Plaintiff Carol Ann Martin appeals the
superior court's decision upholding the Department of Motor Vehicle's (DMV)
refusal to issue her a special motor vehicle license plate displaying the
letters "IRISH." We conclude that the administrative regulation upon which
DMV based its ruling is inconsistent with, and thus unauthorized by, the
governing statute. Accordingly, we reverse the superior court's decision.

2. This case is an example of what can happen when law and common
sense depart. The governing statute provides that the Commissioner of DMV
"may refuse to honor any [vanity plate] request that might be offensive or
confusing to the general public." 23 V.S.A. § 304(d). Neither DMV in
refusing to grant the "IRISH" plate, nor the State in its argument before
this Court, have asserted that "IRISH" is a word that might be offensive to
the public - undoubtedly because the general public would find the
assertion more offensive than the word. (FN1) Rather, DMV's decision, the
superior court's opinion upholding that decision, and the State's defense
of both rely upon an administrative regulation that seeks to insulate the
vanity plate program from constitutional attack by removing the
Commissioner's statutory obligation to determine a requested plate's
potential to offend the general public. (FN2) That the Legislature could
relieve the Commissioner of such an obligation we have no doubt. But until
that body has chosen to do so by amending the statute currently granting
the Commissioner the authority to refuse only those requests that "might be
offensive or confusing to the general public," we cannot find a legal basis
to uphold a regulation that assumes powers greater than those set forth in
the statute purportedly authorizing the regulation.

3. The instant case arose when Martin submitted a special plate
application to DMV listing two choices, "IRISH" and "IRISH1." Martin
received a letter from DMV stating that her application could not be
processed because the Commissioner may deny any special plate request that
might be offensive or confusing to the general public. (FN3) Martin
requested an administrative hearing, which was held before a DMV hearing
officer. At the hearing, DMV did not offer any specific evidence
indicating that the requested plate might be offensive to the general
pubic, but rather relied exclusively upon the new regulation's categorical
exclusion of references to ethnic heritage. In her written decision
upholding the denial of Martin's request, the hearing officer concluded
that the Commissioner has the authority to deny a request for special
plates referring to ethnic heritage, irrespective of whether the reference
is a positive or negative connotation.

4. Martin appealed that ruling to the superior court pursuant to
V.R.C.P. 74 (appeals from decisions of governmental agencies). The court
held a hearing at which both Martin and the State presented oral argument.
In its written decision following the hearing, the court rejected Martin's
request for declaratory relief based on the following rationale:

Given the statutory authority to ban the offensive, and the
constitutional mandate to avoid viewpoint discrimination, the
Commissioner's regulation to place ethnic references off the table
for license plates is reasonable, statutorily authorized and
constitutionally necessary if the state is to preserve its vanity
license plate program and also avoid the issuance of patently
offensive license plates.

5. On appeal to this Court, Martin argues that the amended
regulation is invalid because it is contrary to the intent of the
Legislature, overbroad, and arbitrary. Martin also argues that both the
regulation and its governing statute, 23 V.S.A. § 304(d), violate the First
Amendment of the United States Constitution because they give DMV
unfettered discretion to discriminate based on the viewpoint of the
applicant. The State responds that the regulation is consistent with §
304(d), and is necessary both to insulate the statute from constitutional
challenges and to alleviate DMV's administrative burden. The State also
contends that Martin's constitutional arguments were waived and, in any
event, are without merit.

I.

6. This case is unusual in that it is the anticipation of a
constitutional challenge that formed the basis of not only the superior
court's decision and the State's defense of the case, but also of the
challenged regulation itself. Through regulation, the State sought to
resolve a legal dilemma - how does one constitutionally implement a statute
when the Commissioner's discretion to issue vanity plates must be grounded
in a determination of what might offend the public, given the
susceptibility of such a statute to constitutional attack for allowing
viewpoint discrimination in a designated or nonpublic forum? It is the
attempt of the State's lawyers to address this legal dilemma that frames
this case.

