STATE оf Alaska, DEPARTMENT OF REVENUE, PERMANENT FUND DIVIDEND DIVISION, Petitioner, v. Arturo COSIO and Tomas Cosio, Respondents.
No. 3993.
Supreme Court of Alaska.
Aug. 20, 1993.
858 P.2d 621
Helen L. Simpson, Simpson & Thompson, Anchorage, for respondents.
Jeffrey D. Mahlen, Asst. Public Defender, John B. Salemi, Public Defender, Anchorage, for Alaska Public Defender Agency, amicus curiae.
Before RABINOWITZ, C.J., and BURKE, MATTHEWS, COMPTON, and MOORE, JJ.
OPINION
MATTHEWS, Justice.
Under
The Cosios applied for permanent fund dividends in each of the three years at issue. They received dividends for 1985 and 1986, but were denied dividends for 1987. Additionally, the State demanded repayment of the 1985 and 1986 dividends. Thе Cosios administratively appealed the State‘s actions. Following a hearing, the hearing officer ruled that the Cosios were ineligible to receive dividends from 1985 through 1987 under a regulation which stated: “An alien with resident alien status or a refugee otherwise qualifying under [the provisions of state law pertaining to such eligibility] is eligible to receive a permanent fund dividend.” 15 Alaska Administrative Code (AAC) 23.615(d) (1988). This ruling was subsequently adopted by the commissioner of the Department of Revenue.
The Cosios appealed to the superior court. The court ruled that the regulation was inconsistent with the statutory definition of “state resident” and was therefore invalid: “[T]he establishment of the immigration status of resident alien as the minimal threshold required for alien eligibility, however convenient, is inconsistent with the plain language of the statute which determines residency by a person‘s intent.” The State petitioned fоr review from this ruling. We granted the petition.
The legislature has authorized the commissioner of the Department of Revenue to promulgate regulations implementing the permanent fund dividend program.
Application and proof of eligibility. (a) The commissioner shall adopt regulations under the Administrative Procedure Act (
AS 44.62 ) for determining the eligibility of individuals for permanent fund dividends. The commissioner may require an individual to provide proof of eligibility, and the commissioner may use other information available from other state departments or agencies to determine the eligibility of an individual.
Duties of the department. The department shall
(2) adopt regulations under the Administrative Procedure Act ( AS 44.62 ) that establish procedures and time limits for claiming a permanent fund dividend;
Pursuant to this authority, the commissioner promulgated 15 AAC 23.615(d), which limits dividend eligibility to aliens who are resident aliens or refugees.
I. The regulation is authorized by statute.
Initially, we must determine whether the authorizing statutes require the commissioner to promulgate procedural regulations, substantive regulations, or both. Section .055(2) clearly limits the commissioner‘s authority to adoption of procedural regulations concerning dividend applications and proof of dividend eligibility. Section .015(a), on the other hand, can reasonably be read to encompass both procedural and substantive regulations. We conclude that section .015(a) requires the commissioner to adopt regulations setting substantive eligibility requirements for permanent fund dividends.
We reach this conclusion for two reasons. First, if the legislature had intended the delegation contained in .015(a) to pertain strictly to matters of procedure, the legislature likely would have used language plainly expressing this limitation, as it did in
This case, therefore, reduces to a single question: whether 15 AAC 23.615(d), as construed by the hearing officer and the commissioner to restrict permanent fund dividend eligibility to aliens with resident alien or refugee status, falls within the commissioner‘s delegated authority to regulate the eligibility of individuals for permanent fund dividends. In answering this question, we accord the administrative regulation a presumption of validity; the party challenging the regulation bears the burden of demonstrating invalidity. Alaska Int‘l Indus. v. Musarra, 602 P.2d 1240, 1245 n. 9 (Alaska 1979). We review a “legislative” type of regulation, such as is presented here, with considerable deference:
First, we will ascertain whether the regulation is consistent with and reasonably necessary1 to carry out the purposes of the statutory provisions conferring rulemaking authority on the agency. This aspect of review insures that the agency has not exceeded the power delegated by the legislature. Second, we will determine whether the regulation is reasonable and not arbitrary. This latter inquiry is proper in the review of any legislative enactment.
