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.
#28963, #28983-aff in pt & rev in pt-SRJ
IN THE SUPREME COURT OF THE STATE OF SOUTH DAKOTA
OPINION FILED 02/10/21
2021 S.D. 6
THE HONORABLE DAWN M. ELSHERE, Judge
CONSIDERED ON BRIEFS NOVEMBER 4, 2019
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APPEAL FROM THE CIRCUIT COURT OF THE THIRD JUDICIAL CIRCUIT DEUEL COUNTY, SOUTH DAKOTA
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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.
[¶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
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
[¶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
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
[¶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
[¶15.] We address the following issues on appeal:
- Whether any members of the Board had a disqualifying interest or bias under the Due Process Clause of the United States Constitution or under South Dakota statutes.
- Whether the Board failed to regularly pursue its authority in defining the term “business” under the Ordinance.
- Whether the circuit court abused its discretion when it excluded evidence related to Board members’ disqualifying interests.
Analysis & Decision
[¶16.] Judicial review of certiorari proceedings under
[¶17.] We review a circuit court‘s evidentiary rulings for an abuse of discretion. State v. Scott, 2019 S.D. 25, ¶ 11, 927 N.W.2d 120, 125. “Not only must this Court find that the [circuit] court abused its discretion, but it must find that the [judge‘s] consideration of the erroneously excluded evidence might and probably would have resulted in a different finding by the jury in order to warrant a reversal of the circuit court.” O‘Day v. Nanton, 2017 S.D. 90, ¶ 17, 905 N.W.2d 568, 572.
- Whether any members of the Board had a disqualifying interest or bias under the Due Process Clause of the United States Constitution or under South Dakota statutes.
[¶18.] In reviewing the Appellees’ claim that four of the five Board members had a disqualifying interest, the circuit court considered Armstrong v. Turner Cnty. Bd. of Adjustment, 2009 S.D. 81, 772 N.W.2d 643 (determining that a member of a county board of adjustment had a disqualifying interest under the Due Process Clause of the United States Constitution). The circuit court also considered
statutes, the circuit court applied the following standard for disqualification of the challenged Board members: “whether there has been clear and convincing evidence that a board member‘s actions demonstrate prejudice or an unacceptable risk of bias.” Under this standard, the circuit court concluded that “Board members DeBoer and Dahl each held an unacceptable risk of bias in voting on this project and should have disqualified themselves.” However, the court rejected Appellees’ claims that either Kanengieter or Brandt had a disqualifying interest preventing them from considering the WESs.
[¶19.] Both parties challenge the circuit court‘s decision. Deuel Harvest claims that none of the Board members had a direct pecuniary interest in the WESs at the time of the hearing, as required by
[¶20.] The parties’ arguments suggest a lack of clarity in our prior decisions concerning the due process requirements for disqualification of public officials involved in quasi-judicial decision-making. Additionally, our prior decisions have not discussed the interplay between Constitutional due process standards and
a. Disqualification under the Due Process Clause.
[¶21.] The
Decision makers are presumed to be objective and capable of judging controversies fairly on the basis of their own circumstances. However, where actual bias or an unacceptable risk of actual bias or prejudgment exists, the decision maker must be disqualified from participating.
Armstrong, 2009 S.D. 81, ¶ 23, 772 N.W.2d at 651.
[¶22.] Deuel Harvest claims that this test from Hanig and Armstrong is inconsistent with
[¶23.] In Caperton v. A.T. Massey Coal Co., Inc., 556 U.S. 868, 129 S. Ct. 2252, 173 L. Ed. 2d 1208 (2009), the United States Supreme Court re-examined the standard for disqualification of judicial officers for interest or bias under the Due Process Clause.11 Caperton reviewed a decision from the Supreme Court of Appeals of West Virginia, which reversed a $50 million judgment in favor of the plaintiff against A.T. Massey Coal Co. (Massey), on a 3 to 2 vote. Between the time of the verdict and its initial consideration on appeal, West Virginia held public elections for a justice position on the West Virginia Supreme Court. Knowing that the West Virginia Supreme Court would hear the case on appeal, Massey‘s chairman and chief executive officer (CEO) supported a lawyer, Brent Benjamin, for the position. During the election, Massey‘s CEO contributed
the total money spent by both the other candidates by more than $1 million. Benjamin narrowly won the election.
[¶24.] After the election, Plaintiff moved to disqualify Justice Benjamin at several points during the appeal. Benjamin denied each motion and refused to recuse himself. Benjamin explained that there was “no objective information to show that [he] has a bias for or against any litigant, that [he] has prejudged the matters which comprise the litigation, or that [he] will be anything but fair and impartial.” Id. at 874. In his opinion, concurring with the majority opinion, Benjamin wrote that he had no “direct, personal, substantial, pecuniary interest in this case.” Id. at 876.
