Opinion ID: 2334700
Heading Depth: 1
Heading Rank: 5

Heading: Administrative Procedure Act and Procedural Due Process

Text: The Town next argues that DES' decision not to conduct its evaluation of NCES' application as an adjudicative proceeding contravened the APA and RSA 72:12-a, portions of DES' own administrative rules, and the Due Process Clause of our State Constitution. We address the Town's statutory, regulatory, and constitutional arguments seriatim. The APA defines an adjudicative proceeding as the procedure to be followed in contested cases, as set forth in RSA 541-A:31 through RSA 541-A:36. RSA 541-A:1, I (1997). Under the APA, a contested case is defined as a proceeding in which the legal rights, duties, or privileges of a party are required by law to be determined by an agency after notice and an opportunity for hearing. RSA 541-A:1, IV (1997). In support of its position that this matter was a contested case, the Town contends that it opposed granting an exemption to NCES and was therefore a party whose rights were required to be adjudicated pursuant to the contested case procedures of the APA. We conclude that the Town was not a party to the proceedings before DES. Party is defined in the APA as each person or agency named or admitted as a party, or properly seeking and entitled as a right to be admitted as a party. RSA 541-A:1, XII (1997). Nothing in the record indicates that the Town was named or officially admitted as a party to the proceedings before DES. In fact, DES expressly stated, in its November 28, 2005 order, that it never ruled upon the Town's motion to intervene because it did not consider the proceedings on NCES' application to be adjudicative. In addition, the Town was not entitled as of right to be admitted as a party. Instead, the Town's involvement was pursuant to RSA 72:12-a, II, IV and VI and RSA 541-A:39 (1997). See RSA 72:12-a, II (notice to municipality by applicant); RSA 72:12-a, IV (notice to municipality by DES); RSA 72:12-a, VI (opportunity for municipality to move for rehearing or appeal); RSA 541-A:39, I (opportunity for municipality to submit data, views or comments). We have held that the entitlement to notice of the proceedings and the opportunity to submit comments to the agency [does not] make one a party for purposes of a contested case under the APA. Appeal of Town of Nottingham, 153 N.H. 539, 550, 904 A.2d 582 (2006). If the legislature desired to permit a municipality which opposed a tax exemption application the opportunity for a formal hearing and to become a party to an adversarial-type proceeding, it could easily have done so. It did not. Accordingly, we conclude that DES was not required to treat the Town as a party as that term is statutorily defined in RSA 541-A:1, XII. Since the Town was not a party within the meaning of the APA, its arguments concerning its involvement in the DES proceeding do not implicate the requirements for a contested case. We find equally unpersuasive the Town's contention that its right to petition for rehearing under RSA 72:12-a, VI conferred upon it a right to formal adjudicative proceedings. First, the fact that RSA 72:12-a permits the Town to request a rehearing or appeal in accordance with RSA chapter 541 does not necessarily make it a party to the underlying tax exemption proceeding. See, e.g., RSA 541:3 (1997) (persons other than parties may move for rehearing). Second, although RSA 72:12-a, VI confers upon the Town the right to request a rehearing or appeal, it specifically indicates that such a rehearing or appeal is conducted pursuant to RSA chapter 541it does not indicate that such a rehearing triggers all of the requirements of the APA. The Town has not pointed to any provisions of RSA chapter 541 that would have required DES, upon receipt of the Town's motion for rehearing (or on remand), to conduct an adjudicative hearing as described in RSA 541-A:31-:36 (1997 & Supp.2005). We observe that many courts have been reluctant to construe statutes that do not expressly require formal adjudicative proceedings as containing such a requirement. 