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Brakke v. Iowa Department of Natural Resources

Supreme Court of Iowa

June 16, 2017

TOM BRAKKE and RHONDA BRAKKE d/b/a/ PINE RIDGE HUNTING LODGE, and McBRA, INC., Appellees,
v.
IOWA DEPARTMENT OF NATURAL RESOURCES and IOWA NATURAL RESOURCE COMMISSION, Appellants.

          Appeal from the Iowa District Court for Polk County, Dennis J. Stovall, Judge.

         The Iowa Department of Natural Resources appeals from a district court order ruling an emergency order was outside of its legislative grant of authority. AFFIRMED.

          Thomas J. Miller, Attorney General, David L. Dorff, Assistant Attorney General, for appellants.

          Rebecca A. Brommel and Douglas E. Gross of Brown, Winick, Graves, Gross, Baskerville and Schoenebaum, P.L.C., Des Moines, for appellees.

          APPEL, Justice.

         This case presents a challenge by landowners to an emergency order issued by the Iowa Department of Natural Resources (DNR) to order the landowners to quarantine land formerly used as a whitetail deer preserve for five years after whitetail deer harvested on the property tested positive for chronic wasting disease, or CWD. The DNR emergency order required the landowners to repair and maintain an electric fence around the property for the quarantine period.

         The landowners challenged the DNR emergency order in an administrative appeal under the Iowa Administrative Procedures Act, Iowa Code section 17A.19(10) (2013). An administrative law judge issued a proposed decision, finding the DNR lacked the statutory authority to issue the emergency order imposing a quarantine on the land. Upon review by the Iowa Natural Resources Commission (NRC), the NRC reversed the ruling, finding instead that the DNR had sufficient statutory authority to support the order. The landowners appealed.

         The district court reversed the NRC. The court held the DNR's emergency order was irrational, illogical, and wholly unjustifiable under Iowa Code section 17A.19(10)(l) because the DNR was acting outside the legislature's grant of authority. The court, however, rejected the landowners' argument that the DNR's emergency order amounted to a compensable taking under the United States and Iowa Constitutions. Upon entering its judgment, the court also refused to reopen the record to allow the DNR to present additional evidence that the landowners received certain indemnity payments from the United States Department of Agriculture (USDA).

         The DNR appealed, and the landowners cross-appealed. For the reasons expressed below, we conclude the DNR lacked statutory authority to issue an emergency order that imposed a quarantine on land used as a whitetail deer-hunting preserve. We also conclude the action of the DNR did not amount to an impermissible taking of property under the United States Constitution or the Iowa Constitution. In light of these rulings, we conclude the DNR's challenge of the district court's failure to reopen the record to receive additional evidence is moot. We therefore affirm the judgment of the district court.

         I. Factual and Procedural Background.

         A. Introduction: Positive CWD Test from Deer Harvested at the Pine Ridge Hunting Lodge.

         In the 1990s, Tom and Rhonda Brakke (the Brakkes) established a whitetail deer-breeding farm in Clear Lake, Iowa. In 2005, they bought Pine Ridge Hunting Lodge (Pine Ridge) in Davis County, Iowa, for $575, 000.[1] The Brakkes' purpose in purchasing the hunting lodge was to provide an "end market" for the deer they raised on the Clear Lake property. After the purchase, the Brakkes spent an additional $200, 000 to improve the property by constructing a cabin and investing in additional fencing, including a fence to separate the northern and southern halves of the property, which prevented deer from the north side from entering the south side of the preserve and vice versa.

         The property was licensed as a whitetail deer-hunting preserve under Iowa Code chapter 484C. The majority of the deer the Brakkes placed at Pine Ridge came from their Clear Lake breeding farm.

         Whitetail deer are susceptible to CWD. CWD is a type of transmissible spongiform encephalopathy, also known as prion disease. The DNR seeks to prevent the spread of CWD through voluntary agreements with breeding farms and statutory regulation of whitetail deer-hunting preserves. See Iowa Code § 484C.12.

         Originally, the Brakkes participated in a voluntary CWD program at their Clear Lake breeding farm so they could transport and sell their deer to others. With the success of their hunting operations at Pine Ridge, in 2012 the Brakkes ceased enrollment of the Clear Lake breeding farm in the voluntary CWD program because they were no longer in the business of selling deer to other operations. The Brakkes, however, continued to submit samples for testing from all deer harvested from Pine Ridge as required by Iowa Code section 484C.12.

