OAH DOCKET No. 2-0900-16778-2

STATE OF MINNESOTA

OFFICE OF ADMINISTRATIVE HEARINGS

FOR THE MINNESOTA DEPARTMENT OF HEALTH

In the Matter of the License Revocation of Woodlyn Court

ORDER GRANTING MOTION FOR SUMMARY DISPOSITION

The above-captioned matter came before Administrative Law Judge Raymond R. Krause on a motion by the Minnesota Department of Health (“MDH”) for summary disposition. MDH filed its motion for summary disposition on December 29, 2005. The applicant, Woodlyn Court filed its response on January 30, 2006. The record, with respect to the motion, closed on February 7, 2006. The Minnesota Pollution Control Agency (“MPCA”) did not join in the motion.

John E. Bonner, III, Esq., 1950 U.S. Bank Plaza South, 220 South Sixth Street, Minneapolis, MN 55402, represented Woodlyn Court, L.L.P.

Kristen Olsen, Assistant Attorney General, Suite 1200, Brenner Tower, 445 Minnesota Street, St. Paul, MN 55101-2131, represented the MDH.

J. Sebastian Stewart, Assistant Attorney General, Suite 900, Brenner Tower, 445 Minnesota Street, St. Paul, Minnesota 55101, represented the MPCA.

Based upon the record herein and for the reasons set forth in the following Memorandum, the Administrative Law Judge makes the following:

ORDER AND RECOMMENDATION

IT IS HEREBY ORDERED:

That the Motion of the Minnesota Department of Health for Summary Disposition is GRANTED.

IT IS HEREBY RECOMMENDED:

That the Department of Health’s decision to revoke the conditional permit and assess an Administrative Penalty Order be AFFIRMED.

Dated: February 17th, 2006

s/Raymond R. Krause

RAYMOND R. KRAUSE

Chief Administrative Law Judge

NOTICE

This report is a recommendation, not a final decision. The Commissioner of Health will make the final decision after a review of the record. The Commissioner may adopt, reject, or modify the Findings of Fact, Conclusions, and Recommendations. Under Minn. Stat. § 14.61, the final decision of the Commissioner shall not be made until this Report has been made available to the parties to the proceeding for at least ten days. An opportunity must be afforded to each party adversely affected by this Report to file exceptions and present argument to the Commissioner. Parties should contact Dianne Mandernach, Commissioner, PO Box 64975, St. Paul, MN 55164-0975, to learn the procedure for filing exceptions or presenting argument.

If the Commissioner fails to issue a final decision within 90 days of the close of the record, this Report will constitute the final agency decision under Minn. Stat.§ 14.62, subd. 2a. The record closes upon the filing of exceptions to the report and the presentation of argument to the Commissioner, or upon the expiration of the deadline for doing so. The Commissioner must notify the parties and the Administrative Law Judge of the date on which the record closes.

Under Minn. Stat. § 14.62, subd. 1, the agency is required to serve its final decision upon each party and the Administrative Law Judge by first class mail or as otherwise provided by law.

MEMORANDUM

MDH Legal Authority

The MDH is responsible for establishing and enforcing the health standards that protect and promote public health.[1] Minnesota law requires manufactured home parks to be licensed. MDH licenses manufactured home parks and enforces the health and safety standards those parks are required to meet under Minn. Stat. §§ 327.14-28 (2004). Licenses for year-round manufactured home parks must be renewed annually and expire each year on December 31.[2] The regulations allow MDH to condition the grant of or the renewal of a license to operate a manufactured home park upon a demonstration by the applicant that it has taken actions to ensure compliance with the standards governing manufactured home parks.[3]

Manufactured home parks are required to meet standards designed to protect the park’s water supply and the residents of the park from contamination. Minn. Stat. § 327.20, subd. 1 (2) provides as follows:

All manufactured home parks shall be well drained and be located so that the drainage of the parking area will not endanger any water supply. No waste water from manufactured homes or recreational camping vehicles shall be deposited on the surface of the ground. All sewage and other water carried wastes shall be discharged into a municipal system whenever available. When the municipal sewage system is not available, a sewage disposal system acceptable to the state commissioner of health shall be provided.

Both the MDH and the MPCA must approve a sewage disposal system when a municipal system is not available.[4]

The Commissioner of Health is authorized to issue administrative penalty orders (“APO”s), correction orders, and to assess an amount not to exceed ten thousand dollars ($10,000) for violations of statutes and rules that MDH is required to enforce.[5] The Commissioner may issue an APO assessing a penalty and requiring a violation to be corrected within 30 calendar days from the date the order is received. The recipient of the order must provide information to the Commissioner before the 31^st day after the order was received, either that the violation has been corrected or that a corrective plan, acceptable to the Commissioner, has been developed.

