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Church v. State of Alaska; Department of Revenue (2/12/99), 973 P 2d 1125
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) 264-0608, fax (907) 264-0878.
THE SUPREME COURT OF THE STATE OF ALASKA
PATRICK J. CHURCH, )
) Supreme Court No. S-7606
Appellant, )
) Superior Court No.
v. ) 3HO-95-8 CI
)
STATE OF ALASKA, ) O P I N I O N
DEPARTMENT OF REVENUE, )
)
Appellee. ) [No. 5079 - February 12, 1999]
______________________________)
Appeal from the Superior Court of the State of
Alaska, Third Judicial District, Homer,
Charles K. Cranston, Judge.
Appearances: Patrick J. Church, pro se,
Homer. Linda M. O'Bannon, Assistant Attorney General, Anchorage,
Bruce M. Botelho, Attorney General, Juneau, for Appellee.
Before: Matthews, Chief Justice, Compton,
Eastaugh, Fabe, and Bryner, Justices.
MATTHEWS, Chief Justice.
I. INTRODUCTION
Appellant Patrick Church was denied a 1993 Permanent Fund
Dividend (PFD) because he was absent from the state for 274 days in
1992 while caring for his dying mother. At the time of his
absence, caring for a terminally-ill relative was not an excusable
absence for PFD purposes. [Fn. 1] Church challenges the denial of
his PFD, arguing that the Department of Revenue did not have
authority to adopt certain PFD regulations, that the regulations
and statutes defining a resident for PFD purposes were unreasonable
and arbitrary, and that the Department of Revenue violated his
procedural and substantive due process rights, his equal protection
rights, his right to travel, and his rights to privacy and family
relationships. We conclude that Church's rights were not violated
and that the denial was appropriate.
II. FACTS AND PROCEEDINGS
Patrick J. Church, an Alaska resident since 1975, was
absent from Alaska from December 19, 1991, to September 30, 1992,
while caring for his dying mother. The Alaska Department of
Revenue (DOR), Permanent Fund Dividend Division (the Division),
denied his application for a 1993 PFD because he was absent from
the state for more than 180 days during 1992, and his absence did
not fit into one of the allowable absences enumerated in AS
43.23.095(8)(A)-(G) or 15 Alaska Administrative Code (AAC)
23.163(c) (1997).
The Division denied Church's appeal for a PFD in an
informal conference decision on February 28, 1994, and Church moved
for a formal hearing. Revenue Hearing Officer Diane Colvin denied
Church's motion for a formal hearing because there were no genuine
issues of material fact in dispute and granted the State's motion
for summary adjudication because Church did not "meet the
requirements established by law for PFD eligibility during the 1993
eligibility year." This denial was upheld by Superior Court Judge
Charles K. Cranston. Church appeals.
III. DISCUSSION
A. Standard of Review
We review administrative determinations independently.
See Handley v. State, Dep't of Revenue, 838 P.2d 1231, 1233 (Alaska
1992). Church does not dispute any factual findings; instead, he
disputes the reasonableness and constitutionality of the applicable
regulations and statutes. We apply the substitution of judgment
standard to issues of law not involving agency expertise, such as
statutory interpretation and constitutional claims. See Madison v.
Alaska Dep't of Fish and Game, 696 P.2d 168, 173 (Alaska 1985).
However, this court "will not substitute [its] judgment for that of
the agency with respect to the efficacy of [a] regulation nor
review the 'wisdom' of a particular regulation." State, Dep't of
Revenue v. Cosio, 858 P.2d 621, 624 (Alaska 1993) (citing Alaska
Int'l Indus. v. Musarra, 602 P.2d 1240, 1245 n.9 (Alaska 1979)).
B. The Regulations under Which Church Was Denied a 1993 PFD
Were Reasonable and Not beyond the Authority of the Commissioner to
Adopt.
Church was denied a 1993 PFD because he was absent from
Alaska for more than 180 days during 1992 -- the qualifying year
for the 1993 PFD -- and his absence was not "specifically allowed
under AS 43.23.095(8)(A)-(G) or 15 AAC 23.163(c)." Alaska Statute
43.23.095(8) defines "state resident"for PFD purposes, and at the
time of this action listed seven excusable absences for residents
who were not in the state but intended to return. [Fn. 2]
Subsection (F) of AS 43.23.095(8) allows for excusable absences for
"other reasons which the commissioner may establish by regulation."
