Navigating water rights: What happens when there is too little or too much water?

FORT WAYNE, Ind. — Think water is not an issue in Indiana or the Midwest, like it is in Arizona or California?

Think again, cautioned Brianna Schroeder, a partner at Janzen Schroeder Ag Law, during an educational seminar at the Fort Wayne Farm Show.

“If I was here 10 years ago giving this presentation, I would not say that because we would not be talking about water. We would say, ‘Northern Indiana, we got a ton of water, we’re not worried about it,’” Schroeder said.

“I’m telling you that is changing, and we are seeing how water impacts decisions around the state in everything from development to land use, zoning and on the litigation front, as well.”

One of the complicating factors is the many levels of government that have jurisdiction or the ability to regulate over water.

That can include the Indiana Department of Natural Resources, the Indiana Department of Environmental Management, the U.S. Army Corps of Engineers, the U.S. Department of Agriculture’s Natural Resources Conservation Service and the U.S. Environmental Protection Agency.

“Before you feel like dumping a bunch of dirt into a wetland, make some phone calls,” Schroeder advised.

“What you need to know is if you go out in your backyard and you’ve got water flowing through your backyard, you could be triggering any one of these government agencies from federal, state and local. So, that is one of the reasons water becomes very relevant here.”

Changing Times

Historically, Schroeder said, the prevailing thought has been that Indiana has a lot of water, so the state has not been concerned about it and, in turn, has been very hands-off.

“Here in Indiana, you want to put a water well in? Go for it. Don’t worry about it,” she said.

“You want to put a high-capacity water well in? Go for it. Let the DNR know. But you don’t need a permit. You don’t need to go through some extensive, application process. You put your well in. That’s fine.”

However, with more economic development has come increased competition for that water.

In particular, the proposed Limitless Exploration Advanced Pace district, a 9,000-acre state-supported industrial project in Boone County, has brought the issue to the forefront.

The Indiana Economic Development Corporation has been working to attract large industrial and high-tech projects like microchip manufacturers and pharmaceutical facilities to build in the LEAP district.

The goal is to create a hub of global innovation with high-paying jobs and sustainable development between Indianapolis and Chicago, along I-65 near Purdue University.

“They didn’t quite get dialed in how much water they were going to need. So, there’s been these conversations about taking water out of the Wabash. ‘We’re going to ship it over here. We’re going to cross counties with it. We’re going to export water,’” Schroeder said.

“What does that do to the water that the farmers in the original area were using to irrigate or for their drinking water wells? So, we’ve suddenly got this tension between different water uses.”

In turn, akin to actions taken in western states, Tippecanoe County passed a moratorium on exporting large amounts of water out of the county.

“That’s the first time that I’m aware of in Indiana that we’ve had a county say we are not going to export our water,” Schroeder said.

“I think there’s a good question as to whether Tippecanoe County is really allowed to do this or not,” she said. “But the fact that we’re seeing things like this happen makes it really clear that water is becoming a resource that is driving legislation at federal, state and local levels.”

Similarly, Schroeder said, solar energy, wind power, carbon sequestration and livestock farms are also sparking conversations about land use among county commissioners, area plan commissions and boards of zoning appeals.

“In different counties, you’re going to have to take different routes. If you want to build a hog farm in Decatur County, it is going to be a very different process than if you want to build it in Whitley County,” she said.

“So, you consult your local zoning rules, your area plan might have additional procedural rules and you figure out the route forward for that. And the reason you need to nail that down, if you need something like a rezone, a rezone is essentially passing a new zoning ordinance — that’s not the BZA’s job. So, if you need a rezone, you go through the APC and the county commissioners. If you need a special exception or a variance, then you’re going to go through the BZA.

“There can be people who sit on both of those boards. There can be overlap, but there can be very different driving factors for different people on those different boards.

“We’re seeing that with solar in some places around the state where maybe you’ve got a BZA that is anti-solar and maybe you’ve got county commissioners that are pro-solar.

“Depending on the route that a solar project needs to take, it may go through one or more of those bodies, and you could come up with different results based on who hears the project.”

Overlay District

An overlay district is a zoning ordinance, allowing a more targeted approach for the APC and county commissioners to manage airports and highway commercial corridors, preserve historic sites and protect natural resource areas, for example.

“You can say this area, these city blocks, this part of the county is going to have special rules that apply. It also means you don’t need to do a case-by-case basis,” Schroeder said.

“If you set up a part of the county and you say this is where solar is going to go, and wind and carbon, all the things are going to go here, that sets up special rules so then they would apply to anyone who wanted to build one of those projects in your overlay district.”

But notices must be published in the local newspaper and a public hearing must be held to establish an overlay district, as well as a moratorium, like those to ban solar projects or confined feeding operations throughout a county.

“If you skip any of those steps at the APC or the county commissioner level, I am sure I have a client that will sue you,” Schroeder said.

Home Rule

Indiana’s “Home Rule” ordinance assures local control. But if the state is regulating in a space, then the county cannot.