[¶25.] In considering the challenge to Benjamin sitting on the case, the United States Supreme Court initially reviewed its prior due process decisions, recognizing that “[a] fair trial in a fair tribunal is a basic requirement of due process,” but “most matters relating to judicial disqualification do not rise to a constitutional level.” Id. at 868. Caperton reaffirmed its prior decision that “matters of kinship, personal bias, state policy, remoteness of interest, would seem generally to be matters merely of legislative discretion,” but “a judge must recuse himself when he has a direct, personal, substantial, pecuniary interest in a case.” Id. at 876 (quoting Tumey v. State of Ohio, 273 U.S. 510, 523, 47 S. Ct. 437, 441, 71 L. Ed. 749 (1927)). Under this standard, the Court‘s prior decisions had only required disqualification of a judicial officer in two instances under the Due Process Clause. The first involved cases where a judicial officer had a financial interest in the case. Id. at 868 (citing Tumey, 273 U.S. at 510). The second involved certain contempt proceedings arising from a defendant‘s previous interaction with the judge. Id. (citing Mayberry v. Pennsylvania, 400 U.S. 455, 466, 91 S. Ct. 499, 27 L. Ed. 2d 532 (1971)). Caperton expanded on these prior decisions, recognizing that due process may require disqualification in rare instances, even in the absence of a showing of a direct pecuniary interest. The Court concluded that while Benjamin did not have a direct financial interest in the case, the extraordinary contributions made to support Benjamin‘s campaign violated due process because the “significant and disproportionate influence—coupled with the temporal relationship between the election and the pending case—offers a possible temptation to the average judge to lead him not to hold the balance nice, clear and true.” Id. at 886. “On these extreme facts the probability of actual bias rises to an unconstitutional level.” Id. at 886-87.
[¶26.] Caperton did not question Benjamin‘s subjective claims of impartiality or the absence of bias. Id. at 868. Instead, the Court found that the total amount of money Massey‘s CEO contributed to Benjamin‘s campaign had a “significant and disproportionate influence on the electoral outcome. And the risk that [the CEO‘s] influence engendered actual bias is sufficiently substantial that it must be forbidden if the guarantee of due process is to be adequately implemented.” Id. The Court concluded that the serious objective risk of actual bias required Benjamin‘s recusal. Id. at 886.
[¶27.] While Caperton expanded the reach of the Due Process Clause for fairness in judicial proceedings, the Court reaffirmed that the standard for disqualification
[¶28.] We believe that the due process standard described in Caperton applies to judicial officers as well as those who are making quasi-judicial administrative decisions. We conclude that the circumstances here do not rise to the constitutional level envisioned in Caperton. There is no evidence that any Board member stood to financially benefit, directly or indirectly, from the approval of the SEPs. Further, the prior payments made by Deuel Harvest to DeBoer and Dahl under the cancelled Agreements do not objectively give rise to the concerns addressed in Caperton. The prior payments to DeBoer and Dahl were not extraordinary in amount and were calculated using the same per-acre payment terms that Deuel Harvest applied in its agreements with the landowners of other properties where Deuel Harvest planned to develop the WESs. Further, there is no evidence that Deuel Harvest entered into the Agreements with DeBoer and Dahl or made the payments in an effort to curry favor with them.
[¶29.] Similarly, the involvement of Kanengieter and Brandt in other wind projects and Kanengieter‘s prior support of wind energy do not create due process concerns under the standard enunciated in Caperton. Appellees argue that Brandt‘s business interests in Supreme Pork required his disqualification. Appellees presented evidence that Supreme Pork‘s subsidiary had performed past work for a manufacturer that provided wind turbines on other projects. However, Appellees failed to present any evidence that the subsidiary would perform work for the wind turbine manufacturer in the future, or that the manufacturer had an agreement with, or expected any business from, Deuel Harvest.
[¶30.] Importantly, Caperton explained that “[t]he Due Process Clause demarks only the outer boundaries of judicial disqualifications. Congress and the states, of course, remain free to impose more rigorous standards for judicial disqualification than those we find mandated here today.” Id. at 889-90 (quoting Aetna Life Ins. Co. v. Lavoie, 475 U.S. 813, 828, 106 S. Ct. 1580, 1589, 89 L. Ed. 2d 823 (1986)). See also Bracy v. Gramley, 520 U.S. 899, 904, 117 S. Ct. 1793, 138 L. Ed. 2d 97 (1997) (“distinguishing the ‘constitutional floor’ from the ceiling set by common law, statute, or the professional standards of the bench and bar“); Marko v. Marko, 2012 S.D. 54, ¶ 19, 816 N.W.2d 820, 826 (discussing due process under Caperton, but applying the South Dakota Code of Judicial Conduct to determine whether judicial disqualification was required). Apart from the Due Process Clause, the Legislature has adopted
b. Disqualification under State statutes.
[¶31.]
[¶32.]
