ISSUES PRESENTED

I. Was it proper to permit intervention under Rule 24, Minn. R. Civ. P. by a group of citizens in Sunfish Lake, known as Power Line Task Force, Inc., who are vitally effected by the proposed replacement of a single-circuit electric transmission line with a new and more intensive double-circuit power line?

The Trial Court held in the affirmative, allowing the group to intervene under Rule 24 of the Minnesota Rules of Civil Procedure.

Appellants maintain that the decision of the Trial Court was correct. Norman v. Refsland, 383 N.W.2d 673, 678 (Minn. 1986); Costley v. Caromin House, Inc., 313 N.W.2d 21, 28-29 (Minn. 1981); Snyder’s Drug Stores, Inc., v. Minn. State Bd. of Pharmacy, 221 N.W.2d 162, 166 (Minn. 1974); BE & K Constr. Co. v. Peterson, 464 N.W.2d 756 (Minn. Ct. App. 1991).

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II. Did the Trial Court err in dismissing this lawsuit with prejudice, over the objection of the Intevenor, without providing terms or conditions that are “proper” to protect the right of Intevenor to appeal from an earlier mandamus decision entered by the Court?

The Trial Court held in the negative, ordering that the lawsuit be dismissed with prejudice and without providing any terms or conditions to permit the Intevenor to appeal from the earlier decision.

Appellant maintains that the decision of the Trial Court dismissing the case with prejudice was erroneous. Lang v. William Bros Boiler & Mfg. Co., 85 N.W.2d 412 (Minn. 1957); Muirhead v. Johnson, 46 N.W.2d 502 (Minn. 1951); Lombardo v. Seydow-Weber, 529 N.W.2d 702 (Minn. Ct. App. 1995); Erickson v. Bennett, 409 N.W.2d 884 (Minn. Ct. App. 1987).

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III. Did the Trial Court err in directing the City of Sunfish Lake to furnish a Conditional Use Permit (CUP) to allow replacement of an existing power line with a different, more intensive transmission line?

The Trial Court ruled in the affirmative, holding that the decision by the City Council of Sunfish Lake to deny a CUP was arbitrary, capricious, and unreasonable and ordered the City to grant the application.

Appellant maintains that the decision by the Trial Court was erroneous and should be reversed. Interstate Power Co., Inc. v. Nobles County Bd. of Comm’rs, 617 N.W.2d 566 (Minn. 2000); Honn v. City of Coon Rapids, 313 N.W.2d 409 (Minn. 1981); State v. Larson Transfer & Storage, Inc., 246 N.W.2d 176 (Minn. 1976); Beck v. City of St. Paul, 231 N.W.2d 919 (Minn. 1975).

STATEMENT OF THE CASE

This is an appeal from a determination by the Dakota County District Court, the Honorable Rex Stacey, concerning an effort by Northern States Power Company d/b/a Xcel Energy (“Xcel”) to replace a single-circuit electric power line with a new more intensive double-circuit transmission structure running through the City of Sunfish Lake. After its application for a Conditional Use Permit (CUP) to replace the line was denied by the City, Xcel sued the City seeking Mandamus directing it to grant the application.

The City initially opposed the lawsuit. It was joined by the Power Line Task Force, Inc. (“Task Force”), an organization consisting of residents effected by Xcel’s proposal, as well as two individual homeowners, who sought to intervene in the action. The Trial Court allowed them to intervene under Rule 24 of the Minnesota Rules of Civil Procedure.

The Trial Court, on a motion for Partial Summary Judgment by Xcel, ordered the City by Mandamus to issue the CUP for replacement of the power line. The Intervenors intended to appeal, but in the meantime, Xcel and the City without involvement of the Intervenors, entered into a Settlement Agreement. Under the Agreement, the City granted the CUP, and the City and Xcel, without the participation of the Intevenors, stipulated to a proposed Court order dismissing the lawsuit with prejudice.

The Intervenors, who were not signatories to the settlement or stipulation, opposed dismissal of the lawsuit with prejudice. The Court, without notice to Intervenors, signed the order requested by the City and Xcel to dismiss the lawsuit with prejudice. Rule 41.01(b) Minn. R. Civ. P. states that a lawsuit may not be dismissed with prejudice unless all parties agree or the Court does so upon terms and conditions that are “proper.” After signing its Order, it conducted a hearing at which Intervenors requested that the matter not be dismissed with prejudice without protecting their right to appeal from the prior Mandamus ruling.

The Trial Court adhered to its prior ruling and ordered the lawsuit dismissed with prejudice without any other terms or conditions. Judgment was then entered dismissing the lawsuit with prejudice.

The Task Force brought two related appeals. The present appeal challenges: dismissal of the lawsuit with prejudice without “proper” terms to protect the rights of the Intervenor. A separate appeal, C0-02-1285, contested the Mandamus ruling of the Trial Court. A Panel of this Court, on September 3, 2002, dismissed C0-02-1285, but expressly reserved the issues raised in that proceeding to be reviewed in this appeal.

STATEMENT OF THE FACTS

A. The Power Line Proposal

This case concerns the attempted replacement by Xcel of an existing single circuit power line with a new double-circuit structure bearing a different, more intensive power line running through the community of Sunfish Lake.

In the late 1990’s, Xcel announced a project seeking to build a new double-circuit of 115 kV transmission line covering a distance of 14.76 miles from the Red Rock Substation in Newport to the Wilson Substation in Bloomington. App. p.15 (Finding 9), passing within 50 feet of about 208 housing units, including apartments, including several homes in Sunfish Lake. App. p.25 (Finding 53). [1] About 1.24 miles would run through Sunfish Lake. App. p.16 (Findings 7-8). The new line would have the capacity to carry up to 1600 amps of current in each circuit, double the current load. App. pp.2, 6 (Findings 9, 25). The utility sought to locate this new transmission line along the 50-foot easement currently used by Xcel for a single-circuit 115 kV transmission line originally constructed in 1923, is narrower than the customary 100-foot easements. App. p.16 (Finding 6).

The existing line, supported by wooden H-frame structures ranging from 51 – 85 feet high, is part of Xcel’s transmission grid delivering electric power to customers throughout the Twin Cities metropolitan area. App. p.17 (Findings 10-11). Xcel sought to replace that line with steel structures supporting double-circuit lines ranging from 80-110 feet high. App. p.17 (Finding 12). In addition to the greater height, the proposed double circuit would have concrete foundations drilled into the ground at a depth in excess of 30 ft, in lieu of the current wooden poles that are embedded without permanent foundations. Id.

The Minnesota Public Utilities Commission (“PUC”) earlier had declined a request by a group of citizens to remove the existing single-circuit power line. See In the matter of the Complaint regarding the safety of Northern States Power Company’s transmission lines in the Southeast Metro Area, Docket No. E-002/C-99-902, 2000 WL 772434 (Minn. P.U.C.) It noted that five of the six effected communities through which the new power line would pass (Newport, South St. Paul, Inver Grove Heights, Mendota Heights, Bloomington, and Sunfish Lake) must approve the specific proposals for running the line through their respective communities. Id., at 5. The PUC, determined that permit proceedings in those communities would provide “more appropriate and wide-ranging forums for exploring the issues this line poses, including but not limited to health-related concerns.” Id.

The Minnesota Environmental Quality Board (“MEQB”) also declined to require the submission of an Environmental Impact Statement in conjunction with the proposed project. App. p.8. The MEQB could have declared itself the “Responsible Government Unit” and passed upon the merits of Xcel’s application, but chose not to do so, nor did it reach a judgment on whether a Statement was needed. Stating that it was not the “responsible governmental authority to make that determination,” the agency agreed with the PUC that the project is “subject to local control, including Conditional Use Permits.” Id., ¶ 34, p.5.

Xcel then sought approval from the various communities through which the replacement line would run, including Sunfish Lake. Xcel filed an application with Sunfish Lake on November 13, 2001, for a Conditional Use Permit, a site plan approval, and minor variances, collectively referred to as “CUP,” as required by the City’s Zoning Code. App. pp.9-10 (Application) and City Code § 1224.05. The application was filed 3 ½ months after new legislation went into effect, August 1, 2001, requiring approval by both the PUC and MEQB for a power transmission line with capacity of 100 kV and more than 10 miles in length. Minn. Stat. § 216B.243 subd.2 (2002 Supp.) and Minn. Stat. § 216B.2421 subd.2(3) (2002 Supp.) (Certificate of Need required from PUC); Minn. Stat. § 116C.57 subd.2 (2002 Supp.) and Minn. Stat. § 116C.52 subd.4 (2002 Supp.) (Route permit required from MEQB).

B. The Sunfish Lake Proceedings

Although the existing line is “grandfathered” as a non-conforming use, the proposed double circuit replacement requires a CUP and site approval under the City’s Zoning Code, City Code § 1224.05. The criteria for granting or denying the CUP include the protection of the public health, safety, and welfare, the health effects, impact on surrounding properties and need for the project. City Code, §§ 1204 and 1224.

The City has a multi-step process to replace or reconstruct a transmission line. First, a CUP has to be obtained for the project as a whole and its route, if approved, the site and building plan approval must be obtained. City Code § 1224.05. In addition to seeking a CUP, Xcel also sought a minor variance from the City’s requirement that poles be 60 ft from houses and conductors be at least 37.5 ft from homes, although the 50-foot width of the easement would remain unchanged. App. p.17 (Finding 16).

