presented by the iowa state bar association's ......10:00 - 10:30 - an update on drainage...

Presented by The Iowa State Bar Association's Environmental Law Sections

2017 Environmental Law Seminar

Friday, February 17, 2017

ISBA Headquarters

CaveatThe printed materials contained in this book

and the oral presentations of the speakers arenot intended to be a definitive analysis of the

subjects discussed. The reader is cautioned that neither the program participants nor The IowaState Bar Association intends that reliance beplaced upon these materials in advising your

clients without confirming independent research.

2017 Environmental Law SeminarCLE Credit: 6.75 state hours which includes

1 ethics CLE hour and 4.75 Federal CLE hoursActivity ID # (in-person) 251911

Activity ID # (live webinar) 251910

ScheduleSchedule

8:30 - 9:00 – Registration

9:00 - 10:00 - Case Law UpdateSpeaker: Ryan S. Fisher, Bradley & Riley, PC

10:00 - 10:30 - An Update on Drainage Districts and Iowa Drainage Law Speaker: Erin Herbold-Swalwell and Eldon McAfee, Brick Gentry PC

10:30 - 10:45 – Break

10:45 - 11:30 - Wetland Mitigation (no materials provided)Speaker: Judy Joyce, EarthView Environmental, Inc.

11:30 - 12:15 - Lunch (included with registration)

11:45 - 12:15 - Update from the Iowa Department of Natural Resources Speaker: Chuck Gipp, Director, Iowa DNR (no materials provided)

12:15 - 1:00 - Technical Beneficial Use Determination (BUD) UseSpeaker: Charles Hostetler, Senior Progam Manager, PDC Technical Services, Inc.

1:00 - 2:00 - Legal Update from the Iowa Department of Natural Resources Speaker: Ed Tormey, General Counsel, Iowa Department of Natural Resources

2:00 - 2:45 - Legal Update from the U.S. Environmental Protection Agency Speaker: Dave Cozad, Regional Counsel, Environmental Protection Agency (no materials provided)

2:45 - 3:00- Break

3:00 - 3:30 – Industrial Wastwater Services AgreementsSpeaker: Greg Sindt, Bolton & Menk, Inc.

3:30 - 4:30 - Ethics: Technology Security Issues for AttorneysSpeaker: Brian McCormac, Brown Winick PLC

2017 Environmental Law Seminar

Case Law Update

9:00 a.m. - 10:00 a.m.

Presented byRyan Fisher

Bradley & Riley, PCPO Box 2804

Cedar Rapids, IA 523406Phone: 319-861-9770

Environmental Law Seminar


Copyright © 2017Bradley & Riley PC - All rights reserved.

Ryan Fisher Bradley & Riley PC

ENVIRONMENTAL CASE LAW UPDATE

February 17, 2017

BRADLEY & RILEY PC ATTORNEYS AND COUNSELORS

www.bradleyriley.com

Agenda • U.S. Supreme Court Decisions:

– U.S. Army Corps of Engineers v. Hawkes Co., Inc. 136 S. Ct. 1807 (2016) – Clean Power Plan (Update) – Michigan v. EPA, 80 ERC 1577 (Update)

• Bakken Pipeline

• President Trump’s Executive Order on Regulation

• Eighth Circuit Decisions:

– Richland/Wilkin Joint Powers Auth. v. United States Army Corps of Engineers, 826 F.3d 1030 (8th Cir. 2016) • District Court Decisions:

– Kuehl v. Sellner, 161 F. Supp. 3d 678, 684 (N.D. Iowa 2016): – Gulf Restoration Network v. EPA, 2016 WL 7241473 (E.D. La. Dec. 15, 2016)

• Iowa Court Decisions:

– Bd. of Water Works Tr. of Des Moines v. Sac Cnty. Bd. of Supervisors et al. (Des Moines Water Works), 2017 WL 382402 (Iowa Jan. 27, 2017)

• Upcoming Cases:

– Mississippi v. Tennessee (Docket No. 22O143, before the U.S. Supreme Court)



U.S. Supreme Court

U.S. Army Corps of Engineers v. Hawkes Co., 136 S. Ct. 1807 (2016)

Ruling: Supreme Court ruled 8-0 that property owners

can go to court to challenge jurisdictional determinations (JDs) from the Army Corps of Engineers identifying the extent of “waters of the United States” (WOTUS) under the Clean Water Act (CWA).



U.S. Army Corps of Engineers v. Hawkes Co.

Facts/Background: • The CWA prohibits the discharge of any pollutant

without a permit into navigable waters of the United States.

• WOTUS includes ponds, swamps, wetlands, and ephemeral washes

• To identify WOTUS, project proponents can ask the Corps to issue JD (preliminary “PJD” and approved “AJD”) – AJDs are official and binding determinations of whether or not there are jurisdictional WOTUS on site




• The Corps issued an AJD finding the property contained WOTUS – “significant nexus” between wetlands and navigable water

located 120 miles away.

• Hawkes Co. disagreed and sought judicial review of AJD under the APA – District Court rejected claim – no final agency action – 8th Cir. reversed – causing a circuit split




• Supreme Court concluded that AJDs satisfy the APA’s “finality” requirement – AJDs are definitive – AJDs give rise to “direct and appreciable legal consequences” by binding the Corps

and EPA and warning of significant penalties for disturbing jurisdictional areas.

• Supreme Court rejected alternatives to APA review as inadequate (discharge and risk enforcement or apply for permit and seek judicial review) – permitting process is “arduous, expensive, and long” – takes years and nearly $300k.

• Supreme Court also concluded that CWA penalties are serious and a landowner “need not assume such risks while waiting for EPA to ‘drop the hammer’ in order to have their day in court.”




Justice Kennedy (concurrence):

- Raises major doubts about the government’s power under the Clean Water Act: - Oral Argument: Clean Water Act perhaps

“unconstitutionally vague”

- Opinion: Clean Water Act “continues to raise troubling questions regarding the Government’s power to cast doubt on the full use and enjoyment of private property throughout the Nation.”




Impact: • Businesses can now challenge the federal government’s

decisions on which wetlands and streams it can regulate.

• Hawkes is considered a big win for property rights activists regarding challenging the federal government’s reach under the Clean Water Act.

• The ruling that the Corps’ wetland determinations are reviewable = justices’ leanings on broader, high-stakes questions in lawsuits over WOTUS rule.



U.S. Supreme Court Clean Power Plan Background: • Proposed by EPA in 2014, with final version announced in August 2015

• Set a national limit on carbon dioxide pollution from power plants

– Aims to reduce national carbon dioxide emissions (relative to 2005 levels) from electrical power generation by 32% within 25 years

– Reduce coal-burning power generation and increase the use of renewable energy – Would require individual states to meet specific standards – Means of reducing emissions are up to the states, but must submit plans by

September 2016 or by September 2018 if extension is approved



Clean Power Plan • Only ten days after the final rule/plan was announced, 27 states

petitioned the U.S. Court of Appeals for the Dist. of Columbia Cir. to issue an emergency stay.

• Subsequently, 18 states joined the litigation in support of the EPA’s plan.

• On February 9, 2016, SCOTUS ordered the EPA to halt enforcement of the plan until a lower court rules in the lawsuit. This stay was without a written decision, was a 5-4 split, and was the first time SCOTUS has ever stayed a regulation before a judgment by the lower Court of Appeals.

• The case was heard before the U.S. Court of Appeals for the Dist. of Columbia Cir. on September 27, 2016. Chief Judge Merrick Garland recused himself because he was also President Obama’s SCOTUS nominee. No decision has been filed yet.



Clean Power Plan • The CPP’s future is very unclear, but it does not appear

promising given the current administration.

• During his campaign, President Trump vowed to get rid of the CPP.

• It is unclear if an alternative will be implemented: – A carbon tax that has some Republican support (?), or – If the EPA will be directed to repeal the plan (?), or – If the Trump administration will simply stop defending the plan

in the courts (?). • However, if this is the case, other parties will likely continue to defend

the CPP and could drag litigation out for years to come.



U.S. Supreme Court An update to the Michigan v. EPA, 80 ERC 1577.

Background: • EPA rules that limit the emissions of mercury and other

harmful pollutants (i.e., MATS standards) that are byproducts of burning coal.

• Supreme Court: – In developing the mercury and air toxics standards , the

EPA had violated the Clean Air Act by not considering the compliance costs to electric utilities

– Didn’t overturn the rule



Michigan v. EPA

• Court of Appeals decided how the EPA should proceed: – Found that the regulations put in place by the EPA could remain in effect

while the agency revised the way it calculated the potential industry costs.

• April 2016, EPA released an updated analysis of costs and benefits of the regulations: – a fraction of annual revenue – would not cause steep increase in customer bills

• Supreme Court refused take up an appeal from 20 states to

block the MATS rule.



Michigan v. EPA Impact: • Power plants are the largest source of mercury in the United

States

• EPA estimates that every $1 spent in reductions = $9 in public health benefits

• Many utilities have already complied with the new MATS requirements

• On the other hand, states and groups opposing the regulations argue its too expensive relative the health benefits



Bakken Pipeline

• Passes through North Dakota, South Dakota, Iowa and Illinois

• Has been resisted by residents and property owners, environmental groups, and native tribes (including the Meskwaki and Sioux tribal nations)

• As of now, the pipeline is 100% completed in Iowa, with the only remaining work being ground/land reconstruction on some properties, which is scheduled to be completed in Spring 2017



Bakken Pipeline

In Iowa: • Dakota Access filed for a permit to build the pipeline pursuant to Iowa

Code 479B (“Hazardous Pipeline and Storage Facilities” statute) – IUB approved permit

• Dakota Access obtained negotiated easements with most property owners • Filed condemnation proceedings on remaining properties pursuant to

Iowa Code 479B and general condemnation procedure under Iowa Code 6B – Some property owners then negotiated easements, while others continued to fight

condemnation proceedings – Condemnation easements were granted, and some property owners are

challenging the amount of their awarded damages



Bakken Pipeline

• May 27, 2016, the Iowa chapter of the Sierra Club filed suit in Polk County district court (Case No. CVCV051999) – Seeking judicial review of the IUB’s decision to issue a

permit to construct the pipeline, naming the IUB and Dakota Access as defendants/respondents



Bakken Pipeline The Petition challenges the IUB’s decision on the following

grounds: – IUB did not properly apply the requirements of public

convenience and necessity

– IUB denied due process to the Sierra Club and other interveners who oppose the pipeline by denying them the right to cross examine witnesses during the IUB proceedings

– IUB failed to comply with its own order which stated the IUB would deny the permit if Dakota Access did not meet its burden of proving that environmental issues were addressed

– IUB did not properly consider impacts on climate change



Bakken Pipeline The Petition challenges the IUB’s decision on the following

grounds (cont’d): – IUB did not properly consider the negative economic consequences of

the pipeline project, and the IUB improperly considered the alleged benefit of jobs and economic development

