Petition Filed Seeking Permit to Build Crude Oil Pipeline Across Iowa

Overview

On January 20, 2015, Dakota Access, LLC, a subsidiary of Dallas-based Energy Transfer Partners, filed a petition with the Iowa Board of Utilities seeking a permit to build a crude oil pipeline across the State of Iowa. The private Houston-based company is moving forward with plans to build a pipeline to transport crude oil from the Bakken Shale Oil field to a refinery hub in Illinois. Dakota Access is proposing a 1134-mile pipeline stretching from northwestern North Dakota to the Patoka Oil Terminal Hub in south-central Illinois. The plan includes 346 miles of pipeline—30 inches in diameter—across 18 Iowa counties.

To build the Iowa portion, Dakota Access must obtain a permit from the Iowa Utilities Board. Although the Board has no jurisdiction to regulate the safety of hazardous liquid pipelines (the U.S. Department of Transportation Pipeline and Hazardous Material Safety Administration has safety jurisdiction), the Board has sole discretion to determine whether to allow Dakota Access to build the crude oil pipeline across Iowa. The decision will ultimately turn on whether the Board believes the pipeline will “promote the public convenience and necessity.”

Informational Meetings

Dakota Access initiated the legal process on October 29, 2014, by filing with the Board a map of the proposed pipeline and a legal notice of public informational meetings to be held in the 18 impacted Iowa counties. Dakota Access is seeking to acquire easement rights for the construction, operation, and maintenance of the pipeline. Dakota Access held informational meetings with affected landowners throughout December after serving the landowners with notice of the meetings through certified mail. These informational meetings were led by a representative of the Board who explained the permitting process to the landowners and provided them with an overview of their legal rights. A representative from the company presented the proposed project, and landowners asked questions.

Once the informational meetings were completed, Dakota Access was free to begin negotiating with landowners for the purchase of individual easements. Dakota Access is seeking 50-foot-wide permanent easements through which to construct its pipeline. During construction, the company will need up to 100 feet of additional workspace. The company also states that the pipeline will be buried under a minimum of 48 inches of soil on agricultural land, although the required newspaper notice erroneously stated that it would be buried under at least 60 inches of soil on agricultural land.

Because of this discrepancy, a coalition of environmental groups (led by the Iowa Chapter of the Sierra Club), filed with the Board a “motion for clarification” on January 5, 2014, asking the Board to require Dakota Access to reschedule its informational meetings. The motion also contends that Dakota Access did not provide proper notice to all landowners. In a January 15, 2015, resistance, Dakota Access contended there was no basis for the coalition’s allegations and that the group was merely seeking to “delay the pipeline.” The Board promised to rule on the motion sometime after January 26.

Dakota Access was free to file its formal petition seeking a permit anytime between 30 days and two years after holding its last informational meeting. Once the informational meetings were held, Dakota Access was also free to access the impacted properties to conduct a survey after giving landowners 10 days’ written notice.

Petition Filed

On January 20, 2015, Dakota Access filed its petition with the Board. The filing, which lists every tract of land through which the pipeline is proposed, does not include a request for rights to eminent domain for any specific parcels. Instead, Dakota Access states that it is “in the early stages of negotiating voluntary easements” and will at a later time file any requests for eminent domain in their required form “to the extent that become necessary.”

Next Steps

Because the Dakota Access petition is not in its final form, it will not yet trigger a notice of hearing from the Board. Once the Board determines that the petition is "substantially correct," it will fix a time for the hearing and provide a notice for two consecutive weeks in the impacted counties’ newspapers. The hearing would take place in the county seat of the county at the “midpoint” of the proposed line. It must be held no less than 10 days (but not more than 30 days) from the date of the last published notice. Iowa law allows interested persons to file written objections with the Board. Persons filing objections, as well as impacted landowners, would receive individual notice of the hearing.

At the hearing, interested parties would be allowed to present evidence to support or oppose the line’s construction. Ultimately, the Board would have to decide whether the proposed line would “promote the public convenience and necessity.” Iowa law provides that a pipeline company granted a pipeline permit “shall be vested with the right of eminent domain, to the extent necessary and as prescribed and approved by the Board, not exceeding seventy-five feet in width.” This means that Dakota Access would be given the right to acquire easements through eminent domain in exchange for “just compensation.” The law also requires the Board to establish standards for the “restoration of agricultural lands during and after” the construction of the pipeline.

If the Board were to grant Dakota Access the power of eminent domain, county compensation commissions would determine the “just compensation” to which the individual landowners would be entitled. Landowners and Dakota Access would have the right to appeal these initial determinations through the Iowa court system.

Dakota Access wishes to complete its proposed pipeline by the end of 2016. Its plans, however, will no doubt face many legal challenges. Impacted landowners should be in no hurry to voluntarily sign an easement agreement. It is important to seek legal counsel to review the terms of the proposed agreement offered by the company and to understand the full scope of the rights being relinquished. Compensation and damages will be strictly limited to the terms of any voluntary agreement. Once seven days has passed from the time of agreement, a pipeline easement is a permanent property right that cannot be revoked. 

We will continue to bring you important developments as they unfold.