HIGHWOOD GENERATING STATION ZONING CHANGE (AND MORE)

1. HIGHWOOD GENERATING STATION ZONING CHANGE(AND MORE) Brian Hopkins Deputy County Attorney Cascade County

2. OUTLINE • Chronology to includes Rounds I and II of zoning change • Appeal to District Court and Supreme Court • Appeal of location/conformance permit • Judicial Issues in Round II • Collateral Issues

3. Zone Change – Round I (short version) • October 10, 2006 – Applicants filed Rezoning Petition for 800 acres of land from A-2 to I-2 • Applicants were landowners with Southern Montana Electric (SME) guiding them • Zone change for construction and operation of 250 MW electrical generating facility • October 16, 2006 – 3 page Staff report issued • October 17, 2006 – Planning Board Hearing

4. Zone Change – Round I (short version) • October 24, 2006 – County Commissioners pass Resolution of Intent to rezone, 2-1 • November 29, 2006 – Commissioners pass final resolution to rezone • December 22, 2006 – Plaintiffs file Complaint and Application for writ of mandate • June 14, 2007 – Case settled adversely to County

5. Round I – Brief Conclusion • Reason for Settlement: • County’s regulations did not comply with State law • Commissioners failed to conduct public hearing, per MCA Section 76-2-205(1). Planning Board’s hearing not an adequate substitute • Notice of Resolution of intent inadequate (205[6]) • Because Environmental Impact Statement had been completed, refused to consider public comment regarding environmental issues

6. Round I - Terms of Settlement • Final Zoning Resolution repealed • $8,500 in Attorney fees • County paid significant attorney fees because litigation not covered by MACO policy

7. Zone Change – Round II • Commissioners execute rider on MACo policy to include defense of zoning actions • Fall, 2007: Application submitted for zoning change • Planning Board Hearing on December 4, 2007 • Procedural protections: • Transcript • All comments welcome , subject to time limit

8. Zone change – Round II • Role of Planning Board: Make recommendations to County Commissioners regarding boundaries and regulations • Advisory Only, per MCA Sect. 76-2-204 • Mandatory criteria for evaluating zoning change: • Made in accordance with growth policy • The other 11 criteria (modified in 2009)

9. Zone Change – Planning Board • Challenges related to Board members: • One member applauding opponents • One member unable to attend, wanted to participate by phone • One member president of local bank where SME had “depository relationship” Board recommended zone change by 5-4 vote

10. Zone Change - Commissioners • County Commissioner held public hearing on January 15, 2008: Ran from 3 pm – 2:30 am • Commissioners tabled application to review huge volume of material submitted at hearing • Approved Resolution of Intent to rezone by 2-1 vote on January 31, 2009 • Subject to 11 conditions

11. The 11 Conditions • Offered on January 9, 2008 • Primary condition: “SME agrees as a condition of rezoning ... that such use shall be solely for … an electrical plant” (Coal/gas?) • The other 10 conditions: Preconditions to issuance of a location/conformance permit • Included fire provisions, traffic mitigation, letter of credit to pave road, control noise and glare

12. Round II • Dispute over Protest period • MCA 76-2-205(6): “ … However, if 40% of the freeholders within the district … of if freeholders representing 50% of the titled property ownership whose property is taxed for agricultural purposes … or forest land … have protested … the commissioners may not adopt the resolution

13. Round II – Protest Period • Opponent argued that the “district” was the County • Little v. Flathead County Commissioners: “only those within the proposed zoning area can contest the proposed action” • County invited protests: Mistake!