[¶33.] The record demonstrates that the Board knew of the prior Agreements that DeBoer and Dahl had with Deuel Harvest, but it did not take any action to disqualify DeBoer or Dahl under
[¶34.] Finally, in the circuit court proceedings, both DeBoer and Dahl testified that they had informed the other Board members of their Agreements with Deuel Harvest. DeBoer stated that he was told when he came onto the Board in 2017 that he would be required to recuse himself if he had an Agreement with Deuel Harvest, and this prompted him to seek release from the Agreements before the Deuel Harvest SEPs came before the Board.
[¶35.] As a part of a board‘s authority to remove members with an “identifiable conflict of interest” under
[¶36.] Simply put, the standard in
[¶37.] We next consider whether disqualification was required by
[¶38.]
[¶39.] Applying
[¶40.] As discussed above, there is no evidence that, at the time of the hearing and vote, any Board member stood to benefit financially from the approval of the SEPs. While Brandt‘s business interests in Supreme Pork raise some possibility that he might benefit financially from the Deuel Harvest projects, the presumption of fairness under
[¶41.] Next, we consider evidence of the Board members’ support for wind energy and financial interests in other wind projects.
[¶42.] Here, Kanengieter‘s prior advocacy for wind energy in Deuel County, and his prior opposition to more stringent
[¶43.] Similarly,
[¶44.] Finally, we consider whether
[¶45.] While family or other relationships do not alone form a basis for disqualification under the statute, an officer‘s communications and activities arising from such relationships may provide a basis for disqualification when there is clear
[¶46.] Our consideration of due process standards, as well as
- Whether the Board failed to regularly pursue its authority in defining the term “business” under the Ordinance.
[¶47.] “A writ of certiorari is an equitable remedy available when an inferior court exceeds its jurisdiction.” Duffy v. Circuit Court, Seventh Judicial Circuit, 2004 S.D. 19, ¶ 3, 676 N.W.2d 126, 128. “The scope of review ‘cannot be extended further than to determine whether the inferior court has regularly pursued the authority of such court.‘” Id. (quoting
[¶48.] Appellees argue that the Board did not regularly pursue its authority because it misapplied the term “business” under Section 1215.03(2)(A) of the Ordinance in determining the setback requirements for wind turbines from non-participating businesses. See Lamar Advert. of S.D., Inc. v. Zoning Bd. of Adjustment of City of Rapid City, 2012 S.D. 76, ¶ 13, 822 N.W.2d 861, 864 (holding a board of adjustment must interpret an ordinance consistently with its plain language). Section 1215.03(2)(A) of the Ordinance provides that a wind turbine‘s “distance from existing non-participating residences and business shall be not less than four times the height of the wind turbine.” In the absence of a definition in the Ordinance, the Board interpreted this requirement to mean a physical structure. Appellees claim that this definition failed to consider the 480-acres of land upon which South Dakota Pheasant Hunts operates and host hunters.12
[¶49.] The circuit court found that the Board‘s interpretation of the term “business” was not erroneous. The court also concluded that the Board‘s interpretation was not inconsistent with the purpose of the Ordinance: to avoid the placement of wind turbines in close proximity to non-participating businesses and residences. We agree. There is no language in the Ordinance suggesting that the setback requirements were aimed at rural locations where individuals do not regularly live or work. Rather, the Ordinance‘s exclusion of
- Whether the circuit court abused its discretion when it excluded evidence related to Board members’ disqualifying interests.
[¶50.] The Appellees made a motion for the circuit court to consider additional evidence in the certiorari proceedings. The circuit court denied the motion in part and granted it in part. Appellees primarily take issue with the court‘s decision to exclude the depositions of the five Board members, arguing the deposition transcripts were necessary for the court to consider the alleged biases of the various Board members.
[¶51.] Appellees argue that the court did not consider all the evidence of bias set forth in the depositions, such as: the relationship of DeBoer‘s brothers with Deuel Harvest; Kanengieter‘s existing wind agreements with other wind developers and prior advocacy for wind development in Deuel County; and Brandt‘s agreements with other wind developers and ownership interest in a company that has previously done substantial business with a wind turbine manufacturer.
[¶52.]
[¶53.] We have reviewed the deposition transcripts and considered all the relevant facts supporting Appellees’ claims of conflicts of interest or bias. Our review of the record and the circuit court‘s findings does not provide a basis for concluding there was a disqualifying interest or bias by any of the Board members. Therefore, the court‘s evidentiary ruling does not warrant reversal.
Conclusion
[¶54.] We affirm in part and reverse in part. We affirm the circuit court‘s determination that Kanengieter and Brandt did not have a disqualifying interest under the Due Process Clause or applicable South Dakota statutes. We also affirm the circuit court‘s determination that the Board regularly pursued its authority when it defined the term “business” in the Ordinance. However, the circuit court erred by invalidating the votes of DeBoer and Dahl. We reverse the court‘s decision overturning the Board‘s unanimous vote approving the SEPs and reinstate the Board‘s decision granting the SEPs.
[¶55.] KERN, SALTER, and DEVANEY, Justices, and GILBERTSON, Retired Chief Justice, concur.