city of valdez v. state, alaska (2016)

7/25/2019 City of Valdez v. State, Alaska (2016)

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Notice: This opinion is subject to correction before publication in the PACIFICREPORTER.

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

[email protected].

THESUPREMECOURTOFTHESTATEOFALASKA

CITYOFVALDEZ,

Appellant,

v.

STATEOFALASKA,NORTHSLOP

BOROUGH,andFAIRBANKSNORTSTARBOROUGH,

Appellees.

E

H

)

) SupremeCourtNo.S-15840

SuperiorCourtNo.

3AN-13-08917CI

OPINION

No.7100April29,2016

)

)

))

)

))

)

))

AppealfromtheSuperiorCourtoftheStateofAlaska,ThirdJudicialDistrict,Anchorage,JohnSuddock,Judge.

Appearances:RobinO.Brena,LauraS.Gould,andJonS.Wakeland,Brena, Bell&Clarkson, P.C.,Anchorage, for

Appellant. Mary Hunter Gramling, Assistant AttorneyGeneral,andCraigW.Richards,AttorneyGeneral,Juneau,

forAppelleeStateofAlaska.NoappearancebyAppellees

NorthSlopeBoroughandFairbanksNorthStarBorough.

Before:Stowers,ChiefJustice,Fabe,Winfree,Maassen,and

Bolger,Justices.

BOLGER,Justice.

I. INTRODUCTION

UnderaDepartmentofRevenueregulation,allappealsofoil andgas

propertytaxvaluationmustbeheardbytheStateAssessmentReviewBoard(SARB),
mailto:[email protected]:[email protected]


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whileappealsofoilandgaspropertytaxabilitymustbeheardby theDepartmentof

Revenue(Revenue). Threemunicipalitieschallengedthisregulation,arguingthatit

contradictsa statute thatgrantsSARBexclusivejurisdictionoverall appeals from

Revenues assessments ofoil and gas property. The superior court upheld the

regulationasvalid,concludingthatitwasareasonableinterpretationofthestatute. But

weconcludethattheregulationisinconsistentwiththeplaintext,legislativehistory,and

purposeofthestatute;therefore,wereversethesuperiorcourtsjudgment.1

II. FACTSANDPROCEEDINGS

A. RegulatoryBackground

The Alaska Constitution grants the legislature the authority to set

[s]tandards for the appraisal of all property assessedby the State or its political

subdivisions.2 In1973thelegislatureusedthisauthoritytoestablishanoverarching

regimeforthestatewideassessmentofoilandgasproperty3inordertolevyadvalorem

1

Thisfullopinionfollowsourearliersummaryorderresolvingthisappeal.See City of Valdez v. State,et al.,___P.3d___,OrderNo.89(AlaskaJan.29,2016).

2 AlaskaConst.art.IX,3.

3 Toconstitutetaxableoilandgasproperty,thepropertymustbeusedorcommittedbycontract...forusewithin[Alaska]primarilyintheexplorationfor,

productionof,orpipelinetransportationofgasorunrefinedoil...,orintheoperation

ormaintenanceoffacilitiesused[forsuchpurposes].AS43.56.210(5)(A).Thestatutethenenumeratesspecifictypesofpropertythatdoanddonotconstituteoilandgas

property. See AS43.56.210(5)(A)-(B). Revenuehasadoptedaregulationthatdefinespropertywiththerequisiteprimaryuseaspropertythatiscommittedbycontract,specification,orotherexpressedintentionofthepropertyownertooneormoreofthese

purposes,orpropertythatisactuallyusedforsuchpurposesmorethan50percentof

its total operation time in the year preceding the assessment year. 15 AlaskaAdministrativeCode(AAC)56.075(a)(2015).

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taxes.4 Underthisstatewideregime,codifiedatAS43.56,theStatetaxesoilandgas

propertyat20mills,andmunicipalitiesarepermittedtotaxoilandgaspropertylocated

withintheirboundariesatthesamerateastheydolocalproperty. 5 ButtheState,through

Revenue,managesthisassessmentprocess,determiningwhetherpropertyis taxable

underAS43.56and,ifso,itstaxablevalue. 6

Theassessmentprocessbeginseachyear inJanuarywhenoilandgas

propertyownersfilereturnslistinganddescribingtheirtaxableoilandgasproperties.7

Revenuemaythenchoosetoinvestigateanyinformationincludedoromittedonthe

return.8 Itmustalsomakeaninitialtaxabilitydeterminationwhetheranassetisproperly

deemed taxable oil and gas propertyunder the statute.9 Revenue thenascribes a

valuationtotheproperty,whichbecomesprimafacieevidenceofthepropertysfull

value.10Next,Revenueissuesanassessmentrolllistingalltaxableoilandgasproperty

forthatyearanditsassessedvalue. 11 OnoraroundMarch1ofeachyear,Revenuesends

anassessmentnoticetoeachownerwhosepropertyisincludedontheassessmentroll,

4

Ch.1,1,FSSLA1973.5 AS43.56.010(a)-(b).

6 AS43.56.060.

Revenueispermittedtoenterintojointorcooperative

assessmentadministrationagreementswithmunicipalities,buthasneverenteredinto

suchanarrangementwithValdez. AS43.56.060(g).

7 AS43.56.070(a);15AAC56.005(a).

8 AS43.56.080.

9 See AS43.56.210(5).

10 AS43.56.080(a).

11 AS43.56.090.

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andacopyofthenoticetoeachrelevantmunicipality.12 Thestatutoryschemeprovides

bothtaxpayersandaffectedmunicipalitieswithaseriesofappealsofthispreliminary

assessment,firsttoRevenue, 13 thentoSARB,14 thentothesuperiorcourtforatrial

denovo.15 RevenuemustthenissueafinalassessmentrollbyJune1ofeachyear.16

Afterthe legislature initiallyestablishedthisassessment scheme,allappeals

ofRevenuesoilandgaspropertytaxassessmentswereheardbySARB.17 In1986

Revenuepromulgatedamoredetailedframeworktogoverntheseappeals.18 Underthis

framework,appealsofRevenuesvaluationofapropertyproceedonaseparatetrack

fromappealsofRevenuesdeterminationthatapropertyistaxableunderAS43.56. A

propertyownerormunicipalityappealingRevenuesvaluationofoilandgasproperty

mustappealfirst toRevenue;Revenueissuesan informalconferencedecision,whichcan

12 AS43.56.100.

13 AS43.56.110.

14 AS43.56.120.

SARBisaspecializedboardcomprisedoffivepersons

knowledgeableaboutassessmentprocedureswhoareappointedbythegovernorandsubjecttolegislativeconfirmation.

AS43.56.040.

15 AS43.56.130(i).

16 AS43.56.135.

17 See Alyeska Pipeline,No.001-000-0015(StateAssessmentReviewBd.

Dec.9,1974).18 Thisregulationwasamendedonce,in2003,tograntamunicipalityan

identical right tothatofa taxpayer toappealRevenuesdeterminationofwhetherpropertyistaxable.

Compare 15AAC56.015(eff.5/10/86),with 15AAC56.015(am.

1/1/03).

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beappealedtoSARB.19 SARBsdecisioncanthenbeappealedtothesuperiorcourtfor

atrialdenovo.20 Incontrast,apropertyownerormunicipalityappealingRevenues

determinationwhetherpropertyistaxableunderAS43.56mustalsoappealtoRevenue,

which issues an informal conference decision;21but an appeal from this informal

conferencedecisionisheardbyahearingofficerappointedbytheCommissionerof

Revenue,notbySARB.22 Thehearingofficersdecisioncanthenbeappealedtothe

superiorcourt,23butthedecisiontograntatrialdenovoislefttothediscretionofthe

superiorcourtjudge.24

Thisregulationalsomodifiedwhoisgrantedpartystatusinsuchappeals.

