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South Dakota’s first in-situ leach uranium mining project

Posted on: November 13th, 2015
by David Ganje

South Dakota’s first in-situ leach uranium mining project application is pending before the authority of several federal and state agencies. Many regulatory issues have not yet been decided.  I address an issue given little notice:  What is a mining permit applicant’s obligation and capacity to offer financial assurance for the operation, safety and closure of the mine if it is approved?

My concern with any large natural resource project is the risk of socializing the expense of any possible environmental cleanup as a cost paid by the taxpayer. “Superfund” is a federal environmental law under which the government supervises cleanup of contaminated mining and industrial sites. The polluter is financially responsible for the cleanup.  However about 30% of Superfund sites are orphaned sites where no responsible party is available to pay for cleanup. Without adequate financial assurance terms in place by a mine operator to pay for a possible cleanup, the taxpayer may have to step in to pay.

A mine operator’s financial capacity comes into play in the matter of abandoned mines, orphaned mines, spills, costs of water reclamation, decontamination and closure or decommissioning of a mine.  Many mine operators address financial assurance requirement by using surety bonds.  A surety bond is an insurance company’s guarantee of an applicant’s performance under a permit.  An applicant must prove adequate financial resources for reclamation, spills and final closure. Nevertheless several mining operations in the US have been closed with unresolved environmental and groundwater issues exceeding the costs of the financial assurances posted for the operation.

The approval of financial requirements is done by an intermarriage (I call it a challenging marriage) of federal and state agencies. In the case of uranium mining it will be the NRC/EPA and the SD DENR. The relevant agency establishes the financial assurance requirement based on the applicant’s disclosed information and then the agency’s own analysis of the adequacy of any proposals.

It is important that agencies have competence in determining the financial assurance of a permit holder in view of the long term risks involved in mining operations. It is up to state and federal regulators to impose financial assurance standards with effectiveness.

Do specialized environmental agencies have the staff resources to conduct adequate review of financial assurance issues? In a 2001 report on the NRC’s oversight of nuclear power plants, the federal watchdog agency General Accountability Office (GAO) concluded that the NRC (Nuclear Regulatory Commission) did not always adequately verify the owners’ financial qualifications to safely operate power plants. In 2006 the GAO criticized the EPA for not holding mining operators financially accountable for cleanup issues. In 2011 the GAO criticized the BLM in a letter to Congress for not properly considering hard rock mining operators’ financial assurances needed to cover reclamation costs. In a 2012 report on the NRC’s supervision of nuclear power plants the GOA asserted that the “NRC’s formula may not reliably estimate adequate decommissioning costs.” In this report the GOA also stated, “NRC officials told us that their staff resources are limited and that they lack the financial expertise to evaluate compliance with investment restrictions. . . However, weaknesses remain in NRC’s oversight of decommissioning funds that could leave the public and environment vulnerable.”  And in a 2012 GOA report on uranium mining the GAO expressed concern over the BLM and NRC’s ability to determine the costs of reclamation.

The jurisdictional boundaries between the NRC as the lead agency and the state of South Dakota  over specific regulatory issues in the pending Dewey-Burdock in-situ uranium mining applications has not yet been formalized.  Both have authority over various financial assurance issues.  Because these issues are significant but not easily resolved between agencies we have the ‘challenging marriage’ to which I earlier referred.  South Dakota for example has legal authority to require a performance or damage bond, and can require as a condition of a permit financial assurances guaranteeing performance of cleanups. The NRC and BLM also both have financial assurance requirements for mines.

What is a remedy?  I suggest the following:  The agency with designated authority over an applicant’s financial assurance requirements shall evaluate in writing all financial assurance documentation using an agency-designated non-party (Consultant) with recognized experience in the areas of financial assurance. This designation shall be a condition of any permit or license. The costs incurred by the agency in contracting with the Consultant shall be paid by the applicant.

