Metropolitan Utilities Dist. v. Black Hills Neb. Gas, LLC (In re Application No. P-12.32 of Black Hills Neb. Gas, LLC)

311 Neb. 813

976 N.W.2d 152

IN RE APPLICATION NO. P-12.32 OF BLACK HILLS NEBRASKA GAS, LLC.

Metropolitan Utilities District, appellant,

v.Black Hills Nebraska Gas, LLC, et al., appellees.

No. S-21-620.

Supreme Court of Nebraska.

Filed June 17, 2022

Mark A. Fahleson, Andrew S. Pollock, Lincoln, and Jennifer L. Ralph, of Rembolt Ludtke, L.L.P., and Mark Mendenhall, Omaha, and Marc Willis, of Metropolitan Utilities District, for appellant.

Trenten P. Bausch and Megan S. Wright, of Cline, Williams, Wright, Johnson & Oldfather, L.L.P., Omaha, and Douglas J. Law, Associate General Counsel, Black Hills Energy, for appellee Black Hills Nebraska Gas, L.L.C.

Douglas J. Peterson, Attorney General, and L. Jay Bartel, for appellee Nebraska Public Service Commission.

Heavican, C.J., Miller-Lerman, Cassel, Stacy, Funke, and Freudenberg, JJ., and Dougherty, District Judge.

Miller-Lerman, J.

NATURE OF CASE

Metropolitan Utilities District (MUD) appeals the order of the Public Service Commission (PSC) which approved the application of Black Hills Nebraska Gas, LLC, doing business as Black Hills Energy (Black Hills), seeking an enlargement or extension of its natural gas mains in Sarpy County, Nebraska. MUD generally argues that the application was contrary to a 2010 order which it asserts conclusively established that it was in the public interest for MUD to provide natural gas service to the area that was the subject of Black Hills’ application. We affirm the PSC's order.

STATEMENT OF FACTS

Black Hills’ Application.

On February 23, 2021, Black Hills filed an application with the PSC pursuant to Neb. Rev. Stat. § 66-1863 (Reissue 2018) in which it sought a determination that Black Hills’ proposed extension of its natural gas mains to provide service to a site in Sarpy County was in the public interest. The application was designated by the PSC as "Application No. P-12.32." Black Hills asserted that it would be providing service to Omaha Public Power District (OPPD) at a site in the area of 168th Street and Fairview Road in Sarpy County and that OPPD planned to build new generation facilities at the site. The approval of Application No. P-12.32 is the subject of this appeal.

Black Hills asserted in the application that the site at issue was within the extraterritorial zoning jurisdiction of Papillion, Nebraska, and that Black Hills served Papillion and its extraterritorial jurisdiction under a current and valid natural gas franchise. Black Hills noted that there had been litigation between Papillion and Springfield, Nebraska, and that following such litigation, the two cites had agreed that the site at which OPPD planned to build its facilities would be within the boundaries of Papillion and not within Springfield. Black Hills asserted that because the site was within Papillion's extraterritorial jurisdiction, under Neb. Rev. Stat. § 66-1861(2) (Reissue 2018), there was a rebuttable presumption that it was in the public interest for Black Hills to provide service to the area. Black Hills also stated that MUD did not possess a current and valid franchise to serve areas within Papillion and that pursuant to Neb. Rev. Stat. § 66-1858 (Reissue 2018), MUD could not solicit a franchise from Papillion.

Black Hills asserted in Application No. P-12.32 that the facilities to be built by OPPD would "support growth in the region while ensuring high reliability of electric generation" and that the facilities would require a high volume of natural gas which would require installation of a new main.

Black Hills stated its preferred route for a new main would be almost entirely within the extraterritorial jurisdiction of Papillion and that the small portion that was not located within such jurisdiction was not presently located within the zoning jurisdiction of any community. Black Hills provided a map depicting known existing infrastructure in the area of OPPD's proposed site, and it stated that it was not aware of any MUD mains within a quarter mile of the proposed service area.

Black Hills finally asserted that extension of its gas distribution system into the site at issue would "contribute to the orderly development of natural gas utility infrastructure," and it noted that as Papillion expanded into its extraterritorial zoning jurisdiction, Black Hills would be the service provider to customers in those areas. Black Hills therefore requested an order from the PSC determining that the proposed extension by Black Hills was in the public interest.

MUD's Protest.

