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
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.
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:
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
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:
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 turned to the eminent domain issues. It found that sections 6A.21 and 6A.22 gave authority to a pipeline company under the IUB's jurisdiction to condemn an easement for "public use." It concluded that this statutory public-use requirement had been met. In addition, it determined that constitutional objections to the exercise of eminent domain were
The IUB also considered a series of objections by landowners to the exercise of eminent domain over their specific properties. In several instances, it sustained the objections in whole or in part. Thus, in one case, it required that the route be relocated to avoid additional buildings that were being constructed for a turkey farm. In response to another landowner's plea, the IUB directed the preservation of certain fruit trees that were roosting places for several species of bats. The IUB also refused, on legal grounds, to allow the condemnation of property that was owned by governmental entities such as counties.
The IUB was not persuaded, however, by landowner Keith Puntenney's objection. Puntenney requested that the pipeline's path be diverted because he wanted to install three wind turbines on his property in the area of the proposed route. But the IUB concluded that there was no "firm plan" to install wind turbines and "it has not been shown that the pipeline would necessarily interfere with the possible future installation of wind-driven turbine generators." As to landowner LaVerne Johnson, the IUB did not agree that the pipeline could not cross his tiling system, although it did require that the pipeline be bored under his tiling system including the main concrete drainage line.
Following the IUB's final decision and order, several motions for clarification and rehearing were filed. On April 28, the IUB issued an order denying these motions.
On May 26 and May 27, several petitions for judicial review were filed in the Polk County District Court. The petitioners included Puntenney, Johnson, the Sierra Club, and a group of landowners known as the Lamb petitioners. The petitions were later consolidated for hearing.
Meanwhile, in June, Dakota Access began construction of the pipeline in Iowa. On August 9, the Lamb petitioners asked the district court to stay any construction activity on their property. The stays would have been limited to construction on the fifteen parcels of land owned by the Lamb petitioners and would not have extended statewide. In their expedited relief request, the Lamb petitioners argued, "Until the pipeline trench is actually dug, petitioners' claims are not moot," and added that "if they do not receive a stay before [Dakota Access's] pipeline trench is dug, any remedy will be inadequate."
On August 21, the district court denied the request for stay because the Lamb petitioners had failed to seek relief first from the IUB. See id. § 17A.19(5)(c). The Lamb petitioners returned to the IUB, which denied the stay. On August 29, the district court denied the Lamb petitioners' renewed request for a stay. No request was made to this court for interlocutory review of the denial of the stay.
On February 15, 2017, following briefing and argument, the district court denied the petitions for judicial review. Regarding the question of public convenience and necessity, the court concluded that the IUB had "balanced the pros and cons of the project and entered a reasonable decision based on the evidence presented." It added that the decision was "supported by substantial evidence."
On the eminent domain question, the district court reasoned that Iowa Code sections 6A.21 and 6A.22 conferred condemnation authority on common-carrier pipelines under the jurisdiction of the IUB. It also found that the condemnations were for a public use, thus meeting the requirements of the Fifth and Fourteenth Amendments and article I, section 18 of the Iowa Constitution. Finally, it overruled the specific claims advanced by Puntenney and
Puntenney, Johnson, the Sierra Club, and the Lamb petitioners appealed. We retained the appeal.
When an administrative review proceeding is before us, we "apply the standards set forth in section 17A.19(10) and determine whether our application of those standards produce[s] the same result as reached by the district court." Hawkeye Land Co. v. Iowa Utils. Bd., 847 N.W.2d 199, 207 (Iowa 2014) (alteration in original) (quoting Auen v. Alcoholic Beverages Div., 679 N.W.2d 586, 589 (Iowa 2004)).
Accordingly, "we review constitutional issues in agency proceedings de novo." Id. at 208 (quoting NextEra Energy Res. LLC v. Iowa Utils. Bd., 815 N.W.2d 30, 44 (Iowa 2012)); see also Iowa Code § 17A.19(10)(a).
Regarding an agency's interpretation of a statute:
NextEra, 815 N.W.2d at 37 (citations omitted) (quoting Doe v. Iowa Dep't of Human Servs., 786 N.W.2d 853, 857 (Iowa 2010)); see also Iowa Code § 17A.19(10)(c), (l).
Here, we think the legislature clearly vested the IUB with the authority to interpret "public convenience and necessity" as used in Iowa Code section 479B.9. We reach this conclusion for several reasons.
First, we believe "public convenience and necessity" is a term of art within the expertise of the IUB. See Renda v. Iowa Civil Rights Comm'n, 784 N.W.2d 8, 14 (Iowa 2010) (referring to "a substantive term within the special expertise of the agency").
In addition, the Iowa Code itself indicates that the legislature wanted the IUB to have leeway in determining public convenience and necessity. Section 479B.9 states,
(Emphasis added.) The phrase "unless the board determines" seemingly affords the IUB deference. Otherwise, if the matter were to be left to judicial determination, the statute would say something like, "unless the proposed services will promote the public convenience and necessity."
Additionally, we have previously held that it is not a judicial function to determine whether a service will promote the public convenience and necessity. See Application of Nat'l Freight Lines, 241 Iowa 179, 186, 40 N.W.2d 612, 616 (1950) ("We have held several times that the determination whether the service proposed will promote the public convenience and necessity is a legislative, not a judicial, function.... It is not for the district court or this court to determine whether the commission has acted wisely nor to substitute its judgement for that of the commission.")
