In re Reichmann Land & Cattle, LLP.

867 N.W.2d 502

In the Matter of REICHMANN LAND AND CATTLE, LLP.

No. A13–1461.

Supreme Court of Minnesota.

July 29, 2015.

Lori Swanson, Attorney General, Ann E. Cohen, Assistant Attorney General, Saint Paul, Minnesota, for appellant/cross-respondent Minnesota Pollution Control Agency.

Gary W. Koch, Matthew C. Berger, Gislason & Hunter LLP, New Ulm, Minnesota, for respondent/cross-appellant Reichmann Land and Cattle, LLP.

OPINION

ANDERSON, Justice.

The question presented by this case is whether a farm must obtain federal or state pollution discharge permits for using fields as cropland in the summer and as an animal feeding site during the winter. We conclude that the winter feeding facility managed by respondent/cross-appellant Reichmann Land and Cattle, LLP (“Reichmann”) is not an “animal feeding operation,” as defined by 40 C.F.R. § 122.23(b)(1) (2014), and therefore Reichmann need not obtain a national-pollutant-discharge-elimination-system permit (“NPDES permit”). We also conclude that because Reichmann does not meet the “pasture” exemption in Minn.Stat. § 116.07, subd. 7d (2014), it must obtain a state-disposal-system permit (“SDS permit”). We therefore affirm the court of appeals.

Reichmann is a 4,000–acre farm in Pope County that grows row crops and operates two registered cattle feedlots, a trucking business, and a grain-grinding business. In addition to the registered feedlots, Reichmann has used some of its cropland as a winter feeding facility for cattle since the 1990s. After the fall harvest each year (in November or December), Reichmann places cattle on four tracts of cropland totaling 416 acres. During the winter months, cattle consume crop residues that remain on the land after harvest. Reichmann augments the diet of the cattle with “supplemental feed,” which provides at least 90 percent of the daily nutritional needs for the cattle. In the spring, Reichmann removes the cattle from the winter feeding fields and plants crops on those same fields during the “normal growing season,” which spans from the time of spring planting (late April or early May) until the first frost in the fall. Reichmann keeps between 2,000 and 3,500 cattle on its winter feeding fields each year.

Since 2001, appellant/cross-respondent Minnesota Pollution Control Agency (MPCA) has taken the position that Reichmann's winter feeding practices allow a discharge of pollutants and therefore require an NPDES or SDS permit. When Reichmann and the MPCA were unable to reach an agreement to decrease the operation's pollution levels, the MPCA issued a draft administrative order on March 22, 2011, requiring Reichmann to obtain NPDES and SDS permits or discontinue the winter feeding operation. Reichmann requested a contested case hearing that began in October 2012 before an administrative law judge (ALJ). At the center of the dispute was whether Reichmann maintained a vegetative cover on its winter feeding fields while the cattle were present. MPCA experts stated that Reichmann's cattle typically consumed almost all crop residue by January of each year. Any remaining vegetation was “soiled by urine and solid manure and [wa]s not suitable for forage,” or was removed when Reichmann scraped manure from the fields. Reichmann's owner, however, testified that cattle would regularly graze on forage and crop residue throughout the winter. Reichmann's expert also believed that forage was maintained throughout the winter, although he never visited the farm during the winter and based his testimony on photographs taken by the MPCA.

The MPCA also presented evidence that Reichmann has discharged pollutants from its winter feeding fields. MPCA inspectors took water samples from the fields and an adjacent stream, and the inspectors concluded that the water contained pollutants. Photographs of Reichmann's winter feeding fields showed “ponded water” that discharged into an inlet and road ditch. The MPCA also presented computer-modeling evidence that predicted a discharge of pollutants.

The ALJ concluded that Reichmann's winter feeding fields constitute a “concentrated animal feeding operation” due to the large numbers of cattle and lack of adequate vegetation sustained during the winter when cattle are present. See 40 C.F.R. § 122.23(b). The ALJ also determined that Reichmann's winter feeding fields are not pastures as defined by Minn.Stat. § 116.07, subd. 7d, because the fields lack vegetation during the winter and the cattle are not “allowed to forage.” The Commissioner of the MPCA adopted the findings and conclusions of the ALJ with minor modifications. Reichmann was therefore required to apply for an NPDES/SDS permit.¹

Reichmann appealed the Commissioner's decision, and the court of appeals affirmed the Commissioner's conclusion that Reichmann must apply for an SDS permit. In re Reichmann Land & Cattle, LLP, 847 N.W.2d 42, 48 (Minn.App.2014). Although the court concluded that the Commissioner erred by examining the type of vegetation on Reichmann's feeding fields only in the winter, it agreed that Reichmann's winter feeding fields are not pastures because cattle are not “allowed to forage.” Id.;see Minn.Stat. § 116.07, subd. 7d(b). But the court reversed the Commissioner's requirement that Reichmann must apply for an NPDES permit. In re Reichmann, 847 N.W.2d at 50. The court concluded that 40 C.F.R. § 122.23(b)(1) unambiguously provides that fields serving as cropland in the summer are not an animal feeding operation, regardless of whether animals are present on the fields in the winter. In re Reichmann, 847 N.W.2d at 49. The court of appeals therefore held that the Commissioner erred by considering only the time period when Reichmann's cattle were present on the fields.Id.

