In re: Route Permit for Construction of a Substation and a High Voltage Transmission Line in Dakota County, Minnesota, Issued to Great River Energy & Xcel Energy.

In re: Route Permit for Construction of a Substation and a High Voltage Transmission Line in Dakota County, Minnesota, Issued to Great River Energy & Xcel Energy. A05-661, A05-662, Court of Appeals Unpublished, March 14, 2006.

This opinion will be unpublished and

may not be cited except as provided by

Minn. Stat. § 480 A. 08, subd. 3 (2004).

 

STATE OF MINNESOTA

IN COURT OF APPEALS

A05-661

A05-662

 

In re:  Route Permit for Construction of a Substation and a
High Voltage Transmission Line in Dakota County, Minnesota,
Issued to Great River Energy & Xcel Energy

 

Filed March 14, 2006

Affirmed

Peterson, Judge

 

Minnesota Environmental Quality Board

04-81-TR-AIR

 

Dan Lipschultz, Michael J. Bradley, Moss & Barnett, 4800 Wells Fargo Center, 90 South Seventh Street, Minneapolis, MN  55402-4129 (for respondent Great River Energy)

 

Lisa M. Agrimonti, Briggs and Morgan, P.A., 2200 IDS Center, 80 South Eighth Street, Minneapolis, MN  55402 (for respondent Xcel Energy)

 

Alina Schwartz, Joel J. Jamnik, Campbell Knutson, P.A., 317 Eagandale Office Center, 1380 Corporate Center Curve, Eagan, MN  55121 (for relator City of Farmington)

 

Robert J. Hajek, Warchol, Berndt & Hajek, 3433 Broadway Street Northeast, Suite 110, Minneapolis, MN  55413 (for relator 210th Street group)

 

Mike Hatch, Attorney General, Lisa A. Crum, Assistant Attorney General, Suite 900, 445 Minnesota Street, St. Paul, MN  55101-2134 (for respondent Minnesota Environmental Quality Board)

 

Dwight S. Wagenius, Public and Human Resources Section, Attorney General's Office, 445 Minnesota Street, Suite 900, St. Paul, MN  55101 (for respondent Minnesota Environmental Quality Board)

 

            Considered and decided by Peterson, Presiding Judge; Halbrooks, Judge; and Huspeni, Judge.*

U N P U B L I S H E D   O P I N I O N

PETERSON, Judge

            This is a consolidated appeal from respondent Minnesota Environmental Quality Board's decision to grant a route permit to respondents Great River Energy and Xcel Energy to construct a high-voltage transmission line and a new substation in Dakota County.  Relator City of Farmington opposes the portion of the route that will be constructed through the city and relator citizens group, known as the 210th Street group, oppose the portion of the route that will be constructed along 210th Street.  Because the decision is supported by substantial evidence and is not arbitrary and capricious and the permit process did not violate due process, we affirm.

FACTS

            On April 30, 2004, Great River Energy (GRE) and Xcel Energy(Xcel) applied to the Minnesota Environmental Quality Board(MEQB) under the alternative permitting process, Minn. Stat. § 116C.575 (2004), for a permit to construct a high-voltage transmission line (HVTL)to connect the Air Lake substation in Lakeville to a proposed Vermillion River substation in Farmington and continue on to the Empire substation in Empire Township.   

The first portion of the HVTL, from the Air Lake substation to the proposed Vermillion River substation, and the proposed substation will be owned by Xcel.  The second portion of the line, from the Vermillion River substation to the Empire substation, will be owned by GRE.  In the permit application, GRE sought a permit to construct the HVTL from the Vermillion River substation to Highway 3 following a route north of the City of Farmington, and from Highway 3 to the Empire substation following 210th Street.

            On May 7, 2004, the MEQB accepted the route-permit application.  On May 13, 14, and 15, 2004, GRE and Xcel published notice of the application in the Farmington Independent, the Rosemount Town Pages, and This Week newspapers.  The notice told citizens how to get on the MEQB mailing list.  On June 3, 2004, notice of a June 24, 2004 public meeting was mailed to individuals on the mailing list.  On June 10, 2004, notice of the meeting was published in the Farmington Independent.  The public meeting was held on June 24, 2004, and July 9, 2004, was set as the deadline for the public to submit written comments to the MEQB.

