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You can search the entire site. or go to the recent opinions, or the chronological or subject indices. Native Village of Eklutna v. Alaska Railroad Corp. (03/12/2004) sp-5787

Native Village of Eklutna v. Alaska Railroad Corp. (03/12/2004) sp-5787

     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,
     e-mail corrections@appellate.courts.state.ak.us.


            THE SUPREME COURT OF THE STATE OF ALASKA

                                
NATIVE VILLAGE OF EKLUTNA,    )
                              )    Supreme Court No. S-10270
             Appellant,            )
                              )    Superior Court No.
     v.                       )    3AN-01-04169 CI
                              )
ALASKA RAILROAD               )    O P I N I O N
CORPORATION and               )
MUNICIPALITY OF ANCHORAGE,    )    [No. 5787 - March 12, 2004]
                              )
             Appellees.            )
________________________________)
                              )
MUNICIPALITY OF ANCHORAGE,    )
                              )
             Cross-Appellant,      )    Supreme Court No. S-10279
                              )
     v.                       )
                              )
ALASKA RAILROAD               )
CORPORATION,                  )
                              )
             Cross-Appellee.       )
________________________________)



          Appeal  from the Superior Court of the  State
          of    Alaska,   Third   Judicial    District,
          Anchorage, Mark Rindner, Judge.

          Appearances:   Sara  E.  Heideman,   Hedland,
          Brennan,  Heideman  & Cooke,  Anchorage,  for
          Appellant.   William S. Cummings,  Ashburn  &
          Mason, Anchorage, for Appellee/Cross-Appellee
          Alaska  Railroad  Corporation.   William   W.
          Whitaker,  Assistant Municipal Attorney,  and
          William   A.   Green,   Municipal   Attorney,
          Anchorage,    for    Appellee/Cross-Appellant
          Municipality of Anchorage.

          Before:    Fabe,  Chief  Justice,   Matthews,
          Eastaugh, Bryner, and Carpeneti, Justices.

          FABE, Chief Justice.
          MATTHEWS, Justice, with whom BRYNER, Justice,
          joins, dissenting.


I.   INTRODUCTION

           This  is  the third appeal arising out of  the  Alaska

Railroad    Corporation's   quarry   operations   on   culturally

significant land adjacent to the Native Village of Eklutna, which

lies  within  the  boundaries of the Municipality  of  Anchorage.

Eklutna  sought a preliminary injunction to enjoin  the  Railroad

from  blasting and all other quarry activities, arguing that  the

Railroad  does  not have a conditional use permit  to  operate  a

gravel  pit  in  that  area  as Anchorage  Municipal  Code  (AMC)

21.40.240(D)(4)   requires.    The  Municipality   of   Anchorage

intervened  as a plaintiff.  The trial court denied  Eklutna  the

preliminary injunction and entered judgment as a matter of law in

favor  of  the  Railroad, concluding that  the  Railroad  is  not

subject to local planning and zoning ordinances.  Eklutna and the

Municipality  of  Anchorage appeal.  Because the legislature  did

not  clearly express its intent to exempt the Railroad from local

zoning laws, we reverse and remand.

II.  FACTS AND PROCEEDINGS

     A.   Factual History

           1.    Cultural significance and history of the Eklutna

quarry site

           The quarry is located on one of two hills, or "knobs,"

adjacent  to Eklutna.  Dr. James Fall, a cultural anthropologist,

prepared  a  report for the Railroad that explained  the  Eklutna

quarry site's significance as the source of the village's name:

          The   Dena'ina  name  for  the  village   [of
          Eklutna]  is  "Idlughet," "The Place  by  the
          Plural Objects" . . . .  The "plural objects"
          referenced in these place names are  the  two
          hills,  or  to  use  the term  used  by  many
          Eklutna residents today, the "knobs," located
          between the village and Knik Arm, just  north
          and east of the community.
          
For  purposes  of  this appeal, the parties  agree  that  Eklutna

considers  the knobs within the quarry property to be  culturally

significant.

           The  Alaska Railroad, at the time owned by the  United

States government, owned and operated the Eklutna quarry from  an

undetermined date in the 1940s until 1985.1  In 1985,  under  the

Alaska  Railroad  Transfer Act of 1982, the Railroad  was  turned

over  to the State of Alaska, which operated it through the  then

newly  created  Alaska Railroad Corporation.2  In  1987  Eklutna,

Inc.  and  the  Alaska  Railroad  Corporation  entered  into   an

agreement  settling their respective claims over  property  under

the  Alaska  Native Claims Settlement Act3 and under  the  Alaska

Railroad  Transfer  Act.4   Under  that  agreement,  the   Alaska

Railroad  Corporation was granted the land containing the  quarry

until  it  ceases to use the land "in connection with  furnishing

mass  or  bulk transportation," at which time the land is  to  be

conveyed to Eklutna.

          2.   Previous proceedings regarding the Eklutna quarry

           The  larger  of  the two Eklutna knobs  has  been  the

subject of two previous appeals before this court.  In July  1995

the  National  Bank  of Alaska, which owned part  of  the  quarry

operated  by the Railroad, filed an application for a conditional

use  permit  to conduct a granite mining operation  there.5   The

Municipality  of  Anchorage's  Planning  and  Zoning   Commission

approved  the conditional use permit, and the Anchorage Board  of

Adjustment  and the superior court affirmed this  decision.6   We

reversed  and  remanded  in 2000, concluding  that  "the  Board's

finding  that `no cultural resources will be adversely  affected'

was  unsupported by substantial evidence in light  of  the  whole

record."7

           The  second  case,  Alaska Railroad  Corp.  v.  Native

Village  of  Eklutna,  arose after the Railroad  entered  into  a

licensing agreement in 1995 granting Damco Paving Corporation the

exclusive  use of the quarry for commercial quarrying  operations

in  exchange for the Railroad receiving royalty payments for  the

rock  quarried.8   In 1997 Eklutna filed suit to  enjoin  Damco's

quarrying   operations,   alleging  that   the   quarry   was   a

nonconforming use of the land and that neither the  Railroad  nor

Damco  had  sought a conditional use permit to proceed  with  the

commercial quarrying operation.9  In May 1999 the superior  court

granted judgment in favor of Eklutna, requiring Damco to obtain a

conditional  use permit before it could continue  with  quarrying

operations.10  We affirmed in February 2002.11  Not addressed  in

that  decision  was  the  question now before  us:   whether  the

Railroad enjoys sovereign immunity from local zoning laws in  its

own operation of the quarry.

          3.   Quarry operations in recent years

            After  the  superior court entered  its  decision  in

Alaska  Railroad Corp. in May 1999,12 the Railroad resumed direct

operation  of the quarry.  The Railroad began removing  rock  and

other  materials  from the quarry in May or  June  2000,  and  it

blasted in the quarry on July 26, 2000.

          On January 12, 2001, the Railroad notified Eklutna that

"no  operations or blasting would occur at the site until  March,

2001."   However,  at  a January 19, 2001 meeting,  the  Railroad

informed Eklutna that blasting would occur on January 26, 2001.

     B.   Procedural History

           On  January  22, 2001, Eklutna filed a  complaint  and

motion   for   preliminary  injunction  to  stop  the   blasting.

Following  expedited briefing, an evidentiary hearing,  and  oral

argument,  the  trial  court  denied  Eklutna's  request  for   a

preliminary injunction.  Although the trial court recognized that

"[t]hese  hills  are  vital cultural resources  for  the  Village

inhabitants  and the Denaina Athabascan Indians as a people,"  it

concluded  that  the municipal ordinance could  not  prevent  the

Railroad's quarry operation and entered final judgment  in  favor

of  the  Railroad  as a matter of law, because  "the  legislature

intended that [the Railroad] not be subject to local planning and

zoning ordinances."

           On  March 1, 2001, the Municipality of Anchorage moved

to  intervene  in  the  litigation in order to  seek  declaratory

relief endorsing its position that the Railroad must comply  with

municipal  zoning.   The superior court set  aside  its  judgment

while  it  considered the Municipality's motion.  After  granting

the  motion  to intervene and reviewing supplemental briefing  by

the  parties,  the court reinstated its previous final  judgment.

Eklutna appealed the judgment and the Municipality filed a cross-

appeal against the Railroad.

III. DISCUSSION

     A.   Standard of Review

           We  review a grant of summary judgment de novo.13   To

obtain  summary judgment, the moving party must prove the absence

of a genuine factual dispute and its entitlement to judgment as a

matter of law.14  All reasonable inferences of fact must be drawn

in  favor of the nonmoving party.15  Because this appeal presents

an issue of first impression before this court, we adopt the rule

of law that is most persuasive in light of precedent, reason, and

policy.16

     B.   The Railroad Is Not Immune from Local Zoning Laws.
          
           The  Railroad maintains that it is not subject to  the

Municipality of Anchorage's zoning ordinance, which would require

it  to  obtain  a  conditional use permit  before  operating  the

quarry.   It  argues  that the Alaska Railroad Corporation  Act17

(ARCA)  and  its  legislative history show that  the  legislature

intended  the Railroad to be immune from such laws.   It  further

argues  that  even if ARCA does not evidence express  legislative

intent  to  immunize the Railroad, Alaska law presumes  that  the

legislature  intends state instrumentalities to  be  immune  from

local  zoning  in the absence of a legislative statement  to  the

contrary.   Eklutna and the Municipality (collectively "Eklutna")

maintain that because there is no clear and express provision  in

the  statute regarding whether the Railroad is immune from  local

land  use regulation, a balancing of interests test should  apply

to determine the legislature's intent.

           We  hold that ARCA provides no clear indication of the

legislature's intent with regard to local land use authority over

the  Railroad and that Alaska law does not presume state immunity

to  local zoning.  Left with unclear indications of intent and no

presumption of immunity, we turn to a balancing of interests test

to  determine  whether the legislature intended  to  subject  the

Railroad to local zoning ordinances.

               1.     No   provision   of  the  Alaska   Railroad

               Corporation   act  clearly  indicates  legislative

               intent to exempt the Railroad from local zoning.

           At  the  outset,  it is important to  note  that  ARCA

created  a state entity with a unique combination of private  and

public powers and immunities.  Although it is "an instrumentality

of  the  state,"18 the Railroad is not part of the Department  of

Transportation and Public Facilities (DOTPF) and is  not  subject

to  certain financial and procedural requirements to which  other

state  agencies are subject, such as the State Procurement  Code,

the  Fiscal Procedures Act, and the Executive Budget Act.19  With

the Railroad's unique status within the state government in mind,

we  examine  several provisions of ARCA to determine whether  the

legislature intended to immunize it from local zoning.

                              a.   Alaska Statute 42.40.920(b)

           Alaska Statute 42.40.920(b) lists statutes from  which

the Railroad is exempt.  It provides:

                     (b)   Unless specifically provided
          otherwise in this chapter, the following laws
          do   not  apply  to  the  operations  of  the
          corporation:
          
               . . . .
          
               (3)  AS 35 . . . .

Title  35  of the Alaska Statutes is entitled "Public  Buildings,

Works, and Improvements" and authorizes DOTPF to construct almost

all  public  works  in  the  state.20  Alaska  Statute  35.30.020

provides:   "A  department shall comply with local  planning  and

zoning ordinances and other regulations in the same manner and to

the  same  extent  as  other landowners."   In  AS  35.95.100(3),

"department"  is  defined as DOTPF "unless the  context  requires

otherwise."    Other  sections  of  Title  35   refer   to   "the

department";  this  section's shift to "a  department"  (emphasis

added) implies that it subjects any department to local zoning.21

If  AS 35.30.020 applied to the Railroad, then the Railroad would

be  subject  to  local  zoning.  The  Railroad  argues  that  the

converse  must  be true:  by releasing it from AS 35.30.020,  the

Railroad claims, ARCA indicates legislative intent to immunize it

from  such authority.  This argument assumes that in the  absence

of  AS  35.30.020, the Railroad would be immune to local  zoning.

As  discussed in Part III.B.2 below, that assumption  is  faulty.

