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You can search the entire site. or go to the recent opinions, or the chronological or subject indices. Alyeska Pipeline Service Company v. State, Dept. of Environmental Conservation (10/13/2006) sp-6063

Alyeska Pipeline Service Company v. State, Dept. of Environmental Conservation (10/13/2006) sp-6063, 145 P3d 561

     Notice:   This opinion is subject to correction  before
     publication  in  the  Pacific  Reporter.   Readers  are
     requested to bring errors to the attention of the Clerk
     of  the  Appellate  Courts, 303  K  Street,  Anchorage,
     Alaska 99501, phone (907) 264-0608, fax (907) 264-0878,


COMPANY, ) Supreme Court No. S- 12029
Appellant, ) Superior Court No. 3AN-04-10710 CI
v. ) O P I N I O N
STATE OF ALASKA, DEPART- ) No. 6063 - October 13, 2006
Appellee. )

          Appeal  from the Superior Court of the  State
          of    Alaska,   Third   Judicial    District,
          Anchorage, Joel H. Bolger, Judge.

          Appearances:    Svend   A.   Brandt-Erichsen,
          Heller  Ehrman LLP, Seattle, Washington,  for
          Appellant.    Steven  E.  Mulder,   Assistant
          Attorney  General, Anchorage,  and  David  W.
          M rquez,   Attorney  General,   Juneau,   for

          Before:    Bryner,  Chief Justice,  Matthews,
          Eastaugh, Fabe, and Carpeneti, Justices.

          EASTAUGH, Justice.

          The  Alaska  Department  of Environmental  Conservation
billed  Alyeska  Pipeline Service Co. for  costs  the  department
incurred  defending against Alyeskas administrative challenge  of
an air quality control permit.  Although federal law requires the
department  to  recover all permit-related costs  from  industry,
Alyeska  argues that state law and due process do not  allow  the
department  to  recover these costs directly from  the  appealing
permit  holder.   Because  we interpret former  AS  46.14.240  as
allowing  the fee assessment, and because Alyeska has  failed  to
demonstrate that its due process rights were violated, we  affirm
the  decision of the superior court that affirmed the  ruling  of
the departments deputy commissioner.
          The federal Clean Air Act (the Act) requires states  to
issue air quality control permits to major stationary sources  of
air   pollution.1   These  permits  contain[],   in   a   single,
comprehensive  set of documents, all [Act] requirements  relevant
to  [a]  particular polluting source.2  In late 2003  the  Alaska
Department  of Environmental Conservation issued two air  quality
control permits to Alyeska regulating its Valdez Marine Terminal.
Alyeska administratively appealed several aspects of the permits.
After some motion practice, Alyeska and the department apparently
settled the consolidated appeals of the permits.
          The current dispute concerns the departments attempt to
recoup  from Alyeska the costs the department incurred  defending
the two permits during Alyeskas administrative appeals.3  Shortly
after Alyeska initiated its appeals of the permits it received  a
department  invoice  for $8,073 for permit  administration  fees.
The  department charges these permit administration fees to  each
permit  applicant  to recoup the direct costs of  processing  and
administering  the  applicants permit.4   This  invoice  included
charges  for the time the department spent preparing its  defense
against Alyeskas appeals.
          On  April 30, 2004 Alyeska requested department  review
of  these  fees  under  the  departments  fee  review  procedure.
Alyeska argued that neither Alaska law nor due process authorized
the  department to recover the departments defense costs directly
from  an  appellant.  The director of the departments Air Quality
Division  denied Alyeskas appeals on June 8, 2004.   On  Alyeskas
motion  for  reconsideration, the departments deputy commissioner
again  denied the fee appeal.  Alyeska appealed the  decision  to
the superior court.  On July 7, 2005 Superior Court Judge Joel H.
Bolger upheld the decision of the deputy commissioner.
          Through  March 2005 Alyeska had contested  a  total  of
$34,556.39 in permit administration fees invoiced to  it  by  the
department  in connection with Alyeskas appeals of  the  two  air
quality  permits.   Alyeska  also  anticipates  being  billed  an
additional  $63,500  in  fees and $2,151.27  in  costs  for  work
performed  by  the Department of Law on the permit appeals.   The
appeal  now before us, however, concerns only the initial  $8,073
invoice.   As far as we can tell from the record, the  department
had not yet ruled on the propriety of the remaining invoices when
this  appeal was commenced.  Furthermore, Alyeska could not  have
challenged the Department of Laws costs and fees because  it  had
not  yet  been  invoiced  for them.  Our decision  today  is  not
intended  to  address any charges other than the  initial  $8,073
     A.   Standard of Review
          When reviewing an agency decision that raises questions
of  statutory  interpretation involving  legislative  intent,  we
review     the    questions    independently,    applying     the
substitution-of-judgment standard.5  When  deciding  due  process
claims, we apply our independent judgment,6 adopting the rule  of
law  that  is most persuasive in light of precedent, reason,  and
          Whether  an  agency  action is a  regulation  requiring
rulemaking  under the Alaska Administrative Procedure  Act  is  a
question  of law that does not involve agency expertise and  that
we therefore review applying our independent judgment.8
     B.    Former AS 46.14.240 Allowed the Department To  Recover
the Costs           of an Administrative Appeal.