Under the Sunfish Lake Zoning Code, when an application is made for a CUP for a transmission line, the City Counsel is to consider other potential routes in addition to that proposed by the applicant. City Code § 1224.05 (F) and (G). Scrutiny of the project consists of public hearings before the Planning Commission, which makes a recommendation of the City Council for approval or denial. Following public hearings, the council makes a decision. If the application is approved, the council next addresses a proposal for site specific construction details, known as the site and building plan stage; if the CUP is not granted, no further action is taken.

Three of the effected communities, including Sunfish Lake, established an unofficial group known as the “Mayors Steering Committee,” which gathered facts relevant to the proposal, although it was not authorized to reach any decision or make any recommendations. As part of the process, Xcel paid $130,000 to a consultant it had procured for the Steering Committee, Commonwealth Associates, Inc. (CAI), with which it has a relationship dating back to the 1970’s. CAI’s mandate was limited to developing information useful to the committee and was specifically precluded from making recommendations. CAI, which was paid by Xcel, did not examine the need for the proposed double-circuit line nor Xcel’s forecast regarding additional electricity demand. It simply accepted the information provided by Xcel without any critical analysis and summarized it for the Steering Committee. CAI also did not provide any expertise regarding potential health consequences of exposure to Electromagnetic Fields (EMF), which forms the basis for health concerns regarding the new power line.

C. The Health Concerns

Significant health issues pertained to the replacement power line upon those living nearby. Power frequency magnetic fields arise from electric currents. They are part of the electromagnetic field (EMF) associated with every power line. The intensity of a magnetic field is a function of the amperage going through the line. The greater the current transmitted, the greater is the magnetic field intensity. The intensity of a magnetic field varies with the distance from the source. App. p.19 (Finding 23.)

The proposed line would carry a great deal of current, up to 1600 amps in each of its two circuits. App. pp.16,20 (Findings 9, 24-25). It would pass within 30 feet of houses, much closer than Xcel’s own practice for new lines according to Xcel’s own estimates, and would expose the residents of adjacent homes to magnetic fields more than 40 times more intense than the average residential fields in the United States.

Health hazards posed by power lines have been of concern since 1971. [2] The issue is not one of “junk” science. It has been treated seriously by the established scientific community, physicians, and national and international health organizations. The adverse health effects from exposure to EMF include increased likelihood of child leukemia, ameotrophic lateral sclerosis (ALS or Lou Gehrig’s Disease), neurological disorders, breast cancer, and miscarriages, among other afflictions, especially among those already susceptible to those diseases. App. pp.25-26 (Findings 55 – 60).

Debate existed for many years within the scientific community regarding the relationship between EMF and those diseases. There were inconsistencies in the epidemiological research: some studies found a linkage and others did not. But in 2000, in three independent studies, scientists reexamined earlier investigations and concluded that a link exists between EMF and a heightened risk of contracting serious diseases. App. p.28 (Finding 70). As a result, credible and strong scientific data shows that exposure to heightened EMF is epidemiologically linked with an enhanced risk of contracting serious disease, a view shared by many officials and leading government authorities, including some who have modified their earlier doubts regarding the existence of this linkage. [3]

The double-circuit line proposed by Xcel initially would reduce EMF in comparison to the existing single-circuit line. App. p.22 (Finding 34). But opponents of Xcel’s plan, supported by independent experts, submitted substantial information that the new power line would, based upon future demand, result in an increase in amps and EMF that could endanger the health of those living near the site. App. p.25 (Findings 54 – 55). Some of this testimony was furnished by Dr. Martin Blank, a Microbiologist and Professor of Physiology at Columbia University, who discussed his own and others' research documenting the harmful effects of EMF-emissions with special emphasis on micro-biological impacts, App. p.38, and Dr. Magda Havas, a Canadian scientist with expertise in the biological effects of EMF emmissions on human health. App. p.38.

Their views, along with voluminous supporting documents, were provided to the Steering Committee and were part of the record used by the Sunfish Lake City Council in evaluating Xcel’s request for a CUP. App. pp.35-44. Documentation also was submitted from MSB, an independent engineering consulting firm, casting doubt upon Xcel’s projections concerning the intensity of power line usage and resulting EMF. App. p.38. Four practicing physicians (a surgeon, OB/GYN, radiologist, and general practitioner) also testified about potential health effects resulting from increased future exposure to EMF from the proposed new line.

Xcel submitted testimony of one health-related consultant and a mid-level official from the Minnesota Department of Public Health. In contrast, Jan Malcolm, the Commissioner of the State Department of Public Health, wrote that “[f]rom a public health standpoint, I am concerned about the level of magnetic field exposure (EMF) to which certain residents are now and will continue to be subject,” noting that Xcel’s project was anticipated to generate much greater exposure levels than those in the MEQB studies.

D. Denial of The CUP

The Mayoral Steering Committee did not adopt any report nor issue conclusions or recommendations of its own. The Sunfish Lake Planning Commission held three lengthy hearings in December, 2001 and January, 2002, consuming about ten hours, and received more than 100 documents, comprising in excess of 2,000 pages, along with live testimony, forming the voluminous administrative record in this case. App. p.43. During the proceeding, Xcel orally stated, without supporting documentation, that it would defer its 14-plus mile project and limit the proposal to a 6.36 segment running from the Red Rock Substation in Newport to the Roger Substation in Mendota Heights. App. pp.29-30 (Findings 81, 82).

The City considered three available options: an above-ground double circuit 115 kV transmission line; a below-ground double circuit 115 kV transmission line; a below-ground double circuit transmission line; or denial of the project. App. p.18 (Finding 17). Xcel maintained that the project was necessary and that a below-ground line would be economically unfeasible, costing some $6.5 million, compared to $500,000 for an above-ground structure. App. p.23 (Findings 36-37).

Opposition to the project focused on several issues: diminution of the value of adjoining properties, adverse health effects due to increased exposure to EMF, and lack of need for the project. App. p.18 (Finding 18).

The City was guided through the process by its City attorney, who emphasized the importance of basing any action on facts in the record and drafted alternative proposed findings of fact, one supporting approval of the CUP and the other containing supporting denial, which were made available to Xcel members of public, including opponents of the project, who offered extensive comments to the alternate versions, which were modified as the process progressed. On January 29, 2002, the Planning Commission, following three lengthy hearings, recommended denial of the CUP by a vote of 4-0, with one abstention. The City Council conducted a public hearing and, after extensive deliberation, on February 5, 2002, denied the application by a vote of 4-1. App. p.34. The denial was accompanied by a Resolution consisting of extensive Findings and Conclusions supporting its decision. App. pp.15-44.

The Findings included a determination that the project “will cause a reduction in the market value” of homes in the vicinity of the power line. App. p.19 (Finding 22). In evaluating health concerns, the Council noted that several residents near the power line have “health problems” that may be aggravated by EMF exposure, App. pp.25-26 (Finding 58), that EMF exposure will increase over time, as demand for power rises and the increase will “have adverse health effects,” including a greater likelihood of child leukemia, ameotrophic lateral sclerosis (Lou Gehrig’s Disease), neurological disorders, breast cancer and miscarriages, among other matters, especially among those already susceptible to those afflictions. App. p.26 (Findings 59-60). The Council also determined that it was not reasonable to permit the “unjustified [health] risks . . . of constant and cumulative exposure to EMF,” that would result from the project. App. p.26 (Findings 62-63). The Council also found that Xcel had not “shown a demonstrated need” for the project based upon the lack of any certificate need from the PUC or determination from that agency that a Certificate of Need was not required. App. p.30 (Findings 86, 89).

The City made supporting Conclusions that the project “will cause a reduction of the market value” of homes in the area, App. p.33 (Conclusion F), that “credible” evidence exists of “adverse” health effects stemming from the project, App. p.33, (Conclusions D and E), and that there was no showing of a “need for the project” at the present time. App. p.34 (Conclusion H).

Coupled with its Findings and Conclusions, the Council identified a voluminous record of 109 items of testimony, reports, and other materials that constituted the record and support its determination, including appraisal materials concerning real estate values; numerous reports about adverse health effects from EMF, including testimony from two experts, Dr. Blank and Dr. Havas, and four local physicians, and numerous other data gathered during the process as well as from hearings from other nearby cities regarding efforts by Xcel to replace its power line in those communities, too. App. pp.35-44.

E. The Present Litigation

Xcel sued the City on February 26, 2002 and amended its Complaint on March 15, 2002. App. pp.45-80. It asserted a number of claims, revolving around its contention that the denial of the CUP was arbitrary, capricious, and unreasonable and should be overturned. The City opposed the lawsuit, as did a group of residents who formed the Task Force as a not-for-profit organization.[4]

Xcel brought a Motion for Partial Summary Judgment seeking Mandamus for issuance of a CUP. App. pp.81-82. The City made a cross-motion for summary judgment. App. p.96. The Task Force and two individual residents timely sought intervention as Defendants. App. pp.97-98. At a hearing on the cross-motions for Summary Judgment, the Court permitted them to intervene, over objection of Xcel. App. ____. Although granted the right to intervene, the Task Force was not allowed by the Court to make any argumentation or submit a brief at the hearing on the Motions. App. p.102 (Trial Court Memorandum, p.4).

