On March 16, 2015, Des Moines Waterworks (“DMWW”) filed a Complaint in the Federal District Court for Northern Iowa against several drainage districts in Calhoun, Buena Vista and Sac counties. A total of ten separate counts were alleged. Counts I and II alleged statutory violations of the Clean Water Act (I) and violations of Iowa Code section 455B.186 that prohibits the discharge of pollutants into waters of the state (II). The remaining Counts III-X in the federal complaint alleged claims counts alleged tort-based and constitutional causes of action against the districts: public nuisance (III), statutory nuisance (IV), private nuisance (V), trespass (VI), negligence (VII), takings under the Fifth Amendment (VIII), due process and equal protection under the Fourteenth Amendment (IX), and permanent injunction (X).  The claims essentially argued that the drainage districts had polluted the Raccoon River with nitrates and that the nitrates required DMWW to spend large sums of money to remove the nitrates so that the water was suitable for drinking.

At the urging of the federal district court, eight counts were certified to the Iowa Supreme Court so that the court could inform the federal district court what its ruling would be on those certified questions. The remaining two counts (I-II) are still awaiting further action in the federal district court.

On January 27, 2017 the Supreme Court ruled on all four questions in favor of the drainage districts. The decision was written by Justice Waterman and joined by Justices Mansfield and Zager. Justices Cady and Appel concurred in part and dissented in part. Justices Wiggins and Hecht took no part.

The certified questions and answers have been answered 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.

A. Existing Law is unfavorable to DMWW

The court’s opinion began by noting that the immunity of drainage districts from money damage claims is based on long-standing case law. “Our cases have consistently held that a drainage district is not susceptible to suit for money damages. It has no corporate existence for that purpose.”  The court noted that this has been the law for “over one hundred years.” In lieu of a suit for money damages, the court found that under its case law that mandamus is the proper remedy to adjudicate claims that a drainage district is violating a duty imposed by an Iowa statute.

Next, addressing the constitutional claims brought by DMWW, the court noted that another line of cases holds that political subdivisions, as creatures of statute, cannot sue to challenge the constitutionality of state statutes. The court held that this reasoning readily extends to a public utility such as the DMWW because it is also a creature of statute. Therefore, the law” precludes [DMWW’s] constitutional challenges to chapter 468.”

Based on existing law it was clear to the Supreme Court that DMWW’s arguments should be rejected. However, DMWW knew that the existing law was against it when it agreed to certify the questions to the Iowa Supreme Court. Therefore, DMWW argued that the Supreme Court should depart from precedent, citing cases that allow the court to depart from precedent when “continued vitality is questionable.” In response, the Iowa Supreme Court began its analysis by observing that “our prior holdings that the DMWW seeks to overturn were unanimously reaffirmed by our court in 1994 and 2012 without any intervening changes in the law underlying the immunity.” (emphasis supplied).

B. There is no reason to depart from precedent.

Nonetheless, the court went on to examine “whether DMWW has provided compelling reasons for overruling our century of precedent interpreting chapter 468 that the legislature has left intact.”  DMWW raised several arguments why the court should make new law:

1. Immunity should not apply in a water pollution case in light of the evolution in the understanding of environmental contamination.
2. The enactment of the home rule amendment to the state constitution in 1978 undermines the rationale for the immunity.
3. The nitrate contamination at issue rebuts the public health rationale for drainage districts.
4. Decisions of other states allowing tort claims against drainage districts.
5. Immunity is unconstitutional as applied.

The court rejected DMWW’s first argument that immunity for drainage districts was established long before there was any desire to protect water quality. The court held that the law protected drainage districts from tort claims “under any state of facts” and that “[p]ollution claims do not present a stronger case to impose liability.” The court also noted that chapter 468 which governs drainage districts “imposes no duty on drainage districts to filter out nitrates.” In perhaps the most important statement in the entire opinion, the court observed that:

The defendants’ lack of statutory authority to regulate farmer nitrate use cuts against revisiting our longstanding precedent, which rests upon the limited existence and powers of drainage districts. “Liability follows control . . . .”

What is interesting about this statement is that it is an argument that the districts have also made in their motion for summary judgment in the federal district court on the first two statutory counts. Even Justice Appel in his partial concurrence (joined in by Justice Cady) noted that “the most valid rationale for the no-money damages approach – that a drainage district has limited powers—is a broad proposition that applies across the board.” A federal judge may be hard-pressed to ignore this unanimous opinion even if that judge considers it to be mere obiter dicta that was not necessary to the court’s conclusion.