7. To be sure, the State's sensitivity to the potential
constitutional complications of a vanity plate program is well founded.
While a special plate program limiting requests to names and places would
negate all but the most frivolous challenges, the decision of state
legislatures to authorize more expansive (and lucrative) vanity plate
programs has implicated more significant First Amendment concerns.
Although courts and commentators have differed on the extent to which the
establishment of a vanity plate regime implicates free speech rights, there
is little doubt that there are some constitutional limitations on the
government's authority in this area. (FN4) See generally M. Herald,
Licensed to Speak: The Case of Vanity Plates, 72 U. Colo. L. Rev. 595
(2001); L. Jacobs, The Public Sensibilities Forum, 95 Nw. U. L. Rev. 1357
(2001).

8. But though the State's preemptive strike is understandable,
neither its lawyers nor this Court is free to ignore the plain meaning of a
legislative enactment in contemplation of its perceived legal infirmities.
Indeed, the State has cited no case law, and we have found none, suggesting
that an administrative agency can promulgate regulations inconsistent with
an unambiguous statute to save the statute from a potential constitutional
attack. Rather, the State cites In re G.T., 170 Vt. 507, 517, 758 A.2d
301, 308 (2000) for the unremarkable proposition that in "exceptional
circumstances," this Court "must narrow the reach of a broadly worded
statute to make it consistent with other statutes or to avoid serious
questions of constitutionality." Of course, "[u]nlike courts, which are
granted their power by the Constitution, see Vt. Const. ch. II, § 4,
administrative bodies have only the adjudicatory authority conferred on
them by statute." Workers' Comp. Div. v. Hodgdon, 171 Vt. 526, 529, 759
A.2d 73, 77 (2000) (mem.).

9. Even assuming that DMV stood on par with this Court in terms of
insulating § 304(d) from constitutional attack, see Elks Lodges 719 & 2021
v. Dep't of Alcoholic Beverage Control, 905 P.2d 1189, 1202 (Utah 1995) (as
with court, agency must prefer constitutional reading of statute over
unconstitutional interpretation), the agency's attempt to protect the
statute is misplaced because, as discussed in more detail below, § 304(d)
is not ambiguous. (FN5) If a statute is unambiguous, an agency cannot
insulate it from constitutional attack by adopting a new interpretation
unsupported by the statutory language. See Nat'l Rifle Ass'n of Am. v.
Reno, 216 F.3d 122, 127 (D.C. Cir. 2000) (quoting Chevron U.S.A. Inc. v.
Natural Res. Def. Council, Inc., 467 U.S. 837, 842-43 (1984) for
proposition that "the court, as well as the agency, must give effect to
unambiguously expressed intent of Congress"); see also United States v.
Robel, 389 U.S. 258, 267 (1967) (task of writing legislation within
constitutional bounds is "committed to Congress"); Scales v. United States,
367 U.S. 203, 211 (1961) ("Although this Court will often strain to
construe legislation so as to save it against constitutional attack, it
must not and will not carry this to the point of perverting the purpose of
a statute.").

10. The obligation to refrain from rewriting a statute to insulate
it from constitutional attack is particularly strong, even for courts, when
the revised reading of the statute would create new policy among several
choices - especially when those policy choices implicate constitutional
rights. Where a number of choices are available, judicial (or agency)
statutory restructuring necessarily implicates "troublesome policy
considerations which should in the first instance be dealt with by our
Legislature rather than this Court." State v. Rosenfeld, 303 A.2d 889, 894
(N.J. 1973). For these reasons, we find unavailing the State's argument
that promulgation of the challenged regulation was necessary to avoid a
constitutional challenge to the statute.

11. Moreover, even if we were inclined to uphold the challenged
regulation and, in effect, allow DMV to rewrite § 304(d), we would not do
so here. From the beginning, Martin's position has been that the amended
regulation is inconsistent with § 304(d). For the first time on appeal -
and only in response to the State's constitutional necessity defense -
Martin argues that both the amended regulation and § 304(d) are
unconstitutional. Because these arguments were not raised before the
superior court, they are not preserved for review here. See Jakab v.
Jakab, 163 Vt. 575, 581, 664 A.2d 261, 264 (1995) ("Even with respect to
constitutional claims, we ordinarily require that the issue on appeal be
raised below.").

