Here's one we've been waiting to drop for a while, on an issue we wrote about earlier this week.
In Puntenney v. Iowa Utilities Board, No. 17-0423 (May 31, 2019), the Iowa Supreme Court -- taking a different view than Kentucky -- held that a pipeline which runs through Iowa, but which does not have any "offramps" for oil in Iowa, will nonetheless promote the public convenience and necessity" for the people of Iowa.
The court's reasoning boils down to this: a pipeline is a "traditional" public use.
The court first adopted Justice O'Connor's Kelo dissent (along with the reasoning of Hathcock, Norwood, and SWIDA), concluding that economic development alone does not qualify as a public use under the Iowa Constitution:
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.
Slip op. at 31. So far, so good.
But then the other shoe fell:
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.
Slip op. at 31-32. This pipeline is like a railroad: privately owned, but with public benefit.
Which raised a second issue: doesn't the lack of an actual use of the pipeline or its oil by Iowans mean there's no public use? The court concluded that whether oil flowed to Iowans wasn't the right question. Instead of looking at whether the pipeline or oil would be used by Iowa's public, the court only examined whether any Iowans would benefit from it. Having framed the issue that way, you know the answer: we all benefit from lower gas prices. Yes, there's private benefit flowing from the pipeline (I'll say), but "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." Slip op. at 33.
In short, a remote connect-the-dots benefit (which Iowans share with anyone anywhere who puts gas in their tank who might conceivably benefit from a cheaper oil supply) overcomes the lack of any direct use of the property taken or the project which it now occupies, by Iowans.
We Are The World...
Kentucky and West Virginia courts have reached the opposite conclusion, but Ohio and Illinois go the other way.
The court also rejected other sundry public use and necessity arguments. See slip op. at 19-21.
The court's ruling also means that the decision whether there's a public use sufficient to support an exercise of eminent domain may be exercised by the Iowa Utilities Board when it decides whether to issue a certificate of public convenience.
Finally, a procedural note. The court rejected Dakota Access's claim that because the pipeline was already built and the oil already flowing, the appeal was moot. Slip op. at 17. While dismantling the pipeline (were the owners to have prevailed) "would not be feasible," the IUB could impose conditions or restrictions on the pipeline. Thus, any ruling could do something. And that's enough to render the appeal not moot.
Two thoughts on this. First, what conditions could the IUB impose to remedy a private benefit taking other than to not take the property? Force the pipeline to build an oil offramp in Iowa (for processing at a nonexistent Iowa refinery)? We're not sure. Second, the mootness argument, although rejected by the court, shows how the build-first-worry-later approach whipsaws property owners by making these situations fait accompli. An owner can't stop a project while the wheels of justice turn, and when the appeals court gets around to deciding, the owner is forced to spend time and fees pushing back on arguments that oh well, it's too late to do anything about it.
Read the briefs and view the oral argument video here. More on the case here ("Dakota Access pipeline was justified in using eminent domain, Iowa Supreme Court rules") from the Des Moines Register.
Puntenney v. Iowa Utilities Board, No. 17-0423 (Iowa May 31, 2019)
