Sierra Club must exhaust administrtative remedies before challenging Iowa DOT highway extension proposal

by Kaitlin Heinen

Sierra Club Iowa Chapter, Linda Biederman, and Elwood Garlock v. Iowa Department of Transportation
(Iowa Supreme Court, June 7, 2013)

The Iowa chapter of the Sierra Club has more than 5000 members residing in the state, some of which hike in Rock Island State Preserve and Rock Island County Preserve. The Iowa Department of Transportation (IDOT) is a state administrative agency that has proposed extending Highway 100 west of Cedar Rapids, which would run adjacent to Rock Island State Preserve and through Rock Island County Preserve, thus negatively impacting the ecosystems in the two preserves.

The Sierra Club Iowa Chapter and two of its members filed a petition for judicial review challenging IDOT’s Highway 100 project. The IDOT responded with a motion to dismiss, which was granted by the district court because the Sierra Club “had not exhausted administrative remedies by first seeking a declaratory order from IDOT under section 17A.9(1)(a).” The Sierra Club did not participate in any administrative proceedings with IDOT prior to filing the petition for judicial review.

On appeal, the Iowa Supreme Court addressed the issue “if a party challenging agency action must seek a declaratory order from the agency under section 17A.9(1)(a) before petitioning for judicial review in order to satisfy the exhaustion doctrine.” Important to note, Iowa Code § 17A.19(1) provides: “A person or party who has exhausted all adequate administrative remedies and who is aggrieved or adversely affected by any final agency action is entitled to judicial review thereof . . . .”  There are situations when a party can bypass the exhaustion doctrine; however, “the Sierra Club has not preserved error on an argument for one of these exceptions to apply.”

The Sierra Club filed a complaint in federal court, captioned “Complaint for Declaratory and Injunctive Relief.” The complaint involved the United States Secretary of Transportation and the Administrator of the Federal Highway Administration as defendants. The Sierra Club alleged that “the secretary and administrator did not follow the applicable federal statutes and regulations when they issued and approved the Final Supplemental Impact Statement for the Highway 100 project.” Because of the complaint’s caption, the Iowa Supreme Court held that the Sierra Club requested declaratory and injunctive relief. Because the Sierra Club sought declaratory relief, “the court must [construe] section 17A.9 to determine whether declaratory orders are mandatory or permissive.” Section 17A.9 was adopted in 1974 as part of the Model State Administrative Procedure Act. When enacted, 17A.9 required “any agency with authority to issue declaratory rulings to do so within thirty days after a party files the petition…Failure of the agency to do so results in the administrative remedy being ‘deemed inadequate or exhausted.’”

To construe such a statute, the court must determine legislative intent. If the statute’s language is unambiguous, the court looks no further. One could argue that “the requirement to file a petition for declaratory relief with the agency is permissive because the word ‘may,’ as found in section 17.9(1)(a), is unambiguous.” The Iowa Code’s rules of statutory construction state: “The word ‘shall’ imposes a duty. . . . The word ‘must’ states a requirement. . . . The word ‘may’ confers a power.” Further, “the legislature’s use of the word ‘may’ usually indicates legislative intent for the statute to apply permissively…[so] a person can argue that a party need not exhaust administrative remedies before filing a declaratory judgment action with the court.” But to the contrary, “when a statute provides a person with an administrative remedy and uses the word ‘may,’ but does not explicitly state the administrative remedy is the exclusive remedy, the person is still required to exhaust the administrative remedy before seeking court intervention…[so] a person can also argue that a party must file a declaratory order with the agency before seeking court intervention, because the Code uses the word ‘may.’” As a result of these competing interpretations, the court found the statute ambiguous.

After assessing the statute in its entirety, the court concluded the legislature’s intent when enacting section 17A.9(1)(a) “requires the Sierra Club to first petition IDOT and therein ask the agency to determine whether IDOT complied with sections 314.23(3) and 314.24 in extending Highway 100 adjacent to the Rock Island State Preserve and through the Rock Island County Preserve.” First, by using the term “inadequate or exhausted,” the legislature indicated that a party must first exhaust his or her administrative remedies before seeking court intervention. Second, an article written by the 1973-1974 counsel to the Subcommittee, Arthur Bonfield, “revealed that the legislature created the administrative procedure for agency-issued declaratory orders to replace the court-provided remedy of declaratory judgments for matters within an agency’s jurisdiction,” which means that the legislature clearly “intended section 17A.9 to be the preferred method for obtaining a declaratory order when a person challenges the agency’s administration of a statute.” Third, “in a declaratory order proceeding, the agency must state in its order the facts it relied upon and the basis for its decision…[which] ensures the agency will make a complete record and the parties will know the rationale supporting the agency’s decision.” Fourth, though the Sierra Club argued it would be futile to ask the agency to reverse its own decision, the court did not agree. In the past, “agencies…have decided many issues within their purview…[with] no evidence to suggest agencies will conduct declaratory order proceedings in a biased, unprofessional manner and without regard for the rules promulgated by the legislature.” Finally, “any party to a declaratory order may seek judicial review of that order…[which] protects a party to a declaratory order proceeding if the agency makes the incorrect decision.”

