IN COURT OF APPEALS
In the Matter of an Investigation into the
Commission’s Jurisdiction Over the City of Hutchinson’s
Gas Pipeline Pursuant to
Filed December 27, 2005
Minnesota Public Utilities Commission
File No. G-252/CI-04-452
Gary A. Van Cleve, Molly McKee, Larkin Hoffman Daly & Lindgren, Ltd., 7900 Xerxes Avenue South, 1500 Wells Fargo Plaza, Bloomington, MN 55431 (for relator Hutchinson Utilities Commission)
Kathleen M. Brennan, Andrew J. Shea, McGrann Shea Anderson Carnival Straughn & Lamb, Chartered, 800 Nicollet Mall, Suite 2600, Minneapolis, MN 55402-7035 (for relator Minnesota Municipal Utilities Association)
Mike Hatch, Attorney General, Kari Valley Zipko, Assistant
Attorney General, 1100
Hugh T. Nierengarten, Nierengarten & Hippert, Ltd., P.O. Box 214, New Ulm, MN 56073 (for amicus curiae City of New Ulm)
Susan L. Naughton, League of
Considered and decided by Stoneburner, Presiding Judge; Peterson, Judge; and Halbrooks, Judge.
Relators Hutchinson Utilities Commission (HUC), a municipal utility, and Minnesota Municipal Utilities Association (MMUA), a nonprofit corporation that provides services and assistance to Minnesota cities engaged in utility enterprises, challenge the exercise of jurisdiction by respondent Minnesota Public Utilities Commission (MPUC) over a pipeline owned by the City of Hutchinson on the ground that it exceeds the statutory mandate of the MPUC. Alternatively, relators challenge the MPUC’s exercise of jurisdiction as arbitrary and capricious. Because we find that the MPUC exceeded its statutory mandate, we reverse without reaching relators’ alternative argument.
case concerns the regulation of an 89-mile underground natural-gas pipeline that
runs from Trimont to
HUC applied for and was granted a Certificate of Need from the MPUC on December 13, 2002. At that time, the MPUC concluded that it need not decide whether the pipeline would be subject to regulation under Minn. Stat. § 216B.045 (2004).
On January 28, 2004, Northern, now a competitor of HUC, submitted a letter to the MPUC requesting that the commission address the jurisdictional issues deferred in the certificate-of-need decision and investigate to determine whether HUC’s pipeline services complied with Minn. Stat. § 216B.045. On March 23, 2004, the MPUC held an initial hearing but ultimately deferred the matter and ordered additional briefing.
The next hearing occurred on August 19, 2004. At that time, the MPUC considered whether it had jurisdiction and, if so, whether it should regulate HUC’s pipeline under section 216B.045. In an order issued September 15, 2004, the MPUC determined that the HUC’s pipeline meets the statutory definition of an intrastate natural-gas pipeline under Minn. Stat. § 216B.045, subd. 1, and that MPUC had jurisdiction over HUC’s pipeline.
MMUA, and the City of
Did the MPUC exceed its statutory mandate by exercising jurisdiction over HUC’s pipeline?
agency has jurisdiction over a matter is a legal question, and thus a reviewing
court need not defer to agency expertise on the issue. Frost-Benco
Elec. Ass’n v.
Minn. Stat. § 14.69 (2004) outlines the scope of judicial review of an agency decision:
In a judicial review under sections 14.63 to 14.68, the court may affirm the decision of the agency or remand the case for further proceedings; or it may reverse or modify the decision if the substantial rights of the petitioners may have been prejudiced because the administrative finding, inferences, conclusion, or decisions are:
(a) in violation of constitutional provisions; or
(b) in excess of the statutory authority or jurisdiction of the agency; or
(c) made upon unlawful procedure; or
(d) affected by other error of law; or
(e) unsupported by substantial evidence in view of the entire record as submitted; or
(f) arbitrary and capricious.
On appeal from an agency decision,
the party seeking review bears the burden of proving that the agency’s
conclusions violate one or more provisions of Minn. Stat. § 14.69. Markwardt
v. State, Water Resources Bd., 254 N.W.2d 371, 374 (
As a creature of
statute, the MPUC enjoys only the authority granted to it by the
legislature. Minnegasco v.
