11-2200-12862-2

 

 

 

STATE OF MINNESOTA

OFFICE OF ADMINISTRATIVE HEARINGS

FOR THE MINNESOTA POLLUTION CONTROL AGENCY

 

 

 

In the Matter of the Jennie-O Foods Administrative Penalty Order dated June 21, 1999

RECOMMENDED RULING ON CROSS-MOTIONS FOR SUMMARY DISPOSITION

 

The above-entitled matter is before Administrative Law Judge Barbara L. Neilson on cross-motions for summary disposition.  The parties filed their motions for summary disposition on July 21, 2000.  Jennie-O Foods filed a responsive memorandum on August 4, 2000, and the Minnesota Pollution Control Agency filed a responsive memorandum on August 7, 2000.  Oral argument concerning the cross-motions was heard on August 10, 2000.  The record closed on August 14, 2000, with receipt of a copy of the 1979 rule report regarding the proposed animal feedlot rules.

Paul Merwin, Assistant Attorney General, 445 Minnesota Street, Suite 900, St. Paul, Minnesota, 55101-2127, represented the Minnesota Pollution Control Agency (“MPCA”).  Thaddeus Lightfoot, Esq., Oppenheimer Wolff & Donnelly, 3400 Plaza VII Building, 45 South Seventh Street, Minneapolis, Minnesota 55402, represented Jennie-O Foods, Inc.

Notice is hereby given that, pursuant to Minn. Stat. § 14.61, the final decision of the Minnesota Pollution Control Agency shall not be made until this Recommended Order has been made available to the parties to the proceeding for at least ten days, and an opportunity has been afforded to each party adversely affected to file exceptions and present argument to the Agency.  Parties should contact the Minnesota Pollution Control Agency, 520 Lafayette Road, St. Paul, Minnesota 55155-4194, to learn about the procedure for filing exceptions or presenting argument.

Based upon all the files, records, and proceedings herein, and for the reasons set forth in the accompanying Memorandum, the Administrative Law Judge makes the following:

RECOMMENDATION

 

IT IS HEREBY RECOMMENDED:

 

1.      That Jennie-O Foods’ motion for summary disposition be GRANTED.

 

2.      That the Minnesota Pollution Control Agency’s motion for summary disposition be DENIED and the Administrative Penalty Order be dismissed.

 

Dated:  September 13, 2000.

 

BARBARA L. NEILSON

Administrative Law Judge

MEMORANDUM

 

Undisputed Underlying Facts

This matter involves an appeal of an Administrative Penalty Order that the MPCA issued to Jennie-O Foods on June 21, 1999.[1]  The Administrative Penalty Order cites Jennie-O Foods for several violations of state water quality rules as a result of the improper storage of turkey manure that Jennie-O generated at its feedlot and sold to Schurman Farms and Grain.  There are no material facts in dispute and the parties have stipulated to the following:  On or about June 12, 1998, Jennie-O completed the sale of turkey manure for use as a domestic fertilizer to Schurman Farms and Grain, Inc.  Schurman Farms operates a manure application business.  The manure was produced at Jennie-O’s White Oak and Mananah Farms in Meeker County.  Schurman Farms hauled the manure from the Jennie-O Farms to cropland owned by Kay Olson.  The Olson farm is located in Meeker County near an unnamed tributary of Grove Creek.  Schurman Farms intended to store the manure at the Olson farm site until it could be applied as fertilizer to the cropland. 

On June 12, 1998, Minnesota Pollution Control Agency staff received a complaint alleging that poultry manure was improperly stockpiled in Swede Grove Township in Meeker County.  On June 25, 1998, Kevin Molloy of the MPCA inspected the site, accompanied by Meeker County Zoning Administrator John Boe, Denis Anderson of Jennie-O Foods, and Kent Smith, the person who leased and farmed the Olson property.  It had rained the previous night and the ground surrounding the manure stockpile was saturated.  MPCA staff observed that the manure stockpile was located near the unnamed tributary of Grove Creek.  Channelization on the ground indicated that the manure had flowed east to the unnamed creek and north to the road ditch, which flows toward the same creek.  On June 25 and 26, 1998, Schurman Farms removed the manure pile from the area near the unnamed tributary and relocated the pile on the Olson farm. 

On June 21, 1999, the MPCA issued an Administrative Penalty Order to Jennie-O Foods alleging that Jennie-O violated Minnesota Rules 7050.0210, subps. 1 and 13--the general rules prohibiting discharge of untreated sewage.  MPCA alleged that Jennie-O was “the generator, and responsible party for the manure as described by Minn. R. 7020.0400, subp. 5.”[2]  On July 15, 1999, the MPCA issued Schurman Farms a Notice of Violation, alleging that Schurman Farms also violated Minnesota Rules 7050.0210, subps. 1 and 13.  MPCA alleged that Schurman Farms stockpiled turkey manure from the Jennie-O feedlots at the Olson farm site in an area close to the unnamed tributary of Grove Creek, and that there was a discharge from the turkey manure stockpile to the unnamed tributary.[3] 

