Hawkeye Land Company v. Iowa Utilities Board ( 2014 )

IN THE SUPREME COURT OF IOWA
No. 13–0146
Filed May 23, 2014
HAWKEYE LAND COMPANY,
Appellant,
vs.
IOWA UTILITIES BOARD,
Appellee.
Appeal from the Iowa District Court for Linn County, Nancy A.
Baumgartner, Judge.
Property owner appeals district court judgment affirming decision
of Iowa Utilities Board allowing independent transmission company to
use pay-and-go procedure of Iowa Code section 476.27, the railroad-
crossing statute. REVERSED.
Jon M. McCright of Lynch Dallas, P.C., Cedar Rapids, and
Andrew C. Potter, Cedar Rapids, for appellant.
David J. Lynch, General Counsel, and Cecil I. Wright II, Assistant
General Counsel, Des Moines, for appellee Iowa Utilities Board.
Mark R. Schuling, John S. Long, and Ronald C. Polle, Des Moines,
for appellee Office of Consumer Advocate.
Theresa C. Davis and Nancy J. Penner of Shuttleworth & Ingersoll,
P.L.C., Cedar Rapids, for appellee ITC Midwest LLC.
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Dennis L. Puckett and Benjamin M. Clark of Sullivan & Ward,
P.C., West Des Moines; Robert P. Jared, Davenport; Julie A. Smith,
Johnston; and Danielle K. Dixon Smid, Des Moines, for appellees Iowa
Association of Electric Cooperatives, MidAmerican Energy Company,
Interstate Power and Light Company, and Iowa Association of Municipal
Utilities & Iowa Rural Water Association.
Mark Godwin, Des Moines, for appellee City of Des Moines and
Des Moines Metropolitan Wastewater Reclamation.
3
WATERMAN, Justice.
This appeal presents questions of first impression on the
interpretation and constitutionality of the railroad-crossing statute, Iowa
Code section 476.27 (2009). This statute was enacted to facilitate public
utility crossings over railroad tracks. It authorizes a “pay-and-go”
procedure with a legislatively predetermined $750 standard crossing fee
the utility pays to the owner of the railroad right-of-way. The Iowa
Utilities Board (IUB) allowed an independent transmission company, ITC
Midwest, to use this statute to run electrical power lines across a
railroad at three locations—over the objection of the owner of the
railroad-crossing easement. That owner, Hawkeye Land Company, does
not own or operate a railroad, but owns the right to sell easements
across active railroad tracks. An administrative law judge (ALJ) upheld
the use of the pay-and-go procedure and denied compensation beyond
the $750 per crossing. IUB, asserting interpretive authority over section
476.27, reached the same conclusions in its final decision, and the
district court affirmed on judicial review. We retained Hawkeye Land’s
appeal.
Hawkeye Land contends the crossing statute does not apply to it or
to ITC Midwest, because it is not a “railroad” and ITC Midwest is not a
“public utility” within the meaning of the statute. Hawkeye Land
alternatively argues $750 is not just compensation for crossing its
easement, and the pay-and-go procedure is unconstitutional under the
takings clause of article I, section 18 of the Iowa Constitution. Hawkeye
Land claims its similar easement sales show just compensation for each
crossing is $30,000, and it also seeks to recover attorney fees, costs, and
expenses denied by IUB.
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For the reasons explained below, we determine that IUB lacks
interpretive authority over the terms of the crossing statute. We hold
section 476.27 applies to Hawkeye Land but that ITC Midwest, as an
independent transmission company, is not a public utility allowed to use
the pay-and-go procedure. We therefore reverse the judgment of the
district court and decision of IUB. Because we resolve the appeal on the
statutory ground, we do not reach the constitutional issue or remaining
claims.
I. Background Facts and Proceedings.
A. The History and Purpose of the Crossing Statute. We begin
with a review of the events that led to the passage of Iowa Code section
476.27, to provide context for the issues we decide today. In 2000, the
Iowa Senate issued a concurrent resolution “relating to a study of the
issues involving railroad rights-of-way crossings by utilities.” S. Con.
Res. 119, 78th G.A. (Iowa 2000). Senate Concurrent Resolution 119
proposed that representatives from Iowa utilities—including electricity,
natural gas, telephone service, and rural water service—meet with
railroad representatives to consider legislative solutions that might
“resolve legal and practical problems and differences of opinion” between
the parties. Id. IUB was to facilitate the meetings. Id.
The problems referred to in the resolution related to the
requirements utilities had to fulfill in order to secure a railroad crossing
and the fees railroads charged utilities for crossings. The utilities were
dissatisfied with the complexity of the application process and the time it
took to obtain permission to cross railroad tracks. The utilities also
complained that the railroads charged excessive fees for crossings. The
utilities proposed a pay-and-go system under which utilities could notify
a railroad of a desired crossing, pay a one-time fee, and then move
5
forward with construction—without awaiting individual review and
approval by the railroads. The railroads sought to ensure that utility
crossings would be safe and would not create liability for the railroads.
The railroads also advocated for their right, as property owners, to set
their own fees for railroad crossings. Legislators had introduced and
considered bills in the house and senate relating to these issues, and the
resolution sought additional input from the interested parties. Id.
Hawkeye Land was actively involved in the resulting discussions.
Hawkeye Land owns the right to grant easements along more than two
thousand miles of Iowa railroad track, but does not own the railroad
track itself. It purchased this property right in 1985, during bankruptcy
proceedings for the Chicago, Rock Island and Pacific Railroad. The
bankruptcy trustee separated ownership of the physical railroad tracks
from the right to grant easements along and across the tracks. The
Union Pacific Railroad Company now owns the railroad tracks used by
its freight trains. Hawkeye Land has never owned or managed a railroad.
Hawkeye Land wrote a letter to IUB in August 2000 presenting its
position on railroad-crossing issues. Hawkeye Land noted that easement
fees were the company’s revenue source and commented: “Hawkeye
incurs costs in generating those easements and when one considers the
lack of regard for a recorded document and the exposure that Hawkeye
incurs because of this ignorance, overall the revenue does not match the
risk.” Hawkeye Land offered to meet with IUB and the other parties to
discuss crossing issues.
Both the railroads and the utilities acknowledged Hawkeye Land as
an interested party. The Iowa Utility Association pointed to Hawkeye
Land as a source of the problems they identified; namely, that Hawkeye
Land’s crossing application process took too long and it charged
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exorbitant fees. The railroads summarized the progress the railroads
and utilities had made in negotiations. Under the topic of “Absentee
Managers/Land Management Companies,” the railroads commented
“Hawkeye is a unique situation that the Railroads are powerless to
address, but it appears that Hawkeye is at the table and will participate
in resolving the issues.”
In a report to Iowa legislators on October 31, 2000, IUB
summarized the positions of the stakeholders who had provided input:
(1) the utilities, (2) the railroads, and (3) Hawkeye Land. IUB described
Hawkeye Land’s position as follows:
In 1985 Hawkeye purchased the right to grant utility
easements along the former Chicago, Rock Island and Pacific
Railroad corridor and, as such, became a third party to the
discussions. Hawkeye stated it is a party with a verified,
recorded interest in the property and that it incurs certain
costs associated with the easements. It was supportive of
meeting to begin resolution of the issues.
The parties met several more times in 2001, with the goal of
adopting a “master crossing agreement” to govern all of the interested
parties. The meetings were productive, with the parties reaching
agreement on most issues. Significantly, the railroads agreed to the
adoption of a standardized pay-and-go crossing procedure. The parties,
however, reached an impasse on the issues of insurance, indemnity, and
compensation for crossings. Consequently, the parties failed to adopt a
master agreement. IUB reported in January 2001, “It is our
understanding that the utilities may now work for legislation on crossing
issues.”
