This opinion will be unpublished and
may not be cited except as provided by
Minn. Stat. § 480A.08, subd. 3 (2000).
STATE OF MINNESOTA
IN COURT OF APPEALS
In the Matter of the System designation of
Multi-Flo Wisconsin Aerobic Treatment Units
followed by Dispersal in a Soil Treatment
System with One-foot Vertical Separation
Distance to the Seasonally Saturated Soil.
Filed December 21, 2001
Minnesota Pollution Control Agency
Delmar R. Ehrich, Elizabeth H. Schmiesing, Karleen M. O’Connor, JT Haines, Faegre & Benson LLP, 2200 Wells Fargo Center, 90 South Seventh Street, Minneapolis, MN 55402-3901 (for relator Multi-Flo Wisconsin)
Mike Hatch, Attorney General, Paul Merwin, Assistant Attorney General, 445 Minnesota Street, Suite 900, St. Paul, MN 55101-2127 (for respondent Minnesota Pollution Control Agency)
Considered and decided by Willis, Presiding Judge, Lansing, Judge, and Forsberg, Judge.*
U N P U B L I S H E D O P I N I O N
The Minnesota Pollution Control Agency (MPCA) denied relator’s application for statewide approval of its new-technology individual sewage-treatment system for statewide use. Relator challenges the denial, arguing that (1) because the MPCA failed to deny its application within 60 days of submission, the application must be deemed approved by operation of Minn. Stat. § 15.99 (2000), and (2) the MPCA violated the Administrative Procedure Act (APA). Because we conclude that section 15.99 does not apply to the MPCA’s approval of a new-technology individual sewage-treatment system and that the MPCA violated the APA but the violations were not prejudicial, we affirm.
Relator Multi-Flo Wisconsin (Multi-Flo) manufactures an individual sewage-treatment system (ISTS) that uses aerobic bacteria in wastewater to decompose domestic sewage. The sewage is processed in a tank containing the wastewater, and the processed effluent is then filtered and discharged. Because Multi-Flo’s ISTS uses a tank-based sewage-treatment system instead of a traditional soil-based system, it is considered new technology.
On March 13, 2000, Multi-Flo submitted an application to the MPCA for approval of its ISTS as a “standard system” under Minn. R. 7080.0400 (1999), which provided a tiered procedure for approval of a new-technology ISTS as a standard system. First, an applicant must submit documentation that shows that an ISTS meets the technical criteria necessary for designation as an “alternative system.” Minn. R. 7080.0400, subps. 2–3. Second, the MPCA must designate the ISTS as an alternative system. Id., subp. 4(A). Finally, the applicant must show that at least 100 units of the ISTS have been in operation for at least seven years. Id., subp. 4(B). Designation as a standard system allows an ISTS to be used statewide, subject to local rules, without the regulatory constraints of an alternative system. Minn. R. 7080.0305 (1999).
Multi-Flo’s application sought approval of its ISTS for use at sites where the effluent is discharged into a drainfield with one foot of vertical separation, consisting of unsaturated soil or sand, between the point of discharge and seasonally saturated soil or bedrock. The unsaturated soil or sand acts as an additional filter, removing harmful bacteria from the effluent. For a traditional soil-based ISTS, two or three feet of vertical separation is required for approval as a standard system. Minn. R. 7080.0060, subp. 3(B) (1999). For a new-technology ISTS, however, the distance of vertical separation is determined by what is “appropriate” for the design of the sewage-treatment system. Minn. R. 7080.0400, subp. 2(A), .0179, subp. 2(C)(1) (1999). Thus, instead of mechanically applying the rule requiring a vertical separation of two or three feet, the MPCA must evaluate the specific design and performance of a new-technology ISTS to determine the appropriate distance for that system.