On the other hand, we do not defer to the IUB's interpretation of Iowa Code sections 6A.21 and 6A.22. Chapter 6A is a general eminent domain law that applies to
Lastly, we review the IUB's factual findings under a substantial evidence standard. See Iowa Code § 17A.19(10)(f). "The agency's decision does not lack substantial evidence merely because the interpretation of the evidence is open to a fair difference of opinion." NextEra, 815 N.W.2d at 42 (quoting ABC Disposal Sys., Inc. v. Dep't of Nat. Res., 681 N.W.2d 596, 603 (Iowa 2004)).
We must first consider two threshold matters—standing and mootness. Dakota Access challenges the standing of the Sierra Club. The Sierra Club is a nonprofit environmental organization. The Sierra Club is asserting the interests of two of its members—Mark Edwards and Carolyn Raffensperger. Edwards lives in Boone and worked for the Iowa Department of Natural Resources as a trail coordinator for thirty years. He submitted an affidavit expressing concern that the pipeline will damage Iowa's waterways, contribute to climate change, and destroy Native American burial grounds and cultural sites.
Raffensperger lives in Ames. Her home sits about one mile from the pipeline. She submitted an affidavit voicing concern for her own safety and the immediate environment around her property as well as her belief that the pipeline will contribute to climate change, damage Native American cultural sites, and pollute Iowa waterways.
Dakota Access does not dispute that the Sierra Club can assert the interests of its members for standing purposes. See Citizens for Wash. Square v. City of Davenport, 277 N.W.2d 882, 886 (Iowa 1979). However, Dakota Access points out that Sierra Club has not shown that any of its members owns property on the pipeline route. Accordingly, Dakota Access maintains that the Sierra Club lacks standing.
We disagree. In Bushby v. Washington County Conservation Board, we adopted the United States Supreme Court's standard for standing in environmental disputes. 654 N.W.2d 494, 496-97 (Iowa 2002) ("The United States Supreme Court has held that plaintiffs in cases involving environmental concerns establish standing if `they aver that they use the affected area and are persons "for whom the aesthetic and recreational values of the area will be lessened" by the challenged activity.'" (quoting Friends of the Earth, Inc. v. Laidlaw Envtl. Servs., 528 U.S. 167, 183, 120 S.Ct. 693, 705, 145 L.Ed.2d 610 (2000))).
Here, Sierra Club met the Bushby standard. Sierra Club members Raffensperger and Edwards submitted affidavits describing their use and enjoyment of the rivers, streams, soil, and other natural areas and aesthetics. They described their concerns that the construction and operation of the pipeline would have adverse environmental impacts on those areas that they use and enjoy.
Raffensperger's and Edwards's concerns are not entirely speculative, remote, and in the uncertain future as Dakota Access suggests. Sierra Club presented the IUB with actual evidence of pipeline accidents that have resulted in millions of dollars in cleanup and damages.
Nothing in the Iowa Code limits standing in pipeline proceedings to individuals whose property is in the direct path of the pipeline. Section 479B.7 allows any person "whose rights or interests may be affected by the proposed pipeline" to file objections. Iowa Code § 479B.7. Section 17A.19 authorizes any "person or party whose is aggrieved or adversely affected by agency
Dakota Access next argues that the appeal is moot. This presents a closer issue. The pipeline was actually completed two years ago in May 2017 at a cost of approximately $4 billion. Since then it has been regularly carrying crude oil from North Dakota to Illinois. Its capacity is 450,000 barrels of oil per day. The record does not indicate how much Dakota Access actually paid for easements to bury the pipeline underground in Iowa, but the projected cost was $85 million. Where the pipeline was buried during construction, land restoration has already taken place.
Iowa Code section 17A.19 states in part, "The filing of the petition for review does not itself stay execution or enforcement of any agency action." Id. § 17A.19(5)(a). In short, it places the burden on the party contesting agency action to obtain a stay. As noted above, the Lamb petitioners' application for a stay from the district court was denied nearly three years ago. They did not seek a stay from this court, nor did they ask to expedite this appeal when it was filed over two years ago.
Ninety years ago, this court ruled that an eminent domain appeal challenging the taking of the plaintiff's twenty-tree apple orchard was moot once the road in question had been built. Welton v. Iowa State Highway Comm'n, 208 Iowa 1401, 1401, 227 N.W. 332, 333 (1929). We explained,
Id. (emphasis added) (citations omitted).
Welton arguably should control here. As in Welton, the petitioners lost on the merits and then did not try to obtain a stay from this court while a substantial construction project went forward. See id.
Similarly, in Porter v. Board of Supervisors, we held it was too late for us to
238 Iowa 1399, 1404, 28 N.W.2d 841, 844 (1947).
On the other hand, in Lewis Investments, Inc. v. City of Iowa City, we held that an appeal from an order condemning a property as a nuisance so the city could rehabilitate it was not moot, because the only thing that had happened was that the city had paid its deposit and taken possession of the property. 703 N.W.2d 180, 184 (Iowa 2005). We observed that
Id. In short, Lewis Investments was distinguishable from Welton because no work had been performed on the property.
The petitioners counter that the case is not moot because the courts could order relief other than a tear-out of the entire pipeline. For example, the pipeline could be partially removed and rerouted around the petitioners' properties. Another possibility is that the petitioners could obtain trespass damages. It is noteworthy that most property owners along the route chose to make voluntary easement agreements with Dakota Access to allow the pipeline to go underneath their farmland; hence, their rights and status might not be affected by a decision in this case. The petitioners also counter that a lawsuit of these constitutional and practical dimensions should not become moot simply because Dakota Access chose to proceed with construction while the petitioners' judicial review proceeding was still pending.