The provision exempting the Railroad from Title 35 shows only the

legislature's  desire  that the Railroad  not  be  treated  as  a

subdivision  of DOTPF and that DOTPF not control construction  of

Railroad  projects.   ARCA's legislative  history  supports  this

reading.22

                              b.   Alaska Statute 42.40.930

           Alaska Statute 42.40.930 provides:  "If provisions  of

this chapter conflict with the provisions of other state law, the

provisions  of this chapter prevail."  The Railroad  argues  that

this  statute  "preempts the application of local  zoning."   But

this  provision describing how to sort out conflicts among  state

laws  gives us no insight into the relationship between the state

law creating the Railroad and local ordinances that may apply  to

it.

                              c.   Alaska Statute 42.40.935

          Alaska Statute 42.40.935, entitled "Railroad facilities

code  compliance," provides that within two years after the  date

of  transfer,  the Railroad "shall develop and adopt  a  plan  to

achieve compliance with," among other laws, "building and related

safety codes applicable to facilities of the [Railroad]."23   The

Railroad  employs the canon expressio unius est exclusio alterius

to  argue  that  this  provision  implies  that  the  legislature

intended  immunity  for  the  Railroad.   The  statute's  express

application  of  certain local regulations, the Railroad  argues,

implies  that other local regulations, omitted from  mention,  do

not  apply.   At  the  heart  of the Railroad's  argument  is  an

interpretation of AS 42.40.935 subjecting the Railroad  to  local

safety  and building regulations.  The words of the statute  show

that  this  reading is faulty.  For the statute to  do  what  the

Railroad claims, it would need another clause, stating explicitly

that local safety codes govern the Railroad.  Instead, it assumes

the  existence  of  "codes applicable to the  facilities  of  the

[Railroad]."  The effect of the statute is to lay out a procedure

for   compliance  with  codes  whose  authority  pre-exists   the

provision, not to subject the Railroad to that authority.    This

section  of  the  statute does not list the local  ordinances  to

which  the Railroad is subject, so expressio unius does not apply

and  the  fact  that zoning is not mentioned sheds  no  light  on

whether the legislature intended to immunize the Railroad.

           The  assumption that the Railroad is not the exclusive

authority  on  its property is reflected in at  least  one  other

section  of ARCA.  The section laying out the Railroad's  general

powers,  AS 42.40.250, grants the Railroad authority to "maintain

a  security  force to enforce municipal ordinances  .  .  .  with

respect  to  violations that occur on or to"  Railroad  property.

This  section similarly takes no action to require that municipal

ordinances apply on Railroad property, instead starting from  the

assumption  that  they  do.  This bolsters  the  claim  that  the

Railroad  is subject to zoning - if the legislature assumed  that

local  safety  and  building regulations  apply,  it  is  a  fair

inference that it also assumed that land use regulations apply.

                              d.   Alaska Statute 42.40.390

           Alaska  Statute 42.40.390, entitled "Land Use  Rules,"

provides:

                 The  board  [of  the  Alaska  Railroad

          Corporation]   may  adopt   exclusive   rules

          governing   land   use  by   parties   having

          interests  in  or permits for land  owned  or

          managed   by  the  corporation.   The   power

          conferred  by  this section is exercised  for

          the common health, safety, and welfare of the

          public  and  to  the extent  constitutionally

          permissible, may not be limited by the  terms

          and conditions of leases, contracts, or other

          transactions.

The  Railroad  argues that "[t]his grant of power to  the  ARRC's

board  to  adopt  `exclusive rules governing  land  use'  by  its

lessees  and  permittees  would be rendered  ineffective  if  the

[Railroad]  was  also  subject  to  possibly  conflicting  zoning

ordinances in each of the municipalities in which it operates."

            This  provision  presents  some  evidence  that   the

legislature  intended to exempt the Railroad  from  local  zoning

laws.  Its reference to "exclusive rules" might indicate that  no

other  government's rules would apply on Railroad land.  But  the

term  "exclusive" could also be read as a choice-of-law provision

-  if the Railroad Board promulgated rules conflicting with local

ordinances, the Railroad's regulations would govern, but  in  the

absence of a conflict, local rules are unaffected.24

           An  examination of the provision's legislative history

shows that it should not be read as a clear declaration that  the

legislature intended to shield the Railroad from local  land  use

regulation.  At a Senate Transportation Committee hearing on  the

Railroad bill, Tamara Cook, a lawyer from the Legislative Affairs

Agency,  asked the committee whether the provision was  meant  to

supersede  municipal land use regulation.25   Senator  Moss,  the

committee  chairman, replied that it was not.26   Dave  Walsh,  a

member  of  the  Alaska  Railroad Transfer  Team,  said,  without

contradiction  from any legislator or witness, that  he  did  not

think  "this  section . . . allows the railroad to  ignore  local

law."27   In a memorandum the next month, Cook again pointed  out

that  the  statutory  language might  be  read  to  immunize  the

Railroad; the memo suggested that if the provision was  meant  to

provide  this immunity, it ought to be clarified.28  At a hearing

following  the  memo, committee member Senator  Halford  declared

that   he   thought   the  statute  should  protect   "[R]ailroad

operations"  from  local  regulation.29   He  asserted  that  the

provision as it was worded would do so.30  Senator Gilman  agreed

that   local   zoning   authority  would  be   problematic,   but

nevertheless  moved  to  delete  AS  42.40.390.31   Although   he

acknowledged  Senator Halford's concern, he argued the  provision

should be deleted because it was originally added to ensure  that

Railroad bonds would be tax exempt under a federal law.  The  law

had  recently  been changed to explicitly give the Railroad  tax-

exempt  status, regardless of whether it had land-use  authority,

so  the section was no longer necessary.32  A third senator  then

noted   that  the  Railroad's  status  as  a  tax-exempt  bonding

authority  was again in question, and the provision was  restored

in  response.33   The record of the meeting reflects  no  further

discussion of local zoning authority.

          This series of events suggests that AS 42.40.390 should

not be read as clearly granting the Railroad immunity from zoning

ordinances.    Most  importantly,  different   members   of   the

responsible  committee, on separate occasions,  denied  that  the

provision  was  intended as a shield against local  regulation  -

once  by  an  explicit denial and once by assigning  an  entirely

different purpose to the section.  The possible immunizing effect

was  brought to the committee's attention, and one of its members

expressed   an  interest  in  providing  such  protection.    The

committee had before it explicit advice from Legislative  Affairs

on how to address that concern and ensure immunity.  It chose not

to  take  action.    It  is  often  an  error  to  make  much  of

legislative inaction,34 but in this context, with the problem and

solution plainly before it, we see the legislature's decision  as

at  least  suggesting that AS 42.40.390 was  not  intended  as  a

shield  against local regulation.  Senator Halford's view of  the

provision indicates that he did intend such an exemption, but  we

cannot  say the rest of the committee, let alone the legislature,

agreed with him.  Whatever it does stand for, AS 42.40.390 is not

a  clear  indication of legislative intent to exempt the Railroad

from local zoning.

               e.   Alaska Statute 42.40.250(13)

           The  dissenting opinion also enlists AS 42.40.250(13),

which authorizes  the Railroad to "apply to the state, the United

States,  and foreign countries or other proper agencies  for  the

permits" required for its operation.35  The list does not include

"municipalities" or "political subdivisions" of the state, as the

dissent points out, but other sections of ARCA do,  and a former,

unenacted  version  of  ARCA was amended  to  drop  inclusion  of

municipalities.  The dissent concludes that the legislature  must

have intended that the Railroad should not have to obtain permits

from  local  authorities.  This logic has  two  essential  flaws.

First,  it  ignores the words "or other proper  agencies,"  which

clearly includes municipalities, regardless of whether they  were

explicitly  mentioned in other sections of the statute.   Second,

it  relies on changes made to a version of the act that failed to

pass.  The legislature rejected the bill that had been amended to

drop  the  requirement of compliance with municipal  regulations.

We  cannot  give that amendment any weight in our inquiry.36   If

anything,  we might imply from this history that the  legislature

was  opposed to the exemption, since it turned down the bill that

included it.

               2.    The  legislature did not create  the  Alaska
               Railroad  relying  on  a  presumption  that  state
               instrumentalities are immune from local zoning.
               
           The legislature did not express in ARCA a clear intent

to  immunize the Railroad from local zoning regulations;  nor  is

there  anywhere  in the legislation a clear expression  that  the

Railroad is to be subject to them.  We must therefore decide  how

to  determine  the  legislature's intent in order  to  fill  that

statutory  gap.  The Railroad argues that "Alaska  first  adopted

its  statutory scheme governing relations between the  State  and

localities" at a time when the black-letter rule was that  states

and  state  agencies  were exempt from municipal  zoning  in  the

absence  of  express  statutory language to the  contrary.   This

presumption,  it argues, answers the question left unresolved  by

ARCA;  because  there  is no clear statement  that  local  zoning

applies to the Railroad, the legislature must have intended  that

it does not.

           The  Railroad points to the fact that in Alaska "there

are  no  statutes expressly stating that a state  agency  is  not

subject  to  local  zoning,  but there  are  at  least  two  that

expressly provide for compliance with local zoning."  As examples

of   statutes  in  which  the  Alaska  Legislature  rejected  any

presumption of immunity, the Railroad cites

AS  18.55.100(a)(7)37  AS 40.15.200,38  AS  35.30.020,39  and  AS

22.05.025(a)(2)40 - all of which expressly require an agency  (or

several)  to comply with local zoning laws.  These statutes,  the

Railroad  argues,  reflect  a  baseline  presumption  that  state

instrumentalities are immune from local zoning.  Without  such  a

presumption,  state instrumentalities would be subject  to  local

authority with no legislative action, and these statutes would be

superfluous.

           The  presumption of immunity the Railroad seeks  is  a

form  of the state's sovereign immunity.  When a party invokes  a

background  rule  granting it immunity,  stated  by  neither  the

courts  nor  the  legislature of Alaska,  it  would  do  well  to

confront  how  to square that rule with this court's  unambiguous

summation of the common law of sovereign immunity:  "liability is

the  rule,  immunity  the exception."41  Although  liability  for

negligence  is  not  at  issue here,  the  principle  behind  our

presumption  of  liability  retains  its  force:   The  state  is

responsible  for  its  actions to the same degree  as  a  private

party, and those, like the Railroad, who propose a rule weakening

its  responsibility  have  a  heavy  burden  to  carry.   And  by

abolishing  the state's common law immunity to suits sounding  in

contract,  quasi-contract,  or tort, the  legislature  has  shown

complementary disfavor for sovereign immunity.42

              That said, there is no doubt that the Railroad  and

the  dissent are correct that under the "traditional"  rule,  the

state  and  its instrumentalities would be presumed  immune  from

local  regulation.   But  this rule is contrary  to  our  general

precept  of  state  liability.   There  are  exceptions  to   our

principle  -  for  example,  as discussed  below,  the  state  is

presumed immune from punitive damages awards43 - but neither  the

Railroad nor the dissent has made the strong showing necessary to

demonstrate that Alaska operates under a rule presuming immunity.

The  history of enactments dealing with the relationship  between

state  and local authorities, as ably recounted in the dissenting

opinion,  does make a plausible argument that the legislature  at

one  time  operated  from  that presumption.   There  is  another

plausible reading, however.

           The  legislature  has in the past enacted  legislation

that  restates an underlying presumption.  We recognized as  much

in  Alaska Housing Finance Corp. v. Salvucci, where we noted that

the  legislature had "specifically exclude[d] awards of  punitive

damages  against the State" from AS 09.50.280, part  of  Alaska's

Tort Claims Act,44 but we were not dissuaded from finding that "a

presumption  exists . . . which disfavors punitive damage  awards

against  the State."45  The presumption means that the state  was

not  subject to punitive damages awards even before the  law  was

passed.   The  law  did not change anything; yet the  legislature

passed it anyway.  But the dissent argues that here we must  find

that the legislature's enactments changed the situation - we must

read  from  the enactments that the legal landscape was different

before  they  were  passed.  By the dissent's reasoning  in  this

case,  the Tort Claims Act should have been evidence against  the

presumption  of state immunity that we affirmed in Salvucci.   We

did  not  employ that logic then, and we will not employ it  now.

