Certain Territorial Elec. Boundaries (Mitchell Area) F-3105, Matter of

• Decision Date: 21 June 1979
• Docket Number: No. 12402,F-3105,12402
• Parties: In the Matter of Establishing CERTAIN TERRITORIAL ELECTRIC BOUNDARIES Within the State of South Dakota (MITCHELL AREA)William WILLRODT and Mary Willrodt, Appellants, v. NORTHWESTERN PUBLIC SERVICE COMPANY, Respondent.
• Court: South Dakota Supreme Court

Page 65

281 N.W.2d 65

31 P.U.R.4th 201

In the Matter of Establishing CERTAIN TERRITORIAL ELECTRIC BOUNDARIES Within the State of South Dakota (MITCHELL AREA) F-3105 William WILLRODT and Mary Willrodt, Appellants, v. NORTHWESTERN PUBLIC SERVICE COMPANY, Respondent.

No. 12402.

Supreme Court of South Dakota.

Argued Jan. 18, 1979.

Decided June 21, 1979.

John W. Larson, of Larson, Sundall, Wright & Larson, Chamberlain, for appellants.

Merle D. Lewis, Huron, for respondent, Northwestern Public Service Co.

Judith Meierhenry, Vermillion, for the Public Utilities Commission; Ben Stead, Asst. Atty. Gen., Pierre, on the brief.

Leo P. Flynn, Milbank, for amicus curiae, South Dakota Rural Elec. Ass'n.

Robert B. Frieberg, of Frieberg, Frieberg, & Peterson, Beresford, for amicus curiae, South Dakota Municipal Elec. Ass'n.

Harold H. Deering, Jr., of May, Adam, Gerdes & Thompson, Pierre, for amicus curiae, Investor-Owned Utilities Companies in South Dakota.

FOSHEIM, Justice.

This case involves the establishment of territorial boundaries for electric utilities. Appellants, William Willrodt and Mary Willrodt (Willrodts), are appealing a decision of the circuit court that reversed a Public Utilities Commission (PUC) determination and granted the right to serve the Willrodts' property to respondent Northwestern Public Service Company (NWPS). The investor-owned utility companies in South Dakota, the South Dakota Municipal Electric Association (SDMEA) and the South Dakota Rural Electric Association (SDREA), filed briefs and appeared as amicus curiae supporting respondent. The attorney general's office represents the PUC. On appeal the Willrodts contend that SDCL 49-34A is unconstitutional; that NWPS's appeal from the PUC order was not timely; that the Willrodts should have been allowed to present further evidence; and that if the challenged statutes are constitutional, the PUC order was improperly reversed. We affirm the judgment as modified.

Pursuant to the enactment of Sess.L.1975, ch. 283, pertinent portions of which are now codified in SDCL 49-34A, the PUC was required on or before July 1, 1976, after notice and hearing, to assign service areas to electrical utilities then doing business within the state and to prepare maps accurately showing the boundaries of the assigned service area of each utility. The assignee utility was to be granted the exclusive right to provide electric service at retail within the assigned area.

Appellants have owned, since prior to 1975, an unimproved tract of farmland, near the City of Chamberlain, which they desire to irrigate by pumping water from the Missouri River a distance of about one mile. Their proposed pumping station at the river was assigned to respondent for service and is not in dispute.

SDCL 49-34A-43 provides that the electric utilities may enter into contracts to divide various service areas subject to PUC approval. In the absence of such an agreement, the PUC was authorized to assign service areas, according to equidistant guidelines, based on the electric lines of adjacent utilities as they existed on March 21, 1975.

NWPS is an investor-owned electric utility and the Tri-County Electric Association (TCEA) is a rural electric cooperative. Both serve customers in the Chamberlain vicinity. These two utilities entered into an agreement for division of the customer service area, which assigned the Willrodts' property to NWPS for service. The PUC held a hearing in Mitchell on May 27, 1976, in order to decide whether this agreement should be approved. The parties to this appeal (the Willrodts and NWPS) appeared. TCEA also appeared but has not since taken part in the proceedings except in joining amicus curiae SDREA. After this hearing, the PUC, in an order dated July 1, 1976, refused to approve the agreement as to appellants' property, but enforced it in all other respects. Thereafter, on September 15, 1976, NWPS filed a protest and a petition for stay of execution of the July 1 order. The Willrodts filed an objection to this protest on September 27, 1976. The PUC, by order dated September 29, 1976, granted NWPS's protest and petition and set a hearing for October 15, 1976. The hearing was held on that date and sworn testimony was presented by both parties. The PUC, on December 22, 1976, entered its final order. NWPS petitioned the PUC for a rehearing on January 4, 1977. That petition was denied on January 11, 1977. From that denial, NWPS filed its notice of appeal to the circuit court on February 9, 1977. The trial court found that the appeal was timely and reversed the PUC determination in an order dated October 26, 1977. This order was later canceled and a new order reaching essentially the same result was entered on November 7, 1977. It remanded the matter back to the PUC for further evidence on the equidistant concept. The record is not clear concerning the scope of the remand.

