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You can search the entire site. or go to the recent opinions, or the chronological or subject indices. Alyeska Pipeline Service Company v. State, Dept. of Environmental Conservation (10/13/2006) sp-6063
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
| ALYESKA PIPELINE SERVICE | ) |
| COMPANY, | ) Supreme Court No. S- 12029 |
| ) | |
| Appellant, | ) Superior Court No. 3AN-04-10710 CI |
| ) | |
| v. | ) O P I N I O N |
| ) | |
| STATE OF ALASKA, DEPART- | ) No. 6063 - October 13, 2006 |
| MENT OF ENVIRONMENTAL | ) |
| CONSERVATION, | ) |
| ) | |
| Appellee. | ) |
| ) | |
Appeal from the Superior Court of the State
of Alaska, Third Judicial District,
Anchorage, Joel H. Bolger, Judge.
Appearances: Svend A. Brandt-Erichsen,
Heller Ehrman LLP, Seattle, Washington, for
Appellant. Steven E. Mulder, Assistant
Attorney General, Anchorage, and David W.
M rquez, Attorney General, Juneau, for
Appellee.
Before: Bryner, Chief Justice, Matthews,
Eastaugh, Fabe, and Carpeneti, Justices.
EASTAUGH, Justice.
I. INTRODUCTION
The Alaska Department of Environmental Conservation
billed Alyeska Pipeline Service Co. for costs the department
incurred defending against Alyeskas administrative challenge of
an air quality control permit. Although federal law requires the
department to recover all permit-related costs from industry,
Alyeska argues that state law and due process do not allow the
department to recover these costs directly from the appealing
permit holder. Because we interpret former AS 46.14.240 as
allowing the fee assessment, and because Alyeska has failed to
demonstrate that its due process rights were violated, we affirm
the decision of the superior court that affirmed the ruling of
the departments deputy commissioner.
II. FACTS AND PROCEEDINGS
The federal Clean Air Act (the Act) requires states to
issue air quality control permits to major stationary sources of
air pollution.1 These permits contain[], in a single,
comprehensive set of documents, all [Act] requirements relevant
to [a] particular polluting source.2 In late 2003 the Alaska
Department of Environmental Conservation issued two air quality
control permits to Alyeska regulating its Valdez Marine Terminal.
Alyeska administratively appealed several aspects of the permits.
After some motion practice, Alyeska and the department apparently
settled the consolidated appeals of the permits.
The current dispute concerns the departments attempt to
recoup from Alyeska the costs the department incurred defending
the two permits during Alyeskas administrative appeals.3 Shortly
after Alyeska initiated its appeals of the permits it received a
department invoice for $8,073 for permit administration fees.
The department charges these permit administration fees to each
permit applicant to recoup the direct costs of processing and
administering the applicants permit.4 This invoice included
charges for the time the department spent preparing its defense
against Alyeskas appeals.
On April 30, 2004 Alyeska requested department review
of these fees under the departments fee review procedure.
Alyeska argued that neither Alaska law nor due process authorized
the department to recover the departments defense costs directly
from an appellant. The director of the departments Air Quality
Division denied Alyeskas appeals on June 8, 2004. On Alyeskas
motion for reconsideration, the departments deputy commissioner
again denied the fee appeal. Alyeska appealed the decision to
the superior court. On July 7, 2005 Superior Court Judge Joel H.
Bolger upheld the decision of the deputy commissioner.
Through March 2005 Alyeska had contested a total of
$34,556.39 in permit administration fees invoiced to it by the
department in connection with Alyeskas appeals of the two air
quality permits. Alyeska also anticipates being billed an
additional $63,500 in fees and $2,151.27 in costs for work
performed by the Department of Law on the permit appeals. The
appeal now before us, however, concerns only the initial $8,073
invoice. As far as we can tell from the record, the department
had not yet ruled on the propriety of the remaining invoices when
this appeal was commenced. Furthermore, Alyeska could not have
challenged the Department of Laws costs and fees because it had
not yet been invoiced for them. Our decision today is not
intended to address any charges other than the initial $8,073
invoice.
III. DISCUSSION
A. Standard of Review
When reviewing an agency decision that raises questions
of statutory interpretation involving legislative intent, we
review the questions independently, applying the
substitution-of-judgment standard.5 When deciding due process
claims, we apply our independent judgment,6 adopting the rule of
law that is most persuasive in light of precedent, reason, and
policy.7
Whether an agency action is a regulation requiring
rulemaking under the Alaska Administrative Procedure Act is a
question of law that does not involve agency expertise and that
we therefore review applying our independent judgment.8
B. Former AS 46.14.240 Allowed the Department To Recover
the Costs of an Administrative Appeal.
Alyeska argues that the permitting system in place when
it appealed the air quality permits did not authorize the
department to recover its appeal costs directly from Alyeska.
