State Public Intervenor v. Wisconsin Department of Natural Resources

DYKMAN, J.

Green Bay Harbor, located at the mouth of the Fox River, is subject to shoaling because of silt deposits. In 1978, the U.S. Army Corps of Engineers dredged the harbor to permit larger ships to enter. The spoils were used to construct Kidney Island, about fifty-five acres in size.

The Corps subsequently determined that the fifty-five acres were insufficient to hold all of the spoils being generated, and petitioned the Department of Natural Resources (DNR) for permission to add 126 acres contiguous to the fifty-five-acre site. The DNR conditionally granted the petition. The public inter-venor petitioned for judicial review of this conditional grant. We upheld the DNR's action in State Pub. Intervenor v. DNR, 156 Wis. 2d 376, 456 N.W.2d 878 (Ct. App. 1990).

The DNR next issued a notice of preliminary determination of water quality certification. The public intervenor filed a petition for a contested case hearing to review the certification. The DNR granted a contested hearing and referred the case to the Department of Administration (DOA), Division of Hearings and Appeals pursuant to sec. 227.43, Stats., and Wis. Adm. Code sec. NR 299.06(6) (Aug. 1983).

The hearing examiner reversed the DNR's certification decision and made extensive findings as to various adverse effects which could result from the additional 126 acres of spoils. Brown County petitioned the DNR secretary for review of the examiner's deci*670sion. Brown County and the Brown County Board of Harbor Commissioners also filed a petition for judicial review of the examiner's decision.1 That petition was not decided and apparently remains pending in the circuit court for Brown County.

The secretary issued a decision in which he concluded that he would review the examiner's decision. The public intervenor petitioned for judicial review of that decision. The secretary affirmed the hearing examiner, but on much narrower grounds. The public intervenor petitioned for judicial review of the secretary's second decision. The two judicial reviews were consolidated and the circuit court affirmed the secretary. This appeal resulted, and we certified this case to the supreme court pursuant to Rule 809.61, Stats. The supreme court denied the certification.

The public intervenor challenges the authority of the secretary to review the BOA hearing examiner's decision. He concedes that Wis. Adm. Code sec. NR 2.20 authorizes that action, but asserts that sec. NR 2.20 was invalidly adopted because it exceeds the statutory authority granted to the DNR.2 The public intervenor also claims that the secretary's review was tainted by a conflict of interest, that impermissible ex parte contacts require reversal of the secretary's decision, and that Brown County waived its right to petition for review. We conclude that sec. NR 2.20 was not legislatively authorized, and therefore reverse. We do not reach the other assertions of error.

*671In Interest of A.L.W., 153 Wis. 2d 412, 417, 451 N.W.2d 416, 418 (1990), repeated the rule to follow when administrative rules are challenged for lack of statutory authority: "In determining whether an administrative agency has exceeded its statutory authority in promulgating a rule, we must look to the enabling statute to determine whether there is express or implied authorization for the rule." Agencies may exercise "power which arises by fair implication from the express powers." Wisconsin's Envtl. Decade, Inc. v. Public Serv. Comm'n, 69 Wis. 2d 1, 16, 230 N.W.2d 243, 251 (1975). But enabling statutes are strictly construed to preclude the exercise of a power not expressly granted. Racine Fire and Police Comm'n v. Stanfield, 70 Wis. 2d 395, 399, 234 N.W.2d 307, 309 (1975). Any reasonable doubt as to the existence of an implied power should be resolved against the exercise of such authority. Kimberly-Clark Corp. v. Public Serv. Comm'n, 110 Wis. 2d 455, 462, 329 N.W.2d 143, 146 (1983). Whether an administrative agency exceeded its statutory authority in promulgating a rule is a question we resolve without deference to the view of the trial court. Wisconsin Hosp. Ass'n v. Natural Resources Bd., 156 Wis. 2d 688, 705, 457 N.W.2d 879, 886 (Ct. App. 1990). To determine whether a rule is statutorily authorized, we are to "identify the elements of the enabling statute and match the rule against those elements." Id. at 706, 457 N.W.2d at 886.

Brown County identifies two statutes which it claims authorize the DNR to adopt Wis. Adm. Code sec. NR 2.20 — secs. 227.43(1)0») and 227.46(3), Stats.3 It *672argues that sec. 227.43(l)(b) recognizes that the secretary may conduct a contested case hearing. That is correct, but it does not necessarily follow that the secretary may conduct that hearing after a decision by a hearing examiner, as sec. NR 2.20 authorizes.

