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WATER RIGHTS AND WATER LAW WORKSHOP

Posted by David Ganje - July 30th, 2018

The Rapid City office of the United States Geological Survey (USGS) Dakota Water Science Center is hosting a public workshop on South Dakota water rights and water law. USGS has invited attorney David Ganje to give the workshop. The program will be held on September 18th at 10 a.m. Mountain time at 1608 Mt. View Road, Rapid City, SD 57702. The workshop is open to the general public. Admission is free but phone reservations are strongly recommended as space is limited. Reservations may be made by calling 605 385 0330.


The leviathan in the Missouri

Posted by David Ganje - July 30th, 2018

It is good to be vigilant when dealing with a leviathan of a bureaucracy. It is better however to be pointed with them, carry a big stick, keep notes and exercise financial purse strings. The U.S. Army Corps of Engineers, as a government agency, has been in existence since 1802. It is now and forever shall be. It is a federally created ‘regulatory monopoly.’ The Corps is in effect the world’s largest civil engineering firm. This agency of the Department of Defense is the nation’s largest single producer of hydroelectricity. Hydropower plants and dams are authorized by Congress under the Flood Control Act of 1944, commonly called the “Pick-Sloan Act.” The Act authorized the managing of the Missouri River to provide for flood control, navigation, municipal and industrial water supply, recreation, and hydropower generation.

At the time of Lewis and Clark, the Missouri River was diverse. The river had many channels along with widespread bars, islands, and shallow sloughs. It had natural levees, backwater lakes, oxbows, sandbars and dunes. The Missouri was wide and shallow. A hundred years ago it measured about 2,546 miles in length but now has about 200 miles less due to damning and channelization. Along the Missouri River today the Corps operates a total of 36 generator units capable of producing approximately 2.4 million kilowatts of power.

In an editorial this month Senator Mike Rounds expressed concern about the Corp’s flood management practices. He indicated he will be keeping a close watch on the Corp’s flood control management. This is a polite way of addressing a hardcore problem. The Corps is akin to a government highway department – it is good at constructing highways but is often out of its league when administering the highways, creating good rules of the road, or at establishing operations without causing damage to property owners or the environment. The Corp’s problems are devilishly more serious than the senator suggests. In 2016 the GAO, in a report on the Corp’s operations, concluded that the extent to which the Corps has reviewed or revised current water control manuals is unclear because the Corps did not document its own reviews. The GAO report also concluded that the Corps has revised some water control manuals but that various divisions and districts do not track consistent information about revisions to its manuals, and the extent to which operating manuals have or should be updated is unclear.

The Corp’s own ‘outside consultants’ report that historically the Corps was focused on construction of dams, levees, navigation channels, and other infrastructure. But that future Corp’s operations should be focused on (1) operating, maintaining, rehabilitating, and upgrading existing infrastructure, (2) re-allocating reservoir storage and releases among changing water demands and users, and (3) providing some degree of ecosystem restoration and ecological services in heavily altered riparian and aquatic ecosystems. I submit that the Corps has not yet read this memo by its consultants. By way of example, after preliminary motions a Court of Claims judge this year properly ordered a case to go forward brought by farmers, landowners, and business owners who claim a taking of their property without just compensation in contravention of the Fifth Amendment. This lawsuit is based on actions by the Corps on the Missouri River. The plaintiffs allege that the Corps has changed its management of the river and that the changes caused flooding of their properties.

The Corps has a tendency to do what it pleases unless there is hell to pay. South Dakota has used its disproportionate clout in the recent past to send messages to this leviathan. Controlling the purse strings was the key. Money usually is. A material example of this is the Corp’s continuing attempt to control and manage what it calls ‘surplus water’ in the Missouri River. This is a self-defined quantification of water that does not exist in federal legislation or under the common law of waters in this country. It is an attempt by the Corps to acquire control over water that otherwise belongs to the states and Indian tribes. For a look at my extensive critique of the Corp’s past efforts to grab control of surplus waters see my letter to the Western States Water Council found on my website: lexenergy.net

More than mere vigilance will be required, or what you may have now won’t be no more.  Congressional oversight by way of eliminating funding for projects or by way of de-authorizing a project is a good way to manage a federal agency. The risk to upper basin Missouri River states and Indian tribes is that once a quantity of water is regulated and defined by the Corps as surplus water it becomes that much harder to later reinstate the original legal as well as declared beneficial uses of that water. A Prussian general when once asked to notice the beauty of a river nearby, turned and replied ‘an unimportant obstacle.’ The Corps is big brother with all of big brother’s flaws.

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


Arbitration – always look a gift horse in the mouth

Posted by David Ganje - July 12th, 2018

Mandatory arbitration is a court of last resort. When one arbitrates under mandatory arbitration there is no appeal, or even a right of reconsideration of the matter by the arbitrator if something went wrong. One’s legal rights to challenge a final arbitration decision are very limited. The arbitrator’s decision is almost absolute.

I know. I have sat as an arbitrator and have represented parties in arbitration.

