State agencies have a variety of methods for creating and issuing policy determinations. These methods include:
- Written guidance documents
- Contested case proceedings
In addressing concerns about soil vapor intrusion the Minnesota Pollution Control Agency (“MPCA”) has chosen to make policy through issuance of Best Management Practices for Vapor Investigation and Building Mitigation Decisions (“Vapor BMPs”), a form of guidance rather than through rulemaking. The MPCA’s Vapor BMPs, which were recently revised to permit partial building mitigation, are 13 pages long. The Vapor BMPs can be found at https://www.pca.state.mn.us/sites/default/files/c-rem3-06e.pdf and include the following detailed requirements:
- Prescribing how soil gas and sub-slab investigations are to be conducted
- Providing specific direction as to how samples are to be collected
- Requiring sampling in heating and cooling seasons
- Specifying the number of samples required based on building footprint size https://www.pca.state.mn.us/sites/default/files/c-rem3-06h.pdf
- Based on specific sample results, describing when building mitigation is required and not required in: a) residences or b) in commercial and business settings
- Mandating, based on certain elevated results, whether expedited action is required
Arguably the Vapor BMPs are statements of general applicability and future affect that apply to sites across the State. Because the MPCA has bypassed the rulemaking process, there is some question as to the enforceability of the Vapor BMPs. A general discussion of the differences between rulemaking and guidance follows. In addition, a recent Minnesota Court of Appeals panel has reviewed this issue and placed limits on the MPCA’s use of guidance.
One of the primary policymaking methods agencies have is rulemaking under the Minnesota Administrative Procedures Act (“APA”), Minn. Stat. §§ 14.001-.69. The APA requires agencies to satisfy certain procedural steps when promulgating rules. Rules are defined statutorily to include “every agency statement of general applicability and future effect.” Minn. Stat. § 14.02, subd. 4. Rules can be either legislative or interpretive. Legislative rules are statements of substantive law made under authority delegated by the legislature to the agency. Interpretive rules are intended to specify the law administered by the agency.
Agencies generally must follow APA procedures when promulgating either legislative or interpretive rules.
These procedures include:
- Filing a Notice of Intent of Rulemaking in the State Register.
- Preparing Proposed Rules and a Statement of Need and Reasonableness.
- Publishing a Public Notice in the State Register that provides the public with an opportunity to comment on the proposed rules.
- Providing the public with an opportunity to request a hearing to evaluate and challenge the proposed rules.
- With all proposed rules the MPCA must include a discussion of the economic effect of the proposed rule amendments on the regulated community, regulatory entities and other affected parties.
- The MPCA is also required to provide 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 including businesses and individuals.
- If an adequate number of requests are made, a hearing must be held before an Administrative Law Judge (“ALJ”) who will consider testimony and evidence from the Agency and interested parties.
- The ALJ prepares a Report, Findings of Fact and Conclusions of Law and Recommendations for the Agency decision maker.
- Final Agency Action is taken on the Proposed Rules including issuance of Findings of Fact, Conclusions of Law and a Final Decision by the Agency decision maker.
- An opportunity is provided to seek review of the Final Agency Action in the Minnesota Court of Appeals.
The rulemaking process often requires the agency to expend a substantial amount of time and money. However, rulemaking affords the public with procedural due process – that is – an opportunity to be heard. In a rulemaking proceeding, critics of a rule may voice their opposition, express concerns about the cost of complying with the rule and raise other concerns about the effect of the rule on them. Agencies must respond to these concerns, follow required procedures and – in the end – defend and justify the proposed rule. If necessary, the Agency can make modifications to address concerns. An ALJ presides over the rulemaking proceeding. The ALJ ensures that proper procedures are followed, the rights of all parties are protected and that the agency has met its burden and provided adequate reasons to justify the rule.
Any party who is aggrieved by final agency action approving a rule may seek review before the Minnesota Court of Appeals. The Court of Appeals will review the record. Then determine whether the agency’s action was justified and otherwise complied with legal requirements. If a rule is upheld, the Agency may proceed to implement the rule and require parties to comply with its provisions. When noncompliance is noted, the Agency may take action to require a party to comply with the rule and when it deems appropriate exercise its discretion to require that a civil penalty to be paid for past noncompliance.
Because of the costs and potentially protracted process associated with rulemaking, agencies often try to make policy through the issuance of written guidance statements. Guidance may come in the form of manuals, bulletins, guidelines, best management practices, directives, instructions, or press releases.
An agency may choose to adopt guidance after internal discussions. In some cases the agency may seek input from outside stakeholders. Parties who are affected by the guidance may be left out of the process. While these efforts to involve the public may result in changes to the guidance, the level of public involvement typically pales when compared to a rulemaking proceeding.