Section 227.46(3), Stats., authorizes an agency to hear contested cases in three ways. The agency may direct that the hearing examiner's decision be the agency's final decision. The DNR did so in Wis. Adm. Code sec. NR 299.06(7)(b) (Aug. 1983). That rule, which was in effect when the examiner made his decision, read: "If a hearing is held under sub. (6), the hearing examiner shall make findings of fact, conclusions of law and a decision, which shall become final when issued in accordance with the procedures in ch. 227, Stats., and this section." (Emphasis added.)4

An agency may also direct that the record be certified to it without an intervening proposed decision. Section 227.46(3)(b), Stats. But there is no dispute that *673this was not done in the case before us. Finally, an agency may direct that the procedure of sec. 227.46(2), Stats., be followed. That statute provides for a proposed decision by a hearing examiner followed by a decision by officials of an agency. But, that procedure was not followed by the DNR either. The hearing examiner's order was not designated a "proposed order."

Of the three methods of review authorized by sec. 227.46, Stats., only one was followed in this case. Comparing the elements of sec. 227.46(3), Stats., to Wis. Adm. Code sec. NR 2.20, we find no match. Accordingly, we conclude that that statute does not authorize the DNR to adopt sec. NR 2.20.

Brown County argues that Town of Two Rivers v. DNR, 105 Wis. 2d 721, 315 N.W.2d 377 (Ct. App. 1981), overruled on other grounds, Milwaukee Metro. Sewerage Dist. v. DNR, 126 Wis. 2d 63, 72, 375 N.W.2d 648, 652 (1985), holds that the secretary may review a hearing examiner's decision pursuant to Wis. Adm. Code sec. NR 2.20. In Two Rivers, we said:

Further, [Wis. Adm. Code sec.] NR 2.20 allows review of a decision by the independent hearing examiner even if it is a final decision. All that need take place is that a party, adversely affected by the independent hearing examiner's decision, file a written petition for review by the secretary. The secretary of the DNR then has the power to change the decision.

105 Wis. 2d at 737, 315 N.W.2d at 385.

Two Rivers speaks to the effect of Wis. Adm. Code sec. NR 2.20, not its validity. These two concepts are very different. Decisions by the court of appeals should be read with the understanding that we are an error-correcting court. State ex rel. Swan v. Elections Bd., 133 Wis. 2d 87, 93-94, 394 N.W.2d 732, 735 (1986). We *674ordinarily do not address issues not raised. Waushara County v. Graf, 166 Wis. 2d 442, 451, 480 N.W.2d 16, 19 (1992), cert. denied, 113 S. Ct. 269 (1992). In Two Rivers, we were not asked to consider whether sec. NR 2.20 was validly enacted. Neither Brown County nor the dissent should assume that an unbriefed, undiscussed, and undecided issue was not only lurking in Two Rivers, but was decided by that case. Two Rivers is not a decision pertaining to the issue raised in this case.

Nor does Two Rivers hold that the secretary may review the decision of a hearing examiner after the examiner's final decision. If an examiner makes proposed findings of fact and conclusions of law, as authorized by secs. 227.46(3)(c) and 227.46(2), Stats., then the secretary may review those findings and conclusions. But that does not mean that the secretary may also conduct a Wis. Adm. Code sec. NR 2.20 review.

The dissent focuses on one of the three methods the legislature has authorized by which an agency may decide contested cases. It concludes that because the legislature has given an agency three methods of deciding contested cases, a fourth method is implied. That conclusion is a logical fallacy. Had the legislature intended a fourth method of deciding contested cases, it would have so provided. Courts have developed a maxim for this principle, expressio unius est exclusio alterius — in other words, a statute which expresses one thing is exclusive of another. Gottlieb v. City of Milwaukee, 90 Wis. 2d 86, 95 & n.18, 279 N.W.2d 479, 483 & n.18 (Ct. App. 1979). "No agency may promulgate a rule which conflicts with state law." Section 227.10(2), Stats. "An administrative rule 'can have no force against the plain language of the statute.'" Rich*675land School Dist. v. DILHR, 166 Wis. 2d 262, 278, 479 N.W.2d 579, 586 (Ct. App. 1991) (quoting Village of Plain v. Harder, 268 Wis. 507, 511, 68 N.W.2d 47, 50 (1955)), aff'd, 174 Wis. 2d 878, 498 N.W.2d 826 (1993). The dissent's "fair implication" of a fourth method runs squarely into the supreme court's caution that" [a]ny reasonable doubt as to the existence of an implied power in an agency should be resolved against the exercise of such authority." Kimberly-Clark Corp., 110 Wis. 2d at 462, 329 N.W.2d at 146 (emphasis added). All that is necessary to defeat the existence of an implied power is a reasonable doubt that such a power exists. Id. "Reasonable doubt" is our highest burden of proof. Kuehn v. Kuehn, 11 Wis. 2d 15, 26-27, 104 N.W.2d 138, 145 (1960). For us to join in the dissent's reasoning, we would have to conclude that, beyond a reasonable doubt, the legislature intended to give agencies a fourth method by which to decide contested cases. That is too high a standard to overcome.