Previously,bothpropertyownersandaffectedmunicipalitieswereaffordedpartystatus

inallappeals,whilethenewregulationaffordsaffectedmunicipalitiesdifferentrights

depending on what the appeal concerns: in valuation appeals beforeSARB both

19 15AAC56.015(a) (appealprocedures);15AAC56.020(c)(Revenueissues

informalconferencedecision);15AAC56.030(appealtoSARB).

20 AS43.56.130(i).

21 15AAC56.015(b)-(c);15AAC05.020.

22 15 AAC 05.030. Procedures for such appeals are governed by15AAC05.001-.050.

23 15AAC05.040;AlaskaR.App.P.601(b).

24 AlaskaR.App.P.609(b)(1);see also City of Valdez v. State, Dept of

Revenue,Nos.3VA-00-00022CI,3VA-10-00084CI,3AN-11-07874CI,(consol.)

(Alaska Super., Nov. 18, 2013) (noting that the superior court had earlier deniedValdezsrequestforatrialdenovoinanappealfromadecisionoftheCommissioner

ofRevenueontheissueoftaxabilityunderAS43.56).

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propertyowners andtherelevantmunicipalityhaveparty status,25butin taxability

appealsbeforeRevenueonlytheappellantisaffordedpartystatus. 26

B. Facts

TheTrans-AlaskaPipelineSystem(TAPS)isan800-mile-long oilpipeline

system that connects the North Slope oil fields to a shipping terminal in Valdez.

EnrouteitcrossesthroughtheNorthSlopeBorough(NSB),theFairbanksNorthStar

Borough(FNSB),andtheCityofValdez. InFebruary2013Revenueissuedanoticeof

assessmentforoilandgaspropertyheldbytheTAPSowners 27 forAssessmentYear

2013. The TAPS owners appealed this notice of assessment, objecting both to

Revenuesassessedvalueofthepropertyanditsdeterminationthatcertainpiecesof

propertyweretaxableasoilandgaspropertyunderAS43.56.

TheTAPSownerstwoappealsproceededsimultaneouslyontwoseparate

tracks: Revenueissuedaninformalconferencedecisiononthevaluationappeal,which

theownersappealedtoSARB,thenfurtherappealedtothesuperiorcourtforatrial

denovo. Theaffectedmunicipalities alsocross-appealedSARBs decisiononthe

valuationappealtothesuperiorcourt. Revenueissuedaseparate,confidentialinformal

25 15AAC56.020(b).

26 15AAC56.015(b)-(c)(taxabilityappealsgovernedby15AAC05.001

.050);15AAC05.001-.050(containingnoprovisionforpartystatusasofright). Forexample, if a property owner objected to a taxability determination, an affected

municipalitywouldnotbeabletoparticipateinthetaxabilityappealuntiltheproperty

ownerexhaustedalladministrativeappealsandthematterbecameripeforappealtothe

superiorcourt.27 At the time of the 2013 assessment TAPSwas jointly owned by BP

Pipelines (Alaska), Inc.; ConocoPhilips Transportation Alaska, Inc.; ExxonMobilPipelineCompany;UnocalPipelineCompany;andKochAlaskaPipelineCompany.

AlyeskaPipelineServiceCompanyservedastheagentfortheTAPSowners.

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conferencedecisionontheTAPSownerstaxabilityappeal,dismissingtheappealfor

lackofjurisdictionafteritfoundthattheappealactuallyraisedissuesofvaluation,which

are within the exclusive jurisdiction of . . . SARB under AS 43.56.120 [and]

[AS43.56].130.28

TheTAPSownersappealedthisdecisiontotheCommissionerforaformal

conference. TheTAPSownersandtheStatethenjointlyfiledastipulationandmotion

requestingthatthedecisiondismissingthetaxabilityappealforlackofjurisdictionbe

adoptedasthefinaladministrativedecisionofRevenueforpurposesoffurtherappeal

tothesuperiorcourt. TheTAPSownersalsofiledanunopposedmotiontostaythe

taxabilityappealpendingresolutionoftheirseparatevaluationappealbythesuperior

court,29 whichthehearingofficergranted.

C. Proceedings

Afterrepeatedlyattemptingbutfailingtoobtaininformationregardingthe

statusoftheTAPSownerstaxability appeal, theaffectedmunicipalitiesfiledcomplaints

fordeclaratoryandinjunctivereliefwiththesuperiorcourt. NSBfirstfiled,thenValdez

andFNSB(collectivelytheintervenors)successfullyintervenedinthecasewithout

opposition,andjointlyfiledaseparatecomplaint. Themunicipalitiesallchallengedthe

validityof15AAC56.015(b)-(d),Revenuesregulationgoverningtaxabilityappeals

fromassessmentsofoilandgasproperty;theyarguedthatthisregulationimpermissibly

delegatestheauthoritytodecidetaxabilityappealstoRevenue,contraveningthestatutes

28 The municipalitiesdid not have access to this docket, and thus were

unawareof this decision on the owners taxabilityappeal,until they filedsuit fordeclaratoryrelief.

29 Thevaluationappealisitselfstayedbeforethesuperiorcourt,pendingresolutionofNorth Slope Borough v. BP Pipelines (Alaska) Inc.,No.3AN-06-08446CI,

whichthepartieshaverecentlysettled.

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grant of authority to SARB to hear all appeals from initial assessments of such

property.30

Theintervenorsthenfiledamotionforsummaryjudgment,onwhichthe

superiorcourtruledinaconsolidatedorder,denyingthemunicipalitiesrequeststo

invalidatetheregulation.31 ThecourtconcededthatRevenuesinterpretationwasnotthe

onlyor even themost reasonable interpretationbutnonethelessconcluded thatthe

regulation wasa permissible interpretation of thestatute.Thesuperiorcourtthen entered

afinaljudgmenttothiseffect. Valdeznowappeals.

III. STANDARDOFREVIEW

When reviewing the validity of a regulation, in the absence of any

contention that the agency failed to comply with the required procedures for

promulgation,wepresumethatitisvalidandplacetheburdenonthechallengingparty

toproveotherwise.32 Weconsider whether the regulation isconsistentwith and

reasonablynecessarytocarryoutthepurposesof[itsenablingstatute]andwhether[it

30 Inadditiontochallengingthevalidityoftheregulation,themunicipalities

claimedthatRevenueimpermissiblydeniesthemunicipalitiestheabilitytoparticipate

intaxabilityappealsinwhichtheyhaveadirectinterest. FinallytheyclaimedthatRevenueimproperlytreatsthedocketsoftaxabilityappealsastaxpayerconfidential

andassertedthattheyandthepublichavearightofaccesstothedocketsofsuch

proceedings.

31 The courts order also granted the requested declaration that affected

municipalitieshavetherighttoparticipateintaxabilityappealsbeforeRevenueanddeniedwithoutprejudicetheintervenorsrequestforadeclarationforpublicaccesstoappeals.

32 See Grunert v. State,109P.3d924,928-29(Alaska2005)(citingLakosh

v. Alaska Dept of Envtl. Conservation,49P.3d1111,1114(Alaska2002)).

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is] reasonableandnotarbitrary.33 [R]easonablenecessity isnota requirement

separatefromconsistencyandthescopeofreviewshouldcenteraroundconsistency

withtheauthorizingstatute.34 Aregulationsconsistencywithitsenablingstatuteisa

questionoflawtowhichweapplytheappropriatestandardofreviewbasedonthelevel

ofagencyexpertiseinvolved. 35

Iftheissueinvolvesagencyexpertiseorthedeterminationoffundamental

policyquestionsonsubjectscommittedto theagencysdiscretion,reasonablebasis

reviewapplies.36 Inapplyingreasonablebasisreview,weseektodeterminewhether

theagencysdecisionissupportedbythefactsandhasareasonablebasisinlaw,even

ifwemaynotagreewiththeagencysultimatedetermination. 37

Ifnoagencyexpertiseisinvolvedintheagencysinterpretation,weapply

the substitution of judgment standard.38 Under this standard, we exercise our

independent judgment, substituting itfor that of the agency even if the agencys

33 State, Dept of Health & Soc. Servs., Div. of Pub. Assistance v. Gross,347

P.3d116,121(Alaska2015)(quotingLakosh,49P.3dat1114(alterationsomitted));seealso AS44.62.030.

