Case Name: SQUARE BUTTE ELECTRIC COOPERATIVE, Plaintiff and Appellant, v. E. Gene HILKEN, Defendant and Appellee, and eight companion cases
Court: North Dakota Supreme Court
Jurisdiction: North Dakota
Decision Date: 1976-06-23
Citations: 244 N.W.2d 519
Docket Number: Civ. No. 9194
Parties: SQUARE BUTTE ELECTRIC COOPERATIVE, Plaintiff and Appellant, v. E. Gene HILKEN, Defendant and Appellee, and eight companion cases.
Judges: PAULSON, J., concurs.
Reporter: North Western Reporter 2d
Volume: 244
Pages: 519–540

Head Matter:
SQUARE BUTTE ELECTRIC COOPERATIVE, Plaintiff and Appellant, v. E. Gene HILKEN, Defendant and Appellee, and eight companion cases.
Civ. No. 9194.
Supreme Court of North Dakota.
June 23, 1976.
Rehearing Denied July 21, 1976.
Vogel, Vogel, Brantner & Kelly, Fargo, and Johnson, Johnson & Devine, Lakota, for plaintiff and appellant; argued by John D. Kelly, Fargo.
Christensen & Baer, Bismarck, and Jos. A. Vogel, Jr., Mandan, for E. Gene Hilken, Donald T. Bender and Judy A. Bender, Robert J. Dohn and Mary Dohn, Clarence W. Small and Ellen C. Small, Edmund Spitzer and Margaret Spitzer, defendants and ap-pellees; and Jos. A. Vogel, Jr., Mandan, for Ernest Lang, defendant and appellee; appearances by Carma A. Christensen, Bismarck and Jos. A. Vogel, Jr., Mandan; argued by Jos. A. Vogel, Jr., Mandan.
Alfred C. Schultz, Bismarck, for Lawrence Sorch and Gail Sorch, and John Sorch, defendants and appellees.
Dr. and Mrs. Douglas A. Miller, pro se.
Mr. and Mrs. Frank Murray, not represented by counsel.
Square Butte Electric Cooperative, Plaintiff and Appellant v. the following Defendants and Appellees: Donald T. Bender, et at; Robert J. Dohn, et al.; Clarence W. Small, et al.; Edmund Spitzer, et al.; Lawrence Sorch, et al.; John Sorch; Ernest Lang; Douglas A. Miller, et al.

Opinion:
ERICKSTAD, Chief Justice.
This is an appeal from a judgment entered in Burleigh County District Court on September 18, 1975, which denied to Square Butte Electric Cooperative the power of eminent domain for failure to establish a public use.
In Square Butte Electric Cooperative v. Dohn, 219 N.W.2d 877 (N.D.1974), we held that Square Butte was required in its application for a permit to enter upon private property for the purpose of making a survey relating to a possible taking, only to show that it was in the category of persons entitled to seek eminent domain. We also held that whether the specific land sought to be surveyed was "compatible with the greatest public benefit and the least private injury," Section 32-15-06, N.D.C.C., was an issue that would not ripen prior to the commencement of an eminent domain action.
In its findings of fact in this action, the trial court determined that "the selection of the route is compatible with the greatest public benefit and the least private injury." That finding is not challenged here.
After briefly reviewing some cases cited by the parties in Dohn relating to public use, we deferred ruling on the public use issue:
"Because we believe that a determination of this issue is premature at this time, a condemnation action having not been commenced, and that it is better to delay a determination of what constitutes a public use until that issue has been more extensively briefed and considered by the trial court in conjunction with the condemnation action itself, we shall not attempt to determine this issue at this time." Id., at 882.
The matter before us relates specifically to public use. The trial court's conclusions of law read as follows:
"1. That the plaintiff, Square Butte, has wholly failed to sustain its burden of proving public use and the Complaint of the plaintiff is hereby dismissed in all things, with prejudice, and with costs to the defendants.
"2. That any association of Square Butte with power pools and energy backups is not direct enough to support requirement of public use;
"3. That Square Butte will not supply electrical power to the citizens of North Dakota;
"4. That the plaintiff has established the necessity for the taking of the easements as to the route selected and would be entitled to the right of eminent domain on this question if public use has been established."
In order to clarify our discussion of the findings of fact and the judgment, let us review the background and the parties to this action.
