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State, Dept. of Revenue, Permanent Fund v. Bradley (6/9/95), 896 P 2d 237
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Notice: This opinion is subject to correction before
publication in the Pacific Reporter. Readers are
requested to bring errors to the attention of the Clerk
of the Appellate Courts, 303 K Street, Anchorage,
Alaska 99501, phone (907) 264-0607, fax (907) 276-5808.
THE SUPREME COURT OF THE STATE OF ALASKA
STATE OF ALASKA, DEPARTMENT )
OF REVENUE, PERMANENT FUND ) Supreme Court No. S-5834
DIVIDEND DIVISION, )
)
Appellant, ) Superior Court No.
) 3AN-92-3294 CI
v. )
)
CHRISTOPHER BRADLEY, ) O P I N I O N
)
Appellee. ) [No. 4221 - June 9, 1995]
______________________________)
Appeal from the Superior Court of the
State of Alaska, Third Judicial District,
Anchorage,
Rene J. Gonzalez,
Judge.
Appearances: Marilyn May, Assistant
Attorney General, Anchorage, Bruce M.
Botelho, Attorney General, Juneau, for
Appellant. Frederick T. Slone, Kasmar and
Slone, Anchorage, for Appellee.
Before: Moore, Chief Justice,
Rabinowitz, Matthews, Compton and Eastaugh,
Justices.
MATTHEWS, Justice.
This case involves the Department of Revenue's denial
of Christopher Bradley's application for a permanent fund
dividend for the 1990 calendar year.
I. FACTS AND PROCEEDINGS
Christopher Bradley (Bradley) was born in Alaska and
has lived in this state most of his life. Bradley served in the
military from 1982 to 1985 and maintained his Alaska residency
during that time. After his discharge from the military, Bradley
enrolled as a full-time student at the University of Utah. In
the summer following his first year of school, Bradley returned
to Alaska to work. At the end of the summer, Bradley began his
drive back to Utah, but was involved in an auto accident which
delayed his return to the University. Although Bradley intended
to enroll as a full-time student, the delay caused him to miss
the registration deadline. He was, therefore, unable to attend
school full-time during the fall quarter. Bradley's failure to
register for certain classes in the fall made him ineligible to
take the follow-up courses during the winter quarter.1 As a
result, Bradley was enrolled as a part-time student from
September 1989 through March 1990. He returned to Alaska in
April 1990 and has remained in the state since that time.
Bradley paid non-resident tuition the entire time he attended
school in Utah.
Bradley filed a timely application for a 1990 permanent
fund dividend (PFD). The Department of Revenue, Permanent Fund
Dividend Division (Department) denied his application on the
grounds that he was "not enrolled as a full time student or . . .
paying resident tuition"during his absence from the state.
Bradley appealed the denial, and after two Department hearings,
the denial was upheld. Bradley appealed to the superior court.
The superior court reversed, holding that the regulation upon
which the Department's decision was based was invalid. The
Department appeals.
II. DISCUSSION
Bradley argues that he is entitled to a PFD because he
meets the requirements of AS 43.23.095(8)(b).2 At the time
Bradley filed his application a state resident was defined as
an individual who is physically present
in the state with the intent to remain
permanently in the state or, if the
individual is not physically present in the
state, intends to return to the state and is
absent only for any of the following reasons:
. . . .
(B) secondary or postsecondary
education;
AS 43.23.095(8)(b).3 Regulation 15 AAC 23.175 adds detail to
this requirement:
(a) If an individual was not physically
present in Alaska for the entire period
described in AS 43.23.005(a)(2), that
individual must have been a resident of
Alaska immediately before departure from
Alaska, be absent for one or more of the
allowable reasons set out in (c) of this
section or for a reason allowed by the
department under (d) of this section, and
demonstrate at all times during the absence
an intent to return to Alaska and remain
permanently in Alaska.
. . . .
(c) An individual who otherwise
qualifies, but who was not physically present
in Alaska for a period of at least 24
consecutive months immediately preceding
April 1 of the current dividend year, may be
eligible to apply for and receive a permanent
fund dividend if the individual complies with
AS 43.23.005(a)(3) and was absent primarily
for one of the following reasons:
. . . .
(2) enrollment in good standing as
a full-time student at a college, university,
junior or community college, accredited by
the accreditation association for the region
in which the college or university is
located, for the purpose of pursuing an
associate, baccalaureate or graduate degree .
. . .4
Bradley argues that since 15 AAC 23.175(c)(2) excludes PFD
applicants who fall within the literal statutory definition of
eligible applicants, it is not consistent with the statutory
purpose of AS 43.23.095(8)(b) and is also unreasonable and
arbitrary.5
This court resolved a similar issue in State, Dep't of
Revenue v. Cosio, 858 P.2d 621 (Alaska 1993). In Cosio, we held
that AS 43.23.015(a) authorized and required the Commissioner of
the Department of Revenue to promulgate regulations defining
substantive eligibility requirements for PFDs. Alaska Statute
43.23.015(a) provides:
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. The
commissioner shall consider all relevant
circumstances in determining the eligibility
of an individual. However, the residency of
an individual's spouse may not be the
principal factor relied upon by the
commissioner in determining the residency of
the individual.
We then considered whether a particular regulation at issue was
consistent with the statutory purpose and reasonable and not
arbitrary. Id. at 624-25.
The challenged regulation restricted eligibility for
PFDs to aliens with resident alien or refugee status only. The
appellees were denied PFDs based on their status as illegal
aliens. Id. at 623. The question before this court was whether
the regulation added "a permissible gloss to the statutory phrase
'intent to remain permanently in the state.'" Id. at 624; see AS
43.23.095(8).
