State agencies have a variety of methods for creating and issuing policy determinations. These methods include:
The Vapor BMPs include the following detailed requirements:
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:
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.
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.
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 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 Administrative Law 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.