Larsen v. MUNZ CORP.

480 N.W.2d 800, 166 Wis. 2d 751, 1992 Wisc. App. LEXIS 23

• Court: Court of Appeals of Wisconsin
• Decided: January 8, 1992
• Docket: 91-2811
• Status: Published

Opinions

GARTZKE, P.J.

Robert W. Larsen appeals from an order dismissing his action against Munz Corporation and the Department of Administration (department) and its secretary James R. Klauser. Larsen sought a declaration that the department is required to file an environmental impact statement under sec. 1.11, Stats., the Wisconsin Environmental Policy Act (WEPA), before constructing the proposed state administration building at 101 East Wilson Street in the City of Madison.¹

We conclude that the department failed to follow its own rules governing its compliance with WEPA. We therefore reverse and remand the matter, but without the injunction Larsen requested we issue against further construction.²

The building is near the west shore of Lake Monona. Larsen lives near the east shore. He alleges that the top floors of the building will obstruct his view of the Capitol building to a height of one-half to two-thirds of the columns supporting the Capitol dome. Larsen is the only plaintiff, but about 290 other persons have expressed their displeasure in communications of record to the department on the obstruction to the public's view.

Section l.ll(2)(c), Stats., provides in substance that all agencies of the state "shall" include in every report on proposals for "major actions significantly affecting the quality of the human environment" a statement describing the environmental impact of the proposed action, adverse environmental effects which cannot be avoided and alternatives to the proposed action. That statement is usually referred to as an "environmental impact statement" or "EIS." Its preparation is a complex task. For example, before preparing the EIS, the responsible official must consult with and obtain the comments of any agency which has jurisdiction or special expertise with respect to any environmental impact involved. Every proposal other than for legislation must receive a public hearing on notice before a final decision is made. Section l.ll(2)(d), Stats.

To comply with WEPA, an agency contemplating a particular action must decide whether it is a major action significantly affecting the quality of the human environment. This "threshold decision . . . occupies a critical position within the context of WEPA's operation. A negative determination at the initial stage may eliminate to a significant degree environmental consideration by the agency and may curtail much of the input, which an EIS is designed to foster, of other governmental agencies and the public in the agency's decision process." Wisconsin's Environmental Decade, Inc. v. Public Serv. Comm'n, 79 Wis. 2d 409, 419, 256 N.W.2d 149, 155 (1977). An agency may comply with the "threshold decision" requirement by promulgating a rule categorizing the decisions which an agency makes according to the likelihood that those decisions will require a review of their environmental consequences. Wisconsin's Environmental Decade, Inc. v. DILHR, 104 Wis. 2d 640, 646, 650, 312 N.W.2d 749, 752, 754 (1981).³

The facts are undisputed. Early in 1990 the department decided to lease a large block of office space in downtown Madison.⁴ It solicited proposals. Of the nineteen submitted, the department narrowed the list down to three, including one by Munz Corporation to construct a building on its site at 101 East Wilson Street. In early November 1990, the department hired a private firm of engineers, architects and planners to prepare a preliminary environmental impact assessment on the three potential building sites. On November 21, 1990, after receiving the assessment, the department requested approval from the building commission of a lease for the building to be constructed by Munz on East Wilson Street. The building commission approved the request on the day it was received.

The department's request stated that it proposed to consolidate various tenant agencies in leased or state-owned office space in Madison to accommodate about 1,100 employees. According to the request:

A 10-story facility will be constructed at 101 E. Wilson Street. Currently the site is used for surface parking. Included in the facility will be approximately 200 underground parking stalls. The building will have a gross area of 189,100 squáre feet, with a floor size of 18,910 square feet and a net rentable square footage of 160,418 square feet. The lease will be for 20 years and include purchase options at various periods. The purchase price at occupancy will be $18,274,000 or $113.92 per net assignable square feet. The first year rental rate will be $11.25 per square foot plus the cost to operate and maintain the facility. Those costs are estimated to be $4.95 per square foot for a total first year rate of $16.20. The annual first year rent paid to the lessor will be $1,800,000. Rent for the second year will remain the same. For years three through five, the rent will increase 3 percent. Subsequent years, the increase is 4 percent.

