E. Phillips Neighborhood Inst. v. The City of Minneapolis

• Decision Date: 06 February 2023
• Docket Number: A21-1297
• Parties: East Phillips Neighborhood Institute, Inc., et al., Relators, v. The City of Minneapolis, Respondent.
• Court: Minnesota Court of Appeals

East Phillips Neighborhood Institute, Inc., et al., Relators, v. The City of Minneapolis, Respondent.

No. A21-1297

Court of Appeals of Minnesota

February 6, 2023

This opinion is nonprecedential except as provided by Minn. R Civ. App. P. 136.01, subd. 1(c).

City of Minneapolis

City of Minneapolis Miles Ringsred, Duluth, Minnesota (for relators)

Kristyn Anderson, Minneapolis City Attorney, Mark Enslin Ivan Ludmer, Assistant City Attorneys, Minneapolis, Minnesota (for respondent)

Considered and decided by Frisch, Presiding Judge; Reyes, Judge; and Kirk, Judge. ^[*]

FRISCH, Judge

Relators East Phillips Neighborhood Institute, Inc. (EPNI) and Cassandra Holmes argue that an environmental-assessment worksheet (EAW) related to the proposed expansion of a water maintenance facility prepared by respondent City of Minneapolis was incomplete and inaccurate, did not sufficiently address mitigation considerations, and was the product of bias. Relators also argue that an environmental-impact statement (EIS) was required. Because the city prepared a complete and accurate EAW in compliance with applicable authorities, and no EIS was required, we affirm.

FACTS

The Minneapolis Public Works Department proposed to expand its Hiawatha Maintenance Facility, located in the East Phillips neighborhood, into the property immediately to the south (the project). According to the EAW, this expansion would involve the relocation and consolidation of the water distribution maintenance functions from the East Side Wateryard, including office, shop, yard and vehicle/equipment storage functions and sewer and stormwater office staff from elsewhere. The project would require the environmental abatement and demolition of the former Roof Depot warehouse building and the construction of approximately 328,000 square feet of new buildings, as well as surface and structured parking for an additional 360 city and personal vehicles. Wateryard functions are a key element to the distribution of approximately 55 million gallons of safe drinking water per day to city residents and seven wholesale customers located outside the city's boundaries. According to the EAW, the project is part of the city's effort to consolidate services in key locations to improve the efficiency of its services and improve working conditions for employees.

The East Phillips neighborhood-a community primarily comprised of individuals who identify as people of color-has been disproportionately affected by pollution. Historical contamination at the project site includes pollution from petroleum compounds, volatile organic compounds, metals (including arsenic), asbestos, debris contamination in the soil, and groundwater contaminated with petroleum compounds and metals. The unique vulnerability of the East Phillips neighborhood for further impact from pollution led to the Minnesota Pollution Control Agency (MPCA) to recognize it as an area of environmental justice concern, and it has been included in the city's designated Southside Green Zone.^[1]

In January 2020, residents of the East Phillips neighborhood presented the city with a petition to perform an EAW for the project. The city concluded that Minn. R. 4410.1700, subp. 7 (2021),^[2] did not require an EAW for the project, but it ultimately elected to prepare a discretionary EAW. In February 2021, the city published the EAW for public comment. The city granted a request to extend the 30-day comment period until March 25, 2021. EPNI submitted comments in response to the EAW.

Given the "unprecedented" number of public comments, the city postponed issuing a decision for an additional 30 days under Minn. R. 4410.1700, subd. 2a(B) (2021), in order to review and assess the information received. The city presented the EAW to several city council committees, and the city, through the city council, ultimately adopted the EAW's findings of fact, approved the adequacy of the EAW, and approved the determination set forth in the EAW that an EIS is not required.

Relators appeal.

DECISION

Relators argue the city's adoption of the EAW's conclusion that an EIS was not necessary was arbitrary and capricious because the city was biased as the responsible governmental unit (RGU), and the EAW was incomplete and failed to consider several important aspects of the problem.^[3] We address each argument in turn.

