author: GILBERT, Justice.

text:
    LAKE SUPERIOR PAPER INDUSTRIES, Relator, v. STATE of Minnesota and County of St. Louis, Respondent, v. City of Duluth, Intervenor, Respondent.
    No. C0-00-598.
    Supreme Court of Minnesota.
    April 5, 2001.

      Robert C. Maki, Maki & Overon, Robert Asleson, City of Duluth, for respondent City of Duluth.
    Michael R. Dean, St. Louis County Attorney’s Office, Duluth, for respondent County of St. Louis.
   OPINION

GILBERT, Justice.

This case involves a developer’s property tax challenge of the assessor’s value of a redeveloped property that was financed in part by the use of tax increment bonds pursuant to Minn.Stat. § 469.177 (1990) for the City of Duluth’s (City) contribution. The developer is also challenging the validity of the assessment agreement. The tax court ruled in favor of the City on the City’s cross motion for summary judgment. We affirm.

The facts relevant to this appeal are undisputed. On December 2, 1985, Lake Superior Paper Industries (LSPI) and the City entered into a development agreement whereby LSPI agreed to build a paper mill on blighted industrial waterfront property. The mill was designed to manufacture supercalendered paper, which is a semi-glossy paper used in advertising supplements as well as specialty cata-logues, magazines, and commercial printing. The initial plans indicated that the mill’s production capacity would reach 285,700 tons of paper per year, and operations were scheduled to begin by January 1988. Preliminary documents prepared by the City estimated that the total cost in redeveloping the paper mill site exceeded $450,000,000.

The development agreement obligated the City to incur the costs to acquire the land targeted for redevelopment, prepare it for redevelopment, and then sell it to LSPI. Among other things, the agreement required the City to demolish existing structures, rezone the land, make utility improvements, and vacate existing street, avenue, alley, and utility easements. In addition, the agreement required the City to supply the mill with up to 240,000 pounds of steam per ■ hour by acquiring, retrofitting, and operating boilers from a nearby steam plant — the M.L. Hibbard Steam and Electric Station.

The development agreement also provided that the City’s share of the project’s costs would be funded by a $29,300,000 issuance of tax increment revenue bonds. The City entered into an indenture agreement with the First National Bank of Chicago in 1985 (“Trust Indenture”), and the issuance was supported by a letter of credit from National Australia Bank Limited until 1993. Of the total issuance, approximately $5,100,000 was dedicated to acquire and prepare the waterfront property for development, pay the capitalized interest, and pay the costs of issuing the bonds. The remaining $24,200,000 was reserved for the City’s expenses associated with acquiring and improving the Hibbard Steam Plant.

The development agreement obligated LSPI to incur the paper mill’s construction and operation costs and it also required LSPI to purchase the redevelopment property from the City once the City’s obligations under the agreement were complete. Included in an amendment to the agreement was a statement regarding the parties’ intent to execute an assessment agreement in the future setting the minimum market value of the paper mill at a reasonable value. The proposed assessment agreement was attached to the development agreement as “Exhibit O,” but the dollar amounts were left blank.

The Trust Indenture directed that bond payments would first be deposited into the tax increment account to meet the mandatory bond payment requirements. Any amount remaining in that account at the end of the year — which would represent any amount collected in excess of the payment liability — would be transferred into the reserve fund where the funds would accumulate. The Trust Indenture directed that if the amount in the reserve fund exceeded the minimum reserve requirement, the excess' would be transferred to the redemption account. Any funds transferred into the redemption account were then to be applied to the principal, which over time could result in retiring the bonds before their maturity date.

On December 24, 1987, LSPI and the City signed a Certificate of Completion and Continuation Agreement, which certified that LSPI had completed construction and had initiated operation of the paper mill. The agreement also detailed additional responsibilities of each party, including the development-related work not yet completed. The agreement indicated that the new document would supersede the original development agreement “except as otherwise setforth [therejin.” The agreement also stated that the parties intended to “execute an Assessment Agreement substantially in the form attached hereto as Exhibit 0.”

Although the record is not clear as to the reason for the delay, active negotiation on an assessment agreement did not begin until early 1990. Letters between counsel for each party indicated that there was some confusion as to whether the paper mill’s minimum market value was $56,578,900 or $42,742,100. After further negotiations, LSPI and the City signed an assessment agreement in January 1991, which set the minimum market value of LSPI’s paper mill and underlying and surrounding real estate at $42,742,100. The effective date of the agreement was January 1, 1988. The City Assessor certified that $42,742,100 was a reasonable market value for the paper mill. Shortly after the assessor certified the ássessment agreement’s minimum market value, he retired, and he did not retain his notes regarding the paper mill’s valuation. The agreement was recorded in December 1992 after LSPI completed its final obligations, one of which included determining the legal description of the real estate.

In November 1996, LSPI requested the City to agree to adjust the paper mill’s minimum market value downward. The City refused to agree to a downward adjustment, and LSPI sought judicial relief. In total, LSPI petitioned for review of its 1996, 1997, and 1998 property taxes, and those petitions were consolidated into one case. Because LSPI challenged the interpretation of a statute and the validity of the assessment agreement, the parties agreed to bifurcate the case.

LSPI brought a motion for summary judgment requesting the tax court to invalidate the minimum assessment agreement, and the City brought a cross-motion for summary judgment. The tax court granted the City’s motion for summary judgment. It concluded that the assessment agreement was valid and that the City did not unreasonably withhold its consent to employ the adjustment clause. The tax court also held that although construction of the improvements may have been largely completed at the time the assessment agreement was entered into, there were still several uncompleted tasks that were part of the overall project development. These uncompleted tasks included assembling and acquiring additional land, ie. additional purchases; vacating utility easements in City streets, avenues, and alleys; platting; title work; and related surveying. Therefore, the court held that the parties complied with the governing statute. In addition, the tax court held that the City Assessor’s certification of the paper mill’s minimum value was valid because the assessor complied with the statutory requirements. The tax court refused to address an issue related to the enforceability of a stipulation by the parties, and that issue is therefore not an issue in this appeal.

On appeal, LSPI argues that the tax court erred in' interpreting and applying the adjustment clause in the parties’ assessment agreement and in determining that the mill’s construction was not completed until after the assessment agreement was executed; that the assessor’s certification of value for the assessment agreement was valid; and that there were no genuine issues of material fact that would preclude summary judgment in the City’s favor. LSPI argues that any one of the alleged errors would invalidate the assessment agreement, which would cause the paper mill to be assessed at its actual market value under the default provisions of Minn.Stat. § 273.11, subd. 1 (1996).

I.

On an appeal from summary judgment from the tax court, this court determines “whether there are any genuine issues of material fact and whether the lower court erred in its application of the law.” Brookfield Trade Ctr., Inc. v. County of Ramsey, 584 N.W.2d 390, 392-93 (Minn.1998) (hereinafter Brookfield I). Here, the issues relate to whether the tax court erred in its application of the underlying statute when it interpreted the parties’ minimum assessment agreement pursuant to Minn.Stat. § 469.177, subd. 8 (1990). This court reviews statutory interpretation de novo. Brookfield I, 584 N.W.2d at 393. Contract interpretation is also a legal issue that we review de novo. See Turner v. Alpha Phi Sorority House, 276 N.W.2d 63, 66 (Minn.1979).

LSPI first argues that the tax court erred in holding that “the City had no obligation ever to agree to a downward adjustment, and that the only adjustment possible under [the assessment agreement] would be an upward adjustment.” Our review of the tax court’s decision indicates that the tax court never made such a determination. Because this argument lacks merit, we decline to address it.

II.

LSPI next argues that the City unreasonably withheld its consent to LSPI’s request for a downward adjustment in the market value of the redeveloped property. LSPI argues that the tax court erroneously considered extrinsic evidence of a letter from LSPI’s former counsel to Minnesota Power, and the language of the trust indenture between the parties entered into years before the assessment agreement. LSPI further argues that the City had no reasonable basis for refusing LSPI’s request. The City argues that its refusal was not unreasonable because none of the agreements contemplated or executed by the parties required the City to lower the minimum assessed value whenever LSPI requested an adjustment. Further, the City argues that the agreement permits the addition of excess funds to the reserve fund and redemption account to reduce the bonds before their scheduled maturity. The tax court found that the City did not unreasonably withhold its consent to adjust the minimum market value.

Our review of this issue is limited to determining “whether there are any genuine issues of material fact and whether the lower court erred in its application of the law.” Brookfield I, 584 N.W.2d at 392-93. LSPI points to a letter dated December 20, 1985 that was written by its attorney to Minnesota Power, which was one of LSPI’s partners, stating his understanding that the City would have the discretion to use excess tax increment payments to retire the bonds early. This letter from LSPI’s counsel was provided without objection by LSPI to the City in response to a discovery request, and the letter constitutes a communication to a third party that was voluntarily made on behalf of LSPI. LSPI argues that the December 20, 1985 letter was extrinsic evidence and the City was precluded from introducing it by a tax court order prohibiting the introduction of (1) certain identified and already produced documents withheld based on the claim of privilege, (2) documents not previously produced which refer to the privileged documents referred to in the order, (3) oral testimony or affidavits referring to the privileged documents, and (4) other extrinsic evidence relating to the material claimed as. privileged. However, this letter was previously produced by LSPI, and it was excepted from the preclusion order. As a result, the tax court did not err in receiving the December 20,1985 letter into evidence and relying upon it.

LSPI also argues that based on the plain language of the assessment agreement, the City’s refusal to adjust the paper mill’s minimum market value downward constituted a breach of the implied covenant of good faith and fair dealing. LSPI further argues that the trust indenture language does not “preclude the parties’ subsequent agreement to the adjustment clause in the Assessment Agreement” and, in any event, the Trust Indenture was irrelevant. We have held that when interpreting minimum assessment agreements, the language of the agreement is to be given its plain and ordinary meaning. Brookfield I, 584 N.W.2d at 394. The adjustment clause at issue in this case provides:

Due to the complex nature of the improvements and the real estate involved and the complexity of the Redevelopment Project, the market value and tax payments may be subject to adjustments as agreed by the City and LSPI at any time during the course of this Agreement.