The  legislature  may  well  have passed  laws  subjecting  state

entities  to  local  regulation even though those  entities  were

already obliged to follow local authority.

           But more fundamentally, the dissent misapprehends  the

point of our inquiry.  We are seeking to interpret the effect  of

a  gap  in  ARCA in order to determine whether the Railroad  must

comply with local zoning ordinances.  Our task, therefore, is  to

pinpoint the intent of the legislature that enacted ARCA in 1984,

not  to  map  the  understanding of the Alaska Legislature  as  a

historical  body, especially in light of the changing  complexion

of  the  law  of  state-local relations.   Only  one  legislature

enacted ARCA; only that legislature's intent is of concern today.

            Although   it  is  not  determinative,   the   Alaska

Constitution  provides  some guidance.   Article  X,  section  11

assigns  to the state's home rule municipalities "all legislative

powers  not prohibited by law or by charter."  This provision  is

not a bar to the presumption of immunity sought by the Railroad -

leaving  state instrumentalities immune to local regulation  does

not  strip them of a constitutionally guaranteed power.   But  we

should  recall  what  motivated  the  framers  to  include   this

provision:   "It was hoped that the constitutional delegation  of

authority  under the terms of Art. X,  11 would lead  the  courts

of  this jurisdiction to take a new and independent approach when

conflicts  inevitably  arose between the municipalities  and  the

state."46  "[T]his constitutional provision was adopted in  order

to  abrogate  traditional restrictions on the exercise  of  local

legislative authority."47  This court is certainly not  bound  by

some  other jurisdictions' rule that state instrumentalities  are

always immune absent explicit waiver by the legislature.  And  in

light  of  our constitutional commitment to questioning long-held

ideas   about   the  interacting  powers  of  state   and   local

governments, we should hesitate to assign to the legislature  the

failure to rethink the role of municipalities.

           With  that constitutional directive in mind,  we  note

that by 1984, when the legislature created the Railroad as an arm

of the state, support for the traditional presumption of immunity

was  starting to erode.  In 1972 the Supreme Court of New Jersey,

in  Rutgers,  the  State University v. Piluso,48  held  that  the

particular  intent  of  the legislature in  passing  the  law  in

question  was  paramount.   The  court  therefore  discarded  the

traditional   presumption.   Under  its  new   rule,   when   the

legislature  is silent or unclear, instead of presuming  that  it

intended  immunity, courts are to balance the interests at  stake

in  order to determine the legislature's intent.49  By 1982,  the

number  of  states adopting the test was approaching ten.50   The

high court in at least one other state had hinted it might do so,51

and  the American Law Institute had adopted it for its Model Land

Development Code.52  A few years later one state court  described

the  traditional presumption as "both simplistic and  archaic."53

The traditional approach changed because government had changed:

          The  old  tests were adopted at a  time  when
          state government was much smaller. The myriad
          of  agencies now conducting the functions  of
          the  state  have necessarily  resulted  in  a
          diminution   of  centralized   control.   The
          decision   of   a  person  administering   an
          outlying  function  of a  state  agency  with
          respect  to  the  site  where  this  function
          should  be  performed is not necessarily  any
          better   than  the  decision  of  the   local
          authorities on the subject of land use.[54]
          
As  shown  by ARCA's creation of a state-owned Railroad, governed

by  a  board some distance from the center of state government,55

Alaska was as much a part of this trend as any other state.

           There  is  no particular evidence that the legislature

was aware of this development in other states' law, and we do not

claim  that it enacted ARCA with the new test in mind.   However,

an  examination  of  enactments and other legislative  statements

provides  evidence  that like the courts adopting  the  balancing

test,  the  legislature at the time of ARCA was taking notice  of

the  need  for a new balance between state and local  governments

and  loosening  its  adherence to the traditional  rule.   First,

there is a section of ARCA itself, AS 42.40.935(b), discussed  in

Part  III.B.1.c above, which indicates that the legislature  that

enacted  ARCA  may not have been operating from a presumption  of

immunity.   This provision requires the Railroad to consult  with

local  authorities and gives it five years to develop a plan  for

compliance with safety and building codes.  These apply to  other

state instrumentalities through AS 35.10.025, but the Railroad is

exempt  from  AS  35.  Because AS 42.40.935(b)  itself  does  not

contain  any  language applying the codes to  the  Railroad,  the

provision  appears  to  start from the assumption  that  they  do

apply.   Reading the statutes this way admittedly might have  the

effect  of  rendering  AS 35.10.025 superfluous  -  if  the  1984

legislature   assumed   that   local   codes   apply   to   state

instrumentalities,  the provision requiring  such  compliance  is

unnecessary.   It  is,  however,  not  surprising  that  if   the

legislature's views change over time, some older provisions  like

AS 35.10.025, enacted in 1969,56 might be overtaken by changes in

its perspective.

           The  dissent's  own  reading of the  ARCA  legislative

history  further illustrates that the 1984 legislature  may  have

abandoned  any older presumption about immunity.  As the  dissent

recounts  the  March  15,  1984  Senate  Transportation  Standing

Committee   meeting,  Senator  Halford  sought  to  preserve   AS

42.40.390  in  order to "protect the railroad's  operations  from

local zoning restrictions."57  While we differ with the dissent on

the  meaning  of  the committee's response to  Senator  Halford's

remark,  the nature of his concern is unmistakable:   he  thought

that  the Railroad should be shielded from local zoning,  and  he

thought  that the statutory provision was necessary  to  give  it

that   protection.    If  he  thought  that  the   Railroad   was

presumptively  immune from zoning, he would not have  argued  for

the inclusion of AS 42.40.390 on those grounds.

           Finally, the most recent piece of legislation that the

dissent  cites as "central to [its] main premise"58 is  the  1976

amendment to AS 35.10.020, including the University of Alaska  in

its   coverage.   The  dissent  says  this  change   "illustrates

legislative acceptance of the rule of general immunity"59 because

the  amendment shows that "[t]he legislature implicitly  accepted

the  University's view that it was not subject to zoning."60  But

all  the  amendment  shows  is that the  legislature  wanted  the

University to comply with local rules, and the University was not

doing so.  The legislative history cited in the dissent61 suggests

that  the  legislature  believed that the University  was  always

subject to local zoning.  The amendment's sponsor, Senator Croft,

noted  that the legislature, upon passing the original bill,  had

realized  that  "the University considers itself something  other

than  a  portion of the state."62  He went to say that he thought

that  the  University should abide by the bill, and had he  known

"that  they  wouldn't, [the Senate] would have included  it  last

year."63  The real purpose of the 1976 amendment may well not have

been  to strip any preexisting immunity from the University,  but

to  clarify  that  it did not have immunity and ensure  that  the

University  abandon its position that it did.   This  is  not  to

argue  that  the  legislature  actually  did  believe  that   the

University  was never immune, but merely to point  out  that  the

evidence  of  the  legislature's adherence to  a  presumption  of

immunity grows weaker as the date moves closer to 1984.   By  the

time  of the enactment of ARCA, the picture is quite murky -  too

murky to convince us to throw over the legislature's disfavor for

immunity   and  say  that  the  legislature  acted  against   the

background of the traditional presumption.

          3.   The  trial  court  must  apply  the  balancing  of
               interests test if the Railroad's efforts to comply
               with local zoning laws fail.
               
           Because  the  legislature  did  not  state  explicitly

whether it intended the Railroad to be immune and because  we  do

not  find sufficient evidence to impute to it the intent to  rely

on a presumption of immunity, we must adopt a test to discern the

legislature's  intent.   We have never addressed  the  issue  and

there  is  no consensus among other jurisdictions regarding  what

test  should  be  applied  to determine whether  the  legislature

intended   a  state  agency  to  be  immune  from  local   zoning

ordinances.64   In  the  absence of a  clear  expression  by  the

legislature of its intent, there are four tests generally used by

courts  to  resolve  intergovernmental land  use  disputes:   the

"superior  sovereign  test,"  the  "eminent  domain  test,"   the

"governmental  function  test," and the "balancing  of  interests

test."65

            The  superior  sovereign  test,  the  source  of  the

traditional  presumption of immunity, focuses on the relationship

between  the  competing political entities.  If the agency  whose

activities  might  be regulated is "superior" to  the  regulating

authority,  it  is  presumed that the  legislature  intended  the

superior  agency  to  be  immune from  regulation.66   Where  two

governmental entities are of equal rank, the court will resort to

rules  of  statutory  construction  to  determine  whether  one's

regulations should govern the other.67  In a case like this  one,

where   a   local   authority   seeks   to   regulate   a   state

instrumentality,  the superior sovereign test presumes  that  the

legislature intended the state instrumentality to be immune.

           Under  the eminent domain test, if a state agency  has

the  power  of  eminent domain, it is immune  from  local  zoning

regulations.68  The theory behind this test is that the power  of

eminent  domain  is inherently superior to the  exercise  of  the

zoning  power69  and  thus  there  is  a  presumption  that   the

legislature  intended the state or its agency to be  immune  from

local  zoning laws if it granted that entity the power of eminent

domain.70

           Whether  the legislature is deemed to have intended  a

governmental  entity  to  be immune from  local  laws  under  the

governmental function test depends on the purpose of the intended

land  use:  If a use furthers a private purpose, as opposed to  a

governmental function, there is no immunity.71 A proprietary land

use  is said to be one "conferring private advantage pursuant  to

permissive  legislation"72  or  a  function  "undertaken   by   a

governmental   entity  in  a  business,  private,  or   corporate

capacity."73   In  contrast,  a governmental  function  has  been

characterized as a "political function or as a function  mandated

by   statute  and  performed  by  the  governmental   entity   in

furtherance  of  its  duty to discharge its  obligation  for  the

health, safety and general welfare of the public."74  Under  this

test,   "[a]   municipal  corporation  in  the  exercise   of   a

governmental function is not subject to zoning laws or ordinances

either within or outside the municipal boundaries."75  This  test

was  developed  as  a  judicial response to the  breadth  of  the

superior  sovereign and eminent domain tests by limiting immunity

to  governmental functions,76 and it evolved in  the  context  of

governmental immunity from tort claims.77  Although  many  courts

have abandoned the governmental function test, a few continue  to

apply it.78

           All  three  of  these older tests  have  been  heavily

criticized because they have led courts to "frequently  resolve[]

such  [intergovernmental]  conflicts in  perhaps  too  simplistic

terms  and  by  the  use of labels rather than  through  reasoned

adjudication  of  the  critical question  of  which  governmental

interest should prevail in the particular relationship or factual

situation."79   In particular, critics of the superior  sovereign

test urged upon us by the Railroad and relied upon by the dissent

cite  defects  such  as  "the test's lack of  safeguards  against

irresponsibility,   the   practical  difficulties   inherent   in

developing a system of sovereign ranking, the inconsistencies  in

the  test's application, the inability of the test to  deal  with

conflicts  between  governmental units of  equal  rank,  and  the

test's  failure  to recognize that all units of local  government

are  `equally'  agents of the state."80  Courts and  commentators

also  have  criticized the governmental function  test  as  being

difficult  to apply and as requiring an often-tenuous distinction

between governmental and proprietary functions.81  We agree  that

these  three traditional tests are unduly rigid and we  join  the

growing  ranks of jurisdictions who have rejected these tests  in

favor of the balancing of interests test.