Square Butte was incorporated in North Dakota on May 24, 1972, to generate and transmit electric power to rural electric cooperatives. It was capitalized at $1,000 through issuance of 100 shares at $10 per share. Square Butte employs only one person, its general manager Lyle Lund, who has been employed by Minnkota Power Cooperative for nearly 25 years.
Minnkota is a wholesale distributor of electricity organized in Minnesota with its principal place of business being Grand Forks, North Dakota. There are 12 Class A members of Minnkota who own and govern the distributor. Those 12 include four rural electric cooperatives in eastern North Dakota and eight rural electric cooperatives in northwestern Minnesota. Each of the 12 rural electric cooperatives has one representative on Minnkota's board of directors and a designated number of delegates to attend Minnkota's annual meeting.
There are 58,000 billed customers on Minnkota's lines with the number evenly divided between North Dakota and Minnesota. In addition to the Class A members of Minnkota, there are a number of investor-owned utilities and other generation and transmission cooperatives which purchase surplus power from Minnkota on a short-term basis and which are designated as Class C members of Minnkota. Some of the Class C members supply electricity to North Dakota. Nonetheless, the corporate purpose is mainly to serve the 12 rural electric cooperatives who are Class A members.
In the early 1970's, according to witnesses called on behalf of Square Butte, the combination of increasing projected load growths on the Minnkota system and the curtailment of traditional Rural Electrification Administration loans led Minnkota to seek alternate sources of financing for new generating plants. An investor-owned utility serving part of northern Minnesota, including Duluth, was also looking for additional sources of power. Minnesota Power and Light, through negotiations with Minnkota, ultimately agreed to guarantee bonds and securities for construction of generation and transmission facilities in exchange for delivery of electrical power to its system. Because an after-acquired property clause in Minnkota's mortgage with REA would have rendered the project's financiers' interests junior to REA's interest in Minnko-ta property, the creditors required that a new entity — Square Butte — be formed to operate the Square Butte project facilities. Because of the amount of power to be sold to MP&L from the project, ownership of the project by Minnkota would also have resulted in loss of Minnkota's exempt status under 26 U.S.C. § 501 for certain internal revenue purposes.
For those reasons, Square Butte was incorporated with control resting in the 12 rural electric cooperatives who are Class A members of Minnkota. It subsequently entered into a power sales and interconnection agreement with MP&L.
The Square Butte project includes a 400 megawatt lignite fired generating plant (Center # 2) near Center, North Dakota, and a direct current (DC) transmission line from the plant to Duluth, Minnesota. Center # 2 will be adjacent to the Milton R. Young plant (Center # 1) and will require an additional 30 employees. The DC line will cross 225.8 miles of North Dakota, including 155.1 miles of nonirrigated cropland, 63.1 miles of pasture, 2.1 miles of woodland, and 5.5 miles of wetland. Square Butte is apparently seeking easements that are 120 feet wide.
Because the line is DC, Square Butte must install a converter at Center # 2 and MP&L must build another converter at Duluth. It is only before the power is converted from AC to DC at Center and after it is converted from DC to AC at Duluth that the power is usable by existing consumers. The system does not include any other converters and, because of the expense, none are presently planned.
Both Minnkota and MP&L are members of the Mid-Continent Area Power Pool (MAPP) which requires its members to maintain a 15% reserve capacity related to annual system demand. Square Butte is not a member of MAPP. The MAPP system is designed to maintain a degree of reliability such that in only one instance in 10 years will the pool not be able to serve all of the load requirements. Basically, it provides a system capacity to cover generation plant outages, whether scheduled or not.
The defendants herein are landowners in Burleigh County, across whose property Square Butte seeks easements for its DC power line and structures.
Given this factual background and the district court's ruling, we must discuss three matters: (1) whether the public use issue is proper for judicial determination; (2) what the requisites of public use are; and (3) how application of those requisites affects disposition of this case.
I.
