Archive for the ‘New York & South Dakota Law’ Category

Corps of Engineers takes another bite at the apple

Posted on: June 30th, 2017
by David Ganje

The U.S. Army Corps of Engineers recently published a Notice of Proposed Rulemaking in a new effort to obtain control over ‘surplus water’ found in its managed water reservoir systems. The Corps is attempting to define ‘surplus water’ in order to manage and sell the so-called surplus water. This is the second time in recent memory that the Corps has engaged in this enterprise. The Corps is a federally created regulatory monopoly with management over certain waters of the United States. The Corps is in effect the world’s largest civil engineering firm. In its last attempt, the Corps was hand-slapped for trying to sell water it did not own. So now it proposes to ‘enter into contracts for access to surplus water.’ These contracts will inevitably involve the exchange of money of course. In good bureaucratic language the Corps states that it desires to “establish a new methodology for determining a ‘reasonable’ price for surplus water Contracts.”

The Corps in this new rule takes two radical positions regarding water rights. 1. The Corps in drafting this new rule publically states it does not have to acknowledge the several upper Missouri River basin states’ claims to the natural flows of the Missouri river. These Upper Missouri River basin states include North Dakota and South Dakota. ‘Natural flows’ are waters in a river available by law for the states to allocate for the beneficial use of the citizens of the states. In other words these are state’s rights claims to use of the waters within its borders. Under case law and several statutes, states have the right to make use and allocation decisions concerning water within its borders. 2. The proposed new rule also chooses to dismiss claims that the upper basin Indian tribes have to waters under the Winters Doctrine. The U.S. Supreme Court held in the Winters case that water rights were reserved for Indian tribes as an implied right to the use of waters under the treaties that created reservations. These water rights are preserved for the tribes whether or not they are in current use. Nevertheless, in its comments the Corps states, “In proposing this rule, we recognize that Tribal reserved water rights enjoy a unique status under federal law. We do not believe that the proposed rule has tribal implications.”

In both instances described above the Corps is proceeding akin to a bureaucracy that wishes no interference from outside sources. The Flood Control Act under which the Corps obtains authority states that no sale of water may be made that affects existing lawful uses of the water. How could one manage or sell ‘surplus water’ until you knew the claims and amounts of those parties who have a right to the use of all the waters — now and in the future? The Corps is specifically prohibited from selling waters if such sale adversely affects existing lawful uses of such water. The Corps’ rulemaking authority does not extend to superseding legal claims to water rights by American Indian tribes or the states.

The Missouri River’s waters are impounded by the Corps in its managed reservoirs. Under the proposed rule the Corps does not include the two positions (state water claims and tribal water claims) in its calculation of surplus water, neither does it incorporate the two claims in its analysis, nor quantify any claim amounts.

Technical, unresolved issues also exist under the Corps new rulemaking effort. The Corps has over the years issued various water easements and water use agreements. A 2012 review of withdrawals from Corps reservoirs suggested that many water withdrawals are occurring without a formal water supply agreement, without a clear statement of authority for the withdrawals, or without reimbursement to the Treasury for costs incurred by the federal government in accommodating those uses. In a separate report the Corps also acknowledged that, “the quantities of water being withdrawn through these easements are difficult to determine from the available data.”

The largest use of water from the Oahe reservoir, by way of illustration, is for irrigation. This demand may increase. It would behoove the Corps to better know and quantify the demands for irrigation before it declares any reservoir water as ‘surplus water.’ The Corps master manual requires the Corps to defer to irrigation uses when conflicting claims arise. While irrigation management is not within the Corps authority, it acknowledged in 2012 that there were 60 irrigation easements operating out of the Oahe reservoir. The Corps argues under the proposed rule that it should sell water if, “. . . the authorized purpose or purposes for which such water was originally intended have not fully developed;” The risk to upper basin 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 re-institute the original legal as well as declared beneficial uses of the water.

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

U.S. Supreme Court declines to hear S.D. farmer’s wetlands case

Posted on: January 12th, 2017
by David Ganje

On Monday, Jan. 9, The U. S. Supreme Court denied the Petition of a Miner County South Dakota farm couple who were fighting a USDA wetlands designation. USDA enforces rules in which it declares as “wetlands” farmland that has been converted by a farmer from wetlands to arable working land. When such a federal designation is made the farmer loses his right to participate in USDA programs and benefits. Under USDA maps about two thirds of North Dakota, one half of South Dakota and the western part of Minnesota is covered by prairie potholes and wetlands.