When reviewing agency action, we determine whether the agency has taken a "hard look" at the problems involved, and whether it has "genuinely engaged in reasoned decision-making." Rsrv. Min. Co. v. Herbst, 256 N.W.2d 808, 825 (Minn. 1977) (quotation omitted). We defer to the RGU's decisions unless "they reflect an error of law, the findings are arbitrary and capricious, or the findings are unsupported by substantial evidence." Citizens Advocating Responsible Dev. v. Kandiyohi Cnty Bd. of Comm'rs, 713 N.W.2d 817, 832 (Minn. 2006) (CARD). Substantial evidence is evidence that a reasonable person might accept as adequate to support a conclusion. Id. A decision is considered arbitrary and capricious if it is "based on factors that the legislature did not intend," "entirely fails to address an important aspect of the problem," "offers an explanation that is counter to the evidence," or is "so implausible that it could not be explained as a difference in view or the result of the RGU's decision-making expertise." Friends of Twin Lakes v. City of Roseville, 764 N.W.2d 378, 381 (Minn.App. 2009). The party challenging an RGU's decision "has the burden of proving that its findings are unsupported by the evidence as a whole." Id.

I. The record contains no evidence of actual bias by the city.

Relators assert that the city's decision that an EIS was not necessary was arbitrary and capricious because the city was biased in the preparation of the EAW, and its decision represents its will, rather than its judgment. Relators argue the city was biased because (1) the city advocated for the project "prior to the adjudication," (2) the city had already made and implemented its decision to complete the project before the "quasi-judicial review of the EAW," and (3) the city had "[p]ecuniary interests stemming from millions of dollars already expended by [the city] on the Project prior to the adjudication."^[4] We disagree.

First, the RGU that conducted the EAW differed from the city unit that proposed the project. The project was proposed by the Minneapolis Public Works Department, while the EAW was completed by the Minneapolis Department of Community Planning & Economic Development. The separation of the entities that proposed the project and conducted the EAW undermines the assertion that the city was biased as an RGU reviewing its own project. Indeed, the appointment of a different city department as RGU is consistent with Minn. R. 4410.0500, subp. 2 (2021), which provides that the RGU for a discretionary EAW "shall" be the governmental unit that ordered the EAW.

Second, the record contains no evidence of actual bias by the city. Relators do not identify any specific, affirmative evidence showing actual bias. Cf. Living Word Bible Camp v. County of Itasca, No. A12-0281, 2012 WL 4052868, at *8 (Minn.App. Sept. 17, 2012) (concluding that evidence that an individual commissioner who was involved in the EAW repeatedly ordered changes to the EAW that benefited opponents of the project at issue demonstrated actual bias), rev. denied (Minn. Nov. 27, 2012).^[5] Rather, the record indicates that the city council engaged in a robust discussion and received and considered competing views on the project. While the city council recognized that the project has been a longstanding commitment and that the city had invested in the project, several Policy and Government Oversight (POGO) committee members raised concerns about the project, including concerns about environmental and racial justice.^[6] See Stelzner v. Minnehaha Creek Watershed Dist., No. C7-97-1087, 1997 WL 733635, at *4 (Minn.App. 1997) (concluding a city's interest in the benefits of a project does not necessarily constitute bias or prejudice, especially considering that Minn. R. 4410.0500 "anticipates the RGU will have an interest in the project"). Accordingly, relators have not met their burden to show the EAW was arbitrary and capricious due to the city's alleged bias.

II. The city's decision was not incomplete or inadequate.

Relators argue the city's decision that an EIS was not required was arbitrary and capricious because the EAW was incomplete and entirely failed to or did not adequately address several important aspects of the problem. We address each argument in turn.^[7]

A. The EAW was not incomplete.

Relators argue the EAW entirely failed to evaluate the health effects in the East Phillips neighborhood, cumulative effects of the project, and climate change effects. A decision is considered arbitrary and capricious if it "entirely fails to address an important aspect of the problem." See Friends of Twin Lakes, 764 N.W.2d at 381. In determining whether a project may result in "significant environmental effects," the RGU must consider four factors: (1) the "type, extent, and reversibility of environmental effects"; (2) the "cumulative potential effects" of related or anticipated future projects; (3) "the extent to which the environmental effects are subject to mitigation by ongoing public regulatory authority"; and (4) "the extent to which environmental effects can be anticipated and controlled as a result of other available environmental studies undertaken by public agencies or the project proposer, including other EISs." Minn. R. 4410.1700, subp. 7; see also CARD, 713 N.W.2d at 829.

Health and Air Quality

Relators argue the city did not address the project's impact on...