The power of eminent domain inheres in the sovereignty of the state and is not dependent on any specific grant. Georgia v. City of Chattanooga, 264 U.S. 472, 480, 44 S.Ct. 369, 370, 68 L.Ed. 796 (1924); Albert Hanson Lumber Co. v. United States, 261 U.S. 581, 587, 43 S.Ct. 442, 444, 67 L.Ed. 809 (1923); 1 Nichols, Eminent Domain § 1.3 (3d ed. 1975). It is not, however, an unfettered power. Section 14 of the North Dakota Constitution provides in pertinent part that "Private property shall not be taken or damaged for public use without just compensation having been first made to, or paid into court for the owner. " See 1 Nichols, Eminent Domain § 1.4 (3d ed. 1975).
It is also circumscribed by statute:
"32-15-01. 'Eminent domain' defined —How exercised. — Eminent domain is the right to take private property for public use. Private property shall not be taken or damaged for public use without just compensation first having been made to or paid into court for the owner. The right of eminent domain may be exercised in the manner provided in this chapter." N.D.C.C.
By Section 32-15-02, N.D.C.C., and subject to the provisions of the chapter,
" the right of eminent domain may be exercised in behalf of the following public uses:
u
"10. Oil, gas, and coal pipelines and works and plants for supplying or conducting gas, oil, coal, heat, refrigeration, or power for the use of any county, city, or village, or the inhabitants thereof, together with lands, buildings, and all other improvements in or upon which to erect, install, place, maintain, use, or operate pumps, stations, tanks, and other machinery or apparatus, and buildings, works, and plants for the purpose of generating, refining, regulating, compressing, transmitting, or distributing the same, or necessary for the proper development and control of such gas, oil, coal, heat, refrigeration, or power, either at the time of the taking of said property or for the future proper development and control thereof; and U
In Dohn we intimated by delaying determination of the public use issue until it had been more extensively briefed and considered by the trial court that merely falling within the purposes of Section 32-15-02, N.D.C.C., is insufficient to satisfy the requirement of Section 14, N.D.Const., that a use must be public before private property can be taken by eminent domain. Where the existence or non-existence of public use is placed in issue, the determination, dependent as it is upon the facts and circumstances of the matter, is properly a judicial one.
While this conclusion is implicit in many cases that concern the public use issue, it has been squarely met in at least two cases from other jurisdictions. In Clark v. Gulf Power Company, 198 So.2d 368 (Fla.App.1967), the court declared, "The constitutional guarantee of due process and prohibition of the taking of private property without full compensation decree that the use for which the property is taken must be a public use ." Id., at 371. Where a city sought to condemn land for off-street parking plazas, a purpose listed in California statutes as one for which eminent domain may be exercised, the court in City of Menlo Park v. Artino, 151 Cal.App.2d 261, 311 P.2d 135 (1957), indicated its agreement "with appellants' contention that neither the legislature's designation nor the city's resolution that the parking plazas are a public use can make that which is in fact a private use become a public use." 311 P.2d at 140.
In North Dakota, an 1896 decision includes the statement, "True it is that the courts can always inquire into the nature of the use for which the property is to be condemned for the purpose of determining whether such is, in fact, a public use." Bigelow v. Draper, 6 N.D. 152, 165, 69 N.W. 570, 574 (1896).
II.
As to the requisites of a public use, we find a decision of the Montana Supreme Court generally descriptive:
"At the outset, we recognize that there are two conflicting lines of authority in other jurisdictions concerning the requisites of a 'public use' within the meaning of eminent domain proceedings. One view, the limited or narrow view, requires in general the actual use or right to use the proposed system by the public as a whole. The other view, called the broad view, essentially requires only a use conferring a 'public advantage' or a 'public benefit'. Montana, as with many western states, has adhered to the broad view since 1895, presumably to promote general economic development. [Citations omitted.]
"Thus, in Montana a public use is one which confers some benefit or advantage to the public. Such public use is not confined to actual use by the public, but is measured in terms of the right of the public to use the proposed facilities for which condemnation is sought. As long as the public has the right of use, whether exercised by one or many members of the public, a 'public advantage' or 'public benefit' accrues sufficient to constitute a public use. " Montana Power Company v. Bokma, 153 Mont. 390, 457 P.2d 769, 772-773 (1969).
The court noted that Montana Power "is a public utility and as such has dedicated its property to the public use under regulations imposed by the Montana Public Service Commission." Id., 457 P.2d at 773. It sustained use of the eminent domain power for an intrastate 115 KV line designed to furnish electricity to a crude oil pumping station, but the court noted that "service from that line is available to other customers should such service be required." Id., at 771.
