Iowa Court Affirms Condemnation Award in Dakota Access Pipeline Case

On January 27, 2022, the Iowa Court of Appeals affirmed a jury award in an eminent domain proceeding. In 2019, the Iowa Supreme Court held that the condemnation of farmland for the Dakota Access pipeline was constitutional. Because the landowner did not show that the district court abused its discretion when it excluded certain evidence allegedly impacting the value of the property after the taking, the court affirmed there were no grounds for a new trial.

Background

Intending to build a 343-mile crude oil pipeline across the state, Dakota Access, LLC, obtained voluntary easements from many landowners in the pipeline’s path. After receiving a permit from the Iowa Utilities Board, Dakota Access used eminent domain to acquire easements from Iowa landowners who did not voluntarily enter in an agreement. Because this amounted to a taking, these landowners were entitled to “fair and just compensation.”

The pipeline ran through a corner of Keith Puntenney’s land in Webster County. A county commission awarded Puntenney $16,300 for a .78-acre permanent easement and a 1.76-acre temporary construction easement that lasted for eighteen months. Puntenney appealed this award to district court. In a condemnation proceeding, the value of the taking (for which the condemnee is entitled to damages) is the difference between the fair and reasonable market value of the owner’s property “immediately before the taking and the fair and reasonable market value of the property after the taking.” At trial, two appraisers for Dakota Access valued the taking at $7,900 and $5,500. Puntenney testified that the taking reduced the value of his land by $269,100. The jury determined that Puntenney was entitled to $7,900 in compensation. Puntenney moved for a new trial, which the district court denied. Puntenney appealed.

Market Value

On appeal, Puntenney raised several evidentiary issues. First, he claimed that the district court abused its discretion by excluding exhibit 79 from evidence. Exhibit 79 was a document Dakota Access distributed to affected landowners showing the maximum, average, and median market price of property for every county through which the proposed pipeline would run. For Webster County, the document listed values of $12,500, $9,623, and $9,777 respectively.

On appeal, Dakota Access asserted that the document was evidence of “pre-condemnation settlement discussions.” Under Iowa Rule of Evidence 5.408, evidence of “furnishing, promising, or offering…valuable consideration in compromising or attempting to compromise the claim” is not admissible. Although the district court did not specifically mention rule 5.408, the Court of Appeals found that the parties had the opportunity to litigate the issue, yet Puntenney did not address this argument in his appeal. Therefore, the court affirmed that Puntenney failed to meet his burden and the document should be excluded as a pre-condemnation settlement discussion.

Safety Information Pamphlet

Next, Puntenney claimed the district court abused its discretion by excluding a safety information pamphlet as evidence which explained the dangers of underground crude oil pipelines. Publications can be used to show that a danger, whether real or perceived, would influence the market value of land in a condemnation proceeding. Fanning v. Mapco, Inc., 181 N.W. 191, 197 (Iowa 1970). However, the publication must be so widely circulated that it is “common knowledge” among potential buyers. Id. Here, Dakota Access only distributed this pamphlet to homeowners near the proposed pipeline. Because Puntenney did not actually live near the pipeline, he did not receive the safety information pamphlet. Accordingly, the court found that it was not common knowledge. Therefore, the district court did not abuse its discretion in excluding it.

Post-Taking Construction Damages

Puntenney also argued that the district court abused its discretion by excluding evidence of the property damage that would occur because of the pipeline construction. Post-taking damages must be decided in a separate proceeding outside of the condemnation award appeal. Draker v. Iowa Elec. Co., 182 N.W. 896, 898 (Iowa 1921). The court rejected Puntenney’s urging to modify Draker, stating that it was bound by the opinions of the Iowa Supreme Court.

Jury Instructions

Lastly, Puntenney appealed jury instruction fourteen which stated:

     In arriving at your verdict, you may not consider the following items of damages allegedly caused by the construction of the pipeline:

• Loss or reduced yield of crops or forage on the pipeline right of-way, whether caused directly by construction or from disturbance of usual farm operations;
• Loss or reduced yield of crops or yield from land near the pipeline right-of-way resulting from lack of timely access to the land or other disturbance of usual farm operations, including interference with irrigation;
• Fertilizer, lime or organic material applied by the landowner to restore land disturbed by construction to full productivity;
• Erosion on lands attributable to pipeline construction; and
• Any other damages to the land caused by the construction of the pipeline

    These are not elements of damages to be considered in this proceeding.

The court rejected Puntenney’s argument, again noting that the only remedy available in a condemnation appeal is the difference in land value before and after the taking. Here, the verdict form asked the jury to determine the difference in the land’s market value immediately before and after the taking. Because post-taking damages are not recoverable in chapter 6B condemnation proceedings, the Court of Appeals affirmed that the district court did not error.