It is anticipated occupancy of the new facility will be August 1, 1992. The lease will also include approval of the building design by the State, including materials to be used in its construction.⁵

In the same request, the department informed the building commission:

An environmental assessment [referring to the preliminary environmental impact assessment] has been completed for the 101 E. Wilson Street site. The conclusion of the assessment with regard to constructing the proposed facility is that there will be no significant impact on the quality of the human environment. This analysis fulfills the requirements of the Wisconsin Environmental Policy Act Wis. Statutes 1.11.

Consistently with that conclusion, the department has not prepared the EIS that sec. 1.11(2), Stats., would require had the department concluded that the project does significantly affect the quality of the human environment.

The parties agree, however, that the issue before us is whether the department has followed its own rules that it promulgated to comply with WEPA. In 1982, the department adopted Wis. Adm. Code ch. Adm 60 entitled "Wisconsin Environmental Policy Act, Procedures for Department Actions." As we later explain, the record fails to show that the department has followed that part of ch. Adm 60 which requires it to prepare an EIS for the East Wilson Street project. For that reason, the department has not complied with WEPA. Rather than quote all of Wis. Adm. Code ch. Adm 60, we describe its provisions we deem critical to this appeal.

The department has declared the purpose of ch. Adm 60: To establish a policy to ensure departmental consideration of the short- and long-term environmental and economic effects of department actions; to provide principles, objectives, definitions and criteria to be used by the department when implementing WEPA; to "[establish the identification of major actions significantly affecting the quality of the human environment and the need for an environmental impact statement"; and to provide an opportunity for public input to the decision making process. Wisconsin Adm. Code sec. Adm 60.01(1) — (4).

To those ends, the department's rules prescribe how it will approach the task of determining whether it will identify a major action significantly affecting the quality of the human environment which in turn necessitates preparation of an EIS. Section Adm 60.03 provides in pertinent part:

The department has categorized its actions into the following type list which shall determine or aid in the determination of the need for an EIS. Type I actions shall always require an EIS. Type II actions may or may not require an EIS . . .. Type III actions normally do not have the potential to cause significant environmental effects . . .. (Emphasis added.)

Accordingly, the department has determined that all Type I actions are, in the words of WEPA, sec. l.ll(2)(c), Stats., "major actions significantly affecting the quality of the human environment."

Section Adm 60.04(1) provides: "During the early planning stages, the department shall determine the need for preparing an EIS on its actions. The action type list shall be used to determine the category of the proposed action." (Emphasis added.)

We have appended to this opinion the action type list promulgated as part of sec. Adm 60.03 and referred to in sec. Adm 60.04(1). It shows that the department has established a single "Type I" EIS category, the first entry on the list. The Type I category is based on one "action type," facilities development, and identified as " [planning, designing, contracting for and constructing physical facilities when the department of administration is to be the managing authority as defined in ss. 16.84 and 16.845, Stats., i.e. the 'lead agency,' " when the facilities are new and are on parcels not previously developed by the state.

The result in this appeal depends on a fundamental principle of administrative law: an administrative agency is bound by the rules which it itself has promulgated, Vitarelli v. Seaton, 359 U.S. 535, 539-40 (1959), and may not proceed without regard to its own rules. Service v. Dulles, 354 U.S. 363, 388 (1957). We applied the same principles in State v. Griffin, 126 Wis. 2d 183, 197, 376 N.W.2d 62, 69 (Ct. App. 1985), aff'd, 131 Wis. 2d 41, 60, 388 N.W.2d 535, 542 (1986), aff'd, 483 U.S. 868 (1987); Prahl v. Brosamle, 98 Wis. 2d 130, 155, 295 N.W.2d 768, 782 (Ct. App. 1980); State ex rel. Meeks v. Gagnon, 95 Wis. 2d 115, 119, 289 N.W.2d 357, 361 (Ct. App. 1980). Wisconsin's Administrative Procedure Act, ch. 227, Stats., embraces the same principle. In a ch. 227 review, a court must reverse and remand a case to the agency if the court finds that the agency's exercise of its discretion "is inconsistent with an agency rule.”⁶ Section 227.57(8), Stats.