On March 3, 2021, MUD filed a protest and motion to dismiss Black Hills’ Application No. P-12.32. MUD generally asserted that the site of Black Hills’ extension was within MUD's service area as established by a 2010 order of the PSC and that the proposed extension by Black Hills would be duplicative of MUD's planned extension into the area. MUD asserted that the 2010 order established a conclusive presumption that MUD's extension into the area was in the public interest and that presumption could not be overcome by additional evidence or argument. MUD therefore requested that the PSC "summarily dismiss and deny Black Hills's [a]pplication, as a matter of law."

MUD asserted that in 2010, Black Hills and MUD had filed a joint application with the PSC, setting forth their plans to extend and enlarge their respective service areas. MUD further asserted that no objections were filed to the joint application in 2010 and that therefore, pursuant to § 68-1863(3), the application was "conclusively presumed to be in the public interest" and the two utilities were therefore allowed to proceed with their plans without further action by the PSC.

The joint application of Black Hills and MUD, upon which MUD relies, was filed with the PSC on April 19, 2010, and was designated by the PSC as "Application No. P-0014." In the application, Black Hills and MUD provided a map showing areas within Sarpy County into which each intended to extend or enlarge its respective service area. Black Hills and MUD stated in the application that they stipulated and agreed that such extensions or enlargements satisfied relevant statutory requirements. They further asserted that they had discussed the matter with representatives of Sarpy County and of cities within the county, including Papillion and Springfield, and that the application had received the support of those governmental entities. They also attached to the application an exhibit setting forth applicable conditions and providing that, except for certain stated exceptions, neither Black Hills nor MUD would maintain gas facilities within the other's service area as shown in the map. One of the exceptions was when "[t]he parties determine by agreement that it is more practical and efficient for one party to provide gas service to a customer or customers within the other party's area of service."

On May 12, 2010, the PSC filed an order regarding Application No. P-0014 in which it stated that it had sent required notices and posted notice of the joint application filed by Black Hills and MUD on April 19 and that such notices stated that protests or formal interventions must be filed on or before May 11. In the May 12 order, the PSC stated that no protests or petitions for intervention had been filed and that therefore, pursuant to § 66-1863(3), "the proposed enlargement or extension is presumed to be in the public interest and Applicants may proceed with the extension or enlargement without further [PSC] action." The PSC therefore ordered that the docket in Application No. P-0014 be closed without further action.

In its protest to Application No. P-12.32, MUD asserted that the proposed OPPD site at issue in Black Hills’ current application was within MUD's service area established by Application No. P-0014 in 2010 and that MUD was planning to extend service to the site. MUD asserted that in Application No. P-0014, Black Hills had agreed that MUD's extension of service to the area was in the public interest and that the PSC's order in Application No. P-0014 recognized the conclusive presumption that MUD's extension of service to the area was in the public interest. MUD further asserted that Black Hills’ plan to extend service to the site would be duplicative of MUD's planned extension and that therefore, Black Hills’ extension would not be in the public interest.

In sum, MUD denied that Black Hills’ extension of service proposed in Application No. P-12.32 was in the public interest or that it would contribute to the orderly development of natural gas utility infrastructure. MUD therefore requested that the PSC summarily dismiss and deny Black Hills’ application.

Hearing Before PSC.

The PSC held a hearing on Black Hills’ Application No. P-12.32 and MUD's objection thereto on June 9, 2021. At the hearing, exhibits offered by Black Hills and by MUD, as well as by the PSC, were entered into the record. Both Black Hills and MUD presented testimony by their respective witnesses in the form variously of prefiled direct testimony, live testimony, and cross-examination.

Among other evidence and testimony, Black Hills presented testimony by Kevin Jarosz, Black Hills’ vice president of operations. Jarosz provided general background regarding Black Hills’ history, its franchise with Papillion, and Black Hills’ plan to extend service to the site of the planned OPPD facility. He generally testified regarding how the proposed extension would improve the financial profile of Black Hills and would benefit its ratepayers.

Jarosz also testified regarding his involvement with Application No. P-0014 in 2010. Jarosz stated, inter alia, that the joint application was filed in an attempt to resolve ongoing service area disputes between Black Hills and MUD. He stated that the parties had determined as a general matter that MUD would serve Springfield and its future growth and that Black Hills would serve the rest of Sarpy County. Jarosz testified that in 2010, the parties were attempting to estimate how...