Rules of the road

SOUTH SHORE, S.D. -- A proposed dairy on a country road north of Watertown, S.D., is the region's latest flash point over how large-scale livestock operation is sited and over who will pay for impacts to township roads.

The dairy plans to milk 3,000 cows and would house about 4,500 animals with heifers. The facility itself would cost about $15 million, including $10 million for the facility and another $5 million for the cows to fill it.

It's an ambitious project.

Some 3,000 acres of land was purchased nearly a year agoby the family of Rene Van Der Eynden. Last May, Rene died of a heart attack. His widow, Francy Van Der Eynden, and her sons are going forward with the project The Van Der Eyndens, originally from the Netherlands, had sold a dairying business they'd been operating New Zealand.

Wim Hemmink has been shepherding the project for the family and will act as general contractor. Hemmink has worked to develop some 15 large dairies in eastern South Dakota since 2000.

Hemmink, also from the Netherlands, came to the state in 1995 and runs his own of 1,000-head dairy in Bruce, S.D., as well as being a part owner for a consulting firm, Sherman Dairy Development L.L.C., which is named for Sherman Township in Brookings County.

If built as proposed, the dairy would be twice as large as the largest dairy in the Watertown area.

The Codington County, S.D., project would be located a half-mile west of Interstate 29, just west of South Shore, S.D., on a farmstead that's been vacant since about 1970. The site is in Germantown Township, next to the Grant County line.

"The most beneficial thing about this place is that it's a nice site, and it comes with 3,000 acres of cropland," Hemmink says.

Almost all of that was in the Conservation Reserve Program and is in the process of being returned to cropping.

"The disadvantage is we were over two miles from an oil road," he says.

The site is surrounded by township roads.

Besides its size, officials say the notable part of it is how surrounding townships have tried in vain to require the dairy to establish an escrow fund of $250,000 to pay for any road damage.

Models of livestock regulations

Hemmink says the dairy has rejected the township's escrow agreement but has accepted an Aug. 18 agreement in which the dairy would keep a $100,000 line of credit to pay for unanticipated road damage. Zoning officials say that agreement remains unsigned.

Opponent Darrold "Butch" Kaaz, who lives just a half-mile away from the dairy, says he's disgusted the county is considering the smaller deal.

"That $100,000 won't buy two pickups," he says.

The state of South Dakota is looking at whether there needs to be a statewide solution to the issue. Bill Even, state secretary of agriculture, says he's looking at the issue from a statewide perspective.

"There are legitimate needs at the local township road level, and the townships don't have money for road repair," Even says. "We'd better get this down now, before this comes to the forefront. We need to find out who has jurisdiction, who has authority and liability and responsibility on these (issues) and try to develop a model approach that will be workable for livestock production, agriculture and rural businesses."

A key player in the matter is Todd Kays, who has been zoning officer for Codington County since 2004. That's one-fourth of his work.

Three-fourths of his time is as senior land use planner for the First District Association of Local Governments, where he's worked for 16 years. First District is one of six regional planning development groups in the state. First District covers 11 counties, including 74 communities in the northeast corner of the state.

In the larger role, Kay has had a hand in siting numerous livestock projects and expansions in the so-called "I-29 Corridor" for agricultural development. But this dairy is about Codington County, he emphasizes.

In the past five years, this Watertown-based county has processed applications for a dozen large-scale animal feeding operations -- 10 expansions and two new sitings.

"I don't think there's been a large animal permit denied in that time. Codington County is an ag-friendly development county," Kays says.

Most of the permits involve feeder operations -- cow-calf and beef cattle operations.

Before this 3,000-unit proposal, the largest dairy in the county was 1,500 cows.

Authority for such decisions lies with the county Zoning Board of Adjustment. The zoning board decides on variances, which involve a relaxation of ordinances. They also decide on conditional use permits involve uses that must be monitored on an ongoing basis. Ag zoning is similar to gravel pits and other intensive uses.

Evolving state policies

In 1996, the state adopted a "general permit" for swine development in the state, in response to the Murphy Farms and Tyson swine barns that popped up in the state. Shortly afterward, the state changed the ordinance to cover all kinds of animal operations.

In the "general permit," the South Dakota Department of Natural Resources wanted to make sure that manure containment and nutrient management issues were specified. At the time, anything with more than 1,000 animal units required a state permit.

