A24-0958 A24-0959 A24-0960 A24-0976

This opinion is nonprecedential except as provided by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

STATE OF MINNESOTA
IN COURT OF APPEALS
A24-0943
A24-0958
A24-0959
A24-0960
A24-0976

In the Matter of Amendments to Various Water Appropriation Permits.

Filed July 14, 2025
Reversed and remanded
Larkin, Judge

Office of Administrative Hearings
File No. OAH 8-2002-37733

David K. Snyder, Johnson/Turner, Forest Lake, Minnesota (for relator City of Hugo)

James C. Erickson Jr., Erickson, Bell, Beckman & Quinn, P.A., Roseville, Minnesota (for
relator City of Vadnais Heights)

James J. Thomson, Siobhan L. Tolar, Michelle E. Weinberg, Kennedy & Graven,
Chartered, Minneapolis, Minnesota (for relator City of Lake Elmo and respondent on cross-
appeal City of Oakdale)

Jay T. Squires, Squires, Waldspurger & Mace , P.A., Minneapolis, Minnesota (for relator
City of Lino Lakes)

Richard B. Allyn, Shira T. Shapiro, Robins Kaplan LLP, Minneapolis, Minnesota; and

Byron E. Starns, Stinson LLP, Minneapolis, Minnesota (for cross-relators White Bear Lake
Restoration Association and White Bear Lake Homeowners’ Association)

Keith Ellison, Attorney General, Oliver J. Larson, Colin P. O’Donovan, Ryan V. Petty,
Assistant Attorneys General, St. Paul, Minnesota (for respondent Department of Natural
Resources)

David L. Sienko, Matthew M. Ziebarth, Le Vander, Gillen & Miller , P.A., Eagan,
Minnesota (for respondent on cross-appeal City of Mahtomedi)
2

Monte A. Mills, Nicholas Scheiner, Greene Espel PLLP, Minneapolis, Minnesota (for
respondent on cross-appeal City of White Bear Lake)

Considered and decided by Larkin, Presiding Judge; Bentley, Judge; and Jesson,
Judge.*
NONPRECEDENTIAL OPINION
LARKIN, Judge
These consolidated appeals are taken from a decision by an administrative -law
judge (the ALJ) following a contested -case hearing on court-ordered amendments that
respondent Minnesota Department of Natural Resources (the DNR) made to groundwater
appropriations permits held by certain municipalities. On appeal from the ALJ’s decision,
four of the municipalities challenge certain conditions included in the permits, and two
associations challenge the ALJ’s rejection of a different condition. In the unique
circumstances of this case, we conclude that the ALJ’s decision is based on legal error and
is arbitrary and capricious because the decision readjudicated the overall necessity of the
court-ordered permit conditions and failed to make findings specific to each municipal
permittee regarding the feasibility of the conditions . We therefore reverse the ALJ’s
decision and remand for additional findings and a revised decision.
FACTS
These appeals arise in the context of a longstanding dispute about White Bear Lake,
which is located in the northeast part of the Twin Cities metropolitan area . The lake is

* Retired judge of the Minnesota Court of Appeals, serving by appointment pursuant to
Minn. Const. art. VI, § 10.
3
“hydrologically connected” to the Prairie du Chien-Jordan Aquifer “meaning that aquifer
groundwater levels have an effect on the lake’s water levels.” 2 White Bear Lake
Restoration Ass’n ex rel. State v. Minn. Dep’t of Nat. Res. , 946 N.W.2d 373, 377 (Minn.
2020) (WBL II). “The aquifer is the most commonly used aquifer for drinking water in the
Twin Cities metropolitan area,” and “[a]nnual withdrawals from the aquifer have more than
doubled since 1980.” Id. The dispute over White Bear Lake has centered on the extent to
which groundwater pumping in the vicinity of the lake impacts aquifer and lake levels and
on the appropriate remedies for those impacts. See id. at 377-79 (describing history of
dispute); White Bear Lake Restoration Ass’n ex rel. State v. Minn. Dep’t of Nat. Res. , No.
A18-0750, 2020 WL 7690268, at *1-2 (Minn. App. Dec. 28, 2020) (WBL III) (same).
The dispute prompted the White Bear Lake Restoration Association and the White
Bear Lake Homeowners’ Association , Inc. (together, the associations) to bring a civil
action under the Minnesota Environmental Rights Act (MERA), Minn. Stat. §§ 116B.01-
.13 (2024) . The MERA action resulted in injunctive relief requiring the permit
amendments underlying the ALJ decision challenged in these appeals. One of the appeals
is brought by the associations, which intervened in the contested -case proceedings on the
permit amendments. Four of the appeals are brought by the Cities of Hugo, Lake Elmo,

