State v. Harenda Enterprises, Inc., 2005AP1829.

• Decision Date: 31 October 2006
• Docket Number: No. 2005AP1829.,2005AP1829.
• Citation: 2006 WI App 230,724 N.W.2d 434
• Parties: STATE of Wisconsin, Plaintiff-Respondent,<SMALL><SUP>†</SUP></SMALL> v. HARENDA Enterprises, Inc., Defendant-Appellant.
• Court: Wisconsin Court of Appeals

724 N.W.2d 434

2006 WI App 230

STATE of Wisconsin, Plaintiff-Respondent,^† v. HARENDA Enterprises, Inc., Defendant-Appellant.

No. 2005AP1829.

Court of Appeals of Wisconsin.

Oral Argument October 3, 2006.

Opinion Filed October 31, 2006.

On behalf of the defendant-appellant, the cause was submitted on the briefs of Mark W. Rattan of Litchfield Cavo, of Brookfield, WI.

On behalf of the plaintiff-respondent, the cause was submitted on the brief of Peggy A. Lautenschlager, Attorney General, and Jeffrey M. Gabrysiak, Assistant Attorney General.

Before WEDEMEYER, P.J., FINE and KESSLER, JJ.

¶ 1 FINE, J

Harenda Enterprises, Inc., appeals the trial court's grant of summary judgment to the State of Wisconsin imposing environmental penalties and ancillary surcharges in connection with Harenda's inspection of asbestos at the Milwaukee Auditorium under a contract with the Wisconsin Center District's renovation of the Auditorium. See WIS. STAT. § 285.87 (air-pollution penalties). The crux of this appeal turns on the language of the applicable federal regulation, adopted by the State, and whether Harenda's testing for asbestos contamination at what the trial court referred to in its order as "an area of the Auditorium identified as the second floor bowl area" complied with that regulation. We conclude that Harenda's testing for asbestos contamination complied with the law, and, accordingly, reverse.

I.

¶ 2 Under rules promulgated by the Wisconsin Department of Natural Resources pursuant to authority granted to it by WIS. STAT. § 285.11(1), see also WIS. ADMIN. CODE § NR 447.01, "asbestos-containing material" is defined, as pertinent to our discussion and for the Auditorium area under consideration, as a substance "containing more than 1% asbestos as determined using the method specified in Appendix E to Subpart E, 40 CFR part 763, section 1." WIS. ADMIN. CODE § NR 447.02(1)(b); see also WIS. ADMIN. CODE § NR 484.01 (incorporating federal regulations when those regulations are referred to in the rules issued by the Department of Natural Resources set out in, as pertinent here, WIS. ADMIN. CODE ch. NR 447); WIS. ADMIN. CODE § NR 484.04 (incorporating by reference 40 C.F.R. Pt. 763, Subpt. E, App. E, § 1 in, among other rules, § NR 447.02(1)(b)). If asbestos might be released into the air by demolition or remodeling, asbestos exceeding the one-percent limit is characterized by the Department rule as "[r]egulated asbestos-containing material," § NR 447.02(33)(d), and precautions preventing or mitigating such release must be taken, WIS. ADMIN. CODE § NR 447.08. The State charged Harenda Enterprises in this case with relying on the wrong method of assessing the asbestos content of parts of the Auditorium's second-floor-bowl area, so that the necessary precautions were not taken.

¶ 3 As we have seen in the previous paragraph, the Wisconsin Department of Natural Resources adopted 40 C.F.R. Pt. 763, Subpt. E, App. E, § 1 as the way to determine the asbestos content of material pertinent to our discussion. The significant part of that regulation, which the parties agree applies to this appeal, provides:

Bulk samples of building materials taken for the identification and quantitation of asbestos are first examined for homogeneity at low magnification with the aid of a stereomicroscope. The core sample may be examined in its container or carefully removed from the container onto a glassine transfer paper or clean glass plate. If possible, note is made of the top and bottom orientation. When discrete strata are identified, each is treated as a separate material so that fibers are first identified and quantified in that layer only, and then the results for each layer are combined to yield an estimate of asbestos content for the whole sample.¹

40 C.F.R. Pt. 763, Subpt. E, App. E, § 1.7.2.1 (emphasis and footnote added).

¶ 4 Broken into its parts as pertinent to this appeal, 40 C.F.R. Pt. 763, Subpt. E, App. E, § 1.7.2.1 establishes the following testing procedure:

(1) The building materials are first examined to see if they are homogenous.

(2) If, on that examination the examiner sees that the material is made up of "discrete strata," the examiner must treat each stratum as "a separate material."

(3) Each discrete stratum "separate material" is examined and the "fibers are first identified and quantified in that layer only."