On May 31, 2002, the Court ruled in favor of Xcel. It entered Partial Summary Judgment for Xcel and issued an order of Mandamus directing the City to issue the CUP, and did not pass upon the City’s cross-motion. App. pp.99-126.

In its ruling, the Court determined that the City’s denial of a CUP was arbitrary, capricious, and unreasonable. Paying homage to the “very fine efforts” of City officials, App. p.101 (Trial Court Memorandum, p.3), the Court reached the “inescapable conclusion” that the denial of the CUP was “unauthorized, unreasonable, arbitrary and capricious.” Addressing Xcel’s motion for Summary Judgment, the Court declared that the “underlying facts are not in dispute.” Id., p.105. It determined that Xcel had “established a need for the second (replacement) circuit,” which necessitated issuance of the CUP as a matter of law. Id., p.117. It also concluded that decline on property values for homes lying near the replacement line would be insubstantial and not entitled to “much weight,” Id., p.119 and that the evidence regarding potential adverse impact on health was unsubstantiated in the record. Id., pp.120-125.

The Court also determined that Xcel had established need for the replacement line circuit and that it did not need a Certificate of Need from the PUC nor a determination by the Commission waiving a certificate since the statutory requirement for a Certificate of Need, pursuant to Minn. Stat. §216B.242 subd.6, only applies to projects undertaken on or after August 1, 2001 and that Xcel had initially sought the permit prior to that date, which rendered the statute inapplicable. Id., pp.124-125. The Court reasoned that, even if a Certificate of Need was required, Xcel could apply for the Certificate of Need and obtain it prior to commencing construction, which made the certificate merely a condition, rather than a basis for denial. Id. pp.26-27.

The Court concluded that denial of the CUP was unreasonable because the City really wanted “removal of the [existing] line altogether.” Id. p.126. Thus, the Court granted Partial Summary Judgment in Xcel’s favor on two counts of the Complaint and issued an order of Mandamus directing that the CUP be granted.

F. Subsequent Settlement and Dismissal

The Task Force, as Intervenor, planned to appeal.[5] The City and Xcel then began discussions to resolve a case through issuance of a CUP. The Task Force objected, urging that the Mandamus order be appealed. The Council indicated it would appeal if the Task Force would post a bond of $135,000 to cover the City’s legal expenses. App. pp.127-129. The Task Force agreed and arranged for a letter of credit. App. p.130. The City recanted and, rather than appealing, on July 2, 2002, by a vote of 4-1, flip-flopped and entered into a settlement with Xcel July 2, 2002, which was explicitly predicated upon the Mandamus ruling of the Trial Court. App. pp.130,139.

In the settlement, the City agreed to furnish a CUP in exchange for minor consideration by Xcel, and the parties further agreed to stipulate to dismissal of the lawsuit with prejudice.[6] The Task Force, which was not included in discussions or a signatory to the arrangement, opposed the settlement because it believed that the Mandamus ruling that predicated the settlement was erroneous and should be appealed.

Xcel and the City presented the stipulation to the Trial Court, which entered an Order on July 15, 2002 dismissing the case with prejudice. The Task Force twice objected to the dismissal on grounds that it was not a signatory to the agreement and, therefore, under Rule 41.01(b) of the Minn. R. Civ. P., the case could not be dismissed without “proper” terms and conditions to protect its rights as an Intervenor. App. pp.146-147 and 162-163. A week after entering its dismissal Order, the Court conducted a brief hearing at which time counsel for the Intervenor expressed renewed opposition to the proposed dismissal unless it included “proper” terms to preserve the right of the Task Force to appeal from the Mandamus order. App. p.167 (Transcript). The Trial Court rejected the request, adhering to its pre-hearing order dismissing the case with prejudice. App. pp.179, and 199.[7]

The Task Force then brought this appeal, claiming that the Trial Court erred in dismissing the case with prejudice without providing “proper” protection of its rights to appeal the Mandamus decision. The Task Force maintains that the Trial Court erred in not conditioning dismissal on its right to appeal the prior Mandamus decision, which it claims was erroneous and should be reversed.

The Task Force also brought a separate, related appeal challenging the Mandamus decision. Case No. CO-02-1285. A Special Term Panel dismissed that appeal but passed no opinion on “whether the May 31 [mandamus] order should be reviewed in the context of [this] appeal.” App. pp.207-208.

SUMMARY OF ARGUMENT

The Task Force was properly allowed to intervene in this case because it satisfied all four conditions for intervention under Rule 24, Minn. R. Civ. P. In light of the liberal approach to intervention, the Trial Court properly allowed the Task Force to participate as a party defendant.

But the Trial Court erred in dismissing the lawsuit with prejudice over the objection of the Task Force. Under Rule 41.01, a lawsuit may be dismissed with prejudice if all of the parties agree to that disposition. Absent such agreement, Rule 41.01(b) requires that any dismissal be conditioned upon terms that are “proper.” In this case, it would have been “proper” to condition any dismissal upon the express right of the Intervenor to appeal the Mandamus decision, which formed the expressed predicate for the subsequent settlement between Xcel and the City. Alternatively, the Trial Court could have stayed its mandamus order to enable the Task Force to have sufficient time and opportunity to appeal that determination prior to the issuance of a CUP. The failure of the Trial Court to condition to dismissal upon terms that protect the rights of the Task Force was erroneous and should be reversed.

On the merits, the decision by the Trial Court overturning the denial of the CUP by the City on grounds that it was arbitrary, capricious, and unreasonable was erroneous. Under the narrow standard for review of municipal land-use planning decisions, the Court should have given deference to the City Council’s determination, which was based upon a compelling and substantial record. The voluminous data before the Council adequately reflected grounds to deny the CUP based upon the adverse impact upon property values, deleterious effects upon health, and lack of need for the project.

The Trial Court essentially placed itself in the position of decision-maker and, rather than deferential review, weighed the evidence presented to the City Council and substituted its judgment for that of the elected officials. This determination was improper because the City’s denial of the CUP was factually based upon the evidence before it. The Trial Court erred in substituting its judgment for that of the Council, and its determination should be reversed.

ARGUMENT

I. THE TASK FORCE PROPERLY INTERVENED IN THIS CASE

A. The Legal Standard

Intervention under Rule 24, Minn. R. Civ. P. is to be liberally construed. Norman v. Refsland, 383 N.W.2d 673, 678 (Minn. 1986). The Trial Court ruling allowing the Task Force to intervene constitutes a question of law that is reviewed de novo. Id., at 676. [8]

B. The Intervention Was Proper Under Rule 24

The Trial Court’s determination is correct and should be affirmed. A party is entitled to intervene under Rule 24 if it satisfies four requirements: (1) makes a timely request; (2) has an interest relating to the issue in the lawsuit; (3) the disposition of the lawsuit may, as a practical matter, prevent or impair the intervenor’s ability to protect its interest; and (4) the existing parties do not adequately represent the interests of the intervenor. Rule 24.01, Minn. R. Civ. P; see also Minneapolis Star & Tribune Co. v. Schumacher, 392 N.W.2d 197, 207 (Minn. 1986).

The Task Force met all of these criteria. It filed an Answer, which was later amended. App. pp.149-160, and timely moved the Trial Court to intervene, as permitted at the Summary Judgment hearing. App. p.99.

The Task Force clearly has an interest in the CUP application, which is the subject of litigation. Its members all live in the City of Sunfish Lake; the value of their homes will be diminished, and those living near the site are likely to suffer the adverse health effects found by the City Council to be a probable by-product of the project. Thus, they have a cognizable interest in the subject of this lawsuit. Jerome Faribo Farms, Inc. v. County of Dodge, 464 N.W.2d 568 (Minn. Ct. App. 1990), review denied; Mille Lacs Band of Chippewa Indians v. State, 989 F.2d 994 (8th Cir. 1993); Planned Parenthood of Minn., Inc. v. Citizens for Cmty. Action, et al., 558 F.2d 861, 870 (8th Cir. 1977).

The Task Force would be disadvantaged if not allowed to intervene. The subsequent settlement efforts by the City and Xcel demonstrate that the interest of the Task Force will be affected by the outcome of the case and they would be prevented or impaired from exercising their rights. The interest of the Task Force were not adequately protected by the City, as is reflected in the City’s posture in this litigation after the Trial Court’s issuance of the Mandamus order. It was reluctant to appeal unless the Task Force, comprised of many citizens in the community, agreed to underwrite the cost of the appeal. App. pp.127-129. When the Task Force agreed to do so, the City nonetheless refused to appeal. App. p.130. It then entered into a settlement agreement, without involvement or participation by the Task Force, which sought to decimate the rights of the Task Force and now takes a position directly opposed to the Task Force. There could not be greater adversity between a municipality and some of its citizens than reflected in this case.

The presence of a government body in a lawsuit occasionally precludes intervention by its constituents, E.g., Curry v. Regents of Univ. of Minn., 167 F.3d 420 (8th Cir. 1999); Mausolf v. Babbitt, 85 F.3d 1295 (8th Cir. 1996). But when the interests of the citizens are diametrically opposed to those of the governing body, as here, intervention is permissible and proper. Jerome Faribo Farms, Inc. 464 N.W.2d at 570-571. The stark difference between the City Council, which wants to issue the CUP, and the Task Force, which opposes it, warrant intervention so that the rights of the Task Force and its members can be exercised. The Trial Court correctly allowed the Task Force to intervene, and its determination on that issue should be affirmed.