2 In a previous opinion related to the White Bear Lake dispute, we noted that the connection
between the lake and the aquifer was variously referenced in the record as hydrologic and
hydraulic. See White Bear Lake Restoration Ass’n ex rel. State v. Minn. Dep’t of Nat. Res.,
928 N.W.2d 351, 356 n.5 (Minn. App. 2019) ( WBL I), aff’d in part and rev’d in part, 946
N.W.2d 373 (Minn. 2020). In these proceedings, the term hydrogeologic has also been
used. We use the term hydrologic, but note, as we did in our previous decision, that the
use of different terminology “seems not to affect the legal analysis.” Id.
4
Lino Lakes, and Vadnais Heights (together, the municipal relators ), each of which has a
groundwater-appropriations permit that the DNR amended as a result of the MERA
injunction. The DNR is a respondent to all of the appeals. The Cities of Mahtomedi,
Oakdale, and White Bear Lake (together, the municipal respondents) also have
groundwater-appropriations permits that the DNR amended as a result of the MERA
injunction; they have not appealed from the ALJ’s decision but are respondents to the
associations’ appeal. Because of the relationship of these appeals to the MERA action, we
begin by discussing the history of that action.
MERA action and permit amendments
In 2013, the associations sued the DNR under MERA. 3 The associations alleged
that the DNR “mismanaged the groundwater-appropriations permitting process, leading to
materially adverse effects on the lake and aquifer including effects on the natural
environment; recreational activities; historical, cultural, scenic, and aesthetic qualities; and
on homes and businesses.” WBL II, 946 N.W.2d at 377. The City of White Bear Lake and
the Town of White Bear intervened as defendants to the MERA action. Each of the
municipal relators and municipal respondents were on notice of the MERA action, but none
sought to intervene. 4 Following a bench trial, the district court found “that groundwater

3 The associations also asserted a claim under the public trust doctrine that the supreme
court later determined was not viable. See WBL II, 946 N.W.2d at 386-87.
4 The DNR moved to dismiss the MERA action for failure to join potentially affected
municipalities as necessary parties. The district court denied that motion, and we affirmed
that decision because permittees do not have a vested right to groundwater. WBL III, 2020
WL 7690268, *5 (citing Minn. Stat. § 103G.315, subd. 11(a) (2018); Minn. R. 6115.0740,
subp. 2(A) (2019)).
5
pumping has had a negative, cumulative impact on both the lake and the aquifer.” WBL
III, 2020 WL 7690268, at *1. The district court granted injunctive relief, requiring the
DNR to take actions that included adding certain conditions to groundwater-appropriations
permits within five miles of the lake. Id. at *1, *3-4.
The DNR, the City of White Bear Lake, and the Town of White Bear appealed the
MERA injunction and sought a stay pending appeal, which the district court denied.
Thereafter, as required by the MERA injunction, the DNR took action to add four
conditions to 44 permits with wells inside the five -mile radius of the lake. Three of those
conditions are at issue in these appeals . We refer to them as the residential irrigation ban
condition, the per capita use condition, and conversion planning condition. The residential
irrigation ban condition requires permittees to enforce a residential irrigation ban when
notified by the DNR that the lake has fallen below 923.5 feet and until notified that the lake
has reached a level of 924 feet. The per capita use condition requires permittees to submit
an enforceable plan to phase down per capita residential water use to 75 gallons per day
(gpd) and total per capita water use to 90 gpd. And t he conversion planning condition
requires permittees to prepare a contingency plan for fully or partially converting to surface
water sources.
In December 2020, we affirmed the MERA injunction but ordered modifications to
the relief ordered by the district court. 5 WBL III, 2020 WL 7690268, at *15. We rejected

