Mor-Flo Industries, Inc. v. Board of Review of Indus. Com'n, MOR-FLO
| Decision Date | 02 August 1991 |
| Docket Number | No. 900510-CA,MOR-FLO,900510-CA |
| Citation | 817 P.2d 328 |
| Parties | INDUSTRIES, INC. and Polaris Water Heaters, Petitioners, v. BOARD OF REVIEW OF the INDUSTRIAL COMMISSION, Respondent. |
| Court | Utah Court of Appeals |
Before BILLINGS, ORME and RUSSON, JJ.
Petitioners seek review of a decision of the Board of Review of the Industrial Commission (Commission) upholding an order issued by its safety division requiring the removal of Polaris water heating units. The safety division issued a final removal order on August 30, 1989, claiming the Polaris did not comply with the Utah Boiler Code. Following an evidentiary hearing, an administrative law judge (ALJ) upheld the removal order. The Commission affirmed and petitioners now seek review in this court. We reverse.
A building inspector for the safety division of the Commission visited Arlington Place Condominiums in February 1989 to inspect its Polaris water heating system. The Polaris units at issue are designed like most other water heaters, but utilize an additional pipe loop or coil to provide space heat when a fan blows air across the coil. After the water circulates through the additional loop or coil it is returned to the water heater where it is reheated. This arrangement allows the Polaris to provide both potable water and space heat, but does not substantially modify the water heater. The Polaris is built to specifications required under Utah law for a water heater, but not to specifications required for a boiler.
The inspector determined that because the Polaris system provided both potable water and space heat, the Polaris was a "hot water heating boiler," covered by the Utah Boiler Code and the Commission's boiler and pressure vessel regulations. Because the Polaris units did not have the stamp of the American Society of Mechanical Engineers (ASME) required for boilers under the Utah Boiler Code, he ordered them removed.
In March 1989, the safety division sent a letter to Arlington Place ordering the units removed. The parties then entered into negotiations delaying a final decision. In August 1989, the division sent a final letter ordering the Polaris units removed within thirty days. Petitioner Mor-Flo Industries, Inc. (Mor-Flo), the manufacturer of the Polaris, challenged the order, but it was affirmed after an evidentiary hearing before an ALJ.
Ultimately, the Commission upheld the safety division's initial order and denied Mor-Flo's motion for review stating,
The record clearly demonstrates, and [Mor-Flo] does not contest, that [Mor-Flo's] device is a functional hybrid. Besides supplying hot water, it is designed to provide heat to raise the air temperature of an enclosed space.... This functionally based categorization subjects a dual-function device to regulation for each function it fulfills.
On appeal, Mor-Flo contends the Polaris is a hot water heater exempt from regulation under the ASME, incorporated into Utah law through the Utah Boiler Code. Mor-Flo argues that the Polaris complies with the standards required by the American National Standards Institute (ANSI) and incorporated into the Uniform Plumbing Code which has been statutorily adopted in Utah and which is regulated by the Department of Health. The Commission responds that the Polaris is a functional hybrid used to provide heated potable water and space heating and therefore is subject to regulation as both a water heater and a boiler.
We must decide whether the Commission correctly concluded the Polaris combination unit must meet the requirements for a boiler under the Utah Boiler Code. See Utah Code Ann. § 35-7-5 to -9 (1988 & Supp.1991). Petitioners contend the issue is one of law and thus we should review the Commission's determination for correctness without affording any deference. Respondents argue for an intermediate standard of reasonableness and rationality because of the Commission's special expertise.
Proceedings commenced after January 1, 1988 are governed by the Utah Administrative Procedures Act (UAPA), Utah Code Ann. §§ 63-46b-1 to -22 (1989). In Pro-Benefit Staffing v. Board of Review, 775 P.2d 439, 442 (Utah App.1989), this court held that the intermediate standard of review of reasonableness, previously applied by the Utah Supreme Court to judicial review of an agency's determination of mixed questions of fact and law or to an agency's "interpretation of the operative provisions of the statutory law it is empowered to administer," id. (quoting Utah Dep't. of Admin. Servs. v. Public Serv. Comm'n, 658 P.2d 601, 610 (Utah 1983)), was consistent with section 63-46b-16(4)(d) of the UAPA. 1 However, the Utah Supreme Court recently reached a different conclusion in Morton Int'l, Inc. v. Auditing Div. of the Utah State Tax Comm'n, 814 P.2d 581 (Utah 1991).
