12-2000-15353-2

 

STATE OF MINNESOTA

OFFICE OF ADMINISTRATIVE HEARINGS

 

FOR THE DEPARTMENT OF NATURAL RESOURCES

 

In the Matter of the City of Lakeville v. Department of Natural Resources – Division of Waters

FINDINGS OF FACT, CONCLUSIONS AND RECOMMENDATION

The above-entitled matter came on for hearing on May 20, 2003, in Lakeville, Minnesota.  The Office of Administrative Hearing record closed on July 9, 2003, upon receipt of the final post-hearing brief.

Appearances:

Matthew B. Selzer, Assistant Attorney General, 445 Minnesota Street, Suite 900, St. Paul, Minnesota 55101-2127, appeared on behalf of the Department of Natural Resources (the Department).

James G. Golembeck, Jardine, Logan & O’Brien, PLLP, 8519 Eagle Point Boulevard, Suite 100, Lake Elmo, MN 55042, appeared on behalf of the City of Lakeville (Lakeville).

Complainant Paul Thomas, 2733 80^th St., Granada, MN 56039, appeared pro se.

Complainants Corey and Jennifer Glab, 19121 Edgewater Lane, Prior Lake, MN 55372, appeared pro se.

Complainant Michael Foty, P.O. Box 464, Fairmont, MN 56031, appeared pro se.

NOTICE

This Report is a recommendation, not a final decision.  The Commissioner of Natural Resources will make the final decision after a review of the record, and may adopt, reject or modify the Findings of Fact, Conclusions, and Recommendations contained in this recommended decision.  Pursuant to Minn. Stat. § 14.61, the final decision of the Commissioner shall not be made until this report has been made available to the parties to the proceeding for at least ten days.  An opportunity must be afforded to each party adversely affected by this Report to file exceptions and to present argument to the Commissioner.  Persons should contact the Commissioner of National Resources, 500 Lafayette Road, St. Paul, Minnesota 55155, to ascertain the procedure for filing exceptions or presenting argument.

If the Commissioner fails to issue a final decision within 90 days of the close of the record under Minn. Stat. § 14.61, this report becomes the final decision of the agency.

STATEMENT OF ISSUES

Is the City of Lakeville responsible for the change in water levels that affected private wells in the area in 2001?

If so, are the owners of the affected wells entitled to the payment of “all costs necessary to provide an adequate supply with the same quality and quantity” as before the City’s interference with the water supply?

If the owners of the affected wells are entitled to payments, what amount is appropriate for each well owner?

Based upon all of the proceedings herein, the Administrative Law Judge makes the following:

FINDINGS OF FACT

Factual Background

1.               The City of Lakeville (City) operates municipal wells to meet its water needs.  The Department of Natural Resources (DNR) issues permits for the appropriation of water.[1]  The City received three permits to operate wells in the period from 1960 through 1980.[2]  On April 2, 1981, the City received a permit from the DNR to operate wells 1 through 6 in the City’s water supply system.[3]  The volume of water that could be appropriated under this permit was 464 million gallons.  A new permit was issued in 1984 for wells 2 through 7 allowing appropriation of 600 million gallons annually.  The City obtained a new permit in 1989 for wells 1 through 8 allowing appropriation of 1000 million gallons of water annually.[4]

2.               In addition to the annual volume limits, the DNR permits limited the gallons per minute that water could be removed.  The 1989 permit limited the City to 8100 gallons of water per minute that could be pumped through its wells.[5]

3.               The City added wells 9 and 10 to its municipal water system in December 1994.[6]  Well 11 was added on July 26, 1996.  Well 12 was added on May 1, 1997.  The City added well 13 to its system on July 2, 1999.  Well 15 was added on February 2, 2001.  The City added well 14 to its system on July 11, 2001.  The City did not obtain written permits for wells 9 through 15 when those wells went into operation.

4.               The City requested an increase in appropriation to 1300 million gallons of water annually in 1994.[7]  An application form and fee was received, but no permit was issued by the DNR.  Further discussions were held between the City and DNR staff regarding the City’s appropriations and the need for an additional permit.  The largest volume of water appropriated by the City before 2001 was 1600 million gallons annually, that volume having been reported for the year 2000.  

5.               Immediately to the north of the City are Burnsville and Apple Valley.  On the east of the City is Farmington.  Eleven of the City’s system of wells are located in the northeast portion of the City.[8]

6.               The City reports its total water appropriation to the DNR.  In 2001, the City reported pumping between 3 and 4 million gallons per day in the winter, spring, and fall months.[9]  In mid-May, the City increased its appropriation of water to more than 5 million gallons per day, peaking at approximately 9 million gallons.[10]  From late June through early September, however, the amount pumped by the City consistently exceeded 10 million gallons per day.  For most of July, the amount exceeded 13 million gallons per day.  The City reported pumping in excess of 20 million gallons on July 9, 2001.