5 We initially reversed the MERA injunction, holding that the associations were precluded
from bringing an action under Minn. Stat. § 116B.03 to challenge the DNR’s permitting
decisions. WBL I, 928 N.W.2d at 364. The supreme court reversed that aspect of our
6
the DNR’s argument that the district court lacked authority under MERA to require the
DNR to make specific permit amendments. Id. at *8. But we concluded that the “relief
ordered by the district court deprives the municipalities of their right to an administrative,
contested-case hearing before an amendment can be made to their permits.” Id. at *9
(citing Minn. Stat. § 103G.311 (2018) ; Minn. R. 6115.0750, sub p. 5(C) (2019)). We
“note[d] the error of the district court in its phrasing of paragraph 4(E) of the relief,”
explaining that the paragraph, “which dictates that the DNR must ‘immediately amend’ all
permits, [was] in conflict with the statutory right of permit holders to a hearing before their
permits can be amended by the DNR.” Id. at *10. We therefore affirmed the injunction
but directed that “paragraph 4(E) must be revised to reflect the right of the permit holders
to a hearing prior to any permit amendments.” Id. at *10. In requiring the revision, we
reasoned:
The district court can order the DNR to reopen the impacted
permits to seek [amendments], but cannot order the DNR to
impose amendments without honoring the right of the permit
holders to obtain a contested -case hearing. This is not to say,
however, that the permit holders have the right to relitigate
whether groundwater appropriations within a five -mile radius
of the lake have or will have a negative impact on surface
waters . . . . The issue of negative impact has been determined
in this case.

Id.
We further noted the possibility that it would be unreasonable to apply to a particular
permittee the permit conditions ordered by the district court. Id. More specifically, with

decision and remanded for us to address the remaining issues raised by the DNR. WBL II,
946 N.W.2d at 385, 387.
7
respect to the per capita use condition, we stated that “it may not be feasible for a particular
municipality—for example, a small municipality with a high percentage of industrial users
to residential users—to reduce its water use to these levels.” Id. And with respect to the
conversion planning condition , we acknowledged the DNR’s hypothetical that a
municipality with a well within the five -mile radius might draw its water from a different
source than the aquifer. Id. at *11. We stated: “Consequently, there would be no basis to
require that particular municipality to develop a contingency plan for alternat e water
sources.” Id. We concluded:
At this point in time, however, these concerns are only
hypothetical. Since the municipalities (aside from [the City of
White Bear Lake and the Town of White Bear]) were not
parties to these proceedings, the evidence is simply not in the
record to allow us to evaluate these issues or order modification
of the relief beyond correcting paragraph 4(E) as set out above.
We nevertheless caution the district court that heed must be
taken of the permit holders’ statutory right to a hearing as it
administers the injunction and that, depending on the evidence
adduced at the contested -case hearings, modifications may be
appropriate.

