IN RE: PETITION FOR DECLARATORY RULING. RE: SDCL 62-1-1(6)
on Briefs November 30, 2015
Corrected June 3, 2016.
FROM THE CIRCUIT COURT OF THE SIXTH JUDICIAL CIRCUIT HUGHES
COUNTY, SOUTH DAKOTA. THE HONORABLE MARK BARNETT, Judge.
D. LEACH, Rapid City, South Dakota, Attorney for petitioner
and appellant James D. Leach.
R. CROMWELL of Tieszen Law Office, LLC Pierre, South Dakota,
Attorneys for appellee Associated School Boards of South
S. MCKNIGHT LAURA K. HENSLEY of Boyce Law Firm, LLP Sioux
Falls, South Dakota, Attorneys for appellees First Dakota
Indemnity and Dakota Truck Underwriters.
Justice. SEVERSON, WILBUR, and KERN, Justices, concur.
GILBERTSON, Chief Justice, concurs in result in part and
dissents in part.
[¶1] Attorney James Leach petitioned the
Department of Labor for a declaratory ruling regarding the
application of a statute. The statute governs the "
earnings" used to calculate the " average weekly
wage" in workers' compensation cases. Leach
contended that discretionary bonuses should be included in
the calculation. The Department ruled that only
non-discretionary bonuses should be included, and Leach
appealed to circuit court. The court, sua sponte,
dismissed the appeal because it concluded that the Department
lacked jurisdiction to issue such rulings. Leach now appeals
to this Court. We reverse and remand to consider the appeal
on the merits.
and Procedural History
[¶2] James Leach is a South Dakota attorney
who, among other things, represents clients in workers'
compensation cases. Settlement agreements in those cases must
be approved by the Department. Leach disagrees with the
Department's interpretation of a statute under
which the Department excludes discretionary bonuses from the
" earnings" used to calculate an injured
worker's " average weekly wage."  However,
Leach has been unable to challenge the Department's
interpretation in actual cases because employers moot the
issue by stipulating to include discretionary bonuses in the
calculation. Because this controversy is recurring
but evading judicial review, Leach petitioned the Department
for a declaratory ruling on the proper method of calculating
average weekly wages under the governing statute.
[¶3] The Department accepted the petition
and gave public notice of a hearing to consider the question.
Appellees, Associated School Boards of South Dakota
Workers' Compensation Trust Fund and First Dakota
Indemnity and Dakota Truck Underwriters appeared in
opposition to Leach's interpretation of the
statute. At the hearing, Leach presented
argument supporting the inclusion of discretionary bonuses in
the calculation. Appellees argued against the inclusion. The
Department received evidence in the form of an affidavit from
James Marsh, the Director of the Division of Labor and
Management within the Department of Labor. Marsh indicated
that a Department policy (based on an interpretation of the
statute) required employers and insurers to exclude
discretionary bonuses from the calculation. Marsh also
indicated that the Department would not approve benefits
unless the employer followed its policy. Thus, the wage
calculation issue arises every time an injured worker, who
has received a timely discretionary bonus, receives
[¶4] Following the hearing, the Department
issued a declaratory ruling that discretionary bonuses may
not be included in the calculation. On appeal, the circuit
court, sua sponte, dismissed the appeal for lack of
jurisdiction. The court ruled that, in the absence of an
actual case, the Department was without subject matter
jurisdiction to issue declaratory rulings. The court further
concluded that because the Department had no jurisdiction,
the court had no jurisdiction to consider the appeal.
Nevertheless, the court vacated the declaratory ruling in
addition to dismissing the appeal. Leach now appeals to this
Court, raising the question whether the Department had
subject matter jurisdiction to issue the declaratory ruling.
[¶5] This case was resolved below by the
circuit court's determination that the Department had no
jurisdiction to entertain the declaratory ruling, and
therefore, the circuit court had no jurisdiction to entertain
the appeal. If there was no jurisdiction in the tribunals
below, there is likely no jurisdiction to consider this
appeal. Therefore, we must first determine the jurisdiction
of all three tribunals. See Sioux City Boat Club
v. Mulhall, 79 S.D. 668, 672, 117 N.W.2d 92, 94 (1962)
(" Where the want of jurisdiction appears on the face of
the record or from a geographical or other fact of which this
[C]ourt may take judicial notice, it becomes the duty of this
[C]ourt to determine whether it has jurisdiction as a
condition precedent to its right to decide the issues
[¶6] The South Dakota Constitution delegates
to the Legislature the authority
to determine this Court's and the circuit court's
appellate jurisdiction. " The Supreme Court shall have
such appellate jurisdiction as may be provided by the
Legislature . . . . The circuit courts have such appellate
jurisdiction as may be provided by law." S.D. Const.