One case worth considering is Grandview Baptist Church v. Zoning Board of Adjustment, 301 N.W.2d 704 (Iowa 1981). In Grandview Baptist, a church obtained a permit from the building commissioner to build a steel storage building. Id. at 706. Within days, a contractor built the building and several neighboring property owners appealed the granting of the permit to the zoning board of adjustment. Id. The board ruled that the structure was not proper and had to be removed. Id. Both the district court and our court upheld the board's action. Id. at 708-09.
In our decision, we rejected the church's argument that it was too late for our court to do anything about the building. Id. at 709. We elaborated,
Id.
We are not persuaded that Grandview Baptist controls here. There the contractor
Iowa Code section 414.11 governs city board of adjustment appeals and states that an appeal from the city administrative officer to the board of adjustment
This is different from section 17A.19(5)(a), which provides that an appeal does not stay administrative action.
Nonetheless, after careful consideration, we do not believe the present appeal is moot. "The key in assessing whether an appeal is moot is determining whether the opinion would be of force or effect in the underlying controversy." Perkins v. Bd. of Supervisors, 636 N.W.2d 58, 64 (Iowa 2001). We are not persuaded that a decision in this case would lack force or effect. Although dismantling of the pipeline would not be feasible, the IUB still has authority to impose other "terms, conditions, and restrictions" to implement a ruling favorable to the petitioners. Iowa Code § 479B.9; see also Standing Rock Sioux Tribe v. U.S. Army Corps of Eng'rs, 301 F.Supp.3d 50, 61-64 (D.D.C. 2018) (dismissing National Historic Preservation Act claims as mooted by the construction of the Dakota Access pipeline, but proceeding to determine other claims on the merits).
Section 479B.9 gives the IUB authority to issue a permit for a pipeline that "will promote the public convenience and necessity." Iowa Code § 479B.9. Chapter 479B begins,
Id. § 479B.1.
Regarding the meaning of "public convenience and necessity," our court has held,
Wabash, Chester & W. Ry. v. Commerce Comm'n ex rel. Jefferson Sw. R.R., 309 Ill. 412, 141 N.E. 212, 215 (1923). The IUB also relied on our decision in S.E. Iowa Cooperative Electric Association v. Iowa Utilities Board, which approved the IUB's use of a balancing test in a related context and its determination that "the substantial benefits [of the project] outweighed the costs." 633 N.W.2d 814, 821 (Iowa 2001).
In our view, the IUB's balancing approach to public convenience and necessity should be upheld because it is not "irrational, illogical, or wholly unjustifiable." Iowa Code § 17A.19(10)(l). The approach is consistent with our prior caselaw and is supported by legal authority elsewhere. See Fed. Power Comm'n v. Transcon. Gas Pipe Line Corp., 365 U.S. 1, 23, 81 S.Ct. 435, 447, 5 L.Ed.2d 377 (1961) (indicating that "`public convenience and necessity' connotes a flexible balancing process, in the course of which all the factors are weighed prior to final determination").
Puntenney, Johnson, and the Sierra Club challenge the IUB's determination of public convenience and necessity on several grounds. First, they urge that the pipeline does not serve the public because shippers wanted it. But shippers wanted it as a way of reducing transportation costs. Given that petroleum products are commodities sold in a competitive market, lower costs for crude oil transportation tend to keep prices of crude oil derivatives lower than they otherwise would be.
Iowa is a heavy user of petroleum products. Iowa consumes the equivalent of 85.2 million barrels of oil per year but produces no oil itself. Iowa is fifth in the country in per capita energy use. Iowa ranks eighth in the country in per capita gasoline consumption. Iowa's percentage of gross domestic product from manufacturing ranks near the top in this country, and Iowa ranks sixth highest nationally in energy consumption per capita in its industrial sector. The record indicates that the Dakota Access pipeline will lead to "longer-term, reduced prices on refined products and goods and service dependent on crude oil and refined products." We agree with the IUB that these are public benefits, even though the pipeline also provides benefits to the shippers of crude oil. See S.E. Iowa Coop. Elec., 633 N.W.2d at 820 (stating that "cost savings are a legitimate consideration").
Next, Puntenney, Johnson, and the Sierra Club contend that drilling in the Bakken Oil Field has declined, demonstrating a reduced need for pipeline transportation. But according to the evidence before the IUB, actual crude oil production from the Bakken Oil Field has only declined about
Additionally, Puntenney, Johnson, and the Sierra Club maintain that rail transportation is safer than the pipeline transportation that would replace it. Various data were presented to the IUB on this issue. However, the IUB found, and the data support, that on a volume-distance basis (i.e., per barrel-mile), pipeline transportation of oil is safer than rail transportation of oil.
Lastly, Puntenney, Johnson, and the Sierra Club challenge the IUB's reliance on secondary economic benefits resulting from the construction and operation of the pipeline in Iowa. For example, the IUB observed that the pipeline would result in at least 3100 construction jobs in Iowa, at least twelve long-term jobs for Iowans, and more than $27 million annually in property tax revenue. As the Puntenney petitioners point out, Dakota Access, the IUB, and the district court cited no authority that these types of benefits can be taken into account in making a public-convenience-and-necessity determination. Yet the Puntenney petitioners cited no authority that these benefits cannot be considered. See N. Plains Res. Council v. Surface Transp. Bd., 668 F.3d 1067, 1094-95 (9th Cir. 2011) (noting that the Surface Transportation Board considered "new jobs created by the construction and operation of the new rail line"); Pliura Intervenors v. Ill. Commerce Comm'n, 405 Ill.App.3d 199, 347 Ill.Dec. 373, 942 N.E.2d 576, 585 (2010) (considering, among other things, "increased revenues for local economies" resulting from a pipeline extension); Accokeek, Mattawoman, Piscataway Creeks Cmtys. Council, Inc. v. Md. Pub. Serv. Comm'n, 227 Md.App. 265, 133 A.3d 1228, 1240 (2016) (treating "monetary benefits from construction employment and longer-term tax payments" as benefits relevant to the public-convenience-and-necessity determination). We are not persuaded that the IUB acted improperly in factoring these benefits into the public-convenience-and-necessity determination.