          Alyeska argues that the permitting system in place when
it  appealed  the  air  quality permits  did  not  authorize  the
department to recover its appeal costs directly from Alyeska.
          The  Clean  Air  Act  sets national standards  for  the
reduction  of air pollution but allows states to largely  control
the process by which those standards are met.9  Under Title V  of
the  Act,  participating  states must issue  to  each  stationary
source  permits  setting out all the regulatory  requirements  to
which  the  source is subject.10  State permitting programs  must
meet specific requirements set out in the Act.11  If a state fails
to  meet  these requirements, the federal government  may  impose
sanctions and even assume direct control over permitting  in  the
          The  Act  requires that industry, not state government,
bear the costs of the permitting program.13  Congress imposed the
cost-recovery requirement because it determined that states  were
not adequately funding their clean air programs.14  It also wished
to  force  sources of pollution to internalize the cost  of  such
pollution.15   Hence,  the Act requires  the  EPA  to  promulgate
regulations mandating that state permitting programs include
          [a]  requirement under State or local law  or
          interstate compact that the owner or operator
          of  all sources subject to the requirement to
          obtain a permit under this subchapter pay  an
          annual fee, or the equivalent over some other
          period,  sufficient to cover  all  reasonable
          (direct  and  indirect)  costs  required   to
          develop  and  administer the  permit  program
          requirements  of  this  subchapter,  .  .   .
          including the reasonable costs of
               (i)    reviewing  and  acting  upon  any
          application for such a permit . . . .[16]
          Alaska has created a permitting program under the Act.17
Alaska  recoups the costs of its permitting program from industry
through  two  types  of  fees:  permit  administration  fees  and
emission  fees.18   Although  the Alaska  legislature  has  since
amended the state statute authorizing permit administration fees,19
the  statute  at  the  time  of Alyeskas  administrative  appeals
defined permit administration fees in relevant part as:
          fees  assessed to recover costs  incurred  by
          the  department  and  other  state  or  local
          governmental agencies, to the extent required
          under  42  U.S.C. 7661a(b)(3)(A) and  federal
          regulations implementing that provision,  for
          the   following   services  to   a   specific
          stationary source that are performed in order
          to  implement the permit program  established
          under this chapter:
               . . .
               (3)   receiving,  reviewing,  preparing,
          processing,  and     issuing permits,  permit
          amendments,   modifications,      reopenings,
          renewals      and      revocations,       and
          reissuance . . . .[20]
In  its regulations in force at the time of the controversy,  the
department set the permit administration fee rate at $78 per hour
of  staff  time.21   The regulations did not  elaborate  on  what
specific   department   services  were   chargeable   as   permit
administration fees.22
          All stationary emissions sources must also pay emission
fees, which former AS 46.14.250(h) defined as
          fees  assessed to recover costs  incurred  by
          the  department  and  other  state  or  local
          governmental agencies, to the extent required
          under  42  U.S.C. 7661a(b)(3)(A) and  federal
          regulations implementing that provision,  for
          execution  of the permit program  established
          under  this  chapter that are  generally  not
          associated   with  service  provided   to   a
          specific  facility  . . .  ;  the  costs  may
          include   rent,  utilities,  permit   program
          management,  administrative  and   accounting
          services,  and  other costs as identified  by
          the department in regulations.[23]
Unlike  the  permit  administration fees, the emission  fees  are
dispersed among all permit holders on the basis of each facilitys
estimated assessable emissions.24
          Alyeska   argues   that  under  the   version   of   AS
46.14.240(c)  that  applies in this case the department  was  not
authorized  to  recover the costs of defending an  administrative
appeal through permit administration fees.  It suggests that  the
department  could have more appropriately recovered  these  costs
through emission fees.
          In interpreting a statute we consider its language, its
purpose,  and  its  legislative history, in an  attempt  to  give
effect  to  the  legislatures intent, with  due  regard  for  the
meaning   the   statutory  language  conveys  to  others.25    In
considering  legislative history we follow  the  maxim  that  the
plainer  the  language, the more convincing contrary  legislative
history must be.26
          To  prevail, Alyeska must explain why the plain text of
the  statute should not govern the outcome of this case.   Former
AS 46.14.240(c)(3) specifically allowed the department to recoup,
through permit administration fees, the costs of reviewing . .  .
permits.  An administrative appeal of permit terms would seem  to
fall squarely within the ambit of reviewing the permit.
          Alyeska  advances several arguments against this  plain
reading  of  the  statute.   It  first  contends  that  the  term
reviewing,  read in the overall context of receiving,  reviewing,
preparing,  processing,  and  issuing  permits,  cannot   include
adjudication  of  a  permit because reviewing  is  listed  before
issuing.27   It argues that the order of the terms suggests  that
each term should be limited chronologically to a particular stage
in  the  process  of  approving  a  permit  application.   Hence,
reviewing  a  permit by the department must be  completed  before
preparing, processing, and issuing can occur.28
          It  is  not obvious that the terms are in chronological
order.  Although it is true, for example, that receiving a permit
application  must precede issuing the permit, it  is  less  clear
