Water in Motion, Inc. v. Minnesota Department of Labor and Industry, Minnesota Plumbing Board

• Court: Court of Appeals of Minnesota
• Decided: December 5, 2016
• Docket: A16-335
• Status: Unpublished

Opinion

This opinion will be unpublished and may not be cited except as provided by Minn. Stat. § 480A.08, subd. 3 (2014).

STATE OF MINNESOTA IN COURT OF APPEALS A16-0335

Water in Motion, Inc., et al., Petitioners,

vs.

Minnesota Department of Labor and Industry, Respondent,

Minnesota Plumbing Board, Respondent.

Filed December 5, 2016 Rules declared valid Larkin, Judge

Minnesota Department of Labor and Industry OAH File No. 60-1904-32225

David M. Aafedt, Michael E. Obermueller, Christina Rieck Loukas, Winthrop & Weinstine, P.A., Minneapolis, Minnesota; and

Douglas P. Seaton, Seaton, Peters & Revnew, P.A., Minneapolis, Minnesota (for petitioners)

Lori Swanson, Attorney General, Christopher M. Kaisershot, Sarah L. Krans, Assistant Attorneys General, St. Paul, Minnesota (for respondent)

Kathleen M. Brennan, McGrann, Shea, Carnival, Straughn & Lamb, Chartered, Minneapolis, Minnesota (for Amici Curiae Minnesota Building Owners & Managers Coalition, et al.) Considered and decided by Smith, Tracy M., Presiding Judge; Larkin, Judge; and

Rodenberg, Judge.

UNPUBLISHED OPINION

LARKIN, Judge

In this preenforcement administrative rules challenge pursuant to Minn. Stat.

§ 14.44 (2014), petitioners challenge respondent Minnesota Plumbing Board’s adoption of

a new uniform plumbing code. We declare the rules valid.

FACTS

The Minnesota Plumbing Board is the state entity with authority to adopt a state

plumbing code and amendments to that code. See Minn. Stat. § 326B.435, subd. 2(3)

(2014). The board is composed of 14 members: 12 appointed by the governor with the

advice and consent of the senate; the commissioner of labor and industry or a designee;

and the commissioner of health or a designee. Id., subd. 1(a) (2014). By statute, 11 of the

12 appointed members are required to hold various specified licenses or professions

relevant to the plumbing code. Id. The remaining appointed member must be a public

member. Id. Since its inception in 2007, the board has been chaired by John Parizek.

In 2010, the board received a request to replace Minnesota’s existing, “homegrown”

plumbing code with the International Plumbing Code (IPC), a product of the International

Code Council (ICC), and another request to replace the existing plumbing code with the

Uniform Plumbing Code (UPC), a product of the International Association of Plumbing

and Mechanical Officials (IAPMO). The IPC is part of a family of “I-codes”; Minnesota

has adopted a number of the I-codes, including the International Residential Code. The

2 IPC is considered in the industry to be more “performance based,” meaning that

requirements in the code are stated in terms of what must be accomplished, rather than the

precise manner in which it must be done. The UPC, in contrast, is considered to be a more

“prescriptive” code.

The board formed a National Code Review Committee (the committee) to study the

possibility of adopting a model plumbing code and make a recommendation to the board.

The committee met twice in early 2011, and discussed model-code adoption in terms of

code administration, health and safety, costs and training, and accessibility. The

committee’s meeting minutes reflect its consideration that the IPC is the more

performance-based code, but the committee deemed the two codes fairly equal in terms of

health and safety. The committee discussed costs of adopting a model code generally,

which it concluded would be hard to quantify. The committee noted that Minnesota’s

licensing reciprocity agreements with North Dakota and South Dakota could be

jeopardized if Minnesota adopted the IPC because those states have adopted the UPC. At

the end of its March 31, 2011 meeting, the committee voted to recommend to the full

plumbing board that one of the model codes be adopted.

At the board’s April 19, 2011 meeting, the committee made its recommendation and

the board heard presentations from representatives of the ICC and IAPMO about their

respective model codes. The board also allowed public comments from individuals

advocating for adoption of the IPC or UPC. Following the presentations and public-

comment period, the board discussed commissioning side-by-side comparisons of the

model codes and the existing plumbing code. Motions were made to require such analysis

3 of both of the model codes, but none of these motions prevailed. Instead, the board

unanimously passed a motion to move forward with adopting either the IPC or UPC with

“appropriate amendments at a future rulemaking” and a motion to “adopt[] the UPC and

direct the [committee] to report back to the Board any necessary amendments.” Although

it was not mentioned in the latter motion, according to board chair Parizek, “the Board was

well aware that adoption of a national code can only be accomplished through proper

rulemaking, and the intent was to move forward down this path.”

