Friday, January 18, 2019

Government Shutdowns, Turbulent Markets, Falling Consumer Confidence--Not The Best Indicators For South Dakota's Tourist Season This Year. We Need To Get This Stuff Settled, And Now.

     With some justification, South Dakota's Secretary of Tourism Jim Hagen, seems confident
Tourists Love Us
Let's Stay Open For Business
about how 2019 will go for those of us in the hospitality trade. 
I'm in the biz, having lodging interests in western South Dakota, where our natural wonders, history and national parks pull in millions of tourists every Summer.  Hagen's remarks to KSFY-TV noted that '18 was a record year for the industry, pulling in $4 billion, a 2.5% increase over '17.  That made for 9 straight years of growth, a decent turn of events, and a nice reflection of the good job that SD Tourism officials, led by Hagen, have been doing.  I'm confident that most of my peers would agree.
     Regarding the upcoming season, though, Hagen's forecast that 2019 "will be a really good year" leaves some room for consideration.  Hagen says that consumer confidence remains very high, a point with which I take issue.  The University of Michigan's Survey Research Center just came out with its widely-followed reading on consumer sentiment.  The indicator took a beating in recent months, with the January number reaching its lowest level since 2016.  The survey's index numbers have been trending down since last September, with January's drop looking more like a plunge than an incremental point on a downslope.  If consumer sentiment is the basis for predicting the outlook for this year's tourism season, I'd be looking ahead with some tempered optimism.
      Fact is, even though our statewide spending numbers have been good, National Park Service attractions in the Black Hills/Badlands region saw a falloff in visitation in 2018.  Per data compiled by NPS, Mt. Rushmore was -5%, Badlands National Park was -4% and Devils Tower just across the border in Wyoming was -6%.  Wind Cave and Jewel Cave were mixed, the former up a bit, the latter slightly lower.  South Dakota state park visitations were down by 90 thousand for the year.  I couldn't find a figure indicating what the percentage drop was in our state parks, but the trend overall seems pretty clear. 
     As to the outlook for 2019?  Secretary Hagen alluded to it in his interview with KSFY.  He said that he feels confident that the federal government's partial shutdown will end by the time the peak season begins. That's a big point. We can live with fluctuations in consumer confidence, but severe service cutbacks or even outright closures of our National Park Service facilities would make for a horrendous blow to our tourist economy.  The last time something like this occurred was in October, 2013, and it turned out to be a train wreck for western South Dakota's autumn tourism period.  I've noted here before that the town of Keystone, at the base of Mt. Rushmore, saw its sales tax receipts fall by more than a third for that period.  Extrapolating that kind of falloff over the length of the entire tourist season is a frightening thought.
     At this point, with vacationers planning their trips and setting up their itineraries, South Dakota's congressional delegation--Senators John Thune and Mike Rounds, along with U.S. Representative Dusty Johnson--need to remember their constituents in western South Dakota and do everything they can to get our national parks, caves, memorials and monuments running normally and as quickly as possible.  Consumer confidence has fallen by a factor of 11% since last September.  If Secretary Hagen is correct in using that index as an indicator of how things will go in 2019, we have good reason to be concerned.

Wednesday, January 16, 2019

Guest Poster David Ganje Discusses Wind Power In South Dakota

Windless in Woonsocket
I marvel in South Dakota how many landowners sign a wind turbine
agreement or an oil and gas lease without the benefit of good counsel.  I have seen the end product. It is not pretty. Though we are taught about the seven deadly sins of this world also called the seven cardinal sins or capital sins, yet a wind turbine agreement may contain an even greater smorgasbord of “contract sins” all of which should be discovered, remedied and purged by any negotiating landowner.  We will in this opinion piece visit a few contract issues.  Let us first however examine a difference one occasionally finds between a North Dakota landowner and a South Dakota landowner.  I am reminded of an old Aberdeen lawyer friend who has now passed away.  He once said, “In North Dakota they spend money to make money and they spend money to save money, but in South Dakota they just don’t spend money.”  Consider that many wind turbine agreements are private contracts in which the parties have an unequal bargaining position.  To be involved with one is not the time to practice parsimony.
A particular contract term used by wind farm developers is the confidentiality agreement.  This stratagem requires landowners sign a confidentiality agreement often before even seeing a form lease.  The clause attempts to give a developer an advantage over landowners by prohibiting the sharing of information among landowners.  Such a “gag” provision is also found in a final executed wind lease in order to protect the contract terms from disclosure.  A confidentiality clause makes it a bit more challenging to determine what the regional “market” payment terms really are for a given project.  And it in turn the clause hinders a landowner’s ability to knowingly negotiate terms which are fair for a particular project in that particular market. The absence of market knowledge gives a competitive advantage to project developers.  When I consult ag land appraisers to discuss regional wind turbine payment terms I usually find these experts bereft of much information on the subject.  While there are methods for learning what a fair payment term should be, the methods are a bit more expensive than what might be found in an open and transparent market.
I here list some important terms found in a wind turbine agreement.  This is a sobering list, and should motivate the landowner to seek the exact parameters of each term.  Common agreements contain:  a construction and land use option all in favor of the developer; an access easement to cross and use one’s property; the right to construct roads; the right to construct large turbines on one’s land; the right to construct underground and above-ground transmission lines and substations; and terms that bind on one’s heirs or any subsequent purchasers of the land.  As in a courtship, pretty pictures painted, verbal promises and solid verbal commitments between the landowner and developer mean nothing once an agreement is signed.
    Some wind turbine agreements are called easements, some leases, some something else.  It matters not.  These babies are a binding, long-term land contract.  Or, as the young people say, these agreements are a land contract with benefits.  Be not dissuaded by the good money offered.  While by and large the agreement often presents itself as if the agreement were a lease - the agreement is considerably more than a lease. A wind turbine agreement is a binding, long lasting commitment of the landowner allowing the developer the right to broad use of the landowner’s property.  This right-to-use language often has ambiguous or liberal terms that may be subject to interpretation.  I suggest one leave as little to interpretation as one can.  A wind turbine agreement is a business marriage with all its serious consequences.  Let me provide an example of language found in an agreement:  ‘The final decision concerning the placement of any wind turbine equipment remains in the sole discretion of the developer.’  This is an open-ended term indeed.  A written wind energy agreement is the very Constitution of the land use relationship.  It has many consequences not here discussed including a legal liability issue and several tax questions.  A tax and legal analysis is essential.  A landowner should invest money to make money.
David Ganje of Ganje Law Offices practices in the area of natural resources, environmental and commercial law. 