Here, HUC and MMUA argue that the MPUC exceeded its statutory authority when it asserted jurisdiction over HUC’s pipeline. MPUC asserted jurisdiction pursuant to Minn. Stat. § 216B.045, subd. 3 (2004), which provides: “Every owner or operator of an intrastate pipeline shall offer intrastate pipeline transportation services by contract on an open access, nondiscriminatory basis.”
MPUC noted in its order that jurisdiction was proper because (1) the pipeline meets the definition of an “intrastate pipeline” under the statute; (2) the statute gives jurisdiction over “every owner or operator” and HUC is an “owner or operator” of a pipeline; (3) the only owners excluded from regulation under Minn. Stat. § 216B.045 (2004) are “public utilities” and HUC does not meet the definition of a “public utility”; and (4) section 216B.045 provides for broad oversight and regulation by the commission over contracts governing services provided by intrastate pipelines and a forum for consumer complaints. See Minn. Stat. § 216B.045, subds. 3, 4, 5.
But in the first
section of the statutory scheme on public utilities, the legislature expressly
excluded municipal utilities, of which HUC is one, from most of the regulatory
scheme: “Because municipal utilities are
presently effectively regulated by the residents of the municipalities which
own and operate them, . . . it is deemed unnecessary to subject such
utilities to regulation under this chapter except
as specifically provided herein.”
The MPUC argues that it was proper to assert jurisdiction because HUC is an “owner” or “operator” within the meaning of Minn. Stat. § 216B.045, subd. 3, which requires “[e]very owner or operator of an intrastate pipeline [to] offer intrastate pipeline transportation services by contract on an open access, nondiscriminatory basis.” And HUC also meets the definition of “person” under section 216B.045, subdivision 1, which regulates all “intrastate pipelines,” meaning any pipeline “wholly within the state of Minnesota which transports or delivers natural gas received from another person at a point inside . . . the state, which is delivered . . . within the state to another, provided that all the natural gas is consumed within the state.” Minn. Stat. § 216B.045, subd. 1. “Person” is defined by statute as, among other entities, a “corporation” which includes “a municipality, an association, a cooperative . . . or any political subdivision or agency.” Minn. Stat. § 216B.02, subds. 2, 3 (2004).
We look to the
language of chapter 216B to determine whether the MPUC properly asserted
jurisdiction. Statutory construction is
a question of law, which this court reviews de novo.
We conclude that
the language of section 216B.01 is clear on its face. It mandates that municipal utilities are
excepted from regulation under chapter 216B, “except as specifically provided
Next, the MPUC
argues that it was proper to assert jurisdiction because the purpose of section
216B.01 is not met in this case, given that HUC’s pipeline also serves New Ulm
residents. The MPUC contends that
because the New Ulm residents have no control over HUC by the opportunity to
vote for HUC members, the HUC is not “effectively regulated” according the
section 216B.01. We disagree. In this case, non-residents of
Finally, although we do not inquire into public-policy concerns when a statute is unambiguous, we note that, here, the legislature’s expressed public policy is to allow local governments to regulate municipal utilities, see Minn. Stat. § 216B.01, and our result is consistent with that policy.
Because the legislature mandated that municipalities are excluded from the regulatory scheme unless the statute expressly provides and Minn. Stat. § 216B.045 (2004) does not expressly provide for regulation of municipal utilities, MPUC exceeded its statutory authority by asserting jurisdiction over HUC’s pipeline. We, therefore, reverse the agency determination as provided under Minn. Stat. § 14.69 (2004).
After HUC applied for a Certificate of Need, as a “person” proposing to
construct a “large energy facility,” Northern intervened and objected. MPUC determined that HUC’s proposed pipeline
would meet the energy demands that could not be met more cost effectively by
other measures. This court affirmed that
decision. In re Application of
 HUC initially questioned Northern’s standing to bring a complaint under Minn. Stat. § 216B.045, subd. 5, which states that the parties entitled to complain are customers or persons seeking to become customers of an intrastate pipeline, the department, or the commission on its own motion. While HUC continues to believe that Northern was not a proper complainant, it concedes on appeal that the commission has, in essence, addressed the jurisdiction issue on its own motion. Therefore, this issue is before us.