In re Vermont Marble Co.

IN_RE_VERMONT_MARBLE_COMPANY.93-497; 162 Vt. 355; 648 A.2d 381

[Opinion Filed June 10, 1994]

[Motion for Reargument Denied July 13, 1994]

 NOTICE:  This opinion is subject to motions for reargument under V.R.A.P. 40
 as well as formal revision before publication in the Vermont Reports.
 Readers are requested to notify the Reporter of Decisions, Vermont Supreme
 Court, 109 State Street, Montpelier, Vermont 05609-0801 of any errors in
 order that corrections may be made before this opinion goes to press.


                                 No. 93-497


 In re Vermont Marble Company                 Supreme Court

                                              On Appeal from
                                              Water Resources Board

                                              February Term, 1994


 Stephen Reynes, Acting Chair

 Jeffrey L. Amestoy, Attorney General, and Ron Shems, Assistant Attorney
   General, Montpelier, for appellant

 Edward V. Schwiebert of Abell, Kenlan, Schwiebert & Hall, P.C., Rutland,
   for appellee


 PRESENT:  Allen, C.J., Gibson, Dooley, Morse and Johnson, JJ.


      DOOLEY, J.   This is the second of two appeals by the Vermont Agency
 of Natural Resources (ANR) in which the Agency contests decisions
 invalidating  delegations of duties by the ANR Secretary to the Commissioner
 of the Department of Environmental Conservation (DEC).  See also Secretary,
 Agency of Natural Resources v. Henry, No. 93-605 (Vt. April 22, 1994).  In
 this case, ANR challenges a decision of the Water Resources Board vacating a
 water quality certificate issued by the DEC Commissioner to appellee OMYA
 (formerly known as Vermont Marble Company) because it was not signed by the
 ANR Secretary.  We reverse and remand for review by the Board on the merits
 of the appeal.

 

      The Vermont Marble Power Division of OMYA owns and operates a
 hydroelectric dam on the Otter Creek in Rutland.  This dam, known formally
 as the Center Rutland Hydroelectric Project, has been in operation for
 nearly a century, and currently serves the industrial power needs of Vermont
 Marble, as well as the Town of Proctor and its residents.  The Center
 Rutland Project was licensed by the Federal Power Commission, predecessor to
 the Federal Energy Regulatory Commission (FERC), in 1965.  As this license
 was scheduled to expire on December 31, 1993, OMYA filed an application for
 a thirty-year renewal license with FERC in December 1991.
      Any applicant for a federal license which discharges into navigable
 waters is required by { 401(a)(1) of the Clean Water Act, 33 U.S.C. {
 1341(a)(1), to obtain state certification that the applicant's discharge
 complies with applicable provisions of the Clean Water Act.(FN1)  By statute,
 the ANR is the designated certifying agency for purposes of { 401 of the
 Clean Water Act.  See 10 V.S.A. { 1004.  A certifying agency must act on an
 application within one year or it is deemed to have waived certification.
 See 33 U.S.C. { 1341(a)(1); 18 C.F.R. { 4.38(f)(7) (1993).
      OMYA filed an application for a water quality certificate with the
 Water Quality Division of DEC on December 27, 1991.  The DEC Commissioner
 issued OMYA a certificate on November 20, 1992, meeting the one-year
 deadline prescribed by federal law.  Due to the inclusion in the certificate
 of several conditions with which it disagreed, OMYA appealed the