Monday, January 14, 2019

Trump's Tantrum, South Dakota's Anxiety.

     When will South Dakota's all-GOP Congressional trio (Senators Thune & Rounds,
Thune, Rounds, Johnson
Representative Johnson) grasp that anxiety about the government shutdown is beginning to build around here? 
This morning's Rapid City Journal reports that the shutdown "could delay upcoming local road projects," citing closures of the Fish & Wildlife Service, the Bureau of Indian Affairs, and the Forest Service as the main reason for the hold-up.  These agencies have to sign off on many road and bridge projects and, RCJ notes, "as the shutdown drags on, the likelihood of some projects getting delayed increases."  The State of Oklahoma has already announced plans to delay bids on 45 road projects totaling about $140 million, a situation that should make South Dakotans think hard about the economic loss that the federal shutdown would inflict on our state if the federal government doesn't reopen for business soon. 
     Here in the Black Hills region, planned highway projects totaling "multi-millions," include the reconstruction of Sheridan Lake Road, resurfacing Highway 79, and reconstruction of a stretch of I-90.  If the seriousness of this amount of money being delayed--or even withheld until next year if this shutdown lasts for months--hasn't dawned on our congressional reps, then they're so addled by the politics of the situation that they've lost touch with the concerns of their constituents. 
     Those concerns aren't limited to western South Dakotans looking to get some road projects underway.  KSFY-TV in the eastern part of our state is reporting that the Farm Service Agency closure is "causing issues for local farmers."  When they call their local FSA office to find out about the status of federal funds they depend on, farmers get a recording that says, "we are not in the office at this time.  We are on furlough due to the lack of government funding.  Please leave a voicemail."  I can only imagine some of the choice voicemails that must be getting left by farmers who need their money.  This isn't right.
     To the antsy-ness in the construction and farming trades that's been set off by the shutdown, our Congressional threesome should know that tourism interests in this state are also starting to wonder about their fate should the standoff continue.  The lack of personnel at our national parks is creating horror stories about conditions and accessibility.  National Geographic says the damage done could be long term.  16,000 National Park Service employees have been furloughed, leaving the parks in a royal mess.  Tourism will suffer if this situation doesn't end soon. Considering that tourism is the lifeblood of the Black Hills/Badlands region here in western South Dakota, the economic pain will be acute. 
It's A Monument, Alright

     This state of affairs is untenable.  It's made all the more disgusting by the indifference of our federal representatives, whose political commitments are more compelling than their need to serve the people who sent them to Washington in the first place. 

Friday, January 11, 2019

The Reasons For Doing Away With Presumptive Probation In South Dakota Make No Sense

     South Dakota's Senate Bill 19 would repeal a law passed in 2013.  That law ("The Public
Give Rehab A Fair Chance
We could save lives and money
Safety Improvement Act"
or PSIA) includes a section that calls for "presumptive probation," which allows South Dakota judges to sentence criminals of Class 5 and Class 6 felonies, including many common drug offenses such as distribution of marijuana, to probation instead of hard time in one of the state's prisons.  PSIA came into being largely as a response to the rapid growth of South Dakota's prison population, rising by 750% between 1977 and 2017, from about 500 to nearly 4,000.  That's 30 times faster than the state's population has grown.  (My data for this piece come from retired South Dakota judge and recent Democratic candidate for Congress Tim Bjorkman, whose 2017 pamphlet on the subject was published by the University of South Dakota Law Review.)
     By 2012, growth projections over the next decade predicted that South Dakota would be spending an additional $200 million a year on prisons, which prompted a reform effort that resulted in PSIA.  The law passed with strong bi-partisan support.  Allowing for presumptive probation is perhaps its most significant component because of its potential for reducing growth in the prison population and giving rehabilitation and supervision a chance to reform probationers.  Results through 2017 have been mixed at best, though, because as Bjorkman notes in his study, "the state has not fulfilled its promise to provide enhanced treatment and supervision for offenders."  Bjorkman says that this is a concern shared by "law enforcement, prosecutors, defense lawyers" and others "who work within the court system."
     On this level, detractors of the status quo allowing for "presumptive probation" are unfairly criticizing it.  The set-up isn't functioning as envisioned, and until the state makes a real commitment to helping probationers recover and return to normal society, all bets on the potential for this program are off.  Supporters of Senate Bill 19 should be thinking of more material and financial support for a program that hasn't been operating as planned from the get-go.
     In the meantime, South Dakota Attorney General Jason Ravnsborg, the driver for Senate Bill 19, pushes for its adoption with an argument that makes no sense.  Ravnsborg last week told WNAX radio that by repealing presumptive probation, Senate Bill 19 "gives discretion back to the judges," implying that judges have no latitude and must order probation for offenders.  This doesn't square with the wording in the existing law, which clearly states that judges "may" (italics mine) defer prison sentencing and put defendants on probation according to the terms of the presumptive probation model.  In other words, judges already have the discretion that Ravnsborg seeks to restore, gratuitously.
     Rather than toss a law that was enthusiastically passed by the state and then allowed to languish for lack of interest and/or money, we'd be better off to make the existing program work the way it's supposed to.  South Dakota's legislature should take a breather before hastily tossing a law that might help those in desperate need of recovery.   It could also save our state a ton of money on prison construction and operations at the same time.

Monday, January 7, 2019

Senator Thune, Being Against The Wall Is Not The Same As Being Against Border Security.