Consequently, if the East Wilson Street project is a Type I action, then it is a major action significantly affecting the quality of the human environment and the department must therefore prepare an EIS. In that event, we ignore the department's representation to the building commission in November 1990 that the project will have no significant impact on the quality of the human environment. If the project is a Type I, then, contrary to the department's representation to the commission, its preliminary impact assessment does not fulfill the requirements of WEPA.

We construe administrative rules in the same manner as statutes. Law Enforcement Standards Bd. v. Village of Lyndon Station, 101 Wis. 2d 472, 489, 305 N.W.2d 89, 97 (1981). The facts being undisputed, whether the East Wilson Street project is a Type I action, as defined in sec. Adm 60.03, is a question of law. Employers Ins. v. Pelczynski, 153 Wis. 2d 303, 307, 451 N.W.2d 300, 301 (Ct. App. 1989). The trial court's answer to that question was negative. The court reached that answer because even though the department was involved in the planning, designing, contracting for and constructing of physical facilities as the lead agency, the facilities were not on land being developed by the state.⁷ We, of course, are not bound by the trial court's answer to a question of law. Nor do we defer to it. Ball v. District No. 4, Area Bd. of Vocational, Technical & Adult Educ., 117 Wis. 2d 529, 537, 345 N.W.2d 389, 394 (1984). We decide the Type I question independently, unless we should defer to the department's interpretation of its rule. Ordinarily we defer to an agency's interpretation of a rule which it has written. Pfeiffer v. Board of Regents, 110 Wis. 2d 146, 155, 328 N.W.2d 279, 283 (1983).

However, deference to the department's interpretation of sec. Adm 60.03 is not possible in the case before us. The reason is simple. The department did not interpret sec. Adm 60.03, since it did not decide whether the East Wilson Street project is a Type I action. We have searched the record for evidence that the department made that decision. We find none. The record contains no reference whatever to sec. Adm 60.03. It contains no reference, direct or oblique, to whether the East Wilson Street project is a Type I, Type II or Type HI. During oral argument, we asked defendants' counsel for the date on which the department made a decision that this was not a Type I action. Counsel could not provide it. We asked counsel whether the department had ever expressly decided that this was or was not a Type I action. Counsel could not answer the question.

That the department properly adopted ch. Adm 60 is unchallenged. The properly adopted rules of an administrative agency have the force of law. Kranzush v. Badger State Mut. Casualty Co., 103 Wis. 2d 56, 77-78, 307 N.W.2d 256, 267-68 (1981). Ordinarily agencies are presumed to have acted in accordance with the law and therefore in accordance with their own rules. State ex rel. Sell v. Milwaukee County, 65 Wis. 2d 219, 226-27, 222 N.W.2d 592, 596 (1974). But the department's own procedure overcomes and indeed negates the presumption. The department relied on its preliminary environmental impact assessment when it advised the building commission that constructing the East Wilson Street facility did not require an EIS. Had it applied its own rule, sec. Adm 60.03, and concluded that the project is a Type II, it would have based its decision on the "environmental assessment" described in sec. Adm 60.04(2). Had it concluded that the project is a Type III, it would have prepared no assessment whatever. The only reasonable inference is that the department either ignored, or proceeded in ignorance of, its own rule. Either alternative prevents us from applying a presumption of regularity.

We conclude that, as a matter of law, the facts satisfy the Type I "action identification" elements of "planning, designing, contracting for and constructing physical facilities." "Action" is the key word. WEPA requires an EIS for "major actions significantly affecting the quality of the human environment." Section l.ll(2)(c), Stats. As sec. Adm 60.03 states: "The department has categorized its actions into the following type list. ..." For categorization purposes, the department defines "action" as "any activity, initiated by the department or initiated by someone outside state government, which could not have occurred but for the department and which may affect the human environment." Wisconsin Adm. Code sec. Adm 60.02(1).