that  preparing must precede processing or must follow reviewing.
But even assuming that the terms are listed in the order in which
the  agency generally starts a particular stage of the permitting
process,  it  does  not follow that the legislature  intended  to
specify  a  rigid  sequence  that  prevented  one  activity  from
beginning  before a previous one ended.  [R]eviewing,  preparing,
and  processing  are  all functions that one would  expect  might
continue  throughout  the  permitting  process.  Nothing  in  the
statute  suggests  that  these  functions  necessarily  end  upon
issuing  the  permit.   Thus, reviewing is  best  interpreted  as
referring  to  not only the departments initial  review  when  it
first receives a permit application, but also its review at  each
point  when  it  reviews  or is asked to review  its  work;  this
logically includes administrative hearings.
          Alyeska  next  argues  that  an  administrative  appeal
cannot be considered reviewing by the department because once the
appeal  process is initiated, the department becomes  an  adverse
party  and is therefore defending rather than reviewing its work.
But  as  we  have noted, the purpose of an administrative  review
process is to allow an agency to correct its own errors so as  to
moot  judicial controversies.29  The departments more adversarial
role  in  an  administrative appeal serves the ultimate  goal  of
ensuring  that  the permit is legally sound and  error-free.   In
other  words,  by  defending its permitting decisions  during  an
administrative  proceeding,  the  department  is  reviewing   the
permit, even though it is acting in an adversarial capacity.
          Even if we were to conclude that the text of former  AS
46.14.240(c), read in isolation, is ambiguous on the question  of
whether  the departments defense costs are recoverable, any  such
ambiguity  disappears  when the statute is  read  in  context  of
federal  law.  Alaska created its current permitting  program  in
response to a federal mandate.30  The Clean Air Act requires that
states  recoup from industry all reasonable (direct and indirect)
costs  required  to  develop and administer  the  permit  program
requirements.31  Because 42 U.S.C.  7661a(b)(6) requires states to
          provide applicants with procedures for expeditious review of
permit  actions,32 the costs of such review must be  among  those
required  to  .  . . administer the permit program  requirements.
States  are therefore required to recover appeal costs under  the
Act.   We  note  that the EPA reached the same  conclusion  in  a
policy guidance issued in 1993.33
          In  its  1993 act creating Alaskas permitting  program,
the   legislature  identified  one  of  the  acts   purposes   as
retain[ing]  federal approval of the states air  quality  control
program  in  order  to ensure the continued  receipt  of  federal
highway  and  air pollution control money.34  This  statement  of
purpose obliges us to interpret any ambiguity in the statute in a
way  that  complies with federal requirements if it is reasonable
to  do so.  Without specific legislative direction or history  to
the  contrary,  it is implausible to think that  the  legislature
wished to depart from the clear requirements of the Act regarding
cost  recovery.  Hence, we must interpret former AS  46.14.240(c)
as allowing recovery of appeal costs.
          Alyeska  suggests that an interpretation of  former  AS
46.14.240(c) that excludes appeal costs need not violate  federal
law  because the department could recoup those costs via emission
fees.   As  noted  above,  emission fees  cover  costs  that  are
generally  not  associated with service provided  to  a  specific
facility,  such  as  rent, utilities, permit program  management,
administrative  and  accounting  services,  and  other  costs  as
identified  by the department in regulations.35  Because  federal
law  does not require that each permit holder pay its own  costs,
but  only that the state recover the total costs of administering
the permit program from permit holders as a group,36 the emission
fees  provision could be viewed as a catch-all provision intended
to  recover all the costs of the permitting program that were not
within  the  scope of the eight enumerated services  set  out  in
former  AS  46.14.240(c).  Alyeska points out  that,  unlike  the
provision  authorizing permit administration fees,  the  emission
fee   provision   allows  the  department  to   specify   through
regulations  what costs can be recovered through  emission  fees.
Alyeska   argues   that   the  department   could   have   placed
administrative   appeal   costs  into   this   category   through
          We  are not convinced that the statutory definition  of
emission  fees is properly understood as including appeal  costs.
Unlike   the   departments   rent   or   utilities   costs,   the
administrative appeal costs of defending a particular  permitting
decision for a particular facility are directly associated with a
service  provided  to a specific facility.   An  attempt  by  the
department  to  recover its appeal costs as emission  fees  would
appear  to  violate  former  AS  46.14.250(h)s  requirement  that
emission fees cover costs that are generally not associated  with
service  provided  to a specific facility.  By limiting  emission
fees  to  indirect  costs   those  not  associated  with  service
provided  to a specific facility  the legislature seems  to  have
viewed  permit  administration fees as  the  proper  vehicle  for
collecting costs that can be traced to a specific permit holder.
          We  also note that the legislative history of former AS
          46.14.240(c) indicates a desire to require individual permit
holders  to  internalize  the costs of their  own  permits.   The
statute  was drafted by a legislative working committee comprised
of representatives from various stakeholders in the federal Clean
Air  Act,  including the oil and gas industry.37   The  committee
explained  that  the bifurcated fee system was developed  on  the
policy  premise that a cost generator is to be the cost bearer.38
At  a  committee  meeting, a representative of the  oil  and  gas
industry  elaborated on this premise: Those people who have  very
complex permits, that have controversial permits, who dont  do  a