     Our Senator John Thune's piece in the Rapid City Journal's editorial page this morning
Has He Actually Studied This Thing?
was a carefully crafted bit of misdirection. 
First, he actually makes a pretty good case for enhanced border security, which, as he notes, "experts throughout the national security community say we need." But then Thune goes on to claim misleadingly that the "far-left wing" of the Democratic Party has led Democrats "toward the dangerous idea that we don't need to secure our borders at all,"  which, of course is utter baloney, going beyond the bounds of political hyperbole and into the region of outright lying.  Yes, lying.  Thune knows better, especially considering that Democrats have voted for some significant money, well over $1 billion, to enhance border security.
     Thune ignores that fact in a rather sneaky fashion.  His piece entirely avoids the word "wall," which of course is the sticking point to this entire government-paralyzing impasse.  Thune seems to be trying to convince us that being against the wall, as the Democrats are, is the same as being against border security.  But Democrats have good reason to be dubious about the need for the wall.  All those "experts" Thune alludes to have some serious misgivings about the cost-effectiveness of Trump's obsession.  The federal Government Accountability Office itself, which is the government's watchdog over spending proposals, in a report issued last August warned that costs could be far more than estimated and that the wall might not  "perform as expected."  Conservative thinkers and analysts at The Cato Institute studied this and concluded that "the wall won't work."  Last November a joint study at Stanford and Dartmouth Universities said that a wall would "have high costs and low benefits."
     Let's give wall supporters the benefit of the doubt. These analyses may be incomplete and inconclusive--but try as you might (google "studies that support Trump's wall"), you'll have a hard time finding analyses that make the wall look like a productive venture. The GAO report alone should be enough to make our elected officials think twice before charging ahead.  Nonetheless, President Trump and his political handmaidens, Majority Whip Senator Thune most conspicuously among them, continue to blindly support it, claiming unreasonably and ignorantly that the wall is the essence of border security.  Thune's fatuous attempt at conflating opposition to the wall with opposing "the need to secure our borders" doesn't wash.

Saturday, January 5, 2019

Guest Poster David Ganje Comments On South Dakota Water Laws

A distortion of the state’s water law
A Minnesota newspaper, the StarTribune published on December 27th an
extensive story on the history and operations of the successful and important Lewis and Clark Regional Water System (L&C).  This South Dakota water system supplies treated water to water districts and communities in three states.  In the article and in prior pieces I pointed out that the system has not planned for water shortages, natural disasters such as a drought, or a production facility breakdown.  I had written prior opinion pieces on the absence of an interstate water compact as well as problems with no contingency operating plan. The response of the L&C to these issues:  “South Dakota's bedrock water laws are enough. . .”  Traffic laws are also bedrock laws.  Yet traffic laws do not give a driver guidance on a better way to drive, nor do these bedrock traffic laws give a driver guidance on a better route to take, or the safest way to travel the roads.  The L&C is in charge of routing, conserving and managing a great amount of water as well as a quintessential natural resource.  The L&C confuses legal compliance with the management of a sophisticated multi-state water distribution system. 
The response of “water laws are enough” fails to take into account unaddressed water management issues of the L&C system.  If the system functions well on autopilot why does it have a multiple-member board, a professional staff, lobbyists, lawyers and engineers?  I am puzzled by the simplicity of the water system’s view of managing a natural resource under which it is given the right to distribute public waters to three states.  It has been said that water law itself provides few options for reallocating water in the face of a drought emergency.
The newspaper article reported that community leaders who would put the new project together thought that water was the “new oil.”  The suggestion is there was an oil rush in water.  I have some experience with the oil and gas business.  For some time now that industry has ended a bias of practicing “drill baby drill.”  That attitude had signified man’s aggressive and unfettered production of oil and gas.  The oil and gas industry has matured today well beyond this moniker.  Water which is relatively inexpensive to the user and which may be readily available will often be taken for granted. Water is a much more important natural resource and should never be considered under the guidance of “drill, baby drill.”  In South Dakota the waters, outside of Indian Country, are held in trust by the state for the benefit of all the state.  Water rights are not sellable property rights.  Under state law the conservation of water is to be exercised with a view to the reasonable and beneficial use of the water in the interest of the people and for the public welfare.  Water rights are unique legal rights which are subject to permitting conditions and use-oversight by the state.  Yes, water is the lifeblood of many communities but it should not be treated as a marketable commodity. 
If state water law is a sufficient safeguard for a water system’s operations, why does the U S Bureau of Reclamation offer competitive grants for water systems to write drought contingency plans and to establish water efficiency procedures on projects that conserve and use water more efficiently?   South Dakota’s water law does not speak to serious operational events effecting a water system.  Because water laws do not address these occurrences many water systems in the U S adopt written water contingency plans.  The L&C has none.  Contingency Plans guide a water system in how decisions will be made in allocating water and in reducing demand during these challenges.  Plans minimize the adverse impacts of water supply shortage or other water emergencies.   Plans also include a water contingency plan in the event of 1.) drought, 2.) water supply reductions, 3.) failure of a distribution system, 4.) needed water conservation guidelines, 5.) and other emergencies such as a government ordered use reduction.   Such Plans attempt to assure reliability of water delivery and protect the environment.  Water management issues only grow in importance the longer they are left unaddressed.
David Ganje of Ganje Law Offices practices in the area of natural resources, environmental and commercial law. 

Friday, January 4, 2019

The Shutdown Might Last For Months? Maybe Years? We West River South Dakotans Better Brace Ourselves.

     Looking like he's digging in those bone-spurred heels of his, President Trump just came out of a
It Happened In '13
Do We Need To Go Through This Again?
meeting with congressional leaders and made an uncompromising threat. 
At the close of the confab today, the president said "I'm prepared for the shutdown to last for years."  Apparently convinced that he'll have an easier time getting the money for his border wall from Americans than he did from Mexico, as repeatedly promised during the campaign, Trump is using the only leverage at his disposal--the partial government shutdown that's been ongoing for almost two weeks now.
     It seems to matter not that most Americans oppose the wall.  In surveys conducted during the past couple of weeks, Quinnipiac finds that opposition to the wall runs 54-43.  Harris has it at 56-44 against.  Marist  says that 69% of Americans don't even think it should be a priority. Undeterred by public opinion, Trump is ignoring the will of the majority and is standing on principle, or something that passes for principle to a man whose contempt for principled behavior is long- standing and well-documented.  It may be bonkers, but Trump is standing firm, to the detriment and outright financial jeopardy of a whole lot of Americans, including hundreds of thousands of us living in western South Dakota, where tourism is such a major prop to the local economy.
     Specifically, I'm talking about the effects of the shutdown on our major national parks and monuments.  That would be Mt. Rushmore, the Badlands, Wind Cave, Jewel Cave and Devil's Tower.  Statewide, tourism in 2017 saw visitors spending nearly $4 billion.  It's hard to find data that show how much of that spending occurred in South Dakota's Black Hills/Badlands, where our state's major National Park Service facilities are located (Devil's Tower being just across the border in Wyoming), but considering that Mt. Rushmore alone drew 2.5 million visitors last year, you can figure that the economic impact in our state's southwestern counties is immense.
     If these parks and monuments are forced to close because of the shutdown, it will be a financial catastrophe.  I note that a couple of days ago Joshua Tree National Park in California had to close because there was no maintenance staff to maintain facilities, including overflowing toilets.  You can only imagine what kind of a mess you'd have at Mt.  Rushmore, with its limited space and facilities, when 2.5 million people show up and there's nobody on staff to maintain the place.  As tourists in California just found out, closing Mt. Rushmore is a very real possibility if there's no federal money to staff it during the tourist season.
     The financial loss to the surrounding communities would be colossal.  During the brief federal shutdown that occurred during October, 2013, when Mt. Rushmore was closed, the town of Keystone, SD, at the base of Mt. Rushmore saw sales taxes fall for that month by 32%--with significant (though not so extreme) drops in all of the tourism-dependent communities in the Black Hills/Badlands region.  And that dropoff occurred during a government shutdown that lasted for about 2 weeks.  Can you imagine the blow that the region will take if, as Trump, threatens, the shutdown last for months, or even years?
     Do us all a favor, Congressman Johnson, Senator Thune and Senator Rounds.  Keep your constituents in mind while you're playing this ridiculous game of chicken.  There are tens of thousands of west river families depending on you to do your blankety-blank jobs.  You work for us, remember?