On November 13, 2012, the board initiated the statutory rulemaking process by

publishing a request for comments on possible amendments to the state plumbing code in

the State Register, specifying the “possible incorporation of the 2012 [UPC] by reference,

with amendments.” The board completed a Statement of Need and Reasonableness

(SONAR), stating the board’s intent to adopt the UPC with amendments and noted that the

UPC was chosen over the IPC because “the UPC most closely resembles the existing

Minnesota Plumbing Code, and the UPC is adopted in three of the four states adjacent to

Minnesota, two of which have reciprocity agreements with Minnesota, providing

consistency” and that “adopting the UPC presents an easier transition from the existing

code than the IPC would.” The board published a dual notice to adopt rules without a

hearing or to hold a hearing if 25 or more requests for hearing were received. More than

25 requests for a hearing were received, and an administrative-law judge (ALJ) conducted

a hearing. The ALJ heard testimony from Parizek and public comments from 15 interested

individuals.

4 Parizek testified that, by virtue of their background and experience, the members of

the plumbing board (with the exception of the public member) were familiar with the

existing Minnesota Plumbing Code as well as the UPC and IPC. Parizek testified that

adoption of a model code was necessary because the board had been overwhelmed by

requests for product approval, proposals for new and amended code language, and inquiries

regarding licensing requirements and code interpretation. Model codes, which are

regularly updated by an outside organization, will allow the board to operate more

efficiently. Parizek testified regarding reasons for adopting the UPC rather than the IPC,

including that:

 The UPC is certified by the American National Standards Institute (ANSI), an impartial organization acting as a third party to oversee the code development process through consensus standards.

 The UPC is effective and relevant, and will be adequate to protect the health and safety of Minnesota citizens through minimum prescribed standards and is still specific enough to ensure uniform installations and enforcement throughout the state.

 The UPC has been adopted in North and South Dakota, which have licensing reciprocity agreements with Minnesota.

 Minnesota’s version of the UPC will be freely accessible on the Internet and through a publication to be offered for purchase by IAPMO.

Following the hearing, the ALJ held the record open for the submission of written

comments and rebuttal. The board submitted a letter response to the written comments

received and the hearing testimony. In that letter, the board reasserted its three reasons for

selecting the UPC over the IPC: (1) the UPC most closely resembled the existing plumbing

code; (2) the UPC has been adopted in three adjacent states, two of which Minnesota has

5 licensing reciprocity agreements with; and (3) the UPC would provide a smoother

transition. The board submitted a letter from the North Dakota State Plumbing Board

noting that there were very few differences between the UPC and the existing Minnesota

Plumbing Code and that the UPC “is a very prescriptive code that is also very enforceable

and user friendly.”

The board also responded to a number of objections that had been raised—both in

proceedings before the board and at the administrative hearing—to adoption of the UPC.

The overriding concern of commentators was that complying with the UPC, as the more

prescriptive code, would be more expensive than complying with the IPC. The board

expressly disagreed with this assertion, noting that even commentators opposing the

adoption of the UPC conceded that the two codes are very similar in their technical

requirements. The board refuted specific examples of more costly compliance offered by

commentators, noting that most examples were based on a comparison of the IPC to the

UPC without the amendments proposed by the board, and that the cost information

presented was not substantiated, represented opinion, and was therefore unreliable. As to

the performance-versus-prescriptive debate, the board expressed its judgment that the more

prescriptive nature of the UPC promotes public safety, particularly in the context of

inspections performed by persons who are not plumbers. The board concluded that the

“UPC, as amended, is performance-based to the extent practicable.”

Commentators also asserted that adopting the UPC would conflict with other

portions of the Minnesota State Building Code, which is mostly comprised of I-codes. In

this respect, the board noted that the current Minnesota Plumbing Code was not an I-code

6 but had worked hand-in-hand with the I-codes, that proposed amendments to the UPC

would “tailor it for consistency with Minnesota statutes and rules,” and that other states

have “successfully adopted many ICC building codes but adopt the UPC in lieu of the

IPC.”

