Kinley Corp. v. Iowa Utilities Bd., Utilities Div., Dept. of Commerce

• Citation: 999 F.2d 354
• Decision Date: 19 July 1993
• Docket Number: Nos. 92-2063,92-2146,s. 92-2063
• Parties: KINLEY CORPORATION, Appellee, v. IOWA UTILITIES BOARD, UTILITIES DIVISION, DEPARTMENT OF COMMERCE, Appellant. Office of Consumer Advocate, Appellant.
• Court: U.S. Court of Appeals — Eighth Circuit

Page 354

999 F.2d 354

KINLEY CORPORATION, Appellee, v. IOWA UTILITIES BOARD, UTILITIES DIVISION, DEPARTMENT OF

COMMERCE, Appellant.

Office of Consumer Advocate, Appellant.

Nos. 92-2063, 92-2146.

United States Court of Appeals,

Eighth Circuit.

Submitted Feb. 17, 1993.

Decided July 19, 1993.

Diane C. Munns, Des Moines, IA, argued (Susan Allender, James R. Maret, Ronald C. Polle, on brief), for appellant.

Helen C. Adams, Des Moines, IA, argued (Philip E. Stoffregen, on brief), for appellee.

Before McMILLIAN, MAGILL and LOKEN, Circuit Judges.

McMILLIAN, Circuit Judge.

Appellants Iowa Utilities Board (IUB) and the Office of Consumer Advocate (OCA) appeal from a final judgment entered in the District Court ¹ for the Southern District of Iowa holding that the Hazardous Liquid Pipeline Safety Act of 1979 (HLPSA), 49 U.S.C. App. § 2001 et seq., expressly preempted Iowa Code ch. 479 (1991) with respect to interstate hazardous liquid pipelines. Kinley Corp. v. Iowa Utilities Board, No. 4-90-CV-80687, 1992 WL 526745 (S.D.Iowa Apr. 3, 1992) (Kinley ). For reversal appellants argue the district court erred in holding that (1) the HLPSA expressly preempted the safety provisions of Iowa Code ch. 479 and (2) the non-safety provisions of Iowa Code ch. 479, including the hearing, permit and inspection provisions, as well as the environmental and damage remedies provisions, were not severable from the safety provisions. For the reasons discussed below, we affirm the judgment of the district court.

The underlying facts are not disputed. Appellee Kinley Corp. owns and operates an interstate hazardous liquid pipeline extending some 13 miles from an Amoco Oil Co. terminal facility located near Council Bluffs, Iowa, to Offutt Air Force Base in Bellevue, Nebraska. The pipeline is 4 inches in diameter and transports aviation jet fuel. Aviation jet fuel is a petroleum product and thus a "hazardous liquid" for purposes of the HLPSA. 49 U.S.C.App. § 2001(2)(A). The pipeline was constructed in April 1968 and was purchased by Kinley after construction had begun but before it was completed. Neither the company that constructed the pipeline nor Kinley ever applied for a Chapter 479 state pipeline permit until 1988. Chapter 479 establishes a comprehensive state program supervising the intrastate and interstate transportation by pipeline of solid, liquid or gaseous substances, with the exception of water and interstate natural gas, ² in order to protect the safety and welfare of the public. In July 1987 IUB, formerly the Iowa State Commerce Commission, became aware of the existence of the pipeline (the Nebraska Fire Marshal's office had asked IUB whether IUB had any information about the pipeline), and in August 1987 IUB inspected the pipeline. Donald Stursma, an IUB staff engineer, was a member of the inspection team.

On September 21, 1987, Stursma wrote a letter to Kinley asserting IUB jurisdiction over the pipeline under Iowa Code ch. 479 In June 1989 IUB issued an administrative order directing Kinley to show cause why civil penalties should not be assessed for non-compliance with Chapter 479 and IUB's administrative regulations. In April 1990 IUB denied Kinley's application for a state pipeline permit and ordered Kinley not to operate the pipeline in Iowa or to replace portions thereof, and assessed civil penalties.

                and directing Kinley to apply to the IUB for a state pipeline permit.   After Stursma reminded Kinley again to file an application for a state pipeline permit or face civil penalties, Kinley filed an application for a state pipeline permit on March 16, 1988
                

In May 1990 IUB reopened the record and Kinley filed a motion to dismiss on the ground that the IUB lacked jurisdiction over the pipeline because the HLPSA preempted Iowa Code ch. 479, except for provisions about inspection fees (Iowa Code § 479.14-.16) and authorizing the IUB to act as an agent for the federal government (id. § 479.33). In September 1990 IUB denied the motion to dismiss. In December 1990 Kinley filed this action against IUB in federal district court seeking a declaration that Iowa Code ch. 479 had been preempted by the HLPSA with respect to interstate hazardous liquid pipelines and an injunction prohibiting IUB from taking any further action to enforce Chapter 479 against it. The district court later allowed OCA to intervene as a party defendant.