The Clean Air Act sets national standards for the
reduction of air pollution but allows states to largely control
the process by which those standards are met.9 Under Title V of
the Act, participating states must issue to each stationary
source permits setting out all the regulatory requirements to
which the source is subject.10 State permitting programs must
meet specific requirements set out in the Act.11 If a state fails
to meet these requirements, the federal government may impose
sanctions and even assume direct control over permitting in the
state.12
The Act requires that industry, not state government,
bear the costs of the permitting program.13 Congress imposed the
cost-recovery requirement because it determined that states were
not adequately funding their clean air programs.14 It also wished
to force sources of pollution to internalize the cost of such
pollution.15 Hence, the Act requires the EPA to promulgate
regulations mandating that state permitting programs include
[a] requirement under State or local law or
interstate compact that the owner or operator
of all sources subject to the requirement to
obtain a permit under this subchapter pay an
annual fee, or the equivalent over some other
period, sufficient to cover all reasonable
(direct and indirect) costs required to
develop and administer the permit program
requirements of this subchapter, . . .
including the reasonable costs of
(i) reviewing and acting upon any
application for such a permit . . . .[16]
Alaska has created a permitting program under the Act.17
Alaska recoups the costs of its permitting program from industry
through two types of fees: permit administration fees and
emission fees.18 Although the Alaska legislature has since
amended the state statute authorizing permit administration fees,19
the statute at the time of Alyeskas administrative appeals
defined permit administration fees in relevant part as:
fees assessed to recover costs incurred by
the department and other state or local
governmental agencies, to the extent required
under 42 U.S.C. 7661a(b)(3)(A) and federal
regulations implementing that provision, for
the following services to a specific
stationary source that are performed in order
to implement the permit program established
under this chapter:
. . .
(3) receiving, reviewing, preparing,
processing, and issuing permits, permit
amendments, modifications, reopenings,
renewals and revocations, and
reissuance . . . .[20]
In its regulations in force at the time of the controversy, the
department set the permit administration fee rate at $78 per hour
of staff time.21 The regulations did not elaborate on what
specific department services were chargeable as permit
administration fees.22
All stationary emissions sources must also pay emission
fees, which former AS 46.14.250(h) defined as
fees assessed to recover costs incurred by
the department and other state or local
governmental agencies, to the extent required
under 42 U.S.C. 7661a(b)(3)(A) and federal
regulations implementing that provision, for
execution of the permit program established
under this chapter that are generally not
associated with service provided to a
specific facility . . . ; the costs may
include rent, utilities, permit program
management, administrative and accounting
services, and other costs as identified by
the department in regulations.[23]
Unlike the permit administration fees, the emission fees are
dispersed among all permit holders on the basis of each facilitys
estimated assessable emissions.24
Alyeska argues that under the version of AS
46.14.240(c) that applies in this case the department was not
authorized to recover the costs of defending an administrative
appeal through permit administration fees. It suggests that the
department could have more appropriately recovered these costs
through emission fees.
In interpreting a statute we consider its language, its
purpose, and its legislative history, in an attempt to give
effect to the legislatures intent, with due regard for the
meaning the statutory language conveys to others.25 In
considering legislative history we follow the maxim that the
plainer the language, the more convincing contrary legislative
history must be.26
To prevail, Alyeska must explain why the plain text of
the statute should not govern the outcome of this case. Former
AS 46.14.240(c)(3) specifically allowed the department to recoup,
through permit administration fees, the costs of reviewing . . .
permits. An administrative appeal of permit terms would seem to
fall squarely within the ambit of reviewing the permit.
Alyeska advances several arguments against this plain
reading of the statute. It first contends that the term
reviewing, read in the overall context of receiving, reviewing,
preparing, processing, and issuing permits, cannot include
adjudication of a permit because reviewing is listed before
issuing.27 It argues that the order of the terms suggests that
each term should be limited chronologically to a particular stage
in the process of approving a permit application. Hence,
reviewing a permit by the department must be completed before
preparing, processing, and issuing can occur.28
It is not obvious that the terms are in chronological
order. Although it is true, for example, that receiving a permit
application must precede issuing the permit, it is less clear
that preparing must precede processing or must follow reviewing.
But even assuming that the terms are listed in the order in which
the agency generally starts a particular stage of the permitting
process, it does not follow that the legislature intended to
specify a rigid sequence that prevented one activity from
beginning before a previous one ended. [R]eviewing, preparing,
and processing are all functions that one would expect might
continue throughout the permitting process. Nothing in the
statute suggests that these functions necessarily end upon
issuing the permit. Thus, reviewing is best interpreted as
referring to not only the departments initial review when it
first receives a permit application, but also its review at each
point when it reviews or is asked to review its work; this
logically includes administrative hearings.
Alyeska next argues that an administrative appeal
cannot be considered reviewing by the department because once the
appeal process is initiated, the department becomes an adverse
party and is therefore defending rather than reviewing its work.
