Original Author: John Simonett<\/p>\n
Revised 2014 by Kari Thoe Crone<\/a><\/p>\n Revised 2022 by Ian Lewenstein<\/p>\n Download a PDF of Chapter 24<\/a><\/p>\n Chapter Contents<\/p>\n \n There are two ways to challenge a rule\u2019s validity. First, a party may challenge a rule\u2019s validity by petitioning for declaratory judgment on the rule. The petition, also called a pre-enforcement challenge (\u00a7\u00a7 24.2-.11),[1]<\/a><\/sup> is filed after the rule has been adopted but before an agency has enforced the rule against the party.\n<\/p>\n \n Second, a party may challenge a rule\u2019s validity when an agency is enforcing the rule against the party. As with the pre-enforcement challenge, the party files a petition for declaratory judgment; this petition is known as a collateral rule challenge (\u00a7 24.12).\n<\/p>\n \n Both a pre-enforcement challenge and a collateral challenge are prescribed under Minnesota Statutes, section 14.44, and both challenges are started by filing a petition with the Minnesota Court of Appeals.<\/a>\n<\/p>\n \n A party may bring a pre-enforcement challenge at any time by filing a petition with the Minnesota Court of Appeals, but the party should first check the statutory authority under which the agency adopted its rule to see if there are any time limits for bringing a challenge.<\/a>[2]<\/a><\/sup>\n<\/p>\n \n When a party brings a challenge, an exhaustion-of-remedies requirement doesn\u2019t apply, as the APA expressly provides that a declaratory judgment may be rendered whether or not (1) the petitioner has first requested the agency to pass on the rule\u2019s validity, and (2) the agency has started an enforcement action against the petitioner.[3]<\/a><\/sup>\n<\/p>\n \n Because a petition for declaratory judgment is filed with the court of appeals, the petition should be considered as somewhat analogous to a petition for a writ of certiorari, whereby the agency\u2019s action is brought before the court for judicial review.[4]<\/a><\/sup>\n<\/p>\n \n Although a petition is first filed with the court of appeals, the supreme court has prescribed what the petition must contain\u2014for example, it must describe the specific rule to be reviewed and the errors claimed by the petitioner [5]<\/a><\/sup> The supreme court has also prescribed that the court\u2019s review of the rule\u2019s validity is on the official rulemaking record.[6]<\/a><\/sup>\n<\/p>\n \n Since review through the court of appeals became available in 1984, various parties have challenged a rule\u2019s validity.[7]<\/a><\/sup>\n<\/p>\n \n Important to note, however, is that the court of appeals has held that only formally adopted rules\u2014not proposed rules[8]<\/a><\/sup>\u2014may be challenged; an unadopted rule should be challenged in a contested-case action[9]<\/a><\/sup> or, more commonly since 2001, by petitioning OAH for an order that \u201can agency is enforcing or attempting to enforce a policy, guideline, bulletin, criterion, manual standard, or similar pronouncement as though it were a duly adopted rule.\u201d[10]<\/a><\/sup>\n<\/p>\n \n On the other end of the spectrum, mandamus relief\u2014requested to compel an agency to adopt a rule\u2014has been denied when an agency\u2019s statutory authority to adopt rules was discretionary and the agency\u2019s commissioner had exercised discretion to not adopt a rule.[11]<\/a><\/sup>\n<\/p>\n \n But instead of first going to the courts, a party may choose a less-expensive option by directly petitioning an agency to adopt a rule.[12]<\/a><\/sup>\n<\/p>\n \n Unless otherwise prescribed by statute, a party has standing if it shows \u201cinjury in fact.\u201d<\/a>[13]<\/a><\/sup> For example, the Minnesota Supreme Court has held that a taxpayer\u2019s status may be sufficient to provide standing by showing injury in fact.<\/a>[14]<\/a><\/sup>\n<\/p>\n \n In 2021, the Minnesota Court of Appeals solidified the conditions sufficient to confer standing under a pre-enforcement challenge.[15]<\/a><\/sup> In this case, three categories of petitioners[16]<\/a><\/sup> challenged a secretary of state\u2019s rule on absentee ballots that are reviewed by local ballot boards. The court ruled that none of the petitioners had standing, finding that under a pre-enforcement challenge, \u201ca petitioner must demonstrate (1) a direct interest in the rule that is different in character from that of the citizenry in general; (2) the alleged harm is not speculative or hypothetical; and (3) the alleged harm is uniquely attributable to the rule.