Thursday, January 3, 2019

Thanks To Trump And His Foolish TPP Decision, South Dakota Ag Producers Are On The Outside Looking In

    The Trans-Pacific Partnership (now designated the Comprehensive and Progressive
Why No U.S.?
Too Proud, Too Dumb, Too What?
Agreement For Trans-Pacific Partnership, or CPTPP) that President Trump conspicuously walked away from shortly after his inauguration is now a done deal. 
The likely result for South Dakota's ag producers?  Not very pretty.  Consider that the eleven nations (Australia, Japan, Canada, Mexico, New Zealand, Singapore and Vietnam--soon to be joined by Brunei, Chile, Malaysia and Peru) account for 14% of global growth.  They'll soon go on a tariff-slashing binge that will undoubtedly have a negative effect on South Dakota producers.
     Our state's cattle producers are particularly at risk because of the Japan-Australia connection in this deal.  Kevin  Kester, President of the National Cattleman's Beef Association (NCBA), notes that the treaty will result in a 28% cut in Japanese tariffs on Australian beef, which doesn't bode well for American cattle producers, for whom Japan is their top overseas customer.  In 2016, Japan bought $1.3 billion worth of American beef, a figure that will probably be significantly reduced now that the Pacific Rim alliance is in place.  Kester says that "the U.S. beef industry is at risk of losing significant market share in Japan" unless immediate action takes place. It's hard to imagine what sort of "immediate action" the United States can take now that our country is on the outside looking in.  The NCBA has been lamenting our departure from these talks for a long time, calling it "a missed opportunity to gain greater access to foreign markets" over a year ago.
     When I was feeding and trading cattle back in the '90s it was obvious to everybody I knew in the business that opening Asian markets to American beef would give our industry a big boost.  And as trade barriers fell, that's exactly what happened.  Now that just about the entire Pacific Rim has joined to trade more freely, sans the United States, NCBA has good reason to be concerned.
     Meantime, South Dakota's wheat producers have their own reasons for concern.  By April, Japan's tariff on wheat imported from Canada and Australia will drop by 12%, making American wheat so expensive that our country's wheat industry faces an "imminent collapse" of its business with Japan, according to U.S. Wheat Association President Vince Peterson.  What makes the loss of the Japanese market for American farm goods particularly painful and ironic is that the United States has long had a sizable agricultural trade surplus with that country, amounting to $12 billion in 2017.  Japan is the world's 4th largest importer of agricultural goods, and now that we've lost much of our competitiveness in that market, you can bet that there'll be some price repurcussions affecting South Dakota's ag economy.
     Trump needs to wise up and figure out that our ag industry in South Dakota needs freer, not more restricted, trade.  

Tuesday, January 1, 2019

Dusty Johnson Will Go Without Pay During The Shutdown, But What Does He Know About The Wall Itself?

      A little political showboating is fine.  It creates nice optics and soundbytes, gets some face time in the media, and usually makes the showboater look okay--so on that score, our Congressman-elect, Republican Dusty Johnson, probably did himself some good when he announced to KELO-TV yesterday that he'd forego his coming congressional paychecks while the federal government's partial shutdown is in place.  The upside of Dusty's act of conspicuous non-consumption was that it showed some solidarity with those government employees who have to work without pay.                                                                                                                                                                                            The downside?  Two fold.  First, there was a certain insensitivity in the announcement, making him look like a guy who can take care of his family's financial obligations without having to live on a paycheck-to-paycheck basis, which I understand from media reports is the plight that many unpaid federal employees are dealing with right now.  Second, Johnson gave no hint about how he'll deal with the matter of Trump's wall in a few days, when he's a voting member of the House of Representatives.     

     While Johnson's commitment to financial self-denial played well on the optical level, it also spared him the necessity of taking a stand on the issue itself.   To be fair, he wasn't pressed to take a position. Saying that he wouldn't speculate on the timing of the shutdown, he concluded that a deal probably "is not imminent." We're left to wonder about his opinion of the wall. I don't think there's much doubt about which side he'll take.  Republican Johnson gave a strong signal about his inclination on his Facebook page  when he said that he "looks forward to working with Trump," who "has proven to be an effective chief executive."  As an admirer of the President, Johnson will also be a loyalist and bend to Trump's will.
    That's politics, I suppose, but if Johnson does, indeed, follow through with the practical necessity of bowing to Trump's imperatives, I hope he'll do so with some knowledge about the cost-effectiveness of the wall that the GOP is pushing.  I haven't found a single objective, politics-free analysis that makes the project seem worthwhile.  The Government Accountability Office is dubious, saying in a report last August that the project faces an increased risk that it "will cost more than projected, take longer than planned, or not fully perform as expected."  It's up to Dusty Johnson to make us South Dakotans believe his vote is informed about the project itself, not the result of political fealty to his political pater noster Donald Trump.

Friday, December 28, 2018

Who Put Machiavelli In Charge?