After considering the information received at the public meeting and the written comments submitted by the public, the MEQB made its scoping decision on July 23, 2004.  The scoping document indicates that MEQB staff members were to perform an environmental assessment for the proposed route and for a number of alternative routes suggested by citizens.  The environmental assessment was completed September 27, 2004.  On September 28, 2004, notice of an October 11, 2004 public hearing was mailed to those on the mailing list; and on September 30, 2004, notice of the hearing was published in the Farmington Independent.

On October 11, 2004, a public hearing was held before an administrative law judge (ALJ).  At the hearing, members of the public testified regarding their concerns and asked questions of the MEQB staff and GRE representatives.  The ALJ set November 1, 2004, as the deadline for written submissions and November 8, 2004, as the deadline for responses to the submissions.  On December 13, 2004, the ALJ issued his report and recommendation.  After evaluating the alternative routes, the ALJ recommended proceeding from the Vermillion River substation using one of the "south route" alternatives through the City of Farmington and then using the route along 210th Street, as originally proposed in the permit application, to the Empire substation. 

To accommodate the city's request that the HVTL not pass through the city center, the ALJ's recommended route through the city was modified to run along Pine Street, and the permit application, with this modification, went before the MEQB on January 20, 2005, and was rejected.  The MEQB requested that the MEQB staff prepare for the next board meeting draft findings of fact regarding each of the route alternatives so that the board could consider all possible permutations, rather than just one.  On January 28, 2005, notice of the next MEQB meeting was mailed to the people on the mailing list. 

At the MEQB meeting on February 17, 2005, the city and the 210th Street group again voiced their concerns about the alternative routes.  The MEQB granted the permit to construct the HVTL along the modified south route and 210th Street.

The city and the 210th Street group appealed the MEQB's decision.

D E C I S I O N

In a judicial review [of an agency decision in a contested case], the court may affirm the decision of the agency or remand the case for further proceedings; or it may reverse or modify the decision if the substantial rights of the petitioners may have been prejudiced because the administrative finding, inferences, conclusion, or decision are:

(a) in violation of constitutional provisions; or

(b) in excess of the statutory authority or jurisdiction of the agency; or

(c) made upon unlawful procedure; or

(d) affected by other error of law; or

(e) unsupported by substantial evidence in view of the entire record as submitted; or

(f) arbitrary or capricious.

 

Minn. Stat. § 14.69 (2004).  "The party seeking review of the agency action has the burden of proving that the agency's conclusions violate one or more of the provisions of section 14.69."  In re  Space Ctr. Transp., 444 N.W.2d 575, 579 (Minn. App. 1989).

"The substantial evidence test requires a reviewing court to evaluate the evidence relied upon by the agency in view of the entire record as submitted.  If an administrative agency engages in reasoned decisionmaking, the court will affirm, even though it may have reached a different conclusion had it been the factfinder."  Cable Commc'ns Bd. v. Nor-West Cable Commc'ns P'ship, 356 N.W.2d 658, 668-69 (Minn. 1984) (citation omitted).  The agency's conclusions are not arbitrary and capricious so long as the agency has articulated a rational connection between the facts found and the choice made.  In re Excess Surplus Status of Blue Cross & Blue Shield of Minn., 624 N.W.2d 264, 277 (Minn. 2001).  

Upon review, a court must exercise judicial restraint, lest it substitute its judgment for that of the agency.  Id.  "[D]eference should be shown by courts to the agencies' expertise and their special knowledge in the field of their technical training, education, and experience."  Reserve Mining Co. v. Herbst, 256 N.W.2d 808, 824 (Minn. 1977).  The court will generally defer to the fact-finder's determination regarding credibility.  State by Cooper v. Moorhead State Univ., 455 N.W.2d 79, 83-84 (Minn. App. 1990).

I.

The city argues that (a) the MEQB's decision to grant a permit to construct the HVTL along the south route through the city is not supported by substantial evidence; and (b) the MEQB violated due process by failing to adequately notify affected landowners.