Id. At the end of our opinion, we reiterated that, “[b]ecause the district court has retained
jurisdiction over the matter, it may modify the requirements of its order or lift the injunction
as future circumstances may dictate.” Id. at *15.
Following remand and on the parties’ stipulation, the district court amended the
MERA injunction, replacing the language requiring immediate amendments with language
requiring the DNR to reopen permits and insert the conditions that the district court had
determined were necessary to protect the lake and the aquifer. Id.
8
Contested-case proceedings
After the DNR amended the 44 permits, 17 impacted permittees requested
contested-case hearing s. The DNR initiated those proceedings, noticing as issues for
determination whether each of the added permit conditions “is reasonably necessary for
the safety and welfare of the people of the state within the meaning of Minnesota Statutes
section 103G.315, subdivision 6.” T he commissioner of natural resources designated the
ALJ to issue the final agency decision pursuant to Minn. Stat. § 14.57(a) (2024).
The contested-case proceedings were stayed pending resolution of the appeals from
the MERA injunction and resumed after our decision in WBL III. In denying the DNR’s
motion for summary disposition, the ALJ summarized the issues for determination as
follows:
As the [court of appeals] points out, permit holders are entitled
to claim that their permits should not be revised if their
withdrawals of water do not contribute to shortfalls in the
aquifer or that compliance with the region -wide limit is not
feasible. An evidentiary hearing is needed to answer such
questions.

Ten permittees reached settlements, and the remaining seven permittees (the municipal
relators and municipal respondents) participated along with the DNR and the associations
in a consolidated hearing before the ALJ. During the hearing, each of the municipal
relators and municipal respondents presented its own evidence regarding the feasibility of
the challenged permit conditions.
In May 2024, the ALJ issued findings of fact, conclusions of law, and a final order
on behalf of the DNR. The ALJ determined that the residential irrigation ban condition
9
was so underinclusive as to be arbitrary and thus not “reasonably necessary for the ‘safety
and welfare of the people of the state,’ as those words are used in Minn. Stat. § 103G.315,
subd. 6(b).” And the ALJ determined that the conversion planning and per capita use
conditions “support compliance with the collective annual withdrawal limits for White
Bear Lake and help maintain the Lake’s Protected Elevation,” “are reasonable measures to
protect groundwater supplies for future generations,” and “are reasonably necessary for the
safety and welfare of the people of Minnesota.” Based on those determinations, the ALJ
universally granted the municipal relators’ and municipal respondents’ challenges to the
residential irrigation ban condition and universally denied their challenges to the per capita
use and conversion planning conditions.
The associations and each of the municipal relators filed separate certiorari appeals,
which we consolidated.
DECISION
These appeals arise in a unique context that implicates the interplay between court-
ordered relief under MERA and water -appropriation permitting standards and contested -
case-hearing rights under Minn. Stat. § 103G.315 (2024) and Minn. R. 6115.0750 (2023).
We set forth the standard of review and summarize the implicated statutory schemes before
turning to the parties’ challenges to the ALJ’s decision.
Because these appeals are taken from a final order in a contested case, our standard
of review derives from the appeal provisions of the Minnesota Administrative Procedure
Act, Minn. Stat. §§ 14. 001-.69 (2024). See Minn. Stat. §§ 14.63-.69. Under Minn. Stat.
10
§ 14.57 and pursuant to the commissioner’s designation, the decision of the ALJ is the final
agency decision subject to this court’s review. And under Minn. Stat. § 14.69
the court may affirm the decision of the agency or remand the
case for further proceedings; or it may reverse or modify the
decision if the substantial rights of the petitioners may have
been prejudiced because the administrative finding, inferences,
conclusion, or decisions are:
(a) in violation of constitutional provisions; or
(b) in excess of the statutory authority or jurisdiction of
the agency; or
(c) made upon unlawful procedure; or
(d) affected by other error of law; or
(e) unsupported by substantial evidence in view of the
entire record as submitted; or
(f) arbitrary or capricious.