Indeed, a bill “providing for the crossing of railroad rights-of-way
by public utilities” was introduced that year and enacted into law.
S.F. 515, 79th G.A., Reg. Sess. (Iowa 2001); 2001 Iowa Acts ch. 138
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(codified at Iowa Code § 476.27). The legislation created the framework
for a pay-and-go process and empowered IUB to adopt rules prescribing
the terms and conditions for a crossing. Iowa Code § 476.27(2). The
administrative regulations governing crossing are found in Iowa
Administrative Code rule 199—42. Pursuant to section 476.27 and its
related regulations, a public utility can erect a crossing over a railroad
right-of-way by submitting a notification of intent to construct and
paying a one-time standard crossing fee of $750 for each crossing. See
Iowa Code § 476.27 (defining relevant terms and setting forth governing
rules); Iowa Admin. Code r. 199—42.3 (detailing notice procedures). A
railroad can petition IUB for additional compensation if “special
circumstances” exist. Iowa Code § 476.27(4). A party who disagrees
with IUB’s determination of damages may appeal to the district court. Id.
§ 476.27(5)(a) (noting the appeal is governed by the general eminent
domain procedures in Iowa Code sections 6B.18 and 6B.21 through .23).
ITC Midwest was not involved in the discussions that led to the
passage of section 476.27, nor were any other independent transmission
companies. The Federal Energy Regulatory Commission (FERC) had
authorized the creation of independent transmission companies in 1996,
but no independent transmission company was operating in Iowa in
2001. See generally New York v. FERC, 535 U.S. 1, 122 S. Ct. 1012, 152
L. Ed. 2d 47 (2002) (reviewing the evolution of federal energy regulation,
discussing the impact of FERC Order 888, and upholding federal
regulation of independent transmission companies). Historically, public
utility companies were vertically integrated and maintained their own
transmission assets. Id. at 5, 122 S. Ct. at 1016–17, 152 L. Ed. 2d at 55.
The 1996 FERC action allowed utility companies to unbundle their rates
with regard to wholesale generation, transmission, and ancillary services.
8
Id. at 11, 122 S. Ct. at 1019–20, 152 L. Ed. 2d at 58. The Iowa
legislature acknowledged the creation of independent transmission
companies in 2003 when it enacted Iowa Code section 390.8, entitled
“Equity investment in independent transmission company.” 2003 Iowa
Acts ch. 116, § 1 (codified at Iowa Code § 390.8). That section allows
“any city operating a city electric utility [to] enter into agreements with
and acquire equity interests in independent transmission companies.”
Id.
IUB recognized ITC Midwest as an independent transmission
company in 2007. That year, IUB gave ITC Midwest its approval to
purchase the electric transmission assets of Interstate Power and Light
Company (IPL). See Interstate Power & Light Co., Iowa Utils. Bd. Docket
No. SPU–07–11, at 84–85 (Sept. 20, 2007), available at
http://www.state.ia.us/government/com/util/docs/orders/2007/0920_
SPU0711.pdf. At that time, ITC Holdings, ITC Midwest’s corporate
parent, was “the only, publicly traded company engaged exclusively in
transmission in the United States.” Id. at 2. Independent transmission
companies are federally—not state—regulated. Id. at 58–59. Because
independent transmission companies are regulated by FERC, IUB’s
decision in 2007 to allow the sale of IPL’s transmission assets to ITC
Midwest deprived IUB of jurisdiction over those assets. Id. As IUB
explained then, “FERC will affirmatively exercise jurisdiction over ITC
Midwest’s transmission charges to IPL’s retail customers because those
transmission charges will no longer be part of a vertically integrated
utility’s bundled rate.” Id.
IUB acknowledged that it lacked jurisdiction over ITC Midwest
under Iowa Code chapter 476 because ITC Midwest is not a public utility,
but noted chapter 478 gives IUB jurisdiction over electric transmission
9
lines. Id. at 59; see also Iowa Code § 478.18(1) (“The utilities board shall
have power of supervision over the construction of a transmission line
and over its future operation and maintenance.”); id. § 478.12 (providing
that any person who owns, obtains, or operates a transmission line is
deemed “to have consented to such reasonable regulation as the utilities
board may, from time to time, prescribe”). One IUB member dissented,
citing concerns “that the Board will have reduced ability to directly
influence transmission issues because of the loss of rate regulation
authority.” Id. at 89. The dissenter also noted “this Board is perceived
as being more accessible than FERC.” The debate over IUB’s jurisdiction
over independent transmission companies in that administrative
proceeding foreshadows the fighting issue today: whether ITC Midwest is
a “public utility” as defined in the crossing statute. 1 Id.
1Twenty-four parties intervened in the 2007 action. Interstate Power & Light Co.,
Iowa Utils. Bd. Docket No. SPU–07–11, at 3. The majority were other energy
companies. Id. Most objected to the sale to ITC Midwest. Id. at 11–14. Several objected
that the sale would diminish IUB’s ability to protect the interests of Iowa consumers.
Id. Many predicted that the cost of transmitting electricity would increase, resulting in
higher prices for Iowa consumers. Id. As the Municipal Coalition—which represented
the Iowa Association of Municipal Utilities, Midwest Municipal Transmission Group,
Missouri River Energy Services, and Wisconsin Public Power, Inc.—explained,
[IUB] will have no choice but to pass FERC rates through to retail
ratepayers, even if [IUB] disagrees with the high returns allowed by the
FERC formula. . . . [A]ny protests to the rate would have to be at FERC,
where the burden is on those protesting the rate; in Iowa, the burden is
on the utility to prove the rate is just and reasonable.
Id. at 55.
IUB approved the sale because it concluded the “substantial” benefits of the sale
outweighed these costs. Id. at 81–82. IUB concluded that the sale would “most likely
. . . have a negative net present value to ratepayers. . . . [I]t is likely that the
transmission component of IPL’s retail rates will be slightly higher as a result of this
transaction, if approved.” Id. at 47. But, emphasizing the importance of transmission
investment, IUB concluded “ITC Midwest is better positioned than IPL to move forward
on new transmission projects, in part because ITC Midwest is a transmission-only
company and will not have to compete for investment with other business units, such
as generation and distribution.” Id. at 81–82. IUB predicted that these investments
would have positive impacts on prices for all electricity users. Id. at 82. IUB further
stated:
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B. The Dispute Between ITC Midwest and Hawkeye Land.
Against this backdrop, we now turn to the present dispute. In the spring
of 2009, ITC Midwest sought to erect three power line crossings that
would intersect railroad tracks owned and operated by Union Pacific in
Franklin County. Hawkeye Land owns the right to grant easements
along those railroad tracks, subject to Union Pacific’s approval. ITC
Midwest complied with the procedures set forth in Iowa Code section
476.27 and Iowa Administrative Code chapter 199—42. ITC Midwest
first obtained permission for the crossings from IUB. The company then
sent engineering drawings to Union Pacific, which approved the crossing
plans. After receiving this approval, ITC Midwest sent Hawkeye Land
three $750 statutory payments and notification of the planned crossing
construction. Hawkeye Land refused the tendered payments. ITC
Midwest, nevertheless, proceeded to construct the three crossings as
permitted by the pay-and-go procedure of section 476.27.
On August 7, 2009, Hawkeye Land filed a formal complaint with
IUB regarding these three crossings. Hawkeye Land’s complaint alleged:
(1) IUB did not have jurisdiction over Hawkeye Land because Hawkeye
Land is not a “railroad” or “railroad corporation” as defined in Iowa Code
section 476.27; (2) $750 was inadequate compensation for each of the
crossings ITC Midwest constructed and special circumstances existed
_________________________
One of the most significant benefits is that the transmission
system will be under the control of an independent operator. An
independent operator has no motive to discriminate in favor of or against
any transmission system user, because the independent transmission
operator is not a market participant. This should benefit small
producers, renewable energy, and other wholesale users of the
transmission system. The ratepayer and public benefits of this
transaction far outweigh the upfront costs to Iowa ratepayers.
