In re Application of Gourley Brothers, LLC for a Water Appropriation Permit.

This opinion will be unpublished and
may not be cited except as provided by
Minn. Stat. § 480A.08, subd. 3 (2012).
STATE OF MINNESOTA
IN COURT OF APPEALS
A13-2247
In re Application of Gourley Brothers, LLC for a Water Appropriation Permit
Filed August 18, 2014
Remanded
Connolly, Judge
Minnesota Department of Natural Resources
Permit No. 2013-1423
Amanda E. Prutzman, Eckberg, Lammers, Briggs, Wolff & Vierling, PLLP, Stillwater,
Minnesota (for relators)
Amanda P. Hungerford (pro hac vice), The Humane Society of the United States,
Washington, D.C. (for individual relators)
Christopher R. Fenton (pro hac vice), Shearman & Sterling, LLP, New York, New York
(for relator The Humane Society of the United States)
Jack Y. Perry, Maren F. Grier, Briggs & Morgan, P.A., Minneapolis, Minnesota (for
respondent Gourley Brothers, LLC)
Lori Swanson, Attorney General, Fiona B. Ruthven, Assistant Attorney General, St. Paul,
Minnesota (for respondent Minnesota Department of Natural Resources)
Considered and decided by Connolly, Presiding Judge; Peterson, Judge; and
Schellhas, Judge.
UNPUBLISHED OPINION
CONNOLLY, Judge
Relators challenge respondent Minnesota Department of Natural Resources’
(MDNR) issuance of a water appropriation permit, arguing that (1) they have standing to
appeal, (2) MDNR’s decision was arbitrary and capricious because it is not supported by
findings of fact or reasons, (3) MDNR’s decision was based on unlawful procedure
because it did not consider all comments received and was based on an incomplete
permit, and (4) MDNR’s decision was not supported by substantial evidence. We
remand for additional findings.
FACTS
Respondent Gourley Brothers LLC (Gourley) proposed a total-confinement hog
feedlot in Todd County. The feedlot is expected to house approximately 2,930 sows, 300
nursery pigs, and 750 gilts.
In 2012, the Gourley facility underwent environmental review. See Minn. Stat.
Ch. 116D; Minn. R. 4410.1000. The Minnesota Pollution Control Agency (MPCA),
acting as the responsible government unit (RGU), prepared an environmental assessment
worksheet (EAW). MPCA completed and distributed the EAW in July 2012. It
concluded that the facility “does not have the potential for significant environmental
effects,” and issued a negative declaration on the need for an environmental impact
statement (EIS). Relators did not appeal the negative declaration on the need for an EIS.
On May 3, 2013, Gourley submitted an application to MDNR for an individual
water-appropriation permit for its feedlot. The application identified two wells from
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which water would be appropriated and the maximum rate at which water would be
taken. Gourley attached a “well and boring record,” which (1) identifies the location of
each well, (2) provides information about the geological formations into which the wells
are drilled, and (3) provides information on the static water level of the aquifer from
which the wells take water. MDNR requested additional information from Gourley,
including property tax information, and a detailed breakdown of estimated daily and
annual water usage, which Gourley subsequently provided.
On October 4, 2013, MDNR issued Gourley a water-appropriation permit. The
permit enables the facility to appropriate up to 8,000,000 gallons of water annually. On
November 1, relators submitted a written demand for a hearing on the issuance of the
permit under Minn. Stat. § 103G.311 (2012). On November 5, MDNR denied this
request, concluding that relators are not one of the parties permitted to demand a hearing
under Minn. Stat. § 103G.311, subd. 5(a). This certiorari appeal follows.
DECISION
I. Do relators have standing?
Respondent MDNR argues that “relators lack standing to bring the present appeal
because they have not shown any injury in fact caused by the issuance of the permit.”
We disagree.
“Standing is the requirement that a party has a sufficient stake in a justiciable
controversy to seek relief from a court.” State v. Philip Morris, Inc., 551 N.W.2d 490,
493 (Minn. 1996) (citing Sierra Club v. Morton, 405 U.S. 727, 731-32, 92 S. Ct. 1361,
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1364-65 (1972)). The issue of standing may be raised at any time. In re Horton, 668
N.W.2d 208, 212 (Minn. App. 2003).