The nutrient management plant required any proposed CAFO to supply information about how the manure will be distributed -- crop, crop yields, as well as nitrogen and phosphorus loading. The farm's lagoon or other manure containment must meet state standards.

Among 66 counties in the state, some 44 have their own zoning regulations, Kays says.

In the late 1990s, the regional planning authorities and other stakeholders sat down and drafted a model ordinance for concentrated animal feeding operations. This set a template for counties to use on issues involving issues like setbacks, manure application and definitions for animal units.

"Many counties adopted the model ordinance as it was or modified it to fit their specific counties," Kays says. Some have their own setbacks for identified wetlands, some from fishing lands.

The northeast counties were active in this process and had Kays' help.

Codington County and five others in the area, for example, require that if a proposed feedlot has fewer than 1,000 animal units, they must be a quarter-mile from existing neighbors. CAFOs of 1,000 to 1,999 animal units require a three-eighths mile setback. For those with more than 2,000 animal units, the setback is a half-mile.

Kays says there is little controversy over new or expanded livestock operations with fewer than 1,000 animal units.

"You don't have a problem when 'Joe on the farm' wants to get bigger, or wants to make room for his kid to come home from college," he says. "When it comes to venture capitalists who no one knows, right, wrong or indifferent, it causes problems."

Kays says one of his jobs is to make sure the ordinances apply equally to all. And some rules are for residents, not the farmers.

In 2001, Codington County implemented an ordinance that reflects the state's right-to-farm laws. If you build a home within a half-mile of an existing livestock feeding operation, you have to sign an agreement that acknowledges you are encroaching on agricultural areas. To receive a building permit for a rural home, you must promise not to complain about things like farm smells, dust from farm vehicles or other nuisances.

A new Codington County farm home must be sited on at least 35 acres.

"You can have only so many houses per quarter section," he says. "That doesn't encourage a lot of residential development outside the communities."

These laws are cold comfort for existing neighbors.

You want $250,000 for what?

In February and March, Van Der Eynden came to light in public meetings.

As with other projects, it required a half-mile set-back. The site met all the requirements, Kays says. There were questions about whether the Oglala Aquifer would be compromised, but the zoning board was satisfied by answers from the South Dakota Geological Survey and the East Dakota Water Development District, Kays says.

In May, the zoning board asked the state for a site review. Another hearing was held April 7, and the board decided to grant a permit subject to acquiring a state general permit for nutrient management.

Significantly, the dairy agreed to build up roads to support milk hauling -- three miles of primary road and two miles of secondary road.

But township officials balked. They were getting nothing from the project except expense of road maintenance. They wanted written conditions about what would happen if township roads are damaged. There were estimates of 3,000 to 5,000 trucks hauling products to and from the dairy every year. Peterson lives just up the road, in Germantown Township.

Similarly, Grant County and farmers in adjoining townships saw no benefit.

From April to July, the townships and their lawyers drafted a "haul road agreement," which specified compensation for road damage. In August, the zoning board met again and discovered the townships and the dairy had come to loggerheads.

The township demanded wanted $250,000 in an escrow account to fix or repair roads that are damaged by hauling of haylage and silage at different times of the year. The dairy and the townships would drive the roads before heavy hauling seasons and agree on the condition of the road. Then, the same people would inspect the roads after the season and, if there was damage, the dairy would fix it with funds from the escrow account. Under the proposal, the dairy would have to replenish the account within 30 days.

The dairy objected.

"The dairy said they'd fix the road, but they didn't want to carry an escrow account," Kays says.

Hemmink argued that maintaining the roads was one thing, but requiring the dairy to maintain a quarter-million-dollar account with no other use than an escrow account was unfair.

Kays notes that some questioned whether the same conditions would have to extend to livestock operations of all sizes.

In late August, the Codington County Board of Adjustment negotiated out set a new policy, requiring the dairy to carry a $100,000 escrow account, line of credit or bond -- "whatever the dairy wanted to do" -- to cover road damage, Kays says.

Damage costs would be recorded in the first three years of the agreement, and the amount of coverage would be the running average of the three previous years of damage.

Kays says that as of Nov. 10, the dairy hadn't signed the agreement.

"It hasn't been signed and they haven't asked for reconsideration, so I'm not sure the whole thing is resolved," he says.

Meanwhile, some neighbors are concerned.

