Northern States Power Co. v. City of Oakdale, C3-98-867

Citation588 N.W.2d 534
Decision Date02 February 1999
Docket NumberNo. C3-98-867,C3-98-867
PartiesUtil. L. Rep. P 26,701 NORTHERN STATES POWER COMPANY, Appellant, v. CITY OF OAKDALE, Respondent.
CourtCourt of Appeals of Minnesota

Syllabus by the Court

1. The manner in which NSP's rate tariffs at issue were filed with the Minnesota Public Utilities Commission was not procedurally inadequate and therefore did not prevent the tariffs from attaining the status of general state law.

2. An ordinance adopted by a municipality requiring that new electric distribution lines be placed underground is authorized by Minn.Stat. § 216B.36 (1998), and is reasonably related to the municipality's interest in protecting the public safety.

3. The municipality's ordinance at issue is neither preempted by nor in conflict with state law.

George O. Ludcke, Kelly & Berens, P.A., Minneapolis, MN; and Harold J. Bagley, Senior Attorney, Law Department, Northern States Power Company, Minneapolis, MN (for appellant).

James M. Strommen, Daniel J. Greensweig, Kennedy & Graven, Chtd., Minneapolis, MN (for respondent).

Michael A. Hatch, Attorney General, Megan J. Hertzler, Dennis D. Ahlers, Assistant Attorneys General, St. Paul, MN (for amicus curiae Minnesota Public Utilities Commission).

Christopher D. Anderson, Minnesota Power, Inc., Duluth, MN (for amicus curiae Minnesota Power, Inc.).

Harold LeVander, Jr., Maun & Simon, PLC, St. Paul, MN (for amicus curiae Rural Electric Association).

Carla J. Heyl, League of Minnesota Cities, St. Paul, MN (for amicus curiae League of Minnesota Cities).

Considered and decided by HALBROOKS, Presiding Judge, ANDERSON, Judge, and HOLTAN, Judge.

O P I N I O N

HARVEY A. HOLTAN, * Judge.

Northern States Power Company (NSP) appeals from the district court's grant of summary judgment in favor of the City of Oakdale (the city) in a case involving an ordinance requiring underground electric distribution lines. We affirm.

FACTS

In the spring of 1997, Imation Corporation requested that NSP provide additional service to its facility located in the City of Oakdale. NSP subsequently informed the city of its intent to construct new overhead electric distribution lines along state highways 5 and 120. NSP's General Rules and Regulations (tariff) § 5.1A provides that "[t]he Company reserves the right to designate the type of facilities to be installed either overhead or underground." The city requested that the lines be installed underground. NSP's tariff § 5.3A provides in relevant part:

When requested by the customer, group of customers, developer, or municipality to provide types of service that result in an expenditure in excess of the Company designated service installation as provided under Section 5.1, STANDARD INSTALLATION, the requesting * * * municipality will be responsible for such excess expenditure.

NSP agreed to construct the new lines underground if the city would agree to pay the additional costs associated with undergrounding. NSP estimated that undergrounding would cost an additional $338,000, over and above the $190,000 cost of overhead construction.

In July 1997, the city passed an ordinance requiring that any installation of electric distribution systems of less than 15,000 volts be placed underground. Oakdale, Minn.Code of Ordinances §§ 23-40 and 23-41 (July 1997).

NSP was then granted a permit from MnDOT authorizing completion of the project using overhead lines. NSP informed the city that it was not required to obtain a permit from the city because MnDOT had exclusive authority over state trunk highway right-of-ways under Minn.Stat. § 161.45 (1998). NSP offered to amend its franchise with the city so that the additional costs of undergrounding could be paid through a franchise fee collected from NSP ratepayers in the city. The city declined the offer.

NSP began construction of the overhead lines. On the first day of construction, the Oakdale Police Department notified the NSP crew that the construction was in violation of the ordinance, and crew members would be arrested if they did not cease construction. NSP then brought this action seeking a declaratory judgment that the ordinance was invalid and seeking to enjoin enforcement of the ordinance.

The city subsequently agreed to allow NSP to go forward with the overhead construction. The city later amended the ordinance to exclude state trunk highways from the undergrounding requirement. Oakdale, Minn.Code of Ordinances § 23-41 (October 1997). The city then brought a motion to dismiss NSP's complaint for mootness. NSP brought a cross motion for summary judgment on the validity of the ordinance. NSP included with its motion an affidavit detailing future projects in the city that would be affected by the ordinance. One of the projects was scheduled to begin in January 1998, and included 1.2 miles of power line within the city.

