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Dept. of Revenue, Permanent Fund Div., v. Cosio (8/20/93), 858 P 2d 621
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Notice: This is subject to formal correction before
publication in the Pacific Reporter. Readers are
requested to bring typographical or other formal errors
to the attention of the Clerk of the Appellate Courts,
303 K Street, Anchorage, Alaska 99501, in order that
corrections may be made prior to permanent publication.
THE SUPREME COURT OF THE STATE OF ALASKA
STATE OF ALASKA, DEPARTMENT )
OF REVENUE, PERMANENT FUND ) Supreme Court No. S-4344
DIVIDEND DIVISION, )
) Trial Court No.
Petitioner, ) 3AN-89-7128 Civil
)
v. ) O P I N I O N
)
ARTURO COSIO and )
TOMAS COSIO, )
)
Respondents. ) [No. 3998 - August 20, 1993]
______________________________)
Petition for Review from the Superior
Court of the State of Alaska, Third Judicial
District, Anchorage, Peter A. Michalski,
Judge.
Appearances: Joyce James, Vincent L.
Usera, Assistant Attorneys General, Charles
E. Cole, Attorney General, Juneau, for
Petitioner. Helen L. Simpson, Simpson &
Thompson, Anchorage, for Respondents.
Jeffrey D. Mahlen, Assistant Public Defender,
John B. Salemi, Public Defender, Anchorage,
for Alaska Public Defender Agency, Amicus
Curiae.
Before: Rabinowitz, Chief Justice,
Burke, Matthews, Compton, and Moore,
Justices.
MATTHEWS, Justice.
BURKE, Justice, dissenting.
Under AS 43.23.005(a)(1) a "state resident"is entitled
to receive a permanent fund dividend. Alaska Statute
43.23.095(8) defines "state resident"as "an individual who is
physically present in the state with the intent to remain
permanently in the state . . . ." From 1985 to 1987, Arturo and
Tomas Cosio were in the United States illegally. During that
period, however, both men were physically present in Alaska and
intended to remain. The Cosios claim they were "state residents"
within the meaning of AS 43.23 and thus entitled to a permanent
fund dividend.
The Cosios applied for permanent fund dividends in each
of the three years at issue. They received dividends for 1985
and 1986, but were denied dividends for 1987. Additionally, the
State demanded repayment of the 1985 and 1986 dividends. The
Cosios administratively appealed the State's actions. Following
a hearing, the hearing officer ruled that the Cosios were
ineligible to receive dividends from 1985 through 1987 under a
regulation which stated: "An alien with resident alien status or
a refugee otherwise qualifying under [the provisions of state law
pertaining to such eligibility] is eligible to receive a
permanent fund dividend." 15 Alaska Administrative Code (AAC)
23.615(d) (1988). This ruling was subsequently adopted by the
commissioner of the Department of Revenue.
The Cosios appealed to the superior court. The court
ruled that the regulation was inconsistent with the statutory
definition of "state resident"and was therefore invalid: "[T]he
establishment of the immigration status of resident alien as the
minimal threshold required for alien eligibility, however
convenient, is inconsistent with the plain language of the
statute which determines residency by a person's intent." The
State petitioned for review from this ruling. We granted the
petition.
The legislature has authorized the commissioner of the
Department of Revenue to promulgate regulations implementing the
permanent fund dividend program. Alaska Statute 43.23.015(a)
provides:
Application and proof of eligibility.
(a) The commissioner shall adopt regulations
under the Administrative Procedure Act (AS
44.62) for determining the eligibility of
individuals for permanent fund dividends.
The commissioner may require an individual to
provide proof of eligibility, and the
commissioner may use other information
available from other state departments or
agencies to determine the eligibility of an
individual.
Alaska Statute 43.23.055(2) provides:
Duties of the department. The
department shall
. . . .
(2) adopt regulations under the
Administrative Procedure Act (AS 44.62) that
establish procedures and time limits for
claiming a permanent fund dividend; . . . .
Pursuant to this authority, the commissioner promulgated 15 AAC
23.615(d), which limits dividend eligibility to aliens who are
resident aliens or refugees.
I. The regulation is authorized by statute.
Initially, we must determine whether the authorizing
statutes require the commissioner to promulgate procedural
regulations, substantive regulations, or both. Section .055(2)
clearly limits the commissioner's authority to adoption of
procedural regulations concerning dividend applications and proof
of dividend eligibility. Section .015(a), on the other hand, can
reasonably be read to encompass both procedural and substantive
regulations. We conclude that section .015(a) requires the
commissioner to adopt regulations setting substantive eligibility
requirements for permanent fund dividends.
We reach this conclusion for two reasons. First, if
the legislature had intended the delegation contained in .015(a)
to pertain strictly to matters of procedure, the legislature
likely would have used language plainly expressing this
limitation, as it did in AS 43.23.055(2). Second, if the legis
lature intended only a procedural meaning, AS 43.23.015(a) would
be superfluous because of the presence of section .055(2). Since
no statute should be construed to be merely superfluous if it
reasonably has another meaning, Homer Electric Association v.
Towsley, 841 P.2d 1042, 1045 (Alaska 1992), we conclude that
section .015(a) delegates authority to the commissioner to
promulgate regulations dealing with substantive eligibility
requirements.
This case, therefore, reduces to a single question:
whether 15 AAC 23.615(d), as construed by the hearing officer and
the commissioner to restrict permanent fund dividend eligibility
to aliens with resident alien or refugee status, falls within the
commissioner's delegated authority to regulate the eligibility of
individuals for permanent fund dividends. In answering this
question, we accord the administrative regulation a presumption
of validity; the party challenging the regulation bears the
burden of demonstrating invalidity. Alaska Int'l Indus. v.