II. DISMISSAL OF THE CASE WITH PREJUDICE VIOLATES RULE 41.01(B) AND WAS IMPROPER.

A. The Legal Standard

Rule 41.01 proscribes dismissal of a lawsuit with prejudice unless agreed to by all the parties or, under 41.01(b), upon such terms as the Court deems “proper.” Dismissal of this lawsuit with prejudice, over objection of the Intervenor, is reviewed under the abuse of discretion standard. Metro. Fed. Bank of Iowa, F.S.B. v. W.R. Grace & Co., 999 F.2d 1257 (8th Cir. 1993); Brazinsky v. Brazinsky, 610 N.W.2d 707 (Minn. Ct. App. 2000).

B. Dismissal of the lawsuit with prejudice was improper.

The Trial Court erred in dismissing the lawsuit with prejudice. The ostensible purpose of the dismissal was to prevent the Task Force, as an Intervenor, from challenging the Mandamus decision directing the City to furnish a CUP, which formed the explicit basis for the subsequent settlement between Xcel and the City. App. p.167 (Transcript, lines 14-25).

But Rule 41.01(b) proscribes wielding dismissal in such a blunt fashion to wipe out the right of appeal of a non-consenting litigant. The purpose of the rule is to prevent connivance of parties in litigation, as occurred here, to restrict another party from challenging the determinations of the Trial Court.

As an Intervenor, the Task Force has the right to participate in litigation as a co-equal. Lang v. William Bros Boiler & Mfg. Co., 85 N.W.2d 412, 418 (Minn. 1957) (settlement by plaintiff of claims and dismissal of the action does not affect rights of Intervenor); Muirhead v. Johnson, 46 N.W.2d 502, 506 (Minn. 1951); Erickson v. Bennett, 409 N.W.2d 884, 888 (Minn. Ct. App. 1987). Under Rule 41.01(b), the rights of the Task Force, as an Intervenor, must be preserved in any order of dismissal, which should be conditioned upon “proper” terms. Lombardo v. Seydow-Weber, 529 N.W.2d 702 (Minn. Ct. App. 1995).[9]

Cases in which dismissal with prejudice has barred a party from proceeding in an earlier phase of a case are distinguishable. In Sammons v. Pike, 117 N.W. 244 (Minn. 1908), a second judgment of dismissal made an appeal of an earlier judgment moot in litigation involving the same parties. In contrast, the issue in the present case is the propriety of a dismissal with prejudice under Rule 41.01(b) without any terms that protect the rights of an Intervenor, who was not a party to the stipulation that predicated the dismissal. Similarly, Wills v. Red Lake Municipal Liquor Store, 389 N.W.2d 769 (Minn. Ct. App. 1986) also involved a stipulation for dismissal with prejudice without any third-party Intervenor.

In the present case, the issue is not whether Xcel and the City can stipulate and reach a settlement, but the propriety of the terms of any such dismissal in order to protect the rights of the Intervenor Task Force, a co-party defendant in the litigation and a non-signatory to the settlement. Because the Task Force was a party in the litigation, its rights cannot be dissipated by the unilateral actions of the other parties in an effort to avoid an appeal of the Mandamus ruling.

The Trial Court disregarded these requirements in running rough-shod over the rights of the Intervenor. Ordinarily, this review Court would, in reviewing the Mandamus ruling, require Xcel to show that the City Council’s denial of its CUP was arbitrary, unreasonable or capricious. Interstate Power Co., Inc. v. Nobles, County Bd. of Cmm’rs, 617 N.W.2d 566 (Minn. 2000); Honn v. City of Coon Rapids, 313 N.W.2d 409 (Minn. 1981). But dismissal of prejudice could force the Task Force to start a separate lawsuit against the City challenging its subsequent granting of the CUP. In such an action, Xcel would assert that the Task Force must show that the City’s action was arbitrary, capricious, unreasonable, a high standard that is extraordinarily difficult to achieve. The proper evidentiary standard should focus on whether the City’s denial of the CUP was unreasonable, a burden that belongs to Xcel, not the Intervenor.

Thus, the dismissal with prejudice could reverse the evidentiary standard, forcing the Task Force to show that the City’s issuance of the CUP following the Mandamus order was unreasonable. But the real issue in this case is whether the Trial Court erred in deciding that the City’s initial denial of the CUP was arbitrary, capricious or unreasonable. Interstate Power Co., supra; Honn, supra.

It also is troubling that the Trial Court, adopted and signed verbatim the dismissal documentation submitted by Xcel and the City, even while the Task Force, a party to the lawsuit, was disallowed participation in the process until after the dismissal was a fait accompli. The Trial Court adopted the stipulation submitted by Xcel and the City and signed it a week before it allowed the Task Force to be heard on the issue. App. p.199.

This procedure runs afoul of Due Process requirements of notice and a meaningful opportunity to be heard.[10] The Supreme Court recently reaffirmed its condemnation of this conduct, lamenting that “the practice of the verbatim adoption of a party’s findings and conclusions is hardly commendable.” Pederson v. State, 649 N.W.2d 161 (Minn. 2002).

The Court below should have provided “proper” terms for dismissal of the lawsuit in order to assure the right of the Task Force to appeal. This could have been done by directing the entry of judgment on the Mandamus order to permit an appeal from that determination. See Ullrich v. County of Newberg Township Board, 648 N.W.2d 743 (Minn. Ct. App. 2002) (Court orders Trial Court Administrator to enter judgment on Mandamus order to permit immediate appeal). It could have coupled that action with stay of any dismissal so as to allow the Task Force the time and opportunity to appeal before a CUP was to be issued.

In sum, the Trial Court erred in disposing of this lawsuit by dismissing it with prejudice, over the objection of the Intervenor Task Force. Consistent with the requirement of Rule 41.01(b) that any such dismissal be conditioned upon “proper” terms, the Trial Court should have directed the entry of judgment in the Mandamus ruling and stayed dismissal pending this appeal so as to give this Court the opportunity to consider the merits of the Mandamus ruling overturning the City’s denial of the CUP. Since construction has not begun on the project, it is not too late for the Court to reverse the dismissal with prejudice and reverse the Mandamus ruling. This would negate the basis of the subsequent settlement and issuance of the CUP and allow recision of the CUP. State ex rel. Howard v. Village of Roseville, 70 N.W.2d 404 (Minn. 1955); State v. Houghton, 213 N.W. 907 (Minn. 1927); Snyder v. Minneapolis, 422 N.W.2d 747 (Minn. Ct. App. 1988).

III. THE TRIAL COURT ERRED IN HOLDING THAT DENIAL OF THE CUP WAS UNREASONABLE AND ORDERING THE CITY TO GRANT THE APPLICATION.

A. The Legal Standard

The Task Force, is harmed by the dismissal because it has a meritorious claim that the Trial Court erred in its order of Mandamus overturning denial of the CUP and directing the City to grant Xcel’s application. Because the Trial Court issued Mandamus on a motion for Summary Judgment, the standard of review is 1) whether any genuine issues of material fact exist, and 2) whether the District Court erred in applying the law. Rule 56.01, Minn. R. Civ. P.; Fisher v. County of Rock, 596 N.W.2d 646 (Minn. 1999); State by Cooper v. French, 460 N.W.2d 2, 4 (Minn. 1990).

The legal standard for reviewing denial of an application for a CUP is whether the denial was arbitrary, capricious and unreasonable. Honn, 313 N.W.2d at 413; Trisko v. City of Waite Park, 566 N.W.2d 349, 352 (Minn. Ct. App. 1997). Because municipal land-use decisions are “entitled to great deference,” the Courts may set them aside “only in instances in which the City’s decision has no rational basis.” SuperAmerica v. City of Little Canada, 539 N.W.2d 264, 266 (Minn. Ct. App. 1995).

Review of a denial of a CUP is limited to “the legal sufficiency and the factual basis for those reasons.” Trisko, 566 N.W.2d at 349. An applicant like Xcel that is denied a CUP must show that “the reasons stated by the council for the denial of the permit are either without factual support in the record or are legally insufficient.” Hubbard Broad., Inc. v. City of Afton, 323 N.W.2d 757, 763 (Minn. 1982). The City’s denial of a CUP is reasonable and valid when at least one of the reasons given for the denial satisfies the rational basis test. St. Croix Dev., Inc. v. City of Apple Valley¸ 446 N.W.2d 392, 398 (Minn. Ct. App. 1989) rev. denied (Minn. Dec. 1, 1989). See also Hubbard, 323 N.W.2d at 765, n.4. Thus, the appropriate standard of review in this case is whether Xcel established that each of the reasons advanced by the City for denying the CUP was irrational. St. Croix Dev., Inc., 446 N.W.2d at 398.

Therefore, the standard for this Court in reviewing the decision of the Trial Court is whether there are any genuine issues of material of fact in dispute regarding the reasonableness of the City’s action denying the CUP. If so, the determination of the Trial Court must be reversed and Summary Judgment entered upholding the City’s denial.