– IUB improperly granted eminent domain authority to Dakota Access

– IUB did not properly consider the impact on landowners in the path of the pipeline

– IUB erred in finding that insurance policies and parent company guarantees were sufficient to assure financial responsibility for damages from the pipeline



Bakken Pipeline

• Subsequently, a number of parties have intervened on both sides of the litigation, including – Iowa Office of Consumer Advocate, – MAIN Coalition, – Northwest Iowa Landowners Association, and – Iowa Farmland Owners Association

• Furthermore, a motion to consolidate by the IUB

was granted and a number of landowner challenges were consolidated with the Sierra Club’s challenge



Bakken Pipeline

• As of November 21, 2016, it appears that all briefs in support of affirming the IUB’s decision, as well as reply briefs, have been filed

• On December 9, 2016, notice of additional authority that cited to a November 15, 2016, pipeline case from West Virginia was filed by the petitioners

• No decision has been filed yet, so stay tuned



Bakken Pipeline Lake Oahe: • Final piece of the pipeline

• In July 2016, the Standing Rock Sioux sued the Army Corps of Engineers;

preliminary injunction was denied, and the appeal on same was denied in October 2016

• In November 2016, the Obama administration stated it was monitoring the situation and was communicating with the Corps about rerouting the pipeline

• In December 2016, the Corps stated it would not grant the permit to run the pipeline under the lake and that it was conducting a new Environmental Impact Statement regarding alternate routes



Bakken Pipeline Lake Oahe: • On January 18th, the Corps filed its formal Notice of Intent to

conduct the Environmental Impact Statement

• On January 24th, President Trump signed an executive order to expedite the review and advance construction of the pipeline

• On February 7th, the Corps granted the final easement under Lake Oahe

• On February 9th, the Cheyenne River Sioux filed a challenge alleging the violation of an 1851 treaty and interference with their religious practices



Bakken Pipeline Related: • On January 25, 2017, the Magellan Pipeline running from Rosemount,

MN, to Mason City leaked diesel fuel in Worth County.

• Initially, the leak was estimated at 138,600 gallons, but was subsequently adjusted to an actual figure of 46,830 gallons after Magellan crews fixed the leak.

• Currently, there does not appear to be any regulation violations that contributed to the leak, and Magellan properly reported the leak to Iowa officials.

• However, it will be interesting to see what impact, if any, this leak may have on the pending litigation over the Bakken pipeline.



President Trump’s

Executive Order on Regulation • 2-for-1 provision directs agencies to identify two regulations

that could be repealed for every one new regulation that is proposed for question and comment

• Unless mandated by law or approved by the Director of the Office of Management and Budget, all new regulations must have a regulatory cost of zero

• Public Citizen, Natural Resources Defense Council, and Communications Workers of America filed suit on February 8, 2017, alleging that President Trump exceeded his constitutional authority in issuing the order and that the order violates the Administrative Procedure Act



8th Circuit

Richland/Wilkin Joint Powers Auth. v. United States Army Corps of Engineers, 826 F.3d 1030 (8th Cir. 2016)



Richland/Wilkin Joint Powers Auth. Background: • Red River flows between ND and MN

• In the spring, snow melt creates sudden and unpredictable

flooding over very large flood plain near Fargo, ND

• After floods in 2009, several proposals were made to mitigate flood risk to Fargo-Moorhead metropolitan area, all including a “control structure”, high-hazard dam

• Environmental Impact Statements (“EIS”) were completed

for three plans



Richland/Wilkin Joint Powers Auth.

• At request of local cities and counties, Assistant Secretary of the Army for Civil Works approved the Locally Preferred Plan (“LPP”), which would divert 35,000 cubic feet of water per second to the ND side, as the tentatively selected plan

• Further modeling indicated that LPP would have more extensive downstream impact, and an EIS was released that recommended further changes

• Modifications included ring levees around the communities of Oxbow, Hickson, and Bakke, ND (“OHB ring levees”) to protect them from flooding caused by the larger diversion project




• MN Dept. of Nat. Resources (“MDNR”) determined that because the larger diversion project included a high-hazard dam, it required the MDNR to complete a full EIS

• MDNR also determined that any continued construction on the OHB ring levees before it could complete its EIS violated the MN Env. Procedure Act (“MEPA”)

• However, Fargo-Moorhead Diversion Board of Authority

(“Authority”) began construction of the OHB levees under the Corps’ supervision




• MEPA prohibits approval of environmentally damaging projects where feasible and prudent alternatives exist, and Joint Powers Authority of Richland Cty., ND, and Wilkin, Cty., MN (“JPA”) alleged that the National Economic Development (“NED”) plan would not require construction of the OHB ring levees or cause same amount of flooding to JPA’s members’ properties

• In 2014, Congress enacted the Water Resources Reform and Development Act of 2014 (“WRRDA”) to specifically authorized the LPP and noted that the Sec. of the Army should carry out the project in substantially in accordance with the plan

• JPA complaint alleged that the ongoing construction of the OHB ring levees violated the MEPA by commencing a project before MDNR had completed an EIS and determined plan to be adequate




• JPA sought a preliminary injunction to halt construction of OHB ring levees, claiming construction would harm its members by: – prejudicing the environmental review and – permitting systems and forcing selection of a project which

would flood its members’ properties

• District court granted the preliminary injunction




• 8th Cir. affirmed the district court’s grant of preliminary injunction

• Notably, arguing against finding of irreparable harm, the Authority argued that only procedural harm had occurred and procedural harm was not sufficient to create irreparable harm, and that impact on JPA would not occur for years and would be as a result of the larger project and not the OHB ring levees




• Court found that because OHB ring levees were an integral part of the larger project, JPA members faced procedural harm because of the difficulty in stopping the specific, LPP version of the larger project once construction of the levees commenced (quoting “the difficulty of stopping a bureaucratic steam roller” language from precedential case).

• Found further that if the LPP plan specifically was implemented, the plaintiffs faced irreparable harm to their environmental interests because it would limit the ways in which they could use their lands during flooding.

• Based on this, the court found there was both procedural and substantive environmental harm.




• Court also rejected Authority’s argument the MEPA could not apply out-of-state.

• Court agreed with district court that MN had a strong and unique interest in preventing flooding within its lands, and finding that OHB ring levee was part of the larger, interstate project.

• The Court also turned to the integral nature of the OHB ring levee to the larger project, as well as the interstate nature of the project to reject a Dormant Commerce Clause argument by the Authority



District Court Cases

Kuehl v. Sellner, 161 F. Supp. 3d 678, 684 (N.D. Iowa 2016):



Kuehl v. Sellner

• Plaintiffs were the Animal Legal Defense Fund (“ALDF”) and five individuals

• Defendants were Cricket Hollow Zoo (“Cricket Hollow”) and the Sellners (owners, operators, etc. of Cricket Hollow)

• Cricket Hollow had exhibits of numerous animals, including tigers, lemurs, pigs, wolf hybrids, and hundreds of birds

• Individual plaintiffs had all at various times visited Cricket Hollow and were upset by the conditions there



Kuehl v. Sellner

• Plaintiffs brought suit alleging that the Defendants were violating the Endangered Species Act (“ESA”) and its prohibition on “taking” endangered species by “harming” and “harassing” them

• Defendants argued that Plaintiffs did not have Art. III standing, which “requires that the party seeking review be himself among the injured” – must be an “imminent injury” and not one based on “some day” intentions that are not particularized, actual or imminent



Kuehl v. Sellner • Court held that the Plaintiffs did have standing.

• Court noted that the Plaintiff’s testified that they have an

“aesthetic” interest in viewing endangered species living in inhumane conditions.

• Court found the individual Plaintiffs asserted a concrete and particularized injury to themselves that was not just conjectural or hypothetical because all of them lived within easy driving distance of Cricket Hollow and would return if conditions improved.

• Because the individual Plaintiffs had standing, the ALDF also had standing based on the standing of three of the individuals who were members of the ALDF.



Kuehl v. Sellner • Defendants stipulated that tigers and lemurs were subject to the ESA, as they are

specifically listed as protected animals in the Code of Fed. Regs.

• However, Court also held that wolf hybrids were not subject to the ESA and its jurisdiction.

• Court noted that prior case law and Dep’t of the Interior policy demonstrated that as to hybrids, only those where both parents were protected at the species level were also protected (e.g., a cross between a Bengal tiger and a Siberian tiger would still be protected).

• Wild wolves are subject to ESA, and Plaintiffs argued that all subspecies of a protected species are also protected and that dogs are a subspecies of wild wolves.

• Court found that the conclusion that domesticated dogs are a protected species under the ESA “boggles the mind” and that wolf-dog hybrids are not subject to the ESA



District Court Cases

Gulf Restoration Network v. EPA, 2016 WL 7241473 (E.D. La. Dec. 15, 2016)



Gulf Restoration Network

Facts/Background: • High levels of nitrogen and phosphorus are

devastating the Gulf of Mexico

• States in the Mississippi River Basin have not adopted numeric water quality standards

• EPA has not stepped in




Gulf Restoration Network: • Don’t like the EPA’s “hands off” approach to nitrogen

and phosphorus pollution.

• States have done little to regulate as assigned under Clean Water Act (CWA)

• Argued the EPA, not the states, needs to enforce more specific water quality standards under CWA.

• Argued for federal standards to be adopted.




EPA: • Issued a formal denial to Gulf Restoration Petition:

– Did not determine a new standard was necessary – Also did not determine that a new standard was not

necessary – In other words, EPA decided not to decide (i.e., a

“necessity determination”)

• This was appealed up to the 5th Circuit, then remanded to the E.D. Louisiana.




Issue: E.D. Louisiana was tasked to determine whether the

EPA’s explanation for why it refused to make a necessity determination was legally sufficient.




Federal Court: • Ruled in favor of the EPA

• Highly deferential -- EPA rulemaking not as effective or

practical as having States adopt their own standards

• The CWA leaves the States with the authority to adopt water quality standards for their territorial waters, and the “EPA exercises oversight, stepping in only when the states demonstrate that they either cannot or will not comply.”

• Recognized the federal role is secondary to the States.



Iowa Court Cases

Des Moines Water Works, 2017 WL 382402 (Iowa Jan. 27, 2017)



Des Moines Water Works

• Des Moines Water Works sued northwest Iowa counties for letting nitrates from field fertilizer to flow down the Raccoon River.

• Water Works has to remove the nitrates in an expensive process (costing millions).

• The suit was filed in federal court, but the Iowa Supreme Court was tasked with answering specific questions of Iowa law certified by the federal court.

• Federal case is still pending.




Four Certified Questions presented to Iowa Supreme Court




Q1: As a matter of Iowa law, does the doctrine of implied immunity of drainage districts . . . grant drainage districts unqualified immunity from all the damage claims set forth in the complaint?

