Call Our Firm:   605.385.0330   |   701.355.6885

Commercial Transactions & Litigation, Environmental Law, Natural Resources Law, & Energy Law

CAFOs in South Dakota

Posted by David Ganje - October 19th, 2017

‘We used to do things for posterity.  Now we do things for ourselves and leave the bill to posterity.’  Signs of this attitude are seen in the current and historical misuse (and mismanagement) of the state’s waters.  Both groundwater and surface waters of the state are held in trust by the government for the benefit of the citizens of the state.  Waters of the state are affected by CAFOs.  CAFOs are governed by South Dakota law as well as local county ordinances.  In this opinion piece I will show how state and county governments have dropped the ball regarding CAFO regulations.  CAFOs can effect both groundwater and surface waters.  I discuss in this piece requirements for financial responsibility of a CAFO, and how that can affect the waters of the state.  This piece is not a conversation on the pros and cons of a CAFO or of its economic efficiencies.

The purpose of ‘financial assurance’ is to secure the testing and replacement of any potentially contaminated wells and water within areas near a CAFO, and to ensure proper closure of a CAFO should the operator elect to close or should the closure occur for some other reason.  Oklahoma by way of example has a financial assurance requirements which are reasonably fair from both the operator’s and the public’s perspective.

Why require financial assurance of a business which affects the environment?   There are plenty of examples of businesses shutting down and not cleaning up after themselves.  South Dakota requires financial assurance terms for oil well permits, for mining operations, for
sand and gravel permits, for wind turbines, but not for CAFOs. This noticeable absence of financial terms is also followed by counties who hold legal authority over CAFOs. Consider the current status of surface water in the state.  This is from the state’s official 2016 assessment of surface water quality:  “Currently, 21.3% of the assessed stream miles fully support all assigned beneficial uses; a decrease from 30.6% in the 2014 Integrated Report. 78.7% do not presently support one or more uses. The high percentage of impairment can be attributed largely to high levels of TSS, E. coli, and fecal coliform bacteria.”   Groundwater is also put at risk by CAFO operations.  In a 2006 study in Idaho samples from six private wells formerly used as sources for drinking water by the residents of a nearby CAFO were collected to assess the impact on the quality of the local groundwater.  The samples were found contaminated by antimicrobials and also contained elevated concentrations of nitrate and ammonium.  It is telling that South Dakota requires monitoring wells for 96 CAFOs. My concern is practical.  To whom do the neighbors turn if a CAFO cannot clean up contamination at the closure of its operations?  Discussing a CAFO Chapter 11 bankruptcy filing in Indiana, a local newspaper reported, “If a CAFO ceases operations, the state of Indiana apparently has no way to ensure an environmental cleanup because the state does not require owners/operators of CAFOs to provide financial assurance for closure.”

What happens in an abandonment of the operation, in a Chapter 7 Bankruptcy filing, or in a closure when the operation has no capital?  How does an agency hold such an operator responsible for clean up?  In this arena state and local governments have indeed dropped the ball.

Both state and counties have broad jurisdiction over writing CAFO laws and regulations.  Both write and oversee permitting.  The difference between state and county jurisdiction is not as important as the fact that they fail to deal correctly with an exit plan, also known as financial assurance, for CAFOs.   CAFO laws are complicated.  They involve providing soil and water data, nutrient management plans, buffer zones, maintaining effluent limits, hiring an engineer to ‘certify’ an operation, setback requirements, water right permits, surface water discharge permits, rules for treatment ponds or lagoons and so forth.  Taken together these laws can be called a code.  A code is a comprehensive set of rules meant to be a complete system in a particular area of law.  But in South Dakota it doesn’t.

State permitting rules require no environmental insurance or other type of financial assurance for a CAFO.  CAFOs are permitted in the following counties but the counties have no financial assurance requirements:  Minnehaha County, Lawrence County, Brown County, Spink County, to name but a few.  Clay County requires insurance in an unspecified amount to take care of closure and clean-up.  Brookings and Hughes require environmental insurance with a $100,000. minimum.  The efforts of these counties are very incomplete but do start to recognize a way to remedy the risks.

In testimony to the US Senate the USGS Associate Director stated, “The USGS has found CAFOs to be a source of nutrient, pharmaceutical, and metal contaminants in nearby waters and lands receiving wastes.”   Are state and county officials in charge of the stewardship of public waters in favor of continued indifference to clean, potable, usable water?

