Puntenney v. Iowa Utilities Bd.

• Decision Date: 31 May 2019
• Docket Number: No. 17-0423,17-0423
• Citation: 928 N.W.2d 829
• Parties: Keith PUNTENNEY ; LaVerne I. Johnson; Richard R. Lamb, Trustee of the Richard R. Lamb Revocable Trust; Marian D. Johnson by her Agent Verdell Johnson, Northwest Iowa Landowners Association; Iowa Farmland Owners Association, Inc.; and the Sierra Club Iowa Chapter, Appellants, and Hickenbottom Experimental Farms, Inc. and Prendergast Enterprises, Inc., Petitioners, v. IOWA UTILITIES BOARD, a Division of the Department of Commerce, State of Iowa, Appellee, and Office of Consumer Advocate and The Main Coalition, Intervenors-Appellees, and Dakota Access, LLC, Appellee.
• Court: Iowa Supreme Court

928 N.W.2d 829

Keith PUNTENNEY ; LaVerne I. Johnson; Richard R. Lamb, Trustee of the Richard R. Lamb Revocable Trust; Marian D. Johnson by her Agent Verdell Johnson, Northwest Iowa Landowners Association; Iowa Farmland Owners Association, Inc.; and the Sierra Club Iowa Chapter, Appellants,
and
Hickenbottom Experimental Farms, Inc. and Prendergast Enterprises, Inc., Petitioners,
v.
IOWA UTILITIES BOARD, a Division of the Department of Commerce, State of Iowa, Appellee,
and
Office of Consumer Advocate and The Main Coalition, Intervenors-Appellees,
and
Dakota Access, LLC, Appellee.

No. 17-0423

Supreme Court of Iowa.

Filed May 31, 2019

William E. Hanigan and Jason R. Lawrence of Davis, Brown, Koehn, Shors & Roberts, P.C., Des Moines, for appellants Richard R. Lamb; Marian D. Johnson by Agent, Verdell Johnson; Northwest Iowa Landowners Association; and Iowa Farmland Owners Association, Inc.

Wallace L. Taylor of Law Offices of Wallace L. Taylor, Cedar Rapids, for appellants Keith Puntenney, LaVerne I. Johnson, and Sierra Club Iowa Chapter.

Bret A. Dublinske and Brant M. Leonard of Fredrikson & Byron, P.A., Des Moines, for appellee Dakota Access, LLC.

David J. Lynch (until withdrawal), Cecil I. Wright II, and Benjamin J. Flickinger, Des Moines, for appellee Iowa Utilities Board.

Mark R. Schuling and John S. Long, Des Moines, for intervenor-appellee Office of Consumer Advocate.

Matthew C. McDermott and Espnola F. Cartmill of Belin McCormick, P.C., Des Moines, for intervenor-appellee The Main Coalition.

David Bookbinder, Washington, D.C., and Scott L. Long of Long & Gilliam, Des Moines, for amicus curiae Niskanen Center.

MANSFIELD, Justice.

The Bakken Oil Field has made North Dakota the second leading oil-producing state in our country. Almost all of America’s oil-refining capacity, however, is located elsewhere in the nation. For this reason, an underground crude oil pipeline was proposed that would run from western North Dakota across South Dakota and Iowa to an oil transportation hub in southern Illinois. Following a lengthy administrative proceeding, the Iowa Utilities Board (IUB) approved the construction of this pipeline in Iowa and approved the use of eminent domain where necessary to condemn easements along the pipeline route.

Several landowners and an environmental organization sought judicial review. They contended the pipeline did not serve the "public convenience and necessity" as required by law, see Iowa Code § 479B.9 (2016); did not meet the statutory standard

928 N.W.2d 833

required for a taking of agricultural land, see id. §§ 6A.21(1)(c ), .22(1); and did not meet the constitutional definition of "public use" set forth in article I, section 18 of the Iowa Constitution and the Fifth Amendment to the United States Constitution. Two of the landowners also raised claims personal to them. The district court denied the petitions for judicial review, and the petitioners have appealed.

On appeal, we conclude that the IUB’s weighing of benefits and costs supports its determination that the pipeline serves the public convenience and necessity. We also conclude that the pipeline is both a company "under the jurisdiction of the [IUB]" and a "common carrier," and therefore is not barred by Iowa Code sections 6A.21 and 6A.22 from utilizing eminent domain. See id. §§ 6A.21(2), .22(2)(a )(2). In addition, we conclude that the use of eminent domain for a traditional public use such as an oil pipeline does not violate the Iowa Constitution or the United States Constitution simply because the pipeline passes through the state without taking on or letting off oil. Lastly, we determine that the IUB’s resolution of the two individual landowner claims was supported by the law and substantial evidence. For these reasons, we affirm the district court’s judgment.