Id. at 82. IUB’s analysis highlights the difference between independent transmission
companies and traditional public utilities that are vertically integrated with their own
transmission assets.
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justifying a higher fee; and (3) the statutorily prescribed one-time fee of
$750 “is an unlawful and an unjust and unreasonable taking and
therefore the public utility must use its condemnation rights and
procedures.” IUB assigned the complaint to an ALJ who conducted an
evidentiary hearing. Hawkeye Land introduced evidence of other
easement sales to support its claim that $30,000 was just compensation
for each crossing. The following parties intervened in the administrative
proceedings: The Iowa Association of Electric Cooperatives, the Iowa
Association of Municipal Utilities, IPL, MidAmerican Energy Company,
Black Hills Energy, NextEra Energy Resources, the Iowa Rural Water
Association, the City of Des Moines, the Des Moines Metropolitan
Wastewater Reclamation Authority, and the Consumer Advocate of the
Iowa Department of Justice.
On October 14, 2010, the ALJ issued a proposed decision that
rejected Hawkeye Land’s claims. The ALJ denied Hawkeye Land any
relief above the $750 per crossing fee because it concluded there was
“nothing unusual” about the crossings. The ALJ described the crossings:
Each of the three crossings in this case consists of
four wires running across the railroad right-of-way. There
are no poles in the right-of-way. The evidence shows that
each crossing involves a standard 161 kV transmission line.
At the most, the utility requires 10 feet on either side of each
line to accommodate sway, for a total maximum width of
each crossing where the lines exist of 20 feet.
The ALJ concluded the three crossings did not interfere with the
construction of longitudinal easements and, therefore, did not lessen the
value of Hawkeye Land’s property interest.
Hawkeye Land appealed the proposed decision to IUB. Hawkeye
Land contended: the ALJ erred (1) in finding the crossing statute applies
to Hawkeye Land’s property interest; (2) by declining to award Hawkeye
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Land more than $750 for each crossing; and (3) by declining to award
Hawkeye Land fees and litigation expenses. IUB broadened the scope of
the issues to include the question of whether ITC Midwest is a “public
utility” as defined by Iowa Code section 476.27, and the parties filed
supplemental briefing on this issue.
On September 20, 2011, after considering the positions of
Hawkeye Land, ITC Midwest, and the intervenors, IUB issued a final
order. IUB first concluded it has interpretive authority over Iowa Code
section 476.27. “In the exercise of [that] discretion,” IUB ruled ITC
Midwest is entitled to use the pay-and-go procedure of Iowa Code section
476.27. IUB acknowledged that ITC Midwest does not meet the
definition of “public utility” because it is an independent transmission
company. IUB noted ITC Midwest had, in fact, previously resisted being
classified as a public utility for purposes of state regulation. Yet, IUB
concluded the legislature intended section 476.27 to cover companies
that, like ITC Midwest, carry electricity “primarily, if not exclusively” for
public utilities. IUB next ruled Hawkeye Land is subject to section
476.27 because it is a “railroad corporation’s successor in interest,” and
it owns an “interest in real estate” that is occupied or managed by or on
behalf of a railroad corporation. IUB ruled $750 was just compensation
for each of the three Franklin County crossings because the crossings
were standard and no special circumstances existed. Finally, IUB
declined to award Hawkeye Land attorney fees and litigation expenses.
Hawkeye Land filed two appeals from IUB’s ruling. Section
476.27(5)(a) states an appeal regarding IUB’s damage determination may
be appealed “to the district court in the same manner as provided in
section 6B.18 and sections 6B.21 through 6B.23.” Iowa Code
§ 476.27(5)(a). In turn, Iowa Code section 476.27(5)(b) provides: “An
13
appeal of any determination of the board other than the issues of
damages for rights granted to a public utility shall be pursuant to
chapter 17A.” Accordingly, Hawkeye Land’s first appeal to the district
court challenged IUB’s refusal to award damages beyond the $750
crossing fees, pursuant to chapter 6B, the general condemnation statute.
This action was stayed by the district court. In a separate action,
Hawkeye Land appealed IUB’s other rulings to the district court
pursuant to chapter 17A and again challenged the $750 fee authorized
by section 476.27 as an unconstitutional taking. On December 31,
2011, the district court affirmed IUB’s rulings and rejected Hawkeye
Land’s constitutional argument. Hawkeye Land appealed, and we
retained the appeal. Hawkeye Land, ITC Midwest, IUB, the Consumer
Advocate, and seven intervenors filed appellate briefs on the merits. 2
II. Scope of Review.
The crossing statute provides that judicial review of IUB’s rulings
on all issues other than the amount of damages “shall be pursuant to
chapter 17A.” Id. § 476.27(5)(b). Iowa Code section 17A.19(10) governs
judicial review of an agency ruling. See Iowa Med. Soc’y v. Iowa Bd. of
Nursing, 831 N.W.2d 826, 838 (Iowa 2013). The district court reviews
the agency’s decision in an appellate capacity. Id. In turn, “ ‘[w]e review
the district court’s decision to determine whether it correctly applied the
law.’ ” Id. (quoting City of Sioux City v. GME, Ltd., 584 N.W.2d 322, 324
(Iowa 1998)). “We must apply the standards set forth in section
17A.19(10) and determine whether our application of those standards
2A joint brief was filed on behalf of the following intervenors: Iowa Association of
Electric Cooperatives, Iowa Association of Municipal Utilities, Iowa Rural Water
Association, MidAmerican Energy Company, and IPL. Two other intervenors, the City of
Des Moines and the Des Moines Metropolitan Wastewater Reclamation Authority, joined
the briefs of all the appellees.
14
produce[s] the same result as reached by the district court.” Auen v.
Alcoholic Beverages Div., 679 N.W.2d 586, 589 (Iowa 2004). “The burden
of demonstrating the . . . invalidity of agency action is on the party
asserting invalidity.” Iowa Code § 17A.19(8)(a).
A threshold question is the deference owed to IUB’s interpretation
of the crossing statute. If the legislature has clearly vested the agency
with authority to interpret the relevant statute, we give deference and
reverse only if the agency’s interpretation is “irrational, illogical, or wholly
unjustifiable.” Id. § 17A.19(10)(l); see, e.g., Iowa Med. Soc’y, 831 N.W.2d
at 838 (concluding “[t]he legislature has clearly vested the nursing board
with rulemaking and interpretive authority for Iowa Code chapter 152”).
If the agency lacks interpretive authority, “we review for erroneous
interpretations of law.” Iowa Dental Ass’n v. Iowa Ins. Div., 831 N.W.2d
138, 142–43 (Iowa 2013) (citing Iowa Code § 17A.19(10)(c)). In Renda v.
Iowa Civil Rights Commission, we noted, “The question of whether
interpretive discretion has clearly been vested in an agency is easily
resolved when the agency’s enabling statute explicitly addresses the
issue.” 784 N.W.2d 8, 11 (Iowa 2010). No provision in chapter 476,
however, expressly gives IUB interpretive authority over the crossing
statute.
Resolution of this appeal turns on the meaning of terms in section
476.27—specifically, “public utility” and “railroad corporation.” We must
therefore determine if the legislature clearly vested IUB with authority to
interpret these terms. See NextEra Energy Res. LLC v. Iowa Utils. Bd.,
815 N.W.2d 30, 36–37 (Iowa 2012). The focus of our inquiry is narrow—
we must decide only if IUB has been vested with the authority to define
the disputed terms in Iowa Code section 476.27. See, e.g., id. at 37
(“[W]e must determine whether the general assembly explicitly vested the
15
Board with the authority to interpret specific terms in chapter 476.”
