Kinley Corporation v. Iowa Utilities Board, Utilities Division, Department of Commerce, Office of Consumer Advocate
Docket: 92-2063, 92-2146
Court: Court of Appeals for the Eighth Circuit; July 19, 1993; Federal Appellate Court
The Eighth Circuit Court of Appeals upheld a District Court ruling that the Hazardous Liquid Pipeline Safety Act of 1979 (HLPSA) preempts Iowa Code chapter 479 regarding interstate hazardous liquid pipelines. The Iowa Utilities Board (IUB) and the Office of Consumer Advocate (OCA) appealed the ruling, contending that the district court incorrectly determined that the HLPSA preempts both the safety and non-safety provisions of Iowa Code chapter 479, which includes hearing, permit, inspection, environmental, and damage remedies provisions. Kinley Corporation, the appellee, operates an interstate hazardous liquid pipeline transporting aviation jet fuel from an Amoco Oil terminal in Iowa to Offutt Air Force Base in Nebraska. The pipeline, constructed in 1968, was not permitted under Iowa law until 1988, after IUB became aware of it in 1987. Following inspections and communications from the IUB, Kinley applied for a permit, which was subsequently denied, leading to civil penalties being assessed against the company. The court affirmed the district court's judgment, thus maintaining the preemption of the state law by federal law.
In May 1990, the Iowa Utilities Board (IUB) reopened the record regarding a pipeline issue, prompting Kinley to file a motion to dismiss, arguing that the Hazardous Liquid Pipeline Safety Act (HLPSA) preempted Iowa Code chapter 479, except for certain inspection fee provisions and IUB's role as a federal agent. The IUB denied this motion in September 1990. Subsequently, in December 1990, Kinley initiated federal court proceedings seeking a declaration that Iowa Code chapter 479 was preempted by the HLPSA concerning interstate hazardous liquid pipelines and sought an injunction against the IUB's enforcement of Chapter 479. The federal district court allowed the Office of Consumer Advocate (OCA) to intervene.
The case was presented to the district court on stipulated facts. The court ruled that Iowa Code chapter 479 was expressly preempted by the HLPSA and inconsistent with its regulatory framework, thus invalid under the Supremacy Clause of the U.S. Constitution. The court referenced a prior ruling (ANR Pipeline Co. v. Iowa State Commerce Comm'n) which had similarly preempted Iowa Code chapter 479 regarding interstate natural gas pipelines. Additionally, the court concluded that non-safety provisions of Chapter 479 were inseverable from its safety provisions and denied injunctive relief. IUB and OCA subsequently appealed.
During the appeal, the appellants acknowledged the preemption of safety provisions but contended that the non-safety provisions, aimed at protecting farmland and ensuring payment for damages, were not preempted. They argued that the ANR decision was not applicable due to differences between federal regulations of natural gas and hazardous liquid pipelines. The appeals court clarified that the Supremacy Clause invalidates state laws that conflict with federal law, emphasizing that congressional intent is central to preemption analysis. It outlined that federal law can preempt state law through express terms, comprehensive federal regulation, or when state law conflicts with federal law, making compliance impossible or obstructing federal objectives.
The HLPSA contains an express preemption provision stating that no state agency may implement safety standards for interstate pipeline facilities or the transportation of hazardous liquids related to such facilities, as outlined in 49 U.S.C. App. 2002(d). The court agrees with the district court that this case involves express preemption, affirming Congress's intent to restrict state regulation in the safety domain concerning interstate hazardous liquid pipelines. Consequently, any state laws, such as Chapter 479, that attempt to regulate this area are deemed invalid. The document references Cipollone v. Liggett Group, emphasizing that explicit preemption provisions within legislation eliminate the need to infer congressional intent regarding state authority. The legislative history of the HLPSA and its relationship with the Natural Gas Pipeline Safety Act (NGPSA) further reinforce this preemptive intent, as Congress established federal safety regulations for hazardous liquids by pipeline to mirror those set for natural gas. The court also highlights that a prior case, ANR, which dealt with the NGPSA's preemption of state laws, should guide the current analysis, as the preemption provisions in both the NGPSA and HLPSA are nearly identical. Thus, the preemption rationale from ANR is found to be persuasive in this context.
Appellants contend that while the Hazardous Liquid Pipeline Safety Act (HLPSA) preempts state authority over safety regulations for interstate hazardous liquid pipelines, Kinley was denied a state pipeline permit not due to safety concerns but because it failed to meet financial responsibility requirements under Iowa Code 479.26. However, the Iowa Utilities Board (IUB) letter dated September 21, 1987, contradicts this, emphasizing ongoing state interest in pipeline safety despite federal preemption. Furthermore, the enforcement action against Kinley appears to have followed federal Office of Pipeline Safety's inaction after IUB's inquiry, suggesting safety was indeed a consideration.
Additionally, Appellants argue that Chapter 479 serves as a valid gap-filling state regulation since certain pipelines are exempt from federal safety standards. However, this interpretation is rejected, as a federal decision to exempt certain pipelines implies that the area is intentionally left unregulated, thereby preempting state regulation. Congress has granted exclusive regulatory authority over interstate hazardous liquid pipelines to the Secretary of the Department of Transportation, preventing states from establishing or supplementing safety standards.
Lastly, Appellants assert that the district court incorrectly determined that the non-safety provisions of Chapter 479 are inseparable from the preempted safety provisions. They argue that the hearing, permit, inspection, environmental, and damage remedy provisions are distinct and not preempted. Nevertheless, this argument is also dismissed.
Severability of valid portions of a state statute found to be constitutionally deficient is governed by state law. The court reviews district court determinations of state law de novo. In the case referenced, the court agreed with the district court's conclusion based on the ANR decision, which established that the hearing, permit, and inspection provisions of Chapter 479, as they existed in 1987 and are similar to the current provisions, were preempted by the Natural Gas Pipeline Safety Act (NGPSA). This preemption occurred because the provisions attempted to allow state review and the imposition of safety conditions on interstate natural gas pipeline construction. ANR recognized Iowa's preference for severability but determined that the environmental and damage remedy provisions could not be separated from the preempted provisions, leading to their preemption as well. The court held that the current Chapter 479's provisions are similarly preempted by the Hazardous Liquid Pipeline Safety Act (HLPSA) concerning interstate hazardous liquid pipelines.
Regarding the Pipeline Safety Act of 1992, signed into law on October 24, 1992, it was noted that while the Act amended several federal statutes, it did not change the provisions related to interstate hazardous liquid pipelines in 49 U.S.C. App. 2002(d). The amendments added safety standards aimed at environmental protection but expanded federal regulation rather than restricted it, thus maintaining consistency with federal preemption.
The judgment of the district court is affirmed. The court recognizes that state regulation of interstate natural gas pipelines is expressly preempted by the Natural Gas Pipeline Safety Act, as established in ANR Pipeline Co. v. Iowa St. Commerce Comm'n. Four types of preemption are identified: express preemption from Congressional directives, implied preemption inferred from Congressional intent, conflict preemption arising from federal-state law conflicts, and field preemption indicating Congressional intent to remove an area from state authority. The case at hand specifically involves express preemption. Following the ANR decision, Iowa's state legislature amended Chapter 479 to exclude interstate natural gas pipelines and introduced Chapter 479A to regulate these pipelines concerning environmental and economic damages.