Por a textual discussion of the narrow and broad views of public use referred to in Bokma, and a comment on them, see 2A Nichols, Eminent Domain § 7.2 (3d ed. 1975).
While the project involved in Bokma was of an intrastate character, the reservoir with which the court was concerned in Adams v. Greenwich Water Co., 138 Conn. 205, 83 A.2d 177 (1951), was of an interstate character. Responding to the contention that since the chartered defendant proposed to construct a reservoir greater in capacity than necessary to supply its Connecticut customers, then the reservoir was "for the exclusive benefit of nonresidents," the Connecticut Supreme Court conceded "that no state is permitted to exercise or authorize the exercise of the power of eminent domain except for a public use within its own borders. [Citations omitted.]" Id., 83 A.2d at 182. But the court concluded, "If the taking is for a public use which will provide a substantial and direct benefit to the people of the state which authorizes it, it is a proper exercise of the power of eminent domain even though it also benefits the residents of another state." Id.; accord, Grover Irr. & Land Co. v. Lovella Ditch, R. & Irr. Co., 21 Wyo. 204, 131 P. 43, 53 (1913); and Annot., 90 A.L.R. 1032 (1934).
In Graiapp v. Mississippi Power Company, 280 Ala. 368, 194 So.2d 527 (1967), the defendant was one of four companies affiliated with and controlled by the Southern Company, a public utility holding company. The Southern Company System had been unified from the perspective of generation and transmission and was
"devised so that electrical power will flow from an area where there is an excess of generating ability at a particular time as compared with load or demand for electricity toward an area where there is (or there is a tendency to be) a deficiency of generating capacity as compared with the existing load in such deficiency area." Id., 194 So.2d at 529.
The Alabama court declared that "it is a fundamental principle in the law of eminent domain that private property may not be condemned unless it is to be subjected to a recognized public use, affording benefits which are not vague, indefinite or restrictive. [Citations omitted.]" Id., at 531. Responding to the argument that since Mississippi Power was not subject to the control of the Alabama Public Service Commission and since Alabama Power held only a contractual right to receive power transmitted over the proposed line, the public in Alabama had no legal right to benefits from the line, the Alabama court held that as the evidence in the ease established that electricity would flow in both directions along the proposed line there was sufficient benefit to the public in Alabama.
The court in Graiapp by its discussion of the requirement that the public in Alabama benefit from the proposed line implied that the power of eminent domain must benefit the public within the territorial confines of the jurisdiction delegating the power of eminent domain. Two decisions have explicitly discussed the requirement.
The Wyoming Supreme Court in a case involving the diversion and appropriation of water in Wyoming for the irrigation of land in Colorado detected a principle "to be deduced from all the authorities, although distinctly stated in but few" that
"in every case where the use as a justification for the proceeding has been questioned, the inquiry in that respect has been confined to the interest and welfare of the state or sovereignty within whose limits or jurisdiction the land sought to be condemned is located." Grover Irrigation, supra, 131 P. at 55.
The court also declared that the benefit must "arise directly" from the proposed use and that "the interest or welfare dependent upon or affected by development and growth in another state" is insufficient to uphold the exercise of eminent domain. Id.
In Clark the Florida court determined that the pleadings were insufficient to allege a public use and declared:
" the sovereign's power of eminent domain, whether exercised by it or delegated to another, is limited to the sphere of its control and within the jurisdiction of the sovereign. A state's power exists only within its territorial limits for the use and benefit of the people within the state. Thus, property within one state cannot be condemned for the sole purpose of serving a public use in another state. Conjecture might be made ' that electrical current generated in Georgia will flow into Florida for the benefit of Florida citizens and vice versa; however, the pleading before us indicates that a one way transmission line is contemplated from which the citizens of Florida will not derive one iota of benefit." Clark v. Gulf Power Company, supra, 198 So.2d at 371.
As a result of the insufficient pleadings, the order of taking was reversed and the cause remanded. Id., at 372.
From these cases, it appears that the following elements must be present for a public use to exist in the state where the property sought to be condemned lies. First, the public must have either a right to benefit guaranteed by regulatory control through a public service commission [Bok-ma] or an actual benefit [Gralapp]. Second, although other states may also be benefited, the public in the state which authorizes the taking must derive a substantial and direct benefit [Greenwich Water], something greater than an indirect advantage [Grover Irrigation ]. Third, the public benefit, while not confined exclusively to the state authorizing the use of the power [Greenwich Water], is nonetheless inextricably attached to the territorial limits of the state because the state's sovereignty is also so constrained [Clark and Grover Irrigation].