Kelly v. Zamarello, 486 P.2d 906, 911 (Alaska 1971). We will not substitute our judgment for that of the agency with respect to the efficacy of the regulation nor review the “wisdom” of a particular regulation. Alaska Int‘l Indus. v. Musarra, 602 P.2d at 1245 n. 9.
The commissioner argues that the regulation in question adds a permissible gloss to the statutory phrase “intent to remain permanently in the state,”
Such interpretative rules were made pursuant to statutory authority, and appellant does not point out, nor do we perceive, that those rules are unreasonable and not in accord with the terms and purposes of the statute pursuant to which they were adopted. We have no basis for not upholding such an administrative interpretation of
AS 39.25.170 [the statute using the term “employee in the classified service“], particularly in view of the well settled rule that requires courts to give consideration and respect to the contemporaneous construction of a statute by those charged with its administration, and not to overrule such construction except for weighty reasons.
Id. at 722 (footnote omitted). We decided, then, that the agency in Whaley had the authority to promulgate a regulation that excluded employees who arguably fell within the statute‘s definition. Similarly, in this case we agree that the commissioner has the authority to promulgate a regulation excluding permanent fund dividend applicants who arguably fall within the statutory definition of eligible applicants. That exclusion, however, must still be consistent with the statutory purpose and “reasonable and not arbitrary.” Kelly v. Zamarello, 486 P.2d at 911.
These conditions are met. The objective of
We have made similar inferеnces in other statutory contexts. For example, in Colville Environmental Services v. North Slope Borough, 831 P.2d 341, 349 (Alaska 1992), a statute gave grandfather rights to municipalities which provided garbage collection services before a certificate of authority was granted to a competing provider of such services. The question was whether the statutory language “provided similar services” referred to all services or only lawfully provided services. We construed the statute to apply only where the municipality had lawfully provided services. Similarly, in Simpler v. State Commercial Fisheries Entry Commission, 728 P.2d 227, 230 (Alaska 1986), the litigant challenged an agency regulation that required prior fishing as the holder of both an interim-use permit and a gear license in order to qualify for grandfather rights in a fishery. The regulation was challenged as inconsistent with the authorizing statute which only required prior fishing as the holder of a gear license. We upheld the regulation, noting that one could not legally fish without both a gear license and an interim-use permit. The regulation was held to be consistent with the act based on the inference that the legislature intended to establish eligibility based on lawful participation. Id. Underlying both of these decisions is an assumption that the legislature did not intend to reward unlawful conduct. The commissioner was entitled to make the same assumption in this case.
One objective of section .015(a) is to require the commissioner to make substantive regulations resolving questions as to who is and who is not a permanent resident. 15 AAC 23.615(d) is such a regulation. It makes abundant sense to conclude that aliens who may not legally live in Alaska are not permanent residents for dividend purposes. To exclude such people from the permanent fund dividend program is consistent with a public policy which regards it as unwise to reward illegality. The regulation, therefore, is not invalid on statutory grоunds.
Amicus contends that 15 AAC 23.615(d) is unconstitutional because dividend eligibility depends upon a classification that burdens aliens who are not resident aliens or refugees. Amicus argues that this classification denies the excluded aliens equal protection of the law under the state equal rights provision, article I, section 3 of the Alaska Constitution, and under the Fourteenth Amendment to the United States Constitution.2
A. Federal Equal Protection
Like ancient Gaul, modern analysis under the federal equal protection clause3 is divided into three parts. First, the United States Supreme Court has reserved its most searching review—strict scrutiny—for legal classifications that burden suspect classes of individuals or that burden a fundamental right. Only classifications based on race, alienage, and national origin merit strict scrutiny. Strict scrutiny requires that the government show that its law is narrowly tailored to the achievement of a compelling government interest. City of Richmond v. J.A. Croson Co., 488 U.S. 469, 493-94 (1989) (plurality opinion). Laws often fail to survive strict scrutiny, prompting one commentator to label the test “‘strict’ in theory, and fatal in fact.” Gerald Gunther, The Supreme Court Term 1971—Foreword: In Search of Evolving Doctrine on a Changing Court: A Model for Newer Equal Protection, 86 Harv. L. Rev. 1, 8 (1972); but see Korematsu v. United States, 323 U.S. 214, 216 (1944).
