State of S.D. Water Management Bd. Approving Water Permit No. 1791-2, Matter of

Citation351 N.W.2d 119
Decision Date27 June 1984
Docket NumberNo. 14296,14296
CourtSupreme Court of South Dakota

Daniel J. Doyle, Asst. Atty. Gen., Pierre, for South Dakota Conservancy Dist. and South Dakota Water Management Bd.; Mark V. Meierhenry, Atty. Gen., Pierre, on brief.

Jacqueline Huber, Belle Fourche, for appellants Henry Bruch and Art Crowley, Jr.

James S. Nelson, Rapid City, for appellee ETSI.

DUNN, Justice.

This is an appeal from an order of the circuit court affirming the South Dakota Water Management Board's approval of Water Permit No. 1791-2, and from orders of the circuit court denying several motions. We affirm.

On September 24, 1981, the South Dakota Legislature passed legislation which allowed the South Dakota Conservancy District (SDCD) to make application to the Water Management Board (Board) for a permit to appropriate water from Oahe Reservoir; the same act also allowed SDCD to transfer the permit to Energy Transportation Systems, Inc. (ETSI). 1 ETSI plans to pipe the water to Wyoming, where it will be used to transport coal in a coal slurry pipeline.

On September 25, 1981, SDCD submitted its application (No. 1791-2), including a project map, to Board. The application described the proposed location of the diversion point, the amount of water to be diverted, the period of use of the water, the intended use of the water, and the general project plan. The hearing on this application had originally been scheduled for October 15, 1981, but was rescheduled for October 27, 1981, then for November 5, 1981, and finally for January 5, 1982. The reason for the rescheduling was that SDCD had not yet entered into the contract to transfer the water permit to ETSI. Notice of the January 5, 1982, hearing was published on December 17 and 24, 1981, in The Times, the official newspaper of Stanley County, South Dakota, as required by statute, 2 and in seventeen other South Dakota newspapers during the period of December 19 to 31, 1981.

Board held the hearing on the application on January 5, 1982, at Philip, South Dakota. At least forty-eight people who were neither witnesses, attorneys, nor intervenors attended the hearing. Board made it clear at the beginning of the hearing that those persons who wished to intervene should identify themselves and that all others would have an opportunity to testify. After a lengthy meeting, Board continued the hearing until January 14, 1982, so the intervenors could obtain witnesses.

The January 14 hearing was held in Rapid City, South Dakota, and after a day of testimony, the hearing was again continued to facilitate case preparation and public participation. The continued hearing was held on January 21, 1982, in Pierre, South Dakota; at that time, after all parties had presented their testimony, Board voted to approve the permit. On February 4, 1982, after examining proposed findings of fact and conclusions of law from interested parties, Board adopted its findings and conclusions.

There are two appellants in the appeal before this court: Art Crowley, Jr. and Henry Bruch. Appellant Crowley did not attend any of the hearings, did not intervene, and did not submit proposed findings of fact and conclusions of law to Board. Appellant Bruch attended the hearings on January 5 and 14, 1982, and successfully intervened on January 14; on February 4, 1982, he submitted his own proposed findings of fact and conclusions of law to Board. Throughout the process, Bruch was given the opportunity to call his own witnesses, cross-examine other witnesses and testify on his own behalf. The record indicates that his primary concerns at the hearings were the route of the pipeline and the question of eminent domain.

Appellants appealed the decision of Board to circuit court, pursuant to SDCL 1-26-30, and moved for a dismissal of the findings and conclusions of Board. They also moved to present additional evidence to Board, to present additional testimony before the circuit court, and to stay the use of Water Permit No. 1791-2 during appeal. The circuit court denied all the motions.

Our first concern in this appeal is the proper scope of review. Prior to the amendment of SDCL 1-26-37, this court reviewed the record of an administrative agency in the same manner as the circuit court, guided by SDCL 1-26-36 and not bound by any presumption that the circuit court was correct. We would uphold a ruling or decision of an administrative agency unless we found that in light of the entire record the decision was clearly erroneous or we were left with a firm and definite conviction that a mistake was made. Matter of Ackerson, Karlen & Schmitt, 335 N.W.2d 342 (S.D.1983); Deuter v. South Dakota Highway Patrol, 330 N.W.2d 533 (S.D.1983).