34 Id. at121n.25(quotingBd. of Trade, Inc. v. State, Dept of Labor, Wage

& Hour Admin.,968P.2d86,89(Alaska1998)).

35 Davis Wright Tremaine LLP v. State, Dept of Admin.,324P.3d293,299

(Alaska2014).

36 See Marathon Oil Co. v. State, Dept of Nat. Res.,254P.3d1078,1082

(Alaska2011).

37 Davis Wright,324P.3dat299(quotingTesoro Alaska Petroleum Co. v.

Kenai Pipe Line Co.,746P.2d896,903(Alaska1987)).

38 Marathon Oil,254P.3dat1082.

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[interpretation]ha[s]areasonablebasisinlaw.39 Wewilladopttheruleoflawthatis

mostpersuasiveinlightofprecedent,reason,andpolicy,butindoingsowegivedue

deliberative weight to what the agency has done, especially where the agency

interpretationislongstanding.40

Thepartiesdisagreewhetherthisregulationimplicatesagencyexpertiseor

fundamentalagencypolicy,andthusdisagreewhetherreasonablebasisorsubstitution

ofjudgmentreviewapplies. TheyalsodisagreewhetherRevenuesinterpretationis

longstanding. WeconcludethatthisregulationdoesnotimplicateRevenuesexpertise

orfundamentalpoliciesandthusapplythesubstitutionofjudgmentstandardinassessing

thevalidityofRevenuesinterpretationofthestatute.

In upholding thevalidityof the regulation the superior court applied

reasonablebasis review,citingRevenuesexpertiseregardingthemostefficacious

forum [fortaxabilityappeals]intermsofstaffandyear-roundavailability,SARBswork

load,theadvantagesofformalmotionpracticeanddiscoveryin...taxabilityversus

valuationappeals,andanyneedforrapiddecisionastobothgenresofappeals. Butif

thesubjectsthatthesuperiorcourtcharacterizedaswithinRevenuesexpertisewere

sufficientforreasonablebasisreviewtoapply,thensubstitutionofjudgmentreview

wouldalmostneverapplybecauseanagencywillnearlyalwaysbemoreknowledgeable

aboutitsinternaladministrativefunctioningandcapacitythanacourt. ButRevenues

expertiseisintaxpolicy,notrelativeefficacyofforumsorproceduralneeds.

Indeterminingwhichstandardofreviewappliestothisregulationwemust

preciselyidentifythestatutorytermtheregulationisinterpreting. Wehavepreviously

39 Tesoro Alaska,746P.2dat903.

40 Heller v. State, Dept of Revenue,314P.3d69,73(Alaska2013)(quotingChugach Elec. Assn v. Regulatory Commn of Alaska,49P.3d246,249-50(Alaska

2002)).

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heldthatthesubstitutionofjudgmentstandardapplieswhenreviewinganagencys

interpretationofnon-technicalstatutoryterms.41 Thisisbecausemerefamiliarityin

...application[oftheseterms]bythe[agency]doesnotrenderthatagencyanybetter

abletodiscerntheintentofthelegislaturethanthecourts.42Examplesofsuchterms

wehavedeemedtobenon-technicalincludeadjacentto,43localauthorizedplanning

agencies,44 disposal,45 interest in land,46 and revocable.47 Here the term

assessmentiscommonlyusedbythegeneralpublicand thusconformswiththeseother

termsthatwehavepreviouslyfoundtobenon-technicaltermsandmattersofpure

statutoryconstruction.48 Furtherwehavealsostatedthatthesubstitutionofjudgment

standardisappropriatewherethecaseconcernsanalysisoflegalrelationshipsabout

which the courtshave specialized knowledge and experience.49 Here Revenues

41 N. Alaska Envtl. Ctr. v. State, Dept of Nat. Res.,2P.3d629,633(Alaska2000).

42 Id. at634(quotingState v. Aleut Corp.,541P.2d730,737(Alaska1975)).

43 Aleut Corp.,541P.2dat736.

44 Id. at737-38.

45 N. Alaska Envtl. Ctr.,2P.3dat633.

46 Id.

47 Id.

48 Cf. State, Dept of Revenue v. OSG Bulk Ships, Inc.,961P.2d399,403n.6(Alaska1998)(holdingthat theconstructionofa taxstatutewasamatterofpure

statutoryconstructionwhichisnotwithintheparticularexpertiseof[Revenue]andwhichrequiresustoexerciseourindependentjudgment).

49 Tesoro Alaska Petroleum Co. v. Kenai Pipe Line Co.,746P.2d896,903(Alaska1987)(quotingEarth Res. v. State, Dept of Revenue,665P.2d960,965(Alaska

(continued...)

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interpretationofthetermassessmentimplicatessuchalegalrelationship:thescope

ofRevenuesjurisdictioninrelationtothatofSARB. Becausethiscaseinvolvesboth

statutoryinterpretationofanon-technicalstatutoryterm,ataskinwhichcourtsarewell

versed,50 and thequestionofthescopeofand relationshipbetweenRevenuesand

SARBsjurisdictions,51 wewillapplysubstitutionofjudgmentreviewinconsidering

whetherRevenuesinterpretationofAS43.56throughitsregulationisconsistentwith

thestatute.

We also may in some circumstances give more deference to agency

interpretations that are longstanding and continuous.52 The State argues that

Revenuesinterpretationisentitled toourdeferencedueto itslongstandingnature.

Revenuefirstpromulgatedthisregulationin1986andamendeditin2003toafford

municipalitiestherighttoappealtaxabilitydeterminations. Ithasthusexistedinits

currentformfor12yearsandhastwicebeenthesubjectofpublicnoticeandcomment,

aspartoftherequiredprocessforpromulgatingregulations.53

Buttheapplicationofthisregulationhasnotbeenconsistent. Afterthe

regulationwaspromulgated,SARB,anindependententityfromRevenue,continuedto

49 (...continued)1983)).

50 Grunert v. State,109P.3d924,929(Alaska2005)(statingthatthetaskof

statutoryinterpretationisafunctionuniquelywithinthecompetenceofthecourts).

51 Cf. McCaffery v. Green, 931 P.2d 407, 408 n.3 (Alaska 1997)

(Jurisdictional issues are questions of law subject to this courts independent

judgment.).

52 PremeraBlueCross v.State, Dept of Commerce, Cmty. &Econ. Dev.,Div.

of Ins.,171P.3d1110,1119(Alaska2007).

53 See AS44.62.190-.215.

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hear taxability appeals fromoil and gas property assessments. SARB decided a

taxabilityappealregardingTAPSpropertyasrecentlyas2008. 54 Itwasnotuntilthe

followingyearthatSARBassertedthatunder15AAC56.015,ithadnoroleintaxability

appealsand wouldnot hear themunless the municipalities prevail[ed] ina court

challenge to thevalidityof theregulationsthatgive[Revenue]jurisdictionovertaxability

issues.55 Given the relatively recent conflicting actions of Revenue and SARB,

Revenues interpretation is not entitled to the additional deference that we afford

longstandingandcontinuousinterpretations.