It is undisputed that the department initiated the planning and contracting for the East Wilson Street site. It participated in the design. Munz's architects did most of the design, and Munz's contractor is performing the actual construction. However, the design and construction could not have occurred but for the department.⁸ Each of those activities, and surely their total, may affect the human environment. Since the department is the managing authority, as defined in sec. 16.845(2)(b), Stats., all of the "action identification" elements for a Type I EIS category have been met.

We turn to the "description/comments" section applicable to the Type I category. The building at 101 East Wilson Street is a new facility. According to the preliminary environmental impact assessment, the site was previously occupied only by a bituminous parking lot. It is undisputed that the state has never before developed anything on the parcel.

This leaves for our consideration the parcel "not previously developed by the state" element in the "description/comments" section. The state need not own the parcel. Nothing in the Type I category refers to title or ownership.⁹ The verb "developed" in the "description/comments" section characterizes the primary elements in the "action identification" section: planning, designing, contracting for and constructing a physical facility. That is what "development" is about. Those elements constitute development, and we have already concluded that the facts satisfy each.

We therefore conclude that construction of the building at 101 East Wilson Street comes within the Type I EIS category established by sec. Adm 60.03. It therefore is, in the words of WEPA, sec. l.ll(2)(c), Stats., a major action "significantly affecting the quality of the human environment." For that reason, the department must prepare an EIS. Because the department did not, Larsen is entitled to the declaration he seeks that the department has failed to file an environmental impact statement as required by sec. 1.11, Stats.

The issue remains of what, if anything, this court can and should do with respect to the East Wilson Street building construction while the department prepares an EIS. Larsen asks that we enjoin the defendants from continuing with construction of the State Administration Building pending preparation of the EIS. We have jurisdiction under art. VII, sec. 5(3) of the Wisconsin Constitution to issue an injunction in an original action brought in this court, but this is an appeal. We do not have authority to issue an injunction since we lack supervisory jurisdiction over matters pending before administrative bodies. State ex rel. Swan v. Elections Bd., 133 Wis. 2d 87, 91, 394 N.W.2d 732, 734 (1986) (per curiam). The supreme court itself has doubted that it has jurisdiction to issue an injunction where its original jurisdiction has not been invoked. In State ex rel. Cowie v. La Crosse Theaters Co., 232 Wis. 153, 163, 286 N.W. 707, 712 (1939), the court said:

This court does not, except where the original jurisdiction of the court is directly invoked, grant temporary injunctions. The granting of such injunctions is more appropriately and properly left to the discretion of the trial courts, even if we have jurisdiction to grant injunctions where our original jurisdiction is not invoked in the first instance, which may be doubted and which we refrain from here deciding.

Larsen may apply to the trial court for a temporary injunction to restrain the defendants from proceeding with further construction pending the department's preparation and filing of an EIS. We express no opinion as to whether the trial court should grant the injunction.

By the Court. — Order affirmed in part; reversed in part and cause remanded for further proceedings consistent with this opinion. Injunction denied.

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1 Larsen requested that we stay further construction pending this appeal. The building is scheduled for completion in August 1992. On December 16,1991, we entered an order to expedite our decision rather than grant the stay. Briefs were filed on Friday, December 20,1991, and oral argument was held on December 23, 1991.

2 Larsen also sought a declaration that, independently of WEPA, the department must comply with the state policy announced in sec. 1,1989 Wis. Act 222, "to preserve, promote and enhance the view of the state capítol." That policy was announced in connection with a limitation in sec. 16.842, Stats., on the height of buildings located within one mile of the Capitol building. The new building at 101 East Wilson Street will not exceed the limitation. The statute permits certain structures, such as elevator penthouses, to exceed the limitation if approved by the City of Madison. The proposed elevator penthouse will exceed the limitation. The city has approved the proposed elevator penthouse for the building. We affirm dismissal of Larsen's complaint based on the announced policy without further discussion since the statutorily allowed exception removes the penthouse from the policy issue. Therefore, we ultimately affirm the order in part and reverse in part.