12. Absent a squarely presented constitutional challenge, we
decline to make an unchartered foray into an unsettled area of
constitutional law. Compare Lewis v. Wilson, 253 F.3d 1077, 1080-81 (8th
Cir. 2001) (statute that agency relied upon in rejecting "ARYAN-1" plate as
contrary to public policy violated First Amendment), cert. denied, 535 U.S.
986 (2002); Pruitt v. Wilder, 840 F. Supp. 414, 417-18 (E.D. Va. 1994) (DMV
policy banning reference to deities violated First Amendment because it
regulated speech in non-public forum based on viewpoint) with Perry v.
McDonald, 280 F.3d 159, 163 (2d Cir. 2001) (applicant does not have First
Amendment right to vanity plates bearing letters "SHTHPNS"); Kahn v. Dep't
of Motor Vehicles, 20 Cal. Rptr. 2d 6, 11-13 (Cal. Ct. App. 1993) (state
has substantial interest in protecting its plates from degradation, and
there was ample evidence that request would have been offensive to
reasonable person). (FN6) Notably, the United States Supreme Court has not
addressed a First Amendment challenge pertaining to vanity plates, and, as
the dissent repeatedly points out, its law on viewpoint neutrality is not a
model of clarity. See, e.g., Pruitt, 840 F. Supp. at 417-18 (discussing
viewpoint neutral analysis in Lamb's Chapel v. Ctr. Moriches Union Free
Sch. Dist., 508 U.S. 384 (1993)).

13. In short, the situation presented here - no direct
constitutional challenge and no definitive or controlling law in this area
- is not one that tempts us to bypass our normal rule requiring that issues
be preserved for appeal. Cf. In re Sealed Documents, 172 Vt. 152, 156, 772
A.2d 518, 523 (2001) (our tradition of addressing issues of constitutional
significance only when they are "squarely and necessarily presented
counsels restraint and forbearance" as to broader First Amendment
questions); Herald Ass'n, Inc. v. Ellison, 138 Vt. 529, 533, 419 A.2d 323,
326 (1980) (although First Amendment appears to be implicated, decisions of
United States Supreme Court do not clearly determine whether First
Amendment violation exists; in face of such uncertainty, "the wisdom of our
traditional rule of self-restraint - that we do not needlessly decide
constitutional issues - is all the more apparent" (internal citations
omitted)).

II.

14. Although we find unavailing the State's argument that
promulgation of the challenged regulation was constitutionally necessary,
we recognize that an expansive administrative reading of § 304(d) is of
particular concern because the statute and the regulation implicate First
Amendment protections. Where citizens' constitutional rights are
concerned, we must be especially vigilant in assuring that elected
officials - and not appointed administrators - are making policy. With
this in mind, we now consider Martin's principal argument that the
challenged regulation is inconsistent with, and thus beyond the authority
provided by, § 304(d), its governing statute.

15. It is axiomatic that an administrative agency's power to
promulgate regulations may extend only as far as its legislative grant of
authority. Bowen v. Georgetown Univ. Hosp., 488 U.S. 204, 208 (1988); see
In re Vt. Gas Sys., 150 Vt. 34, 39, 549 A.2d 627, 630 (1988) ("An
administrative agency's rule-making authority cannot support an expansive
interpretation of its own powers."). Thus, while we generally presume the
validity of regulations within the agency's authority, we will uphold an
administratively adopted regulation only "where we can do so without
compromising the intent of the statute which authorized it." In re Agency
of Admin., 141 Vt. 68, 74, 444 A.2d 1349, 1351-52 (1982); see Vt. Ass'n of
Realtors, Inc. v. State, 156 Vt. 525, 530, 593 A.2d 462, 465 (1991) ("[W]e
will not countenance any agency rule that exceeds the authority delegated
to the agency under its enabling act."). If an agency operates outside the
bounds, or for purposes other than those, authorized by the enabling
legislation, "this Court will intervene." In re Agency of Admin., 141 Vt.
at 75, 444 A.2d at 1352.