“Local governments generally have all the power. They can do whatever they need to do to make sure their citizens are happy and safe and doing well,” Schroeder said.

“However, there’s an exception. Local governments cannot do all of those things if they try to regulate conduct that is already regulated by the state.”

For example, five to 10 years ago, there were counties that were passing stringent CFO zoning ordinances, but they were infringing on what IDEM had already put into place.

“IDEM has a whole set of rules for confined feeding. You know, how it has to be built, what kind of concrete, what kind of rebar, what kind of drainage — all of these things are addressed by IDEM regulations,” Schroeder said.

“It doesn’t mean the county can’t do anything. The county still has some control over siting, over location, but not over the details of how you build something like this.”

So, what happens if a county says it has decided that manure storage on a livestock facility has to be done in a certain way?

“Just like if the state and the feds have a conflict, the feds win — if a county and the state conflict, the state wins. So, a county cannot pass zoning ordinances whether it’s dealing with water, whether it’s dealing with livestock,” Schroeder said.

In the future, she said, that could also apply to solar, carbon and windmills, or perhaps even casinos and data centers, if the state approves new siting laws for those types of projects.

“Water is impacting zoning decisions. It’s impacting ordinance passage at the local level. This is new. I cannot stress this enough,” Schroeder said.

“This is not something that was happening 10 years ago. But now we’re seeing counties change their zoning ordinance, like Tippecanoe County to address the export of water, but also to address livestock farms, digesters and wind and solar based on water quality and water quantity issues. That’s a new issue to keep your eye on.”

Flooded Fields

Takings, or inverse condemnation law, is also changing in Indiana and in the federal court system.

Schroeder detailed a case of government-induced flooding from the lake in Marshall County in northern Indiana.

The lake has two different legal levels. It is a little bit higher part of the year and a little bit lower part of the year — an attempt from 1980s to satisfy both the farmers in the area and lake users.

Farmers back in the 1940s and 1950s were instructed to set their drainage tile at a certain level. Those drainage tiles ultimately feed the lake.

As the water in the lake is maintained at higher levels, that water cannot drain off of those fields and they can flood.

So, Schroeder explained, the different levels allow for better drainage in the summer and then a higher level after the crops have been harvested.

“Eventually, the Indiana DNR says, ‘Let us come in and help. Let us take over here.’ What could go wrong, right? So, the DNR says, ‘You know, we’re going to handle this from now on,’” Schroeder said.

“They operate it for a little bit, and then oftentimes what happens is they say, ‘You know, we think there’s a better way. What if we just didn’t operate it? What if we just kind of let it go? That would save some money. We’ll just keep the water higher.’”

“‘We’re going to go ahead and let this water get a little bit higher because then we don’t need as many employees, and that that seems like a good fix.’ Well, they went a step further, and they actually set the water way higher,” she said.

“And eventually, through discovery process where they had to turn over all of their internal memos to us, they determined that what had happened was simply ‘an innocent keystroke error’ — which set up about an extra foot of water in this lake at various times.”

After several years of litigation involving questions about government immunity, the significance of damages when there is crop insurance, water as a common enemy and ownership of the dam, the case finally went to trial.

“We had an accountant and we had our farmer sitting down with all of this ag data to sort out exactly how that land was impacted every year,” Schroeder said.

“Ultimately, we felt pretty good because we got a judgment from the court in favor of our clients. He said, ‘Yeah, there the DNR created a nuisance and inverse condemnation, which is like a taking.’”

However, DNR appealed the ruling — for $485,000 for some crop damages over multiple years and some tile damages — to the Indiana Court of Appeals.

“This is a little bit of new law when we talk about water and taking, but the court said government-induced flooding, even if temporary, that can be a taking,” Schroeder said.

After a whole lot more back-and-forth and while another flooding case was being considered by the Indiana Supreme Court, the DNR eventually agreed to make a payment of $810,000.

“You can see that over the last maybe 18 months, our Court of Appeals and our Supreme Court have really been grappling with how do we address those problems when there’s too much water, especially when there’s too much water because the government had a bit of a whoops-a-daisy,” Schroeder said.

“What the court held, and this is what I think is really kind of cool and I think we’ll see more cases on it, that in a temporary taking, you are entitled to the damages you suffer each year, not necessarily the value of your land.”

It depends on the property and fact-specific analysis conducted by the court. The type of flooding that occurs — if it is temporary or permanent — may dictate, to a large extent, the amount of damages that the property owner would be entitled to receive.

“I think you could be awarded a whole lot more in damages for a temporary government taking than a permanent government taking,” Schroeder said.

“This is law that is in fact based on World War II taking cases, where the government came in and said, ‘We’re going to have to take your airplane manufacturing plant for a couple of years, but we’re going to give it back to you’ — that’s a temporary taking.”

“These farm cases are all based on those World War II cases,” she said. “What we’re seeing is that the Indiana law and the federal law around these flooding taking cases has changed significantly and that the analysis could be to landowners’ benefit if they suffer these temporary damages.”