SD Supreme Court Reverses Finding that Board Members Had Disqualifying Interests in Wind Energy Systems

This post was authored by Matthew Loescher, Esq.

Deuel Harvest Wind Energy, LLC and Deuel Harvest Wind Energy South, LLC applied for special exception permits (“SEP”) from the Deuel County Board of Adjustment to develop two wind energy systems (“WES”) in Deuel County. Despite several residents of Deuel County and neighboring counties objecting, the Board unanimously approved the permits. Appellees petitioned the circuit court for writ of certiorari challenging the SEPs, including a claim that several members of the Board had interests or biases which disqualified them from considering the SEPs. The circuit court determined that two Board members had disqualifying interests and invalidated their votes. The court then reversed the decision of the Board granting the SEPs, and Deuel Harvest appealed.

On appeal, Deuel Harvest first argued that none of the Board members had a direct pecuniary interest in the WESs at the time of the hearing, as required by SDCL 6-1-17, and the Board made no collective determination that any member had an “identifiable” conflict of interest. As such, Deuel Harvest posited there was no basis to disqualify any Board member. Appellees responded that the circuit court properly disqualified DeBoer and Dahl, but the disqualification should have been made under due process standards rather than SDCL 6-1-17. Appellees further claimed that Kanengieter and Brandt were subject to disqualification under SDCL 6-1-21 and the Due Process Clause.

The record reflected that at the start of the hearing each Board member stated his subjective belief that he could act fairly in the consideration of the SEPs, and there was no determination by the Board that any individual Board member had a conflict of interest. Additionally, there was no showing that any member of the Board had a direct pecuniary interest in the Deuel Harvest SEP applications. Thus, the standard in SDCL 6-1-17 did not support disqualification of any of the Board members in this instance. Furthermore, while Brandt’s business interests in Supreme Pork raised some possibility that he could potentially benefit financially from the Deuel Harvest projects, the court found the presumption of fairness under SDCL 6-1-21 could not be rebutted by the mere possibility that his business may indirectly receive business in the future because of the Deuel County projects. The court further found that Kanengieter’s prior advocacy for wind energy in Deuel County, and his prior opposition to more stringent ordinance requirements for WESs, were insufficient to rebut the presumption of objectivity under SDCL 6-1-21. Accordingly, the court held that the circuit court properly determined Appellees failed to establish Kanengieter and Brandt should have been disqualified.

Appellees next contended 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. The court found that there was no question that several Board members supported wind energy development in Deuel County and have financially benefitted from its development. Nevertheless, Appellees failed to present clear and convincing evidence that any of these other interests would be enhanced or detrimentally impacted by the approval of the SEPs or otherwise “demonstrate prejudice or unacceptable risk of bias” in the Board’s consideration of Deuel Harvest’s SEP applications. The court therefore held that the circuit court erred in disqualifying DeBoer and Dahl from voting on the SEPs.

As a final matter, the court upheld the circuit court’s finding that the Board’s interpretation of the term “business” was not erroneous or inconsistent with the purpose of the Ordinance: to avoid the placement of wind turbines in close proximity to non-participating businesses and residences. Specifically, there was no language in the Ordinance suggesting that the setback requirements were aimed at rural locations where individuals do not regularly live or work; in fact, the Ordinance’s exclusion of “agricultural uses” from of the definition of a business suggested the opposite. Thus, the Board’s decision to exclude unimproved land from the definition of a “business” was not erroneous because this interpretation was consistent with the provisions of the Ordinance and the purposes of the setback requirements.

Holburn v Deuel County Board of Adjustment, 2021 WL 501343 (SD 2/10/2021)