16. The fundamental principle served by these tenets is the
doctrine of separation of powers. See 1A N. Singer, Statutes and Statutory
Construction § 31.06, at 544 (5th ed. 1993). Courts have generally upheld
broad delegations of authority to administrative agencies, but agency
action that "transcends the delegation will not be sustained." 1 J. Stein,
G. Mitchell, & B. Mezines, Administrative Law § 3.03[5], at 3-110 (2002).
Confining delegated lawmaking authority within its intended bounds helps to
assure that ultimate control over policymaking rests with the legislative
branch of government rather than unelected administrative officials. 1 N.
Singer, Statutes and Statutory Construction § 4.15, at 166 (5th ed. 1994);
see Chambers v. St. Mary's Sch., 697 N.E.2d 198, 202 (Ohio 1998)
(legislative accountability is cornerstone of democratic process that
justifies general assembly's role as lawmaker and restricts administrative
rule-making to placing general assembly's policy into effect).

17. Here, the Legislature has given the Commissioner the general
authority to assign a combination of numbers and letters for each
registered motor vehicle, see 23 V.S.A. § 304(a), and to issue vanity
plates and specialty plates for safety or service organizations, see id. §
304(b). Under the statute, the Commissioner "shall issue" vanity plates
"at the request of the registrant of any motor vehicle," except as
otherwise provided. Id. 304(b)(1). Section 304(d) provides that vanity
plates "shall be issued" in any combination of seven or less numbers and
letters that do not duplicate or resemble a regular-issue plate. The
Commissioner may, however, refuse to honor or revoke "any request that
might be offensive or confusing to the general public." Id. § 304(d).

18. Plainly, the Legislature intended to allow applicants to
obtain vanity plates in any combination of seven or less numbers and
letters, as long as the requested plate is not similar to a regular-issue
plate, confusing to identify, or offensive. See State v. Lussier, 171 Vt.
19, 23, 757 A.2d 1017, 1020 (2000) ("Our primary duty in construing a
statute is to discern the intent of the Legislature by examining the
language of the entire statute, along with its purpose, effects, and
consequences."). Put differently, the applicant gets what she wants unless
the Commissioner, in her discretion, determines that the request would be
offensive or confusing and hence incompatible with the official state
function served by license plates.

19. The plain intent of the statute is revealed by closely
examining the critical sentence at issue: "The commissioner may refuse to
honor any request that might be offensive or confusing to the general
public." Notably, the sentence does not give the Commissioner the
discretion to refuse to honor any request - period. Rather, the
Commissioner "may" refuse to honor only those requests that might be
confusing or offensive. In other words, the Commissioner may not refuse to
honor a request unless she determines that the request might be offensive
or confusing. This point is further supported by the language in § 304(b)
and (d) instructing that the Commissioner "shall issue" requested plates
not found to be offensive, confusing, or otherwise outside the statutory
criteria.

20. Rather than make categorical exclusions with respect to vanity
plates, the Legislature has given the Commissioner the discretion to reject
any "request" that might be offensive or confusing. The Legislature
certainly knows how to exclude entire categories, as evidenced by §
304(b)(2)(C), which requires organizations applying for specialty plates to
"present the commissioner with a name and emblem that is not obscene,
offensive or confusing to the general public and does not promote,
advertise or endorse a product, brand or service provided for sale, or
promote any specific religious belief or political party." (Emphasis
added.). The Legislature elected not to set forth categorical exclusions
with respect to vanity plates, however.

21. Nonetheless, the challenged regulation extends beyond the
statutory language and permits the Commissioner to reject requests for
vanity plates that are themselves inoffensive but belong in one of several
designated categories that include words with the potential to offend.
Indeed, in the case at bar, Martin's request for "IRISH" was refused, not
because it might be offensive - there was no evidence or argument to that
effect - but rather because it refers to ethnicity, a topic that would also
include offensive ethnic slurs.

22. DMV's policy is not limited to ethnicity, however; it also
applies to each of the other topics set forth in the challenged regulation.
Plainly inoffensive requests such as "BLUE" (color), "GREEN"
(color/political affiliation), or "ALLGIRLS" (gender) are excluded under
the regulation without any determination that they are offensive. Names
such as "ROSE," "SCARLET" and "VIOLET" are also excluded. These examples
demonstrate that, by promulgating the challenged regulation, DMV is
imposing its own policy with respect to vanity plate requests - one that is
distinct from, and inconsistent with, the one adopted by the Legislature.