Summary Disposition Standard

Summary disposition is the administrative equivalent of summary judgment.  Summary disposition is appropriate where there is no genuine issue as to any material fact and one party is entitled to judgment as a matter of law.[4]  The Office of Administrative Hearings has generally followed the summary judgment standards developed in judicial courts in considering motions for summary disposition regarding contested case matters.[5]

The moving party has the initial burden of showing the absence of a genuine issue concerning any material fact.  A genuine issue is one that is not sham or frivolous.  A material fact is a fact whose resolution will affect the result or outcome of the case.[6]  To successfully resist a motion for summary judgment, the nonmoving party must show that there are specific facts in dispute that have a bearing on the outcome of the case.[7]  A nonmoving party cannot rely on pleadings alone to defeat a summary judgment motion.[8]  The nonmoving party must establish the existence of a genuine issue of material fact by substantial evidence; general averments are not enough to meet the nonmoving party’s burden under Minn. R. Civ. P. 56.05.[9]  The evidence presented to defeat a summary judgment motion, however, need not be in a form that would be admissible at trial.[10]

When considering a motion for summary judgment, the facts must be viewed in the light most favorable to the non-moving party,[11] and all doubts and factual inferences must be resolved against the moving party.[12]  If reasonable minds could differ as to the import of the evidence, judgment as a matter of law should not be granted.[13]

Discussion of Parties’ Contentions

The MPCA asserts that Jennie-O, as the owner of the animal feedlot that generated the turkey manure, is responsible for the untreated sewage and pollution violations resulting from the improper storage of the manure.  The MPCA bases its position on Minnesota Rule 7020.0400, subp. 5, which states that:

“The owner of any animal feedlot shall be responsible for the storage, transportation, and disposal of all animal manure consistent with the provisions herein.”

The MPCA maintains that this rule means that the feedlot owner is responsible for the manure at all stages of its handling, including storage, transportation and disposal.  And the MPCA argues that the word “disposal” means the ultimate disposal of the manure. According to the MPCA, the feedlot owner remains liable for violations arising from the handling of the manure it generates, even if the handling is carried out by a third-party who has purchased the manure.  Therefore, the MPCA asserts in this matter that Jennie-O remains responsible for the ultimate disposal of its turkey manure as cropland fertilizer and is liable for the improper storage of the manure on the Olson land by Schurman Farms.  Moreover, the MPCA argues that, because it is interpreting its own rule, its interpretation should be accorded considerable deference.  It is the MPCA’s position that it has broad discretion to interpret its own rules and that it has “appropriately determined that feedlot owners retain responsibility for ensuring the proper handling of their manure, even after it leaves their possession.”[14]

Jennie-O argues that Minnesota Rule 7020.0400 does not make it liable for Schurman Farm’s failure to store the turkey manure properly at the Olson farm site.  Jennie-O sold the manure for use as fertilizer to Schurman Farms in an arm’s-length transaction more than two weeks before the MPCA discovered Schurman Farm’s improper storage of the manure at the Olson farm site.  Once sold, Jennie-O no longer had possession of the manure or control over its handling.  Jennie-O maintains that the express language of Minnesota Rule 7020.0400, subp. 5, limits a feedlot owner’s duties to the provisions of Rule 7020.0400.  Subpart 5 states that a feedlot owner shall be responsible for the handling of manure it generates in a manner “consistent with the provisions herein”--that is, the provisions contained in 7020.0400--and these provisions apply pollution control requirements to animal feedlots and their associated manure storage areas.  Jennie-O asserts that these provisions do not create a “cradle-to-grave” regulatory program under which a manure generator is strictly liable for the storage of manure forever.  Jennie-O also argues that nothing in Minnesota Rule 7020.0400 supports the MPCA’s position that the rule applies once a feedlot owner sells animal manure as a fertilizer to a third party. 

Moreover, Jennie-O contends that the MPCA’s position is contrary to sound public policy.  If feedlot owners are held accountable for the actions of third party purchasers, feedlot owners will not be able to ensure regulatory compliance and the third party purchasers will have no incentive to comply with pollution control regulations.  Finally, Jennie-O argues that the MPCA’s interpretation of Minnesota Rule 7020.0400, subp. 5, is not entitled to deference because the language of the rule is unambiguous, and the MPCA’s interpretation is inconsistent with the rest of 7020.0400 or with the Agency’s Statement of Need and Reasonableness drafted in support of the proposed rule back in 1979.