To determine whether a decision is supported by substantial evidence, we inquire
(1) “whether the agency has adequately explained how it derived its conclusion,” and
(2) whether that conclusion is “reasonable on the basis of the record.” In re NorthMet
Project Permit to Mine Application , 959 N.W.2d 731, 749 (Minn. 2021) (NorthMet)
(quotation omitted) . “[A]n agency decision may fail substantial -evidence review if the
agency does not adequately explain the reasons for its decision or if the record does not
support the agency’s reasons for its decision.” In re Issuance of Air Emissions Permit No.
13700345-101 for PolyMet Mining, Inc., 965 N.W.2d 1, 9 (Minn. App. 2021).
An agency decision is arbitrary or capricious if it (1) “relied on factors not intended
by the legislature”; (2) “entirely failed to consider an important aspect of the problem”;
(3) “offered an explanation that runs counter to the evidence”; or (4) “the decision is so
implausible that it could not be explained as a difference in view or the result of the
agency’s expertise.” Citizens Advocating Responsible Dev. v. Kandiyohi Cnty. Bd. of
11
Comm’rs, 713 N.W.2d 817, 832 (Minn. 2006) (CARD). Put another way, “[a]n agency
decision is arbitrary or capricious if it represents the agency’s will and not its judgment.”
In re Denial of Contested Case Hearing Requests , 993 N.W.2d 627, 646 (Minn. 2023)
(quotation omitted).
Although these standards for reviewing agency decisions are well established, we
apply them here in a unique context. We cannot ignore that the contested-case proceedings
here were initiated to challenge permit amendments that were determined to be necessary
in a MERA action and required by a MERA injunction. We emphasize that these appeals
implicate two statutory schemes related to environmental protection, and we recognize the
need to harmonize the requirements of both statutory schemes. See People for Env’t
Enlightenment & Resp. (PEER), Inc. v. Minn. Env't Quality Council, 266 N.W.2d 858, 866
(Minn. 1978) (recognizing “general policy of statutory construction followed by this court
of harmonizing statutes dealing with the same subject matter”); cf. State ex rel. Swan Lake
Area Wildlife Ass’n v. Nicollet Cnty. Bd. of Cnty. Comm’rs , 799 N.W.2d 619, 628 (Minn.
App. 2011) (affirming award of equitable relief under MERA that “achieved harmony
between and among chapters 103E, 103G, and 116B”).
Under the first statutory scheme—MERA—a district court, upon a proper showing,
see Minn. Stat. § 116B.04, “may grant declaratory relief, temporary and permanent
equitable relief, or may impose such conditions upon a party as are necessary or appropriate
to protect the air, water, land or other natural resources located within the state from
pollution, impairm ent, or destruction.” Minn. Stat. § 116B.07. MERA confers “broad
equitable power” on the district court. WBL II, 946 N.W.2d at 383 n.6 . Indeed, a ctions
12
under Minn. Stat. § 116B.03 are “adjudicate[d] in a fashion similar to traditional courts of
equity.” Id. at 383; see also WBL III, 2020 WL 7690268, at *8 (relying on broad statutory
language and WBL II to reject arguments that the district court lacked authority to order
the DNR to make specific amendments to permits).
Under the second statutory scheme, Minn. Stat. §§ 103G.001-.801 (2024), part of
the state’s Water Law, 6 the commissioner of natural resources is charged with
administering “the use, allocation, and control of waters of the state.” Minn. Stat.
§ 103G.255(1); see Minn. Stat. § 103G.005, subd. 17 (defining “waters of the state” to
include groundwater); see also WBL II , 946 N.W.2d at 380 (noting that “the Legislature
expressly contemplated that the DNR would engage in, and be held accountable for,
ongoing conduct in managing groundwater appropriation”).
A municipality must obtain a permit from the DNR before appropriating
groundwater, Minn. Stat. § 103G.271, subd. 1, and the commissioner’s authority to issue
permits is constrained by the requirements of Minn. Stat. § 103G.287, which, among other
things, precludes the issuance of permits “unless ‘the groundwater use is sustainable to
supply the needs of future generations and . . . will not harm ecosystems [or] degrade
water.’” WBL II, 946 N.W.2d at 380 (quoting Minn. Stat. § 103G.287, subd. 5). Similarly,
under governing administrative rules, a permit for groundwater appropriation “shall be
limited to the safe yield of the aquifer to the maximum extent feasible and practical.” Minn.
R. 6115.0670, subp. 3(C)(1) (2023).