For the foregoing reasons, upon our review of the record, we conclude the IUB's legal determinations with respect to public convenience and necessity were not "[b]ased upon an irrational, illogical, or wholly unjustifiable application of law" and its factual determinations were supported by "substantial evidence." Iowa Code § 17A.19(10)(f), (l).
The Lamb petitioners argue that Dakota Access's exercise of eminent domain over farmland would violate Iowa Code sections 6A.21 and 6A.22. Section 6A.21(1)(c) limits the authority to condemn agricultural lands by defining "public use," "public purpose," or "public improvement" in a way that requires landowner consent. Id. § 6A.21(1)(c). Hence, section 6A.21(1)(c) reads, "`Public use' or `public purpose' or `public improvement' does not include the authority to condemn agricultural land for private development purposes unless the owner of the agricultural land consents to the condemnation." Id.
But section 6A.21 also carves out exceptions. See id. § 6A.21(2). One of them is that "[t]his limitation also does not apply to utilities, persons, companies, or corporations under the jurisdiction of the Iowa utilities board." Id.
The Lamb petitioners argue vigorously that Dakota Access is not a "utility." That,
The Lamb petitioners urge us to apply the canon of ejusdem generis to section 6A.21(2). Hence, they ask us to interpret "persons, companies, or corporations" as related to the immediately preceding word, "utilities." Their argument is difficult to follow. If the Lamb petitioners are saying that the phrase "persons, companies, or corporations" refers to kinds of utilities, then the word "utilities" would be sufficient by itself and the remaining language would become unnecessary. That would contravene an established principle of statutory construction. See id. § 4.4(2) (setting forth the presumption that "[t]he entire statute is intended to be effective"). On the other hand, if the Lamb petitioners are saying that the phrase "persons, companies, or corporations" refers to entities other than utilities that are nonetheless under the jurisdiction of the IUB, then Dakota Access seemingly falls in that category.
The IUB also advances an alternative ground for rejecting the Lamb petitioners' argument. It notes that section 6A.22(2) authorizes "[t]he acquisition of any interest in property necessary to the function of... a common carrier." Id. § 6A.22(2)(a)(2). In the IUB's view, Dakota Access qualifies as a common carrier.
There is no dispute that most of the pipeline capacity has been contracted to shippers in advance; however, 10% is required to be made available for walk-up business. That is all the Federal Energy Regulatory Commission requires of a common carrier. See, e.g., Navigator BSG Transp. & Storage, 152 F.E.R.C. ¶ 61,026, at 61,127 (July 10, 2015); Shell Pipeline Co., 146 F.E.R.C. ¶ 61,051, at 61,238 (Jan. 29, 2014). The IUB maintains it is enough here.
Based on the record before us, and our own common-carrier precedents, we agree with the IUB. It would be unrealistic to require a $4 billion pipeline to depend entirely on walk-up business, just as it would be unrealistic to require an airline to refuse all advance bookings for a flight. The key is whether spot shippers have access, and the federal agency with expertise in the matter has concluded that 10% is sufficient. We have said that "a common carrier need not serve all the public all the time." Wright v. Midwest Old Settlers & Threshers Ass'n, 556 N.W.2d 808, 810 (Iowa 1996) (per curiam). A common carrier may combine "other vocations" and still be considered a common carrier. Id. at 811. Long ago we held that a trucker who transported films and advertising for members who had signed an alleged association agreement was still a common carrier where he also transported films and advertising for theaters that had not signed the agreement. State ex rel. Bd. of R.R. Comm'rs v. Rosenstein, 217 Iowa 985, 989-93, 252 N.W. 251, 254-55 (1934). Significantly, Dakota Access does not involve a situation where service "has been limited to those under contract." State ex rel. Bd. of R.R. Comm'rs v. Carlson, 217 Iowa 854, 857, 251 N.W. 160, 161 (1933) (emphasis added).
This brings us to the most significant issue in the case, whether the use of eminent domain for the Dakota Access pipeline as authorized by Iowa Code section 479B.16 violates article I, section 18 of the Iowa Constitution or the Fifth and Fourteenth Amendments to the United States Constitution.
Section 479B.16 addresses the use of eminent domain for pipelines. It provides in part,
Iowa Code § 479B.16.
Article I, section 18, the takings clause in the Iowa Constitution, states in part,
Iowa Const. art. I, § 18. The Fifth Amendment to the United States Constitution similarly provides that "private property [shall not] be taken for public use, without just compensation." U.S. Const. amend. V.
We have said that we consider federal cases interpreting the Federal Takings Clause "persuasive in our interpretation of the state provision," but "not binding." Kingsway Cathedral v. Iowa Dep't of Transp., 711 N.W.2d 6, 9 (Iowa 2006); see also Harms v. City of Sibley, 702 N.W.2d 91, 97 (Iowa 2005).
The Lamb petitioners deny that the Dakota Access pipeline furthers a constitutionally valid public use. They contend that the indirect economic benefits of an infrastructure project, such as jobs created or tax revenues generated, cannot be considered in determining public use. They also contend that an oil pipeline that crosses Iowa but does not pick up or drop off oil within the state does not constitute a public use. We will address these arguments in order.
