This opinion will be unpublished and

may not be cited except as provided by

Minn. Stat. § 480A.08, subd. 3 (2000).







Hofman Oil Co., Inc., petitioner,





City of Princeton,




Filed January 2, 2002


Halbrooks, Judge



Mille Lacs County District Court

File No. C90130


Jon Erik Kingstad, St. Croix Law Center, 310 South St. Croix Trail, PO Box 318, Lakeland, MN 55043 (for appellant)


Clifford M. Greene, Mehmet K. Konar-Steenberg, Greene Espel, P.L.L.P., 333 South 7th Street, Suite 1700, Minneapolis, MN 55402 (for respondent)




            Considered and decided by Shumaker, Presiding Judge, Halbrooks, Judge, and Mulally, Judge.*

U N P U B L I S H E D   O P I N I O N


            Appellant Hofman Oil Co., Inc. challenges the denial of its petition for writ of mandamus to enforce the right of first refusal under Minn. Stat. § 222.632 (2000), as the leaseholder of rail line property abandoned in 1983.  Appellant argues that the district court erred in its determination that appellant is ineligible under Minn. R. 8910.0300 (1999), which limits eligibility to leaseholders of rail lines abandoned on or after March 22, 1986.  Because we conclude that the district court did not err in its interpretation of the statute, we affirm.


The property at issue is located within a former railroad right-of-way along an abandoned rail line in the City of Princeton (city).  The Burlington Northern Railroad (BN) leased the land to a succession of oil companies as a location for oil storage tanks.  In 1976, the Amoco Corporation assigned its lease with the BN to what is now known as Hofman Oil Co., Inc. (Hofman).  The 1976 assignment lease contained a provision that

either party hereto shall have the right to cancel and terminate this agreement at any time upon giving to the other party ten (10) days written notice of its intention so to do.


It also provided that

[u]pon the termination and cancellation of this agreement in accordance with its terms the Lessee * * * shall remove within thirty (30) days thereafter, all improvements located on said premises, including concrete building foundations, concrete floor slabs, concrete tank footings or saddles, and any piping, at Lessee’s own cost and expense.


The lease further provided that any improvements and property remaining on the premises after 30 days “shall immediately vest in the Railway Company.”

On December 29, 1983, the BN received permission from the Interstate Commerce Commission to formally abandon this rail line.  But the BN continued as Hofman’s lessor until it conveyed the property and assigned the lease to the city on December 5, 1991.  Hofman has occupied the property without paying rent since the city acquired it.

On June 10, 1999, the city entered into a purchase agreement to sell the property to a developer.  The following day, the city sent Hofman a letter apprising it of the intended sale.  Hofman responded on December 26, 2000, with a letter setting forth the statutory right of first refusal contained in Minn. Stat. § 222.632 (2000).  The letter demanded that the city make Hofman an offer or provide Hofman with relocation assistance pursuant to Minn. Stat. § 117.52 (2000).  Receiving no response, Hofman served the city on January 9, 2001, with an alternative writ of mandamus, compelling the city to either offer to sell the property to Hofman or to show cause why it would not do so.  The city complied with the writ by submitting documentary evidence, affidavits, and a memorandum of law outlining the bases for its position that Hofman’s claim was in error. 

The district court dismissed Hofman’s writ and claims with prejudice and awarded costs to the city.  The court concluded that Minn. R. 8910.0300, subp. 4 (1999), the administrative rule that implements Minn. Stat. § 222.632, limits eligibility under the statute to leaseholders on rail lines abandoned on or after March 22, 1986.  Because this line was abandoned in 1983, the district court held that Hofman was not eligible for the right of first refusal.  The court also concluded that appellant’s claim was barred by the six-year statute of limitations imposed by Minn. Stat. § 541.05, subd. 1(2) (2000), and that Hofman’s argument that the city had a continuing public trust obligation was without merit.  With respect to Hofman’s claim for relocation costs, the district court ruled that Hofman was ineligible under Minn. Stat. § 117.52 and, further, that mandamus relief was not available because an adequate remedy at law for any such claim existed through the administrative process.  This appeal follows.