6 Chapters 103A, 103B, 103C, 103D, 103E, 103F, and 103G constitute the Water Law.
See, e.g., Minn. Stat. § 103G.001.
13
Permit application procedure is governed by Minn. Stat. §§ 103G.301-.15 and
Minn. R. 6115.0600 -.0810 (2023). Under Minn. Stat. § 103G.315, subd. 6(b), “the
commissioner may include in [a permit] terms and reservations about the amount and
manner of the use or appropriation or method of construction or operation o f controls as
appear reasonably necessary for the safety and welfare of the people of the state.” The
commissioner has authority to modify permits, applying the foregoing standard, after
providing notice and an opportunity for the permittee to be heard. Minn. Stat. § 103G.315,
subd. 11; Minn. R. 6115.0750, subp. 5(B).
Having discussed our standard of review and the two statutory schemes implicated
in this matter, we next turn to the merits of the appeals. The associations and the municipal
relators advance numerous arguments for reversal of the ALJ’s decision. We focus on two
of the arguments, our resolution of which persuades us to reverse the ALJ’s decision and
remand to the ALJ for additional findings and a revised decision . Then, because we are
remanding the matter, we reach an issue raised by the parties regarding the burden of proof.
I. The ALJ erred by universally rejecting the residential irrigation ban condition.
We first address the associations’ challenge to the ALJ’s universal rejection of the
residential irrigation ban condition. Here, we focus on the associations’ argument that the
ALJ readjudicated issues that were settled by the district court . In particular, the
associations argue that the ALJ readjudicated the issues of whether the residential irrigation
ban condition is—on the whole—necessary and whether the five-mile radius for the ban is
appropriate. They argue that this court allowed the contested -case hearings to give
individual municipalities within the five -mile radius an opportunity to demonstrate that
14
their water use does not impact White Bear Lake and thus that they should not be subject
to the condition. In the unique circumstances of this matter, we conclude that the ALJ
erred by universally rejecting the residential irrigation ban condition.
As we explain above, both MERA and the Water Law have played a role in the
dispute over White Bear Lake. In issuing the MERA injunction, the district court
determined that the DNR had failed to comply with its obligations under the Water Law
and otherwise violated MERA in relation to White Bear Lake and the Prairie du Chien-
Jordan Aquifer, and the district court ordered the DNR to take specific steps to comply,
including making permit amendments. Thus, the MERA injunction effectively required
the DNR to e xercise its authority under the Water Law in a particular manner. And the
district court necessarily found that the actions required by the MERA injunction were
“necessary or appropriate” to protect the lake and the aquifer. Minn. Stat. § 116B.07. We
affirmed the district court’s grant of relief in WBL III, with modifications to preserve the
statutory contested-case-hearing rights of affected municipalities and a caution that it may
be appropriate to amend the MERA injunction based on the results of the contested-case
hearings. 2020 WL 7690268, at *11. In doing so, we sought to give effect to both the
district court’s broad, equitable authority under MERA and the municipalities’ contested -
case rights under the Water Law. Id.
Given this procedural context, we agree with the associations that the purpose of the
contested-case hearing was to provide individual municipalities with the opportunity to
demonstrate that it would be unreasonable to apply the court -ordered conditions to them.
For instance, as we discussed in WBL III, it might be unreasonable to apply the conditions
15
to a municipality that, although it has a well within five miles of the lake, does not draw its
water from the aquifer. Id. The ALJ acknowledged this limited purpose for the contested-
case hearing in denying the DNR’s motion for summary disposition , explaining that
“permit holders are entitled to claim that their permits should not be revised if their
withdrawals of water do not contribute to shortfalls in the aquifer or that compliance with
the region-wide limit is not feasible.” But the ALJ’s final decision contradicts this limited
purpose by universally determining that the residential irrigation ban condition is “so
underinclusive in its application . . . that it is an arb itrary and unlawful condition on the
appropriations of groundwater.”
We acknowledge that the ALJ’s findings regarding the residential irrigation ban
condition are based on a scientific model that was not available when the district court
found the ban necessary to protect the lake and aquifer. That model has allowed the DNR
to identify the top 15 influencers on White Bear Lake water levels, which includes
municipalities that do not have wells within five miles of the lake and thus are not subject
to the residential irrigation ban. This evidence led the ALJ to determine that the residential
irrigation ban was underinclusive and thus arbitrary, a determination that the municipal
relators and municipal respondents argue is supported by substantial evidence. It may be
that new evidence supports a modification of the MERA injunction’s requirement for a
residential irrigation ban. But that is for the district court to determine on a proper motion
for modification of the injunction. See WBL III, 2020 WL 7690268, at *11; Channel 10,
Inc. v. Indep. Sch. Dist. No. 709 , 215 N.W.2d 8 14, 829 (Minn. 1974) (explaining that
“courts have the inherent power to amend, modify, or vacate an injunction where the
16
circumstances have changed and it is just and equitable to do so”) ; see also Minn. Stat.
§ 116B.09, subd. 1 (conferring broad intervention rights under MERA).
In sum, we conclude that the ALJ erred by universally rejecting the residential
irrigation ban condition.
II. The ALJ acted arbitrarily and capriciously by universally affirming the per
capita use condition and did not adequately explain the decision to affirm the
conversion planning condition for Lino Lakes.