• Iowa Sup. Ct.: Yes. – "[D]rainage districts have a limited, targeted role--to facilitate

the drainage of farmland in order to make it productive. Accordingly, Iowa law has immunized drainage districts from damages claims for over a century."




Q2: 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?

• Iowa Sup. Ct.: Yes.

– Iowa law recognizes that drainage districts are immune from injunctive relief claims other than mandamus.




Q3: 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?

• Iowa Sup. Ct.: No.

– Under these clauses, one subdivision of state government cannot sue another subdivision of state government.




Q4: 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?

• Iowa Sup. Ct.: No.



Upcoming Case to Watch

Mississippi v. Tennessee (Docket No. 22O143, before the U.S. Sup. Ct.)

Importance: Supreme Court’s First Interstate

Groundwater Case



Mississippi v. Tennessee

Background/Facts: • Mississippi suing Tennessee for wrongfully converting

groundwater from the Sparta-Memphis Aquifer – Memphis depends heavily on the Aquifer.

• Withdrawals top over 187 million gallons per day – much higher than the Aquifer’s recharge rate.

• Mississippi does not suffer from a water shortage, but instead contends that Tennessee’s water pumping is a wrongful conversion of state property.




• Mississippi first sued the City of Memphis in the District Court and the Fifth Circuit – arguing it owned the groundwater resources within its sovereign territory.

• Each Court rejected Mississippi’s suit because the Aquifer was shared interstate water and must be equitably apportioned before one state can sue an entity for invading its share.

• Mississippi appealed to the Supreme Court maintaining its argument that it owns the groundwater within its boundaries and Tennessee’s pumping is wrongful conversion.




Issues for the Court: • Whether the Court will grant Mississippi leave to file an original

action to seek relief from respondents’ use of a pumping operation to take approximately 252 billion gallons of high-quality groundwater;

• Whether Mississippi has sole sovereign authority over and control of groundwater naturally stored within its borders, including in sandstone within Mississippi’s borders; and

• Whether Mississippi is entitled to damages, injunctive, and other

equitable relief for the Mississippi intrastate groundwater intentionally and forcibly taken by respondents.

Cedar Rapids 2007 First Avenue SE

PO Box 2804 Cedar Rapids, Iowa 52406

Ph: 319.363.0101 Fax: 319.363.9824

Iowa City Tower Place

One South Gilbert Iowa City, Iowa 52240

Ph: 319.466.1511 Fax: 319.358.5560

THANK YOU



Follow up questions can be directed to Ryan Fisher at [email protected]

An Update on Drainage Districts and Iowa Drainage Law

10:00 a.m. - 10:30 a.m.

Presented byErin Herbold-Swalwell

Brick Gentry6701 Westown Pkwy

Suite 100West Des Moines, IA 50266

Phone: 515-271-5908

Eldon McAfeeBrick Gentry

6701 Westown PkwySuite 100

West Des Moines, IA 50266Phone: 515-271-5916



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AN UPDATE ON DRAINAGE DISTRICTS AND IOWA DRAINAGE LAW

2017 ISBA Environmental Law Seminar, Drake University Law School February 17, 2017

Eldon McAfee

Erin Herbold-Swalwell Brick Gentry, P.C.

6701 Westown Pkwy, Suite 100, West Des Moines, IA 50266 Office 515-271-5916, 515-271-5908 [email protected] [email protected]

www.brickgentrylaw.com

CONTENTS Page

1. Iowa Drainage Law Update . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

2. Drainage Districts Case Update and Legislation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

3. Board of Water Works Trustees of the City of Des Moines v. Sac County Board of Supervisors, as Trustees of Drainage Districts 32, 42, 65, 79, 81, 83 and 86, et. al., NO. C15-4020-LTS, U.S. District Court, Northern District of Iowa Western Division ………………………………………………………………………………………9

______________________________________________________________________________

1. Iowa Drainage Law Update

a. In Iowa, the dominant estate (higher elevation) landowner has the right to let naturally-occurring water course from his land to the servient estate (lower elevation).

• Iowa Code §468.621: Owners of land may drain the land in the general course of natural drainage by constructing or reconstructing open or covered drains, discharging the drains in any natural watercourse or depression so the water will be carried into some other natural watercourse, and if the drainage is wholly upon the owner’s land the owner is not liable in damages for the drainage unless it increases the quantity of water or changes the manner of discharge on the land of another. An owner in constructing a replacement drain, wholly on the owner’s land, and in the exercise of due care, is not liable in damages to another if a previously constructed drain on the owner’s own land is rendered inoperative or less efficient by the new drain, unless in violation of the terms of a written contract.

mailto:[email protected]

mailto:[email protected]

http://www.brickgentrylaw.com/

2

• Iowa Code § 468.2(1): The drainage of surface waters from agricultural lands and all other lands or the protection of such lands from overflow shall be presumed to be a public benefit and conducive to the public health, convenience, and welfare. See also Wright v. Repp Farms, Inc., 5/205/04-0390 (Iowa App. 2005), citing Hicks v. Franklin County Auditor, 514 N.W.2d 431, 435 (Iowa 1994).

• “In Iowa there is also a common law rule which provides: There has been adopted and developed in this jurisdiction what may best be characterized as a modified civil law rule which recognizes a servitude of natural drainage as between adjoining lands. Under this concept a servient estate must accept surface waters which drain thereon from a dominant estate. On the other hand, no right exists to alter the natural system of drainage from a dominant estate in such manner as to substantially increase the servient estate burden. Braverman v. Eicher, 238 N.W.2d 331, 334 (Iowa 1976). The holder of a dominant estate has a legal and natural easement in a servient estate for the drainage of surface waters. Franklin v. Sedore, 450 N.W.2d 849, 852 (Iowa 1990).

o In addition, our supreme court has held that the owner of a dominant estate is not required to retain water in ponds or depressions to his detriment. Moody v. Van Wechel, 402 N.W.2d 752, 757 (Iowa 1987). The owner may divert water by surface drainage even though additional water enters the servient estate. Id. This rule, however, is subject to limitations. A servient owner is entitled to relief if the volume of water is substantially increased, or if the manner or method of drainage is substantially changed, and this results in actual damages. Grace Hodgson Trust v. McClannahan, 569 N.W.2d 397, 399 (Iowa Ct. App. 1997).” Wright v. Repp Farms, Inc.

• An owner of a dominant estate has the right to drain land onto a servient estate even though this result in an increase in the amount of water being drained. Dodd v. Blazek, 66 N.W.2d 104 (Iowa 1954).

• “The natural flow or passage of the waters cannot be interrupted or prevented by the servient owner to the detriment or injury of the dominant proprietor.” Thome v. Retterath, 433 N.W.2d 51, 53 (Iowa App. 1988).

• Sobotka v. Salamah, 828 N.W.2d 325 unpub. (Iowa Ct. App. Jan. 9, 2013).Case stands for the long-standing common law rule in Iowa that the owner of servient land cannot interfere with the natural water drainage from a dominant land owner and breach of the duty could result in a significant damage award. Here, landowners challenged the sufficiency of the evidence supporting the district court’s finding of liability for the obstruction of the flow of water onto the plaintiffs’ land, as well as the court’s award of punitive damages and injunctive relief. In a cross-appeal, the prevailing parties contended they were entitled to additional damages. “We affirm the district court's liability conclusion, award of

3

injunctive relief and compensatory damages, and its refusal to award double damages. We reverse the court's award of punitive damages. We remand for entry of judgment in the reduced amount. Costs of the appeal shall be divided equally between the plaintiffs and defendants.”

• Analysis of a drainage case: o Is the land in a drainage district or is there a drainage agreement between

the landowners? If so, consult the statutory provisions and terms of the drainage district or the terms of the drainage agreement.

o Will there be a substantial increase in volume or will there be a substantial change in the manner or method of drainage, either of which will result in actual damages?

o For an overview of Iowa drainage law, see Iowa Surface Drainage Law and Groundwater Quality Protection: Is There Potential Landowner Liability for Plugging Agricultural Drainage Wells and Sinkholes?, - Sec. II, Principles of Iowa Drainage Law, Neil Hamilton, Drake Law Review, Vol. 39, No. 4, pp. 813-826 (1989-1990).

b. Lease Supplements:

• Tile and Drainage Improvements o Lease Supplement for Use in Obtaining Tile and Drainage Improvements

between Land Owners and Tenants, available at http://www.extension.iastate.edu/AGDm/wholefarm/html/c2-29.html

o In an agreement for tile and drainage improvements between Landlords and Tenants, the signers agree that the improvements (they agree upon and list in the written farm lease) will be completed on the described-farm on or before a specific date listed.

o The Landlord and Tenant agree on who will pay the costs necessary to complete the improvement, who will provide labor, the estimated value of the project, and whether the tenant’s contribution will reduce the cash rental rate. This agreement can be signed as a separate contract or a supplement to the written farm lease.

o Common fact pattern: An upgradient landowner wants to install additional field tile and the downgradient landowner demands compensation for installing or allowing the installation of larger tile to handle the additional drainage into the downgradient landowner’s existing field tile. In other words, must the downgradient landowner accept, either into tile lines or onto the land surface, drainage from the upgradient landowner’s land.

o In the typical farm fact situation, the dominant estate has a right to drain water onto the servient estate without the consent of, or payment of compensation to, the servient estate.

http://www.extension.iastate.edu/AGDm/wholefarm/html/c2-29.html

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• Lease Supplement for Obtaining Conservation Practices and Controlling Soil Loss, publication available at http://www.extension.iastate.edu/AGDm/wholefarm/html/c2-08.html

o Landlord and Tenant agree to follow specific conservation practices that will control soil loss for a field or farm.

o Contains provisions relating to ground cover, cost-share payments available through the Natural Resource and Conservation Service (NRCS), soil loss limits, cropping practices that will be required by Landlord, such as contour planting and tiling, no-till on designated fields, etc.

o The purpose is to encourage cooperation between landlords and tenants to maintain conservation practices. The theory is that a tenant is not likely to make a significant contribution to soil conservation unless the costs are shared and tenant is assured repayment, etc.

c. Practical solutions available?:

• Tile drain easements, including express easements, implied easements and prescriptive easements. An express easement, or written agreement, recorded in the property records is the easiest and most practical to enforce.

2. Drainage Districts Case Update and Legislation. • In 1908, the Iowa Legislature created a system of drainage districts to facilitate

construction and repair of drainage tile, levies, waterways, and terraces in certain parts of the state. Amendment of 1908 adding Section 18 of Article I of the Iowa Constitution. The drainage district system was supposed to make the management of drainage water more efficient by allowing drainage outside of the “natural course” as discussed above.

• A county board of supervisors can establish a drainage district or two or more landowners by filing a petition with the county auditor. Once the district is established, then a tax assessment is made against benefitted land and kept in a “county drainage fund.”