The MPCA provided its first written response to Multi-Flo’s application on June 12, 2000, nearly three months after it was submitted. The MPCA requested additional documentation from Multi-Flo and stated that an advisory committee had been established “to review and make recommendations to [the MPCA] concerning designations of new technologies as alternative or standard.” The committee worked on a policy-and-process document during the next several months but never finished it.
In August 2000, Multi-Flo notified the MPCA that it had “learned * * * that under Minnesota law,” the MPCA’s failure to deny Multi-Flo’s application within 60 days constituted approval of the application. See Minn. Stat. § 15.99, subd. 2 (2000) (stating that “an agency must approve or deny within 60 days a written request relating to * * * septic systems * * * for a permit, license, or other governmental approval of an action” and that “[f]ailure of an agency to deny a request within 60 days is approval of the request”). The MPCA disagreed, replying that “[t]he statute applies to the approval of individual septic systems, not to the designation of new technologies for long-term statewide use.”
The MPCA denied Multi-Flo’s application on April 3, 2001, citing insufficient evidence that Multi-Flo’s ISTS meets the new-technology performance standards under Minn. R. 7080.0179, subp. 2(B)–(C) (1999). Multi-Flo appeals by writ of certiorari.
D E C I S I O N
Decisions of administrative agencies are presumed to be correct, but this court will reverse or modify an agency decision if a party’s substantial rights have been prejudiced because the decision was (1) in excess of the statutory authority of the agency, (2) made upon unlawful procedure, (3) affected by other error of law, or (4) arbitrary or capricious. See Minn. Stat. § 14.69 (2000) (enumerating criteria for reversal or modification); In re Excess Surplus Status of Blue Cross & Blue Shield of Minn., 624 N.W.2d 264, 277 (Minn. 2001).
Multi-Flo asserts that Minn. Stat. § 15.99 (2000) applies to its request for approval and that, therefore, the MPCA erred in its interpretation of the statute. The interpretation of a statute and its application to undisputed facts present questions of law, which this court reviews de novo. Wynkoop v. Carpenter, 574 N.W.2d 422, 425 (Minn. 1998). The object of statutory interpretation is to ascertain and effectuate legislative intent. Minn. Stat. § 645.16 (2000).
When interpreting a statute, a court must first determine whether the statute’s language, on its face, is ambiguous. Am. Tower, L.P. v. City of Grant, ___ N.W.2d ___, ___, 2001 WL 1553784, at *2 (Minn. Dec. 6, 2001). Statutory language is ambiguous if it is susceptible to more than one reasonable interpretation. Amaral v. Saint Cloud Hosp., 598 N.W.2d 379, 384 (Minn. 1999). If a statute is ambiguous, a court may determine legislative intent by examining factors that include the legislative history and the consequences of a particular interpretation. Minn. Stat. § 645.16.
Minn. Stat. § 15.99 establishes a time limit for state agencies to approve or deny applications related to septic systems. Subdivision 2 provides:
Except as otherwise provided in this section and notwithstanding any other law to the contrary, an agency must approve or deny within 60 days a written request relating to zoning, septic systems, or expansion of the metropolitan urban service area for a permit, license, or other governmental approval of an action. Failure of an agency to deny a request within 60 days is approval of the request.
Minn. Stat. § 15.99, subd. 2. An agency may extend the time limit before the end of the initial 60-day period “by providing written notice of the extension to the applicant.” Id., subd. 3(f). The initial 60-day period begins when the agency receives a written request “containing all information required by law or by a previously adopted rule, ordinance, or policy of the agency.” Id., subd. 3(a). If the request does not contain all the required information, the 60-day period “starts over only if the agency sends notice within ten business days of receipt of the request telling the requester what information is missing.” Id.
If section 15.99 applies to Multi-Flo’s application, as it asserts, the statute requires approval of the application. The MPCA received the application on March 13, 2000. Although the MPCA later determined the application to be incomplete, it did not notify Multi-Flo within ten business days of receipt of any missing information. Nor did the MPCA provide written notice of an extension of the time limit before the end of the initial 60-day period. Thus, the 60-day period began on March 13, 2000, and was not extended. Because the MPCA did not deny the application until April 3, 2001, it must be approved by operation of section 15.99, if the statute applies. See id., subd. 2 (“Failure of an agency to deny a request within 60 days is approval of the request.”)