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


Covet not thy neighbor’s water

Posted by David Ganje - October 4th, 2017

Here we go again. The South Dakota Supreme Court decided another case this summer on surface water drainage.  It is the perennial water problem in the state:  some have too much water and some have too little.  Neighbor versus neighbor.  Mother nature does not distribute surface water or drainage equitably.  The latest case decided by the Court is mostly right, and gives us an opportunity to look at what I call the grand inequity of surface water law.  I am sure the ‘editorial board’ will not find these comments to their liking, but the comments should be made.  To the devil with the editorial board.

We are taught that the stranger who dwelleth with you shall be unto you as one born among you.  This stranger should be treated as a guest.  Even so, this good rule applies to people, not things.  Unwanted water is a thing.  A neighbor’s surface water on one’s commercial, residential or ag land is an unwelcome guest.  Let’s call it an unruly, inconsiderate, delinquent and disrespectful guest.  And this can get problematic when it is a city or government doing the diverting.

East River drainage disputes occur more often, and can be more technically difficult on account of the land not having as much undulation.  But the West River disputes are more entertaining as they can involve calls to the sheriff, communications suggesting a physical resolution of the pending dispute and other such florid utterances.  Some of these problems are dreadful serious and impede land production. Some are so trivial you want to incarcerate the complainant for stupidity:  why make a federal case out of water drainage from a swimming pool onto your land?  Some would like to.

To make my comments on water drainage tactile, understandable and straight to the mark, I will use a dance analogy.  Put your mindset into that of a ballroom dancer and we can begin our review.  Fast dance:  If you are the water-sending party and your efforts to drain your land cause water to flow over your neighbor’s land in a “sporadic and forceful’ way.  That’s okay.  If the water sits on the receiving neighbor’s land for only a short period of time, the world is good.  That’s a fast dance.  That’s okay.  If the owner of the sending flow does not substantially alter on a permanent basis the course of flow, the amount of flow, or the time of flow, that’s okay.  It appears some landowners are in need of lessons in the samba, rumba, cha-cha and even the East Coast Swing.

Slow dance:  If the sending flow from your neighbor’s water is continuous, slow and causes water to stay on your land rather than quickly flow over it or flow through it, this is what the SD Court called “unnatural or unusual.”  That is a no no.  Slow or standing water of course prejudices the receiving landowner’s use of the land.  (Funny how the state can prejudice one’s use of the land in the case of non-meandered lakes but private neighbors can’t do it) There can be no slow dancing with your neighbor if you are trying to get rid of your surface water.  This is the rule even if the slow moving water is going over a natural watercourse.  So don’t ask your neighbor to do a slow dance with you.  Now, to make the dance card a bit more complicated, the latest case also suggested that the receiving landowner does not have a special duty to remove naturally occurring obstructions on the watercourse just to make the water move faster.

Are there remedies for these neighbor versus neighbor problems?  Yes there are. I have developed some.  That’s for another conversation.

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


Considerations on the closing of a mine

Posted by David Ganje - October 2nd, 2017

The South Dakota mining company Powertech has applications for in situ uranium mining approval pending before several agencies including the SD DENR, EPA, NRC and BLM.  The Dewey Burdock project is large, including up to 4,000 injection wells, an in situ extraction well system using one aquifer and a waste discharge well using a different aquifer.   Powertech is required to also submit future decommissioning mine closure plans with its permit applications.  Each agency rule for mine closure is different but each requires a form of financial assurance (cash money or its equivalent) showing that a closure will be properly completed should there be a bankruptcy, a closing or an abandonment of the project.  The conventional method is by use of a bond or letter of credit.

Mining closure is often called ‘decommissioning.’   I also call it an exit plan.  Why is an exit plan important?  One issue is groundwater restoration.  The groundwater chemical baseline used by a mine should be returned as close to pre-mining (baseline) conditions as can practically be achieved.  A 2009 USGS groundwater restoration study (disputed by a 2014 private study) showed problems in groundwater restoration in uranium in situ mines in Texas after the restoration had occurred.