Pursuant to this grant, the DOR promulgated 15 AAC 23.163 --
Allowable Absences. Subsection (c) of this regulation lists
sixteen excusable absences, the last one of which provides in
relevant part:
(16) any other reason or reasons
consistent with the individual's intent to remain a resident
provided the absence or cumulative absences do not exceed
(A) 180 days if the individual
is not claiming any of the absences listed in (1) through (15) of
this subsection . . . .
15 AAC 23.163(c)(16) (emphasis added).
Since neither the statute nor the regulation specifically
listed the reason for Church's absence, and he was gone longer than
180 days, the Division was required to deny him a PFD. The
regulation is clear and Church does not allege that the Division
misinterpreted it; instead, he asserts that the regulation itself
is invalid because it circumvents the legislative intent of AS
43.23.
We have held that AS 43.23.015(a), the statute concerning
proof of eligibility for PFDs, authorizes "and require[s] the
Commissioner of the Department of Revenue to promulgate regulations
defining substantive eligibility requirements for PFDs." State,
Dep't of Revenue v. Bradley, 896 P.2d 237, 239 (Alaska 1995)
(citing Cosio, 858 P.2d at 624-25). Cosio held that a regulation
can "exclud[e] permanent fund dividend applicants who arguably fall
within the statutory definition of eligible applicants,"as long as
the exclusion is consistent with the statutory purpose and is not
unreasonable or arbitrary. Id. at 625. In Brodigan v. Alaska
Dep't of Revenue, 900 P.2d 728, 732 (Alaska 1995), we held that 15
AAC 23.42.175(c)(6), which denies PFDs to seasonal residents, was
not beyond the authority of the commissioner to promulgate and that
the regulation was consistent with the purpose of AS 43.23.095(8),
which is "to limit payment of dividends to permanent residents."
Id. The Brodigan opinion also stated that a legitimate purpose of
the regulation was to "ease[] the administrative burden of
attempting to determine what treatment level is sufficient to merit
eligibility for a PFD." Id. The court reasoned that if seasonal
residents were allowed PFD consideration on the mere showing that
a physician thought a change of climate was beneficial, any person
"could qualify for a PFD simply by visiting Alaska every year and
establishing paper connections to Alaska . . . ." Id.
Church argues that 15 AAC 23.163(c)(16) creates a bright
line 180-day cut-off for discretionary review of absences that are
not listed in the statute or regulation and is thus unreasonable
and beyond the authority of the commissioner to promulgate. [Fn. 3]
This argument is similar to the challenge in Brodigan and the same
reasoning serves to answer it. The Brodigans claimed that they
should have been eligible for PFDs, even though the time they spent
in the state was less than the time they spent out of the state,
because they had ties to Alaska and had not established a permanent
residence outside of Alaska. 900 P.2d at 733. The Brodigans
argued that 15 AAC 23.175(d) (1990), which at the time allowed for
discretionary approval of temporary absences not listed, should
have allowed them to receive a dividend. Id. However, the
Brodigan court, citing to State, Dep't of Revenue v. Gazaway, 793
P.2d 1025, 1027 (Alaska 1990), held that temporary absences only
include those that "are not longer in duration than the time spent
in Alaska." Id. This ruling thus allows the state to limit
discretionary review of non-listed absences to those that are less
than a defined period; in Brodigan half a year or less, here 180
days or less.
Church argues, generally, that any temporal restriction
on PFD eligibility is unreasonable; he argues that consideration of
residency for PFD purposes should be the same as consideration of
state residency under AS 01.10.055, which focuses on one's subjec-
tive intent to remain. However, this court has recognized that
"the residency requirement for PFD eligibility may differ from
other residency requirements." Brodigan, 900 P.2d at 733 n.12.