But as we have noted, the purpose of an administrative review
process is to allow an agency to correct its own errors so as to
moot judicial controversies.29 The departments more adversarial
role in an administrative appeal serves the ultimate goal of
ensuring that the permit is legally sound and error-free. In
other words, by defending its permitting decisions during an
administrative proceeding, the department is reviewing the
permit, even though it is acting in an adversarial capacity.
Even if we were to conclude that the text of former AS
46.14.240(c), read in isolation, is ambiguous on the question of
whether the departments defense costs are recoverable, any such
ambiguity disappears when the statute is read in context of
federal law. Alaska created its current permitting program in
response to a federal mandate.30 The Clean Air Act requires that
states recoup from industry all reasonable (direct and indirect)
costs required to develop and administer the permit program
requirements.31 Because 42 U.S.C. 7661a(b)(6) requires states to
provide applicants with procedures for expeditious review of
permit actions,32 the costs of such review must be among those
required to . . . administer the permit program requirements.
States are therefore required to recover appeal costs under the
Act. We note that the EPA reached the same conclusion in a
policy guidance issued in 1993.33
In its 1993 act creating Alaskas permitting program,
the legislature identified one of the acts purposes as
retain[ing] federal approval of the states air quality control
program in order to ensure the continued receipt of federal
highway and air pollution control money.34 This statement of
purpose obliges us to interpret any ambiguity in the statute in a
way that complies with federal requirements if it is reasonable
to do so. Without specific legislative direction or history to
the contrary, it is implausible to think that the legislature
wished to depart from the clear requirements of the Act regarding
cost recovery. Hence, we must interpret former AS 46.14.240(c)
as allowing recovery of appeal costs.
Alyeska suggests that an interpretation of former AS
46.14.240(c) that excludes appeal costs need not violate federal
law because the department could recoup those costs via emission
fees. As noted above, emission fees cover costs that are
generally not associated with service provided to a specific
facility, such as rent, utilities, permit program management,
administrative and accounting services, and other costs as
identified by the department in regulations.35 Because federal
law does not require that each permit holder pay its own costs,
but only that the state recover the total costs of administering
the permit program from permit holders as a group,36 the emission
fees provision could be viewed as a catch-all provision intended
to recover all the costs of the permitting program that were not
within the scope of the eight enumerated services set out in
former AS 46.14.240(c). Alyeska points out that, unlike the
provision authorizing permit administration fees, the emission
fee provision allows the department to specify through
regulations what costs can be recovered through emission fees.
Alyeska argues that the department could have placed
administrative appeal costs into this category through
regulations.
We are not convinced that the statutory definition of
emission fees is properly understood as including appeal costs.
Unlike the departments rent or utilities costs, the
administrative appeal costs of defending a particular permitting
decision for a particular facility are directly associated with a
service provided to a specific facility. An attempt by the
department to recover its appeal costs as emission fees would
appear to violate former AS 46.14.250(h)s requirement that
emission fees cover costs that are generally not associated with
service provided to a specific facility. By limiting emission
fees to indirect costs those not associated with service
provided to a specific facility the legislature seems to have
viewed permit administration fees as the proper vehicle for
collecting costs that can be traced to a specific permit holder.
We also note that the legislative history of former AS
46.14.240(c) indicates a desire to require individual permit
holders to internalize the costs of their own permits. The
statute was drafted by a legislative working committee comprised
of representatives from various stakeholders in the federal Clean
Air Act, including the oil and gas industry.37 The committee
explained that the bifurcated fee system was developed on the
policy premise that a cost generator is to be the cost bearer.38
At a committee meeting, a representative of the oil and gas
industry elaborated on this premise: Those people who have very
complex permits, that have controversial permits, who dont do a
good job on their permits, [should not] get a free ride, and
everybody else pays for it.39 The committees understanding was
that emission fees should be limited to recovering the costs of
performing those functions of the permit program that benefit or
assist all permit holders through execution of a state permit
program.40 These statements reinforce our conclusion that the
legislature intended administrative appeal costs to be recovered
through permit administration fees and not through emission fees.
Because the legislature created no other fee provision
that can reasonably be interpreted as allowing the recovery of
appeal costs, an interpretation of subsection .240(c) that
excluded such costs would seem to require a conclusion that the
legislature did not intend to comply with the Acts mandate to
recoup appeal costs. We are unwilling to draw such a conclusion
without evidence suggesting that the drafters intended such a
result.
We therefore conclude that former AS 46.14.240(c)
allowed the department to recover the costs of administrative
appeals through permit administration fees.
C. Recovery of Appeal Costs Does Not Violate Alyeskas Due
Process Rights.
Alyeska also argues that the departments interpretation
of former AS 46.14.240(c) violated Alyeskas due process rights.