In Morton Int'l, the supreme court conducted an in-depth analysis of the effect of section 63-46b-16(4)(d) of UAPA 2 on the standard of review for administrative interpretations of statutes within an agency's area of expertise. The court recognized its holding in Savage Industries Inc. v. Utah State Tax Comm'n, 811 P.2d 664, 668-71 (Utah 1991) that section 63-46b-16(4)(d) suggests a correction of error standard of review when the court reviewing statutory construction is in as good a position as the agency to interpret the statute and indicated that "a court may decide that the agency has erroneously interpreted the law if the court merely disagrees with the agency's interpretation." Morton Int'l, 814 P.2d at 587 (quoting Savage Industries, 811 P.2d at 669-70) (quoting Model State Admin.Procedure Act § 5-116, 15 U.L.A. 127-30 (1981)).
In Morton Int'l, the court acknowledged that UAPA did not change the applicable standard of review where the agency has been granted discretion, but the court noted that, "nothing in the language of section 63-46b-16 or its legislative history suggests that an agency's decision is entitled to deference solely on the basis of agency expertise or experience." Morton Int'l, 814 P.2d at 587. The court concluded that "absent a grant of discretion, a correction-of-error standard is used in reviewing an agency's interpretation or application of a statutory term." Id. at 587-589.
The Morton Int'l court indicated that this conclusion regarding the standard of judicial review may not significantly affect review of agencies' interpretations and applications of their own statutes because often where a court would summarily grant an agency deference because of its expertise, it is also appropriate to grant the agency deference on the basis of an explicit grant of discretion, id. at 589, or on the basis of statutory language suggesting the legislature left the specific issue unresolved. Id. Where legislative intent can be discerned, the agency's interpretation is given no deference, but where legislative intent is not discernible, the determination is one of policy and the agency is given deference. Id.
We need not review the Boiler Code in depth, nor refer to legislative history to determine whether to apply a correction of error or a reasonableness standard of review in this case, as we have concluded that, even utilizing the more deferential intermediate standard, the Commission's interpretation of the Boiler Code was not reasonable.
The Commission's safety division contends the Polaris is a hot water heating boiler regulated by the Commission under the Utah Boiler Code and the specifications contained in the ASME. However, the Commission admits that no provision in the ASME specifically addresses water heaters which provide both potable hot water and space heat, the latter by way of air blown across an additional loop or coil of pipe. In fact, the only reference to such a hybrid is in the ANSI standards utilized by the Uniform Plumbing Code, incorporated into Utah law and administered by the Utah Department of Health. 3
The ASME Code does carefully delineate the characteristics of commercial water heaters to distinguish them from boilers. 4 See ASME Code, Section IV, Part HLW (1986 & 1988 addenda). The 1988 addenda sets forth the following differences in applicable criteria for water heaters versus hot water heating boilers:
(a) In a water heater, the temperature of the water is limited to a maximum of 210? F. (b) A water heater is provided with a corrosion resistant lining or constructed with corrosion resistant materials. (c) A water heater is intended to supply potable hot water with 100% makeup from a potable water supply system. Therefore, certain controls and indicating instruments, such as a water level indicator, low and high water cut-offs, and pressure and altitude gages, are not necessary on a water heater. Vessels built under the rules of Part HLW may be used for storage of potable water.
The Polaris combination unit satisfies all three of the above statutory requirements for a water heater. It is also important to note that the ASME Code does not include a space heating function as a criteria for distinguishing a water heater from a hot water heating boiler.
Mor-Flo also calls our attention to the Utah Boiler and Pressure Vessel Rules and Regulations, part I, section 6(m) (1988) to support its...
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