Meredith v. Iowa Dept. of Transp.

• Decision Date: 17 July 2002
• Docket Number: No. 01-0741.,01-0741.
• Citation: 648 N.W.2d 109
• Parties: MEREDITH OUTDOOR ADVERTISING, INC., Appellant, v. IOWA DEPARTMENT OF TRANSPORTATION, OFFICE OF RIGHT OF WAY, Appellee.
• Court: Iowa Supreme Court

648 N.W.2d 109

MEREDITH OUTDOOR ADVERTISING, INC., Appellant, v. IOWA DEPARTMENT OF TRANSPORTATION, OFFICE OF RIGHT OF WAY, Appellee.

No. 01-0741.

Supreme Court of Iowa.

July 17, 2002.

Michael P. Mallaney and Andrew B. Howie of Hudson, Mallaney & Shindler, P.C., Des Moines, for appellant.

Thomas J. Miller, Attorney General, David A. Ferree, Special Assistant Attorney General, and Carolyn J. Olson, Assistant Attorney General, for appellee. CADY, Justice.

Meredith Outdoor Advertising, Inc. (Meredith) appeals from a decision by the Iowa Department of Transportation (Department) revoking two permits for outdoor advertising signs located more than 660 feet from an interstate highway right-of-way. The Department found the two signs had been reconstructed or modified without first obtaining new permits from the department of transportation in violation of Iowa Administrative Code rule 761-117.6(5) (1999). Meredith contended the Department exceeded its rulemaking authority under Iowa Code chapter 306C (1999) in relying on rule 761—117.6(5) to cancel the permits. On judicial review, the district court upheld the Department's decision. On our review, we agree with the district court's conclusion that rule 761— 117.6(5) was a valid exercise of the Department's rulemaking authority. We therefore affirm the decision of the district court.

I. Background Facts and Proceedings.

Meredith is engaged in the business of outdoor advertising. In 1993, it purchased two signs or billboards from Montgomery Signs, Inc. The signs are located along Interstate 35 North in an agricultural zone, more than 660 feet from the interstate right-of-way. They were erected prior to July 1, 1972, when the Iowa legislature enacted the comprehensive Junkyard Beautification and Billboard Control Act of chapter 306C.

One sign is located in Story County. At the time the original owners applied for the requisite provisional permit, the sign had a wooden face eight feet above ground level, supported by five posts. The face was sixteen feet in height and sixty feet in width. After Meredith purchased the sign, it added four support posts, enlarged the dimensions to eighteen feet by sixty feet, and increased the height above ground level to fourteen feet.¹ Meredith did not apply for a new permit with the Department prior to implementing these changes.

The second sign is located in Hamilton County. The specifications of the sign listed in the application for the provisional permit mirrored those listed for the Story County sign. A severe windstorm extensively damaged the Hamilton County sign in 1998. Meredith subsequently repaired the sign. In doing so, it added six support posts, plywood for the face, and increased the dimensions to eighteen feet by sixty feet. It also raised the sign fourteen feet above ground level. Meredith did not apply for a permit before repairing this sign.

After conducting several field checks on the two signs, the Department determined the signs were improperly reconstructed or modified without a permit in violation of Iowa Code section 306C.19 and Iowa Administrative Code rule 761—117.6(5). On April 15, 1999, the Department notified Meredith it was canceling the two permits.

Meredith appealed. The Department requested a contested case hearing pursuant to rule 761—13.3(1). Following the hearing, an administrative law judge issued a written decision overruling the Department's revocation. See id. r. 761— 13.6. The administrative law judge invalidated the rule relied upon by the Department after finding chapter 306C did not expressly delegate rulemaking authority to the Department for outdoor advertising devices beyond 660 feet from a highway right-of-way.

The Department appealed. Two days following the issuance of the decision by the administrative law judge, the Department served notice of appeal on Steven B. Westvold. Westvold was the beautification administrator of the department's office of right of way division, and was responsible for administering the department's outdoor advertising device program. He was authorized to accept service of a notice of appeal regarding a permit revocation of an outdoor advertising device on behalf of the director of the department's office of right of way. Westvold promptly forwarded the notice of appeal to the director of the department of transportation. See id. r. 761— 13.7(4) (notice of appeal must be forwarded to department director).