It contends that the departments interpretation impermissibly
impeded the ability of permit holders to seek review of flaws in
their permits by forcing them to bear the departments defense
costs even if their complaints were valid. It also argues that
its due process rights were violated because it was not given
proper notice that it would have to pay the departments appeal
costs and because the departments adjudication process was biased
against Alyeska.
1. The departments recovery of its appeal costs from
Alyeska did not unconstitutionally impede Alyeska
from seeking review of its permit.
Alyeskas first argument is that the departments
interpretation of the fee administration provision unjustifiably
impedes its access to justice, and therefore fails the balancing
test set out in Mathews v. Eldridge41 and Midgett v. Cook Inlet
Pre-Trial Facility.42 Per those cases, the court must weigh three
factors: (1) the private interest affected by the official
action; (2) the risk of an erroneous deprivation of such interest
through the procedures used and the probable value, if any, of
additional or substitute procedural safeguards; and (3) the
governments interest, including the fiscal and administrative
burdens that additional or substitute procedural requirements
would entail.43
The parties disagree regarding all three factors. But
even if we assume that the first and third factors favor Alyeska,
its due process claim nevertheless fails because Alyeska has not
shown that the fees created any risk of an erroneous deprivation
in this case.
Alyeska contends that shifting the departments appeal
costs onto the permit holder creates a risk of erroneous
deprivation because it gives the department an unfair advantage
by forcing Alyeska and other permit holders to consider forgoing,
limiting, or abandoning legitimate claims. Alyeska also suggests
that the departments cost-shifting removes the normal incentives
and constraints that influence assessment of the strengths and
weaknesses of [the departments] case, such as whether to press on
and defend a provision with little legal basis and minimal
environmental return.
Alyeska cannot claim that its due process rights were
violated merely because it was forced to consider forgoing some
or all of its claims. In Varilek v. City of Houston we held in a
zoning dispute that a landowners due process right of access to
the courts would be violated by a mandatory administrative appeal
fee of $200 only if the landowner could demonstrate that he was
unable to pay the fee.44 Varilek recognized the principle that a
party claiming violation of its right of access to the courts
must demonstrate that it was itself placed at risk of an
erroneous deprivation.45 Even in due process cases in which our
holding had potentially broad implications for a class of
litigants (e.g., parolees, defendants in license revocation
hearings), the parties seeking relief had suffered actual
deprivations of their rights.46
In this case, Alyeska pursued its claims vigorously and
admits that it reached settlement with the department on
contested elements of the permits. It identifies no specific
harm that it suffered during that litigation. It does not
suggest, for example, that the department coerced it into an
unfavorable settlement under threat of exorbitant permit
administration fees. Rather, it speculates about the incentives
created by the provision. Because Alyeska has not demonstrated
that it was in any way denied access to agency or judicial
review, its due process argument fails.47
Alyeska argues that Malvo v. J.C. Penney Co. requires a
contrary result. In that case we held that the superior court
abused its discretion by awarding full attorneys fees to the
prevailing party.48 We reasoned that the prevailing party should
not automatically be awarded full attorneys fees without
considering whether those fees are just.49 Although we suggested
that due process might be implicated by an automatic award of
full attorneys fees, we declined to decide the case on due
process grounds, holding instead that the superior courts
decision was manifestly unreasonable under Alaska Civil Rule 82
and, thus, an abuse of discretion.50
Malvo was not decided on due process grounds and
therefore its discussion of the due process implications of
automatic fee shifting is dictum. Furthermore, unlike Malvo,
Alyeska was not required to pay the full amount of the
departments fees regardless of whether those fees were
reasonable. The applicable regulations give permit holders the
right to dispute a fee or computation through an administrative
appeal.51 Although Alyeska challenged only the permissibility of
the fees, it was free under this provision to challenge their
reasonableness as well. It did not do so. More broadly, in
Malvo, as in Varilek, we were principally concerned about the
effect of a financial barrier in the specific circumstances of
that case. We noted in Malvo that a cost requirement, valid on
its face, may offend due process because it operates to foreclose
a particular partys opportunity to be heard.52 We left open the
possibility that an award of full fees could be justified in some
cases.53 Because Alyeska has not demonstrated that the fees
assessed by the department were unreasonable or detrimental to
Alyeskas litigation efforts, Malvos dictum is inapposite.
2. Alyeska was given constitutionally sufficient
notice of the fees.
Neither former AS 46.14.240 nor the implementing
regulations in force at the time specifically identified appeal
costs as recoverable through permit administration fees. 54
Alyeska argues that, given this silence, the departments failure
to notify it of the cost-shifting policy violated due process.
It argues that later process, such as this appeal, cannot remedy
the violation because had it known about the charges it might
have decided to file more limited appeals, or no appeal at all.