(4) Once the step in (3) is finished for all the strata, "the results for each layer are combined to yield an estimate of asbestos content for the whole sample."

Thus, for example, if the material under analysis has three "discrete strata" and the first layer has no asbestos, the second layer has asbestos of two-percent, and the third layer has asbestos of one-half of one percent, the parties agree that, unless the "clarifications" are thrown into the mix, the "asbestos content for the whole sample" is less than one-percent.²

¶ 5 The State contends that 40 C.F.R. Pt. 763, Subpt. E, App. E, § 1.7.2.1 cannot be looked at in a vacuum, but, rather, that we must also consider what everyone refers to as "clarifications" that were issued by the United States Environmental Protection Agency. Harenda, on the other hand, argues that § 1.7.2.1 is clear on its face, that the "clarifications" contradict the regulation's unambiguous language, and because, as conceded by the State, the "clarifications" were never adopted by either the federal government or the State pursuant to established rule-making procedures, § 1.7.2.1 must be applied as it is written without resort to the "clarifications," to which we now turn.

¶ 6 On January 5, 1994, the Environmental Protection Agency published in the Federal Register what it called a "clarification" that it said it "intended solely as guidance" and which did "not represent an action subject to judicial review under the section 307(b) of the Clean Air Act or section 704 of the Administrative Procedure Act."³ 59 Fed.Reg. 542. As pertinent here, that "guidance" suggested the following in connection with the "analysis of multi-layered samples" for asbestos: "In general, when a sample consists of two or more distinct layers or materials, each layer should be treated separately and the results reported by layer (discrete stratum)." Ibid. It did not explain what the hedge-phrase "[i]n general" meant.

¶ 7 The Agency issued another "clarification" on December 19, 1995, "to address common questions regarding situations where one or more layers which may contain asbestos are present, and supplement the January 5, 1994 Federal Register clarification (59 FR 542)." 60 Fed.Reg. 65,243. It reiterated, as pertinent here, that under 40 C.F.R. Pt. 763, Subpt. E, App. E, § 1.7.2.1, with exceptions not at issue here, "all multi-layered systems ... must be analyzed as separate materials, and results were not allowed to be combined to determine average asbestos content (continuing the policy that dilution of an asbestos-containing material is not allowed)." 60 Fed.Reg. 65,243. It further explained:

If the result of the composite analysis shows that the average content for the multi-layered system (across the layers) is greater than one percent, then the multi-layered system must be treated as asbestos-containing and analysis by layers is not necessary. If the result of the composite sample analysis indicates that the multi-layered system as a whole contains asbestos in the amount of one percent or less, but greater than none detected, then analysis by layers is required to ensure that no layer in the system contains greater than one percent asbestos. If any layer contains greater than one percent asbestos, that layer must be treated as asbestos-containing. This will have the effect of requiring all layers in a multi-layered system to be treated as asbestos-containing if the layers can not [sic] be separated without disturbing the asbestos-containing layer. Once any one layer is shown to have greater than one percent asbestos, further analysis of the other layers is not necessary if all the layers will be treated as asbestos-containing.

Ibid. Without application of the "clarifications," the State concedes that a sample from a multi-layered wall would pass asbestos-content muster if the asbestos-content of each layer averaged together was below the applicable limit even though one or more of the layers has an asbestos content greater than that limit. If the "clarifications" are applied, the multi-layered wall would exceed the applicable limit if any of the layers exceeded that limit. The trial court applied the "clarifications" to interpret 40 C.F.R. Pt. 763, Subpt. E, App. E, § 1.7.2.1, and granted summary judgment to the State.

II.

¶ 8 Our review of a trial court's grant of summary judgment is de novo. Green Spring Farms v. Kersten, 136 Wis.2d 304, 315-317, 401 N.W.2d 816, 820-821 (1987). In assessing an administrative agency's interpretation of the statutes it enforces, we give it varying degrees of deference, depending on the agency's experience and expertise in implementing and applying those statutes. See UFE Inc. v. Labor & Indus. Review Comm'n, 201 Wis.2d 274, 284-287, 548 N.W.2d 57, 61-63 (1996) (discussing the three levels of deference given to an agency interpretation of a statute within its purview: "great weight deference, due weight deference and de novo review"). Irrespective of what level of deference is appropriate, however, an agency interpretation may not trump a statute's clear language. See id., 201 Wis.2d at 282 n. 2, 548 N.W.2d at 60 n. 2 ("The plain meaning of a statute takes precedence over all extrinsic sources and rules of construction, including agency interpretations. For example, even if an agency interpretation is accorded the highest level of deference by a court, great weight, it will not be upheld if the interpretation directly contravenes the clear meaning of the statute."). Similar considerations apply to an agency's interpretation of an administrative...