• Recent Case Law Involving Drainage Districts and Rights of Landowners: o Chicago Central and Pacific Railroad Company v. Calhoun County Board of

Supervisors, No. 0-637/10-0061, 2010 Iowa App. LEXIS 1343 (Iowa Ct. App., Nov. 10, 2010).

1. Here, railroad workers discovered a sink hold under the railroad tracks. The land was located in a drainage district. Railroad workers contacted the county engineer and the county refused to fix it, saying that it was not the responsibility of the drainage district. The railroad fixed the problem and brought suit to recover the cost.

2. The drainage district argued that Iowa Code Ch. 468 stated that the cost of repairing a culvert or bridge when the improvement is located at a place of natural waterway is the responsibility of the railroad. The railroad argued that provision only applied to the duty of railroads to pay the costs of the initial construction.

http://www.extension.iastate.edu/AGDm/wholefarm/html/c2-08.html

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3. The trial court sided with the drainage district and looked at definitions of the word “culvert.” The trial court determined that even though the pipe was connected to a tile line in a field that falls within the drainage district, the district was not responsible.

4. The appellate court agreed and looked at the legislative history. When railroad companies were constructing the lines, they assumed the responsibility for maintenance of the embankments and ditches associated with the railroad.

o Hardin County Drainage Dist. 55 v. Union Pacific Railroad Co., 2013 Iowa Sup. LEXIS 10 (Iowa Sup. Ct. 2013)

1. In a similar fact pattern, , Union Pacific filled a “void” under the track with rock in compliance with federal safety regulations. However, the void damaged drain tile installed in 1914. The land was part of a drainage district. The drainage district notified the railroad that they needed to fix the damage to the drain tile. After notice was sent, the drainage district decided they needed a bigger tile and installed it. The railroad didn’t object, but refused to pay.

2. Iowa Code §468.109 requires railroads receive notice of an improvement if in the railroad right of way. The issue was whether the damaged drainage tile was a “culvert” and if the railroad was responsible for the cost of improvement. If it was just tile, then they are not responsible.

3. The court concluded that the district was responsible because the legislature did not intent for the railroad to be financially responsible for underground improvements to drainage that need to occur regardless of whether the railroad exists.

o Gannon, et al. v. Rumbaugh, 772 N.W.2d 258 (Iowa Ct. App. 2009) 1. Two neighboring landowners sued an adjacent landowner on theories of

nuisance, negligence, trespass, and failure to abide by Iowa drainage district rules when the adjacent landowner lowered a levy and built a dam on his property resulting in flooding of the plaintiffs’ property.

2. A Drainage District was established on the land to prevent flooding in the 1900’s. There were significant issues discussed in the case regarding whether the district was dissolved at some point.

3. The trial court sided with the plaintiffs on all counts and ordered the defendant to pay damages and restore the levee and road ditch.

4. The appellate court did not give deference to the trial court and closely scrutinized the record, finding that there was evidence that the district had been dissolved, that mediation had not been attempted as required by Iowa Code for farm disputes involving nuisance, and that the defendant was not negligent in removing the levy because the flow was increased in the natural course of drainage.

o Ray W. Ohrtman Revocable Trust, et al. v. Palo Alto County Board of Supervisors, et al. (Iowa Ct. App., Dec . 17, 2008)

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1. This case involved the annexation of land into a drainage district. Can land benefitted by a district be annexed into an existing district?

2. A district was established in 1916 with about 12,000 acres. The drainage district received drainage from nearly 45,000 acres of adjoining lands through ditches and tile. The defendant sought to annex the adjoining lands into the district and the plaintiff objected. Both sides hired engineers.

3. Land can be annexed if an engineer examines the land and conducts a survey and plat showing the condition of drainage and the benefit to the annexed land. If annexation is recommended, then the board can annex the land if notice and an opportunity for hearing has been given.

4. The appellate court found the more specific report of the plaintiff’s engineer more persuasive than the drainage district’s engineer and held that the district failed to show that the plaintiff’s land would materially benefit from the annexation.

o Webster County Board of Supervisors v. Showers, 2006 Iowa App. LEXIS 1080 (Iowa Ct. App. 2006).

1. In this case, plaintiff owned farmland in a drainage district and attempted to drain from the watershed of one main of the district because he thought his drainage system was inadequate. He argued that he was entitled to use the facilities of the district.

2. Because the plaintiff interfered with a main for which he was not assessed, he could not install drainage tile and cause irreparable damage to the land. The appellate court affirmed the trial court, stating that plaintiff should have gotten permission to install the lateral tile and that the tile mains of the district were not designed to hold the extra water. The plaintiff was ordered to remove the tile and was barred from taking such actions in the future.

o Vorhes Ltd. v. Staudt,2012 App. LEXIS 544 (Iowa Ct. App. Jul. 11, 2012) 1. Plaintiff landowners sued the county and board of supervisors for failure

to adequately maintain a drainage district and claimed their land was damaged by increased water. The district attempted to fix the problem of the sink hole that developed for the plaintiffs and assessed the cost to the landowners in the district.

2. The Plaintiffs were not satisfied and sued the county. The court stated that the Plaintiffs were not entitled to a more expensive fix as that was a discretionary, not a mandatory improvement. There was abnormally high rainfall in the area that contributed to the increase in water and the Plaintiffs also did not take advantage of other solutions such as the planting of grasses to take care of the problem.

o Olinger v. Smith, Iowa Ct. App., Dec. 21, 2016. 1. Claims of trustees of drainage district violating IOMA (Iowa Open

Meetings Act). 2. Drainage district and trustees are subject to requirements of IOMA.

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3. Closed meetings: Substantial compliance with IOMA? 4. Case discusses removal of a trustee, damages and attorneys fees 5. Court held that trustees violated IOMA and did not provide a good-faith

defense. The court assessed a fine and awarded attorney fees. o Naeve v. Humboldt County Drainage District #126, Iowa Ct. App. August 13,

2014. 1. Pursuant to Iowa Code §468.19, landowners waived their arguments

regarding procedural deficiencies in the creation of the drainage district by failing to timely file objections to notice or any other claimed procedural defect; landowners complaint was untimely under §468.28 and they failed to show fraud, prejudice, gross error in the commissioners actions.

2. Purpose of a drainage district is to make land tillable or suitable for profitable use. To achieve the goal, counties can establish a district and construct whatever improvements as necessary for public health, convenience, welfare.

o Pieper, Inc. v. Green Bay Levee & Drainage Dist. No. 2, 2016 Iowa App. LEXIS 1314 (Iowa Ct. App., Dec. 21, 2016).

1. Appeal from district court’s rulings rejecting claims the drainage district improperly classified and assessed district landowners.

2. Court affirmed trial court based on review of whether the board acted illegally or in excess of jurisdiction.

3. Land was located along the Mississippi River. Litigation arose after improvement to river levee and proposal to construct a fertilizer plant on land benefited by the improvement.

4. Trial court ruled the commissioners carried out their duties and acted in a way consistent with the original establishment of the drainage district.

o Christy v. Harrison County Board of Supervisors, 2015 Iowa App. LEXIS 433 (Iowa Ct. App., 2015)

1. Court held that Iowa Code §468.126(1)(a)vested the county board of supervisors with authority and jurisdiction to approve and pay for the replacement of a drainage tube.

2. The property owners lacked standing to challenge the absence of notice to other drainage districts or to require payment from other districts, as that decision rested with the board and the board’s failure to notify other districts did not render an assessment excessive.

o Knoer v. Palo Alto County Board of Supervisors, 2016 Iowa App. LEXIS 703 (Iowa Ct. App., June 29, 2016).

1. Landowner complained of a county road damming up water on his property, essentially acting as a levee. The county supervisors hired an engineer to evaluate the situation and the engineers voted to install a culvert under the road. The landowners to the south objected and filed a petition seeking injunctive relief and a writ of mandamus, arguing that Iowa Code Ch. 468 places duties on the supervisors to give notice and an

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opportunity to be heard when an owner of land tries to secure better drainage across a highway.

2. The district court held that those provisions were only triggered when a private landowner filed an application with the county auditor. This was a situation where the county board of supervisors acted on their own to drain surface water from a public road in its natural channel.

3. The appellate court affirmed and stated that the board had discretion to do what they did and the court could not compel the board to follow procedures that did not apply to them.

• Legislation introduced Iowa Legislative Session 2017 relating to Water Quality and Drainage:

o Senate Study Bill 1034 proposed by Governor. 01/31/17 Intro., ref. to Sen. Nat’l Res. & Env. Subc. Rozenboom, Kinney, Dvorsky, Kapucian, Breitbach. Water Quality. This bill appropriates $229 million from RIIF over 13 fiscal years for water quality projects into a water quality infrastructure fund created by the bill and establishes two water quality programs (agriculture edge-of-the-field infrastructure and in-field infrastructure). Appropriations would be as follows: 4.3 million for FY 2017-2018; 4.3 million for FY 2018-2019; 11.5 million for FY 2019-2020; 16.5 million for FY 2020-2022 (two year period); 22 million for an eight year period 2022-2030 and ending on June 30, 2030.

o The bill requires the programs to be administered in accordance with the Iowa Nutrient Reduction Strategy and allows the Soil and Water Division to use 4% of the funds for administration. There are reporting requirements.

o The programs (ag edge of the field/ and in field infrastructure) will provide financing on a cost-share basis to certain ag infrastructure projects including demonstration projects. The edge of field program will support projects that capture or filter nutrients entering into surface water. includes wetlands, bioreactors, saturated buffers, land use changes as examples that may qualify. The in-field program will support erosion decrease and precipitation induced surface runoff, increase water infiltration rates and soil sustainability. The bill includes structures, terraces, waterways and soil conservation or erosion control structures and managed drainage systems that might qualify.

o The bill requires that the soil and water division and landowners enter into agreements for financing projects and the two programs may be combined if the cost is effective to do so. The bill provides that certain information related to ag land and obtained by the soil and water division under the programs remain confidential.

o Tax: Exempts metered water sales to residential customers from the sales tax and establishes a 6% excise tax. Adds a sunset date for the tax. Transfers the funds 40% (IFA for wastewater/drinking water assistance) 45% (IFA water quality program); 15% (Soil & Water Division). Establishes a new water quality program. Contains implementing provisions.

o House File 288 by Nunn. Introduced 2/9/2017 and referred to House Ways and Means. Water Excise Tax. Replaces the current sales tax on metered water with a

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6% excise tax with 1/6 of the tax collected going to the SAVE fund. Phases out the excise tax by decreasing it by 1% each fiscal year. Sets excise tax to expire in 2023. Authorizes counties to implement a local option sales tax on water service of not more than 1% after passage of the tax in an election. If a county or city already has a local option sales tax in place, they are required to set the service tax on water at the same rate as the local option sales tax.

