Montana-Dakota Utilities Co. v. Behm ( 2019 )

Filed 5/16/19 by Clerk of Supreme Court
IN THE SUPREME COURT
STATE OF NORTH DAKOTA
2019 ND
Montana-Dakota Utilities Co., a Division of
MDU Resources Group, Inc., n/k/a Montana-
Dakota Utilities Co., a Subsidiary of MDU
Resources Group, Inc., Plaintiff, Appellant, and
Cross-Appellee
v.
Lavern Behm, Defendant, Appellee, and
Cross-Appellant
No. 20180321
Appeal from the District Court of Ward County, North Central Judicial
District, the Honorable Gary H. Lee, Judge.
REVERSED AND REMANDED.
Opinion of the Court by Tufte, Justice.
Anthony J. Ford (argued) and Malcolm H. Brown (appeared), Bismarck, N.D.,
for plaintiff, appellant, and cross-appellee.
Lynn M. Boughey, Mandan, N.D., for defendant, appellee, and cross-appellant.
Montana-Dakota Utilities Co. v. Behm
No. 20180321
Tufte, Justice.
[¶1] Montana-Dakota Utilities Co. (“MDU”) appeals, and Lavern Behm cross-
appeals, from a judgment dismissing MDU’s eminent domain action. Because the
district court misapplied North Dakota law in concluding a taking was not necessary
for a public use, we reverse and remand for trial on eminent domain damages to be
awarded to Behm.
I
[¶2] MDU brought an eminent domain action under N.D.C.C. ch. 32-15 to acquire
an easement across Behm’s property for a 3,000-foot natural gas pipeline to service
a Burlington Northern Santa Fe (“BNSF”) railroad switch. The railroad switch must
be heated to keep it operable during winter months. The switch is currently heated
using propane from tanks that are serviced and refilled by truck. Winter weather
occasionally prevents service trucks from accessing the tanks to refill the propane.
BNSF requested service from MDU by gas pipeline, believing that natural gas by
pipeline would increase reliability and decrease the cost associated with heating the
switch. MDU claimed that other routes for the pipeline would be too expensive or
might in the future require modification or removal of the pipeline.
[¶3] The district court bifurcated the proceedings between necessity and damages.
Following a bench trial, the district court concluded that the “proposed pipeline is . . .
a use authorized by Section 32-15-02, NDCC,” but that a taking of Behm’s property
was not necessary for the public use under N.D.C.C. § 32-15-05. Relying on an 1883
California case for the proposition that “necessity cannot mean mere convenience,”
the court explained:
MDU’s proposal is to place a 3000 foot pipeline beneath Lavern
Behm’s property for the benefit of a single user, Burlington Northern
Santa Fe. While it is certainly not subject to dispute that maintaining
railway switches is a necessity to the safe operations of the railroad, the
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construction of this pipeline is not necessary for this purpose. The
current switch has been, and can continue to be maintained through the
use of propane. The proposed pipeline serves only the convenience of
a single user, Burlington Northern Santa Fe, while imposing a
permanent restriction on Lavern Behm’s use of his private property.
The location of the proposed pipeline further stretches the
meaning of necessity to mean mere convenience to MDU. That
convenience is not even a present convenience, but one of a future,
highly speculative convenience.
....
The proposed taking [of] Lavern Behm’s property for the
purpose of this pipeline is thus premised on a project to benefit a single
user, Burlington Northern Santa Fe. It is to be placed on Lavern
Behm’s property, a mere 5 feet from the existing 33 foot section line
right [of way]. That placement is deemed necessary by MDU based on
the speculative fear of a future event which may never occur, and even
if it does, may not necessitate the repair or replacement of the pipeline.
The necessity proposed by MDU is nothing more than its own mere
convenience.
Contrasted to this are Lavern Behm’s rights to own his property
and to farm or otherwise develop it as he sees fit, without the burden of
this easement. The burden on Lavern Behm is immediate and
permanent as opposed to the uncertain and speculative necessity argued
by MDU.
The Court therefore finds that the proposed taking and pipeline
route is not compatible with the greatest public benefit when weighed
against the immediate and permanent private injury to Lavern Behm.
The court further concluded that “[t]his one-sided analysis by MDU, resolving all
uncertainties and speculations in its favor, and without consideration of Lavern
Behm’s rights of ownership is arbitrary and capricious.”
II
[¶4] MDU argues the district court’s ruling that the proposed taking was not
necessary contradicts North Dakota law.
[¶5] In Brandt v. City of Fargo, 2018 ND 26, ¶ 11, 905 N.W.2d 764, we recently
restated the standard for a court’s review of questions of public necessity:
Under N.D.C.C. § 32-15-05(2), “the legislature has entrusted the right
to review a determination of the question of necessity in an eminent
domain action to the judicial branch of government.” Oakes Mun.