We begin by considering the United States Supreme Court's interpretation of the Fifth Amendment in Kelo v. City of New London, 545 U.S. 469, 125 S.Ct. 2655, 162 L.Ed.2d 439 (2005). In Kelo, the Court addressed the question of "whether a city's decision to take property for the purpose of economic development satisfies
Justice O'Connor filed a dissenting opinion in which Chief Justice Rehnquist and Justices Scalia and Thomas joined. Id. at 494, 125 S. Ct. at 2671 (O'Connor, J., dissenting). She characterized the majority as holding
Id. at 501, 125 S. Ct. at 2675. In her view, a secondary benefit alone was not enough for a governmental transfer of property from one private entity to another to qualify as a taking for a public purpose. Id. She reasoned that almost any lawful use of private property will generate some secondary benefit and, thus, if "positive side effects" are sufficient to classify a transfer from one private party to another as "for public use," those constitutional words would not "realistically exclude any takings." Id.
Although she did not agree that economic development alone could justify a taking, Justice O'Connor did acknowledge there were three categories of legitimate public use:
Id. at 497-98, 125 S. Ct. at 2673 (citations omitted).
The Kelo decision has proved controversial, not least because the development that justified the taking of Ms. Kelo's home never occurred. See Alberto B. Lopez, Kelo-Style Failings, 72 Ohio St. L.J. 777, 779-80 (2011). Several state supreme courts have held that public use must mean something more than indirect economic benefits. See, e.g., Sw. Ill. Dev. Auth. v. Nat'l City Envtl., L.L.C., 199 Ill.2d 225, 263 Ill.Dec. 241, 768 N.E.2d 1, 10-11 (2002); County of Wayne v. Hathcock,
Thus, in Southwestern Illinois, the Illinois Supreme Court held that a regional development authority could not exercise eminent domain to take a recycling facility's property and convey it to a private racetrack for a parking lot. 263 Ill.Dec. 241, 768 N.E.2d at 4, 11. The court concluded the purported benefit of positive economic growth in the region was not enough to satisfy public use as required under the Illinois Constitution. Id., 263 Ill.Dec. 241, 768 N.E.2d at 10-11. The court also found shorter lines to enter parking lots and the fact that pedestrians might be able to cross from parking areas to event areas in a safer manner unpersuasive as sufficient factors to satisfy the public-use requirement. Id., 263 Ill.Dec. 241, 768 N.E.2d at 9.
In Southwestern Illinois, the racetrack estimated the condemned land, which was to be used for open-field parking, would lead to an increase of $13 to $14 million in revenue per year. Id., 263 Ill.Dec. 241, 768 N.E.2d at 10. The Illinois court recognized that such profit could trickle down and bring revenue increases to the region. Id. Yet it reasoned, "[R]evenue expansion alone does not justify an improper and unacceptable expansion of the eminent domain power of the government." Id., 263 Ill.Dec. 241, 768 N.E.2d at 10-11.
Similarly, in Hathcock, the Michigan Supreme Court held a private entity was not entitled to exercise eminent domain to build a business and technology park. 684 N.W.2d at 783-84. The Michigan court determined that something beyond economic benefits was required to show public use under the Michigan Constitution. Id. at 783. The court there relied on its own jurisprudence and its interpretation of the Michigan constitutional founders' intent. Id. at 785-87. The court, tracking O'Connor's dissent in Kelo, concluded,
Id. at 783. While the Michigan Constitution's takings clause is not identical to ours, it resembles ours in prohibiting takings of private property "for public use without just compensation therefore being first made." Mich. Const. art. X, § 2 (1963) (amended in 2006, after Hathcock, to define "public use" as more than "for the purpose of economic development or enhancement of tax revenues").
Adopting Hathcock's reasoning, the Ohio Supreme Court held that economic factors could be considered in determining whether property may be appropriated but could not alone satisfy the public-use requirement of the Ohio Constitution. Norwood, 853 N.E.2d at 1123. In Norwood, a struggling city (much like New London in Kelo) entered into a contract with a private developer to redevelop a neighborhood. Id. at 1124. The plans called for over 200 apartments and condominiums, over 500,000 square feet of office and retail space, and two large public-parking facilities. Id. at 1124. The city estimated the redeveloped
Several property owners, however, refused to sell for the planned development, and the city therefore tried to exercise eminent domain to take the properties. Id. at 1124-26. The Ohio Supreme Court declined to follow the majority opinion in Kelo, stating that the Hathcock opinion and the dissenting opinions in Kelo were better models for interpreting the Ohio Constitution. Id. at 1140-41.
Id. at 1137-38.
Along the same lines, the Oklahoma Supreme Court determined that economic development alone was not a public purpose to justify the exercise of eminent domain under the Oklahoma Constitution. See Bd. of Cty. Comm'rs of Muskogee Cty., 136 P.3d at 647. In Board of County Commissioners, the city wanted to install three water pipelines, two of which would serve only a proposed privately-owned electric generation plant and which would improve and expand existing public service. Id. at 642-43. The private energy company had agreed to build the third public pipeline only if the company first obtained all rights-of-way to construct the energy plant and the accompanying first two water pipelines. Id. at 643.
The court reasoned that although one pipeline would serve the public, the purpose of the takings was for the construction and operation of the privately owned energy company. Id. at 649. Further, the court said that although the construction of the energy plant would enhance economic development through taxes, jobs, and investment, those economic benefits alone would not suffice to satisfy the public use requirement. Id.