3. Board of Water Works Trustees of the City of Des Moines v. Sac County Board of Supervisors, as Trustees of Drainage Districts 32, 42, 65, 79, 81, 83 and 86, et. al., NO. C15-4020-LTS, U.S. District Court, Northern District of Iowa Western Division.

a. Federal Clean Water Act citizen suit in U.S. District Court, Northern District of Iowa, Western

Division, Judge Leonard Strand. Complaint filed by Plaintiff Des Moines Waterworks (DMWW) on Mar. 16, 2015; against 10 Drainage Districts (DD’s) in Sac, Buena Vista, and Calhoun counties

b. Petitioners: DMWW i. Independently owned & operated public utility ii. Authorized under Iowa Code, but cannot levy taxes iii. Owned and funded by customers iv. Board appointed by mayor of Des Moines

c. Defendants: Drainage Districts

i. Authorized by Iowa Code to establish and maintain unified drainage systems to drain farmland

ii. Assess fees to landowners for joint drainage tile and ditches

d. Water Sampling by DMWW: i. March 18 until Dec. 30, 2014 for nitrates in nine different locations in the Drainage Districts

e. Allegations by DMWW:

i. Clean Water Act: Alleges discharges from field tile lines are discharges from “point sources” without an NPDES permit under the Clean Water Act a) Alleges discharges from field tile lines are discharges from “point sources” without an

NPDES permit under the Clean Water Act b) Point sources are “discernable, confined and discrete conveyances” c) Alleges districts qualify as “point sources” due to extensive, unified, and engineered

drainage systems d) CWA point source exemptions:

1. DMWW alleges not an ag storm water discharge that would be exempt under CWA because drainage is artificially drained groundwater, not ag storm water runoff

2. DMWW alleges not “return flows from irrigated agriculture” ii. Iowa Code 455B: Alleges discharges from field tile lines are discharges from “point sources”

without a permit under Iowa law iii. Public, Statutory and Private Nuisance, Trespass, Negligence, Taking without compensation,

and Due Process & Equal Protection iv. DMWW alleges:

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a) Corn - soybean crop rotation & lack of perennial crops coupled with extensive subsurface tile drainage results in excessive nitrates in groundwater that are discharged to surface waters

b) Surface water runoff has fewer nitrates than tile discharges – “the conveyance of nitrate is almost entirely by groundwater transport”

f. Trial date, June 26, 2017; estimated 2 week trial

g. Drainage District’s partial motion for summary judgment filed Sep. 24, 2015 on Counts III - X; i. Drainage Districts legal entities that are proper parties to adversary proceedings? ii. Drainage Districts subject to money damages and tort? iii. DMWW suit can only be brought by mandamus? iv. DMWW constitutional claims fail because:

a) No allegation of taking of private property? b) Political subdivisions may not claim that other political subdivisions denied them of

constitutional protections?

h. Drainage District’s motion for summary judgement filed April 1, 2016 on: a) Count I (discharges from field tile lines are discharges from “point sources” without an

NPDES permit under the Clean Water Act) b) Count II (Iowa Code 455B: Alleges discharges from field tile lines are discharges from

“point sources” without a permit under Iowa law)

i. Board of Water Works Trustees of the City of Des Moines v. Sac County Board of Supervisors, as Trustees of Drainage Districts 32, 42, 65, 79, 81, 83 and 86, et. al., Iowa Supreme Court, No. 16-0076, Jan. 27, 2017.

i. Opinion of Justice Waterman, joined by Justice Mansfield and Justice Zager (Justice Appel and Chief Justice Cady filed a concurring in part and dissenting in part opinion and Justice Wiggins and Justice Hecht took no part in the decision.) The Court began its 41 page majority/plurality opinion by expressly answering the questions certified by the U.S. District Court: “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?

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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.” In finding the Drainage Districts are immune from DMWW’s claims for money damages, the Court noted that drainage districts have had immunity for “over one hundred years” and that there was no basis to change that legal precedent. The Court noted that the Iowa legislature had created drainage districts for a very limited purpose – to drain and therefore make productive land that was otherwise unproductive. The Court also ruled that downstream property owners cannot sue drainage Districts for injunctive relief and that mandamus is the only proper remedy. Finally, the Court emphasized that this case was a dispute between public entities and ruled that the DMWW, as a government entity, cannot bring claims under the Iowa Constitution against the Drainage Districts as another government entity, e.g., “[t]his case involves public water supplies, not private property. There can be no taking of a public resource.” More specifically, the Court ruled:

a) The Drainage Districts have no authority under state law to regulate farmer nitrate use and that lack of control means the Districts cannot be held liable for the discharges – “liability is premised on control” the Court stated.

b) Well established Iowa court decisions favor placing liability on the party who can avoid the harm at the least cost. As has been emphasized by the scientific and agricultural community, the Court ruled that because the Drainage Districts’ drainage systems were not designed or intended to filter out nitrates, the “least-cost avoider” for removing nitrates from drinking water may well be DMWW, the party which is already required by law to provide safe drinking water to its customers. The Court reinforced this point stating that DMWW “itself at times has lawfully deposited back into the Raccoon River the very nitrates it removed” and “[t]he DMWW’s claim that putting nitrates into the Raccoon River creates a public nuisance is at odds with its own practice of depositing those nitrates back into the same river.”

c) Iowa law gives farmers who comply with fertilizer label instructions immunity from liability for nitrate contamination and that reinforces the Drainage Districts’ immunity from DMWW’s claims. As the Court stated, claims for nitrate contamination against drainage districts would be a way to get “backdoor relief against farmers that the legislature has specifically barred through the front door.”

d) Iowa law only authorizes drainage districts to assess costs to landowners to drain land, not to assess costs to redesign drainage systems to abate nitrates.

e) Drainage Districts could not get liability insurance for DMWW’s claims, presumably because of the immunity provided by Iowa law.

ii. Concurrence in part and dissent in part by Justice Appel joined by Chief Justice Cady. Justice Appel’s 60 page opinion concurring in part and dissenting in part concluded as follows:

“ . . . I would answer the certified questions as follows.

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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 to money damages generally. No as to just compensation that might arise from a takings claim. 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: No. 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: Yes with respect to the takings clause, no with respect to all other clauses. 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: Possibly, depending on further factual development. In summary, I would find that DMWW’s lawsuit should be allowed to proceed. Of course, I express no view on the merits of the litigation.”

iii. Following the Iowa Supreme Court decision the U.S. District Court issued an Order on Jan. 27 directing the parties to provide a joint status report by Feb. 13, 2017 indicating their positions as to if and how further proceedings should be scheduled in federal court. This report, entitled Joint Status Report Regarding Iowa Supreme Court Ruling, was filed on Feb. 13. The parties agree that there are two pending motions for summary judgment filed by the Drainage Districts, but disagree on how the Supreme Court ruling affects those motions. a. Counts I and II.

a. DMWW argues that the Iowa Supreme Court’s ruling does not affect Counts I and II because they were not part of the certified questions. DMWW argues that the Drainage Districts have the power to do what is necessary to drain land within their districts and that power would necessarily include obtaining permits required by law, such as a NPDES permits.

b. The Drainage Districts argue that although the Iowa Supreme Court’s ruling was not directed at Counts I and II, the ruling still disposes of these counts as a matter of law because of the “redressability” argument. That being that because the Supreme Court ruled that the Drainage Districts do not have authority under Iowa law to regulate farmer nitrate use the Districts have no authority to require farmer compliance with NPDES permits for nitrate discharge even if the federal court were to rule that the federal Clean Water Act requires the Districts to obtain those permits.

b. Counts III – X. The parties agree that the only issues remaining after the Iowa Supreme Court decision under these counts are the federal constitutional claims. 1) DMWW argues that Iowa drainage law that gives the Districts total immunity for

pollution violates federal Due Process, Equal Protection and Takings. 2) The Drainage Districts argue that the Iowa Supreme Court’s ruling effectively

resolves the federal constitutional issues because state law defines property for this issue and the Iowa Supreme Court found that the property right DMWW alleged does not exist under Iowa law.

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c. The parties agreed that the June 26, 2017 trial date is feasible for any counts that remain after the court rules on the two pending motions for summary judgment.

d. Regarding additional discovery, DMWW argues additional discovery should be permitted and that it should be allowed to designate a rebuttal expert witness. The Drainage Districts argue that discovery is closed.

Technical Beneficial Use Determination (BUD) Use

12:15 p.m. - 1:00 p.m.

Presented byDr. Charles Hostetler

PDC Technical Services Inc.Email: [email protected]

Phone: 309-218-3343



Technical Aspects of Beneficial Use

Dr. Charles J. Hostetler Prepared for the 2017 Environmental

Law Seminar February 17, 2017

Scope of Presentation

• Covers IAC 567 Chapter 108 – Beneficial Use Determinations: Solid By-Products as Resources and Alternative Cover Material

• Focuses on practical approaches to satisfying some of the technical requirements

• Does NOT include aspects regarding the land application of solid waste, solid-waste processing, or solid-waste composting

Purposes of Beneficial Use

• Take advantage of situations where a solid by-product can appropriately be considered a resource rather than a solid waste.

• Relieve the generator and users of the resource from the solid waste requirements

• Not adversely impact or improve human health and the environment

Beneficial Use

• Must be specific • Must involve reuse rather than disposal • Must be approved by IDNR • Some examples are:

– Asphalt shingles ground into road surfacing material – Cement kiln dust as a soil amendment – Paper mill sludge as animal bedding – Coal combustion residue or spent foundry sand as fill

First and Foremost!

• The generator and user are not relieved from compliance obligations with respect to other local, state, and federal statutes, ordinances, rules, and requirements (particularly RCRA)

• The toxicity characteristic leaching procedure (TCLP) is a chemical test that is employed to determine whether a material is a characteristic hazardous waste. It is required for some beneficial use determinations and is a good risk mitigation tool for generators and users

Universally Approved Beneficial Use

• This is a streamlined process for specific beneficial uses listed in IAC 108.4. If these specific listed conditions are met, further approval from IDNR is not required.

• There are ancillary technical requirements incorporated by reference that must be demonstrated.

• If not universally approved, an application must be submitted and approved by IDNR pursuant to IAC 567-108.5

Chemistry of Materials Used as Fill

• Leachate characteristics of the material must be measured by the synthetic precipitation leaching procedure (SPLP) and meet statewide standards

• Total metal concentrations must be analytically determined and meet statewide standards

• The pH of the material must be measured and meet certain standards

• The material shall not be putrescible

Location Standards for Fill

• Not in a waterway, wetland, or other waters of the state

• Not below or within 5 feet of the high water table

• Not in a 100-year flood plain • Not closer than 200 feet to a sinkhole or to a

well that is or could be used for domestic or livestock consumption

High Water Table

• The location of the saturated zone, in the spring, in years of normal or above-normal precipitation.