(Emphasis added.)); Renda, 784 N.W.2d at 12 (“It is conceivable that the
legislature intends an agency to interpret certain phrases or provisions of
a statute, but not others.”). To conclude that IUB is clearly vested with
the authority to interpret the disputed terms, we
“must have a firm conviction from reviewing the precise
language of the statute, its context, the purpose of the
statute, and the practical considerations involved, that the
legislature actually intended (or would have intended had it
thought about the question) to delegate to the agency
interpretive power with the binding force of law over the
elaboration of the provision in question.”
Renda, 784 N.W.2d at 11 (quoting Arthur E. Bonfield, Amendments to
Iowa Administrative Procedure Act, Report on Selected Provisions to Iowa
State Bar Association and Iowa State Government 63 (1998)).
Our caselaw analyzing whether IUB has interpretive authority
illustrates that this issue is “not conducive to the development of bright-
line rules.” Id. at 12. In cases involving section 476.103, we have held
the legislature clearly vested IUB with interpretive authority. See
Evercom Sys., Inc. v. Iowa Utils. Bd., 805 N.W.2d 758, 762–63 (Iowa
2011); Office of Consumer Advocate v. Iowa Utils. Bd., 744 N.W.2d 640,
643 (Iowa 2008). We concluded in those cases that “[t]he legislature’s
requirement [in section 476.103(3)] that the Board ‘adopt rules
prohibiting an unauthorized change in telecommunication service’
evidences a clear legislative intent to vest in [IUB] the interpretation of
the unauthorized-change-in-service provisions in section 476.103.”
Office of Consumer Advocate, 744 N.W.2d at 643. By contrast, in NextEra
Energy, we concluded the legislature did not grant IUB interpretative
authority over section 476.53(4)(c)(2). 815 N.W.2d at 38. We recognized
16
that section 476.2(1) grants IUB “broad general powers to carry out the
purposes of chapter 476.” Id. at 37. But, we noted
simply because the general assembly granted the Board
broad general powers to carry out the purposes of chapter
476 and granted it rulemaking authority does not
necessarily indicate the legislature clearly vested authority in
the Board to interpret all of chapter 476.
Id. at 38. With no clear indication the legislature intended to vest IUB
with interpretive authority over section 476.53(4)(c)(2), we reviewed IUB’s
interpretation of that section for correction of errors at law. Id. These
cases highlight the importance of focusing on the specific statutory terms
interpreted by the agency.
IUB’s authority under section 476.27 makes this case more like
NextEra Energy, with IUB lacking interpretive authority over terms in the
crossing statute. First, section 476.27(1) contains definitions of “public
utility” and “railroad.” This is an obstacle to finding IUB has authority to
interpret these terms. See Sherwin-Williams Co. v. Iowa Dep’t of
Revenue, 789 N.W.2d 417, 423–24 (Iowa 2010) (“The insurmountable
obstacle to finding the department [of revenue] has authority to interpret
the word ‘manufacturer’ in this context is the fact that this word has
already been interpreted, i.e., explained, by the legislature through its
enactment of a statutory definition.”).
Second, the fact that section 476.27 delegates the state’s power of
eminent domain has constitutional implications and therefore cuts
against granting IUB broad interpretative authority over the crossing
statute. See Hardy v. Grant Twp. Trs., 357 N.W.2d 623, 625 (Iowa 1984)
(noting the “power of eminent domain is an attribute of sovereignty which
may be delegated only by express authorization of the legislature”).
Statutes that delegate the power of eminent domain “should be strictly
17
construed and restricted to their expression and intention.” Id. at 626.
Moreover, “we review constitutional issues in agency proceedings
de novo.” NextEra Energy, 815 N.W.2d at 44.
Third, though section 476.27(2) empowers IUB to adopt rules
“prescribing the terms and conditions for a crossing,” it requires IUB to
do so “in consultation with” the Iowa Department of Transportation
(IDOT). Iowa Code § 476.27(2). This indicates IUB does not have the
exclusive authority to administer the crossing statute, but rather, shares
decision making authority with IDOT. Cf. Iowa Med. Soc’y, 831 N.W.2d
at 841 (“If the legislature had intended to give another agency or
organization the power to determine recognition by the medical
profession, it would have said so in this provision.”). Furthermore, “we
have not concluded that a grant of mere rulemaking authority gives an
agency the authority to interpret all statutory language.” Renda, 784
N.W.2d at 13.
For these reasons, we hold IUB lacks interpretive authority as to
the crossing statute. Accordingly, we review IUB’s interpretation of the
disputed terms in section 476.27 for correction of errors at law.
III. Analysis.
Hawkeye Land raises several grounds for reversing the district
court and IUB. First, Hawkeye Land asserts the crossing statute does
not apply to it or to ITC Midwest. Second, Hawkeye Land alternatively
argues the pay-and-go procedure of Iowa Code section 476.27 violates
the takings clause of article I, section 18 of the Iowa Constitution.
Hawkeye Land further argues it is entitled to attorney fees, appraisal
costs, and direct expenses. Because we conclude the crossing statute
does not apply to ITC Midwest, we need not reach, and do not decide, the
constitutional question.
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An overview of the crossing statute facilitates our discussion of the
sequence of the issues to be adjudicated. As noted, Iowa Code section
476.27 creates a pay-and-go procedure by which public utilities can
exercise eminent domain powers to get electricity across railroad tracks.
Essentially, section 476.27 allows a public utility to circumvent the
eminent domain proceedings required by Iowa Code chapter 6B and
instead condemn the utility crossing by satisfying certain notification
requirements and paying a standard crossing fee of $750. Iowa Code
§ 476.27(2)(b); Iowa Admin. Code r. 199—42.3(1) (requiring public utility
to “submit to the railroad a notification of intent to construct, along with
a specification exhibit that shows the location of the crossing and the
railroad’s property, tracks, and wires that the public utility’s facilities will
cross”). A railroad or its successor in interest may petition IUB for
additional compensation if special circumstances exist and can appeal
IUB’s determination of damages to the district court. Id. § 476.27(4),
(5)(a).
These procedures implicate article I, section 18 of the Iowa
Constitution, which provides in pertinent part:
Private property shall not be taken for public use
without just compensation first being made, or secured to be
made to the owner thereof, as soon as the damages shall be
assessed by a jury, who shall not take into consideration any
advantages that may result to said owner on account of the
improvement for which it is taken.
Iowa Const. art. I, § 18. 3 The power of eminent domain is a creature of
statute, constitutionally limited by article I, section 18 for the protection
of private property rights:
3The
Federal Takings Clause provides: “nor shall private property be taken for
public use, without just compensation.” U.S. Const. amend. V.
19
“[A] party seeking to take land by eminent domain must first
satisfy the court that it has been authorized by the
legislature to exercise the power, that the statute purporting
to grant such authority is constitutional, that the conditions
exist under which it was provided that the authority might
be exercised, and that the condemning party has complied
with the requirements of the statute.”
State v. Johann, 207 N.W.2d 21, 23–24 (Iowa 1973) (quoting 1 Julius L.
Sackman, Nichols’ The Law of Eminent Domain § 4.101(2) (rev. 3d ed.
1964) [hereinafter Nichols’]). Hawkeye Land argues the pay-and-go
procedure in the crossing statute is unconstitutional because (1) no jury
or neutral fact finder determines the amount of just compensation; and
(2) the property right is taken first by the condemner for a token $750
payment, without security, and the burden shifts to the property owner
to seek additional compensation after the taking has occurred.