A. The Statutory Framework

Under Minnesota law, municipalities have authority to regulate within their borders utility transmission lines with a capacity of less than 200 kV. Minn. Stat. §462.357 subd.1 (Municipal Planning Act grants municipalities power to control the use of land within communities). Cities also are empowered to designate certain land development activities, such as the installation of transmission lines, as a conditional use under their own zoning regulations. Minn. Stat. § 462.359 subd.1. The City of Sunfish Lake has done so in its Zoning Code. City Code § 1224.05.A.

Minnesota law grants specific regulatory authority to municipalities over the installation of transmission lines. Under Minn. Stat. § 216B.36, a municipality may require a public utility to obtain any “license, permit, right or franchise” required under the city’s own zoning code. This authority is particularly significant because, until recently, no statewide agency was empowered to regulate transmission of power lines of less than 200 kV. [11] The PUC had the authority to issue a Certificate of Need prior to the construction or siting of any “large energy facility” by a utility under Minn. Stat. § 216B.243 subd.2, while the MEQB was authorized to issue a Route Permit prior to construction or siting of any “large energy facility,” pursuant to Minn. Stat. § 116C.57 subd.2. The statutes defined “large energy facility” to include transmission lines with capacities of more than 200 kV. Minn. Stat. § 216B.2421 subd.2; Minn. Stat. § 116C.52 subd.4. Consequently, under Minnesota law, municipalities alone historically exercised authority over the installation of power lines with 200 kV or less. See N. States Power Co. v. Oakdale, 588 N.W.2d 534, 539 (Minn. Ct. App. 1999) (under Minn. Stat. §216B.36, municipalities are empowered “to regulate utility line placement notwithstanding any statewide regulations.”)

The statutory scheme changed on August 1, 2001 with enactment of legislation requiring that a utility seeking to build a transmission line with capacity of 100 kV and more than 10 miles in length like the Xcel proposal in this case, must obtained a Certificate of Need from the PUC. Minn. Stat. § 216B.243 subd.2 (2002 Supp.); Minn. Stat. § 216B.2421 subd.2(3) (2002 Supp.) There is no exemption from this statutory requirement. Minn. Stat. § 216B.243 (2002 Supp.)

The regulatory role of the MEQB also was expanded after August 1, 2001. In addition to a Certificate of Need from the PUC, lines with capacity of 100 kV or more now must obtain a Route Permit by the MEQB prior to installation. Minn. Stat. § 116C.57 subd.2 (2002 Supp.); Minn. Stat. § 116C.52 subd.4 (2002 Supp). This requirement applies to all power lines, regardless of length. Id. The events in the present case transpired within the ambit of these statutory provisions, including the PUC and MEQB measures, which went into effect on August 1, 2001. These statutes became applicable more than three months before Xcel applied to Sunfish Lake for the CUP for the new double-circuit line.

B. The City had a rational basis for denying the CUP.

The Sunfish Lake City Council based its denial of the CUP on several grounds: the absence of any demonstrated need for the project; the diminution of property values in the community if the project were approved; and potential adverse health risks of the project stemming from increased exposure to EMF. App. p.33. This determination was based upon a voluminous record compiled during extensive public hearings by three bodies: the Mayors Steering Committee, the Planning Commission, and the Council itself.

The Council’s determination in February to deny the CUP, by a 4-1 vote, was rationally based upon the record before it. The Trial Court erred in re-evaluating the evidence before the City, weighing the pros and cons, and reaching a conclusion that differed from that of the lawmakers who are specifically vested with that duty. While some of the issues may be reasonably debatable, the Trial Court mistakenly substituted its own judgment for that of the Council, departing from the principle that “the duty of the judiciary [is] to exercise restraint and accord appropriate deference to [municipal] authorities in the performance of their duties.” White Bear Docking v. City of White Bear Lake, 324 N.W.2d 174, 176 (Minn. 1982); See also Sun Oil Co. v. Vill. of New Hope, 220 N.W.2d 256, 263 (Minn. 1974) (in land use cases, trial courts may not substitute their own judgments for that of legislative bodies if the question is fairly debatable).

Because of this high standard of deference, Trial Courts rarely overturn land use decisions by municipalities, especially when a compelling, conclusive record has been accumulated in the process, as in Sunfish Lake. When they do, they are frequently reversed on appeal. E.g., White Bear Docking 324 N.W.2d at 178 (reversing trial court mandamus directing city to expand special use permit); Sun Oil Co. 220 N.W.2d at 263 (reversing trial court order requiring village council to grant oil company's petition to rezone its tract of land from limited business to general business to allow erection of a gasoline service station).

The Trial Court began its analysis from a defective premise and, not surprisingly, ended up with a defective result. The flaw was its view that “[t]he underlying facts are not in dispute.” App. p.105. This is the standard for Summary Judgment, but was not remotely satisfied in this case. In fact, the entire municipal proceeding, ranging from the Mayors Steering Committee to the final 4-1 vote by the City Council denying the CUP, was replete with disputes regarding many matters, including:

§ The length of the project, whether the 14-plus mile line, as originally proposed or the lesser 6.36 segment as Xcel sought to revise;

§ Whether there is a need for the project, in whole or in part, as Xcel claimed, or there was no need;

§ The sufficiency of the existing 50-foot easement for the project;

§ The effect of the replacement line on present values, which Xcel claimed was slight and opponents claimed was appreciable;

§ The amount and extent of exposure to EMF resulting from the project now and in the future, which Xcel claimed would be reduced and opponents asserted would increase as electricity demand rises in the future;

§ The impact of the exposure to EMF on the health of nearby residents, which Xcel claims lacks causal connection and the citizenry maintain is dangerous then, especially those with existing susceptibilities.

These matters were all the subject of heated controversy during the proceedings. There was evidence presented by Xcel, as proponent of the project, and by others in opposition on all of these contested issues. The City Council chose to accept some of the views advanced by both sides in reaching its conclusion.

The issue here is whether the City had any reasonable basis to deny the CUP.[12] That question must be viewed through the prism of the Summary Judgment standard, which requires that all disputed facts be regarded in the light most favorable to the non-moving party.

In this case, the record reflects many factual disputes. It also contains ample evidence upon which the City could, and did, reasonably decide to deny the CUP. Any of the reasons relied upon by the City was sufficient; all of them are overwhelming.

1. The record reasonably reflects an absence of a need for the project.

a. A Required Certificate From the PUC was Lacking

As a threshold matter, the Council’s decision must be upheld because it rationally determined that Xcel failed to demonstrate need for the project, a pre-requisite for granting a CUP under the City’s Zoning Code. City Code §§1204, 1224.

One reason the CUP was denied was because of Xcel’s failure to obtain a Certificate of Need from the PUC, as required by Minn. Stat. § 216B.243 subd.2 (2002 Supp.) The statute dictates that a Certificate of Need from the PUC be issued to authorities before any “large energy facility,” as defined, is “sited or constructed.” Minn. Stat. § 216B.243 subd.2. The facility for which the Certificate is required is defined, as of August 1, 2001, to be a transmission line if 1) the capacity of the line exceeds 100 kV, as does the Xcel project, and 2) is greater than 10 miles in length, as was Xcel’s proposal. Minn. Stat. § 216B.242 subd.2 (2002 Supp.)

It is undisputed that Xcel did not obtain a Certificate of Need from the PUC on or after August 1, 2001. It submitted its CUP application to Sunfish Lake on November 13, 2001, describing a line covering a distance of more than 14 miles between the Red Rock and Wilson Substations from Newport to Bloomington. App. pp.9-10. Because of its voltage of 115 kV and its length of more than 10 miles, the project constitutes a “large energy facility” under the statute. Therefore, Xcel must have a Certificate of Need from the PUC. Its failure to obtain a Certificate constitutes a reasonable basis for the City to deny its application for CUP, as the City so determined in its findings. App. pp.29-30 (Findings 72-89)[13]

The Trial Court erred as a matter of law in overturning the City’s determination. It mistakenly reasoned that the Certificate from the PUC was not needed under Minn. Stat. § 216B.2421 subd.6 (Supp. 2001) because Xcel applied for approval for a new power line in nearby communities, other than Sunfish Lake, before August 1, 2001. App. p.124-125.

The Trial Court was mistaken for several reasons. First, it cites a non-existent statute; there is no § 216B.2421 subd.6. The Court may have meant § 216B.2425, which refers to a different matter: reports of ongoing projects to the PUC. But that statute does not exempt facilities from PUC approval or certification under §216B.243 subd.2.

Xcel applied on November 13, 2001, 3 1/2 months after the statutory requirement for a Certificate of Need went into effect. It is bound by the statutory requirement. That it applied elsewhere before August 1, 2001 does not justify an exemption under the applicable statute, Minn. Stat. § 216B.243 subd.2, which lists no exceptions.

The Court below also erroneously stated that the City was wrong in requiring any PUC Certificate be obtained before the CUP was approved. The Trial Court reasoned that because, a Certificate could be obtained before construction began, the City could have made obtaining PUC approval a condition of the PUC, rather than a reason for denial. App. pp.124-125.