3 As the supreme court noted in Wisconsin's Environmental Decade, Inc. v. DILHR, 104 Wis. 2d at 646, 312 N.W.2d at 752: "In 1976, an executive order, entitled Revised Order, Guidelines For The Implementation Of The Wisconsin Environmental Policy Act, Executive Order No. 26 (February 12, 1976), instructed all state agencies to categorize the decisions which they make according to the likelihood that they will require a review of their environmental consequences." We are not certain whether the department adopted the rule we describe in this opinion to comply with that executive order. The rule which the department promulgated does not completely track the Guidelines. The state law library has preserved a copy of the order in Wisconsin Legislative Council Reports, Miscellaneous Materials (1977-79), item 8.

4 We have taken the facts from the affidavits and other documents supporting the motions by both sides for summary judgment. Because both sides moved for summary judgment, and no genuine factual issue appears to exist, we treat the facts submitted by both sides as undisputed and as creating an issue of law. Powalka v. State Mut. Life Assurance Co., 53 Wis. 2d 513, 518, 192 N.W.2d 852, 854 (1972).

5 In September 1991, the department exercised its option to purchase. Our analysis of the EIS issue is such that neither the option nor its exercise affects our ultimate conclusion.

6 This, of course, is not a ch. 227 review. We cite ch. 227's embracement of the same principle to show that it pervades the law regarding administrative agencies.

7 The trial court concluded that the project is a Type II action and therefore ordered the department to prepare an environmental assessment. An environmental assessment is used to determine whether an EIS should be prepared. Wisconsin Adm. Code sec. Adm 60.04(2). The department prepared the assessment, which concluded that no EIS was required. If, as we conclude, the project is a Type I action, an EIS must be prepared.

8 We conclude from our review of the record that the following facts supply the indicated element or elements of "planning, designing, contracting for and constructing": The state solicited proposals for leasing office space and narrowed the list of nineteen down to three (planning). The state selected the Munz proposal (planning and contracting). Munz "proposed" primary subcontractors, apparently for state approval (contracting). The lease provides that the state shall approve the final plans and specifications (designing). It allows the state to review all bids for construction (contracting) and allows the state to add items and moveable equipment to the building (planning and designing). Munz must have a full-time construction representative of the state on the site during construction (constructing). The floor and ceiling plans are to be provided by architects Potter Lawson (contracting). The state has the right of reasonable approval of materials, colors and textures (designing). The purchase of certain materials is subject to state approval (designing). The state agrees to provide Munz with floor layouts of ceiling high partitioning (designing). The state requested the addition of numerous items, including upgraded acoustical tile, carpet squares, computer flooring, extra pumps, a central clock system, and a dock lift (designing). At the state's request, the lease was amended to provide for kitchen and cafeteria areas, to upgrade entrance and elevator lobby areas, to provide break areas, to add shower and locker rooms, and to provide a meeting room on the first floor, as well as other matters (planning and designing). The state provided over 150 pages of state-created construction guidelines and minimum requirements covering, but not limited to, the exterior building envelope, a selection of face brick masonry units, exterior walls, exterior wall flashing, parapet walls, laying and cleaning of new masonry, architectural precast concrete, mortar, sealants in exterior walls, chemical treatment systems, electrical system, basic mechanical system, duct work, fans, etc. (planning and designing).

9 In this respect, the department's Type I category differs markedly from the Revised Order, Guidelines for the Implementation of the Wisconsin Environmental Policy Act, Executive Order No. 26 (February 1976). See supra note 3. The Guidelines provided in part at page 2, "Each agency should apply the definition of 'significantly affecting the quality of the human environment' to types of actions such as, but not limited to, the following: A. Facilities development: Planning, designing and construction of physical facilities to be owned and operated by state agencies or the state. Examples include highways, buildings and park facilities." The "not limited to" provision shows that an agency could modify the "facilities development" description in the Guidelines.