Minnesota Court of Appeals Strikes Down Sprinkler Rule

Larkin Hoffman real estate litigation attorneys Rob Stefonowicz and Bryan Huntington successfully obtained a declaratory judgment from the Minnesota Court of Appeals invalidating an administrative rule while representing the Builders Association of the Twin Cities (“BATC”). Specifically, BATC challenged a rule adopted by the Minnesota Department of Labor & Industry (“DLI”) requiring residential fire sprinklers in all newly-constructed single- and two-family homes, except for those single-family homes under 4,500 square feet (the “Sprinkler Rule”).
 
BATC relied upon a Minnesota law that allows a private party to challenge the validity of an administrative rule – prior to its enforcement – in the Court of Appeals. That law permits a party to challenge a rule’s validity regardless of whether the party ever violated the rule. Importantly, a party may challenge an administrative rule even if the party did not participate in the administrative proceedings on the rule.
 
Shortly before the Sprinkler Rule went into effect in January 2015, BATC petitioned the Court of Appeals to stay enforcement of the rule pending a final decision on the validity of the rule. BATC alleged that the rule requiring sprinklers was invalid because it was adopted outside DLI’s rulemaking authority, violated the constitutional requirement of substantive due process, and was adopted in a manner that violated statutory rulemaking procedure. The Court of Appeals denied BATC’s stay request, however this preliminary ruling would have no effect on the court’s final decision on the validity of the rule.
 
In October 2015, the Court of Appeals issued its ruling invalidating the Sprinkler Rule. The Court of Appeals determined there was “simply no evidence or explanation” supporting the notion that new two-family homes and single-family homes 4,500 square feet or greater present a unique fire-safety risk that justifies requiring sprinklers. Furthermore, the court noted there was no explanation in the record for why DLI adopted a threshold of 4,500 square feet as opposed to a threshold of any other square footage, be it 3,000 or 5,000 square feet. Consequently, the court held the “Sprinkler Rule” was “arbitrary and not the result of a reasoned determination.” The lack of any evidence supporting the rule meant that DLI had also acted outside its rulemaking authority. Finally, the court recognized that DLI had failed to comply with Minnesota law insofar as it required DLI to consider the costs of the rule on small businesses and cities.
 
In mid-November 2015, DLI filed a petition asking the Minnesota Supreme Court to review the Court of Appeals’ decision. The Supreme Court has discretion to decide whether to review the case; if the Supreme Court decides to hear the case, that decision has no bearing on how it will ultimately rule on the merits. The Supreme Court will likely decide whether to hear the case by the end of January 2016. Rob and Bryan are representing BATC related to the Supreme Court proceedings.
 
Administrative rule challenges require a complex interweaving of diverse practice areas. Retaining litigation counsel familiar with the mechanics of such a challenge is crucial. If you are considering challenging an administrative rule, Larkin Hoffman’s lawyers have the experience that you need.

Update: Dec. 29, 2016
The Minnesota Supreme Court decided not to review the case and the October ruling that invalidated the Sprinkler Rule will stand.

Further Coverage
Minneapolis/St. Paul Business Journal
Star Tribune