This opinion will be unpublished and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UNPUBLISHED OPINION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).
18