Second, the Supreme Court applies a less searching form of review—intermediate scrutiny—to legal classifications that burden quasi-suspect classes. Thus far, the Supreme Court has applied intermediate scrutiny to classifications based on gender and illegitimacy. See, e.g., Mills v. Habluetzel, 456 U.S. 91, 99 (1982) (illegitimacy); Mississippi Univ. for Women v. Hogan, 458 U.S. 718, 724 (1982) (gender). Under intermediate scrutiny, the government must show that its law bears a substantial relationship to an important government interest. Hogan, 458 U.S. at 724.
Third, the Supreme Court reviews all other legal classifications under its most deferential standard of review—rational basis. Under rational basis review, the government only need show that the challenged law is rationally related to the attainment of a legitimate state interest. United States R.R. Retirement Bd. v. Fritz, 449 U.S. 166, 174-75 (1980). Rational basis review is often as permissive as strict scrutiny is fatal. See Laurence Tribe, American Constitutional Law § 16-3, at 1443 (1988). Occasionally, however, the Supreme Court has intensified its gaze and subjected a law to a more searching inquiry, ultimately striking down the law under rational basis review. See, e.g., City of Cleburne v. Cleburne Living Ctr., Inc., 473 U.S. 432, 439 (1985). One commentator refers to this stricter review as “covertly heightened scrutiny” under which the Court increases the government‘s task in justifying the challenged law. Tribe, supra, § 16-33, at 1612.
The Cosios, as illegal aliens, do not automatically fall within one of the three pre-set categories. Where they do fall is best discovered by examining Plyler v. Doe, 457 U.S. 202 (1982). In Plyler, Texas denied public school funding for the children of illegal aliens. The Court began its analysis with a recognition that illegal aliens,
Plyler indicates that the Court‘s increased scrutiny cannot be attributed solely to the fact that the challenged law burdened illegal aliens. Rather, the Court offered two important reasons for subjecting the Texas law to higher scrutiny:
[(1) The state law] imposes a lifetime hardship on a discrete class of children not accountable for their disabling status. [(2)] The stigma of illiteracy will mark them for the rest of their lives. By denying these children a basic education, we deny them the ability to live within the structure of our civic institutions, and foreclose any realistic possibility that they will contribute in even the smallest way to the progress of our Nation.
Id. at 223 (emphasis added). Neither of these reasons exists in the present case. First, the Cosios, both adults, are fully “accountable for their disabling status.” Second, a permanent fund dividend is not comparable to education, the deprivation of which leaves the victim irretrievably stigmatized. Rather, a dividend is a matter of grace, a “governmental ‘benefit’ indistinguishable from other forms of social welfare,” id. at 221, which the Plyler Court suggested merits mere rational basis review. Thus, the State‘s dividend eligibility requirement only warrants rational basis review.
As we have recognized elsewhere, three main purposes underlie the Alaska permanеnt fund dividend program:
(1) to provide a mechanism for equitable distribution to the people of Alaska of at least a portion of the state‘s energy wealth derived from the development and production of the natural resources belonging to them as Alaskans;
(2) to encourage persons to maintain their residence in Alaska and to reduce population turnover in the state; and
(3) to encourage increased awareness and involvement by the residents of the state in the management and expenditure of the Alaska permanent fund....
Ch. 21, § 1(b), SLA 1980 (emphasis added), quoted in Williams v. Zobel, 619 P.2d 448, 458 (Alaska 1980), rev‘d, 457 U.S. 55 (1982). We believe that the program‘s permanent residence requirement, as interpreted to require “legal” residence, is rationally related to the attainment of these legitimate purposes.4
First, we agree with the State that “giving dividends to illegal aliens would ... contravene public policy by rewarding individuals for illegal acts.” The State may properly determine that it is inequitable to give the same treatment to those who gain their resident status illegally as opposed to those who do so legally. Compliance with the law is a legitimate consideratiоn when the legislature considers entitlement to public funds. Thus, a regulation distinguishing between law-abiding and law-breaking state residents, and rewarding the former, is rationally related to the purpose of equitably distributing income from the permanent fund.