In Amerada Hess Pipeline Corp. v. Alaska Public
Utilities Commission, the Alaska Public Utilities Commission
(APUC) charged pipeline owners nearly two million dollars in
costs and attorneys fees for a tariff investigation.55 The
commission was statutorily authorized to assess such charges, but
the owners claimed that a vague statute and the lack of
regulations interpreting the statute failed to give them notice
of the possibility of such fees.56 We ruled in favor of the APUC,
holding that [t]he adequacy of process does not depend on the
advance adoption of standards. Rather, we must look to the
entire set of safeguards provided in the particular proceeding.57
We continued:
Even assuming, arguendo, that the owners had
no notice of the APUCs cost allocation policy
during most of the six years in which the
costs were expended, they received notice and
an opportunity to object to the APUCs policy
and decision before the allocation order
became final. [58]
Like the owners in Amerada Hess, Alyeska began receiving fee
invoices and was given an opportunity to contest them relatively
soon after it initiated its appeals. Generally speaking, the
notice requirement in due process is associated with the
requirement that there be a meaningful opportunity to be heard.
As we have explained: [t]he crux of due process is opportunity to
be heard and the right to adequately represent ones interests.
Adequate notice is the common vehicle by which these rights are
guaranteed.59 Alyeska does not contend that it was denied an
adequate opportunity to argue that the departments fees were
impermissible or unreasonable.
It is true that, unlike the owners in Amerada Hess,
Alyeska initiated the cost-producing action. If it had been
aware of the departments policy, Alyeska could have exercised
control over the costs by limiting or forgoing its appeals. This
fact distinguishes this case somewhat from Amerada Hess, in which
lack of notice of the APUCs policy could not have harmed the
owners because they did not have any control over the
investigation.60 But any due process violation that may have
resulted from Alyeskas inability to make a fully informed choice
whether to appeal is demonstrably harmless. Alyeska commenced
its appeals of the two permits on October 24, 2003 and December
24, 2003 respectively. Alyeska first received notice that it
would be assessed some fees when, several months later, it
received the April 13, 2004 invoice for $8,073. Although it
could have withdrawn or limited its appeals at that point,
Alyeska continued to pursue its appeals for almost a year after
it knew the department would charge its fees to Alyeska. Also,
Alyeska mentions in its reply brief that the air quality permits
contained terms that were not only in error, but that the company
could not meet. Indeed, after reviewing drafts of the permits
one of Alyeskas engineers warned the department that Alyeska
would have little choice but to pursue an appeal if the permits
were issued without modification. Given Alyeskas continued
pursuit of the appeals after receiving notice of the fees and the
apparently vital interests at stake for Alyeska, we may assume
that Alyeska would have prosecuted the permit appeals regardless
of whether it was aware of its potential liability for fees. Any
due process violation resulting from its inability to make a
fully informed decision whether to appeal is therefore harmless.
In addition, Alyeska should have realized that the
department might recoup its appeal costs. Alyeska argues that
this case is distinguishable from Amerada Hess because the owners
there had some notice of the possibility of a fee assessment
while Alyeska had no notice at all. Alyeska points out that AS
46.14.240(c) does not directly state that the department may
recover the costs of administrative appeals. But for the reasons
discussed in Part III.B above, a careful reading of AS
46.14.240(c) particularly in light of the Clean Air Acts cost-
recovery requirements should have alerted Alyeska to the
possibility that it would have to pay the departments costs if
Alyeska appealed, just as it has been required to pay all other
costs related to its permits. Thus, Alyeskas position at the
beginning of this case was little different than that of the
pipeline owners in Amerada Hess. Both had at least constructive
notice of the possibility that they would be forced to pay the
states costs.
3. The departments fee review provisions do not
create an unconstitutional conflict of interest.
Alyeska asserts that the regulations establishing the
procedure for reviewing fees are constitutionally flawed because
they create impermissible conflicts of interest. Under 18 AAC
15.190, the director of the departments Air Quality Division
decides fee disputes.61 Alyeska argues that the director cannot
impartially decide whether the fees are permissible because he
has a vested interest in ensuring that the department complies
with the requirements of federal law, and in ensuring the
financial health of the department. Alyeska posits that the
director has a second conflict of interest because in substantive
(i.e., non-fee-related) permit appeals, he directs the
departments defense. Alyeska concludes that the director cannot
impartially review the departments fee assessments because the
director is largely responsible for incurring those fees in the
first place.