(a)       Substantial evidence

Minn. Stat. § 116C.57 (2004), which governs the HVTL route-permitting process, identifies factors that the MEQB is to consider when permitting a route.  Minn. Stat. § 116C.57, subd. 4 (2004), states:

The board's site and route permit determinations must be guided by the state's goals to conserve resources, minimize environmental impacts, minimize human settlement and other land use conflicts, and ensure the state's electric energy security through efficient, cost-effective power supply and electric transmission infrastructure. To facilitate the study, research, evaluation and designation of sites and routes, the board shall be guided by, but not limited to, the following considerations:

(1) Evaluation of research and investigations relating to the effects on land, water and air resources of large electric power generating plants and high voltage transmission lines, and the effects of water and air discharges and electric and magnetic fields resulting from such facilities on public health and welfare, vegetation, animals, materials and aesthetic values, including baseline studies, predictive modeling, and evaluation of new or improved methods for minimizing adverse impacts of water and air discharges and other matters pertaining to the effects of power plants on the water and air environment;

(2) Environmental evaluation of sites and routes proposed for future development and expansion and their relationship to the land, water, air and human resources of the state;

(3) Evaluation of the effects of new electric power generation and transmission technologies and systems related to power plants designed to minimize adverse environmental effects;

(4) Evaluation of the potential for beneficial uses of waste energy from proposed large electric power generating plants;

(5) Analysis of the direct and indirect economic impact of proposed sites and routes including, but not limited to, productive agricultural land lost or impaired;

(6) Evaluation of adverse direct and indirect environmental effects that cannot be avoided should the proposed site and route be accepted;

(7) Evaluation of alternatives to the applicant's proposed site or route proposed pursuant to subdivisions 1 and 2;

(8) Evaluation of potential routes that would use or parallel existing railroad and highway rights-of-way;

(9) Evaluation of governmental survey lines and other natural division lines of agricultural land so as to minimize interference with agricultural operations;

(10) Evaluation of the future needs for additional high voltage transmission lines in the same general area as any proposed route, and the advisability of ordering the construction of structures capable of expansion in transmission capacity through multiple circuiting or design modifications;

(11) Evaluation of irreversible and irretrievable commitments of resources should the proposed site or route be approved; and

(12) When appropriate, consideration of problems raised by other state and federal agencies and local entities.

 

            Minn. R. 4400.3150 (2005) also identifies factors that the MEQB is to consider when permitting an HVTL route.  Minn. R. 4400.3150 states:

In determining whether to issue a permit for a large electric power generating plant or a high voltage transmission line, the board shall consider the following:

A.        effects on human settlement, including, but not limited to, displacement, noise, aesthetics, cultural values, recreation, and public services ;

B.        effects on public health and safety;

C.        effects on land-based economies, including, but not limited to, agriculture, forestry, tourism, and mining;

D.        effects on archaeological and historic resources;

E.         effects on the natural environment, including effects on air and water quality resources and flora and fauna;

F.         effects on rare and unique natural resources;

G.        application of design options that maximize energy efficiencies, mitigate adverse environmental effects, and could accommodate expansion of transmission or generating capacity;

H.        use or paralleling of existing rights-of-way, survey lines, natural division lines, and agricultural field boundaries;

I.          use of existing large electric power generating plant sites;

J.         use of existing transportation, pipeline, and electrical transmission systems or rights-of-way;

K.        electrical system reliability;

L.         costs of constructing, operating, and maintaining the facility which are dependent on design and route;

M.       adverse human and natural environmental effects which cannot be avoided; and

N.        irreversible and irretrievable commitments of resources.

 

Throughout the permit-application process, landowners north of the city opposed the route originally proposed in the application (the north route) and the city opposed the alternative route through Farmington (the south route).  In the context of its argument that the MEQB's decision is not supported by substantial evidence, the city raises four issues:  (1) the MEQB failed to properly consider the effects on natural resources; (2) the south route does not follow a preexisting route; (3) the MEQB failed to properly evaluate the effects on human settlement as the south route runs through a highly populated area and the Pine Street segment was not part of the environmental assessment; and (4) the cost analysis relied upon by the MEQB is unreliable.

Substantial evidence means "(1) such relevant evidence as a reasonable mind might accept as adequate to support a conclusion; (2) more than a scintilla of evidence; (3) more than some evidence; (4) more than any evidence; or (5) evidence considered in its entirety."  Minn. Ctr. for Envtl. Advocacy v. Minn. Pollution Control Agency, 644 N.W.2d 457, 466 (Minn. 2002); see Cable Commc'ns Bd., 356 N.W.2d at 668 (same). 

            The city first alleges that the MEQB failed to properly consider the effects on land, water, and air resources as evidenced by the massive tree removal that will occur in Rambling River Park.  But the record establishes that the MEQB did consider the effects on land and water and that the north route was disfavored because it interfered with agricultural land and involved three river crossings, rather than the one river crossing on the south route.

