Arkansas State Highway and Transp. Dep't v. Kidder

ARKANSAS STATE HIGHWAY and TRANSPORTATION
DEPARTMENT v. Milton A. KIDDER and Douglas
Kidder

96-645                                             ___ S.W.2d ___

                    Supreme Court of Arkansas
               Opinion delivered November 18, 1996


1.   Administrative law & procedure -- judicial review of decisions
     of administrative agencies -- standard of review. -- The rules
     governing judicial review of decisions of administrative
     agencies by both the circuit and appellate courts are the
     same; review is not directed toward the circuit court but
     toward the decision of the agency recognizing that
     administrative agencies are better equipped by specialization,
     insight through experience, and more flexible procedures than
     courts, to determine and analyze legal issues affecting their
     agencies; if the administrative decision is supported by
     substantial evidence and is not arbitrary, capricious or
     characterized by an abuse of discretion, the appellate court
     will uphold it.

2.   Evidence -- substantial evidence -- factors on review. -- To
     determine whether a decision is supported by substantial
     evidence, the record is reviewed to ascertain if the decision
     is supported by relevant evidence that a reasonable mind might
     accept as adequate to support a conclusion; when reviewing the
     evidence, the court gives it its strongest probative force in
     favor of the agency; to establish an absence of substantial
     evidence, appellant's burden is to show that the proof before
     the agency was so nearly undisputed that fair-minded persons
     could not reach its conclusion; the issue is not whether the
     evidence supports a contrary finding, but whether it supports
     the finding that was made.

3.   Evidence -- hearing officer's findings of fact supported by
     substantial evidence -- circuit court erred. -- The circuit
     court erred in ruling that there was no substantial evidence
     to support the hearing officer's findings of fact where the
     hearing officer, on practically undisputed facts, found moot
     the appellees' contention that the billboard was nonconforming
     and pre-existed the State Highway Beautification Act because
     it was undisputed that the billboard rotated and no attempt
     was made to obtain a permit under a grandfather clause; a
     review of all of the evidence introduced at the administrative
     hearing revealed that all of the pertinent findings of fact
     were undisputed.

4.   Administrative law & procedure -- hearing officer's conclusion
     that billboard was subject to requirements of state and local
     acts correct -- circuit court's ruling in error. -- Where 
     federal regulations provided that for a nonconforming sign to
     be continued and maintained, it must have been lawful on the
     effective date of the State law or regulations, and must have
     continued to be lawfully maintained; state regulations
     specifically required permits for outdoor, off-premise
     advertising devices; and appellees failed to obtain the
     necessary permit to continue to use the billboard in a lawful
     nonconforming manner, the sign was unlawfully maintained;
     undisputed evidence supported the conclusion that the
     advertising device in question violated the state regulations;
     the conclusion of the hearing officer was not arbitrary and
     not in error.    

5.   Administrative law & procedure -- permits -- one cannot accept
     benefits of permit and then challenge conditions of that
     permit. -- One cannot accept the benefits of a permit and then
     challenge the conditions of the permit. 


     Appeal from Sebastian Circuit Court; Don R. Langston, Judge;
reversed and remanded.
     Robert L. Wilson and Maria L. Schenetzke, for appellant.
     Hardin, Dawson & Terry, by: J. Leslie Evitts, III, for
appellees.