Considering this language alone, there is no indication that the adjustment clause requires an adjustment whenever one party requests the adjustment. The adjustment clause indicates that the minimum market value can be changed only when both parties agree to the change.

LSPI relies on In re Hennepin County 1986 Recycling Bond Litigation to support its position that the City’s refusal breached the implied covenant of good faith and fair dealing. 540 N.W.2d 494 (Minn.1995). However, in Hennepin County 1986 Recycling Bond Litigation, we simply determined that the bond holders pleaded a claim for breach of the implied covenant of good faith and fair dealing that was sufficient to withstand the defendant’s Minn. R.Civ.P. 12.02(e) motion to dismiss. Hennepin County 1986 Recycling Bond Litigation, 540 N.W.2d at 503. We did not decide the substantive issue for which LSPI cites this case, i.e., whether the defendants actually breached the implied covenant of good faith and fair dealing. Id. There is nothing in the record to support the contention that the City’s refusal to adjust the paper mill’s minimum market value was either unreasonable or a breach of the implied covenant of good faith and fair dealing. In fact, LSPI’s argument that the use of the funds complained of “to make additional unscheduled payments to the bondholders, thereby accelerating the date when the bonds would be fully paid” is precisely what the Trust Indenture’s reserve fund and redemption account were designed to accomplish. We hold that the tax court did not err in finding that the City did not unreasonably withhold its consent to employ the adjustment clause to adjust the paper mill’s minimum market value downward.

III.

LSPI next argues that because Minn.Stat. § 469.177, subd. 8 (1990), like its predecessor statute Minn.Stat. § 273.76, subd. 8 (1984), requires that an assessment agreement be executed prior to completion of the improvements, the assessment agreement at issue in this case is invalid because construction of the paper mill was completed well before the minimum assessment agreement became effective in 1991. The City argues that this reading of the statute is too narrow because it allows one party’s delay to prevent the execution of a valid assessment agreement. The tax court held that the agreement was valid and resolved LSPI’s argument by first citing PRN Music Corp. v. County of Carver, in which the tax court held that an assessment agreement is invalid if it is signed after the development is completed. No. C8-92-523 1994 WL 258409 at *1 (Minn. T.C. June 7, 1994). The tax court held that in the instant case, the agreement was valid because it was signed in January 1991, which was before the property development was completed because title work and the complete conveyance of the final land plats was not completed until November 1992. Id. Resolution of this issue requires us to review de novo “whether there are any genuine issues of material fact and whether the lower court erred in its application of the law.” Brookfield I, 584 N.W.2d at 392-93.

We have never had occasion to examine the language of the assessment agreement statute in order to determine the narrow issue of when an assessment agreement becomes effective. In PRN Music Corp., the tax court stated that the assessment agreement was effective when both parties signed it. 1994 WL 258409 at *1. The tax court made the same finding in this case, determining that the agreement was not effective until signed in January 1991. We agree with the tax court’s reasoning as to this issue. We therefore hold that the assessment agreement became effective when it was signed in January 1991. As a result, the statute that governs the agreement is Minn.Stat. § 469.177, subd. 8 (1990).

When the agreement became effective in January 1991, this assessment statute provided:

An authority may * * * enter into a written assessment agreement in recordable form with the developer or rede-veloper of property within the tax increment financing district which establishes a minimum market value of the land and completed improvements to be constructed thereon * * *.

Minn.Stat. § 469.177, subd. 8. Although this statute permits assessment agreements “establishfing] minimum market value[s] of the land and completed improvements to be constructed thereon,” it does not define “completed improvements.” Minn.Stat. § 469.177, subd. 8. We have never interpreted “completed improvements” in the context of this statute. In the instant case, the tax court determined that “completed improvements” meant completion of the entire development. It further found that there were several uncompleted tasks that were part of the overall project development and were specifically noted in the continuation agreement. The tax court recognized that the construction of improvements may have been largely complete by the time the assessment agreement was executed, but that the term “development” is broader than “construction of improvements” and encompasses things such as land acquisition and transfer.

This case does not require us to determine the meaning of existing or “completed improvements,” and LSPI’s reliance on PRN Music Corp.* is misplaced. In PRN Music Corp., the relator purchased the subject property from a private party in the fall of 1985 and completed construction of a recording studio in 1987. 1994 WL 258409 at *1. Then, in 1989, PRN and Carver County signed an assessment agreement and made the agreement retroactive. Id. When the tax court considered the validity of the assessment agreement, it examined when the agreement was signed in relation to when the development was completed. Id. On those facts, the tax court determined that the agreement was invalid because it was executed after the development was completed. Id. Here, it is undisputed that at the time the parties executed the assessment agreement in January 1991, all of the land contemplated in the development agreement had not even been acquired, vacated, or platted, nor had LSPI completed the title and plat work it was responsible for completing.

LSPI argues that the only statutory criterion relevant in determining whether the assessment agreement is valid is whether the construction of the physical improvements were completed before the assessment agreement became effective. However, both Minn.Stat. § 469.177, subd. 8 and the development agreement executed by the parties in 1985 encompass more than the mere completion of the construction of physical improvements in establishing minimum market values. Minnesota Statutes § 469.177, subd. 8 requires that the assessment agreement establish “a minimum market value of the land and completed improvements to be constructed thereon * * *.” (emphasis added). This language indicates that the minimum market value in an assessment agreement includes two components — land and completed improvements constructed thereon. The agreements entered into by the parties in the instant case recognize both components.

The development agreement states that LSPI “has proposed that the City establish a renewal program (the ‘Redevelopment Plan’) which has as its objective the assembly of a paper mill site of approximately 92 acres (the ‘Property’) * ⅜ *.” This language includes'1 not only the improvements contemplated by* the parties but also the acquisition and transfer of land to LSPI. Later in the development agreement, the parties included the following definition:

“Project” means the construction and operation of (i) the Paper Mill, (ii) the City Sewer Improvements, (iii) the City Site Improvements, (iv) the City Steam Improvements, (v) the City Utility Improvements, and (vi) any additional improvements made by [LSPI] on the Redevelopment Property pursuant to the terms of this Agreement.

This language also indicates that the parties intended that the redevelopment project included more than simply the construction of the paper mill.

Moreover, the Certificate of Completion and Continuation Agreement reiterates the notion that the improvements contemplated by the parties included more than simply the construction of a paper mill. In the continuation agreement, the parties acknowledge that although LSPI completed construction of the paper mill and initiated operation, the assembly of the land for the site had not yet been completed. The continuation agreement also outlines the remaining duties of each party. The City was obligated to complete site improvements and sewer improvements and to also vacate street, avenue, alley, and utility easements and use its “best efforts” to acquire additional properties for LSPI and then sell those additional properties to LSPI. The agreement also outlined LSPI’s obligation to purchase additional land and plat the entire paper mill site within 1 year after the conveyance of the last portion of the property. The Certificate of Completion and Continuation Agreement also reiterated the parties’ intention to execute “Exhibit 0,” the assessment agreement at issue herein. This agreement establishes the minimum market value of both the land and “improvements constructed thereon.” Minnesota Statutes § 469.177, subd. 8 has the same two requirements.

Our review of the record indicates that although the construction of the paper mill was completed in 1987, the tax court was correct in determining that the assembly and acquisition of the land on which the improvements were to be constructed was not completed in January 1991, the date of the assessment agreement. Furthermore, it was LSPI that had the responsibility to complete the final plat and title work, which was not accomplished until November 1992. Therefore, we hold that the tax court did not err in determining that the assessment agreement was in compliance with Minn.Stat. § 469.177, subd. 8.

IV.

LSPI next argues that the assessment agreement should be invalidated because the city assessor did not follow professional appraisal standards when certifying the minimum assessed value of the paper mill, which resulted in an unreasonable minimum market value. The City argues that the city assessor complied with the statutory duties imposed by Minn.Stat. § 469.177, subd. 8 in preparing the certification of minimum market value. When the tax court considered this issue, it held that the assessment agreement was valid and enforceable. In reaching its decision, the tax court noted that John Young, then Duluth City Assessor, testified that he retained independent appraisers to value the land, required an appraisal on each parcel, received the paper mill’s blueprints, used cost and construction manuals, inspected the facility numerous times, consulted with assessors in other communities where similar paper mills were located, and signed a certification acknowledging that he complied with the statute. The tax court pointed out that the city assessor’s testimony was uncon-troverted in regard to his compliance with the statutory requirements.

This issue involves a de novo determination of whether the Duluth City Assessor complied with the statute governing certification of assessment agreements. Brookfield I, 584 N.W.2d at 393. We recently addressed the issue of whether an assessor’s certification complied with the statute governing assessment agreement certification requirements in Brookfield Trade Ctr., Inc. v. County of Ramsey, 609 N.W.2d 868, 874 (Minn.2000) (hereinafter Brookfield II). In Brookfield II, the developer challenged the validity of the minimum assessment agreement, arguing that the assessor did not perform “an independent valuation analysis of the subject property to determine if the proposed minimum market value is a reasonable estimate.” Id. We held that a full market value appraisal was not required and that the assessment agreement statute “simply requires the assessor to determine whether a minimum market value agreed to by the parties and presented to the assessor is a reasonable estimate.” Id. at 875. We further held that our focus turns on whether there are genuine issues of material fact as to whether the assessor complied with the statute. Id. We stated:

Specifically, we must determine whether the assessor received the proposed minimum market value, reviewed the plans and specifications for the proposed development, considered the previous market value for the property, and determined that the minimum market value in the agreement was a reasonable estimate.