We first consider Hawkeye Land’s arguments that the crossing
statute does not apply to it or ITC Midwest. Whether the statute applies
turns on the definitions of several terms in section 476.27. If this case
may be resolved on statutory grounds, we need not reach Hawkeye
Land’s constitutional argument. See State v. Seering, 701 N.W.2d 655,
663 (Iowa 2005) (recognizing our “duty to avoid constitutional questions
not necessary to the resolution of an appeal”); State v. Button, 622
N.W.2d 480, 485 (Iowa 2001) (“Ordinarily we will not pass upon
constitutional arguments if there are other grounds on which to resolve
the case.”).
Iowa Code section 476.27 allows public utilities to use its pay-and-
go procedure to cross railroad right-of-ways. Hawkeye Land argues it is
not a “railroad” or “railroad corporation,” as defined by section
476.27(1)(f), and ITC Midwest is not a “public utility,” as defined by
section 476.27(1)(e). We will consider each of these statutory arguments
in turn. See N. Natural Gas Co. v. Iowa Utils. Bd., 679 N.W.2d 629, 633
20
(Iowa 2004) (“The question of jurisdiction by the Utilities Board over this
controversy is one of statutory interpretation.”).
In interpreting the terms in section 476.27, our goal is to ascertain
the legislature’s intent. See NextEra Energy, 815 N.W.2d at 39.
We are guided in that determination by well-established
principles. First, legislative intent is expressed by what the
legislature has said, not what it could or might have said.
When a statute’s language is clear, we look no further for
meaning than its express terms. Intent may be expressed by
the omission, as well as the inclusion, of statutory terms.
Put another way, the express mention of one thing implies
the exclusion of other things not specifically mentioned.
State v. Beach, 630 N.W.2d 598, 600 (Iowa 2001) (citations omitted). “We
‘may not extend, enlarge or otherwise change the meaning of a statute’
under the guise of construction.” NextEra Energy, 815 N.W.2d at 39
(quoting Auen, 679 N.W.2d at 590).
Furthermore, we are interpreting a statute that delegates the
power of eminent domain, and such statutes “should be strictly
construed.” Hardy, 357 N.W.2d at 626; see also Johann, 207 N.W.2d at
24 (“We have consistently maintained, however, that statutes providing
for the exercise of eminent domain must be strictly complied with and
restricted to their expression and intent.”).
A. Is Hawkeye Land a “Railroad” or “Railroad Corporation”
Under Iowa Code Section 476.27? Hawkeye Land argues it is not
subject to section 476.27 because it does not own or operate a railroad
and is not a “successor in interest” to a “railroad corporation.” See Iowa
Code § 476.27(1)(f). “[O]ur first task is to look to the language of the
statute to determine the legislative intent.” State v. DeCamp, 622 N.W.2d
290, 294 (Iowa 2001). Section 476.27(1)(f) provides: “ ‘Railroad’ or
‘railroad corporation’ . . . is the owner, operator, occupant, manager, or
agent of a railroad right-of-way or the railroad corporation’s successor in
21
interest.” Iowa Code § 476.27(1)(f) (second emphasis added). Section
476.27(1)(g) defines a “ ‘Railroad right-of-way’ ” as “one or more of the
following:”
(1) A right-of-way or other interest in real estate that is
owned or operated by a railroad corporation, the trustees of
a railroad corporation, or the successor in interest of a
railroad corporation.
(2) A right-of-way or other interest in real estate that is
occupied or managed by or on behalf of a railroad
corporation, the trustees of a railroad corporation, or the
successor in interest of a railroad corporation, including an
abandoned railroad right-of-way that has not otherwise
reverted pursuant to chapter 327G.
(3) Another interest in a former railroad right-of-way
that has been acquired or is operated by a land management
company or similar entity.
Id. § 476.27(1)(g) (emphasis added).
Hawkeye Land’s property interest does not fit neatly within the
plain language of section 476.27(1)(g)(3) because the railroad right-of-
way at issue in this case is active, not a “former railroad right-of-way.”
Id. (emphasis added). Union Pacific, a railroad corporation, currently
owns and operates the train tracks. But, we conclude the property right
Hawkeye Land owns—the right to grant easements along or across these
railroad tracks—is an “other interest in real estate” within the meaning of
sections 476.27(1)(g)(1) and 476.27(1)(g)(2).
We next address whether Hawkeye Land is “the successor in
interest of a railroad corporation” as required by sections 476.27(1)(g)(1)
and 476.27(1)(g)(2). See id. The crossing statute does not contain a
definition of “successor in interest.” See id. “There is, and can be, no
single definition of ‘successor’ which is applicable in every legal context.”
Howard Johnson Co. v. Detroit Local Joint Exec. Bd., 417 U.S. 249, 264
n.9, 94 S. Ct. 2236, 2243 n.9, 41 L. Ed. 2d 46, 56 n.9 (1974). A party
22
“may be a successor for some purposes and not for others.” Id. The
question of whether a party is a successor in interest must be
determined in light of the interests of the parties involved and the policy
behind the applicable law. See id. at 256, 94 S. Ct. at 2240, 41 L. Ed. 2d
at 53 (“Particularly in light of the difficulty of the successorship question,
the myriad factual circumstances and legal contexts in which it can
arise, and the absence of congressional guidance as to its resolution,
emphasis on the facts of each case as it arises is especially
appropriate.”); see also, e.g., Leib v. Ga.-Pac. Corp., 925 F.2d 240, 247
(8th Cir. 1991) (holding “the district court erred in focusing exclusively
on whether there was continuity of ownership or control in determining
whether Georgia–Pacific was a successor in interest under the veterans’
reemployment rights statute”). The question is successor to what
interest? Here, it is the easement rights to cross the railroad tracks.
Hawkeye Land argues the term “successor in interest” has a
specific, limited meaning. Hawkeye Land cites the definition we quoted
in Grundmeyer v. Weyerhaeuser Co., 649 N.W.2d 744, 751 (Iowa 2002).
In that case, we stated:
A successor in interest has been defined as
“[o]ne who follows another in ownership or control of
property. In order to be a ‘successor in interest,’ a party
must continue to retain the same rights as [the] original
owner without [a] change in ownership and there must be [a]
change in form only and not in substance. . . . In [the] case
of corporations, the term ordinarily indicates statutory
succession as, for instance, when [a] corporation changes its
name but retains the same property.”
Grundmeyer, 649 N.W.2d at 751 (quoting Black’s Law Dictionary 1431–
32 (6th ed. 1990)). We applied that definition in Grundmeyer to
determine if the purchaser of a manufacturing plant was liable for the
debts and liabilities of the transferor. Id.
23
Hawkeye Land argues that it does not satisfy the Grundmeyer
definition because it does not have the same rights as the original
railroad owner, the Chicago, Rock Island and Pacific Railroad. Hawkeye
Land asserts it “is a mere transferee of substantially different rights.”
Hawkeye Land claims “a railroad never owned Hawkeye Land’s property
because the [bankruptcy] trustee created” the easement rights Hawkeye
now owns. Hawkeye Land further argues it is not a successor to a
railroad corporation because it did not purchase its property rights
directly from the Chicago, Rock Island and Pacific Railroad. When that
railroad went through bankruptcy, the bankruptcy trustee separated the
easement rights from the fee and transferred those easement rights to
Chicago Pacific Corporation. It was Chicago Pacific Corporation that in
turn deeded the easement rights to Hawkeye Land. Hawkeye Land
argues it is therefore a remote transferee, not a successor in interest.