These state constitutional decisions would not necessarily have disappointed the Kelo majority. The Kelo majority themselves noted that "nothing in our opinion precludes any State from placing further restrictions on its exercise of the takings power." Kelo, 545 U.S. at 489, 125 S. Ct. at 2668 (majority opinion). It added that "many States already impose `public use' requirements that are stricter than the federal baseline," and "[s]ome of these requirements have been established as a matter of state constitutional law." Id.
Since Kelo was decided, we have twice quoted from Justice O'Connor's dissent. In Clarke County Reservoir Commission v. Robins, we noted,
862 N.W.2d 166, 171-72 (Iowa 2015) (alteration in original) (quoting Kelo, 545 U.S. at 496, 125 S. Ct. at 2672 (O'Connor, J., dissenting)). We went on to state, "The public-use
843 N.W.2d 446, 459 n.11 (Iowa 2014) (quoting Kelo, 545 U.S. at 497, 125 S. Ct. at 2673).
Like our colleagues in Illinois, Michigan, Ohio, and Oklahoma, we find that Justice O'Connor's dissent provides a more sound interpretation of the public-use requirement. If economic development alone were a valid public use, then instead of building a pipeline, Dakota Access could constitutionally condemn Iowa farmland to build a palatial mansion, which could be defended as a valid public use so long as 3100 workers were needed to build it, it employed twelve servants, and it accounted for $27 million in property taxes.
Having said that, this case is not that one. Instead, this case falls into the second category of traditionally valid public uses cited by Justice O'Connor: a common carrier akin to a railroad or a public utility. See Kelo, 545 U.S. at 498, 125 S. Ct. at 2673. This kind of taking has long been recognized in Iowa as a valid public use, even when the operator is a private entity and the primary benefit is a reduction in operational costs.
Back in 1870, when our constitution was only thirteen years old, this court held that a taking for a private railroad was a taking for a public use within the meaning of article I, section 18. Stewart v. Bd. of Supervisors, 30 Iowa 9, 19-21 (1870). We said this proposition was "elementary and unquestionable." Id. at 21. We quoted with approval "the leading American case," where it was written:
Id. (quoting Beekman v. Saratoga & Schenectady R.R., 3 Paige Ch. 45, 73 (N.Y. Ch. 1831)). More recently, in S.E. Iowa Cooperative Electric Association, we held that cost savings alone were a sufficient statutory "public use" to justify the construction of a new electrical transmission line. 633 N.W.2d at 820. We explained that "the public is served" when they can "obtain service at a lower cost." Id.
In sum, because we do not follow the Kelo majority under the Iowa Constitution, we find that trickle-down benefits of economic development are not enough to constitute a public use. To the extent that Dakota Access is relying on the alleged economic development benefits of building and operating the pipeline, we are unmoved. But here there is more. While the pipeline is undeniably intended to return profits to its owners, the record indicates that it also provides public benefits in the form of cheaper and safer transportation of oil, which in a competitive marketplace results in lower prices for petroleum products. As already discussed, the pipeline is a common carrier with the potential to benefit all consumers of petroleum products, including three million Iowans.
The Lamb petitioners assert that even these benefits are not enough, because no Iowa business or consumer will actually use the pipeline to deliver or receive crude oil. This approach is too formalistic. Iowa has some of the most advanced and productive farming in the world. But our economy, including our agricultural economy, depends on other states to produce crude oil and refine that crude oil into petroleum products. If our consideration of public use were limited as the Lamb petitioners propose, it would be very difficult ever to build a pipeline across Iowa carrying any product that isn't produced in Iowa. Yet Iowa is crisscrossed with pipelines.
In Enbridge Energy (Illinois), L.L.C. v. Kuerth, the Illinois Appellate Court took a more nuanced view, which we find persuasive. 421 Ill.Dec. 210, 99 N.E.3d 210, 218 (Ill. App. Ct. 2018). There the court rejected an appeal by certain landowners and upheld a grant of eminent domain authority for an oil pipeline project. Id., 421 Ill.Dec. 210, 99 N.E.3d at 213-14, 218. The court reasoned, "The fundamental flaw of landowners' argument is that they focus entirely upon who uses the pipeline rather than who benefits from it." Id., 421 Ill.Dec. 210, 99 N.E.3d at 218. The court added,
Id. Further, the court noted, "[T]he public use requirement can still be met even if the public does not have the right to enter or use the condemned property." Id. The court went on,
Id., 421 Ill.Dec. 210, 99 N.E.3d at 220-21 (citations omitted).
This reasoning applies here. The record indicates that the Dakota Access pipeline will lead to "longer-term, reduced prices on refined products and goods and service dependent on crude oil and refined products."
In a similar vein, the Ohio Court of Appeals confronted and then ultimately rejected the following argument from a landowner:
Sunoco Pipeline L.P. v. Teter, 63 N.E.3d 160, 171-72 (Ohio Ct. App. 2016). Notwithstanding Norwood, the court found this argument unpersuasive. Id. at 172-73. It reasoned,
The Lamb petitioners rely on Mountain Valley Pipeline, LLC v. McCurdy, 238 W.Va. 200, 793 S.E.2d 850 (2016). There a company sought to build a natural gas pipeline to carry almost exclusively natural gas produced by its own affiliates from West Virginia to a terminus in Virginia. Id. at 852. The West Virginia Supreme Court found that this was not a public use within the meaning of a West Virginia statute. Id. at 855, 862-63. The court explained,
Id. at 860-61 (footnotes omitted).
