The Highway Advertising Act (HAA) (MCL 252.301 et seq.); MCL 252.307b; MCL 252.323(3); 23 USC § 131; Directional sign defined; MCL 252.302(j); Directional & direction defined; Judicial review of an agency’s decision; Wescott v. Civil Serv. Comm’n; The Administrative Procedures Act (APA) (MCL 24.201 et seq.); MCL 24.306(1); VanZandt v. State Employees Ret. Sys.; Romulus v. Department of Envtl. Quality; Substantial evidence; Department of Cmty. Health v. Risch; Principle that a reviewing court cannot set aside an agency decision if it finds it inequitable; Huron Behavioral Health v. Department of Cmty. Health; Effect of a reviewing court’s application of incorrect legal principles; Dignan v. Michigan Pub. Sch. Employees Ret. Bd.; Michigan Department of Transportation (MDOT); Federal Highway Administration (FHWA)

Holding that the circuit court clearly erred in reviewing the ALJ’s decision and applied incorrect legal principles, and that the ALJ’s decision was supported by law and should have been upheld, the court reversed the circuit court’s decision and reinstated the ALJ’s decision in this dispute under the HAA. The ALJ determined that petitioner-Wolverine Sign Works owned six signs that were out of compliance with § 7b (MCL 252.307b) of the HAA, and ordered that they “be brought into compliance or removed.” The circuit court reversed the ALJ’s decision. The court concluded that the circuit court clearly erred “by disregarding the ALJ’s factual findings and failing to apply the appropriate standard of review. Essentially, the circuit court substituted its judgment for that of the ALJ.” Its decision was based largely “on its conclusion that MDOT had allowed the signs to contain phone numbers, websites, and more for several years. After concluding that MDOT was responsible for the nonconforming signs,” the circuit court determined that “MDOT was estopped from enforcing” the HAA’s restrictions. However, the court noted that “the APA does not allow the reviewing court to ‘set aside an administrative decision it finds inequitable.’” Further, it appeared that the circuit court did not “consider whether the ALJ committed an error of law or whether its decision was supported by competent, material, and substantial evidence.” As the circuit court applied incorrect legal principles when it failed to review the ALJ’s decision under the proper standard, its decision was clearly erroneous. The court held that, “as a matter of law, the ALJ appropriately concluded that MDOT’s decision was appropriate, and that the expansion of items permissible on directional signs, such as the use of websites, phone numbers, and slogans, did not fit within the limitations established by the HAA.” To the extent the circuit court determined that “the ALJ’s decision was arbitrary and capricious,” the record did not support this conclusion. “The ALJ correctly found that MDOT’s decision was based on a sound determining principle, namely, that the signs were not in compliance with the relevant statutes. Additionally, the ALJ correctly held that MDOT’s interpretation of the law was supported by the guidance provided by FHWA.”