The court listed several additional reasons to reject DMWW’s arguments:

1. “While attitudes toward the environment may differ today from when the first drainage tiles were placed generations ago, tort claims based on alleged pollution are nothing new. “Tort claims challenging environmental pollution can be traced back to at least the seventeenth century . . . .”
2. “Drainage districts and their trustees have presumably relied on our long-standing precedent recognizing their immunity. One practical result of that reliance is the lack of liability insurance to cover defense costs or indemnify judgments.”
3. “The absence of any evidence or argument that drainage districts are the cheapest cost avoider for nitrate contamination. The drainage systems were not designed or intended to filter out nitrates.”

On the second argument by DMWW asking that the court deviate from existing law, DMWW argued that the enactment of the home rule amendment in 1978 broadened the police powers of county government. The court quickly disposed of this argument noting that “Home rule powers can only be exercised in a manner consistent with acts of the general assembly.” The court also found that “the home rule amendment prohibits local governments from assessing taxes without legislative authorization.” This is an important observation because drainage districts have no innate ability to raise the funds needed to build the nitrate treatment systems that DMWW is demanding. The court obviously recognized this problem. Justice Appel also agreed with this majority holding in his separate opinion.

DMWW next argued that its allegations of nitrate contamination should overwhelm the historical immunity of drainage districts because the purpose of drainage districts is to benefit “public health.” The court rejected this argument noting that although drainage districts are presumed to be conducive to the public health, they are also presumed to be conducive to “convenience and welfare” and that this would include converting “economically unproductive swamps into tillable farmland.” The court concluded by finding:

Ultimately, this case is about who pays for nitrate removal from the drinking water that reaches our kitchen faucets. The DMWW does not claim nitrate levels render the Raccoon River unsafe for swimming or fishing. The DMWW does not challenge that estimate. It is for the legislature to decide whether to reallocate the costs of nitrate reduction.

The court may be inferring that the Raccoon River’s purpose is not to provide water that is ready to drink and that this is a service that utilities are better positioned to provide.

DMWW next argued that a few other state courts have allowed private persons to sue drainage districts in tort. The court quickly rejected this argument finding first that none of those cases involved a suit filed by a water utility or public entity and finding second that Iowa law was unique.

Finally, the court addressed DMWW’s various constitutional arguments against drainage district immunity.  The court began by citing precedent upholding statutory immunity provisions against equal protection attacks. The court disposed of the “takings claim” by noting that the constitution only protected the taking of private property and that “no private property is involved in this case.” Instead, the Raccoon River was owned by the State of Iowa. The court also rejected the argument that a public utility could be involved in a “proprietary” as opposed to “governmental” function, entitling it to constitutional protection against a taking. The court cited a 1923 U.S. Supreme Court case to support its conclusion that neither the Iowa nor US Constitution protected DMWW from a taking regardless of whether its water activities were a proprietary or governmental function.  The court also cited an old Iowa Supreme Court case noting that downstream landowners are not entitled to recover eminent domain payments from a drainage district for harm to private property caused by water flow. The court next nixed DMWW’s argument that district immunity violated its due process. The court reasoned that governmental entities have no right to sue other governmental entities for due process violations. Otherwise, the court observed, tax payers would “foot the bill for both sides.” Justice Appel did not agree with the majority on the question of takings.

The court concluded that “Even if we regarded the DMWW as a private entity and accepted its factual allegations as true, no compensable takings claim is alleged under the Iowa Constitution.” The court added that “DMWW was not denied access to the Raccoon River; rather, it simply must expend additional funds for nitrate removal.”

C. The Partial Concurrence and Dissent

As noted above, Justice Appel agreed with the majority on several points, namely the unavailability of damages against a district, the inapplicability of the Home Rule statute on drainage districts, and the lack of equal protection, due process and inalienable rights claims attacking what Justice Appel refused to characterize as district “immunity.” Justice Appel did however, conclude that DMWW could raise a takings claim and that nuisance should be available. Justice Appel was joined by Justice Cady in his opinion. Justice Cady issued an additional very short opinion that appeared to be an appeal for legislative action.

James L. Pray

Brown Winick Law Firm