Inapplyingsubstitutionof judgment review,weinterpretthestatuteatissue

denovo.56 Whenconstruingstatutesdenovo,weconsiderthreefactors: thelanguage

ofthestatute,thelegislativehistory,andthelegislativepurposebehindthestatute.57

Wedecidequestionsofstatutoryinterpretationonaslidingscale58:theplainerthe

54 Trans-Alaska Pipeline Sys.,OAHNo.08-SARB-TAXat18-19(May30,2008), http://aws.state.ak.us/officeofadminhearings/Documents/TAX/PROP/

TAX08SARB%20TAPS.pdf.

55 Appeal from the 2009 Assessment,OAHNo.09-SARB-TAXat2(May21,2009)(orderstayingappeal).

56 See Marathon Oil Co. v. State, Dept of Nat. Res.,254P.3d1078,1082

(Alaska2011)(Weapplythe[substitutionof]judgmentstandard,underwhichthe

courtmakesitsowninterpretationofthestatuteatissue....(quotingMatanuska-

Susitna Borough v. Hammond,726P.2d166,175(Alaska1986))).

57 Oels v. Anchorage Police Dept Emps. Assn,279P.3d589,595(Alaska

2012)(quotingShehata v. Salvation Army,225P.3d1106,1114(Alaska2010)).

58 Marathon Oil Co.,254P.3dat1082.

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languageofthestatute,themoreconvincinganycontrarylegislativehistorymustbe....

toovercomethestatutesplainmeaning. 59

IV. DISCUSSION

Revenuepromulgated15AAC56.015 in1986.60

Subsection(a)provides

forappealsoftheassessedvalueof[oilandgas]property:61 thepropertyownerorthe

relevantmunicipalitymayfileanappealwithRevenueasprovidedin15AAC56.020

or15AAC56.047,asapplicable.62 Thoseregulationsinturnsetproceduresforthe

appealandprovidethatRevenuesdecisionontheappealmaybeappealedtoSARB.63

Subsections(b)and(c)settaxabilityappealsonaseparateproceduralroute: property

ownersandmunicipalitieschallenginga taxabilitydeterminationmustappealunder

15AAC05.001-.050,not15AAC56.020.64 ThoseregulationscontainRevenues

generalhearingprocedures,andprovidethatRevenuesdecisiononthetaxabilityappeal

maybeappealedtoaformalhearingbeforeRevenue.65 Theydonotprovideforan

appealtoSARB.

59 Peninsula Mktg. Assn v. State,817P.2d917,922(Alaska1991).

60 TheregulationlistsAS43.05.010,.080,and .260,AS43.56.110-.130,.140,and.200asitsstatutoryauthority. 15AAC56.015.

61 15AAC56.015(a).

62 Id.

63 15AAC56.020,.030(a),and.047(d).

64 15 AAC 56.015(b)-(c). Subsection (d) also directs property ownersappealingastatementoftheamountoftaxorpenaltydueto15AAC05.001-.050.

15AAC56.015(d).

65 15AAC05.001,.030,and.040.

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Valdezchallengessubsections(b)through(d)ofthisregulation. Alaska

Statutes43.56.110-.130providethatSARBshallhearadministrativeappealsofall

assessment[s]ofoilandgasproperty; 66throughthisregulation,Revenuehastherefore

interpretedassessmentinAS43.56toincludeonlythevaluationoftaxableoilandgas

property,andnotRevenues initialdeterminationof taxability.IncontrastValdezargues

thatassessmentencompassesthedeterminationofwhetherpropertyistaxableunder

AS43.56,becausethatdeterminationismadebyRevenueintheinitialstagesofthe

assessmentprocess. Valdezconcludes thatappealsoftaxabilitydeterminationsare

therefore committed to SARBs jurisdiction by statute, and that 15 AAC 56.015

impermissiblyremovesthoseappealsfromSARBsjurisdiction.

InordertodeterminewhetherRevenuesinterpretationisconsistentwith

AS43.56,itisfirstnecessarytoindependentlyinterpretAS43.56usingourthreemetrics

forstatutoryinterpretation: text,legislativehistory,andpurpose.67 Thisisthefirsttime

wehavebeensquarelypresentedwiththequestionofthescopeoftheterm assessment

inAS43.56.InapairofpriordecisionsonotherissuesassociatedwithAS43.56,we

appearedtousethetermassessmentasreferringtovalue.68 Butthispriorusageisnot

66 AS43.56.110(a)(propertyownersandmunicipalitiesmayobjectto[an]

assessment);AS43.56.120(a)(Afterarulingby[Revenue]onanappealmadeunder

AS 43.56.110, the owner or a municipality may further appeal to [SARB].);AS43.56.130(a)([SARB]shallhearappealsfiledunderAS43.56.120(a).).

67 See Oels v. Anchorage Police Dept Emps. Assn,279P.3d 589, 595

(Alaska2012).

68

See State, Dept of Revenue v. BP Pipelines (Alaska) Inc.,354P.3d1053,1056(Alaska2015)(UnderAlaskalaw...only[Revenue]mayassessthevalueof[oil

andgas]property....Apartymayappeal[Revenues]valuation to[SARB].(emphasis

added));BP Pipelines (Alaska) Inc. v. State, Dept of Revenue,325P.3d478,480(Alaska2014)([Revenue]assessesthefullandtruevalueof[oilandgas]property.

(continued...)

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bindingon thequestionnowbeforeusbecauseinbothpriorcasestheonly issues

presentedwerethoseofvaluation,69sowehadnoneedtodistinguishbetweenissuesof

valuationandissuesoftaxabilityforthepurposesofassessments. Accordingly,wewill

proceedbyindividuallyexaminingeachofthethreestatutoryinterpretationmetrics:the

statutestext,legislativehistory,andpurpose.

A. RevenuesInterpretationOfAssessmentThroughItsRegulationIs

NotConsistentWithTheTextOfAS43.56.

Interpretationofastatutebeginswithitstext. 70 ButAS43.56doesnot

definethetermassessment.71 AndAS43.56splaintextdoesnotdistinguishbetween

appealsinvolvingvaluationandappealsinvolvingtaxability. Asthesuperiorcourt

recognized,[t]heonlyexplicitappellatepathspecifiedinAS43.56isthroughSARB.72

Whether the text of AS 43.56 is flexible enough to accommodate Revenues

interpretation through its regulation depends on the scope of the statutory term

assessment.

68 (...continued)Alaska Statute 43.56.060 controls [Revenues] assessment. A party may appeal

[Revenues]valuation to...[SARB].(emphasisadded)(footnoteomitted)).

69 See BP Pipelines,354P.3dat1055;BP Pipelines,325P.3dat480.

70 City of Kenai v. Friends of the Recreation Ctr., Inc.,129P.3d452,458-59

(Alaska2006)(citingBartley v. State, Dept of Admin., Teachers Ret. Bd.,110P.3d

1254,1258(Alaska2005)).

71 See AS43.56.210(providingdefinitionsoftermsusedinthechapter,but

notdefiningassessment).

72 See AS43.56.120.

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1. Thetextoftheoverallstatutoryscheme

BecausethetermassessmentisusedthroughoutAS43.56sstatutory

scheme,anoutlineofthelanguagesetforthinthestatutoryschemewillprovehelpful

here:

(1)AlaskaStatute43.56.060providesstandardsfortheassessmentand

taxationofoilandgasproperty. Subsections(a)and(b)mandatethatRevenueshall

assess property.73 Subsections (c) through (f) then set out the standards for the

valuationofoilandgasproperty.Butthesesubsectionsdescribethepropervaluation

oftaxableproperty,74 ratherthansimplyproperty. ThisdistinctionRevenue

assesses all property but then only values taxable property indicates that the

assessment required by AS 43.56.060(a) necessarily includes a determination that

propertyistaxableunderAS43.56.75 Thetextofthissectionthussuggeststhatthe

taxabilitydeterminationisacomponentoftheassessmentprocess,notadetermination

thatprecedestheprocess.

