William Couser & Summit Carbon Sols., LLC v. Shelby Cnty. Iowa

681 F.Supp.3d 920

William COUSER and Summit Carbon Solutions, LLC, Plaintiffs, v. SHELBY COUNTY IOWA, Shelby County Board of Supervisors,Steve Kenkel, in his official capacity as a Shelby County Supervisor,Charles Parkhurst, in his official capacity as a Shelby County Supervisor,and Darin Haake, in his official capacityas a Shelby County Supervisor, Defendants.

Case No. 1:22-cv-00020-SMR-SBJ

United States District Court, S.D. Iowa, Western Division

Signed July 10, 2023

Bret Alan Dublinske, Brant Michael Leonard, Kristy Dahl Rogers, Fredrikson & Byron, P.A., Des Moines, IA, Brian David Boone, Pro Hac Vice, Michael Roger Hoernlein, Pro Hac Vice, Alston & Bird LLP, Charlotte, NC, Karla M. Doe, Pro Hac Vice, Alston & Bird LLP, Atlanta, GA, for Plaintiffs.

Jason Michael Craig, Ahlers & Cooney PC, Des Moines, IA, for Defendants.

ORDER ON MOTION FOR PRELIMINARY INJUNCTION

STEPHANIE M. ROSE, CHIEF JUDGE

Last year, the Shelby County Board of Supervisors ("the Board") promulgated Shelby County Ordinance 2022-4 ("the Ordinance") in response to planned construction of a hazardous liquid pipeline. Plaintiffs filed this suit to enjoin enforcement of the Ordinance on the grounds that it is preempted by federal and state law. When the Board sought to enforce the Ordinance, Plaintiffs filed a Motion for Preliminary Injunction to prevent its enforcement. For the reasons discussed in detail below, the Motion is GRANTED.

I. BACKGROUND

A. Carbon Capture Technology in Iowa

The State of Iowa produces a significant volume of corn, much of which is used to produce ethanol through a fermentation process. [ECF No. 26 at 9]. Many byproducts are created during this process, including carbon dioxide ("CO₂"). [ECF No. 26-1 at 3 (Pirolli Decl.)]. This CO₂ can be captured at the time of generation, transported to another location, and stored through a carbon capture and sequestration procedure ("CCS"). Id. CCS technology uses an extensive network of pipelines to transport the captured CO₂ from its original location to its desired destination. Id.

Plaintiff Summit Carbon Solutions, LLC ("Summit") is developing an interstate network of pipelines "to implement CCS technology" in the Midwest. [ECF No. 26-1 at 3]. This project will transport CO₂ from thirty-one facilities, including twelve ethanol and fertilizer plants located in Iowa, to various destinations. [ECF Nos. 26-1 at 3; 47-2 at 1-2]. The proposed project will lead to the construction of more than six hundred and fifty miles of pipeline across thirty counties, including Shelby County. [ECF No. 47-2 at 2]. The proposed pipeline will cross both private and public land in Shelby County. Id. at 7.

B. Application Process with the Iowa Utilities Board

The process for constructing the proposed pipeline began when Summit held informational meetings in each of the thirty counties identified as being impacted by the project, which included Shelby County. [ECF No. 26-1 at 4]. After the meetings, Summit filed a Petition for a Hazardous Liquid Pipeline Permit with the Iowa Utilities Board ("IUB") on January 28, 2022. See [ECF No. 47-1]. The application included a description of the "proposed main line route," identified the watersheds that may be impacted, and described the facilities along the proposed route. [ECF No. 47-2 at 8]. It explained how the applicant "performed extensive analyses utilizing Geographic Information Systems . . . to avoid or minimize features identified as moderate risk, and exclude features identified as high risk." Id. It provided "an explanation of the purpose of the project" and the "products carried" in the pipelines. [ECF No. 47-1 at 2]. The permit application has also been involved in extensive administrative proceedings before the IUB since its submission.¹

C. Enactment of the Shelby County Ordinance

While the IUB proceedings were ongoing, residents of Shelby County submitted a petition to the Board requesting that it implement an ordinance regulating hazardous liquid pipelines. [ECF No. 30-1 at 60-77]. The Board referred the petition to the Shelby County Planning and Zoning Commission on August 16, 2022. [ECF No. 30-1 at 29 (Notice)]. The Commission conducted a hearing on the proposed ordinance on September 23, 2022.² [ECF No. 30-1 at 6-14 (Minutes of the Commission Meeting), 30]. The Planning and Zoning Commission drafted a report to the Board, explaining that the Board should adopt a zoning ordinance to address community concerns about the impact and safety of the pipeline. [ECF No. 30-1 at 121-125].