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Airport Auth. v. Wiese, 265 N.W.2d 697, 699 (N.D. 1978); see also
KEM Elec. Coop., Inc., v. Materi, 247 N.W.2d 668, 670 (N.D. 1976);
Otter Tail Power Co. v. Malme, 92 N.W.2d 514, 521 (N.D. 1958); Cty.
of Pembina v. Nord, 78 N.D. 473, 477, 49 N.W.2d 665, 667 (1951). In
Wiese, 265 N.W.2d. at 700 (citations omitted), this Court clarified the
court’s role in determining public necessity:
To clarify the court’s role in the determination of the
question of public necessity, we emphasize that the
determination of a condemning authority to exercise the
power of eminent domain for an authorized public use is
solely a legislative or political question which is not
subject to judicial review. . . . The court’s review of
public necessity is limited to the question of whether the
taking of the particular property sought to be condemned
is reasonably suitable and usable for the authorized
public use. Much latitude is given to the condemning
authority to determine the location and the extent of the
property to be acquired, and a taking is not objectionable
merely because some other location might have been
made or some other property obtained that would have
been as suitable for the purpose. In the absence of bad
faith, gross abuse of discretion, or fraud by the
condemning authority in its determination that the
property sought is necessary for the authorized use and
is pursuant to specific statutory authority, such
determination should not be disturbed by the courts.
[¶6] Behm’s primary issue in his cross-appeal is that this Court has misinterpreted
our earlier eminent domain case law since the Wiese decision was rendered in 1978.
According to Behm, the problem was exacerbated by dicta in Cent. Power Elec.
Coop., Inc. v. C-K, Inc., 512 N.W.2d 711, 714 n.2 (N.D. 1994), where this Court said
in the course of dismissing for lack of jurisdiction, “[w]hen contested, necessity is
generally found unless the condemnor acted arbitrarily, capriciously, in bad faith, or
fraudulently.” Behm argues earlier cases such as KEM Elec. Coop., Inc. v. Materi,
247 N.W.2d 668 (N.D. 1976); Otter Tail Power Co. v. Malme, 92 N.W.2d 514 (N.D.
1958); Bd. of Educ. of City of Minot v. Park Dist., 70 N.W.2d 899 (N.D. 1955); and
N. Pac. Ry. Co. v. Boynton, 17 N.D. 203, 115 N.W. 679 (1908), stand for the
proposition that the limited standard of review for bad faith, gross abuse of discretion,
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or fraud committed by the condemnor applies only to the extent of a proposed taking
and not to the necessity of the taking. Behm urges that we adopt an expanded judicial
review of the necessity of taking so condemnors cannot “use any presumption or
standard of proof to [countenance] a taking that is not first fully justified as necessary
and for a proper public use.” To the extent he is not simply misreading our cases,
Behm has not provided persuasive reasons for us to depart from the reasoning in more
than 40 years of our precedent.
A
[¶7] Section 32-15-05(1), N.D.C.C., requires that before property can be taken from
a landowner, it must appear “[t]hat the use to which it is to be applied is a use
authorized by law.” MDU argues the district court correctly ruled that its proposed
taking is for a public use authorized by law. Behm contends the district court did not
find that the proposed taking was for a public use authorized by law, but instead that
the taking was for the mere convenience of a single user, BNSF. We interpret Behm’s
argument to be that the court erred in ruling the proposed taking was for a public use.
[¶8] The Century Code authorizes exercise of eminent domain for the following
public uses:
Oil, gas, coal, and carbon dioxide pipelines and works and plants for
supplying or conducting gas, oil, coal, carbon dioxide, heat,
refrigeration, or power for the use of any county, city, or the inhabitants
thereof, together with lands, buildings, and all other improvements in
or upon which to erect, install, place, maintain, use, or operate pumps,
stations, tanks, and other machinery or apparatus, and buildings, works,
and plants for the purpose of generating, refining, regulating,
compressing, transmitting, or distributing the same, or necessary for the
proper development and control of such gas, oil, coal, carbon dioxide,
heat, refrigeration, or power, either at the time of the taking of said
property or for the future proper development and control thereof.
N.D.C.C. § 32-15-02(10) (emphasis added); see also N.D.C.C. § 32-15-02(4)
(including as “public uses” both “railroads” and “pipes for public transportation”).
[¶9] Where a property owner contests “public use” under N.D.C.C. ch. 32-15,
“there is a presumption a use is public when the Legislature has declared it to be and
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we treat the Legislature’s decision with the deference due a coordinate branch of
government.” City of Medora v. Golberg, 1997 ND 190, ¶ 8, 569 N.W.2d 257.