art. V, § 5. In 1966, the Legislature enacted three
jurisdictional statutes pertaining to proceedings under SDCL
chapter 1-26, the Administrative Procedure Act (APA). One
governs jurisdiction of agencies to issue declaratory
rulings, one governs jurisdiction of the circuit courts to
consider appeals of agency decisions, and one governs this
Court's jurisdiction to consider appeals from the circuit
courts on agency determinations. See 1966 S.D. Sess.
Laws ch. 159, § § 8, 15, 16, which are codified at
SDCL 1-26-15, SDCL 1-26-30, and SDCL 1-26-37 respectively.
Thus, the jurisdictional questions in this case are matters
of statutory interpretation, a matter we review de novo.
See Wheeler v. Cinna Bakers, LLC, 2015 S.D.
25, ¶ 4, 864 N.W.2d 17, 19.
of Agencies to Issue Declaratory Rulings
[¶7] The APA contains two statutes
authorizing declaratory rulings. SDCL 1-26-15 authorizes
declaratory rulings by agencies on statutes, rules, and
agency orders. And SDCL 1-26-14 authorizes declaratory
rulings by circuit courts on agency rules. Both provisions
were taken almost verbatim from the Revised Model State
Administrative Procedure Act of 1961 (MSAPA). See
Revised Model State Admin. Procedure Act § § 7-8
(Unif. Law Comm'n 1961).
[¶8] A comparison of the two statutes
reveals a clear difference in the standing required for
persons requesting declaratory rulings from administrative
agencies and declaratory rulings from courts. To request a
declaratory ruling from a court, SDCL 1-26-14 requires an
actual case or controversy. The plaintiff must allege that
the administrative " rule, or its threatened
application, interferes with or impairs, or threatens to
interfere with or impair, the legal rights or privileges of
the plaintiff." Id. In contrast, the
Legislature excluded this actual case or controversy language
from the statute authorizing declaratory rulings by agencies.
SDCL 1-26-15 requires agencies to adopt rules permitting
anyone other than penitentiary inmates to request "
declaratory rulings as to the applicability of any statutory
provision or of any rule or order of the agency."
In accordance with this statute, the Department adopted a
rule permitting the
filing of petitions requesting " a declaratory ruling
concerning the applicability of a statutory provision or of a
rule or order made by the department." ARSD
47:01:01:04. And like its authorizing statute, the
rule does not contain an actual case or controversy
requirement. On the contrary, instead of requiring an actual
case or controversy, the rule permits petitions to merely
" contain all the pertinent facts necessary to inform
the secretary of the nature of the rulings requested."
Id. Thus, the Department has routinely issued
declaratory rulings based on hypothetical
[¶9] The underlying question, however,
remains one of statute: whether SDCL 1-26-15 authorizes
agencies to issue declaratory rulings absent an actual case
or controversy. " When engaging in statutory
interpretation, we give words their plain meaning and effect,
and read statutes as a whole, as well as enactments relating
to the same subject." Citibank, N.A. v. S.D.
Dep't of Revenue, 2015 S.D. 67, ¶ 12, 868
N.W.2d 381, 387. Here, in adopting the APA, the Legislature
included case or controversy language in the statute
authorizing declaratory rulings by courts while
simultaneously excluding that language in the statute
authorizing declaratory rulings by agencies. " [E]very
word excluded from a statute must be presumed to have been
excluded for a purpose." Magellan Pipeline Co. v.
S.D. Dep't of Revenue & Regulation, 2013 S.D.
68, ¶ 9, 837 N.W.2d 402, 404. Considering these statutes
together as a part of the same act, we conclude that by
excluding the case or controversy language from SDCL 1-26-15,
the Legislature excluded an actual case or controversy
requirement in agency declaratory proceedings. Appellees'
request to read an actual case or controversy requirement in
SDCL 1-26-15 would require that we insert SDCL 1-26-14's
case or controversy language into SDCL 1-26-15. "
However, when this Court interprets legislation, it
'cannot add language that simply is not there.'"