The ALJ issued a report concluding that the board had complied with rulemaking

requirements and demonstrated the need for and reasonableness of the proposed rules. The

ALJ recommended adoption of the rules. The board voted to adopt the rules, and they were

published in the State Register on July 27, 2015. The new rules took effect January 23,

2016. One month later, petitioners filed this declaratory-judgment action.

DECISION

This court exercises original jurisdiction, under the Minnesota Administrative

Procedure Act (MAPA), over preenforcement challenges to the validity of administrative

rules. Minn. Stat. § 14.44; Coal. of Greater Minn. Cities v. Minn. Pollution Control

Agency, 765 N.W.2d 159, 163 (Minn. App. 2009), review denied (Minn. Aug. 11, 2009).

A preenforcement challenge “questions the process by which the rule was made and the

rule’s general validity before it is enforced against any particular party.” Coal. of Greater

Minn. Cities, 765 N.W.2d at 164 (quoting Mfg. Hous. Inst. v. Pettersen, 347 N.W.2d 238,

240 (Minn. 1984)). “The standard of review is more restricted than in an appeal from a

contested enforcement proceeding in which the validity of the rule as applied to a particular

party is adjudicated.” Id. (citing Pettersen, 347 N.W.2d at 240-41).

7 I. The scope of this action is limited to challenges to the rules formally promulgated.

Petitioners argue at length that the board adopted a rule at its April 19, 2011 meeting

that must be invalidated for failure to comply with statutory rulemaking requirements. In

an April 20, 2016 order denying petitioners’ motion to modify the record, this court stated

that such assertions are beyond our scope of review in this preenforcement administrative

rules challenge. We apply that determination here.

“Only formally promulgated rules may be challenged in a pre-enforcement action

under Minn. Stat. § 14.44.” Minn. Ass’n of Homes for the Aging v. Dep’t of Human Servs.,

385 N.W.2d 65, 69 (Minn. App. 1986), review denied (Minn. June 13, 1986). The proper

procedure to challenge the alleged enforcement of an unpromulgated rule is to file a petition

with the Office of Administrative Hearings (OAH) for decision by an ALJ that can then be

appealed to this court. See Minn. Stat. § 14.381, .44 (2014).

It is undisputed that the board did not formally promulgate the rules adopting the

UPC until July 2015. Indeed, Parizek testified to the board’s awareness that a new

plumbing code could not be adopted without rulemaking proceedings. Moreover,

petitioners’ predominant argument against the April 19, 2011 “rule” is that it was not

formally promulgated. Under these circumstances, there is no basis for review by this court

under Minn. Stat. § 14.44. See L.K. v. Gregg, 380 N.W.2d 145, 149 (Minn. App. 1986)

(noting that this court “cannot review what does not exist”), review denied (Minn. Mar. 14,

1986).

8 Petitioners argue that the plain language of Minn. Stat. § 14.44 allows a challenge

to a “rule” without regard to whether it has been formally promulgated. But we decline to

depart from our plainly worded previous holdings limiting our review to formally

promulgated rules.1 Petitioners also urge that this court should address its challenges to

the April 19, 2011 “rule” because there is a sufficient record to do so. See Minn. Ass’n of

Homes for the Aging, 385 N.W.2d at 69 (noting that a rule that has not been formally

promulgated lacks a record and this court cannot review it). But this court has not held that

it can review a “rule” that has not been formally promulgated under Minn. Stat. § 14.44 if

there is a record, and our previous holdings regarding review under that statute are not

contingent on the existence or absence of a record.

Even if we were to follow petitioners’ preferred interpretation of Minn. Stat.

§ 14.44, we would not conclude that the board adopted a rule at its April 19, 2011 meeting.

A “rule” is “every agency statement of general applicability and future effect, including

amendments, suspensions, and repeals of rules, adopted to implement or make specific the

law enforced or administered by that agency or to govern its organization or procedure.”

Minn. Stat. § 14.02, subd. 4 (2014). Petitioners urge that the board adopted a rule when it

voted to “adopt” the UPC at its April 19, 2011 meeting. Notwithstanding the board’s poor

choice of words, the board knew that it lacked authority to adopt the UPC at that meeting.

1 Notably, following this court’s decisions limiting direct § 14.44 actions to rules formally promulgated, the legislature amended MAPA to add § 14.381, which provides a remedy for parties asserting that an agency is enforcing rules without formal promulgation. See 2001 Minn. Laws ch. 179 § 8, at 673-74. Thus, even were we to reach petitioners’ interpretation argument, we would conclude that the legislature endorsed our limitation of direct review under Minn. Stat. § 14.44 to promulgated rules by passing § 14.381.