Brown County points out that Wis. Adm. Code sec. NR 2.20 has been in existence since 1976, and has been consistently interpreted by the DNR as authorizing the secretary to review hearing examiners. Accordingly, that interpretation is entitled to great weight. See Racine Educ. Ass'n v. Commissioner of Ins., 158 Wis. 2d 175, 179, 462 N.W.2d 239, 241 (Ct. App. 1990). But there is a limit to this deferential review. Where an agency determines the limits of its own powers, we owe no deference to its decision. GTE North, Inc. v. Public Serv. Comm'n, 176 Wis. 2d 559, 564, 500 N.W.2d 284, 286 (1993).

Brown County cites various foreign and Wisconsin cases holding that an administrative agency has the power to reconsider its own decisions since the power to *676decide carries with it the power to reconsider. We agree with this view of the law. But the secretary is not reconsidering or modifying his own decision. He is modifying the hearing examiner's decision, a decision the DNR identified as "final" when it enacted Wis. Adm. Code sec. NR 299.06(7)(b) (Aug. 1983). We find no statutory authority for this procedure.

The DNR offers additional arguments. It asserts that State ex rel. Foshey v. DHSS, 102 Wis. 2d 505, 514, 307 N.W.2d 315, 319 (Ct. App. 1981), holds that the secretary or his designee may perform a de novo review of evidence presented to a hearing examiner. But Foshey was decided under a Division of Corrections rule permitting the secretary to review final decisions of a hearing examiner. Foshey, 102 Wis. 2d at 516-18 n.8, 307 N.W.2d at 320-21 n.8. Again, as in Two Rivers, we did not address the validity of an administrative rule, only its application.

The DNR cites numerous federal cases that approve the principle of delegation of agency authority to a hearing examiner with agency retention of ultimate decisionmaking authority. We have no quarrel with the holdings of these cases. But once again, the question is whether Congress gave the head of an agency the power to review a final order of a hearing examiner, not whether the agency head, having been given that power, properly exercised it.

We do not hold that the legislature cannot give the DNR the power to enact Wis. Adm. Code sec. NR 2.20. That question is not before us. We hold only that it has not done so. Accordingly, the hearing examiner's decision is the final decision of the DNR, subject only to the judicial review proceeding apparently still pending in *677the circuit court of Brown County. Therefore, we direct the trial court to vacate the secretary's orders on remand.

Because we have held that Wis. Adm. Code sec. NR 2.20 is invalid and that the secretary's action was void, we need not address the public intervenor's other assertions of error.

By the Court. — Judgments reversed and cause remanded with directions.

We will refer to Brown County and the Brown County Board of Harbor Commissioners collectively as "Brown County."

Wisconsin Adm. Code sec. NR 299.06(7)(b) (Aug. 1983) provides that a DOA hearing examiner's determination becomes final when he or she issues findings of fact, conclusions of law and a decision.

Section 227.43(1), Stats., provides in relevant part:

The administrator of the division of hearings and appeals in the department of administration shall:
*672(b) Assign a hearing examiner to preside over any hearing of a contested case which is required to be conducted by the department of natural resources and which is not conducted by the secretary of natural resources. [Emphasis added.]

Section 227.46(3), Stats., states:

With respect to contested cases, an agency may by rule or in a particular case may by order:
(a) Direct that the hearing examiner's decision be the final decision of the agency;
(b) Except as provided in sub. (2) or (4), direct that the record be certified to it without an intervening proposed decision; or
(c) Direct that the procedure in sub. (2) be followed, except that in a class 1 proceeding both written and oral argument may be limited.

An identical provision is now found in Wis. Adm. Code sec. NR 299.05(7)(b).