If the corrective action has taken place or an acceptable corrective plan has been developed, the penalty must be forgiven unless the violation is serious or repeated. A non-forgivable penalty may be issued for serious or repeated violations.

In addition to penalty assessments, the Commissioner may deny or refuse to renew a license if an applicant does not meet, or fails to maintain, the minimum qualifications for holding the license. The Commissioner may also revoke or refuse to renew a license if there are unresolved violations related to the licensed activity.

Factual Background

Woodlyn Court is a manufactured home community owned by Woodlyn Court Properties. L.L.P. and operated by Wagner Management.[6] Woodlyn Court is located at 6050 Highway 10, Anoka, Minnesota and abuts Highway 10, a public highway.[7] Wagner Management is the holder of a license for the operation of the manufactured home park, issued by MDH in 1999. No sewer lines have been constructed along the portion of Highway 10 that abuts Woodlyn Court.

On September 8, 2004, MDH received a complaint about strong sewer smells at Woodlyn Court.[8] Two days later, MDH conducted an investigation at the park. The MDH investigators were accompanied by a representative from Anoka County.[9] The MDH investigator observed “several septic tanks on the property.” He found neither evidence of a connection to the municipal sewer system nor evidence of an approved individual sewage treatment system (“ISTS”).[10]

On September 13, 2004, MDH notified Woodlyn Court of eight alleged violations of regulations governing manufactured home parks. Seven of the violations relate to sewage disposal and treatment. The eighth violation was unrelated to sewage and was subsequently corrected.[11] The notification of September 13, 2004, stated that Woodlyn Court would need to respond within 10 days and indicate whether the violations had been corrected. The notification also stated that MDH would consider Woodlyn Court’s response in deciding what further enforcement action to take in the matter.

Woodlyn Court responded within the 10-day period by letter dated September 23, 2004.[12] In its response, Woodlyn Court did not deny that its sewage system was non-compliant. The response did not, however, contain a plan or timetable for a plan to correct the violations that were alleged. The response stated that Woodlyn Court was in contact with the City of Anoka and a sewer contractor.

On September 29, 2004, the Anoka City Building Official and an Environmental Health Specialist for Anoka County inspected the property.[13] The Anoka officials noted multiple septic systems on the property and one in particular that was discharging sewage onto the surface of the ground. Subsequently, the City and the County of Anoka made a determination that the Woodlyn Court sewage system met the definition of a failed system under the City’s sewer ordinance.[14] The findings of the Anoka officials were forwarded to MDH by letter dated October 4, 2004.[15]

On October 22, 2004, MDH notified Woodlyn Court that, because MDH had found the park to be discharging waste into cesspools in violation of Minn. Stat. § 327.20, subd. 1(2), Minn. R. 4630.0800, Minn. R. 4715.0310, and Minn. Stat. § 115.55, subd. 5a, the park’s license would not be renewed. MDH gave Woodlyn Court 30 days to submit an acceptable plan for remediation of the violations and abandonment of the existing cesspools.[16]

On October 25, 2004, MDH issued an APO to Woodlyn Court for failure to comply with Minn. R. 4630.0800, which requires that all sewage and other water carried wastes be discharged into a municipal sewage system or a sewage disposal system acceptable to the Commissioner of MDH and to the MPCA.[17] The APO imposed a $10,000 penalty which could be forgiven. The APO gave an additional 30 days from receipt of the order to demonstrate in writing that the park was in compliance. The APO specified that if Woodlyn Court complied within the specified period, the penalty would be forgiven.[18] The 30-day period expired November 25, 2004.

Woodlyn Court responded with two letters, dated November 1 and November 4, 2004, informing MDH of its activities with regard to the violations but also stating that compliance by November 24, 2004 was unlikely.[19]

On December 14, 2004, Woodlyn Court requested an extension of the deadline until June 1, 2005 so that it could prepare “an acceptable plan.”[20] On December 17, 2004, MDH granted the extension requested. MDH informed Woodlyn Court that if a plan, acceptable to the Commissioner was not received by June 1, 2005, MDH would revoke the conditional license it was granting.

