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You can search the entire site. or go to the recent opinions, or the chronological or subject indices. City of Soldotna v. State of Alaska, Local Boundary Commission (9/27/2024) sp-7722
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, email
corrections@akcourts.gov.
THE SUPREME COURT OF THE STATE OF ALASKA
CITY OF SOLDOTNA, )
) Supreme Court No. S-18538
Appellant, )
) Superior Court No. 3KN-21-00054 CI
v. )
) O P I N I O N
STATE OF ALASKA, LOCAL )
BOUNDARY COMMISSION, ) No. 7722 - September 27, 2024
)
Appellee. )
)
Appeal from the Superior Court of the State of Alaska, Third
Judicial District, Kenai, Lance Joanis, Judge.
Appearances: Brooks W. Chandler, Samuel C. Severin, and
Kody George, Chandler, Falconer, Munson & Cacciola,
LLP, Anchorage, for Appellant. Eugene F. Hickey and
William E. Milks, Assistant Attorneys General, and Treg
Taylor, Attorney General, Juneau, for Appellee.
Before: Maassen, Chief Justice, and Carney, Borghesan,
Henderson, and Pate, Justices.
CARNEY, Justice.
INTRODUCTION
The City of Soldotna sought to expand its boundaries by annexing
adjacent land. It submitted an annexation petition to the Local Boundary Commission
(Commission); if approved Soldotna intended to proceed by legislative review of the
petition. The Commission voted to convert the petition and subject it to a local vote
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instead, exercising its authority pursuant to a regulation that had not previously been
used. Soldotna appealed the Commission's decision and the superior court affirmed.
Soldotna now appeals, arguing that the Commission exceeded its authority, that the
underlying regulation was invalid because it lacked standards and was required to
undergo the rulemaking process, that there was not a sufficient basis in the record for
its decision, and that the decision was internally inconsistent. We conclude that the
Commission acted within its statutory grant of authority and had a reasonable basis for
converting the petition. We therefore affirm the superior court's decision upholding the
Local Boundary Commission's decision.
FACTS AND PROCEEDINGS
A. Local Boundary Commission Background
Article X, section 12 of the Alaska Constitution requires the legislature to
establish a local boundary commission to handle proposed changes to local government
1
boundaries. We previously concluded that the constitutional delegates believed that
"local political decisions do not usually create proper boundaries and that boundaries
2
should be established at the state level," because "[b]y placing authority in this third-
3
party, arguments for and against boundary change can be analyzed objectively." To
further the statewide approach to setting boundaries, the legislature created the Local
Boundary Commission with five members appointed by the governor for overlapping
1 Alaska Const., art. X, § 12 ("A local boundary commission or board shall
be established by law in the executive branch of the state government. The commission
or board may consider any proposed local government boundary change.").
2 Fairview Pub. Util. Dist. No. One v. City of Anchorage , 368 P.2d 540, 543
(Alaska 1962).
3 Id. (quoting 6 Proceedings of the Alaska Constitutional Convention
(PACC) App. V at 50 (Dec. 19, 1955)).
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4
five-year terms. There is one commissioner representing each of the four judicial
5
districts and a final member at large who acts as the Commission's chair.
Article X, section 12 declares that the Commission may: "consider any
proposed local government boundary change," "present proposed changes to the
legislature during the first ten days of any regular session," and "establish procedures
6
whereby boundaries may be adjusted by local action." In doing so, the constitutional
delegates made clear that those pursuing annexation could seek Commission approval
to proceed by either legislative review of their petition or local action.
B. Soldotna's Annexation Petition
Soldotna has annexed land four times in the past: over 40 acres in 1984;
4 acres in 1987; 1.45 acres in 1993; and 1.72 acres in 2007. Each time the annexation
was done through unanimous consent, a form of local action that does not require voter
7
approval. When Soldotna began the process leading to this appeal, it was 7.4 square
miles and had a population of under 5,000.