Following a hearing, the district court denied the city's motion to dismiss for mootness, denied NSP's motion for summary judgment, and granted summary judgment on the merits in favor of the city. The court concluded that NSP's commission-approved tariffs did not attain the status of general state law, that the ordinance was not preempted by or in conflict with the Minnesota Public Utilities Act (MPUA), Minn.Stat. ch. 216B (1998), and that the ordinance was a valid exercise of the city's power. The court denied injunctive relief accordingly, and the remaining portions of NSP's complaint were dismissed with NSP's assent.

NSP appeals the district court's grant of summary judgment. It alleges that the district court erred in concluding that NSP's tariffs, filed with the Minnesota Public Utilities Commission (the commission), did not assume the status of general state law. It further alleges that the court erred by concluding that the city's ordinance was valid and not in conflict with or preempted by the MPUA and its approved tariffs.

ISSUES

I. Did the district court err in determining that the filed tariffs did not assume the status of general state law?

II. Did the district court err in determining that the ordinance was valid, and not preempted by or in conflict with state law?

ANALYSIS

On appeal from summary judgment, a reviewing court determines whether any genuine issues of material fact exist and whether the district court erred in applying the law. Wartnick v. Moss & Barnett, 490 N.W.2d 108, 112 (Minn.1992). In making its determinations, "the court must view the evidence in the light most favorable to the nonmoving party." State by Beaulieu v. City of Mounds View, 518 N.W.2d 567, 571 (Minn.1994). No deference need be given to the district court's application of the law. Frost-Benco Elec. Ass'n v. Minnesota Pub. Utils. Comm'n, 358 N.W.2d 639, 642 (Minn.1984). Statutory interpretation presents a question of law that an appellate court reviews de novo. Hibbing Educ. Ass'n v. Public Employment Relations Bd., 369 N.W.2d 527, 529 (Minn.1985).

I.

NSP argues that the district court erred when it determined that the commission-approved tariffs failed to attain the status of general state law due to procedural deficiencies. We agree.

The commission has been granted legislative authority to regulate public utilities and determine whether their rates are reasonable. See Minn.Stat. ch. 216B (1998). Ratemaking is a quasi-legislative function. Peoples Natural Gas Co. v. Minnesota Pub. Utils. Comm'n, 369 N.W.2d 530, 533 (Minn.1985). Utilities are required to file schedules with the commission "showing all rates, tolls, tariffs and charges which it has established * * *." Minn.Stat. § 216B.05, subd. 1 (1998). Filings made with the commission by utilities "continue in force until amended by the public utility or until changed by the commission * * *." Minn.Stat. § 216B.09, subd. 3 (1998). The commission's decisions "command the same regard and are subject to the same tests as enactments of the legislature." Minneapolis St. Ry. Co. v. City of Minneapolis, 251 Minn. 43, 71, 86 N.W.2d 657, 676 (1957) (citation omitted).

The district court concluded that:

NSP Rules 5.1 and 5.3 never assumed the status of general state law because they were not adopted pursuant to any agency rulemaking proceeding. Their purpose was limited to advising the MPUC of the manner in which this utility would treat all of its customers. To file these "rules" without benefit of the protections of notice and opportunity for hearing and then claim they have the force and effect of general state law is vastly overstating the purpose and intent of these tariffs.

This court has previously held a filed tariff to be "an inherent part of the lawful rate charged to consumers * * *." Computer Tool & Eng'g, Inc. v. Northern States Power Co., 453 N.W.2d 569, 573 (Minn.App.1990) (holding NSP tariff § 1.4 valid and enforceable), review denied (Minn. May 23, 1990). The Computer Tool court concluded that the tariff had been "recognized as a reasonable limitation of liability by the agency exclusively empowered by the legislature to make this determination," based upon the tariff's survival through several contested rate changes. Id. The same analysis applies here. The tariffs at issue here were originally filed with the commission in 1984. Since that time they have been reviewed and approved through a series of commission ratemaking proceedings, most recently in 1992. See MUPC Docket No. E-002/GR-92-1185 (1992). As approved by the commission, the tariffs at issue are not invalid as the product of a procedural defect.

The city asserts that even if the tariffs are not procedurally invalid, tariff section 5.1 represents an improper delegation of authority from the commission to NSP. The city cites Northern Pac. Ry. Co. v. State of Minn. ex rel. Duluth, 208 U.S. 583, 597, 28 S.Ct. 341, 345-46, 52 L.Ed. 630 (1908), for the proposition that the commission could not delegate the authority to determine placement of utility lines to NSP, a private interest. However, Northern Pac. Ry. merely states that...

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