good  job  on  their permits, [should not] get a free  ride,  and
everybody  else pays for it.39  The committees understanding  was
that  emission fees should be limited to recovering the costs  of
performing those functions of the permit program that benefit  or
assist  all  permit holders through execution of a  state  permit
program.40   These statements reinforce our conclusion  that  the
legislature intended administrative appeal costs to be  recovered
through permit administration fees and not through emission fees.
          Because  the legislature created no other fee provision
that  can  reasonably be interpreted as allowing the recovery  of
appeal  costs,  an  interpretation  of  subsection  .240(c)  that
excluded  such costs would seem to require a conclusion that  the
legislature  did  not intend to comply with the Acts  mandate  to
recoup  appeal costs.  We are unwilling to draw such a conclusion
without  evidence suggesting that the drafters  intended  such  a
          We  therefore  conclude  that  former  AS  46.14.240(c)
allowed  the  department to recover the costs  of  administrative
appeals through permit administration fees.
     C.    Recovery of Appeal Costs Does Not Violate Alyeskas Due
     Process   Rights.
          Alyeska also argues that the departments interpretation
of  former AS 46.14.240(c) violated Alyeskas due process  rights.
It  contends  that  the departments interpretation  impermissibly
impeded the ability of permit holders to seek review of flaws  in
their  permits  by  forcing them to bear the departments  defense
costs  even if their complaints were valid.  It also argues  that
its  due  process rights were violated because it was  not  given
proper  notice  that it would have to pay the departments  appeal
costs and because the departments adjudication process was biased
against Alyeska.
          1.    The departments recovery of its appeal costs from
          Alyeska  did     not unconstitutionally impede  Alyeska
          from seeking review of   its permit.
          Alyeskas   first  argument  is  that  the   departments
interpretation of the fee administration provision  unjustifiably
impedes  its access to justice, and therefore fails the balancing
test  set out in Mathews v. Eldridge41 and Midgett v. Cook  Inlet
Pre-Trial Facility.42  Per those cases, the court must weigh three
factors:   (1)  the  private interest affected  by  the  official
action; (2) the risk of an erroneous deprivation of such interest
through  the procedures used and the probable value, if  any,  of
          additional or substitute procedural safeguards; and (3) the
governments  interest,  including the fiscal  and  administrative
burdens  that  additional  or substitute procedural  requirements
would entail.43
          The  parties disagree regarding all three factors.  But
even if we assume that the first and third factors favor Alyeska,
its  due process claim nevertheless fails because Alyeska has not
shown  that the fees created any risk of an erroneous deprivation
in this case.
          Alyeska  contends that shifting the departments  appeal
costs  onto  the  permit  holder  creates  a  risk  of  erroneous
deprivation  because it gives the department an unfair  advantage
by forcing Alyeska and other permit holders to consider forgoing,
limiting, or abandoning legitimate claims.  Alyeska also suggests
that  the departments cost-shifting removes the normal incentives
and  constraints that influence assessment of the  strengths  and
weaknesses of [the departments] case, such as whether to press on
and  defend  a  provision  with little legal  basis  and  minimal
environmental return.
          Alyeska  cannot claim that its due process rights  were
violated  merely because it was forced to consider forgoing  some
or all of its claims.  In Varilek v. City of Houston we held in a
zoning  dispute that a landowners due process right of access  to
the courts would be violated by a mandatory administrative appeal
fee  of $200 only if the landowner could demonstrate that he  was
unable to pay the fee.44  Varilek recognized the principle that a
party  claiming violation of its right of access  to  the  courts
must  demonstrate  that  it  was itself  placed  at  risk  of  an
erroneous deprivation.45  Even in due process cases in which  our
holding  had  potentially  broad  implications  for  a  class  of
litigants  (e.g.,  parolees,  defendants  in  license  revocation
hearings),  the  parties  seeking  relief  had  suffered   actual
deprivations of their rights.46
          In this case, Alyeska pursued its claims vigorously and
admits  that  it  reached  settlement  with  the  department   on
contested  elements  of the permits.  It identifies  no  specific
harm  that  it  suffered  during that litigation.   It  does  not
suggest,  for  example, that the department coerced  it  into  an
unfavorable   settlement  under  threat  of   exorbitant   permit
administration fees.  Rather, it speculates about the  incentives
created  by  the provision.  Because Alyeska has not demonstrated
that  it  was  in  any  way denied access to agency  or  judicial
review, its due process argument fails.47
          Alyeska argues that Malvo v. J.C. Penney Co. requires a
contrary  result.  In that case we held that the  superior  court
abused  its  discretion by awarding full attorneys  fees  to  the
prevailing party.48  We reasoned that the prevailing party should
not   automatically  be  awarded  full  attorneys  fees   without
considering whether those fees are just.49  Although we suggested
that  due  process might be implicated by an automatic  award  of
full  attorneys  fees,  we declined to decide  the  case  on  due
process  grounds,  holding  instead  that  the  superior   courts
decision was manifestly unreasonable under Alaska Civil  Rule  82
and, thus, an abuse of discretion.50
          Malvo  was  not  decided  on due  process  grounds  and
therefore  its  discussion  of the due  process  implications  of
automatic  fee  shifting is dictum.  Furthermore,  unlike  Malvo,
Alyeska  was  not  required  to  pay  the  full  amount  of   the
departments   fees  regardless  of  whether   those   fees   were
reasonable.   The applicable regulations give permit holders  the
right  to  dispute a fee or computation through an administrative
appeal.51 Although Alyeska challenged only the permissibility  of