Meredith moved to dismiss the intra-agency appeal. It contended the Department should have served the notice of appeal on William E. McGuire, the acting director of the department's office of right of way. See id. r. 761—13.7(3) (Appeal must be filed with the "director of the office or division which administers the matter being contested." (Emphasis added.)). Meredith argued the appeal was required to be dismissed for lack of compliance with the administrative procedural rules and for failure to timely file an intra-agency appeal.

The reviewing officer denied Meredith's motion to dismiss. Additionally, the officer reversed the administrative law judge's decision and reinstated the Department's decision to revoke the two permits. The officer determined several sections of the Iowa Code authorized the Department to regulate outdoor advertising devices under chapter 306C.

Meredith petitioned for judicial review. It raised three issues: (1) improper service, (2) lack of rulemaking authority, and (3) unconstitutionality of rule 761— 117.6(5). The district court denied Meredith's first two claims on grounds similar to those relied on by the reviewing officer. Although the court found Meredith had waived the constitutional challenge, it deemed the argument without merit.

Meredith appeals. It reasserts the same three issues presented to the district court in the judicial review proceedings.²

II. Standard of Review.

Our review of a district court's decision on judicial review is for errors at law. Al Khattat v. Eng'g & Land Surveying Examining Bd., 644 N.W.2d 18, 23 (Iowa 2002). We are guided by the standards of section 17A.19(8) in determining whether the district court applied the law correctly. Id. As section 17A.19(8) explains, we uphold the action of the agency as long as it is supported by substantial evidence in the record, and the agency did not act capriciously, unreasonably, or arbitrarily. Id. We consider the record before both the agency and the district court when reviewing the promulgation of an administrative rule. Iowa-Ill. Gas & Elec. Co. v. Iowa State Commerce Comm'n, 334 N.W.2d 748, 751 (Iowa 1983). In doing so, we defer to the agency's interpretation if the rule falls within an area of the agency's expertise. Al-Khattat, 644 N.W.2d at 23.

III. Service of Notice of Appeal.

We first address Meredith's claim that the Department improperly served the notice of appeal. If we agree with this contention, the reviewing officer had no jurisdiction over the intra-agency appeal, and our analysis would end here. Contrary to Meredith's belief, we conclude the Department properly effectuated service of process under department regulations.

Iowa Administrative Code rule 761— 13.7 governs agency appeals of the department's decisions. Specifically, if a person wishes to appeal the decision of an administrative law judge to a reviewing officer, a written appeal must be submitted to "the director of the office or division which administers the matter being contested" within twenty days of the decision. Id. r. 761—13.7(3).

Meredith first contends rule 761—117.2(2) directs all appeals of decisions involving permit revocations to be filed with the director of the department's office of right of way. Yet, a review of this rule reveals that it does not pertain to appeals, but simply informs those who wish to contact the department about general matters of the proper address to do so. See id. r. 761—117.2(2) ("Inquiries, requests for forms, and applications regarding this chapter shall be directed to Advertising Control Section, Office of Right of Way ...." (Emphasis added.)).

On the other hand, rule 761— 13.7(3) specifically applies to appeals. It directs the service of notice on "the director of the office or division which administers the matter" involved in the appeal. (Emphasis added.) As beautification administrator, Westvold was responsible for overseeing the highway beautification program, which was also located within the office of right of way. Meredith's permits were revoked for failing to comply with the regulations of the beautification act. Thus, the Department could have reasonably concluded Westvold was the proper party to serve under rule 761—13.7(3).

Even if the Department was required to serve McGuire in his capacity as department director under the rule, we still find service was properly effectuated. We have long recognized the general rule that notice to an agent is notice to a principal if the agent was acting within his duties in accepting service. See Warburton v. Lauman, 2 Greene 420, 424, 1850 WL 140, at *3 (Iowa 1850) ("His acts while within the sphere of his agency were the acts of his principals. Notice to him was notice to those for whom he was acting."); see also Tonelli v. United States, 60 F.3d 492, 495 (8th Cir.1995)

("[N]otice to an agent is effective if the agent has a duty to receive that knowledge and report it to the principal."); Vermeer v. Sneller, 190 N.W.2d 389, 393 (Iowa 1971) ("[T]he principal is chargeable with ... notice to his agent received while the agent is acting as such within the scope of his authority...."). Thus, if notice must be delivered to a particular officer listed by statute, notice to a designated representative of the officer should normally be sufficient. Vermeer, 190 N.W.2d at 394. Clearly, the record demonstrated Westvold was acting as an authorized agent of the department in accepting service of the notice of appeal. See Warburton, 2 Greene at 424, 1850 WL 140, at *3. Conse...