TANICK ANALYSIS OF POSSIBLE RESCISSION

 

BACKGROUND FACTS

 

          As you know, the CUP was issued following a settlement agreement between Xcel and the City in connection with litigation brought by Xcel challenging the City’s denial of the application for CUP last February.  The Task Force, which intervened as a Defendant in the lawsuit, desired and intended to appeal the mandamus decision of the Dakota County District Court ordering the City to issue the CUP.   

         

          The former City Council and Xcel, without any input from the Task Force, entered into a settlement agreement in early July in which Xcel agreed to dismiss the lawsuit in consideration for the City’s issuance of the CUP.  The Court then, over the objection of the Task Force, dismissed the lawsuit.

 

          The Task Force has an appeal currently pending before the Minnesota Court of Appeals challenging the Trial Court’s dismissal of the lawsuit as well its decision ordering the issuance of the CUP.  All of the briefs have been filed in the appeal and oral argument has been scheduled for January 14, 2003.

 

          Regardless of the outcome of the appeal, I believe there are substantial grounds upon which the City could, if it chooses, rescind the agreement and revoke the CUP.  Whether to do so constitutes a policy decision that will have to be made by the City Council when its new members take office after the first of the year.

 

RESCISSION AND REVOCATION OF CUP

 

          There are several grounds upon which such a rescission and revocation could be based.  They include the following:

 

1.                 The Process By Which the Lawsuit was Settled and the CUP Issued Was Flawed. 

 

          The Task Force, as an Intervenor, was entitled by law to have input in any disposition of the lawsuit, but Xcel and the City froze it out of settlement negotiations.  Because the Task Force was deprived of an opportunity to participate in the settlement discussions, the new Council could conclude that the process was fundamentally unfair, that the Task Force was deprived of its rights, and that the settlement agreement should, therefore, be nullified.  The City’s right to determine that the process was flawed, to re-evaluate the issuance of the CUP, and to revoke it on this basis is legally supportable.  See 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)(dismissal of plaintiff’s complaint did not affect the rights of the intervening plaintiff, who had filed its own complaint); Erickson v. Bennett, 409 N.W.2d 884, 888 (Minn. Ct. App. 1987)(intervening insurance carrier, whose rights were affected by default judgment against its insured, was entitled to judgment reopening the default).

 

2.                Evidence of Health Risks Associated With the Proposed Power Line is Greater Than When the CUP Was Issued.       

 

          The City Council’s initial denial of the CUP was based in large part upon health concerns from increased exposure to Electromagnetic Fields (EMF) that would emanate from the new power line.   This concern was grounded, in part, upon a preliminary draft of a study of EMF by the California Department of Health.  At the time of the Council’s consideration, a representative of the Minnesota Department of Health told it that the draft report was suspect and “not consistent” with other governmental determinations.  He went on to intimate his feeling that the draft report would likely be dramatically weakened when placed in final form.  Exchange between Mayor Tiffany and Charles Stroebel of MDH, City of Sunfish Lake Public Hearing, February 4, 2002.

 

          However, the final report, which was published this past October, maintained the findings of concern that were in the draft.  The final report, entitled “An Evaluation of the Possible Risks from Electric and Magnetic Fields (EMF) from Powerlines, Internal Wiring, Electrical Occupations and Appliances,” reaches several dramatic conclusions regarding the relationship between an increased exposure to EMF and actual health hazards or afflictions, including the following:

 

·                    Up to a 95% probability that increased exposure to EMF causes childhood leukemia;

 

·                    Up to 85% probability it causes adult leukemia;

 

·                    Up to 80% probability it causes adult brain cancer;

 

·                    A 50% to 60% probability it causes ALS; and

 

·                    A 50% to 60% probability that it causes miscarriages.

 

These conclusions are set forth in the Executive Summary to the report, which I am attaching to this letter.

 

          The California report is not unique.  It parallels other studies that have been conducted in Europe on the health hazards posed by exposure to EMF.  The conclusions in the final draft of the California report reflect much greater health hazards than were originally assumed or anticipated by the City, both at the time of the original decision to deny the CUP and the decision to cave in and settle in the face of the May 31st Mandamus Order.  Because of the new information that underscored, rather than undercut, its original health concerns, the City could determine that the settlement was based upon a mistaken premise, and could, therefore, rescind the settlement agreement and revoke the CUP.

