Builders Association of the Twin Cities v. Minnesota Department of Labor and Industry
2015 Minn. App. LEXIS 79
| Minn. Ct. App. | 2015Background
- The Minnesota Department of Labor and Industry amended the Minnesota Residential Code (MRC) and Minnesota Residential Energy Code (MREC) to adopt the 2012 IRC and 2012 IECC (with amendments); the Energy Code (MREC) and a Sprinkler Rule (MRC) were adopted after rulemaking and became effective in 2015.
- The Sprinkler Rule required sprinklers in townhouses and in one- and two-family dwellings, but exempted one-family dwellings under 4,500 sq. ft.; petitioner (Builders Ass’n of the Twin Cities) challenged that exemption and the Energy Code in a pre-enforcement declaratory-judgment action under Minn. Stat. §§ 14.44–.45.
- Administrative record: advisory committee recommended removing sprinkler mandate; SONARs were prepared; public hearing held on the MRC amendments (including sprinkler issue); Energy Code hearing canceled for lack of requests; ALJ approved both rules; Department published adoptions and rules became effective.
- Petitioner argued the Energy Code exceeded statutory authority and lacked adequate SONAR support; it argued the Sprinkler Rule was arbitrary, exceeded statutory authority, and violated rulemaking procedures (including the §14.127 small-business cost assessment).
- The Court upheld the Energy Code as within the Department’s statutory authority and properly supported in the administrative record; the Court invalidated the Sprinkler Rule’s 4,500 sq. ft. exception as arbitrary and not supported by a reasoned determination in the record and found a procedural violation for failing to adequately assess first-year costs to small businesses/cities under Minn. Stat. § 14.127.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Validity of Energy Code (statutory authority/SONAR adequacy) | Energy Code imposes unnecessary/new requirements and lacks supporting evidence in the record | Department has authority to adopt model codes (energy standards) and complied with SONAR; 2015 IECC not in record or available when rulemaking began | Energy Code valid — within statutory authority; SONAR/relevant record adequate |
| Validity of Sprinkler Rule’s 4,500 sq. ft. exception (substantive due process/arbitrary) | Exception is arbitrary; no reasoned determination in record explaining 4,500 sq. ft. cutoff | Department balanced life-safety benefits vs. costs and relied on advisory input and cost data | Exception arbitrary and violates substantive due process — invalidated |
| Sprinkler Rule (exceeding statutory authority — conformity to model codes/costs/standards) | Rule departs from model codes in use and exceeds authority; not generally accepted; may increase costs | Statute requires conformity "insofar as practicable"; department may modify model code; statewide code may lower costs overall | Not an independent basis for invalidation here; main statutory-authority concern tied to arbitrariness of 4,500 cutoff |
| Sprinkler Rule (rulemaking procedure — SONAR and §14.127 small-entity cost assessment) | SONAR failed to consider alternatives/cost evidence; no adequate §14.127 analysis for small businesses/cities | SONAR addressed required factors for the overall proposed rule; rebuttal not required; costs would not exceed $25,000 in first year because no immediate construction | Violated procedural requirement under §14.127: Department failed to perform adequate first-year cost assessment for small businesses/cities; SONAR otherwise sufficient |
Key Cases Cited
- Manufactured Housing Inst. v. Pettersen, 347 N.W.2d 238 (Minn. 1984) (agency rule must rest on a reasoned determination; arbitrary standards invalid)
- Jacka v. Coca-Cola Bottling Co., 580 N.W.2d 27 (Minn. 1998) (arbitrary-and-capricious test for substantive due process review of administrative rules)
- Minn. Chamber of Commerce v. Minn. Pollution Control Agency, 469 N.W.2d 100 (Minn. App. 1991) (agency must explain evidence relied on and its rational relation to rule)
- City of Morris v. Sax Investments, Inc., 749 N.W.2d 1 (Minn. 2008) (adoption of a uniform statewide code intended to lower costs and increase predictability)
- White Bear Lake Care Ctr., Inc. v. Minn. Dep’t of Pub. Welfare, 319 N.W.2d 7 (Minn. 1982) (failure to follow required rulemaking procedures renders rule invalid)