Id. We next considered the available evidence in light of the presumption that assessors, as government officials, perform their duties properly and comply with statutory procedures when certifying minimum market values. Id. at 876.

In the instant case, we can apply the same analysis articulated in Brookfield II. Here, Young certified that he (1) received the proposed minimum market value, (2) reviewed the plans and specifications for the improvements constructed, (3) reviewed the market value assigned to the land as described^ in an attached exhibit and upon which the improvements have been and are to be constructed, and ultimately determined that the minimum market value contained in the foregoing assessment agreement appeared reasonable. The certification was signed by Young and notarized. Consistent with our holding in Brookfield II, absent probative evidence to the contrary, a certification conforming to the statutory requirements is sufficient in-dicia of a valid certification. 609 N.W.2d at 877.

LSPI argues that this presumption can be rebutted by the city assessor’s lack of information, the testimony of the successor to the city assessor who certified the minimum market value, and the testimony of LSPI’s expert. However, LSPI’s first argument fails because the assessor’s signed certification alone without rebuttal evidence indicates prima facia compliance with the statute. Brookfield II, 609 N.W.2d at 877-78. LSPI’s second argument also fails because testimony from a subsequent assessor who was not involved with the original certification does little to illuminate whether the previous assessor actually performed the statutorily required analysis and is not probative of .the narrow factual issues before the court. Id. at 877. LSPI’s third argument fails as well because LSPI’s expert testimony indicating a lower value is appropriate is also not probative as to the narrow issue before this court because the expert’s testimony is based on a valuation method that differs from the method used by the assessor and is not required by statute. Because LSPI cannot rebut the presumption that the assessor’s certification complied with the statute, we hold that the tax court did not err in determining that the assessor’s certification satisfied the statutory requirements.

V.

LSPI also argues that the tax court erred in failing to find any genuine issue of material fact as to the adjustment clause and assessor’s certification issues. LSPI argues that their expert’s opinions, combined with the admissions of Lynn Duncan, who is Young’s predecessor, and Young himself, “created a genuine issue of material fact as to the reasonableness of Young’s certification of value, precluding the entry of summary judgment in the City’s favor.” The tax court held as a matter of law that Young’s estimate was not unreasonable at the time he certified the value, that the material facts were not in dispute, and that the evidence offered by LSPI to controvert the city assessor’s testimony was not probative. It further pointed out that Young’s failure to keep good records is not particularly relevant because this case involves a challenge to the validity of the assessment agreement and is not a valuation case.

Our standard of review in resolving this issue is to determine “whether there are any genuine issues of material fact.” Brookfield I, 584 N.W.2d at 392-93. The only factual dispute raised by LSPI is that LSPI’s expert valued the paper mill at $32,000,000 while Duncan certified that the $42,742,100 valuation negotiated and agreed upon by the parties was reasonable. However, the two values are based on different valuation formulas, and Young’s analysis was completed before the paper mill site was completed while Rams-land’s valuation was completed well after the paper mill was completed. As a result, the different values are not per se unreasonable as a matter of law. Moreover, the issue in the instant case is statutory compliance and not valuation. Ramsland’s testimony does not raise a genuine issue of material fact because it is not probative as to whether the assessor complied with the relevant statute when he certified the reasonableness of the paper mill’s minimum assessed value. We hold that the tax court did not err in holding that there were no issues of material fact.

Affirmed.

      . On January 2, 1995 and on January 2, 1996, the assessor estimated that the paper mill's market value was higher than the paper mill’s minimum assessed value.

      . Minnesota Statutes § 467.177, subd. 8 (1990) was amended and the new language was effective June 1, 1991. Minn.Stat. § 469.177, subd. 8 (1991). The new language indicates that an assessment agreement may be entered into for land, existing improvements, or improvements to be constructed.

      . The tax court pointed out that "[i]f the certified estimate was so unreasonable, the Petitioner need not have agreed to the terms of the Assessment Agreement in the first place or .could have challenged it long before now.” Lake Superior Paper Indus. v. State, Nos. CX-96-600516, C4-97-600649, C1-98-600621 2000 WL 204062 at *7 (Minn. T.C. Feb. 9, 2000).


source: Caselaw Access Project

license: Public Domain

text:
    James REGAN, Relator, v. VOA NATIONAL HOUSING CORPORATION, et al., Respondents.
    No. C2-01-130.
    Supreme Court of Minnesota.
    April 6, 2001.
    Carl J. Sommerer II, Minneapolis, for relator.
    Philip C. Warner, Minneapolis, for respondents.
   ORDER

Based upon all the files, records and proceedings herein,

IT IS HEREBY ORDERED that the decision of the Workers’ Compensation Court of Appeals filed December 20, 2000, be, and the same is, affirmed without opinion. See Minn. R. Civ.App. P. 136.01, subd. 1(b).

BY THE COURT:

/s/ Russell A. Anderson Associate Justice


author: STRINGER, Justice.

text:
    In the Matter of the EXCESS SURPLUS STATUS OF BLUE CROSS AND BLUE SHIELD OF MINNESOTA.
    No. C5-99-1383.
    Supreme Court of Minnesota.
    April 12, 2001.

      David Aafedt, Assistant Attorney General, St. Paul, for appellant.
    Meagher and Geer, P.L.L.P., John J. McDonald, Jr., Jenneane L. Jansen, Minneapolis, for appellant/intervenor.
    Robins, Khplan, Miller & Ciresi, L.L.P., Michael V. Ciresi, Deborah J. Palmer, David W. Beehler, and Joel A. Mintzer, Minneapolis, for respondent.
    Alan I. Gilbert, Chief Deputy and Solicitor General; Chestnut and Cambronne, P.A., Karl L. Cambronne and Jeffrey D. Bores; Heins Mills <& Olson, P.C., Samuel D. Heins, Daniel E. Gustafson, and Daniel C. Hedlund; Lockrige Grindal Ñauen, P.L.L.P., Hugh V. Plunkett and Robert K. Shelquist, for amicus.
   OPINION

STRINGER, Justice.

Respondent BCBSM, Inc., d/b/a Blue Cross and Blue Shield of Minnesota (hereinafter BCBSM) initiated legal proceedings against Philip Morris, Inc., R.J. Reynolds Tobacco Company, Brown & Williamson Tobacco Corporation, B.A.T. Industries P.L.C., Lorillard Tobacco Company, The American Tobacco Company, Liggett Group, Inc., The Council for Tobacco Researeh-U.S.A., Inc., and The Tobacco Institute, Inc. in 1994 alleging that as a result of the unlawful conduct of the tobacco companies, BCBSM has been damaged by paying substantially higher claims to its contracted health care providers due to smoking-related illnesses. A settlement was reached in 1998 providing for the payment to BCBSM of approximately $469 million with an estimated present value of $434 million at the time of the administrative proceedings in this matter. BCBSM was notified by the Department of Commerce (department) that receipt of the settlement proceeds would cause BCBSM to exceed its allowable surplus under Minn.Stat. § 62C.09 (2000) and therefore it must submit a plan for the department’s approval to adjust its operations to bring the surplus into compliance. Upon submission and consideration of the plan.in a contested case proceeding, the administrative law judge (ALJ) presiding over the evidentiary hearing recommended approval of the plan, but the Deputy Commissioner of Commerce (deputy commissioner), acting pursuant to a delegation of authority from the Commissioner of Commerce to make the final decision in the matter, disagreed and denied approval. On certiorari to.the court of appeals, the court concluded that the record “manifestly” supported approval of the BCBSM. plan, reversed the deputy commissioner’s order disapproving the plan and remanded the matter to the commissioner for implementation. Following a thorough review of the record herein we reverse the court of appeals.

The statutory framework relating to review of BCBSM’s proposed plan is the Nonprofit Health Service Plan Corporations Act prescribing, among a variety of regulations, the capital structure of nonprofit health service plan corporations such as BCBSM. See Minn.Stat. § 62C.09. With respect to the matter before the court, the act requires BCBSM to maintain adequate cash reserves to pay its health service claims and related administrative expenses and retain sufficient surplus funds to serve as a volatility cushion. Minn.Stat. § 62C.09, subds. 2 and 3 (2000). Directly on point here, the act further provides that if BCBSM has excess surplus, its “operations shall be adjusted to correct the condition, according to a written plan proposed by the corporation and approved by the commissioner [of commerce].” Minn.Stat. § 62C.09, subd. 4 (2000).

The legislature has granted the commissioner, under Minn.Stat. § 60A.03, subd. 2 (2000), the authority to administer and enforce “all the laws of this state relating to insurance,” including monitoring the financial condition of nonprofit health service plan corporations like BCBSM, and the commissioner’s authority to approve a written plan submitted by a nonprofit health services corporation to correct its excess surplus condition is a part of that broad authority. Minn.Stat. ch. 62C. The commissioner is entrusted inter alia with ensuring that BCBSM charges reasonable rates “in relation to the benefits, considering actuarial projection of the cost of providing or paying for the health services, considering costs of administration, and in relation to reserves and surplus required by law.” Minn.Stat. § 62C.15, subd. 1 (2000) (emphasis added). As a nonprofit health service plan corporation, BCBSM is subject to a minimum surplus reserve of the greater of the initial surplus minus $100,000 or 16 ⅜ percent of the sum of all health service claims and administrative expenses incurred in the most recent calendar year, and a maximum surplus of 33 ½ percent of claims and expenses in the most current calendar year. See Minn. Stat. § 62C.09, subd. 3. This is known as the “surplus corridor.” Believing that the settlement would cause BCBSM to have surplus in excess of the 33 ⅜ percent allowable, the commissioner notified BCBSM that it must submit a plan of action to eliminate the excess surplus, and determined that a hearing relating to the plan would be conducted pursuant to the contested case procedures under the Minnesota Administrative Procedures Act (MAPA).