\u201d[17]<\/a><\/sup>\n<\/p>\n \n Courts have determined insufficient standing such as when a hair salon challenged a Department of Commerce cosmetology rule.[18]<\/a><\/sup> Here, the court found that the challenged rule didn\u2019t harm the salon; consequently, the salon lacked standing.\n<\/p>\n \n Minnesota courts, however, don\u2019t always adhere to the same test for standing that federal courts use. For example, under the federal test, taxpayer status alone is insufficient to provide standing.[19]<\/a><\/sup>\n<\/p>\n \n In a pre-enforcement challenge, the agency whose rule is being challenged is made a party to the proceeding.[20]<\/a><\/sup> Although the APA doesn\u2019t say who else may or should be respondents, the Minnesota Rules of Civil Appellate Procedure states that persons\u2014other than the petitioner, agency, and attorney general\u2014may participate in the action with leave of the court of appeals.[21]<\/a><\/sup>\n<\/p>\n \n The procedural rules require that the petition be served on the attorney general and the agency whose rule is being challenged.[22]<\/a><\/sup> Usually, the agency\u2019s commissioner is also named (for boards, the board itself would be named).\n<\/p>\n \n A petition must comply with the Minnesota Rules of Civil Appellate Procedure.[23]<\/a><\/sup> Some of the most important requirements state:\n<\/p>\n \n Once a petition is served, the agency\u2014within 30 days\u2014must produce the rulemaking record and an itemized list of its contents.[28]<\/a><\/sup><\/a>\n<\/p>\n \n The content of the official rulemaking record is prescribed under Minnesota Statutes, section 14.365. Ordinarily, the record may not be supplemented with new material on appeal. The Minnesota Supreme Court has noted, however, that \u201c[c]onceivably, instances might arise where an irregularity might, in fairness, require supplementation or clarification of the rulemaking record . . . .\u201d[29]<\/a><\/sup> And in appropriate cases, the parties may stipulate to an abbreviated, more manageable record.\n<\/p>\n \n A rare instance may occur in which a petitioner, seeking to establish procedural irregularities in the agency\u2019s rulemaking process, needs to develop evidence outside the record. While the Minnesota Supreme Court has\u2014for contested cases\u2014authorized a limited form of discovery,[30]<\/a><\/sup> a similar use of discovery might be applicable in a pre-enforcement challenge. At least in a contested case, it appears that limited written interrogatories may be directed to agency officials, but agency officials cannot be deposed orally, nor may their mental processes be explored.[31]<\/a><\/sup>\n<\/p>\n \n A rule may be found invalid on three grounds:[32]<\/a><\/sup>\n<\/p>\n \n The usual constitutional challenges allege that the rule does one of the following:\n<\/p>\n \n In other words, the same claims of constitutional invalidity that may be asserted against a statute may be asserted against a rule.[33]<\/a><\/sup>\n<\/p>\n \n Owing to the increased complexity of matters subject to agency regulation, the Minnesota Supreme Court has frequently been willing to find a permissible delegation of rulemaking power to an agency under general legislative policy directives.[35]<\/a><\/sup> But a rule may be challenged if it delegates the agency\u2019s authority to a private or public body.[36]<\/a><\/sup>\n<\/p>\n \n Whether a rule places an unreasonable burden on interstate commerce requires a court to analyze the evenhandedness of the rule\u2019s impact on the affected parties and the legitimacy of the state interest sought to be promoted.[37]<\/a><\/sup> For instance, in Minnesota League of Credit Unions v. Minnesota Department of Commerce<\/em><\/a>,[38]<\/a><\/sup> the Minnesota Supreme Court held that a rule prohibiting a credit union from soliciting individuals to join an affiliated group was valid, determining that the rule was a permissible regulation of commercial speech and gave fair warning to an individual of the conduct prohibited.\n<\/p>\n \n A third common constitutional challenge is that a rule purports to classify affected parties without a rational basis for the classification, thereby raising an equal-protection claim.[39]<\/a><\/sup>\n<\/p>\n \n But the most common constitutional challenge is that a rule violates due process because the rule is arbitrary and capricious[40]<\/a><\/sup><\/a> or vague or overbroad.