Woodlyn Court did not submit a plan by June 1, 2005. Representatives of Woodlyn Court met with MDH on June 1, 2005, and stated that they were unwilling to incur the costs of connection to the municipal sewer system and intended to sell the property for commercial use and would begin the formal park closing process once a buyer was found. MDH granted Woodlyn Court one week to submit a proposed timeframe for selling the property and closing the park.[21]

On June 6, 2005, Woodlyn Court responded with a proposal to grant Woodlyn Court another extension until July 1, 2006, to enter into an agreement to sell the property and until June 30, 2007 to close the park.[22] The proposal included no plan to correct the sewage violations or to abandon the failed systems. The proposal, as it regarded sewage disposal, was simply to continue using the existing system and “continue the process of pumping the cesspools” as needed.[23]

On June 29, 2005, MDH notified Woodlyn Court that it would not accept the proposal and was revoking the conditional license.[24] The notice informed Woodlyn Court that the penalty of $10,000 would be forgiven if MDH was provided with documentation that the park closing process set forth in Minn. Stat. § 327C had begun within 20 days.

On July 19, 2005, Woodlyn Court notified MDH that it wished to appeal both the proposed license revocation and the administrative penalty.[25]

On May 6, 2005, the City of Anoka issued a Compliance Order to Woodlyn Court.[26] The Order directed Woodlyn Court to come into compliance with regard to its sewage system within six months of receipt of the notice. On November 14, 2005, representatives from the City and County of Anoka and from the MPCA inspected Woodlyn Court. They determined that the failing sewage system had not been replaced, upgraded or discontinued.[27] On November 17, 2005, the City of Anoka filed a criminal complaint in Anoka District Court alleging violations of City of Anoka ordinance sections 38-96(a) and 38-99.

On September 6, 2005, the MPCA filed a Motion to Intervene in this matter. The motion was granted on September 16, 2005.

Summary Disposition Standard

The Department’s request for summary disposition is analogous to a motion for summary judgment under Rule 56.02 of the Minnesota Rules of Civil Procedure. Summary disposition is appropriate when there is no genuine issue as to any material fact and one party is entitled to a favorable decision as a matter of law.[28] A material fact is one that is substantial and will affect the result or outcome of the proceeding, depending on the determination of that fact.[29] In considering the Motion for Summary Disposition, an Administrative Law Judge must view the evidence in the light most favorable to the nonmoving party.[30]

To obtain a summary disposition, the moving party must establish that there is no genuine issue of material fact. The initial burden is on the moving party to establish a prima facie case for the absence of material facts at issue.[31] Once the moving party has established a prima facie case, the burden shifts to the nonmoving party.[32] To defeat a motion for summary judgment, the nonmoving party must show that there are disputed facts that have a bearing on the outcome of the case.[33] The existence of a genuine issue of material fact must be established by the nonmoving party by substantial evidence.[34]

Analysis

The Administrative Law Judge and the Commissioner of Health have jurisdiction over the license application appeals pursuant to Minn. Stat. §§ 14.50 and 153A.14. At a hearing, an applicant for a license bears the burden of proof to demonstrate by a preponderance of the evidence that he or she has complied fully with the regulations required for licensure.[35]

There are essentially two substantial and material facts in this case that determine the outcome of this request for summary disposition. Neither of these facts is in dispute. Minn. Stat. § 327.20, subd. 1(2) (2004) requires, with respect to manufactured home parks, that “[a]ll sewage and other water carried wastes shall be discharged into a municipal sewage system whenever available. When a municipal sewage system is not available, a sewage disposal system acceptable to the state commissioner of health shall be provided.”

There is no dispute that Woodlyn Court is not connected to a municipal sewage system. There is also no dispute that the system Woodlyn Court is using is not acceptable to the Commissioner of Health, the MPCA, Anoka County or the City of Anoka. The MDH is therefore entitled to a favorable decision on the law.

Woodlyn Court argues that there is no municipal sewage system “available”, and MDH argues that there is municipal sewage disposal “available” at a price. Both of these arguments miss the point. Availability of municipal sewage disposal is only one prong of the two prong test. In order to grant summary disposition, the facts must be viewed in the light most favorable to the nonmoving party. Assume, therefore, that municipal sewer is not available. The statute states clearly that in such a situation, the licensee must use a sewage disposal system “acceptable to the state commissioner.” Since the system used by Woodlyn Court is not acceptable to the Commissioner, it does not help the applicant to find a municipal sewage hookup “unavailable.” The applicant still fails the second prong of the test.