With respect to the city's argument that the south route does not follow a pre-existing route, it is true that the Minnesota Supreme Court has concluded "that in order to make the route-selection process comport with Minnesota's commitment to the principle of nonproliferation, the [Minnesota Environmental Quality Council][1] must, as a matter of law, choose a pre-existing route unless there are extremely strong reasons not to do so."  People for Envtl. Enlightenment & Responsibility (PEER), Inc. v. Minn. Envtl. Quality Council, 266 N.W.2d 858, 868 (Minn. 1978).  But due to the existence of a power line in Rambling River Park and a railway corridor, the MEQB staff considered the south route through the city as the route that uses preexisting corridors.  Furthermore, the north route is mostly agricultural land with no pre-existing corridor until it connects with Highway 3.  While the city maintains that its proposed 208th Street extension will provide a corridor for the north route, the street will not be built until after the HVTL is constructed, and, therefore, the extension is not a preexisting corridor. 

The city's argument regarding the effects on human settlement is based on the number of people that the city claims will be affected by the south route.  But this argument was countered by two property owners along the north route who indicated their intentions to convert their land to residential developments and argued that the north route would have a large impact on those developments.  And although one of the landowners later indicated that he did not intend to develop the land, the land is being used for agricultural purposes, and Minn. Stat. § 116C.57, subd. 4(5), (9), requires the MEQB to consider the direct and indirect economic impact of productive agricultural land lost or impaired and evaluate governmental survey lines and other natural division lines of agricultural land to minimize interference with agricultural operations.    

The city's final argument is that the cost analysis that the MEQB relied on was not supported by substantial evidence.  But several cost analyses were introduced into the record, and there is no evidence that the MEQB failed to consider any of them.  If the MEQB found one cost analysis more credible than another, this court must defer to that determination.  See Cooper, 455 N.W.2d at 83-84 (explaining that this court must defer to fact-finder's credibility determination).  It is true that GRE's cost estimates changed from early estimates that indicated that the north route was less expensive, to later estimates that indicated that the south route was less expensive, which, the city suggests, indicates that GRE amended its cost estimates at the last minute to support the south route.  But the evidence that the city cites to support this inference was available to the MEQB, and the MEQB could evaluate GRE's estimates knowing that the estimates had changed during the proceeding.  The mere fact that the estimates changed is not a sufficient basis for this court to conclude that the MEQB could not find the estimates credible.

In this case, one route was not obviously superior to the others.  As the city's representative stated:

[W]hen [the ALJ] issued his opinion he made a reference in his memorandum to the fact that as far as the two routes through the city are concerned there was not one route that was clearly superior to another.  It wasn't a 90/10, an 80/20 type of decision.  It was probably more like a 51/49.

 

. . . [T]here is no substantially superior considerations related to either route.

 

The record demonstrates that after considering the relevant factors, the MEQB engaged in reasoned decisionmaking and determined that the south route was preferable to the north route.  The MEQB also articulated rational connections between the information presented to it, the facts it found based on that information, and its decision.    

(b)       Due process

The city argues that the issuance of the permit violates due process because certain affected residents along Pine Street were not notified or afforded an opportunity to be heard before the segment on Pine Street was added to the route and because the updated cost estimates were issued too late in the process to give the city adequate time to respond. 

Minn. Stat. § 116C.57, subd. 2b (2004), contains specific requirements for who must receive notice of a route-permit application, when they must receive notice, and the form of the notice.  The statute requires that notice of the application be published in a legal newspaper of general circulation and that notice be mailed to municipalities along the route, property owners whose property is along the route, and to those persons who have requested to be placed on a list maintained by the MEQB.  Minn. Stat. § 116C.57, subd. 2b.  The statute also states that "[t]he failure to give mailed notice to a property owner, or defects in the notice, shall not invalidate the proceedings, provided a bona fide attempt to comply with this subdivision has been made."  Id.  In addition, Minn. Stat. § 116C.57, subd. 2d (2004), requires the MEQB to publish notice of a public hearing on an application in a legal newspaper of general circulation and mail notice of the hearing to the chief executives of municipalities along the route.

The record demonstrates that at each stage of the proceeding, notice was mailed and published as required under the statute, and the city has not identified any person who was entitled to receive notice that did not receive notice or produced evidence that the MEQB did not make a bona fide attempt to comply with the statutory notice requirements.  Finally, the city's argument regarding lack of time to respond to the updated cost estimates is not persuasive.  The city was involved at every stage of the proceeding and disputed the updated cost estimates.  The city has not established any due-process violation.