Musarra, 602 P.2d 1240, 1245 n.9 (Alaska 1979). We review a
"legislative"type of regulation, such as is presented here, with
considerable deference:
First, we will ascertain whether the reg
ulation is consistent with and reasonably
necessary[1] to carry out the purposes of the
statutory provisions conferring rule-making
authority on the agency. This aspect of
review insures that the agency has not
exceeded the power delegated by the legis
lature. Second, we will determine whether
the regulation is reasonable and not
arbitrary. This latter inquiry is proper in
the review of any legislative enactment.
Kelly v. Zamarello, 486 P.2d 906, 911 (Alaska 1971). We will not
substitute our judgment for that of the agency with respect to
the efficacy of the regulation nor review the "wisdom" of a
particular regulation. Alaska Int'l Indus. v. Musarra, 602 P.2d
at 1245 n.9.
The commissioner argues that the regulation in question
adds a permissible gloss to the statutory phrase "intent to
remain permanently in the state," AS 43.23.095(8). The
commissioner cites Whaley v. State, 438 P.2d 718 (Alaska 1968),
as authority for the proposition that an agency having authority
to make legislative regulations may by regulation refine and add
meaning to statutory language. In Whaley, various personnel
rules excluded probationary or provisional employees from the
statutory classification "employee[s] in the classified service"
although the statute itself did not contain such an exclusion.
We upheld the exclusion as within the authority of the director
of personnel:
Such interpretative rules were made
pursuant to statutory authority, and
appellant does not point out, nor do we
perceive, that those rules are unreasonable
and not in accord with the terms and purposes
of the statute pursuant to which they were
adopted. We have no basis for not upholding
such an administrative interpretation of AS
39.25.170 [the statute using the term
"employee in the classified service"],
particularly in view of the well settled rule
that requires courts to give consideration
and respect to the contemporaneous
construction of a statute by those charged
with its administration, and not to overrule
such construction except for weighty reasons.
Id. at 722 (footnote omitted). We decided, then, that the agency
in Whaley had the authority to promulgate a regulation that
excluded employees who arguably fell within the statute's
definition. Similarly, in this case we agree that the
commissioner has the authority to promulgate a regulation
excluding permanent fund dividend applicants who arguably fall
within the statutory definition of eligible applicants. That
exclusion, however, must still be consistent with the statutory
purpose and "reasonable and not arbitrary." Kelly v. Zamarello,
486 P.2d at 911.
These conditions are met. The objective of AS
43.23.095(8) is to limit payment of dividends to permanent
residents. Those who are present in the state illegally may
reasonably be seen to fall outside of this category. The
challenged regulation accomplishes this. The commissioner
justifies this regulation by, in effect, interpreting the
statutory phrase "intent to remain permanently"to mean "intent
to lawfully remain permanently,"inferring a requirement of
lawful action from the statute.
We have made similar inferences in other statutory
contexts. For example, in Colville Environmental Services v.
North Slope Borough, 831 P.2d 341, 349 (Alaska 1992), a statute
gave grandfather rights to municipalities which provided garbage
collection services before a certificate of authority was granted
to a competing provider of such services. The question was
whether the statutory language "provided similar services"
referred to all services or only lawfully provided services. We
construed the statute to apply only where the municipality had
lawfully provided services. Similarly, in Simpler v. State
Commercial Fisheries Entry Commission, 728 P.2d 227, 230 (Alaska
1986), the litigant challenged an agency regulation that required
prior fishing as the holder of both an interim-use permit and a
gear license in order to qualify for grandfather rights in a
fishery. The regulation was challenged as inconsistent with the
authorizing statute which only required prior fishing as the
holder of a gear license. We upheld the regulation, noting that
one could not legally fish without both a gear license and an
interim-use permit. The regulation was held to be consistent
with the act based on the inference that the legislature intended
to establish eligibility based on lawful participation. Id.
Underlying both of these decisions is an assumption that the
legislature did not intend to reward unlawful conduct. The
commissioner was entitled to make the same assumption in this
case.
One objective of section .015(a) is to require the
commissioner to make substantive regulations resolving questions
as to who is and who is not a permanent resident. 15 AAC
23.615(d) is such a regulation. It makes abundant sense to
conclude that aliens who may not legally live in Alaska are not
permanent residents for dividend purposes. To exclude such
people from the permanent fund dividend program is consistent
with a public policy which regards it as unwise to reward
illegality. The regulation, therefore, is not invalid on
statutory grounds.
II. The regulation is constitutional.
Amicus contends that 15 AAC 23.615(d) is
unconstitutional because dividend eligibility depends upon a
classification that burdens aliens who are not resident aliens or
refugees. Amicus argues that this classification denies the
excluded aliens equal protection of the law under the state equal
rights provision, article I, section 3 of the Alaska
Constitution, and under the Fourteenth Amendment to the United
States Constitution.2
A. Federal Equal Protection
Like ancient Gaul, modern analysis under the federal
equal protection clause3 is divided into three parts. First, the
United States Supreme Court has reserved its most searching
review -- strict scrutiny -- for legal classifications that
burden suspect classes of individuals or that burden a
fundamental right. Only classifications based on race, alienage,
and national origin merit strict scrutiny. Strict scrutiny
requires that the government show that its law is narrowly
tailored to the achievement of a compelling government interest.