           In  Rutgers, the State University v. Piluso,  the  New

Jersey Supreme Court recognized that the scope of immunity may be

limited,  and  that its scope is best determined  by  applying  a

"balancing  of  the  interests" test.82  The  burden  is  on  the

governmental entity that seeks exemption from local  zoning  laws

to prove that a balancing of the following factors weigh in favor

of  immunity:83  "the  nature and scope  of  the  instrumentality

seeking immunity, the kind of function or land use involved,  the

extent  of  the public interest to be served thereby, the  effect

local   land  use  regulation  would  have  upon  the  enterprise

concerned and the impact upon legitimate local interests."84  The

court noted the importance of the flexibility of this test,85 and

emphasized that even where the balance tips in favor of immunity,

"it must not . . . be exercised in an unreasonable fashion so  as

to   arbitrarily   override   all  important   legitimate   local

interests."86

           Some  form of a balancing of interests test  has  been

embraced in at least fourteen jurisdictions:   Delaware, Florida,

Indiana, Iowa, Kansas, Minnesota, Missouri,

New Jersey, New York, North Dakota, Ohio, Oklahoma, Rhode Island,

and  South Dakota.87  Others have approved it in dicta.88  A  few

other  states,  while  not explicitly adopting  balancing  tests,

resolve such conflicts by assessing the necessity for the state's

action,89  or  the  reasonableness of  the  state's  exercise  of

immunity,90 or of the zoning ordinance,91 tasks that  may  easily

turn   into  a  balancing  of  interests.   A  similar  balancing

methodology has been endorsed by the drafters of the American Law

Institute Model Land Development Code.92

            We  join  those  courts,  adopting  the  factors   as

articulated  by  the  New Jersey Supreme Court.   Resort  to  the

balancing   of  interests  test  is  limited  by  two   threshold

requirements.    First,  because  the  test   aims   to   discern

legislative  intent, direct statutory grants of immunity  control

when  they exist.93  Second, the court will not resolve conflicts

under  the  balancing test unless the state has made a reasonable

good  faith  attempt  to comply with local zoning  laws.94   This

second requirement is consistent with the premise that "the basic

purpose  of the doctrine of exhaustion of administrative remedies

is `to allow an administrative agency to perform functions within

its  special competence -  to make a factual record, to apply its

expertise,  and to correct its own errors so as to moot  judicial

controversies.' "95  Requiring the Railroad to first  attempt  to

comply   with   Anchorage's   zoning  procedures   enhances   the

possibility  that  the parties will reach an  accommodation  that

serves  the public interest underlying both the zoning power  and

the  Railroad's quarrying activity without resorting to  judicial

remedies.96   Because  the  Railroad  has  not  yet  sought   the

conditional   use   permit  required  by  the  Anchorage   zoning

ordinance,  neither this court nor the superior court should  yet

apply the balancing of interests test.  If the Railroad continues

to  want to operate the quarry, it should apply for a conditional

use  permit  from  the  Municipality.   If  the  result  of  that

application  is  unsatisfactory to it (or  any  other  interested

party), further proceedings may follow.

           The balancing of interests test has been criticized by

the   Pennsylvania  Supreme  Court  as  amounting  to   "judicial

legislation"  because  it yields uncertain results  and  requires

courts  to resolve intergovernmental land use disputes where  the

legislature  is silent.97  The eminent domain test, the  superior

sovereign test, and the governmental function test admittedly may

provide  a more clear-cut resolution to intergovernmental  zoning

disputes in some cases.  But the very fact that the balancing  of

interests test does not yield highly predictable results, coupled

with  the requirement that the state first attempt to comply with

local   zoning   laws,  may  promote  good  faith   attempts   at

accommodation by the parties and minimize the need  for  judicial

intervention.98

           We  conclude  that  the balancing  of  interests  test

represents  the  most  enlightened approach  to  determining  the

legislature's  intent with regard to the applicability  of  local

zoning  laws  to  state agencies.  We agree  with  the  Minnesota

Supreme Court that "[t]he trend is to limit [the state's] freedom

from  regulation,  a trend which we believe is  well  within  the

dictates of the public interest, principally because the  pungent

realities of urban sprawl and overpopulation have accentuated the

need  for  land_use  planning and control."99   In  adopting  the

balancing  of  interests  test, we join  the  ranks  of  American

jurisdictions  that have rejected the formalistic  approaches  of

the traditional tests.100

     C.   The Interstate Commerce Commission Termination Act Does

          Not  Preempt Local Zoning Regulation of the  Railroad's

          Operations at the Eklutna Quarry.

           The Railroad argues that Anchorage may not force it to

obtain  a  conditional  use permit for  the  quarry  because  the

federal Interstate Commerce Commission Termination Act (ICCTA)101

preempts  Anchorage's zoning ordinances with respect to  Railroad

property.   "ICCTA abolished the Interstate Commerce  Commission,

created the [Surface Transportation Board], and granted the board

jurisdiction   over   certain  interstate  rail   functions   and

proceedings."102  Section 10501 of ICCTA provides,  in  pertinent

part:

                (b)   The  jurisdiction of the [Surface
          Transportation] Board over -
          
               . . . .
          
                 (2)   the  construction,  acquisition,
          operation, abandonment, or discontinuance  of
          spur,  industrial, team, switching,  or  side
          tracks, or facilities, even if the tracks are
          located . . . entirely in one State,
          
          is  exclusive.  Except as otherwise  provided
          in  this  part,  the remedies provided  under
          this  part with respect to regulation of rail
          transportation are exclusive and preempt  the
          remedies  provided  under  Federal  or  State
          law.[103]
          
          Eklutna argues that case law in other jurisdictions and

the  legislative history of ICCTA indicate that the act  preempts

only  state  economic  regulation, and does  not   disturb  local

zoning   authority.   In  determining  the   scope   of   federal

preemption,  "we  `start with the assumption  that  the  historic

police  powers  of  the States were not to be superseded  by  the

Federal  Act  unless that was the clear and manifest  purpose  of

Congress.'  "104   " `[T]he purpose of Congress is  the  ultimate

touchstone' in every pre-emption case."105  Thus, we will evaluate

the  regulation  the Municipality wishes to  apply  in  order  to

determine  whether it "st[ands] as an obstacle to  the  goals  of

ICCTA."106

           In passing ICCTA, Congress focused on "removing direct

economic  regulation by the States."107  One  House  Report,  for

example, noted that state criminal and antitrust law would not be

preempted as applied to railroads, "because they do not generally

collide  with the scheme of economic regulation .  .  .  of  rail

transportation."108   Similarly,  another  report  contrasts  the

states'  retained  "police powers"  to the  exclusive  "[f]ederal

scheme  of  economic regulation and deregulation."109  Congress's

focus on economic regulation makes clear that it had no intention

of   preempting  all  state  or  local  regulation  that  touches

railroads in any way.  Instead, "there are areas with respect  to

railroad   activity  that  are  reasonably   within   the   local

authorities' jurisdiction."110  These areas are defined not by the

subject  matter  of  the regulation - we will  not  draw  a  line

between "economic" and "environmental" or "land use" regulations.111

Congress  did  not  intend  ICCTA  to  preempt  state  or   local

regulation  with  only  "a remote or incidental  effect  on  rail

transportation."112    State or local regulation of "manufacturing

activities and facilities not integrally related to the provision

of  interstate  rail service are not subject .  .  .  to  federal

preemption."113  The Surface Transportation  Board  has  provided

examples  of  allowable  regulations,  including  "a  local   law

prohibiting the railroad from dumping excavated earth into  local

waterways,"  or  a  law  penalizing  the  railroad  if   "harmful

substances were discharged during railroad construction."114

          If Anchorage's zoning ordinance survives preemption, it

will  at  least  delay the operation of the quarry  by  the  time

needed  for the Railroad to obtain a conditional use permit,  and

may  bar the Railroad's use of the land altogether, if the permit

is  denied.  Whether this amounts to undue interference with  the

Railroad's operation is a "fact-bound determination."115  Although

obtaining   ballast  for  the  Railroad's  tracks   arguably   is

"integrally  related"  to  its  operations,  the  Railroad's  own

operation of a gravel quarry is not.  Thomas E. Brooks, Chief  of

Engineering   Services  for  the  Railroad,  testified   at   the

evidentiary  hearing that the Railroad generally obtains  ballast

by  "request[ing]  material from commercial sources  outside  the

railroad  or  ask[ing] contractors to come into the pit  that  we

operate."   Brooks's  affidavit  indicates  that  rock  from  the

Eklutna  Quarry  is  a superior quality granite  and  provides  a

particularly  economical  source  for  ballast.   It  does   not,

however, establish that the economic impact of obtaining  ballast

from  other  sources  would  be  so  significant  that  it  would

necessarily interfere with rail operations. Brooks testified that

if  the Railroad is enjoined from obtaining ballast from Eklutna,

it  could get ballast from another source, as it did for  eighty-

two years prior to the quarry's opening.

            ICCTA's   preemption  is  aimed  at   improving   the

"nationwide efficiency of the railroad industry," not at stopping

all  regulation that "prevents an individual firm from maximizing

its  profits."116   Local regulation may bring some  hardship  or

inconvenience to a railroad without causing the sort of  economic

impact  that would trigger preemption.  Therefore, on the  record

before  us,  the  Railroad has not shown that Anchorage's  zoning

ordinance  will  have  a  more  than  incidental  impact  on  its

operations; the ordinance is therefore not preempted by ICCTA.

IV.  CONCLUSION

           We  REVERSE  the order of the superior court  entering

judgment  in  favor  of the Railroad.  If the Railroad  does  not

succeed  in  obtaining  the  necessary  permit  from  the  zoning

commission,  it  may seek judicial review in the superior  court.

The  superior  court will then apply the balancing  of  interests

test,  consistent  with  this opinion, to determine  whether  the

legislature intended the Railroad to be immune from local  zoning

laws.

MATTHEWS, Justice, with whom BRYNER, Justice, joins, dissenting.

           The  question  presented in this case is  whether  the

state-owned  Alaska  Railroad  is  subject  to  municipal  zoning

ordinances.   In my opinion the answer is no.  In  Alaska,  state

government  activities are exempt from local  regulation  in  the

absence of a statute making them subject to local regulation.  No

statute   makes   the  Railroad  subject  to  local   regulation.

Therefore,  the Railroad is exempt.  Although this rationale  is,

in  my  opinion, conclusive and fully sufficient to  decide  this

case,  there  is another reason why the Railroad is exempt:   the

legislature  in  passing  the  Alaska  Railroad  Corporation  Act

indicated its intention to exempt the Railroad from local  zoning

regulation.  I address each of these reasons in this opinion.

I.   Alaska  State  Government Activities Are Exempt  from  Local
     Regulation  in the Absence of a Statute Subjecting  Them  to
     Local Regulation.
     
           The traditional view is that state agencies are immune

from  municipal  zoning in the absence of a statute  making  them

subject to municipal zoning.117  As the following discussion of the

history  of  AS  35.30.020 and .030 will make clear,  the  Alaska

Legislature  has  accepted this rule in enacting these  statutory

sections  and their precursors.  I start with these  sections  as

they appear now.  Alaska Statute 35.30.020 provides:

                A  department shall comply  with  local
          planning  and  zoning  ordinances  and  other
          regulations  in the same manner  and  to  the
          same extent as other landowners.
          
Alaska Statute 35.30.030 provides:

                If a department clearly demonstrates an
          overriding  state interest, waiver  of  local
          planning   authority   approval    and    the
          compliance requirement may be granted by  the
          governor.  The governor shall issue  specific
          findings  giving  reasons  for  granting  any
          waiver under this section.
          
There  are  two  other sections in AS 35.30.  Both  of  them  are

helpful  in understanding AS 35.30.020 and .030.  Alaska  Statute

35.30.010 provides:

                (a)  Except as provided in (b) of  this
          section, before commencing construction of  a
          public project,
          
                (1)  if  the  project is located  in  a
          municipality, the department shall submit the
          plans   for  the  project  to  the   planning
          commission of the municipality for review and
          approval;
          
               (2) if the project is located within two
          miles  of  a  village, the  department  shall
          submit  the plans to the village council  for
          review and comment;
          
                (3)  if  the project is located  within
          one_half  mile  of the boundary  of  an  area
          represented    by    a   community    council
          established   by   municipal    charter    or
          ordinance,  the department shall  submit  the
          plans to the community council for review and
          comment.
          