II.

The 210th Street group argues that the MEQB's decision is arbitrary and capricious and not supported by substantial evidence. "An agency decision is arbitrary and capricious when it is an exercise of that agency's will, rather than its judgment."  In re Medical License of Friedenson, 574 N.W.2d 463, 467 (Minn. App. 1998), review denied (Minn. Apr. 30, 1998).  "Where there is room for two opinions on the matter, such action is not arbitrary and capricious."  Id. (quotation omitted).

Citing Johnson v. Comm'r of Health, 671 N.W.2d 921 (Minn. App. 2003),  the 210th Street group argues that the MEQB failed to provide evidence that it considered all of the statutory factors that it was required to consider with respect to the permit application.  In Johnson, this court explained that when an agency is required to consider statutory factors when making a decision, the agency is "obliged not only to consider the statutory factors but to indicate that they [have] been considered."  671 N.W.2d at 923.  This court noted in Johnson that there was no evidence that the agency considered information pertaining to five of eight applicable statutory factors and concluded that it could not sustain the agency's decision "[a]bsent written findings and reasons, and provided only with a conclusory explanation of the application of three of the eight factors."  Id. at 924.  But this does not mean that an agency must report its decision in a format that addresses the statutory factors point-by-point.    

The MEQB's decision is significantly different from the agency decision in Johnson.  With a minor amendment, the MEQB adopted the ALJ's summary of evidence, which quotes both Minn. Stat. § 116C.57, subd. 4, and Minn. R. 4400.3150.  The summary states that the permit application and the environmental assessment contain adequate information to allow the MEQB to consider the statutory factors and then addresses each of the factors in Minn. Rule 4400.3150 point-by-point.  The 210th Street group acknowledges that there is some overlap among the factors in the statute and the factors in the rule, but contends that the decision does not provide evidence that the MEQB considered the statutory factors.  But, unlike Johnson, there is evidence in the record that indicates that the MEQB considered information pertaining to the applicable statutory factors.  A February 10, 2005 MEQB-staff memorandum to the members of the board specifically addresses the factors listed in Minn. Stat. § 116C.57, subd. 4(3), (5), (6), (8), (9), (11), (12).  Of the five remaining statutory factors, paragraph (4) is not applicable because the permit application does not involve a generating plant, and the specific factors identified in paragraphs (1) and (2) are also identified in Minn. R. 4400.3150, and they are specifically addressed in the decision in the context of the rule.  The record demonstrates that the factor identified in paragraph (7), evaluation of alternatives to the applicant's proposed route, was extensively considered by the MEQB.  Finally, the factor identified in paragraph (10), the future need for additional high-voltage transmission lines in the general area of the proposed route, is addressed in paragraph 13 of the ALJ's summary, which indicates that the proposed HVTL will increase electrical system reliability in the area sufficiently to allow for projected regional growth over the next 15 to 20 years.  As required under Johnson, the MEQB's decision and the record of the proceedings demonstrate that the MEQB considered the applicable statutory factors and that its decision was not arbitrary and capricious.

The 210th Street group also argues that because the cost analysis that the MEQB relied on was inaccurate because it did not contain easement costs, the MEQB's decision was not supported by substantial evidence.  But the 210th Street group prepared and submitted its own cost estimates, which included easement costs, and the 210th Street group acknowledges in its brief that cost is just one of the six more significant factors that the board considered.  The MEQB was able to consider all of the cost estimates presented and consider cost along with the other required factors.  In light of the deference that we must give to the MEQB's expertise and its credibility determinations, the 210th Street group has not met its burden of showing that the MEQB's decision was not supported by substantial evidence. 

The extensive record demonstrates that the MEQB thoroughly considered all proposed routes and all applicable statutory and rule factors and made a reasoned decision that is supported by an articulated, rational connection between the facts found and the choice made. 

Affirmed.

*   Retired judge of the Minnesota Court of Appeals, serving by appointment pursuant to Minn. Const. art. VI, § 10.

[1]When the MEQB was created by statute in 1973, the agency was named the Minnesota Environmental Quality Council.  In 1975, the legislature changed the name of the agency to the Minnesota Environmental Quality Board.  People for Envtl. Enlightenment & Responsibility, (PEER) Inc. v. Minn. Envtl. Quality Council, 266 N.W.2d 858, 861 n.1 (Minn. 1978).