City of Richmond v. J.A. Croson Co., 488 U.S. 469, 493-94 (1989)
(plurality opinion). Laws often fail to survive strict scrutiny,
prompting one commentator to label the test "'strict' in theory,
and fatal in fact." Gerald Gunther, The Supreme Court Term 1971-
-Foreword: In Search of Evolving Doctrine on a Changing Court: A
Model for Newer Equal Protection, 86 Harv. L. Rev. 1, 8 (1972);
but see Korematsu v. United States, 323 U.S. 214, 216 (1944).
Second, the Supreme Court applies a less searching form
of review -- intermediate scrutiny -- to legal classifications
that burden quasi-suspect classes. Thus far, the Supreme Court
has applied intermediate scrutiny to classifications based on
gender and illegitimacy. See, e.g., Mills v. Habluetzel, 456
U.S. 91, 99 (1982) (illegitimacy); Mississippi Univ. for Women v.
Hogan, 458 U.S. 718, 724 (1982) (gender). Under intermediate
scrutiny, the government must show that its law bears a
substantial relationship to an important government interest.
Hogan, 458 U.S. at 724.
Third, the Supreme Court reviews all other legal
classifications under its most deferential standard of review --
rational basis. Under rational basis review, the government only
need show that the challenged law is rationally related to the
attainment of a legitimate state interest. United States R.R.
Retirement Bd. v. Fritz, 449 U.S. 166, 174-75 (1980). Rational
basis review is often as permissive as strict scrutiny is fatal.
See Laurence Tribe, American Constitutional Law 16-3, at 1443
(1988). Occasionally, however, the Supreme Court has intensified
its gaze and subjected a law to a more searching inquiry, ulti
mately striking down the law under rational basis review. See,
e.g., City of Cleburne v. Cleburne Living Ctr., Inc., 473 U.S.
432, 439 (1985). One commentator refers to this stricter review
as "covertly heightened scrutiny"under which the Court increases
the government's task in justifying the challenged law. Tribe,
supra, 16-33, at 1612.
The Cosios, as illegal aliens, do not automatically
fall within one of the three pre-set categories. Where they do
fall is best discovered by examining Plyler v. Doe, 457 U.S. 202
(1982). In Plyler, Texas denied public school funding for the
children of illegal aliens. The Court began its analysis with a
recognition that illegal aliens, as a class, merit merely
rational basis review: "Undocumented aliens cannot be treated as
a suspect class because their presence in this country in
violation of federal law is not a 'constitutional irrelevancy.'"
Id. at 223. The Court, however, ultimately held the State to a
higher standard, concluding that the challenged law "can hardly
be considered rational unless it furthers some substantial goal
of the State." Id. at 224 (emphasis added). Thus, while
reviewing the Texas law under the "rational" basis test, the
Court required the State to produce a "substantial,"as opposed
to merely "legitimate,"state interest. In doing so, the Court
seemed to employ its intermediate level of scrutiny.
Plyler indicates that the Court's increased scrutiny
cannot be attributed solely to the fact that the challenged law
burdened illegal aliens. Rather, the Court offered two important
reasons for subjecting the Texas law to higher scrutiny:
[(1) The state law] imposes a lifetime
hardship on a discrete class of children not
accountable for their disabling status.
[(2)] The stigma of illiteracy will mark
them for the rest of their lives. By denying
these children a basic education, we deny
them the ability to live within the structure
of our civic institutions, and foreclose any
realistic possibility that they will
contribute in even the smallest way to the
progress of our Nation.
Id. at 223 (emphasis added). Neither of these reasons exists in
the present case. First, the Cosios, both adults, are fully
"accountable for their disabling status." Second, a permanent
fund dividend is not comparable to education, the deprivation of
which leaves the victim irretrievably stigmatized. Rather, a
dividend is a matter of grace, a "governmental 'benefit'
indistinguishable from other forms of social welfare," id. at
221, which the Plyler Court suggested merits mere rational basis
review. Thus, the State's dividend eligibility requirement only
warrants rational basis review.
As we have recognized elsewhere, three main purposes
underlie the Alaska permanent fund dividend program:
(1) to provide a mechanism for equitable
distribution to the people of Alaska of at
least a portion of the state's energy wealth
derived from the development and production
of the natural resources belonging to them as
Alaskans;
(2) to encourage persons to maintain
their residence in Alaska and to reduce
population turnover in the state; and
(3) to encourage increased awareness
and involvement by the residents of the state
in the management and expenditure of the
Alaska permanent fund . . . .
Ch. 21, 1(b), SLA 1980 (emphasis added), quoted in Williams v.
Zobel, 619 P.2d 448, 458 (Alaska 1980), rev'd, 457 U.S. 55
(1982). We believe that the program's permanent residence
requirement, as interpreted to require "legal" residence, is
rationally related to the attainment of these legitimate
purposes.4
First, we agree with the State that "giving dividends
to illegal aliens would . . . contravene public policy by
rewarding individuals for illegal acts." The State may properly
determine that it is inequitable to give the same treatment to
those who gain their resident status illegally as opposed to
those who do so legally. Compliance with the law is a legitimate
consideration when the legislature considers entitlement to
public funds. Thus, a regulation distinguishing between law-
abiding and law-breaking state residents, and rewarding the
former, is rationally related to the purpose of equitably
distributing income from the permanent fund.