     The moral equivocation that passes for political representation these days is a
The Prince Returns
disconcerting if not altogether alarming consequence of the 2016 election. 
You saw it fully blown a few days ago when President Trump visited our front-line troops in Iraq and stood there, without batting an eye, telling them "You protect us.  We are always going to protect you.  And you just saw that, 'cause you just got one of the biggest pay raises you've ever received . . . You haven't gotten one in more than 10 years.  More than 10 years . . . They had plenty of people that came up, they said, you know, we could make it smaller.  We could make it 3%, we could make it 2%, we could make it 4% . . . I said no.  Make it 10%.  Make it more than 10%."  
     That boatload of malarkey was quickly exposed for what it is. Our troops get annual pay raises, averaging between 2% and 3% since 2008.  This year's raise, not even close to Trump's ridiculous claim of 10%, came in at 2.6%. South Dakota's congressional reps--famous for repeatedly touting themselves as exponents of "South Dakota family values"--haven't made a statement or given any indication that they're even aware of this and Trump's many other lies during the course of his presidency nor the campaign that preceded it.  This morning's USA Today has a piece that tallies Trump's lies, coming up with an average of 10 a day that he's told since taking office.  At what point can we expect our Senators Thune and Rounds, Congresswoman Noem (and Congressman-elect Dusty Johnson, for that matter) to come out and say enough is enough?  Habitual lying isn't a South Dakota value, so why do they silently tolerate it in Washington?  It's all about political reprisals, of course, so our federal reps just keep their mouths shut, to heck with their not-so-bold commitments to values.
     I fear that we have entered a dark era of the darkest Machiavellian principle, the one where lying leaders can function with impugnity because their utterances are possessed of "effectual truth."  In a nutshell, the 16th century political philosopher Niccolo Machiavelli posited in his treatise "The Prince" that a lie is effectively the truth (verite effetuale) because it is sometimes necessary to do evil in pursuit of what the leader perceives to be the good.  Dangerous stuff, this "ends justifies the means" system of governing, but a danger of necessity, says Macchiavelli, because "a man who wants to make a profession of good in all regards must come to ruin among so many who are not good."
     That cynical view of human nature makes it clear that President Trump fits Machiavelli's profile of successful leadership. But our elected reps embrace a higher standard when avowing their commitment to South Dakota values.  I just wish that they and the rest of Trump's congressional enablers  didn't make it look like they're among the "many" who are not so good.

Thursday, December 27, 2018

Guest Poster David Ganje On Interstate Water Compacts

One state’s water is another state’s gold
The Lewis & Clark Regional Water System (L&C), a non-government
corporation, uses a series of wells to tap into an aquifer adjacent to the Missouri River in South Dakota.  The system provides water to 20 member cities and rural water systems (all called member users) in a large area of South Dakota, Minnesota and Iowa.  The L&C is the biggest rural water system in South Dakota.  The L&C has no interstate water use agreement with its members in South Dakota, Minnesota and Iowa.  Such an agreement is called an interstate water compact.  There are 23 interstate water compacts in the U. S.  Since 1943 South Dakota has had a congressionally approved interstate water compact with Wyoming for the Belle Fourche River.
In 2015 in a public statement the U S Bureau of Reclamation stated, “the Lewis and Clark Regional Water System is the largest, by volume, rural water system that has been authorized by Congress.”  In water system projects the Bureau acts as a federal supervising engineer.  It does not step into the role of an overseer or regulator of the operations of the system.  That matter is left to the parties using and providing the water.
One purpose of an interstate water compact is to guide a variety of interstate policy concerns regarding water use and management.  The U.S. Constitution (Art. 1, Sec. 10, Clause 3) gives states the right to enter into cross-state agreements. Congress must approve any compact before it is binding.  Although Congress has funded several different phases of the L&C it has not directed that the parties enter into such a compact.  That is not unusual.  Congress does not want to step into regional turf battles.  Political discretion dictates that ‘locals’ should deal with the issue of water management.  The L&C has not dealt with the issue.
Voluntary cooperation among water users and its single bulk provider will prevail – so the old argument goes.  An emergency should await a serious emergency.  You must have a demonstrated need, otherwise cooperation is the best way to manage water use among the provider and the multiple users.  Really?  Cooperation among the different states and water users is indeed a good thing.  ‘Cooperation’ however quickly leaves the party through the back door when ‘Crisis’ enters the room carrying a big stick.  As my high school guidance counselor said, “If you aint got rules this whole place turns into bedlam.”
An interstate water compact avoids federal intervention and federal preemption of individual state powers when a problem occurs.  Is it not better to have disputes managed and settled regionally rather than by federal or court intervention?  A written compact allows the local parties, users and experts to write a regional water-use roadmap on water rights and water resource management.
Think of the cross-border distribution of water from South Dakota as a commercial marriage.  Premarital contracts between spouses are called ‘prenupts’ in the arcane world of lawyerspeak.  Is it better to have a prenupt when a problem occurs, or is it better to go hell-bent for leather and litigate a full-fledged divorce trial? Which is more economic? Which more administratively efficient?
An interstate compact can be completed as well as approved by Congress even after an interstate water project has been started.  The Supreme Court has stated that, “. . . where the agreement relates to a matter which could not well be considered until its nature is fully developed, it is not perceived why the consent may not be subsequently given.”
I am not aware of any adopted formal water apportionment schedule or scheme in the L&C project.  A contemporary interstate water compact would have a decision-making process to deal with droughts and emergency events.  Nakedness is an invitation to litigation.  This litigation, in interstate water matters, is handled directly by the U S Supreme Court.  Interstate fights become territorial.  No one likes their neighbor telling them how to run their operation. The U S Constitution has no guidance on how to resolve interstate water disputes between states.  Thus the Supreme Court as the court of first and last resort has punted and has created a body of federal common law for water allocation known as “equitable apportionment.”  The U S Supreme Court is not an ideal forum for resolution of interstate water disputes because:  it takes too long; it’s too expensive; the court historically ducks the issue and assigns the problem to a court-appointed Master to find the facts and make a recommendation; and the Court often bounces out or bounces back the Master’s recommendations.  I will add that a court is a bit of a blunt instrument as a “water manager” for a modern, complicated water system.  The ten or so established “equitable apportionment” cases of the U S Supreme Court do not tend to address important contemporary management issues such as water conservation or environmental questions.
David Ganje of Ganje Law Offices practices in the area of natural resources, environmental and commercial law

Saturday, December 22, 2018

Memo to commentors.