the  fees,  it  was free under this provision to challenge  their
reasonableness  as  well.  It did not do so.   More  broadly,  in
Malvo,  as  in Varilek, we were principally concerned  about  the
effect  of  a financial barrier in the specific circumstances  of
that  case. We noted in Malvo that a cost requirement,  valid  on
its face, may offend due process because it operates to foreclose
a  particular partys opportunity to be heard.52  We left open the
possibility that an award of full fees could be justified in some
cases.53   Because  Alyeska has not demonstrated  that  the  fees
assessed  by  the department were unreasonable or detrimental  to
Alyeskas litigation efforts, Malvos dictum is inapposite.
          2.    Alyeska  was  given  constitutionally  sufficient
          notice of the  fees.
          Neither   former  AS  46.14.240  nor  the  implementing
regulations  in force at the time specifically identified  appeal
costs  as  recoverable  through permit  administration  fees.  54
Alyeska  argues that, given this silence, the departments failure
to  notify  it of the cost-shifting policy violated due  process.
It  argues that later process, such as this appeal, cannot remedy
the  violation  because had it known about the charges  it  might
have decided to file more limited appeals, or no appeal at all.
          In   Amerada  Hess  Pipeline  Corp.  v.  Alaska  Public
Utilities  Commission,  the  Alaska Public  Utilities  Commission
(APUC)  charged  pipeline owners nearly two  million  dollars  in
costs  and  attorneys  fees  for a tariff  investigation.55   The
commission was statutorily authorized to assess such charges, but
the  owners  claimed  that  a  vague  statute  and  the  lack  of
regulations  interpreting the statute failed to give them  notice
of the possibility of such fees.56  We ruled in favor of the APUC,
holding  that  [t]he adequacy of process does not depend  on  the
advance  adoption  of standards.  Rather, we  must  look  to  the
entire set of safeguards provided in the particular proceeding.57
We continued:
          Even assuming, arguendo, that the owners  had
          no notice of the APUCs cost allocation policy
          during  most  of the six years in  which  the
          costs were expended, they received notice and
          an  opportunity to object to the APUCs policy
          and  decision  before  the  allocation  order
          became final. [58]
Like  the  owners  in Amerada Hess, Alyeska began  receiving  fee
invoices  and was given an opportunity to contest them relatively
soon  after  it  initiated its appeals.  Generally speaking,  the
notice  requirement  in  due  process  is  associated  with   the
requirement that there be a meaningful opportunity to  be  heard.
As we have explained: [t]he crux of due process is opportunity to
be  heard  and the right to adequately represent ones  interests.
Adequate  notice is the common vehicle by which these rights  are
guaranteed.59   Alyeska does not contend that it  was  denied  an
adequate  opportunity  to argue that the  departments  fees  were
impermissible or unreasonable.
          It  is  true  that, unlike the owners in Amerada  Hess,
Alyeska  initiated the cost-producing action.   If  it  had  been
aware  of  the  departments policy, Alyeska could have  exercised
control over the costs by limiting or forgoing its appeals.  This
fact distinguishes this case somewhat from Amerada Hess, in which
lack  of  notice  of the APUCs policy could not have  harmed  the
owners   because  they  did  not  have  any  control   over   the
investigation.60   But any due process violation  that  may  have
resulted from Alyeskas inability to make a fully informed  choice
whether  to  appeal is demonstrably harmless.  Alyeska  commenced
its  appeals of the two permits on October 24, 2003 and  December
24,  2003  respectively.  Alyeska first received notice  that  it
would  be  assessed  some  fees when, several  months  later,  it
received  the  April  13, 2004 invoice for $8,073.   Although  it
could  have  withdrawn  or limited its  appeals  at  that  point,
Alyeska  continued to pursue its appeals for almost a year  after
it  knew the department would charge its fees to Alyeska.   Also,
Alyeska  mentions in its reply brief that the air quality permits
contained terms that were not only in error, but that the company
could  not  meet.  Indeed, after reviewing drafts of the  permits
one  of  Alyeskas engineers warned the department  that   Alyeska
would  have little choice but to pursue an appeal if the  permits
were  issued  without  modification.   Given  Alyeskas  continued
pursuit of the appeals after receiving notice of the fees and the
apparently  vital interests at stake for Alyeska, we  may  assume
that  Alyeska would have prosecuted the permit appeals regardless
of whether it was aware of its potential liability for fees.  Any
due  process  violation resulting from its inability  to  make  a
fully informed decision whether to appeal is therefore harmless.
          In  addition,  Alyeska should have  realized  that  the
department  might recoup its appeal costs.  Alyeska  argues  that
this case is distinguishable from Amerada Hess because the owners
there  had  some  notice of the possibility of a  fee  assessment
while  Alyeska had no notice at all.  Alyeska points out that  AS
46.14.240(c)  does  not directly state that  the  department  may
recover the costs of administrative appeals.  But for the reasons
discussed  in  Part  III.B  above,  a  careful  reading   of   AS
46.14.240(c)  particularly in light of the Clean Air  Acts  cost-
recovery  requirements   should  have  alerted  Alyeska  to   the
possibility  that it would have to pay the departments  costs  if
Alyeska  appealed, just as it has been required to pay all  other
costs  related  to its permits.  Thus, Alyeskas position  at  the
beginning  of  this case was little different than  that  of  the
pipeline  owners in Amerada Hess.  Both had at least constructive
notice  of the possibility that they would be forced to  pay  the
states costs.
          3.    The departments     fee review provisions do  not
          create an      unconstitutional conflict of interest.
          Alyeska  asserts that the regulations establishing  the
procedure for reviewing fees are constitutionally flawed  because