Several federal reports in recent years have been critical of whether federal agencies have sufficient competency to set correct financial assurance terms.  Concerning the financial assurance issue, I provide the following regional examples of agencies that imposed inadequate financial requirements are the following:  1. In the recent Anderson Seed Company insolvency, the setting of a bond by the SD PUC was too small.  $2.6 million in claims were lost. Bond payouts in the matter amounted to a little over 4 cents on the dollar.  2.  An oil well breakdown occurred near the SD town of Wasta.  A drill bit broke part way down an oil well.  The operator ran out of money.  The operator had put up a bond of $120,000 for each well.  In 2016 the state DENR estimated that the bond money was not enough to address the problem.  The official stated remedial costs could be $2 million if the project were to be plugged.  3. The Gilt Edge gold mine in the northern Black Hills closed in 1999.  Among other problems the mine was polluted with contaminated water.  The company’s bond was valued at about $8.2 million. Regulators also received another $9.8 million in settlement payments and interest. However the EPA reports that cleanup costs, likely in excess of $200 million, will be primarily funded through the EPA’s Superfund.  4. A 2007 Wyoming Land Quality Division report on the Smith uranium mine recommended the company’s “bond be immediately raised to a level of $80 million until a thorough evaluation, including critical path analysis, can be completed and an appropriate bonding level established. No permit amendments should be approved or new wellfields authorized until the bonding situation is corrected.”  In 2008 the company agreed to increase its reclamation bond from $40.7 million to $80 million.  5. In 1998 the Zortman-Landusky gold mine in Montana closed.  A $29.6 million financial security was not enough to remediate the sites.  As of 2002 Montana estimated that an additional $33.5 million would be needed from state and federal coffers.

Decommissioning requirements are written to assure sufficient funds will be available to carry out mine closure, for reclamation of disturbed areas, for waste disposal, dismantling and disposal of facilities as well as for any necessary groundwater restoration.  A US court recently stated that by requiring financial assurance the incentive for safety is obvious: the availability and cost of a bond will be tied directly to the structural integrity of a facility and the soundness of a mining company’s day-to-day operations.  Agencies however do not in each case require good exit plans for projects they regulate.  Better agency scrutiny as well as more open public comment and access to the setting and revising of adequate financial terms are essential.  I submit that decommissioning is the most significant long-term aspect to the government mine permitting process.

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


Will The Legislature Make A Constitutional Correction?

Posted by David Ganje - September 27th, 2017

The government’s control of property — for a public road, for a pipeline right-of-way, or by the declaration of non-meandered waters as subject to public access — are examples of a government taking.  The concept of a government ‘taking’ should not be considered literally.  This would be a grave, although common, mistake made by legislatures and the public alike.  If an owner is to be granted compensation from a government only when there is a visible grabbing of a chunk of one’s property, the constitutional right to just compensation would be reduced to only land grabs.  A taking by a government means more than an old fashioned land grab.  When a property owner lives with a discernible deprivation in the ordinary use of his property, or when the value of the property is diminished in other significant ways by an act of government, this can be a ‘taking.’

Takings occur even without a formal government-filed lawsuit for the condemnation of property.  A private landowner may in his own name claim that a taking has occurred.  “Inverse condemnation” is a lawsuit brought by a private property owner to recover the value of property ‘taken’ for public use by a governmental even though no formal condemnation proceedings under a government’s power of eminent domain were filed.  A taking can occur when a governmental with the power of eminent domain takes action which destroys, interrupts, or interferes with significant use or the value of real property owned by a private property owner.  In a taking there must be substantial interference with the beneficial use and enjoyment of a private property owner’s property.  In South Dakota there does not have to be a physical invasion of the property for damages to occur.  Damage to property is compensable under the SD Constitution.  The South Dakota Supreme Court has ruled, “Our case law provides that the “damage” clause in our State Constitution affords more rights to our citizens than the Fifth Amendment to the Federal Constitution.”

A state legislature can go too far in regulating public trust properties. Public waters in SD are held in a public trust for the benefit of the citizens of the state.  Even so, a state legislature or state agency may go only so far in declaring and setting public trust rules.  The state legislature in the special session of 2017 went too far.  The legislative opposite of fairness and equity is not arbitrariness; but rather it is legislative indifference.  Without taking recommendations suggesting the use of property setback rules and quiet time rules to protect private landowners with land on and surrounding the waters, the legislature opened up non-meandered lakes. The new statute creating public access has no provision for setback from private property or quiet time zones to protect private property from a 6 a.m. gas-powered ice auger drilling fishing holes in the water next to farm property.   This indifference to private property rights runs up against the state constitution which protects not only the confiscation of private property but the damaging of the value to private property.

The legislature has the power to change law to conform to current standards and public needs but private property cannot be reduced in value or damaged without due process of law.  The 2017 non-meandered law provides no compensation for property owners whose property has been burdened by establishing public use of the waters.  The new law violates the constitutional prohibition against the damaging of private property without just compensation.  Giving certain lake bed owners the vague right to ‘petition’ the state Game Fish and Parks to set some future limitations on use of the waters is an onerous, burdensome and unacceptable way of giving lip service to property rights.  The South Dakota Supreme Court has stated that there is no magic formula that enables a court to judge whether a given government interference is a taking.  I submit that the lack of provision for a minimum setback from dwellings or confined livestock for sportsmen activities on the waters, and no provision for a quiet time from sportsmen activities near dwellings and confined livestock constitute a taking.  The Wisconsin Supreme Court has also said that a taking can occur when there is a direct and immediate effect on the use and enjoyment of property.  Will the SD legislature make a constitutional correction and amend the law?  As President Trump says, ‘Time will tell. Time will tell.’