“[I]t has long been established that a person has standing to invoke judicial review
of agency action only if that person suffers ‘injury in fact’ as a consequence of that
action.” Matter of Sandy Pappas Senate Comm., 488 N.W.2d 795, 797 (Minn. 1992). To
satisfy the injury-in-fact requirement, relators “must demonstrate that they have suffered
actual, concrete injuries caused by the challenged conduct.” Alliance for Metro. Stability
v. Metro Council, 671 N.W.2d 905, 913 (Minn. App. 2003.) Economic injury or the
potential for economic injury may be sufficient to establish standing. In re Application of
Crown CoCo, Inc., 458 N.W.2d 132, 135 (Minn. App. 1990). “An organization can
assert standing if its members’ interests are directly at stake or if its members have
suffered an injury-in-fact.” Builders Ass’n of Minn. v. City of St. Paul, 819 N.W.2d 172,
177 (Minn. App. 2012).
Relators in this case are the Humane Society of the United States (the Humane
Society) and the following individuals: Russell Anderson, Randall Anderson, Katrina
Downes, Aimee Goodwin, Corey Goodwin, Travis Winter, Joel Walsh, Amy Walsh, and
Mary Soupir. The individual relators rely on the same aquifer that Gourley will use in its
feedlot operation. Relators indicate that their domestic water use has been negatively
affected since the Gourley operation began and report that the water pressure in their
homes has decreased and their wells have tested positive for coliform bacteria since the
Gourley facility became operational. These effects have caused relators to expend
economic resources to monitor their wells or obtain alternative water sources. Because
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the “primary goal of the standing requirement is to ensure that the factual and legal issues
before the courts will be vigorously and adequately presented,” we conclude that relators’
interests are sufficient to confer standing. See Lorix v. Crompton Corp., 736 N.W.2d
619, 624 (Minn. 2007).
Additionally, the Humane Society submitted evidence that its members have
suffered an injury in fact as a result of MDNR’s issuance of the Gourley water-
appropriation permit. The Humane Society seeks to combat environmental degradation
caused by concentrated animal-feeding operations. One of the individual relators in this
case is a member of the Humane Society. Because a Humane Society member has
demonstrated an injury in fact and its members’ interests are directly at stake, we
conclude that the Humane Society has standing.
II. Was MDNR’s decision arbitrary and capricious?
“[D]ecisions of administrative agencies enjoy a presumption of correctness, and
deference should be shown by courts to the agencies’ expertise and their special
knowledge in the field of their technical training, education, and experience.” Reserve
Mining Co. v. Herbst, 256 N.W.2d 808, 824 (Minn. 1977). This court “will not disturb
an agency’s decision as long as the agency’s determination has adequate support in the
record as required by the substantial evidence test.” In re Denial of Eller Media Co.’s
Applications for Outdoor Adver. Device Permits, 664 N.W.2d 1, 7 (Minn. 2003).
“Substantial evidence consists of: (1) such relevant evidence as a reasonable mind might
accept as adequate to support a conclusion; (2) more than a scintilla of evidence; (3) more
than ‘some evidence’; (4) more than ‘any evidence’; and (5) evidence considered in its
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entirety.” Citizens Advocating Responsible Dev. v. Kandiyohi Cnty. Bd. of Comm’rs, 713
N.W.2d 817, 832 (Minn. 2006) (quotation omitted). An agency’s decision is arbitrary
and capricious if the agency
(a) relied on factors the legislature never intended it to
consider, (b) entirely failed to consider an important aspect of
the problem, (c) offered an explanation for the decision that
runs counter to the evidence, or (d) rendered a decision so
implausible that it could not be ascribed to a difference in
view or the result of agency expertise.
Watab Twp. Citizen Alliance v. Benton Cnty. Bd. of Comm’rs, 728 N.W.2d 82, 89 (Minn.
App. 2007), review denied (Minn. May 15, 2007). The party challenging the agency
decision has the burden of proving grounds for reversal. Markwardt v. State Water Res.
Bd., 254 N.W.2d 371, 374 (Minn. 1977).
Relators argue that MDNR’s decision to grant Gourley’s water-appropriation
permit was arbitrary and capricious because MDNR issued the permit based on an
incomplete application and the permit was not supported by written findings of fact or
reason. We agree that there are insufficient findings for this court to conduct meaningful
appellate review.
