§ 15.99

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OPINION GILDEA, Justice. This action arises from respondent Robert W. Hubbard's application to the City of *316 Lakeland (City) for a variance in connection with Hubbard's efforts to build a new home on a bluff overlooking the lower St. Croix River. The City granted the variance, but the Department of Natural Resources (DNR) declined to certify[1] the City's action. The DNR upheld its decision through a contested case hearing pursuant to the Administrative Procedure Act, Minn. Stat. ch. 14 (2008). The court of appeals reversed the agency's decision, concluding that the variance was deemed granted by operation of the "60-day rule" of Minn. Stat. § 15.99 (2008). In re Denial of Certification of Hubbard Variance, Nos. A07-1932 & A07-2006, 2008 WL 5136099, at *5 (Minn.App. Dec.9, 2008). Because we conclude that the DNR did not have the authority to certify the City's decision to grant the variance, we affirm. Hubbard purchased property in the City in 2006. The 3.8-acre, heavily forested property has approximately 200 feet of frontage along the St. Croix River and is within an area designated as the Lower St. Croix National Scenic Riverway. The river bluff extends the entire length of Hubbard's property. Hubbard purchased the property with the intent to build a new, single-family, 10,000-square-foot residence. Hubbard wanted to build the new house right up to the bluff so that the beach would be visible from the house. Under state regulation and City ordinance, however, new construction generally must be at least 40 feet back from the bluffline. City officials accordingly told Hubbard that if he wanted to build the house within 40 feet of the bluffline, he would need a variance from the City's bluffline-setback ordinance. On July 14, 2006, the City received a request from Hubbard for three variances, including the bluffline-setback variance.[2] The request was assigned first to the Lakeland Planning Commission for its recommendation to the Lakeland City Council. During the planning commission process, the DNR opposed Hubbard's request. Specifically, the DNR argued that the request should be denied because there was adequate space for Hubbard to build the home in compliance with the City ordinance's setback requirements. On September 6, 2006, the Lakeland Planning Commission held a public hearing on Hubbard's variance request. The DNR reiterated its opposition to the variance request at the hearing. The commission also considered the comments of several neighbors and organizations. Commission members voted to forward the application to the Lakeland City Council with a recommendation that the council deny Hubbard's bluffline-setback variance request on the basis that he had not shown hardship. The city council then met to consider Hubbard's request. The DNR submitted written comments to the council stating its opposition to the variance request. The council voted to grant Hubbard's variance. At a meeting on October 17, 2006, the council adopted a resolution formally granting the variance request, concluding that Hubbard had met the requirement to show hardship justifying the variance. *317 The City notified the DNR of its variance decision so that the DNR could certify the variance pursuant to DNR rule, Minn. R. 6105.0540 (2009). The rule requires that local units of government notify the DNR Commissioner of any decision to grant a variance from an ordinance applicable to the lower St. Croix, and provides that the local unit's decision is not "effective unless and until the Commissioner has certified that the action complies" with law. Minn. R. 6105.0540, subps. 2, 3. In a letter dated November 29, 2006, the DNR sent the City a "notice of nonapproval" of the bluffline-setback variance. The DNR refused to certify the City's decision because it did not "find adequate justification of the bluffline variance in the City's Findings." According to the notice, "[n]othing in the City's findings addresses the question of why the landowner cannot simply move the house [design] back to meet the 40-foot bluffline setback." Under Minn. R. 6105.0540, subp. 3(E), the DNR's nonapproval notice "becomes final" unless, within 30 days of the notice, the local authority or the applicant files a demand for a hearing. Both the City and Hubbard demanded a hearing within the 30-day time period. That hearing was held on March 29 and 30, 2007, and on May 8, 2007, the administrative law judge (ALJ) issued a report recommending that the DNR Commissioner affirm the DNR's denial of certification of the bluffline-setback variance. The ALJ concluded that Hubbard had failed to show hardship justifying a variance from the bluffline-setback ordinance. Hubbard and the City filed exceptions and arguments, which challenged the legal basis of the ALJ's conclusion, and urged the DNR Commissioner to reject the ALJ's recommendation. The City later contended to the Commissioner that under the 60-day rule of Minn. Stat. § 15.99,[3] its request for certification had been approved by operation of law on August 21. On September 18, 2007, the Commissioner adopted the ALJ's findings of fact with some minor modifications, accepted the ALJ's recommendation, and affirmed the DNR's denial of certification of the bluffline variance. Hubbard and the City appealed the Commissioner's order to the Minnesota Court of Appeals. The court of appeals, in an unpublished decision, reversed the Commissioner's order. In re Denial of Certification of Hubbard Variance, Nos. A07-1932 & A07-2006, 2008 WL 5136099, at *5 (Minn.App. Dec.9, 2008). The court concluded that because the Commissioner "failed to affirm the denial of the variance request on or before August 21, 2007, the request is approved," under the 60-day rule of Minn. Stat. § 15.99, subd. 2(a). Because the court decided the appeal under the 60-day rule, it did not reach three other issues argued by Hubbard and the City. The DNR Commissioner, the Sierra Club, and the St. Croix River Association petitioned us to review the question of whether the 60-day rule applies to an agency's consideration of an administrative law judge's recommended order in a contested case, rather than the 90 days allowed by the Administrative Procedure Act, Minn. Stat. § 14.62, subd. 2a. (2008). We granted their petitions. After oral argument on June 10, 2009, we ordered additional briefing by the parties on three alternative issues that Hubbard and the City raised. Specifically, Hubbard and the City argued that (1) the DNR lacks statutory authority to certify local variance decisions; (2) the Municipal Planning Act, *318 Minn. Stat. § 462.357 subd. 1e(a) (2008), gives the property owner the right to replace the nonconforming old house on his property without a variance; and (3) the DNR Commissioner did not apply the correct legal standard for granting a variance. We turn first to the question of the DNR's authority to certify the City's variance decision.

OPINION GILDEA, Justice. This action arises from respondent Robert W. Hubbard's application to the City of *316 Lakeland (City) for a variance in connection with Hubbard's efforts to build a new home on a bluff overlooking the lower St. Croix River. The City granted the variance, but the Department of Natural Resources (DNR) declined to certify[1] the City's action. The DNR upheld its decision through a contested case hearing pursuant to the Administrative Procedure Act, Minn. Stat. ch. 14 (2008). The court of appeals reversed the agency's decision, concluding that the variance was deemed granted by operation of the "60-day rule" of Minn. Stat. § 15.99 (2008). In re Denial of Certification of Hubbard Variance, Nos. A07-1932 & A07-2006, 2008 WL 5136099, at *5 (Minn.App. Dec.9, 2008). Because we conclude that the DNR did not have the authority to certify the City's decision to grant the variance, we affirm. Hubbard purchased property in the City in 2006. The 3.8-acre, heavily forested property has approximately 200 feet of frontage along the St. Croix River and is within an area designated as the Lower St. Croix National Scenic Riverway. The river bluff extends the entire length of Hubbard's property. Hubbard purchased the property with the intent to build a new, single-family, 10,000-square-foot residence. Hubbard wanted to build the new house right up to the bluff so that the beach would be visible from the house. Under state regulation and City ordinance, however, new construction generally must be at least 40 feet back from the bluffline. City officials accordingly told Hubbard that if he wanted to build the house within 40 feet of the bluffline, he would need a variance from the City's bluffline-setback ordinance. On July 14, 2006, the City received a request from Hubbard for three variances, including the bluffline-setback variance.