9 See Minn. Stat. § 326B.13, subd. 1 (2014) (providing that adoption of state building code

is subject to MAPA). And there is no suggestion, much less evidence, that the board

intended to apply or did apply the UPC before its formal promulgation and January 2016

effective date. Accordingly, the board’s April 19, 2011 vote to “adopt” the UPC was not

an “agency statement of general applicability and future effect.” See Minn. Stat. § 14.02,

subd. 4.2

II. The rules formally promulgated on July 27, 2015, are valid.

“In 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 rulemaking procedures.” Minn. Stat.

§ 14.45 (2014). Petitioners assert that the rules were adopted without compliance with

statutory rulemaking procedures because the board failed to include adequate information

in the SONAR and that the rules otherwise lack a rational basis.

A. The SONAR is not prejudicially defective.

“Agency rulemaking is strictly controlled by statute and the statutory procedures

must be followed in order to create a valid rule.” Minn. Envtl. Sci. & Econ. Review Bd. v.

Minn. Pollution Control Agency, 870 N.W.2d 97, 101 (Minn. App. 2015). One of the

statutory requirements is that an agency prepares a statement of need and reasonableness

2 To the extent petitioners argue that the board’s vote to pursue adoption of the UPC was a statement of future effect, we reject that argument, which would lead to the absurd and circular result that any decision to pursue rulemaking would itself be subject to rulemaking. As the ALJ noted in his report, the board’s decision to pursue adoption of the UPC “represented the Board’s choice of regulatory approach,” and did not create a rule.

10 (SONAR). See Minn. Stat. § 14.131 (2014). To the extent that “the agency, through

reasonable effort” can ascertain the information, the SONAR must include the following:

(1) a description of the classes of persons who probably will be affected by the proposed rule, including classes that will bear the costs of the proposed rule and classes that will benefit from the proposed rule; (2) the probable costs to the agency and to any other agency of the implementation and enforcement of the proposed rule and any anticipated effect on state revenues; (3) a determination of whether there are less costly methods or less intrusive methods for achieving the purpose of the proposed rule; (4) a description of any alternative methods for achieving the purpose of the proposed rule that were seriously considered by the agency and the reasons why they were rejected in favor of the proposed rule; (5) the probable costs of complying with the proposed rule, including the portion of the total costs that will be borne by identifiable categories of affected parties, such as separate classes of governmental units, businesses, or individuals; (6) the probable costs or consequences of not adopting the proposed rule, including those costs or consequences borne by identifiable categories of affected parties, such as separate classes of government units, businesses, or individuals; (7) an assessment of any differences between the proposed rule and existing federal regulations and a specific analysis of the need for and reasonableness of each difference; and (8) an assessment of the cumulative effect of the rule with other federal and state regulations related to the specific purpose of the rule.

Id.

An agency is separately required to determine, before the close of the hearing

record, “if the cost of complying with a proposed rule in the first year after the rule takes

effect will exceed $25,000” for a business with fewer than 50 full-time employees or a

statutory or home rule charter city with fewer than ten full-time employees. Minn. Stat.

§ 14.127, subds. 1-2 (2014).

11 The board indisputably prepared a SONAR addressing each of the considerations in

Minn. Stat. § 14.131 and made the determination that the cost of compliance for small

businesses and municipalities would not exceed $25,000. Petitioners assert that the board

failed to provide adequate information and analysis of SONAR considerations (3)-(5) and

the small business and municipality cost determination. Thus, petitioners assert, the rules

must be invalidated.

A SONAR “must be sufficiently specific so that interested persons will be able to

fully prepare any testimony or evidence in favor of or in opposition to the proposed rules.”

Minn. R. 1400.2070, subp. 1 (2015). Deficiencies in the information provided in a SONAR

do not require rule invalidation absent prejudice. See Minn. League of Credit Unions v.

Minn. Dep’t of Commerce, 486 N.W.2d 399, 405-06 (Minn. 1992).

We agree that the board’s analysis in the SONAR is conclusory and that the better

practice would be to include more thorough analysis. However, we cannot conclude that

petitioners were prejudiced by the conclusory nature of the SONAR. There is no argument

that petitioners were surprised or prejudiced by the board’s testimony at the hearing or that

they were unable to fully prepare their own testimony and arguments for the hearing. We

therefore reject petitioners’ argument that the rules should be declared invalid based on

deficiencies in the SONAR.