Hawkeye Land claims the legislature knew Hawkeye Land was “an
independent property owner,” and if the legislature had intended to cover
Hawkeye Land, it would have included “mere transferees” in the
definition of “railroad corporation.” In support of this argument,
Hawkeye Land points to Iowa Code section 327G.62, which governs
disagreements between “a railroad corporation, its grantee, or its
successor in interest” and a person with property on a railroad right-of-
way. Hawkeye Land asserts this section demonstrates the legislature
distinguishes between a successor in interest and a grantee. Hawkeye
Land believes it is akin to a railroad grantee, which is not covered by
section 476.27.
We conclude the definition of successor in Grundmeyer is not
controlling. Grundmeyer was concerned with rights and liabilities of a
corporate successor operating a manufacturing plant. 649 N.W.2d at
24
751. Here, the relevant statute concerns a specific property right: the
right to grant easements over railroad tracks. That property right had
been owned by a railroad before Hawkeye Land obtained the right
through the railroad’s bankruptcy trustee’s transferee. In the context of
the crossing statute, it is clear that “successor in interest” in section
476.27(1)(g) is intended to address the concept of successorship in terms
of ownership of that property right—the right to cross railroad tracks—
and is not limited to ownership of a railroad. Accordingly, we hold that
Hawkeye Land, as owner of the right to grant easements across railroad
tracks—a property right previously held by a railroad—is a successor in
interest under section 476.27(1)(g). It is immaterial that Hawkeye
obtained the easement rights from an entity created by the railroad’s
bankruptcy trustee rather than directly from a railroad.
We are not persuaded by Hawkeye Land’s arguments to the
contrary. If the right to grant easements had never been separated from
ownership of the remaining fee, Union Pacific would be required to
comply with section 476.27 as the railroad owning the tracks.
Separating the right to grant easements from the bundle of property
rights does not exempt the easement from section 476.27. We also reject
the notion that the owner must obtain its property rights directly from a
railroad in order to be a successor in interest to a railroad corporation.
Under Hawkeye Land’s interpretation of section 476.27, a railroad could
avoid the pay-and-go procedure by using a straw man to transfer
ownership of a crossing easement to a third party. We will not open such
a loophole. Rather, we are to “ ‘seek a reasonable interpretation which
will best effectuate the purpose of the statute.’ ” State v. Walker, 804
N.W.2d 284, 290 (Iowa 2011) (quoting State v. Johnson, 528 N.W.2d 638,
640 (Iowa 1995)).
25
The legislative history of section 476.27 reinforces our conclusion
that the legislature intended that statute to cover Hawkeye Land.
Hawkeye Land participated in the meetings and discussions leading up
to the passage of section 476.27. The legislature was aware of Hawkeye
Land’s existence and its interest in the railroad crossings, which explains
why the legislature did not simply limit the ambit of section 476.27 to
railroads. The legislature knew Hawkeye Land had purchased the right
to grant easements indirectly from the Chicago, Rock Island and Pacific
Railroad. By defining “railroad right-of-way” broadly to include
successors in interest to railroad corporations, the legislature ensured
the procedures of section 476.27 could not be avoided by conveying
crossing easements to separate entities.
The disputed crossings thus involve a “railroad right-of-way” as
defined by section 476.27(1)(g)(1) because Hawkeye Land is a “successor
in interest to a railroad corporation” and owns an “other interest in real
estate.” Iowa Code § 476.27(1)(g)(1). The definition of “railroad right-of-
way” in section 476.27(1)(g)(2) is also satisfied because the disputed
crossings are an “other interest in real estate” that is managed on behalf
of a “successor in interest to a railroad corporation.” Id. § 476.27(1)(g)(2).
Accordingly, we hold Hawkeye Land’s easement-crossing rights are
subject to section 476.27.
B. Is ITC Midwest a “Public Utility” Under Iowa Code Section
476.27? We now turn to Hawkeye Land’s second argument that the
crossing statute is inapplicable. Hawkeye Land asserts ITC Midwest has
not been authorized by the legislature to exercise the power of eminent
domain under section 476.27 because ITC Midwest is not a “public
utility” as defined by section 476.27(1)(e). See Johann, 207 N.W.2d at
23–24 (stating “a party seeking to take land by eminent domain must
26
first satisfy the court that it has been authorized by the legislature to
exercise the power”).
Several subsections of the crossing statute use the term “public
utility.” A “crossing” is defined as “the construction, operation, repair, or
maintenance of a facility over, under, or across a railroad right-of-way by
a public utility.” Id. § 476.27(1)(b) (emphasis added). The operative
language for the pay-and-go provision at issue is found in Iowa Code
section 476.27(2)(b), which provides: “a public utility that locates its
facilities within the railroad right-of-way for a crossing . . . shall pay the
railroad a one-time standard crossing fee of seven hundred fifty dollars
for each crossing.” (Emphasis added.) This allows a public utility to
effectively condemn easement rights across a railroad for the $750
statutory fee. Iowa Code section 476.27(7), entitled “Conflicting
provisions,” further states:
Notwithstanding any provision of the Code to the contrary,
this section shall apply in all crossings of railroad rights-of-
way involving a public utility as defined in this section, and
shall govern in the event of any conflict with any other
provision of law.
(Emphasis added.) Reading section 476.27 as a whole, it is clear that
only a public utility, as defined in this statute, may use the pay-and-go
procedure.
We must determine whether an independent transmission
company such as ITC Midwest is a public utility within the meaning of
the crossing statute. As noted, we give no deference to IUB’s
interpretation of that term. Iowa Code section 476.27(1)(e) sets forth this
definition:
“Public utility” means a public utility as defined in section
476.1, except that, for purposes of this section, “public
utility” also includes all mutual telephone companies,
municipally owned facilities, unincorporated villages,
27
waterworks, municipally owned waterworks, joint water
utilities, rural water districts incorporated under chapter
357A or 504, cooperative water associations, franchise cable
television operators, and persons furnishing electricity to five
or fewer persons.
This expanded definition of “public utility” does not mention
“independent transmission companies.” 4 Iowa Code section 476.1,
which is included by reference in the crossing statute’s definition, defines
“public utility” as:
[A]ny person, partnership, business association, or
corporation, domestic or foreign, owning or operating any
facilities for:
1. Furnishing gas by piped distribution system or
electricity to the public for compensation.
Id. § 476.1. ITC Midwest does not furnish electricity directly to the
public, but rather, delivers it to electrical utilities who in turn furnish the
electricity to end users such as homes and other buildings.
ITC Midwest concedes it is not a public utility as defined in section
476.1. When IUB gave ITC Midwest approval to purchase the electric
transmission assets of IPL in 2007, IUB recognized:
If the reorganization is allowed to go forward, ITC Midwest
will not fit within the definition of public utility in Iowa Code
chapter 476 because it will not furnish electricity to the
public for compensation. Instead, it will furnish
transmission service to IPL and others.
Interstate Power & Light Co., Iowa Utils. Bd. Docket No. SPU–07–11, at
17. 5 We agree with that determination by IUB. Under the plain meaning
4No party contends ITC Midwest is a “person[] furnishing electricity to five or
fewer persons” within the meaning of section 476.27(1)(e).
5IUB recognized that independent transmission companies are outside the
definition of public utility and apparently sought to remedy this by passing Iowa
Administrative Code rule 199—42.11. That rule states in relevant part:
The public utility may assign or otherwise transfer any rights to cross
railroad right-of-way to any financially responsible entity controlled by,
controlling, or under common control with the public utility or to any
entity into or with which the public utility is merged or consolidated or
28
of section 476.1, ITC Midwest is not a public utility because it does not
furnish electricity to the public.