Third, the State has legitimately tailored dividend eligibility to “encourage increased awareness and involvement by the residents of the state in the management and expenditure of the Alaska permanent fund.” The state constitution requires that twenty-five percent of “all mineral lease [revenues] be placed in [the] permanent fund....”
The dividend program was intended to create a constituency in the voting public which would favor reinvestment of permanent fund earnings rather than using such earnings to finance new government programs or to defray the expenses of existing ones. Zobel, 619 P.2d at 462. These voters would, in turn, influence legislative decisions concerning the allocation of permanent fund revenue. The result would be an eventual increase in the size of the permanent fund and a deferral of the use of permanent fund earnings for government operations until the earnings are truly needed for that purpose.
This purpose could well be achieved by limiting dividend recipients to Alaska residents eligible to vote. In the original dividend program enacted in 1980, Ch. 21 SLA 1980, children were excluded from dividend eligibility. In 1982, after three justices of this court had expressed doubts concerning the constitutionality of this exclusion,6 the legislature expanded the class of dividend recipients to inсlude children. Similarly, the exclusion of aliens who are legal residents of the state could raise serious constitutional questions.7 Thus, the commissioner‘s inclusion of legal aliens among those eligible to receive dividends can be viewed as a prudent response to current constitutional learning. Dividend recipients thus include those eligible to vote and those whose exclusion would raise serious constitutional questions.8 Such a classification is rationally related to the third purpose of the dividend program.
In sum, the commissioner‘s eligibility requirements are rationally related to the
B. Alaska Equal Protection
Analysis under our state equal protection clause9 is considerably more fluid than under its federal counterpart. Instead of using three levels of scrutiny, we apply a sliding scale under which “[t]he applicable standard of review for a given case is to be determined by the importance of the individual rights asserted and by the degree of suspicion with which we view the resulting classification scheme.” State v. Ostrosky, 667 P.2d 1184, 1192-93 (Alaska 1983). As the right asserted becomes “more fundamental” or the classification scheme employed becomes “more constitutionally suspect,” the challenged law “is subjected to more rigorous scrutiny at a more elevated position on our sliding scale.” Id. at 1193.
The importance of the asserted right and the suspectness of the classification scheme determine the ends-means scrutiny to be applied. Our general approach is as follows:
As the level of scrutiny selected is higher on the [sliding] scale, we require that the asserted governmental interests be relatively more compelling and that the legislation‘s means-to-ends fit be correspоndingly closer. On the other hand, if relaxed scrutiny is indicated, less important governmental objectives will suffice and a greater degree of over/or underinclusiveness in the means-to-ends fit will be tolerated.
Id. (footnote omitted).
In the present case, we see no reason why 15 AAC 23.615(d) warrants greater than minimal scrutiny under our state equal protection analysis. First, “[a] dividend is merely an economic interest and therefore is entitled only to minimum protection under our equal protection analysis.” State v. Anthony, 810 P.2d 155, 158 (Alaska 1991). Second, Amicus has provided no reason why the classification “persons who have voluntarily failed to comply with the United States immigration laws”10 should receive greater than minimal equal protection scrutiny. For these reasons, we apply minimal scrutiny under our state equal protection analysis.
Minimal scrutiny under our state constitution may be more demanding than under the federal constitution. As under the federal constitution, the challenged exclusion must be designed to achieve a “legitimate” governmental objective; however, the exclusion must bear a “fair and substantial” relationship to the accomplishment of the legitimate objective.11 As discussed above, we have concluded that limiting the distribution of dividends to those who are lawful permanent residents is rationally related to legitimate objectives of the dividend program; we also conclude, for the same reasons that the limitation is fairly and substantially related to these goals. Thus, 15 AAC 23.615(d) survives rational basis review under our state equal protection method of review.