MAPA sets forth the statutory procedural requirements imposed on administrative agencies in the course of carrying out their powers and duties, see Minn.Stat. ch. 14 (2000), including those related to monitoring levels of reserves and surplus. The approval of a plan submitted by a health service plan corporation under Minn.Stat. § 62C.09, subd. 4 (2000) is a determination of the rights of specific parties rather than an agency statement of general applicability and future effect. See Minn.Stat. § 14.02, subds. 3 and 4 (2000) (definitions). The parties’ constitutional due process rights must be respected in the context of a contested case proceeding but the commissioner also has the authority to dispose of contested cases through stipulation, agreed settlement, consent order or default. See Minn.Stat. § 14.59(2000).

Following the $469 million settlement, BCBSM and the department entered into a consent cease and desist order shaping the issues in dispute by providing that the commissioner had jurisdiction over the BCBSM surplus, that BCBSM would refrain from spending the settlement funds until its proposed plan had been approved with the exceptions that BCBSM could satisfy tax liability incurred as a result of the settlement and reduce its tax liability by making a donation to a charitable organization upon consultation with the commissioner. BCBSM then filed a corrective action plan with the commissioner proposing to reduce its excess surplus by creating a “Tobacco Cessation Pharmacy Reserve” (pharmacy reserve) and “Tobacco Cessation and Other Health Risk Behavior Programs” (health behavior program). The pharmacy reserve would pay for pharmaceutical smoking cessation aids for insured members of BCBSM for the next 20 years without imposing any premium charge on subscribers for the drug benefit. The health behavior program would educate insured members of BCBSM for the next 20 years about the benefits of adopting healthy habits such as quitting smoking, getting immunizations, exercising, and following safety precautions.

Although not required by Minn.Stat. § 62C.09, the commissioner exercised his authority under Minn.Stat. § 45.027, subd. 1(3) (2000) and Minn.Stat. §' 60A.03, subd. 2 to call a public hearing and provide all interested parties an opportunity to be heard regarding the BCBSM plan. The notice of hearing issued by the commissioner invited intervention by interested parties, solicited public comment and provided that the contested case proceeding would determine whether the commissioner should approve or disapprove BCBSM’s plan for adjustment of its operations to correct its excess surplus status pursuant to Minn.Stat. § 62C.09. The notice identified the issues to be addressed at the hearing: 1) whether the proposed plan meets the requirements of MinnStat. § 62C.09; 2) whether the proposed plan is fair and equitable to the subscribers of BCBSM; 3) the impact of the proposed plan on the regulation and orderly operation of the insurance and health industries in Minnesota; and 4) whether the pro.posed plan is in the public interest of the citizens of Minnesota.

The notice of hearing appointed an administrative law judge (ALJ) and granted the ALJ the authority to issue orders pertaining to pre-hearing discovery and admissibility of evidence, conduct an eviden-tiary hearing and prepare a report and recommendation for the commissioner. The commissioner directed the ALJ to certify motions and questions to the commissioner or commissioner’s designee where appropriate upon consideration of the factors listed in Minn. R. 1400.7600 (1999). The commissioner reserved for the agency decision-maker the authority to issue the final findings of fact,-conclusions • of law and order approving or disapproving the plan, along with the authority to make the final decision regarding scheduling, party intervention and standing, and other items. The commissioner determined the department would participate as an advocate in the matter and delegated the agency decision making authority in the matter to Deputy Commissioner LaVasseur (deputy commissioner) under Minn.Stat. § 45.024, subd. 2 (2000). The commissioner and Deputy Commissioner Nelson, head of the insurance and registration division, acted as department advocates in the proceedings.

Following the initiation of the public hearing and the delegation of authority to the deputy commissioner, the commissioner and other department staff continued to engage in discussion of the plan with BCBSM. In response to a statement by the commissioner that the plan should contain more immediate benefits for BCBSM members, BCBSM amended its plan to redirect $80 million of the funds originally proposed for the health behavior program to a two and a half year “Member Health Awareness” program (health awareness program) of quarterly mailings to all BCBSM members of health information and health-related merchandise such as vegetable steamers to promote healthy eating, booklets describing how to avoid home injuries, child window decals and smoke detectors for fire safety.

While discussions continued between BCBSM and department advocates, public comment was received into the record and interested parties submitted petitions to intervene. Plaintiffs in proceedings commenced by Dakota County BCBSM subscribers argued at a prehearing conference before the ALJ and a second prehearing conference before the deputy commissioner that the administrative proceedings should be stayed pending the issuance of a decision by the court of appeals regarding their appeal of the Dakota County suit. The deputy commissioner denied the request for a stay.

Meanwhile, former BCBSM subscriber Scott W. Johnson and group subscriber Twin Cities Federal (TCF) petitioned for and were granted permission to file briefs without acquiring party status but later Johnson was allowed to intervene with full party status. HealthPartners, a major competitor of BCBSM in the Minnesota health insurance industry, was also granted leave to intervene with full party status.

The ALJ ordered the parties to file their objections to the plan. HealthPartners’ objections were based primarily on its contention that BCBSM’s plan would disrupt the health insurance market in Minnesota. Johnson and TCF objected on the basis that BCBSM received the settlement proceeds in trust on behalf of its members and could only use the funds for reduction of premiums or as a rebate. Johnson and TCF also claimed that the plan’s goal of serving the public at large exceeds the scope of activities a nonprofit health service plan corporation such as BCBSM may engage in under Minn.Stat. ch. 62C. They argued that a rebate would be an equitable and practical way to disburse the settlement proceeds and objected to the plan’s stated goals to serve the public at large as ultra vires. Department advocates objected to the plan on the basis that it set aside excessive funds for payment of potential tax liability, it did not contain enough detail regarding the health awareness and health behavior programs, nor did it provide monitoring objectives, require BCBSM to provide regular reports of its activities and updated financial projections to the department, or require BCBSM to submit modifications to the plan for department approval. After negotiations with the department, BCBSM agreed to move $49 million from the tax reserve component of the plan to the health behavior program and to provide assurances that funds not paid as taxes would be applied toward benefits for subscribers under other components of the plan. In December of 1998 BCBSM entered into a consent order that specified the agreed upon changes and resolved many of the department’s objections to the plan.

HealthPartners and Johnson continued to object to the consent order however, and discussions were held between the parties in an effort to reach a settlement. Three days before the evidentiary hearing, the commissioner and BCBSM signed an amended consent order resolving Health-Partners’ objections by adding additional financial reporting requirements, provisions for oversight of program development by the commissioner, independent analysis of the impact of implementation of the plan on BCBSM, its subscribers, and the insurance market, and methods by which the commissioner could enforce BCBSM implementation of the plan. HealthPartners thereupon withdrew from the proceedings. The amended consent order again referenced the authority of the deputy commissioner to approve or disapprove the plan.

At the evidentiary hearing before the ALJ, BCBSM presented its plan. The components presented included the $80 million “Member Health Awareness Program” that would mail information and merchandise to BCBSM subscribers to raise awareness about home safety, fitness, nutrition, emotional health and other topics. The 20 year, $109.9 million “Tobacco Cessation Pharmacy Reserve” would allow BCBSM subscribers to receive smoking cessation aids such as nicotine gum with a doctor’s prescription without paying a higher insurance premium for the addition of the smoking cessation aids to the BCBSM formulary. The 20 year, $148.1 million “Tobacco Cessation and Other Risk Behavior Program” public health initiative would be delivered to subscribers in hospitals, schools and work sites to educate about quitting smoking, fitness, healthy eating, immunizations and other health behaviors. Finally, the BCBSM plan included a $75 million tax liability fund and a $21 million donation to the BCBSM Foundation.

BCBSM presented expert testimony regarding the benefits of its plan to its subscribers and the state. BCBSM experts testified that public health education initiatives such as the health behavior program can improve the health of populations and lower health care costs dramatically, and that to reduce duplication with other programs funded by tobacco settlement funds, it would be coordinated with MPAAT, an entity funding tobacco cessation programs through tobacco litigation settlement funds. BCBSM experts testified that the pharmacy reserve would complement the health behavior program by providing medications to those receiving education about quitting smoking, presented information about the health care costs associated with smoking and projected health care savings resulting from successful attempts by its tobacco addicted health insurance subscribers to quit smoking. BCBSM admitted that the health awareness program was not yet fully developed and did not predict health care savings from this component of its plan.

Deputy Commissioner Nelson testified regarding the oversight and financial reporting requirements imposed upon BCBSM by the consent order and the amended consent order. Nelson stated that the department’s concerns regarding the plan were resolved by the amended consent order, and that the department recommended the plan be approved.

Intervenors Scott W. Johnson and TCF argued against the plan on the basis that the tobacco litigation settlement proceeds represent a portion of health care premiums to cover health care costs associated with smoking that were paid to BCBSM by former insurance subscribers and should be returned to them. Intervenor Johnson testified that the interests of those who paid the higher premiums were not taken into account in the plan, contrary to BCBSM’s assertion in subsequent public statements that it was acting on behalf of the subscribers when the lawsuit was filed.

Comments supporting the plan were submitted by nonparty members of the public including private citizens, current BCBSM subscribers, business people, health care professionals, school officials, police officers, individuals employed in nonprofit organizations, an official from the U.S. Department of Health and Human Services, and others. A letter submitted by former Surgeon General C. Everett Koop described the negative effects of smoking, praised the plan and asserted that spending the settlement proceeds as proposed by the BCBSM plan would benefit the most people and achieve the most good.