Meet the neighbors

Darrold "Butch" Kaaz of Summit, S.D., lives with his wife, Judy, just a couple of miles north and west of the proposed dairy. He's lived for 65 years on a farm his father, Karl, now 99, bought in 1944.

Butch and Judy raise 140 acres of grain and a few stock cows, but he also has run a trucking business, hauling livestock for 42 years. He's been on the township board, as was his father. She's the clerk. He's on the local petroleum co-op board and on the state board of cooperatives.

"We know what the effect is on the roads," he says. "Our township only takes in $12,000 a year. It's like a $40 million dairy wants to come in and milk anywhere from 3,000 to 6,000 head. I've been here all my life, I've got too much heart in my community to let something like that run over us." (Hemmink notes that the proposed dairy is only half of that size.)

Another neighbor is Randy Peterson, 58, who moved from Watertown to the farmstead just south of the proposed dairy in July 2007.

Peterson retired as a driver for the United Parcel Service in 2007. His wife, Sandra, retired from a retail sales job. They wanted to get out of busy Watertown and soon started to imagine the constant rush of trucks coming past their 11-acre farmstead.

"This was our retreat," he says. "At the time, I wasn't aware that the state is recruiting people to build (dairies) along the interstate."

Peterson says he isn't planning to flee from the deal. "I'm going to sit and see what happens," Peterson says.

"I'm not so much concerned about the smell as traffic and water situation," he says.

Peterson says he'd have no objection to a "normal" dairy of about 500 cows.

Kaaz, who milked cows early in his career, has seen articles that say dairies lose their efficiency past 700 to 800 head. He thinks the largeness is driven by the cheese plants that simply want to make fewer stops.

Hemmink says residents in North Dakota, South Dakota and Minnesota are simply accustomed to smaller-scale dairies. Dairies in states such as California, New Mexico and Texas are large and need to be to capture efficiencies of scale.

Hemmink says the most cost-efficient dairies are 2,000 to 3,000 cows because all of them require machines to run, and getting the next larger size of tractor-loader, for example, can double production and income.

"One guy I know has a 3,000-head dairy and a 5,000-head dairy. He says he can produce milk 80 cents per hundredweight cheaper on the larger one," he says.

Minding the details

The Kaazes are watching the details in the permit.

Butch Kaaz raises the issue of whether the state permit for manure management is even valid. He says he's seen state documents of proposed manure handling sites. Some absentee landlords listed on the documents haven't been contacted. Heck, he says, even some of his own land is listed on the permit, and he wouldn't agree to such a thing.

Hemmink doubts that.

He says only the owner of land can approve a parcel for a manure management plan. Besides, there's plenty of land to spread the manure. He says the 4,500 cattle would need 6,000 to 7,000 acres for manure distribution per year. He says the dairy-owned land covers 3,000 acres of that. There are more than enough agreements.

Kays says if there is something wrong with the land spreading agreements, there's something wrong and the plan will need to be revised.

"We don't issue permits for construction until that's taken care of," he says.

Both Peterson and Kaaz complain that the new dairy wouldn't create jobs for existing workers, but instead would bring "Latinos" in and potentially create problems.

They cite the housing restrictions and the concerns about the workers' families not being able to afford health care. They wonder if the workers will need food stamp help and the impact on other local government agencies and the schools.

Hemmink says Hispanic workers are a fact of life in dairying.

"The fact is, we can't find enough local people who want to the jobs on dairies," he says. "Every gallon of milk or pound of cheese you buy in the store will have some Hispanic labor in it."

He says many schools are happy to have the students to keep their numbers from depleting.

To Kays, the major unanswered issue in the deal is who pays for the roads and how.

With setback regulations, livestock operations must be pushed into more remote rural locations and onto township roads

CAFOs can't be built too close to people, but that's where the road infrastructure is best.

"The most interest will be in the I-29 corridor, with its proximity to ethanol plants, and transportation that works, I guess," he says. "But putting dairies in the eastern third of the state causes a problem because that's where the majority of the population in the state lives."

Often this places a burden on townships.

"Townships have been the 'ugly sister in the closet' for generating capital off taxes," Kays says. "Even with a multimillion(-dollar) investment -- a house or a dairy -- how do you generate enough revenue off taxes to justify the use? It's a theoretical question, and a question no one has understood or asked yet."