Similarly, the argument that because MDH is claiming that the municipal system is “available.” Woodlyn Court was somehow unable to pursue a plan for an alternative to municipal hookup is not persuasive. Nothing prevented Woodlyn Court from maintaining its position that municipal sewage was unavailable and simultaneously preparing a contingency plan should they happen to be correct.

MDH has the authority under statute and rule to refuse to grant or to revoke a license for a manufactured home park that does not meet the licensing standards. With respect to sewage disposal, a license applicant must either be on municipal sewer or, if not available, be on an approved system. Woodlyn Court has done neither.

Woodlyn Court also contends that there is a material fact in dispute concerning whether the sewage disposal systems at the park are cesspools or not. Again, this is not a material fact and does not bear on the outcome of the case. Despite the fact that counsel for Woodlyn Court has termed the sewage system “cesspools” in his correspondence with MDH, the contention is that no one really knows what they are.[36] The parties do agree that the sewage system at Woodlyn Court is not connected to a municipal system. There is also no dispute that the Commissioner has not approved the existing system, whatever it is. It is immaterial whether the sewage treatment system is a cesspool or not since it is neither a municipal system nor an MDH approved ISTS. Therefore, Woodlyn Court does not meet either requirement of Minn. Stat. § 327.20, subd.1(2) or Minn. R. 4630.0800.

Woodlyn Court also argues that it is regularly “pumping out the cesspools” and therefore the threat to public health has been corrected. This may or may not have a bearing on the amount of the administrative penalty, but it does not absolve Woodlyn Court of the need to comply with one of the two requirements of the statute in order to maintain its license.

Woodlyn Court has also appealed the validity and the amount of the administrative penalty. The basis for the appeal is that 1) Woodlyn Court is not a repeat offender; 2) it is accused of violating only one regulation and; 3) the alleged unlawful behavior was not willful in that Woodlyn Court had not previously been apprised of any need to change its sewage disposal system.

When considering issuing an APO, the Environmental Health Division of the MDH (“the Division”) uses a guide entitled Plan for the Use of Administrative Penalty, Cease and Desist Authority and Other Division-Wide Enforcement Tools (“the Plan”). The Plan is used by the Division to determine whether a penalty should be forgivable or not and what dollar amount is appropriate under the circumstances.

In this case, the Division convened a “penalty calculation forum” to consider an APO for Woodlyn Court.[37] The attendees completed a worksheet for determining whether the penalty should be forgivable and what amount should be assessed.[38] The worksheet is part of the Plan. The violation was rated “serious” but a forgivable penalty was recommended as an “incentive to comply.”[39] The potential for harm was rated “severe” because of the failing nature of the sewage systems and the discharge of sewage onto the soil surface. On the worksheet, the Division noted the fact that there was only one violation and that Woodlyn Court was not a repeat offender. No adjustments were made, however, based on those notations.

Nothing in the Plan or in the worksheet requires the Division to reduce the monetary level of a severe-potential-for-harm penalty because of the number of violations or the violator’s past conduct. Woodlyn Court has made no showing that MDH has failed to follow its own rules or procedures in this regard.

The argument that the penalty is too harsh considering that Woodlyn Court was not apprised of the need to change its sewage system is likewise unconvincing. The MDH granted several requests for extensions of the deadlines. Woodlyn Court was on notice from September 13, 2004, that its systems were unacceptable. All MDH asked, at first, was for a plan for remediation and the penalty would be forgiven. To date, Woodlyn Court has not proposed a plan for remediation, only a plan to continue to use the failing systems, which is no plan at all.

The ALJ recommends that the Commissioner affirm the revocation of the conditional license and the issuance of the administrative penalty order.

R.R.K.

[3] Minn. Stat. § 144.99, subd. 8 (c) (2004).

[28] Minnesota Rules of Civil Procedure, Rule 56.03.

[29] Highland Chateau v. Minnesota Dep’t. of Public Welfare, 356 N.W.2d 804 (Minn. App.1984).

[30] Grandahl v. Bulluck, 318 N.W.2d 240 (Minn. 1988).

[31] Thiele v. Stich, 452 N.W.2d 580, 583 (Minn. 1988).

[32] Minnesota Mutual Fire & Casualty Co. v. Retrum, 456 N.W.2d 719, 723 (Minn. 1990).

[33] Hunt v. IBM Mid America Employees Federal Credit Union, 384 N.W.2d 853, 855 (Minn. 1986).

[35] Minn. Stat. § 144.99, subd. 8(c) (2004).