This rationale is flawed. It interferes with the discretion accorded municipal officials in land use decisions and misconstrues the Certificate requirement. The statute requires a Certificate of Need before “applying for a site or route permit” from the MEQB or “construction of the facility.” Minn. Stat. § 216B.243 subd.4 (Supp. 2002). Thus, a “large energy facility” project, like the one proposed by Xcel, must obtain a permit from the PUC before siting a project, which precedes construction. The phrase “or” refers to the need to obtain certification at the beginning of a project, not mid-way through it or the end. Allowing Xcel to obtain a CUP without the necessary Certificate of Need would distort the process, permitting a lengthy and costly CUP process within a municipality that would become moot if construction is not subsequently approved by the PUC. The blending of local authority and PUC approval, as contemplated by the post-August 1, 2001 statutory scheme, is accomplished by requiring the Certificate of Need from the PUC to be obtained as a pre-condition for the granting by a municipality of a CUP, not to be tacked on as a condition subsequent to a CUP.

The statutory interpretation by the Trial Court was based upon its mistaken view that Sunfish Lake denied the permit because of a desire for “removal of the [existing] line altogether.” Trial Court at p.18. This misreads the record. The City Council was not prohibiting any power lines, but seeking to assure that any new line would not impose harm to the community. App. p.28 (Finding 69). To this end, it expressly considered two alternatives, an underground route or an above-ground route. App. p.18 (Finding 17). Xcel refused to consider the below-ground route because it deemed it too expensive, $6.5 million compared to $500,000 for an above-ground facility. App. .23 (Findings 36-37). Thus, an alternative was available to Xcel, which it chose, for its own economic reasons, not to pursue. It may be economically prudent for a land-use applicant to disdain a more expensive alternative, but that does not compel a local authority to genuflect to the private fiscal concerns of the applicant. If so, any land use applicant could dispense with various legal requirements of a locality simply for its own private economic well-being. While private economic considerations may be a factor a municipality takes into account, the applicant’s cost savings is not dispositive. State, by Rochester Ass'n of Neighborhoods v. City of Rochester, 268 N.W.2d 885 (Minn. 1978); Almquist v. Town of Marshan, 245 N.W.2d 819 (Minn. 1976); Beck v. City of St. Paul, 231 N.W.2d at 925.

The unilateral announcement by Xcel of its intent to change the project, from the original 14-plus miles to a 6.63 segment during the CUP process, does not dispense with the requirement for a Certificate of Need from the PUC. Xcel never submitted a revised application for the shorter route to Sunfish Lake. Rather, it simply announced the revision for the first time, in the midst of the approval process. Thus, Xcel has consistently stated that the project will run from its Red Rock station in Newport to the Wilson substation in Bloomington, a length of more than 14 miles.[14] App. p.30.

Xcel’s basis for the project was the claimed need for electric power over a 14-plus mile span. App. p.30 (Finding 85). But in light of reduced demand forecasts, Xcel sought to disavow earlier projections and indicated that it intended to build only a 6.33 mile segment for the first stage, a proposal that the City Council correctly regarded as “disjointed, conflicting, and unpersuasive.” App. p.30 (Finding 89). Xcel never submitted any revised data reflective of the need for this lesser project. Thus, the record reflected that Xcel believed it needed the 14-plus mile project, based on outdated forecasts, and furnished no data supporting the need for a lesser 6.33 mile segment.

Xcel is bound by its repeated representations in its application to the City, App. pp.9-10, as well in prior representation to the MEQB, that it contemplated a 14-plus mile project. App. p.16 (Finding 9). This length for a line in excess of 115kV invokes the Certificate of Need from the PUC under Minn. Stat. § 216B.243 subd.2 (2002 Supp). Because Xcel never formally revised the project nor submitted any revised materials in its CUP application, the only matter before the Council was the 14-plus mile project, not a segmented or serial project of lesser length.

The statutory requirement of a Certificate of Need is intended to assure that utilities do not cavalierly circumvent PUC approval. See No Power Line, Inc. v. Minn. Envtl. Quality Council, 262 N.W.2d 312, 321 (Minn. 1977). Utilities like Xcel should not be permitted to make an end-run around this statutory obligation simply by segmenting an entire transmission line project into individual units of less than 10 miles in length in order to avoid the required Certificate of Need from the PUC. If so, any project could be Balkanized, as Xcel seeks to do here, obviating the need for a Certificate of Need from the PUC and then using the absence of a Certificate as grounds to show that need for the project is not disputed. This would negate the statutory goal of obtaining PUC approval for a major project (“large energy facility”), such as this one, while preserving to local authorities the determination of the propriety of a CUP on grounds of health, safety, and public welfare, and other relevant considerations. Because Xcel did not have a Certificate of Need when it filed its CUP application, its application was rationally denied on that ground alone.

b. The Evidence About Need Was Conflicting

The Trial Court also erred in reasoning that there was no evidence substantiating the lack of need for the project. The Trial Court mistakenly placed the burden on the City to prove lack of need, whereas the City Code imposes the duty to establish need upon the applicant. City Code, § 1224.05.

The Trial Court erroneously stated that “[v]irtually no one testified . . . to a lack of need for the Project.” App. p.117. In fact, there was abundant testimony questioning whether the project was necessary, including testimony before both the Planning Commission and the City Council by the Task Force that the project was not needed. This evidence was complemented by voluminous documentation reflecting the lack of need for the project. App. p.30 (Finding 89).

The Trial Court based its view that the project was needed solely on Xcel’s exhortation that it was. App. p.117. It reasoned that because Xcel made a “business judgment” that the project was needed, the City Council must abide by that decision. Id.

But the law does not require that municipal authorities slavishly acquiesce to the business decisions of land use applicants. If it did, as the Trial Court suggests, there would be no need for municipalities (or the PUC or MEQB) to exercise their quasi-judicial discretion in passing upon land use applications. The legal authorities dispel the Trial Court’s supposition that once a business determines the need for a project, municipal approval must occur. E.g., SuperAmerica Group, Inc. v. City of Little Canada, 539 N.W.2d 264 (Minn. Ct. App. 1995) (rezoning not required even though site could support the proposed use and project would not exacerbate traffic conditions); Sun Oil Co. v. Vill. of New Hope, 220 N.W.2d 256 (Minn. 1974)(rezoning of property not required even though a similar use existed across the street).

Since the record reasonably supported the City’s finding that the need for the project “has not been shown,” App. p.30 (Finding 89), the Trial Court was obligated to sustain the Council’s denial on this ground alone.

c. The Project was not a non-conforming use

The Trial Court also erroneously assumed that the City had no choice but to approve Xcel’s application because it constituted a non-conforming use, antedating the enactment of the City Zoning Code. App. pp.115-116. Citing the City Zoning Code, § 1202.06, the Trial Court stated that a pre-existing use that is “continued in like fashion and activity” must be automatically approved. Id.

But this provision deals only with continuity of a non-conforming use, or “grandfathering” of a pre-existing activity, that was lawful before enactment of the Zoning Code. It is inapplicable because Xcel proposes to expand the pre-existing use considerably with new, higher, and different structures and circuits of greater intensity. The Xcel proposal does not constitute an extension of a “like” use since the proposed new “activity” constitutes a substantial enlargement of the pre-existing use. County of Freeborn v. Claussen, 203 N.W.2d 323 (Minn. 1972) (construction of building to house equipment that had previously been stored in the open was an expansion of a pre-existing use); SLS Partnership v. City of Apple Valley, 496 N.W.2d 429 (Minn. Ct. App. 1993), review granted, affirmed in part, reversed in part, 511 N.W.2d 738 (expansion in size of mobile home on pre-existing pad in mobile home park was an enlargement of the pre-existing Use); County of Lake v. Courtney, 451 N.W.2d 338 (Minn. Ct. App. 1990), (removal of cabin walls and roof and building new structure on existing foundation with roof line six feet higher than prior line was expansion of use).

The Zoning Code proscribes a non-conforming use from being “enlarged or reconstructed,” City Code § 1215.02A. The replacement power line proposed by Xcel exceeds permissible “normal maintenance” or “incidental alterations” allowable under § 1215.02B of the Code. See Aegerter v. City of Delafield, 174 F.3d 886 (7th Cir. 1999). By being taller, larger, and carrying more amp of current, the double-circuit proposal does “intensify” the non-conforming use which the Code prohibits. § 1215.02B. Accordingly, the City was not compelled, as the Trial Court intimates, to “automatically” grant the application under the non-conforming use or “grandfather” provision of the Zoning Code. App. pp.115-116.

The Court also presumed that, because the proposal was a non-conforming use, the City was obliged to approval of it, and the only issue was which alternative route was to be selected. App. p.117. The Court’s conclusion that the City was not entitled “to deny the line altogether” is erroneous. Id.

The City Code expressly provides that application may be approved or denied. City Code § 1274.05 (F) and (G). The second step of the CUP process contains a “no build” alternative, as well as another alternative which places the line underground. Id., (f) – (5). Thus, the Zoning Code does not compel that Xcel’s application be “automatically approved,” as the Court reasoned, but gives the City the discretion that municipalities traditionally have to approve or deny CUP applications or to impose conditions upon them, such as alternative routes.

Thus, the record amply reflects that the Council could approve or deny the CUP, or approve it with a different route than that sought by Xcel. The Trial Court’s conclusion that the City had no choice but to “automatically” approve the project was erroneous as a matter of law. The City had the authority to deny the application and rationally did so. Because Xcel failed to establish need for the project, the City’s decision must be upheld and the determination of the Trial Court reversed.

2. The diminution of property values constitute a rational basis to deny the CUP.

In addition to the absence of need, abundant evidence was presented to the Council reflecting that the replacement double-circuit transmission line would have an adverse impact on property values in the community.