To dispose of this case, we must determine whether the benefits alleged by Square Butte provide, either singly or in unison, a substantial and direct benefit to North Dakota.
III.
Reserve and Emergency Power Supplies
Square Butte alleges first that its project will increase reserve and emergency power supplies available within North Dakota. The Mid-Continent Area Power Pool requires each of its participants to hold fifteen percent of its.total generating capacity in reserve to meet emergency and short-term requirements. Since MP&L and Minnkota are both members of MAPP, the project will increase the reserve supply available to MAPP participants.
The trial court found "[t]hat any association of Square Butte with power pools and energy backups is not direct enough to support requirement of public use." Reserve supplies of electricity through power pooling are designed to increase the reliability of power systems and to decrease capital expenditures since each company need not install a reserve capacity equal to the size of its largest generating unit.
The Square Butte project adds 60 megawatts of reserve and emergency power supply to what would otherwise be available to the North Dakota members of MAPP. This is a significant factor relating to the adequacy and reliability of the power pool reserve. There may be, additionally, certain economic benefits to North Dakotans from Center # 2 as a backup source of power. We discuss that later in this opinion.
Stabilizing Effect of DC Line on Supply System
Square Butte does contend that the DC line will increase the reliability of the electrical supply system in North Dakota by reducing the frequency of phenomena known as "low frequency oscillations." Whether or not low frequency oscillation will occur depends on the combination of the amount of generation in the area, the amount of transmission and the strength of that transmission.
Professor Jack Krueger of the University of North Dakota further explained the phenomenon and its effect as follows:
"The oscillation process is a — an actual displacement between the generation and the utilization point on electric power. A good example, one that is used in our classwork at the University, is to have two electrical machines, one is a generator, one is a load connected by a transmission line.
"And as the load is brought up to a particular level, the mechanical displacement between the rotating element of the motor that comprises the load versus the position of the rotating element of the machine, that is the generator, has a certain angular displacement. As you increase the load this angular displacement will increase still further. And above a certain point the angular displacement becomes so bad that they fall out of syn-chronism. And the generator then speeds up, the motor slows down and eventually would come to a stop. At that point . . . the system has collapsed."
MP&L's manager of system planning testified that 68 low frequency undamped oscillations were recorded in North Dakota during 1972. He indicated that seven of those resulted in system collapses: "The transmission system in North Dakota breaking up, the units tripping off the line, circuit breakers opening, et cetera."
Since the power flow on a DC line is controllable by operator action, it can be modulated "in exactly the right phase relationship with those low frequency oscillations to damp them or get them to reduce in magnitude and disappear from the system." The modulation would apparently occur at Center as the current is changed into DC. The generation will bypass the AC transmission system and the flow of AC power will be introduced at "the eastern end of [the] system so that a return of energy to Square Butte will unload the existing facilities that are normally transferring power from west to east."
In effect, the disturbance will be moved from North Dakota to Minnesota where the distances between the generating systems and the effective load center of the system are different enough so that the oscillation will not hinder operations on the receiving end.
MP&L's employee was unable to specify the time or date of any system collapses in North Dakota, although he was aware that the Minnkota system had collapsed in 1972. He assumed that it took eight hours to get Minnkota's steam plant back on line, based on his experience with MP&L's plants of a similar size, but he did not know how long the outage lasted for the ultimate consumer. He testified that the length of such an outage "would depend upon the availability of energy in other systems; under certain circumstances we could put it back together in a few minutes, under others it may take hours."
Testimony at the trial included an averment that with the stabilizing effect of the DC line on the AC system the entire generating complex in the Bismarck area will be able to operate at a higher output level than currently exists. During his deposition, Professor Krueger indicated additional generation on the AC system "with a stabilizing DC line . . . would not contribute to instability of the system, but without the line it would."
MP&L chose the DC line after its studies indicated that various 345 KV AC transmission schemes totaling more than 950 miles of line would not be "adequate to support the [generating] unit in North Dakota and deliver its output to the MP&L service area for the initial seven-year period."