23. Under DMV's policy, certain topics the agency considers too
sensitive are off limits, even if the individual "requests" within that
subject area have no potential to offend. In effect, DMV has cut the
statutorily required nexus between the denial of the plate and the
potential to offend. I agree with the dissent that the Commissioner has
considerable discretion to interpret § 304(d) in a way that is reasonable,
but blanket regulations intended to prohibit the issuance of potentially
offensive vanity plates cannot be characterized as reasonable when the
result is to prohibit words such as "IRISH" or "BLUE."

24. DMV's promulgation of a regulation containing categorical
exclusions of topics irrespective of their potential to offend was
apparently prompted by a suit against DMV based on the agency's denial of a
request for the plate "SHTHPNS." See Perry v. McDonald, 280 F.3d 159 (2d
Cir. 2001). In defending DMV's decision in Perry - a determination made
before the regulation at issue in this case was promulgated - the State
relied on DMV's exercise of its authority to prohibit offensive plates
through an unwritten policy of denying requests referencing scatological
terms. In upholding the DMV's decision as reasonably serving legitimate
governmental interests in a nonpublic forum, the Second Circuit Court of
Appeals observed that § 304(d) "concerns offensive scatological terms, not
just scatological terms." Id. at 170 (emphasis in original).

25. The new regulation excises the very nexus that the Second
Circuit identified as critical - the link between DMV's denial of a request
and the request's potential to offend. A similar situation arose in Carr
v. Dir. of Revenue, 799 S.W.2d 124 (Mo. Ct. App. 1990). There, the agency
involved had rejected a request for "ARYAN-1" because it violated an agency
regulation prohibiting any personalized license plates " 'containing or
suggesting any profane, obscene, inflammatory or patently offensive word or
phrase or otherwise conflicting with an overriding public policy.' " Id.
at 126 (quoting Mo. Code Regs. tit. 12, § 10-23.100(6)). The car owner
appealed, arguing that the regulation was contrary to its governing
statute, which provided that " 'no plates shall be issued containing any
profane or obscene word or phrase.' " Id. (quoting Mo. Rev. Stat. §
301.144). The court agreed, reversing the agency's decision because the
regulation imposed additional restrictions beyond those set forth in the
governing statute and thus was void in part. Id. The same reasoning
applies here.

26. The State argues, however, that the Legislature, through the
Legislative Committee on Administrative Rules, endorsed the approach taken
by DMV in the amended regulation. The Committee minutes reveal that, at
the first meeting in which the new regulation was reviewed, some of the
Committee members expressed concerns about the additional restrictions
imposed by the proposed regulation. The Committee decided to continue its
review. Ultimately, at a later meeting, five members of the Committee
elected not to object to the regulation, with one member dissenting.

27. The Committee's actions are hardly a ringing endorsement of
the regulation. In any event, it is this Court, not the Committee, that
must determine whether the challenged regulation is consistent with its
governing statute. The Administrative Procedures Act (APA) requires that
agencies file proposed rules with the Committee. 3 V.S.A. § 841(a). The
Committee may object that the rule is arbitrary, beyond the authority of
the agency, or contrary to the intent of the Legislature, and recommend
that the agency withdraw or amend the proposal. 3 V.S.A. § 842(a)-(b). If
the committee objects to the rule, the burden is on the agency, in any
action for judicial review or enforcement of the rule, to establish that
the part of the rule objected to is not arbitrary, outside the agency's
delegated authority, or inconsistent with the intent of the Legislature.
Id. § 842(b). "If the agency fails to meet its burden of proof, the court
shall declare the whole or portion of the rule objected to invalid." Id.
Thus, under the APA, the Committee has no authority to determine the
validity of a proposed administrative regulation, but rather can indicate
only whether it will object to the proposed regulation.

III.

