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Eminent Domain

Posted on: February 3rd, 2022
by David Ganje

SIOUX FALLS, S.D. (KELO) — Landowners continue to gather and plan meetings as Summit Carbon Solutions has applied for a carbon dioxide (CO2) pipeline permit in Iowa.

“In the coming weeks we will be filing our permits in South Dakota and North Dakota,” said Jim Pirolli, the chief commercial officer for Summit. The developer has already applied in Iowa, Pirolli said.

Once the permit is submitted South Dakota that kicks off a process that is roughly a year long, he said.

Projects would harvest CO2 for transport in pipelines across five states

Summit and Navigator have proposed two CO2 pipelines whose routes include South Dakota, parts of Iowa and Minnesota. Pipelines would capture CO2 from ethanol plants, which would reduce the plants’ overall carbon footprint and allow those plants to sell ethanol at a higher price in markets such as California, which has strict carbon guidelines. The project would also allow participants to use tax credits provided in the 45Q, which provides a tax credit for each metric ton of sequestered CO2. The captured CO2 would be buried at site in North Dakota by Summit and in Illinois by Navigator.

As Summit seeks to secure easements from landowners in South Dakota, Iowa and other states, the possible use of eminent domain comes up.

Ed Fischbach, a landowner in Spink County, said eminent domain is a concern because as of now, there is at least some opposition to agreeing to easements for the Summit pipeline in his region and in other states.

Eminent domain is “a right of a government to take private property for public use by virtue of the superior dominion of the sovereign power over all lands within its jurisdiction,” according to Merriam-Webster.

“I can only speak to my neighbors but there has been a lot of opposition,” Fischbach said.

Several counties in Iowa have passed resolutions, or written letters to the state’s public utilities board, in opposition to the use of eminent domain for CO2 pipelines.

Pirolli said Summit is somewhat surprised by the letters and resolutions in opposition to eminent domain because it wants to use easements and the project will benefit farmers, participating ethanol plants and the overall rural economy.

“Iowa is really organized and ahead of us,” Fischbach said of organized opposition to CO2 pipelines and eminent domain.

McPherson County has passed a moratorium on pipelines that would include CO2 pipelines, Fischbach and Bruce Mack, a landowner near Aberdeen, said.

Opponents of the proposed C02 pipelines cite safety concerns, permanent damage to the land on which the pipeline is buried, and the use of eminent domain on a private project in which a private developer will make millions.

Landowners should have questions about eminent domain and even the easements, said Dave Ganje, a lawyer based in Rapid city. Ganje works in natural resources law and commercial law and litigation.

Eminent domain for private developers

“The use of eminent domain for pipelines and private developers has been established by the U.S. Supreme Court,” Ganje said.

Ganje cited a 2005 U.S. Supreme Court case called Kelo vs. City of New London (Connecticut) in which the court ruled that the city could use eminent domain to transfer land from one private owner to another private owner. The use did not violate the 5th Amendment’s taking clause, according to the court. The court cited public use and economic development.

Rep. Charlie Hoffman, a Republican from Eureka, said the South Dakota courts may need to decide if eminent domain would be an appropriate use for CO2 pipelines.

Part of the original pipeline plan would have gone through Hoffman’s property. The route has since been switched but Hoffman said that is why he supports the pipeline. The pipeline will be a benefit to farmers and ethanol plants, Hoffman said.

Although he supports the proposed Summit CO2 project he understands farmers’ fears of eminent domain. In general, farmers don’t want private development on their property, he said.

Using eminent domain for the purpose of a pipeline is not unusual, Ganje said. The U.S. has thousands of miles of pipelines for various materials, he said.

The use of eminent domain can be allowed through statute, regulatory body such as a state agency or county government, Ganje said.

Chris Nelson, the South Dakota Public Utilities Commissioner, said the PUC does not get involved in eminent domain. That is between the landowner and developer and decided in circuit court, he said.

Pirolli said it’s too early to talk of eminent domain because Summit wants to work with landowners to obtain easements.

“We have just begun right of way acquisition in the state of South Dakota,” Pirolli said. “So far, we’ve had a great reception.”

“It’s preliminary to say we would have to go down that path…,” Pirolli said of eminent domain. “…acquiring right of way takes a long time.”

If Summit believed it would have to use eminent domain to get much of the property for the pipeline, it would not have pursued the project, Pirolli said.

Eminent domain and easements as a share of the profit?

If eminent domain is used then what is the obligation of the private developer to the property owners? Ganje asked.

How is the value of that property determined and should the property owner be entitled to more than a “one-off” payment, Ganje said are questions that must be asked. Should property owners share in the profit from the private development? Ganje asked.