The Mountain Valley Pipeline court cited Bluegrass Pipeline Company, LLC v. Kentuckians United to Restrain Eminent Domain, Inc. 478 S.W.3d 386 (Ky. Ct. App. 2015). 793 S.E.2d at 862. In Bluegrass Pipeline, the Kentucky Court of Appeals concluded that a pipeline transporting natural gas liquids through Kentucky on the way to the Gulf of Mexico was not in "public service" and could not exercise eminent domain. 478 S.W.3d at 388, 391-92. Among other things, the court took note that
Id. at 392.
These cases can be distinguished. The West Virginia case involved a private pipeline, not a common carrier. See Mountain Valley Pipeline, 793 S.E.2d at 860-61. The Kentucky case turned in part on the court's view that "the legislature only intended to delegate the state's power of eminent domain to those pipeline companies that are, or will be, regulated by the [Kentucky Public Service Commission]." Bluegrass Pipeline Co., 478 S.W.3d at 392. But more importantly, we have a different view of "public use" under the Iowa Constitution. We do not believe a common carrier of a raw material that is essential to Iowa's economy but isn't produced or processed in Iowa is prohibited from exercising eminent domain when so authorized by the general assembly. The public use concept is not that restrictive. See Transcon. Gas Pipe Line Corp. v. Calco Enters., 132 N.C. App. 237, 511 S.E.2d 671, 676 (1999) ("The concept is flexible and adaptable to changes in society and governmental duty."). The Iowa Constitution does not hang on the presence of spigots and on-ramps.
Accordingly, we hold that there was no violation of article I, section 18 of the Iowa Constitution. For the reasons already stated, we also find no Fifth Amendment violation. We recognize that a serious and warranted concern about climate change underlies some of the opposition to the Dakota Access pipeline. Maybe, as a matter of policy, a broad-based carbon tax that forced all players in the marketplace to bear the true cost of their carbon emissions should be imposed. The revenues from this broad-based tax could be used to offset other taxes. But policy making is not our function, and as a legal matter we are
Puntenney lives in Boone and owns farmland in Webster County, which is used for growing soybeans and corn. Before the IUB, Puntenney submitted a map showing that the pipeline route was going to cut through the very southwest corner of his property and that it could be rerouted, without becoming any less "straight," so as not to go through his property. Puntenney contends the pipeline should have been rerouted around his property, especially in light of his plans to install wind turbines.
The record shows that the pipeline generally runs on a straight line from northwest Iowa to southeast Iowa but is not entirely straight because of the software employed by Dakota Access to account for environmental features (such as critical habitat, fault lines, state parks, national forests, and historic sites), engineering considerations (such as existing pipelines and power lines), and land use considerations (such as homes, other buildings, dams, airports, cemeteries, and schools).
Puntenney contends that by not requiring Dakota Access to go around his property, the IUB violated Iowa Code section 479B.1, which only confers "rights of eminent domain where necessary." (Emphasis added). According to Puntenney, it was not necessary for the pipeline to traverse his property.
We do not read the statute that way. Obviously, with a pipeline that bisects the entire state, it is never going to be strictly "necessary" for that pipeline to cut across any particular landowner's property. Diversions will always be possible. In our view, the demands of this statute are met if the pipeline company demonstrates that the pipeline requires the exercise of eminent domain and demonstrates why the particular route it has proposed is superior. Both criteria were met here. See Green v. Wilderness Ridge, L.L.C., 777 N.W.2d 699, 704 (Iowa 2010) (deciding in a private condemnation action that the legislature intended a flexible approach and that "it is unlikely that the legislature intended to mandate that the land to be condemned must always be the shortest route").
Puntenney also contends the IUB acted arbitrarily in not relocating the proposed pipeline to accommodate his plans to install wind turbines, even as it directed a rerouting for the benefit of a turkey farmer. But the IUB explained why. The turkey farmer was further along. He was talking turkey about putting up new buildings. Puntenney, on the other hand, had merely conceived the idea of installing wind turbines and had no specific plan. Moreover, the record did not show that the pipeline would interfere with any later plans to erect wind turbines, especially when it only ran under the very southwest corner of Puntenney's property.
Lastly, Puntenney contends that he was not allowed to testify to his concerns about the impact of the pipeline on his drainage tile. However, Puntenney was allowed to file written objections that detailed his tiling concerns. He was also asked specifically about tiling in his live testimony. And he was asked open-ended questions in his live
Johnson is a corn and soybean farmer in Boone County, who like Puntenney sought the rerouting of the pipeline to avoid his property. Johnson said he feared the pipeline would destroy the drainage tile and concrete pipe he had installed on his land. The IUB did not order rerouting, but it did grant relief to Johnson: it directed Dakota Access to install the pipeline below Johnson's entire drainage system, including the twenty-four-inch concrete main that was already buried up to twenty-two feet deep. A Dakota Access witness explained that it would not be feasible to divert the line as Johnson had requested because in the area of proposed diversion there were a forest, a creek, and a county drain line. Dakota Access would have to cut out trees, cross a creek, and encumber another drain line. The IUB concluded, "[T]here appears to be no reasonable alternative to granting eminent domain along the route proposed by Dakota Access and boring under the 24-inch main appears to be the least intrusive alternative." This finding is supported by substantial evidence.
For the foregoing reasons, we affirm the judgment of the district court.
All justices concur except Wiggins, J., who concurs in part and dissents in part, joined by Appel, J., and McDonald, J., who dissents.
WIGGINS, Justice (concurring in part and dissenting in part).
I dissent from the majority's conclusion that the use of eminent domain does not violate the Iowa Constitution. I agree with the majority that incidental economic benefits alone are not enough for a taking to qualify as "for public use" under article I, section 18. However, I disagree that the Dakota Access pipeline fits within the "common carrier exception" for purposes of the Iowa Constitution. I also find fault in Dakota Access's use of eminent domain because it is unrelated to the purpose of the applicable eminent-domain-authorizing statute.