Comments in opposition to the plan were submitted by the Minnesota Attorney General, the Minnesota Chamber of Commerce, and others. Several elderly subscribers submitted letters describing the rise in health insurance premiums. Counsel for TCF submitted oral comment criticizing the plan for squandering the funds on “a bunch of cheap trinkets” such as vegetable steamers, state park stickers, stress test wallet cards and other items. Written comments submitted by the Minnesota Attorney General criticized the health awareness component of the plan as nothing more than “a public relations gimmick with regard to its future subscribers.” The attorney general contended that the products and services that would be given to subscribers would be in the nature of a dividend to obtain future business and eliminate competition. He argued that the plan was unfair because the majority of those who paid the price for the tobacco-related health costs through higher premiums would not receive the benefits of the proposed programs and urged that the excess surplus be refunded to the policy holders who paid it. The attorney general criticized the accounting methods proposed for the pharmacy reserve as improperly treating the program funds as a liability and expressed concern that this would create a precedent allowing other insurers to create current reserves to pay for items which the insurer is not obligated to provide. Written comments submitted by the Minnesota Chamber of Commerce questioned the health awareness component of the plan as “highly untested with no measurable predictions on the long-term savings.” The chamber of commerce also questioned whether the products that would be funded through the pharmacy reserve would be as effective as BCBSM claimed in helping subscribers quit smoking and urged that California’s program for research and smoking cessation funded through tobacco litigation settlement proceeds be evaluated before further funds are spent on similar programs in Minnesota. Both the attorney general and the chamber of commerce raised concerns about disruption to the stability of the health insurance market in Minnesota. •

In summary, BCBSM presented testimony praising the plan at the hearing, and the department presented testimony that the départment’s concerns were resolved by the consent orders and the department was recommending approval. Intervenor Johnson argued against approval of the plan. The majority of the public comment submitted was positive; out of almost 100 written comments filed, 15 clearly opposed approval. Only one of the 19 oral comments clearly opposed the plan.

I.

Following the conclusion of the hearing, the ALJ issued 199 findings of fact, 33 conclusions of law, a memorandum detailing the reasoning behind the final recommendation, and a recommendation that the BCBSM plan be approved. As to the four issues framed by the commissioner, the ALJ, in summary, ruled as follows:

i. Does the plan meet the requirements of Minn.Stat. 62C.09, subd. 4 that operations be adjusted to correct the excess surplus condition within a reasonable time?

The ALJ found that the plan proposed by BCBSM as modified by the January 1999 amended consent order would eliminate the excess surplus by the year 2005, “if [BCBSM] incurs an additional tax liability of $49 million.” Therefore, the plan corrects the excess surplus within a reasonable time. The ALJ noted that the department advocates agreed with this conclusion.

ii. Is the plan fair and equitable to BCBSM subscribers?

The ALJ found that tobacco usage is the number one preventable cause of illness in the United States and a multi-faceted approach like the BCBSM plan that includes drugs and counseling is necessary to achieve significant smoking cessation success rates. Quitting smoking will result in immediate health benefits for BCBSM subscribers who currently smoke, and the BCBSM plan will improve the health of its members and achieve health care savings in the long term. The ALJ found that based on the assumptions behind the pharmacy reserve, BCBSM anticipates achieving approximately $1 billion savings due to cumulative reduction in health care costs by the end of the program and that for every dollar spent on the health behavior program, $2 to $5 in health care savings will result. These savings will ultimately be passed on to future BCBSM subscribers as an approximate 2.3% reduction in the rate of anticipated premium growth over the next two decades. The ALJ found that to the extent non-renewing members who enroll in new health plans have quit smoking because of BCBSM programs, other health plans will experience lower health care costs.

The ALJ rejected intervenors’ arguments that the only method of correcting the surplus would be to rebate the funds to the subscribers who paid them. The ALJ reasoned that current BCBSM subscribers would gain more in quality of health and reduced health care cost than would be paid in rebates. The ALJ found that BCBSM considered and rejected a rebate option and that it would be difficult and costly for BCBSM to identify members from the time frame covered by the tobacco litigation and determine how much money each member would be entitled to claim. The ALJ also found that Interve-nor Johnson agreed that BCBSM’s complaint in the tobacco lawsuit allows BCBSM to spend some of the settlement proceeds in furtherance of its plan, that benefits can take many forms, and that if the tobacco litigation was exclusively brought as a direct action Intervenor Johnson would agree with BCBSM’s plan. The ALJ also found that there are significant tax savings to BCBSM under the plan which would be lost if BCBSM instead gave rebates to past subscribers. Therefore, the ALJ concluded that rebates would not be fair and equitable to subscribers because they would have little health benefit, the present value of rebates would be less than the potential benefits of the proposed public health programs, and litigation over the rebates would squander the settlement proceeds.

iii.What impact will the plan have on the regulation and orderly operation of the insurance and health industries in Minnesota?

The ALJ found that BCBSM did not develop its plan to improve its market share and although the amended consent order does not guarantee that there will be no market impact, it provides assurance that marketplace impact will be limited. Noting HealthPartners’ statement that its objections relating to market impact were appropriately addressed by amendments to the BCBSM plan, and that Allina Health system, the other major competitor in the Minnesota marketplace, submitted a written comment in support of the plan, the ALJ concluded that the plan contained reasonable reporting and accounting procedures. The ALJ determined that the plan would not adversely impact the regulation and orderly operation of the insurance and health industries in Minnesota,

iv. Is the plan in the public interest of the citizens of Minnesota?

The ALJ found that the department had negotiated with BCBSM to make alterations to the plan and department advocates were satisfied that the plan would serve the public interest. In addition, most of the public comments submitted were in favor of the plan. He concluded that the plan would benefit the public by providing funds for research into addiction and the information gathered will be shared with other organizations. The ALJ found that BCBSM contracts with 97% of the physicians and all the hospitals in the state and because the BCBSM program would train providers to implement better practices, Minnesota providers would learn how to help both their BCBSM and non-BCBSM patients. The ALJ also found that the gains in health brought about by the BCBSM plan will result in lower claims to other insurers in the marketplace who would be able to charge lower premiums, and that the funds donated to the BCBSM Foundation would be used for programs that benefit the community. Based on these findings the ALJ concluded that the plan was in the public interest of the citizens of Minnesota.

As all four issues framed by the commissioner for review of the plan were resolved favorably to the plan proposed by BCBSM, the ALJ recommended to the deputy commissioner that the plan be approved.

Upon issuance of the ALJ’s report containing findings, conclusions and a recommendation of approval, the record was certified to the department for the deputy commissioner’s review. The deputy commissioner was required to make an independent decision based on the record before him, see City of Moorhead v. Minn. Pub. Utils. Comm’n, 343 N.W.2d 843, 846 (Minn.1984), and his final decision must be supported by substantial evidence which we have defined in part as “such relevant evidence as a reasonable mind might accept as adequate to support a conclusion.” Cable Communications Bd. v. Nor-West Cable Communications P’ship, 356 N.W.2d 658, 668 (Minn.1984). He was not required to treat the ALJ’s recommendation with the same deference an appellate court must accord the findings of a trial court, as the ALJ’s report is only one part of the record. City of Moorhead, 343 N.W.2d at 847.

Although the agency decision-maker may not consider evidence that has not been made part of the record in the determination of the case, see Minn.Stat. § 14.60, subd. 2 (2000), agencies may “utilize their experience, technical competence, and specialized knowledge in the evaluation of the evidence in the hearing record.” Minn.Stat. § 14.60, subd. 4 (2000). Agencies must make their own “independent decisions and not * * * ‘rubber stamp’ the findings of a hearing examiner.” City of Moorhead, 343 N.W.2d at 846. See also People for Envtl. Enlightenment & Responsibility (PEER), Inc. v. Minn. Envtl. Quality Council, 266 N.W.2d 858, 873 (Minn.1978).

II.

On July 1, 1999 the deputy commissioner denied approval of the BCBSM plan on the basis that it was not fair and equitable to BCBSM subscribers, it was not in compliance with the statutory mandate that BCBSM reduce its excess surplus within a reasonable time, it wrongfully permitted BCBSM to maintain control of the funds, it would have an adverse impact upon the orderly operation and regulation of the health insurance market in Minnesota, and it was not in the public interest. The final order issued by the deputy commissioner adopted approximately three-quarters of the ALJ’s 199 findings of fact, modified 15 and struck 38. He struck 10 of the ALJ’s 33 conclusions of law, added 11 of his own, and issued a 19 page memorandum detailing his reasoning.

Along with many minor modifications to the ALJ’s recommended findings of fact in which the deputy commissioner inserted a more precise statement or modified the tone from unquestioning applause of BCBSM’s plan to neutrality, the deputy commissioner resolved the four central issues framed by the commissioner as follows:

Regarding the question whether the plan met the requirements of Minn.Stat. § 62C.09 to adjust operations to correct the excess surplus condition within a reasonable time, the deputy commissioner struck the ALJ’s finding that the plan corrected the excess surplus in a reasonable time and substituted his own conclusion that “[Wjhile [BCBSM] proposes admirable goals in the Amended Plan, [BCBSM] fails to correct its excess surplus status because it retains control of the excess surplus funds.” He explained that Minn.Stat. § 62C.09 does not provide for the creation of supplemental reserves for any programs or initiatives as contemplated by the BCBSM plan, and in fact Minn. Stat. § 62C.10 (2000) “provides that any amounts that [BCBSM] invests in corporations whose business is the arrangement for, management of, or provision of health care services * * * shall be added to the minimum and maximum reserve requirements.” He concluded that designation of the surplus funds to the 20 year “Tobacco Cessation Pharmacy Reserve” and “Tobacco Cessation and Other Health Risk Behavior” programs would not correct the excess within a reasonable time because the excess funds would remain under the control of BCBSM. In reaching this conclusion, he considered and rejected the assertion in the amended consent order that the “Proposed Plan faithfully discharges [BCBSM’s] obligation to adjust its operations to correct its excess surplus within a reasonable time pursuant to the requirements of Minn.Stat. § 62C.09 (1998),” observing that “[a]n unequivocal statement will not suffice where evidence to support it has not been introduced.”

