Iowa regulators question whether Dakota Access pipeline has enough insurance to protect against an oil spill

Kevin Hardy | The Des Moines Register

Show Caption Hide Caption Iowa Supreme Court hears Dakota Access Pipeline case More than a year after oil began flowing under Iowa fields in the Dakota Access pipeline, landowners who objected to the project got the chance to argue their case in front of the Iowa Supreme Court.

The Iowa Utilities Board is questioning whether the builder of the controversial Dakota Access pipeline has adequate insurance coverage to protect Iowans from potential oil spills.

That crude oil pipeline spans four states from North Dakota to Illinois, cutting through 18 Iowa counties. In permitting the controversial project, the utilities board required that its builder, Dallas-based Energy Transfer Partners, secure $25 million in insurance coverage to protect against the potential of an Iowa oil spill.

Energy Transfer has $50.1 million in total coverage across the four-state pipeline, but IUB officials say that doesn't prove that the company holds $25 million in Iowa-specific coverage. In essence, the board has argued that a catastrophic incident in one of the other three states could exhaust the pipeline's insurance coverage for Iowans.

Dakota Access has maintained it secured more than adequate coverage. But the IUB has rejected that logic: On Tuesday, the board ordered the company to provide more information on how it would comply with the $25 million insurance requirement. Energy Transfer has 21 days to respond.

IUB spokesman Don Tormey said the board had no further comment beyond its order to the company.

The spat between the IUB and the pipeline operator represents just the latest controversy for a project that has sparked protests, arrests and lawsuits up and down the route. Most notably, the project led to a giant gathering of Native Americans near the Standing Rock Sioux reservation in North Dakota.

More: Near Standing Rock, pipeline protest meets a spiritual movement

More: Why Dakota Access is giving away hundreds of thousands in Iowa

In Iowa, property owners along the route are currently awaiting a decision from the state's highest court on whether the IUB should have granted eminent domain authority to Dakota Access in the first place.

More: 'We've waited a long time for this:' Iowa Supreme Court to decide fate of Dakota Access pipeline

In public filings, the pipeline builder has argued that its $50 million insurance policy adequately covers any damages that could occur in Iowa.

"The fact that the policies could also cover an incident on the pipeline occurring in a neighboring state does not mean that the policies do not cover an incident occurring in Iowa," Bret Dublinske, a Des Moines attorney representing the pipeline builder, wrote to the board on Monday.

Both the Sierra Club Iowa chapter and the Northwest Iowa Landowners Association submitted filings imploring the utilities board to enforce the $25 million insurance requirement. The group of landowners said the state should yank the pipeline company's permit if it doesn't comply.

"It is a simply self-evident fact that farmers are concerned about their land," the association wrote, "and that, cumulatively speaking, there is no greater asset in Iowa than its farmland."

In a statement, Energy Transfer spokeswoman Lisa Dillinger said the filings from those organizations revealed a "lack of understanding of business insurance." And she said the company's insurance policy not only meets the conditions of its 2016 permit, but provides more than double the required coverage.

"We look forward to providing the Iowa Utilities Board with further information," Dillinger said. "We are not commenting beyond that at this time."