Arbitration is defined as an alternative to litigation in which the parties are required to put their dispute before an arbitrator. The arbitrator, for good or ill, and without the benefit of a black robe, makes the final decision on the dispute. If one’s agreement contains a mandatory arbitration clause, you can’t go to court. (There are minor exceptions, but we will save that for another sermon).

Mandatory arbitration clauses can be found in easements, real estate contracts, water rights agreements, some mineral rights contracts, business agreements, and are often found in a public contract, that is, a contract with a government body or agency. An arbitration clause is sometimes buried in the agreement’s terms particularly in consumer agreements. Consumer agreements containing arbitration clauses, as described by an old labor leader, are akin to negotiations between a lion and a lamb in which the lamb wakes up the next morning in the stomach of the lion.

I find it commonplace for parties, and their attorneys, not to seriously consider the issue of arbitration when negotiating the language to be placed in an agreement. Big mistake. Never approach a goat from the front. Never approach a horse from the rear. Never approach an arbitration clause from any angle unless you and your well-seasoned counsel, have weighed the pros and cons while in a sober state of mind. Arbitration is a shortcut to justice, but there are many pitfalls, cliffs, dark places and precipices along the way.

South Dakota statutory law enforces and encourages arbitration clauses. And regarding the legitimacy of arbitration the state Supreme Court stated as recently as this year, “The plain language of [state law], being clear, certain and unambiguous, does not provide for a right of appeal from an order compelling arbitration.” The South Dakota Supreme Court some time ago gave its official blessing to arbitration as a dispute resolution process: “This Court has consistently favored the resolution of disputes by arbitration.”

Arbitration is faster and less expensive than litigation. These are its two most compelling attractions. But one rolls the dice in arbitration in that one can never be sure of the wisdom, fairness and competence of the sole judge of the affair – the arbitrator. In some arbitration clauses the parties have a right to agree upon a particular arbitrator. Arbitration itself is a private process meaning it is not a public event. This can be advantage in several situations.

So what are problems with arbitration? I have already painted a pretty colored picture in this piece, but will here elaborate a bit more.

No appeals are allowed. In small-dollar conflicts the costs of arbitration are not always justified. The rules of evidence in arbitration are a bit loose and that can be problematic. A pre-hearing exchange of evidence between the disputing parties is not as well managed as it is in litigation. If an arbitrator does not carefully follow the relevant law dealing with the problem, the decision of that arbitrator will still stand as a final decision.

Judges are a bit different. A judge is constantly looking over his or her shoulder. A judge is, or at least should be, always considering the consequences of a decision from the point of view of another court — the appellate court.


Water and mineral rights workshop

Posted by David Ganje - July 12th, 2018

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.


Water and mineral rights workshop

Posted by David Ganje - May 30th, 2018

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.


Ganje Seminar in Pierre – May 18

Posted by David Ganje - May 23rd, 2018

David Ganje, a South Dakota attorney who specializes in natural resources law led a seminar on mineral and water rights in Pierre May, 18.


Two proposals for managing water sources

Posted by David Ganje - May 14th, 2018

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.


Well-known Attorney David Ganje to speak at land and water rights seminar in Pierre

Posted by David Ganje - April 26th, 2018

Well-known natural resources Attorney David Ganje will conduct a seminar on mineral rights and water rights in Pierre on May 18th. The seminar is sponsored by the Capital Journal.

Ganje was born and raised in Aberdeen, South Dakota, and handles matters throughout South Dakota related to mineral law, environmental law, oil and gas law, energy law and water rights/water law in his natural resources practice.

Capital Journal Publisher John Clark said Ganje has been writing regular columns in the Journal and other statewide publications. Topics include South Dakota land and water rights, non-meandering waters (including hunting and fishing restrictions), mineral rights, natural resources and property issues. “Now our readers will have a chance to meet David and ask him firsthand about some of these timely topics,” said Clark. “This is a great opportunity to draw upon his wealth of knowledge about issues that affect our livelihoods and quality of life here in South Dakota,” he added.

Ganje graduated from Central High School in Aberdeen and received both his BA and JD degrees from the University of South Dakota. His practice includes representation before local and federal regulatory bodies. In his commercial law and commercial litigation practice, Ganje represents businesses and individuals in trans-actional and business litigation matters as well as serving as local counsel for individuals and institutions.

Ganje has held many teaching positions including faculty of Law Guest Lecturer, Masaryk University, Czech Republic, former Adjunct Professor of Law, Albany Law School, Union University, former Adjunct Visiting Professor, Augsburg University School of Law, Augsburg, Germany, former Adjunct Faculty Member, School of Business and Industry, Northern State University, Aberdeen.

He is a former arbitrator, Commodity Futures Trading Commission, former United States Department of Justice Chapter 7 bankruptcy trustee, consultant to the South Dakota Real Estate Commission as well as the Illinois Section American Water Works Association.

The seminar will be held in the amphitheater 1 at the Ramkota Inn, 920 W. Sioux Ave., Pierre, from 1:00 p.m. until 4:00 p.m. Admission is $20 in advance or $25 at the door. Tickets are available at the Capital Journal. Phone 605-224-7301 for more information.