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Lamar Central Outdoor, LLC v. State of Wisconsin Division of Hearings & Appeals

Supreme Court of Wisconsin

December 19, 2019

Lamar Central Outdoor, LLC d/b/a Lamar Advertising of Central Wisconsin and TLC Properties, Inc., Petitioners-Appellants-Petitioners,
State of Wisconsin Division of Hearings & Appeals, Respondent-Respondent, State of Wisconsin Department of Transportation, Other Party.

          ORAL ARGUMENT: September 4, 2019

          Circuit Court Portage County L.C. No. 2016CV196. John M. Counsell Judge.

         REVIEW OF DECISION OF THE COURT OF APPEALS Reported at 385 Wis.2d 211, 923 N.W.2d 168 (2018 - unpublished)

          For the petitioners-appellants-petitioners, there were briefs filed by Thomas S. Hornig, Kraig A. Byron, and von Briesen & Roper, . S.C., Madison. There was an oral argument by Thomas S. Hornig.

          For the respondent-respondent, there was a brief filed by Thomas C. Bellavia, assistant attorney general; with whom on the brief was Joshua L. Kaul, attorney general. There was an oral argument by Thomas C. Bellavia.

          There was an amicus curaie brief filed on behalf of Wisconsin Manufacturers & Commerce, Midwest Food Products Association, Outdoor Advertising Association of Wisconsin, Wisconsin Cheese Makers Association and Wisconsin Dairy Alliance by Robert I. Fassbender and Great Lakes Legal Foundation, Madison. There was an oral argument by Robert J. Fassbender.

          KELLY, J., delivered the majority opinion of the Court, in which ROGGENSACK, C.J., ANN WALSH BRADLEY, ZIEGLER, REBECCA GRASSL BRADLEY, DALLET, and HAGEDORN, JJ., joined.

          DANIEL KELLY, J.

         ¶1 From time to time an administrative agency changes its interpretation of a statute in a manner that adversely affects a regulated activity. Here, an agency developed a new statutory interpretation that prohibited the owner of a roadside sign from remedying a modification that caused the sign to lose its "legal, nonconforming" status. In this case we address whether Wis.Stat. § 227.10(1) (2015-16)[1] required the agency to promulgate a rule containing the new statutory interpretation before applying it against the sign owner. We conclude that our statutes do require promulgation of a new rule under circumstances presented by this case, and therefore we reverse the decision of court of appeals.[2]

         I. BACKGROUND

         ¶2 On a piece of property next to Interstate 39 in Stevens Point, Wisconsin, there is a sign. It has been there since 1991 when Orde Advertising obtained a permit to build it. Upon its completion, the sign (we will refer to it as the "Billboard") complied with the terms of its permit and all applicable laws (the "permit"). The Billboard has two faces and cumulatively measures 1, 344 square feet. Orde Advertising sold the Billboard to Lamar Central Outdoor, LLC ("Lamar") in 1999.[3]

         ¶3 For purposes of this case, the Billboard came to the attention of the Wisconsin Department of Transportation (the "Department") in 2012 when Lamar applied for a permit to remove vegetation that partially obscured the Billboard from view (the "Application") . As part of the permitting process, the Department reviewed historical photographs, at least one of which depicted the addition of an extension panel that increased the Billboard's total advertising area. But the added panel was temporary, and Lamar had already removed it several years before filing the Application. With the panel removed, the Billboard returned to its originally-permitted size. Nothing in the record suggests that, at the time Lamar filed the Application, the Billboard failed to comply with the terms of the permit or any applicable laws that existed at the time the permit issued.

         ¶4 But circumstances have changed, and the laws no longer allow the Billboard where it is presently located. As relevant here, the Billboard may exist only on property defined as a "business area." See Wis.Stat. § 84.30 (governing outdoor advertising signs). What qualifies as a business area depends on whether the property is adjacent to an interstate highway or, instead, a non-interstate highway. § 84.30(2)(a), (b). In 1996, the stretch of road next to the Billboard was redesignated from U.S. Highway 51 to Interstate Highway 39. The parties agree that, although the property on which the Billboard is located qualified as a business area when the adjacent highway was designated U.S. Highway 51, it no longer qualified once the highway became Interstate 39.[4] Consequently, the highway's redesignation changed the Billboard's status from legal to "legal, nonconforming."

         ¶5 The Billboard's status is important in this case because the Department says that "legal, nonconforming" signs like the Billboard may not be enlarged. And if they are enlarged, the Department says, they become illegal and are subject to removal. On that basis, the Department denied Lamar's Application. The Department's amended decision[5] said that "records show this sign was 1344 square feet in area when it became nonconforming in 1996. Since then, the sign was enlarged, subjecting the sign to removal as an illegal sign."

         ¶6 Shortly after denying the Application, the Department sent Lamar an order requiring it to remove the Billboard (the "Order"). The operative part of the Order said:

NOTICE: Under the authority provided in Wisconsin Statutes, [§] 84.30(11) and Wisconsin Administrative Code, [§] TRANS 201.09, you are hereby ordered to remove the above-described outdoor advertising sign within 60 days of the date of this notice.
REASON FOR THIS ACTION: This sign does not comply with applicable federal and/or state laws and agreements, as detailed below: This sign has been enlarged, in violation of Wisconsin Administrative Code [§] Trans 201.10(2)(e) and Wisconsin Statute 84.30(5)(bm) .... This is an illegal sign.