MP&L's manager of system planning concluded that the DC line "will make the AC systems more reliable and increase the capability of loading those transmission lines that leave the generating complex in the Bismarck area."
None of the trial court's findings of fact concern the effect of the DC line on low frequency oscillations. In his memorandum opinion, the trial judge observed, "There has been testimony regarding the stabilization of the AC lines within the State of North Dakota which this Court finds is not persuasive enough to supply public use for condemnation purposes."
By Rule 52(a), N.D.R.Civ.P., we may not set aside findings of fact in civil actions unless such findings are clearly erroneous. We explained that standard in In re Estate of Elmer, 210 N.W.2d 815 (N.D.1973):
"A finding is 'clearly erroneous' only when, although there is some evidence to support it, the reviewing court on the entire evidence is left with a definite and firm conviction that a mistake has been made. [Citation omitted.] The mere fact that the appellate court might have viewed the facts differently, if we had been the initial trier of the case, does not entitle us to reverse the lower court. [Citations omitted.]" Id. at 820; accord, Schumacher v. Schumacher, 242 N.W.2d 136 (N.D.1976); In re Estate of Blank, 219 N.W.2d 815 (N.D.1974)
In light of the fact that the testimony asserting that the DC line will stabilize the existing AC generating and transmission systems in North Dakota was not disputed, it is possible that the trial court determined that the stabilizing effect is a benefit, but that such an influence is by itself insufficient to justify exercising the power of eminent domain. In any case we conclude that the trial court was clearly erroneous in not giving some effect to this influence. We think that the stabilizing influence is a factor that must be considered with other factors to determine whether there is a direct and substantial benefit to North Dakota.
Electricity Available to North Dakota Consumers in Reasonable Future
The availability of electricity to Square Butte (and, hence, to Minnkota) is governed by a "Power Sales & Interconnection Agreement between Minnesota Power & Light Company and Square Butte Electric Cooperative" dated as of April 1,1974. We quote from that contract:
"Section 3. Availability of Power and Energy, (a) Square Butte agrees to make available to MP&L at the Duluth, Minnesota, HVDC terminal all of the Net Capability, less line losses, to which MP&L is entitled under Section 3(b) below which can at any time be produced by Center # 2 either prior to or after the Completion Date without exceeding its reasonable and proper capability.
"(b) MP&L's entitlement to power shall be the entire Net Capability, reduced, at Square Butte's option, by amounts on a noncumulative basis as follows:
Square Butte must give MP&L five years' notice of its election to exercise any of its options and, once made, the elections are irrevocable. MP&L holds the right of first refusal on any surplus power inuring to Square Butte as a result of its option exercise, in which case the "price of such surplus energy shall be 75% of the overall average price paid by MP&L during the three immediately preceding calendar years for Economy Energy or its substitute . . . provided, however, that such overall average price shall not be less than 2.4 times the fuel cost of producing such energy at Center # 2."
If Square Butte purchases certain trust estates specified in the Bond Purchase and Participation Agreement and thereafter sells those assets to MP&L, or if the semiannual lease rentals exceed 5.25 percent of a specified sum, then Square Butte, on at least five years' notice to MP&L, may change MP&L's entitlement to power to the entire net capability reduced by 15,000 KW.
If Square Butte exercises any of its options, the obligation to retain the specified capacity continues for the remainder of the 30 year term of the agreement. That obligation can be altered by mutual agreement of the parties. In any event, Square Butte may reduce its options to the extent that MP&L restricts Square Butte's right to MP&L's transmission facilities.
Any power retained by Square Butte will be transferred by the DC line to Duluth and routed back to Square Butte by MP&L's transmission system. While the agreement contemplates that MP&L will have "substantial excess bulk transmission capacity" to facilitate the transfer and that MP&L will "endeavor to facilitate" such transfer, it is not intended that the agreement "shall obligate MP&L to finance new or additional transmission facilities." MP&L grants Square Butte a right to use such excess capacity as "shall be from time to time available thereon, which capacity is not needed to supply MP&L firm and wheeling loads, as determined by MP&L."
Subject to a grant of a 40,000 KW transmission capacity if Square Butte exercises any of its options, "MP&L will retain priority for use of its transmission system for service to its customers, and for carrying out the terms of existing agreements with other power suppliers."