Ganje said the same questions need to be asked with an easement.

Fischbach said landowners also need to understand if an easement obligates them completely, even if the project is not developed.

“They may never get that easement back,” Fischbach said.

Ganje said some easements are written to allow for uses other than the intended use if the original project does not happen.

Pirolli said if Summit’s pipeline is not developed, nothing else can happen on that easement.

Summit has a structure it uses to determine a fair easement payment to the landowner, Pirolli said.

The structure is based on the value of the land, crop production and other factors, he said.

Summit will also pay 100% of the crop or pasture damage in the first year which is the year of construction, Pirolli said.

It will pay 80% of the crop or pasture damage in the second year and 60% in the third year, Pirolli said. Many farmers report little or no crop damage loss in the second and third year, he said.


When Summit applies for a permit in the state of South Dakota the process includes information meetings, hearings and other requirements.

Summit already had several meetings in 2021 to inform the public about the proposed CO2 pipeline project in South Dakota, Pirolli said.

Fischbach said at least two meetings were held in October during harvest which was inconvenient for farmers. Also, he received a letter about the proposed CO2 project toward the end of July and surveyors arrived shortly after to ask about surveying property, Fischbach said.

“No one had heard anything prior to then (July letter),” Fischbach said.

Pirolli said Summit hasn’t been invited to meetings such as the one planned for 5:30 p.m. Wednesday, Feb. 2, at the 4-H building in the fairgrounds in Redfield.

Mack said they hope to have ethanol and county representatives at the meeting.

He described some meetings as organized by “activists who are not focused on the benefits of the project…” They are instead focused on opposing it, Pirolli said.

Summit is focused on educating the public about how pipelines can safely transport CO2 and how capturing it can improve the rural economy.

Meanwhile, Fischbach said landowners like him will continue to educate the public about the possible dangers of CO2 pipeline transport and discuss how to oppose a private development using federal tax credits to make money and possibly, take their land.

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.

Free Land — If You Can Keep It

Posted on: October 12th, 2016
by David Ganje

Free Land – If You Can Keep It

It seems everyone is looking for newfound money whether in the form of land or the lottery. Let us look at the miracle of “new land” obtained by accretion along a riverbank as a phenomena of newfound money. Property boundaries matter when your land is next to a river. If the river deposits land onto your riverfront by “accretion”, then who owns it? Accretion is the gradual increase to land, notably riparian land, stemming from the movement of water. A meandering river has no master. Certainly man-made law has not corralled a meandering river with anything close to perfection, or to some landowners, with any degree of satisfaction. Questions come up when riverfront boundaries naturally shift due to erosion or accretion.

In Norby v. Estate of Kuykendall, 2015 ND 232, 869 N.W.2d 405, Norby owned land adjacent to the Kuykendalls along the North Dakota-Montana border. Norby’s land was on the eastern Montana side and Kuykendal was on the western North Dakota side, with the Yellowstone River separating the properties. But, importantly, neither party’s deed history described the legal boundaries by reference to the Yellowstone River. Gradually the Yellowstone River moved eastward, eroding land from its eastern bank and accreting it on to the western bank. This “new land” on the North Dakota side made up 96 acres.

Norby brought suit to eject the Kuykendalls from the disputed property and to quiet title on the theory that the disputed land were his “riparian accretions.”

Typically riparian and ownership rights of a riverbank shift as the river moves without considering other fixed boundaries. Nevertheless, since Norby’s deed never mentioned the Yellowstone River as the property line, his argument sank.

Perhaps an even more relevant case is the older case of Perry v. Erling, 132 N.W.2d 889 (N.D. 1965). Mrs. Perry argued that she was entitled to “new land” formed by accretion. She owned land directly east of the Big Muddy originally as a non-riparian owner (i.e. landlocked). Since the original land survey in 1872, the river had shifted eastward eroding other intervening riparian lots and eventually turning Mrs. Perry’s lot into riparian land. Over time the river built up “new land” by accretion over the intervening lots. The Court rejected Mrs. Perry’s arguments by making clear that non-riparian owners, such as Mrs. Perry, are only entitled to the land that falls within their original property lines when their property boundaries were not set with reference to a body of water. The original riparian lot owners however would be entitled to the accreted lands.

These cases raise several important points for landowners who hold title to land near bodies of water. For instance, if your land now has additional riverbank or land because of how the river shifted over time, you may still not have ownership over any of the “new land” if your property description was not acquired with legal reference to a river. Laws that normally give rights to riverbank landowners will not help you in this case. However, if your original property boundary was set by descriptive reference to a river, then you may be able to claim the newly formed land as your own. The law of man does not direct the flow of a river.  So be specific in your land deed descriptions or be at the mercy of the river. A good scrivener (lawyer) is worth a thousand words.