Nevertheless, “the ultimate decision regarding whether a proposed use of property is,
in fact, a public use is a judicial question.” Id. “Private property may not be taken for
the use of, or ownership by, any private individual or entity, unless that property is
necessary for conducting a common carrier or utility business.” N.D.C.C. § 32-15-
01(2). Where, as here, eminent domain is exercised by a utility business,
“[c]ondemnation for service to a single industrial customer does not forestall a finding
that the taking is for a public use.” United States ex rel. Tenn. Valley Auth. v. An
Easement and Right-of-Way Over 1.8 Acres of Land, More or Less, in Maury Cty.,
Tenn., 682 F. Supp. 353, 358 (M.D. Tenn. 1988); see also Carolina Tel. and Tel. Co.
v. McLeod, 364 S.E.2d 399, 401 (N.C. 1988); Dyer v. Tex. Elec. Serv. Co., 680
S.W.2d 883, 885 (Tex. Ct. App. 1984); 2A J. Sackman, Nichols on Eminent Domain
§ 7.05[4][a] (3rd ed. 2018).
[¶10] MDU, the condemnor, and BNSF, the customer it intends to serve, are both “a
common carrier or utility business.” N.D.C.C. § 32-15-01(2). It is only MDU’s use
of the easement to pipe gas, not that of its customer BNSF to heat its switch with the
gas, that is relevant to the public use determination here. MDU’s proposed pipeline
to supply natural gas to BNSF for the purpose of heating the railroad switch is for a
public use because MDU is a public utility, even though the portion of the pipeline
at issue here is intended to serve only a single customer. The district court correctly
concluded the “proposed pipeline is . . . a use authorized by Section 32-15-02,
NDCC.”
B
[¶11] MDU argues the district court erred in ruling the proposed taking of Behm’s
property was not necessary for the public use but was of “mere convenience to
MDU.” Before property may be taken for a use authorized by law, “it must appear . . .
[t]hat the taking is necessary to such use.” N.D.C.C. § 32-15-05(2); N.D.C.C. § 32-
15-01(2) (“Private property may not be taken for the use of, or ownership by, any
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private individual or entity, unless that property is necessary for conducting a
common carrier or utility business.”).
[¶12] In support of its decision, the district court relied on an 1883 California
Supreme Court decision, Spring Valley Water-Works v. San Mateo Water-Works, 28
P. 447 (Cal. 1883), in which the court affirmed a decision refusing to allow a water
corporation to condemn 28 acres of land:
Private property, contiguously situated to the works of a corporation,
may be very convenient for its corporate purpose, and the acquisition
of the same might add to the wealth of the corporation by enhancing the
value of the property which it has in hand, and yet not be reasonably
necessary to the corporation in the discharge of its duty to the public.
“For public uses the government has the right to exercise its power of
eminent domain and take private property, giving just compensation;
but for public convenience it has not. A public convenience is not such
a necessity as authorizes the exercise of the right of eminent domain.
The taking of private property for public uses is in derogation of private
right, and in hostility to the ordinary control of the citizen over his
estate, and statutes authorizing its condemnation are not to be extended
by inference or implication.”
Id. at 449. Here, the district court reasoned that no necessity was shown because a
pipeline crossing Behm’s property would only serve the convenience of MDU, which
could select an alternative route for the pipeline, and the convenience of BNSF, which
could continue to heat its railroad switch with propane.
[¶13] The district court’s analysis of the necessity of the public use is inconsistent
with North Dakota law. Unlike in Spring Valley Water-Works, the easement sought
by MDU is not a taking for “mere convenience.” In Materi, 247 N.W.2d at 671-72,
we held that a showing of customer convenience in uninterrupted electric service and
the condemnor’s convenience and safety in construction and maintenance was
sufficient to render reasonable a conclusion in favor of a taking’s necessity. In Spring
Valley Water-Works the court found it relevant to the necessity analysis “that it was
entirely practicable for the plaintiff to construct on its own land, just above the land
of defendant, the improvement for which it seeks to condemn the defendant’s land.”
28 P. at 450. In contrast, MDU does not own adjacent land on which it could
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construct a pipeline. We have held that “a taking is not objectionable merely because
some other location might have been made or some other property obtained that
would have been as suitable for the purpose.” Brandt, 2018 ND 26, ¶ 11, 905 N.W.2d
764 (quoting Wiese, 265 N.W.2d at 700) (emphasis added).