In upholding the regulation, we stated that one of the
objectives of AS 43.23.015(a) was "to require the commissioner to
make substantive regulations resolving questions as to who is and
who is not a permanent resident." Cosio, 858 P.2d at 625. We
concluded that the regulation at issue was such a regulation.
Id. The regulation's exclusion of some PFD applicants who
arguably fell within the statutory definition of eligible
applicants did not mean that the regulation was unlawful as long
as the exclusion was "consistent with the statutory purpose and
'reasonable and not arbitrary.'" Id. at 625 (citation omitted);
see also Whaley v. State, 438 P.2d 718 (Alaska 1968) (upholding
rule which excluded probationary and provisional employees from
the statutory classification "employees in the classified
service" although the statute itself did not contain such an
exclusion).
In the present case, Bradley argues that unlike the
regulation upheld in Cosio, 15 AAC 23.175(c)(2) is not consistent
with the statutory purpose. He argues that the purpose of AS
43.23.095(8)(b) was to allow people to maintain their Alaska
residency while pursuing an education outside the state. He
contends that the regulation serves to discourage Alaska
residents from furthering their educational objectives by denying
a PFD to those who choose to pursue their education on a part-
time basis.
Even assuming that some students are discouraged from
part-time education outside of Alaska, the Department's
requirement that a student be enrolled full-time in an accredited
institution is not inconsistent with AS 43.23.095(8)(b). The
regulation appropriately adds content to the standard set forth
in the statute. In addition, it facilitates the Department's
duty to determine whether an individual is outside Alaska "only"
to pursue a "secondary or postsecondary education."
Bradley also contends that the regulation is arbitrary
and unreasonable. He argues that, because each educational
institution determines the meaning of a full-time student, the
requirement that students be full-time in order to qualify for a
PFD is arbitrary. However, the Department ensures the legitimacy
of the institution and its attendance standards by requiring that
the institution be "accredited by the accreditation association
for the region in which the college or university is located."
15 AAC 23.175(c)(2). As a result of this standard, the
recognized bounds of "full-time status"are circumscribed and not
arbitrary.6
Bradley also argues that the regulation is unreasonable
because it requires an individual to attend school full-time even
if the individual needs only a limited number of courses to
obtain his or her degree. However, the possible exclusion of one
deserving recipient does not make the regulation unreasonable.
The purpose of the regulation is to avoid unwarranted dividend
payments without unduly burdening the agency. Adopting a
regulation conditioning student status upon full-time attendance
is a reasonable means of accomplishing this goal. Moreover, in
the event that a student needs only one or two classes to obtain
a degree, as Bradley hypothesizes, he or she may qualify for a
PFD under 15 AAC 23.175(d).7
III. CONCLUSION
Regulation 15 AAC 23.175(c)(2) is consistent with AS
43.23.015(a) because it defines "absent only for . . . secondary
or postsecondary education"and thereby resolves the question of
who is a permanent resident qualified to receive a PFD. The
regulation is not arbitrary or unreasonable. Consequently, we
REVERSE the superior court's decision and uphold the Department's
denial of Bradley's PFD application.
_______________________________
1 Bradley testified that the classes he needed were
offered in consecutive quarters so that to be a full-time student
in the winter and spring quarters he had to have started the
classes in the fall. Since he missed the fall registration
deadline, he was unable to maintain full-time student status in
the later quarters.
2 This court gives no weight to the superior court's
decision when, as here, the superior court was acting as an
intermediate appellate court. South Anchorage Concerned
Coalition, Inc. v. Coffey, 862 P.2d 168, 173 (Alaska 1993); Cook
Inlet Pipe Line Co. v. Alaska Pub. Util. Comm'n, 836 P.2d 343,
348 (Alaska 1992).
3 This statute was subsequently amended in April 1992.
4 Repealed January 1, 1993.
5 In determining whether a regulation is valid, this
court must
[first] ascertain whether the regulation
is consistent with and reasonably necessary
to carry out the purposes of the statutory
provisions conferring rulemaking authority on
the agency. This aspect of review insures
that the agency has not exceeded the power
delegated by the legislature. Second, [this
court] will determine whether the regulation
is reasonable and not arbitrary.
State, Dep't of Revenue v. Cosio, 858 P.2d 621, 624 (Alaska 1993)
(quoting Kelly v. Zamarello, 486 P.2d 906, 911 (Alaska 1971)
(footnote omitted)).
6 The regulation need not be the only or most effective
means of carrying out the Department's goals. See State v.
Anderson, 749 P.2d 1342, 1346 (Alaska 1988). Rather, this court
must only decide whether the regulation the Department actually
adopted is reasonable and not arbitrary. Id. at 1346 (citing
Kelly v. Zamarello, 486 P.2d 906 (Alaska 1971)).
7 15 AAC 23.175(d) states:
(d) An absence for any purpose other
than one stated in (c) of this section will,
in the department's discretion, be allowed by
the department if the nature and duration of
the absence are temporary and are consistent
with an intent to return to Alaska and remain
permanently in the state.
An individual absent for a quarter or a semester while
completing a degree may qualify for a PFD under this section.
But see State, Dep't of Revenue v. Gazaway, 793 P.2d 1025, 1027
(Alaska 1990) (upholding Department's interpretation of
regulation permitting absences from Alaska only if the absence
was not longer in duration than the time actually spent in
Alaska).
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