[2] The request was assigned first to the Lakeland Planning Commission for its recommendation to the Lakeland City Council. During the planning commission process, the DNR opposed Hubbard's request. Specifically, the DNR argued that the request should be denied because there was adequate space for Hubbard to build the home in compliance with the City ordinance's setback requirements. On September 6, 2006, the Lakeland Planning Commission held a public hearing on Hubbard's variance request. The DNR reiterated its opposition to the variance request at the hearing. The commission also considered the comments of several neighbors and organizations. Commission members voted to forward the application to the Lakeland City Council with a recommendation that the council deny Hubbard's bluffline-setback variance request on the basis that he had not shown hardship. The city council then met to consider Hubbard's request. The DNR submitted written comments to the council stating its opposition to the variance request. The council voted to grant Hubbard's variance. At a meeting on October 17, 2006, the council adopted a resolution formally granting the variance request, concluding that Hubbard had met the requirement to show hardship justifying the variance. *317 The City notified the DNR of its variance decision so that the DNR could certify the variance pursuant to DNR rule, Minn. R. 6105.0540 (2009). The rule requires that local units of government notify the DNR Commissioner of any decision to grant a variance from an ordinance applicable to the lower St. Croix, and provides that the local unit's decision is not "effective unless and until the Commissioner has certified that the action complies" with law. Minn. R. 6105.0540, subps. 2, 3. In a letter dated November 29, 2006, the DNR sent the City a "notice of nonapproval" of the bluffline-setback variance. The DNR refused to certify the City's decision because it did not "find adequate justification of the bluffline variance in the City's Findings." According to the notice, "[n]othing in the City's findings addresses the question of why the landowner cannot simply move the house [design] back to meet the 40-foot bluffline setback." Under Minn. R. 6105.0540, subp. 3(E), the DNR's nonapproval notice "becomes final" unless, within 30 days of the notice, the local authority or the applicant files a demand for a hearing. Both the City and Hubbard demanded a hearing within the 30-day time period. That hearing was held on March 29 and 30, 2007, and on May 8, 2007, the administrative law judge (ALJ) issued a report recommending that the DNR Commissioner affirm the DNR's denial of certification of the bluffline-setback variance. The ALJ concluded that Hubbard had failed to show hardship justifying a variance from the bluffline-setback ordinance. Hubbard and the City filed exceptions and arguments, which challenged the legal basis of the ALJ's conclusion, and urged the DNR Commissioner to reject the ALJ's recommendation. The City later contended to the Commissioner that under the 60-day rule of Minn. Stat. § 15.99,[3] its request for certification had been approved by operation of law on August 21. On September 18, 2007, the Commissioner adopted the ALJ's findings of fact with some minor modifications, accepted the ALJ's recommendation, and affirmed the DNR's denial of certification of the bluffline variance. Hubbard and the City appealed the Commissioner's order to the Minnesota Court of Appeals. The court of appeals, in an unpublished decision, reversed the Commissioner's order. In re Denial of Certification of Hubbard Variance, Nos. A07-1932 & A07-2006, 2008 WL 5136099, at *5 (Minn.App. Dec.9, 2008). The court concluded that because the Commissioner "failed to affirm the denial of the variance request on or before August 21, 2007, the request is approved," under the 60-day rule of Minn. Stat. § 15.99, subd. 2(a). Because the court decided the appeal under the 60-day rule, it did not reach three other issues argued by Hubbard and the City. The DNR Commissioner, the Sierra Club, and the St. Croix River Association petitioned us to review the question of whether the 60-day rule applies to an agency's consideration of an administrative law judge's recommended order in a contested case, rather than the 90 days allowed by the Administrative Procedure Act, Minn. Stat. § 14.62, subd. 2a. (2008). We granted their petitions. After oral argument on June 10, 2009, we ordered additional briefing by the parties on three alternative issues that Hubbard and the City raised. Specifically, Hubbard and the City argued that (1) the DNR lacks statutory authority to certify local variance decisions; (2) the Municipal Planning Act, *318 Minn. Stat. § 462.357 subd. 1e(a) (2008), gives the property owner the right to replace the nonconforming old house on his property without a variance; and (3) the DNR Commissioner did not apply the correct legal standard for granting a variance. We turn first to the question of the DNR's authority to certify the City's variance decision.

