Lamar Central Outdoor, LLC v. DHA—Agency Avoidance of Rulemaking & the “Error-Correcting Exception”
On December 19, 2019, in a unanimous decision, the Wisconsin Supreme Court said state agencies must promulgate as a rule changes to their policies. GLLF filed an amicus brief on behalf of five Wisconsin associations. We also participated in oral argument before the Supreme Court.
In this case, Wisconsin Department of Transportation (DOT) violated Wisconsin law when ordering the uncompensated removal of an outdoor sign because it changed its mind on what the law means. As we noted in our press release:
Agreeing with us and writing for the court, Justice Kelly notes that “from time to time an administrative agency changes its interpretation of a statute in a manner that adversely affects a regulated activity.” In this instance, DOT must “promulgate a rule containing the new statutory interpretation before applying it against the sign owner.”
This isn’t about one sign, or one agency. It is a clear directive to all state agencies that they cannot impose their changing views of the law without providing the due process procedural protections we all deserve.
Our interest in this case stems from agency avoidance of Chapter 227 rulemaking and the so-called “error-correcting exception” coined by the Wisconsin Court of Appeals (District IV-Madison). Under the error-correcting exception, an agency does not need to promulgate a rule if it “administers the statute according to its plain terms.” If upheld, this exception would allow agencies to govern Wisconsin’s regulated community by regulatory edicts without any of the Chapter 227 rulemaking protections.
In a 7-0 opinion, the Wisconsin Supreme Court reversed the Court of Appeals and threw out this unlawful exception to Chapter 227.
The fact this decision was unanimous makes it all the more significant. Requiring agencies to follow the law is of vital importance to all Wisconsin citizens, not just businesses. Seven justices on the Wisconsin Supreme Court agree.
Why This Case is Important
- The Foundation’s interest in this case stems from agency avoidance of Chapter 227 rulemaking and the so-called “error-correcting exception” coined by the Wisconsin Court of Appeals (District IV). Under the error-correcting exception, an agency does not need to promulgate a rule if it “administers the statute according to its plain terms.” (Lamar Cent. Outdoor, LLC v. DHA, 2019 WI App 1, ¶76). The error-correcting exception rests awkwardly on a strained reading of an over forty-year-old Wisconsin Supreme Court case: Schoolway Transp. Co., Inc. v. DMV. Not only does it misapply Schoolway’s holding, the error-correcting exception creates a judicially-mandated exception that would allow agencies to avoid rulemaking in almost every instance. This would severely limit the protections afforded Wisconsin’s regulated community.
On June 12, 2012, Lamar Central Outdoor, LLC (Lamar) requested permission from the Wisconsin Department of Transportation (DOT) to remove the vegetation surrounding its lawful but nonconforming billboard sign. DOT denied the request and further demanded the sign be taken down. According to DOT, the sign lost its lawful status years earlier when Lamar placed sign extensions on it, making it bigger than permitted.
Lamar argued that even if the sign violated the size requirement, Wisconsin law gave it a chance to cure the violation. Wis. Stat. § 84.30(11) provides sign owners a 60-day “right to cure” before a sign-removal order goes into effect.
DOT argued the right to cure did not apply to nonconforming signs like Lamar’s. Relevantly, however, DOT used to give nonconforming signs the right to cure. The agency changed its mind about the meaning of the statute but did not promulgate a rule.
Lamar appealed the decision and the case made its way to the Wisconsin Court of Appeals. Of relevance here, Lamar argued DOT needed to promulgate a rule reflecting its changed interpretation of Wis. Stat. § 84.30(11). The court of appeals, however, held the agency’s actions fell under an “error-correcting exception.” In effect, the court of appeals claimed an agency does not need to promulgate a rule if its interpretation aligns with the meaning of the statute.
Here is why the error-correcting exception proves especially problematic:
- The language of the error-correcting exception tracks with the requirement for rulemaking. Agencies must promulgate a rule for “each interpretation of a statute which it specifically adopts to govern its enforcement or administration of that statute.” Wis. Stat. § 227.10(1). The error-correcting exception applies when an agency “administers the statute according to its plain terms.” In effect, the exception excuses an agency every time it does what it must—follow the law.
- The error-correcting exception creates a judicially-mandated exception to agency rulemaking without basis in existing law. The Wisconsin Legislature provided over 70 exceptions to agency rulemaking. See Stat. §§ 227.01(13)(a)-(zz). But the error-correcting exception is not grounded in any of them—or any other part of Chapter 227 statutes governing administrative agencies.
- The error-correcting exception misreads the holding in Schoolway Transp. Co., Inc. v. DMV and extends it outside its context as a definition of a rule. Schoolway’s holding arose from a very narrow fact-pattern where a clear statutory directive required no agency interpretation, and thus, no rulemaking. It did not create an exception to rulemaking but rather recognized a very narrow instance where a fact-pattern did not meet the statutory requirements for a rule. See What Is A Rule.
Supreme Court Documents
Lamar Central Outdoor, LLC v. DHA: Supreme Court Opinion (December 19, 2019)
Lamar Central Outdoor, LLC v. DHA: GLLF Amicus Brief (July 12, 2019)
Lamar Central Outdoor, LLC v DHA: GLLF Motion to File Amicus Brief (July 5, 2019)
Lamar Central Outdoor, LLC v. DHA: Supreme Court Lamar Reply Brief (July 1, 2019)
Lamar Central Outdoor, LLC v. DHA: Supreme Court DHA Response Brief (June 20, 2019)
Lamar Central Outdoor, LLC v. DHA: Supreme Court Lamar Opening Brief (May 9, 2019)
Court of Appeals Documents
Lamar Central Outdoor, LLC v. DHA: Court of Appeals Opinion (November 29, 2018)