Nor do we conclude independent transmission companies such as
ITC Midwest fall within the broader definition of “public utility” in section
476.27(1)(e). Another rule of statutory construction applies here: “[T]he
express mention of one thing implies the exclusion of other things not
specifically mentioned.” Beach, 630 N.W.2d at 600. The legislature
included a list of entities that are considered public utilities for the
purpose of section 476.27. 6 Notably, the legislature did not state a
public utility “includes but is not limited to” the entities explicitly listed in
section 476.27(1)(e). Yet, in a preceding section, “direct expenses” are
_________________________
which acquires ownership or control of all or substantially all of the
transmission assets of the public utility.
In its September 30, 2011 ruling, IUB explained the adoption of this regulation:
[IUB] understands that independent transmission companies,
such as ITC Midwest, were not operating in Iowa at the time the crossing
statute was enacted. However, [IUB] recognized the possibility of
independent transmission companies operating in Iowa at the time it
promulgated rules concerning the crossings. To address this
circumstance, [IUB] adopted rules that allow the transfer of a public
utility’s right to cross railroad right-of-way to any financially responsible
entity that acquires ownership or control of all or substantially all of the
transmission assets of a public utility.
IUB may not amend or expand the scope of the crossing statute by rulemaking that
adds a new form of entity to the definition of public utility. See Meredith Outdoor
Adver., Inc. v. Iowa Dep’t of Transp., 648 N.W.2d 109, 117 (Iowa 2002) (noting a “rule
must not exceed or limit the scope of the authority granted by the enabling legislation”);
Smith-Porter v. Iowa Dep’t of Human Servs., 590 N.W.2d 541, 545 (Iowa 1999) (“An
agency cannot by rule, however, expand or limit authority granted by statute.”).
6Hawkeye recognized in 2001 the need for the legislature to specifically define
“public utility.” In its letter to IUB in response to Resolution 119, Hawkeye wrote:
What is the definition of “utility” especially public utility, is it
Internet cabling, cable television? Since many companies are
consolidating their lines to handle Internet, cable and telephone
capabilities at once, it would seem that the term of “utility” is being
broadened, and only for the benefit of the company installing it.
The list in section 476.27(1)(e) appears to be the legislature’s attempt to respond to this
concern.
29
defined with a list of examples introduced with the phrase “includes, but
is not limited to, any or all of the following.” Iowa Code § 476.27(1)(c)
(emphasis added). The use of such a phrase in one definition but not
the other indicates the legislature was selective in choosing which list is
a closed set. See Oyens Feed & Supply, Inc. v. Primebank, 808 N.W.2d
186, 193–94 (Iowa 2011) (concluding the fact that a phrase was
“selectively incorporated” in certain provisions showed the legislature’s
omission of that phrase in related provision was intentional). We
conclude the legislature, by omitting the phrase “but not limited to” in
section 476.27(1)(e), intended to limit the entities considered public
utilities to those expressly mentioned. The omission of independent
transmission companies from the list in section 476.27(1)(e) shows the
legislature did not intend to allow such an entity to use the procedure of
section 476.27.
Nevertheless, the Consumer Advocate argues ITC Midwest meets
the definition of public utility in section 476.1. The Consumer Advocate
focuses on the word “furnish” in section 476.1(1). Iowa Code § 476.1(1)
(stating a public utility is one who “[f]urnish[es] gas by piped distribution
system or electricity to the public for compensation”). The Consumer
Advocate defines “furnish” to mean “to provide or supply with what is
needed, useful, or desirable.” It argues the legislature consciously chose
“furnish”—what it argues is a broad word—instead of using more specific
verbs that refer to individual functions utility companies commonly
perform, like generate, transmit, or distribute.
This argument focuses on the wrong wording. It is not the word
“furnish” in section 476.1(1) that controls this issue, it is the phrase “to
the public.” ITC Midwest does not furnish electricity to the public, it
furnishes electricity to public utilities, which in turn furnish that
30
electricity to the public. In order to side with ITC Midwest, we would
have to read the word “indirectly” into the definition of public utility: A
public utility furnishes electricity indirectly to the public. We decline to
do so. A plain meaning of “to the public” requires that there be a direct
transaction between the public utility and the public. See N. Natural Gas
Co., 679 N.W.2d at 634 (“Both the [National Gas Policy Act of 1978] and
cases interpreting it recognize that states are free to regulate the natural
gas industry by state utility commissions or boards in retail sales to
ultimate customers.” (Emphasis added.)); see also Iowa State Commerce
Comm’n v. N. Natural Gas Co., 161 N.W.2d 111, 115 (Iowa 1968)
(determining “to the public” means “sales to sufficient of the public to
clothe the operation with a public interest” (emphasis added)).
The Consumer Advocate disagrees, asserting the Northern Natural
Gas definition inappropriately limits the plain meaning of section
476.1(1) to those companies that furnish electricity directly to the public.
The Consumer Advocate argues, “Without any specification as to whether
the furnishing is required to be direct or indirect, the intent to cover both
possibilities is apparent.” The Consumer Advocate cites Comes v.
Microsoft Corp., 646 N.W.2d 440, 445 (Iowa 2002), in which we held the
Iowa Competition Act does not “restrict the class of persons who may
bring suit” to only direct purchasers when “[n]othing in the statute says
in order to seek redress for antitrust violations a purchaser must be
directly injured.”
Comes is distinguishable. First, section 476.27 delegates the
State’s power of eminent domain and must be strictly construed. See
Hardy, 357 N.W.2d at 626. By contrast, the Iowa Competition Act at
issue in Comes is remedial and is therefore construed broadly to effect its
purpose. Comes, 646 N.W.2d at 446. Moreover, the competition statute
31
defined a class of plaintiffs based on a result; namely, injury. Id. at 445.
That statute, Iowa Code section 553.12, creates a cause of action for “a
person who is injured or threatened with injury by conduct prohibited
under this chapter.” We stated:
The legislature did not specifically limit standing to direct
purchasers, but instead it simply authorized “[a] person who
is injured” to sue. . . . Given the clear, broad language of the
state antitrust law, we conclude the Iowa Competition Law
creates a cause of action for all consumers, regardless of
one’s technical status as a direct or indirect purchaser.
Comes, 646 N.W.2d at 445 (citations omitted).
The operative language of section 476.1(1) is narrower. Section
476.1(1) defines a business as a public utility based upon that business’s
relationship to the public. We will not expand the definition of public
utility by allowing an indirect relationship with the public to suffice. See
City of Des Moines v. City of W. Des Moines, 239 Iowa 1, 7, 30 N.W.2d
500, 504 (1948) (“The authorities quite generally refuse to attempt an all-
inclusive definition of the term ‘public utility.’ ”).
ITC Midwest concedes it is not a public utility under section
476.1(1), but nevertheless argues it is a public utility as more broadly
defined in section 476.27. IUB, ITC Midwest, and the intervenors note
that the definitions used in section 476.27 apply “unless the context
otherwise requires.” Iowa Code § 476.27(1). They argue this case
presents a context that requires us—in light of the purpose of the
crossing statute—to read the definition of public utility expansively.
They next point to section 476.27(7), which the joint utility intervenors
describe as a “catch-all” provision. That section provides:
Conflicting provisions. Notwithstanding any provision of the
Code to the contrary, this section shall apply in all crossings
of railroad rights-of-way involving a public utility as defined
32
in this section, and shall govern in the event of any conflict
with any other provision of law.
Id. § 476.27(7) (second emphasis added). ITC Midwest and the
intervenors contend the Franklin County crossings fall within the ambit
of section 476.27 because ITC Midwest carries electricity for public
utilities and the crossings thus involve public utilities. The Consumer
Advocate states:
The fact that the transmission system is now separated from
IPL legally does not mean it does not continue to provide
services that are vital to the public utility function of the
formerly integrated system. Each of the separate parts
performs the same service in what is functionally the same
system.