Since the purpose of AS 43.23.095(8) is to ensure that
PFDs are only given to permanent residents and a legitimate
function of corresponding regulations is to ease the administrative
burdens of determining eligibility, see id. at 732, 15 AAC
23.163(c)(16) is consistent with its statutory purpose. Addition-
ally, since this court has ruled that limiting discretionary review
of absences not for purposes listed in the statutes or regulations
to absences shorter than half a year is not an abuse of discretion,
see id. at 733; Gazaway, 793 P.2d at 1027, and that a regulation
can be more restrictive than its authorizing statute, see Cosio,
858 P.2d at 625, 15 AAC 23.163(c)(16) is not unreasonable or
arbitrary. The purpose of the requirement that applicants fall
into one of the enumerated excusable absences listed in AS
43.23.095(8) and 15 AAC 23.163(c) is to limit eligibility for PFDs
to permanent residents. The legislature has given broad discretion
to the commissioner to determine the factors which define a
permanent resident. See Cosio, 858 P.2d at 624. Requiring those
not otherwise defined as permanent residents in the statute or
regulation to be present in the state for at least 180 days in the
year in question is a reasonable interpretation of AS 43.23-
.095(8)'s objectives. [Fn. 4]
C. Church Was Not Denied Procedural Due Process When His
Dividend Appeal Was Decided in a Summary Adjudication.
Church argues that his procedural due process rights were
violated when the Division denied his appeal in a summary adjudica-
tion. "There is no right to an evidentiary hearing in the absence
of a factual dispute." Human Resources Co. v. Alaska Comm'n on
Post-Secondary Educ., 946 P.2d 441, 445 n.7 (Alaska 1997); see also
Douglas v. State, Dep't of Revenue, 880 P.2d 113, 117 (Alaska
1994); Smith v. State, Dep't of Revenue, 790 P.2d 1352, 1353
(Alaska 1990). In Smith we held that a hearing officer's summary
adjudication of a child support award did not violate the
appellant's statutory right to a hearing "because there were no
material facts in dispute, and the hearing on the motion for
summary judgment afforded [the appellant] a fair opportunity to
contest legal issues raised by his appeal." Id. at 1353. Since
Church did not challenge the facts, there was no factual dispute
and Church was not entitled to an evidentiary hearing.
Church admits that he was absent from Alaska for 274 days
during 1992 and that he was absent to care for his terminally-ill
mother, which was not an excusable absence under AS 43.23.095(8) or
15 AAC 23.63(c) at that time. According to the statutory and
regulatory system in place at the time, Church was ineligible for
a PFD as a matter of law because he was out of the state for more
than 180 days and did not fit into one of the excusable absences.
See AS 43.23.095(8); 15 AAC 23.163(c)(16). "The crux of due
process is an opportunity to be heard and the right to adequately
represent one's interests." Keyes v. Humana Hosp. Alaska, Inc.,
750 P.2d 343, 353 (Alaska 1988) (citations omitted). Since there
were no issues of fact presented and the law was clear, summary
adjudication offered Church sufficient opportunity to be heard and
to represent his interests. See Smith, 790 P.2d at 1353.
D. The Statutory and Regulatory Scheme Denying Church a PFD
Did Not Violate Substantive Due Process.
Church argues that the list of excusable absences in AS
43.23.095(8) and 15 AAC 23.163(c) is unreasonable and arbitrary and
should focus on subjective intent to return, instead of listing
some excusable absences. He also contends that he has a property
interest in the PFD and perhaps a liberty interest.
The standard for establishing a substantive due process
violation is rigorous. A due process claim will only stand if the
state's actions "are so irrational or arbitrary, or so lacking in
fairness, as to shock the universal sense of justice." Application
of Obermeyer, 717 P.2d 382, 386-87 (Alaska 1986) (citation
omitted). In our view the dividend eligibility requirements do not
reach the level of unfairness necessary to support a due process
violation. The requirements are a reasonable way to ensure that
only legitimate permanent residents receive PFDs. See Brodigan,
900 P.2d at 732. Some bright line rules are necessary to allow for
the efficient distribution of dividends and to "ease[] the admini-
strative burden of . . . determin[ing] . . . eligibility for a
PFD." Id. Requiring an applicant to be present for at least 185
days if he or she does not fit into one of the listed excusable
absences is not unreasonable. See id. at 733.
