Milwaukee Metropolitan Sewerage Dist. v. Wisconsin Dept. of Natural Resources

• Decision Date: 29 October 1985
• Docket Number: No. 83-1217,83-1217
• Citation: 375 N.W.2d 648,126 Wis.2d 63
• Parties: MILWAUKEE METROPOLITAN SEWERAGE DISTRICT, Petitioner-Appellant, v. WISCONSIN DEPARTMENT OF NATURAL RESOURCES, Respondent-Petitioner.
• Court: Wisconsin Supreme Court

Page 648

375 N.W.2d 648

126 Wis.2d 63

MILWAUKEE METROPOLITAN SEWERAGE DISTRICT, Petitioner-Appellant, v. WISCONSIN DEPARTMENT OF NATURAL RESOURCES, Respondent-Petitioner.

No. 83-1217.

Supreme Court of Wisconsin.

Argued Sept. 5, 1985.

Opinion Filed Oct. 29, 1985.

Carl A. Sinderbrand, Asst. Atty. Gen., argued, for respondent-petitioner; Bronson C. La Follette, Atty. Gen., on briefs.

David S. Branch, Sr. Staff Atty., argued, Milwaukee for petitioner-appellant; Michael J. McCabe, Director of Legal Services, Milwaukee, on brief.

CALLOW, Justice.

This is a review of a decision of the court of appeals reversing an order of the circuit court for Milwaukee county, Judge Harold B. Jackson, Jr., dismissing the petition of respondent, Milwaukee Metropolitan Sewerage District (District), for review of the Department of Natural Resources' (DNR) denial of respondent's request for a contested case hearing under sec. 227.064(1), Stats. We affirm the decision of the court of appeals.

The issue on appeal is whether the District satisfies the requirements for a contested case hearing contained in sec. 227.064(1), Stats. Specifically, we must decide whether sec. 227.064(1) creates an independent right to a contested case hearing; and, if so, whether the District satisfies the qualifying conditions outlined in sec. 227.064(1)(a)-(d).

In 1977, pursuant to court order, the District initiated a massive water pollution abatement program, which initially was expected to cost 1.6 billion dollars. When completed, the system will eliminate the discharge of raw and partially treated sewage into area waterways and ensure compliance with applicable treatment standards. In accordance with sec. 144.04, Stats., the District, in 1980, submitted to the DNR its Master Facilities Plan (MFP), a general, conceptual outline of the major elements of the District's abatement program. Under sec. 144.04, the DNR is instructed to approve, approve conditionally, or reject the plan, stating in writing any conditions of approval. After preparing an environmental impact statement and conducting hearings, the DNR conditionally approved the MFP in June, 1981.

This case concerns one element of the MFP--the inline storage system or "deep tunnels." The inline system consists of two large interceptor sewers tunneled in rock between 300 and 400 feet underground. The major purpose of the sewers is to provide storage capacity during periods of peak flow; excess sewage will be contained in the tunnels, thereby preventing an overload of the system during which untreated sewage would flow into Lake Michigan and local rivers.

As generally described in the MFP, the inline system tunnels were to be fully lined with one-foot thick concrete to protect against leaks. In conditionally approving the MFP, however, the DNR instructed the District to conduct further tests regarding the possibility of groundwater or sewage infiltrating into or out of the tunnels. After further study, the District concluded that a concrete lining would not provide added protection against infiltration because the concrete used for lining would be as permeable or more permeable than the rock in which the tunnels would be built. Accordingly, in February of 1982, when the District submitted a more detailed Inline Storage Facilities Plan to the DNR for approval, the plan did not call for concrete lining throughout the tunnels. By omitting the concrete lining, the District expected to save approximately forty-five million dollars.

In August of 1982, the DNR conditionally approved the Inline Storage Facilities Plan. The DNR required, as one of the conditions for approval, that all portions of the deep tunnels be lined with one foot of concrete. The District responded by demanding a contested case hearing under sec. 227.064, Stats., on the requirement that the deep tunnels be lined with concrete. The DNR denied the District's request, believing that sec. 227.064(1), as construed in Town of Two Rivers v. DNR, 105 Wis.2d 721, 315 N.W.2d 378 (Ct.App.1981), did not authorize a contested case hearing unless the District had a preexisting hearing right under another statute.

In October of 1982, the District filed a petition with the circuit court for Milwaukee county seeking review under sec. 227.15, Stats, of the DNR's denial of the request for a contested hearing. In May of 1983, the circuit court held that the District did not have a right to a contested hearing.

