Development agreements may be reached prior to public utility commission (MN) decision on permits

by Victoria Heldt

Concerned River Valley Citizens, Inc., et al. v. Chisago County, Lent Township, Sunrise River Energy, LLC
(Minnesota Court of Appeals, December 19, 2011)

Concerned River Valley Citizens, Inc. is a non-profit organization that works to promote the development of the St. Croix River Valley while protecting the environmental interests of the area.  Sunrise River Energy, LLC (SRE) is an affiliate of LS Power Group, a company that develops, manages, and operates power-generation facilities.  In 2008, LS Power voiced its desire to construct a power plant next to an existing one in the area and submitted a request to the Midwest Independent Transmission System Operator.  A power plant may not be constructed without a certificate of need and a site permit from the Minnesota Public Utilities Commission (MPUC).  It preempts all local zoning laws.

Prior to seeking the two documents from the MPUC, LS Power and SRE requested legislation to allow a personal-property-tax exemption for the power plant, which it received.  The statute included the conditions that SRE must receive approval from the county board and the township board.  SRE also submitted a development agreement to the county and township boards, both of which approved the proposal.  The agreement contained language that explicitly stated that the document did not serve as a substitute for the two necessary permits from the MPUC.  Concerned River Valley Citizens argued that the county and the township are prohibited from entering into an agreement with SRE until the two permits from the MPUC are obtained.  The district court dismissed the complaint based on failure to state a claim.

On appeal, Concerned River Valley Citizens argued that, because local zoning laws are not preempted until permits from the MPUC have been granted, the development agreement is unlawful since it violates local zoning laws.  The Court disagreed, finding that statute did not require MPUC permits to be obtained before entering into a development agreement.  It only required MPUC permits to be granted before the actual development of the property.  The Court also stated that the township did not act outside of its authority by entering into the development agreement since the agreement is contingent upon SRE getting the necessary permits.

Concerned River Valley Citizens further alleged that the development agreement violated their due process rights because it may have prejudiced future opinions of the project.  The agreement might have been perceived as governmental endorsement of the development before any permits were obtained.  They also claimed that it prevented the public from having a say in discussions regarding the location of the power plant.  The Court disregarded this claim, finding that Concerned River Valley Citizens’ assertions about the prejudicial effect of the development agreements were simply speculation unsupported by facts.  The Court affirmed the district court’s decision in favor of SRE and LS Power.

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