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Alaska Dep't. of Transportation v. Fairbanks North Star Borough (4/25/97), 936 P 2d 1259
NOTICE: This opinion is subject to formal 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; (907) 264-0608, fax (907)
THE SUPREME COURT OF THE STATE OF ALASKA
STATE OF ALASKA, DEPARTMENT )
OF TRANSPORTATION AND PUBLIC ) Supreme Court No. S-7122
) Superior Court No.
Appellant,) 4FA-94-2260 CI
v. ) O P I N I O N
FAIRBANKS NORTH STAR BOROUGH, ) [No. 4814 - April 25, 1997]
Appeal from the Superior Court of the State of Alaska, Fourth
Judicial District, Fairbanks,
Ralph R. Beistline, Judge.
Appearances: M. Leone Hatch, Assistant Attorney General,
Fairbanks, and Bruce M. Botelho, Attorney General, Juneau, for
Appellant. Ardith Lynch, Borough Attorney, Fairbanks, for
Appellee. Lance C. Parrish and James A. Parrish, Parrish Law
Office, APC, Fairbanks, for Amicus Curiae Bentley Family
Before: Compton, Chief Justice, Rabinowitz, Matthews, Eastaugh,
and Fabe, Justices.
This appeal raises the issue of whether the State of Alaska, Department of
Transportation and Public Facilities (State), was required to exhaust its administrative remedies
before filing a declaratory judgment action challenging the validity of an ordinance adopted by
the Fairbanks North Star Borough (Borough). Because we conclude that the doctrine of
exhaustion of administrative remedies does not apply to the State's claims, we reverse the
superior court's decision that the State must seek administrative review in this action.
II. FACTS AND PROCEEDINGS
In 1991, the Borough adopted an ordinance that provided in relevant part:
In addition to all other requirements levied by this title, for all
acquisitions of real property resulting from the exercise of the
power of eminent domain by the United States, the State of
Alaska, the Fairbanks North Star Borough, the City of Fairbanks,
or the City of North Pole, any right-of-way created or modified by
the exercise of the power of eminent domain shall be located more
than fifteen feet from any building. . . . This section shall not
apply in a case where the owner of the real property taken in
eminent domain waives in writing the requirements of this section.
Fairbanks North Star Borough Code of Ordinances (FNSBCO) 17.100.035 (1993) (Setback
In August 1994, the State filed a complaint in superior court seeking a declaratory
judgment that the Setback Ordinance is invalid. The complaint alleged that the ordinance
will either force the state to provide higher compensation than just
under state law to obtain a landowner's waiver, or to condemn
more property than necessary to acquire buildings within 15 feet
of a new right-of-way boundary if a waiver cannot be obtained, or
move and/or destroy structures which would otherwise not be
impacted if a landowner refuses to provide a written waiver or
abandon otherwise viable and worthy public projects.
The State also alleged that it "has several planned public works projects within the North Star
Borough including the Old Steese project and the Collage [sic] Road widening project to which
[the setback ordinance] will apply."
On the Borough's motion for summary judgment, the superior court held that the
State must exhaust its administrative remedies before bringing an action challenging the Setback
Ordinance. The court noted that the Fairbanks North Star Borough Planning Commission
(Planning Commission) had conditioned approval of two of the variances requested by the State
in connection with the Old Steese Highway reconstruction project on the State's conformance
to the requirements of the Setback Ordinance. The court ruled that the State must first appeal
the Planning Commission's conditional approval of the variances to the Borough Assembly or
the proper city council before it could file its declaratory action. (EN2) The court denied a
motion by the State for reconsideration, and the State appeals.