Next, based on his conclusion that past, present and future subscribers would not be well served by the plan and that the ALJ did not consider the impact on past subscribers, the deputy commissioner struck the ALJ’s conclusion that the BCBSM plan is fair and equitable to subscribers. First, he noted that the plan “ignores the increased premium costs borne by past fully-insured group subscribers” and that the legislative history of Minn.Stat. § 62C.09 indicates that excess surplus “should trigger a rate review leading to an adjustment of premium rates,” which would normally lower premiums for substantially the same group as the one that paid the premiums that led to the surplus condition. He noted that according to BCBSM testimony, the majority of those who paid higher premiums due to the costs incurred by those made ill by smoking are no longer BCBSM members and would not benefit from future programs.

The deputy commissioner concluded that the plan “is neither fair nor equitable to its present and future subscribers because it dissipates tobacco settlement funds on du-plicative programs and on goods and services of uncertain value.” He fbund support for the conclusion that the plan is not fair to present and future subscribers in the BCBSM testimony that BCBSM did not anticipate any long-term savings from the “Member Health Awareness Program” and that both the “Member Health Awareness” and the “Tobacco Cessation and Other Risk Behavior” programs proposed to educate subscribers about similar topics. He concluded that the plan would duplicate current BCBSM initiatives for its subscribers as well as state programs that already devote more than $1.1 billion to health prevention efforts -targeted to assist Minnesotans to stop smoking and lead healthier lives, and suggested that donations of the surplus to existing state programs would avoid duplication of administrative costs and would be a better use of the funds.

In discussing the need to address the fairness of the plan to past subscribers, the deputy commissioner noted:

legislative history indicates that [an excess surplus] should trigger a rate review leading to an adjustment of premium rates. Because the surplus is normally calculated every year, any subsequent reduction in premium rates implemented to correct an excess surplus would confer an immediate financial benefit on substantially the same subscriber population that paid the premiums that contributed to the excess surplus status. This process provides a fair and equitable adjustment of operations to correct the excess surplus: the subscribers who paid high premiums receive the direct benefit of reduced premiums.

He observed that the typical remedy in excess surplus circumstances was the adjustment of premiums, taking into account the interest of past as well as present subscribers as the only way to address the fact that the past subscriber population paid the premiums that contributed to the excess. He concluded that the plan would not be fair in “these unusual circumstances” because the settlement recovered by BCBSM represented its damages for 20 years of payment of claims for tobacco-related illnesses and the current group of subscribers is substantially different from those who actually experienced the increased premiums.

The deputy commissioner concluded that there was insufficient evidence that the plan would not pose a risk of disruption to the stability of the health insurance market, that rebates would be fair to subscribers because they would return the excess surplus to the subscribers who paid high premiums, and that BCBSM failed to adequately consider the feasibility of rebates.

In rejecting the ALJ’s conclusion that the BCBSM plan would not adversely impact the regulation and orderly operation of the insurance and health industries in Minnesota, the deputy commissioner noted that “nothing in the Amended Consent Order purports to limit the effect on the insurance market of the goods and services which will be offered to present and future [BCBSM] subscribers.” The deputy commissioner cited the comments submitted in evidence by the attorney general and the chamber of commerce that providing millions of dollars in pharmaceutical benefits, free gifts, education and counseling to subscribers without raising premiums, would be a strong incentive for future subscribers to join BCBSM and would disrupt the highly concentrated Minnesota health care market. He further noted that if other plans chose to compete they would have to charge higher premiums to offer similar benefits, resulting in higher premiums for all consumers. He criticized the BCBSM plan for its reservation of the discretion to change the program details at any time and its failure to make a concrete commitment to a specific set of goals.

Finally, the deputy commissioner rejected the ALJ’s conclusion that the BCBSM plan is in the public interest of the citizens of Minnesota on the basis of his concerns about the long-term control of the excess surplus funds by BCBSM management, his conclusion that BCBSM maintaining control of the surplus funds would inhibit the ability of the commissioner to accurately assess BCBSM’s financial condition, and his concerns about the destabilizing effect the plan might have on the insurance and health industries in Minnesota. He again criticized the plan for squandering the settlement funds on duplicative programs and suggested that donations to existing institutions and programs would provide the greatest value to the largest number of people and would avoid the problems inherent in the plan.

III.

On certiorari, the court of appeals reversed and remanded for approval and implementation of the BCBSM plan. The court held that the deputy commissioner’s rejection of the plan was arbitrary and capricious, not supported by substantial evidence in the record and affected by errors of law and that the deputy commissioner failed to articulate reasons or provide evidentiary support for rejecting the ALJ’s findings. It held that the deputy commissioner failed to accord the “burdens of deference” the court believed should be attributed to the ALJ’s finding and views of agency experts. The court noted that because Minn.Stat. § 62C.09 contemplates sanctions for improper surplus status, the deputy commissioner had the burden of proving noncompliance and that those who objected to the plan had to overcome a “prima facie” showing of compliance of BCBSM’s plan.

The court criticized the deputy commissioner’s finding that rebates would be a reasonable alternative and his failure to consider BCBSM’s arguments against rebates. It held that the findings that the proposed programs are duplicative and of uncertain value ignored the testimony presented regarding coordination with MPAAT and the evidence of health care savings presented. The court ruled the deputy commissioner’s stated concerns about financial oversight and market disruption were unfounded because department advocates testified that their concerns were addressed by the provisions agreed to in the amended consent order.

An appellate court may reverse or modify an administrative decision if substantial rights of the petitioners have been prejudiced by administrative findings, inferences, conclusions or decisions that are unsupported by substantial evidence in view of the entire record, or arbitrary and capricious, see Minn.Stat. § 14.69 (2000), but the court must also recognize the “need for exercising judicial restraint and for restricting judicial functions to a narrow area of responsibility lest (the court) substitute its judgment for that of the agency.” Reserve Mining Co. v. Herbst, 256 N.W.2d 808, 825 (Minn.1977) (citation omitted). It must be guided in its review by the principle that the agency’s conclusions are not arbitrary and capricious so long as a “rational connection between the facts found and the choice made” has been articulated. Burlington Truck Lines, Inc. v. United States, 371 U.S. 156, 168, 83 S.Ct. 239, 9 L.Ed.2d 207 (1962).

We disagree with the holding of the court of appeals that the deputy commissioner’s denial of approval of the plan was arbitrary and capricious, unsupported by substantial evidence and affected by errors of law, that the deputy commissioner owed “burdens of deference” to the ALJ and agency experts, that the commissioner had the burden of proving noncompliance and its conclusion that BCBSM’s plan was pri-ma facie in compliance with section 62C.09.

When reviewing agency decisions we “adhere to the fundamental concept that decisions of administrative agencies enjoy a presumption of correctness, and deference should be shown by courts to the agencies’ expertise and their special knowledge in the field of their technical training, education, and experience.” Reserve Mining Co., 256 N.W.2d at 824. The agency decision-maker is presumed to have the expertise necessary to decide technical matters within the scope of the agency’s authority, In re Special Instruction & Servs. for Pautz, 295 N.W.2d 635, 637 (Minn.1980), and judicial deference, rooted in the separation of powers doctrine, is extended to an agency decision-maker in the interpretation of statutes that the agency is charged with administering and enforcing. Krumm v. R.A. Nadeau Co., 276 N.W.2d 641, 644 (Minn.1979). We defer to an agency’s conclusions regarding conflicts in testimony, the weight given to expert testimony and the inferences to be drawn from testimony. See Quinn Distrib. Co. v. Quasi Transfer, Inc., 288 Minn. 442, 448, 181 N.W.2d 696, 700 (1970).

The standard of review is not heightened where the final decision of the agency decision-maker differs from the recommendation of the ALJ. See Hymanson v. City of St. Paul, 329 N.W.2d 324, 326-27 (Minn.1983) (noting that “the agency is not bound by the findings and recommendations of the hearing examiner [and] * * * the relationship differs from that of an appellate court reviewing a lower court’s findings of fact: an agency could make new findings and decide contrary to the hearing examiner’s recommendation.”). Rejection of the ALJ’s recommendations without explanation however, may suggest that the agency exercised its will rather than its judgment and was therefore arbitrary and capricious. Markwardt v. State, Water Res. Bd., 254 N.W.2d 371, 374-75 (Minn.1977).

As to the court of appeal’s holding that the deputy commissioner owes “significant deference” to the ALJ and judicial deference for the application of the deputy commissioner’s expertise is applied “only to the extent it is evident on review that this separate expertise exists,” the amended consent order clearly stated that it did not constrain the deputy commissioner’s decision making authority. We require the agency decision-maker to weigh all of the evidence presented and come to an independent decision and contrary to the court of appeals’ conclusion, the agency decision-maker owes no deference to any party in an administrative proceeding, nor to the findings, conclusions, or recommendations of the ALJ. We therefore reverse the court of appeals’ ruling that deference should be accorded the recommendations of the ALJ and the evidence presented by agency advocates.

-We also reverse the court of appeals’ ruling that BCBSM made a prima facie showing “that the plan met the prescribed criteria” and that the deputy commissioner had the burden of proving that the plan did not comply with Minn.Stat. § 62C.09 or the commissioner-created criteria for its approval. The rule applies here that “[t]he party proposing that certain action be taken must prove the facts at issue * * * unless the substantive law provides a different burden,” Minn. R. 1400.7300, subp. 5 (1999), because submission of the plan by BCBSM was a proposal that the department take an action requested by BCBSM. We therefore reverse the court of appeals as to its assignment of burden of proof.

IV.

Our guiding principle is that if the ruling by the agency decision-maker is supported by substantial evidence, it must be affirmed. We adopted the following principles in the context of reviewing an agency decision in Reserve Mining Co. v. Herbst, 256 N.W.2d at 825:

“1) unless manifestly unjust, inferences must be accepted even though it may appear that contrary inferences would be better supported; 2) a substantial judicial deference [is to be accorded] to the fact-finding processes of the administrative agency; and 3) the burden is upon the appellant to establish that the findings of the agency are not supported by the evidence in the record, considered in its entirety.”