We REVERSE the decision of the superior court invalidating 15 AAC 23.615(d) and
BURKE, Justice, dissenting.
I respectfully dissent from the court‘s decision upholding 15 AAC 23.615(d) as a valid exercise of the Department of Revenue commissioner‘s regulatory authority. I do not agree that 15 AAC 23.615(d), which excludes mоst classes of aliens from dividend eligibility, is consistent with or reasonably necessary to carry out the statutory purposes of
The Permanent Fund Dividend Division (hereafter “department“) declared Arturo and Tomas Cosio ineligible to participate in the Permanent Fund Dividend Program,
The superior court reversed this decision on appeal, ruling that there was an impermissible conflict between the department‘s eligibility requirements and those established by the legislature in
Since [the legislature has declared that] eligibility is determined by the applicant‘s intent, the [department] may not deny eligibility based on someone else‘s intent. Immigration status is one factor which may be considered in evaluating an applicant‘s intent, but it is not deter
minative under the current statute, without amendment.
Cosio v. State, Dept. of Revenue, No. 3AN-82-6892 Civ. at 4 (Alaska Super., December 13, 1990). The superior court declared the regulation invalid, and the case came to this court for review.
I
The first question I address is the proper degree of deference tо be afforded the department‘s regulation. The court does not directly address the proper standard to be used to review the department‘s interpretation of the phrase “intent to remain permanently in the state.”3
In my view, the court‘s arguments on this point are flawed, and the entire discussion is misdirected. The court notes that, in addition to
First of all, the regulatory authority granted by section .015(a) is plainly distinct from section .055(2). The former section provides the commissioner the authority to adopt criteria and proofs for a claimant to establish dividend eligibility.4 The later section requires the department to adopt regulations setting the procedures and time limits for claiming a dividend. Thus, section .015(a) allows the department to regulate the eligibility determination process and section .055(2) allоws it to set up general procedures for claiming dividends. There is nothing redundant or superfluous about these separate grants of regulatory authority.
Furthermore, I would not dispute that
As we noted in Kelly v. Zamarello, 486 P.2d 906, 911 (Alaska 1971):
Certain provisions of the Alaska Administrative Procedure Act provide guidance as to the standard of review for regulations adopted pursuant to an administrative agency‘s quasi-legislative rule-making function.
AS 44.62.020 states in part:To be effective, each regulation adopted must be within the scope of authority conferred and in accordance with standards prescribed by other provisions of law.
AS 44.62.030 states:If, by express or implied terms of a statute, a state agency has authority to adopt regulations to implement, interpret, make specific or otherwise carry out the provisions of the statute, a regulation adopted is not valid or effective unless consistent with and reasonably nance of customary ties indicative of Alaska residency and the absence of those ties elsewhere.
Id. Another example is 15 AAC 23.173, which lists specific indicia of intent as “proof of eligibility.” Similar regulations covering the dividend years at issue in this case, 1985-87, were repealed in 1989. See 15 AAC 23.030(b) and .050(b) repealed 4/1/89.
necessary to carry out the purposes of the statute.
In deciding whether the regulation is “effective” under
I find no indication in the language of
The court‘s opinion does not even attempt to provide, nor do I perceive, a sound basis for concluding that the legislature intended the department to use its discretion to further define the qualities of a “state resident,” particularly by means of federal immigration status. The definition of “residency” as “physical presence plus a dures which would allow the department to divine which applicants truly satisfy the definition.