they  create  impermissible conflicts of interest. Under  18  AAC
15.190,  the  director  of the departments Air  Quality  Division
decides fee disputes.61  Alyeska argues that the director  cannot
impartially  decide whether the fees are permissible  because  he
has  a  vested interest in ensuring that the department  complies
with  the  requirements  of  federal law,  and  in  ensuring  the
financial  health  of the department.  Alyeska  posits  that  the
director has a second conflict of interest because in substantive
(i.e.,   non-fee-related)   permit  appeals,   he   directs   the
departments  defense. Alyeska concludes that the director  cannot
impartially  review the departments fee assessments  because  the
director is largely responsible for incurring those fees  in  the
first place.
          Alyeskas  argument that the director has a conflict  of
interest  because  he  is charged with ensuring  compliance  with
federal   law   and   meeting  state   budget   requirements   is
unpersuasive.  Officials employed by administrative agencies  may
decide  administrative appeals without violating due  process  so
long  as  adequate  procedural safeguards exist  to  protect  the
rights  of  the appellant.  As we noted in Amerada  Hess,  [m]ost
courts  .  .  .  accept  that  the merger  of  investigative  and
executive  responsibilities with adjudication  does  not  violate
federal due process if institutional safeguards exist against the
abuse of unchecked administrative discretion.62  In this case, the
requirement of a written decision and the right to superior court
review sufficiently protect the litigant from abuse.63
          Alyeskas argument that the appeal process violates  due
process  because the director is the principal generator  of  the
fees  he  is  called  upon  to adjudicate  also  fails.   As  the
department   points   out,  Alyeska  is   challenging   not   the
reasonableness  of  the departments fees but  its  statutory  and
constitutional  authority to charge them  at  all.  There  is  no
reason  to  think that the director would be unable  to  consider
this  argument impartially.  Similarly, Alyeskas contention  that
superior  court review is insufficient because of  the  directors
ability to shape the record is unpersuasive because there are  no
factual issues in dispute in this appeal.
     D.    The  Department Was Not Required To Adopt a Regulation
     Before It      Could Recoup Its Costs.
          Alyeska argues that the Alaska Administrative Procedure
Act  prohibited  the department from billing Alyeska  for  appeal
costs  because  the  department  had  not  adopted  a  regulation
allowing recovery of such costs.
          The  Alaska  Administrative  Procedure  Act  defines  a
regulation as:
          every rule, regulation, order, or standard of
          general application . . . adopted by a  state
          agency  to  implement,  interpret,  or   make
          specific the law enforced or administered  by
          it,  or  to govern its procedure, except  one
          that  relates only to the internal management
          of  a state agency; . . . regulation includes
          manuals,  policies, instructions,  guides  to
          enforcement,    interpretative     bulletins,
          interpretations, and the like, that have  the
          effect  of  rules,  orders,  regulations,  or
          standards  of general application,  and  this
          and  similar phraseology may not be  used  to
          avoid or circumvent this chapter;  whether  a
          regulation, regardless of name, is covered by
          this  chapter depends in part on  whether  it
          affects  the public or is used by the  agency
          in dealing with the public.[64]
Regulations as defined by this provision must be adopted pursuant
to the notice and public comment requirements of the act.65
          We  have  held  that  the  term  regulation  should  be
understood expansive[ly].66  An indication of a regulation is that
it  implements, interprets, or makes specific the law enforced or
administered by the state agency.67 Alyeska argues that under this
expansive view, the departments policy of recovering appeal costs
is  a  regulation  subject  to  the  notice  and  public  comment
provisions of the Alaska Administrative Procedure Act.
          Although the definition of regulation is broad, it does
not  encompass  every  routine, predictable interpretation  of  a
statute  by  an  agency.  Nearly every agency  action  is  based,
implicitly  or explicitly, on an interpretation of a  statute  or
regulation authorizing it to act.  A requirement that  each  such
interpretation be preceded by rulemaking would result in complete
ossification of the regulatory state.  We recognized as  much  in
Alaska Center for the Environment v. State, in which we faced the
question  whether  an  agencys  interpretation  of  a  regulation
defining  major energy facility itself constituted  a  regulation
subject to the requirements of the Administrative Procedure Act.68
We  held  that  the agencys interpretation was not  a  regulation
because  it  was  merely  a common sense  interpretation  of  the
regulations  applicability.69   We  noted  that  [t]he  Divisions
interpretation  was  not  an addition to a  regulation  involving
requirements of substance,  but rather, an  interpretation of the
regulation  according  to its own terms.  70   We  reaffirm  this
          principle today.  Although the Administrative Procedure Act may
require rulemaking in cases in which an agencys interpretation of
a  statute is expansive or unforeseeable, or in cases in which an
agency  alters its previous interpretation of a statute, obvious,
commonsense   interpretations  of   statutes   do   not   require
          The    departments   interpretation   of   former    AS
46.14.240(c)  was  such  a  commonsense  interpretation  and  was
therefore not subject to the Administrative Procedure Acts notice
and  comment  requirements.   The department  was  therefore  not
required  to issue regulations before assessing Alyeska  for  the
          We  consequently  AFFIRM the decision of  the  superior
court   affirming   the   ruling  of   the   departments   deputy
     1    See Clean Air Act  502, 42 U.S.C.  7661a (2000); Public
Citizen, Inc. v. EPA, 343 F.3d 449, 453 (5th Cir. 2003).