Second, permanent fund dividends should "encourage
persons to maintain their residence in Alaska and to reduce
population turnover . . . ." To this end, the legislature has
specifically limited dividend eligibility to permanent residents
of the state. AS 43.23.005(a)(1). The commissioner has defined
permanent residence with regard to one's ability to remain
permanently. This definition is rational because one's "intent
to remain permanently"means little without the right or ability
to effectuate that intent. Since compliance with federal
immigration laws is a prerequisite for one's continued ability to
reside in this state, resident alien or refugee status is an
adequate proxy for, and thus rationally related to ascertaining,
an individual's meaningful "intent to remain permanently" in
Alaska.
Third, the State has legitimately tailored dividend
eligibility to "encourage increased awareness and involvement by
the residents of the state in the management and expenditure of
the Alaska permanent fund." The state constitution requires that
twenty-five percent of "all mineral lease [revenues] be placed in
[the] permanent fund . . . ." Alaska Const. art. IX, 15.5 The
principal of the fund must remain to produce income; the income
from the fund, however, may be allocated as "provided by law."
Id. The legislature has provided that half of the fund's annual
income available for distribution must be available for
dividends. AS 37.13.145(b). The other half of annual income is
currently reinvested in the fund directly or in the earnings
reserve account of the fund. These allocations are subject to
legislative change.
The dividend program was intended to create a
constituency in the voting public which would favor reinvestment
of permanent fund earnings rather than using such earnings to
finance new government programs or to defray the expenses of
existing ones. Zobel, 619 P.2d at 462. These voters would, in
turn, influence legislative decisions concerning the allocation
of permanent fund revenue. The result would be an eventual
increase in the size of the permanent fund and a deferral of the
use of permanent fund earnings for government operations until
the earnings are truly needed for that purpose.
This purpose could well be achieved by limiting
dividend recipients to Alaska residents eligible to vote. In the
original dividend program enacted in 1980, Ch. 21 SLA 1980,
children were excluded from dividend eligibility. In 1982, after
three justices of this court had expressed doubts concerning the
constitutionality of this exclusion,6 the legislature expanded
the class of dividend recipients to include children. Similarly,
the exclusion of aliens who are legal residents of the state
could raise serious constitutional questions.7 Thus, the
commissioner's inclusion of legal aliens among those eligible to
receive dividends can be viewed as a prudent response to current
constitutional learning. Dividend recipients thus include those
eligible to vote and those whose exclusion would raise serious
constitutional questions.8 Such a classification is rationally
related to the third purpose of the dividend program.
In sum, the commissioner's eligibility requirements are
rationally related to the achievement of the three legitimate
purposes underlying the permanent fund dividends. For this
reason, 15 AAC 23.615(d) survives scrutiny under the federal
equal protection clause.
B. Alaska Equal Protection
Analysis under our state equal protection clause9 is
considerably more fluid than under its federal counterpart.
Instead of using three levels of scrutiny, we apply a sliding
scale under which "[t]he applicable standard of review for a
given case is to be determined by the importance of the
individual rights asserted and by the degree of suspicion with
which we view the resulting classification scheme." State v.
Ostrosky, 667 P.2d 1184, 1192-93 (Alaska 1983). As the right
asserted becomes "more fundamental"or the classification scheme
employed becomes "more constitutionally suspect,"the challenged
law "is subjected to more rigorous scrutiny at a more elevated
position on our sliding scale." Id. at 1193.
The importance of the asserted right and the
suspectness of the classification scheme determine the ends-means
scrutiny to be applied. Our general approach is as follows:
As the level of scrutiny selected is
higher on the [sliding] scale, we require
that the asserted governmental interests be
relatively more compelling and that the
legislation's means-to-ends fit be
correspondingly closer. On the other hand,
if relaxed scrutiny is indicated, less
important governmental objectives will
suffice and a greater degree of over/or
underinclusiveness in the means-to-ends fit
will be tolerated.
Id. (footnote omitted).
In the present case, we see no reason why 15 AAC
23.615(d) warrants greater than minimal scrutiny under our state
equal protection analysis. First, "[a] dividend is merely an
economic interest and therefore is entitled only to minimum
protection under our equal protection analysis." State v.
Anthony, 810 P.2d 155, 158 (Alaska 1991). Second, Amicus has
provided no reason why the classification "persons who have
voluntarily failed to comply with the United States immigration
laws"10 should receive greater than minimal equal protection
scrutiny. For these reasons, we apply minimal scrutiny under our
state equal protection analysis.
Minimal scrutiny under our state constitution may be
more demanding than under the federal constitution. As under the
federal constitution, the challenged exclusion must be designed
to achieve a "legitimate"governmental objective; however, the
exclusion must bear a "fair and substantial"relationship to the
accomplishment of the legitimate objective.11 As discussed above,
we have concluded that limiting the distribution of dividends to
those who are lawful permanent residents is rationally related to
legitimate objectives of the dividend program; we also conclude,
for the same reasons that the limitation is fairly and
substantially related to these goals. Thus, 15 AAC 25.615(d)
survives rational basis review under our state equal protection
method of review.
We REVERSE the decision of the superior court invalid
ating 15 AAC 25.615(d) and REMAND for proceedings consistent with
this opinion.
BURKE, J., dissenting,
I respectfully dissent from the court's decision
upholding 15 AAC 23.615(d) as a valid exercise of the Department
of Revenue commissioner's regulatory authority. I do not agree
that 15 AAC 23.615(d), which excludes most classes of aliens from
dividend eligibility, is consistent with or reasonably necessary
to carry out the statutory purposes of AS 43.23.005(a)(1) and
AS 43.23.095(a).12 Nor do I agree that the legislature delegated
authority to the commissioner to pass a regulation which actually
changes the eligibility standard.