Multi-Flo argues that section 15.99 applies to the MPCA’s consideration of its application because the application is a request “relating to * * * septic systems.” See id. We agree, and the MPCA conceded at oral argument, that the term “septic systems” encompasses Multi-Flo’s ISTS. We also agree that the application is one directly “relating to” the ISTS.
But this does not end our inquiry. Section 15.99 applies only if Multi-Flo’s application is a request “for a permit, license, or other governmental approval of an action.” See id. The application is not a request for a “permit” or a “license,” as those terms are used in the context of septic systems. See Minn. Stat. § 115.07, subds. 1, 3 (2000) (requiring permit for ISTS installation or modification); Minn. Stat. § 115.56, subd. 2 (2000) (requiring license for ISTS installation or maintenance). Section 15.99 applies, therefore, only if Multi-Flo’s application is a request for “other governmental approval of an action.” See Minn. Stat. § 15.99, subd. 2. Multi-Flo sought the MPCA’s approval for its new-technology ISTS to be used at sites with one foot of vertical separation and with minimal regulatory restrictions, which requires that the MPCA designate the ISTS as a standard system. Thus, we must determine whether designation of a new-technology ISTS is “governmental approval of an action” within the meaning of subdivision 2.
We first consider whether the term “action” is ambiguous. See Am. Tower, ___ N.W.2d at ___, 2001 WL 1553784, at *2. “Action,” standing alone, contains no restrictions; the term can be broadly read to mean “[t]he process of doing or performing something.” See The American Heritage Dictionary 16-17 (4th ed. 2000) (defining “act” and “action”). But we cannot read subdivision 2 without noting a strong suggestion that “action” refers to an action that involves a local geographical area. Each of the three subjects to which the 60-day time limit applies--zoning, septic systems, and expansion of the metropolitan urban service area--operates within a constrained area, ranging from an individual property to a metropolitan area. See Minn. Stat. § 15.99, subd. 2. Multi-Flo’s application is for the MPCA’s approval of a new-technology ISTS for statewide use, an action with a geographical scope exceeding that suggested by the language of subdivision 2. But we do not find this suggestion sufficiently clear to render unreasonable an interpretation that “action” is unrestricted. We conclude, therefore, that “action” is ambiguous. See Amaral, 598 N.W.2d at 384.
To resolve the ambiguity, we turn to the legislative history of section 15.99. See Minn. Stat. § 645.16. The statute was enacted in 1995. See 1995 Minn. Laws ch. 248, art. 18, § 1. During committee hearings and floor debates on the bill, legislators discussed hypothetical situations to which the 60-day time limit would apply. The geographical scope of these situations ranged from an individual property to county boundaries. See Hearing on S.F. 647 Before the Senate Comm. on Governmental Operations and Veterans (Mar. 29, 1995) (statement of Sen. Beckman) (County of Faribault to install septic system); Hearing on H.F. 641 Before the House Comm. on Local Gov’t and Metro. Affairs (Apr. 6, 1995) (statement of Rep. Kelley) (shelter seeking conditional-use permit); Senate Floor Debate on S.F. 1246 (May 2, 1995) (statements of Sen. Weiner and Sen. Mondale) (city to expand and lay down sewers). We find no indication that the legislature intended for section 15.99 to apply to actions with statewide effect.