OPINION GILDEA, Justice. This action arises from respondent Robert W. Hubbard's application to the City of *316 Lakeland (City) for a variance in connection with Hubbard's efforts to build a new home on a bluff overlooking the lower St. Croix River. The City granted the variance, but the Department of Natural Resources (DNR) declined to certify[1] the City's action. The DNR upheld its decision through a contested case hearing pursuant to the Administrative Procedure Act, Minn. Stat. ch. 14 (2008). The court of appeals reversed the agency's decision, concluding that the variance was deemed granted by operation of the "60-day rule" of Minn. Stat. § 15.99 (2008). In re Denial of Certification of Hubbard Variance, Nos. A07-1932 & A07-2006, 2008 WL 5136099, at *5 (Minn.App. Dec.9, 2008). Because we conclude that the DNR did not have the authority to certify the City's decision to grant the variance, we affirm. Hubbard purchased property in the City in 2006. The 3.8-acre, heavily forested property has approximately 200 feet of frontage along the St. Croix River and is within an area designated as the Lower St. Croix National Scenic Riverway. The river bluff extends the entire length of Hubbard's property. Hubbard purchased the property with the intent to build a new, single-family, 10,000-square-foot residence. Hubbard wanted to build the new house right up to the bluff so that the beach would be visible from the house. Under state regulation and City ordinance, however, new construction generally must be at least 40 feet back from the bluffline. City officials accordingly told Hubbard that if he wanted to build the house within 40 feet of the bluffline, he would need a variance from the City's bluffline-setback ordinance. On July 14, 2006, the City received a request from Hubbard for three variances, including the bluffline-setback variance.[2] The request was assigned first to the Lakeland Planning Commission for its recommendation to the Lakeland City Council. During the planning commission process, the DNR opposed Hubbard's request. Specifically, the DNR argued that the request should be denied because there was adequate space for Hubbard to build the home in compliance with the City ordinance's setback requirements. On September 6, 2006, the Lakeland Planning Commission held a public hearing on Hubbard's variance request. The DNR reiterated its opposition to the variance request at the hearing. The commission also considered the comments of several neighbors and organizations. Commission members voted to forward the application to the Lakeland City Council with a recommendation that the council deny Hubbard's bluffline-setback variance request on the basis that he had not shown hardship. The city council then met to consider Hubbard's request. The DNR submitted written comments to the council stating its opposition to the variance request. The council voted to grant Hubbard's variance. At a meeting on October 17, 2006, the council adopted a resolution formally granting the variance request, concluding that Hubbard had met the requirement to show hardship justifying the variance. *317 The City notified the DNR of its variance decision so that the DNR could certify the variance pursuant to DNR rule, Minn. R. 6105.0540 (2009). The rule requires that local units of government notify the DNR Commissioner of any decision to grant a variance from an ordinance applicable to the lower St. Croix, and provides that the local unit's decision is not "effective unless and until the Commissioner has certified that the action complies" with law. Minn. R. 6105.0540, subps. 2, 3. In a letter dated November 29, 2006, the DNR sent the City a "notice of nonapproval" of the bluffline-setback variance. The DNR refused to certify the City's decision because it did not "find adequate justification of the bluffline variance in the City's Findings." According to the notice, "[n]othing in the City's findings addresses the question of why the landowner cannot simply move the house [design] back to meet the 40-foot bluffline setback." Under Minn. R. 6105.0540, subp. 3(E), the DNR's nonapproval notice "becomes final" unless, within 30 days of the notice, the local authority or the applicant files a demand for a hearing. Both the City and Hubbard demanded a hearing within the 30-day time period. That hearing was held on March 29 and 30, 2007, and on May 8, 2007, the administrative law judge (ALJ) issued a report recommending that the DNR Commissioner affirm the DNR's denial of certification of the bluffline-setback variance. The ALJ concluded that Hubbard had failed to show hardship justifying a variance from the bluffline-setback ordinance. Hubbard and the City filed exceptions and arguments, which challenged the legal basis of the ALJ's conclusion, and urged the DNR Commissioner to reject the ALJ's recommendation. The City later contended to the Commissioner that under the 60-day rule of Minn. Stat. § 15.99,[3] its request for certification had been approved by operation of law on August 21. On September 18, 2007, the Commissioner adopted the ALJ's findings of fact with some minor modifications, accepted the ALJ's recommendation, and affirmed the DNR's denial of certification of the bluffline variance. Hubbard and the City appealed the Commissioner's order to the Minnesota Court of Appeals. The court of appeals, in an unpublished decision, reversed the Commissioner's order. In re Denial of Certification of Hubbard Variance, Nos. A07-1932 & A07-2006, 2008 WL 5136099, at *5 (Minn.App. Dec.9, 2008). The court concluded that because the Commissioner "failed to affirm the denial of the variance request on or before August 21, 2007, the request is approved," under the 60-day rule of Minn. Stat. § 15.99, subd. 2(a). Because the court decided the appeal under the 60-day rule, it did not reach three other issues argued by Hubbard and the City. The DNR Commissioner, the Sierra Club, and the St. Croix River Association petitioned us to review the question of whether the 60-day rule applies to an agency's consideration of an administrative law judge's recommended order in a contested case, rather than the 90 days allowed by the Administrative Procedure Act, Minn. Stat. § 14.62, subd. 2a. (2008). We granted their petitions. After oral argument on June 10, 2009, we ordered additional briefing by the parties on three alternative issues that Hubbard and the City raised. Specifically, Hubbard and the City argued that (1) the DNR lacks statutory authority to certify local variance decisions; (2) the Municipal Planning Act, *318 Minn. Stat. § 462.357 subd. 1e(a) (2008), gives the property owner the right to replace the nonconforming old house on his property without a variance; and (3) the DNR Commissioner did not apply the correct legal standard for granting a variance. We turn first to the question of the DNR's authority to certify the City's variance decision.

