GH Holdings, LLC v. Minnesota Department of Commerce

840 N.W.2d 838, 2013 WL 6724600, 2013 Minn. App. LEXIS 113
CourtCourt of Appeals of Minnesota
DecidedDecember 23, 2013
DocketNo. A13-0281
StatusPublished
Cited by1 cases

This text of 840 N.W.2d 838 (GH Holdings, LLC v. Minnesota Department of Commerce) is published on Counsel Stack Legal Research, covering Court of Appeals of Minnesota primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
GH Holdings, LLC v. Minnesota Department of Commerce, 840 N.W.2d 838, 2013 WL 6724600, 2013 Minn. App. LEXIS 113 (Mich. Ct. App. 2013).

Opinion

OPINION

SCHELLHAS, Judge.

Invoking this court’s original jurisdiction under Minn.Stat. §§ 14.44-.45 (2012), petitioner challenges the validity of Minn. R. 2890.4600, subp. 2(A), which purports to limit the evidence in a contested case to the evidence previously submitted to respondent board. Petitioner argues that rule 2890.4600, subpart 2(A), exceeds respondent-board’s statutory authority and violates petitioner’s right to due process. Because we conclude that respondent-board exceeded its statutory authority in adopting the rule, we declare the rule to be invalid. We therefore do not address petitioner’s constitutional argument.

FACTS

Petitioner GH Holdings LLC (GH) claims that, when excavating property for redevelopment in Rochester, it discovered releases from two underground gasoline storage tanks that date back to the early 1900s. GH’s environmental consultant surveyed the releases, determined the extent of the contamination, and oversaw GH’s voluntary cleanup of the site. GH sought reimbursement from respondent Minnesota Petroleum Tank Release Compensation Board (the board) for GH’s response costs, including excavation; treatment; and disposal costs of 1,872 cubic yards of contaminated soil. The board denied GH’s application in its entirety on the grounds that the Minnesota Pollution Control Agency (MPCA) did not order any corrective action and therefore GH’s costs were not corrective-action costs. GH appealed the denial as a contested case. An administrative law judge (ALJ) scheduled a hearing.

Consistent with Minn. R. 2890.4600, subp. 2(A), the board argued that the evidence the ALJ can consider is limited to the written record previously submitted to the board. GH petitioned this court for a declaratory judgment to determine the validity of Minn. R. 2890.4600, subp. 2(A). The ALJ stayed the contested-case proceeding, pending a decision by this court on the petition for declaratory judgment. A special-term panel of this court ruled that GH could proceed with its petition for declaratory judgment.

ISSUE

Is the challenged portion of Minn. R. 2890.4600, subp. 2(A), invalid because the board exceeded its statutory authority when it adopted the rule, purporting to limit evidence in a contested case to the written record previously submitted to the board?

ANALYSIS

The Petroleum Tank Release Cleanup Act is embodied in Minnesota Statutes sections. 115C.01-.13 (2012). “[T]he Act governs liability and procedures for releases of petroleum into the environment and establishes a fund for reimbursement of cleanup costs for such spills.” In re Crown CoCo, Inc., 458 N.W.2d 132, 135 (Minn.App.1990), review dismissed (Minn. Sept. 14, 1990). The act created the board, which is responsible for administering the act. Minn.Stat. § 115C.07. The board will “generally refund up to 90 percent and in certain cases more than 90 percent of corrective action costs incurred in remediating a petroleum spill.” Moorhead Econ. Dev. Auth. v. Anda, 789 N.W.2d 860, 870 (Minn.2010). Reimburse[841]*841ment determinations may address (1) whether the person seeking reimbursement is an “eligible applicant,” (2) what costs “were actually incurred and were reasonable,” and (3) whether the costs were “corrective.” Minn.Stat. § 115C.09.

When the board adopted procedural rules for both reimbursement determinations and contested-case appeals, it purported to exercise its rulemaking power under Minn.Stat. § 115C.07, subd. 3. The rules require that a reimbursement applicant submit a written application to the board. Minn. R. 2890.4400, subp. 1 (2013). The commissioner of the MPCA reviews the application and submits a report to the board. Id., subp. 6 (2013) (requiring the commissioner to submit a report); see generally Minn. R. 2890.0015, subp. 18 (2013) (defining “Commissioner”). The board’s staff then makes a determination of eligibility for reimbursement. Minn. R. 2890.4500, subp. 2 (2013). An applicant may appeal that determination to the board. Id., subp. 3 (2013). In this case, GH appealed the determination of the board’s staff.

When the board considers an appeal of a reimbursement determination, the board must determine the amount of the reimbursement based on those costs it finds are eligible, actually incurred, and reasonable. The determination must be made on the basis of the written record. The board may also allow supplemental information explaining the application to be presented orally. The board may establish a fair and reasonable limit on time allowed for oral presentation.

Id. (emphasis added).

“An applicant for reimbursement may appeal a reimbursement determination of the board as a contested case under chapter 14.” Minn.Stat. § 115C.12, subd. 2(a). “On appeal, the Office of Administrative Hearings must determine whether the evidence submitted to the board entitles the applicant to reimbursement and whether the board’s determination is otherwise consistent with or contrary to law.” Minn. R. 2890.4600, subp. 2(A) (emphasis added). The final decision in a contested case is made by the commissioner of commerce. Minn.Stat. § 115C.12, subd. 3.

GH argues that rule 2890.4600, subpart 2, is invalid because the board exceeded its statutory authority by purporting to limit the evidence that may be presented in contested case appeals of board decisions. “The validity of any rule may be determined upon the petition for a declaratory judgment thereon, addressed to the Court of Appeals, when it appears that the rule ... interferes with or impairs ... the legal rights or privileges of the petitioner.” Minn.Stat. § 14.44. This court “shall declare the rule invalid” if the rule (1) “violates constitutional provisions,” (2) “exceeds the statutory authority of the agency,” or (3) “was adopted without compliance with statutory rulemaking procedures.” Minn.Stat. § 14.45. The board relies on Geo. A. Hormel & Co. v. Asper, 428 N.W.2d 47, 50 (Minn.1988), in which the supreme court stated that the “agency’s interpretation of the statutes it administers is entitled to deference and should be upheld, absent a finding that it is in conflict with the express purpose of the act and the intention of the legislature.” But an agency’s “suggestion of deference is ... misplaced” when appellate courts “are confronted with the threshold question of whether the legislature has granted an agency the authority to take the action at issue.” In re Hubbard, 778 N.W.2d 313, 318 n. 4 (Minn.2010).

Appellate courts “apply the de novo standard of review to the question of whether the [agency] has exceeded its statutory authority” and “resolve any doubt about the existence of an agency’s [842]*842authority against the exercise of such authority.” In re Minn. Power, 838 N.W.2d 747, 753 (Minn.2013) (quotation omitted).

Because an agency is a creature of statute, it “has only those powers given to it by the legislature.” In re Qwest’s Wholesale Serv. Quality Standards,

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840 N.W.2d 838, 2013 WL 6724600, 2013 Minn. App. LEXIS 113, Counsel Stack Legal Research, https://law.counselstack.com/opinion/gh-holdings-llc-v-minnesota-department-of-commerce-minnctapp-2013.