E. Church's Equal Protection Rights Were Not Violated.
Church argues that he was not provided the same benefits
as the members of groups who were absent for one of the listed
excusable absences, and as such his equal protection rights were
violated. He further argues that minimum scrutiny is not the
appropriate standard of review for PFD matters because the right to
travel is implicated.
PFDs represent an economic interest. Equal protection
claims concerning their denial are reviewed under minimum scrutiny.
See State v. Anthony, 810 P.2d 155, 158 (Alaska 1991). Under the
minimum level of scrutiny, the state only needs to show that the
"challenged enactment was designed to achieve a legitimate
governmental objective, and that the means bear a 'fair and sub-
stantial' relationship to the accomplishment of that objective."
Underwood v. State, 881 P.2d 322, 325 (Alaska 1994) (citing Cosio,
858 P.2d at 629).
Despite Church's argument to the contrary, his equal
protection claim should only receive minimum scrutiny. In Brodigan
we held that even though an equal protection claim to a PFD
involved the right to travel, it did not necessarily trigger
heightened scrutiny. 900 P.2d at 734 n.13. As discussed pre-
viously, the challenge in Brodigan was similar to the present
situation, and this court only applied minimum scrutiny.
Additionally, as discussed infra, we conclude that Church's right
to travel is not violated in this case.
The objective of the challenged statutes and regulations
is to ensure that only permanent residents receive dividends. See
Brodigan, 900 P.2d at 732. In Cosio, we held that this goal was
legitimate given that the purpose of the dividend program is to
distribute equitably a portion of the state's wealth to Alaskans,
to encourage people to stay in Alaska, and to increase citizen
involvement in the management of the fund. 858 P.2d at 627. It
remains so.
Further, allowing only enumerated excusable absences
unless a person has been in the state more than half a year bears
a fair and substantial relationship to ensuring that the dividend
goes only to permanent residents. The fair and substantial
relationship test does not mean that there has to be a perfect fit
between the government's actions and its objectives. See State v.
Anthony, 810 P.2d at 159. In Underwood this court held that
legislation aimed at improving the efficiency of and simplifying
the PFD program was legitimate. 881 P.2d at 325. Cutting off
discretionary review of applicants who do not fit into an excusable
absence category and who have been outside the state more than 180
days in a year is a reasonable and efficient way to limit PFD
eligibility to permanent residents.
F. Church's Rights to Travel and to Family Relationships
Were Not Infringed.
Church argues that his right to travel was infringed
because receipt of a PFD was conditioned on his being in the state
more than 185 days out of the year. Further, he argues that his
familial relations rights were violated because he could not leave
the state for more than 180 days to be with his dying mother
without losing his dividend.
Both this court and the United States Supreme Court have
recognized that not all durational residency requirements
necessarily trigger heightened scrutiny. In Alaska Pacific
Assurance Co. v. Brown, 687 P.2d 264 (Alaska 1984), this court
explained that challenges concerning durational residency require-
ments would be addressed using a test that "balance[s] the nature
and extent of the infringement on this right caused by the
classification against the state's purpose in enacting the statute
and the fairness and substantiality of the relationship between
that purpose and the classification." Id. at 271 n.10 (citation
omitted). We utilized this test in Brodigan to conclude that a
regulation disallowing PFDs to seasonal residents with medical
problems did not infringe travel rights because "the State's
purpose in awarding PFDs only to permanent residents outweighs the
minor infringement on the Brodigans' choice of seasonal resi-
dences." 900 P.2d at 734 n.13.
There is no violation of Church's right to travel when
the Brown balancing test is applied to the present case. The
infringement on Church's right to travel is relatively small and
would not be likely to deter a person from traveling. See Brown,
687 P.2d at 273. An applicant has no vested property right in a
permanent fund dividend and should not expect to receive a dividend
if he doesn't meet the qualifications. See Underwood, 881 P.2d at
325. Additionally, as discussed supra in the equal protection
analysis, the regulations and statutes in question bear a fair and
substantial relationship to the state's legitimate objective of
efficiently awarding PFDs only to permanent residents.