     2     Virginia v. Browner, 80 F.3d 869, 873 (4th Cir.  1996)
(citing Clean Air Act Amendments of 1990: Chafee-Baucus Statement
of  Senate Managers (Conf. Rep. No. 952, 101st Cong., 2d  Sess.),
reprinted  in 136 Cong. Rec. S16933, S16983 (daily ed.  Oct.  27,
1990)).   Browner  characterizes a permit  as  a  source-specific
bible for Clean Air Act compliance.  Id.

     3     As  described in Part III, the legislature  has  since
modified  the statutory scheme allowing the department to  recoup
these costs.

     4    See AS 46.14.240.

     5    State v. Dupier, 118 P.3d 1039, 1044 (Alaska 2005).

     6     Wendell  C.  II v. State, OCS, 118 P.3d 1,  3  (Alaska

     7    Paxton v. Gavlak, 100 P.3d 7, 10 (Alaska 2004).

     8     Alaska  Ctr. for the Envt v. State, 80 P.3d  231,  243
(Alaska 2003).

     9     See  Commonwealth of Va. v. EPA, 108 F.3d  1397,  1410
(D.C.  Cir.  1997)  (The  states are  responsible  in  the  first
instance  for  meeting  the  national ambient  standards  through
state-designed  plans  that provide for attainment,  maintenance,
and  enforcement  of the national standards in each  air  quality
control region. Thus, each state determines an emission reduction
program  for  its nonattainment areas, subject to  EPA  approval,
within  deadlines imposed by Congress. (internal quotation  marks

     10    See N.Y. Pub. Interest Research Group, Inc. v. Johnson,
427 F.3d 172, 176 (2d Cir. 2005).

     11    Id.

     12    Clean Air Act  502, 42 U.S.C.  7661a(d) (2000).

     13    42 U.S.C.  7661a(b)(3).