7.               The summer of 2001 was exceptionally dry, with the lack of rainfall creating drought conditions throughout the southern region of Minnesota, including environs of the City.[11]  Some municipalities, including Farmington, imposed lawn-watering bans on property owners.[12]  The City decided against imposing a ban on lawn-watering.  The City added an item to its newsletter asking residents to cut back on their use of water.  A similar item was posted on the City’s website.[13]

8.               David and Diane Rolfing reside at 8481 198^th Street West in Lakeville.  Their domestic water supply was provided by a well that had been originally installed in the early 1900’s.  The well had been drilled to a depth of 220 feet.[14]  The pump was installed at a depth of 153 feet (914 feet above mean sea level (MSL)).[15]  In late May 2001, the water supply in the Rolfing well showed impairment.  The problem manifested itself as a lack of water pressure.  In July 2001 the well provided no water.

9.               The Rolfing well had mineral build-up on the casing beginning at a depth of approximately 135 feet.[16]  A notation by a well driller on the pump house wall stated, “will run low on water if pump runs too long.”[17]   This encrustation and the limitation on pump operation time did not prevent the Rolfing well from providing an adequate domestic water supply.

10.           The well driller brought in to address the problem determined that the condition of the well prevented lowering the pump.  The Rolfings had a new well drilled to provide water to their residence. The new well was located adjacent to the old well and drilled to a depth of 280 feet.  The total cost incurred by the Rolfings for this work was $8,031.68.[18]  That amount included the installation of an extra water line to a hydrant that cost $204.00.  Only the cost of the extra water line to the hydrant is not a reasonable cost for restoring the domestic water supply. 

11.           Corey and Jennifer Glab live at 19121 Edgewood Lane in Credit River Township.  Their residence is part of a development (Scottview Estates) that overlooks the Legends Golf Course.  The Glab’s domestic water supply was provided by a well that was installed in August 1995.[19]  The well had been drilled to a depth of 260 feet.[20]  The pump was installed at a depth of 147 feet (909 MSL).[21]  On July 9, 2001, the water supply in the Glab well failed.  The well driller who was contacted about the problem determined that the depth to water on that date was 158 feet.[22]

12.           The Glabs had their pump replaced and repositioned to a lower depth in their well.  The cost of this work was $1,059.98.[23] 

13.           Tomasz and Marie Kaczynski live at 9285 Overland Drive, which is located in Scottview Estates.  The Kaczynski’s domestic water supply was provided by a well that was installed in December 1995.[24]  The well had been drilled to a depth of 280 feet.[25]  The pump was installed at a depth of 165 feet (907 MSL).[26]  On July 9, 2001, the water supply in the Glab well failed.  The well driller who was contacted about the problem determined that the depth to water on that date was 165 feet.[27]

14.           The Kaczynskis had their 36 additional feet of pipe added to their well and the pump repositioned to a lower depth.  The cost of this work was $319.98.[28]

15.           Paul Thomas owns the property located at 19266 Cedar Avenue West in Lakeville.  The property had originally been a farm, with a residence and 26 dairy cows.[29]  The property is now rented to a family.  The domestic water supply to the premises was provided by a well that had been originally installed in approximately 1939.[30]  The well had been drilled to a depth of 254 feet.[31]  The pump was installed at a depth of 147 feet.[32]  On July 12, 2001, the water supply in the Thomas well failed.  The well driller who was contacted about the problem determined that the water level was below the pump. 

16.           The Thomas well had mineral build-up on the casing and the pump.[33]  This encrustation did not prevent the Thomas well from providing an adequate domestic water supply.

17.           The condition of the Thomas well precluded lowering the pump in the existing opening.  A new well was drilled to provide water to the rental property. The new well was drilled to a depth of 270 feet.  The reasonable costs incurred for restoring the water supply are: $6,225.00 for drilling a new well, $971.34 for new wiring for the pump, $1,221.00 for sealing the old well, and $100.00 for emergency water for the tenant.[34]     Mr. Thomas also incurred expenses of $200.00 for a rent reduction to his tenant for the out of water condition and $5.00 for reseeding around the new well.[35]  The rent reduction and reseeding costs are not reasonable costs incurred for restoring the water supply.