Therefore, the Iowa Supreme Court “concluded [overall] that the Sierra Club must first seek a declaratory order under Iowa Code section 17A.9(1)(a) before asking the court for relief; and thus, the exhaustion doctrine bars its petition.” The Iowa Supreme Court affirmed the district court’s judgment.

“Auto graveyard” fails to exhaust state administrative remedies

by Kaitlin Heinen

Joseph P. Stanislaw v. Thetford Township
(Federal 6th Circuit Court of Appeals, February 20, 2013)

In July 1983, Joseph and Lorraine Stanislaw submitted a “vehicle dealer supplemental location license application” to sell used cars in Thetford Township, Michigan.  The township’s zoning ordinance required that automobile sales be conducted inside an enclosure, so the planning commission ordered the Stanislaws to construct such an enclosure in 30 days. In April 1984, a neighbor, Daniel Case, complained about the Stanislaws’ property. So Joseph Stanislaw appeared before the Planning Commission in May 1984 and August 1984 and received approval of a a plan that included an enclosing fence.  Thetford Township approved a new zoning ordinance in 1989, and the Stanislaws’ business was grandfathered in as a previously approved non-conforming use.

In September 2005, Case complained to the Township that the Stanislaws’ property was a junk yard. In 2004, Michigan passed an act that required car dealers to obtain “written verification from the appropriate governing or zoning authority that the established place of business meets all applicable municipal and zoning requirements” prior to any license renewal. So in December 2005, Lorraine Stanislaw submitted the necessary form to  renew the car dealership’s license. The Thetford Township Building Inspector, Mark Angus, inspected the property before signing. He refused to sign the Stanislaws’ forms concluding that the fence was in poor condition and that the property was “an auto graveyard.”

The Stanislaws submitted the license-renewal form to Michigan anyway. The state ordered the Stanislaws to fix their incomplete application by January 31, 2006. On January 24, 2006, the Stanislaws met with Angus, the Township Supervisor (Luther Hatchett) and the Police Chief (Thomas Kulcher). Lorraine Stanislaw testified that the Township said that they would revisit their application if the fence was restored and the cars were moved out of view. So Angus wrote a letter to the state asking for an extension to allow the Stanislaws more time to comply with the zoning ordinances. Joseph Stanislaw made the repairs to the fence. Hatchett sent Chief Kulcher to inspect the property.  Kulcher refused to sign the form because he found that vehicles were still sitting out front on the property.

In February 2006, the Planning Commission passed a motion, requiring the Stanislaws to construct a 6-foot-tall fence on the property.  The Stanislaws wanted to appeal this motion to the Zoning Board of Appeals, but Chief Kulcher supposedly told them that they could not. Kulcher denied saying this, testifying that he did not know anything about zoning appeals procedures. The Stanislaws instead filed this action in federal district court; however, the district court determined that it lacked subject-matter jurisdiction to consider the Stanislaws’ claim that the Thetford Township’s decision constituted a taking. This is because the Stanislaws did not give the state court the opportunity to adjudicate the issue of whether or not the State failed to provide just compensation.

The Stanislaws never appealed in state court Angus’ denial or the ZBA’s acceptance of Angus’ denial and order to construct a fence. The Stanislaws partly claim that they failed to the December 2005 ZBA vote because Chief Kulcher had told them that they could not. According to the federal district court, the Stanislaws provided no legal support that this would have excused them from their failure to appeal the ZBA’s decision. “Chief Kulcher is not familiar with appellate zoning procedures; however, the Stanislaws are quite familiar having dealt with the local zoning regulations on their property over the past two decades.”

The 6th Circuit Court agreed with the district court that the Stanislaws’ failed to exhaust their state administrative remedies.   “if a State provides an adequate procedure for seeking just compensation, the property owner cannot claim a violation of the Just Compensation Clause until it has used the procedure and been denied just compensation.” The Stanislaws argued that their claim was to be left alone to continue to do what they have been doing to earn a living for decades – not a taking of real estate, but rather their business interests.  The court held that the Stanislaws’ claim encompassed “some sort of ill-defined Fifth Amendment takings claim.” The Court disagreed with the assertion that the Stanislaws did not raise a takings claim; and agreed with the district court that the  claim was not ripe for federal review.

The Stanislaws’ other claims, according to the Court, were “somewhat jumbled and poorly explained” and “abstractly involved” procedural due process, substantive due process, and equal protection. They did not cite any case law that suggested a hearing would have been required for a decision to sign or not sign the license-approval form. Rather, the Stanislaws “had numerous hearings and opportunities over the course of two decades to remedy their non-conforming use of the property.” If a decision had been made without appropriate process, the correct recourse still would have been first to the state courts, not the federal courts. As for the equal protection claim,  The Stanislaws “failed to identify any similarly situated businesses who were actually treated differently,”  Thus the 6th Circuit Court affirmed the district court’s judgment.

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