 

 certificate to the Water Resources Board on December 10, 1992.  See 10
 V.S.A. {{ 1004 (ANR Secretary's Clean Water Act certification appealable to
 Water Resources Board); 1024(a) (person aggrieved by decision of ANR
 Secretary under { 1004 or { 1023 may appeal to Board within fifteen days of
 notice of Secretary's action).  Two months later, OMYA filed a petition for
 a declaratory ruling, seeking to have the Board pronounce the water quality
 certificate null and void on the ground that the DEC Commissioner was
 without authority to issue it.
      In October 1993, the Water Resources Board granted OMYA's petition and
 vacated the water quality certificate.  The Board determined that under
 Vermont law, a Clean Water Act certificate must be issued by the ANR
 Secretary and may not be issued by the DEC Commissioner, a subordinate ANR
 officer.  Therefore, the Board declared OMYA's water quality certificate
 null and void.  The Board also granted OMYA's motion to dismiss its appeal,
 ruling that there was no final appealable action from the ANR Secretary, and
 remanded the matter to ANR for further action consistent with the Board's
 opinion.  ANR then brought the instant appeal.(FN2)  In light of this action,
 FERC granted OMYA's request for stay of its relicensure pending the final
 outcome of this appeal.  65 FERC ^ 61,376 (Dec. 22, 1993).
      ANR has raised a number of procedural challenges to the Board's ruling.
 Because we agree with ANR that the water quality certificate, signed by the

 

 Commissioner, was valid, we do not reach these procedural challenges.  Thus
 the question we address is whether the Secretary can subdelegate his
 statutory power to issue a water quality certificate to a subordinate
 commissioner within his agency.
      Subdelegation is a term that "in the administrative law context has
 been defined as 'the transmission of authority from the heads of agencies to
 subordinates.'"  Society for the Protection of N.H. Forests v. Site
 Evaluation Comm., 337 A.2d 778, 784 (N.H. 1975) (quoting 1 K. Davis,
 Administrative Law Treatise { 9.01, at 616 (1958) (Supp. 1970, at 401)).
 The keys to subdelegation are that the ability to delegate be authorized,
 and that the delegating authority articulate clear standards under which the
 delegated authority is to be used.  C. Koch, Jr., Administrative Law and
 Practice { 1.22[5], at 16 (Supp. 1994).  Our inquiry in this case focuses on
 the first key:  whether the ANR Secretary's ability to delegate water
 quality certificate issuance to the DEC Commissioner is authorized.  This
 inquiry is primarily a matter of statutory interpretation.  See In re
 Advisory Opinion To Governor, 627 A.2d 1246, 1248 (R.I. 1993) (agency
 action, including subdelegation of duties, valid only if agency "acts within
 the parameters of the statutes that define their powers"; therefore,
 validity of subdelegation primarily question of statutory interpretation).
      The Board's holding centers on two statutes.  The first is the general
 delegation of authority statute, 3 V.S.A. { 214, which states:
           A secretary, commissioner or director may delegate
         any authority, power or duty other than a specific
         statutory authority of the office to a designee; and a
         board or council in its discretion and with the approval
         of the governor may delegate to the commissioner of the
         department any of its authority, power or duty other
         than a specific statutory authority except those

 

         necessary to its rulemaking and quasi-judicial
         functions.

 The second is the statutory provision applicable to the water quality
 certificate issued in this case.  That statute, 10 V.S.A. { 1004, provides
 in part:
           The secretary shall be the agent to coordinate the
         state interest before the Federal Energy Regulatory
         Commission in all matters involving water quality and
         regulation or control of natural stream flow through
         the use of dams situated on streams within the
         boundaries of the state, and it shall advise the Federal
         Energy Regulatory Commission of the amount of flow
         considered necessary in each stream under consideration.
         The agency of natural resources shall be the certifying
         agency of the state for purposes of section 401 of the
         federal Clean Water Act and the secretary's
         determination on these certifications shall be final
         action by the secretary appealable to the water
         resources board.