The only issue presented in this proceeding is the proper interpretation Minnesota Rule 7020.0400, subpart 5, and the application of the rule to the stipulated facts.  Deference is given to an agency’s interpretation of its own regulation, especially when the relevant language is unclear or susceptible to different interpretations.[15]  If the regulation is ambiguous, the agency’s interpretation will generally be upheld if it is reasonable.[16]  No deference is given to an agency’s interpretation, however, where the language of the regulation is clear and capable of being understood.[17]  Moreover, if an interpretation has not been consistently applied in the past, a court may cite this as an important factor in finding the interpretation to be an invalid (unpromulgated) interpretive rule.[18]  Interpretations by agencies that attempt to clarify the law they administer and are not within the plain meaning of an existing rule are deemed to be interpretive rules.  Interpretive rules must be adopted pursuant to the rulemaking requirements of the Minnesota Administrative Procedure Act in order to be valid.[19]

As an initial matter, the Administrative Law Judge finds that the MPCA’s interpretation of Minnesota Rule 7020.0400, subpart 5 should not be accorded deference.  Although the MPCA is interpreting its own rule, the rule part at issue is not ambiguous, and the agency’s interpretation is not one of longstanding application.  In fact, when asked during the motion hearing whether the MPCA had ever issued an Administrative Penalty Order or initiated any enforcement action against a feedlot owner under this provision and similar circumstances, counsel for the MPCA responded that there has been no similar enforcement action brought against a feedlot owner by the MPCA.  Accordingly, as this is the first application of the agency’s interpretation of feedlot owner responsibility for improper storage of manure by a third-party owner under Minnesota Rule 7020.0400, subp. 5, the MPCA’s interpretation is not entitled to deference beyond the weight typically accorded the position of the regulating agency. 

Minnesota Rules Chapter 7020, which is entitled “Animal Feedlots,” governs animal feedlots and their associated manure storage areas.  Specifically, the chapter provides regulations for the control of pollution caused by manure generated from animal feedlots.  Although the MPCA maintains that the rulemaking history of chapter 7020 evidences the drafters’ intent to hold manure generators responsible for the handling and disposal of their manure even if it is sold to a third party,[20] no mention of such an intention is made in the rule, the Agency’s supporting Statement of Need and Reasonableness, or the rule report issued by the Administrative Law Judge on June 6, 1979. 

After reviewing the rule and the record in this matter, the Administrative Law Judge concludes that the MPCA’s expansive interpretation of feedlot owner responsibility is not warranted by Minnesota Rule 7020.0400, subpart 5.  The plain language of the rule limits a feedlot owner’s duties to the handling of manure while it is in the control of the feedlot operation.  In essence, the MPCA is attempting to read into subpart 5 a strict liability standard for feedlot owners that is simply not contained in the provisions of Rule 7020.0400.  In fact, nothing in Minnesota Rules Chapter 7020 supports the MPCA’s position that the rule provisions apply once a feedlot owner sells manure to a third-party applicator.  There is no specific statement in the rule that feedlot owners will be held responsible for the handling or disposal of manure after it is sold to a third party and the feedlot owners no longer have possession or control over it.  Had the MPCA intended for feedlot owners to be strictly liable for the handling and ultimate disposal of the manure it generates, it clearly could have made explicit provision for this in the rule.[21]  It did not do so.  If either the Agency or the regulated public had expected such an expansive interpretation of the rule, it also would stand to reason that there would have been some specific discussion of the issue at the time the rule was initially proposed for adoption.  It appears from the portions of the rulemaking record filed in connection with this proceeding that no such discussion occurred.  Because the MPCA’s interpretation goes far beyond the plain meaning of the rule, it is an invalid interpretive rule and it cannot be used as the basis for the agency’s issuance of an administrative penalty order.

The Administrative Law Judge finds the case of Tessman Seed & Chemical Co. v. State of Minnesota[22], cited by Jennie-O, to be instructive in this matter.  In Tessman, the Minnesota Court of Appeals held that manufacturers and distributors of pesticides are no longer “responsible parties” liable for incidents under the Minnesota Pesticide Control Act after they sell their product.  Tessman involved the liability for costs associated with the environmental clean-up of a nursery and pesticide retail business that caught fire and released large amounts of pesticides into the water, soil and air.  The Minnesota Department of Agriculture attempted to hold the pesticide manufacturers and distributors responsible for the environmental cleanup costs of the retail business.  Pursuant to the governing statute, a person is liable as a “responsible party” for a pesticide “incident” if “at the time of an incident [the person] has custody of, control of, or responsibility for a pesticide, pesticide container, or pesticide rinsate.”[23]  The Department argued that the manufacturers and distributors continued to have “responsibility for” the pesticides, despite having sold the pesticides to a third party.  The Court of Appeals was not persuaded by the agency’s arguments, and instead concluded that the manufacturers and distributors of the pesticide relinquished their responsibility upon the sale of the pesticide to the distributors and to the retail seller.[24]

As with Tessman above, the Administrative Law Judge finds that Jennie-O Foods relinquished its responsibility for the storage of the turkey manure once it sold the manure as fertilizer to Schurman Farms.  Any attempt by the MPCA to hold feedlot owners responsible for the handling of manure that is no longer in their possession or control must be supported by a rule that has been promulgated in accordance with the Minnesota Administrative Procedure Act.  Since the existing rules do not contain authority for the MPCA’s proposed administrative penalty order, the ALJ recommends that Jennie-O Foods’ motion for summary disposition be granted and the MPCA’s cross-motion for summary disposition be denied.

The Administrative Law Judge is aware that the Agency and the Legislature have both been involved in amendments to the existing rules and those amendments have not yet taken effect.  This decision is based on the statutes and rules that were in effect on the date of the incident.

B.L.N.