Alyeskas argument that the director has a conflict of
interest because he is charged with ensuring compliance with
federal law and meeting state budget requirements is
unpersuasive. Officials employed by administrative agencies may
decide administrative appeals without violating due process so
long as adequate procedural safeguards exist to protect the
rights of the appellant. As we noted in Amerada Hess, [m]ost
courts . . . accept that the merger of investigative and
executive responsibilities with adjudication does not violate
federal due process if institutional safeguards exist against the
abuse of unchecked administrative discretion.62 In this case, the
requirement of a written decision and the right to superior court
review sufficiently protect the litigant from abuse.63
Alyeskas argument that the appeal process violates due
process because the director is the principal generator of the
fees he is called upon to adjudicate also fails. As the
department points out, Alyeska is challenging not the
reasonableness of the departments fees but its statutory and
constitutional authority to charge them at all. There is no
reason to think that the director would be unable to consider
this argument impartially. Similarly, Alyeskas contention that
superior court review is insufficient because of the directors
ability to shape the record is unpersuasive because there are no
factual issues in dispute in this appeal.
D. The Department Was Not Required To Adopt a Regulation
Before It Could Recoup Its Costs.
Alyeska argues that the Alaska Administrative Procedure
Act prohibited the department from billing Alyeska for appeal
costs because the department had not adopted a regulation
allowing recovery of such costs.
The Alaska Administrative Procedure Act defines a
regulation as:
every rule, regulation, order, or standard of
general application . . . adopted by a state
agency to implement, interpret, or make
specific the law enforced or administered by
it, or to govern its procedure, except one
that relates only to the internal management
of a state agency; . . . regulation includes
manuals, policies, instructions, guides to
enforcement, interpretative bulletins,
interpretations, and the like, that have the
effect of rules, orders, regulations, or
standards of general application, and this
and similar phraseology may not be used to
avoid or circumvent this chapter; whether a
regulation, regardless of name, is covered by
this chapter depends in part on whether it
affects the public or is used by the agency
in dealing with the public.[64]
Regulations as defined by this provision must be adopted pursuant
to the notice and public comment requirements of the act.65
We have held that the term regulation should be
understood expansive[ly].66 An indication of a regulation is that
it implements, interprets, or makes specific the law enforced or
administered by the state agency.67 Alyeska argues that under this
expansive view, the departments policy of recovering appeal costs
is a regulation subject to the notice and public comment
provisions of the Alaska Administrative Procedure Act.
Although the definition of regulation is broad, it does
not encompass every routine, predictable interpretation of a
statute by an agency. Nearly every agency action is based,
implicitly or explicitly, on an interpretation of a statute or
regulation authorizing it to act. A requirement that each such
interpretation be preceded by rulemaking would result in complete
ossification of the regulatory state. We recognized as much in
Alaska Center for the Environment v. State, in which we faced the
question whether an agencys interpretation of a regulation
defining major energy facility itself constituted a regulation
subject to the requirements of the Administrative Procedure Act.68
We held that the agencys interpretation was not a regulation
because it was merely a common sense interpretation of the
regulations applicability.69 We noted that [t]he Divisions
interpretation was not an addition to a regulation involving
requirements of substance, but rather, an interpretation of the
regulation according to its own terms. 70 We reaffirm this
principle today. Although the Administrative Procedure Act may
require rulemaking in cases in which an agencys interpretation of
a statute is expansive or unforeseeable, or in cases in which an
agency alters its previous interpretation of a statute, obvious,
commonsense interpretations of statutes do not require
rulemaking.
The departments interpretation of former AS
46.14.240(c) was such a commonsense interpretation and was
therefore not subject to the Administrative Procedure Acts notice
and comment requirements. The department was therefore not
required to issue regulations before assessing Alyeska for the
fees.
IV. CONCLUSION
We consequently AFFIRM the decision of the superior
court affirming the ruling of the departments deputy
commissioner.
_______________________________
1 See Clean Air Act 502, 42 U.S.C. 7661a (2000); Public
Citizen, Inc. v. EPA, 343 F.3d 449, 453 (5th Cir. 2003).
2 Virginia v. Browner, 80 F.3d 869, 873 (4th Cir. 1996)
(citing Clean Air Act Amendments of 1990: Chafee-Baucus Statement
of Senate Managers (Conf. Rep. No. 952, 101st Cong., 2d Sess.),
reprinted in 136 Cong. Rec. S16933, S16983 (daily ed. Oct. 27,
1990)). Browner characterizes a permit as a source-specific
bible for Clean Air Act compliance. Id.
3 As described in Part III, the legislature has since
modified the statutory scheme allowing the department to recoup
these costs.
4 See AS 46.14.240.
5 State v. Dupier, 118 P.3d 1039, 1044 (Alaska 2005).
6 Wendell C. II v. State, OCS, 118 P.3d 1, 3 (Alaska
2005).
7 Paxton v. Gavlak, 100 P.3d 7, 10 (Alaska 2004).
8 Alaska Ctr. for the Envt v. State, 80 P.3d 231, 243
(Alaska 2003).
9 See Commonwealth of Va. v. EPA, 108 F.3d 1397, 1410
(D.C. Cir. 1997) (The states are responsible in the first
instance for meeting the national ambient standards through
state-designed plans that provide for attainment, maintenance,
and enforcement of the national standards in each air quality
control region. Thus, each state determines an emission reduction
program for its nonattainment areas, subject to EPA approval,
within deadlines imposed by Congress. (internal quotation marks
omitted)).