[41]<\/a><\/sup> To survive a substantive due-process challenge, the rule need only bear some rational relation to accomplishing a legitimate public interest.[42]<\/a><\/sup>\n<\/p>\n \n Another common due-process challenge occurs when the rule violates the guarantee for a person to have proper notice and an opportunity to be heard.[43]<\/a><\/sup>\n<\/p>\n \n A rule may be challenged constitutionally on the grounds that it takes property without just compensation.[44]<\/a><\/sup>\n<\/p>\n \n In rulemaking, the term reasonable<\/em> is an important term of art for the agencies, OAH, and the courts. The concept of reasonableness was set forth in Mammenga v. Department of Human Services<\/em>,[45]<\/a><\/sup> a 1989 case in which the supreme court clarified the important distinction between constitutional unreasonableness<\/strong> of a rule and administrative unreasonableness <\/strong>of an agency action.[46]<\/a><\/sup>\n<\/p>\n \n A rule is constitutionally unreasonable if, on its face or as revealed by the record, it violates substantive due process by not being rationally related to the statutory objective sought to be achieved. An administrative decision, on the other hand, may be unreasonable\u2014that is, arbitrary and capricious\u2014in how it resolves a dispute, but this kind of unreasonableness doesn\u2019t implicate the constitution or make the underlying rule itself invalid. As a term, unreasonable<\/em> has caused confusion, as seen in Christian Nursing Center v. Department of Human Services<\/em>.[47]<\/a><\/sup>\n<\/p>\n \n Other examples of challenges over constitutional unreasonableness include Vang v. Commissioner of Public Safety<\/em><\/a>[48]<\/a><\/sup><\/a> <\/sup>and Good Neighbor Care Centers v. Minnesota Department of Human Services<\/em>.[49]<\/a><\/sup>\n<\/p>\n \n The upshot: a rule is unreasonable if it lacks a rational constitutional basis.\n<\/p>\n \n In addition to constitutional challenges, a rule may be challenged on nonconstitutional grounds. For example, a rule may be declared invalid if it exceeds an agency\u2019s statutory authority.[50]<\/a><\/sup>\n<\/p>\n \n When considering whether a rule exceeds an agency\u2019s statutory authority, a court must analyze what the legislative enactment, either expressly or impliedly, authorizes the agency to do by rule. For instance, take a case where the statute authorized an agency to issue standards or guidelines for housing products containing formaldehyde. After the agency adopted its rule, an aggrieved party argued that the agency had exceeded its statutory authority by going beyond mere regulation to instead banning products with formaldehyde if they contained a certain level of the chemical. The Minnesota Supreme Court held, however, that the express authority to regulate included, by necessary implication, the power to ban.[51]<\/a><\/sup>\n<\/p>\n \n The court in another case, however, held that the enabling legislation didn\u2019t confer statutory authority on the agency to adopt legislative or substantive rules; but the court nevertheless allowed the rule as a valid exercise of the agency\u2019s statutory power to adopt interpretative rules.[52]<\/a><\/sup>\n<\/p>\n \n A third way in which a rule may be declared invalid is if it was adopted without compliance with statutory rulemaking procedures under the APA. The APA explicitly states the procedural requirements that an agency must follow, at least substantially, for valid rulemaking.[53]<\/a><\/sup> Although under the federal APA interpretative rules are exempt from the act\u2019s notice-and-comment procedures,[54]<\/a><\/sup> this is not true under Minnesota\u2019s APA.[55]<\/a><\/sup>\n<\/p>\n \n Whether there has been compliance with the statutory rulemaking requirements assumes, of course, that the rule being challenged is a rule<\/em>, as defined under the APA. Thus it may be necessary to first establish that an agency pronouncement is a rule. In one case, for example, an aggrieved party successfully established that an agency-issued policy bulletin was a rule, and because the agency had not complied with notice-and-hearing requirements when it issued the bulletin, the agency\u2019s pronouncement was invalid.