Square Butte agrees not to engage in any business or activity other than Center # 2 and its transmission facilities. Other sections of the agreement provide for consultation with and approval by MP&L relating to additional facilities and operating procedures at Center # 2.
The jurisdiction of the North Dakota Public Service Commission is limited as to certain utilities by statute:
"49-02-01.1. Jurisdiction of commission limited as to certain utilities. — Nothing in this chapter shall authorize the commission to make any order affecting rates, contracts, services rendered, adequacy, or sufficiency of facilities, or the rules or regulations of any public utility owned and operated by the state or by any city, county, township, or other political subdivision of the state or any public utility that is not operated for profit, but all other provisions herein shall apply to such utilities. " N.D.C.C.
Nor are such cooperatives subject to the requirement of obtaining a certificate of public convenience and necessity before beginning construction or operation of a plant or system or extension thereof. See Section 49-03-01.5, N.D.C.C. If sufficient regulatory powers were vested in the PSC, we would have precedent for holding the right to such power as a basis upon which to sustain the exercise of eminent domain. See Montana Power Company v. Bokma, supra, 457 P.2d at 772-773, and 2A Nichols, Eminent Domain § 7.221 (3d ed. 1975).
Square Butte asserts that REA has the authority to compel each of the 12 cooperatives "to exercise its option to assign all of its rights and obligations hereunder [to Minnkota] for the duration of this Agreement [the 'fifteen party' power sales agreement among Square Butte, Minnkota, the REA, and each of the twelve cooperatives] if the Administrator of REA shall so direct in writing at anytime." Considering that the purpose of the provision is merely to protect REA mortgage money and the admission that REA is "not likely to [force exercising the options] against the interests of the majority," we cannot hold that specific provision alone to be sufficient to sustain the power of eminent domain in North Dakota.
Given this absence of regulatory 'authority, we must determine from the record whether the trial court's conclusion that Square Butte will not supply electrical power to consumers in North Dakota is erroneous.
The trial court made the following findings of fact which bear upon the power sales and interconnection agreement:
"10. That agreements entered into, provided MP&L will receive all power from this line for 7 years, commencing when line becomes operational; such projected date to be 1985;
"11. That the afore agreement also allegedly provides Square Butte, the plaintiff herein, an option of taking up to 120 mega watts, but not more than 30% of the plant net capability;
"12. That the afore agreement also provides Square Butte, the plaintiff herein, an option of taking up to 51% of plant net capability some 17 years after line is in existence;
"13. That Board action would be necessary in order for an individual member of Minn-Kota and Square Butte to receive power;
"14. That the projection indicating a need for power by Minn-Kota and its members by 1977-78 assumes annual load growth based on average load growth only without other supporting authority;"
Defendants have made much of the fact that of Minnkota's directors the eight from Minnesota cooperatives can clearly control the four from North Dakota cooperatives. Since Square Butte can receive power only through exercising its options by its board of directors (the same board that directs Minnkota), the implication arises that Minnesotans on the board will prevent North Dakota from receiving any of the power produced at Center #2. We suspect, however, that if the Minnkota system requires additional power at the times the options become available, and if it is economically advantageous to exercise those options, then those needs and advantages will not be overshadowed by a zealous state patriotism.
Whether the trial court's conclusion that Square Butte will not supply electrical power to citizens of North Dakota is correct depends on Finding of Fact # 14, not on # 13, and the power sales agreement.
Testimony at trial indicated that Minnko-ta had 366 megawatts of generating capacity and purchased power available to its consumers. Minnkota projected that during the winter of 1977-78 its system would have a 19 megawatt deficiency. With no additional power source the system is projected to have a 240 megawatt deficiency by 1982. By the mid-1980's, Minnkota's present power sources will supply approximately one-half of Minnkota's projected needs.
Since Minnkota will receive power from Center # 2 only during operational emergencies pursuant to the joint operating agreement or from the MAPP reserve system until January 1, 1985, or later, it proposes to make short-term purchases from the pool to use some type of short-operating peaking capacity, and to use interconnections with power sources in Manitoba. Cross-examination elicited an admission of the possibility that an additional generating unit could be constructed at Center during that period of time.