4 AS 44.33.810.
5 Id.
6 Alaska Const., art. X, § 12.
7 3 Alaska Administrative Code (AAC) 110.150 lays out the three ways of
proceeding by local action following Commission approval:
(1) city ordinance if the territory is wholly owned by the
annexing city;
(2) city ordinance and a petition signed by all the voters and
property owners of the territory;
(3) approval by a majority of votes on the question cast by
voters residing in
(A) the territory; and
(B) the annexing city.
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In 2015 Soldotna published a website with information about a proposal
to annex nine areas adjacent to current city boundaries. In 2017 the city held a series
of informational meetings and mailed letters to every landowner in the nine areas
inviting them to participate in the process, but overall public participation was about
2%. Participants were generally opposed to annexation and expressed distrust and
skepticism about the value of city services and the necessity of city regulations; many
objected to imposing the city on people who had made a conscious choice to live outside
its limits. The Kenai Peninsula Borough adopted a resolution in September 2018,
opposing annexation and encouraging Soldotna to seek voter approval for annexation.
In 2019 Soldotna decided to seek annexation of seven of the original nine
areas. It shared a draft petition with the public and held a public pre-submission hearing
in September 2019. Those who attended the hearing generally opposed annexation.
The city council then narrowed the petition to seek annexation of fewer areas.
Soldotna submitted the modified petition to the Commission in December,
seeking to annex 2.63 square miles by legislative review. In the petition Soldotna
argued that recent commercial development and population growth at its periphery had
increased demand on city services and infrastructure while it undermined the tax base
that funded those services. It sought to address "critical concerns" about its future
capacity to deliver essential services through annexation.
The Commission opened a public comment period on the petition from
December 2019 through February 2020. Commission staff issued a preliminary report
in May 2020 that recommended approval and submission of the petition to the
legislature. Addressing public comments that called for approval by local option, the
preliminary report noted that setting city boundaries was "legitimately the concern of
the state, and not just that of the local community." A final staff report was issued in
July 2020, concluding that the petition met requirements to pursue annexation through
legislative review.
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The Commission held a public hearing on the petition in August. Public
opinion was markedly negative, though several residents spoke in favor of annexation.
The following day, the Commission held a decisional meeting to discuss the petition.
A motion to approve the petition by legislative review was made and seconded. A
commissioner then proposed converting the petition from legislative review to local
8
option under 3 AAC 110.610(a) in light of the opposition voiced at public hearings.
The Commission scheduled a continued meeting in October and recessed.
At the October meeting the Commission accepted a statement from Soldotna opposing
the proposal to pursue annexation by local action instead of by legislative review. The
Commission met a third time nine days later to discuss the proposal to convert the
petition to local option. A motion to convert the petition to the local option eventually
passed by a 3-2 vote. The Commission issued its written decision in late December
2020. The two commissioners that favored legislative review wrote a dissenting
opinion.
C. Superior Court Appeal
Soldotna appealed to the superior court from the Commission's decision
to convert the petition. Soldotna argued that the Commission's decision conflicted with
article X, section 12, that the Commission's decision was irrational because it was
contrary to the best interests of the State, and that the Commission had failed to adopt
regulatory standards and define key terminology. The superior court upheld the
Commission's decision in September 2022. It held that 3 AAC 110.610, the regulation
under which the Commission acted, was authorized by the Alaska Constitution and that
the Commission's decision to convert the petition was reasonable.
8 This regulation provides: "The commission may determine during the
course of proceedings that a legislative review petition must be amended and considered
as a local action or local option petition if the commission determines that the balanced
best interests of the locality and the state are enhanced by local participation."
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Soldotna now appeals the superior court order. Soldotna argues the
Commission exceeded its statutory authority in violation of Alaska's Administrative
Procedure Act (APA). It argues that the regulation on which the Commission relied
lacks sufficient standards and that its application to the petition is unconstitutional. It
also argues that because the Commission had never previously relied on
3 AAC 110.610(a), it was required to go through the rulemaking process before doing
so. It also argues that even if rulemaking was not required, the Commission's decision
failed to provide sufficient basis for judicial review. Finally, it argues that the superior
court erred by finding that there was sufficient evidence to support the Commission's
decision, which it claims is "internally inconsistent." Because the Commission acted
within its discretion, we affirm the conversion of Soldotna's petition to local action.