18.           Michael Foty owns the property located at 11900 210^th Street West in Lakeville.  The property is now rented to a family.[36]  The domestic water supply to the premises was provided by a well that had been originally installed in March 1990.[37]  The well had been drilled to a depth of 344 feet (806 MSL).[38]  The pump was installed at a depth of 231 feet (919 MSL).[39]  On July 18, 2001, the water supply in the Foty well failed.  The well driller who was contacted about the problem determined that the “water level in well dropped 32’, had to lower new pump 18’.”[40]

19.           Mr. Foty had his pump replaced, since the existing pump burned out.  An additional 18 feet of pipe was added to that well and the new pump was repositioned to a lower depth.  The cost of this work was $1,899.86.[41]

20.           The DNR began receiving complaints from affected property owners in July 2001.  These complaints alleged that pumping by a number of entities, including the City, caused their wells to fail.  In all, the DNR received approximately thirty formal complaints of well interference.[42]  The DNR received an additional thirty informal complaints of interference with wells in the area.[43]  Those property owners did not file formal complaints.

Actions by the Department

21.           Jay Frischman, PG, a hydrogeologist for the DNR’s Ground Water Unit, was assigned to investigate the well interference complaints.  Mr. Frischman began monitoring water levels in observation wells and charting the location of each complaint.  The DNR used the reported water elevations in the City Well 7, the Legends Golf Course observation well, the old Thomas well, and the old Rolfing well to compare the City’s pumping volume to the water depth changes experienced at these locations.    

22.           Mr. Frischman analyzed the location and depth of various wells, and their reach into the geologic formations below.[44] The data recorded from the Legends Golf Course observation well, the old Thomas well, and the old Rolfing well show a strong correlation between the volume of water pumped by the City and the reduction of elevation in each well.[45]  The water levels recorded in the City Well 7 reflected a dramatic drop in water elevation (below 880 MSL) in July 2001.[46]  City Well 7 is close to the Foty well.  Mr. Frischman concluded that City’s pumping was the cause of the Foty well interference.

23.           The Glab and Kaczynski wells are on the western end of the City.  The only nearby appropriator is the Legends Golf Course.[47]  The Legends Golf Course draws its water from the Franconia and Ironton-Galesville formations.[48]  Mr. Frischman concluded that the Legends Golf Course pumping would not have an impact on the water levels in Prairie du Chien formation, from which the Glab and Kaczynski wells draw water.  The observed correlation between the City’s pumping and the water elevation supports the conclusion that the City’s pumping was the cause of the interference with the Glab and Kaczynski wells.

24.           The scope of the City’s effect on other wells is reflected in the comparison of the water levels in the old Rolfing well and the Legends Golf Course observation well.  These two wells are approximately five miles apart and on either side of the bulk of the City’s system wells.  The drop in water elevation during the peak pumping periods correlate very closely at these two locations.[49]  The DNR noted that pumping in the new Rolfing well had no impact in the water level of the old Rolfing well.[50]

25.           The act of pumping water from a well creates a “cone of depression” around the well that lowers the static level of water in a zone around the well.[51]  Increasing the volume of water pumped increases the size of the cone of depression.  Pumping from multiple wells within each other’s cone of depression can drastically lower the static level of the water where the cones intersect.  Lowering the static level of water in a well lowers the level at which a pump can operate to pump water.

26.           The DNR compared the historic elevation of water from approximately 1988, to current levels.  With the exception of three wells, the City system of wells showed a reduction in water level from 13 to 21 feet in 2001 from the historic water levels.[52]  The rate of pumping from the City’s wells vastly exceeds any other appropriator, except the City of Farmington.

27.           The sources of impact on domestic wells can be determined through the location of the wells, the geologic formations that water is being drawn from, and the volume of water obtained from each well.  The DNR compared the impact from the City, Farmington, and other permitted well operators.  To include Farmington’s wells, a radius of two miles was used from the location of easternmost well affected (Thomas well).[53]  The City pumped 416 million gallons in July 2001.  By comparision, Farmington pumped 95 million gallons in that month.[54]  The DNR concluded that the “Lion’s share” of the responsibility rests with the City.[55]  The combination of the pumping volume and location of the wells supports the DNR’s conclusion that the City was the fundamental cause of the interference that caused the five Complainants’ wells to fail. [56] 

28.           The Department determined that the City’s appropriation of water had interfered with the Complainants’ well and that the City was obliged to negotiate a reasonable settlement or request a public hearing.[57]  The City made settlement offers to Complainant Thomas and refused to accept any responsibility for the other four complaints.[58]  Complainant Thomas refused the City’s settlement offers and the City requested hearings on all five complaints.[59]

29.           On July 23, 2002, the DNR issued a new permit to the City for its system wells.  The permit allowed the City to pump 2,420 million gallons per year and placed significant conditions on the City’s appropriation of water.  Included in the conditions is the obligation to cease pumping based on verified well interference complaints and the imposition of demand reduction methods in the event that the maximum daily limits are exceeded.[60]

Based upon the foregoing Findings of Fact, the Administrative Law Judge makes the following:

CONCLUSIONS

1.               The Commissioner of Natural Resources and the Administrative Law Judge have jurisdiction in this matter pursuant to Minn. Stat. §§ 14.50 and 103G.315, and Minn. R. 6115.0730.