I just deleted a comment that didn't meet my standard for decorum:  If I wouldn't have wanted my old-fashioned Greek Orthodox grandma to see it, it won't get posted here.

Our South Dakota Senator Thune Blows Off The Rule Of Law

     Our Republican U.S. Senator John Thune has moved up the chain of Congressional
Does the Constitution Matter?
command to a position as majority whip in the Senate. 
That's reason for some good cheer among us South Dakotans, at least on the surface, but Thune spoiled the merriment by disclosing that he doesn't think much of the rule of law.  Telling the Sioux Falls Argus Leader yesterday that he hopes there are accomplishments in the next Congress and "not just a lot of investigations of the President," Thune exposes his dismissive attitude toward the workings of the law in this country.
     Considering that Senator Thune has sworn to "support and defend the Constitution of the United States against all enemies, foreign and domestic," his casual attitude toward the Mueller and other investigations of President Trump and his inner circle is disconcerting, if not altogether outrageous.  As of now there are eight investigations from the Special Counsel, four investigations by the U.S. Attorney for the Southern District of New York, one by the U.S. Attorney for the District of Columbia, two by the U.S. Attorney for the Eastern District of Virginia, one by New York City, one by New York State, and one by the State of Maryland. If further probes are launched in Congress next year, they'll be consistent with one of the most important non-legislative powers of Congress--the power to investigate.  
     You can holler "politics" and "witch hunt" all you want, but it's a Congressional function that has a long-standing history and one that fulfills the public's right to know just what the heck is going on in D.C.  I wasn't a fan of the Benghazi hearings, but in the end, the fact that they didn't result in any post-investigative actions is irrelevant.  They gave the American public a good airing out of the elements that led to that disaster.  Now with all the convictions proving that there was indeed some criminal activity surrounding Trump, Americans have every reason and right to expect a full look-see by Congress.  By characterizing these as "just a lot" of investigations, Thune doesn't show much of a commitment to supporting and defending the Constitution.  Even though the document doesn't explicitly enumerate investigations as a power of Congress, they were assumed to be part of the legislative process, the first investigation having occurred in 1790, when the First Congress investigated Robert Morris' handling of the country's money during the Revolutionary War.
     Thune's rhetorical brushoff notwithstanding, Congress has a right and a duty to look into Trump's activities.  These are not "just a lot" of investigations.  A great deal has been disclosed and trying to stall the process or, like Thune, hoping it will go away just makes them seem more relevant than ever.

Wednesday, December 19, 2018

Deck The Halls With Boughs Of Folly

    Man-oh-man, talk about a lump of coal in your Christmas stocking. This Trump-obsessed stock market is beginning to make it look like The Grinch isn't such a bad sort after all.  What happened this year to South Dakota's farmers was tough enough, being the fifth consecutive year that they (along with farmers nationwide) saw their incomes drop.  I note that there was actually a bit of an upturn during 2015 an 2016, but from there, the prospects of a tariff war just overwhelmed the ag trade.  Our state's farmers made $2 billion in 2016, the year Trump was elected, but from then on it's been nosedive city.  SD farm income fell to just $700 million in the fiscal year that ended last summer.  Given the awful prices that soybean farmers are getting for this year's recently harvested crop, I doubt that this second half of the year has provided much relief.                                       Farmers' financial woes have been softened a bit by a stopgap program that provides some federal cash compensation to those who've been financially strapped because of Donald Trump and his demented tariff war, but stopgap it is.  The few nibbles on American farm products that Chinese buyers have made during the past week or so have been noticeable, and soybean prices have edged up a bit--but they're still well below their levels of last Spring, when the tariff war broke out in earnest, by a factor of nearly two bucks a bushel.  Considering that South Dakota soybean farmers will harvest something on the order of 275 million bushels this year, you can see how much this state's ag sector has been hit by the Trump tariff tsunami.  We can only hope things turn up in 2019, but as I've noted here, the Chinese are working at remaking their livestock production industry into one that has a vastly reduced need for American soybeans.                                                                          But the folly of it doesn't end with the ag sector.  Every South Dakotan--and I'm sure there are plenty of us--with a position in the stock market, either through brokerage or retirement accounts is getting pounded as mercilessly as our cousins and compadres in the country.  Despite on-the-surface positive economic numbers, markets are focused on the structural economic disrepair that has been created during the past two years, probably initiated by the years-long commitment to low interest rates by the Federal Reserve Board.  The "Fed" has been making money so cheap that it looks to me like the country is in a debt-inflated asset bubble.  This is not a brilliant flash of insight emanating solely from yours truly, by the way.  Former Federal Reserve Board Chairman Alan Greenspan said earlier this year that "we have a stock market bubble."  Just yesterday, talking about the likelihood of more stock market "corrections" (a too-benign-sounding word that's defined as a steep and often frightening selloff) Greenspan warned investors "to run for cover."                                                          If the Fed's policies in recent years (reversed lately by some upticks in the bellwether interest rate that it controls) have been folly, they've only been aggravated by President Trump's budget busting tax cuts.  Trump and his enablers, including South Dakota's Congressional all-GOP trio of Senators Thune and Rounds, along with Congresswoman Noem, has taken the country's debt to highs that haven't been seen since the end of World War II.  The Congressional Budget Office last year warned the government that "our structural fiscal imbalance puts the economy at risk over the long term."  But did the government, including our South Dakota federal reps, listen?  No they did not. And the results have been? No big deal.  The 2 million jobs created in 2018 about matches up with the 2 million created in 2016.  As to wage growth, real (inflation adjusted) wages haven't budged.  Forbes magazine notes that real wages have actually declined a bit in the past two years. And even that low unemployment rate we're experiencing has to seen in the context of a still low "labor participation" rate, which hasn't come back to the levels it reached before the 2008 recession. A lot of people who are no longer in the labor force don't get counted as "unemployed."
     The folly of Trump's tax-and-budget policies is twofold.  First are the policies themselves, and second is the fact that Trump and his enablers in Congress are trying to convince us of the rosiness of the present scenario.  But the fact is, deficits are soaring, interest rates are rising and markets are reeling.  What William Butler Yeats expressed poetically ("Things fall apart, the center cannot hold; Mere anarchy is loosed upon the world"), Alan Greenspan made bluntly prosaic:  "Run for cover."   

