Administrative Law CLE
2009 Case Law Review
June, 2009
David Schultz, Attorney, Professor
Hamline University
School of Business
570 Asbury Street, Suite 305
St. Paul, Minnesota 55104
651.523.2858
dschultz@hamline.edu
I.
Introduction and Trends
A.
Trends and observations
1.
A thin admin law year
2.
No blockbusters
B.
Important issues
1.
Agency due process
2.
Deference to agency construction
3.
Mixed federal-state deference standards (or the legacy of In the Matter of the
Cities of Annandale and Maple Lake NPDES/SDS Permit Issuance for the
Discharge of Treated Wastewater, and Request for Contested Case Hearing, 731
N.W.2d 502 (Minn. 2007)).
II.
Minnesota Supreme Court
A.
In the Matter of the Alexandria Lake Area Sanitary District NPDES/SDS Permit No.
MN0040738 Reissuance for the Expanded Discharge of Treated Wastewater, Douglas
County, 763 N.W. 2d. 303 (Minn. 2009).
1.
Facts: MPCA issues a NPDES draft permit to the Alexandria Lake Area Sanitary
District (ALASD) to expand its wastewater treatment plant. The Minnesota
Center for Environmental Advocacy (MCEA) challenged the MPCA decision,
contending the resultant discharges would increase the phosphorus in a lake
(Lake Winona) declared impaired under the Clean Water Act. MCEA argued
that the permit did not comply either with the MPCA phosphorus rule (Minn. R.
7050.0211, subp. 1a (2007)) or an EPA rule (40 C.F.R. §122.44(d)(1)) that limits
phosphorus discharge. After hearings on the draft permit MPCA amended it to
reduce phosphorus discharge limits, setting them based on scientific modeling
and also promulgating a schedule of compliance, but doing both prior to the
completion of a total-maximum-daily-load (TMDL) test being completed as
required under federal law. MPCA notified the EPA of the permit changes and
the latter did not object. MCEA challenged the issuance of the final permit and
the court of appeals reversed, arguing that the effluent standards violated EPA
rule (40 C.F.R. §122.44(d)(1)).
2.
Issue: Did the MPCA exceed its authority in the issuance of a NPDES permit
when it did so based upon the setting of effluent standards that were determined
prior to the completion of a TMDL? No.
3.
Reasoning: EPA rule (40 C.F.R. §122.44(d)(1)) sets forth the standards for the
issuance of NPDES permits. However, the Court found that it was unclear
regarding what standards applied in situations such as here where there was a
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2009 Case Law Review
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4.
5.
III.
request for a reissuance of an NPDES permit for an existing facility.
Specifically, while the federal regulations require a setting of effluent standards,
left unclear is how quickly compliance is expected. This silence is an indication
of ambiguity under Chevron USA v. NRDC, 467 837 (1984). Drawing on
Annandale, the Court looked to several factors to determine whether it should
thus defer to an agency’s construction of a rule. These factors include the nature
of the regulation, the agency’s expertise, and finally whether the agency’s
interpretation of the rule in this instance is reasonable. Considering all of these
factors the Court concluded that the MPCA interpretation was reasonable here
and it did not abuse its discretion.
Dissent: Justice P. Anderson dissented arguing that EPA rule (40 C.F.R.
§122.44(d)(1)) was not unclear regarding the schedule of compliance. Anderson
cites Annandale to support his analysis.
Why significant? This is the continuation of the battle over what Annandale
means and the importation of federal administrative law deference standards
under Chevron into state law and analysis.
Minnesota Court of Appeals
A.
In the Matter of the On-Sale Liquor License, Class B, Held by T.J. Management of
Minneapolis d/b/a Gabby’s Saloon and Eatery, 763 N.W. 2d 359 (Minn. Ct. App. 2009)
1.
Facts: A city council member communicated to city officials several complaints
received regarding neighborhood activities near Gabby’s Saloon. These events
included public urination, littering, and the playing of loud music. Police met
with the bar owners, indicated that they believed these problems were caused by
their patrons, and also impressed upon the owner that these incidents could affect
their liquor license. The city sought to convince Gabby’s to adopt new
conditions upon their license to address these neighborhood problems and when
the owner refused the city sought a decision from an ALJ to revoke the license.
The ALJ ruled that the license could not be revoked but found that under the
Minneapolis Code of Ordinances (MCO) § 259.250(9) (2008), it had “good
cause” to modify the license. Gabby’s appealed the decision.
2.
Did the City of Minneapolis have a good cause under MCO § 259.250(9) (2008)
to modify the terms of liquor license in a situation when it did not have the
authority to suspend or revoke it? No.
3.
Reasoning: While municipalities have broad discretion to determine when to
issue or revoke liquor licenses, that discretion is not unlimited and they may not
act in a arbitrary and capricious fashion or without substantial evidence. Here,
because the bar had not violated any law or statute, the interpretation of good
cause in MCO § 259.250(9) (2008) to allow for the modification of a license was
vague and standardless and the city lacked evidence to support its change in the
license.
4.
Why significant? Unless a regulator can show a violation, you cannot impose
new conditions upon a liquor license without a due process violation. “No harm,
no good cause.”
B.
Obara v. Minnesota Department of Health, 758 N.W. 2d 873 (Minn. Ct. App. 2008.)
1.
Facts: Police respond to a report of the plaintiff punching his wife in the face in a
vehicle. Plaintiff is heard telling his wife he could kill her if he wanted.
