William Petroski

bpetrosk@dmreg.com

Attorneys challenging approval of the Dakota Access pipeline say state regulators made mistakes in granting construction permits and improperly authorized eminent domain to seize access to farmland along a 346-mile pipeline route.through 18 Iowa counties.

Lawyers representing the Iowa chapter of the Sierra Club and a group of 14 owners of Iowa farmland made their case Thursday before Polk County District Judge Jeffrey Farrell, who didn't rule immediately. Attorneys for the Iowa Utilities Board and the pipeline's developer, Dallas-based Energy Transfer Partners, defended the state panel's decisions as legal and appropriate.

Bret Dublinske, a lawyer for Energy Transfer Partners, suggested the lawsuit is moot, noting that 100 percent of the pipeline has already been built by construction workers along the Iowa route. "It is not this court's place to reweigh the evidence," he said.

But Bill Hanigan, a lawyer for the land owners, raised the possibility that some land owners will require the pipeline to be dug up and removed from their farms if the court concludes their rights were violated by an improper authorization of eminent domain. "They would be allowed ... damages for every barrel of oil that passed through their property," he added.

Similarly, a court's reversal of the state board's approval could potentially result in the entire Iowa section of the pipeline being shut down, even if it's already begun operating, the plaintiffs' lawyers suggested.

Pipeline critics: Iowa regulators fail to protect farmland

The case was debated for two hours in a packed courtroom in downtown Des Moines that held about 100 people while some other supporters and opponents of the pipeline mingled outside in the courthouse hallway. After the hearing, a crowd of anti-pipeline activists carried protest signs as they marched to a rally at nearby Cowles Commons, chanting, "No oil in our soil" and "No eminent domain for private gain."

Farrell indicated he hopes to rule as soon as possible on the lawsuit. But the plaintiffs' lawyers said they expect key legal issues in the case may ultimately be decided after appeals to the Iowa Supreme Court and possibly the U.S. Supreme Court.

The $3.8 billion pipeline, which will transport up to 570,000 barrels of crude oil daily, begins in North Dakota's Bakken oil fields and passes through South Dakota and Iowa en route to a distribution hub at Patoka, Ill. Work on the entire four-state project is nearing completion, according to pipeline officials.

The Iowa court case is proceeding as Dakota Access and the U.S. Army Corps of Engineers are engaged in a separate battle in federal court over permission for the pipeline to cross under the Missouri River at Lake Oahe in North Dakota.

Members of the Standing Rock Sioux tribe, who have been joined by thousands of other anti-pipeline activists, are concerned a judge will allow Dakota Access to finish the project, which they believe could contaminate their water supply in the event of an oil leak and damage sacred tribal lands. They also worry that President-elect Donald Trump will overturn a Corps of Engineers' decision earlier this month to deny an easement for the river crossing. Trump's nominee for U.S. energy secretary is former Texas Gov. Rick Perry, a board member of Energy Transfer Partners.

Wallace Taylor, an attorney for the Sierra Club, an environmental group which has 5,500 members in Iowa, said the Iowa Utilities Board did not properly apply a requirement of "public convenience and necessity" in approving the pipeline project. The group also contends state regulators failed to properly address environmental issues related to the pipeline project and they did not properly consider the impacts of climate change. In addition, the Sierra Club said the board denied due process for pipeline opponents and it did not properly consider the project's negative consequences.

"There is no evidence that oil or refined products are not getting where they need to go and where they need to be served and at a fair price," Taylor said. He urged the court not to simply rubberstamp the Iowa Utilities Board's decision, saying, "The deference that the court should give to an agency is not absolute."

Dublinske questioned whether the Sierra Club has a legal standing to bring a court challenge, and he urged the court to defer to the expertise of the Iowa Utilities Board. Although the pipeline would not have distribution points in Iowa, the state shouldn't prevent the construction of crude oil pipelines because there is no oil production in Iowa and Iowa residents are dependent upon other states for petroleum products, he said.

"There is nothing about providing a service that requires it to be a retail end-user service," Dublinske said."You don't have to serve all of the public, all of the time."

Dublinske also accused the Sierra Club of "grossly misrepresenting the record" by contending Iowa's entire pipeline route wasn't subject to environmental surveys. In addition, he said the plaintiffs failed to show they were denied a full opportunity to participate during the state board's proceedings.

The use of eminent domain for the pipeline project is being challenged by landowners in Boone, Webster, Wapello, Cherokee, Calhoun, Mahaska and Story counties. Eminent domain is the power of government to seize private land for a public purpose in return for fair market compensation. Hanigan contended the Iowa Utilities Board has misinterpreted a 2006 Iowa law intended to protect Iowa farmland. He also maintained that Iowa statutes and federal law prohibit the taking of their property because Dakota Access is a private, interstate pipeline, and not a utility.

David Lynch, general counsel for the Iowa Utilities Board, said flatly that the Iowa Legislature has authorized the use of eminent domain for the transportation of liquids that include crude oil. Although Hanigan cited court cases involving eminent domain in Kentucky, West Virginia and Pennsylvania that he believes supports the rights of Iowa farmers who oppose the pipeline, Lynch said the Iowa statute doesn't have a counterpart in those three states.

Could Dakota Access pipeline move after permit is denied?

Lynch also responded to arguments by the plaintiffs that the federal government has recently toughened standards for railroad tank cars that transport Bakken crude oil, saying it will likely take years to determine the impact of the safety improvements. One of the arguments in support of the pipeline is that it offers a less-hazardous method of shipping crude oil.

"Every decision that an agency makes is subject to being second-guessed, based on changed circumstances. We need finality at some point," Lynch said.

In public comments, the Iowa Utilities Board has defended its decision to approve the pipeline, saying the board concluded that issues of safety, economic benefits, environmental factors and landowners’ rights merited the most significant weight in reaching their decision. The board also said in a statement last March that it applied a "statutory balancing test" that concluded that the public benefits of the project outweighed other factors. The public benefits included significant safety advantages of transporting oil by pipeline compared with alternatives, plus the creation of jobs and other economic benefits, projected to be at least $787 million during the construction period.