On July 1, 1983, the following addition to SDCL 1-26-37 became effective: "The Supreme Court shall give the same deference to the findings of fact, conclusions of law and final judgment of the circuit court as it does to other appeals from the circuit court. Such appeal may not be considered de novo." In the recent decision of State v. Miller, 349 N.W.2d 42 (S.D.1984), we decided that despite the new language in the statute, this court still reviews the administrative decision essentially in the same manner as did the circuit court; the required deference to the circuit court has not changed.

Concerning the actual merits of the case, we first observe that we are here dealing with special legislation to permit the appropriation of water from the Missouri River for energy industry purposes and to permit SDCD to enter into a contract for sale of the water. The desirability and feasibility of such a contract were fully explored and passed on by the legislature. Standards were set by the legislature as to the amount of water which could be appropriated each year, so that there would be no appreciable diminution of the flow of water in the river.

While the legislative act still required the formality of a hearing and the granting of a permit by Board, the act left very little power with Board to deny a permit. As the title to the act states, the legislation was intended "to authorize, facilitate and effectuate the marketing by the South Dakota conservancy district of water for energy industry use ..." (emphasis added). 1982 S.D.Sess.Laws, ch. 1 at p. 4. Furthermore, the act states: "Notwithstanding any other provision of law, the district may acquire, by obtaining a permit or permits from the water management board, rights to appropriate water for energy industry use ..." (emphasis added). Id. at Sec. 3, p. 4-5.

With these realities in mind, we turn to the issues of this case. Appellants have raised a total of fourteen different issues on appeal. A close examination of the record, however, reveals that of all these issues raised on appeal, appellants raised only two of them before Board: actual notice to landowners and the necessity of an environmental impact statement. Appellant Bruch's other concerns at the hearings dealt with eminent domain and the pipeline route, neither of which are raised on appeal. Appellant Crowley raised no issues before Board since he did not appear at any of the hearings.

It is well settled that if objections are not raised before the administrative agency at the hearing, they are not preserved for appeal. Application of Am. State Bank, Pierre, 254 N.W.2d 151 (S.D.1977). Accord, Buchholtz v. Iowa Dept. of Public Instr., 315 N.W.2d 789 (Iowa 1982); Amoco Production Co. v. N.D. Indus. Com'n., 307 N.W.2d 839 (N.D.1981); B. Schwartz, Administrative Law Sec. 206 (1976). See also Matter of South Lincoln Rural Water System, 295 N.W.2d 743 (S.D.1980). In addition, where objections at a hearing were made on behalf of parties who did not appeal, persons who did not join in those objections may not avail themselves of such objections in court proceedings. City of Portsmouth v. Public Utilities Com'n, 154 Ohio St. 174, 93 N.E.2d 563 (1950); 73A C.J.S. Public Administrative Law and Proc. Sec. 214 (1983). Therefore, we will consider only those issues on appeal which appellants raised before Board at the hearings.

The first of these issues which appellants raised before Board is the question of notice to property owners on the pipeline route. Appellants claim they are "affected landowners" and thus should have been given actual notice by letter rather than merely notice by publication. They maintain that such actual notice is required by due process considerations whenever private property is taken. The circuit court ruled that holding a hearing on the application for a permit to appropriate water does not give rise to a requirement of personal service upon any citizen of South Dakota.

It is certainly correct that due process rights apply to contested cases before administrative agencies. Application of Union Carbide Corp., 308 N.W.2d 753 (S.D.1981). It is also correct that in proceedings affecting private property interests, when the owners of the property are known, notice to them by publication is insufficient. See, e.g., Mullane v. Central Hanover B. & T. Co., 339 U.S. 306, 70 S.Ct. 652, 94 L.Ed. 865 (1950). Nevertheless, a consideration of what procedures due process may require under any given set of circumstances must begin with a determination of the precise nature of the government function involved as well as of the private interest that has been affected by government action. Goldberg v. Kelly, 397 U.S. 254, 90 S.Ct. 1011, 25 L.Ed.2d 287 (1970).

Here, the government function was not a determination of the pipeline route, or of ETSI's powers of eminent domain, or of the taking of any private property. The sole question before Board was the granting of a permit for appropriation of water from Oahe Reservoir. This question was of concern to all South Dakotans equally, since "all water within the state is the...

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