(2)AlaskaStatute43.56.090requiresRevenue toprepareannuallyan

assessmentrollcontainingthreethings: adescriptionofalltaxableproperty;...the

assessedvalueofalltaxableproperty;[and]...thenamesandaddressesofpersons

owning propertysubject toassessmentand taxation. The firstcomponentof the

73 AS43.56.060(a)&(b).

74 AS43.56.060(c)-(f)(emphasisadded).

75 Thisdistinctionappearselsewhereinthestatuteaswell,indicatingthatit

isnotsimplyadraftingerror.

Forexample,Revenuemaymakeaninvestigationofpropertyonwhichareturnhasbeenfiledoroftaxablepropertyuponwhichnoreturn

hasbeenfiled.AS43.46.080(a).AndAS43.56.210(5)specificallydefinestaxable

property,suggestingthatthelegislaturespecificallyusedthattermthroughoutwhenitmeanttoreferonlytopropertytaxableunderthestatute.

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assessment roll, a description of all taxable property, necessarily involves a

determinationbyRevenuethatthepropertydescribedistaxableunderAS43.56.The

statutory scheme defines what constitutes taxable property under AS 43.56 and

specificallyenumeratescertaintypesofpropertythatareandarenotincludedinthe

definitionof taxableproperty.76 Thusinorder toprepare thestatutorilymandated

assessmentroll,Revenuemustmakeaninitialdeterminationthatpropertyfitswithinthe

statutorydefinitionoftaxableoilandgaspropertyandisnotexemptedfromtaxation.

And,asdiscussedabove,thatdeterminationisapartoftheassessmentprocess.

(3)UnderAS43.56.100,Revenuemustannuallysendtoeveryownerof

taxablepropertynamedin the assessmentrollanoticeofassessment, showing the

assessedvalueofthepropertyandmustsendacopyofthenoticeofassessmentonany

taxablepropertythatisassessedunder[AS43.56]toeachaffectedmunicipality. This

assessmentnoticethusservesasbothnoticeofapropertysassessedvalueand notice

thatthepropertyhasbeendeterminedtaxableunderAS43.56,asthestatutedoesnot

requirethatownersofpropertydeemednottaxableunderAS43.56receiveanysuch

assessmentnotice.

(4)UnderAS43.56.110,apropertyownerormunicipalitywhoreceives

suchanassessmentnoticemayappeal itby advising [Revenue] inwritingof the

objectionstotheassessmentwithin20daysoftheeffectivedateofthenotice.77 Upon

apropertyownersobjection,Revenueisauthorizedtoadjusttheassessmentandthe

assessmentroll.78 Thissubsectiondoesnotlimitwhatanownerormunicipalitycan

appealtoRevenueanyobjectiontotheassessmentmaybeappealed. Bytheplain

AS43.56.210(5).76

AS43.56.110(a).77

AS43.56.110(c).78

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79 Id.

80 AS43.56.130(a)(emphasisadded).

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languageof thestatute,thisincludesthemerefactofthepropertysinclusiononthe

assessmentroll,notonlythedollaramountatwhichRevenuehasvaluedtheproperty.

Revenuesremedialpowerissimilarlybroad,encompassingthepowertoadjustboththe

assessmentandtheassessmentroll. 79 Thus,ifapropertyownerormunicipalitycan

appeal the inclusion ofproperty on the assessment roll, Revenuemay remove the

propertyfromtherollaltogetherifitagreesthatthepropertyisnottaxable;itspoweris

notlimitedtoadjustingthevaluationoftheproperty.

(5)AlaskaStatute43.56.120providesthat[a]fterarulingby[Revenue]

onanappealmadeunderAS43.56.110,theowneroramunicipalitymayfurtherappeal

to[SARB].Thissectionissimpleandunequivocal:whateverwasappealedtoRevenue

underAS43.56.110canbefurtherappealedtoSARB. And,aspreviouslynoted,under

AS43.56.110thepropertyownercanobjecttoanyaspectoftheassessmentnoticeand

Revenuemustruleonthisobjection.

(6) Alaska Statute 43.56.130 further underscores the broad scope of

SARBsjurisdictionestablishedbyAS43.56.120. Thissectionestablishesprocedures

forhearingsbeforeSARBandmandatesthatSARBshall hearappealsfiledunder

AS43.56.120(a).80 Theuseofthemandatoryshallindicatesthatthelegislaturedid

notintendtograntSARBorRevenuethediscretiontocategoricallyremoveaclassof

appealsfromSARBsjurisdiction.

(7) Alaska Statute 43.56.130(f) provides that SARB may adjust a

propertysassessedvalueonlyuponproofofunequal,excessive,orimpropervaluation

orvaluationnotdeterminedinaccordancewiththestandardssetoutin[AS43.56].But


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simplybecausethelegislaturelimitedthegroundsuponwhichSARBcouldadjusta

propertysassessedvaluedoesnotindicatethatitintendedtolimitSARBsrolesolely

toadjustmentsofvalue. SuchaninterpretationofAS43.56.130(f)wouldcontradict

AS43.56.130(a)ssimpleandexplicitcommandthatSARBshallhearappealsfiled

underAS43.56.120(a).81 MoreoverapropertythatRevenuehasincorrectly determined

istaxablehascertainlybeenimproper[ly]valu[ed],soAS43.56.130(f)expressly

permitsSARBtoaddressissuesoftaxability. IndeedthisishowSARBinterpretedthe

grantofjurisdictionformanyyearsbeforeRevenuepromulgated15AAC56.015. 82

(8)Finally,AS43.56.135mandatesthatRevenueshallcertifythefinal

assessmentrollandmail...astatementoftheamountoftaxduetoeachownerof

taxablepropertybyJune1ofeachyear. Thisrequirementimpliesthatallissuesrelating

totheassessmentrollmustberesolvedattheadministrativelevelbyJune1ofeachyear.

Thisrequirementmustencompasstaxabilityappeals,becauseanassessmentrollisnot

finalifitstillcontainspropertywhoseownersaredisputingitstaxabilityinappeal

proceedingsbeforeRevenue. Allowingtaxabilityappealsattheadministrativelevelto

extendbeyondJune1,astaxabilityappealsbeforeRevenuecurrentlydo,contravenes

81 See Estate of Kim ex rel. Alexander v. Coxe,295P.3d380,386(Alaska

2013)(Wheninterpretingstatutes,wemust,wheneverpossible,interpreteachpartor

sectionofa statutewith every otherpartorsection,soastocreate aharmoniouswhole. (quotingState, Dept of Commerce, Cmty. & Econ. Dev., Div. of Ins. v.

Progressive Cas. Ins. Co.,165P.3d624,629(Alaska2007))).82 See, e.g.,Alascom Inc.at11(StateAssessmentReviewBd.Mar.31,1981)

(concludingthatRevenuesassessmentofasegmentofatelecommunicationssystemwasimproperforfailuretomeetthedefinitionoftaxablepropertyunderAS43.56).

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thisclearstatutoryrequirementbecauseifanadministrativetaxabilityappealwerelater

successful,theassessmentrollwouldthenhavetobealteredafterJune1,indirect

tensionwiththisstatutoryprescription.

2. Commonusageofthetermassessment

Wheninterpretingastatute,weconstrueitslanguageinaccordancewith

[its]commonusage,unlessthewordorphraseinquestionhasacquiredapeculiar

meaning,byvirtueofstatutorydefinitionorjudicialconstruction.83 Asmentioned

earlier,thetermassessmentisnotdefinedinAS43.56,andwehavenotruledonits

meaning.NorisassessmentdefinedinAS29.45,whichgovernsmunicipaltaxation.84

Adiligent search oftheAlaska Statutesreveals there isnodefinition for the term

assessmentinthecontextofpropertytaxationintheentiretyofthecode.

