. However the WMB has no such rule for water permit applications. It should. The WMB has rulemaking authority to do this.

The second problem is one I have addressed before. It is not new advice. However your humble practitioner’s prior recommendation has fallen on deaf ears. A particular South Dakota statute requires the WMB to determine that the average estimated withdrawal of groundwater by an applicant does not exceed the average estimated annual recharge of water in the aquifer to be used. A circuit court a few years ago ruled that using historical data from existing state observation wells does not fulfill the requirements of the statute. In that case the court said that the statute “requires not only analyzing existing and historic drawdown and recharge to the [permitted] aquifer, but also how the applicant’s [requested] drawdowns will affect the recharge to the aquifer.” The judge ruled that the WMB’s findings which show a draw of 720,000 gallons per day failed to take into account what affect the use of 720,000 gallons per day would have on the particular aquifer. The court noted that a recharge study of the subject aquifer was not included in the permit application. The court reversed the approval of the permit given by the WMB.

And just this year the WMB approved a large-quantity groundwater permit without requiring a recharge study. Such a study should take into account what effect the applicant’s use has on the particular aquifer. The approved applicant in the recent matter would be able use up to 30,000 gallons per hour when pumping. In granting the permit the WMB relied on state observation wells and historical data without a specific report showing what the recharge would be on the identified water source. I previously recommended that a water permit applicant, who will use large quantities of water, provide an aquifer recharge study as a required part of the application process. For a sustainable system the amount of water withdrawn from a particular aquifer should be balanced with the amount of water returned (recharged) by nature to that particular aquifer. The state’s existing water use policy which forbids the “mining” of the public’s water would be better served by requiring this specific water information. The requirement for a recharge study does not exist in the state’s current water code or in WMB rules.

The WMB, as an agent of the people, has general supervision of the waters of the state which includes measurement, appropriation and distribution. The duty of an agent is to guide the events in his control to a good result. The WMB is empowered with authority to establish procedures and criteria for issuing water permits. I have tendered two proposals which should be adopted by the WMB.

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

Is the Missouri River a mere obstacle?

Posted on: August 2nd, 2017
by David Ganje

The 2018 Energy and Water Development Appropriations bill just passed the U. S. House of Representatives on July 27th. Among other matters the bill attempts to address the ongoing issue of the Army Corps of Engineers proposed ‘surplus waters’ regulation. In a prior opinion piece as well as a letter to the Western States Water Council, both of which can be found on my website, I discuss the dangers of the Corps’ proposed rule. By its new proposed regulation the Corps wants to define ‘surplus water’ in order to control and obtain revenue from so-called surplus water in Corp-managed reservoirs. The new proposed rule is objected to and opposed by Indian tribes and several states. It must be reported just the same that none of these objecting parties effectively or productively advised Congress on this issue.

There is no question that the Corps is an essential agency in the operation of public dams, and in managing successful regional and national flood protection systems. The Corps’ value and success do not however justify its acquisitive effort to control waters to the prejudice legitimate public water claimants whether they are states or Indian tribes. The Corps is a regulatory monopoly with management over certain waters of the United States. The Corps is in effect the world’s largest civil engineering firm. As a federal agency it has been in existence since 1802 making the Corps one of the oldest federal agencies. The Corps outlasts president after president and has outlived every session of Congress since 1802. It is a powerful agency. Powerful agencies in Washington DC have a saying, ‘Don’t worry – we can outlast the summer help around here.’ By summer help they refer to the president and members of Congress.

The House of Representatives in the 2018 bill ‘requests’ that the surplus waters problem be fixed. The bill’s language does not resolve the issue or require the Corps to change its ways. The bill’s language merely makes a request. The bill states, “Surplus Water—The Committee urges the Corps to consider adoption of the alternative definition of ‘‘surplus water’’ excluding ‘‘natural flows’’ from stored water in the Missouri River mainstem reservoirs. . . .“

This is ineffective. The bill’s language was not written by an informed observer. Nor was it written by an informed participant in water rights. The bill’s language accomplishes nothing. Bureaucracies by their nature do not prefer change from the outside. Indeed, an established bureaucracy is inclined not move when nudged from without. It must be pushed. The problem at hand needs laser surgery, not placid ‘transparency.’ If the Army Corps is not required to correct its action, it will not.

What is the antidote for the bureaucratic creep? Money. Money can make an intransigent bureaucracy abide by elected official’s goals. Cut off money or reduce budgets. Money gets their attention. Certainly much more so than polite requests to comply with a preferred Congressional policy.

‘Requests’ given to teenagers and bureaucracies often result in verbal acquiescence but little real implementation. I should know. As a teenager I was given plenty of policies and requests by my parents. I dutifully confirmed receipt of parental policies, but if you were to check my activity in Aberdeen at around 11 p.m. on any given Saturday night you would find an absence of full implementation of the policies. When dealing with a teenager or a bureaucracy one cannot simply trust to the discretion of the recipient. To trust that the Corps will properly define ‘natural flows’ of public waters is a mistake. The Corps, under political pressure, started a study in 1985 to define the natural flows of rivers, but soon ‘abandoned’ the study. The Corps will never be interested in constricting its own flexibility concerning reservoir water.

It is not over however. The Senate has not yet taken up the House bill. Legislative redemption is possible. Congressional oversight by way of eliminating funding for projects or by way of de-authorizing a project is a method for proper legislative management of a federal agency. The risk to upper basin Missouri River states and Indian tribes is that once water is regulated as surplus water, and once it is consumed by end-users, it becomes that much harder to later reinstate the original legal as well as declared beneficial uses of the water. A Prussian general when once asked to notice the beauty of a river nearby, turned and replied ‘an unimportant obstacle.’

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