Courts will examine agency guidance to determine whether it constitutes a rule under the APA. An agency’s failure to follow rulemaking procedures will render the guidance invalid. In recent years there has been a marked trend with the MPCA toward issuing guidance. The MPCA initiates rulemaking proceedings in certain cases, but far less frequently than in the past.
In the case of the latest revision Vapor BMPs, the MPCA announced the change had been made to existing Vapor BMPs through an October 6, 2017 e-mail to a MPCA Daily Digest Bulletin e-mail group. If a party has subscribed to that list, it would have likely received notice of the Vapor BMPs update. The updated Vapor BMPs also now appear on the MPCA’s website.
Contested Case Proceedings
Agency policymaking may also occur in a contested case proceeding where the rights of a regulated party are adjudicated before an ALJ. Agencies often adopt policy by taking a particular stance during the adjudication of a dispute with a party. When policymaking calls for the application of specific facts to specific parties, policy questions can be effectively resolved through contested case proceedings. This forum has limitations however. The decision may only affect the party or parties involved with the contested case.
U.S. Steel Corp. v. MPCA: The Agency’s Attempt To Apply Guidance in An Air Quality Permitting Proceeding Was Invalidated
A recent Minnesota Court of Appeals opinion illustrates the consequences of an agency inappropriately using written guidance instead of following the rulemaking process. U.S. Steel Corp. v. MPCA, No. A14-1789 (Minn. App. July 27, 2015) (unpublished opinion). The decision can be found at: https://law.justia.com/cases/minnesota/court-of-appeals/2015/a14-1789.html
The MPCA is a delegated state responsible for assuring air quality in accordance with the federal Clean Air Act. The MPCA accomplishes this in part through the enforcement of air-quality rules governing the permitting of any facility that emits air pollutants. Under federal law, the MPCA must determine what type of ambient air monitoring a permit applicant must perform to show the effect that a modification will have on air emissions. Applicants must perform “modeling” or “remodeling” to show the modification results in equivalent or better dispersion of emissions.
In 2014, the U.S. Steel Corporation obtained an amended air-emissions permit from the MPCA for the company’s Keetac iron-ore mine and taconite-processing facility in Keewatin, Minnesota. Shortly before the issuance of the amended permit, the MPCA developed new standards for remodeling requirements. The standards included a tiered system that placed a facility in one of four categories based on how close the facility was to its permissible-emissions limitation at the time of its previous remodeling. The MPCA informed the regulated community about the new standards through written guidance.
U.S. Steel’s 2014 amended permit included a remodeling requirement based on the new standards. The company sought review of the permit at the Minnesota Court of Appeals. They argued that the remodeling requirements were the result of unlawful rulemaking. Also, the MPCA argued that because the permitting staff decides the appropriate remodeling language using specific facts on a case-by-case basis, it established a policy, not a rule.
MPCA Argument That Rulemaking Was Not Required Rejected
The Minnesota Court of Appeals rejected the MPCA’s argument. Although the MPCA tailored permit requirements to each individual applicant’s circumstances, the court determined that the agency’s standards were nevertheless “statement[s] of general applicability and future effect.” The court concluded that the standards were therefore rules. Because the standards were adopted without following rulemaking procedures, the court held they were invalid. The court therefore reversed and remanded the matter back to the MPCA to reissue the permit without the remodeling language.
State agencies are at risk when they rely heavily on guidance to direct the actions of regulated parties. Attempts to apply the guidance in a specific case, similar to what occurred with US Steel, may be determined by a reviewing court to be improper. In such a case, the agency’s guidance may be determined to constitute an unlawful or unpromulgated rule. With this judicial finding, the guidance may be legally unenforceable. A finding of the invalidity may affect similarly situated parties. As a result, there may be questions as to the legality of the agency’s actions on a broader programmatic basis. When a court invalidates agency guidance, the substantive policy issues remain unresolved. This uncertainty and ambiguity disrupts the marketplace and is not in the public interest.
Although a court has not yet been asked to review the MPCA’s Vapor BMPs, issuance of the Vapor BMPs as guidance rather than rules may prove to be problematic for the MPCA and for parties who have relied on the Vapor BMPs/guidance.
At Hessian & McKasy we represent clients in before state and federal agencies particularly agencies that administer environmental rules, regulations and guidance. During the course of our representation we evaluate the legality of agency actions and the impact of rules. As well as regulations and guidance on our clients and their operations and locations. Also, please see the disclaimer at the bottom of this page that relates to limitations on this blog and to legal advice. Furthermore, thanks to associate Joseph Reutiman for assistance with this post.
Finally, for more information, please contact:
Hessian & McKasy, P.A.
 The MPCA has also issued guidance for Diagnostic Testing, Installation and Confirmation Sampling for Active Vapor Mitigation Systems In Single-Family Residential Buildings found at: https://www.pca.state.mn.us/sites/default/files/c-rem3-06.pdf