The City Council found that there would be an adverse impact upon property values if the CUP were granted. App. p.19 (Findings 19-22). It based its determination on a report that showed potential reduction of sales prices for single family homes caused by proximity to transmission lines ranging from 4% to 7% in the Midwest, including Minnesota. App. p.19 (Finding 19). The negative effects apply to properties crossed by, or immediately adjacent, to a power line as well as to homes further away. This evidence was buttressed by testimony of three experienced real estate agents, Capital Appraisals, a certified appraisal firm, and individual property owners. Id.

While the Council did not determine the precise amount of diminution of property values, it concluded that the evidence showed that the Xcel project would “cause a reduction in the market value of the residential homes adjoining the line.” App. p.19 (Finding 22). The basis for the decline in value encompassed aesthetic concerns, including the increased height of the new power lines and its greater visibility to adjoining homeowners and the neighbors, as well as the fears of health risks associated with EMF. Id. Concerns about adverse health effects resulting from high voltage transmission lines have been recognized frequently as causing diminution in property values. E.g., Criscuola v. Port Auth. of New York, 621 N.W.2d 1195, 1196-97 (N.Y. 1993); Dealers Mfg. Co. v. County of Anoka, 615 N.W.2d 76 (Minn. 2000); Westling v. County of Mille Lacs, 581 N.W.2d 815 (Minn. 1998). Given the City Council’s desire (and duty) to maintain high property values in the community, the diminution in violation stemming from the CUP cannot be lightly disregarded.

The Court also questioned the “qualifications” of the real estate agents. App. p.119. The Court disregarded that the evidence of diminishment of property values included data from Capital Appraisals, which noted a number of deficiencies in a report submitted on behalf of Xcel, which prompted the appraisal company to observe that “the reduction in property value and longer selling times which are mentioned in the report [Xcel-commissioned], underestimate the effect of power lines on property value.” App. p.11.[15]

The Council is not required to follow strict rules of evidence for expert witness testimony. See Rule 702, Minn. R. Evid. It is entitled to rely upon any credible evidence, even including hearsay. Larson v. Washington County, 387 N.W.2d 902, 906 (Minn. Ct. App. 1986); rev. denied; Honn 313 N.W.2d at 415-16. The testimony of the real estate agents was buttressed by testimony of individuals concerning their own perceived decline in property values, which is permissible under Minnesota law. Lehman v. Hansord Pontiac Co., 74 N.W.2d 305, 309 (Minn. 1955), (property owners may offer lay testimony about value of their property).

Since the Court overlooked the other expert testimony showing diminution in value, its views that the real estate testimony “should not have been given much weight” is baseless. The testimony of the local real estate agents supplemented the other expert testimony and did not stand alone. The amount of weight, if any, to give to the testimony was a matter to be determined by the City Council, not by the Court in second-guessing the Council. Honn v. City of Coon Rapids, supra; Larson v. Washington County, supra. The evidence about project values was disputed. On a motion for Summary Judgment, the evidence must be viewed in the light most favorable to the City. Therefore, the Court erred in deriding the witnesses who testified about the negative effect on property values and reaching its own judgment of which conflicting evidence to credit.

The Court also determined that the City’s decision was erroneous because its findings did not reference a property value study prepared by Colliers Towle Real Estate, which showed a .5% depreciation in property values, within a 1% tolerance for errors of surveys of this type. App. p.118. The Trial Court determined, from its review of the record, a decrease of no more than .5% in property values of homes near the new power line, which it regarded as de minimus. Id.

But, even a .5% (one half of one percent) decline in property values is not nominal. The City has an assessed value of $110,296,200, which, like most assessed value, is much lower than the actual market value. Thus, a .5% decline in property values across the board could result in the diminution of about $550,000 in assessed valuation. There are 251 homes in the community. Spreading a .5% decline among all of them may result in a diminution of their property of about $2,200 each. According to Capital Appraisals, the decline in property values would be much greater for the homes that are closest to the power line, which could suffer a much more sizeable debasement than the average diminution of $2,200 per residence. App. p.19 (Finding 19).

The City was not compelled to accept some of the conflicting evidence over the other. Faced with competing evidence, the Council chose to credit Capital Appraisals, these three local real estate agents, and individual property owners, who testified to greater diminution in property values, and the Council’s determination should be accorded deference, rather than “weighed” by the Court.

The testimony from the certified real estate appraisal company, real estate experts, and individual property owners provides a “rational basis” to support a determination of adverse impact upon property values. Hubbard 323 N.W.2d at 764. Accordingly, the Trial Court’s determination that the CUP was “arbitrary and capricious” on grounds of a lack of insufficient evidence of adverse impact on property values was erroneous and should be reversed.

3. The adverse health risks associated with the project also form a rational basis for denying the CUP.

Finally, the City denied the CUP on grounds of potential adverse health effects due to increased exposure to EMF resulting from the project. App. p.19-28 (Findings 23 – 71). The City based its determination on voluminous scientific and medical documents, supplemented by testimony of experts such as Dr. Blank and Dr. Havas and local physicians, as well as professional studies reflecting that increased exposure to EMF is associated with health risks, such as leukemia in children, brain cancer, miscarriages, neurological problems, Lou Gehrig’s Disease, and other afflictions. Findings,23-71.

The District Court mischaracterized the testimony of both scientific experts, Dr. Blank and Dr. Havas. It dismissed the view of Dr. Blank with the observation that he “relies” on a 1999 study conducted by the Natural Institute of Environmental Health Services (NIEHS) which concluded, at that time, that EMF exposure from transmission lines does not represent a potential for significant adverse health impact. App. p.121. This constitutes a gross distortion of his extensive testimony, numbering 12 pages in the record. He mentions the NIEHS study, in passing, only thrice, in two of 19 passages, comprising barely 10% of his testimony. App. p.38.

The Court also incorrectly reported the testimony of Dr. Havas, characterizing her as having focused on the effects of EMF from small household appliances. App. p.120. In fact, she primarily testified about animal studies, not appliances. App. p.38.

The impact of EMF on health is a contentious and evolving subject. Not surprisingly, the record contained conflicting testimony on the issue. While the topic is debatable, the Council had before it, as noted above, ample evidence reflecting potential adverse health impact and, based upon that evidence, chose to deny the CUP, for that reason, along with the others. This constituted a permissible reason to deny the CUP. C.R. Investments, Inc. v. Village of Shoreview, 304 N.W.2d 320, 324 (Minn. 1981) (special use permit denied due to negative impact on health).

The Trial Court relied heavily upon the City’s adoption of the determination by CAI, Xcel’s paid consultant that there initially will be “substantial reduction in EMF levels” following construction of the new power line. App. p.120. But the Court disregarded Xcel’s own projection, which showed the long-range impact of EMF resulting from increased power uses over time, a fact the City rationally relied upon in its decision to deny the CUP. App. p.25 (Findings 52, 54).

This view rationally flows from much of the evidence in the record. For example, the California Department of Health Services conducted a 7 year, $9 million review of the health impact of magnetic fields associated with transmission power lines. It concluded that the linkage between these fields and an enhanced risk for contracting disease was a statistical certainty. It also noted a possibility of up to 95% that EMF cause birth defects, low birth weight, neonatal problems, and cancer generally. App. p.25 (Findings 55 – 57). Contrary to Xcel’s assertion, the report states that EMF may cause specific diseases and a 95% likelihood of a causal relationship to specific afflictions. Id.

The Trial Court erred in finding that the new power line would reduce EMF intensities by as much as 80%. App.p.122. The Council made no such determination. The findings cited by the Court merely report upon an example set forth by Xcel’s paid representative, CAI. The example overstates the amount of possible reduction in EMF since it assumes currents in the present line substantially exceed the actual maximum currents. The assumed currents in the proposed line are less than the expected currents. App. pp.20-22 (Findings 25 – 33). Further, Xcel data suggest that, in a few years, the EMF levels will return to close to their present status, if not exceed them. App. p.20 (Finding 25).

The District Court apparently was content to rely upon outdated research submitted by Xcel questioning the impact of EMF on health dating back to 1997, while disregarding the subsequent reversal of that skepticism in the past few years, which were part of the contemporaneous record before the City Council. The NIEHS study, relied upon by the Court to show insufficient linkage of EMF exposure and diseases, was subsequently called into doubt by the California Department of Health reports. App. p.14 (Finding 70).

The California study relied upon by the Council is hardly unique. In a recent report of Microwave News, the California Health Department has issued its most “stringent warnings to date on the potential health effects from exposure to power-frequency Electro-Magnetic fields (EMF).” It reports causative links to childhood leukemia, adult brain cancer, amio lateral sclerosis (ALS) and miscarriages. See “California EMF program to issue strongest health warning yet,” Microwave News, Vol. XXII, no. 4 (July/August 2002) pp.1, 4. This view is supported by a number of other respectable studies from national and international health organizations, scientific and governmental bodies warning of exposure to EMF emissions in siting power lines. App. p.28 (Findings 70).

The Trial Court dismissed the California report on grounds that the “vast majority” of people exposed to EMF do not experience problems and only a “very low” percent might be afflicted. App. pp.121-122. That conclusion is belied by the record, including a study on progestrin/estrogen, which reported that the incidence of breast cancer contracted by those using the therapy is less than the incidence of various cancers experienced by those living adjacent to the power line. App. p.28 (Finding 70), a fact of particular significance in Sunfish Lake, where at least a dozen residents near the power line already have the diseases associated with EMF, including a pair with breast cancer. App. pp.25-26 (Finding 58).