We will first address the issue of whether the appeal of NWPS from the PUC order was timely. Appellants' contentions as to why the appeal by NWPS was untimely are essentially based on the premise that the July 1, 1976, order was final. At the May 27, 1976, hearing, counsel for the Willrodts informed the PUC that his clients objected to their property being placed in NWPS's assigned service area. Mr. Willrodt also offered unsworn testimony. As the PUC hearing drew to a close, the staff counsel for the PUC recommended that another hearing be set to take evidence on the Willrodts' objection. The PUC then agreed to conduct a hearing "specifically on this." Thereafter, on July 1, 1976, and prior to the second hearing, the PUC announced its decision and order.

On September 15, 1976, NWPS filed a protest and petition for stay of execution of the July 1 order. In the protest, NWPS enumerated several grounds, among them that the PUC failed to hold additional hearings on the Willrodts' objection. The Willrodts filed an objection to this protest. The PUC, in an order dated September 29, 1976, granted NWPS's protest and petition and set a hearing for October 15, 1976. The order specifically found that:

All evidence previously submitted in this proceeding and all new evidence offered and received at the forthcoming rehearing shall be and shall constitute the record in this matter upon which the Commission shall base its final Decision and Order in regards thereto.

At the October 15, 1976, hearing, all interested parties appeared and presented sworn testimony. Thereafter, on December 22, 1976, the PUC entered its order. NWPS petitioned the PUC for a rehearing on January 4, 1977. This was denied by a PUC order on January 11, 1977. From that denial NWPS filed its notice of appeal on February 9, 1977.

We conclude that the PUC reached no final decision regarding the Willrodts' objection until December 22, 1976. NWPS had a right to expect that no final decision regarding the Willrodts' property would be made until after a hearing, as indicated on May 27, 1976, and as stated in the September 29, 1976, order. The PUC apparently understood this, since it granted the promised hearing on this specific matter. After receiving testimony, the PUC made its final decision. NWPS properly filed its request for rehearing. This was denied and a timely appeal was taken. We agree with the trial court that the July 1, 1976, order was not a final determination of the matter.

The Willrodts' second contention on the timeliness issue is that the notice of appeal from the PUC to the circuit court was not timely filed. This is based upon the premise that no rehearing was possible from the December 22, 1976, order since the October 15, 1976, hearing was the final rehearing that could be had under the PUC's procedures. The October 15, 1976, protest hearing provided for in SDCL 49-34A-44, however, is a separate hearing from an administrative rehearing provided for by ARSD 20:10:14:39 (Supp.1977). NWPS filed for a rehearing from the protest hearing within the time allowed by this rule. NWPS appealed to the circuit court within the time allowed after the PUC denied its application for an administrative rehearing from the December 22, 1976, order.

We next turn to the issue of whether the trial court's determination that disapproval of the agreement between NWPS and TCEA as to the appellants' property constituted an abuse of discretion and an unwarranted exercise thereof. The scope of review of the administrative tribunal's action on appeal to this court is the same as that before the trial court. Piper v. Neighborhood Youth Corps, 241 N.W.2d 868 (S.D.1976). At the time this appeal was taken to circuit court, SDCL 1-26-36 provided that the court was not to substitute its judgment for that of the agency as to the weight of the evidence on questions of fact. The trial court, however, could reverse or modify the decision if substantial rights of NWPS were prejudiced because the administrative findings, inferences, conclusions, or decisions were:

(1) In violation of constitutional or statutory provisions;

(2) In excess of the statutory authority of the agency;

(3) Made upon unlawful procedure;

(4) Affected by other error of law;

(5) Unsupported by substantial evidence on the whole record; ¹ or

(6) Arbitrary or capricious or characterized by abuse of discretion or clearly unwarranted exercise of discretion.

While the expertise of the administrative agency is recognized, the agency must lend credence to the guidelines established in the statutes. Valley State Bank of Canton v. Farmers State Bank, 87 S.D. 614, 213 N.W.2d 459 (1973). On review this court must decide whether the law has been correctly applied and whether the resultant conclusion is supported by competent and sufficient evidence. Scissons v. City of Rapid City, 251 N.W.2d 681 (S.D.1977).

SDCL 49-34A-43 provides in part:

The commission shall approve a contract if it finds that the contract will eliminate or avoid unnecessary duplication of facilities, will provide...