You're On Your Own Kid: Court of Appeals Limits MERA Actions Against Counties Under §§ 116B.10 and 116B.03

Originally published in the January/February 2025 issue of Bench & Bar of Minnesota Environmental Law Update, Minnesota State Bar Association.

On December 9, 2024, the Minnesota Court of Appeals affirmed a district court’s summary dismissal of claims brought by local businesses against Pope County under the Minnesota Environmental Rights Act (MERA). State by Peters Sunset Beach, Inc. v. Pope County, No. A24-0804, 2024 WL 5036669 (Minn. Ct. App. Dec. 9, 2024). In its nonprecedential opinion, the court concluded that Minn. Stat. § 116B.10 does not permit an action against a county unless the county acted as an agency or instrumentality of the state.The court’s opinion also addresses the “no-action clause” ban under MERA, which bars MERA suits against permit holders for actions taken pursuant to approvals or permits set forth in Minn. Stat. § 116B.03.

Peters Sunset Beach Inc., Sunset Beach Cottage Owners Association Inc. and Pezhekee Inc. (collectively, the Businesses) opposed Pope County’s proposal to reconstruct a section of County State Aid Highway 17 that runs along the shore of Lake Minnewaska and is known as South Lakeshore Drive (the Project).

In September 2022, the Businesses initiated an action against Pope County under two MERA provisions, Minn. Stat. §§ 116B.03 and 116B.10. The Businesses alleged that Pope County’s proposed Project was misrepresented in size and scope, violates environmental quality standards, would likely materially and adversely affect water resources, public safety, historical and cultural resources, quietude, human health, air quality, and scenic and aesthetic resources, and that feasible and prudent alternatives exist. The Businesses sought a declaration that they made a prima facie showing under MERA and a permanent injunction against the Project.

Pope County secured various permits and approvals for the highway reconstruction project, including: (1) coverage under the Minnesota Pollution Control Agency (MPCA) general permit for stormwater discharges associated with construction activity; (2) approval by the Minnesota Department of Transportation (MnDOT); (3) confirmation from the historic-preservation office that the highway reconstruction project is unlikely to adversely affect the historic resort operated by Peters Sunset Beach Inc.; and (4) shoreland-alteration and floodplain-development permits issued by Pope County.

In granting summary judgment to Pope County, the district court reasoned that “(1) the Businesses cannot pursue relief against the county under Minn. Stat. § 116B.10 because that provision only permits an action against the state or a state agency or instrumentality; (2) the language of Minn. Stat. § 116B.03 prevents the Businesses from pursuing relief against the county for any action taken pursuant to the MPCA permit, which precludes claims pertaining to water issues; and (3) the Businesses’ other claims under Minn. Stat. § 116B.03 concern claims of pollution, impairment, or destruction of resources outside the ambit of MERA or for which there is no evidence.” State by Peters Sunset Beach, Inc. v. Pope County, No. A24-0804, 2024 WL 5036669, at *2 (Minn. Ct. App. Dec. 9, 2024).

MERA Civil Action Against the State or Its Instrumentalities

Minn. Stat. § 116B.10, subd. 1, provides that any person may bring an action “for declaratory or equitable relief against the state or any agency or instrumentality thereof where the nature of the action is a challenge to an environmental quality standard, limitation, rule, order, license, stipulation agreement, or permit promulgated or issued by the state or any agency or instrumentality thereof for which the applicable statutory appeal period has elapsed” (emphasis added).

The Businesses argued that the district court erred by concluding that Minn. Stat. § 116B.10 does not permit an action against Pope County. The Minnesota Court of Appeals rejected the Businesses’ argument that, as a matter of law, a county is an agency or instrumentality of the state under Minn. Stat. § 116B.10 because counties and other political subdivisions are creations of the state.

The court concluded that MERA’s plain language demonstrates “the legislature did not intend for counties to be always subject to suit under Minn. Stat. § 116B.10” (emphasis added). Here, the Businesses did not assert that Pope County had acted as an “agency or instrumentality” of the state for purposes of the highway reconstruction Project. The court thus held that the district court did not err by concluding that the Businesses are precluded from proceeding against the county under Minn. Stat. § 116B.10.

MERA Civil Actions Under Minn. Stat. § 116B.03

In challenging summary judgment on their claims under Minn. Stat. § 116B.03, the Businesses alleged that the Project will pollute, impair, or destroy (1) water resources, (2) public safety, and (3) historical resources.

Minn. Stat. § 116B.03, subd. 1, provides that any person may bring an action “for declaratory or equitable relief in the name of the state of Minnesota against any person, for the protection of the air, water, land, or other natural resources . . . from pollution, impairment, or destruction.” Notably, Minn. Stat. § 116B.03, subd. 1, provides an exception, often referred to as the “no-action clause,” barring civil actions concerning “conduct taken by a person pursuant to any environmental quality standard, limitation, rule, order, license, stipulation agreement or permit issued by the [Minnesota] Pollution Control Agency [(MPCA)], Department of Natural Resources, Department of Health or Department of Agriculture.”

The Businesses alleged that Pope County misrepresented to MPCA the Project's anticipated effect on water resources (in particular, the increase in impervious surface area and resulting stormwater runoff). However, the Businesses did not contest that the anticipated impacts to water resources would be the result of stormwater runoff, which is the “conduct” governed by the MPCA construction-stormwater permit. Accordingly, the court affirmed the district court’s determination that the no-action clause bars the Businesses from bringing a MERA claim based on the Project's impact to water resources. The court did not address the Businesses’ factual allegations regarding the Project's anticipated effect on water resources; such considerations would only be relevant, the court noted, if the no-action clause did not apply.

Regarding the Businesses’ MERA claims based on impacts to public safety and historical resources, the court first affirmed the district court’s determination that public safety is not a “natural resource” within the scope of MERA. And although MERA expressly identifies “historical resources” a covered natural resource, the court held the Businesses failed to demonstrate genuine fact issues on whether the Project will pollute, impair, or destroy historical resources because the Project will occur entirely within the highway's existing right-of-way.