Our reading of subdivision 2 is also supported by an analysis of the public interests involved and the consequences of the particular interpretation of section 15.99 urged by Multi-Flo. See Minn. Stat. §§ 647.16, .17 (2000). This state has a strong interest in the protection of the health and safety of its citizens. Forster v. R.J. Reynolds Tobacco Co., 437 N.W.2d 655, 658 (Minn. 1989). This state also has a strong interest in the preservation of the environment and natural resources. Domtar, Inc. v. Niagara Fire Ins. Co., 533 N.W.2d 25, 34 (Minn. 1995); see also Minn. Stat. § 116B.01 (2000) (stating that “it is in the public interest * * * to protect air, water, land and other natural resources located within the state from pollution, impairment, or destruction”). And by enacting section 15.99, the legislature expressed a public interest in prompt action by state agencies.
The public interest in prompt agency action would be furthered if, as Multi-Flo asserts, section 15.99 applies to the MPCA’s consideration of Multi-Flo’s application. But the approval by default of unproven sewage-treatment systems as “standard systems” would pose a potential statewide hazard to the health and safety of citizens and to the environment. Although the legislature clearly was prepared to accept negative local consequences from the automatic approval of requests resulting from agency delays, we find nothing in the language of the statute or its legislative history that leads us to conclude that the legislature intended to accept negative statewide consequences of this magnitude from such an automatic approval. Nor do we find that, as applied here, the public interest in prompt agency action outweighs the dual strong interests of the state in the protection of its citizens and environment. We conclude, therefore, that the time limit of section 15.99 does not apply to a written request that the MPCA designate a new-technology ISTS as a “standard system.”
A. Multi-Flo contends that the MPCA engaged in rulemaking without public notice and comment by allowing the advisory committee to establish policy for new-technology systems. This court must declare an agency’s action invalid “if the agency adopts policy without complying with statutory rulemaking requirements.” In re Assessment Issued to Leisure Hills Health Care Ctr. on Mar. 2, 1992, 518 N.W.2d 71, 74 (Minn. App. 1994) (citation omitted), review denied (Minn. Sept. 16, 1994). Minnesota law requires an agency to promulgate, as rules, all procedures of an agency “to the extent that those procedures directly affect the rights of or procedures available to the public.” Minn. Stat. § 14.06 (2000). Rules are “agency statement[s] of general applicability and future effect * * * adopted to * * * make specific the law enforced or administered by that agency or to govern its * * * procedure.” Minn. Stat. § 14.02, subd. 4 (2000).
Multi-Flo claims that the MPCA effectively transformed the advisory committee into a rulemaking body. Multi-Flo points to a document attached to a letter it received from the MPCA, which states, in part:
Part 7080.0400 New Technology
Comment: Some baseline criteria have been discussed by the [advisory committee], but haven’t been finalized. [The criteria] are offered here. These basic policy statements will change if research is submitted that supports an opposing policy. As of this date, the following policy prevails.
*Service contract required for all non-gravity systems.
*Pressure distribution after any pre-treated effluent technology.
*Below system testing for vertical separation before designation for less than 3 feet of vertical separation
*Professional engineer sends in and signs submittal
*Any extrapolation calculations must be submitted
*Surge storage discussion and application must be part of the submittal
*Theory of cold-temperature operation submitted
*Soil textures for testing are the major classifications from Table V in part 7080.0170
*Use of 95% confidence for performance sampling
The document was prepared by the advisory committee and was cited with approval in the MPCA’s letter, which “reflects the views of the MPCA.” Multi-Flo argues that the document adds requirements to those promulgated in Minn. R. 7080.0400 (1999). We agree.
The MPCA was charged with administering Minn. Stat. § 115.55, subd. 3(a)(7) (1998), which required the adoption of rules establishing “procedures * * * to approve new individual sewage treatment system technologies.” The MPCA did so by promulgating Minn. R. 7080.0400, which included performance and application-submittal requirements. The MPCA’s document essentially adopted policy by implementing rules that were more specific than those in Minn. R. 7080.0400. We find no merit in the MPCA’s claim that it was merely applying the plain meaning of the rule to the facts of Multi-Flo’s application.