During the trial, which occurred in the autumn of 1975, MP&L projected its winter peak load at 762 megawatts. During 1980 MP&L's projected peak load will be 1505 megawatts. Its existing capacity was 855 megawatts. MP&L's manager of system planning testified that the taconite industry is the largest single user of electrical energy on MP&L's system, that its expansion is the major cause of increased power needs by the MP&L system, and that residential and commercial loads on the MP&L system were increasing at a relatively small rate.
MP&L anticipates that it will have a plant with a generating capacity of 500 megawatts on line by 1982, and it has asked the Minnesota Environmental Quality Council for a site capable of supporting between 1800 and 3400 megawatts of generation. It thus appears that if MP&L's projections are accurate, its system will be deficient in 1985 even with the power available from Center # 2 and from an additional 500 megawatt plant in Minnesota.
During direct examination Lyle Lund explained that Square Butte took an option rather than a firm commitment in case some "totally unheard of development which could reduce the cost of power from some other source" is developed or in case a severe depression reduces demand for power in the Red River Valley. Asserting that he believed the power would be needed, he continued
" If we did not have this Square Butte deal and we had no other way to go, we would probably build a plant and that would be a commitment. We would have to use it. We would have to pay for it, whether we used it or not. This is a preferable arrangement from the standpoint of these rural electric consumers."
The trial court apparently concluded that Minnkota's projected needs are exaggerated since the projection "assumes annual load growth only without other supporting authority." While it is true that the trier of facts is not required to accept uncontradict-ed evidence of an interested party, Waletzko v. Herdegen, 226 N.W.2d 648 (N.D.1975), and Bergley v. Mann's, 99 N.W.2d 849 (N.D.1959), as an appellate court we are left with the conviction that a mistake has been made in this instance.
The defendants did not challenge the projections during the trial nor did they seek to diminish the weight to be attached to the projections by inquiring into the statistical assumption used or the assumptions ignored by Minnkota. From our reading of the record, therefore, we cannot agree with the necessary implication arising from the trial court's findings and conclusions that Minnk-ota will not quire additional electrical power when its options mature.
Given the lack of regulatory control over Square Butte by our PSC and the alterable nature of the power sales agreement, it is difficult to predict the extent of benefit which may be derived from the contract, but at the very least it must be considered a hedge against future increases in the cost of production and an insurance against shortage of power in 1985. Absent a showing that the contract is designed only to defraud North Dakota by allowing eminent domain without an attendant benefit to the State, the power sales agreement is a factor which should not be ignored. We conclude that the agreement evidences a reasonable probability that Minnkota's customers in North Dakota will receive power from the Square Butte project.
Low Cost Power to the Consumer
Square Butte asserts that operation of Center # 2 will reduce labor costs at Center # 1 and that when its options mature, the associated cooperatives will be able to secure power based on present construction costs. Testimony at trial also indicated that with the stabilizing influence of the DC line, hydroelectric or low-cost steam generation can be increased, replacing higher cost oil or diesel-fired units on the extremities of the state, thereby lowering the cost to consumers in the entire state.
Additionally, Center # 2 will be available as a backup source of power if Center # 1 should suffer certain operational emergencies. Pursuant to the joint operating agreement between Square Butte and Minnkota, after the first two years of operation they will, during operational emergencies, share the net capability of the generating unit unaffected by the emergency condition within specified limits, including a maximum of 117 megawatts available to Center # 1 from Center # 2. The agreement allows sharing for an aggregate of 500 hours on the part of either party during any calendar year and for 168 hours during any single emergency.
Thus, it appears that, in addition to the reasonable probability that Minnkota customers in North Dakota will receive direct and substantial power after 1985, there are other incidental benefits in terms of power availability and cost savings to North Dakota.
Because of the cumulative effect of the increase in reserve and emergency supplies, of the stabilizing effect of the DC line on the existing AC system, of the existence of the options and the likelihood that Minnkota will exercise its options to receive power from Square Butte after 1985, of the lower cost of that power, and of certain incidental benefits, we disagree with the trial court's conclusion that Square Butte has failed to establish a public use. None of these features alone would suffice, but the sum of the benefits does meet the requirement that North Dakota receive a substantial benefit.
Therefore, we reverse the judgment of the district court that dismissed Square Butte's complaint, reinstate the cause of action, and remand for assessment of damages.
PAULSON, J., concurs.