 The statute was amended in 1987 (FN3) to put it in part of its current form by
 substituting "secretary" for "department [of water resources and environ-
 mental engineering]" in the first sentence and "agency of natural resources"
 for "department" in the second sentence.  The term "secretary" is defined in
 { 1002(11) to mean the Secretary of the Agency of Natural Resources.  It was
 also amended in 1991 to add the phrase on appeals at the end of the second
 sentence.
      The Board concluded that the water quality certificate responsibility,
 as specified in { 1004, is a "specific statutory authority of the office"

 

 and, thus, cannot be subdelegated to anyone else under { 214.  The Board
 also relied upon In re Buttolph, 141 Vt. 601, 604-05, 451 A.2d 1129, 1131
 (1982), for the proposition that the Secretary could not subdelegate
 "discretionary or quasi-judicial duties" without specific statutory
 authority and found the issuance of the certificate required "the exercise
 of considerable discretion and judgment."  The Board found policy reasons
 for this result in the "sensitive nature of federal/state relations."(FN4)
      The issues before us are implicated in Secretary, Agency of Natural
 Resources v. Henry, but that case presented a clearer mandate for
 subdelegation because of statutory language allowing the Secretary's power
 to be exercised by a "duly authorized representative."  Slip op. at 4.  The
 issue before this Court was whether that authority was preempted by a
 later, and more limited, subdelegation authority.  We held that it was not.
 Id. at 5.
      Although Henry did not require us to rely upon In re Buttolph, we did
 quote language from that decision to the effect that discretionary or quasi-
 judicial duties or those requiring the exercise of judgment cannot be
 delegated absent a statute expressly authorizing such delegation.  This case
 requires us to examine closely the Buttolph dicta.  We find it overbroad and
 adopt a rule that is tailored to the underlying policies as detailed below.
      In Buttolph, the Water Resources Board decided a contested case through
 a document entitled "Findings of Fact, Conclusion of Law and Order" signed
 by the Executive Secretary "By the authority of the Water Resources Board."

 

 We held that the issuance of the order was a "quasi-judicial" function that
 could not be subdelegated by the Board because of the prohibition of the
 second phrase of { 214.  The language from Buttolph, which the Board relied
 upon and we quoted in Henry, is dicta that references 73 C.J.S. Public
 Administrative Bodies and Procedure { 57.  It is, however, an incomplete
 reference to the text, which goes on to state:
           It has been observed that in the operation of any
         public administrative body, subdelegation of authority,
         impliedly or expressly, exists and must exist to some
         degree.  Accordingly, it is recognized that express
         statutory authority is not necessarily required for the
         delegation of authority by an administrative agency, and
         the omission by the legislature of any specific grant
         of, or grounds for, the power to delegate is not to be
         construed as a denial of that power.  So, if there is a
         reasonable basis to imply the power to delegate the
         authority of an administrative agency, such an
         implication may be made, and the power to delegate may
         be implied.

 73 C.J.S. Public Administrative Law and Procedure { 56, at 514-15 (formerly
 73 C.J.S. Public Administrative Bodies and Procedure { 57).
      We believe this clarification of the general rule is more consistent
 with the first phrase of { 214, the applicable statutory language, which
 provides:  "A secretary, commissioner or director may delegate any
 authority, power or duty other than a specific statutory authority of the
 office to a designee . . . ."  3 V.S.A. { 214.  It is important to recognize
 that this language creates no special rule for "discretionary or quasi-
 judicial" functions.  The Board's determination that subdelegation is
 prohibited whenever a power involves the exercise of discretion is not
 consistent with the language of { 214.  Nor can we read the first phrase of
 the section as allowing subdelegation only when there is a specific
 statutory authorization for it; such a narrow construction deprives the

 