                 (b)  Prior  approval  by  a  municipal
          planning   commission  may  not  be  required
          before the commencement of construction of  a
          highway or local service road if
          
                (1) the department and the municipality
          have  entered into agreement for the planning
          of   the   project  under  AS  19.20.060   or
          19.20.070  and the plans for the project  are
          completed  in  accordance with the  terms  of
          that agreement;
          
                (2)  the  municipality  has  adopted  a
          municipal  master  highway  plan   under   AS
          19.20.080  and  the highway or local  service
          road is consistent with the plan adopted; or
          
                (3)  the  department has  entered  into
          agreement  with  the  municipality  for   the
          planning of transportation corridors under AS
          19.20.015  and the plans for the project  are
          completed  in accordance with the  provisions
          of that agreement.
          
                (c)  If final disapproval by resolution
          of   the   governing  body  of  the  affected
          municipality  or  village  is  not   received
          within 90 days from the date the project  was
          submitted to the municipality or village, the
          department may proceed with the project.
          
The other section is AS 35.30.040.  It provides:

          In this chapter
          
                (1)  "public  project" means  a  public
          building or other structure, public work,  or
          other  facility,  highway, or  local  service
          road   constructed   or   maintained   by   a
          department; the term includes the acquisition
          by  purchase or agreement of land and  rights
          in  land for materials and the extraction  or
          removal of materials necessary for completion
          of a highway under AS 19.05.080 _ 19.05.120;
          
                (2)  "village"  means an unincorporated
          community of the unorganized borough where at
          least 25 people reside as a social unit.
          
The  definitions  section of Title 35 is also important.   Alaska

Statute 35.95.100(3) provides:

          In  this  title, unless the context  requires
          otherwise,
          
               . . .
          
               (3) "department" means the Department of
          Transportation and Public Facilities[.]
          
          The substance of present day AS 35.30.020 and 35.30.030

were  first  enacted in 1975.  Chapter 96, section 1,  SLA  1975.

The  features now found separately in sections .020 and .030, the

duty   of   compliance  and  waiver  of  compliance,  were   both

incorporated  in  a  single section, AS  35.10.020.   As  it  was

enacted in 1975, this section read:

                Before  the  construction of  a  public
          works in a municipality, the department shall
          confer  with the planning commission  of  the
          municipality to determine that the welfare of
          the  public  is  properly protected  and  its
          agencies  and instrumentalities shall  comply
          with all local planning and zoning ordinances
          and  the local regulations in the same manner
          and  to  the same extent as other landowners.
          However,   if   a   state   agency    clearly
          demonstrates an overriding state interest,  a
          waiver to the compliance requirements may  be
          granted by the governor.
          
           The  history of the 1975 version of AS 35.10.020 began

in  1957.  Chapter 152 Laws of Alaska 1957, Title III, article 3,

section  2, required the Department of Transportation and  Public

Facilities'  territorial  predecessor,  the  Alaska  Highway  and

Public  Works Board, to confer prior to the construction  of  any

public  work within a municipality "with the planning  commission

of  such municipality to determine that the welfare of the public

is  properly protected."  There was no requirement that the board

also  comply with local planning and zoning ordinances, only that

it confer.

           A  change  with respect to local building  codes  took

place  in  1968.   Chapter 89, section 1, SLA 1968,  was  enacted

requiring  compliance with local building codes,  but  not  local

zoning  ordinances.   The  1968  enactment  was  codified  as  AS

35.10.025.  As enacted it read, and still reads, as follows:

                A  public  building shall be  built  in
          accordance  with  applicable  local  building
          codes  including  the obtaining  of  required
          permits.    This  section  applies   to   all
          buildings   of   the  state   and   corporate
          authorities of the state.[118]
          
          An important change was made to AS 35.10.020 in 1974.119

Previously, as noted, the highway board, and after statehood, the

department,  had  to confer with local authorities  to  determine

that  the  welfare of the public was properly protected prior  to

going  forward with construction in a municipality.  In  1974  an

additional  requirement was imposed relating to  compliance  with

zoning  ordinances.  Under the new requirement, uses of  property

sold or leased by the state to other than a public entity had  to

comply  with local zoning ordinances as long as the property  was

"held in private use."  In full, as amended in 1974, AS 35.10.020

provided:

                Before  the  construction of  a  public
          works in a municipality, the department shall
          confer  with the planning commission  of  the
          municipality to determine that the welfare of
          the   public  is  properly  protected.   Real
          property of the state which is leased,  sold,
          exchanged, or otherwise transferred for value
          to  other than a public entity shall  conform
          so  long  as  held in private  use  to  local
          planning    and    zoning   ordinances    and
          regulations  in the same manner  and  to  the
          same   extent  as  real  property  of   other
          landowners  subject to the  local  ordinances
          and  regulations, unless the local ordinances
          and   regulations  are  less  stringent  than
          comparable state standards.
          
(Emphasis added.)

           Having described the history of AS 35.10.020 thus far,

it  is  worthwhile to ask whether a reasonable argument could  be

made in light of AS 35.10.020 as it existed in 1974 that projects

on  state  land  that remained in state hands  were  required  to

comply with local planning and zoning ordinances.  The answer  is

clear  that  they were not.  The unmistakable meaning of  section

.020  as  of the 1974 amendment is that while projects  on  state

land  that had been transferred for private use were required  to

conform  with local zoning ordinances "so long as held in private

use," projects on state land not held in private use did not have

to  conform  to  local zoning requirements.  The  1974  amendment

clearly illustrates the rule that state projects are exempt  from

local zoning unless a statute provides otherwise.

           As  described above, in 1975 AS 35.10.020 was  amended

again.  Instead of being limited to state property that had  been

transferred  for private use, the requirement of compliance  with

local  planning and zoning ordinances subject to a waiver granted

by the governor was made generally applicable.

           In 1976 another change was made that again illustrates

legislative acceptance of the rule of general immunity.  In  1976

the University of Alaska was made subject to AS 35.10.020.120  As

amended in 1976 the statute had the familiar form of the 1975 act

requiring  both a conference with local officials and  compliance

with  local  ordinances, with the latter subject to gubernatorial

waiver.  The statute read:

                Before  the  construction of  a  public
          works  in  a  municipality, or a building  or
          other  structure by the University of  Alaska
          in  a  municipality, the  department  or  the
          University  of Alaska, as appropriate,  shall
          confer  with the planning commission  of  the
          municipality to determine that the welfare of
          the   public  is  properly  protected.    The
          University  of  Alaska or the department  and
          its   agencies  and  instrumentalities  shall
          comply  with  all local planning  and  zoning
          ordinances and the local regulations  in  the
          same  manner and to the same extent as  other
          landowners.   However, if a state  agency  or
          the University of Alaska clearly demonstrates
          an overriding state interest, a waiver to the
          compliance requirements may be granted by the
          governor.
          
           The  University  was  added  to  the  coverage  of  AS

35.10.020  because it took the position that it did not  have  to

comply  with  local  planning  and  zoning  ordinances  and   the

legislature  thought  it  was desirable that  the  University  be

required  to  so  comply.121        The  hearing  concluded  with

Representative  Cotton  and Senator Croft agreeing  that  another

look  should  be  taken  in the future to determine  whether  the

statute  was  still insufficiently comprehensive.  Representative

Cotton stated:  "It was pointed out to me at one time that public

works  was somewhat restrictive and really didn't take everything

that a lot of people would like to have seen into consideration."

Senator Croft responded:  "I think that's a valid point and  sure

would be glad to work on that."



          The rule that state government entities are not subject

to local zoning in the absence of a statute is illustrated by the

1976  amendment.  The University had taken the position  that  it

was not subject to zoning because no statute provided that it was

subject  to  zoning.   The  legislature implicitly  accepted  the

University's view that it was not subject to zoning  but  decided

that as a policy matter that the University should be subject  to

zoning and amended AS 35.10.020 to include the University.

           Nothing occurred to indicate that the legislature  had

altered the general rule of immunity in 1984 when the legislature

enacted the Alaska Railroad Corporation Act.122  As a part of that

act,  AS  42.40.920 specifically provided that Title  35  of  the

Alaska  Statutes  would  not apply  to  the  Railroad.   Thus  AS

35.30.020  and .030 do not apply to the Railroad.  This exemption

put the Railroad in the position that the University had been  in

prior  to the 1976 amendment, and in the position that all  state

projects  had been in prior to the 1975 amendment -  immune  from

local planning and zoning ordinances.

           Having stated this conclusion, I do not mean to  imply

that  no  changes were made between 1976 and 1984 to AS 35.30.020

and  .030.   There was a change in 1977, but it  did  nothing  to

erode  the  principle that state agencies do not have  to  comply

with  local  zoning unless required by statute.   The  change  is

interesting  because it laid the groundwork for a  broadening  in

the coverage of AS 35.30.020.

          In 1977, AS 35.30.020 as it had existed was broken into

two  parts,  with .020 requiring compliance with  local  planning

ordinances  and  .030  providing for a waiver  by  the  governor.

Other  changes  were  also made.  Instead of  referring  to  "the

department"  as previously, .020 was written in its present  form

referring to "a department."  Likewise, the waiver provisions put

in .030 referred to "a department."

           In  the definitions section of the 1977 enactment,  AS

35.30.040(1) stated:  "In this chapter (1) `department' means the

Department  of  Transportation and  Public  Facilities,  and  the

University  of  Alaska."  But this was changed in  1987.   Alaska

Statute 35.30.040(1) was repealed.123  This was the section  that

defined  the  "department"  in  the  1977  act  to  include   the

University of Alaska.  Did this mean that the 1987 legislature no

longer  intended the University of Alaska to be subject to  local

zoning  ordinances?  Or did it mean that the legislature believed

that  without  the  definition the University  would  be  covered

because  it  is "a department"?  It is clear that no  substantive

change was intended.  The changes were described by the title  of

the  act  as merely "corrective amendments to the Alaska Statutes

as  recommended  by the revisor of statutes."   In  a  memorandum

dated   May   17,  1987,  the  revisor  wrote  that  section   AS

35.30.040(1) was "proposed for repeal" because the definition  of

"department" was "redundant to a definition in AS 35.25.020  that

applies to all of AS 35."124  In the same memo the revisor refers

to section 57, among other sections, as a section that "repeal[s]

provisions  that  are  duplicated by other  applicable  law,  and

make[s] conforming changes in related provisions."125  Since  the

1987 amendment disclaims any intent to make a substantive change,

it  seems  that  the  revisor interpreted "a  department"  in  AS

35.30.020   and  .030  to  include  all  departments   of   state

government,  including the University of Alaska.   Otherwise  the

change would have been substantive, deleting the University  from

coverage  of the statute.  As the legislature enacted the  change

suggested  by the revisor, the legislature endorsed the revisor's

view.

           It thus appears that AS 35.30.020 and .030 now include

all  departments  of state government that are  not  excluded  by

other  statutes.  But this interpretation is not central  to  the

main  premise of this dissent, which is simply that the evolution

of  .020 and .030 plainly shows that the legislature has accepted

the  traditional  rule  that state entities  that  are  not  made

subject  to  local  zoning by statute are not  subject  to  local

zoning.126

           In summary, the history related above shows that state

entities  and state activities not covered by .020 and  .030  and

their  predecessors were assumed and intended by the  legislature

to  be  immune  from local zoning.  Acceptance  of  the  rule  of

immunity  is  clearly shown in 1974 when state lands conveyed  or

leased  to private entities were made subject to local zoning  so

long  as  they  remained in private hands, but  state  lands  not

meeting  these conditions remained immune from local zoning.   It

is  also clearly shown in 1976 when the legislature included  the

University in the coverage of .020 because the University was not

originally  included  and it was thought desirable  to  make  the

University  comply with local zoning.  Nothing  occurred  in  the

intervening years between the 1974, 1975, and 1976 enactments and

1984 to change the rule of general state immunity.  Thus when the

legislature  enacted  the  Alaska Railroad  Corporation  Act  and

exempted  the  Railroad  from coverage  by  .020  and  .030,  the

Railroad retained the immunity from local zoning that it  had  as

an  instrumentality of the federal government because no  statute

made it subject to local zoning.