          Rescissions based upon new information are supportable based upon the well-established legal principal that a mistake of fact or law upon which an agreement was premised may warrant rescission of an agreement.  Schoenfeld v. Buker, 114 N.W.2d 560 (Minn. 1962); Serr v. Biwabick Concrete Aggregate Co., 278 N.W. 355 (Minn. 1938).  This principal also has been applied in cases involving revocation of governmental building permits or other zoning-related decisions.  See, e.g., Village of Lordstown v. Barnhart, 1992 Lexis 866 (Ohio App. 1992); Snyder v. City of Minneapolis, 441 N.W.2d 781 (Minn. 1989); Merrihew v. Salt Lake County Planning and Zoning Commission, 659 P.2d 1065 (Utah 1983).  See also Ollinger v. City of Braham, 130 F. Supp. 2d 1068 (D. Minn. 2001); State ex rel Howard v. Village of Roseville, 244 Minn. 343, 350, 70 N.W.2d 404, 408 (1955); See also Jasaka Co. v. City of St. Paul, 309 N.W. 2d 40, 44 (Minn. 1981).  See also Gunkel v. City of Emporia, Kansas, 835 F.2d 1302, 1304-05 and n. 7 (10th Cir. 1987).

 

3.                The City Could Be Remiss If It Fails To Reconsider the CUP.

 

          The City has a legal duty to protect the health, welfare, and safety of the community and its citizens, an obligation codified in Section 1201.02 of the Sunfish Lake Zoning Code.  Given the well-established and documented health hazards resulting from increased EMF, which is inevitable if the new power line is constructed, the City may be remiss if it fails to re-evaluate the issuance of the CUP. 

 

          The law accords broad discretion to municipalities in carrying out their obligations to preserve the public health, welfare and safety of their citizens.  Alexander Co. v. City of Owatonna, 24 N.W.2d 244 (Minn. 1946); City of Birchwood Village v. Simes, 576 N.W.2d 458 (Minn. Ct. App. 1998).  It would be consistent with this broad authorization for the City to re-evaluate and revoke the CUP because of the serious health risks that are now so clearly associated with the expanded power line.

 

          In light of these concerns, there is ample legal support for the City Council to rescind the settlement agreement, and revoke the CUP.  If such action is to be pursued, it should be done before Xcel has taken action in any significant reliance upon the CUP.  To the extent that Xcel may have undertaken some work, it could argue that it is entitled to be reimbursed for the expenses it has incurred prior to any rescission.  See Snyder v. City of Minneapolis, supra.

 

XCEL’S POTENTIAL CLAIMS

 

          There is, of course, a possibility that Xcel would sue the City for breach of contract and perhaps on other grounds if the CUP is revoked.   Any claims by Xcel would be subject to numerous defenses in addition to those referenced above. 

 

          Generally, claims against municipalities in Minnesota are limited to $300,000 in damages, although that limit may be increased to the amount of applicable insurance.  Minn. Stat. §466.04, subd. 1(1).  Additionally, any action taken by the new City Council could be defended on grounds of being a discretionary policy-making decision (the principle of legislative immunity for law-making decisions), Minn. Stat. §466.03; Klingner v. City of Braham, 130 F.Supp.2d 1068 (D. Minn. 2001); Conlin v. City of St. Paul, 605 N.W.2d 396 (Minn. 2000), and under a “public duty” doctrine to protect public safety.  City of Birchwood Village v. Simes, supra.  If they can establish any of these grounds, municipal bodies generally are immune from suits for damages, although equitable or injunctive relief may be imposed.

 

          If the City decides to pursue the rescission and revocation alternative, it may wish to furnish notice of its decision to Xcel and grant Xcel the opportunity to be heard on the proposed rescission. Although the City is not constitutionally required to do so, Snyder v. City of Minneapolis, supra, furnishing Xcel such an opportunity could blunt any claim of unfairness and enhance the City’s ability to defend itself in the event of litigation.  The Zoning Code does not appear to specify any procedure that must be followed if a CUP is to be revoked, but the City could conduct an appropriate hearing on the matter, giving Xcel and interested citizens an opportunity to be heard.  Any such action should probably be taken swiftly in order to minimize any claim by Xcel that it has expended costs or other resources in reliance upon the CUP. 

 

         There is a possibility that Xcel might consider suing the Task Force or individual members of the organization for interference with contract or, perhaps, on other grounds.  Any such claims would be of dubious validity.  The Task Force and its members are merely exercising their First Amendment rights and should not be subject to liability for those activities.  Further, Minn. Stat. § 534.01, known as the SLAPP Law, prohibits most lawsuits against individuals or organizations engaged in peaceful efforts to effect legislative action.

 

         In sum, legitimate legal grounds exist upon which the City could decide, as a policy matter, to revoke the CUP issued to Xcel for the new double-circuit power line. 

 

          It is uncertain what impact a rescission and revocation of the CUP might have on the pending appeal of the mandamus matter.  If the CUP were rescinded the litigation could become moot and the appeal no longer necessary.  In any event, such an action would not have a deleterious effect on the pending appeal.  It could, however result in new litigation.