The Permanent Fund Dividend Division (hereafter
"department") declared Arturo and Tomas Cosio ineligible to
participate in the Permanent Fund Dividend Program, AS 43.23,
based on a department regulation, 15 AAC 23.615(d). Before it
was repealed in 1989,13 the regulation stated: "An alien with
resident alien status or a refugee otherwise qualifying under
[the provisions of state law pertaining to such eligibility] is
eligible to receive a permanent fund dividend." 15 AAC
23.615(d). Because the Cosios' federal immigration status during
the dividend years in question was other than "resident alien"or
"refugee,"the department declared them ineligible.
The superior court reversed this decision on appeal,
ruling that there was an impermissible conflict between the
department's eligibility requirements and those established by
the legislature in AS 43.23.005(a)(1) and .095(8). Cosio v.
State, No. 3AN-82-6892 Civ. (Alaska Super. December 13, 1990).
The court noted that only "state resident[s]"qualify to receive
permanent fund dividends. AS 43.23.005(a)(1). It further noted
that "state resident" is defined as "an individual who is
physically present in the state with the intent to remain perma
nently in the state." AS 43.23.095(8). The superior court then
held:
Since [the legislature has declared
that] eligibility is determined by the
applicant's intent, the [department] may not
deny eligibility based on someone else's in
tent. Immigration status is one factor which
may be considered in evaluating an
applicant's intent, but it is not determi
native under the current statute, without
amendment.
Cosio v. State, Dept. of Revenue, No. 3AN-82-6892 Civ. at 4.
(Alaska Super., December 13, 1990). The superior court declared
the regulation invalid, and the case came to this court for
review.
I
The first question I address is the proper degree of
deference to be afforded the department's regulation. The court
does not directly address the proper standard to be used to
review the department's interpretation of the phrase "intent to
remain permanently in the state."14 AS 43.23.095(8). The court
instead looks to the statutes which authorize the commissioner of
the Department of Revenue "to promulgate regulations implementing
the permanent fund dividend program."Slip Op. at 3. The court
states that AS 43.23.015(a), providing that the commissioner
"shall adopt regulations . . . for determining the eligibility of
individuals for permanent fund dividends," requires the
commissioner to set "substantive eligibility requirements." Slip
Op. at 4. The court then concludes that this statutory authority
also permits the commissioner "to promulgate a regulation
excluding permanent fund dividend applicants who arguably fall
within the statutory definition of eligible applicants." Slip
Op. at 7 (emphasis added).
In my view, the court's arguments on this point are
flawed, and the entire discussion is misdirected. The court
notes that, in addition to AS 43.23.015(a), the legislature
authorized the department to "adopt regulations that establish
procedures and time limits for claiming a permanent fund
dividend." Slip Op. at 3 (quoting AS 43.23.055(2)). The court
then concludes that AS 43.23.015(a) would be superfluous if it
were read to only grant the commissioner the authority to
promulgate "procedural regulations" because section .055(2)
already provides this authority. Slip Op. at 4.
First of all, the regulatory authority granted by
section .015(a) is plainly distinct from section .055(2). The
former section provides the commissioner the authority to adopt
criteria and proofs for a claimant to establish dividend
eligibility.15 The later section requires the department to adopt
regulations setting the procedures and time limits for claiming a
dividend. Thus, section .015(a) allows the department to
regulate the eligibility determination process and section
.055(2) allows it to set up general procedures for claiming
dividends. There is nothing redundant or superfluous about these
separate grants of regulatory authority.
Furthermore, I would not dispute that AS 43.23.015(a)
delegates to the commissioner some substantive or quasi-
legislative rulemaking authority. Assessment of a person's
subjective intent is often difficult, and when a particular
intent will entitle an applicant to receive a substantial sum of
money, there will always be those willing to alter the truth.
Thus, it is clear that the legislature gave the department the
authority under AS 43.23.015(a) to adopt regulations which allow
it to evaluate an applicant's subjective intent, to the extent
possible, by means of objective criteria.16 See State v.
Anderson, 749 P.2d 1342, 1345 n.8 (Alaska 1988) ("an agency does
not need a specific grant of power to adopt each individual
provision of a regulation"). However, contrary to the present
court's analysis, the fact that the commissioner has some quasi-
legislative rulemaking authority does not end the inquiry into
the department's authority to adopt 15 AAC 23.615(d). The key
question is whether the subject matter of the regulation is
within the scope of authority which the legislature conferred on
the commissioner.
As we noted in Kelly v. Zamarello, 486 P.2d 906, 911
(Alaska 1971):
Certain provisions of the Alaska
Administrative Procedure Act provide guidance
as to the standard of review for regulations
adopted pursuant to an administrative
agency's quasi-legislative rule-making
function. AS 44.62.020 states in part:
To be effective, each regulation adopted
must be within the scope of authority
conferred and in accordance with standards
prescribed by other provisions of law.
AS 44.62.030 states:
If, by express or implied terms of a
statute, a state agency has authority to
adopt regulations to implement, interpret,
make specific or otherwise carry out the
provisions of the statute, a regulation
adopted is not valid or effective unless
consistent with and reasonably necessary to
carry out the purposes of the statute.
In deciding whether the regulation is "effective"under
AS 44.62.020 as "within the scope of authority conferred"by the
legislature, this court's job is to determine if "the legislature
has intended to commit to the agency discretion as to the
particular matter that forms the subject of the regulation."Id.;
see generally Anderson, 749 P.2d at 1344-45.