Petitioners assert that strict compliance with rulemaking procedures is required or

rules must be invalidated, citing Minn. Stat. § 14.45, which provides that this court “shall”

declare a rule invalid if it was adopted without compliance with statutory rulemaking

procedures. See also White Bear Lake Care Ctr., Inc. v. Minn. Dep’t of Pub. Welfare, 319

12 N.W.2d 7, 9 (Minn. 1982) (holding that “[r]ules must be adopted in accordance with

specific notice and comment procedures established by statute,” and that “the failure to

comply with necessary procedures results in invalidity of the rule”). But the cases in which

our supreme court has invalidated rules for failure to comply with rulemaking procedures

involved circumstances in which agencies wholly failed to promulgate rules. See White

Bear Lake, 319 N.W.2d at 7-9 (discussing department of public welfare “rule which ha[d]

not been promulgated in accordance with the Administrative Procedure Act”); Johnson

Bros. Wholesale Liquor Co. v. Novak, 295 N.W.2d 238, 242 (Minn. 1980) (discussing

liquor control commissioner’s failure to formally adopt rule and complete lack of

compliance with statutory rulemaking procedures). And the supreme court made clear in

Minn. League of Credit Unions that deficiencies in the SONAR do not require invalidation

absent prejudice. 486 N.W.2d at 405-06.

Petitioners also urge that the rules must be invalidated under this court’s decision in

Builders Ass’n of the Twin Cities v. Minn. Dep’t of Labor & Indus., 872 N.W.2d 263 (Minn.

App. 2015), review denied (Minn. Dec. 29, 2015). In that case, we declared invalid, on

substantive-due-process grounds, a rule adopted by the Minnesota Department of Labor

and Industry that arbitrarily required sprinklers in new one- and two-family dwellings over

4,500 square feet and did not require sprinklers in new one-family dwellings under 4,500

square feet. Builders Ass’n, 872 N.W.2d at 266, 271. After invalidating the rule on due-

process grounds, we separately determined that the department violated rulemaking

procedures by failing to satisfactorily assess whether the cost of the rule would exceed

$25,000 for any small business or city in the first year of enforcement. Id. at 274. Builders

13 Ass’n is distinguishable, however, because it does not appear that the parties in that case

raised the issue of prejudice, which has been squarely raised by respondents here.

B. The rules do not violate substantive due process.

Under a substantive-due-process theory, administrative rules are invalid only if they

bear no rational relationship to the accomplishment of a legitimate public purpose.

Pettersen, 347 N.W.2d at 243. Minnesota courts apply an “arbitrary and capricious” test,

making a “searching and careful inquiry of the record to ensure that the agency action has

a rational basis.” Id. at 244 (quotations omitted). “In attacking a statute or regulation on

due process grounds, one bears a heavy burden; the statute or rule need only bear some

rational relation to the accomplishment of a legitimate public purpose to be sustainable.”

Id. at 243. “When applying the arbitrary and capricious test, deference is to be shown

agency expertise, but the agency must explain on what evidence it is relying and how that

evidence connects rationally to the rule involved.” Minn. Chamber of Commerce v. Minn.

Pollution Control Agency, 469 N.W.2d 100, 103 (Minn. App. 1991) (quotation omitted),

review denied (Minn. July 24, 1991).

Respondents assert that petitioners did not make a substantive-due-process

challenge to the formally promulgated rules in their principal brief and thus have waived

the right to make that challenge. We agree that petitioners failed to expressly articulate

such a challenge. Petitioners’ principal brief does, however, dispute the rational basis for

the rules and argue that their adoption was arbitrary and capricious. We address these

arguments within the applicable substantive-due-process framework.

14 The stated purpose of the statutes governing plumbing is “to promote the public

health and safety through properly designed, acceptably installed, and adequately

maintained plumbing systems.” Minn. Stat. § 326B.41 (2014). Toward that end, the

statutes authorize the board to “adopt the Plumbing Code that must be followed in this state

and any Plumbing Code amendments thereto.” Minn. Stat. § 326B.435, subd. 2(3). The

board determined, in its collective professional judgment, that the UPC, as amended, was

best suited to meet the purposes of the plumbing statutes. We will not lightly interfere with

that judgment. See Minn. Chamber of Commerce, 469 N.W.2d at 103 (stating that this

court defers to agency expertise).