     Robert H. Dudley, Justice. 
     On April 16, 1993, the Arkansas State Highway and
Transportation Department notified Milton and Doug Kidder that
their large, four-sided, rotating billboard located next to State
Highway 22 in Fort Smith could no longer rotate or move in any way. 
The Kidders responded that the billboard had been rotating since
1965, and its rotation was protected under a "grandfather clause." 
They requested a hearing.  The hearing officer ruled that a
rotating billboard was in violation of the statutes and regulations
governing the maintenance of outdoor, off-premise advertising
devices and ordered the Kidders to stop rotating the billboard. The
Kidders appealed to circuit court on August 27, 1993, and, the same
day, the circuit court stayed the ruling of the hearing officer. 
On November 16, 1995, the circuit court ruled that part of the
hearing officer's findings were not supported by substantial
evidence and that the hearing officer's conclusion of law was
arbitrary, capricious, and erroneous.  The Department appealed to
this court.  We hold that the hearing officer's findings of fact
were supported by substantial evidence and that his conclusion of
law was neither arbitrary nor erroneous.  We reverse the judgment
of the circuit court and remand for orders consistent with this
opinion.
                      I. Standard of Review  
     Section 25-15-212 of the Arkansas Code Annotated provides that
a person who considers himself injured by a final act of an agency
is entitled to a review of the action by a circuit court.  Ark.
Code Ann.  25-15-212(a) & (b) (Repl. 1996).  Section 25-15-212(h),
in material part, provides:
          (h) The court may affirm the decision of the agency
     or remand the case for further proceedings. It may
     reverse or modify the decision if the substantial rights
     of the petitioner have been prejudiced because the
     administrative findings, inferences, conclusions, or
     decisions are: 
     (4) Affected by other error or law;
     (5) Not supported by substantial evidence of record;
     or
     (6) Arbitrary, capricious, or characterized by abuse
     of discretion.
Ark. Code Ann.  25-12-215((h) (Repl. 1996).  The rules governing
judicial review of decisions of administrative agencies by both the
circuit and appellate courts are the same.  Franklin v. Arkansas
Dep't of Human Servs., 319 Ark. 468, 892 S.W.2d 262 (1995).  In
Franklin, we set out the standard of review as follows:
     Our review is not directed toward the circuit court but
     toward the decision of the agency recognizing that
     administrative agencies are better equipped by
     specialization, insight through experience, and more
     flexible procedures than courts, to determine and analyze
     legal issues affecting their agencies.  If we find the
     administrative decision is supported by substantial
     evidence and is not arbitrary, capricious or
     characterized by an abuse of discretion, we uphold it.
Id. at 472, 892 S.W.2d  at 264 (citations omitted).  The opinion
also sets out the manner in which this court determines whether a
decision is supported by substantial evidence:
          To determine whether a decision is supported by
     substantial evidence, we review the record to ascertain
     if the decision is supported by relevant evidence that a
     reasonable mind might accept as adequate to support a
     conclusion.  When reviewing the evidence, we give it its
     strongest probative force in favor of the agency. 
     Appellant's burden, then, in order to establish an
     absence of substantial evidence, is to show that the
     proof before the Department was so nearly undisputed that
     fair-minded persons could not reach its conclusion.  The
     issue is not whether the evidence supports a contrary
     finding, but whether it supports the finding that was
     made.
Id. at 474-75, 892 S.W.2d  at 266 (citations omitted).  
                               II.
                       A. Findings of Fact
     The Department's first point on appeal is that the circuit
court erred in ruling that there was no substantial evidence to
support the hearing officer's findings of fact.  The point is well
taken.  The circuit court ruled that the hearing officer's
"determination that prior to the effective date of the [Arkansas
State Highway Beautification] Act the advertising device had been
an on-premise device and therefore was not subject to the
requirements of the Act, is not supported by substantial evidence
in the record."   The hearing officer simply did not make a finding
of fact that the billboard was an on-premises device before the
effective date of the State Highway Beautification Act, Ark. Code
Ann.  27-74-101--502 (Repl. 1994).  Rather, the hearing officer,
on practically undisputed facts, found moot the Kidders' contention
that the billboard was nonconforming and pre-existed the State
Highway Beautification Act because it was undisputed that the
billboard rotates and no attempt was made to obtain a permit under
a grandfather clause.  Moreover, a review of all of the evidence
introduced at the administrative hearing reveals that all of the
pertinent findings of facts were undisputed.
                      B. Conclusion of Law   
     The Department's next point on appeal is that the circuit
court erred in ruling that the hearing officer arbitrarily and
erroneously concluded that the billboard was subject to the
requirements of state and federal acts.  This point is also well
taken.    
     The material part of the hearing officer's ruling is as
follows:  
     It's clear from a reading of the Federal law and
State Regulations that many aspects of the criteria for
operating outdoor advertising devices on Primary Highways
in the State of Arkansas applies to both conforming and
nonconforming devices alike.  Devices violating those
expressly prohibited aspects cannot be operated and
maintained in conformance with the law.  Federal law
prohibits the maintenance of devices which move and the
Regulations prohibit devices with more than two faces and
more than one face visible from the main traveled way of
the highway.  As a Conclusion of Law the continued
operation and maintenance of this device as a four faced
rotating sign violates the provisions of the permit
approval, the Regulations, and State and Federal law.