Butwecanalsorelyonbothdictionariesandtextsinthefieldofproperty

assessmentinordertoascertainthemeaningofassessment. 85 TheeditionofBlacks

Law Dictionary inexistenceatthetimeofthedraftingandenactmentofAS43.56

definesassessmentgenerallyastheprocessofascertaining andadjustingtheshares

respectivelytobecontributedbyseveralpersonstowardsacommonbeneficialobject

83 Municipality of Anchorage v. Suzuki,41P.3d147,150(Alaska2002)

(alterationinoriginal)(quotingMuller v. BP Exploration (Alaska) Inc.,923P.2d783,788(Alaska1996)).

84 See AS29.45.

85

See Alaskans for Efficient Govt, Inc. v. Knowles,91P.3d273,276n.4(Alaska 2004) (Dictionaries provide a useful startingpoint for determiningwhat

statutorytermsmean,astheyprovidethecommonandordinarymeaningofwords.);

Parris-Eastlake v. State, Dept of Law,26P.3d1099,1103(Alaska2001)(consultingatreatiseinordertoascertainthescopeofastatutoryterm).

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accordingtothebenefitreceived.86 Anditdefinesassessmentspecificallyforthe

purposesofpropertytaxationas[t]helisting andvaluationofpropertyforthepurpose

ofapportioningataxuponit.87 Bothdefinitionscontemplatethescopeoftheterm

assessmentasincludingnotjusttheassigningofvaluetoapieceofpropertybutalso

theinitialidentificationofthatpropertyaseligiblefortaxation.

Textswrittenbythosewhoworkinthefieldofpropertyassessmentalso

consideradeterminationoftaxabilitytobeanintegralcomponentofassessment. As

thesuperiorcourtnotedinitsorder,[d]eterminationsthatpropertyistaxable[are]a

necessarysteproutinelyundertakenbymunicipalboardsoftaxequalizationnationwide

as reflected in standard texts on assessment processes. One such text defines

assessmentwithrespecttopropertytaxationastheofficialactof discovering,listing,

andappraisingproperty,whetherperformedbyanassessor,aboardofreview,ora

court.88 Anothertextdescribingtheassessmentprocessandthetasksofassessors

includestheinitialstepintheprocessof[l]ocatingandidentifyingalltaxableproperty

in the jurisdiction.89 Thesedefinitions indicate that assessment, as the term is

commonlyused,includesthestepofaninitialdeterminationthatapropertyistaxable.

86 Assessment,BLACKS LAW DICTIONARY (rev.4thed.1968)(emphasisadded).

87 Id. (emphasisadded).

88

INTL ASSOC. OF ASSESSING OFFICERS, GLOSSARY FOR PROPERTYAPPRAISALANDASSESSMENT11(2ded.2013)(emphasisadded).

89 INTL ASSOC. OF ASSESSING OFFICERS, PROPERTY APPRAISAL AND

ASSESSMENTADMINISTRATION18(JosephK.Eckerted.,1990)

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3. ThesignificantconsequencesofRevenuesinterpretation

Bybifurcating the review process for valuation appeals fromthat for

taxabilityappeals,Revenuesinterpretationofthestatutechangesthestandardofreview

that thesuperiorcourtaffords totheadministrativedecisionbelowonthe issueof

taxability.Thestatuteexplicitlyaffordsapropertyownerormunicipalityappealinga

decisionbySARBarighttoatrialdenovointhesuperiorcourt. 90 Wehaverejected

attemptsbythesuperiorcourttolimitthescopeofdiscoveryinsuchappeals,andwe

haveinterpretedtherighttoatrialdenovoonappealfromSARBdecisionstoinclude

thestandarddiscoveryrightsundertheAlaskaCivilRules. 91 Thetrialdenovothus

affordstheappealingpropertyownerormunicipalityanopportunityforfulldiscovery,

motionspractice,andtimetoresolveanyobjectionsithastoSARBsdeterminations.

Andifthesuperiorcourtsdecisionisfurtherappealedtothiscourtafteratrialdenovo,

wereviewonlythesuperiorcourtsdecision,notSARBsdecision.92

In contrast, under Revenues interpretation, a property owner or

municipalityappealingataxabilitydecisionbyRevenue tothesuperiorcourthasnosuch

statutoryrighttoatrialdenovo. Rathertheyarelimitedtoanadministrativeappealin

90 AS43.56.130(i).

91

See Fairbanks N. Star Borough v. BP Pipelines (Alaska) Inc.,No.S-13150(AlaskaSupremeCourtOrder,Aug.27,2008).

92 See BP Pipelines (Alaska) Inc. v. State, Dept of Revenue,325P.3d478,482(Alaska2014).

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whichthedecisiontograntatrialdenovoislefttothediscretionofthesuperiorcourt

judge.93 Wehavestatedthatsuchdiscretionarydenovoreviewisrarelywarranted 94

andisgenerallylimitedtoreviewofdueprocessviolationsattheagencylevel.95 Ifthe

propertyownerormunicipalityisnotgrantedadiscretionarytrialdenovoonataxability

claim,thesuperiorcourtsreviewofRevenuesdecisionwillbelimitedtotherecordon

filewithRevenueandwillbedeferentialtoRevenuesfindings.96 Itisunlikelythe

legislaturewould haveintendedfortheseseriousconsequencestoarisefroma distinction

notprovidedforinthetextofthestatute,andweareaccordinglywaryofadopting

Revenuesinterpretation.

WhileAS43.56splaintextissilentonthescopeofthetermassessment,

thetextoftheoverallstatutoryscheme,thecommonusageofthetermassessmentin

the property taxation context, and the significant consequences of Revenues

interpretationofthestatuteleadustoconcludethatthestatutestextindicatesthat

assessmentencompassestheinitialtaxabilitydetermination.

93 AlaskaR.App.P.609(b)(1). Wereviewthedecisionofthesuperiorcourt

whethertograntatrialdenovoundertheverydeferentialabuseofdiscretionstandard.

SeeS.AnchorageConcerned Coal., Inc. v.MunicipalityofAnchorageBd.ofAdjustment,172P.3d774,778(Alaska2007)(citingChristensen v. NCH Corp.,956P.2d468,473

(Alaska1998)).

94 S. Anchorage Concerned Coal.,172P.3dat778.

95 See Pacifica Marine, Inc. v. Solomon Gold., Inc., 356 P.3d780,795

(Alaska2015).

96 AlaskaR.App.P.604(b)(1)(A);see also Pacifica Marine,356P.3dat795.

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B. RevenuesInterpretationOfAssessmentThroughItsRegulationIsNotConsistentWithTheLegislativeHistoryOfAS43.56.

Wheninterpretingastatute,wedonotstopwiththeplainmeaningofthe

text;rather,weapplyaslidingscaleapproach,where[t]heplainerthestatutory

languageis,themoreconvincingtheevidenceofcontrarylegislativepurposeorintent

mustbe.97

ThelegislativehistoryofAS43.56lendssomesupporttotheindication

foundintheplaintextthatRevenuesdeterminationofthetaxabilityofoilandgas

propertyispartandparceloftheassessmentprocess. TheentiretyofAS43.56was

adoptedduringthefirstspeciallegislativesessionheldinthefallof1973.98Inaletter

tothespeakerofthehouseintroducingthebillthatwouldbecomecodifiedatAS43.56,

then-GovernorEganexplainedthat[SARB]iscreatedtoservethefunctionofthelocal

boardofequalizationandthat[t]hemannerofassessmentandcollectionofthetaxis

similartothatprovidedformunicipalities.99 UnderAS29.45,whichestablishesthe

mannerinwhichmunicipalities assessand collecttax,the municipalitysgoverningbody

sitsasaboardofequalizationwhenhearingappealsfrommunicipaltaxassessments.100

97 State, Commercial Fisheries Entry Commn v. Carlson,270P.3d755,762

(Alaska 2012) (alteration in original) (quoting Govt Emps. Ins. Co. v. Graham-

Gonzalez,107P.3d279,284(Alaska2005)).

