UPDATES & ANALYSIS

Railroad’s share of drainage district repairs based on benefit, not cost, Iowa Supreme Court rules

by Rox Laird | May 9, 2022

A railroad whose tracks cross an agricultural drainage district should be assessed its share of the cost of repairing deteriorated drainage tile based on the railroad’s benefit from the repairs, not the added cost of complying with federal railroad regulations, the Iowa Supreme Court said in a ruling handed down May 6.

In preparation for repairing drainage tile that was originally installed in 1916, the Hardin County Drainage District 67 Board of Trustees appointed a reclassification commission to determine how much individual property owners within the district should be assessed for the repairs based on how much they benefit.

When the tiling system was first installed, the Union Pacific Railroad was assessed 5.81% of the cost of the tiling system.

The Board of Trustees approved the reclassification commission’s recommendation that half of the $200,891 cost of repairs to deteriorated drainage tile should be assessed against the Union Pacific. The reasoning: Because the use of more costly materials beneath the railroad right of way required by federal regulations account for half the overall cost of the repairs, the railroad should be assessed half the cost of the project.

The railroad appealed to the Hardin County District Court, arguing that the Board’s determination that the additional cost of the tile repair was a “special benefit” to the railroad was contrary to Iowa Code Chapter 468, which regulates drainage district improvements. The Hardin County District Court granted the railroad’s motion for summary judgment, which was affirmed by the Iowa Court of Appeals.

In a unanimous decision affirming both the trial court and Court of Appeals, the Iowa Supreme Court in an opinion written by Justice Brent Appel said the Drainage District Board incorrectly based the railroad’s assessment on the cost, rather the benefit, of the drainage tile repairs.

“It is clear that the benefits a land receives from a drainage improvement are to be distinguished from the cost and expense associated with such improvement,” the Court said. (Union Pacific Railroad Co. v. Drainage District 67 Board of Trustees. Disclosure: Nyemaster Goode attorney Keith Duffy represented Union Pacific in this case.)

In this case, the railroad’s benefit from the drainage tile could include protection from flood damage or soil erosion.

“The reapportionment argument advanced by the trustees is not based on the value of benefits resulting from the repair but focuses solely on the direct costs of the repair itself,” Appel wrote for the Court. “In other words, the trustees’ argument is not based upon the funds the Railroad would be saving as a result of the project but focuses instead on the funds the trustees will be spending.”

Tags: Iowa Supreme Court 2021-2022