III. DISCUSSION (EN3)
In applying the doctrine of exhaustion of remedies, a "court must decide the
following: (1) is exhaustion of remedies required; (2) did the complainant exhaust those
remedies; and (3) is the failure to exhaust remedies excused?" Eufemio v. Kodiak Island Hosp.,
837 P.2d 95, 98-99 (Alaska 1992). The first part of this test requires the court to characterize
the claim at issue. See Moore v. State, Dep't of Transp. & Pub. Facilities, 875 P.2d 765, 767
(Alaska 1994). If "a procedural challenge to agency decisionmaking has simply been dressed
in constitutional clothing,"or if the action is "an attempt to substitute a damage claim in tort for
an unperfected administrative remedy,"the complainant must first exhaust administrative
remedies. Id. at 767; see also Standard Alaska Prod. Co. v. State, Dep't of Revenue, 773 P.2d
201, 207-08 (Alaska 1989) (holding that plaintiff challenging agency amendment of tax
assessment on statutory and constitutional grounds must first exhaust administrative remedies).
On the other hand, if the claim does not challenge any particular decision by an agency and
instead calls upon the superior court to review only the validity of a statute, exhaustion of
administrative remedies is not required. Moore, 875 P.2d at 768.
The resolution of this case thus depends upon the proper characterization of the
State's action. The Borough argues that this action is essentially an appeal from the Planning
Commission's decision to condition its approval of two variances requested by the State on the
State's conformance with the Setback Ordinance. The State contends that it seeks a ruling that
the Setback Ordinance is invalid, not a review of the Planning Commission's decision.
We addressed a similar issue in Owsichek v. State, Guide Licensing & Control
Board, 627 P.2d 616 (Alaska 1981). In that case, the Guide Licensing and Control Board
partially denied the plaintiff's application for an exclusive use guide area permit. Id. at 617.
The plaintiff then filed a complaint in superior court setting forth "three separate claims: one for
declaratory relief, another for injunctive relief, and a third for damages." Id. at 619. The
superior court "treat[ed] his complaint as an appeal from the Guide Board's decision rather than
as an independent action"and dismissed the action as an untimely administrative appeal. Id. at
619. We upheld the superior court's ruling that the claims for injunctive relief and damages
were properly treated as appeals, but reversed on the declaratory action. Id. at 619-20. Stating
that the latter action "require[d] the superior court to review only the statute and regulations and
not the Guide Board's decision," we held that the declaratory action was properly characterized
as a timely independent action rather than an appeal from an administrative decision. Id. at 619.
We applied this reasoning to the doctrine of exhaustion of administrative remedies
in Moore v. State, Department of Transportation, 875 P.2d 765, 768 (Alaska 1994). In Moore,
the State decided to replace state employees responsible for the maintenance of an airport with
a private firm. Id. at 766. The complainant, a state employee who lost his job because of that
decision, filed a declaratory action in superior court alleging that the State's "elimination of his
job in favor of a private contract for the same services violated"the Alaska Constitution. Id.
at 767. The State argued that because the complainant's "state employment was subject to a
collective bargaining agreement that prescribed a union grievance procedure as the exclusive
means of resolving disputes over dismissal, demotion, and suspension . . . [he] was obliged to
pursue this contractual remedy instead of filing an action for declaratory relief." Id. We
rejected the State's argument, stating that because "Moore's request for declaratory relief called
upon the superior court to review only the scope of the Alaska Constitution's merit system
language, it cannot fairly be characterized as being merely a challenge to [the State's] decision
to terminate his employment." Id. at 768 (citing Owsichek, 627 P.2d at 619). We concluded
that "[u]nder these circumstances, exhaustion of administrative remedies was not required." Id.
In light of our decisions in Moore and Owsichek, we hold that only actions
challenging administrative decisions give rise to the requirement that complainants exhaust their
administrative remedies. If the complaint does not allege any error in an administrative action,
the doctrine does not apply. In this case, the State's complaint alleges only that the Setback
Ordinance exceeds the Borough's statutory authority and is therefore invalid. The complaint
does not even mention the Planning Commission's partial approval of the variances, much less
challenge that decision. Nor does the State's claim raise any factual issues concerning the
Planning Commission's application of the ordinance. As in Owsichek, the State's request for
declaratory relief requires the superior court to consider only the relevant statutes and
regulations. We conclude therefore that the State's action is properly characterized as an
independent action, not an appeal from an administrative decision, and that there is no
requirement that the State exhaust its administrative remedies prior to seeking declaratory relief.