14. Round II • Final Resolution to Rezone passed on March 11, 2008 • Appeal to District Court filed April 10, 2009 • Statute of limitations: • 30 days, per MCA 76-2-202, for challenges to creation of zoning district or regs, …. Or … • 6 months, per 76-2-227, for appeals of decisions by Boards, including Board of Adjustment

15. Parties to Action • Who are Plaintiffs? • Surrounding landowners • MEIC • Plaintiff’s attorney – well funded by Libby cases • List of parties – almost two pages long • Defendants • Cascade County • Intervenors (SME)

16. Complaint for Writ of Mandate/Review • 42 pages long with assorted arguments • Boundaries not correct in public notice (always proofread) • Materials were not “on file” for public inspection at the Clerk/Recorder’s Office: (MCA 76-2-205): - The only issue on which evidence was taken • Violated right to participate (!) - SME didn’t offer 11 conditions until day of hearing

17. Further Arguments in Complaint • Commissioners did not follow 11 criteria in MCA Section 76-2-203 (amended in 2009) • Conditional zoning violates regulations • Illegal spot zoning: Test • Is new use different than prevailing use in area • Size of area/benefit to landowners • Special legislation designed to benefit one or a few landowners

18. Further Arguments in Complaint • Violates Growth policy (which is first of 11 criteria under statute) • Key policy provisions: Maintain rural character; ag economy • Violates National Historic Preservation Act – within viewshed of Lewis & Clark Portage National Historic Landmark • Commissioners failed to consider public comment

19. Summary Judgment Motions • Both parties sought expedited decision: SME needed to “commence construction” by November 30 to keep air permit • SME Kicks off in Sept. with Motion for Summary Judgment based on mootness • Plaintiffs failed to seek stay (M. R. App. Pro. 22) to cover costs, damages if decision affirmed • Property sold on Aug. 26, 2008

20. Case law on Mootnes • Henesh v. Bd. of Commissioners (2007): Failed to challenge subdivision approval until after lots were sold: Held moot; failed to seek stay • Povsha v. City of Billings (2007): Failed to appeal denial of injunctive relief and failed to seek stay of rezoning and subdivision: Moot! • Mills v. Alta Vista (2008)

21. P’s Response to Mootness ArgumentFACTS • SME and previous landowners were joint applicants, and they still are • Rural Utility Service funding denied: Funding now uncertain and far from “done deal” • Some of cooperatives backing out (Yellowstone Valley cooperative) • Location/conformance permit not issued

22. Legal Response to Mootness Arg. • Mootness proof burden is heavy • Rezoning was void ab initio: That appealable issue will never be moot • SME is not an “innocent third party”, unlike in Henesh, Povsha and Mills cases • REPLY: Swan Lakers v. Lake County BCC: Supreme Court dissolved injunction without bond it previously imposed, due to huge damages to developer

23. P’s Motion for SJ on merits • Expanded on Complaint (75 pages); filed 9/25 • Cited Bryan v. Yellowstone School: Did not have all of Applicant’s technical date prior to hearing; therefore no “reasonable opportunity” to participate • Lengthy argument under 76-2-203: Regs must be designed to lessen street congestion, secure safety from fire, provide light and air, etc. (AMENDED to Board “shall consider…”)

24. County Response to P’s SJ Motion • Standard of review: Abuse of discretion • Plaintiff’s arguments are hyper-technical; for example, failure to include ‘Section 24, W1/2’ in public notice misled no one. • Proposed zone change was ‘on file’ at Clerk’s office; not every document ever submitted • Plaintiffs also presented numerous documents at hearing, without providing advance copies

25. County Response to P’s SJ Motion • Conditional Zoning mitigates potential impacts and is legitimate exercise of Board’s authority] • Conditional Zoning supported by Citizen Advocates for Livable Missoula and Boland cases • Not spot zoning • Could have obtained special use permit for electrical generation facility • NEPA analysis supported this location • Little criteria not violated

26. County’s Response • The 12 Lowe criteria were thoroughly evaluated in 18-page staff report • Board was not required to make findings of fact, just to reflect that they considered public input

27. SME’s SJ Motion on Merits • The 11 conditions offered by SME addressed public concerns raised at planning board AND the Lowe (“must be designed to…”) criteria under MCA 76-2-203 • No genuine issue of material fact: Thus summary judgment is appropriate • MCA 76-1-605(2)(b): Governing body may not deny land use change based on growth policy

28. SME’s SJ Motion on Merits • Planning Board did not violate 76-2-204: Their written report was in staff’s Agenda Action Report • Distinguish from Bryan: Rating criteria were intentionally not disclosed by School Board • Record reflects that two Commissioners were aware of zoning criteria • Writs don’t apply to discretionary acts