STANDARD OF REVIEW
"When the superior court acts as an intermediate appellate court, we
independently review the merits of the underlying administrative decision" and will
9
"adopt the rule of law that is most persuasive in light of precedent, reason, and policy."
No deference is given to the superior court's decision.10 Depending on the issue being
reviewed, we apply one of four standards of review: "(1) the substantial evidence
standard applies to questions of fact; (2) the reasonable basis standard applies to
questions of law involving agency expertise; (3) the substitution of judgment standard
applies to questions of law where no expertise is involved; and (4) the reasonable and
not arbitrary standard applies to review of administrative regulations."11 An agency's
9 Heller v. State, Dep't of Revenue , 314 P.3d 69, 72-73 (Alaska 2013).
10 Usibelli Coal Mine, Inc. v. State, Dep't of Nat. Res., 921 P.2d 1134, 1141
(Alaska 1996).
11 Alyeska Pipeline Serv. Co. v. State , 288 P.3d 736, 739 (Alaska 2012)
(quoting Alaskan Crude Corp. v. State, Dep't of Nat. Res., Div. of Oil & Gas, 261 P.3d
412, 419 (Alaska 2011)).
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interpretation of its own regulations and exercise of discretionary authority are also
reviewed using the reasonable basis standard.12
DISCUSSION
A. The Local Boundary Commission Had Authority Under
3 AAC 110.610(a) To Convert The Petition.
In 1992 the Commission adopted 3 AAC 110.610(a), which provides:
"The commission may determine during the course of proceedings that a legislative
review petition must be amended and considered as a local action or local option
petition if the commission determines that the balanced best interests of the locality and
the state are enhanced by local participation." It also adopted 3 AAC 110.590(e), which
similarly allows the Commission to consider a local action petition as one for legislative
review if "the balanced best interests of the locality and the state are enhanced by
statewide participation." The Commission relied on 3 AAC 110.610(a) to convert
Soldotna's petition from one for legislative review to one for local action, and Soldotna
challenges the Commission's use of that regulation.
1. The adoption of 3 AAC 110.610(a) did not exceed the
Commission's statutory grant of authority.
Soldotna argues that the Commission exceeded its authority under
AS 44.33.812(a)(2) to adopt regulations because 3 AAC 110.610(a) lacks standards or
procedures. Soldotna also argues that the regulation conflicts with AS 29.06.040(d)'s
preference for legislative review of boundary changes.13
12 North Slope Borough v. State, Dep't of Educ. & Early Dev., 484 P.3d 106,
113 (Alaska 2021).
13 See AS 29.06.040(d) ("A boundary change effected [through legislative
review] prevails over a boundary change initiated by local action, without regard to
priority in time.").
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To determine whether an agency has authority under Alaska's APA14 to
promulgate a regulation, we apply the test articulated in O'Callaghan v. Rue.15 The
first step is to determine "whether the legislature delegated to the administrative agency
the authority to promulgate regulations."16 Because this requires interpretation of the
underlying statute, it is a legal question to which we apply our independent judgment.17
If we are satisfied that the delegation was made, the second step is to consider whether
"the regulation is consistent with and reasonably necessary to implement the statutes
authorizing its adoption" and whether the regulation is "reasonable and not arbitrary."18
Because the regulation here involves agency expertise, we employ a rational basis
standard and will defer to the agency's determination so long as it is reasonable.19
Finally, we consider whether the regulation conflicts with any other state statutes or
constitutional provisions; this is another legal question to which we apply our
independent judgment.20 Because we presume the validity of an administrative
regulation, the challenger bears the burden of proving it is invalid.21
As an initial matter, the Alaska Constitution plainly directed the
legislature to "establish[ ] . . . [a local boundary commission] in the executive branch
of the state government."22 The legislature fulfilled that requirement by enacting
AS 29.06.040, and AS 44.33.810 and .812. Alaska Statute 44.33.812(a)(2) specifically
14 See AS 44.62.010 et seq.
15 996 P.2d 88 (Alaska 2000).
