#27324-a-SLZ

2015 S.D. 81

                           IN THE SUPREME COURT
                                   OF THE
                          STATE OF SOUTH DAKOTA

                                  ****
GERALD PESALL,                             Intervener and Appellant,

     v.

MONTANA DAKOTA UTILITIES, CO.,
OTTER TAIL POWER and
THE SOUTH DAKOTA PUBLIC
UTILITIES COMMISSION,                      Appellees,

     and

SCHURING FARMS, INC. and
BRADLEY MOREHOUSE,                         Interveners.

                                  ****

                  APPEAL FROM THE CIRCUIT COURT OF
                     THE FIFTH JUDICIAL CIRCUIT
                     DAY COUNTY, SOUTH DAKOTA

                                  ****

                    THE HONORABLE SCOTT P. MYREN
                               Judge

                                  ****

N. BOB PESALL
Flandreau, South Dakota                    Attorney for intervener
                                           and appellant.



                                  ****

                                           CONSIDERED ON BRIEFS
                                           ON AUGUST 31, 2015

                                           OPINION FILED 11/04/15
THOMAS J. WELK
JASON R. SUTTON of
Boyce Law Firm, LLP
Sioux Falls, South Dakota                  Attorneys for appellees
                                           Montana Dakota Utilities Co.
                                           and Otter Tail Power.


MARTY J. JACKLEY
Attorney General

JOHN J. SMITH
KAREN E. CREMER
Special Assistant Attorneys General
South Dakota Public Utilities Commission
Pierre, South Dakota                       Attorneys for appellee the
                                           South Dakota Public Utilities
                                           Commission.
#27324

ZINTER, Justice

[¶1.]         Montana Dakota Utilities Co. and Otter Tail Power Company

(Applicants) filed an application with the South Dakota Public Utilities Commission

(PUC or Commission) for a permit to construct a high-voltage electrical

transmission line. Appellant Gerald Pesall objected to the project because he was

concerned that excavating and moving soil to construct the project might unearth

and spread a crop parasite. The PUC granted the permit on conditions, including a

condition to identify and mitigate the potential parasite problem. The circuit court

affirmed. Pesall’s appeal raises two issues: whether the permit condition relating to

the parasites constituted an improper delegation of authority to a private party;

and, whether the PUC exceeded a twelve-month time limit for rendering complete

findings on the application. We affirm.

                            Facts and Procedural History

[¶2.]         On August 23, 2013, Applicants applied for a permit to construct a

345-kilovolt transmission line that would start near Ellendale, North Dakota; would

run through Brown, Day, and Grant counties in South Dakota; and would terminate

near Big Stone City. The construction involved the suspension of high-voltage

electrical lines from steel monopole towers. Each tower would be approximately 120

to 155 feet in height. The towers were to be attached to cylindrical concrete

foundations, six to eleven feet in diameter and twenty-five to thirty feet deep.

Construction required the removal and disposal of approximately thirty cubic yards

of soil for each tower.




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[¶3.]         Applicants’ project would cross one part of Pesall’s farm. Pesall

intervened and was granted party status. 1 In a subsequent contested-case hearing,

Dr. Gregory Tylka, one of Pesall’s witnesses, testified about soybean cyst nematodes

(SCNs). He testified that SCNs are soil-born parasites that can decrease soybean

productivity in infected fields. SCNs may exist in soil at depths of six feet, and they

may remain dormant for ten years. SCNs have been found in three of the counties

through which the transmission line would traverse. SCNs can spread by any

activity that moves soil. There is no dispute that the construction necessary to

build the proposed line could spread the parasite. However, wind, water erosion,

burns, typical farming practices, and even people walking over infected soil can also

spread SCNs. Furthermore, there was no evidence that SCNs infected any soil

along the project route.

[¶4.]         Before the evidentiary hearing, Applicants and PUC staff submitted a

proposed settlement stipulation that would subject the permit to thirty-three

conditions. One condition addressed SCN mitigation. Condition 17 provided:

“Applicant shall develop and implement a mitigation plan to minimize the spread of

[SCNs] . . . in consultation with a crop pest control expert.” Pesall objected to the

proposed condition at the evidentiary hearing.

[¶5.]         Following the hearing, PUC staff and Applicants entered into an

amended settlement stipulation that further addressed SCN mitigation. Pesall also

objected to this proposal. He did not, however, propose an alternative mitigation



1.      Other parties/landowners also intervened, but they are not parties in this
        appeal.

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plan. Instead, he requested that the PUC deny the permit on grounds relating to

SCN mitigation, require the Applicants to reapply within three years, and limit the

reconsideration to SCN mitigation. The PUC acknowledged Pesall’s concerns, but

denied his request. The PUC found that the risk of spreading SCNs from the

project was not a serious threat. Additionally, in rendering its final decision to

grant the permit, the PUC modified Condition 17 to require PUC oversight of any

required SCN mitigation. Modified Condition 17 provided:

             After Applicants have finished the soil sample field assessment
             in accordance with the specifications for such assessment
             prepared in consultation with an expert in the proper
             methodology for performing such a sampling survey, Applicants
             shall submit to the Commission a summary report of the results
             of the field assessment and Applicants’ specific mitigation plans
             for minimizing the risk of the spread of soybean cyst nematode
             from contaminated locations to uncontaminated locations. At
             such time and throughout the construction period, one or more
             Commissioners or Staff shall have the right to request of
             Applicants confidential access to the survey results to enable
             verification of the survey results, assess the appropriateness of
             the mitigation measures to address such results, and monitor
             the execution of the plan during construction.