 phrase of any operative meaning.  We do not need a general statute to tell
 us that specific statutory grant of power to subdelegate is valid.
      Thus, consistent with the general law in other jurisdictions, see,
 e.g., Brown Group, Inc. v. Administrative Hearing Comm'n, 649 S.W.2d 874,
 878 (Mo. 1983); Fulmer v. Jensen, 379 N.W.2d 736, 739 (Neb. 1986), we are
 prepared to accept implied power to subdelegate specific authority when
 subdelegation power is needed and is, in the overall, consistent with
 legislative intent.  We cannot, however, allow subdelegation of a "specific
 statutory authority of the office" as those terms are used in { 214.  To
 determine whether a "specific statutory authority" is present requires a two
 step inquiry:  (1) Does the legislation that creates the authority preclude
 delegation?  (2) If not, can the power to subdelegate be implied from the
 statutory scheme and the circumstances involved?
      The first step uses normal statutory construction tools to determine
 whether the Legislature has shown an intent to prohibit subdelegation of the
 specific power in question.  OMYA argues that it has, primarily from two
 aspects of the statutory scheme.  The first is that the Legislature in 1991
 added to 10 V.S.A. { 1004 the phrase that ends the second sentence: "the
 secretary's determinations on these certifications shall be final action by
 the secretary appealable to the water resources board."  1991, No. 81, { 1.
 In OMYA's view, this sentence clearly specifies that issuance of the
 certification is a personal responsibility of the Secretary.
      We do not read the legislative intent as broadly as OMYA suggests.  The
 purpose of the amendment was to make certification decisions appealable to
 the Water Resources Board.  See 1991, No. 81, title.  There is no indication
 that a second purpose was to modify the subdelegation powers of the

 

 Secretary.  Indeed, at the time of the 1991 amendment, the Secretary had
 subdelegated the signing of certificates to the Commissioner by regulation,
 and the Legislature was presumably aware of that action.  If it intended to
 affect the preexisting practice, we believe it should have spoken more
 clearly.
      OMYA's second argument for express prohibition is that the Legislature
 specifically provided the power of subdelegation for other responsibilities
 of the Secretary but withheld it here.  We rejected this approach to
 determining legislative intent in Henry.  See slip op. at 4-5; see also
 Hoardwood, Inc. v. Department of Pub. Aid, 529 N.E.2d 1009, 1012 (Ill Ct.
 App. 1988) (although preferable to have specific delegation authority, as in
 other statutes, presence of such authority is not required); Commissioner of
 Revenue v. Demoulis Super Mkts., Inc., 588 N.E.2d 625, 627 (Mass. 1992)
 (absence of express statement of delegation authority not determinative,
 even though used elsewhere, absent express limitation on authority).  We
 reject this approach again here.  As discussed below, the Legislature's use
 of specific delegation authority for other responsibilities of the Secretary
 is relevant to whether we can find an implied power to delegate.
      Thus, we turn to the second step of the inquiry, whether an implied
 power to subdelegate can be inferred in this instance.  In making this
 determination, we must look to a number of factors that bear on the need to
 subdelegate and the intent of the Legislature as we best can discern it.
 The most important factors are the function of the office and the nature of
 the delegated responsibility as related to that function.
      In this case, the Legislature has spoken clearly on the role and
 responsibility of the Secretary of Natural Resources:

 

           The secretary shall be responsible to the governor
         and shall plan, coordinate and direct the functions
         vested in the agency.  He shall prepare and submit to
         the governor an annual budget and shall prepare and
         submit to the governor and the general assembly in
         November of each year a report concerning the operation
         of the agency for the preceding fiscal year and the
         future goals and objectives of the agency.

 3 V.S.A. { 2822(a).  The "Secretary" is defined as "[t]he head of the
 agency, a member of the governor's cabinet and responsible to the governor
 for the administration of the agency."  Id. { 2801(6).
      In Buttolph, the primary function of the Water Resources Board was to
 issue findings, conclusions and orders in contested cases, yet the Board
 delegated that very function to its staff.  See 141 Vt. at 604, 451 A.2d  at
 1131.  By contrast, in this case, the primary roles and responsibilities of
 the Secretary are to plan, administer and manage functions of the agency; no
 part of those roles and responsibilities are involved in the delegation
 before us.
      A second, important factor bearing on the propriety of subdelegation is
 the policy reason that supports or weighs against delegation.  As part of
 this factor, we must look at the nature and degree of the need to delegate
 functions.  For example, in Buttolph, there was no demonstrated need for the
 Board to delegate the power to sign decisions.  It is hard to imagine the
 Board being overburdened by having to sign its decision.
      In this case, we are dealing with a document in the nature of a permit.
 Requiring the Secretary to decide whether to issue specific permits, and
 what conditions to impose on those permits, "risk[s] overburdening the
 Secretary, making it more difficult to carry out the broad mandate assigned
 to the position."  See Henry, slip op. at 5.  Other courts have emphasized
 the unreasonable burden placed on a high policy and administrative official