This conclusion is reinforced by two lines of authority. First, an examination of
the doctrine's purpose demonstrates why it is inappropriate in this case. We have stated that the
"basic purpose of the exhaustion doctrine is to allow an administrative agency to perform
functions within its special competence þ to make a factual record, to apply its expertise, and
to correct its own errors so as to moot judicial controversies." Ben Lomond, Inc. v.
Municipality of Anchorage, 761 P.2d 119, 121-22 (Alaska 1988) (quoting Van Hyning v.
University of Alaska, 621 P.2d 1354, 1355-56 (Alaska), cert. denied, 454 U.S. 958 (1981)).
Because resolution of the State's claim does not require a factual record, call upon agency
expertise, or allege administrative error, the purpose of the doctrine would not be served by
requiring the State to exhaust administrative remedies.
Second, we held in Carter v. Alaska Public Employees Ass'n, 663 P.2d 916, 922
n.19 (Alaska 1983) that the "doctrine is not applicable where the remedy sought is judicial rather
than administrative." In this case, the State seeks a ruling that the Setback Ordinance is invalid.
Even if the State had successfully appealed the conditional approval of the two variances, the
conflict at issue in this lawsuit between the Setback Ordinance and the State's power of eminent
domain would remain unresolved. On the other hand, a ruling by the court that the Setback
Ordinance is invalid would moot any dispute over the Planning Commission's conditional
approval. Therefore, the State's complaint calls for a judicial rather than administrative
resolution. Cf. Standard Alaska Prod. Co. v. State, Dep't of Revenue, 773 P.2d 201, 207-08
(Alaska 1989) (stating that administrative review is appropriate where "(1) a ruling on the legal
issues will not necessarily be dispositive of the whole controversy, and (2) an administrative
ruling on the factual issues may moot the legal issues").
For the above reasons, we hold that the doctrine of exhaustion of administrative
remedies does not apply to the State's declaratory judgment action challenging the validity of
the Setback Ordinance. (EN4) The superior court erred in ruling that the State must seek
administrative review before filing this action. (EN5) Therefore, we REVERSE the superior
court's grant of summary judgment and REMAND this case for further proceedings consistent
with this opinion.
1. The ordinance specified that it applied in all zones except light commercial, general
commercial, light industrial, and heavy industrial, and the central business district. FNSBCO
2. The Borough Assembly hears appeals from decisions involving land located outside of
any city incorporated in the Borough, while the appropriate city council hears appeals from
decisions involving land within a city. FNSBCO 18.52.030.
3. The superior court has discretion to dismiss an action over which it has jurisdiction when
the plaintiff improperly fails to exhaust its administrative remedies. Standard Alaska Prod. Co.
v. State, Dep't of Revenue, 773 P.2d 201, 206 (Alaska 1989). However, the court's
determination whether the doctrine of exhaustion of administrative remedies applies to a
particular action is a question of law, which we review de novo. Department of Health & Social
Servs. v. Alaska State Hosp. & Nursing Home Ass'n, 856 P.2d 755, 758 (Alaska 1993).
4. We decline to consider arguments raised only by amicus curiae, the Bentley Family
Charitable Trust, that the State failed to join indispensable or necessary parties and that the State
seeks an advisory opinion by the court. Hootch v. Alaska State-Operated Sch. Sys., 536 P.2d
793, 809 n.62 (Alaska 1975) ("It is well settled that courts will not consider issues raised by
amici curiae which are not raised by the parties.").
5. The trial court had discretion under AS 22.10.020 to grant or refuse declaratory relief.
Jefferson v. Asplund, 458 P.2d 995, 997 (Alaska 1969). However, because the trial court did
not reach the merits of the State's complaint, it did not decide whether to exercise this