28. Finally, the State argues that the challenged regulation is a
valid exercise of DMV's authority because it is administratively necessary.
Again, we find this argument unpersuasive. Agencies generally may not
choose to ignore "their statutory mandate because they believe it is
administratively inefficient or infeasible." Campbell v. U.S. Dep't of
Agric., 515 F. Supp. 1239, 1249 (D.D.C. 1981) (agency cannot decide not to
allow food stamp recertifications at social security offices because of
practical problems they perceive in doing so).

29. In very limited circumstances, "administrative necessity may
be a basis for finding implied authority for an administrative approach not
explicitly provided in the statute." Ala. Power Co. v. Costle, 636 F.2d
323, 358 (D.C. Cir. 1979). A court may uphold streamlined agency
approaches or procedures involving categorical exemptions not explicitly
provided by statute when a case-by-case approach would, as a practical
matter, prevent the agency from carrying out its legislatively authorized
mission. Id. But the agency's burden to justify its actions "in such a
case is especially heavy." Id. at 359.

30. The State has not met that heavy burden here. Cf. Pub.
Citizen, Inc. v. Shalala, 932 F. Supp. 13, 17 (D.D.C. 1996) (FDA failed to
demonstrate administrative impossibility of applying statute's nutrition
content and health claim provisions to restaurant menus). There is no
evidence that DMV could not carry out its statutory mandate without
imposing overbroad categorical exclusions that sever the statutory nexus
between the denial and the offensiveness of the requested plate.

31. In support of its administrative necessity argument, the
State states simply that the Commissioner would be unable to handle the
growing number of special plate applications without regulatory standards
to implement the program. We do not suggest otherwise. DMV may promulgate
regulations consistent with the statute, and, in doing so, may establish
lists of combinations of numbers and letters that might be offensive. DMV
may also, consistent with § 304(d), exclude entire categories comprised
exclusively of words that might offend the general public. Cf. McMahon v.
Iowa Dep't of Transp., 522 N.W.2d 51, 55-57 (Iowa 1994) (upholding
regulation disallowing combinations of numbers and letters that have sexual
connotations or that are defined in dictionaries as terms of vulgarity,
contempt, prejudice, hostility, insult, or racial or ethnic degradation);
Higgins v. DMV, 13 P.3d 531, 533 n.3-4 (Or. Ct. App. 2000) (en banc)
(construing regulation defining "ethnic words" as words that refer to
definable class of persons, and that ridicule or support superiority of
that class). The agency may not, however, claim the authority to establish
policy unauthorized by statute solely because the task is fraught with
difficulty. If the Legislature has set DMV "with an impossible task, their
remedy is with [the Legislature], not this Court." Campbell, 515 F. Supp.
at 1249.

IV.

32. In sum, we conclude that the amended regulation may not
support the decision to deny the "IRISH" plate in that it "prescribes a
standard which [the Legislature] has not authorized the Commissioner . . .
to fix." Lynch v. Tilden Prod. Co., 265 U.S. 315, 321 (1924); see Millette
v. N.H. Ret. Sys., 683 A.2d 531, 534 (N.H. 1996) ("The legislature's grant
of rulemaking authority to an agency is not a grant of power to change or
modify statutory law by regulation."). We do not underestimate the
challenge of crafting a vanity plate program that balances administrative
efficiency with First Amendment concerns. But the response to that
challenge cannot circumvent the branch of government responsible for making
the law. That responsibility and authority resides in the Legislature, not
the Department of Motor Vehicles.

33. Concerned about the possibility of future litigation, the
dissent would have us instruct the administrative agency on how to carry
out its legislative mandate. The dissent's prediction that the vanity
plate program will continue to be litigated is a safe one, given the
uncertain state of federal law on forum analysis and viewpoint neutrality.
The issue in this case, however, is whether DMV's regulation is
unauthorized by the governing statute. We do not question the difficulty
of promulgating a vanity plate program predicated on a statute that
requires a nexus to offensiveness. The agency's removal of entire
categories of subjects may be one way through the constitutional thicket of
viewpoint analysis. But the agency's approach must be authorized by the
governing statute. The current regulation fails to satisfy that
requirement.

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Click the case caption above for the full text of the Court's opnion.