The PUC ultimately found that Applicants’ SCN mitigation plan, together with

modified Condition 17, would reasonably minimize the risk of spreading SCNs. The

PUC entered a written Final Decision and Order granting the permit subject to this

and other conditions.

[¶6.]        Pesall appealed to the circuit court raising six issues. The circuit court

affirmed. Pesall now appeals to this Court raising two issues: (1) whether the PUC

improperly delegated its authority to a private party; and (2) whether the PUC

exceeded a statutory twelve-month time limit for issuing complete findings. Pesall’s

arguments raise questions of law and statutory interpretation. “[Q]uestions of law,

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including statutory interpretation, are reviewed de novo.” In re Establishment of

Switched Access Rates for U.S. W. Commc’ns, Inc., 2000 S.D. 140, ¶ 13, 618 N.W.2d

847, 851.

                                      Decision

[¶7.]        A permit is required to construct the type of electrical transmission

line at issue in this case. See SDCL 49-41B-4. The Legislature conferred the

authority to grant or deny these permits on the PUC. Id.

[¶8.]        Pesall first argues that the PUC should have rejected Applicants’

application because their mitigation proposal did not state with specificity what

Applicants would do to mitigate the spread of SCNs; what Applicants would do with

potentially contaminated soil; and how Applicants would prevent contaminated soil

from being transported by equipment from one field to another. Pesall argues that

the PUC should have required Applicants to correct these alleged defects and

reapply within three years. See SDCL 49-41B-22.1 (authorizing this procedure). 2




2.      SDCL 49-41B-22.1 provides:
             Nothing contained herein shall prohibit an applicant from
             reapplying for a permit previously denied pursuant to § 49-41B-
             24 or 49-41B-25 within three years from the date of the denial of
             the original permit. Upon the first such reapplication, the
             applicant shall have the burden of proof to establish only those
             criteria upon which the original permit was denied, provided
             that nothing in the reapplication materially changes the
             information presented in the original application regarding
             those criteria upon which the original permit was not denied.
             However, nothing contained in this provision shall prohibit the
             Public Utilities Commission from requiring such applicant to
             meet its burden of proof as to any criteria, upon a specific
             finding by the commission of a material change in the
             circumstances regarding those criteria, but the Public Utilities
                                                            (continued . . .)
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Although this was an alternative for the PUC, the PUC chose to grant the permit

subject to SCN mitigation conditions. The Legislature expressly authorized the

PUC’s choice, see SDCL 49-41B-24, 3 and we give “deference to PUC’s expertise and

special knowledge in the field of electric utilities,” Matter of N. States Power Co.,

489 N.W.2d 365, 370 (S.D. 1992). Pesall has not demonstrated an error of law or an

abuse of discretion in the PUC’s decision to grant a conditional permit rather than

requiring reapplication.

[¶9.]         Pesall next argues that modified Condition 17 improperly delegated

the PUC’s authority to a private party. Pesall relies on In re Nebraska Power

District, 354 N.W.2d 713 (S.D. 1984).

[¶10.]        In Nebraska Power District, the Nebraska Public Power District

(NPPD) applied for a permit to construct an electrical transmission facility. Id. at

715. Certain affected landowners had concerns about the soil handling procedures

to be used in the project. See id. at 716. In response, the PUC conditioned the

permit on a requirement that NPPD offer soil treatment options to the affected

landowners. Id. The options allowed the landowners to “require that NPPD utilize
________________________
(. . . continued)
               Commission shall not, in any event, prepare or require the
               preparation of an environmental impact statement.

3.       SDCL 49-41B-24 provides:
              Within twelve months of receipt of the initial application for a
              permit for the construction of energy conversion facilities,
              AC/DC conversion facilities, or transmission facilities, the
              commission shall make complete findings in rendering a
              decision regarding whether a permit should be granted, denied,
              or granted upon such terms, conditions or modifications of the
              construction, operation, or maintenance as the commission
              deems appropriate.

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other specified topsoil preservation procedures on their land.” Id. We concluded,

“SDCL 49-41B-24 dictates that the PUC is the only body which can impose terms

and conditions. Because no other statute expressly states that landowners can

dictate topsoil restoration conditions, the PUC had unlawfully delegated its

authority.” Id. at 719.