10 See N.Y. Pub. Interest Research Group, Inc. v. Johnson,
427 F.3d 172, 176 (2d Cir. 2005).
11 Id.
12 Clean Air Act 502, 42 U.S.C. 7661a(d) (2000).
13 42 U.S.C. 7661a(b)(3).
14 S. Rep. No. 101-228, at 348 (1989), as reprinted in
1990 U.S.C.C.A.N. 3385, 3731 (Throughout the 20-year history of
the current Clean Air Act, inadequate State and local agency
resources have increasingly hampered pollution control efforts.).
15 Id. at 351, as reprinted in 1990 U.S.C.C.A.N. 3385,
3734.
16 42 U.S.C. 7661a(b)(3)(A).
17 See AS 46.14.010 et seq.
18 AS 46.14.240.250.
19 See AS 46.14.240. AS 46.14.240 now provides that the
department shall establish permit administration fees in
accordance with AS 37.10.050.058. Those provisions require
agencies either to set fixed fees for standard designated
regulatory services or to reach a negotiated service agreement
with the regulated party. AS 37.10.052. Under current
department regulations, an adjudicatory hearing regarding a
permit decision is a designated regulatory service subject to an
hourly fee. 18 Alaska Administrative Code (AAC) 50.400(m) (2006
Supp.).
20 Former AS 46.14.240(c). The other services listed in
former AS 46.14.240(c) are:
(1) providing preapplication consultation,
assistance, and completeness review of
applications for a permit, permit amendment,
permit modification, or renewal, except as
provided in (d) of this section;
(2) reviewing or assisting in preparation of
stationary source specific permit support
documents, including on-site evaluations,
except as provided in (d) of this section;
. . .
(4) preparing general operating permits
under AS 46.14.210; however, costs must be
allocated on an equitable basis to each
stationary source covered by the general
operating permit;
(5) performing stationary source inspections
and compliance evaluations;
(6) reviewing, compiling, and reporting
stationary source specific emission, ambient
monitoring, or process measurement data;
(7) preparing, evaluating, or processing
plans or documents to obtain stationary
source compliance or rectify noncompliance
with permit terms and conditions, but not
including any enforcement actions; and
(8) assessing and collecting delinquent
permit administration fees and emission fees.
The department concedes that it cannot collect the fees unless it
is authorized to do so by former AS 46.14.240(c)(1)(8) and does
not argue that any subsection other than (3) might be applicable.
21 Former 18 AAC 50.400 (2004). The current version of 18
AAC 50.400 imposes a variable hourly rate based upon the salary
and benefits of the employees working on the permit, plus costs.
18 AAC. 50.400(m). It also sets fixed annual fees for many of
the regulatory services provided by the department. 18 AAC
50.400(a)(l).
22 Former 18 AAC 50.400 (2004).
23 Former AS 46.14.250(h) (2003).
24 AS 46.14.250(b).
25 In re Estate of Maldonado, 117 P.3d 720, 725 (Alaska
2005) (quoting Alyeska Pipeline Serv. Co. v. DeShong, 77 P.3d
1227, 1234 (Alaska 2003) (internal quotation marks omitted)).
26 State v. Public Safety Employees Assn, 93 P.3d 409, 415
(Alaska 2004) (quoting Tesoro Petroleum Corp. v. State, 42 P.3d
531, 537 (Alaska 2002)).
27 See former AS 46.14.240(c)(3).
28 See id.
29 Voight v. Snowden, 923 P.2d 778, 781 (Alaska 1996)
(citations omitted).
30 See ch. 74, 1, SLA 1993; Clean Air Act 502, 42 U.S.C.
7661a(d) (2000).
31 42 U.S.C. 7661a(b)(3).
32 42 U.S.C. 7661a(b)(6) requires states to provide
[a]dequate, streamlined, and reasonable
procedures for . . . expeditious review of
permit actions, including applications,
renewals, or revisions, and including an
opportunity for judicial review in State
court of the final permit action by the
applicant.
33 EPA, Questions and Answers on the Requirements of
Operating Permits Program Regulations at 9-2 (July 7, 1993),
available at http://www.epa.gov/Region7/
programs/artd/air/title5/t5memos/bbrdq&a1.pdf. The department
suggests that in interpreting former AS 46.14.240 we should defer
to the EPA guidance. But because the guidance was issued after
the Alaska legislature passed former AS 46.14.240 it does not
shed any light on legislative intent. Id.; ch. 74, 1, SLA 1993
(enacted June 25, 1993). The guidance nonetheless remains
relevant as persuasive authority regarding the proper
interpretation of 42 U.S.C. 7661a.