29. SME’s SJ Motion on Merits • Spot zoning cases in Montana do not address rural environment • Not spot zoning: • Nearby coal plant, hydro electric plants • not small area – 688 acres • Not special legislation, designed to benefit 50,000 consumers of SME electricity

30. Plaintiffs request ‘peremptory’ writs • Dirt being moved on site; writ requested because no other “plain, speedy and adequate remedy available in ordinary course of law.” (MCA Section 27-27-102) • Response: • Don’t need location conformance permit to move dirt; permit request is under review • Mandamus is only for “clear legal duty” and writ of review is for judicial functions

31. District Court Decision • Granted summary judgment for Urquharts on mootness; denied it to SME • Plaintiffs’ motion for SJ denied because facts in dispute • Court has jurisdiction to review writ of review, to provide ‘plain, speedy, adequate remedy’

32. District Court Decision • There was only one condition, the other 10 related to location/conformance permit • ‘Conditions’ were response to public concerns • Proposal was “on file”, but not recorded • LCP is “hammer of enforcement” of conditions • Not spot zoning because HGS could be built in A-2 area with special use permit • Reduced to “Order” not “Judgment,” and no decision of SME motion for Summary Judgment

33. Petition for Writ of Supervisory Control – M.R. App. P. 14 • Plaintiffs argue “extraordinary circumstances,” and inadequacy of normal appeal process • Failure to rule on SME motion: Mistake of law • SME’s response on behalf of Judge • Mistake of law must cause gross injustice • Appeal is adequate remedy; Plaintiffs simply don’t want to post bond • Denial of Plaintiffs’ claims disposed of case • The sky is ‘not falling,’ as alleged

34. Decision on Supervisory Control • Court in “anomalous position:” Judge won’t act to avoid complicated matters • Supervisory control exercised to “limited degree” • Directs District Court to resolve remaining claims and issue final judgment; Plaintiffs then free to seek stay • Judge grants SJ to Defendants on 5/27/09

35. Board of Adjustment Appeal • Two appeals: Earth moving allowed without LCP, and appeal of decision to issue permit • Followed Rules of Procedure for Board of Adjustment: Arguments in favor of appeal, followed by arguments in opposition • Board Decision: First appeal moot • Second appeal: Denied • Matters beyond Board’s authority (like air permit) • Standards must be met BEFORE OCCUPANCY

36. Appeal to Supreme Court • District Court was wrong on spot zoning; special use permit allows “commercial wind farms/electrical generation facilities.” This is not either/or – has to meet both • Special use permits for industrial uses must be in areas already zoned industrial (not ag) • Conditional zoning did not have sunset provision and was not provided for by regs • 11 conditions were not offered until hearing; no opportunity to rebut them

37. County’s/SME Response • Many non-ag used allowed in A-2 areas with special permit • Inherent authority of Commissioners to adopt conditions (Title 7 argument) • Conditions in zone change were attempt to address 12 Lowe criteria and respond to public concerns • Bryan case not applicable – Commissioners could not conceal something they didn’t have

38. Supreme Court Argument – 11/18 • During preparation, question of whether appeal is moot due to new zoning regs issued on 8/25/09 • Authority is Highland v. Flathead County, 345 Mont. 379 : Held that challenge to creation of zoning district in 2005 as contrary to County growth policy mooted by 2007 growth policy • County files notice of supplemental authority on 11/10/09

39. Supreme Court’s Questions • J. Morris: “What are you asking us to do?” • J. Nelson: Will the County pass new regs every time it gets an appeal? • J. Leaphart: Is zoning for & around HGS the same under new regs? • Others: How can citizens respond to plethora of technical data? Does gas plant moot the case? • Decision: Supplemental briefing ordered to address County’s “belated” argument

40. Collateral Issues • Constitutional Questions: Stay would have required huge bond; denied access to court • Amicus Appeals (Held: Not timely) • Release of all incoming/outgoing e-mail that pertains to SME or Highwood Plant-Response: • MCA Section 2-6-401; preliminary drafts • Litigation strategy • Personnel • Burdensome!

41. Questions