One way a taking complies with article I, section 18's public use requirement is where "the sovereign ... transfer[s] private property to private parties, often common carries, who make the property available for the public's use." Kelo v. City of New London, 545 U.S. 469, 497-98, 125 S.Ct. 2655, 2673, 162 L.Ed.2d 439 (2005) (O'Connor, J., dissenting). Inherent in this "use-by-the-public" method of compliance is that the condemning sovereign's public be able to use the taken property. Various courts have recognized that
Mountain Valley Pipeline, LLC v. McCurdy, 238 W.Va. 200, 793 S.E.2d 850, 862 (2016) (quoting Clark v. Gulf Power Co., 198 So.2d 368, 371 (Fla. Dist. Ct. App. 1967)); accord, e.g., Adams v. Greenwich Water Co., 138 Conn. 205, 83 A.2d 177, 182 (1951) (noting "no state is permitted to
Recently, other states have relied on that principle when considering whether a pipeline running across the state constituted a public use. See Mountain Valley Pipeline, 793 S.E.2d at 860-62 (West Virginia high court finding a natural gas pipeline was not for a public use because West Virginians could not use and did not directly benefit from the pipeline or the natural gas it was to transport); see also Bluegrass Pipeline Co. v. Kentuckians United to Restrain Eminent Domain, Inc., 478 S.W.3d 386, 392 (Ky. Ct. App. 2015) (finding pipeline was not "in the public service of Kentucky" because the product in the pipeline was being transported to a facility in the Gulf of Mexico and not reaching Kentucky consumers); cf. In re Condemnation by Sunoco Pipeline, L.P., 143 A.3d 1000, 1019 (Pa. Commw. Ct. 2016) (upholding finding of public benefit of pipeline because the intrastate pipeline would enhance delivery options for natural gas and liquids in Pennsylvania).
Additionally, I would find Dakota Access's takings do not qualify as "for public use" because the primary purposes of the takings and their incidental economic and public safety benefits are unrelated to the purpose of the statute authorizing the use of eminent domain.
In this case, the statute authorizing the use of eminent domain is not Iowa Code chapter 6A but rather chapter 479B. The purpose of chapter 479B is "to protect landowners and tenants from environmental or economic damages which may result from the construction, operation, or maintenance of a hazardous liquid pipeline." Iowa Code § 479B.1 (2016).
The primary purported purposes of Dakota Access's pipeline are (1) so a private business can build a private pipeline to "transport crude oil from sources in North Dakota to a hub in Illinois" and (2) to answer the oil industry's desire for a pipeline. However, the purpose of chapter 479B is neither to facilitate private transportation of crude oil (or other hazardous liquids) nor to acquiesce to a particular industry's desire for a particular method of transporting its product. Thus, the primary purported purposes of the pipeline are unrelated to the purpose of exercising eminent domain as contemplated in chapter 479B.
Likewise, the Iowa Utility Board's (IUB) finding that the pipeline promotes public safety does not correspond with the purpose of chapter 479B. The IUB found the pipeline promotes public safety because the risk of an oil spill is lower when the oil is transported by pipeline than when it is transported by rail. But the public safety purpose of chapter 479B is not to lower the risk of damages resulting from the transportation of oil generally. It is to protect against damages resulting "from the construction, operation, or maintenance" of an oil pipeline. Id.
In sum, I conclude the Dakota Access pipeline does not fit within the common carrier exception for purposes of the Iowa Constitution because the Iowa public cannot use and does not derive a direct benefit from it. Further, even taking into account the purported incidental and secondary benefits to Iowans, the use of eminent domain in this case does not accord with the purpose for which eminent
Appel, J., joins this concurrence in part and dissent in part.
McDONALD, Justice (dissenting).
The Iowa Utilities Board (IUB) approved construction of the pipeline. The IUB authorized Dakota Access to use the eminent domain power to condemn easements. Dakota Access exercised the eminent domain power as granted. The appellants accepted the condemnation awards. Dakota Access built the pipeline. Oil is flowing through the pipeline. No further relief is available. What's done, is done. The case is moot.
The leading case is Welton v. Iowa State Highway Commission, 208 Iowa 1401, 227 N.W. 332 (1929). In Welton, we concluded a challenge to the construction of a highway was moot when construction was completed:
Id. at 1402-03, 227 N.W. at 333.
Similarly, in Porter v. Board of Supervisors, we concluded the completion of a drainage ditch was an established fact that precluded relief:
238 Iowa 1399, 1404, 28 N.W.2d 841 (1947).
As in Welton and Porter, the construction and operation of the pipeline is an established fact—what's done cannot be undone. The appellants previously conceded their claims were moot once the pipeline was completed and placed into service. In the district court, the appellants sought a stay. In support of their application for stay, the appellants conceded "if they d[id] not receive a stay before [Dakota Access's] pipeline trench [wa]s dug, any remedy w[ould] be inadequate." The district court denied the application for stay. The appellants did not seek interlocutory appeal, did not seek a stay from this court, and did not seek to expedite the appeal. In the meantime, the "trench [was] actually dug."
The completion of the pipeline and the appellants' acceptance of the condemnation awards are established facts that render their claim moot. See Campbell-Ewald Co. v. Gomez, 577 U.S. ___, ___, 136 S.Ct. 663, 669, 193 L.Ed.2d 571 (2016) ("If an intervening circumstance deprives the plaintiff of a `personal stake in the outcome of the lawsuit,' at any point during litigation, the action can no longer proceed and