I.

We turn first to whether Reichmann must obtain an NPDES permit, which requires an examination of 40 C.F.R. § 122.23(b)(1). Review of a state agency's interpretation of a federal regulation that the agency “is charged with enforcing and administering” is a question of law that we review de novo. In re Cities of Annandale & Maple Lake NPDES/SDS Permit Issuance for the Discharge of Treated Wastewater, 731 N.W.2d 502, 513, 516 (Minn.2007). We begin by determining whether the regulation is “clear or ambiguous on its face.” Id. at 516. When making this determination, we “construe rules ‘as a whole’ ” and interpret words and sentences “in the light of their context.” Troyer v. Vertlu Mgmt. Co./Kok & Lundberg Funeral Homes, 806 N.W.2d 17, 24 (Minn.2011) (quoting State v. Gaiovnik, 794 N.W.2d 643, 647 (Minn.2011) ). “[A] regulation is ambiguous if it is unclear or reasonably susceptible to more than one reasonable interpretation.” Annandale, 731 N.W.2d at 517. If the regulation is ambiguous, we generally defer to the agency's interpretation of the regulation, if its interpretation is reasonable.² Id. at 516 ; see also Auer v. Robbins, 519 U.S. 452, 461, 117 S.Ct. 905, 137 L.Ed.2d 79 (1997) (holding that a federal agency's interpretation of its own regulation is “controlling unless ‘plainly erroneous or inconsistent with the regulation’ ” (quoting Robertson v. Methow Valley Citizens Council, 490 U.S. 332, 359, 109 S.Ct. 1835, 104 L.Ed.2d 351 (1989) )). If the regulation is unambiguous, however, we “need not defer to the agency's interpretation and may substitute [our] own judgment for that of the agency.” Annandale, 731 N.W.2d at 516.

The MPCA argues that we should consider the threshold question of ambiguity “within a framework of deference to the administrative agency charged with implementation of the regulation.” The MPCA cites Annandale, in which we stated that “deference is warranted only after thoroughly considering multiple factors.” 731 N.W.2d at 525. But the MPCA ignores our clear holding in Annandale that we need not defer to an agency's interpretation of an unambiguous regulation. Id. at 516 ; see also Christensen v. Harris Cty., 529 U.S. 576, 588, 120 S.Ct. 1655, 146 L.Ed.2d 621 (2000) (“Auer deference is warranted only when the language of the regulation is ambiguous.”); Resident v. Noot, 305 N.W.2d 311, 312 (Minn.1981) (“We do not defer [to an agency interpretation] when the language employed or the standards delineated are clear and capable of understanding.”). We therefore will not resolve the threshold question of ambiguity “within a framework of deference” to the MPCA.

A.

The Clean Water Act generally prohibits “the discharge of any pollutant by any person.” 33 U.S.C. § 1311(a) (2012). Unless otherwise authorized, an NPDES permit is required to discharge pollutants. Id. § 1342(a) (2012). Pollutants are discharged when they flow to navigable waters from a “point source,” which is defined as “any discernible, confined and discrete conveyance, including but not limited to any ... concentrated animal feeding operation.” Id. § 1362(12)(A), (14) (2012).

Congress authorized the EPA to define “animal feeding operation” (AFO) and “concentrated animal feeding operation” (CAFO) through administrative regulation. See 33 U.S.C. § 1361(a) (2012) (“The Administrator is authorized to prescribe such regulations as are necessary to carry out his functions under this chapter.”).

Animal feeding operation (“AFO”) means a lot or facility ... where the following conditions are met: (i) Animals ... have been, are, or will be stabled or confined and fed or maintained for a total of 45 days or more in any 12–month period, and (ii) Crops, vegetation, forage growth, or post-harvest residues are not sustained in the normal growing season over any portion of the lot or facility.

40 C.F.R. § 122.23(b)(1). An AFO with at least 1,000 cattle is a CAFO. Id. § 122.23(b)(2), (4). There is no dispute that Reichmann keeps at least 1,000 cattle on the lot for more than 45 days in a 12–month period. Thus, Reichmann is a CAFO—and must obtain an NPDES permit—if “[c]rops, vegetation, forage growth, or post-harvest residues are not sustained in the normal growing season over any portion of” Reichmann's winter feeding fields.

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