         On June 16, the DNR received notification from a CWD testing lab that a deer from Pine Ridge tested positive for CWD. The CWD-positive deer originally came from the Brakkes' breeding farm in Clear Lake. After confirming the diagnosis, the DNR notified the Brakkes on July 19. Prior to this case, no captive or wild deer had ever tested positive for CWD in Iowa.

         Under Iowa law, the Iowa Department of Agriculture and Land Stewardship (IDALS) regulates whitetail deer on deer farms, while the DNR regulates deer on whitetail deer-hunting preserves. Iowa Code § 170.1A(2); id. § 484C.2(2). On August 29, IDALS received permission from the Brakkes to kill and test some deer at the Clear Lake farm. One deer at the Clear Lake farm tested positive for CWD. At some point, IDALS issued a notice of quarantine to the Brakkes for the Clear Lake farm.

         B. September 7, 2012 Agreement.

         On September 7, the Brakkes and the DNR signed an "Agreement for Chronic Wasting Disease Recovery Plan at Pine Ridge Hunting Lodge" (Agreement). Under the Agreement, the Brakkes were allowed to carry out planned hunts at Pine

          Ridge scheduled between September 8, 2012, and December 25, 2012. The Brakkes, however, were required to install jointly with the DNR an electronic fence inside the perimeter of the existing fence surrounding Pine Ridge, with the costs split evenly between the DNR and Pine Ridge. After construction of the electric fence, the Brakkes were solely responsible for fence repair and maintenance. DNR staff was to conduct weekly perimeter and fence inspections, with all repairs identified by DNR staff to be submitted to the Brakkes in writing and completed by the Brakkes within twenty-four hours.

         Further, the Agreement provided that Pine Ridge be completely depopulated of all deer and elk no later than January 31, 2013. All animals were to be tested for CWD and disposed of in accordance with applicable regulations at the Brakkes' cost. Once the depopulation of Pine Ridge was complete, the Brakkes, at their expense, agreed to clean and disinfect the facility in compliance with DNR rules. Finally, the parties agreed to a future operational plan to "be developed in conjunction with the DNR after depopulation was complete." The term of the Agreement was from the date of execution until January 31, 2013.

         One additional deer harvested at Pine Ridge in December 2012 tested positive for CWD. After the conclusion of the hunts, Pine Ridge depopulated all its deer. In April 2013, all feeders were disinfected with bleach, excess feed was buried, and all the terms of the Agreement were fulfilled with one exception-the parties did not reach an agreement on a "future operational plan" after depopulation of the animals.

         C. April 26, 2013 Letter.

         On April 26, the Brakkes wrote a letter to the DNR. In the letter, the Brakkes stated, "As you know, the area utilized by Pine Ridge Hunting Lodge as a hunting preserve is subject to a five (5) year quarantine." The letter noted that the Brakkes had

          "complied with all requirements of the September 7, 2012 agreement." The letter announced that if no response were received from the DNR, the Brakkes would regard all requirements of the Agreement as satisfied. The Brakkes further announced they would no longer be operating Pine Ridge as a whitetail deer-hunting preserve.

         By June 5, the DNR discovered the gates at Pine Ridge were standing open and that portions of the fence were damaged or had been removed.

         D. The Emergency Order.

         On June 6, the DNR issued an emergency order to require the Brakkes to stop their deconstruction of the fence surrounding Pine Ridge and to immediately restore the portions of the fence that were damaged. The emergency order also required the Brakkes to close and keep closed all of the gates and to authorize the DNR to access Pine Ridge for a limited duration in order to kill any deer that may be present on the property. Finally, the emergency order required the Brakkes submit and agree to execute a plan designed to ensure that CWD be quarantined within, and not spread beyond, Pine Ridge.

         On June 7, the Brakkes closed the gates at Pine Ridge and repaired the fence. On June 11, however, wild deer were seen inside the fence.

         E. The Administrative Hearing and the Natural Resource Commission Appeal.

         1. Introduction.

         The Brakkes appealed the emergency order on June 25. In the letter initiating the appeal, the Brakkes claimed the emergency order violated their United States and Iowa constitutional rights and other property rights because (1) the DNR lacked jurisdiction over Pine Ridge once it was no longer a hunting preserve; (2) the terms of the quarantine and emergency order without compensation were an unconstitutional taking; and (3) the DNR's actions were arbitrary, capricious, and an abuse of discretion.