[56]<\/a><\/sup>\n<\/p>\n \n In a pre-enforcement challenge, the court of appeals determines whether, on the record, the agency acted reasonably or arbitrarily and capriciously; the court also determines if the agency acted in accordance with the U.S. and Minnesota Constitutions and the law.[57]<\/a> <\/sup>The court is not required, as in a contested case, to use the substantial-evidence standard.[58]<\/a><\/sup> In other words, a court\u2019s standard of review is more restrictive in a pre-enforcement challenge.[59]<\/a><\/sup><\/a> And because a pre-enforcement challenge tends to consider the rule in an abstract or hypothetical setting, a court would be premature to apply a stricter standard of review.[60]<\/a><\/sup>\n<\/p>\n \n Under the arbitrary-and-capricious standard, the court makes a \u201csearching and careful\u201d inquiry of the record to determine if the agency action has a rational basis.[61]<\/a><\/sup><\/a> The court is to show deference to agency expertise, but the agency must explain on what evidence it\u2019s relying and how that evidence connects rationally to the rule involved.[62]<\/a><\/sup> Requiring the agency to explain its actions ensures that the agency action is not a result of \u201cimpermissible whim, improper influence, or misplaced zeal.\u201d[63]<\/a><\/sup>\n<\/p>\n \n At times, the subject matter to be regulated may involve an area in which the technical or scientific knowledge is incomplete or the available data imperfect, yet regulation is needed. A rule adopted on the basis of incomplete or tentative information will still be upheld if the agency explains itself adequately and acts reasonably.[64]<\/a><\/sup>\n<\/p>\n \n As discussed in section 24.8.2, it\u2019s important to remember that the kind of unreasonableness that will invalidate a rule (lack of rational basis) is different from the kind of unreasonableness that renders an agency decision arbitrary or capricious.\n<\/p>\n \n Decisions of administrative agencies enjoy a presumption of correctness.[65]<\/a><\/sup> Mindful of the constitutional prohibition against delegating to the judiciary duties that are essentially administrative, a court must exercise restraint when reviewing agency action so as not to substitute its own judgment for that of the agency.[66]<\/a><\/sup>\n<\/p>\n \n A court may, if grounds exist, declare a rule invalid.[67]<\/a><\/sup>\n<\/p>\n \n When determining a rule\u2019s validity, a court may first have to interpret the rule language.[68]<\/a><\/sup> Although a reviewing court defers to the practical construction that an agency gives its rules or a statute, even long-standing administrative rules may not be binding if they are erroneous or contrary to law.[69]<\/a><\/sup> And courts need not defer to the agency when the rule language or the delineated standard is clear and capable of being understood.[70]<\/a><\/sup>\n<\/p>\n \n When interpreting a rule, courts must be careful of the separation-of-powers doctrine that prohibits delegating nonjudicial functions to the court. For example, if a court declares an agency action invalid, the declaration doesn\u2019t transfer the agency\u2019s legislative power to the court.[71]<\/a><\/sup>\n<\/p>\n \n If a court finds an agency\u2019s rulemaking process to be defective, it may remand the rulemaking to the agency for further proceedings.[72]<\/a><\/sup>\n<\/p>\n\n
24.1 Challenging a Rule\u2019s Validity<\/h2>\n
24.2 Bringing a Pre-enforcement Challenge<\/h2>\n
24.2.1 Time limit to Bring Challenge<\/h3>\n
24.2.2 Filing Petition with the Court<\/h3>\n
24.2.3 What Can Be Challenged<\/h3>\n
24.3 Standing Needed to Challenge Rule<\/h2>\n
24.3.1 When Sufficient<\/h3>\n
24.3.2 When Insufficient<\/h3>\n
24.4 Parties to a Pre-enforcement Challenge<\/h2>\n
24.5 Petition Requirements<\/h2>\n
\n
24.6 Record for Judicial Review<\/h2>\n
24.7 Discovery Procedures<\/h2>\n
24.8 Grounds for Judicial Review<\/h2>\n
\n
24.8.1 Constitutional Violations<\/h3>\n
\n
24.8.1(1) Unlawful-delegation-of-powers Clause[34]<\/a><\/sup><\/strong><\/h4>\n
24.8.1(2) Commerce-Clause Violations<\/h4>\n
24.8.1(3) Equal-protection and Due-process Violations<\/h4>\n
24.8.1(4) Property Violations<\/h4>\n
24.8.2 What Constitutes Reasonableness<\/em><\/h3>\n
24.8.3 Nonconstitutional Challenges<\/h3>\n
24.8.4 Noncompliance with Statutory Rulemaking Procedures<\/h3>\n
24.9 Scope of Review<\/h2>\n
24.9.1 Arbitrary-and-Capricious Standard<\/h3>\n
24.9.2 Presumption of Correctness<\/h3>\n
24.9.3 Determining a Rule\u2019s Validity<\/h3>\n
24.9.4 Remanding Rule<\/h3>\n