[¶14] A “court’s review of public necessity is limited to the question of whether the
taking of the particular property sought to be condemned is reasonably suitable and
usable for the authorized public use.” Brandt, 2018 ND 26, ¶ 11, 905 N.W.2d 764
(quoting Wiese, 265 N.W.2d at 700). In C-K, Inc., 512 N.W.2d at 714, n.2, we said:
While we have said before that “landowner[s] may not object merely
because some other location might have been made or some other
property obtained that would have been as suitable for the purpose,”
KEM, 247 N.W.2d at 671, citing to Otter Tail Power Co. v. Malme, 92
N.W.2d 514, 521 (N.D. 1958) (emphasis ours), we have not held that
this proposition stands when the property chosen for the route is less
suitable. In light of the growing body of case law in the area of
electromagnetic fields, see 8A Nichols, Eminent Domain ch. 26 (3d
ed.), Landowners in this case may have a valid argument that alternate
routes benefit the public with less private injury.
[¶15] Behm proposed two alternative routes for the pipeline. The first would run
through BNSF’s current east-west railroad easement. The second would run along a
north-south section line right of way adjacent to the route selected by MDU. MDU
presented evidence that the first alternative route would add 18,000 feet of pipeline
to the project at an additional cost of $1,200,000. The second alternative route would
result in MDU’s easement being subordinate to the public’s section line right-of-way
easement with MDU being forced to accommodate at its expense any conflicts that
might arise. We have acknowledged it is reasonable for a condemnor to consider
possible future development in determining whether the property sought to be
condemned is reasonably suitable for the project. Malme, 92 N.W.2d at 522
(“Experience had demonstrated that the location of the line far enough in on the land
of the owner to avoid the necessity of moving the line in case of widening or the
relocation of a road or highway was advantageous.”). The determination of necessity
must always balance the burden on the affected landowner and the benefit of the
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public use. A risk of future development or conflict with prior easements is one factor
that may be considered. Although the particular property sought to be condemned
“must be located in the manner which will be compatible with the greatest public
benefit and the least private injury,” N.D.C.C. § 32-15-06, Behm has not
demonstrated how MDU erred in weighing those interests.
[¶16] The district court’s belief that the pipeline was unnecessary because BNSF
could continue to heat the railroad switch with propane erroneously focuses on the
customer’s necessity rather than the public utility’s necessity. Whether a project is
necessary at all, including the “condemning authority’s determination to exercise the
power of eminent domain for an authorized public use[,] is a legislative question
which is not subject to judicial review.” Brandt, 2018 ND 26, ¶ 12, 905 N.W.2d 764.
The necessity inquiry under N.D.C.C. § 32-15-05(2) turns on whether the particular
property proposed to be taken is necessary for the public use, not whether the
authorized public use is itself necessary. Section 49-04-01, N.D.C.C., provides:
Every public utility shall furnish, provide, and maintain such
service, instrumentalities, equipment, and facilities as shall promote the
safety, health, comfort, and convenience of its patrons, employees, and
the public, and as shall be in all respects adequate, convenient, just, and
reasonable, and without any unjust discrimination or preference.
The court’s consideration of BNSF’s preference for gas by pipeline to heat its railroad
switch misapplied the law. It is the necessity of MDU, not that of BNSF that is the
proper consideration. To the extent that we have considered the members of the public
served by the condemnor’s proposed public use, we have said “convenience to the
public becomes a necessity for the board of education in establishing a junior high
school.” Bd. of Educ. of City of Minot, 70 N.W.2d at 906.
[¶17] Ultimately, it appears the district court substituted its judgment for that of the
condemning authority. “In the absence of bad faith, gross abuse of discretion, or fraud
by the condemning authority in its determination that the property sought is necessary
for the authorized use and is pursuant to specific statutory authority, such
determination should not be disturbed by the courts.” Brandt, 2018 ND 26, ¶ 11, 905
8
N.W.2d 764 (quoting Wiese, 265 N.W.2d at 700). Behm did not establish that MDU
acted in bad faith, grossly abused its discretion, or committed fraud in determining
whether its chosen route across Behm’s property was reasonably suitable in terms of
the greatest public benefit and the least private injury.
[¶18] We conclude the district court erred in ruling MDU’s proposed taking was not
necessary for a public use.
III
[¶19] Behm lists ten issues in his cross-appeal but does not specifically address any
of them in his brief. We do not address inadequately briefed issues. See, e.g., State v.
Nice, 2019 ND 73, ¶ 11, 924 N.W.2d 102. We reverse the judgment and remand for
trial on eminent domain damages to be awarded to Behm.
[¶20] Jerod E. Tufte
Jon J. Jensen
Carol Ronning Kapsner, S.J.
Daniel J. Crothers, Acting C.J.
[¶21] The Honorable Carol Ronning Kapsner, Surrogate Judge, sitting in place of
VandeWalle, C.J., disqualified. The Honorable Lisa Fair McEvers disqualified herself
subsequent to oral argument and did not participate in this decision.
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