I find no indication in the language of AS 43.23.015(a)
that the legislature intended to commit the dividend eligibility
of certain classes of immigrants to the department's discretion.17
As we implicitly recognized in Anderson, legislative delegation
is usually done when "the agency has the necessary expertise to
determine the best means" of accomplishing a particular
legislative goal. Id. at 1345. In this case, the subject matter
of the regulation does not relate to the means of proving
dividend eligibility, arguably something within the department's
field of expertise. The regulation, in fact, amounts to the
department's legal conclusion that certain classes of immigrants
do not have the capacity to legally "intend to remain permanently
in the state."18 The court's opinion does not even
attempt to provide, nor do I perceive, a sound basis for
concluding that the legislature intended the department to use
its discretion to further define the qualities of a "state
resident," particularly by means of federal immigration status.
The definition of "residency"as "physical presence plus a
subjective intent to remain permanently"is a particularly legal
concept well known to this court and, presumably, the
legislature. The Permanent Fund Dividend Division has no special
expertise in this area, much less is it an expert in the
intricacies of federal immigration law.19
As noted above, the department must certainly be
afforded some deference in adopting and implementing regulations
which permit it to determine dividend eligibility. I conclude,
however, that the department was not authorized to proscribe
dividend eligibility for a class of applicants who actually, or
"arguably"as the court puts it, satisfy the presence and intent
requirements. In other words, the department may not set up
impediments to eligibility that go beyond those established by
the legislature. For these reasons, I would hold that 15 AAC
23.615(d) is void as violative of AS 44.62.020 and AS 44.62.030,
and I would affirm the superior court's decision.
II
Ordinarily, there would be no need for me to proceed
further. However, even accepting the court's view that
AS 43.23.015(a) granted the commissioner broad authority to pass
regulations covering the subject matter of 15 AAC 23.615(d), I
believe the court's decision seriously misrepresents federal
immigration law. Therefore, in order to bring out what I believe
are erroneous assumptions, I will presume that the department had
the authority to promulgate 15 AAC 23.615(d) and that the only
question is whether the regulation "adds a permissible gloss" to
the statutory definition of state residency. See Slip Op. at 6-7.
The department declared the Cosios ineligible to receive
permanent fund dividends because they were not "resident aliens"
or "refugees" and were therefore ineligible under 15 AAC
23.615(d). The department argues that its regulation is
reasonable and consistent with AS 43.23.005(1) and AS
43.23.095(8) because an alien who does not have permanent
resident or refugee status does not have the "legal ability to
remain permanently in the state."Brief of Petitioner at 16. The
department maintains that "any person without permanent residence
status can be deported despite his wish to remain [in the
state]." Id. at 10. Thus, the department concludes, non-resident
aliens cannot "legally intend to do that which by law . . . they
are prohibited from doing."Id. (quoting Juarrero v. McNayr, 157
So.2d 79, 81 (Fla. 1963)).
The court essentially agrees with the department that
15 AAC 23.615(d) simply infers "a requirement of lawful action
from the statute."Slip Op. at 7. The court then cites a case,
Simpler v. State Commercial Fisheries Entry Comm'n, 728 P.2d 227,
230 (Alaska 1986), where we held that an agency may reasonably
impute a lawfulness component into statutes when adopting
regulations. The court states that it is entirely appropriate to
assume "that the legislature did not intend to reward unlawful
conduct."Slip Op. at 8. It continues:
It makes abundant sense to conclude that
aliens who may not legally live in Alaska are
not permanent residents for dividend
purposes. To exclude such people from the
permanent fund dividend program is consistent
with public policy which regards it as unwise
to reward illegality.
Slip Op. at 9.
If it were, in fact, true that 15 AAC 23.615 excludes
from dividend eligibility only those aliens who may not legally
live in Alaska, then I would have to commend the common sense
result which the court reaches today (if not the analysis it
employs to reach it). However, a short examination of federal
immigration law demonstrates that a regulation restricting
dividend eligibility to citizens and immigrants with "resident
alien" and "refugee"status is over-inclusive if its purpose is
to avoid rewarding illegality.20 In other words, immigrants
without the specific immigration status listed in the regulation
may still be present in Alaska legally and may "lawfully" have
the subjective intent to remain in the state indefinitely.
A few examples suffice to make this point. Foreign
diplomats or foreign fiancees of United States citizens may enter
this country under non-immigrant visas and may subsequently
petition the Immigration and Naturalization Service to adjust
their non-immigrant status to permanent resident status so long
as certain criteria are met. See 8 U.S.C. 1255-1255a (1988 &
Supp. 1993). In fact, almost all classes of lawfully admitted
non-immigrants may use the adjustment of status mechanism to gain
permanent resident status. Id. Although most classes of non-
immigrants would violate the terms of their visas and be subject
to deportation if they had the subjective intent to remain
permanently in the United States at the time they entered the
country, the United States Immigration Code does not prohibit
lawfully admitted non-immigrant aliens from subsequently
petitioning the government to remain in the country indefinitely.21
In a case which is instructive in this regard, the
United States Supreme Court held that aliens holding certain
types of non-immigrant visas were not prevented, as a matter of
federal law, from forming the intent necessary to establish state
residence. See Elkins v. Moreno et al., 435 U.S. 647 (1978).22
The court held:
Under present law . . . were a G-4 alien
[i.e. an officer of a foreign governmental
agency] to develop a subjective intent to
stay indefinitely in the United States, he
would be able to do so without violating
either the [Immigration] Act, the Service's
regulations, or the terms of his visa.
Id. at 666.