DISTRICT COURT DECISION

The case was submitted to the district court on stipulated facts. The district court held that Iowa Code ch. 479 was expressly preempted by the HLPSA, 49 U.S.C.App. § 2002(d), as well as inconsistent with the comprehensive regulatory scheme established by the HLPSA, and was therefore invalid under the Supremacy Clause of the United States Constitution. Kinley, slip op. at 3-5, citing ANR Pipeline Co. v. Iowa State Commerce Comm'n, 828 F.2d 465 (8th Cir.1987) (ANR ) (holding Iowa Code ch. 479 preempted with respect to interstate natural gas pipelines). The district court also held that the non-safety provisions of Chapter 479 were not severable from the safety provisions. Kinley, slip op. at 4. The district court denied injunctive relief. Id. at 5. Both IUB and OCA appealed, and the cases were consolidated for purposes of appeal.

PREEMPTION

Appellants acknowledge that the safety provisions of Chapter 479 were preempted by the HLPSA. Brief for Appellants at 8. However, they argue that the non-safety provisions, specifically the financial responsibility provisions designed to protect the state's farmland and topsoil from damage due to construction, operation and maintenance of pipelines and to guarantee payment of property and environmental damages, were not preempted. Appellants also argue the ANR decision is not controlling here because the federal statutes regulating natural gas pipelines and hazardous liquid pipelines are not comparable. We disagree.

"[T]he Supremacy Clause, U.S. Const., Art. VI, cl. 2, invalidates state laws that 'interfere with, or are contrary to,' federal law." Hillsborough County v. Automated Medical Laboratories, Inc., 471 U.S. 707, 712, 105 S.Ct. 2371, 2375, 85 L.Ed.2d 714 (1985), citing Gibbons v. Ogden, 22 U.S. (9 Wheat.) 1, 211, 6 L.Ed. 23 (1824) (Marshall, C.J.). Congressional intent is the critical question in any preemption analysis. Louisiana Public Service Comm'n v. FCC, 476 U.S. 355, 369, 106 S.Ct. 1890, 1899, 90 L.Ed.2d 369 (1986); see, e.g., Howard v. Uniroyal, Inc., 719 F.2d 1552, 1559 (11th Cir.1983).

Under the Supremacy Clause, federal law may supersede state law in several different ways. First, when acting within constitutional limits, Congress is empowered to pre-empt state law by so stating in express terms. In the absence of express pre-emptive language, Congress' intent to pre-empt all state law in a particular area may be inferred where the scheme of federal regulation is sufficiently comprehensive to make reasonable the inference that Congress "left no room" for supplementary state regulation. Pre-emption of a whole field also will be inferred where the field is one in which "the federal interest is so dominant that the federal system will be assumed to preclude enforcement of state laws on the same subject."

Even where Congress has not completely displaced state regulation in a specific area, state law is nullified to the extent that it actually conflicts with federal law. Such a conflict arises when "compliance with both federal and state regulation is a physical impossibility," or when state law "stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress."

Hillsborough County v. Automated Medical Laboratories, Inc., 471 U.S. at 713, 105 S.Ct. at 2374 (citations omitted). ³

In the present case, we need look no further than the express statutory language. The HLPSA contains the following express preemption provision: "No State agency may adopt or continue in force any safety standards applicable to interstate pipeline facilities or the transportation of hazardous liquids associated with such facilities." 49 U.S.C.App. § 2002(d) (emphasis added). We agree with the district court that this is a case involving express preemption and that Congress has expressly stated its intent to preempt the states from regulating in the area of safety in connection with interstate hazardous liquid pipelines. For this reason, the state cannot regulate in this area and Chapter 479 is invalid to the extent it purports to do so.

When Congress has considered the issue of pre-emption and has included in the enacted legislation a provision explicitly addressing that issue, and when that provision provides a "reliable indicium of congressional intent with respect to state authority," "there is no need to infer congressional intent to pre-empt state laws from the substantive provisions" of the legislation.

Cipollone v. Liggett Group, Inc., --- U.S. ----, ----, 112 S.Ct. 2608, 2618, 120 L.Ed.2d 407 (1992), citing Malone v. White Motor Corp., 435 U.S. 497, 505, 98 S.Ct. 1185, 1190, 55 L.Ed.2d 443 (1978), and California Federal Savings & Loan Ass'n v. Guerra, 479 U.S. 272, 282, 107 S.Ct. 683, 690, 93 L.Ed.2d 613 (1987) (Marshall, J.). Nonetheless, we note that the legislative history of the HLPSA, especially when considered with the Natural Gas Pipeline Safety Act (NGPSA), 49 U.S.C.App. §§ 1671-1686, further demonstrates Congress's intent to preempt state safety regulation of interstate hazardous liquid pipelines. In 1979, at the same time the NGPSA was amended to cover liquified natural gas, Congress also enacted the HLPSA. The HLPSA established federal safety regulation over the transportation of hazardous liquids by pipeline and defined "hazardous liquid" to include petroleum and petroleum products, 49 U.S.C.App. §§ 2001(2)(A), 2002(l ). In enacting the HLPSA, Congress intended to "establish a statutory framework similar to the NGPSA to regulate transportation of hazardous liquids by pipeline."...