Manufactured Housing Institute v. Pettersen

347 N.W.2d 238, 1984 Minn. LEXIS 1285
CourtSupreme Court of Minnesota
DecidedMarch 23, 1984
DocketC7-83-124
StatusPublished
Cited by33 cases

This text of 347 N.W.2d 238 (Manufactured Housing Institute v. Pettersen) is published on Counsel Stack Legal Research, covering Supreme Court of Minnesota primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Manufactured Housing Institute v. Pettersen, 347 N.W.2d 238, 1984 Minn. LEXIS 1285 (Mich. 1984).

Opinion

SIMONETT, Justice.

Appellants contend that a Minnesota Health Department rule setting a maximum indoor air level of formaldehyde in newly constructed housing units is invalid. They claim that the Commissioner of Health exceeded his authority in promulgating the rule, and that the rule is unconstitutional. They further claim the district court erred in restricting its review solely to the record in the administrative rulemak-ing proceeding. We hold that judicial re *240 view is on the record, but we also find that the maximum ambient level set by the rule is an arbitrary and capricious determination; consequently, we reverse and remand to the agency for reconsideration.

On June 28, 1982, the Minnesota Department of Health promulgated Rule 448 entitled “Formaldehyde in housing units.” 39C Minn.Code Agency R. § 1.448 (1982). The rule provides that newly constructed housing units containing more than 0.5 parts of formaldehyde per million parts of air (ppm) at the time the housing unit is to be sold, as measured by testing procedures set out in the rule, may not be sold in this state.

Plaintiff-appellant Manufactured Housing Institute is an incorporated association of mobile home manufacturers. The other plaintiff-appellants either make or sell mobile homes. The plaintiffs bring this declaratory judgment action against the Commissioner of Health, the Department, and the State, challenging the validity of the rule. On December 23, 1982, the district court granted defendants’ motion for summary judgment, ruling as a matter of law that the rule was valid. This appeal followed.

I.

The first question is procedural. Is district court review of the pre-enforcement, rulemaking process made on the basis of the record of the agency proceeding, as the state contends? Or is there a trial de novo in the district court, as appellants contend? The trial court ruled that review is on the agency record only. We agree with the trial court.

This action is a pre-enforcement challenge, i.e., it questions the process by which the rule was made and the rule’s general validity before it is enforced against any particular party. This is to be distinguished from an action wherein the rule is sought to be enforced against a particular party and, in that contested setting, the validity of the rule as applied to a particular party is adjudicated.

In a contested case, Minn.Stat. § 14.68 (1982) says that judicial review “shall be confined to the record, except in cases of alleged irregularities in procedure, not shown on the record * * But where, as here, there is a pre-enforcement challenge, judicial review is governed by Minn. Stat. §§ 14.44 and 14.45 (1982). Section 14.44 provides that “[t]he validity of any rule may be determined upon the petition for a declaratory judgment thereon * * ⅜.” Section 14.45 defines the scope of judicial review, stating that “[i]n proceedings under section 14.44 the court shall declare the rule invalid if it finds that it violates constitutional provisions or exceeds the statutory authority of the agency or was adopted without compliance with statutory rulemak-ing procedures.”

As appellants point out, neither section 14.44 nor 14.45 mentions restricting judicial review to the agency record in a pre-en-forcement challenge. Furthermore, the use of a declaratory judgment action, which traditionally is an independent court action, suggests judicial review is to be on a new record made' in district court with the traditional evidence-receiving and fact-finding functions of the district court employed. Appellants further argue that in a rulemaking hearing, as opposed to a contested lawsuit, the testimony is not under oath and there is no right to cross-examination, to discovery, or to a hearing examiner learned in the law; the agency record thus lacks many of the safeguards that might otherwise entitle it to judicial deference. In Can Manufacturers Institute, Inc. v. State, 289 N.W.2d 416 (Minn.1979), appellants note, the district court conducted a trial and considered additional evidence in a declaratory judgment action challenging a statute and its administrative regulatory scheme as unduly burdensome on 'interstate commerce. Appellants also cite Kassel v. Consolidated Freightways Corp, of Delaware, 450 U.S. 662, 101 S.Ct. 1309, 67 L.Ed.2d 580 (1981), and Raymond Motor Transportation, Inc. v. Rice, 434 U.S. 429, 98 S.Ct. 787, 54 L.Ed.2d 664 (1978), as instances of a trial court making its own *241 record on challenges to the constitutionality of statutes and administrative rules.

Respondents counter that Minnesota’s long and involved rulemaking procedures were designed specifically for the development of a complete hearing record, with little or no restriction on the evidence admissible from any interested party. Minn. Stat. §§ 14.13-38 (1982). Here, plaintiff-appellants participated vigorously in the rulemaking proceeding; and the administrative record supports respondents’ claim that appellants had, and took, full opportunity to dispute the state’s evidence and to advance their own position with witness testimony and a wide range of documentary evidence submitted both before and at the public hearing.

While the statutes are silent on the record to be used for a pre-enforcement rulemaking challenge in the courts, we agree with the trial court that public policy and legislative intent call for restricting judicial review to the record made in the agency proceeding. After the long, even laborious, gathering of evidence in the administrative proceeding there is no need to plow the same ground again in a trial in district court, with the attendant delay and expense. If the administrative hearing is only preliminary to a district court trial, a challenger to the rule might use the administrative hearing as a discovery device, saving its evidence for the district court trial, thus emasculating the rulemaking process at the administrative level. Moreover, the elaborate rulemaking procedure established by the legislature, together with the limitation of judicial review to just three stated legal issues, suggests that the legislature intended judicial review under sections 14.44 and 14.45 to be confined to the record.

In Minnesota-Dakotas Retail Hardware Ass’n v. State, 279 N.W.2d 360 (Minn.1979), we contrasted judicial review in a contested, enforcement proceeding with a pre-en-forcement rule challenge. In a pre-en-forcement challenge, we said that any “[bjroad and far-reaching scrutiny of a rule or regulation, based upon hypothetical facts, is a premature exercise by the judiciary”; and we then concluded, “[cjonse-quently, the standard of review is necessarily more restricted.” Id. at 363. For example, in a pre-enforcement constitutional challenge, the challenge is to the constitutionality of the rule on its face; in a contested enforcement action, the challenge is more to the constitutionality of the rule as applied.

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Bluebook (online)
347 N.W.2d 238, 1984 Minn. LEXIS 1285, Counsel Stack Legal Research, https://law.counselstack.com/opinion/manufactured-housing-institute-v-pettersen-minn-1984.