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


Dewey Burdock Opinion Piece

Posted by David Ganje - August 30th, 2017

Powertech (USA), Inc., a wholly owned subsidiary of Azarga Uranium Corp., is a uranium company with pending applications to South Dakota, the EPA and the NRC for the development of an in situ uranium mine operation in Custer and Fall River Counties. This project, known commonly as the Dewey Burdock project, would be the most significant mining operation in the state in the last twenty years.  The project is an in situ mining operation which would use two different groundwater aquifers in the course of uranium extraction and in the subsequent disposal of process related liquid waste.  I will refer to the company as the developer.  I do not represent any of the parties in the matter.

South Dakota contains several distinguishable aquifers.  These aquifers are usually horizontal in nature.  Aquifers are separated by confinement zones of rock which prevent an aquifer’s waters from flowing to the one above it or to the aquifer below it.  The developer’s project involves a number of pending permit and licensing requirements.  In this opinion piece I discuss one aspect of the project:  the waste water injection permit which would grant the right to construct and operate injection wells for the disposal of treated waste water into the Minnelusa aquifer.  This permit application is under consideration by the EPA.  The EPA has not approved or rejected the application.

The Minnelusa is a major aquifer that encircles the Black Hills and spreads out in all directions radially for some goodly distance.  The aquifer also runs eastward under all of western South Dakota. Minnelusa groundwater near the project area is hard.  It is not used for domestic, municipal or irrigation purposes near the project area. Nevertheless in other areas numerous parties including the city of Rapid City draw upon the Minnelusa aquifer for domestic, municipal, industrial or irrigation use.

The Madison aquifer lies beneath the Minnelusa.  Aquifers are separated by confining zones.  The Madison is used for drinking water and other similar uses more often than the Minnelusa because its water qualities are better.  One issue concerning the use of the Minnelusa as an injection zone for waste water is the question of leakage between aquifers. This is also called hydraulic connection.  If a confinement zone is substantial, leaking is less possible.  If a confinement zone, or its surrounding geological features such as faults, is less substantial, leaking between aquifers is possible. The developer in its water rights application stated, based analysis of groundwater from wells and springs in the general region, that some areas’ geologic features may mean water movement between the Madison and Minnelusa aquifers.

The permit application did not provide the developer’s own studies or any hired tests for the immediate project site that address the issue of possible leakage. Unrelated government studies have been done of other geographic areas of the Minnelusa, for example in 2002 and 1985.  These studies indicate that leakage from or into the Minnelusa in those geographic areas is possible. “In the eastern part of the study area, water may be leaking from the Minelusa to both the Inyan Kara and Madison aquifers.”  -1985 USGS study.  A 2014 article in the Journal of the South Dakota Academy of Science discussing the Dewey Burdock project stated, “There is the possibility that the Madison aquifer could become contaminated with this waste.”

In a waste injection permit application an applicant is required to provide information on the mineral composition and texture of aquifer confining zones. The developer stated in its application papers that there is no evidence of communication between the Madison and Minnelusa in the vicinity of the project area based on water quality differences.   This statement is true based on generally available information, but the developer did not hire out or prepare tests for the immediate project area.
In its June 2012 Water Permit Application the developer acknowledged that there are no aquifer tests in the project site.  The developer also stated that more information will be available when the first deep wells are drilled on site and pumping tests are conducted.  The EPA record  shows no tests done by the developer regarding the confining zones and aquifers in the immediate project area.  The EPA’s pending draft permit, if granted, requires the developer to provide information about  aquifers and confining zones at the site before injection could begin.

Geologic testing and sampling are essential to a mining project.  This is technical project due diligence.  Analysis of a mine’s immediate geology and water quality are also relevant to an agency’s rules and requirements.  To determine whether estimates, other nearby geologic features or other historical data are consistent with the immediate geology and water quality within a designated project site, a developer completes sampling and secures test results from within the project site.  Perhaps one could argue it is better or more economic for a developer to ‘wait and see.’  Regulations allow for such a delay.  However, early presentation of material information to agency decision makers and to the pubic makes sense for a regulated mining project that requires public input and agency approvals. Providing material information at the application stage is more likely to overcome objections.  Providing a developer’s test results from the designated project site early would also produce fewer challenges.  Such test work was not performed by the developer before or during the waste water permit application process on the Dewey Burdock project.  All project due diligence is not required by law.  Yet even so, due diligence is used by a developer to avoid risks, to prevent harm and to substantiate a publicly regulated project.