2.               The Department of Natural Resources has fulfilled all relevant substantive and procedural requirements of law or rule.  In particular, the Department has given proper notice of the hearing in this matter.

3.               The burden of proof is on the Department and Complainants to establish by a preponderance of the evidence that they are entitled to compensation due to the City’s interference with the Complainants’ wells.[61]

4.               At all times relevant to the complaints in this matter, the City was appropriating water pursuant to a permit issued in 1989 which limited to the City to 1000 million gallons of water annually and 8100 gallons of water per minute.

5.               In 2001, the City exceeded its permitted annual appropriation and the permitted pumping rate from July through August.

6.               The appropriation of water pursuant to permit is governed by Minn. Stat. § 103G.275, subd. 1, which states:

Subdivision 1. Permit required. The owner of an installation for appropriating or using waters of the state may not increase the pumping capacity or make any major change in the installation without first applying in writing for, and obtaining, the written permit of the commissioner.

7.               Domestic wells installed after the issuance of an appropriation permit are governed by Minn. R. 6115.0730, subp. 3, which states:

Subp. 3. New domestic wells installed after appropriation permits have been issued. In the event that new domestic wells, exempt from permit requirements, are installed in area of adequate ground water supplies where permits have been issued for appropriation the following shall apply:

A. It shall be the responsibility of the prospective new domestic well owner to ensure that the new domestic well will be constructed at adequate depth so that it will provide an adequate domestic water supply which will not be limited by the permitted appropriation.

B. Holders of valid permits for appropriation of water in areas where adequate water supplies are available shall not be responsible for well interference problems, involving new domestic wells exempt from permit, when such exempt domestic wells are installed subsequent to authorized appropriation.

8.               Complaints of well interference were received from owners of domestic supply wells in the area of the City’s system wells.  Many of these complaints were settled between the City and the well owners.  The City offered a settlement to one Complainant and denied responsibility for the interference alleged by the other Complainants in this matter.

9.               Complaints of well interference where settlements are offered are governed by Minn. R. 6115.0730, subp. 4, which states in pertinent part:

   Subp. 4. Settlement. If the applicant or permittee and the complainant(s) have been unable to negotiate a reasonable agreement pursuant to subparts 1, item E and 2, item E, the following procedure shall be implemented:

A. The applicant or permittee shall submit to the complainant a notarized written offer including a statement that the complainant must respond in writing to the commissioner within ten days from the receipt of the offer either accepting the offer or explaining why it is rejected. The offer must be submitted to the complainant with a copy to the commissioner within 40 days after the receipt of the written notification provided in subparts 1, item E and 2, item E, based on the following:

(1) If an existing domestic well provides an adequate domestic water supply which meets state health standards, and such well no longer serves as an adequate supply because of the proposed or permitted appropriation in the vicinity the applicant or permittee shall be responsible for all costs necessary to provide an adequate supply with the same quality and quantity as prior to the applicant's or permittee's interference.

(2) If an existing well provides an adequate domestic water supply but does not meet state health standards and such well would no longer serve as an adequate supply because of the proposed or permitted appropriation in the vicinity, the applicant or permittee shall be responsible for that portion of costs of providing an adequate water supply, but shall not be responsible for those costs necessary to bring the domestic well(s) to state health standards.

* * * *

10.           Each of the Complainant’s wells was installed prior to the City obtaining an amended permit, allowing the City to pump 2,420 million gallons of water per year.  The Complainants’ wells were not limited by the City’s permitted appropriation.  The Complainant’s wells were interfered with by the City’s appropriation of water in excess of the City’s permitted amount. 

11.           At the time of the City’s interference, each of the Complainant’s wells provided an adequate domestic water supply that met state health standards.  Due to the City’s interference, those wells no longer served as an adequate domestic water supply.  The City is responsible for all costs necessary to provide an adequate supply to the Complainants with the same quality and quantity as had been provided prior to the interference.