98

See Ch.1,1,FSSLA1973.

99 1973HouseJournal41.

100 AS29.45.200(a).

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Thesemunicipalboardsofequalizationroutinelyhearbothvaluationandtaxability

appeals.101

TheStatenotesthat,whilemunicipalboardsofequalizationdooftenhear

taxabilityappeals,suchappealsmayalsobebroughtdirectlyto thesuperiorcourt.102 The

State argues that because municipal boardsof equalization do not have exclusive

jurisdictionovertaxabilityappeals,neithershouldSARBbeunderstoodtohavesuch

exclusive jurisdiction. But municipal boards of equalization do have exclusive

jurisdictionovertaxabilityappealsattheadministrativelevel;thestatutedoesgrant

propertyownerstherighttoappealtaxabilitydeterminationsdirectlytothesuperior

court,butgrantstheboardofequalizationexclusivejurisdictionoversuchappealsatthe

administrativelevel. ThisisconsistentwithSARBhavingexclusivejurisdictionover

taxabilityappealsat theadministrativelevel, afterRevenueissuesaninformalconference

decision,andthestatutorygranttopropertyownersandmunicipalitiesofarightto

appealSARBsdeterminationtothesuperiorcourtfortrialdenovo. 103

Finally,thelegislature,ratherthancontemplatingabifurcatedprocessfor

AS43.56appealswhendraftingthebillthatwouldbecomeAS43.56,emphasizedthe

virtueofcondensingpowertohearsuchappealsinasingleentity. Thecommittee

101 See, e.g., Ketchikan Gateway Borough v. Ketchikan Indian Corp.,

75P.3d1042,1044(Alaska2003)(reviewingadecisionoftheboroughsmunicipalboardofequalizationdeterminingthatonly60percentofapropertywastaxexempt);

N. Slope Borough v. Puget Sound Tug & Barge,598P.2d924,926(Alaska1979)

(reviewingdecisionoftheboroughsboardofequalizationthatseavesselstrappedinice

withintheboroughweresubjecttopropertytaxes).

102 See AS29.45.200(c)([A]determinationoftheassessorastowhether

propertyistaxableunderlawmaybeappealeddirectlytothesuperiorcourt.).

103 See AS43.56.130(i).

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draftingthe bill heardextensivetestimonyonthe need for auniformstandard for

assessmentofoilandgasproperty,104andultimatelycreatedonlyasingleentitytohear

appeals: SARB. Itisexceedinglyunlikelythatthelegislatureintendedtocreatea

bifurcated appeal process without expressly doing so, particularly after hearing

unrebuttedtestimonyontheimportanceofuniformity.

ThelegislativehistorybehindSARBscreationisnotparticularlyextensive

but it does reveal that the legislature modeled SARB after municipal boards of

equalizationandwasawareoftheimportanceofauniformassessmentprocessoverseen

byasingleentity. ThesefactorsarebothinconsistentwithRevenuesinterpretationof

thestatute.

C. Revenues InterpretationOfAssessmentIs Not ConsistentWith The

PurposeOfAS43.56.

Thegoalofstatutoryconstructionistogiveeffecttothelegislatures

intent,withdueregardforthemeaningthestatutorylanguageconveystoothers.105

Accordingly,whenengaginginstatutoryinterpretation,weaimtoconstrueastatutein

lightofitspurpose.106 Wewilldiscusstwoindiciaofwhatthelegislatureintended

104 See, e.g.,Minutes,H.Fin.Comm.HearingonH.B.1,8thLeg.,1stSpecial

Sess.(Oct.22,1973)(testimonyofHomerL.Burrell,Director,Div.ofOil&Gas)

([A]ssessmentpracticesshouldbeuniformthroughoutthestate.); id. (testimonyofTomBrusard,Atlantic-RichfieldFiscalTaxConsultant)([T]hebestwayto[havesome

uniformstandardofassessment][i]stohaveasingleentitytoassessthosestandards.).

105 City of Fairbanks v. Amoco Chem. Co.,952P.2d1173,1178(Alaska1998)

(quotingTesoro Alaska Petroleum Co. v. Kenai Pipe Line Co.,746P.2d896,905(Alaska1987)).

106 Alaskans for a Common Language, Inc. v. Kritz,170P.3d183,193(Alaska2007).

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assessmenttomeaninAS43.56: SARBdecisionsmadenearlycontemporaneously

withtheenactmentofAS43.56andthecompressedtimelinethatthelegislaturesetforth

inAS43.56fortheresolutionofappealsregardingassessments.

1. PriorSARBdecisions

A decisionby SARB nearly contemporaneous with the enactment of

AS43.56providesfurtherinsightintothescopeofthejurisdictionthatthelegislature

intendedtograntSARB,andtherebythescopeitintendedthetermassessmentto

have.107 In1974,oneyearafterthepassageofAS43.56andtheestablishmentofSARB,

SARBissuedanopinionaddressingthescopeofitsjurisdiction. 108 Initsarguments

beforeSARB,theStatearguedthatthequestionwhethertheLivengood-YukonRiver

RoadwastaxableunderAS43.56wasaquestionoflaw,fallingoutsideofSARBs

jurisdictionandwithintheexclusivejurisdictionofthejudiciary.109 SARBrejectedthis

argument,concludingthatissuesofbothtaxabilityandvaluationwerepartandparcel

107 Cf. John v. Baker,982P.2d738,811(Alaska1999)(Indetermininga

statutesmeaning,courtswilldefertothecontemporaneousconstructionofthestatute

givenbyanagencychargedwithitsadministration.Contemporaneityofconstructionisimportantbecauseoftenagencypersonnelhaveassistedinformulatingthelegislation

andarethusknowledgeableofitsintentandmeaning. (footnotesomitted));Keane v.Local Boundary Commn,893P.2d1239,1247(Alaska1995)(Acontemporaneous

and practical interpretationofa statuteby the executiveofficer[] chargedwith its

administrationandenforcement. ..constitutesaninvaluableaidindeterminingthemeaning of a doubtful statute. (alteration and omission in original) (quoting

2BNORMAN J.SINGER,SUTHERLANDSTATUTORY CONSTRUCTION49.03(5thed.1992))).

108 AlyeskaPipeline,No.001-000-0015(StateAssessment ReviewBd.Dec.9,

1974).

109 Id. at4-5.

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ofSARBsstatutorydirectivetoadjusttheassessmentrollifvaluationwasexcessive

orimproper.110

SARBconcludedthat[t]hestandardssetforthinAS43.56includeboth

taxabilityandvaluationstandards.Tosaythat[SARB]mustacceptwithoutquestionthe

taxabilityofaparticularpieceofpropertywouldprevent[SARB]fromactingasan

appella[te]agencyand...wouldsubvertthelegislativeintentincreating[SARB].111

SARBthenwentontofindthattheroadwasnottaxableunderAS43.56.112 This

opinion,issuedoneyearafterthepassageofAS43.56andthecreationofSARB,

demonstrates that fromits inceptionSARBunderstoodits jurisdictiontoextendto

appealsonissuesoftaxabilityaswellasvaluation. Suchnearlycontemporaneous

interpretationsarereliableindiciaoflegislativeintentandsupporttheargumentthat

assessmentincludesaninitialdeterminationoftaxability.