I. Background Facts and Proceedings.

In October 2014, Dakota Access, LLC (Dakota Access) filed documents with the IUB disclosing its intent to construct an underground crude oil pipeline from western North Dakota to Patoka, Illinois, an oil transportation hub. The pipeline would traverse Iowa from the northwest corner to the southeast corner of the state, passing through eighteen counties over a distance of approximately 343 miles.

In December 2014, as required by law, Dakota Access held informational meetings, attended by IUB representatives, in each of the eighteen counties. See id. § 479B.4. The following month, Dakota Access filed a petition with the IUB for authority to construct the pipeline. See id. §§ 479B.4–.5. In the petition, Dakota Access sought "the use of the right of eminent domain for securing right of way for the proposed pipeline project." See id. § 479B.16. Various parties requested and were granted permission to intervene, including landowners, trade unions, business associations, and environmental groups.

On June 8, the IUB filed a procedural schedule for the case in which it identified three issues for consideration:

(a) whether the proposed pipeline will promote the public convenience and necessity, (b) whether the location and route of the proposed pipeline should be approved, and (c) whether and to what extent the power of eminent domain should be granted ....

The hearing on Dakota Access’s application took place in November and December 2015. On the first day, the IUB received public comments from over 200 people both in support of and against the pipeline. An eleven-day evidentiary hearing followed. During that hearing, sixty-nine witnesses testified. After the conclusion of the hearing, the IUB received posthearing briefs.

On March 10, 2016, the IUB issued a 159-page final decision and order. First, it addressed whether the pipeline would promote the public convenience and necessity. The IUB concluded that the public convenience and necessity test should be treated "as a balancing test, weighing the public benefits of the proposed project against the public and private costs or other deteriments as established by the evidence in the record." It also concluded that it could

928 N.W.2d 834

consider "public benefits outside of Iowa" for an interstate oil pipeline. In addition, the IUB noted that climate change is "a very important issue," but that the pipeline "represents, at most, a change in the method of crude oil deliveries that are already taking place and that will continue to take place regardless of whether this pipeline is built." The IUB further found that "the increased safety associated with pipeline transport of crude oil is significant" as compared to existing rail transportation of that oil.

Continuing, the IUB also found overall economic benefits to Iowa from the construction and operation of the pipeline. And while it observed that it would be impossible to build and operate a pipeline without any environmental impact, it found that the route was "selected in a manner intended to minimize adverse environmental impacts" and specifically "to minimize the possibility of leaks." It added that "Dakota Access has taken reasonable steps to reduce the safety risks associated with the proposed pipeline."

The IUB required that the parent companies of Dakota Access provide unconditional financial guarantees of the pipeline’s liabilities and made a series of modifications to the agricultural impact mitigation plan. Among other things, the IUB required that the pipeline be installed at a minimum depth of forty-eight inches where reasonably possible, that all tiling be repaired and restored, and that Dakota Access provide a GPS map to the landowner of any tiling found during construction.

Ultimately, the IUB found that the pipeline would promote the public convenience and necessity. It did so primarily for two reasons:

First, the proposed pipeline represents a significantly safer way to move crude oil from the field to the refinery when compared to the primary alternative, rail transport. The most credible evidence in this record, based on data from the U.S. Department of Transportation, shows that the spill incident rate for transport of crude oil by rail transport is three to four times higher than the incident rate for pipeline transport on a ton-mile basis. The oil is going to be produced and shipped as long as the market demands it; given that reality, shipping by the safest available method makes sense.

Second, in the IUB’s view, there would be considerable economic benefits "associated with the construction, operation, and maintenance of the proposed pipeline."

On the other side of the ledger, the IUB noted that there were potential adverse environmental and agricultural impacts from the pipeline as well as effects on the landowners whose land would be trenched. Yet, with certain precautionary measures in place, it found that the benefits outweighed the costs associated with the project.

Regarding the pipeline’s route through Iowa, the IUB observed that Dakota Access had used a software program that evaluated alternative routes and "developed a route that would avoid those land areas where the pipeline could impact critical structures or habitat." It found that a zigzag route that contained right angles and followed division lines (as proposed by some landowners) would create additional safety issues.

The IUB then...