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


Is the Missouri River a mere obstacle?

Posted by David Ganje - August 2nd, 2017

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.


In SD you cannot mine water

Posted by David Ganje - July 24th, 2017

Gold is a nonrenewable resource. And under SD law, gold can be mined until it is gone.  Water – if it is mismanaged – is also a nonrenewable resource.  Whether as surface water or groundwater, water cannot be ‘mined’ under SD law.

Groundwater supplies about 54% of freshwater water use in the state.  Groundwater is subsurface water that saturates pores or cracks in soils and rocks.  It is replenished by precipitation. It is unevenly distributed in both quantity and quality.  Natural replenishment is subject to interruption by man’s intervention. Aquifers are water bearing formations (pools) of groundwater. Aquifers can be drained to the point of depletion.  This is not a speculative statement.  According to a 2016 study done by the Texas Water Development Board groundwater levels in all major and minor Texas aquifers have declined from predevelopment levels in response to development of groundwater resources for agricultural, municipal, and industrial uses.  The Southwest Kansas Groundwater Management District acknowledged in February of 2017 it is managing a depleted groundwater system. And, while not widely known, a 2013 report by the US Geological Survey indicates that the level of SD aquifers is down.

Nothing shames man’s intelligence more than when human design is used to abuse nature.  This is the very reason behind the concept of water as a public asset.  The  SD Department of Environment and Natural Resources (DENR) and the state Water Management Board are the agencies with authority to manage the state’s public waters.  Their job is to not let water users of the present borrow from the future; that is, the available sources of water in the state are managed in order prevent depletion.  SD law states, “No application to [use] groundwater may be approved if . . . it is probable that the quantity of water withdrawn annually . . .  will exceed the quantity of the average estimated annual recharge of water to the groundwater source.”  This is the anti-mining of water provision found in the law.  It has been suggested that SD is unique regarding this provision.  That is not correct. Other states have similar law.  Idaho has been enforcing its anti-mining provision successfully in court since the early 1970s. State management of state public waters held in trust for the people is the most important environmental issue SD handles.  I can state that DENR is the most open and accessible of any other state’s environmental agency with which I have dealt.

It is up to the state to determine if a body of water has been ‘exhausted’ and should not be accessible to new water permits for industrial or irrigation purposes.  This makes DENR and the Water Management Board both judge and jury on some important questions. When an aquifer is used to its full capacity such that any further use would clearly deplete the aquifers ability to recharge its deficit, it is said in the world of water law that the aquifer is ‘fully appropriated.’  Any new applications for use of the water then put DENR and the state Water Management Board in the role as judge and jury so to speak.

SD has determined that two aquifers are currently fully appropriated.  There is a third aquifer that is close to receiving this designation.  When a body of water is fully appropriated, no further permits for use of the water are approved.  If future water levels and quantities make it available at a later date, it is possible the state would later grant such use.

Monitoring water levels is an ongoing duty of DENR. When temporary overuse is determined DENR has authority to issue shut-off orders.  A shut-off order prevents a license/permit holder from accessing such water even though a previous permit was granted.  At present there are two shutoff orders in place.  A shutoff order is often a temporary directive, and if water levels recover to acceptable levels the shutoff order is withdrawn.

Agencies and boards are not however infallible.  And in the area of water rights this can present a revealing story.  In 2012 the state Water Management Board granted an industrial water permit for the use of 720,000 gallons of water per day for a commercial dairy operation.  Local neighbors challenged this decision by the Board in state Circuit Court.  The Circuit Court in its decision determined that existing well data based on historical use of three decades from nearby test wells was not a sufficient showing of what an additional draw of 720,000 gallons of water a day would do to the affected aquifer.  The Circuit Court ruled there had not been an adequate showing of how the aquifer would recharge itself absent some good evidence of the impact of the requested new use on the aquifer.  The permit applicant in that case offered no water study (hydrology study) reviewing the applicant’s water use impact on the aquifer, and yet the Board approved the permit.  The Circuit Court reversed the Water Management Board’s decision.

I suggest that water use permit applicants who will be using large quantities of water from a water body be required by rule to provide the state with recharge studies as a part of the application process.  The state’s established policy forbidding the mining of the public’s water would be better served.  Such a rule is not currently in place in any SD tribal water code or in the state’s water code or rules.

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


Corps of Engineers takes another bite at the apple

Posted by David Ganje - June 30th, 2017

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.