The DNR Adjusts

In the last several months, the Supreme Court has eviscerated the DNR’s ability to directly manage shoreline property development.  The DNR had exercised review authority over shoreline variances and insisted that its agency rules overrode local ordinances, even when local ordinances had been DNR-approved.  Those powers have now vanished, and in March the DNR suggested that it was going to simply challenge “bad” local decisions in district court.

Today’s Star Tribune reports that the agency is following through on that plan.  As it turns out, for all the Court has done to limit the DNR this year, the Krummenacher variance decision will likely give the agency its mojo back.  The DNR has sued a township in western Minnesota to nullify a variance granted to allow a lake home within 15 feet of the shoreline.  The news story, and the Star Tribune’s prior reporting, makes clear just how much of a seismic shift the Krummenacher holding creates; local officials in the area estimate that 70% – 90% of variance requests are approved by local officials.  In the past, just about anybody who presented something out of line with zoning was simply advised to apply for a variance.  Again, if the use made sense (or at least didn’t offend anyone), the variance was easy to get as long as the “problem” arguably creating the need for a variance wasn’t the owner’s fault.  At this point, cities and towns should just stop suggesting that owners should seek variances, as the standard is now extremely difficult to satisfy.  That, and if it involves a shoreline, bluffline, or scenic area, the DNR will sue you for approving it.

Selected Legislative Updates

by Andrew Haugen

103F.351: St. Croix Wild and Scenic River Act

 Minn. Stat. 103F.351 is also referred to as the Lower St. Croix and Scenic River Act. This Act protects the Lower St. Croix River Area by establishing certain planning criteria and processes that must be followed within the designated area. The act allows for a Commissioner of Natural Resources to aid in developing a comprehensive master plan for the area, as well as adopt rules that establish certain guidelines for zoning activities within the region.

 The amendment to the Act in the 2010 regular session did not delete or change any current language in the Act. The changes served to add a section “d” in subdivision 4, the Rules portion of the Act. The newly added section “d” allows for commercial, nature-oriented and educational uses that occur in rural districts to be classified as conditional uses on property that meets certain criteria. The language is permissive in that the uses “may be allowed,” and makes no requirement that such lands shall be conditional uses.

 Eligibility requirements include that the use must be located in a rural district as defined by the rest of the Act, that the property was in similar use on May 1, 1974 and on January 1, 2010, and if the use “complies with all dimensional standards in the rules, including variance requirements for any changes to the properties” made after January 1, 2010 and also if the use is “similar in scope” to the use that existed on the property on May 1, 1974.

 118A.05: Deposit and Investment of Local Public Funds: Contracts and Agreements

The amendment to subdivision three of this section allows for securities lending agreements to be entered into with qualifying institutions as long as said institution has a bank office locate in Minnesota. This bank office language replaces the requirement that a qualifying institution have “its principal executive office” in Minnesota.

118A.06: Deposit and Investment of Local Public Funds: Safekeeping; Acknowledgements

The substantive changes in this section act to spell out the various requirements that must be met in order to qualify as a security broker-dealer that may hold investments, contracts or agreements for safekeeping.

The three requirements, which are inclusive, state that the broker-dealer must be registered under Chapter 80A or exempt from registration requirements, that it must be regulated by the SEC, and (in what is the most substantial addition) it “maintain insurance through the Securities Investor Protection Corporation or excess insurance coverage in an amount equal to or greater than the value of the securities held.”

471.59: Joint Exercise of Powers

Amendments to this statute acted to add federally recognized Indian tribe and the Minnesota Historical Society to the list of government units that may, by agreement entered into through action of their governing bodies, participate in joint powers agreements.

The other governmental units already authorized to enter into such agreements include every city, county, town, school district, independent nonprofit firefighting corporation, other political subdivision of Minnesota or another state, another state as a whole, the University of Minnesota and a few other hospital and employment related sectors.

44.01: Municipal Civil Service: Peace Officer

A definition of a “peace officer” was added to section 1 of chapter 44 as subdivision 8(a).