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In 2002, the Minneapolis Institute of Arts (MIA) applied for an amendment to its 1973 planned unit development (PUD) in order to add a new wing. The Minneapolis City Planning Commission (planning commission) approved the MIA’s application and the MIA’s neighbors (Smith and Moreno) appealed this decision to the Minneapolis City Council. The city council heard and denied the appeal, approving the MIA’s application subject to conditions recommended by the city-planning department. The neighbors appealed this decision to the district court seeking declaratory and injunctive relief. Although not named in the original complaint, the MIA intervened and argued, by way of cross-claim against the city and counterclaim against Smith and Moreno, that its zoning application was automatically approved by operation of Minn. Stat. § 15.99 (2002). In conjunction with the parties’ cross-motions for summary judgment, the district court found that the MIA’s application was not automatically approved by operation of Minn. Stat. § 15.99. But the district court affirmed, on the merits, the city’s approval of the MIA’s application. On appeal to this court, Smith and Moreno argue that the city erred by approving the MIA’s application because the application was defective and violated Minneapolis zoning ordinances. On appeal and by notice of review, the MIA challenges the district court’s denial of its cross-claim against the city, arguing that its application was automatically approved by operation of Minn. Stat. § 15.99, and therefore Smith and Moreno are precluded from challenging the city’s action. We affirm as modified.

In 2002, the Minneapolis Institute of Arts (MIA) applied for an amendment to its 1973 planned unit development (PUD) in order to add a new wing. The Minneapolis City Planning Commission (planning commission) approved the MIA’s application and the MIA’s neighbors (Smith and Moreno) appealed this decision to the Minneapolis City Council. The city council heard and denied the appeal, approving the MIA’s application subject to conditions recommended by the city-planning department. The neighbors appealed this decision to the district court seeking declaratory and injunctive relief. Although not named in the original complaint, the MIA intervened and argued, by way of cross-claim against the city and counterclaim against Smith and Moreno, that its zoning application was automatically approved by operation of Minn. Stat. § 15.99 (2002). In conjunction with the parties’ cross-motions for summary judgment, the district court found that the MIA’s application was not automatically approved by operation of Minn. Stat. § 15.99. But the district court affirmed, on the merits, the city’s approval of the MIA’s application. On appeal to this court, Smith and Moreno argue that the city erred by approving the MIA’s application because the application was defective and violated Minneapolis zoning ordinances. On appeal and by notice of review, the MIA challenges the district court’s denial of its cross-claim against the city, arguing that its application was automatically approved by operation of Minn. Stat. § 15.99, and therefore Smith and Moreno are precluded from challenging the city’s action. We affirm as modified.

In 2002, the Minneapolis Institute of Arts (MIA) applied for an amendment to its 1973 planned unit development (PUD) in order to add a new wing. The Minneapolis City Planning Commission (planning commission) approved the MIA’s application and the MIA’s neighbors (Smith and Moreno) appealed this decision to the Minneapolis City Council. The city council heard and denied the appeal, approving the MIA’s application subject to conditions recommended by the city-planning department. The neighbors appealed this decision to the district court seeking declaratory and injunctive relief. Although not named in the original complaint, the MIA intervened and argued, by way of cross-claim against the city and counterclaim against Smith and Moreno, that its zoning application was automatically approved by operation of Minn. Stat. § 15.99 (2002). In conjunction with the parties’ cross-motions for summary judgment, the district court found that the MIA’s application was not automatically approved by operation of Minn. Stat. § 15.99. But the district court affirmed, on the merits, the city’s approval of the MIA’s application. On appeal to this court, Smith and Moreno argue that the city erred by approving the MIA’s application because the application was defective and violated Minneapolis zoning ordinances. On appeal and by notice of review, the MIA challenges the district court’s denial of its cross-claim against the city, arguing that its application was automatically approved by operation of Minn. Stat. § 15.99, and therefore Smith and Moreno are precluded from challenging the city’s action. We affirm as modified.

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