In Attorney General of New York v. Soto-Lopez, 476 U.S.
898 (1986), the Supreme Court held that a statute which gave
employment preference points only to veterans who had entered the
military in New York and not to veterans who had entered the
military elsewhere violated the constitutional right to travel.
Id. at 911. However, the Court noted that bona fide residence
requirements that distinguish only between residents and non-
residents and don't treat residents differently based solely on the
time when they became residents will not generally violate the
right to travel. Id. at 904 n.3. The Supreme Court explained that
"[a] bona fide residence requirement, appropriately defined and
uniformly applied, furthers the substantial state interest in
assuring that services provided for residents are enjoyed only by
residents." Id. (quoting Martinez v. Bynum, 461 U.S. 321, 328-29
(1983)). As previously explained, the PFD regulations and statutes
in question are bona fide requirements which ensure that benefits
"provided for residents are enjoyed only by residents,"and as such
do not violate the constitutional right of interstate travel.
Church also argues that because he could not receive a
PFD if he stayed with his mother out of the state for more than 180
days, his right to receive a PFD was conditioned on his not
spending time with his mother. This argument is essentially a
corollary of the right to travel argument. The only reason
Church's familial rights were infringed is because he had to travel
out of the state to see his mother. Had his mother lived in the
state there would have been no violation. Because we conclude that
the PFD eligibility requirement did not violate Church's right to
travel, Church's familial rights, which were contingent on his
right to travel, were also not violated.
IV. CONCLUSION
The regulations denying Church a PFD were valid, none of
his rights were violated, and the denial of his PFD was
appropriate. The judgment of the superior court is AFFIRMED.
FOOTNOTES
Footnote 1:
Effective January 1, 1997, the statute defining "state
resident"for PFD purposes was amended to allow for absences to
care for an "individual's terminally ill parent, spouse, sibling,
child or stepchild." AS 43.23.095(8)(H).
Footnote 2:
At the time of this action, AS 43.23.095(8) provided in
relevant part:
(8) "state resident"means an individual
who is physically present in the state with the intent to remain
permanently in the state under the requirements of AS 01.10.055 or,
if the individual is not physically present in the state, intends
to return to the state and remain permanently in the state under
the requirements of AS 01.10.055, and is absent only for any of the
following reasons:
(A) vocational, professional, or other
specific education for which a comparable program was not
reasonably available in the state;
(B) secondary or postsecondary education;
(C) military service;
(D) medical treatment;
(E) service in Congress;
(F) other reasons which the commissioner
may establish by regulation; or
(G) service in the Peace Corps[.]
Effective January 1, 1997, this section was amended to
add the following excusable absences:
(H) to care for the individual's
terminally ill parent, spouse, sibling, child, or stepchild;
(I) for up to 220 days to settle the
estate of the individual's deceased parent, spouse, sibling,
child, or stepchild; or
(J) to care for a parent, spouse,
sibling, child or stepchild with a critical life-threatening
illness whose treatment plan, as recommended by the attending
physician, requires travel outside the state for treatment at a
medical specialty complex.
AS 43.23.095(8) (emphasis added).
Footnote 3:
In deciding the validity of a regulation, this court considers
"whether the regulation is consistent with the statutory purpose
and is reasonable and not arbitrary." Brodigan, 900 P.2d at 732
(citations omitted). Administrative regulations are presumed to be
valid and a legislative type of regulation such as 15 AAC
23.163(c)(16) will be reviewed with "considerable deference." Id.
at n.9 (citing Cosio, 858 P.2d at 624).
Footnote 4:
Church argues that recently enacted subsections of AS
43.23.095(8), which allow for absences to care for ailing
relatives, see AS 43.23.095(8)(H)(I) and (J), show that the Alaska
legislature now favors such absences as a matter of policy. Church
recognizes that these provisions do not apply to him because they
did not become effective until January 1, 1997; however, he asserts
that they show the state's policy concerning this issue. Since the
new provisions did not apply to Church's case and the DOR did not
abuse its discretion in adopting the regulations used to deny
Church's dividend, it makes no difference that the law has now
changed.