We consider the quantity and quality of evidence on the four issues in light of these principles. See Minn. Power & Light Co. v. Minn. Pub. Utils. Comm’n, 342 N.W.2d 324, 329 (Minn.1983).

i. Does the plan meet the requirement of Minn.Stat. 62C.09, subd. 4 that operations be adjusted to correct the excess surplus condition within a reasonable time?

The deputy commissioner’s conclusion that the plan fails to correct the excess surplus within a reasonable period of time is based on his dissatisfaction with BCBSM’s continued control over BCBSM’s surplus funds. He explained that use of the excess surplus to fund 20 year programs run by BCBSM did not satisfy the statutory requirement to reduce or eliminate the excess surplus within a reasonable time period because it allowed BCBSM to maintain control over the funds for 20 years by designating it as a funding source for new programs. He also criticized BCBSM for failing to provide sufficient detail regarding when the excess surplus would be corrected.

The deputy commissioner’s finding regarding the lack of statutory authority for BCBSM to correct its surplus by creating additional health care programs that remain under its control is accorded substantial deference because it reflects the technical expertise of the agency with regard to the interpretation of a statute under which it exercises its duties and powers to regulate the reserve status of a nonprofit health service plan corporation. See Manufactured Hous. Inst. v. Pettersen, 347 N.W.2d 238, 242 (Minn.1984) (according deference to agency interpretation of statute it is charged with administering). Further, his reasoning referenced the parts of the record he evaluated in coming to his decision, was consistent with comments in evidence by the attorney general and the chamber of commerce and was supported by substantial evidence.

We hold that the conclusions of the deputy commissioner as to the effectiveness of the plan in failing to correct the excess surplus within a reasonable period of time are supported by substantial evidence and are not arbitrary or capricious.

ii. Is the plan fair and equitable to BCBSM subscribers?

The court of appeals criticized the deputy commissioner’s conclusion that the plan is not fair to subscribers on the basis that it was not within the deputy commissioner’s authority to consider the plan’s fairness to past subscribers or suggest that BCBSM return the tobacco settlement proceeds to subscribers in the form of premium rebates.

The legislature has vested broad authority in the commissioner to approve rates, provide oversight of BCBSM subscription charges and contracts, see Minn. Stat. § 62C.15, subds. 2 and 4 (2000), and oversee the reasonableness of BCBSM premiums in relation to costs, reserves, and surplus. See Minn.Stat. § 62C.15, subd. 1. As Minn.Stat. § 62C.09, subd. 4 requires the approval of a corrective action plan by the commissioner but does not prescribe a particular method of correcting excess surplus, the commissioner’s broad oversight includes the authority “to promote a wider, more economical and timely availability of * * * health services for the people of Minnesota” and to “advance public health and the art and science of medical and health care within the state * * .” Minn.Stat. § 62C.01, subd. 2. The deputy commissioner observed that rebates would be an appropriate method of correcting the surplus condition based on his conclusion that the legislative intent in providing for the monitoring of excess surplus under section 62C.09, subdivision 4 is protection of consumers from unfair insurance premiums. His conclusion is based on his reasoning that the statutory scheme requires the regular monitoring of excess surplus, and a resulting premium adjustment typically benefits a substantially similar group of subscribers as the one that paid the inflated premium. The statutory goals of maintaining the surplus corridor, avoiding unfair costs to insurance consumers, advancing health and the general welfare, and maintaining the stability of the insurance and health industries in Minnesota clearly are sufficiently broad to permit consideration of a rebate.

The court of appeals erred in ruling that the deputy commissioner’s finding that rebates might be more practical was unsupported by substantial evidence. The deputy commissioner cited several concerns that would be addressed by a rebate but not by the plan: the plan was duplica-tive of other programs and of uncertain value, starting new tobacco cessation programs would squander funds in unnecessary startup and administrative expenses, and the legislative intent expressed in Minn.Stat. ch. 62C and considerations of fairness require that the benefit of the settlement proceeds inure to the subscribers who actually paid the premiums reflecting the increased expense of caring for the tobacco-related illness. Indeed the ALJ acknowledged the feasibility of such a program? “The record indicates that a rebate proposal raises practical and equitable problems. Nonetheless, it does appear that [BCBSM] would be able to locate a large number of past subscribers were it required to do so.”

While we express no opinion regarding the appropriateness of rebates, the commissioner’s broad oversight responsibility for premium adjustment to assure compliance with reserve requirements clearly provides the deputy commissioner authority to suggest that BCBSM had not fully explored alternatives to its plan and that other alternatives might be more practical, including rebates.

The court of appeals also erred m concluding that there was no substantial evidence in the record to support the deputy commissioner’s finding that programs in the BCBSM plan were duplicative and of uncertain value. The deputy commissioner sharply criticized the fact that BCBSM did not anticipate any long-term savings from the $80 million Member Health Awareness component of the plan and that the fitness and nutrition health education materials that would be distributed by the Member Health Awareness Program were duplicative of the fitness and nutrition health activities that would be covered by the Tobacco Cessation and Other Health Risk Behavior Program. These conclusions were based on materials submitted by BCBSM and arguments made in public comments submitted by the attorney general and the chamber of commerce and were supported by substantial evidence. The deputy commissioner went on to conclude that the plan would be duplicative of other state programs utilizing tobacco litigation settlement proceeds to assist Minnesotans to stop smoking. In reaching this conclusion, the deputy commissioner first cited the $102 million Cessation Account which will be used to offer smoking cessation opportunities to Minnesota smokers and the $100 million National Research Account which will provide research grants for projects relating to the elimination of tobacco use by children and other tobacco control programs that are being administered by Minnesota Partnership for Action Against Tobacco (MPAAT). Although BCBSM presented testimony that it would seek to avoid duplication of the MPAAT programs, the deputy commissioner observed that the creation of BCBSM programs to accomplish the same goals as the MPAAT programs would result in needless expenditure for startup and administrative costs such as overhead, business planning and establishing relationships with those already active in the field.

Further, the deputy commissioner referenced two endowments established by the Minnesota Legislature in 1999 utilizing a portion of the first installment of the state’s $6.1 billion tobacco litigation settlement to fund a $590 million Tobacco Prevention and Local Public Health Endowment that will focus on tobacco prevention efforts targeting youth and provide funds to community health boards and local public health entities for initiatives aimed at tobacco use prevention and other health-related prevention efforts for youths, and a $378 million Medical Education Endowment for clinical training of medical care professionals in Minnesota, including training in how to treat patients for tobacco use cessation. He concluded that with such substantial dollar amounts already dedicated to establishing tobacco cessation programs for Minnesotans, it appears that programs proposed under BCBSM’s plan would duplicate many of the efforts already underway in the state.

It would hardly be consistent with the responsibility of the commissioner to consider the plan in light of the public interest to ignore the existence of other state-run tobacco cessation and health promotion programs, especially given the magnitude of the current state programs. We hold that the deputy commissioner’s finding that the BCBSM plan was duplicative of other state programs was well within his authority, was amply supported by substantial evidence in the record and was not arbitrary and capricious.

The deputy commissioner additionally concluded that the plan would duplicate BCBSM’s own health education programs already in place for BCBSM members and cited a recent BCBSM publication mailed to members and BCBSM member web sites that provide health education regarding nutrition, fitness, tobacco cessation and other topics outlined in the plan. To properly consider such evidence however, an agency decision-maker must take official notice of information outside the record, notify the parties in writing, and provide them an opportunity to respond. Minn.Stat. § 14.60, subd. 4. The member publication and web site pages cited by the deputy commissioner in the memorandum accompanying his final decision were not in the record and the deputy commissioner’s consideration of these materials did not meet the requirements of section 14.60, subdivision 4. Although in-tervenor Johnson submitted a portion of a BCBSM member newsletter that described health promotion programs for members, it was not cited by the deputy commissioner and was insufficient evidence to conclude that the BCBSM plan was duplicative of current BCBSM member education initiatives. Therefore we conclude that there was insufficient evidence in the record to support the determination of the deputy commissioner that the plan duplicates existing BCBSM plans.

Despite our conclusion that the deputy commissioner overstepped his authority by consulting materials outside the record, we find that his conclusion that the plan is not fair and equitable to BCBSM subscribers is supported by his analysis of the impact of the plan on past subscribers, his finding that other methods of reducing the excess surplus might be more practical than the plan, and his concerns regarding the uncertain value and duplicative nature of the proposed programs. We hold that the deputy commissioner’s determination that the plan is not fair and equitable to BCBSM subscribers is supported by substantial evidence and is not arbitrary and capricious.

iii. What impact will the plan have on the regulation and orderly operation of the insurance and health industries in Minnesota?

The court of appeals concluded that there was insufficient evidence to support the deputy commissioner’s conclusion that the plan would disrupt the orderly operation of the health and insurance industries in Minnesota. We disagree. The deputy commissioner rejected the ALJ’s finding that the plan will have limited impact on the marketplace and substituted his own finding that the plan does not provide adequate assurance that the impact would be limited. He explained that his concern stemmed from a lack of mechanisms to protect the market from the impact of the goods and services which would be offered by BCBSM through the plan, quoting comments submitted by the attorney general and the chamber of commerce as to the competitive advantage BCBSM will gain through these “future dividends” and the potential barrier to new market entry. He noted that the plan would allow BCBSM to provide millions of dollars in pharmaceutical benefits, free gifts, education and counseling to subscribers without raising premiums. Citing comments in evidence submitted by the attorney general and the chamber of commerce, the deputy commissioner concluded that the member health awareness program merchandise and other program benefits would be a strong incentive for future subscribers to join BCBSM, thereby disrupting the highly concentrated Minnesota health care market. He further noted that other plans choosing to offer similar benefits, in order to maintain market share, would have to charge higher premiums to offer similar benefits, resulting in higher premiums for consumers. He criticized the BCBSM plan for reserving the discretion to change the program details at any time and its failure to make a concrete commitment to a specific set of goals. He clearly stated his concerns regarding disruption to the health and insurance industries, continued BCBSM control over the excess surplus, and the impact of the plan on subscribers.