Given this controlling federal precedent, I am at a
loss to understand this court's position that 15 AAC 23.615(d)
merely serves to impute a legality requirement into the statutory
definition of "state resident." Under 15 AAC 23.615(d), a person
could be lawfully admitted to this country, be physically present
in Alaska for many years, form the subjective intent to remain
permanently in the state (without violating federal immigration
laws), and still be ineligible to receive a permanent fund
dividend.23 I do not believe this result is either consistent
with or reasonably necessary to carry out the purposes of
AS 43.23.005(a) and .095(8). See AS 44.62.030; Zamarello, 486
P.2d at 911. The regulation is therefore invalid. Id.
Non-resident immigration status is simply an unreliable
indicator of an alien's legal ability to intend to remain in the
state. While the department was entitled to consider the Cosios'
immigration status as a factor in its "totality of the
circumstances" review, it was not authorized to declare the
Cosio's ineligible to receive dividends based solely on their
immigration status.24 I would therefore affirm the superior
court's decision.
_______________________________
1 If we find the proper nexus between the challenged
regulation and the statutory purpose (i.e., the regulation is
consistent with the statutory purpose), we do not generally
require a separate showing of reasonable necessity. Strictly
applied, inquiry into whether a regulation is necessary as a
means to a legislative end would mire this court in questions of
public policy and the advisability of possible alternatives.
Such a searching inquiry is beyond our authority and expertise.
It is a rare case where a regulation, although not inconsistent
with the purpose of the statute, is wholly superfluous to the
achievement of that purpose.
2 Amicus also argues that the classification violates the
state and federal guarantees of due process of law and invades
the exclusive federal power over immigration. Since neither of
these points is reasonably arguable, we do not address them.
3 "No state shall . . . deny to any person within its juris
diction the equal protection of the laws." U.S. Const. amend.
XIV, 1, cl. 4.
4 The State also argues that the "primary objective"of its
regulation is "to preserve the distribution of state benefits to
those properly entitled to receive them . . . ." Taken alone,
this is a tautology: those whom the State excludes from dividend
eligibility are, by definition, not "properly entitled" to a
dividend; thus, their exclusion furthers the State's primary
objective. Under this view, any eligibility requirement would be
supported by the State's "primary objective."
5 Currently 50% of all lease revenues are placed in the
fund. AS 37.13.010(a)(2).
6 Zobel, 619 P.2d at 464 (concurring opinion of Burke,
Justice); 471, 472 (dissenting opinion of Dimond, Senior Justice,
joined by Matthews, Justice).
7 The exclusion of legal aliens could raise a federal equal
protection question reviewable under strict scrutiny. See, e.g.,
Graham v. Richardson, 403 U.S. 365 (1971).
8 We note that there are narrow classes of aliens who may be
legally present in Alaska who are neither resident aliens nor
refugees. Asylees constitute one such class. AS 43.23.005 was
amended in 1992 to specify asylees as a class eligible for
permanent fund dividends. Ch. 4, 4, SLA 1992; see AS
43.23.005(a)(5)(D). By regulation, the commissioner has also
extended eligibility to those aliens who have been granted "condi
tional resident status." 15 AAC 23.153(b). If there are other
aliens who are legally present who do not meet the eligibility
requirements of the regulations, they may have valid claims that
their exclusion from dividend eligibility is unconstitutional.
The Cosios, however, are not in a position to raise this argument
for those individuals.
9 "SECTION 3. Civil Rights. No person is to be denied the
enjoyment of any civil or political right because of race, color,
creed, sex, or national origin. The legislature shall implement
this section." Alaska Const. art. I, 3.
10 Amicus cites Park v. State, 528 P.2d 785 (Alaska 1974),
for the proposition that classifications based on "alienage"
receive heightened equal protection scrutiny. Amicus is correct
on this point. Amicus, however, misses a fundamental
characteristic of the present case: the Cosios were both illegal
aliens during the relevant time period. We believe that the
Plyler Court was correct in finding this illegality relevant to
the constitutional analysis. For this reason, Park is
inapposite.
11 State v. Anthony, 810 P.2d at 158. This formulation may
involve more scrutiny than merely asking whether the connection
between how the statute works and the achievement of its goal is
"rational"; whether it is a more demanding standard depends on
how rigorously "rational"is defined.
12 Most of the statutes involved in this appeal were
substantially revised in 1991 and 1992. These revisions do not
apply to the Cosios and will not affect my analysis. I recognize
that AS 43.23.005 now requires that an individual, in addition to
being a state resident, either be a United States citizen or a
permanent resident, refugee or asylee in order to be eligible for
a permanent fund dividend.
This change in the statute does not deter me from concluding
that 15 AAC 23.615(d), a regulation creating a similar standard,
is invalid both because the Department of Revenue commissioner
had no authority to create a stricter eligibility standard and
because the regulation is inconsistent with the statute in its
old form. As for the legislative history suggesting that the
present legislature was trying to validate the regulation by
amending the statute to clarify rather than change the existing
law, I note this court's discussion in Hillman v. Nationwide Mut.
Fire Ins. Co., 758 P.2d 1248, 1252 (Alaska 1988), wherein we
stated that "[w]hile the legislature is fully empowered to
declare present law by legislation, it is not institutionally
competent to issue opinions as to what a statute passed by an
earlier legislature meant."See also Wrangell Forest Prod. v.
Alderson, 786 P.2d 916, 918 n.1 (Alaska 1990). If anything, the
change in the law supports my conclusion that the prior statute
does not permit immigration status to be used to establish per se
dividend ineligibility. As we noted in Hillman, an "amendment to
an unambiguous statute is generally presumed to indicate a
substantive change in the law." Hillman, 758 P.2d at 1252
(quoting Torkko/Korman/Engineers v. Penland Ventures, 673 P.2d
769, 773-74 (Alaska 1983). I believe the old statute defining
"state resident"for dividend eligibility purposes was completely
unambiguous, and that the new statutory language must be read to
effect a change in the law.