We next address the municipal relators’ challenges to the per capita use condition
and Lino Lakes’ challenge to the conversion planning condition.7 Here, we focus on the
municipal relators’ arguments that the ALJ failed to make findings specific to each
municipality in relation to the conditions.
With respect to the per capita use condition, the municipal relators argue that the
ALJ failed to evaluate the reasonable necessity of the per capita use condition on a city -
by-city basis. They argue that this court acknowledged that the condition may be infeasible
for some municipalities. And they arg ue that the ALJ did not evaluate the evidence they
each offered to demonstrate that the per capita use condition is infeasible for them. The
municipal relators assert various bases for reversal based on the absence of municipality-
specific findings, including that the decision is arbitrary and capricious because it failed to
consider an important aspect of the problem. We agree, that, in the unique circumstances

7 Each of the municipal relators, including Lino Lakes, challenges the per capita use
condition, but only Lino Lakes challenges the conversion planning condition. Thus, our
disposition with respect to the conversion planning condition applies only to Lino Lakes.
17
of this matter, the ALJ ’s decision to universally affirm the per capita use condition is
arbitrary and capricious.
Our reasons for concluding that the ALJ’s decision is arbitrary and capricious in
relation to the per capita use condition mirror our reasons for concluding that the ALJ erred
by universally rejecting the residential irrigation ban condition. We again emphasize that
the contested-case hearing rights under the Water Law must be harmonized with the broad
remedial relief authorized under MERA. We again note our discussion of the contested -
case-hearing rights in WBL III. Specifically in relation to the per capita use condition, we
reasoned that “it may not be feasible for a particular municipality —for example, a small
municipality with a high percentage of industrial users to residential users —to reduce its
water use to these levels.” WBL III, 2020 WL 7690268, at *10. And we again observe that
the ALJ recognized the limited purpose of the contested-case hearing in denying summary
disposition but issued a decision that contradicted that limited purpose. Based on this
analysis, we conclude that the ALJ’s decision to universally affirm the per capita use
condition is arbitrary and capricious because it failed to consider an important aspect of the
problem—whether any of the municipal relators had demonstrated a basis to be exempted
from that condition. See CARD, 713 N.W.2d at 832.
With respect to the conversion planning condition, Lino Lakes argues that the record
lacks substantial evidence to support applying the condition to Lino Lakes. Lino Lakes
argues that the condition is unreasonable as to it because of a lack of surface water within
Lino Lakes and because it has already studied conversion to surface water and determined
it infeasible. The DNR counters that there is no requirement that a municipality converting
18
to surface water supply do so with surface water from within its own borders. And the
DNR states that the most likely source for conversion in the northeast metro is obtaining
water from the St. Paul Regional Water System (which in turn draws from the Mississippi
River). We conclude that the analysis in the ALJ’s decision regarding the conversion
planning condition suffers the same flaw as its analysis of the other conditions—it does not
consider the specific arguments made by Lino Lakes regarding the fea sibility of the
conversion planning condition. The ALJ’s decision is therefore unsupported by substantial
evidence in this regard. See NorthMet, 959 N.W.2d at 749.
In sum, we conclude that the ALJ’s decision is arbitrary and capricious to the extent
that it universally affirms the per capita use condition and unsupported by substantial
evidence to the extent that it affirms the conversion planning condition as to Lino Lakes.
III. The municipal relators bear the burden of proving they should be exempted
from the court-ordered permit conditions.