We hold that the deputy commissioner’s conclusion that the plan would have an adverse impact on the orderly operation of the health insurance industry in Minnesota was supported by substantial evidence and was not arbitrary and capricious.

iv. Is the plan in the public interest of the citizens of Minnesota?

The court of appeals reversed the deputy commissioner’s conclusion that the plan was not in the public interest of the citizens of Minnesota on the basis that it was supported by insufficient evidence and was arbitrary and capricious. The deputy commissioner concluded that diversion of excess surplus funds into separate accounts to fund programs run by BCBSM was unauthorized by chapter 62C and allowing such accounts would circumvent the maximum surplus limit set by the legislature and impede the ability of the commissioner to assess the nonprofit’s financial condition. Based on his earlier conclusion that the BCBSM plan was duplicative of other programs, he observed that it was also not in the public interest because the BCBSM plan would “squander significant sums on unnecessary startup costs and duplicative programs” and it would be more cost effective to donate the funds to existing programs.

Finally, the deputy commissioner cited his concerns regarding the potential disruption of the health and insurance industry in Minnesota resulting from the health-related merchandise and other benefits that would be distributed to BCBSM members under the plan. He characterized the Minnesota health insurance mai’ket as highly competitive and concentrated, and concluded that approval of the plan would afford BCBSM a sustained competitive advantage with the potential to destabilize health premiums in the Minnesota insurance market. The deputy commissioner’s observations regarding the potential impact on the Minnesota health insurance industry and the public interest in stable insurance premiums reflects the technical expertise developed by the agency in the exercise of legislatively delegated duties and powers to protect the public interest and regulate the Minnesota insurance market and is accorded substantial deference. In light of the deputy commissioner’s conclusion that the plan did not comply with chapter 62C and his concerns regarding BCBSM’s continued control over the surplus and the plan’s impact on the orderly operation of the health and insurance industries in Minnesota, we hold that the deputy commissioner’s determination that the plan is not in the public interest of the citizens of Minnesota was supported by substantial evidence and was not arbitrary and capricious.

V.

Although there is insufficient evidence in the record to uphold the deputy commissioner’s conclusion that the plan would be duplicative of current BCBSM programs, we conclude that the deputy commissioner’s determinations that the BCBSM plan did not meet the requirements of Minn. Stat. § 62C.09 to correct the excess surplus condition within a reasonable time, the plan is not fair and equitable to BCBSM subscribers, it could adversely impact the regulation and orderly operation of the insurance and health industries in Minnesota and it was not in the public interest of the citizens of Minnesota is supported by substantial evidence and is not arbitrary or capricious. Our conclusion that the deputy commissioner’s decision was reasoned and sufficiently supported by the evidence of record is based upon well established rules relating to agency proceedings, but it does not reflect any particular view as to the substance or merits of BCBSM’s plan to reduce its excess surplus.

We reverse and remand to the Department of Commerce for further consideration of a revised plan to be submitted by BCBSM for approval by the commissioner in accordance with Minn.Stat. § 62C.09 and this opinion.

Reversed.

PAGE, R. ANDERSON, GILBERT, JJ., took no part in the consideration or decision of this case.

      . The act is codified at Minn.Stat. ch. 62C (2000). The statement of purpose is codified at Minn.Stat. 62C.01, subd. 2 (2000):
      It is the purpose and intent of Laws 1971, chapter 568 to promote a wider, more economical and timely availability of hospital, medical-surgical, dental, and other health services for the people of Minnesota, through nonprofit, prepaid health service plans, and thereby advance public health and the art and science of medical and health care within the state, while reasonably regulating the formation, continuation, operation, and termination of such service plans by establishment and enforcement of reasonable and practical standards of administration, investments, surplus and reserves.

      . See Consent Order of December 31, 1998 ("After the hearing record is closed and the ALJ has transmitted his Findings of Fact, Conclusions of Law and Recommendation, a Deputy Commissioner of Commerce, acting with the authority of the Commissioner pursuant to delegation under Minn.Stat. § 45.024, subd. 2, will decide whether to approve or disapprove the Proposed Plan.").

      . The public hearing was conducted pursuant to the notice of hearing issued by the commissioner, the contested case procedures of the MAPA set out in Minn.Stat. §§ 14.57-14.69 (1999) and the rules of the Office of Administrative Hearings, Minn. R. §§ 1400.5100-1400 .8400 (1999). Upon initiation of contested case proceedings, an ALJ is assigned to the case by the Chief Administrative Law Judge of the Office of Administrative Hearings, an office of the executive branch empowered to hold adversary hearings, take testimony, view exhibits and make findings of fact and conclusions of law. See Minn.Stat. § 14.50 (2000). The ALJ has authority to carry out the duties delegated by the agency ordering the hearing and is charged with the task of ensuring that "hearings are conducted in a fair and impartial manner” and in accordance with the requirements of Minn.Stat. § 14.50 and Minn. R. §§ 1400.5100-14.00.8400. The parties may engage in settlement conferences on their own prior to the hearing, see Minn.Stat. § 14.59, or request an ALJ to preside over a settlement conference. Minn. R. 1400.6550 (1999).

      . -The subscribers brought suit in Dakota County arguing that the settlement proceeds belonged to them. The suit was dismissed on the basis that the commissioner had primary jurisdiction over the disposition of surplus funds under Minn.Stat. ch. 62C.09. In re Blue Cross & Blue Shield Subscriber Litigation, No. C3-98-7780 (Dakota County Dist. Ct. September 24, 1998), affd, No. C5-98-1826, 1999 WL 203762 (Minn.App.), rev. denied (Minn. June 29, 1999).

      . The plaintiffs in the Dakota County subscriber litigation did not seek to intervene in the contested case proceeding and now appear before this court as amicus curiae. A group of former BCBSM subscribers led by American Continental, Inc. appear as amicus and argue that the dismissal of their suit against BCBSM on the basis that the commissioner had primary jurisdiction over the surplus funds was incorrect because the deputy commissioner's order disapproving the plan concluded that he did not have jurisdiction to decide the subscribers' common law claims. We make no ruling regarding the claims of amicus as they did not intervene in the administrative proceedings despite ample opportunity to do so.

      . See Amended Consent Order of Janizary 22, 1999 (“Nothing in this Amended Consent Order, however, limits the discretion of the Deputy Commissioner, acting with the authority of the Commissioner pursuant to delegation under Minn.Stat. § 45.024, subd. 2 (1998), presiding over the hearing to approve or dis-' approve the Proposed Plan.”).

      . The Minnesota Partnership for Action Against Tobacco (MPAAT) is a court-approved administrative body coordinating the distribution of $202 million of the tobacco litigation settlement funds.

      . The deputy commissioner advised the parties of the opportunity to file exceptions and arguments regarding the ALJ’s recommendations. See Minn.Stat. § 14.61 (2000). Interve-nor Johnson and the department timely filed their exceptions and arguments. In his discretion the deputy commissioner also considered correspondence filed by Intervenor Johnson and BCBSM after the stated deadline.

      . The deputy commissioner cited information not in the record that he developed through research on the internet in concluding that the plan would duplicate current BCBSM initiatives.

      . Minnesota law is consistent with federal law with respect to this principle. See Brown v. Wells, 288 Minn. 468, 472, 181 N.W.2d 708, 711 (1970) ("Where there is room for Iwo opinions on the matter, such action is not 'arbitrary and capricious' even though it may be believed that an erroneous conclusion has been reached.”).

      . See Reserve Mining Co., 256 N.W.2d at 824 ("We have consistently viewed with disfavor statutes which specify trials de novo and which attempt to confer original jurisdiction on trial courts over policy matters which are the responsibility of the legislative and executive branches. * * * We have repeatedly called attention to the danger of eroding the barriers which guarantee the separation of powers.”).

      . The parties make no argument that the substantive law provides a different burden. See Minn.Stat. § 62C.09.

      . The ALJ further commented that "locating only those past subscribers who are readily ascertained, would reduce the cost of a rebate program. It seems clear that a rebate program could be proposed by [BCBSM] and could be approved by the Commissioner."
      The court of appeals characterized the deputy commissioner's statements regarding rebates as an attempt to "dictate a special addition to a worthy plan that meets the aims of the statute." See Minn.Stat. § 62C.09. The deputy commissioner's statement that "[i]t would be fair and equitable for any [BCBSM] plan to include a refund of some portion of the settlement to the groups who paid the higher premiums during the period that formed the basis for the damages model [used to calculate the damages owed in BCBSM’s complaint against the tobacco companies]" appears to be an observation only, not a dictate of what must be in the plan. However, the deputy commissioner also stated: "The only way to remain true to the [legislative intent of chapter 62C] would be to direct such a premium adjustment benefit to the fully-insured groups who paid higher premiums during the experience period used by [BCBSM] in its damages model.”

      . Respondent objects to the deputy commissioner's reference to a letter dated December 18, 1998 submitted by the Minnesota Department of Health relating to this point. The letter in question was submitted to the department during the prehearing comment period rather than to the ALJ and thus was not made part of the record. While the deputy commissioner’s consideration of a letter not in evidence was improper because of failure to comply with Minn.Stat. § 14.60, subd. 4, the impact was likely minor as it was cited as support for the type of general knowledge, “experience, technical competence, and specialized knowledge” the decision-maker may utilize to evaluate the record. See Kollmorgen v. State Bd. of Medical Examiners, 416 N.W.2d 485, 488 (Minn.App.1988) (quoting Minn.Stat. § .14.60, subd. 4).