16 Id. at 94.
17 Id.
18 Id.
19 See id.
20 Id . at 95.
21 Id.
22 Alaska Const., art. X, § 12.
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granted discretionary authority to the Commission to "establish procedures whereby
boundaries may be adjusted by local action."23 These statutory delegations clearly
authorize the Commission to promulgate regulations.24
We next consider whether the Commission's regulation is consistent with
and reasonably necessary to implement AS 29.06.040 and AS 44.33.812. "Reasonable
necessity is not a requirement separate from consistency and the scope of review should
center around consistency with the authorizing statute."25
The regulation to which Soldotna objects, 3 AAC 110.610(a), is not
inconsistent with AS 29.06.040(d)'s preference for legislative review petitions as
Soldotna claims. The preference for legislative review does not suggest that the
Commission is not entitled to decide whether local action is appropriate for a petition
to move forward. Rather, by clarifying that a boundary change effected by legislative
review "prevails over a boundary change initiated by local action," the statute informs
the Commission of how to proceed when it is confronted with conflicting proposals.
Neither 3 AAC 110.610(a) nor 3 AAC 110.590(e) addresses such scenarios or
otherwise conflicts with the statute's directive.
Soldotna also argues that the regulation is not consistent with
AS 44.33.812(a)(2) 's directive to "provid[e] standards and procedures for municipal
. . . annexation" because it does not provide sufficient guidance to petitioners or the
Commission about how or when a petition for legislative review should be converted
23 See id.
24 Cf. O 'Callaghan, 996 P.2d at 95 (holding statutory language granting
commissioner authority to "authorize other uses" and prescribing penalties for "[a]
person who violates this section or a regulation adopted under it" reflected clear
legislative intent that regulations should be adopted under statute) (emphasis in
original).
25 City of Valdez v. State, 372 P.3d 240, 246 (Alaska 2016) (internal
quotation marks and brackets omitted) (quoting State, Dep't of Health & Soc. Servs.,
Div. of Pub. Assistance v. Gross, 347 P.3d 116, 121 n.25 (Alaska 2015)).
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to one for local action. But 3 AAC 110.610(a) does provide a standard: the
Commission must balance the "best interests of the locality and the state" before
converting the petition. And it provides a procedure by which annexation may be
approved by local vote that is not inconsistent with the statute. Alaska Statute 29.06.040
expressly requires the Commission to do just that 26 - the annexation procedures "must
include" provisions for approval by majority vote of those residing in the annexing
municipality and those in the area to be annexed.27 This language signals that the
legislature considered situations in which it would be appropriate for the Commission
to involve the public in approving annexation petitions. It is also consistent with the
broad latitude granted to the Commission in the Constitution to "establish procedures"
for local action.28
Given the history of local boundary changes in Alaska, it appears unlikely
a municipality would request that their annexation petition proceed by voter approval.29
Without a regulation making it possible for the Commission to convert petitions in
certain circumstances, this provision required by statute would become a "hollow
mechanism," as the superior court observed. Because local boundary determinations
are within the Commission's expertise, we need not decide whether 3 AAC 110.610(a)
26 See AS 29.06.040(c) ("In addition to the regulations governing annexation
by local action adopted under AS 44.33.812, the Local Boundary Commission shall
establish procedures for annexation and detachment of territory by municipalities by
local action.") (emphasis added).
27 AS 29.06.040(c).
28 Alaska Const. art. X, § 12.
29 See Fairview Pub. Util. Dist. No. One v. City of Anchorage, 368 P.2d 540,
543-44 (Alaska 1962) (acknowledging "most determined opposition" to annexation by
Anchorage of highly populated areas outside of city boundaries following World War
II despite fact that streets on either side of official city boundaries were
"indistinguishable" from one another and formed single urban community with
common "social and economic existence").
