Date: 02-07-2003

Case Style: Martin v. Vermont Agency of Transportation

Case Number: 2001-214

Judge: Amestoy

Court: The Supreme Court of Vermont

Plaintiff's Attorney:

John H. Bloomer, Jr. of McClallen & Bloomer, P.C., Rutland, for Plaintiff-Appellant.

Defendant's Attorney:

William H. Sorrell, Attorney General, William E. Griffin, Chief Assistant Attorney General, and Bridget C. Asay, Assistant Attorney General, Montpelier, for Defendant-Appellee.

Description:

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.

Outcome: The Department of Motor Vehicle's Rule 16 I.(f)(4) is stricken, and the superior court's April 19, 2001 decision is reversed.

Plaintiff's Experts: Unavailable

Defendant's Experts: Unavailable

Comments: Reported by: Fountainheads