Holborn v. Deuel Cnty. Bd. of Adjustment

Decision Date10 February 2021
Docket Number#28963, #28983
Citation955 N.W.2d 363
Parties George HOLBORN, Ruby Holborn, Vicki Hinders, Stacey Hinders, Rick Kolbeck, Jennifer Kolbeck and Steven Overby, Petitioners and Appellees, John Homan, Teresa Homan, William Stone, Fay Stone, Heath Stone and Katie Stone, Petitioners, v. DEUEL COUNTY BOARD OF ADJUSTMENT, Respondent, and Deuel Harvest Wind Energy LLC and Deuel Harvest Wind Energy South LLC, Respondents and Appellants.
CourtSouth Dakota Supreme Court

REECE M. ALMOND of Davenport, Evans, Hurwitz & Smith, L.L.P., Sioux Falls, South Dakota, CHRISTINA L. KILBY of Kilby Law, PLLC, Burnsville, Minnesota, Attorneys for petitioners and appellees.

LEE SCHOENBECK, JOSEPH ERICKSON of Schoenbeck Law, P.C., Watertown, South Dakota, LISA M. AGRIMONTI, MOLLIE M. SMITH, HALEY WALLER PITTS of Fredrikson & Byron, P.A., Minneapolis, Minnesota, Attorneys for respondents and appellants.

JENSEN, Chief Justice

[¶1.] Deuel Harvest Wind Energy, LLC and Deuel Harvest Wind Energy South, LLC (Deuel Harvest) applied for special exception permits (SEP) from the Deuel County Board of Adjustment (Board) to develop two wind energy systems (WES) in Deuel County.1 Several residents of Deuel County and neighboring counties (Appellees) objected. Following a public hearing, the Board unanimously approved the permits. Appellees petitioned the circuit court for writ of certiorari challenging the SEPs, including a claim that several members of the Board had interests or biases which disqualified them from considering the SEPs. The circuit court determined that two Board members had disqualifying interests and invalidated their votes. The court then reversed the decision of the Board granting the SEPs. Deuel Harvest appeals.2

Facts and Procedural History

[¶2.] Deuel County enacted a zoning ordinance (Ordinance) in 2004. In 2016 and 2017, the Board modified the Ordinance to impose more stringent requirements for obtaining a SEP to operate a WES. These requirements included increasing the setback distances for wind turbines from non-participating residences and businesses.

[¶3.] In 2015, Deuel Harvest began plans for developing the WESs in Deuel County. Deuel Harvest conducted environmental surveys, community outreach, and obtained lease and easement agreements (Agreements) from landowners in the areas of the planned WES locations. Deuel Harvest originally leased more land than needed for the WESs. Deuel Harvest later narrowed the locations for the WESs and released some of the initial Agreements.

[¶4.] Deuel Harvest applied for the SEPs on December 22, 2017. The Board held a public hearing regarding the SEPs on January 22, 2018. At the time of the applications, the Board consisted of five members: Chairman Dennis Kanengieter, Paul Brandt, Mike Dahl, Kevin DeBoer, and Steven Rhody. Prior to the hearing, counsel for Appellees submitted a letter to the Board alleging that several of the Board members had conflicts of interest. At the start of the hearing, each individual Board member publicly stated that he had no financial interest in the WESs and believed he could make a fair decision. The hearing lasted for approximately three and one-half hours, as the Board heard testimony from twenty-eight speakers, some supporting and some opposing the projects. Each speaker was limited to three minutes.

[¶5.] During the hearing, discussion arose concerning South Dakota Pheasant Hunts, LLC (South Dakota Pheasant Hunts)—a hunting preserve operating on 480 acres of land in Deuel County.3 Appellees claimed that the bare land used for hunting constituted part of the business, and the approval of the SEPs would place the WESs in closer proximity than permitted by Ordinance § 1215.03(2)(a). The Ordinance provides the distance from non-participating businesses and residences shall not be less than four times the height of the wind turbine. The Ordinance does not define "business," but it provides that "[f]or purposes of this section only, the term ‘business’ does not include agricultural uses." The Board determined that the term business was limited to the physical structures used by South Dakota Pheasant Hunts, not the land used for hunting. By defining the term business as a physical structure, the Board concluded that the WESs would not violate the setback requirements of the Ordinance.

[¶6.] The Board voted unanimously (5 to 0) to approve Deuel Harvest's SEPs. Appellees appealed the issuance of the SEPs to the circuit court via a petition for a writ of certiorari pursuant to SDCL 11-2-61. Appellees claimed four of the five Board members improperly participated in the vote approving the SEPs because of their disqualifying interests or biases. Appellees also challenged the Board's determination that the SEPs would not violate the Ordinance setback requirements with respect to South Dakota Pheasant Hunts.