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is the best way to implement AS 29.06.040 and AS 44.33.812, only whether it is
reasonable. It was reasonable and not arbitrary for the Commission to adopt
3 AAC 110.610(a) to implement those statutes.
Finally, the regulation does not conflict with other state statutes or
constitutional provisions. Soldotna argues broadly that the Commission's
constitutional obligation is to make decisions about municipal boundaries apart from
the political process and local self-interest. But as the State argues, the constitutional
delegates would not have included reference to local action if public opinion within the
community was not to be a consideration at all. We recognize that the circumstances
of the Commission's creation and the delegates' underlying concern that "a small, self-
interested group could stand in the way of boundary changes which were in the public
interest" could weigh against requiring voter approval in many circumstances.30 But
the regulation gives effect to a constitutional provision rather than conflicting with it.
And the presumptive validity of administrative regulations lends further support to the
Commission's authority to promulgate a regulation setting forth procedures for
proceeding through local action.31
The Commission did not exceed its statutory authority when it
promulgated 3 AAC 110.610(a).
2. The regulation establishes a "balanced best interests"
standard.
Soldotna argues that 3 AAC 110.610(a) is not enforceable because it lacks
regulatory standards. Relying on U.S. Smelting, Refining & Mining Co. v. Local
Boundary Commission, it argues the Commission's discretion to approve annexation is
"conditioned upon the development of standards and procedures for changing boundary
30 Port Valdez Co., Inc. v. City of Valdez , 522 P.2d 1147, 1150 n.7 (Alaska
1974) (referencing Fairview 's discussion of Constitutional Convention minutes).
31 See O'Callaghan v. Rue, 996 P.2d 88, 94-95 (Alaska 2000).
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lines."32 Soldotna asserts that the regulation is invalid because terms in the regulation,
such as "locality" and "enhanced," are not defined and no criteria are provided to guide
the Commission's determination.
Fifty years ago in U.S. Smelting, we overturned the Commission 's
approval of an annexation petition because the Commission had failed to develop
"standards and procedures" for changing local boundary lines as required by statute.33
We concluded that the Commission first had to comply with duties outlined in
AS 44.19.260(a) before it could exercise the discretionary functions in subsection (b).34
Because the development of standards and procedures was mandatory, the
Commission's failure to develop them deprived the Commission of authority to
consider local government boundary changes.
Soldotna argues that 3 AAC 110.610(a) similarly lacks "standards with
established factors." It points to other regulations, such as 3 AAC 110.042,
3 AAC 110.065, and 3 AAC 110.135, which include relevant factors and cross
references to other regulations or statutes, and it contends that 3 AAC 110.610(a)'s lack
of specificity "is a failure to follow the statutory mandate." But there were no standards
in the regulation we considered in U.S. Smelting. We held that the complete lack of
standards deprived the Commission of authority;35 we did not require that the standards
it would develop must include multiple factors or be as detailed as other Commission
regulations. We simply required the Commission to develop standards.
3 AAC 110.610(a) permits the Commission to convert a legislative review
petition to a local action petition if it determines that the "balanced best interests of the
32 489 P.2d 140, 142 (Alaska 1971) (invalidating approval of annexation
petition for lack of regulatory standards).
33 Id. at 141-42.
34 Id. at 142 n.6.
35 Id. at 142.
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locality and state are enhanced by local participation." This "balanced best interests"
standard is also used in 3 AAC 110.590(e), which allows the Commission to do the
reverse: it may convert a local action petition to a legislative review petition if it
determines that the "balanced best interests of the locality and the state are enhanced by
statewide participation." We recognize that there is little regulatory history to help
define this broad standard. Because the Commission had not previously converted a
legislative review petition to one by local action, it was appropriate for the
commissioners to exercise their discretion in light of their expertise to interpret the
regulation.
The "balanced best interests" standard is broad, but its requirement that
the Commission consider both the locality's and the State's best interests provides
sufficient guidance to the Commission. Both 3 AAC 110.6 10(a) and 3AAC 110.590(e)
need no additional standards to be enforceable; we therefore reject Soldotna's
argument.