1 K. Davis & R. Pierce, Jr., Administrative Law Treatise § 8.2, at 385 (3d ed.1994). We are likewise reluctant. We now turn to the Town's argument that New Hampshire Administrative Rule, Part Env-C 204, required DES to conduct an adjudicative hearing on the issues the Town raised in the remanded proceedings. The law of this State is well settled that an administrative agency must follow its own rules and regulations. Town of Nottingham, 153 N.H. at 554-55, 904 A.2d 582 (quotation omitted). DES has two sets of rules: one for adjudicative hearings ( N.H. Admin Rules, Part Env-C 204) and one for non-adjudicative hearings ( N.H. Admin Rules, Part Env-C 205). Which set of rules applies in a given proceeding is set forth in the text of the rules themselves. Part Env-C 205 appl[ies] to the conduct of hearings held by the department to provide information and receive public comment in any matter that is not a contested case as defined by RSA 541-A:1, IV. N.H. Admin Rules, Env-C 205.01. Absent a proper basis upon which to conclude that the proceedings before DES constituted a contested case, we conclude that DES was not required to apply Part 204. Having addressed the Town's statutory and regulatory contentions, we turn to its constitutional argument. The Town argues that it had a procedural due process right to an adjudicative hearing under Part I, Article 15 of our State Constitution. The Town also argues that RSA 72:12-a's procedural framework violates state constitutional due process guarantees. Neither DES, NCES, nor the Town has addressed whether a municipality may assert a due process claim against a state agency under Part I, Article 15 of our State Constitution. Compare Appeal of N.H. Dept. of Employment Security, 140 N.H. 703, 710, 672 A.2d 697 (1996) (state agency cannot challenge another state agency's actions on state constitutional due process grounds because Due Process Clause protects only subjects), with Town of Jay v. Androscoggin Energy, LLC, 822 A.2d 1114, 1117 (Me.2003) (discussing due process issue raised by Town in context of pollution control tax exemption proceedings). See also Town of Hampton Falls, 126 N.H. at 814, 498 A.2d 304 (declining to reach Town of Hampton's assertion that Water Supply and Pollution Control Commission violated municipality's due process rights in evaluating RSA 72:12-a tax exemption application); City of Madison v. Ayers, 85 Wis.2d 540, 271 N.W.2d 101, 103 (1978); Village of Schaumburg v. Doyle, 277 Ill.App.3d 832, 214 Ill.Dec. 642, 661 N.E.2d 496, 499-501 (1996), appeal denied, 167 Ill.2d 569, 217 Ill.Dec. 670, 667 N.E.2d 1063 (1996); Village of Sauget v. Pollution Control Bd., 207 Ill.App.3d 974, 152 Ill. Dec. 847, 566 N.E.2d 724, 726-27 (1991), appeal denied, 139 Ill.2d 604, 159 Ill.Dec. 116, 575 N.E.2d 923 (1991); 16B Am. Jur.2d Constitutional Law § 930 (1998). For purposes of this appeal, we will assume, without deciding, that the Town may raise its due process challenge under Part I, Article 15. In determining whether particular procedures satisfy the requirements of due process, we typically employ a two-prong analysis. Initially, we ascertain whether a legally protected interest has been implicated. Bragg v. Director, N.H. Div. of Motor Vehicles, 141 N.H. 677, 678, 690 A.2d 571 (1997). We then determine whether the procedures provided afford appropriate safeguards against a wrongful deprivation of the protected interest. Id. at 678-79, 690 A.2d 571. In terms of a legally protected interest, the Town contends that it has a clear interest in precluding improper exemptions that would shift the burden of taxation to other taxpayers. While the Town may have an interest, in the general sense of the word, in ensuring that improper exemptions are not granted, a successful due process claim must be based upon a protected liberty or property interest. Midway Excavators, Inc. v. Chandler, Comm'r, 128 N.H. 654, 659, 522 A.2d 982 (1986). The Town does not argue that a liberty interest is here involved and we do not discern a protected liberty interest under the circumstances of this case. See 16C C.J.S. Constitutional Law § 1510, at 305-09 (2005) (describing liberty interests generally). Thus, the question becomes whether the Town has advanced a legally protected property interest. We conclude that it has not. That the Town may participate in tax exemption decisions by operation of statutes does not necessarily mean that it has a property interest within the meaning of Part I, Article 15. The hallmark of a legally protected property interest is an individual entitlement grounded in State law. Midway, 128 N.H. at 659, 522 A.2d 982. The Town has not identified any such entitlement. The Town has failed to explain why, given the legislature's broad powers in the area of taxation, a valid tax exemption statute, properly applied, would deprive it of anything to which it was entitled. See Opinion of the Justices, 117 N.H. 512, 515, 374 A.2d 964 (1977) (The legislature has broad discretionary powers to classify subjects of taxation. Classifications made for just reasons do not violate any provisions of our constitution. (citation omitted)); King Ridge, Inc. v. Sutton, 115 N.H. 294, 296, 340 A.2d 106 (1975) (As a general rule taxes cannot be assessed and collected in this State except by authority of the legislature.). Absent such a property interest, the Town's participation is of a statutory  not constitutional due process  dimension.