We disagree that either the context or catchall provisions support
expanding section 476.27 to allow use of the pay-and-go procedure by an
entity other than a public utility as defined in that statute. The context
of this case does not justify judicially modifying an unambiguous
statutory definition, and we do not believe the legislature intended
section 476.27(7), a conflict provision, to supersede the operative
statutory language in section 476.27(2)(b) or the definition of “public
utility” in 476.27(1)(e). See Oyens, 808 N.W.2d at 194 (“To the extent
there is a conflict or ambiguity between specific and general statutes, the
provisions of specific statutes control.” (Internal quotation marks
omitted.)); see also Iowa Code § 4.7. Section 476.27(2)(b) allows a public
utility—but no other entity—to cross railroad tracks using the pay-and-
go procedure, and section 476.27(1)(e) defines public utility as a
company that furnishes electricity to the public and adds specified
additional entities with crossing rights, but not an independent
transmission company. Section 476.27(7) governs conflicts between
33
“this section”—section 476.27—and “any other provision of law.” 7 Iowa
Code § 476.27(7). We will not interpret it to create conflicts within
section 476.27.
Finally, IUB, ITC Midwest, and the intervenors argue the policy
behind section 476.27 requires the inclusion of independent
transmission companies. Quoting section 476.27(2), they assert the
purpose of the crossing statute is to promote “public convenience and
necessity and reasonable service to the public.” Id. § 476.27(2). They
argue ITC Midwest must be able to use the procedures of section 476.27
in order to achieve this purpose. The joint utility intervenors explain the
importance of ITC Midwest’s service:
In general, before the public consumes electricity, the
electricity must be generated, transmitted, and then
distributed to the public. An entity may perform one, two or
all three of the functions. ITC performs one: transmission.
It is the conduit by which electric companies connect the
generation of electricity with the distribution of the electricity
to businesses and individuals.
Indeed, IUB found that ITC Midwest carries electricity “primarily, if not
exclusively” for public utilities. IUB, ITC Midwest, and the intervenors
argue that preventing ITC Midwest from using the procedures of section
476.27 will impede the delivery of electricity to the public.
IUB, ITC Midwest, and the intervenors suggest that section
476.27’s omission of independent transmission companies was a
legislative oversight. They argue the legislature did not explicitly include
independent transmission companies within the definition of public
utility in section 476.27(1)(e) simply because independent transmission
companies did not exist in Iowa at the time the legislature enacted Iowa
7For example, the conflict provision in section 476.27(7) would ensure that the
expanded definition of “public utility” in section 476.27(1)(e) would apply for railroad
crossing issues, not the more limited definition in section 476.1.
34
Code section 476.27. IUB concludes the “[l]egislature intended, or would
have intended had it thought about the question, to include the electric
transmission lines of independent transmission companies, such as ITC
Midwest, within the provisions of this statute.” IUB, ITC Midwest, and
the intervenors argue we should judicially correct this oversight by
reading independent transmission companies into the statute because
such a reading would further the purpose of the statute.
We decline to do so. See Auen, 679 N.W.2d at 590 (“We determine
legislative intent from the words chosen by the legislature, not what it
should or might have said.”). There is reason to believe the omission of
independent transmission companies from section 476.27(1)(e) was no
oversight. Though no independent transmission companies operated in
Iowa in 2001 when the legislature enacted section 476.27, FERC had
authorized the creation of such companies five years earlier. Moreover,
the legislature separately addressed independent transmission
companies in 2003. See 2003 Iowa Acts ch. 116, § 1 (enacting law
entitled, “Equity investment in independent transmission company,”
which allows “any city operating a city electric utility . . . [to] enter into
agreements with and acquire equity interests in independent
transmission companies”). Yet, the legislature has never amended the
definition of public utility in section 476.27(1)(e) to add independent
transmission companies. If the omission of independent transmission
companies from section 476.27 is nothing more than a legislative
oversight, we trust the legislature will correct it.
We disagree with IUB’s assertion that “[t]here is no rational basis
why the sale of transmission lines should affect their status when they
continue to be used for the exact same purpose.” Transmission of high
voltage electricity is a heavily regulated area of law. We find it significant
35
that independent transmission companies are federally—not state—
regulated. IUB acknowledges that its decision in 2007 to allow the sale
of IPL’s transmission assets to ITC Midwest deprived IUB of jurisdiction
over those assets. The legislature is entitled to distinguish between
public utilities and independent transmission companies.
We conclude the policy arguments by appellees are trumped by the
plain language of the statute. See Iowa Code § 476.27(2)(b) (allowing a
public utility, but no other entity, to cross railroad using pay-and-go
procedure); see also Horsman v. Wahl, 551 N.W.2d 619, 620–21 (Iowa
1996) (“If the statutory language is plain and the meaning is clear, we do
not search for the legislative intent beyond the express terms of the
statute.”). “Policy arguments to amend the statute should be directed to
the legislature.” In re Estate of Whalen, 827 N.W.2d 184, 194 (Iowa
2013). We reiterate that statutes delegating the power of eminent
domain are strictly construed. Hardy, 357 N.W.2d at 626. IUB lacks the
constitutional authority to extend eminent domain powers to new forms
of entities not mentioned by the legislature in section 476.27(1)(e). We
cannot allow IUB, in the guise of interpretation, to extend the crossing
statute’s eminent-domain powers to independent transmission
companies. To do so would be an unconstitutional delegation of power.
“[I]t is ‘our mandate to construe statutes in a fashion to avoid a
constitutional infirmity where possible.’ ” State v. Thompson, 836 N.W.2d
470, 484 (Iowa 2013) (quoting In re Young, 780 N.W.2d 726, 729 (Iowa
2010)). Indeed, “[t]he doctrine of constitutional avoidance suggests the
proper course in the construction of a statute may be to steer clear of
‘constitutional shoals’ when possible.” State v. Iowa Dist. Ct., 843
N.W.2d 76, 85 (Iowa 2014). The constitutional-avoidance doctrine
36
provides another important reason to reject appellees’ interpretation of
the crossing statute.
We hold ITC Midwest is not a public utility within the meaning of
the crossing statute. Accordingly, ITC Midwest cannot “ ‘satisfy the court
that it has been authorized by the legislature to exercise the power’ ” of
eminent domain under section 476.27. See Johann, 207 N.W.2d at 24
(quoting 1 Nichols § 4.101(2)). The proceedings before IUB “involved a
substantial departure from statutory requirements,” and ITC Midwest’s
application under section 476.27 was “legally insufficient on its face.” Id.
at 25. IUB erred by allowing ITC Midwest to utilize the crossing statute,
and the district court erred in affirming IUB’s decision on judicial review.
Because we conclude section 476.27 did not authorize ITC Midwest
to use the pay-and-go procedure, we need not reach Hawkeye Land’s
constitutional arguments. See Seering, 701 N.W.2d at 663 (noting we
will avoid constitutional question when appeal can be decided on other
grounds). Iowa Code chapter 6B governs the compensation owed
Hawkeye Land for the crossing easements taken by ITC Midwest, as well
as the related claims for attorney fees, costs and expenses. See Iowa
Code § 478.15 (allowing companies running electric transmission lines to
use “the same proceedings . . . as provided for taking private property for
works of internal improvement” if the company cannot reach an
agreement with a property owner); id. § 6B.1A (stating chapter 6B
provides procedures “for the condemnation of private property for works
of internal improvement, and for other public projects, uses, or
purposes”). Compensation and entitlement to fees cannot be determined
until the procedures of chapter 6B are invoked.
37
IV. Disposition.
For the foregoing reasons, we reverse the district court’s order that
affirmed IUB’s ruling in favor of ITC Midwest under Iowa Code section
476.27. We remand this case for entry of an order by the district court
directing IUB to vacate its decision.
REVERSED.