Friday, December 14, 2018

Um, Senators Rounds And Thune, About That November Budget Deficit? Your GOP Crackpot Economics Seem To Have Gotten Something Wrong

     The metamorphosis of South Dakota's two Republican U.S. Senators has been startling
Why Are These Men Grinning?
U.S. Deficits Are Exploding
and surreal. 
Who could possibly have imagined that our Senators Mike Rounds and John Thune can still smile away the federal budget deficit that has been created by the tax cut that the Trump administration and its GOP handmaidens in Congress foisted on us at the start of this year?  I mean, it was just a few years ago that they were sounding alarms about our country's federal debt.  Rounds in 2016 looked at the country's $18 trillion debt and called it "unsustainable," a sentiment echoed by Senator Thune, whose website complains that "our country is on an unsustainable fiscal path."  Though economists are forever debating about the sustainability of federal deficit spending, Thune and Rounds have made it pretty clear that they see it as the road to economic perdition. 
     Now that their alarm bells have been replaced by silence, Thune and Rounds have been exposed as the fiscal hypocrites that they are.  The budget-wrecking tax cuts they promoted have caused the fiscal year that ended last September 30 to show a deficit of $779 billion, a $113 billion increase (17%) over the prior year's gusher of red ink.  Since then things have only gotten worse, with the November deficit the widest in that month's history at $205 billion, nearly 32% higher than a year ago when the November deficit was $139 billion.  Typically, Republicans blame the red ink on "entitlement" spending, specifically Medicare, Medicaid and Social Security, but a quick look at the last fiscal year's income and expense statement shows how bogus that argument is.  While overall federal spending for the year rose by $127 billion, revenue growth couldn't keep up.  Tax collections came in at $202 billion less than anticipated.  When your revenues don't grow as fast as your expenses, you've got a problem that no amount of politicizing about entitlements is going to fix.  For one thing, even as Senate Republican Majority Leader Mitch McConnell acknowledges, "it's very difficult to do entitlement reform."  For another, history tells me that the same can be said about reforming the rest of the federal budget.  The only politically realistic way to close the budget gap is finding a way to increase government revenues.  The tax cuts tried to do just that, but came up way short.
     Crackpot economics gripped the Republican Party a year ago when these tax cuts were hyped, getting a lot of people to believe the long-debunked canard about how those tax cuts actually can pay for themselves with increased collections created by a stimulated economy.  Rounds and Thune certainly bought it, completely ignoring Congressional Budget Office warnings during the months before the tax cut debate that continuing deficits would create serious budgetary challenges that could hamper economic growth.  So now that those deficit warnings they ignored have come to pass, Thune and Rounds haven't had much to say about them.  I have no doubt that when they do, our senators will blame entitlements, not the revenue falloff from the tax cuts. 

Tuesday, December 11, 2018

South Dakota Senator Mike Rounds Wants $25 Billion For A Border Wall Even Though Nobody Seems To Have A Clue About How Much It Will Cost. This Is Supposed To Be Responsible Leadership?

     The Republican fetish for building Trump's wall along the Mexican border is just one
What's Another $25 Billion?
story-switching endeavor after another. 
Pubs in general and Trump in particular have been changing their approaches to this multi-billion dollar venture from the moment that then-candidate Trump was pitching it to his mobs of supporters.  Which brings us to change-of-story number one.  During the campaign Trump kept telling us over and over again that Mexico was going to pay for that "big beautiful wall" and that "it would be named after me."  As is typical of megalomaniacs, Trump was full of hot air and Mexico won't be paying for a cent of it. 
     Per an act awaiting consideration in the U.S. Senate, the bill for this bait-and-switch gambit is going to be presented to American taxpayers. That doesn't come as much of a surprise, considering that the Mexicans were uniformly saying "no way" from the get-go.  Trump's litany of lies are so numerous and well-documented by now that there's no reason to believe anything the president says.  The ever-changing story on the wall is just the same-oh, same-oh and it looks like his politically infatuated (maybe intimidated is a better word) followers in Congress are not only willing to deal with it, but are capable of crafting policy to adjust for Trump's revised story lines.  Enter South Dakota Republican Senator Mike Rounds.  Yesterday he joined three other Republican senators to introduce a bill ("The Wall Act") that would provide $25 billion for the construction of Trump's border wall.  This brings us to change-of-story number two, which I preface with a question: How come this money Rounds and associates want for the wall is 3 to 4 times as much as Trump said it would cost when he was a candidate?  Back then Trump told Meet The Press that his wall would cost "$6 or $7 billion if I build it.  If somebody else builds it, it's going to cost $20 billion."
      Turns out both estimates were too low.  As it has happened, I've seen construction cost overruns and have felt the exquisite pain of them. Based on my experience, something tells me that when it comes to this wall, we ain't seen nothing yet.  Consider the wide divergence of estimates out there--in 2017 Mitch McConnell said $12 to $15 billion. That same year the Department of Homeland Security estimated $21.6 billion, and also that same year a minority report from DHS's congressional oversight committee came up with a whopping $70 billion.  Given that range, for Rounds and his co-sponsors to ask us taxpayers to fork over $25 billion is just plain ridiculous.  We need a reasonably reliable estimate of the costs before we start tossing billions of dollars into the project.  I can't believe Senator Rounds is being that irresponsible with our money.  As to how the money gets raised?  I think it's pie-in-the-sky.  Rounds claims that it will be paid for over the next 10 years by fines and penalties assessed to people living here illegally "when they get caught."  I might be missing something, but if this wall is going to be as effective as its backers believe, how will that many people be getting here illegally?
     In his haste to ingratiate himself with Trump, it looks like Rounds has put a pretty slapdash proposal together.  We need more analysis on how much this wall is going to cost and just how that money from illegally residing individuals is going to materialize before we consider handing over 25 billion smackers to the project. Without answers, I have no doubt that we will end up hearing change-of-story number three, which will be a collective realization that this whole border wall thing was dumb idea in the first place. 