• This can be an expensive and technically challenging hurdle involving site-specific hydrogeologic investigation. Sufficient lead time is important.

Record Keeping and Reporting

• A solid by-product management plan must be developed and maintained – Lists source(s) of materials – Procedures for testing – Procedures for storage

• Maintain records for a minimum duration of five years

• Submit a report to IDNR annually, or upon revision of the plan

General Guidance

• Make sure there is a beneficial use; use as fill must be distinguished from disposal or landfilling

• Have a sampling and analysis plan that is statistically sound and minimizes risk

• Separate operations from compliance testing • Don’t send annual report without review of

results

Charles Hostetler Ph.D.

• Senior Program Manager at PDC Technical Services, Inc. managing the affiliated site groundwater program.

• B.S. in Geosciences and Ph.D. in Geochemistry from the University of Arizona.

• Over 30 years experience in groundwater contaminant transport studies involving laboratory and field data collection, analysis, and model application.

• Started in the characterization and cleanup side of the consulting business and then gradually moved over into permitting and compliance monitoring.

Legal Update from the Iowa Department of Natural Resources

1:00 p.m. - 2:00 p.m.

Presented byEd Tormey

General CounselIowa Department of Natural Resources

Wallace State Office BuildingDes Moines, IA 50319



PERMIT REQUIREMENTS FOR CAFOS

By Ed Tormey

February 17, 2017

Clean Water Act

• Prior to 1972, little to no regulation for water quality • Clean Water Act (CWA) enacted in 1972, Amendment to the

Federal Water Pollution Control Act of 1948 – Required to trace in-stream pollution back to a specific

discharger – Obligation for dischargers to obtain and comply with

federally-mandated National Pollutant Discharge Elimination System (NPDES) permit program

• In 1976, Concentrated Animal Feeding Operations (CAFOs) were defined in federal rule. A permitting system was established.

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Point Source

• “Any discernible, confined and discrete conveyance, including but not limited to any pipe, ditch, channel, tunnel, conduit, well, discrete fissure, container, rolling stock, concentrated animal feeding operation, or vessel or other floating craft, from which pollutants are or may be discharged. This term does not include agricultural stormwater discharges and return flows from irrigated agriculture.” 33 U.S.C.A. §1362(14)

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2003 CAFO Rules

• First update to the CAFO rules since 1976 • Adopted in 40 CFR Parts 122 and 412 • Each CAFO was required to develop and implement a nutrient

management plan (NMP) • Contained an agricultural stormwater discharge exemption for land

application discharge if Large CAFOs complied with appropriate site- specific nutrient management practices

• All CAFOs were required to apply for an NPDES permit whether or not they discharged – Every CAFO was assumed to have the potential to discharge – There was an option for a Large CAFO to request a no potential to

discharge determination

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Types of CAFOs

• Large CAFO - AFO with animal numbers at or above different thresholds such as 1,000 beef cattle or 2,500 swine > 55 lbs. No confinement/open feedlot distinction

• Medium CAFO - AFO with animal numbers between thresholds (e.g.. 300-999 beef cattle, 750-2,499 swine > 55lbs.) AND either of two conditions: pollutants discharged into waters of U.S. via a “man-made ditch, flushing system or similar man-made device” OR pollutants discharged directly to waters of U.S. that flow through facility or come into direct contact with animals

• Designated CAFO - May designate an AFO a CAFO if it is determined to be a significant contributor of pollutants to waters of the U.S. based on considerations set out in rule

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Waterkeeper Alliance, Inc. v. EPA (2005)

• Both Environmental Groups and Farm Groups challenged the 2003 Rules – No review of NMP by permitting authority – NMP not incorporated into NPDES permit and

was not subject to public review or comment – Agricultural stormwater discharge exemption -

All discharges from CAFOs are regulated – Duty to Apply

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Waterkeeper Alliance, Inc. v. EPA 2005

• Court held: – Permitting authority must review all “effluent

limitations” and this includes an NMP – Because terms of NMP constitute effluent

limitations, the terms of the NMP must be included in the NPDES permit

– Since they are effluent limitations, the public has the right to comment on them

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Waterkeeper Alliance, Inc. v. EPA 2005

• Court held: – “Unless there is a ‘discharge of any pollutant,’ there is no

violation of the Act.” Waterkeeper, 399 F.3d at 504. – No discharge, no obligation to seek or obtain an NPDES

permit – EPA’s interpretation that certain CAFO discharges could be

exempt as agricultural stormwater was a reasonable interpretation

– Rejected the argument that discharges from CAFOs are industrial rather than agricultural

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2008 CAFO Rules

• CAFOs seeking permit coverage must submit NMPs with their permit application

• Permitting authorities required to review NMPs and provide the public with an opportunity for meaningful public comment

• Permitting authorities required to incorporate terms of NMPs as NPDES permit conditions

• Clarified that unpermitted Large CAFOs can also qualify for the agricultural stormwater exemption

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2008 CAFO Rules

• In lieu of a duty to apply, the rule required a CAFO to apply for a permit if the CAFO “discharges or proposes to discharge pollutants”

• A CAFO could be held liable for failing to apply for a permit, in addition to being liable for the discharge itself

• A CAFO could apply for a voluntary certification if it could objectively demonstrate it will not discharge

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• Benefit: in the event of a discharge, CAFO will be liable only for the discharge itself, not the failure to apply

National Pork Producers Council v. EPA 2011

• Farm Group challenged the “Propose to Discharge” language • Court agreed

– There must be an actual discharge – EPA may impose a duty to apply for CAFOS that are

discharging • Court struck down the attempt to impose liability for the

“failure to apply” for an NPDES permit if a discharge occurs • Can only seek penalties for the unlawful discharge of

pollutants

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Where the Permitting Requirement is Today

• 2012 CAFO Rules - Removed the vacated elements from the National Pork Producers case. This included the following: – Elimination of the requirement for an

owner or operator of a CAFO that “proposes to discharge” to apply for a NPDES permit

– Removal of the voluntary certification option for unpermitted CAFOs because removal of the “propose to discharge” requirement renders the certification option unnecessary

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• Who Has to Apply for a NPDES Permit – Must have a discharge of a pollutant from a point source to

a water of the United States – Even if there is a discharge, a producer might be able to

demonstrate that the conditions that gave rise to the discharge have been corrected – a permanent remedy. The question asked is if there is a reasonable likelihood that a past polluter will continue to pollute in the future

• Permanent Remedy – no definition. DNR’s approach has been to have facility address the cause and go one step beyond.

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• 2008 Federal Register Preamble: “EPA received a number of comments concerning past discharges. Some commenters asserted that a prior discharge is not, by itself, a sufficient basis for requiring a permit and observed that it is quite possible that a CAFO may have eliminated the cause of the discharge. EPA agrees that not every past discharge from a CAFO necessarily triggers a duty to apply for a permit; however, a past discharge may indicate that the CAFO discharges or proposes to discharge if the conditions that gave rise to the discharge have not changed or been corrected.” 73 Fed Reg. 70423.

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• Objective 5 of 2013 Work Plan Agreement between EPA and DNR: “[W]here DNR determines the CAFO is required to obtain an NPDES permit because it discharges to a water of the U.S., DNR will notify the CAFO within 60 days after completion of its evaluation and require the CAFO to either: submit an application for an NPDES permit to DNR within 90 days from the date of DNR’s notification … or immediately put in place interim remedial measures that eliminate the discharge … followed by permanent measures that eliminate the cause of the discharge … .”

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Iowa Law - Confinements

• A confinement feeding operation shall retain all manure produced by the operation between periods of manure disposal. A confinement feeding operation shall not discharge manure directly into water of the state or into a tile line that discharges directly into water of the state.

• Notwithstanding subsection 1, a confinement feeding operation that is a [CAFO] as defined in 40 C.F.R. §122.23(b) shall comply with applicable [NPDES] permit requirements as provided in the federal Water Pollution Control Act, 33 U.S.C. ch. 26, as amended, and 40 C.F.R. pts. 122 and 412, pursuant to rules that shall be adopted by the commission. Any rules adopted pursuant to this subsection shall be no more stringent than requirements under the federal Water Pollution Control Act, 33 U.S.C. ch. 26, as amended, and 40 C.F.R. pts. 122 and 412. Iowa Code §459.311(1) and (2).

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Iowa Law – Open Feedlots

• All settleable solids from open feedlot effluent shall be removed prior to discharge into a water of the state. ….

• Notwithstanding subsection 1, an open feedlot operation that is a [CAFO] shall comply with applicable NPDES permit requirements as provided in the federal Water Pollution Control Act, pursuant to rules that shall be adopted by the commission. Any rules adopted pursuant to this subsection shall be no more stringent than requirements under the federal Act. …. Iowa Code §459A.401(1)-(2), as recently amended by House File 583 (2015)

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CAFOs PERMITTED IN IOWA

• 172 CAFOs currently have NPDES permits – 159 Conventional Technology – 13 Alternative Technology

• Of the 172 Permitted CAFOs – 92 Open Feedlots – 80 Combined (confinement and open feedlots)

• No NPDES permit has been issued to a confinement-only facility

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NPDES Withdrawal Petition

• Filed in 2007 by ICCI, Sierra Club and Environmental Integrity Project (EIP)

• Petition outlined 31 legal, permitting and enforcement deficiencies in AFO program

• July 2012: EPA report. Concluded that Iowa had addressed 26 of the 31 deficiencies

• September 11, 2013: EPA/DNR Work Plan Agreement. Sets out how the remaining 5 deficiencies will be addressed

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EPA/DNR Work Plan Agreement

• Recommend to EPC the promulgation of NPDES permitting regulations for confinement CAFOs that discharge to waters of the U.S.

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NRCS

Implement a Comprehensive Survey to identify large CAFOs and medium-sized animal feeding operations that discharge to waters of the U.S. and have failed to apply for NPDES permits


• Comprehensive Survey – To be performed pursuant to CWA CAFO portions of the

DNR Comprehensive Survey Standard Operating Procedure (SOP), which is attached to the Work Plan

– SOP: All facilities subject to a desk-top assessment; some will also be subject to an on-site inspection

– Desk-top assessments and on-site inspections shall be conducted pursuant to other standard operating procedures, which have been completed (and reviewed by EPA)

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Desktop Assessments

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On-site Inspections

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• Comprehensive Survey – DNR agrees to perform

approximately 20% of these evaluations annually.