We finally address the parties’ dispute over the proper allocation of the burden of
proof. The ALJ determined that the DNR had “the burden of proving the reasonableness
and lawfulness of the new conditions.” But the ALJ assigned to the municipalities “the
burden of establishing that it was not possible of complying [sic] with a condition imposed
upon their water appropriation permit, or that the condition was otherwise unlawful.” The
municipal relators argue that the ALJ erred by placing any part of the burden on them. The
DNR responds that, in the circumstances of this case, the municipal rel ators should have
borne the entire burden of proof. The associations likewise assert that, because the
contested-case proceedings were for the purpose of allowing individual municipalities to
19
seek an exemption from the court-ordered permit amendments, which was in the nature of
an affirmative defense, the municipalities had the burden of proof. We agree with the DNR
and the associations.
Under OAH rules,
The party proposing that certain action be taken must
prove the facts at issue by a preponderance of the evidence,
unless the substantive law provides a different burden or
standard. A party asserting an affirmative defense shall have
the burden of provin g the existence of the defense by a
preponderance of the evidence.

Minn. R. 1400.7300, subp. 5 (2023). The substantive law here provides that a permit
“applicant has the burden of proving that the proposed project is reasonable, practical, and
will adequately protect public safety and promote the public welfare.” Minn. Stat.
§ 103G.315, subd. 6(a). The substantive law does not specify which party bears the burden
of proof in relation to amendments to a permit. See Minn. Stat. § 103G.315, subd. 11(a)(2)
(allowing DNR to impose further conditions); Minn. R. 6115.0750, su bp. 5 (governing
amendments to permits). But we have explained that the burden lies with the party
“seeking to change the status quo.” In re Short Call Substitute Teaching License of Yanez,
983 N.W.2d 89, 95 (Minn. App. 2022). Thus, in a typical case where the DNR seeks to
amend a permit, it should bear the burden of proof.
But this case, as we have discussed, is far from typical. As the DNR explains, it did
not “voluntarily amend the permits of the municipalities” but rather was court -ordered to
do so. And as the associations emphasize, this court’s order allowing for contested -case
proceedings was not an invitation to relitigate the MERA relief, at least not globally. In
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these unusual circumstances, we conclude that the status quo is that the permit conditions
are required by the MERA injunction, and the municipalities are attempting to change that
status quo by demonstrating that they should be exempted from the MERA relief. Thus,
we agree with the associations that the only issues before the ALJ are in the nature of
affirmative defenses, on which the municipal relators properly bear the burden of proof.
See Yanez, 983 N.W.2d at 95; Minn. R. 1400.7300, subp. 5.
* * *
Based on our conclusions in sections I and II of this opinion, we reverse the decision
of the ALJ and remand for the ALJ to make additional findings and issue a revised decision
not inconsistent with this opinion. In doing so, the ALJ shall consider whether each
municipal relator met its burden of proving that it should be exempted from the permit
conditions required by the MERA injunction.
Reversed and remanded.