As noted above, the department must certainly be afforded some deference in adopting and implementing regulations which permit it to determine dividend eligibility. I conclude, however, that the department was not authorized to proscribe dividend eligibility for a class of applicants who actually, or “arguably” as the court puts it, satisfy the presence and intent requirements. In other words, the department may not set up impediments to eligibility that go beyond those established by the legislature. For these reasons, I would hold that 15 AAC 23.615(d) is void as violative of
II
Ordinarily, there would be no need for me to proceed further. However, even accepting the court‘s view that
The department declared the Cosios ineligible to receive permanent fund dividends because they were not “resident aliens” or “refugees” and were therefore ineligible under 15 AAC 23.615(d). The department argues that its regulation is reasonable and consistent with
The court essentially agrees with the department that 15 AAC 23.615(d) simply infers “a requirement of lawful action from the statute.” Maj. Op. at 625. The court then cites a case, Simpler v. State Commercial Fisheries Entry Commission, 728 P.2d 227, 230 (Alaska 1986), where we held that an agency may reasonably impute a lawfulness component into statutes when adopting regulations. The court states that it is entirely appropriate to assume “that the legislature did not intend to reward unlawful conduct.” Maj. Op. at 625. It continues:
It makes abundant sense to conclude that aliens who may not legally live in Alaska are not permanent residents for dividend purposes. To exclude such people from the permanent fund dividend program is consistent with а public policy which regards it as unwise to reward illegality.
Maj. Op. at 625.
If it were, in fact, true that 15 AAC 23.615(d) excludes from dividend eligibility only those aliens who may not legally live in Alaska, then I would have to commend the common sense result which the court reaches today (if not the analysis it employs to reach it). However, a short examination of federal immigration law demonstrates that a regulation restricting dividend eligibility to citizens and immigrants with “resident alien” and “refugee” status is over-inclusive if its purpose is to avoid
A few examples suffice to make this point. Foreign diplomats or foreign fiancees of United States citizens may enter this country under non-immigrant visas and may subsequently petition the Immigration and Naturalization Service to adjust their nоn-immigrant status to permanent resident status so long as certain criteria are met. See
In a case which is instructive in this regard, the United States Supreme Court held that aliens holding certain types of non-immigrant visas were not prevented, as a matter of federal law, from forming the intent necessary to establish state residence. See Elkins v. Moreno et al., 435 U.S. 647 (1978).11 The court held:
Under present law ... were a G-4 alien [i.e. an officer of a foreign governmental agency] to develop a subjective intent to stay indefinitely in the United States, he would be able to do so without violating either the [Immigration] Act, the Service‘s regulations, or the terms of his visa.
Given this controlling federal precedent, I am at a loss to understand this court‘s position that 15 AAC 23.615(d) merely serves to impute a legality requirement into the statutory definition of “state resident.” Under 15 AAC 23.615(d), a person could be lawfully admitted to this country, be physically present in Alaska for many years, form the subjective intent to remain permanently in the state (without violating federal immigration laws), and still be ineligible to receive a permanent fund dividend.12 I do not believe this result is either consistent with or reasonably necessary to carry out the purposes of
Non-resident immigration status is simply an unreliable indicator of an alien‘s legal ability to intend to remain in the state. While the departmеnt was entitled to consider the Cosios’ immigration status as a factor in its “totality of the circumstances” review, it was not authorized to declare the Cosio‘s ineligible to receive dividends based solely on their immigration status.13 I would therefore affirm the superior court‘s decision.
STATE of Alaska, Appellant, v. Harold L. LOWRENCE, Appellee.
STATE of Alaska, Appellant, v. Maurice J. HEFFERNAN, Appellee.
STATE of Alaska, Appellant, v. Joyce E. MILLER, Appellee.
STATE of Alaska, Appellant, v. John O. CORNELL, Appellee.
STATE of Alaska, Appellant, v. Marvin W. HUSKE, Appellee.
Nos. A-4365, A-4370 to A-4372 and A-4411.
Court of Appeals of Alaska.
Aug. 27, 1993.
Notes
(a) An alien who before January 1 of the qualifying year has been granted permanent resident under15 AAC 23.153.8 U.S.C. 1101(a)(20) , refugee status under8 U.S.C. 1157 and8 U.S.C. 1159 , or asylum under8 U.S.C. 1158 and who otherwise qualifies is eligible for a dividend. (b) An alien who has been granted conditional residеnt status meets the requirements of permanent resident status under (a) of this section. (c) An alien who does not fall within the provisions of (a) or (b) of this section is not eligible for a dividend.
An individual‘s intent to establish residency, remain permanently in Alaska, or return to Alaska and remain permanently is demonstrated through the establishment and mainte-