The interest group representing the Miner County farmers had called this so-called swampbuster action by the department of agriculture a “phony wetlands designation.” The group’s advocacy on behalf of the Miner County farmers was however weak. The group did not use any experts in its challenge to the designation and appeared uninformed on the methods used by the USDA to designate the Miner County land as wetlands.

In the government’s brief before the Supreme Court the government pointed out that the petitioners neither cross-examined the USDA witness nor offered a competing definition of a local area to use as a comparison site. The landowners separately argued in their Petition that USDA violated the US Constitution by selecting a comparable wetlands site without giving petitioners notice and an opportunity to be heard. However the landowners had not presented this argument in the lower courts.

The Miner County couple’s challenge was timely because of problems with the USDA wetlands process. Nevertheless the landowner’s argument was not based on a strong set of facts. But because of the continuing problems with USDA rules on wetlands designations several congressman introduced a bill amending the swampbuster law.

This wetlands bill, introduced in June 2016, was not acted upon and has had no hearings in Congress. In addition, the new bill was not actively pushed by its sponsors. The proposed amendments have merit and should be actively supported by agriculture interest groups. The proposed reforms do not prejudice proper environmental stewardship of the land. This bill should have bipartisan support. The bill, although now caught in no-man’s-land because of a lack of interest, would require the USDA to make a decision on a piece of property as either wetlands or not wetlands within 60 days of noticing the landowner. The proposed bill also allows for quicker and easier access to federal courts without going through a lot of bureaucratic hearings. The amendments state that the USDA has the burden of proof on any claim that the property in question is a wetlands. The proposed amendments also give the landowner the right to obtain technical assistance early on in any process in order to timely oppose a claim of wetland delineation.

A closer look at North Dakota’s condemnation law

Posted on: December 27th, 2016
by David Ganje

A closer look at North Dakota’s condemnation law

This is the second of two articles discussing eminent domain law in both South Dakota and North Dakota. This article will address several problems with North Dakota condemnation law.

The use of eminent domain (condemnation) is a modern legal problem. Condemnation is the taking of property for a public or, in some cases, private interest. Condemnation is a legally sanctioned sword. My argument is not that eminent domain as a concept is wrong, but that in its present state as a legal vehicle attempting to provide fairness, eminent domain is 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.

Justice Sandra Day O’Connor famously said in her dissent to a private taking condemnation case, “The specter of condemnation hangs over all property. Nothing is to prevent the State from replacing any Motel 6 with a Ritz-Carlton, any home with a shopping mall, or any farm with a factory.” One local North Dakota government official said it aptly regarding action to condemn property: it is better to look at condemnation through our local eyes rather than through the developers’ egos.

In my opinion, there are four notable problems with current North Dakota law:

1. 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? President elect Donald 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.” North Dakota law does not take this into consideration. In fact, state law prohibits this. The law states that no benefit from the proposed improvement may be allowed in calculating a landowner’s compensation.

2. A land owner is not allowed to recover reasonable attorney’s fees if he appeals and does not prevail or if he applies for a new trial and does not receive greater compensation than awarded in the first trial. Why should the land owner be penalized for exercising his right to an appeal or to a new trial when the whole process of condemnation is involuntary in the first place? This lawsuit and claim is not “elective surgery” to the landowner. He is forced into the circumstances of condemnation.

3. 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. North Dakota law does not provide for this.

4. Eminent Domain law is old law — too old. About half of the states still maintain that the property owner has the burden of proving value and proving the amount of compensation; this is ridiculous. Condemnation is not private litigation. It is a special legal right given to the condemnor to take land from another party. But North Dakota law requires that the burden of proof rests with the landowner to prove entitlement to compensation. This is also ridiculous. Rather than placing the burden of proof on the landowner who would often not prefer the forced taking, the law and the legal burden of proof should hold responsible the government or private party trying to take the land.

I am reminded of one of my tutors during my legal internship, who said something very memorable about the law while instructing me: “David, the law is a strange thing to citizens. They don’t pay much attention to it until it affects their property or their daughters.” The North Dakota Supreme Court acknowledges the dilemma in our society concerning the taking of someone else’s property. The Court stated that condemnation is, “Clear in theory but often cloudy in application.” A landowner in a condemnation case is not a party choosing elective surgery. Although the state has made progress in addressing fairness for surface owner’s, equity demands that more work be done.

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

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