More fundamentally, the California Health Department, in its EMF Project on Breast Cancer, addressed this issue, noting that:

[I]f one were to be certain that the epidemiological associations were causal, the population mortality would be more than that from many regulated environmental agents. If one were to adjust these numbers by one’s degree of confidence in causality, [the result] would still not be trivial in the regulatory framework.”

App. p.28 (Finding 70, Executive Summary, p. 16).

But even if a small number of people experience health problems, especially severe ones like cancer, it would be rational for the Council to decide that the risk outweighs the benefits of the new power line, as it did in fact do. App. p.33 (Conclusions D and E). In derogation of the Council’s authority, the Trial Court re-evaluated the conflicting scientific evidence and concluded that the documentation and evidence relied upon by the City Council was wrong.

At a minimum, the Court recognized that there were conflicting opinions, and that “statistical studies in the human population suggest there might be a problem with EMF.” App. p.121. This alone is sufficient to justify the City Council’s denial of the CUP and negates the Trial Court’s conclusion that the City Council acted in an “arbitrary and capricious” manner by determining an absence of potential harmful effects due to exposure to EMF from the power line project. Since the matter is rationally debatable, the City Council was entitled to reasonably base its decision upon facts in the record before it.

The Trial Court also misguidedly rejected any potential adverse health impact upon the basis that the projected double-circuit line would reduce EMF exposure initially by 80% compared to the existing single-circuit line. App. p.122. But the Council took this into consideration and determined that even these reduced levels exceed acceptable safety levels. App. pp.25-26 (Findings 52, 59-60). More significantly, the Council was concerned that the greater exposure that would unquestionably occur in the future with greater demand levels leading to increased current flow and higher EMF emission levels and unsafe exposure associated with childhood leukemia, cancer, and other afflictions, especially to those already susceptible to those illnesses, involving those Sunfish Lake residents living near the existing line. App. pp.25-26 (Findings, 55-59).

The record before the Court is barren of any suggestion by Xcel that power lines are entirely safe. Nor has Xcel denied an enhanced risk associated with living adjacent to them. Rather, it relied upon the assertion that the “cause” of this risk has yet to be identified. In short, it asked the Trial Court to do what Xcel is unwilling to do on its own accord, expose people to an enhanced chance of contracting serious and deadly diseases. Because the record rationally supported the Council’s determination that the CUP would expose residents of the community to increased and unacceptable health risks, its denial of the CUP must be upheld on this ground alone.

4. Summary of Council’s decision

In sum, the District Court mistakenly decided that the City Council’s decision as “arbitrary, capricious, and unreasonable.” It is mind-boggling to imagine a process less arbitrary. The Council based its decision upon the unanimous recommendation of its Planning Commission, which reviewed the issue in three long sessions in which it received testimony from Xcel and opponents.

The Sunfish lake City Council was far from capricious. Essentially the same question considered by Sunfish Lake was before the other two cities through which the proposed line would run, Mendota Heights and South St. Paul. In each of the other two communities, all of the four respective Planning Commissioners and City Councils agreed, often unanimously, to reject or severely restrict the line. Coupled with Sunfish Lake, six different government bodies reached the same decision when presented the same information. That is the antithesis of capriciousness.

The Trial Court erred in substituting its judgment for that of the Council or the potential adverse health effect of the CUP project. The City Council rationally based its determination on the record that, as the Trial Court agreed, there is some likelihood, even though debatable, that the project will cause health risks, especially in the future as exposure to EMF increases due to a rise in electrical use. Since increased exposure to EMF poses health risks and the degree of those risks is a disputed fact issue, the Council was entitled to rely upon the evidence of the experts who said it would, and its determination was factually-based, not fanciful, arbitrary, or capricious.

CONCLUSION

For the above reasons the Order permitting intervention of the Power Line Task Force, Inc. was proper and should be affirmed. The Trial Court erred in dismissing the case with prejudice, and its ruling on the merits and Mandamus directing issuance of a Conditional Use Permit was contrary to law and should be reversed and Summary Judgment granted in favor of dismissal of the lawsuit as originally sought by the City and joined by the Intervenor. Reversal of that determination would negate the express predicate of the settlement agreement and require rescinding the improperly – issued CUP.

MANSFIELD, TANICK & COHEN, P.A.

Dated: September 16, 2002 By:___________________________________

Marshall H. Tanick (108303)

Stephen H. Parsons (84219)

1700 Pillsbury Center South

220 South Sixth Street

Minneapolis, MN 55402-1409

(612) 339-4295

ATTORNEYS FOR APPELLANT POWER LINE TASK FORCE, INC.

LAW OFFICE OF CHRISTOPHER THOMAS JOHNSON

Christopher Thomas Johnson (0303744)

P.O. Box 86

Janesville, MN 56048

(612) 386-8743

[1] All references to the City Council’s Resolution denying the CUP are designated as “Finding ____” or “Conclusion ____.”

[2] The biological impact of a magnetic field varies with its frequency. Power lines emit very low frequency magnetic fields. These fields have been studied for more than three decades and, therefore, much more is known about them then the high frequency fields associated with cellular telephones. The findings of heightened risk for EMF are not relevant to the risk, if any, associated with cell phone emissions.

[3] The groups that have recognized the relationship between EMF and serious diseases, many of whose studies were part of the administrative record before the Sunfish Lake City Council, include the World Health Organization, the British Journal of Cancer, the United Kingdom Government Study of Childhood Leukemia, the German Environmental Ministry on Childhood Leukemia, Japanese National Cancer Center, Japan National Institute for Environmental Studies, the Canadian National Research Council on EMF, the Washington State Health Report on Childhood Leukemia, the California EMF Project on Childhood Leukemia, two studies by the California EMF Project on Miscarriages, the California EMF study on Breast Cancer, and others. App. pp.38,40,44 (Finding 70).

[4] In its ruling, the Trial Court erroneously referred to a survey of Sunfish Lake residents, concluding that “most of them would not favor an alternative that resulted in additional costs to them.” App. ____. (Trial Court Memorandum, p. ____). But that survey did not address the issue of alternative route lines. In fact, the Xcel project was vigorously opposed by a large segment of the Sunfish Lake community. A petition opposing the CUP subsequently was signed by 167 residents, more than 50% of the citizens of the community.

[5] The Task Force is the only Appellant in this case; the other two individual Intervenors are not parties to this proceeding.

[6] Xcel released the City from any claims for damages and legal fees arising from the lawsuit or any act or omission of the City in connection with Xcel’s applications. App. pp.134-135. Although the CUP has been issued, construction has not begun on the new replacement line.

[7] The Task Force requested re-consideration, App. p.181, which the Trial Court refused. App. p.183.

[8] The City and Xcel raises, in their Joint Statement of the Case, the contention that the Task Force should not have been allowed to intervene in this case. But the City did not take any position regarding intervention in the Trial Court proceedings. App. p.203. Since it did not raise the issue below, the City is barred from making the contention for the first time on appeal. Oans v. Allstate Ins. Co, 617 N.W.2d 401 (Minn. 2000); Goab v. Thraldson, 615 N.W.2d 800 (Minn. 2000).

[9] The U.S. Supreme Court, in a different context, recently upheld the right of non-intervenors, who are not named parties in a class action, to appeal the settlement and dismissal of a class action case, even though they have not intervened in the action. Devlin v. Scardelletti, 122 S.Ct. 2005 (2000). While Devlin turned on characteristics of class action litigation, the Task Force has an eminently stronger posture in this case, where it is formerly been granted Intervenor status and, therefore, is entitled to participate fully as a party in the lawsuit.

[10] Although it had written two letters to the Trial Court expressing opposition to the dismissal, App. pp. 146-147 and pp. 162-163, the Task Force was not informed that an order of dismissal was signed on July 15, 2002, a week before the hearing.

[11] The EQB could have declared itself the “Responsible Government Unit,” allowing it to approve or disapprove the Xcel project. But it declined to do so, leaving the matter to the local authorities. App. p.27.

[12] The Trial Court did not discuss or mention this fundamental standard in its ruling. App. pp.99-126.

[13] Xcel also failed to obtain a Route Permit from the EQB, also as required for a “large energy facility,” such as this project, after August 1, 2001. Minn. Stat. § 116C.57 subd.2(2002 Supp.) The provision in the Route Permit statute which allows utilities to opt for local approval, rather than obtaining a approval from the EQB, is not applicable in this case because it requires notification to the EQB within 10 days of the application for the CUP, Minn. Stat. §116C.576 subd.3, which Xcel has not done. Even if it did, Xcel would still be required to obtain a Certificate of Need from the PUC, which it admittedly did not do. Minn. Stat. § 216B.243 subd.4 (2002 Supp.)

[14] The document upon which Xcel relies to justify the need for the project, the report prepared by its paid-for designee, CAI, is based wholly on the premise that the project would run the 14-plus mile length between the Newport and Bloomington substations.

[15] The report negating diminution of property values was paid for by Xcel; the Capital Appraisals report challenging that conclusion was submitted voluntarily and without compensation.

LAW OFFICE OF CHRISTOPHER

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