         The Brakkes cited six reasons why the DNR's actions were arbitrary and capricious. First, they claimed only a limited number of deer species may contract CWD and CWD does not meaningfully limit the growth of the species. Second, the Brakkes asserted that CWD is not highly infectious and there is a reservoir of CWD in the wild that cannot be fully eliminated. Third, the Brakkes claimed there are more harmful diseases which affect deer for which the DNR does not impose such drastic measures. Fourth, the Brakkes asserted the emergency order would not materially affect the spread of CWD. Fifth, the Brakkes claimed the DNR previously told them that it had no issues with removing the fence. Finally, the Brakkes alleged that Pine Ridge was separated into two sections and about half of the property was never exposed to CWD.

         2. Contested case hearing.

         A contested case hearing was held beginning on November 18. Dale Garner of the DNR testified he understood that the USDA indemnification plan for compensating owners of deer killed as a result of positive CWD tests was no longer available. Neither Iowa in general nor the DNR or the IDALS had an indemnification plan.

         The DNR presented evidence that, as a result of the quarantine, the market value of Pine Ridge as real property had declined by $165, 000. The DNR's appraiser testified that she had not calculated the value of the Brakkes' lost business in not being able to operate the property as a hunting preserve.

          The Brakkes presented evidence from a finance expert with experience in hunting leases that the operating income for Pine Ridge for the year 2013, without any quarantine or restrictions, would have been $157, 537. If the Brakkes had operated Pine Ridge as a farm instead of a hunting preserve they would have lost $22, 021. The finance expert calculated the five-year total income of Pine Ridge as a hunting preserve at $917, 309, while the five-year total income of Pine Ridge as a farm would be negative $100, 465. If the Brakkes operated Pine Ridge as a free-range hunting operation, with no fencing or captive animals, the five-year income would be $143, 307. On cross-examination, the finance expert admitted he was not a certified public accountant or a licensed appraiser, and he conducted an analysis that was not a business valuation.

         After the final hearing on January 8, 2014, the Brakkes and the DNR entered a stipulation to submit additional evidence. The stipulation stated that in December 2013, the Brakkes had killed all the remaining deer at Pine Ridge and the DNR collected samples from all of the adult deer. CWD was not detected in any of the samples.

         On February 26, the administrative law judge (ALJ) issued her proposed decision. The ALJ ruled the DNR lacked jurisdiction to issue the emergency order. The ALJ determined Iowa Code chapter 484C only authorized the DNR to quarantine "diseased preserve whitetail, " not the land. Thus, the DNR's interpretation of 484C.12 granting them the power to impose a five-year quarantine on "the preserve and all remaining animals located within the infected preserve" was irrational, illogical, and wholly unjustifiable because the interpretation extended, enlarged, and changed the legislature's intent.

         3. Appeal to NRC.

         On February 28, the DNR appealed the proposed decision. On April 16, the parties submitted a second joint stipulation regarding the submission of additional evidence. The parties noted they "disagree[d] about the relevancy of this finding, " but "[a] wild deer harvested in Allamakee County, Iowa in early December 2013 tested positive for Chronic Wasting Disease." The parties submitted briefs to the NRC, and an unrecorded hearing was held on May 8.

         On May 28, the NRC upheld the DNR's emergency order. The commission found the Brakkes had not met their burden in demonstrating that Iowa Administrative Code rule 571-115.10, authorizing the five-year quarantine "on the preserve and all remaining animals located within the infected preserve, " was not authorized by chapter 484C. The commission admitted that chapter 484C does not explicitly state that the preserve land is to be quarantined, but it did not need to because the statute also gave the DNR the duty to prevent the spread of CWD. The commission held, as a matter of common sense and given the scientific evidence, a quarantine on the land is required to prevent the spread of CWD.

         F. Judicial Review of NRC Action.

         The Brakkes petitioned for judicial review of the NRC's decision on June 27. On December 1, the DNR moved for leave to present additional evidence to the NRC. The DNR alleged the Brakkes had voluntarily depopulated their deer at the Clear Lake farm in August of 2014 and were paid $917, 100 in indemnification by the USDA. The Brakkes resisted the motion. The district court denied the motion on December 18, stating it did not anticipate the need for any additional evidence in order for it to address the issues.