The MPCA’s document contained rules “of general applicability and future effect” that “directly affect the rights of or procedures available to the public.” See Minn. Stat. §§ 14.02, subd. 4, .06. Because the rules were not promulgated by the MPCA, we invalidate those rules.
But we leave the MPCA’s decision intact. This court will reverse or modify an agency’s decision only if a party’s substantial rights have been prejudiced. See Minn. Stat. § 14.69. The MPCA denied Multi-Flo’s application on the ground that Multi-Flo did not demonstrate that its ISTS meets the performance requirements of a new-technology system. See Minn. R. 7080.0400, subp. 2(A), .0179, subp. 2(B)-(C) (1999). The record shows conclusively that the MPCA’s decision did not turn on Multi-Flo’s failure to meet the requirements listed in the MPCA’s document.
B. In a related argument, Multi-Flo claims that the MPCA failed to set forth “the nature and requirements of all formal and informal procedures * * * that * * * directly affect the rights of or procedures available to the public.” See Minn. Stat. § 14.06. We agree. By effectively adding new rules to new-technology approval after Multi-Flo’s application was submitted and while it was being considered, the MPCA did not provide Multi-Flo with adequate notice of the nature and requirements of the procedures that would be used to evaluate the application. But, as we have discussed, Multi-Flo was not prejudiced by the additional requirements.
C. Multi-Flo argues that the presence of competitors on the advisory committee rendered the MPCA biased. A careful review of the record shows that, under any reasonable standard, the committee members were not biased. Multi-Flo does not argue that the presence of competitors on advisory committees is bias per se.
D. Multi-Flo claims that the MPCA’s use of the advisory committee exceeded statutory authority. Minn. Stat. § 115.55, subd. 3(a)(3) (2000), requires the MPCA to promulgate rules on “how the advisory committee will participate in review and implementation of the rules.” The MPCA promulgated those rules in Minn. R. 7080.0025 (1999).
Multi-Flo’s argument is apparently that it had no notice that the advisory committee would use its application as an “example.” In a letter, the MPCA explained that Multi-Flo’s application would be used as an example for the advisory committee’s work on ISTS policy and process. But this work is directly related to “revisions of standards * * * relating to ISTS” and “the administration of standards and ordinances pertaining to ISTS at the state and local level,” duties of the advisory committee that are expressly stated in Minn. R. 7080.0025. The MPCA’s use of the advisory committee did not exceed statutory authority.
E. Multi-Flo contends that the MPCA arbitrarily and capriciously restricted the designation of “other” to soil-based systems. In addition to “alternative” and “standard” designations, an ISTS can be designated as “other.” Minn. R. 7080.0178 (1999). But Multi-Flo applied for designation of its ISTS as a “standard system.” The only designations relevant here are “standard” and “alternative.” See Minn. R. 7080.0400.
Multi-Flo also claims that the MPCA’s decision is arbitrary and capricious because the MPCA denied its application on the ground that the performance of its ISTS was not identical with that of soil-based systems. Specifically, Multi-Flo argues that the MPCA did not consider whether its ISTS was sufficiently protective of public health and groundwater to warrant designation as “alternative” or “standard.”
But the MPCA denied Multi-Flo’s application on the ground that Multi-Flo did not demonstrate that its ISTS meets the performance requirements of a new-technology system. Protection of the public health and protection of groundwater are performance requirements. See Minn. R. 7080.0179, subp. 2(B)-(C). While the performance of soil-based systems may have been a useful benchmark for sewage-system performance, the MPCA did not deny Multi-Flo’s application simply because the performance of the ISTS was not identical with that of soil-based systems.
* Retired judge of the Minnesota Court of Appeals, serving by appointment pursuant to Minn. Const. art. VI, § 10.
 Minn. R. 7080.0400 has been repealed and its authorizing statute section, Minn. Stat. § 115.55, subd. 7 (1998), has been eliminated by amendment. See 2001 Minn. Laws 1st Spec. Sess. ch. 2, §§ 121, 162.