3. The APA's notice and comment requirements were not
triggered by the Commission's use of the regulation.
The APA requires that regulations meet notice and comment requirements
before becoming effective.36 While the term "regulation" is defined broadly and "may
require rulemaking in cases in which an agency 's interpretation of a statute is expansive
or unforeseeable . . . , obvious, commonsense interpretations of statutes do not require
rulemaking."37
Soldotna argues that rulemaking was required to use 3 AAC 110.610(a)
because the decision to convert the annexation petition was a "significant departure
from precedent" that was unforeseeable and added requirements of substance. It also
36 AS 44.62.190- .215; Alyeska Pipeline Serv. Co. v. State, Dep't of Env 't
Conservation, 145 P.3d 561, 572 (Alaska 2006).
37 Alyeska Pipeline Serv. Co. , 145 P.3d at 573.
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claims the Commission engaged in "an improper act of rulemaking" under the standard
we recently laid out in AVCG, LLC v. State, Department of Natural Resources .38
In AVCG we explained that "an agency's interpretation of an existing
statute or regulation requires rulemaking if it adds requirements of substance, is
unforeseeable, or changes the agency's approach."39 An agency adds a requirement of
substance when it invents "specific criteria or values that clarif[y] the existing statutory
or regulatory standard and require[] the public to comport with precise criteria not
specified in existing rules."40 Soldotna claims that the Commission engaged in "an
improper act of rulemaking" because it invented new criteria, was unforeseeable, and
constituted a change of course.
Soldotna asserts that by invoking its history of annexation by unanimous
consent, the Commission created a new criterion, under which past use of unanimous
consent will prevent future legislative review petitions. But the Commission's
discussion of Soldotna's past annexations by unanimous consent did not indicate that it
was a "definitive and strict" requirement, as Soldotna claims. Its consideration of the
past annexations suggests instead that when the Commission exercises its discretion it
is empowered to consider local history as part of its balancing of the locality's best
interests against the State's. Additionally, the Commission's consideration of how to
define terms in the regulation - like "enhanced," "locality," and "balanced best
interests" - more closely resembles "interpret[ing] a broad phrase" than imposing a
new criterion.41 The standard applied in AVCG - whether allowing an overriding
royalty interest would "adversely affect the interests of the State" - was similarly
38 527 P.3d 272 (Alaska 2023).
39 Id. at 281.
40 Id. (quoting Chevron U.S.A., Inc. v. State, Dep 't of Revenue, 387 P.3d 25,
37 (Alaska 2016) (alterations in original)).
41 See id.
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broad and general, and we explained it did not constitute adding a "requirement [] of
substance."42 Neither does the standard here.
Soldotna also argues that the Commission's decision was unforeseeable
and "does not make sense." It asserts that the Commission framework was intended to
"take the process of annexation out of local elections" and "[t]he annexation method
selected by a petitioning municipality had always been respected by the Commission."
Soldotna distinguishes AVCG by noting that the standard that survived challenge there
was " 'developed through a series of past adjudications,' not created out of thin air" as
Soldotna believes occurred with its petition.43
But the Commission applied 3 AAC 110.610(a) just as it was written. We
reiterated in North Slope Borough v. State, Department of Education & Early
Development that when an agency's interpretation "simply interprets the statute
'according to its own terms,' the agency is not required to adopt the interpretation as a
regulation under the APA."44 The same is true when an agency acts in accordance with
the plain language of a regulation. So even though it had not been used before, the
regulation allowing the Commission to convert a petition had existed since 1992 and
the Commission applied it just as it was written.
Soldotna's final argument that converting its petition to local option
amounted to a change of course reiterates that this was the first time in the
Commission's history that it had converted a legislative review petition to proceed by
local action. In AVCG we rejected the argument that "an agency can never apply an
existing statutory standard to the particular facts of a case without first identifying the
42 Id. at 277, 281.
43 See id. at 276.
44 484 P.3d 106, 118 (Alaska 2021) (quoting Alyeska Pipeline Serv. Co. v.