– All standard operating procedures associated with the Work Plan can be found at http://www.iowadnr.gov/Environmental-Protection/Land-Quality/Animal-Feeding-Operations/EPA-DNR-Workplan-Materials

26

http://www.iowadnr.gov/Environmental-Protection/Land-Quality/Animal-Feeding-Operations/EPA-DNR-Workplan-Materials






• Perform CWA NPDES compliance evaluation inspections at NPDES permitted CAFOs

• CAFO NPDES training for all existing and new staff • Provide annual assessment to EPA regarding available

staff resources • Timely issue NPDES permit to a CAFO that discharges

to a water of the U.S. (or immediately put in place interim measures to eliminate the discharge followed by permanent measures that eliminate the cause of the discharge)

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• Enforcement – Assess and seek appropriate penalties, including economic

benefit. Document grounds for not recovering full amount of assessed penalties

– Develop checklists to ensure state-wide consistent and appropriate enforcement

– Provide required training • Provide progress reports to EPA

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Iowa Enforcement Priorities

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AFO Enforcement Priorities

• Fish Kill/Acute Water Quality Degradation • Serious Water Quality Degradation • Discharges of Pollutants to State Waters not

Authorized by an NPDES Permit • Failure to Obtain Required NPDES Permit

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AFO Enforcement Priorities

• Unauthorized Construction • Significant Violations of NPDES Permit and/or

Conditions in the Permit • Failure to Submit MMP Updates • Failure to Obtain Proper Manure Application

Certification

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DNR WEBSITE

• DNR has a website dedicated to the Work Plan • Includes link to Manure Discharge Chart and AFO

enforcement cases • http://www.iowadnr.gov/Environmental-

Protection/Land-Quality/Animal-Feeding-Operations/EPA-DNR-Workplan-Materials

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DNR WEBSITE

33

www.iowadnr.gov

Ed Tormey

General Counsel [email protected]

515-725-8373

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Industrial Wastewater Service Agreements

3:00 p.m. - 3:30 p.m.

Presented byGreg Sindt

Bolton & Menk, Inc.Phone: 515-233-6100

Email: [email protected]



Industrial Wastewater Service Agreements

Environmental Law Conference Iowa State Bar Association

Des Moines, Iowa

February 17, 2017

Gregory L. Sindt, P.E. Bolton & Menk, Inc.

Overview

• Industrial Wastewater Services Agreements: • Agreement between a Publicly Owned Treatment Works

(POTW) and an industrial sewer user

• Objectives and Importance • POTW and Industrial User Obligations • Compliance and Enforcement Considerations • Billing Methods • IDNR Treatment Agreements • Agreement Construction

Agreement Objectives

• Provide framework for long term relationship • Concisely define rights, obligations and limitations for

each party as currently agreed • Avoid unresolvable disputes

Importance • Discharge permit function • Keeps enforcement actions “close to home” • Agreement takes precedence over ordinances

• Protection from future unilateral revisions to relationship by city council actions

• Clears up issues with current poorly drafted ordinances

• Ensures POTW will preserve allocated treatment capacity for industrial user and allow transfer • Practical effect of treating allocated treatment capacity as

an industry asset that supports its production operations

Importance

• Situations where agreements are most important • Industry makes capital contributions to POTW facilities • Industry loading is a very significant portion of the

POTW facility design capacity • Situations where industry and POTW relationships are

strained

POTW Obligations

• Take and Treat Obligation • POTW is adequate for conveying and treating the industrial

user wastewater

• Provide adequate treatment capacity, operate and maintain POTW

• Enforce industrial user discharge limitations • Respond to future NPDES discharge permit requirements

• Inform industrial user of potential future limitations and costs for plant upgrades

Industrial User Obligations

• Comply with discharge limitations • Pay for cost of service • Notify POTW of intent to revise its discharge • Provide adequate discharge monitoring facility • Notify POTW of accidental and slug discharges

Enforcement Considerations

• Keep enforcement actions at local level • Define penalties

• Surcharges are cost of service – not the same as “penalties”

• Define enforcement procedures if ordinances are inadequate

• Encourage POTW to follow the enforcement procedures including fines or penalties • Avoid IDNR, EPA, and citizen action enforcement actions

Enforcement Considerations

• POTW can be cited for failure to enforce • Required meetings between POTW and industrial user

• Confirmation of no issues with treating its wastewater (interference and pass through allegation)

• Advance notice to Industry of potential permit revisions and City plant discharge violations

• User rate review – ensure financial viability of POTW

Enforcement Considerations • Clearly define compliance and penalties

• Monthly average mass (lbs/d) discharge calculated using data from days with discharge concentration measurements

• Include representative number of samples from days of low discharge in calculation of monthly averages

• Alternative pH compliance using continuous pH monitoring in lieu of grab samples

• 40 CFR 401.17 language on allowable excursions • 7 hours and 26 minutes in any calendar month; and • No individual excursion from the range of pH values

shall exceed 60 minutes

Enforcement Considerations • Oil & Grease

• Hexane extractable material (HEM) • Method defined parameter – include method • Sample collection methods

• Grab sample • Multiple grab composite samples • Cannot split samples

• CBOD • Carbonaceous Biochemical Oxygen Demand • Preferred method to BOD – DNR rule may be revised

Billing Methods

• Define billing methods • Average concentration applied to total month volume for

surcharge calculation

• User rates if industry makes direct capital or debt service payment for its allocated POTW capacity • User rate lower than other users – exclude debt service

component of user rates for volume and surcharge parameters (CBOD, TSS, TKN, and P)

• Equitable user rate structure with periodic review • Consider including user rate model as attachment

IDNR Treatment Agreements

• Required if no local pretreatment program and: • Greater than 25,000 gal/d discharge • Loading greater than 5% of POTW rated plant capacity for

any parameter (Flow, CBOD, TKN)

• Limits and monitoring frequencies are included in POTW NPDES discharge permit

• IDNR does NOT have to APPROVE, but can REJECT • Term is not well defined

• IDNR typically requires new Treatment Agreements upon NPDES permit renewal application (5 years)

Coordination with Ordinances

• Sewer user ordinances • Sewer user rate ordinances • Industrial wastewater user enforcement ordinances • Wastewater pretreatment ordinances • Agreement should take precedence over ordinances

Agreement Construction

• Legal professional with experience • Engineering professional with experience for technical

input and review • POTW (City) staff and councilman and/or mayor • Industry representative with ability to make decisions

Monitoring Facilities

• Old “Control Manhole” EPA model ordinance description is inadequate

• Invest in good monitoring facility • Discharge limit compliance determination • User billing determination (surcharges)

• Representative sample collection and accurate flow measurement are as important as good laboratory procedures.

Discharge Monitoring Facilities

• Sampling Method • Flow proportional composite sample

• Sample collected after constant number of gallons have passed through the meter

• NOT time based sampling • Refrigerated sample bottle enclosure

Wells South Plant Monitoring

Wells North Plant Monitoring

Dean Foods Monitoring Station

Monitoring Room Entrance

Effluent Monitoring Room

Multiple Head Sampler

Multiple Sample Bottles

pH Probe with Proximity Switch

Magnetic Flow Meter

Questions and Discussion

Gregory L. Sindt, P.E. Bolton & Menk, Inc.

515-233-6100 [email protected]

Ethics: Technology Security Issues for Attorneys

3:30 p.m. - 4:30 p.m.

Presented byBrian McCormac

Brown Winick PLC666 Grand Ave

Suite 200Des Moines, IA 50309



1

Ethical Issues and Data SecurityPrepared by James Pray

Presented by Brian McCormac

BrownWinick Law Firm666 Grand Avenue, Suite 2000Des Moines, IA 50309-2510

www.brownwinick.com

What You Will Learn

Why it matters

Ethical Rules requiring the safeguarding of confidential data

Rule 1.6 requiring prevention of client information.

Duty to maintain client confidences

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What You Will Learn

What Rules Govern the Use of Personal Information and Data

What Information is Protected other than just client information.

What Happens if There is a Breach

How to Start Protecting you and your firm.

Why This Matters?

Major penetrations of large law firms by Government-sponsored hackers

High Profile Breaches (Cravath, Swaine & Moore, Weil, Gotshal & Manges,Cleary Gottlieb, Mayer Brown, Latham & Watkins, Covington & Burling, and Davis Polk & Wardell).

http://dailycaller.com/2016/12/07/china-allegedly-behind-major-security-breach-at-big-time-us-law-firms/#ixzz4XTpq3LWD)

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Why This Matters?

Some estimate that 1 in 4 law firms have already been breached.

Up to 3 in 4 of major law firms have been breached by some estimates.

Bottom Line Impacts (fines, reputation, PR costs)

Why This Matters?

On December 27, 2016 the Manhattan U.S. Attorney announced the arrest of one foreign national and charges against three others for hacking seven law firms to make more than $4 million from insider trading.

4

Why This Matters?

Litigation threatened against penetrated law firms.

Corporate Clients are asking for proof that law firms are taking steps to protect communications and data.

5

What Rules Apply to Lawyers?

Iowa Ethics Rules

State Privacy Laws (Iowa Code Chapter 715C – Personal Information Security Breach Protection)

Health Insurance Portability and Accountability Act of 1996 (HIPAA)• Business Associate Agreements

Engagement Agreements

Iowa Rules of Professional Conduct

Rule 32:1.6 Confidentiality of Information• (a) A lawyer shall not reveal information

relating to the representation of a client unless the client gives informed consent, the disclosure is impliedly authorized in order to carry out the representation, or the disclosure is permitted by paragraph (b) or required by paragraph (c).

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Rule 32:1.6 Confidentiality of Information• Guess what? Paragraphs (b) through (c )

won’t help (preventing death, crimes, etc.)

Comments 16 and 17 provide guidance.


Rule 32:1.6 Comment 16:• A lawyer must act competently to safeguard

information relating to the representation of a client against inadvertent or unauthorized disclosure by the lawyer or other persons who are participating in the representation of the client or who are subject to the lawyer’s supervision. See rules 32:1.1, 32:5.1, and 32:5.3.

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Rule 32:1.1 (mentioned at 32.1.6, com. 16:• Rule 32:1.1: COMPETENCE A lawyer shall

provide competent representation to a client. Competent representation requires the legal knowledge, skill, thoroughness, and preparation reasonably necessary for the representation.


Rule 32:1.5(a) (mentioned at 32.1.6, com. 16:• A partner in a law firm, and a lawyer who

individually or together with other lawyers possesses comparable managerial authority in a law firm, shall make reasonable efforts to ensure that the firm has in effect measures giving reasonable assurance that all lawyers in the firm conform to the Iowa Rules of Professional Conduct.

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Rule 32:1.5(a) Comment 2:• Paragraph (a) requires lawyers with managerial

authority within a firm to make reasonable efforts to establish internal policies and proceduresdesigned to provide reasonable assurance that all lawyers in the firm will conform to the Iowa Rules of Professional Conduct. . . .

Iowa Ethics Opinion 11-01

Question was whether lawyers could ethically use “software as a service” (SaaS)

We commonly refer to SaaS now as “cloud services.”

The Committee turned to Rule 32:1.6 and comment 17.