Groundwater use permit applications are not complete until the applicant has
submitted:
(1) a water well record . . . information on the subsurface
geologic formations penetrated by the well and the formation
or aquifer that will serve as the water source, and geologic
information from test holes drilled to locate the site of the
production well;
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(2) the maximum daily, seasonal, and annual pumpage rates
and volumes being requested;
(3) information on groundwater quality in terms of the
measures of quality commonly specified for the proposed
water use and details on water treatment necessary for the
proposed use;
(4) an inventory of existing wells within 1-1/2 miles of the
proposed production well or within the area of influence, as
determined by the commissioner. The inventory must include
information on well locations, depths, geologic formations,
depth of the pump or intake, pumping and nonpumping water
levels, and details of well construction; and
(5) the results of an aquifer test completed according to
specifications approved by the commissioner. The test must
be conducted at the maximum pumping rate requested in the
application and for a length of time adequate to assess or
predict impacts to other wells and surface water and
groundwater resources. The permit applicant is responsible
for all costs related to the aquifer test, including the
construction of groundwater and surface water monitoring
installations, and water level readings before, during, and
after the aquifer test.
Minn. Stat. § 103G.287, subd. 1(a) (2012). But “[t]he commissioner may waive an
application requirement in this subdivision if the information provided with the
application is adequate to determine whether the proposed appropriation and use of water
is sustainable and will protect ecosystems, water quality, and the ability of future
generations to meet their own needs.” Minn. Stat. § 103G.287, subd. 1(b) (2012).
“If the commissioner concludes that the plans of the applicant are reasonable,
practical, and will adequately protect public safety and promote the public welfare, the
commissioner shall grant the permit.” Minn. Stat. § 103G.315, subd. 3 (2012). “The
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commissioner shall make findings of fact on issues necessary for determination of the
applications considered. Orders made by the commissioner must be based upon findings
of fact made on substantial evidence.” Minn. Stat. § 103G.315, subd. 2 (2012). The
commissioner shall consider the following factors, as applicable, in reviewing and
analyzing the submitted data:
(1) the location and nature of the area involved and
the type of appropriation and its impact on the availability,
distribution, and condition of water and related land resources
in the area involved;
(2) the hydrology and hydraulics of the water
resources involved and the capability of the resources to
sustain the proposed appropriation based on existing and
probable future use;
(3) the probable effects on the environment including
anticipated changes in the resources, unavoidable detrimental
effects, and alternatives to the proposed appropriation;
(4) the relationship, consistency, and compliance
with existing federal, state, and local laws, rules, legal
requirements, and water management plans;
(5) the public health, safety, and welfare served or
impacted by the proposed appropriation;
(6) the quantity, quality, and timing of any waters
returned after use and the impact on the receiving waters
involved;
(7) the efficiency of use and intended application of
water conservation practices;
(8) the comments of local and regional units of
government, federal and state agencies, private persons, and
other affected or interested parties;
(9) the adequacy of state water resources availability
when diversions of any waters of the state to any place
outside of the state are proposed;
(10) the economic benefits of the proposed
appropriation based on supporting data when supplied by the
applicant.
Minn. R. 6115.0670, subp. 2 (2013).
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Although it appears based on the record that Gourley submitted most of the
required information with its permit application, the application does not contain
information concerning groundwater quality in terms of the measures of quality
commonly specified for the proposed water use or details on water treatment necessary
for the proposed use. The application also does not contain an inventory of existing wells
within the relevant geographic area. The commissioner may very well have waived these
requirements because much of this information is contained in the EAW and negative
declaration on the need for an EIS. But there is nothing in the record to suggest that
MDNR adopted MPCA’s findings or that the commissioner waived any application
requirement.1 And to facilitate appellate review, an administrative agency must state the
facts and conclusions essential to its decision with clarity and completeness. People for
Envtl. Enlightenment & Responsibility, Inc. v. Minn. Envtl. Quality Council, 266 N.W.2d
858, 871 (Minn. 1978).
Gourley argues that MDNR substantially complied with the applicable statutory
requirements, noting that
the law does not mandate in all cases strict and literal
compliance with all procedural requirements. Technical
defects in compliance which do not reflect bad faith,
undermine the purpose of the procedures, or prejudice the
rights of those intended to be protected by the procedures will
1
The only indication that MDNR reviewed MPCA’s findings and adopted them to
supplement Gourley’s application is a handwritten note in the “Accelerated Review of
Ground Water Permit Applications” form. The note states that MDNR referenced the
EAW comments on (1) the surface waters within 1/4 mile of the Gourley facility and
(2) the residence and public water supply within one mile of the facility. It does not refer
to any specific finding.