Article Also Available at Bismark Tribute

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

Is the Trump Option Available In SD For Condemnation?

Posted on: February 13th, 2016
by David Ganje

Is the Trump Option Available In SD For Condemnation?

Eminent domain is one of the toughest and most controversial legal powers available to a government, but the South Dakota legislature has so far failed to manage it properly. Eminent domain allows a governmental body to convert privately owned land to another use, often over the objections of the current landowner. The Donald Trump Option is the right of a private party to use eminent domain.  This is done by developers, pipeline companies and hotel builders alike. This process is commonly known as a ‘taking’ or ‘condemning the land.’ There are rules, of course. A landowner must be paid “just compensation” for the condemnation of his land. Further, the land that is to be taken may only be taken to further a beneficial public use.

The ability to exercise eminent domain is so powerful that it almost always remains the final legal option. The use of eminent domain is not solely limited to governments. Private parties as well as corporations may exercise the immense power of eminent domain. For example, South Dakota law states that “Any person may exercise the right of eminent domain…to acquire as a public use any property or other rights necessary for application of water to beneficial uses.” Private parties as well as corporations may exercise the immense power of eminent domain.

The law allows a private party to manage water rights by a taking. The statute states, “except as otherwise provided…no person may appropriate the waters of this state for any purpose without first obtaining a permit to do so.” The power of eminent domain may used if the taker puts water to a beneficial use. For this reason, a party may not successfully exercise eminent domain without first having a water permit.

This right to take comes into play when a party seeks access to land he doesn’t own in order to access water. What is a beneficial use? South Dakota law is intentionally vague on this subject. It says beneficial use is the use of water “that is reasonable and useful and beneficial to the appropriator, and at the same time is consistent with the interests of the public.” For courts, this is a balancing test, as opposed to a concrete definition. The question in eminent domain cases, then, is whether or not a proposed use of water fits this vague legislative definition of ‘beneficial use.’ The Supreme Court has implied that it can. As a result, eminent domain cases involving water can span an enormous berth of cases, with those claiming eminent domain seeking water for everything from irrigation to oil extraction.

There is irony in too much of what the South Dakota legislature does. Counties and municipalities are forbidden from using eminent domain for the benefit of a private party. Yet the field is wide open for private parties to use eminent domain for a private party’s benefit.

Whether it is a taking to obtain water rights or land for a pipeline, the matter of ‘just compensation’ to be given to the landowner is paramount. I have advocated in prior blog articles the need to revisit the matter of just compensation. This issue applies to a government or private taking.  The ‘valuation process’ should be changed.  The SD Supreme Court has stated that the state legislature has the authority to create the method of compensation in a condemnation proceeding.  The State Constitution is interestingly stronger from a landowner’s perspective than is the US Constitution on the issue of eminent domain.

State Senator Monroe, or his speechwriter, state that that my argument (and that of 5 states and counting as of 2012) is wrongheaded. He has stated, “We have well established legal mechanisms to compensate property owners and treat them fairly.”  Good negotiations by a landowner may result in more favorable compensation. But the playing field should be level between the land taker, who has the power of the law to take, and the landowner.  Senator Monroe’s refusal to look at the issue is a belittlement of efforts to protect property rights.

I do not know whether the Senator has had a pipeline run through his property under an eminent domain proceeding. A taking is not a normal market transaction because the landowner has no choice.  A landowner can’t walk away from the table. The legal process of taking private property is just as important as the right to free speech, freedom of religion and the protection against unreasonable search and seizures.

There are several problems with South Dakotan condemnation law. The law should be revised to include written disclosures following the requirements of Wyoming law. Wyoming law provides new rights for landowners in all condemnation proceedings, whether initiated by the government or private parties. SD law should require that the taker show the details of the proposed project plan and the written basis behind any compensation offer. An additional provision that should be changed is the legal taking procedure. Currently the procedure does not allow the landowner the recovery of all of his court costs, appraisal costs, expert witness fees and attorney’s fees even in the event he should prevail in the case. This forces landowners to fear spending money defending their own land, something that a citizen should never have to do. SD law should provide that a landowner is entitled to an award of all court costs, appraisal costs, expert witness fees and attorney’s fees if the taker failed to negotiate in good faith, or if the compensation awarded by the court or jury exceeds the amount of money offered by the taker to the landowner. Until then, the playing field will remain skewed in favor of takers.

David Ganje. David Ganje of Ganje Law Offices practices in the area of natural resources, environmental and commercial law in South Dakota and North Dakota. The website is Lexenergy.net

Does Eminent Domain Apply to Water Rights?