12.           The City is not responsible for costs unnecessary to the restoration of the domestic water supply to each Complainant.  Similarly, Complainants are not entitled to additional damages or interest on the reasonable costs awarded.    

Based upon the foregoing Conclusions, the Administrative Law Judge makes the following:

RECOMMENDATION

IT IS HEREBY RESPECTFULLY RECOMMENDED that the Commissioner of Natural Resources order that the City of Lakeville pay each Complainant’s reasonable costs of restoring adequate domestic water supply as follows:

 

Complainant	Reasonable Costs
Michael Foty	$1,899.86
Corey and Jennifer Glab	$1,059.98
Tomasz and Marie Kaczynski	$319.98
Paul Thomas	$8,517.34
David and Diane Rolfing	$7,827.68

 

Dated this 7th day of August, 2003.

 

 

s/Steve M. Mihalchick

STEVE M. MIHALCHICK

Administrative Law Judge

 

Taped: Four Tapes, No Transcript Prepared.

 

 

NOTICE

Pursuant to Minnesota Statute § 14.62, subdivision 1, the agency is required to serve its final decision upon each party and the Administrative Law Judge by first class mail.

 

MEMORANDUM

The City asserts that the DNR has not demonstrated the precise level of impact of the City on the Complainants’ wells.  In support of this argument, the City points to the absence of data regarding smaller wells, and the absence of daily pumping data from Farmington.  The City introduced no evidence affirmatively showing that any other appropriator or residential well owner had a role in the failure of any of Complainants’ wells.  The difference in scale between the smaller appropriators and the City renders any contribution to the problem from those smaller appropriators to be insignificant.

The DNR has compiled a substantial body of data regarding the volume of water pumped by the City and the water levels experienced in area wells.  The data shows a correlation between the volume pumped by the City and the water level in those wells.  The well failures correspond to increased pumping by the City.  This evidence amply meets the preponderance of the evidence standard required to show that the City’s pumping was the cause of the well interference experienced by the five Complainants.

The Glab and Kaczynski wells were drilled in 1995.  The Foty well was drilled in 2000.  The City maintains that its appropriations in 2001 were authorized under the 1989 permit and the City’s subsequent contacts with the DNR.  Relying on that argument, the City maintains that the rule regarding new domestic wells governs the Glab, Kaczynski, and Foty claims.  The applicable language of that rule states:

A. It shall be the responsibility of the prospective new domestic well owner to ensure that the new domestic well will be constructed at adequate depth so that it will provide an adequate domestic water supply which will not be limited by the permitted appropriation.[62]

In 2001, the City was permitted to appropriate up to 1000 million gallons of water annually.  None of the discussions with DNR staff rise to the level of a permit amendment.  Any appropriator is expressly obligated by statute to obtain a written permit from the DNR before increasing the amount of water removed.[63]

The Glab, Kaczynski, and Foty wells were not affected by the appropriation of the volume of water that the City was authorized to pump by its written permit.  These wells were not affected by the City’s appropriation of 1600 million gallons of water in 2000.[64]  When the City appropriated 2400 million gallons of water in 2001, those wells failed.  These well owners met their obligation under the rule, which is to ensure that their wells are drilled to a depth that will not be limited by the permitted appropriation.  Those wells failed when the City exceeded its permitted appropriation, so the City is responsible for the costs of replacement.

In making its settlement offer to reimburse a Complainant, the City first estimated the well’s condition and assessed its remaining useful life.  The City then offered some prorated portion of the actual replacement cost.  For the Thomas Complaint, the City offered a settlement of the pump cost and one-half of the other costs for replacement of the water supply.[65]

The DNR disputed the City’s approach.  The DNR cited the settlement rule which provides that the “permittee shall be responsible for all costs necessary to provide an adequate supply with the same quality and quantity as prior to the … permittee's interference.”[66]

The City’s approach to costs has no basis in rule or statute.  The rule is plain that the reasonable cost of restoring an adequate domestic water supply is to be paid by the appropriator.  This means that any well owner with a preexisting adequate domestic supply whose well is interfered with is entitled to the reasonable costs of a restoration of an adequate domestic water supply.[67]           

Some Complainants requested costs that go beyond replacing the domestic water supply after the City’s interference.  These costs include rent adjustments, costs caused by the pursuit of this matter, and interest.  These costs go beyond what is provided for in the rules.  The ALJ lacks the inherent equity power to award damages outside of an agency’s statutory authority.[68]  The ALJ has identified the reasonable costs to be paid for restoring domestic water supply within the meaning of the rule and the recommended amounts have been limited to those costs.

S.M.M.