44.10: Municipal Civil Service: Probationary Period

Section 10 amended the probationary period for a peace officer from a length of six months out to twelve months. The amendments were made effective to any peace officer hired under chapter 44 on or after the effective date of the amendments.

412.02: City Elections, Officers, Terms, Vacancies

Amendments added subdivision 1a to this section. The new subdivision states that neither the mayor nor any city council member may be employed by the city. Employed, as defined, means full-time permanent employment under the given city’s employment policy, and the amendment is to take effect August 1, 2010.

326B.121: State Building Code; Application and Enforcement: Municipal Enforcement

Amendments made during the 2010 regular session specifically apply to municipal enforcement of the state building code. The changes allow for a municipality to enact or enforce ordinances that require existing components or systems of any structure to be maintained in a safe and sanitary condition or in good repair. The municipality is limited, however, as it cannot demand standards exceeding those under which the structure was built, reconstructed or altered unless retroactive provisions have been adopted in the State Building Code. 

More Pruning of DNR Authority

The Supreme Court released its opinion today on the St. Mary’s Point variance case, a close companion to the Lakeland variance case decided in February.  By reversing the DNR’s final decision, the Court restricts the DNR from overriding local ordinances that the DNR previously approved. 

As in the Lakeland case, this matter involved local approval of a variance which the DNR refused to “certify.”  It possibly could have been resolved on the same grounds as the Lakeland case (no authority to certify).  The Court majority, citing procedural reasons, focuses instead on the DNR’s role in approving local ordinances.  In this case, the dispute arose when the DNR determined its current rules differed from the local ordinance, and the agency chose to apply its rules.  Under the local ordinance text, a variance wouldn’t be needed (it’s not really explained in the opinion why the variance was sought, or granted).   The Court again looks at the text of the Lower St. Croix act, and concludes that the DNR’s authority ends when the local ordinance is approved, and the local ordinances govern over DNR rules.  Without DNR approval required, the project can go forward.

So through combination of these two decisions, there is no longer a DNR review requirement for local land use decisions in the lower St. Croix river valley.  Local governments must still send ordinance amendments to the DNR for review, but variances and CUPs are now effective on city council approval.

The DNR Gets It

The Star Tribune today has an article following up on the DNR/Lakeland variance dispute, looking at the constituencies behind the fight.  Legislators have introduced a bill to override the recent Supreme Court decision and “restore” the DNR’s role as a veto point for local-government variance decisions.  Interestingly enough, the DNR opposes the effort:

The DNR doesn’t support the legislative bill to restore its authority to support or deny local variances, Shodeen said. Instead, the DNR now prefers to take contested cases — situations where the agency thinks a city or township hasn’t followed laws already in place — to district court.

This strikes me as exactly the right approach.  Every zoning code has variance standards, and there is a decent body of law surrounding what is and what is not a proper variance.  Anyone bothered by a variance decision can take it to district court, where the city’s decision is tested against those existing standards.  The DNR’s rules, on paper, add nothing to those standards.  They just ensures that the DNR controls the decision, without any requirement to consider opposing viewpoints, or any direct accountability to the public.  The rules (and proposed bill) also ensured that the first round of fighting occurred in the administrative-hearing arena.  Bigger problems arise when the DNR uses this process to shift the goalposts – for instance, substituting “compliance with the intent of the scenic river plan” for “will not alter the essential character of the locality.” 

It’s good that the DNR recognizes that in large part, this is a waste, especially when factoring in the data that the process has really only stopped 2 projects in “recent years,” with 7 others proceeding on past DNR opposition.  There’s no compelling reason either in theory or in practice that the DNR’s objections to a local zoning decision not follow the path of everyone else’s objections – an appeal to district court.

“60-day Rule Case” Turns Out Not To Be A 60-Day Rule Case

The Supreme Court released its ruling in the Lakeland-DNR variance case this morning.  The opinion comes with great anticipation, since the Court seemed to be grabbing non-controversial 60-day cases for review, pointing to a possible shift in doctrine on Minn. Stat. 15.99, the “60-day rule.” 