Mandamus is an extraordinary legal remedy “issued not as a matter of right but upon equitable principles in the exercise of sound judicial discretion.”  Nationwide Corp. v. N.W. Nat’l Life Ins. Co., 251 Minn. 255, 265, 87 N.W.2d 671, 679-80 (Minn. 1958).  In this case, the city submitted affidavits and other evidence prior to the show-cause hearing and both parties briefed the legal issues for the district court.  Based on this record, the district court issued its findings of fact, conclusions of law, and order.  On appellate review, we reverse a district court’s order on an application for mandamus relief only if the evidence does not reasonably tend to sustain the court’s findings.  Popp v. County of Winona, 430 N.W.2d 19, 22 (Minn. App. 1988), review denied (Minn. Nov. 23, 1988).  We need not defer to the ultimate legal conclusions drawn by the district court.  Id. (citing Durfee v. Rod Baxter Imports, Inc., 262 N.W.2d 349, 354 (Minn. 1977). 

            Minn. Stat. § 222.632 (2000) provides, in part, as follows:

A railroad interest that is in bankruptcy proceedings may not sell or offer for sale an interest in real property that is within the right-of-way, a railroad interest that is abandoning a railroad line may not sell or offer for sale an interest in real property within the right-of-way to be abandoned, and a nonrailroad lessor may not sell or offer for sale an interest in real property within the right-of-way with respect to which it is a nonrailroad lessor, unless it first extends a written offer to sell that interest at a fair market value price to each person who is a leaseholder with respect to the property.


The legislature directed the Commissioner of the Department of Transportation (commissioner) to adopt rules to implement the statute, which had an effective date of March 22, 1986.  Minn. Stat. § 222.633(a) (2000).

            The commissioner responded, in part, by issuing the current Minn. R. 8910.0300, subp. 4 (1999), which states:

Eligibility under this part is limited to leaseholds located on rail lines that have been abandoned on or after March 22, 1986, and leaseholds that are offered for sale by a railroad interest in bankruptcy, if the offer to sell was made on or after March 23, 1987.


An “abandoned” rail line is defined as one having, or seeking, formal approval from the Interstate Commerce Commission to discontinue service.  Minn. R. 8910.0100, subp. 2 (1999).

            Hofman concedes that Minn. R. 8910.0300, subp. 4, if valid, disqualifies it from a right of first refusal, given that this land was formally abandoned in 1983.  However, Hofman contends that the rule is unreasonable, and thus void, because it goes against the legislature’s clear and manifest intent. 

Hofman argues that the legislature’s intent is clear from the statute and that nothing indicates an intent to restrict the right of first refusal to the date the land is abandoned.  In support, Hofman notes that the statute outlines several eligibility requirements, none of which involve the timing of abandonment.  Thus, Hofman argues, the “March 22, 1986” restriction contained in the rule adds a condition not contemplated by the legislature.  Further, Hofman contends that this is a substantive change and thus beyond the administrative agency’s limited authority to issue guidelines.

Only the legislature or our supreme court can overrule an agency’s reasonable interpretation of a statute.  In re Univ. of Minn., 566 N.W.2d 98, 103 (Minn. App. 1997).  As a result, this court defers greatly to an agency’s interpretation of a statute that it administers.  A-Plus Demonstrations, Inc. v. Comm’r of Jobs & Training, 494 N.W.2d 522, 524 (Minn. App. 1993).  This court will not disturb an agency’s rule unless it is unreasonable.  Id.

Although the statute does not explicitly impose a time-of-abandonment restriction, Minn. R. 8910.0300, subp. 4, is reasonable.  Minn. Stat. § 222.633(a) compelled the commissioner to enact rules to implement the statute within 360 days of the statute’s effective date, March 22, 1986.  Minn. Stat. § 645.21 (2000) requires that “[n]o law * * * be construed to be retroactive unless clearly and manifestly so intended by the legislature.”  Here, nothing in the statute or record suggests that the legislature intended that the statute have retroactive effect.  The record supports the district court’s findings and we find no error in the court’s conclusions of law.  Because we find that this statutory right is unavailable to Hofman, we need not address its arguments on the statute of limitations.

            Hofman also contends that it is eligible for relocation benefits under Minn. Stat. § 117.52 (2000), part of the eminent domain statutory scheme.  The district court found that Hofman failed to establish the facts necessary to establish entitlement to benefits and, further, that the terms of Hofman’s lease with the city foreclosed any reasonable expectation of allocation assistance.  We agree.  This claim is without merit.

            Finally, Hofman contests the rule’s “surface rights” requirement as beyond the commissioner’s authority.  This argument was not presented below and thus is not addressed here.  Thiele v. Stich, 425 N.W.2d 580, 582 (Minn. 1988). 


*  Retired judge of the district court, serving as judge of the Minnesota Court of Appeals by appointment pursuant to Minn. Const. art. VI, § 10.