13 The Alaska Administrative Code currently contains the
following provision:
(a) An alien who before January 1
of the qualifying year has been granted
permanent resident under 8 U.S.C. 1101(a)
(20), refugee status under 8 U.S.C. 1157 and
8 U.S.C. 1159, or asylum under 8 U.S.C. 1158
and who otherwise qualifies is eligible for a
dividend.
(b) An alien who has been granted
conditional resident status meets the
requirements of permanent resident status
under (a) of this section.
(c) An alien who does not fall
within the provisions of (a) or (b) of this
section is not eligible for a dividend.
15 AAC 23.153.
14 The department claims that because 15 AAC 23.615(d)
interprets the statutory phrase "intent to remain permanently"
and provides an objective standard for determining eligibility,
adoption of the regulation "implicate[s] special agency expertise
[and/or] the determination of fundamental policies within the
scope of the agency's statutory function." Tesoro Alaska
Petroleum Co. v. Kenai Pipe Line Co., 746 P.2d 896, 903 (Alaska
1987). Thus, the department urges this court to apply the
"rational basis"standard in examining its actions. Id.
15 The legislature's purpose in passing this section is made
apparent from the second sentence of the section which provides
that "the commissioner may require an individual to provide proof
of eligibility, and the commissioner may use other information
available from other state departments or agencies to determine
the eligibility of an individual."AS 43.23.015(a).
16 An example of this type of regulation would be 15 AAC
23.143. Subsection (a) provides in part:
An individual's intent to establish
residency, remain permanently in Alaska, or
return to Alaska and remain permanently is
demonstrated through the establishment and
maintenance of customary ties indicative of
Alaska residency and the absence of those
ties elsewhere.
Id. Another example is 15 AAC 23.173, which lists specific
indicia of intent as "proof of eligibility." Similar regulations
covering the dividend years at issue in this case, 1985-87, were
repealed in 1989. See 15 AAC 23.030(b) and .050(b) repealed
4/1/89.
17 Nor do I agree that the commissioner was authorized to
"make substantive regulations resolving questions as to who is
and who is not a permanent resident."Slip Op. at 8. The
determination of who is a "state resident"was accomplished by
the legislature when it passed AS 43.23.095(8) which
unambiguously defines the term. The legislature simply
authorized the commissioner to promulgate rules and procedures
which would allow the department to divine which applicants truly
satisfy the definition.
18 The misdirection aspect of the court's analysis becomes
apparent at this point. It does not really matter whether the
commissioner has quasi-legislative rulemaking authority in
general; it only matters whether 15 AAC 23.615(d) was passed
pursuant to that authority or whether it is actually an example
of a so-called "interpretive regulation."See Kelly, 486 P.2d at
909. Even the department acknowledges that the regulation is
simply interpreting a statutory phrase. In its brief, the
department proclaims that "[a]t issue in this case is the
validity of a regulation interpreting the statutory phrase
'intent to remain permanently.'"Brief of Petitioner at 5.
19 I believe the court's reliance on Whaley v. State, 438
P.2d 718, 722 (Alaska 1968) is flawed precisely because the court
never accounts for the fact that the rules and regulations in
question in Whaley were of the type which implicated the Director
of Personnel's expertise.
20 I assume that there is no dispute amongst my colleagues
that the legality or illegality of which we speak is determined
solely by federal law. The United States Constitution
exclusively entrusts immigration matters to the federal
government. See Graham v. Richardson, 403 U.S. 365, 378 (1971).
21 Even aliens who enter this country without inspection or
overstay a visa (i.e. those commonly referred to as "illegal
aliens") have certain defenses to deportation available to them
by federal statute. Those aliens who qualify may be granted
withholding of deportation, suspension of deportation, temporary
protected status, and asylum. See 8 U.S.C. 1252-54a (1988 &
Supp. 1993). All of these remedies, if granted, will allow an
alien to remain in this country indefinitely, as permanent
residents. Id. Therefore, it is a doubtful proposition to say
even of these aliens that they may not "lawfully" intend to
remain in the country indefinitely.
22 Many state courts have similarly concluded that non-
immigrant aliens have the capacity to form the intent necessary
to establish "domicile"or "residency"for divorce purposes. See
Pirouzkar v. Pirouzkar, 626 P.2d 380 (Or. App. 1981); Bustamante
v. Bustamante, 645 P.2d 40 (Utah 1982). Although this court has
not passed on this issue, I do not read the majority opinion as
holding that non-resident aliens are precluded, as a matter of
state law, from forming the intent necessary to establish
"residency." See, e.g., Perito v. Perito, 756 P.2d 895, 897-98
(Alaska 1988) (discussing the residency requirements under state
law which are sufficient to establish a trial court's
jurisdiction over a divorce).
23 To those who would argue that non-immigrant aliens only
have to wait until the Immigration and Naturalization Service
grants them permanent resident status to become eligible for
dividends, I would point out that the adjustment of status
process often takes many years to complete. Also, this argument
erroneously assumes that those pursuing this option cannot
"legally"intend to remain in the meantime.
24 Because I would declare 15 AAC 23.615(d) invalid on
statutory grounds, I do not believe this court needs to address
the constitutional arguments raised by the parties. Accordingly,
I take no position on the analysis the court today employs to
uphold the constitutionality of the regulation.
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