         The district court issued its ruling on February 13, 2015, reversing the commission and additionally ruling the DNR's actions were not a taking under the United States or Iowa Constitutions. The court found the DNR had been vested with interpretive authority and thus the DNR's interpretation of the law would only be reversed if it was "irrational, illogical, or wholly unjustifiable." The court, however, found it was irrational, illogical, and wholly unjustifiable for the DNR to have interpreted the statute to give it the authority to quarantine a hunting preserve when chapter 484C only specified the authority to quarantine "diseased preserve whitetail." See Iowa Code § 484C.12(1). While the legislature intended to prevent the spread of CWD, the legislature clearly did not intend to give the DNR unfettered authority to quarantine any land that came into contact with infected deer. The court also held that the DNR's actions were not a taking because the invasion to the Brakkes' property was temporary, both specifically as a taking per se and also as a taking involving the Penn Central[2] factors.

         The DNR appealed the district court's decision, and the Brakkes cross-appealed.

         II. Standard of Review.

         "Judicial review of agency decisions is governed by Iowa Code section 17A.19." Kay-Decker v. Iowa State Bd. of Tax Review, 857 N.W.2d 216, 222 (Iowa 2014). We "apply the standards of section 17A.19(10) to determine if we reach the same results as the district court." Renda v. Iowa Civil Rights Comm'n, 784 N.W.2d 8, 10 (Iowa 2010). The district court may properly grant relief if the agency action prejudiced the substantial rights of the petitioner and if the agency action falls within one of the criteria listed in section 17A.19(10)(a) though (n). Id.

         "We defer to the agency's interpretation of law when the legislature has clearly vested that interpretation in the agency's discretion." Kay-Decker, 847 N.W.2d at 222; Renda, 784 N.W.2d at 11; see also Iowa Code § 17A.19(11)(c). We will overturn an agency's interpretation of law when it has discretion only if the agency's interpretation is "irrational, illogical, or wholly unjustifiable." Iowa Code § 17A.19(10)(l); Renda, 784 N.W.2d at 11.

         The standard of review for constitutional claims, including with respect to takings, is de novo. Harms v. City of Sibley, 702 N.W.2d 91, 96 (Iowa 2005); Blumenthal Inv. Trusts v. City of West Des Moines, 636 N.W.2d 255, 260 (Iowa 2001).

         III. Statutory Authority of the DNR to Quarantine Land Where Whitetail Deer Test Positive for CWD.

         A. Introduction.

         The parties contest the scope of DNR "quarantine" authority under Iowa Code section 484C.12. The Brakkes point out the quarantine authority extends only to preserve whitetail deer, while the DNR suggests the power to quarantine preserve whitetail deer necessarily includes the power to exclude deer from reserve property where CWD has been discovered.

         B. Statutory Framework.

         1. Relevant provisions of the Iowa Administrative Procedures Act.

         This appeal is brought under the Iowa Administrative Procedures Act. Under Iowa Code section 17A.23(3), "[a]n agency shall have only that authority or discretion delegated to or conferred upon the agency by law and shall not expand or enlarge its authority or discretion beyond the powers delegated to or conferred upon the agency."

         2. Statutory authority of NRC and DNR.

         Iowa Code chapter 484C generally grants DNR the authority to regulate preserve whitetail. Iowa Code § 484C.2(2). The statute defines "preserve whitetail" as a "whitetail kept on a hunting preserve." Id. § 484C.1(8). The statute defines a hunting preserve as "land where a landowner keeps preserve whitetail as part of a business, if the business's purpose is to provide persons with the opportunity to hunt the preserve whitetail." Id. § 484C.1(6).

         Iowa Code section 484C.12 concerns testing for CWD. Section 484C.12(1) provides,

Preserve whitetail that are purchased, propagated, confined, released, or sold by a hunting preserve shall be free of diseases considered reportable for wildlife . . . . The department may provide for the quarantine of diseased preserve whitetail that threaten the health of animal populations.

Id. § 484C.12(1). Section 484C.12(2) relates to plans for eradication of diseases. It provides,

The landowner, or the landowner's veterinarian, and an epidemiologist designated by the department shall develop a plan for eradicating a reportable disease among the preserve whitetail population. The plan shall be designed to reduce and then eliminate the reportable disease, and to prevent the spread of the disease to other animals. The plan must be developed and signed within sixty days after a determination that the preserve whitetail population is affected with the disease. The plan must address population management and adhere to rules adopted by the department. The plan must be formalized as a memorandum of agreement executed by the landowner or landowner's veterinarian and the epidemiologist. The plan must be approved by the department.

Id. § 484C.12(2).

         3. Rules related to ...


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