At least for the moment, that’s not happening.  The Court decided the case solely on the question of the DNR’s authority to “certify” a locally granted variance (an issue added by the Court following the initial oral argument).  Concluding that the DNR lacks the authority to certify or nullify a local zoning decision, the Court declared the DNR aciton (and, by extension, the part of the City ordinance requiring such certification) void, allowing the variance to go into effect.  The Court does not address other issues raised if a threshold issue like authority resolves the entire dispute.

The opinion is simple – the statutes giving DNR authority in this area do not give the agency the power to nullify local land-use decisions.  As the Court works through the statutes involved, it becomes pretty obvious that this is the case, and has been ever since the program began.  The DNR’s argues what appear to be very thin reeds, winding up with what is really an undefensible position: because the Legislature gave us broad rulemaking authority, we can do whatever we want (“Of course our rules must relate to protection of the river area, Senator, but we believe that local governments levy taxes in a way that threatens the riverbank, so the Commissioner needs the ability to certify City budgets.”).  Justice Gildea systematically takes apart each argument for powers beyond “assisting” local governments with their land use ordinances. 

Where this case ends up is in the building line of recent cases that holds every level of government to just what the constitution and statutes give to it – no more (this case, cases where local governments gave permits they shouldn’t have) and no less (ruling out estoppel when a government official drops the ball).  The rule is becoming clear (if it wasn’t already) that individual actors do not get to alter their granted powers through their actions.  If the Court can stick to this rule when it looks at Constitutional powers, the unallotment decision shouldn’t be that difficult for them.

Supreme Court 09.10.09

Via the Pioneer Press, the Court has requested supplemental briefs and additional argument in the Lakeland/DNR variance approval case (previous posts here and here).  The argument is set for October 12.   The issues noted in the article indicate that the Supreme Court is struggling to determine whether the DNR Commissioner has any decision authority at all once the agency approves a local regulation.  If that’s found lacking, then it probably follows that the local ordinance controls any decision once approved by DNR, regardless of the appearance of a conflict with DNR rules.

The Court issues an opinion vacating all prior actions on the St Paul Port Authority’s 876 Bonds, finding that the lower courts improperly extended a 1993 statute amendment to the bonds, which were all issued prior to 1991.  The short version is that development authority bonds issued since 1993 can be treated as a trust, even if no trust was specifically created, and the authority as trustee can attempt to fix problems (like running out of money, as the 876 Fund did) by petitioning the district court.  Development authority bonds issued before 1993 cannot take advantage of this mechanism, unless a trust was specifically created when the bonds were issued.  A wrinkle to watch going forward is the Court’s decision to remand the issue of the Authority’s 2002 and 2004 petitions to the district court.  Having found that the lower court had no jurisdiction over the bonds and should not have approved the Dutch auctions that took place, the question remains: is the motion to vacate those orders made within a reasonable time?  Translated: since the auctions have already happened and bondholders were paid (without objection at the time), what good is it to vacate the order that let that happen?  The district court gets that issue back for fact-finding and decision.

60-day rule case scheduled next week

The Supreme Court has added an argument day next week – the last argument of the term – to hear the Lakeland/DNR variance approval case.  Here is the issue summary from the Court:

On appeal to the supreme court, appellants raise three issues: (1) does the 60-day rule found in Minn. Stat. § 15.99, subd. 2 (2008), apply to a contested case hearing governed by the Administrative Procedures Act; (2) does a contested case hearing toll the 60-day rule and when does such tolling end; and (3) did the administrative law judge’s notice that the Commissioner had 90 days to issue a decision extend the 60-day deadline under Minn. Stat. § 15.99, subd. 3(f) (2008). 

I have not read the briefs yet, but issue #3 sounds like the main event here.  Argument is set for 9 AM, Wednesday, June 10 in Courtroom 300 of the Judicial Center.