Agency Reinterpretation of Statute Requires Rulemaking

January 2, 2020

In a unanimous decision, the Wisconsin Supreme Court recently ruled that agencies could not change their interpretation of ambiguous statutes without going through rulemaking.  In Lamar Central Outdoor, LLC v. State of Wisconsin Division of Hearings & Appeals, 2019 WI 109, Lamar owned a “legal, nonconforming” billboard.  The billboard met the applicable requirements when it was constructed, but did not comply with current locational requirements.

Lamar applied to the Wisconsin Department of Transportation (WisDOT) for a permit to remove vegetation that was partially blocking the view of the billboard.  In reviewing the matter, WisDOT discovered that at one time there had been an extension panel added to the billboard in order to increase advertising space.  The panel was removed several years before the application was submitted.  Because the sign was enlarged, however, WisDOT determined the billboard was illegal and ordered it removed.

At issue was WisDOT’s interpretation of a statute that allowed a violation to be “cured.”  The statute at issue, Wis. Stat. § 84.30(11), provides in part:  “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 in located, unless such sign is brought into conformance within said 60 days….”

WisDOT’s historic interpretation of this provision was that if a legal, nonconforming sign was extended, it was illegal.  If the extension was removed within the 60-day time-period, however, the sign could remain as a legal, nonconforming sign.  Under this interpretation, Lamar would be able to maintain its sign.

WisDOT, however, changed its interpretation of the statute.  Under WisDOT’s new interpretation, Lamar’s legal, nonconforming sign could not conform by removing the extension, because it did not meet all current requirements. The sign did not conform with current locational requirements.

The issue before the Court was whether WisDOT was required to promulgate a rule prior to changing its interpretation of Wis. Stat. § 84.30(11).  The Court noted that Wis. Stat. § 227.10(1) specified when an agency must engage in rulemaking: “Each agency shall promulgate as a rule each statement of general policy and each interpretation of a statute which it specifically adopts to govern its enforcement or administration of that statute.”  Emphasis added.

The Court noted that an agency may correct an interpretation of an unambiguous statute without rulemaking because the agency would not be interpreting the statute.  Rather, it would be conforming to “the plain language of an unambiguous statute.”  In contrast, the Court explained that when an agency changes its interpretation of an ambiguous statute, it is engaging in rulemaking.  The Court indicated that rulemaking provides notice to those impacted of how the law will be applied.

The Court then turned to whether Wis. Stat. § 84.30(11) was ambiguous.  The Court concluded that the provision was ambiguous because the phrase “brought into conformance” could mean complying with the law at the time when the permit was first granted, or meeting the law in place at the time Lamar submitted the application. Consequently, the Court concluded that WisDOT was required to promulgate a rule before implementing its new interpretation of this statute.  The Court added that if WisDOT promulgated a new rule, it could not apply the rule retroactively to violations cured prior to the rule change.

This case highlights an important protection for the regulated community. Many entities are regulated by WisDOT, the Wisconsin Department of Natural Resources, the Department of Revenue, or other agencies.  An agency may not change its interpretation of a statute that is ambiguous, meaning it is subject to more than one interpretation, without going through rulemaking.  Furthermore, if an agency does change its interpretation of a statute, the statute may likely be ambiguous.  One would assume it would be rare for an agency to misinterpret a clear and unambiguous statute.

This rulemaking requirement ensures that reinterpretations of laws do not occur, for example, simply due to a change in agency personnel.  Requiring rulemaking helps to provide notice of changing regulatory requirements.  Just as importantly, rulemaking provides the regulated community, as well as others, with an opportunity to provide input regarding the proposed changes.

Axley Attorneys frequently deal with regulatory agencies.  If you need assistance dealing with a regulatory agency, please call us.

For more information about "Agency Reinterpretation of Statute Requires Rulemaking," contact Patrick Stevens at pstevens@axley.com or 262.409.2296.