Following this report, the Board conducted three hearings on a proposed ordinance, which were held on October 18, October 25, and November 1, 2022. [ECF No. 30-1 at 32-45, 46-57, 250-63 (Minutes)]. The Board officially approved the proposal at the last meeting. Id. at 263. The Ordinance went into effect on November 11, 2022 upon publication in the official papers of record in Shelby County. [ECF No. 30-1 at 120 (Proof of Publication)].

D. Components of the Challenged Ordinance

The Ordinance contains numerous sections that are directly challenged by Plaintiffs and are relevant to the Motion for Preliminary Injunction. The Court briefly reviews each below.

i. Introductory Section

The Ordinance begins by identifying the federal and state laws governing the transportation of hazardous liquids. [ECF No. 26-2 at 3]. The Ordinance then explicitly names Summit in its text, explaining Summit has "submitted to the IUB a Petition for a Hazardous Liquide Pipeline Permit" and "the IUB has not yet issued a permit to the Company." Id. at 4. After identifying Summit, the next few lines of the Ordinance expressly state how the pipeline "would influence human safety in the event of a rupture." Id. The Ordinance declares a pipeline rupture "could threaten the health and lives of county residents, emergency response personnel, and animals" by asphyxiation or poisoning. Id. Based on the stated concerns, the Ordinance concludes the pipeline is a safety risk that should be regulated based on the framework described therein. Id.

ii. Conditional Use Structure

The Ordinance creates a "conditional use class" for all hazardous liquid pipelines in Shelby County. [ECF No. 26-2 at 10]. Under the conditional use class, "no land or property interest in the County, regardless of the zone or area, shall be used for purposes of a Hazardous Liquid Pipeline except in conformity with this Article." Id. To conform with the Ordinance, landowners and pipeline companies must apply for and receive a conditional use permit. Id.

iii. Conditional Use Permits for Pipeline Companies

Under the Ordinance, a pipeline company seeking to "construct, maintain, or operate a new Pipeline . . . in th[e] County shall submit an Application to the County Zoning Administrator for a conditional use permit." [ECF No. 26-2 at 10]. The pipeline company must include its complete IUB application, maps identifying the impacted county residents and roadways, dimensions of the pipeline, information on compliance with abandonment and removal requirements, an emergency response and hazard mitigation plan, the written template that will be used to negotiate easements with landowners in the County, and certain fees. Id. at 11-12. Under the Ordinance, the application must be submitted to the Board within seven days of the pipeline company filing its petition for a permit with the IUB. Id. at 10.

After submission, the Ordinance tasks the Shelby County Zoning Administrator ("the Administrator") with verifying that "the Pipeline Company permit application requirements are met." [ECF No. 26-2 at 13]. Specifically, the Administrator "shall make a report to the Board of Adjustment recommending approval, denial, or modification of the Application." Id. The Board of Adjustment shall "set the date of one or more public hearings in the County on the question of granting a conditional use permit to the Pipeline Company." Id. "Once the application, public hearing, and other requirements of the Article are met, the Board of Adjustment shall consider each application." Id. If all "applicable standards are met . . . [t]he Board of Adjustment shall issue a permit." Id. The burden of proof is "on the Applicant for the conditional use permit." Id.

The Ordinance imposes certain fees for conditional use permits. [ECF No. 26-2 at 12]. For pipeline owners, the Ordinance requires payment of "$100 for each Affected Person identified in the application." Id. An affected person is "any Person with a legal right or interest in the property, including but not limited to a landowner, a contract purchaser of record, a Person possessing the property under a lease, a record lienholder, and a record encumbrancer of the property." Id. at 6. There is also "an annual assessment fee in the amount of $116.92 per mile of Pipeline constructed, operated, and maintained in the County or an amount equal to the most current user fee assessed to the operators of Hazardous Liquid Pipelines by PHMSA [the Pipeline and Hazardous Materials Safety Administration], whichever is greater." Id. The Ordinance explains that the secondary fee is used for "emergency planning and hazardous mitigation costs, including expenses for law enforcement and emergency response." Id.

iv. Emergency Preparedness Requirements

As noted in the preceding section, an application for a conditional use permit by a pipeline company must include extensive information on emergency response and hazard mitigation. The application must include "documentation of compliance with PHMSA regulations" if applicable. [ECF No. 26-2 at 14]. It should identify how the "Company will work with the County's law enforcement, emergency management personnel, and first responders in the event of a spill, leak, rupture, or other emergency." Id. If there are no application PHMSA regulations, a pipeline company must provide a map and description of the proposed route, a description of the health risks, an estimate of the worst-case scenario for a carbon...