WhilelaterSARBopinionsaregivenlessweight(thancontemporaneous

opinions) in interpreting AS 43.56, they nonetheless confirm SARBs initial

interpretationofthescopeofits jurisdiction. InmanysubsequentopinionsSARB

recognized and exercised its authority to decide taxability appeals from Revenue

assessments.113 As recently as 2008 SARB heard an appeal from Revenues

110 Id. at5.

111 Id.

112 Id. at3.

113

See, e.g.,Kodiak Oilfield Haulers, Inc.,Nos.86-56-7,86-56-10,86-56-11,86-56-12,86-56-13(StateAssessmentReviewBd.May22,1986)(concludingthat

drillingmachineryandequipmentfellwithinthedefinitionoftaxablepropertyunder

AS43.56);Parker Drilling Co.,Nos.85-56-04,85-56-05,85-56-06,85-56-07(StateAssessmentReviewBd.May24,1985)(concludingthatdrillingrigsandassociated

(continued...)

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determination that roadsand bridgesused toaccess TAPS infrastructurewerenot

taxable.114 SARBexerciseditsjurisdictionoverthistaxabilityappealandconcludedthat

theroadsandbridgesweretaxableunderAS43.56becausethispropertyremain[ed]

primarilydedicatedtoongoingpipelineoperationsof...TAPS.115 Onlyinmorerecent

yearshasSARB abided by RevenuesinterpretationofSARBsjurisdictionasextending

onlytovaluationappeals.116 Butthisnewpositiondoesnotobviatethefactthatfromits

inceptionandforseveralsubsequentdecadesSARBhasunderstooditsjurisdictionto

encompasstaxabilityappeals.

113 (...continued)equipmentconstitutedtaxablepropertyunderAS43.56);NorpacExploration Servs., Inc.

v. Petroleum Revenue Div.,No84-56-07(StateAssessmentReviewBd.May1984)

(concludingthatcertainpiecesofdrillingsupportequipmentwerenottaxablepropertyunderAS43.56becausetheywerenotusedforoilexplorationorsupportpurposes

duringthetax year);Brinkerhoff Signal, Inc. v. Div. ofPetroleumRevenue, Nos.83-56-4,

83-56-5,83-56-6(StateAssessmentReviewBd.May31,1983)(concludingthatseveraldrillrigswere taxablepropertyunderAS43.56);Alascom, Inc. (StateAssessment

ReviewBd.Mar.31,1981)(concludingthatasegmentofatelecommunicationssystem

didnotmeetAS43.56sdefinitionoftaxableproperty);Arctic Pipe Inspection, Inc.v. Div. of Petroleum Revenue, Dept of Revenue, State of Alaska, No.80-2(State

AssessmentReview Bd.May21,1980)(determiningthatequipmentusedtoinspectpipe

fellwithinAS43.56sdefinitionoftaxableproperty).

114 Trans-Alaska Pipeline System,No.08-SARB-TAXat21-22(May30,

2008), http://aws.state.ak.us/officeofadminhearings/Documents/TAX/PROP/

TAX08SARB%20TAPS.pdf.

115

Id. at22.116 See, e.g.,Appeal from the 2009 Assessment,OAHNo.09-SARB-TAXat

1 (May 21, 2009) (order staying appeal) (Taxability issues are placed under thejurisdictionof[Revenue][undertheregulations].).

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2. Thetimelinesetforthinthestatute

Thetimelinethatthelegislaturesetforappealsofassessmentsprovides

furtherinsightintoitspurposeinenactingAS43.56. Asthesuperiorcourtrecognized,

inAS43.56thelegislaturesetacompressedtimeframefrominitialassessmentthrough

SARBappealthataccommodate[s]therhythmofyearlytaxcollection. First,Revenue

mustmailinitialassessmentnoticesbyMarch1eachyear.117 Anownerormunicipality

mustthensubmitanyobjectiontothisinitialassessmentnoticewithin20daysofits

effectivedate.118 Ifthepropertyownerormunicipalitywishestofurtherappealthis

assessmenttoSARB,itmustdosowithin50daysoftheeffectivedateoftheinitial

assessmentnotice.119 SARBmust then issuea finaldecisionwithinsevendaysof

holdingahearingontheappeal. 120 Finally,byJune1ofeachyear,Revenuemustcertify

thefinalassessmentrollandmailfinalassessmentstopropertyowners.121 Thusinthe

timelineestablishedbythelegislature,allappealsfromAS43.56initialassessment

noticesissuedunderAS43.56aretoberesolvedattheadministrativelevelwithin

approximatelythreemonths,bynolaterthanJune1ofeachyear.

In contrast to this compressed timeline the legislatureestablished for

appealstoSARB,theprocessfortaxabilityappealsbeforeRevenuecantakeyearsfor

117 AS43.56.100.

118 AS43.56.110(a).

119

AS43.56.120(a).120 AS43.56.130(g).

121 AS43.56.135.

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afinaljudgmenttoberendered.122 Thislengthyprocessfortaxabilityappealsbefore

Revenueisnotonlycontrarytotheexpeditedtimelinethelegislaturesetoutforappeals

beforeSARB,butitcanalsopreventvaluationappealsbeforeSARBfrombeingdecided

inthetimelymannerprescribedbythelegislature. Severalvaluationappealsbefore

SARBhavebeenstayedpendingresolutionoftaxabilityappealsbeingheardbefore

Revenue.123 Thesedelaysdirectlycontravenetheacceleratedadministrativeappeal

processforoilandgaspropertyassessmentssetforthbythelegislatureinAS43.56,with

thegoaloftheassessmentprocessbeingcompletedonanannualbasis. Revenuehas

thuspromulgatedaregulationthatallowsittocircumventthestrictstatutorydeadlines

forcompletingadministrativeappealsunderAS43.56. And,asValdezargues,the

current lengthy process for taxability appeals before Revenue has grave financial

122 Forexample,asrecountedbya2013superiorcourtdecisiononataxability

appealbyValdez,Valdezfirstappealedcertaintaxabilitydeterminationsin1997,but

these claimslanguished in administrativeproceedingsformanyyearsanddidnotreceiveafinaljudgmentfromthesuperiorcourtuntillate2013,approximately16yearsafter

theywereinitiallyraised. City of Valdez v. State, Dept of Revenue,Nos.3VA-0000022CI,3VA-10-00084CI,3AN-11-07874CI(consol.)(AlaskaSuper.,Nov.18,

2013).

123 SARB has issued inconsistent decisions regarding whether valuation

appealsproceedingbeforeitshouldbestayedpendingtheoutcomeoftaxabilityappealsbeforeRevenue.Compare Trans-Alaska Pipeline Sys.,OAHNo.13-0474-TAXat2

(StateAssessmentReviewBd.May1,2013)(orderdenyingmotiontostayvaluationappeal)([T]hevaluationappealandthetaxabilityappealcancontinuesimultaneouslyontwoseparatetracks.), with Brooks Range Petroleum Co.,OAHNo.14-0587-TAX

at2 (StateAssessmentReviewBd.May2,2014)(order stayingvaluation appeal)([Revenue]shouldretaintheappealuntilallquestionsoftaxabilityareresolved.).

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implicationsforaffectedmunicipalitiesbecausetheymustrefundoverpaymentsoftaxes

totaxpayersateightpercentinterest 124andmustplanannualbudgetswithoutknowing

theirexpectedtaxrevenue.

3. Summary

InsumRevenues interpretationofAS43.56throughits regulationis

inconsistentwiththestatutestext,legislativehistory,andpurpose. Thisrendersthe

challengedregulationinvalidbecauseithasnoreasonablebasisinthestatuteandthus

fallsoutsideofRevenuesstatutoryauthority. 125

V. CONCLUSION

WethereforeREVERSEthesuperiorcourtjudgmentandREMANDfor

entryofjudgmentinfavoroftheCityofValdez.

124 AS29.45.500(a)-(b).

125 See McDaniel v. Cory,631P.2d82,88(Alaska1981)(Administrative

agenciesresttheirpoweronaffirmativelegislativeacts.Theyarecreaturesofstatuteand

thereforemustfindwithinthestatutetheauthorityfortheexerciseofanypowertheyclaim. (citing1AM.JUR.2DAdministrative Law70(1962)).

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