 

 when the official is required to make personal decisions about individual
 requests for agency action.  See Fleming v. Mohawk Wrecking & Lumber Co.,
 331 U.S. 111, 122-23 (1946); Fremont RE-1 School Dist. v. Jacobs, 737 P.2d 816, 819 (Colo. 1987).  We are reluctant to infer that the Legislature
 intended that burden.
      In its decision, the Board concluded that the "sensitive nature of
 federal/state relations" in this area was a policy consideration that
 weighed against delegation.  We see nothing in the statute from which we can
 infer that the Legislature intended to implement such a policy.  Indeed, the
 opening sentence of 10 V.S.A. { 1004 defines the Secretary's role as one "to
 coordinate the state interest," a description consistent with the
 Secretary's overall responsibilities as an administrator, but not generally
 consistent with the responsibility to personally make all necessary
 decisions.  The subsequent statutory section authorizes the Secretary to
 contract out part of the State's responsibilities.  See 10 V.S.A. { 1005(a).
 We do not find this authority consistent with a legislative policy of
 personal decisionmaking by the Secretary.
      Moreover, { 1004 implements the 33 U.S.C. { 1341(a)(1) requirement of
 "a certification from the State . . . that any such discharge [into
 navigable waters] will comply with the applicable provisions of sections
 1311, 1312, 1313, 1316, and 1317 of this title."  State certification,
 therefore, involves testing water discharges against a set of federal
 standards.  See 33 U.S.C. {{ 1311 (effluent limitations); 1312 (water
 quality related effluent limitations); 1313 (water quality standards and
 implementation plans); 1316 (national performance standards); 1317 (toxic
 and pretreatment effluent standards).  Thus, { 1341(a)(1) certification is

 

 at heart a matter of water discharge testing for which "the agency of
 natural resources" is responsible.  10 V.S.A. { 1004.  The logic of
 delegating { 1341(a)(1) compliance testing to the DEC is clear, for testing
 is an area of DEC expertise, and not an area requiring an exercise of
 judgment and discretion by the ANR Secretary.  In fact, allowing
 subdelegation for the issuance of water quality certificates to the DEC
 Commissioner places certification in the hands of one charged with expertise
 to administer the State's water resources programs.  See 3 V.S.A. { 2873(a)
 (DEC shall administer water resources programs of Title 10).  Delegation to
 the DEC Commissioner is hardly inconsistent with the sensitive federal/state
 relations.
      A third factor to consider is the Legislature's consistency in
 expressing its intent to allow delegation of an official's
 responsibilities.  As shown in Henry, the Legislature has been far from
 consistent in expressing delegation authority for the Secretary of Natural
 Resources.  There are instances in which delegation is obviously necessary,
 but the Legislature has failed to state so specifically.  See, e.g., 3
 V.S.A. { 2822(g) (providing that the "secretary shall make all practical
 efforts to process permits in a prompt manner" when it is clear that actual
 processing of permits will be subdelegated within agency); 10 V.S.A. {
 753(b) (obligation of "secretary" to provide each municipality with a
 designation of flood hazard areas within the municipality; no specific power
 to subdelegate stated).  The major example in which delegation is necessary,
 but not specifically authorized, is probably found in chapter 41 of Title
 10, which authorizes the certification involved in this case.  10 V.S.A. {
 1021(a) prohibits any person from altering the "course, current or cross-

