When a court's opinion (even a trial court's opinion) starts out with the epigram, "'Freedom and property rights are inseparable, you cannot have one without the other.'- George Washington," you know you are in for a ride.
So begins the opinion of the Clay County, Iowa District Court in Navigator Heartland, LLC v. Koenig, No. EQCV034863 (May 3, 2023). The issue was the validity under the Iowa Constitution of Iowa's precondemnation entry statute, which allows pipeline condemnors to enter property for land surveys:
After the informational meeting or after the filing of a petition if no informational meeting is required, a pipeline company may enter upon private land for the purpose of surveying and examining the land to determine direction or depth of pipelines by giving ten days’ written notice by restricted certified mail to the landowner as defined in section 479B.4 and to any person residing on or in possession of the land. The entry for land surveys shall not be deemed a trespass and may be aided by injunction. The pipeline company shall pay the actual damages caused by the entry, survey, and examination.
Navigator wanted to enter Koenig's land to conduct surveys in anticipation of condemnation. Koenig objected, and the court held a trial at which it heard testimony about the scope of the proposed entries. One witness:
identified the four types of surveys typically performed on each affected property; these include a civil survey, a biological/environmental survey, a cultural survey, and a geotechnical survey. Each of the four surveys are completed at separate times, thus at a minimum, surveyors would expect to enter onto the private land on at least four separate occasions. She additionally testified that Navigator typically hires third parties to perform each of the surveys. She conceded that her lay understanding of the Iowa Code §479B.15 does not limit the duration or number of times surveys may occur so long as they are confined to surveying purpose for the proposed pipeline path.
Opn. at 3.
The property owner argued that the statute effects a facial taking by requiring owners to open their properties to third parties without compensation: "Koenig asserts that Iowa Code §479B.15 strips landowners of their right to exclude by statutorily allowing pipeline companies to come onto private land to perform certain surveying operations, which amounts to a per se taking. Additionally, Koenig argues that the statute does not provide for just compensation in accordance with Article I section 18 of the Iowa Constitution." Opn. at 6-7.
The court noted that until recently, Penn Central "had been the leading approach to determine whether a regulatory use restriction amounts to a taking." Opn. at 8. But Cedar Point changed that, according to the court: if there's a physical invasion, that's a taking, after which the question becomes whether the government has provided compensation.
But, the court also noted, "Cedar Point did not open the door for all government-authorized physical invasions to amount to takings[,]" if those invasions are "consistent with longstanding background restrictions on property rights." Opn. at 9.
Thus, the critical question is: are these private pipeline precondemnation invasions consistent with those background principles? The court held no, they are not. "The Court observes important similarities between the facts of this case and Cedar Point."
Like the private labor organizations in Cedar Point, Navigator presently seeks to repeatedly enter onto privately owned land despite a lack of consent from the landowner. While true the California statute in Cedar Point allowed labor organizations to enter on the property for up to 120 days per year three hours per day whereas Navigator is seeking to enter for no more than four days (ranging from thirty minutes to eight hours at a time); the Court is leery to enter into too much detailed comparison of the intrusive nature of the invasion because, as Cedar Point makes clear, the frequency and duration of the invasion is no longer relevant. Id. at 2074 (“the fact that a right to take access is exercised only from time to time does not make it any less a physical taking” and “the duration of an appropriation—just like the size of an appropriation—bears only on the amount of compensation.”)
Opn. at 10.
The court concluded that although survey access may be a "traditional privilege," the Supreme Court's lack of reference to such access or utility easements "leads to a conclusion." Opn. at 11. And that conclusion? Survey access is more like the union easement in Cedar Point than the background access exceptions also noted in the opinion.
In looking to the language in Iowa Code §479B.15, the Court concludes that the standards established in Cedar Point are applicable. The statute is not a use restriction which can be analyzed under the Penn Central “Takings Test”. Rather, because the statute grants pipeline companies right to physically enter and occupy privately owned land, the statute appropriates a right to invade the landowner’s property. When such appropriation occurs, the Court follows the traditional rule “Because the government appropriated a right to invade, compensation is due.” Cedar Point, 141 S. Ct. at 2076.
The Court finds that Iowa Code section 479B.15 appropriates Koenig’s right to exclude others from his privately owned land. Without Iowa Code §479B.15, Koenig would have had the right under Iowa law to exclude the pipeline company and any third-party surveyors from hi property. Because the statute amounts to a government authorized physical invasion, and additionally appropriates Koenig’s right to exclude, the Court is convinced Iowa Code §479B.15 effects a per se taking for which just compensation is required.
Opn. at 12.
The court also concluded that the statute does not provide just compensation. Yes, the statute requires the pipeline company entering private property to pay "actual damages" caused by the invasion or occupation, but does not, on its face, require just compensation for the invasion if there's no physical damage resulting:
However, if no physical damage is done to the private property, does Iowa Code §479B.15 still require compensation to the landowner for the government-authorized taking? §479B.15 says no and any other interpretation of such is unreasonable. At the end of trial Navigator argued that the distinction between “actual damages” and per se damage is a distinction without a difference. Navigator’s counsel argued that Koenig’s “actual damage” is any damage that he may claim. The Court does not find such interpretation to be reasonable because the damage has to be “actual” and cannot be subjective. It has to be reasonably ascertainable. The statute requires such.
Opn. at 16 (footnote omitted).
A property owner may not be able to easily ascertain the extent of the economic damages caused by a precondemnation survey entry. The damages caused may be pretty subjective, and similar to pain and suffering in tort law. "Therefore, a clear and common sense reading of Iowa Code §479B.15 is that, if by going onto private property to survey, a pipeline company causes actual damage to the property, compensation is required to cover the damages. However, because non actual damages resulting from the government authorized taking are subjective and not readily ascertainable, the Court cannot interpret the meaning of 'actual damages' within the statute to cover a per se taking in and of itself. To find otherwise would deprive 'actual damages' of all its ordinary meaning." Opn. at 17.
Finally, the court concluded that the usual presumption of constitutionality does not save the statute, because there's no reasonable alternative construction the court might give it.
All we can say is wow.
Trial Ruling on Defendant's Counterclaim re: Constitutionality of Iowa Code § 479B.15, Navigator Heartland...