Eminent domain has been all over the news lately due to the construction of the Dakota Access pipeline.
Dakota Access, LLC., a unit of Dallas-based Energy Transfer Partners, proposed a pipeline that will carry up to 570,000 barrels of crude oil daily from North Dakota’s Bakken oil fields through South Dakota and Iowa to a distribution center in Patoka, Ill. The crude oil will be transported to refineries via railroad tank cars and an existing pipeline.
The 3.8 billion dollar pipeline slices diagonally across 18 counties in Iowa. The Iowa Utilities Board granted Dakota Access eminent domain authority, which allowed it to secure easements to bury pipe along the project’s 346-mile route through Iowa. The Iowa Legislature previously has given the Iowa Utilities Board authority to grant rights of eminent domain to pipeline companies.
Eminent domain is the power of a government to take private property for public use conditioned upon the payment of just compensation. Owens v. Brownlie, 610 N.W.2d 860, 865 (Iowa 2000). The government can transfer eminent domain power to private entities, but all takings must be for a public use or purpose. The Iowa Supreme Court has recognized that eminent domain power “cannot be utilized for the purpose of taking private property from one person for the private use of another,” and that “public use” is not synonymous with mere “public benefit.” Simpson v. Low-Rent Housing Agency of Mount Ayr, 224 N.W.2d 624, 626 (Iowa 1974).
However, even though the determination of whether a taking is for a public use or purpose is reserved to the courts, great deference is given to legislative declarations of public purpose unless the purpose is “clearly, plainly and manifestly of a private character.” Id. Whether a use or purpose is public depends on the character, rather than the extent, of the use or purpose. “It is not essential that the entire community or even any considerable portion of it should directly enjoy or participate in an improvement in order to make its use a public one.”
The Fifth Amendment of the United States Constitution and Article I, Section 19, of the Iowa Constitution expressly prohibit any taking of private property for public use without just compensation. Whenever a constitutional taking has occurred, the “just compensation” due the owner is determined by the individual facts of the case. Aladdin Inc. v. Black Hawk County, 562 N.W.2d 608, 611 (Iowa 1997).
Generally, this means the fair market value of the property at the time of condemnation for a total taking. For a partial taking, it is the difference in fair market value before and after the taking. Each Iowa county has a compensation commission made up of people having knowledge of property values in that county (property owners, real estate brokers, bankers and appraisers, for example) who determine the fair market value of the property interest that is being acquired. The compensation commission’s determination of “just compensation” can be appealed to the district court.
The Iowa Utilities Board granted approximately 200 parcels of land for pipeline use under eminent domain to Dakota Access. The owners of 17 parcels have sued. Opponents of the pipeline claim the Iowa Utilities Board failed to properly apply the requirement of “public use” and that it did not consider environmental issues related to the pipeline project, such as leaks. In public comments, the Iowa Utilities Board defended its decision to approve the pipeline, stating that the public benefits of the project outweigh the other factors.
The public benefits include significant safety advantages of transporting oil by pipeline compared with alternatives, plus the creation of jobs and other economic benefits during the construction period.
While landowners have filed several lawsuits and packed courtrooms in Iowa to prevent the construction of the pipeline, their efforts have been unsuccessful. With more than 97 percent of the pipeline complete in Iowa, and the recent ruling by Judge Jeffrey Farrell against Iowa landowners who sought to block the pipeline, the momentum is clearly in favor of the pipeline.
Likewise, work on the pipeline is no longer stalled where it would pass under the Missouri River at Lake Oahe in North Dakota. Native American tribes, along with many other anti-pipeline activists, have been protesting for months and sought court intervention to stop construction of the pipeline. Recently, a district court judge denied their motion to stop construction. With that hurdle cleared, Dakota Access reports that the pipeline could be fully operational by April. Though the Dakota Access pipeline is becoming a reality, the jury is out on the true effects of the pipeline on the economy and the environment.