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Quantum Pipeline Co. v. Illinois Commerce Commission

March 12, 1999

QUANTUM PIPELINE CO. AND SEAGULL PRODUCTS PIPELINE CORP., PETITIONERS,
v.
ILLINOIS COMMERCE COMMISSION, RESPONDENT.



Appeal from the Illinois Commerce Commission ICC Docket Nos. 96--0001/96--0318

The opinion of the court was delivered by: Justice Koehler

IN THE COURT OF APPEALS OF THE STATE OF ILLINOIS

The petitioners, Quantum Pipeline Company and Seagull Products Pipeline Corporation, appeal the Illinois Commerce Commission's (Commission) order rescinding the petitioners' certificate authorizing construction of a common carrier pipeline, and denying the petitioners' request for eminent domain authority. We must decide whether the Commission denied the petitioners procedural due process when it revoked their certificate without giving them notice of a violation of their certificate, and in so doing, we must answer the following questions: (1) Does a liberty or property interest exist that requires due process be afforded? and (2) What process is due? Because we conclude that the procedure used by the Commission violated the petitioners' procedural due process rights, we reverse and remand with directions.

I. FACTS

On April 21, 1995, the petitioners filed an application with the Commission seeking authorization to build a pipeline from Clinton, Iowa, to Morris, Illinois. The petitioners provided the statutorily required notice of their application for a certificate by publication in the official state newspaper. Although not required to do so, the petitioners distributed informational packets to landowners along the pipeline route and cooperated with the Illinois Department of Agriculture and Illinois Farm Bureau to notify and inform landowners of the proposed project. One landowner sought to intervene, but the Commission denied the petition as untimely. Subsequently, the Commission waived a hearing and granted the petitioners' certificate of public convenience and necessity after finding that a public need existed. 625 ILCS 5/18c--8201(1) (West 1992).

The petitioners then negotiated with private landowners for the easements required to build the pipeline. Due to an inability to obtain easements from all of the landowners, the petitioners sought eminent domain power under section 8--509 from the Commission. *fn1 220 ILCS 5/8--509 (West 1992). Thirty-four landowners sought leave to intervene in the eminent domain proceeding. *fn2

After the time to petition the Commission for a rehearing on its grant of petitioners' certificate expired, the Commission's staff filed a report to the Commission requesting that the Commission reopen the certificate proceeding pursuant to section 200.900 (83 Ill. Admin. Code § 200.900 (West 1992)). Section 200.900 allows the Commission to "reopen any proceeding when it has reason to believe that conditions of fact or law have so changed as to require, or that the public interest requires, such reopening."

The Commission's staff stated that "[the] public interest requires such reopening" due to the number of petitions to intervene in the petitioners' request for eminent domain authority. The Commission then entered an order initiating a proceeding to reopen the evidentiary record to determine "whether it will rescind, alter, amend or allow to stand as originally entered" its order granting the petitioners' certificate. This new proceeding was consolidated with the eminent domain proceeding.

In the consolidated proceedings, the petitioners presented the same evidence in support of their certificate that they submitted nine months earlier in the original proceeding, in addition to evidence supporting their request for eminent domain authority. The Commission's staff and various intervening landowners also submitted testimony to the Commission. A sharply divided Commission *fn3 entered an order rescinding the petitioners' certificate that was previously issued after concluding that the proposed pipeline was likely to only serve the petitioners' private needs and, further, that a public need for the pipeline did not exist. Because the Commission rescinded the certificate, it did not consider the propriety of the petitioners' request for eminent domain authority. Subsequently, the Commission also denied the petitioners' petition for rehearing. This appeal followed.

II. ANALYSIS

In determining whether the petitioners' constitutional rights have been violated, the standard of review is de novo. In re Barbara H., 288 Ill. App. 3d 360, 365, 680 N.E.2d 471, 475 (1997). Further, our scope of review of final Commission orders is defined within the Public Utilities Act as follows:

"The [appellate] court shall reverse a Commission rule, regulation, order or decision, in whole or in part, if it finds that:"

***

"C. The rule, regulation, order or decision is in violation of the State or federal constitution of laws; or"

"D. The proceedings or manner by which the Commission considered and decided its rule, regulation, order or decision were in violation of the State or federal constitution or laws, to the prejudice of the appellant." 220 ILCS 5/10--201(e)(iv) (West 1992). *fn4

Based on this statute, we may reverse the Commission's decision to rescind the petitioners' certificate if we conclude that the Commission deprived the petitioners of their constitutional right to procedural due process.

As a threshold matter, does a liberty or property interest exist that requires procedural due process be afforded to the petitioners? An entity may have a property right if such an interest is given to him under state law. East St. Louis Federation of Teachers, Local 1220, American Federation of Teachers, AFL-CIO v. East St. Louis School District No. 189 Financial Oversight Panel, 178 Ill.2d 399, 416, 687 N.E.2d 1050, 1060 (1997). An interest is a property right subject to due process protection if that interest is secured by rules or mutually explicit understandings that support the claim of entitlement. Federation of Teachers, 178 Ill.2d at 416, 687 N.E.2d at 1060. Therefore, the question becomes whether state law creates a property right in a certificate.

In order to answer this question, we look to Frost v. Corporation Commission, 278 U.S. 515, 73 L.Ed. 483, 49 S.Ct. 235 (1929). In Frost, the United States Supreme Court reasoned that the right to operate a cotton gin is not merely a license, but rather a property right within ...


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