 

 section of any watercourse" without a permit from the Secretary.  As with {
 1004, no specific authority to subdelegate is stated.  In each case, "a
 written report shall be made by the secretary concerning the effect of the
 proposed change on the watercourse."  10 V.S.A. { 1023(a).  Requiring the
 Secretary to issue these permits and reports personally would be an
 oppressive burden that the Legislature could not have intended.  Overall, we
 find that the lack of consistency in the Legislature's treatment of
 subdelegation authority supports implied authority to subdelegate here.
      Yet another factor to consider is the identity of the person to whom
 authority is subdelegated.  In Buttolph, the delegation was to a staff
 person unaccountable to anyone but the Board members who hired that person.
 See 141 Vt. at 604, 451 A.2d  at 1131 (Board authorized to employ persons as
 necessary to performance of its duties).  Here, the delegation was to the
 Commissioner of Environmental Conservation, an official who is appointed
 with the approval of the Governor and serves at the pleasure of the
 Secretary.  3 V.S.A. { 2851.  The appointment of the Commissioner is subject
 to the advice and consent of the Senate.  Id. { 256(b).  As discussed
 above, the Commissioner already has primary responsibilities in this area.
      A final important factor to consider is how the delegation is
 effected.  In Buttolph, the delegation appeared to be ad hoc, with no
 formal authorization that described the nature and scope of the delegation.
 The delegation in this case, by contrast, was accomplished by administrative
 regulation.  See Vermont Agency of Natural Resources, Environmental
 Protection Rules { 13.11 in 7 Code of Vermont Rules 12033002-34 (1994).  As
 such, it is entitled to a presumption of validity.  See In re Club 107, 152
 Vt. 320, 323, 566 A.2d 966, 967 (1989).  Moreover, the subdelegation is

 

 authored by the administrator of the statutory scheme, whose construction of
 that scheme is entitled to weight.  See In re Verburg, 159 Vt. 161, 165, 616 A.2d 237, 239 (1992).
      All these factors inform our decision concerning whether a reference to
 an official should be considered as creating a "specific statutory authority
 of the office" that cannot be subdelegated under 3 V.S.A. { 214.  Each
 weighs against considering the Secretary's responsibilities under 10 V.S.A.
 { 1004 as a specific statutory authority of the office.  Each supports a
 conclusion that the power to subdelegate can be implied from the statutory
 scheme and the circumstances involved.
      Accordingly, we hold that there is a reasonable basis from which to
 infer authority for the Secretary to delegate the power to issue section 401
 certifications to the Commissioner of Environmental Conservation.
 Therefore, the certificate issued to appellee OMYA was not void because it
 was signed by the Commissioner.

      Reversed and remanded.

                                    FOR THE COURT:



                                    _____________________________
                                    Associate Justice



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                               Footnotes


FN1.    OMYA has taken the position that the Center Rutland Project does
 not create a discharge into navigable waters, and thus, that the Project is
 not subject to the Clean Water Act.  That issue is not before this Court,
 and we merely note OMYA's contention that application for a state water
 quality certification does not waive its position.

FN2.    During the pendency of this appeal, OMYA moved to dismiss, arguing
 that the appeal should have been taken first to the superior court pursuant
 to 10 V.S.A. { 1024(b).  We denied that motion, finding this to be a
 declaratory judgment proceeding governed by 3 V.S.A. { 815(a), and also
 denied OMYA's subsequent motion for reconsideration of our original denial
 decision.  Since the issue has been resolved, we have not addressed it in
 this opinion.

FN3.    There were actually two amendments, and this is the source of some
 confusion.  The first transferred responsibility from the department level
 to the agency or secretary level as specified in the text.  The second
 conformed the section to name changes in the agency and department.  The
 agency went from the Agency of Environmental Conservation to the Agency of
 Natural Resources.  The department went from the Department of Water
 Resources and Environmental Engineering to the Department of Environmental
 Conservation.

FN4.    Section 1004 states that the Secretary's powers shall not infringe
 on those of the Public Service Board in this area.  In support of its policy
 reasoning, the Board also noted "the sensitive relationship between the ANR
 and the Public Service Board."