The board’s justification for selecting the UPC over the IPC is threefold:

(1) resemblance to the then-existing Minnesota Plumbing Code; (2) the UPC’s adoption in

adjacent states, two of which have licensing reciprocity agreements with Minnesota; and

(3) the smoother transition that could be made by adopting the UPC. These are rational

bases for preferring the UPC and are supported by evidence in the record, particularly

Parizek’s testimony and the letter from the North Dakota State Plumbing Board.

Petitioners suggest that the rules lack a rational basis because the board did not

sufficiently identify and articulate the costs associated with adopting the UPC. The board

in the SONAR recognized two types of potential costs associated with adoption of the

UPC-based rules. First, the board noted that the probable costs of implementation and

enforcement would be minimal because the new rules would replace an existing plumbing

code, for which there were already ongoing costs of training and compliance. Second, the

board acknowledged that there may be increased costs associated with complying with

15 particular provisions of the new UPC-based rules versus the existing plumbing code, and

lower costs associated with complying with other provisions. The board in its judgment,

however, anticipated the overall plumbing-related costs to be “neutral.”

The board’s analysis of the cost of the new rules lacks the level of detail that we

might prefer. We are cognizant, however, of the difficulty in quantifying the costs of

adopting an entire model code, as opposed to particular provisions of a code. Cf. Builders

Ass’n, 872 N.W.2d at 268-71 (addressing adoption of single sprinkler rule). We can

envision endless permutations in cost comparison, depending on the particular work that a

particular business or homeowner desires on a particular property. We are not persuaded

that the board was required to undertake such a complex and hypothetical analysis. Minn.

Stat. § 14.131 (requiring certain information to be included in SONAR “to the extent the

agency, through reasonable effort, can ascertain [the] information” (emphasis added)).

Instead we conclude that, faced with potential costs that were difficult to quantify, the

board reasonably relied on other factors to select between the UPC and IPC.3

Lastly, petitioners assert that the rules must be invalidated because the board failed

to provide analysis in support of its determination under Minn. Stat. § 14.127 (2014). Once

again, although we would prefer more detailed analysis from the board, we cannot conclude

3 As we note above, the board did specifically respond to alleged cost discrepancies raised by commentators during the rulemaking proceedings. Before this court, petitioners rely heavily on the board’s failure to identify costs associated with a particular provision of the new rules requiring annual testing for certain backflow devices. At oral argument, however, it was disclosed that this cost would be incurred regardless of which model code was adopted. And the parties agree that the board acted reasonably in determining to adopt a model code.

16 that invalidation of the rules is required. Minn. Stat. § 14.127, subd. 1, requires an agency

to make a determination whether the cost of complying with the rule in its first year of

effectiveness will exceed $25,000 for certain small businesses and municipalities. The

agency must make this determination before the close of the record before the ALJ and the

ALJ must review and approve or disapprove the determination. See Minn. Stat. § 14.127,

subd. 2.

The statute does not provide for this court’s substantive evaluation of determinations

under Minn. Stat. § 14.127, and, as we note above, our review is limited to determining

whether an agency has violated constitutional provisions, exceeded its authority, or failed

to comply with rulemaking requirements. Because the board made the required

determination under Minn. Stat. § 14.127 and the ALJ reviewed and approved the

determination, we cannot conclude that there was a failure to comply with statutory

rulemaking requirements. Nor can we conclude that the board violated constitutional

provisions or exceeded its statutory authority in making the § 14.127 determination. The

board is authorized to adopt a state plumbing code through rulemaking and has articulated

a rational basis for adopting the UPC. Accordingly, there is no basis for us to invalidate

the rules based on the failure to provide a more thorough analysis under Minn. Stat. §

14.127.4

4 Notably, even an agency determination that a rule will cost a covered small business or municipality more than $25,000 in the first year does not preclude promulgation of the rules. Rather, in the event of an affirmative determination under § 14.127, a covered small business or municipality may file a statement of temporary exemption. If such a statement is filed, “the rules do not apply to that business or that city until the rules are approved by

17 Petitioners rely on Builders Ass’n to argue that invalidation is required, but our

holding in that case was based on our determination that the challenged rule was arbitrary

and capricious and therefore violated due process. See Builders Ass’n, 872 N.W.2d at 271

(holding that rule “violates substantive due process because it is arbitrary and not the result

of a reasoned determination”). Although we separately concluded that the agency violated

§ 14.127, we did not invalidate the rules solely on that ground and see no reason to do so

here. See id. at 273-74.

Rules declared valid.

a law enacted after the agency determination or administrative law judge disapproval.” Id., subd. 3 (emphasis added).