State, 288 P.3d 736, 742 (Alaska 2012)).
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key facts in a rulemaking."45 Simply applying a regulation for the first time does not
make the Commission's decision invalid. To find otherwise would improperly
constrain agencies from exercising their discretion in making policy choices simply
because they waited too long to do so.
B. The Commission's Decision To Convert The Petition Was
Reasonable.
Soldotna argues that the Commission's decision did not have a reasonable
basis because there is not sufficient evidence in the record to support it. Soldotna also
argues that tasking voters with evaluating annexation decisions is an abdication of the
Commission's responsibility and contrary to the Commission's purpose.
The Commission's decision to convert a legislative review petition to one
for local action implicates its subject matter expertise and is ultimately within its
delegated legislative authority to reach basic policy decisions.46 We will uphold a
Commission decision as long as it is supported by a reasonable basis in the record.47
Before reaching the question of whether to convert a petition, the
Commission must first determine whether annexation is appropriate.48 Neither a
legislative review petition nor a local action petition can be approved unless the territory
meets the annexation standards specified in 3 AAC 110.090- .135.49 Once these
45 AVCG , 527 P.3d at 283.
46 See Mobil Oil Corp. v. Local Boundary Comm 'n, 518 P.2d 92, 99 (Alaska
1974).
47 Id.
48 See 3 AAC 110.140 (legislative review); 3 AAC 110.150 (local action).
49 The standards require : a reasonable need for city government that cannot
be met more efficiently and effectively by another city or borough providing essential
municipal services, see 3 AAC 110.090; compatibility in character with the annexing
city, see 3 AAC 110.100; necessary resources to provide essential municipal services
on an efficient, cost-effective level, see 3 AAC 110.110; a sufficiently large and stable
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standards have been met, the territory "may" be annexed by the legislative review
process if the Commission also determines that any one of eight listed circumstances
exists to justify annexation.50 3 AAC 110.610(a) is available to the Commission during
the course of proceedings, allowing it to amend the petition and consider it as a local
action petition if it determines that the balanced best interests of the locality and the
State are enhanced by local participation. Regardless of the path chosen by the
Commission, the petition may not move forward unless the annexation standards have
been met.51
The Commission's Statement of Decision methodically outlines the basis
for its findings. The Commission went through the relevant factors that it was required
to consider under 3 AAC 110.090- .135. It determined that two of the eight
circumstances in 3 AAC 110.140 applied: some of the areas proposed to be annexed
were found to be "substantially surrounded" by Soldotna; and residents or property
owners in the areas receive, or may be reasonably expected to receive, the benefit of
Soldotna's city government without commensurate tax contributions.52 And it
addressed the best interests of the State before it approved the petition's conversion.
The Commission found that although annexation would promote maximum local self-
government and a minimum number of local government units - relevant factors to
the best interests of the State analysis under 3 AAC 110.135 - the standard would be
population to support the extension of city government, see 3 AAC 110.120; the ability
to provide all land and water necessary for the development of municipal services on
an efficient, cost-effective level, see 3 AAC 110.130; and such promotion of maximum
local self-government, minimum number of local government units, or relief to the state
government from the responsibility of providing local services as to be in the best
interests of the State, see 3 AAC 110.135.
50 3 AAC 110.140.
51 See 3 AAC 110.140; 3 AAC 110.150.
52 See 3 AAC 110.140(1), (4).
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enhanced by converting the petition to one for local action. Because it made all these
findings, it did not improperly task voters with deciding whether the petition meets
annexation standards as Soldotna claims.
