Iowa Supreme Court Sides with Drainage Districts

The Iowa Supreme Court today issued a ruling favoring the drainage districts in three northwest Iowa counties in the high profile Des Moines Water Works nitrate litigation. This ruling effectively means that the federal court will enter summary judgment in favor of the districts with respect to DMWW’s claims for money damages and injunctive relief and will likely grant similar relief with respect to DMWW’s claims alleging violations of DMWW’s constitutional rights.

Today’s Iowa Supreme Court ruling has no immediate impact on the core federal claim in the lawsuit, the allegations that the districts have violated the Clean Water Act (and the companion Iowa statute) by discharging nitrates via a point source into “Waters of the United States” without a National Pollutant Discharge Elimination System (NPDES) permit. Those claims will soon be addressed by the federal court when it evaluates the drainage districts’ second motion for summary judgment.

Background

As we’ve explained in past articles, this litigation arose March 16, 2015, when the Des Moines Board of Water Works Trustees (DMWW) filed a federal Clean Water Act (CWA) lawsuit against 10 drainage districts (and their trustees) in Buena Vista, Sac, and Calhoun Counties in Iowa. The lawsuit, which was filed in the United States District Court for the Northern District of Iowa, asserts causes of action falling into two categories:

(1) Claims under the CWA and Iowa Code Chapter 455B positing that discharges from drainage districts are “point sources” of nitrate pollution for which a National Pollutant Discharge Elimination System (NPDES) permit is required and

(2) Claims seeking money damages and injunctive relief under Iowa common law and statutory theories of negligence, nuisance, and trespass. The second category of claims also contains allegations that the districts took DMWW’s property without just compensation when they allowed nitrates to flow into the Raccoon River and that denying DMWW the right to collect money damages against the districts would deprive DMWW of its constitutional rights.

On January, 2016, Judge Strand, the federal district court judge assigned to this case, decided that the Iowa Supreme Court was best positioned to answer the important issues of state law raised by the second category of claims. The district court then certified four questions to the Iowa Supreme Court.

Supreme Court Opinion

The Iowa Supreme Court reviewed the questions and today issued its opinion. Of the seven Justices on the Court, Justices Wiggins and Hecht did not participate in the decision. Of the remaining five, three Justices (Waterman, Mansfield, and Zager) answered the questions for the majority. The remaining two Justices (Cady and Appel) concurred in part and dissented in part.

The majority answered the certified questions as follows:

Question 1:

As a matter of Iowa law, does the doctrine of implied immunity  of  drainage  districts  as  applied  in  cases  such  as  Fisher  v.  Dallas  County,  369  N.W.2d  426  (Iowa  1985),  grant  drainage  districts  unqualified  immunity  from  all  of  the  damage  claims  set  forth  in  the complaint (docket no. 2)?  

Answer:

 Yes.  As   explained   below,   drainage   districts   have   a   limited,  targeted  role—to  facilitate  the  drainage  of  farmland  in  order  to  make it more productive.  Accordingly, Iowa law has immunized drainage districts from damages claims for over a century.    This immunity was reaffirmed unanimously by our court just over four years ago.  

Question 2:

As a matter of Iowa law, does the doctrine of implied immunity grant drainage districts unqualified immunity from equitable remedies and claims other than mandamus?  

Answer:

 Yes.  Again, Iowa precedent, reaffirmed unanimously by our  court  just  four  years  ago,  recognizes  that  drainage  districts  are  immune from injunctive relief claims other than mandamus.  

Question 3:

As  a  matter  of  Iowa  law,  can  the  plaintiff  assert  protections  afforded  by  the  Iowa  Constitution’s  inalienable  rights,  due process, equal protection, and takings clauses against drainage districts as alleged in the complaint?  

Answer:

No.  Although these constitutional clauses are fundamental to our freedom in Iowa, they exist to protect citizens against overreaching    government.  Generally, one subdivision of state government cannot sue another subdivision of state government under these clauses.  And even if they could, an increased need to treat nitrates drawn  from  river  water  to  meet  standards  for  kitchen  tap  water would not amount to a constitutional violation.  

Question  4:

As  a  matter  of  Iowa  law,  does  the  plaintiff  have  a  property  interest  that  may  be  the  subject  of  a  claim  under  the  Iowa  Constitution’s takings clause as alleged in the complaint?  

Answer:

 No,   for   the   reasons   discussed   in   the   answer   to   Question 3.  

Majority Opinion

The majority rested its answers primarily on the doctrine of stare decisis, a rule that requires courts to adhere to their prior case rulings unless there is the “highest possible showing” of error. Stare decisis seeks “to imbue the law with continuity and predictability and help maintain the stability essential to society.” The Court stated that “for over one hundred years” it has been the law in Iowa that “a drainage district is not susceptible for a suit for money damages. It has no corporate existence for that purpose.”

