United States: Supreme Court Holds DNR Without Authority to Intervene in Local Zoning Decisions in Lower St. Croix River Area

The Minnesota Supreme Court has decided two recent cases that will remove a layer of governmental review from zoning requests by property owners in the Lower St. Croix River valley. In both decisions, the Court rejected the notion that the Minnesota Department of Natural Resources (the DNR) had oversight and approval authority over city decisions granting variances to property owners. The DNR has exercised supervisory authority over local zoning decisions made along the Lower St. Croix River since 1972, when Congress designated the Lower St. Croix River as a Wild and Scenic River under the Wild and Scenic Rivers Act of 1968. This authority has been severely limited, if not ended, as a result of these two Minnesota Supreme Court decisions.

Following Congress's action in 1972, the Minnesota Legislature passed a companion state law called the Minnesota Wild and Scenic Rivers Act in 1973. The state act gave the DNR the power to "adopt statewide minimum standards and criteria for the preservation and protection of shorelands within the boundaries of" designated rivers. The state law required local governments to "adopt or amend ... ordinances" to be in compliance with DNR standards and further provided that if local governments did not do so in a timely manner, then the DNR "shall" adopt such ordinances for them. The question raised in both Supreme Court cases was whether the DNR's legitimate power to set and enforce standards includes the power to review and approve specific zoning decisions made by local governments in the Lower St. Croix River valley.

Hubbard: DNR power must be expressly granted or "fairly drawn and fairly evident"

In February, the Minnesota Supreme Court ruled that the DNR had no authority to approve or deny a variance granted by the City of Lakeland to Robert W. Hubbard for a new house he planned to build on a bluff overlooking the St. Croix. In the Matter of the Denial of Certification of the Variance Granted to Robert W. Hubbard by the City of Lakeland, (Minn., Feb. 11, 2010). Lakeland granted Hubbard a variance from the 40-foot bluffline setback, allowing the house to be built closer to the bluffline than the setback allowed.

One of the rules on Wild and Scenic Rivers that the DNR adopted was a requirement that local governments notify the DNR of any decision to grant a variance from an ordinance applicable to the Lower St. Croix. The DNR rule said that the variance decision is not "effective unless and until the [DNR] Commissioner has certified that the action" complies with law. The DNR refused to certify Lakeland's variance decision in favor of Hubbard because it did not "find adequate justification of the bluffline variance in the City's Findings." Following an administrative hearing and an appeal to the Minnesota Court of Appeals, the case landed in the Minnesota Supreme Court.

The Supreme Court looked closely at the laws passed by the Minnesota Legislature to determine whether these laws gave the DNR either express or implied power to approve or disapprove a local government variance decision. The Court concluded that the Legislature had not given this power to the DNR either expressly or by implication. The Court said the DNR's authority was limited to assisting local governments in the enforcement of their ordinances. The Court further said the Legislature has expressly delegated to cities the power to zone, which includes the power to grant variances. The lesson of the case is that both the DNR and cities are subdivisions of the state government, created by the Legislature and only have the powers granted by the Legislature through statutes it adopts. If a power has not been explicitly granted, or if a power cannot be "fairly drawn and fairly evident" from express powers granted by the Legislature, then the governmental subdivision does not have it.

Haslund: no DNR power to prohibit a development approved by a city under ordinance previously approved by DNR

In April, the Minnesota Supreme Court reached a similar result in connection with another local zoning decision made by a city within the Wild and Scenic River Area, St. Mary's Point. In the Matter of the Denial of Certification of the Variance Granted to David Haslund by the City of St. Mary's Point, (Minn., Apr. 29, 2010). David Haslund owned a lot of less than one acre in St. Mary's Point. Under a DNR rule lots of less than an acre are considered "substandard" and not developable without a variance. The DNR rule has an exception for substandard lots in existence before the DNR rule was adopted in 1974; lots pre-existing the rule are developable without a variance. The DNR rule also states the exception does not apply and the substandard lot remains unbuildable if the owner of the lot also owned an adjacent lot that could be combined with the substandard lot to make at least an acre of land.

Another DNR rule requires cities along the Lower St. Croix to submit local zoning ordinances to the DNR for review and approval. Under this rule, the DNR has the power to determine whether the local ordinance is in "substantial compliance" with state standards. St. Mary's Point submitted its zoning ordinance to the DNR for review and approval in 1978 and the DNR concluded that the ordinance was in substantial compliance with state standards. St. Mary's Point included in its DNR-approved zoning ordinance a substandard lot provision that was nearly identical to the DNR's provision—a key difference, however, was that the city ordinance referred only to platted lots.

Haslund requested a variance from St. Mary's Point to allow development of his substandard lot. Haslund's lot was unplatted and the city granted the variance. The DNR refused to approve the variance because it discovered that Haslund and his family had owned for a time (but no longer) land adjacent to the substandard lot that could have been combined with the substandard lot to make a parcel more than an acre in size. Haslund appealed the DNR denial and the case made its way to the Minnesota Supreme Court. The Court reversed the DNR denial of the variance. The Court said that because (a) the DNR had previously approved the city ordinance as being in substantial compliance with state standards, (b) the ordinance only applied to platted lots and (c) Haslund's lot was unplatted, the variance should be allowed. The Court treated the DNR's approval of St. Mary's Point's zoning ordinance as "effective and binding on the DNR"; accordingly, the agency could not countermand a local zoning decision based on the DNR-approved ordinance. Two justices on the Court concurred in this result, but observed that the case should have been decided on the same ground as Hubbard—that the DNR was not given the power by the Legislature to certify local zoning decisions. Hubbard and Haslund represent a significant limitation on the power of the DNR to interfere with local governmental zoning decisions in the Lower St. Croix area.

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