The District filed a notice of appeal with the court of appeals in November, 1983. In July, 1984, this court denied certification of the appeal. The parties then submitted the case on briefs. In December, 1984, the court of appeals reversed the circuit court's decision and ruled that the District was entitled to a contested hearing under sec. 227.064(1), Stats., even though the District did not have a preexisting hearing right. Milwaukee Metropolitan Sewerage District v. DNR, 122 Wis.2d 330, 362 N.W.2d 158 (Ct.App.1984). This court granted the DNR's petition for review on March 5, 1985.

In this case we must decide the circumstances in which a party is entitled to a contested hearing under sec. 227.064(1), Stats. The DNR claims that the District is not entitled to a contested case hearing under sec. 227.064(1) because the District lacks a preexisting right to a statutory hearing and does not have a right to a due process hearing. The District contends, however, that to receive a contested hearing under sec. 227.064(1) it does not need to possess a preexisting hearing right, but only needs to satisfy the conditions delineated in sec. 227.064(1)(a)-(d).

Section 227.064(1), Stats., provides:

"In addition to any other right provided by law, any person filing a written request with an agency for hearing shall have the right to a hearing which shall be treated as a contested case if:

"(a) A substantial interest of the person is injured in fact or threatened with injury by agency action or inaction;

"(b) There is no evidence of legislative intent that the interest is not to be protected;

"(c) The injury to the person requesting a hearing is different in kind or degree from injury to the general public caused by the agency action or inaction; and

"(d) There is a dispute of material fact."

In denying the District's request for a contested hearing, the DNR relied on Town of Two Rivers v. DNR, supra. The Two Rivers court reviewed the first clause of sec. 227.064(1), Stats., and concluded that it established a prerequisite--a person must have a preexisting statutory right to a hearing to be entitled to a contested hearing afforded by sec. 227.064. Two Rivers, 105 Wis.2d[126 Wis.2d 69] at 729, 315 N.W.2d 378. Because the District did not and could not assert a preexisting statutory hearing right, the DNR denied its request for a contested hearing.

We criticized the Two Rivers holding in Wisconsin's Environmental Decade v. DNR, 115 Wis.2d 381, 340 N.W.2d 722 (1983). In Decade the plaintiffs asserted, inter alia, a right to a contested hearing under sec. 227.064, Stats. The DNR followed the Two Rivers holding and ruled that petitioners did not have a right to a contested hearing because they failed to cite any statutory provision which afforded them a hearing right, failed to identify an injury to a substantial interest, and failed to allege an injury different in kind or degree from injury to the general public. On appeal, the DNR also argued that the petitioners did not have a hearing right because the DNR's decision not to grant petitioners a hearing was discretionary. Id. at 405-06, 340 N.W.2d 722.

In reviewing the DNR's decision to deny petitioners a hearing, we expressed concern about the DNR's reliance on Two Rivers. We stated that Two Rivers' narrow interpretation of sec. 227.064(1), Stats., failed to recognize our decision in Nick v. State Highway Commission, 21 Wis.2d 489, 124 N.W.2d 574 (1963), in which we held that the phrase "hearing required by law," as found in sec. 227.01(2), Stats., 1963, ¹ "presupposes either a hearing expressly provided by statute or administrative rule, or a hearing required by due process." Decade, 115 Wis.2d at 406, 340 N.W.2d 722. Nonetheless, we did not reverse Two Rivers at that time because the petitioners were not entitled to a contested hearing for other reasons. Section 227.064(3), Stats., ² specifically refuted the petitioners' claim of a right to a contested hearing because the DNR had discretion in deciding whether to grant a hearing. Decade, 115 Wis.2d at 407, 340 N.W.2d 722.

Since our criticism of the Two Rivers holding, two decisions of the court of appeals have given differing interpretations to sec. 227.064(1), Stats. In Dremel v. Nursing Home Review Board, 119 Wis.2d 75, 349 N.W.2d 725 (Ct.App.1984), the court of appeals concluded that the Decade criticism mandated a broader interpretation of sec. 227.064(1). Accordingly, the Dremel court disavowed the holding in Two Rivers that a person could gain access to sec. 227.064 only with a preexisting statutory hearing right. Instead, it held that a party can proceed under sec. 227.064 with either a preexisting statutory hearing right or a right to a hearing required by due process. Dremel, 119 Wis.2d at 81-82, 349 N.W.2d 725.

In the instant case, however, the court of appeals found that the Dremel interpretation of sec. 227.064(1), Stats., lacks internal consistency. After determining that subsections (a) through (d) of sec. 227.064(1) incorporate due process concerns, the court of appeals held that the Dremel court made subsections (a) and (b) superfluous when it made a preexisting due process hearing right a prerequisite to a contested hearing. Because courts should avoid construing a statute in a manner which renders parts of the statute superfluous, Donaldson v. State, 93 Wis.2d 306, 315, 286 N.W.2d 817 (1980), the court of appeals concluded that the Dremel court's interpretation of sec. 227.064(1) was improper. Milwaukee...