         ¶7 Lamar requested a hearing before the Division of Hearings and Appeals (the "DHA") to review the Order and the Department's denial of the Application. The DHA said the Billboard lost its "legal, nonconforming" status when Lamar added the temporary panel. It also said that removing the temporary panel could not recapture the Billboard's prior status. Therefore, it concluded, Lamar must remove the entire Billboard.[6]

         ¶8 Lamar filed a petition for judicial review of the DHA's decision pursuant to Wis.Stat. § 227.52. The circuit court affirmed the DHA's final decision "in all respects."[7] The court of appeals affirmed. We granted Lamar's petition for review and now reverse.


         ¶9 Our duty in this case is to review the DHA's decision, as opposed to that of the circuit court. Hilton ex rel. Pages Homeowners' Ass'n v. DNR, 2006 WI 84, ¶15, 293 Wis.2d 1, 717 N.W.2d 166 ("When an appeal is taken from a circuit court order reviewing an agency decision, we review the decision of the agency, not the circuit court."). In performing that review, we do "not substitute [our] judgment for that of the agency as to the weight of the evidence on any disputed finding of fact," but we do not rely on "any finding of fact that is not supported by substantial evidence in the record." Wis.Stat. § 227.57(6). And we "accord no deference to the agency's interpretation of law." § 227.57(11); see also Tetra Tech EC, Inc. v. DOR, 2018 WI 75, ¶108, 382 Wis.2d 496, 914 N.W.2d 21 ("We have . . . end[ed] our practice of deferring to administrative agencies' conclusions of law.").

         ¶10 The specific issue before us also presents a question of law. "Whether an agency's action constitutes a 'rule' under Wis.Stat. § 227.01(13) presents a question of law, which we review de novo." Homeward Bound Servs., Inc. v. Office of Ins. Comm'r, 2 00 6 WI.App. 208, ¶27, 296 Wis.2d 481, 724 N.W.2d 380.

         III. ANALYSIS

         ¶11 Our opinion today addresses whether the Department may order Lamar to remove the Billboard because it temporarily exceeded its permitted size. The Department's position on the consequences of temporary violations of a "legal, nonconforming" sign's permit has morphed over the years. This is not necessarily problematic. It is to be expected that an administrative agency might, from time to time, change the manner in which it applies and enforces our State's statutes and regulations. Sometimes a prudential reordering of priorities or other discretionary factors prompt the change. But sometimes the change arises from a reevaluation of what the agency believes a particular statute or regulation requires. This case implicates the latter circumstance and addresses whether it was necessary for the Department to promulgate a rule before implementing its new understanding of the applicable statute's requirements.

         ¶12 The Department says that when Lamar added the temporary extensions to the Billboard, the sign's status changed from "legal, nonconforming" to "illegal," thereby subjecting it to removal. And, more importantly, the Department says the change in status is irreversible-that is, the sign owner has no opportunity to "cure" the violation. A permit program supervisor who recently worked for the Department, Ms. Deborah Brucaya, explained the Department's current position. She said that "if the extension was placed on the sign after it became nonconforming and was later removed, [the Department's] interpretation [is] that the sign lost its nonconforming status" and "became illegal." According to the Department, this result necessarily follows from the terms of Wis.Stat. § 84.30(11), which say:

Any sign erected in an adjacent area after March 18, 1972, in violation of this section or the rules promulgated under this section, may be removed by the department upon 60 days' prior notice by registered mail to the owner thereof and to the owner of the land on which said sign is located, unless such sign is brought into conformance within said 60 days. No notice shall be required to be given to the owner of a sign whose name is not stated on the sign or on the structure on which it is displayed, or whose address is not stated thereon or is not on file with the department.

§ 84.30(11) (emphasis added). Lamar cannot exercise this cure option, the Department says, because changed circumstances make it impossible to conform the Billboard to the law. It concludes that, because the redesignation of the adjacent highway means the property may no longer host signs like the Billboard, "conformance" actually requires the sign's removal.

         ¶13 Lamar says the Department's current understanding of Wis.Stat. § 84.30(11) represents a sharp break from its prior practice. Previously, it says, the Department granted the owner of a "legal, nonconforming" sign 60 days to cure whatever condition caused the sign to violate the permit. One of the Department's former permit program supervisors, Mr. Robert Hardie, confirmed that this is how the Department handled changes to signs like the Billboard. He said that "[i]f a sign was either permitted at a certain size or legal nonconforming at a certain size, if an extension went up, it would be considered illegal and have to be removed or taken back to where it was before." And if the owner removed the extension "within the 60-day period allotted, the remainder of the sign could continue unimpeded[.]" That is, the sign returned to the "legal, nonconforming" status it enjoyed before the violation. This practice, the supervisor said, was based on the Department's interpretation of § 84.30(11)-the same statute on which the Department relies for its current, but contradictory, position.

         ¶14 Lamar argues that the Department may not eliminate the opportunity to cure a violation until it first promulgates a rule to that effect using the Wis.Stat. Ch. 227 rulemaking procedure. The Department does not deny that its "no-cure" position differs from its prior practice, but says no rulemaking is necessary ...

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