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•Opinion begins with Rule 32:1.6 Comment 17:

•When transmitting a communication that includes information relating to the representation of a client, the lawyer must take reasonable precautions to prevent the information from coming into the hands of unintended recipients.

•Rule 32:1.6 Comment 17: •This duty, however, does not require that the lawyer use special security measures if the method of communication affords a reasonable expectation of privacy. Special circumstances, however, may warrant special precautions.

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•Rule 32:1.6 Comment 17: •Factors to be considered in determining the reasonableness of the lawyer's expectation of confidentiality include the sensitivity of the information and the extent to which the privacy of the communication is protected by law or by a confidentiality agreement.

•Rule 32:1.6 Comment 17: •A client may require the lawyer to implement special security measures not required by this rule or may give informed consent to the use of a means of communication that would otherwise be prohibited by this rule.

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Iowa Ethics Opinion 11-01

Committee suggested: • Preserve access to data if access to SaaS

(Cloud) is lost.

• Due diligence regarding the vendor.

• Know the cost and how to terminate (and erase) after termination of service.

• Password protection and if there is potential public access to data.

• Consider data encryption to protect data.

Iowa Ethics Rules

Opinion and rules, though not updated for current data use, are surprisingly applicable to today’s environment. • Know the risks.

• Avoid loss of data to third parties.

• Install adequate management systems to protect data.

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Ethics vs. State Law

Lawyers’ obligations to protect client data are also covered by state laws governing the obligation to inform not just clients but third parties whose data may be on your firm server.

Ethics vs. State Law

As an example, social security numbers of both buyers and sellers may be in your real estate and business closing files.

If a hacker has access to your server due to a breach, your firm may have to contact the other side of the deal under applicable state law.

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State Data Breach Notification Laws

Each state has slightly different laws.

If you or your firm suffer a breach you will need to comply with the laws of EVERY state that your clients or third parties reside in if their information has been breached.

Firm Objectives

Minimize risk to the Clients and Firm.

Decide on reporting to State and Federal agencies.

Coordinate reporting breaches to customers and agencies.

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Get the facts:

What do we know?

How was it discovered? • Customers

• FBI

• Secret Service

• IT Vendor

• IT Department

Get the facts:

Have specialists been brought in?

What sort of information may have been exposed?

Is the breach over?

Can we trust the firm’s IT department?

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Confidences

Attorney can conduct a confidential investigation

IT specialists, investigators, and law enforcement are not subject to the attorney-client privilege.

Steps need to be taken to make sure that the attorney-client privilege is maintained.

The Breach:

Internal breach?• Internal: HR issues are

triggered.

• Access lockdown protocols.

• Logging: Your firm has installed logging of activity, right?

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The Breach:

Loss of a smartphone?

Loss of a tablet or laptop?

Loss of CDs, backup tapes?

Forget to wipe hard drives on printers after the lease is up?

The Breach:

External breach?• Random?

• Targeted? What were they looking for?

• Is it some Ukraniankid or a foreign state?

• What did they get access to?

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Right team?

Do we have the right IT people? • Can IT be trusted?

• Are they competent?

• Who needs to be hired if not?

After the breach, Lock it down

Restrict Access.

Change passwords.

Copy log files.

Prevent overwriting of backups.

Stop deletion of backups.

Keep track of all steps during lock down.

Preserve all data.

18

Determine what was Accessed/Attacked?

What was accessed? • Private customer files?

• Client assets? (patents, R&D)

• Was it encrypted?

What was attacked? • DOS?

• Defacement?

• Ransomware?

Get the dates:

Dates breaches took place?

Date of breach first suspected? • Note that this is an important date

• May trigger notice deadlines.

Date breach confirmed?

Date private information was confirmed to have been stolen/accessed?

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Determine if it is private information under state law

Client Confidence may not equal Private Information.

A client confidence could be typed-up notes from the client interview or e-mails from the client: “I may have poured 2,000 gallons of TCE on the back forty”

Private Information could be the client’s SS#.

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What is private information?• Government Issued Identifier (SSN, Driver’s

License, Pilot License, Inmate Number, Etc…);

• Financial Account Number (credit card / debit card) in combination with any information to grant access to account (Exp., Security Code);

• Username and Password to Financial Account; or• Biometric Data Representation (fingerprint, retina,

or iris);• Health Information.

Next: Notifications.

Is there a crime?

Duty to report?

Will the breach be reported to agencies? • Local Police (good luck)

• FBI (cross-jurisdictional, federal laws)

• Secret Service (banking)

• Regulatory (Defense Department, Treasury, FDIC, State/Federal banking, SEC, and FTC)

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Notification of Law Enf.

• Criminal Notification. • Law enforcement must determine if notification to

consumers/users of data will reveal sensitive sources and methods or impede the ability of the agency to conduct its investigation.

• Make sure you are prepared. • Backup copies.

• Logs.

Next: Notifications.

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This is a real law firm notification.

Notification Requirements

Contract Notifications• IT Vendor contracts may require notification of

any breach, regardless of whether information can be identified.

• Client agreements may require notification of breaches.

• Poorly drafted contracts may inadvertently trigger unnecessary notifications.

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Notification Requirements

Insurance Notifications• Must be timely under the terms of the policy.

• Read the policy.

• Should not be subject to a Criminal Investigation hold. Report.

• Do not assume that you will get this handled and that an unnecessary report will drive up premiums.

• Report it to the carrier.

Iowa Code Chapter 715C Keep in mind that if you have 50 clients in

50 different states then you will have to follow all of the laws of all 50 states.

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Iowa Code Chapter 715C 715C.1(11) defines a “breach of security” in

relevant part as follows: • “Unauthorized acquisition of personal information

maintained in computerized form by a person that compromises the security, confidentiality, or integrity of the personal information.”

• Iowa is an “acquisition” state. You or your investigatory consultant would need to determine if the breach resulted in a “acquisition.”

• Some states (very few) are “access” states.

Iowa Code Chapter 715C It is possible for a rogue program to

“access” a system without actually acquiring any data. • Difficult but not impossible to prove with sufficient

security logs and monitoring software.

• One example could be a malicious e-mail that launches ransomware. The ransomware will potentially destroy data without transmitting the data to third parties.

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Iowa Code Chapter 715C 715C.1 defines a “personal information” as”

• SS#

• Government ID (driver’s license)

• Financial Account numbers

• Unique ID that in combination with passwords or codes allows access to a financial account

• Biometric data.

Iowa Code Chapter 715C Requires notification to consumers if

“Personal Information” is accessed

If more than 500 Iowan’s affected, then also notify Attorney General’s office

26

Iowa Code Chapter 715C Data that law firms can have that would

constitute 715C personal information:• Tax Returns (account data, SS#s)

• Payment Systems (credit card numbers)

• Bank Payment information

Note that the firm may have lost very valuable information that constitutes a “client confidence” that does not constitute 715C personal information.

Iowa Code Chapter 715C If personal information is lost then Iowa law

triggers consumer notifications.

Most expeditious manner without unreasonable delay.

Law Enforcement may request a delay.

27

Iowa Code Chapter 715C Iowa is one of the states that has a safe

harbor exception: • Notification is not required if, after an appropriate

investigation or after consultation with the relevant federal, state, or local agencies responsible for law enforcement, the person determined that no reasonable likelihood of financial harm to the consumers whose personal information has been acquired has resulted or will result from the breach.

Other States are very different.

There are excellent “large firm” databases that provide reasonably up to date charts with the laws of each state: https://www.mintz.com/newsletter/2007/PrivSec-DataBreachLaws-02-07/state_data_breach_matrix.pdf

https://www.bakerlaw.com/files/uploads/documents/data%20breach%20documents/data_breach_charts.pdf

You need to do your own due diligence, however.

28


Massachusetts:

• Do not include description of the breach in the letter.

• Do not specify the number of individuals affected.

Most other states:

• DO include a description of the breach.


Texas, Arkansas, Minnesota (as an example):

• If an account number or debit card number is stolen, only a notification requirement is required if a security code, access code, or password was also stolen.

Massachusetts, North Carolina, Maryland (as an example):

• Have different notification of consumer rights.

29

State Data Breach Notification

Generally requires notice to people if there is a breach of personal information that is not encrypted.• Indiana, Wyoming, – no.

• New York City, D.C., - no.

Encryption exception may not last much longer. • Was key also stolen? Not encrypted.

State Data Breach Notificationfor Consumers

Many states have many different triggers for state office notifications – some 2015 examples:

Alaska: 1,000

California, Florida and Iowa: 500

Georgia: 10,000

Maryland: First must notify A.G.

Montana, Indiana: 1

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State Data Breach Deadlines for Notification to Consumers

States have many different triggers – some

examples:

Connecticut: 90 days after discovery.

Florida: no more than 30 days.

Ohio: 45 days after discovery.

State Data Breach Agencies for Notification of Consumers

States list different agencies that require notifications:

New Jersey: State Police

Puerto Rico: Dept. of Consumer Affairs.

Maine: Dept. of Professional & Fin. Reg.

Mass: Office of Consumer Affairs & Reg.

31

“Regular email is not a secure method for sending sensitive data. The better practice is to encrypt any transmission that contains information that could be used by fraudsters or identity thieves.”

Federal Trade Commission’s November 2011 Guide to Business.

32

First Steps Develop & Review Policies and Procedures

Train Employees

Long, Unique Passwords

Multiple Usernames and Passwords (2-Step)

Secure Connections

Encryption

Indemnification of Third-Party Agreements

Add/Review Insurance Coverage

Second Steps Train all staff and attorneys on how to spot bad e-

mails and how to avoid clicking on potentially bad links.

Conduct phishing tests of your attorneys and employees.

Install mobile device management on all tablets, laptops, and smart phones that have access to your system.

33

BrownWinick tests its attorneys and staff every month

Different e-mails are sent out to everyone in the firm to train them not to click on links from unknown or suspicious sources.

Second Steps

Install advanced (new generation) firewalls that can actively monitor information on your system for malicious behavior and not just examine data when it arrives at the firewall.

Install logging software for forensic use.

Consider hiring a security firm to conduct penetration audits of your firm

Consider hiring a security firm to monitor your server and firewall logs

34

Website: www.brownwinick.comToll Free Phone Number: 1-888-282-3515

OFFICE LOCATIONS:

666 Grand Avenue, Suite 2000Des Moines, Iowa 50309-2510

Telephone: (515) 242-2400Facsimile: (515) 283-0231

DISCLAIMER: No oral or written statement made by BrownWinick attorneys shouldbe interpreted by the recipient as suggesting a need to obtain legal counsel fromBrownWinick or any other firm, nor as suggesting a need to take legal action. Do notattempt to solve individual problems upon the basis of general information providedby any BrownWinick attorney, as slight changes in fact situations may cause amaterial change in legal result.

presented by the iowa state bar association's ......10:00 - 10:30 - an update on drainage...

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