Plaintiff is a registered nurse in Minnesota working a licensed facility. A
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2009 Case Law Review
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C.
background check revealed two prior felonies for which the plaintiff had been
convicted. As a result DHS revoked the plaintiff’s license for 15 years. A
requested reconsideration and oral rehearing was denied, with the request being
based on the claim that the plaintiff did not punch his wife but that she fell out of
the car. Subsequently a Minnesota court upheld the conviction for the assault on
his wife.
2.
Issue: Did DHS act in an arbitrary and capricious fashion in revoking a nurse’s
license without an evidentiary hearing when it had determined that the individual
had committed a felony under state law that required revocation of a license?
No.
3.
Reasoning: The Minnesota Constitution applies the same due process standards
as the Federal Constitution. Under the Due Process clause, the necessity of a
hearing will be reviewed under the Mathews v. Eldridge, 424 U.S. 319 (1976).
The test looks to whether there is a protected property interest, the risk of an
erroneous deprivation of that interest by current procedures and hearings, and the
addition cost in providing the additional hearings. Here while the Court noted
that the license was a protected interest, the cost for the new hearing would
exceed the additional the benefits from the protection to it when the facts forming
the basis of the revocation of the license has already been adjudicated in court.
4.
Why significant? The case explicitly notes the parallel standards between state
and federal due process requirements and it adopts a federal standard. Second,
the case effectively applies some type of issue preclusion or res ipse loquitur to
administrative due process hearings.
5.
Compare to: Mertins v. Commissioner of Natural Resources, 755 N.W. 2d. 329
(Minn. Ct. App. 2008).
a.
Here the Court used the Mathews test and ruled that there was a property
interest in a fishing license but that the existing procedures in place to
impose a temporary suspension of a license while appeals are pending
was reasonable in light of the State’s interest in seeking to protect natural
resources.
Coalition of Greater Minnesota Cities v. MPCA, 765 N.W. 2d. 159 (Minn. Ct. App.
2009).
1.
Facts: The MPCA sought to a rule regulating the discharge of phosphorus into
state waters such as lakes and reservoirs, and rivers and streams. Several
contested cases were initiated seeking to impose a 1 mg/L phosphorus limit on
municipal facilities through a permit process under the National Pollution
Discharge Elimination System. These cases sought, inter alia, to clarify what
constituted a lake and reservoir and also the MPCA’s interpretation of “affects”
for the purposes of defining how discharges impact algal growth in lakes and
reservoirs. As a result of these cases MPCA did an review and issued new
amendments and rules clarifying these terms which did not change much from its
initial determinations. In its SONAR MPCA indicted there would be few
exemptions from the rules. After an ALJ conducted hearings on the rules, the
MPCA adopted them. The Coalition of Minnesota Cities, under Minn. Stat.
§14.44, sought a declaratory judgment to the rules with a pre-enforcement
challenge, claiming among other things that the rule would give the MPCA
unbridled discretion to grant or deny exemptions.
2.
Issue: May the Coalition of Minnesota Cities under Minn. Stat. §14.44 bring a
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2009 Case Law Review
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3.
4.
5.
pre-enforcement challenge to a rule adopted by the MPCA regarding the
discharge of phosphorus effluent into Minnesota waters? Yes.
Reasoning: The Coalition does have standing to bring a pre-enforcement
declaratory judgment. Standing exists when one can show that a rule or its
threatened application interferes with or impairs the legal rights or privileges of a
petitioner.
One must show that the rule is or will be applied to one’s
disadvantage; mere possibility of an injury is not enough. Here the Coalition
argued that the overbroad application of the MPCA’s rule and limited intent to
grant exemptions was not speculative. Instead, were the rule enforced as the
MPCA indicated, it would cost cities significant resources to upgrade their
facilities. This was enough to grant standing to challenge the rule.
Why significant? The decision clarifies the standing rule about what constitutes
an injury, indicating that one does not have to wait for actual enforcement for the
injury to occur. Instead, injury may occur based upon simply upon agency
construction or declaration of a rule.
Note: The Coalition also challenged in this case the MPCA regarding whether it
had too much discretion in this case in terms of how it constructed its authority
The Court held no, stating that the discretion was limited and consistent with the
MPCA’s authority. Finally, the Court said that the MPCA’s determination of
what ‘affects” means was well within the agency’s technical expertise to decide.
IV.
Readings on Federal Law
A.
David Schultz, Give a Hoot, Don’t Pollute: The Roberts Court and the Environment, 17
PENN STATE ENVIRONMENTAL LAW REVIEW 191 (2009).
1.
Good background on some recent trends with the U.S. Supreme Court regarding
its application of agency deference rules and statutory interpretation.
V.
Electronic Version of this Document
A.
Go to http://davidschultz.efoliomn2.com/index.asp and click on “Minnesota
Administrative Law” on the left side of the page to find a downloadable version of this
and
other
admin
law
summaries
dating
back
to
1999.
VI.
Obtaining Current Decisions by E-mail
A.
Supreme Court
1.
United States Supreme Court Opinions
a.
Send e-mail to: listserv@listserv.law.cornell.edu
b.
Put in message body ONLY: SUBSCRIBE LIIBULLETIN Your Name
B.
Eighth Circuit
1.
Send e-mail to: listserver@statebar.gen.mn.us
2.
Put in the message body ONLY: subscribe msba-fedciv
C.
Minnesota Appellate Cases
1.
Send e-mail to: majordomo@mr.net
2.
Put in message body ONLY: subscribe msba-ctops
Administrative Law CLE
2009 Case Law Review
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