34 Ch. 74, 1, SLA 1993. As noted above, noncompliance
with the Clean Air Acts requirements can result in sanctions,
such as loss of federal funding and even federal takeover of
pollution control within the state. 42 U.S.C. 7661a(d).
35 Former AS 46.14.250(h).
36 See 42 U.S.C. 7661a.
37 Other participants included, among others,
environmental groups, the Department of Defense, and the state.
Letter from the Air Quality Legislative Working Comm. to John
Sandor, Commr, Alaska Dept of Envtl. Conservation, attach. #4 at
6 (Dec. 28, 1992).
38 Letter from the Air Quality Legislative Working Comm.
to John Sandor, Commr, Alaska Dept of Envtl. Conservation,
attach. #4 at 6 (Dec. 28, 1992).
39 Transcript of Air Quality Legislative Working Comm.
Meeting #6 at 58 (Nov. 17, 1992).
40 Letter, supra note 38, attach. #4 at 7.
41 Mathews v. Eldridge, 424 U.S. 319, 335 (1976).
42 Midgett v. Cook Inlet Pre-Trial Facility, 53 P.3d 1105,
1111 (Alaska 2002).
43 Id.
44 Varilek v. City of Houston, 104 P.3d 849, 85355 (Alaska
2004) (remanding to superior court to determine whether landowner
was indigent).
45 See id.
46 See Javed v. Dept of Pub. Safety, Div. of Motor
Vehicles, 921 P.2d 620, 625 (Alaska 1996) (holding that statute
prohibiting accused in license revocation hearing from
introducing evidence that he was not driving at time of arrest
violated due process as applied to accused and others like him);
Bush v. Reid, 516 P.2d 1215, 121520 (Alaska 1973) (holding that
statute barring parolees from bringing civil suits violated
parolees due process rights by prohibiting him from bringing
personal injury action).
47 We acknowledge the possibility that an administrative
procedure could alter the litigating position of a class of
litigants so drastically as to render the procedure facially
invalid. But in this case, Alyeska has not demonstrated that its
due process right of access to the courts was harmed, let alone
that no set of circumstances exists under which the [provision]
would be valid or that the provision does not have a plainly
legitimate sweep. See Treacy v. Municipality of Anchorage, 91
P.3d 252, 260 n.14 (Alaska 2004).
48 Malvo v. J.C. Penney Co., 512 P.2d 575, 587 (Alaska
1973).
49 Id. at 58687.
50 Id. at 587.
51 18 AAC 15.190.
52 Malvo, 512 P.2d at 587 (emphasis added) (quoting Boddie
v. Connecticut, 401 U.S. 371, 380 (1971)).
53 Id. at 588.
54 See former AS 46.14.240; former 18 AAC 50.400 (2003).
55 Amerada Hess Pipeline Corp. v. Alaska Pub. Utils.
Commn, 711 P.2d 1170, 1174-75 (Alaska 1986).
56 Id. at 1175, 1179.
57 Id. at 1178.
58 Id. at 1179.
59 Matanuska Maid, Inc. v. State, 620 P.2d 182, 192-93
(Alaska 1980) (citations omitted).
60 Amerada Hess, 711 P.2d at 1179.
61 18 AAC 15.190 states:
Fee review.
(a) An applicant for a permit or approval
who is authorized by a provision of this
title to seek a review of a fee decision of
the department under this section may, within
30 days of receipt of the fee invoice, make a
written request that the director of the
division issuing the invoice review the
matter. The applicant need not pay the
disputed fee until the director issues a
final decision under (b) of this section, and
the department will not charge interest while
the director considers the request for fee
review.
(b) A request for fee review must be
accompanied by a written discussion that sets
out the reasons why the fee or computation is
disputed and how it should be adjusted. The
director of the department division issuing
the invoice shall issue a written decision on
the disputed invoice within 30 days after
receiving the request for fee review. A
decision made under this subsection is the
final agency decision. A person aggrieved by
that decision may appeal it to the superior
court in accordance with the Alaska Rules of
Appellate Procedure.
62 Amerada Hess, 711 P.2d at 1180.
63 See 18 AAC 15.190.
64 AS 44.62.640(a)(3).
65 See AS 44.62.190.215.
66 Messerli v. Dept of Natural Res., State, 768 P.2d 1112,
1117 (Alaska 1989), abrogated on other grounds by Olson v. State,
Dept of Natural Res., 799 P.2d 289, 29293 (Alaska 1990).
67 Kenai Peninsula Fishermans Coop. Assn v. State, 628
P.2d 897, 905 (Alaska 1981).
68 Alaska Ctr. for the Envt v. State, 80 P.3d 231, 24344
(Alaska 2003).
69 Id. at 244.
70 Id. (quoting Usibelli Coal Mine, Inc. v. State, Dept of
Natural Res., 921 P.2d 1134, 1149 n.24 (Alaska 1996)).
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