Monday, December 10, 2018

Guest Poster David Ganje Writes About The Impact And The Maintenance Of The Lewis And Clark Water System

The Achilles Heel of South Dakota’s Largest Water System
     The Lewis & Clark Regional Water System (L & C), a non-government
corporation, uses a series of wells to tap into an aquifer adjacent to the Missouri River in South Dakota.   Raw water is collected from aquifers adjacent to the Missouri River near Vermillion. The water is then treated and distributed through a network of pipelines, pump stations and storage reservoirs.   The system draws from publically held water over which the South Dakota government is the legal trustee.  The system provides water to 20 member cities and rural water systems (all called member users) in a large area of South Dakota, Minnesota and Iowa. It is without question the biggest rural water system in South Dakota.  The proposed maximum amount of water to be treated when the project is completed is about 45 million gallons per day.  To put this in context, the city of Minneapolis produces an average of 57 million gallons of drinking water per day.  In 2015 the state issued a report on the L&C system entitled “Investigation of the Impact of Ground Water Drawdown.” The analysis of the report was inconclusive.  The report recommended that the system “continue to be monitored” and add more observation wells.
     An official from L&C stated that the L&C system’s water source is “abundant and drought-resistant.”  This is a bold statement and one of uncertain accuracy.  The former Federal Reserve Chairman cautions us not to practice irrational exuberance.  Concerning management of a water resource he is right.  Water resources are not inexhaustible.  More importantly, no water resource should be assumed to be inexhaustible.  As consumers we tend to be disconnected from a natural resource used by society, and thus we are often indifferent to the proper management of a resource like water.  Making use of the resource is only one part of managing public waters.  As important as “What’s available?” should be “How do we properly manage, prioritize and conserve?” 
     The L&C water source may be strong but it cannot be looked at as inexhaustible.  L&C recognizes that its wells are integrally connected to the waters of the Missouri River.  The US Army Corps of Engineers by law manages these waterways and must balance many interests when controlling Missouri River dam and water flow.  Water management and use upstream in the Missouri is watched closely by regional politicians and commercial interests down South all along the Missouri and Mississippi rivers.  Water management policies of the Army Corps cannot practice favoritism.  Even in times of drought.  Droughts occur and effect the Missouri River flow.  No one user group can assume unlimited access.
     Under its state water permits L&C is the custodian of an immense amount of public waters which is distributed to member users.  What is the sustainability of the L&C water source?  How will increased water use affect the water supply?  Can the aquifer meet the demand?  Will the demand harm the aquifer?  Can the water source sustain the increased level of the growing system’s groundwater pumping?  Is there a public emergency water shortage and priority-of-use written policy? Where is a current L&C written public analysis and policy concerning the reliability and use of the water source?  The largest rural water system in the state certainly has the ability to answer these questions.
     One method of determining a diminishing water source is to look at historical information on water levels over time in observation wells for the source. When I looked at data from two longstanding state monitoring wells located near the water system, it suggested that from 2009 through 2018 there was a decline in the observation well water levels. Neither the state Geologic Survey, the DENR or the operator have provided any public reports on the system water levels since 2015.  This should be done.
     The L&C is a water system of great consequence to the area, and it is growing.  The L&C ought to provide a current written public analysis and policy concerning the reliability and use of its water source.
David Ganje of Ganje Law Offices practices in the area of natural resources, environmental and commercial law

Wednesday, December 5, 2018

Is Detachment From Reality A Condition For Serving As A Senator From South Dakota?

     After reading today's op-ed in the Rapid City Journal, in which South Dakota Senator
Here's A Sliver For Ya
Mike Rounds argues that "the benefits of tax reform continue," I'm tempted to say the answer is "yes." Oblivious to reality, Rounds says the Trump administration's Tax Cut And Jobs Act is a "win for farmers." 
As his main example in the piece, Rounds touts how doubling the tax exemption on estates from $5.5 million to $11 million is one of those "wins" for farmers.  This is actually laughable, as The Tax Policy Center found that last year there were a grand total of 80 farms and businesses nationwide that would have been forced to pay taxes over the $5.5 million threshold.  As to South Dakota, about a dozen estates had to pay the tax in 2016.  I'm surprised the number is even that large, considering that we have some competent estate-planners in law offices around the state who probably could have used their skills to minimize the tax liabilities of those 12 estates.  A wealthy handful of people got a nice break, but the vast majority of smaller estates gained nothing--which is consistent with the overall weighting of benefits from the tax cut, the brunt of which went to the rich.  The Center On Budget And Policy Priorities just released its findings on the effects of Trump's reforms and concluded as much.
     And how have South Dakota farmers fared, in the context of all that's going on?  Even Rounds concedes that the tax law has given them just a "sliver of relief and certainty."  A sliver?  Yes, a sliver.  Good grief almighty, this man has some chutzpah.  Farm bankruptcies have doubled in the upper Midwest during the past few years and Minneapolis Fed analyst Ron Wirtz expects that trend to continue.  Farm income, as even Rounds concedes, has been down 50 percent in the past five years.  Meantime, trade uncertainty has the whole farm belt twisted in financial knots, with Nebraska farmers having already lost $1 billion to Trump's tariff madness according to that state's Farm Bureau.  I have yet to see an assessment of how South Dakota farmers are weathering this storm, but I doubt it's much better than their Nebraska counterparts.  And as farmers look off to Washington, D.C., to see how their Congressional reps are supporting them, Rounds reassures them with a "sliver" of relief.
     Meantime, as Rounds touts his party's tax cut, he overlooks a few points.  Mentioning the 2 million jobs created this year, he doesn't notice that more than 2 million were created in 2016, the year before Trump took office.  2 million is fine, but we've been there, done that--and under Obama's watch.  Rounds correctly notes that incomes are rising, but that's more a function of people working more hours, not because they're getting better pay.  Forbes notes  that real wages are actually falling.  Yes, unemployment is low, but the Brookings Institution says the aging population has accelerated retirements and boosted labor participation as a result.  Much of this is about demographics, not tax cuts.
     What Rounds misses altogether, and I have no doubt that it was intentional, is the financial havoc that the tax cuts are wreaking on our country's budget.  The tax cut that Rounds is so proud of has resulted in a shortfall of more than $200 billion this year, which is the amount of revenues the government lost to the GOP tax bonanza to the rich.  Our federal debt is about to explode, and Rounds is completely mum about it.  The Republican mantra about the recent gusher of red ink being a function of "entitlement" spending is a bunch of bull, which they'll try to sell to the public with the same gusto that they used for pushing their tax cut.