II.  The  Alaska  Railroad Corporation Act Exempts  the  Railroad
     from Local Zoning.
     
           Although the rationale that state agencies are  immune

from  local zoning unless a statute makes them subject  to  local

zoning  expressed above is sufficient to decide this case,  there

are a number of provisions in the Alaska Railroad Corporation Act

that affirmatively indicate that the Railroad was intended to  be

exempt from local planning and zoning control.  These include:

     a.   AS 42.40.390.

          This section provides:

                The  board  may  adopt exclusive  rules
          governing   land   use  by   parties   having
          interests  in  or permits for land  owned  or
          managed   by  the  corporation.   The   power
          conferred  by  this section is exercised  for
          the common health, safety, and welfare of the
          public  and  to  the extent  constitutionally
          permissible, may not be limited by the  terms
          and conditions of leases, contracts, or other
          transactions.
          
           By  this section the Railroad Board is given the power

to  "to  adopt exclusive  rules governing land use" for  railroad

land.   The  second  sentence of this section confirms  that  the

exclusive  rules have the same purpose as a planning  and  zoning

ordinance, namely to provide "for the common health, safety,  and

welfare  of  the  public."   The word "exclusive"  by  definition

excludes  the possibility that a municipality could impose  rules

governing land use of railroad property.

           The  legislative history of this section of the Alaska

Railroad Corporation Act confirms that the legislature was  aware

that  section  .390 placed railroad lands beyond the  control  of

local  zoning.  Tamara Cook, Deputy Director of the  Division  of

Legal Services of the Legislative Affairs Agency, first raised  a

question as to the effect of section .390 on March 1, 1984, at  a

Senate  Transportation Committee meeting.  She asked, "what  does

it  do,  is  this  an  effort  to supercede  municipal  land  use

regulations?   Is  that  what this  does?   Does  this  say  that

property  controlled by the railroad is not subject to  municipal

land  regulations?   Is  that what this  is?"127   Chairman  Moss

initially responded in the negative:  "I don't believe that  that

was  the  original intent on it.  Maybe, I'm wrong on  it."   But

Cook  persisted, stating:  "What this says though,  it  says  the

board  may adopt exclusive regulations governing land use,  which

means  that  the  board  would then be operating  as  a  planning

commission."  After further discussion Cook again explained  that

the  Railroad  could "attempt to put a subdivision"  on  acquired

property  "and  not  be subject to municipal zoning  ordinances."

She recommended that "until this section is made a lot clearer  I

think  the  committee  ought to consider dropping  it  entirely."

Chairman  Moss observed that this would be "one way to  eliminate

the  problem."  Senator Gilman agreed that "removing it is  fine"

but  observed that as to a version of the legislation in a  prior

session there were reasons why the section was written as it was,

but  he could not remember what they were.  He suggested that  he

be  allowed to "revisit the file."  Chairman Moss agreed:  "Let's

do  that  before we delete this section" and proceeded to adjourn

the meeting.

          Cook put her concerns in writing, in a memorandum dated

March  12,  1984,  to  the  Chair of  the  Senate  Transportation

Committee.   Observing that there are two alternative effects  of

AS   42.40.390,  she  again  recommended  that  section  .390  be

clarified or deleted:

          Section 42.40.390 appears to be an attempt to
          grant the power of land use regulation,  such
          as  platting  and  zoning,  to  the  railroad
          corporation,   which  would  contravene   the
          requirement contained in Article X, section 2
          that  all  local government powers  shall  be
          vested  in boroughs and cities.  If,  on  the
          other hand, the purpose of the section is  to
          exclude rail property from municipal land use
          regulation, that should be done specifically.
          I   would  recommend  that  the  section   be
          clarified or eliminated.
          
It  is  worth  noting that while Cook states that there  are  two

possible interpretations of section .390 - that it grants  zoning

power to the Railroad or that it excludes railroad property  from

municipal  land use regulation - under either interpretation  the

Railroad  would be immune from local zoning.  Under the first,  a

grant of exclusive zoning power to the Railroad would necessarily

exclude  the  power of a municipality to zone the same  property.

Under  the  second,  the  exclusion of municipal  zoning  is  the

explicit purpose.128  Section .390 was retained as written, despite

Cook's suggestion that it be clarified or deleted.

           The question of retaining or deleting section .390 was

taken  up for the last time by the Senate Transportation Standing

Committee  on  March  15,  1984.  The  minutes  of  that  meeting

indicate  that  Senator  Gilman initially  sought  to  remove  AS

42.40.390.  But Senator Halford responded "that there should be a

way  to  protect  railroad operations.  That  would  protect  the

railroad's  operations  from local zoning restrictions."129   The

matter  was discussed further.  Senator Gilman stated  that  .390

"originally  was  put in at a time when it was  anticipated  that

they  were going to have to establish some rationale for why  the

railroad  should get a tax-exempt bonding authority."   He  noted

that this was no longer a problem.  But Senator Faiks stated that

pending  in  the House of Representatives was a bill  that  would

take  away tax-exempt status from the Railroad.  She argued  that

section  .390  should be left in the bill.  This  was  the  final

resolution.

           The  discussion  reveals  that  the  Senate  Committee

clearly   understood  that  .390  would  protect  the  Railroad's

operations  from local zoning restrictions.  No one  argued  with

Senator  Halford's characterization that this was  the  section's

direct  function.  Senator Gilman's observation that the  purpose

of  section  .390 was to guarantee tax-exempt bonding  status  is

consistent with section .390's function.  In order to  have  tax-

exempt  bonding status, it was believed that the Railroad  needed

land  use  regulation  powers comparable  to  those  of  a  local

government.   Such  powers  were granted.   It  does  not  matter

whether  the  powers were granted primarily so that the  Railroad

could  issue tax-free bonds or so that the Railroad would not  be

disturbed  in  its operations by municipal zoning.  Whatever  the

dominant  motive may have been, the grant of exclusive  land  use

regulatory power was the same.

     b.   AS 42.40.920(b)(3).

           This is the section that declares that AS 35 does  not

apply to the Railroad.  Since, as discussed above, AS 35 contains

AS  35.30.020  requiring  "a department"  to  comply  with  local

zoning, exempting the Railroad from AS 35 indicates, among  other

purposes, an intent to exempt the Railroad from local zoning.

     c.   AS 42.40.935(b).130

          This section required the Railroad to comply with local

building and safety codes within five years, subject to waiver by

the  Commissioner  of  Public  Safety.   Because  AS  35  is  not

applicable  to the Railroad, AS 35.10.025,131 which requires  all

public  buildings to comply with local building  codes,  did  not

apply  to  the  Railroad.   Recognizing  that  a  transition   to

compliance with local building codes was desirable, subject to an

executive  waiver, the legislature enacted AS 42.40.936(b).   Its

enactment shows legislative awareness that in light of  the  fact

that  AS  35  was  made  inapplicable to  the  Railroad,  special

measures  were needed in areas where it was intended to make  the

Railroad  subject  to  local laws.  The  omission  of  a  similar

measure relating to compliance with local zoning codes thus seems

deliberate and purposeful.

     d.   AS 42.40.250(13).132  (13) apply to the state, the United

States,  and foreign countries or other proper agencies  for  the

permits,  licenses,  rights_of_way,  or  approvals  necessary  to

construct,  maintain,  and  operate  transportation  and  related

services, and obtain, hold, and reuse the licenses and permits in

the same manner as other railroad operators[.]

           Section  .250 lists the general powers of  the  Alaska

Railroad  Corporation.  Subsection (13) authorizes  the  Railroad

Corporation to apply to various entities for permits or approvals

necessary  to  construct  various facilities.   The  Railroad  is

authorized to apply to the "state, the United States, and foreign

countries or other proper agencies."  But the list pointedly does

not  include  political subdivisions of the state.  By  contrast,

subsection  (9)  of  section  .250 expressly  mentions  political

subdivisions.  Subsection (13) thus suggests that the legislature

thought that it would not be necessary for the Railroad to  apply

to  political  subdivisions for approval  to  obtain  permits  to

construct and operate facilities.

           The  legislative history of subsection (13)  indicates

that  the  omission of political subdivisions was not accidental.

Versions  of the Alaska Railroad Corporation Act were  considered

in  1982.   Senate Bill 212 in 1982 contained a section  entitled

"Licenses and Permits."  It provided:

               Whenever the laws of a municipality, the
          state, or the United States require a license
          or  a  permit to undertake certain activities
          or  perform an act, the authority,  prior  to
          undertaking  the activity or  performing  the
          act,  shall  comply  therewith  to  the  same
          extent  as  the  state, except  as  otherwise
          provided in this chapter.
          
A  notation in the legislative folio indicates that the  Railroad

requested  that  the  word "municipality" be  deleted  from  this

provision.   Offered as a reason for this was that "the  railroad

presently  negotiates  with a number of municipalities  regarding

crossings,  traffic  signals, etc.  If  the  municipalities  were

granted  authority  to  regulate the railroad's  passage  through

their  boundaries,  the railroad's transportation  of  goods  and

services would be so erratic as to be totally nonoperable."133

            The   specific  examples  offered  by  the  Railroad,

"crossings, traffic signals, etc.," may not be subjects  governed

by  typical zoning codes, but the more general topic of  "passage

through municipal boundaries" potentially is.  Further, the  bill

applied  to  all  permits  "to undertake  certain  activities  or

perform  an  act," terms that readily encompass permits  such  as

conditional  use  permits needed for zoning compliance.   If  the

legislature  intended the Railroad to be subject to local  zoning

codes  -  regulatory systems in which permits of many  types  are

standard  fare - it would not have deleted political subdivisions

from  the  list of government entities to which the  Railroad  is

authorized to apply for permits.

           In  summary, the legislature in section  .390  of  the

Alaska   Railroad  Corporation  Act  gave  the  board   exclusive

authority   to  adopt  rules  governing  railroad   land.    This

necessarily excluded local zoning authority over the  same  land.

The  Legislative  Affairs  Agency  and  a  legislative  committee

recognized that section .390 had this effect.  A number of  other

provisions  of the Alaska Railroad Corporation Act  confirm  that

the  legislature intended that the Railroad was to be exempt from

local zoning.

III. Conclusion

           The  traditional  rule  that state  entities  are  not

subject  to  local zoning unless a statute so provides  has  been

repeatedly  recognized  by the Alaska  Legislature.   The  Alaska

Railroad  is exempt from local zoning under this rule because  no

statute  makes it subject to zoning.  In addition, provisions  of

the  Alaska  Railroad Corporation Act show that  the  legislature

intended the Alaska Railroad Corporation to be exempt from  local

zoning.

          For these reasons, I dissent.