Posted on: February 7th, 2016
by David Ganje

Does Eminent Domain Apply to Water Rights?

Eminent domain is one of the toughest and most controversial legal powers available to a government. The doctrine of eminent domain allows a governmental body to convert privately owned land to another use, often over the objections of the current landowner. This process is commonly known as ‘condemning the land.’ There are rules, of course. A private landowner must be paid “just compensation” for the condemnation of their land. I have written several blog articles regarding the matter of just compensation. Further, the land that is to be taken must be taken to further a beneficial public use.

The ability to exercise eminent domain is so powerful that it almost always remains a final legal option left to state and government bodies. In North Dakota, a little-known law allows private citizens to exercise eminent domain. North Dakota law states that “The United States, or any person, corporation, limited liability company, or association [may] exercise the right of eminent domain to acquire for a public use any property or rights existing when found necessary for the application of water to beneficial uses.” Private citizens as well as corporations may exercise the immense power of eminent domain – but only when it comes to using water for a beneficial use.

North Dakota evaluates whether or not a citizen is able to put water to a beneficial use through a permit system. The law requires “any person, before…appropriating waters of the state…, shall first secure a water permit from the state engineer.” There are few sources of water (groundwater, surface water, river water, etc.) within the limits of the state that are not subject to such a water permit. The power of eminent domain can only be harnessed in order to put water to a beneficial use. For this reason, a citizen cannot successfully exercise eminent domain without first having a water permit.

The right of eminent domain may come into play when a private citizen or corporation wants to use water for a beneficial use, but needs access to land they don’t own in order to access water. What is a beneficial use? North Dakota law is intentionally vague on this subject. It says beneficial use is the use of water for “a purpose consistent with the best interest of the people of the state.”

Traditionally the landowner who desires the use of a water source, having first secured a state permit, will negotiate an easement with the landowner who owns the land on which the water sits. But this does not always work out. Such was the case in Mougey Farms v. Kaspari, a 1998 North Dakota Supreme Court case. The plaintiff, Mougey, owned farmland neighboring the defendant Kaspari’s land. Kaspari’s land also bordered the Sheyenne River. Mougey wanted to use the Sheyenne River as a water supply to irrigate his land. To that purpose Mougey approached Kaspari to negotiate a lease of his land in order to build a water transport system connecting Mougey’s irrigation system to the Sheyenne River. Kaspari agreed, the two signed a lease, and the irrigation system was built across Kaspari’s land without incident. The lease began in 1979 and continued for almost seventeen years.

In 1996 Kaspari informed Mougey that the lease would not be renewed, and Mougey would no longer be allowed to transport water from the Sheyenne River to Mougey’s farmland. This left Mougey without a source of water for irrigation. Mougey brought suit with an eminent domain claim against Kaspari’s land – in other words, he brought a suit to condemn the part of Kaspari’s land on which the water pipeline stood, asking for the right to continue piping water from the river to his irrigation system. Though this argument was rejected in the lower court, the North Dakota Supreme Court held that “irrigation of farmland under a perfected water permit issued by the State Engineer is a beneficial use of water consistent with the best interests of the people of North Dakota, which we conclude satisfies the ‘public use’ requirement.” The Supreme Court of North Dakota held that a private citizen could exercise the power of eminent domain in order to condemn part of his neighbor’s land, so long as the condemnation was in support of an approved public use of water.

The law lays out what public uses trigger the right of eminent domain. It states, “oil, gas, coal, and carbon dioxide pipelines and works” and the plants for supplying the above, together with “lands, buildings, and all other improvements” needed to for the purpose of “generating, refining, regulating, compressing, transmitting, or…development and control” are all public uses capable of triggering eminent domain.

The question is whether or not use of water fits a category. Is the use one that supports “generating, refining, regulating, compressing, transmitting,” or “development and control” of oil and/or natural gas? This issue may be considered regarding one of the most important uses of water in the oil and gas industry, hydraulic fracturing. There are parallels that can be drawn between the use of water for irrigation seen in Mougey Farms and the use of water for hydraulic fracturing.

Energy developers and landowners should be aware of this eminent domain statute and the possibility of its use. Both parties need to remember that when water rights are involved in a public use, the prospect of eminent domain is conceivable. The North Dakota Supreme Court teaches us that the ‘eminent domain of water statute’ allows individuals or companies to acquire for public use property when found necessary for using water for beneficial purposes.

David Ganje. David Ganje of Ganje Law Offices practices in the area of natural resources, environmental and commercial law in South Dakota and North Dakota. The website is Lexenergy.net