[¶11.]         Nebraska Power District does not, however, apply in this case. In

Nebraska Power District, the private parties “could, if they desired, require that

NPPD utilize other specified topsoil preservation procedures on their land.” Id. at

716. We acknowledge that the PUC specified other procedures. Nevertheless, this

Court characterized the topsoil restoration program as a matter involving private

party “choice.” Id. at 720. In this case, the Applicants may not choose the

mitigation procedure because the PUC retained oversight authority to make the

ultimate decision. Consequently, Nebraska Power District is no support for the

proposition that the PUC delegated its authority to the Applicants. 4

[¶12.]         On the contrary, the permit and the PUC’s modifications of Condition

17 reflect that the PUC retained its authority to make the ultimate decision

regarding SCN mitigation. There is no dispute that the PUC itself granted the

permit and imposed the mitigation conditions. Concededly, modified Condition 17

does not include a specific mitigation plan, but the condition requires Applicants to


4.       Pesall also relies on two federal cases. See Ass’n of Am. R.Rs. v. U.S. Dep’t of
         Transp., 721 F.3d 666 (D.C. Cir. 2013), vacated on other grounds sub nom.
         Dep’t of Transp. v. Ass’n of Am. R.Rs., ___ U.S. ___, 135 S. Ct. 1225, 191 L.
         Ed. 2d 153 (2015); and Carter v. Carter Coal Co., 298 U.S. 238, 269, 56 S. Ct.
         855, 858, 80 L. Ed. 1160 (1936). These cases are inapposite because they
         involved private actors exercising regulatory authority over other private
         actors.

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conduct a field assessment to determine if SCNs contaminate the soil. Additionally,

Applicants must consult an expert to ensure their field assessment follows a proper

methodology. Then, the permit condition requires Applicants to submit the field

assessment and a specific mitigation plan to the PUC for a sufficiency review.

Finally, under the permit condition, the PUC must verify the survey results, assess

the appropriateness of the mitigation measures, and monitor execution of the

mitigation plan during construction. Thus, although the PUC did not specify a

precise pre-construction mitigation plan, if SCNs are encountered during

construction, Applicants do not have the ultimate authority to choose the final

mitigation plan. Modified Condition 17 requires the PUC to oversee and determine

the actual mitigation requirements in light of the variables that will be encountered

in construction. 5 As the PUC indicated in its findings of fact, Condition 17 was

modified to provide “clarity concerning exactly what process [Applicants] would

follow in the SCN soil assessment[,] . . . mitigation plan development[,] [mitigation

plan] execution[,] and [the PUC’s] ability to verify and exercise its oversite authority

over the development and execution during construction.” (Emphasis added.) We

5.    Applicants’ mitigation plan explained the dilemma:
             Mitigating the spread of SCN from an existing affected field to a
             non-SCN affected field, a variety of measures may be utilized,
             which are dependent on soil conditions, weather conditions,
             topography, distance traveled, equipment type, and cost.
             Unfortunately, one mitigation measure alone is not a “catch-all”
             and will be determined on a site-specific basis. Measures to
             assist in the control of soils on equipment may include: cleaning
             stations, utilizing clean crews for non-affected fields and a dirty
             crew for affected fields, equipment mats, and weather-
             dependent construction (i.e. frozen and dry soils). The measures
             ultimately used will depend on the results of the sampling effort,
             cost, resource availability, and contractor input.

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conclude that modified Condition 17 did not delegate the PUC’s authority to the

Applicants. 6

[¶13.]          Pesall also argues that the PUC did not issue complete findings on the

permit within twelve months as required by SDCL 49-41B-24. Pesall points out

that the PUC did not order a specific mitigation plan within a year after the

application was filed. Pesall contends that the PUC lacks authority to act after that

twelve-month deadline. The implication is that SDCL 49-41B-24 was violated

because the PUC made no specific finding on the ultimate mitigation plan that

would be implemented.

[¶14.]          Applicants filed their application on August 23, 2013. On August 22,

2014, the PUC issued its Final Decision and Order. Detailed findings and modified

Condition 17 were included in the Final Decision and Order. Therefore, the PUC

timely rendered a decision granting the permit on conditions and included detailed

findings. We acknowledge Pesall’s point that specific mitigation plans are not

included: modified Condition 17 contemplates future action after the one-year

deadline. However, as previously noted, the future action involves PUC

enforcement of modified Condition 17. The fact that the PUC retained jurisdiction

to enforce its conditions does not mean they failed to render complete findings on

the permit. SDCL 49-41B-33 authorizes future enforcement of conditions: “A

permit may be revoked or suspended by [the PUC] for . . . [f]ailure to comply with

the terms or conditions of the permit[.]” See also In re Otter Tail Power Co. ex rel.


6.       Pesall also advances three policy considerations for not allowing the PUC to
         delegate its authority. We do not address those concerns because the PUC
         did not unlawfully delegate authority to a private party.

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Big Stone II, 2008 S.D. 5, ¶ 33, 744 N.W.2d 594, 604 (upholding a similar forward-

looking enforcement provision in a case where the permit required “that the

Applicants submit annual reviews of any regulations on CO2 emissions and their

efforts to comply with those regulations”). Enforcement of conditions is often

necessary in these types of cases. Pesall’s contrary suggestion is unsupported by

the nature of the project and the PUC’s statutory authority.

[¶15.]       The PUC did not delegate its regulatory authority to Applicants, and

the PUC timely rendered complete findings on the permit application. We affirm.

[¶16.]       GILBERTSON, Chief Justice, and SEVERSON, WILBUR, and KERN,

Justices, concur.




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