State v. Hatchett, 2014 S.D. 13, ¶ 14, 844
N.W.2d 610, 615 (quoting Rowley v. S.D. Bd. of Pardons
& Paroles, 2013 S.D. 6, ¶ 12, 826 N.W.2d 360,
365). See also Voss v. Ralston ( In re
Voss's Adoption ), 550 P.2d 481, 485 (Wyo. 1976)
(" Words may not be inserted in a statutory
provision under the guise of interpretation." ). We
further note that this difference in the statutes was not
inadvertent. At the time the APA was adopted, the Legislature
was clearly concerned about the scope of those who would be
authorized to request declaratory rulings. Although the
Legislature followed the model act in excluding the case or
controversy requirement from SDCL 1-26-15, it added a
non-model act restriction prohibiting penitentiary inmates
from requesting those rulings.
[¶10] The decisions of other courts support
our conclusion. In Power Authority of State of New York
v. New York State Department of Environmental
Conservation, 58 N.Y.2d 427, 448 N.E.2d 436, 438-39, 461
N.Y.S.2d 769 (N.Y. 1983), the New York Court of Appeals
reversed a lower court's holding that agencies had
jurisdiction to issue declaratory rulings " only if they
are based upon the actual facts, established or conceded, of
genuine question, dispute or controversy." The Court of
Appeals held that under statutory language like SDCL
1-26-15, agency declaratory rulings may be
based on " any state of facts described by a
petition" including " an assumed state of
facts[.]" Id. at 439. Like we do today, the New
York Court reasoned: " Notably absent from [New
York's statutory] language is any limitation to agreed or
proved facts or 'genuine' questions, disputes or
controversies." Id. The Court also observed
that the New York administrative provision was unlike
declaratory judgments actions in courts. Id. See
also City of Des Moines v. Pub. Emp't Relations
Bd., 275 N.W.2d 753, 758 (Iowa 1979) (stating that
Iowa's then verbatim adoption of § 8 of MSAPA "
contemplates declaratory rulings by administrative agencies
on purely hypothetical sets of facts . . . . And it provides
that such rulings will be the subject of judicial
review." ) (citations omitted); Matrix Funding Corp.
v. Auditing Div. of Utah State Tax Comm'n, 912 P.2d
960, 961 (Utah 1996) (holding that the " hypothetical
posture of a case does not, by itself, prevent [the court]
from reviewing an administrative declaratory order." ).
Federal courts have also concluded that the similar
unrestricted language in the Federal Administrative Procedure
Act does not require an actual case or controversy for agency
declaratory rulings. See Tenn. Gas Pipeline
Co. v. Fed. Power Comm'n, 606 F.2d 1373, 1380, 197
U.S.App.D.C. 1 (D.C. Cir. 1979) (concluding that agencies may
issue " an advisory opinion or abstract declaration
without regard to the existence of an actual
controversy." ); N.C. Util. Comm'n v. Fed.
Commc'n Comm'n, 537 F.2d 787, 791, n.2 (4th Cir.
1976) (stating that federal agencies are not restricted to
adjudicating only cases or controversies).
[¶11] Appellees, however, argue that
language expressing a case or controversy requirement need
not be in SDCL 1-26-15 because the requirement is inherent.
Appellees rely on Boever v. South Dakota
Board of Accountancy, 526 N.W.2d 747, 750 (S.D.
1995), in which we concluded that an action for declaratory
judgment was not ripe because it was based on future injuries
that would not likely occur. Boever, however, does
not apply because it involved a request for declaratory
relief in a court under South Dakota's Uniform
Declaratory Judgment Act--SDCL chapter 21-24. Id. at
749-50. And that act, like SDCL 1-26-14, contains language
requiring an actual case or controversy in requests for the
construction of statutes. Appellees' other
cases suffer from the same infirmity. See
Campbell v. Fritzsche, 78 S.D. 593, 596, 105 N.W.2d
675, 676 (1960) (holding that courts should not issue
advisory opinions); Steinmetz v. State, DOC Star
Acad., 2008 S.D. 87, ¶ 17, 756 N.W.2d 392, 399
(holding that the matter was not ripe for review by a court);
Kneip v. Herseth, 87 S.D. 642, 654, 214 N.W.2d 93,
100 (1974) (upholding a declaratory judgment by a
[¶12] Appellees finally argue that our
interpretation of SDCL 1-26-15 leads to an absurd result.
Appellees contend that any person could demand an agency
declaratory ruling on any issue no matter how speculative or
remote. However, many courts conclude that administrative
agencies retain discretion to deny ...