The Commission was particularly concerned about "whether the territory
[was] truly in need of the services proposed by the city." That concern arose from
divided opinion about the need for and quality of services that Soldotna could offer
through annexation. Under 3 AAC 110.090(a), there must be "a reasonable need" for
city government in order for a territory to be annexed. But under subsection (b) of that
regulation, a territory may not be annexed "if essential municipal services can be
provided more efficiently and more effectively by another existing city or by an
organized borough."53 Both were recurring themes in the public comment surrounding
the petition. And while the Commission did determine there was a reasonable need for
city government, it failed to make an express finding as to whether government services
could be provided more efficiently or effectively by another city or borough. Although
an omission of an express finding generally necessitates remand,54 we agree with the
superior court that the issue was necessarily resolved by the Commission in favor of
Soldotna because the petition would not have been permitted to move forward if it
found otherwise. The survival of the petition thus requires that result. Soldotna
suffered no prejudice and any failure to make this express finding constitutes harmless
error.
The State points to four facts that support the Commission's decision:
(1) Soldotna has a history of annexing territory through local action ; (2) the Kenai
Peninsula Borough supported local action; (3) many people who provided public
53 3 AAC 110.090(b).
54 Keane v. Local Boundary Comm'n , 893 P.2d 1239, 1246 (Alaska 1995).
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comment supported local action; and (4) the Commission analyzed the balanced best
interests of the State and locality in their decisional meetings. Soldotna disagrees.
We recognize the distinction between annexation by unanimous consent,
which Soldotna has used in the past, and by majority vote, which it has not. But even
so, Soldotna's history does show that building support among local residents has been
important to past municipal border changes and lends support for proceeding via local
action. And it was reasonable for the Commission to acknowledge the preferences of
residents who will be affected by annexation and the Kenai Peninsula Borough, which
currently provides services to those areas. The Kenai Peninsula Borough assembly
adopted a resolution opposing Soldotna's proposed annexation and encouraged the city
council to seek voter approval on the issue as early as 2018. Given that the regulatory
requirements for annexation were established but fierce debate among locals continued
amidst borough opposition, there was a reasonable basis for the Commission to decide
that a vote could "enhance" the balanced best interests of the locality and State.
As we explained above, the Alaska Constitution, AS 29.06.040, and
AS 44.33.812 clearly authorize, and even require, the Commission to create pathways
to annexation through local action. Annexation petitions require fact-specific inquiries
that take into account "the unique circumstances presented by each petition."55 There
are certainly compelling arguments as to why the local option should be used sparingly,
especially in light of the Commission's historical purpose to act as a check on local
interests. But the Commission made findings that the territory met the standards
required for annexation and acted within its discretion to proceed with the petition in
the manner it determined to be in the best interests of the locality and the State. And
although it made the decision to proceed by local action this time, there is nothing
55 Mobil Oil Corp. v. Local Boundary Comm'n , 518 P.2d 92, 98-99 (Alaska
1974).
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preventing the Commission from deciding differently under different circumstances, as
long as there is a reasonable basis for doing so.
The Commission's choice to require voter approval of the annexation
decision falls within its own area of expertise. While a "best interests" standard is
broad, determining what the "balanced best interests" might be is within the scope of
the Commission's authority and expertise. Its role is to represent statewide interests in
making decisions about municipal borders, recognizing that without it, processes that
favor local popular opinion could hamper municipal development and the goals of the
Alaska Constitution. But it is not necessarily the Commission's role to override or
counter local opinion. Its role is to provide objectivity, which means balancing
statewide interests with constituent feedback and democratic processes.
It is ultimately within the Commission's discretion to make policy
decisions based on its own expertise, which the State characterizes fairly as "balanc[ing]
the wide array of political, social, economic and geographic factors involved." While
the Commission is meant to operate outside of the political process, it is not obligated
to ignore these factors entirely. The same constitutional delegates that created an
objective administrative body to make municipal boundary decisions also explicitly
gave it power to contemplate when local action would be appropriate. Although the
Commission has never before converted a municipality's petition for annexation by
legislative review to one by local option, the Commission had a reasonable basis for
choosing to use it for the first time here.56
CONCLUSION
We AFFIRM the superior court's decision affirming the Commission's
decision.
56 We recognize that the Commission itself was divided in its resolution of
this challenging issue. But that does not suggest its decision was unreasonable.
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