Larsen v. Munz Corp.

• Decision Date: 23 December 1991
• Docket Number: No. 91-2811,91-2811
• Court: Wisconsin Court of Appeals
• Parties: Robert W. LARSEN, Plaintiff-Appellant, v. MUNZ CORPORATION, and the State of Wisconsin Department of Administration, and its Secretary, James R. Klauser, Defendants-Respondents. d . Oral Argument

Page 800

480 N.W.2d 800

166 Wis.2d 751

Robert W. LARSEN, Plaintiff-Appellant, v. MUNZ CORPORATION, and the State of Wisconsin Department of Administration, and its Secretary, James R Klauser, Defendants-Respondents.^d

No. 91-2811.

Court of Appeals of Wisconsin.

Oral Argument Dec. 23, 1991.

Opinion Released Jan. 8, 1992.

Opinion Filed Jan. 8, 1992.

For the plaintiff-appellant the cause was submitted on the briefs of Robert W. Larsen of Monona. Oral argument by Robert W. Larsen.

For the defendants-respondents the cause was submitted on the briefs of David J. Harth and Douglas B. Clark of Foley and Lardner of Madison. Oral argument by David J. Harth.

Before EICH, C.J., GARTZKE, P.J., and SUNDBY, J.

GARTZKE, Presiding Judge.

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 1.11(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 1.11(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 square 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 "[e]stablish 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. 1.11(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 "[p]lanning, 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, 79 S.Ct. 968, 972-73, 3 L.Ed.2d 1012 (1959), and may not proceed without regard to its own rules. Service v. Dulles, 354 U.S. 363, 388, 77 S.Ct. 1152, 1165, 1 L.Ed.2d 1403 (1957). We applied the same principles in State v. Griffin, 126...