_______________________________
1Alaska  R.R. Corp. v. Native Vill. of Eklutna, 43 P.3d 588,  590
(Alaska 2002).
245 U.S.C.  1201-1214 (1982).
343 U.S.C.  1601-1629 (1971).
445 U.S.C.  1201-1214 (1982).
5Native Vill. of Eklutna v. Bd. of Adjustment, 995 P.2d 641,  642
(Alaska 2000).
6Id. at 643.
7Id. at 645.
843 P.3d 588, 590 (Alaska 2002).
9Id.
10Id. at 589.
11Id. at 592-95.
12Id. at 590.
13State v. Alaska Civil Liberties Union, 978 P.2d 597, 603 (Alaska
1999).
14Id.
15McGlothlin  v. Municipality of Anchorage, 991 P.2d  1273,  1277
(Alaska 1999).
16Taranto  v.  North Slope Borough, 992 P.2d 1111,  1113  (Alaska
1999).
17AS 42.40.010.See AS
18AS 42.40.010.
19See AS 42.40.920(b)(4)-(6).
20See AS 35.05.010.
21But  see Rabbit Creek Shooting Range Improvement, 1981 Informal
Op.  Att'y  Gen. 867, 867-68; 1981 WL 38706, at *1 (Alaska,  July
13, 1981).
22See  First Reading of HB 512 before the House Transp.  Standing
Committee  at  0275  (Alaska, May 13, 1984)  (statement  of  Mark
Hickey)  (describing  steps  taken by  drafters  to  ensure  that
Railroad  was  free of DOTPF oversight); House  Transp.  Standing
Comm.  meeting  on  HB  512  at  0145  (Alaska,  Feb.  22,  1984)
(statement of Chairwoman Representative Cato ) ("[T]he senate . .
.  [was] told they would have to put [the Railroad] under one  of
the  departments.   They  chose the Department  of  Commerce  and
Economic  Development  as they felt that was  where  it  belonged
rather than under DOT/PF.").
23AS 42.40.935(b).
24The  Railroad  Board has not promulgated any  such  regulation.
Contrary to the dissent's assertion (dissent at 49 n.12) a choice-
of-law  rule does not grant any immunity or authority,  but  only
resolves conflicts between laws.
25Hearing on SJR 43 and SB 352 Before the Senate Transp. Standing
Comm.   (Alaska, Feb. 22, 1984) (statement of Tamara Cook, Deputy
Director  of the Division of Legal Services, Legislative  Affairs
Agency).
26Id. (statement of Senator Moss).
27Id. (statement of Dave Walsh).
28Memorandum from Tamara Cook, Deputy Director of the Division of
Legal  Services,  Legislative Affairs  Agency  to  Senator  Moss,
Chairman, Senate Transp. Comm. 2 (March 12, 1984) ("If . . .  the
purpose of the section is to exclude rail property from municipal
land  use regulation, that should be done specifically.  I  would
recommend that the section be clarified or eliminated.").
29Hearing  on  SB  352 Before the Senate Transp.  Standing  Comm.
(Alaska, March 15, 1984) (statement of Senator Halford).
30Id.
31Id. (statement of Senator Gilman).
32Id.
33Id.  at 307, 321 (statement of Senator Faiks, motion of Senator
Gilman).
34See Cmty. For Creative Non_Violence v. Reid, 490 U.S. 730,  749
(1989) ("Ordinarily, Congress' silence is just that - silence.").
35Dissent at 52-53.
36Cf. Westlands Water Dist. v. Natural Res. Def. Council, 43 F.3d
457,   462  (9th Cir. 1994) (refusing to "transfer[]" legislative
history from one bill to another); Troy Gold Industries, Ltd.  v.
Occupational Safety & Health Appeals Bd., 231 Cal. Rptr. 861, 868
n.6  (Cal.  App.  1986) ("[A] single unenacted  bill  .  .  .  is
meaningless  as  an  expression  of  legislative  intent  as  are
statements of the individual legislators in favor of the rejected
bill.");  2A  Norman  J. Singer, Statutes and  Statutory  Constr.
48:01,  at  411 (6th ed. 2000) ("[S]tatements made by persons  in
favor of a rejected or failed bill are meaningless . . . .").
37"[T]he  [Alaska Housing Financing C]orporation has  all  powers
necessary  to . . . provide, subject to the applicable  planning,
zoning,  sanitary, and building laws, ordinances, and regulations
for  the  construction, improvement, alteration, or repair  of  a
housing  or  public building project . . . ."  AS 18.55.100(a)(7)
(emphasis added).
38"All  subdivisions  of land made by the  state,  its  agencies,
instrumentalities, and political subdivisions are subject to .  .
. home rule ordinances or regulations governing subdivisions, and
shall comply with ordinances and other local regulations  .  .  .
in the same manner and to the same extent as subdivisions made by
other landowners."  AS 40.15.200.
39"A  department  shall  comply with local  planning  and  zoning
ordinances  and other regulations in the same manner and  to  the
same extent as other landowners."  AS 35.30.020.
40"[I]n  the  exercise  of  its  authority  [to  construct  court
facilities],  the  supreme court shall cooperate  and  coordinate
with  the  Department of Transportation and Public Facilities  so
that  court  facility construction projects are  carried  out  in
accordance with the statutes and regulations applicable to  state
public works projects." AS 22.05.025(a)(2).
41Adams  v.  State,  555 P.2d 235, 244 (Alaska  1976);  see  also
Johnson  v. Alaska State Dept. of Fish & Game, 836 P.2d 896,  905
(Alaska 1991); Freeman v. State, 705 P.2d 918, 920 (Alaska 1985).
42AS  09.50.250; see also Estate of Arrowwood By and Through Loeb
v.  State, 894 P.2d 642, 644 (Alaska 1995).  Immunity is retained
for  certain  types  of suits, including those  arising  from  "a
discretionary function or duty" of the state.  AS 09.50.250(1-5);
see also, e.g., Estate of Himsel v. State, 36 P.3d 35, 40 (Alaska
2001).
43Alaska  Housing Finance Corp. v. Salvucci, 950 P.2d 1116,  1123
(Alaska 1997).
44950 P.2d at 1123.
45Id.
46Jefferson v. State, 527 P.2d 37, 42-43 (Alaska 1974); see  also
Area  Dispatch, Inc. v. City of Anchorage, 544 P.2d 1024, 1025-27
(Alaska 1976).
47Simpson  v.  Municipality of Anchorage,  635  P.2d  1197,  1200
(Alaska App. 1981).
48286 A.2d 697 (N.J. 1972).
49Id.  at  702-03.   The specific factors to  be  considered  are
discussed below in  Part III.B.3.
50In Blackstone Park Improvement Ass'n v. State Bd. of Standards &
Appeals,  448  A.2d  1233,  1239 (R.I. 1982),  the  Rhode  Island
Supreme  Court counted nine states adopting the test,  and  added
itself as the tenth.  Our review of the cases, however, indicates
that  several  had  only adopted part of the  test  or  had  only
indicated in dicta that the test might be the right one.
51Kunimoto v. Kawakami, 545 P.2d 684, 687 (Haw. 1976) .
52See Model Land Dev. Code  7_301 to 304 and 12_201 (1975).
53Hayward v. Gaston, 542 A.2d 760, 766 (Del. 1988) ("We find that
the  [superior  sovereign]  hierarchical  approach  to  land  use
disputes between competing governmental entities, as urged by the
Department, is both simplistic and archaic.").
54Blackstone Park Improvement Ass'n, 448 A.2d at 1237-38 (quoting
City  of  Temple Terrace v. Hillsborough Association for Retarded
Citizens,  Inc., 322 So. 2d 571, 578-79 (Fla. Dist.  App.  1975),
aff'd, 332 So. 2d 610 (Fla. 1976)).
55See  AS  42.40.020 (setting out makeup of Railroad's  Board  of
Directors).
56Ch. 89,  1, SLA 1968.
57Hearing  on  SB  352 Before the Senate Transp.  Standing  Comm.
(Alaska, March 15, 1984) (statement of Senator Halford).
58See dissent at 46.
59Dissent at 49.
60Dissent at 44.
61Dissent at 42 n.5.
62Track  1,  16:00-19:20  - 1976 Senate Committee:   Community  &
Regional Affairs.
63Id.; see also Track 2, 0:27-4:00 - House Committee:  Community &
Regional  Affairs (statement of Senator Croft) ("[W]e thought  we
were   picking  up  the  University  but  there  was  a  drafting
mistake.").
64See    generally   Elaine   Marie   Tomko-DeLuca,   Annotation,
Applicability of Zoning Regulations to Governmental  Projects  or
Activities,  53 A.L.R. 5th 1 (1997) (surveying tests  in  various
jurisdictions  for  determining legislative  intent  to  immunize
state agencies from local zoning laws).
65See  Laurie  Reynolds, The Judicial Role  in  Intergovernmental
Disputes:  The Case Against Balancing, 71 Minn. L. Rev. 611, 612-
13  (1987).  The Pennsylvania Supreme Court has adopted  a  fifth
test,   the  "legislative  intent"  test,  which  provides   that
"legislative  intent may be determined by a consideration,  inter
alia,  of  the  consequences  of  a  particular  interpretation."
Commonwealth  v. Ogontz Area Neighbors Ass'n, 483 A.2d  448,  454
(Pa.  1984).  The parties have not addressed the merits  of  this
test.  We decline to adopt the legislative intent test because it
appears  to  be a modified balancing of interests test  but  with
less guidance as to the factors to be considered.
66J.  Scott MacBeth, Zoning and Planning:  The Economics of State
Land  Use  and the Balancing of Interests Test, 30 Washburn  L.J.
148, 151 (1990).
67City of Richmond v. Bd. of Supervisors, 101 S.E.2d 641, 646 (Va.
1958).
68MacBeth, supra note 66, at 152.  For a survey of cases in which
the  courts  have  applied the eminent domain  test,  see  Tomko-
DeLuca, supra note 64, at  22.
69Note,  Governmental Immunity from Local Zoning  Ordinances,  84
Harv. L. Rev. 869, 874 (1971).
70MacBeth, supra note 66, at 152.
71City  of Albuquerque v. Jackson Bros., Inc., 823 P.2d 949,  951
(N.M. App. 1991) (citing 6 Patrick J. Rohan, Zoning and Land  Use
Controls  40.03[2] (a) (1978)).
72Note, Municipal Power to Regulate Building Construction and Land
Use by Other State Agencies, 49 Minn. L. Rev. 284, 295-96 (1964).
73Tomko-DeLuca, supra note 64, at  2[a].
74Id.
758  Eugene  McQuillin, Municipal Corporations  25.15,  at  55-56
(West Group ed., 3d ed. 2002) (citations omitted).
76Reynolds, supra note 65, at 621.
77MacBeth, supra note 66, at 153.
78Tomko-DeLuca, supra note 64, at  10-1; see also, e.g., Town  of
Bourne  v.  Plante,  708 N.E.2d 103, 105 (Mass.  1999);  Lane  v.
Zoning  Bd.  of Adjustment, 669 So. 2d 958, 959 (Ala.  Civ.  App.
1995).
79Rutgers, the State University v. Piluso, 286 A.2d 697, 701 (N.J.
1972); see also 4 Sandra M. Stevenson, Antieau's Local Gov't  Law
  57.08[3],  at  p.  57-107 (2d ed. 2002) (calling  balancing  of
interests  "more  realistic  than  other  tests"  such   as   the
governmental  function  test);  Note,  supra  note  69,  at   872
("Inconsistent  results proliferate due largely  to  state  court
reliance  upon  artificial  labels to  rationalize  `governmental
immunity' from local zoning ordinances . . . .").
80Reynolds, supra note 65, at 619-20 (citations omitted); see also
Blackstone  Park  Improvement Ass'n, 448 A.2d at  1238;  MacBeth,
supra note 66, at 152.
81See, e.g., Township of Washington v. Village of Ridgewood,  141
A.2d  308,  311  (N.J.  1958);  2 Kenneth  H.  Young,  Anderson's
American Law of Zoning  12.05, at 507-11 (4th ed. 1996).
82286 A.2d 697, 702-03 (N.J. 1972).
83City  of Crown Point v. Lake County, 510 N.E.2d 684, 690  (Ind.
1987)  ("We conclude that an intruding entity must be allowed  to
seek relief under some circumstances.  It must, however, bear the
burden  to  show  that  immunity  is  necessary  to  advance  the
governmental ends it seeks."); City of Fargo v. Harwood Township,
256  N.W.2d 694, 698 (N.D. 1977); Temple Terrace, 322 So.  2d  at
579.
84Piluso, 286 A.2d at 702.
85Id.  at  703 ("[T]here is no precise formula or set of criteria
which    will    determine    every   case    mechanically    and
automatically.").
86Id.
87See City of Washington v. Warren County, 899 S.W.2d 863, 865-66
(Mo.  1995);  Herrmann v. Bd. of County Comm'rs, 785  P.2d  1003,
1008  (Kan. 1990);  In re County of Monroe, 530 N.E.2d  202,  203
(N.Y.  1988);  Hayward v. Gaston, 542 A.2d 760, 766 (Del.  1988);
City  of  Crown Point v. Lake County, 510 N.E.2d 684,  690  (Ind.
1987);  City of Ames v. Story County, 392 N.W.2d 145,  149  (Iowa
1986);  Indep.  Sch. Dist. No. 89 v. City of Oklahoma  City,  722
P.2d  1212,  1215 (Okla. 1986); Brownfield v. State,  407  N.E.2d
1365,  1368  (Ohio  1980), overruled on other grounds  by  Racing
Guild  of Ohio v. Ohio State Racing Comm'n, 503 N.E.2d 1025 (Ohio
1986);  Blackstone  Park  Improvement  Ass'n  v.  State  Bd.   of
Standards  &  Appeals, 448 A.2d 1233, 1239 (R.I. 1982);  City  of
Fargo  v.  Harwood  Township, 256 N.W.2d 694,  698  (N.D.  1977);
Lincoln  County  v.  Johnson, 257 N.W.2d 453,  458  (S.D.  1977);
Hillsborough Ass'n for Retarded Citizens, Inc. v. City of  Temple
Terrace,  332 So. 2d 610, 612 (Fla. 1976), aff'g Temple  Terrace,
322  So. 2d at 578-79; Town of Oronoco v. City of Rochester,  197
N.W.2d  426,  429 (Minn. 1972); Rutgers, the State University  v.
Piluso, 286 A.2d 697, 701 (N.J. 1972); see also  Dearden v.  City
of  Detroit,  296  N.W.2d 139, 142 & n.4 (Mich.  1978)  (adopting
"legislative intent" test, citing Piluso favorably).
88Hagfeldt  v.  City of Bozeman, 757 P.2d 753, 757 (Mont.  1988);
Kunimoto v. Kawakami, 545 P.2d 684, 687 (Haw. 1976).
89City of New Orleans v. Bd. of Comm'rs, 640 So. 2d 237, 252 (La.
1994).
90Austin  Indep. Sch. Dist. v. City of Sunset Valley, 502  S.W.2d
670, 674 (Tex. 1973).
91City of Everett v. Snohomish County, 772 P.2d 992, 997-98 (Wash.
1989).
92See Model Land Dev. Code  7_301 to 304 and 12_201 (1975).
93See Temple Terrace, 322 So. 2d at 579; see also Brownfield, 407
N.E.  2d at 1368; City of Fargo, 256 N.W.2d at 698; Young,  supra
note 81, at  12.05.
94See  Piluso, 286 A.2d at 703; see also City of Crown Point  510
N.E.2d at 690-91; Brownfield, 407 N.E.2d at 1368; Temple Terrace,
322 So. 2d at 579.
95Mount Juneau Enters., Inc. v. City & Borough of Juneau, 923 P.2d
768,   776-77  (Alaska  1996)  (quoting  Ben  Lomond,   Inc.   v.
Municipality of Anchorage, 761 P.2d 119, 122 (Alaska 1988)).
96Cf.  Ben  Lomond, 761 P.2d at 122 ("[S]uccessful pursuit  of  a
claim  through the administrative process could obviate the  need
for  judicial review of the constitutional issues."); Gregory  W.
Stype,   Comment,   Government   Immunity   from   Local   Zoning
Restrictions: The Balancing Test of Brownfield v. State, 43  Ohio
St. L.J. 229, 241 (1982).
97Ogontz Area Neighbors Ass'n, 483 A.2d at 454-55.
98See Brown v. Kansas Forestry, Fish & Game Comm'n, 576 P.2d 230,
236  (Kan. App. 1978) ("[I]f the state were not required to  seek
local  approval, the city would always be forced to litigate  its
disagreement . . . .") (quoting Temple Terrace, 322 So. 2d at 612
n.3); Stype, supra note 96, at 264.
99Town of Oronoco, 197 N.W.2d at 429.
100Our decision today is also consistent with an opinion letter of
the  Alaska Attorney General, advocating for the adoption of  the
balancing  of interests test in 1981.  See Rabbit Creek  Shooting
Range  Improvement, 1981 Informal Op. Att'y  Gen.  867,  869;  WL
38706, at *2 (Alaska, July 13, 1981).
10149  U.S.C.  701 et seq.  ICCTA applies to the Railroad via  45
U.S.C.   1207(a)(1), which provides that " the [Alaska  R]ailroad
shall  be  a  rail  carrier  engaged in  interstate  and  foreign
commerce  subject to Part A of subtitle IV of Title  49  and  all
other Acts applicable to rail carriers subject to that chapter."
102City of Auburn v. United States, 154 F.3d 1025, 1028 n.3  (9th
Cir.  1998)  (quoting ICC Termination Act of 1995,  Pub.  L.  No.
104_88,  109  Stat.  803  (1995)), cert. denied,  527  U.S.  1022
(1999).
10349 U.S.C.  10501 (emphasis added).
104Medtronic, Inc. v. Lohr, 518 U.S. 470, 485 (1996) (quoting Rice
v. Santa Fe Elevator Corp., 331 U.S. 218, 230 (1947)).
105Id.  (quoting  Retail  Clerks  Int'l  Ass'n,  Local  1625   v.
Schermerhorn, 375 U.S. 96, 103 (1963)).
106In re Vermont Ry., 769 A.2d 648, 503 (Vt. 2001).
107Florida East Coast Ry. Co. v. City of West Palm Beach, 266 F.3d
1324, 1337 (11th Cir. 2001).
108H.R. Rep 104-422, at 167 (1995), reprinted in 1995 U.S.C.C.A.N.
850, 852.
109H.R. Rep. 104-311, at 96 (1995), reprinted in 1995 U.S.C.C.A.N.
at 807-08.
110Cities of Auburn and Kent, WA, STB Finance Docket No. 33200, at
*6 (Surface Transp. Bd. July 1, 1997); 1997 WL 362017.
111Cf. City of Auburn, 154 F.3d at 1031 (noting that environmental
regulations "will in fact amount to `economic regulation' if  the
[rail]   carrier  is  prevented  from  constructing,   acquiring,
operating, abandoning, or discontinuing a line").
112Florida East Coast Ry., 266 F.3d at 1331; see also Borough  of
Riverdale, STB Finance Docket No. 33466, at *5, (Surface. Transp.
Bd.  Sept. 9, 1999); 1999 WL 715272 ("[S]tate or local regulation
is  permissible where it does not interfere with interstate  rail
operations . . . .").
113Borough of Riverdale, 1999 WL 715272, at *7.
114Cities of Auburn and Kent, 1997 WL 362017, at *6.
115In re Vermont Ry., 769 A.2d at 502.
116Florida East Coast Ry., 266 F.3d at 1338 n.11.
117See 6 Rohan, Zoning and Land Use Controls  40.03[1][b] at  40-
122 (1993).
118Note  that although this section is in Title 35, which  mainly
relates   to   the  Department  of  Transportation   and   Public
Facilities, its application extends beyond the department to  all
state entities.
119Ch. 63,  1, SLA 1974.
120Ch. 50,  1, SLA 1976.
121Senator  Chancy Croft, sponsor of the measure,  explained  the
purpose of the amendment as follows to the Community and Regional
Affairs Committee of the Senate:

                Mr. Chairman, you will recall that last
          year we passed a bill that contained all this
          except for the reference to the University of
          Alaska.   None of us I think being  sensitive
          enough  that the University considers  itself
          something  other than a portion of the  state
          as  far  as public works are concerned.   The
          bill  as  far  as I know was satisfactory  to
          everybody   with  the  exception   that   the
          University told people that they just weren't
          going  to  abide by it.  I think they  should
          and  if I frankly had had any knowledge  that
          they wouldn't, we would have included it last
          year and this bill simply adds the University
          to  the  bill that was passed last year  that
          requires  state instrumentalities  to  comply
          with  local  planning and  zoning  ordinances
          unless the governor determines that there  is
          a  sufficient reason to override it in  which
          he  case he can do it but otherwise they have
          to abide by the same laws as everybody else.
          
Track  1,  16:00-19:20  -  1976 Senate  Committee:   Community  &
Regional Affairs.

           When the legislation was being considered by the House
of  Representatives, Senator Croft explained the evolution of the
requirement  of state government compliance with local  codes  as
follows:

                This,  I  might say Mr. Chairman,  this
          whole  area has been one in which  the  state
          has gone on a gradual basis to it.  The first
          portion  of  the bill of the present  statute
          that the state would consult was passed in 57
          and then it was 68 before the state said that
          it  would  comply with local building  codes.
          And then in 75 we went and we thought we were
          picking  up  the University but there  was  a
          drafting  mistake and we weren't,  that  they
          shall  comply with local planning and zoning,
          and  so  it  has  been  a  real  evolutionary
          process . . . .
          
Track  2, 0:27-4:00 - 1976 House Committee:  Community & Regional
Affairs.

122AS 42.40.010 - .990.
123Ch. 14,  57, SLA 1987.
124House Journal Supp. No. 11 at 8, 1987 House Journal 1617.
125Id. at 2.
126There are a number of particularized statutes that also indicate
the  legislature's acceptance of the rule that state agencies and
state  activities should be immune from local zoning unless  made
subject  to  zoning by statute.  Thus AS 18.55.100(7)  makes  the
Alaska  Housing Finance Corporation subject to local zoning.   If
the  corporation  were already subject to local zoning  this  act
would  not  have  been needed.  Similarly, AS 19.30.080  provides
that access roads to state land constructed within a municipality
that has zoning shall conform with zoning regulations as to width
of  right-of-way - but, by implication, not with other standards.
Likewise,  AS 38.04.045 requires that the Department  of  Natural
Resources  when  subdividing  state  land  for  sale   within   a
municipality comply with local zoning.
127See Senate Transportation Committee Hearing, tape 65, side  A,
March 1, 1984.
128Today's opinion offers a third interpretation of section .390.
It states that the section "could also be read as a choice-of-law
provision . . . ."  Slip Op. at 11.  Thus, "if the Railroad Board
promulgated   rules  conflicting  with  local   ordinances,   the
Railroad's  regulations would govern, but in  the  absence  of  a
conflict, local rules are unaffected."  Under this interpretation
the  Railroad  Board may promulgate a land-use rule covering  the
land  in  question, permitting it to be used for quarry purposes.
Since  such a rule would conflict with the municipal zoning code,
the   rule   would   govern.   Thus  even   under   the   court's
interpretation,  section .390 is a "direct statutory  grant[]  of
immunity,"  Slip  Op.  at 27-30, albeit a conditional  one,  that
controls over the balancing test adopted by today's opinion  when
the  Railroad  Board  promulgates rules inconsistent  with  local
zoning.
129Minutes of Committee Meeting of March 15, 1984.
130AS 42.40.935(b) provides:

                No  later than two years after the date
          of  transfer, the corporation in consultation
          with  the  Department of  Public  Safety  and
          appropriate   municipal   officials,    shall
          develop   and   adopt  a  plan   to   achieve
          compliance  with building and related  safety
          codes   applicable  to  facilities   of   the
          corporation.   The plan shall be  implemented
          and  compliance  achieved within  five  years
          after   it   is   adopted.    In   the   sole
          determination of the commissioner  of  public
          safety,   any  existing  building  owned   or
          controlled by the corporation that  does  not
          present a serious safety hazard and for which
          compliance    would   be   uneconomical    in
          consideration  of its remaining  useful  life
          shall  be exempted from compliance with state
          or municipal safety codes.
          
131See supra p. 40.
132AS 42.40.250 provides in relevant part:

                In  addition to the exercise  of  other
          powers authorized by law, the corporation may
          
               . . .
          
                (9) contract with and accept transfers,
          gifts,  grants, or loans of funds or property
          from  the United States and the state or  its
          political  subdivisions,  subject  to   other
          provisions  of  federal  or  state   law   or
          municipal ordinances;
          
               . . .
          
133April 12, 1982 Memorandum from Senator Kerttula to the  Senate
Transportation  Committee  outlining the  amendments  to  SB  212
requested by Frank Jones, the manager of the Alaska Railroad.