[¶7.] During the certiorari proceedings before the circuit court, Appellees took the deposition of each Board member to develop their claims that Board members had disqualifying interests or biases. At the hearing, the circuit court excluded the depositions, but nonetheless made findings of fact based upon some of the evidence in the deposition transcripts. During the certiorari proceedings, Appellees alleged disqualifying interests of four of the five Board members.4

Mike Dahl

[¶8.] In January 2016, Deuel Harvest executed an Agreement with Dahl, permitting Deuel Harvest to develop a WES on Dahl's land in the future. Deuel Harvest terminated the Agreement on November 17, 2016, after determining the property was outside of the planned locations for the WES. Dahl received one payment of $3,095 in August 2016, per the terms of the Agreement. He received no payments after the Agreement was terminated and had no current or prospective relationship with Deuel Harvest at the time of the hearing on the SEPs.

Kevin DeBoer

[¶9.] Prior to DeBoer's appointment to the Board in February 2017, Deuel Harvest executed two Agreements with DeBoer in July 2016 to potentially develop a WES on DeBoer's property. DeBoer had also attended two informational events that were hosted by Deuel Harvest at local restaurants prior to his appointment. The Agreements between DeBoer and Deuel Harvest were terminated in December 2017, at DeBoer's request, because of his belief that the Agreements would conflict with his Board duties in considering the impending SEP applications. Deuel Harvest terminated the Agreements approximately one week before it submitted the SEP applications to the Board. DeBoer received payments of $3,060 for the Agreements in August 2016 and again in August 2017. DeBoer received no payments after the Agreements were terminated and had no current or prospective relationship with Deuel Harvest at the time of the hearing on the SEPs.

[¶10.] In his deposition, DeBoer testified that his two brothers also had Agreements with Deuel Harvest for the development of the WESs. At the time of the hearing before the Board, his brothers had a combined 827 acres that were subject to the Agreements with Deuel Harvest. DeBoer testified that his only discussion with his brothers regarding the Agreements was whether the WESs would come to "fruition." DeBoer had no knowledge of the financial arrangements between his brothers and Deuel Harvest. He also had no knowledge if any wind turbines would be placed on his brothers’ property in the future.

Chairman Dennis Kanengieter

[¶11.] At the time of the hearing, Kanengieter had been employed for twenty-four years by two individuals who owned land subject to Agreements with Deuel Harvest. Kanengieter also admitted in his deposition that he had advocated for wind development in Deuel County and had signed a petition for referendum challenging the 2016 decision of the Deuel County Commission to impose more stringent requirements for WESs in Deuel County. He also signed a transmission line agreement relating to his own land with a different wind developer, Flying Cow Wind, LLC, prior to the Deuel Harvest hearing before the Board. That agreement was unrelated to Deuel Harvest's project.

Paul Brandt

[¶12.] Brandt testified that he had previously signed two lease agreements for wind projects that were unrelated to the Deuel Harvest WESs.5 He also invested in an unrelated wind energy development company. At the time of the hearing, Brandt was also an officer and 18% owner of a company called Supreme Pork. A subsidiary of Supreme Pork, Supreme Welding, had previously performed over $865,000 of work for a manufacturer of fiberglass wind turbine blades. There is no evidence that the wind turbine manufacturer or Supreme Welding had a business relationship with Deuel Harvest or otherwise expected to receive business related to the projects. Supreme Pork also had a lease and an easement agreement with another wind company that had placed a wind turbine on property owned by Supreme Pork in Minnesota. That contract included a "No Interference" provision that precluded Supreme Pork from impeding or interfering with wind power facilities in the future.6 Brandt signed the agreement as Chairman of the Board and President of Supreme Pork.

The Circuit Court Decision

[¶13.] Following a hearing, the court issued a written decision on January 25, 2019, invalidating the votes of DeBoer and Dahl due to disqualifying interests, but affirming the Board's approval of the SEPs on a vote of 3 to 0. Deuel Harvest filed a motion for reconsideration with the circuit court, arguing that by disqualifying the votes of DeBoer and Dahl, the court effectively denied the SEPs under SDCL 11-2-59, a statute which required SEPs to be approved by a vote of two-thirds of the entire Board.7

[¶14.] In response to the motion for reconsideration, the circuit court filed an addendum to its original written decision. The addendum reaffirmed the disqualification of DeBoer and Dahl but overturned the Board's approval of the SEPs. On March 27, 2019, the circuit court...

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    ...643, in support of their due process claims. Armstrong , however, has been limited by our holdings in Holborn v. Deuel County Board of Adjustment , 2021 S.D. 6, 955 N.W.2d 363, and Miles v. Spink County Board of Adjustment , 2022 S.D. 15, 972 N.W.2d 136. In both Miles and Holborn , we appli......
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