This immunity, the Court explained, is not rooted in sovereign immunity principles, but in the fact that drainage districts are entities with “special and limited powers and duties.” The legislature has given drainage districts the “limited purpose” to build and maintain drainage improvements. Past Iowa Supreme Court cases (from the early 1900s through 2012) have relied on the limited nature of a drainage district’s purposes and powers to find that such districts can only be sued in mandamus. These are actions to compel a drainage district to complete or correct the performance of a statutory duty. “A century’s worth of precedent, including a case our court decided unanimously just four years ago, precludes any remedy against drainage districts other than mandamus,” the majority opinion stated.

The Court noted that drainage districts have no statutory authority to regulate farmer nitrate use or mandate changes in farming practices. This, the Court stated, cuts against DMWW’s argument to impose liability on the districts. “Liability follows control.” “A party in control of an activity can take precautions to reduce the risk of harm to others.” The Court continued, "Economic theory underlying tort law favors placing liability on the party who can avoid the harm at the least cost.” That party, the Court reasoned, “may well be the DMWW,” which effects its nitrate reduction at a cost of around one cent per day per customer. But the Court was clear that such policy decisions “are for the legislature.” The Court noted that the legislature has presumably followed the Court’s decisions and has had ample time to change policy if it disagreed with the immunity granted to the districts through decades of precedent. The Court also stated that the legislature has failed to give the drainage districts any authority or funding mechanism to pay money damages if they were awarded.  

The Court had little time for DMWW’s claim that the districts had unconstitutionally taken DMWW’s property without just compensation (so as entitle DMWW to damages). “The drainage districts have not unconstitutionally deprived the DMWW of any property,” the Court ruled. The Raccoon River, the Court reasoned, is owned by the State of Iowa, not DMWW. Furthermore, the Court found that DMWW, a public entity, could not assert a takings claim against another political subdivision of the State.” The Court applied the same reasoning in answering the question of whether DMWW’s constitutional rights were violated by denying it the right to sue for damages. The Iowa Constitution, the Court ruled, “does not provide a basis for one public entity to sue another over the use of state-owned assets.” “It makes sense to limit litigation between public entities because the people of Iowa foot the bill for both sides.”

The majority opinion concluded with a pointed statement, “The DMWW’s claim that putting nitrates into the Raccoon River creates a public nuisance is at odds with its own practice of depositing those nitrates back into the same river. Under the circumstances, it has failed to state an actionable takings claim under the Iowa Constitution.”

Dissenting/Concurring Opinions

Justices Cady and Appel wrote separate opinions, and Justice Cady joined in Justice Appel’s lengthy opinion. These Justices, while voicing their disagreement with the policy behind the law, agreed with the majority that stare decisis applies to prevent DMWW from pursuing money damages stemming from tort claims against the districts. Such precedent, Justice Appel reasoned, might have caused reasonable drainage districts to forgo the possibility of insurance in light of the case law. “Although I am not completely confident in the result, I am inclined to conclude that stare decisis precludes our reconsideration of our caselaw that generally stands for the proposition that money damages are not an available remedy against drainage districts.”

Justices Appel and Cady, however, did not agree with the majority as to the availability of the injunctive relief sought by DMWW. Justice Appel wrote that past precedent did not bar injunctive forms of relief against drainage districts. In fact, he urged, other statutory law would give the districts the obligation to abate a nuisance created by their operation. Justice Appel wrote that DMWW should be allowed to attempt to meet its burden to prove that it is entitled to injunctive relief to require the districts to abate any nuisance created by their activities.

As to the constitutional claims, Justices Appel and Cady also disagreed with the majority opinion. Justice Appel wrote that DMWW should not be regarded as an instrument of the state for purposes of analyzing its takings claim, but as an instrument of the citizens it serves. As such, Justice Appel wrote that DMWW should be allowed to challenge the actions of government subdivisions (i.e. the drainage districts) that “allegedly run afoul of the specific constitutional command of the takings provision” of the Iowa Constitution. Justice Appel also argued that DMWW should be allowed to attempt to prove at trial that it has a property interest in the water based upon its riparian rights. Such a determination, Justice Appel wrote, would be based upon a number of facts and circumstances, such as the social value and purpose of the use.

What’s Next?

Based upon today’s decision, Judge Strand will be left to enter summary judgment in favor of the drainage districts with respect to all state law claims addressed by the certified questions. The only potential claims left for the federal court to address in the first motion for summary judgment are the "takings claim" based upon a violation of the Federal Constitution and the alleged claim that drainage district immunity deprives DMWW of its federal constitutional rights. Most likely summary judgment will be granted to the districts as to these segments of the claims as well.

That leaves the pending motion for summary judgment as to the claims under the CWA and its Iowa counterpart. It is expected that the federal court will issue its ruling on that motion in the very near future. If summary judgment is not granted, the case will go to trial, which is currently scheduled for June 26, 2017. Today, however, upon receiving the Iowa Supreme Court’s opinion, Judge Strand ordered the parties to file a joint status report indicating their positions as to if and how further proceedings should be scheduled.

Today's ruling by the Supreme Court makes the first argument of the drainage districts in their motion for summary judgment on the CWA claims more interesting: Because the districts have no powers to redress the injuries alleged, DMWW has no case or controversy with these defendants that will permit them to maintain this action in this court. We should hear from the federal court shortly.

We’ll keep you posted!