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not suffice to overturn governmental action, particularly
where . . . substantial commitments have been made.
See City of Minneapolis v. Wurtele, 291 N.W.2d 386, 391 (Minn. 1980); Manco of
Fairmont, Inc. v. Town Bd. of Rock Dell Twp., 583 N.W.2d 293, 295 (Minn. App. 1998),
review denied (Minn. Oct. 20, 1998). We disagree. To determine whether the doctrine of
substantial compliance applies to a specific ordinance or rule, we determine first whether
the ordinance or rule in question is mandatory or directory. See Manco, 583 N.W.2d at
295. To determine whether a statute is mandatory rather than directory, we consider
whether the statute expresses the consequences of a failure to comply with its provisions;
if it does, it is mandatory. Sullivan v. Credit River Twp., 299 Minn. 170, 176-77, 217
N.W.2d 502, 507 (1974). Because there is no consequence listed for failing to issue
written findings in granting a water appropriation permit, the statute might be construed
as directory. But the doctrine of substantial compliance is more appropriately geared
toward situations where there is a minor deviation in procedure, not, as Gourley argues,
where a state agency completely disregards explicit statutory requirements.
Consequently, we conclude that the doctrine of substantial compliance is not applicable
to these circumstances.
MDNR relies on the fact that the permit was issued “on the basis of statements and
information contained in the permit application, letters, maps, and plans submitted by the
applicant and other supporting data, all of which are made part hereof by reference,” to
argue that it fulfilled the requirement that it provide written findings when granting the
permit. We disagree. Prior to applying for the permit at issue, the Gourley feedlot
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operation underwent environmental review. MPCA prepared an EAW to determine
whether the operation would potentially result in significant environmental effects. After
completing the EAW, MPCA issued a negative declaration on the need for an EIS, which
contains 75 findings of fact and concludes that the Gourley operation will not result in
significant environmental effects.
But there is nothing specific in the permit that indicates that MDNR considered
the relevant permitting factors or adopted MPCA’s findings and conclusions. MDNR did
not provide any findings or conclusions supporting the issuance of the Gourley permit,
and therefore, we cannot conduct meaningful appellate review of its decision. We
therefore remand for additional findings.
III. Was MDNR’s decision to issue the permit supported by substantial evidence?
Relators also argue that even if MDNR’s issuance of Gourley’s permit was
supported by sufficient findings, MDNR’s decision to grant the water appropriation
permit was not supported by substantial evidence because MDNR did not consider threats
to water quality and public health. As stated above, the commissioner’s orders must be
based upon findings of fact supported by substantial evidence. Minn. Stat. § 103G.315,
subd. 2. Substantial evidence means “(1) such relevant evidence as a reasonable mind
might accept as adequate to support a conclusion; (2) more than a scintilla of evidence;
(3) more than some evidence; (4) more than any evidence; and (5) evidence considered in
its entirety.” White v. Minnesota Dept. of Natural Res., 567 N.W.2d 724, 730 (Minn.
App. 1997) (quoting Cable Cmmc’ns Bd. v. Nor-West Cable Cmmc’ns P’ship, 356
N.W.2d 658, 668-69 (Minn. 1984) (quoting Reserve Mining Co., 256 N.W.2d at 825)).
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MPCA conducted environmental review of the Gourley facility under Minn. R.
4410.1000. MPCA determined that the facility “does not have the potential for
significant environmental effects based on the type, extent, and reversibility of impacts
related to water quality that are reasonably expected to occur.” Relators did not appeal
this conclusion. Relators are appealing MDNR’s decision to grant Gourley a water
appropriation permit; they are not challenging MPCA’s negative declaration on the need
for an EIS. To the extent that relators attempt to challenge MPCA’s conclusion that the
Gourley facility will not result in significant environmental effects, that issue is not
properly before this court. Moreover, because MDNR’s issuance of Gourley’s water
appropriation permit was not supported by sufficient findings to conduct appellate
review, we cannot conclude whether any findings are supported by substantial evidence.
See Minn. Stat. § 103G.315, subd. 2.
Remanded.
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