MN Court of Appeals Rejects City's Consideration of Project's Potential Effects on Wildlife or Cumulative Potential Effects

Originally published in the January/February 2024 issue of Bench & Bar of Minnesota Environmental Law Update, Minnesota State Bar Association.

On November 27, 2023, the Minnesota Court of Appeals, for a second time, reversed and remanded the City of Eagle Lake’s determination that an environmental impact statement (EIS) was not required for a proposal to construct a motorsports park on agricultural land. See In re Determination of the Need for an Environmental Impact Statement for the Mankato Motorsports Park, No. A23-0091 (Minn. Ct. App. Nov. 27, 2023)

Environmental Review Requirements

The Minnesota Environmental Policy Act (MEPA) establishes a formal process for investigating the environmental impacts of major development projects. The purpose of the review is to provide information about a project’s environmental impacts before approvals or necessary permits are issued. MEPA imposes a set of procedural requirements on responsible governmental units (RGUs) for the environmental review of major governmental actions. MEPA defines government action as “activities, including projects wholly or partially conducted, permitted, assisted, financed, regulated or approved by units of government including the federal government.” Minn. Stat. § 116D.04, subd. 1a(d).

MEPA requires distinct types of environmental review depending on the nature of the project being proposed. Under Minn. R. 4410.1000, an environmental assessment worksheet (EAW) must be prepared for any project that meets or exceeds the thresholds of any of the EAW categories listed in Minn. R. 4410.4300 or any of the EIS categories listed in Minn. R. 4410.4400. An EAW is defined as “a brief document which is designed to set out the basic facts necessary to determine whether an environmental impact statement is required” for the proposed project.” Minn. Stat. § 116D.04, subd. 1a(c).

Minn. Stat. § 116D.04, subd. 2a(a), provides that, where there is potential for significant environmental effects resulting from any major governmental action, that the action be preceded by a detailed EIS prepared by the RGU. The EIS provides detailed information about the extent of potentially significant environmental impacts of a proposed project, presents alternatives to the proposed project, and identifies methods for reducing adverse environmental effects. Minn. R. 4410.2000, subp. 1. The EIS is not meant to approve or deny a project, but instead function as a source of information to guide approval and permitting decisions.

The threshold question in determining whether a major government action requires an EIS is whether that proposed project has the potential to significantly affect the environment. Minn. R. 4410.1700, subp. 7, requires RGUs to consider the following factors when determining whether a project has the potential for significant environmental effects:

1. Type, extent, and reversibility of environmental effects;
2. Cumulative potential effects. The RGU shall consider the following factors: whether the cumulative potential effect is significant; whether the contribution from the project is significant when viewed in connection with other contributions to the cumulative potential effect; the degree to which the project complies with approved mitigation measures specifically designed to address the cumulative potential effect; and the efforts of the proposer to minimize the contributions from the project;
3. The extent to which the environmental effects are subject to mitigation by ongoing public regulatory authority. The RGU may rely only on mitigation measures that are specific and that can be reasonably expected to effectively mitigate the identified environmental impacts of the project; 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.

The City’s Initial Review

In February 2019, a developer proposed construction of a private 3-mile motor sports driving track and related facilities (the Project) on a site of approximately 230 acres in Eagle Lake, MN. In addition to the driving track, the Project would include a track clubhouse, car condos, a restaurant, a 70-unit hotel, a golf course and related parking lots.

The City of Eagle Lake (the City) is the RGU charged with determining what environmental review is required. Pursuant to Minn. R. 4410.4300, subp. 36, an EAW is required for projects that may convert 80 or more acres of agricultural land to a different use. Because of the nature and size of the Project, the City hired a consultant to prepare an EAW of the Project. Several state and county agencies, as well as members of the public, submitted comments addressing the EAW. In May 2020, based on the EAW and related public comments, the City Council determined that the project did not have the potential for significant environmental effects and therefore an EIS was not required for the Project to move forward.

Citizens Against Motorsports Park and two individuals (CAMP), appealed the City’s initial negative declaration on the need for an EIS, arguing that the city’s decision was arbitrary and capricious and unsupported by substantial evidence. CAMP also challenged the City’s procedure and analysis of noise impacts on humans, wildlife, waste storage and disposal, land alterations and wetlands. On April 26, 2021, in an unpublished opinion, the Minnesota Court of Appeals (the Court) concluded that the City’s negative EIS declaration was arbitrary and capricious, and reversed and remanded for a new EIS determination. The Court found that the City failed to rely on substantial evidence to determine the Project’s potential effects on wildlife and failed to consider the project’s cumulative effects on climate change. The Court reasoned that the City made no attempt to identify, survey or catalog wildlife in the Project area. The Court also noted that the City failed to address the potential harm from the Project’s vehicular and human traffic or automobile exhaust fumes, which were identified by state and county officials. Furthermore, the City concluded that it was unlikely that noise-sensitive wildlife would be impacted by the Project without having conducted a study of the Project’s noise impact on wildlife. The Court also found that the City failed to adequately respond to concerns regarding climate change and the Project’s cumulative potential effects, as required by Minn. R. 4410.1700, subp. 4 (requiring specific responses to all substantive and timely comments on the EAW).

The City’s Second Review

Following the Court’s decision, the City’s consultant prepared a supplemental EAW to further evaluate whether the Project has the potential for significant environmental effects. The supplemental EAW concluded that the Project would not increase known wildlife disturbances to a level that will affect wildlife on Eagle Lake, and that the Project’s contribution to greenhouse gas (GHG) emissions in the area would be “negligible.”

On December 5, 2022, the City Council approved findings of fact and a decision on the need for an EIS. Based on the information generated through the supplemental environmental-review process, the City Council again determined that the Project did not have the potential for significant environmental effects and therefore an EIS was not required for the Project to move forward.

CAMP appealed the City’s second negative declaration on the need for an EIS, arguing that the City’s decision was arbitrary and capricious and unsupported by substantial evidence because the City did not adequately consider the Project’s potential effects on wildlife or cumulative potential effects. On November 27, 2023, the Court, for a second time, reversed and remanded the City’s determination that an EIS was not required for the Project.

The Court found that the City’s second negative declaration on the need for an EIS was unsupported by substantial evidence in part because the city made no attempt to identify, survey or catalog the wildlife in the Project area. The Court reasoned that neither the EAW nor the supplemental EAW contained a complete discussion of the species that use or inhabit the Project site, a portion of which will be paved over to accommodate the track, track clubhouse, car condos, parking lots and other elements of the Project. The Court noted that although the supplemental EAW did list some species that have been observed in or near Eagle Lake in the past, it failed to identify the species currently known to use or inhabit the area. The Court explained that without knowing which species use or inhabit a Project area, an RGU cannot ascertain the type, extent, and reversibility of environmental effects on wildlife in that area, and therefore cannot determine whether the Project has the potential for significant environmental effects.

The Court also found that the City’s second negative declaration failed to address the Project’s potential for cumulative effects from GHG emissions. The supplemental EAW included a discussion of GHG emissions, and an estimate that the Project would increase GHG emissions in the area by 35,221.87 metric tons of carbon dioxide-equivalent per year. Even though the supplemental EAW indicated that the Project “needed to be near the Mankato Regional Airport” because it would be a “destination course,” the estimate did not include anticipated GHG emissions from visitors who would reach the Project through the Mankato Regional Airport. The Court stated that, by declining to consider how regional air travel to the Project would affect the Project’s overall GHG emissions, the City failed to address an important aspect of the problem and ignored evidence in the record.

The Court did not express an opinion about whether an EIS is required. The Project is no longer being pursued by the developer.