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

Surface Water Rights & Surface Water Drainage, A Modern Problem

Posted on: November 11th, 2015
by David Ganje

Surface Water Rights and Surface Water Drainage, A Modern Problem

Surface Water drainage issues are longstanding issues in agricultural production areas, and have a significant effect on the agricultural economy of a state.  South Dakota, by way of example, has been plagued by surface water drainage problems for decades.  Surprisingly, there is little coherent or efficient planning to meet the challenge.  Instead, property owners and government agencies have witnessed debates, numerous court cases, and the failure of new legislation capable of addressing the issue.  The state has experimented and over the years implemented a smorgasbord of agencies with authority over water issues including the State Water Management Board, County Drainage Commission statutes, irrigation districts, water user districts, water project districts, water development districts, conservation districts, and watershed districts. The results are less than successful when one considers the state’s drainage problems.  There are benefits to water drainage, both environmentally and economically.  However, the road to effective water drainage law and policy remains elusive in South Dakota, partly due to the unwillingness of those in authority to exercise existing rights given to the state’s leaders.

 

Surface water drainage is defined as the depletion of water from a water-logged piece of land.  By draining off excess water, soil goes from saturated to unsaturated, allowing air to better move through the soil, making it healthier.  This can result in a decreased amount of runoff and topsoil loss with water drainage, also improving soil quality.  By making the soil healthier, crops are healthier, more abundant, and typically generate better profits.

 

Water drainage is beneficial environmentally as well as economically.  Studies done by North Dakota State University indicate that there is a 30-50% yield increase in fields that have added tile drainage systems.  This yield change increases revenue, as well as the quality of the land in general.

 

Despite the evidence that supports water drainage systems, dispute about the benefits remain, including the questions: How does one drain the water?  Where should it go?  And how much is too much?

 

A few Water Rights concepts, such as the Civil Law Rule, should be considered. The Civil Law Rule states that a lower estate is responsible for the water that naturally drains across it, and whatever trouble that may come with it – however, an upper estate cannot lawfully do anything to increase this burden.  This means that an upper landowner cannot add to the natural volume of water the lower landowner would naturally receive, or change the course of the water’s flow.  These principles have been demonstrated and applied in numerous court cases.

 

For example, in the 1909 South Dakota case of Boll v. Ostroot, in which the defendant dug a ditch to drain water onto the plaintiff’s lower lands, the court ruled that the defendant could not lawfully discharge water onto another’s land through an artificial channel.  In addition, it was also ruled that one could not change the natural course of the water’s natural drainage path.

 

More recently, the 1985 case of Gross v. Connecticut Mutual Life Insurance Co. held that discharge is allowed over, but not onto another’s land.  The principle is that drainage can flow but not in such a manner as to create a new water depository. The precedents and general guidelines set by these court cases are not enough to combat all of South Dakota’s water drainage issues.

 

Part of the problem lies in South Dakota’s 1985 water drainage statutes which offer guidelines such as when permits are needed, the application process, coordinating precise drainage areas, and so on. The law allows for both creating drainage plans and managing drainage controls.  While this may have been effective in theory, in practice it falls short.  For example, the manpower, data, and resources necessary to carry out all that the ordinance calls for are not widely available and are often given as the reasons for the failure of counties to administer the law.  The more accurate reason is that political leaders at the county level are reluctant to take the bull by the horns and ‘domesticate’ the water drainage issues. In addition, as of July 2012, only 18 out of 66 counties in South Dakota had a drainage ordinance in place, making it nearly impossible for the state as a whole to deal with all the complications that can arise.

 

With all the problems that water drainage and water drainage laws have brought up, what can be done to remedy and alleviate the situation?  Fortunately, there are many options for South Dakota.  To start, a minimum criteria needs to be established for drainage applications to act as a baseline for what is lawful.  Following that, more definitive criteria to evaluate these applications need to be made in order to best protect all parties involved.  Finally, a level of cooperation and consideration among all parties involved needs to be more actively employed.

 

It is evident that water drainage laws have caused hardships and issues in South Dakota for many generations.  However, by employing new standards and better understanding water drainage rights and tactics, South Dakota has the ability to overcome these hardships and improve the land.

Local Commentary: All sides should comment on proposed NED Pipeline

Posted on: October 27th, 2015
by David Ganje

NED Pipeline
ContributedThis map from Kinder Morgan shows the Pennsylvania and New York portions of the route for the company’s proposed Northeast Energy Direct pipeline.