      The Arkansas Highway Beautification Act, Ark. Code Ann. 
27-74-101--502 (Repl. 1994), was enacted in 1967 to bring Arkansas
into conformance with the Federal Highway Beautification Act and,
in part, to avoid losing substantial amounts in federal-aid highway
funds.  Preamble to Act 640 of 1967.  The Act authorizes the
Arkansas State Highway Commission to enter into agreements with the
Secretary of Transportation, as provided in Title 23 of the United
States Code. Ark. Code Ann.  27-74-209.  
     Pursuant to the Act, the Commission entered into an agreement
with the Secretary of Transportation and promulgated rules and
regulations for the erection of outdoor advertising signs.  See
Regulations for Control of Outdoor Advertising on Arkansas
Highways.  The scope of the agreement in the regulations provides
that the determinations set forth in the agreement do not apply to
"outdoor advertising signs legally erected and maintained, in zoned
and unzoned commercial and industrial areas established by this
agreement, on FAP and FAI Highways prior to the date of enactment
of this agreement."  Regulations for Control of Outdoor
Advertising, II., p. 7 (emphasis added).  
     The federal regulations provide the following regarding
grandfather clauses:
     (c) Grandfather clause.  At the option of the State, the
     agreement may contain a grandfather clause under which
     criteria relative to size, lighting, and spacing of signs
     in zoned and unzoned commercial and industrial areas
     within 660 feet of the nearest edge of the right-of-way
     apply only to new signs to be erected after the date
     specified in the agreement.  Any sign lawfully in
     existence in a commercial or industrial area on such date
     may remain even though it may not comply with the size,
     lighting, or spacing criteria.  This clause only allows
     an individual sign at its particular location for the
     duration of its normal life subject to customary
     maintenance.  Preexisting signs covered by a grandfather
     clause, which do not comply with the agreement criteria
     have the status of nonconforming signs.
23 C.F.R.  750.707(c) (1996).  Section 750.707(d) provides in part
that for a nonconforming sign to be continued and maintained, it
"must have been lawful on the effective date of the State law or
regulations, and must continue to be lawfully maintained."  Section
750.303(e) defines nonconforming signs as:
     One which was lawfully erected, but which does not comply
     with the provisions of State law or State regulations
     passed at a later date or which later fails to comply
     with State law or State regulations due to changed
     conditions.  Illegally erected or maintained signs are
     not nonconforming signs.  
     The state regulations specifically require permits for
outdoor, off-premise advertising devices such as the one in issue,
including devices already in existence, as of October 1, 1972. 
Revised Regulations for Issuance of Permits for Outdoor Advertising
Devices and Signs, Section 2, p. 21.  The state regulations provide
two different types of permits, Class A permits for conforming
devices and Class B permits for existing nonconforming devices. 
Revised Regulations for Issuance of Permits for Outdoor Advertising
Devices and Signs, Section 3, p. 21.  Permits are not required for
on-premises devices.  Section 6, p. 23.  
     Under the foregoing state and federal regulations, in order
for the Kidders to continue to use the billboard in a nonconforming
manner, it would have been necessary for them to maintain it
lawfully.  They failed to do this because they did not obtain a
permit on or after October 1, 1972, as the regulations required. 
They did obtain a permit in 1980, but it was a Class A conforming
permit with restrictions on it, one of which was that the sign not
rotate or simulate movement.  They did not comply with the
restrictions; therefore, the sign was unlawfully maintained.
     Under the federal regulations, the agreements between states
and the Secretary of Transportation may contain grandfather clauses
that apply to devices that do not comply with the requirements for
size, lighting, and spacing, but, in the present case, the issue
was not size, lighting, or spacing; rather, it was that the
billboard had four sides and rotated.  Additionally, the agreement
between the State and the Secretary of Transportation provides in
pertinent part that a sign structure may consist of two facings as
long as only one facing is visible from the approaching traveled
way.  Each facing may contain two signs; a sign structure may not
contain more than four signs.  Regulations for Control of Outdoor
Advertising, III. B., p. 8.  The federal regulations provide that
"[n]o sign may be permitted which has any animated or moving
parts."  23 C.F.R.  750.106(b)(6) (1996) (emphasis added).  The
undisputed evidence supports the conclusion that the advertising
device in question violated the state regulations in that it had
more than two faces, with more than one face being visible to the
approaching traveled way.  In sum, the conclusion of the hearing
officer was not arbitrary and not in error.    
     The hearing officer's conclusion was correct for an additional
reason.  The Kidders finally applied for and obtained a permit for
the billboard in 1980, but it was a Class A conforming permit that
provided the sign could not rotate.  It is settled that one cannot
accept the benefits of a permit and then challenge the conditions
of the permit.  See Arkansas State Highway Comm'n v. Hightower, 238
Ark. 569, 383 S.W.2d 279 (1964).  In Hightower, this court said:
"The plaintiff could not, after having applied for and accepted
from the building inspector a permit to build a wall twelve inches
thick, build one eight inches thick, and, when ordered to show
cause why the permit granted should not be revoked or cancelled,
for that reason plead that the provisions of the building ordinance
requiring him to agree to build in accordance with the plans and
specifications were illegal and void and not binding upon him." 
Id. at 575-76, 383 S.W.2d  at 283 (quoting James H. Dailey Estate v.
City of Lincoln, 107 Neb. 151, 159, 185 N.W. 332, 335 (1921)). 
     Reversed and remanded for proceedings consistent with this
opinion.
     Jesson, C.J., not participating.