By David Ganje Local Commentary

As demand for natural gas has increased, so too has the need to overhaul the region’s delivery infrastructure. One proposed development is the Northeast Energy Development Pipeline, which will connect the natural gas fields of Pennsylvania to the New York Capital Region, before continuing on to connect with Boston and other parts of New England.

The proposed NED Pipeline is currently under review by the Federal Energy Regulatory Commission. As part of the review process, FERC considers a variety of factors, including public commentary. Originally, the NED deadline for accepting public commentary was scheduled to expire on Aug. 31. However, after urging from several sources, including U.S. Senators Charles Schumer and Kirsten Gillibrand, the public commentary period was extended and remains open.

As part of the review process, both FERC and Kinder Morgan have hosted town hall-style meetings where members of the public are able to pose questions directly to officials and various experts. Further, the public is able to submit their commentary directly to FERC through the agency’s website athttps://ferconline.ferc.gov/QuickComment.aspx under docket number PF 14-22-000.

As of Oct. 13, nearly 6,000 comments had been submitted to FERC via the online tool. Comment sources range from civic groups, businesses, and school districts, to various special interest groups, and perhaps most importantly from private citizens.

Public commentary is an important part of FERC’s review process because it allows private citizens and groups to raise individualized concerns. During review, FERC reviews a variety of sources such as professionally prepared environmental or economic impact assessment reports. However, public commentary also plays a crucial role in the review process.

FERC itself states that public commentary raises issues that might otherwise escape notice by the agency, such as:

• “Environmental and socioeconomic resources that are important and should be examined by FERC,”

• “Other alternatives to the proposed project that should be evaluated,”

•  or even “Mitigative measures that they want the FERC to include in any approvals issued.”

Of course, FERC must consider a plurality of interests when reviewing a proposed project, including natural gas pipelines. Private interests and concerns are just one piece of the puzzle, as FERC also owes a duty to serve the broader public interest. However, legitimate and well-presented concerns raised during public commentary have the potential to bring about significant results. This can vary from delaying or extending the review process, to changing a pipeline projects route altogether to avoid sensitive areas that had previously escaped notice.

Public commentary is also the first step toward becoming an “intervener.” During the public commentary phase private citizens with legitimate questions about the NED’s potential impact can seek to have those questions addressed. After raising a question during public commentary, a citizen with lingering questions can go through a more formal process and become an “intervener.” 

To become an intervener, one must prepare and file a Motion to Intervene with FERC. After acceptance by FERC, an official “intervener” may actually appeal a FERC decision in Federal Court should they feel the situation warrants such action. Due to the formal nature of becoming an “intervener,” it is probably wise to seek assistance of counsel.

Public participation is a cornerstone of the democratic process. Public commentary periods are a classic example of empowering the public voice. No matter what one’s personal politics or feelings toward energy development are, participation in the process is always important.

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

Termination of Oil & Gas Leases

Posted on: October 22nd, 2015
by David Ganje

David L. Ganje, of Ganje Law Offices, has been invited to speak on November 11th at a professional legal education program sponsored by Strafford Publications, Inc. Ganje’s presentation will discuss Termination of Oil & Gas Leases based upon Lack of Production.

WIND POWER WORKSHOP, Spearfish

Posted on: August 28th, 2015
by David Ganje

The Black Hills Pioneer presents
WIND POWER WORKSHOP
Friday, Oct. 2, 2015
8:30 a.m. to Noon
High Plains Western Heritage Center
Exit 14, Spearfish

WIND POWER WORKSHOP Friday, Oct. 2, 2015 8:30 a.m. to Noon High Plains Western Heritage Center Exit 14, Spearfish

Speakers Include:

David Ganje
Ganje Law Offices, Rapid City
•    Reviewing Wind Easements – The Good, The Bad, The Ugly

Scott Minos
US Department of Energy
Senior Policy and
Communications Specialist
for the office of Energy Efficiency
and Renewable Energy (EERE)
•    Perspectives of Wind Energy Potential for South Dakota