     14     S.  Rep. No. 101-228, at 348 (1989), as reprinted  in
1990  U.S.C.C.A.N. 3385, 3731 (Throughout the 20-year history  of
the  current  Clean Air Act, inadequate State  and  local  agency
resources have increasingly hampered pollution control efforts.).

     15     Id.  at 351, as reprinted in 1990 U.S.C.C.A.N.  3385,

     16    42 U.S.C.  7661a(b)(3)(A).

     17    See AS 46.14.010 et seq.

     18    AS

     19     See AS 46.14.240.  AS 46.14.240 now provides that the
department   shall  establish  permit  administration   fees   in
accordance  with  AS   Those  provisions  require
agencies  either  to  set  fixed  fees  for  standard  designated
regulatory  services or to reach a negotiated  service  agreement
with   the   regulated  party.   AS  37.10.052.   Under   current
department  regulations,  an  adjudicatory  hearing  regarding  a
permit decision is a designated regulatory service subject to  an
hourly fee.  18 Alaska Administrative Code (AAC) 50.400(m)  (2006

     20     Former AS 46.14.240(c).  The other services listed in
former AS 46.14.240(c) are:

          (1)    providing preapplication consultation,
          assistance,   and  completeness   review   of
          applications for a permit, permit  amendment,
          permit  modification, or renewal,  except  as
          provided in (d) of this section;
          (2)  reviewing or assisting in preparation of
          stationary  source  specific  permit  support
          documents,   including  on-site  evaluations,
          except as provided in (d) of this section;
          . . .
          (4)    preparing  general  operating  permits
          under  AS 46.14.210; however, costs  must  be
          allocated  on  an  equitable  basis  to  each
          stationary  source  covered  by  the  general
          operating permit;
          (5)  performing stationary source inspections
          and compliance evaluations;
          (6)    reviewing,  compiling,  and  reporting
          stationary source specific emission,  ambient
          monitoring, or process measurement data;
          (7)   preparing,  evaluating,  or  processing
          plans   or  documents  to  obtain  stationary
          source  compliance  or rectify  noncompliance
          with  permit  terms and conditions,  but  not
          including any enforcement actions; and
          (8)    assessing  and  collecting  delinquent
          permit administration fees and emission fees.
The department concedes that it cannot collect the fees unless it
is  authorized to do so by former AS 46.14.240(c)(1)(8) and  does
not argue that any subsection other than (3) might be applicable.

     21    Former 18 AAC 50.400 (2004). The current version of 18
AAC  50.400 imposes a variable hourly rate based upon the  salary
and  benefits of the employees working on the permit, plus costs.
18  AAC.  50.400(m).  It also sets fixed annual fees for many  of
the  regulatory  services provided by  the  department.   18  AAC

     22    Former 18 AAC 50.400 (2004).

     23    Former AS 46.14.250(h) (2003).

     24    AS 46.14.250(b).

     25     In  re Estate of Maldonado, 117 P.3d 720, 725 (Alaska
2005)  (quoting  Alyeska Pipeline Serv. Co. v. DeShong,  77  P.3d
1227, 1234 (Alaska 2003) (internal quotation marks omitted)).

     26    State v. Public Safety Employees Assn, 93 P.3d 409, 415
(Alaska  2004) (quoting Tesoro Petroleum Corp. v. State, 42  P.3d
531, 537 (Alaska 2002)).

     27    See former AS 46.14.240(c)(3).

     28    See id.

     29     Voight  v.  Snowden, 923 P.2d 778, 781 (Alaska  1996)
(citations omitted).

     30    See ch. 74,  1, SLA 1993; Clean Air Act  502, 42 U.S.C.
7661a(d) (2000).

     31    42 U.S.C.  7661a(b)(3).

     32    42 U.S.C.  7661a(b)(6) requires states to provide

          [a]dequate,   streamlined,   and   reasonable
          procedures  for . . . expeditious  review  of
          permit   actions,   including   applications,
          renewals,  or  revisions,  and  including  an
          opportunity  for  judicial  review  in  State
          court  of  the  final permit  action  by  the
     33     EPA,  Questions  and Answers on the  Requirements  of
Operating  Permits  Program Regulations at 9-2  (July  7,  1993),
available              at   
programs/artd/air/title5/t5memos/bbrdq&a1.pdf.   The   department
suggests that in interpreting former AS 46.14.240 we should defer
to  the EPA guidance.  But because the guidance was issued  after
the  Alaska  legislature passed former AS 46.14.240 it  does  not
shed  any light on legislative intent.  Id.; ch. 74,  1, SLA 1993
(enacted  June  25,  1993).   The  guidance  nonetheless  remains
relevant   as   persuasive   authority   regarding   the   proper
interpretation of 42 U.S.C.  7661a.

     34     Ch.  74,  1, SLA 1993.  As noted above, noncompliance
with  the  Clean Air Acts requirements can result  in  sanctions,
such  as  loss  of federal funding and even federal  takeover  of
pollution control within the state.  42 U.S.C.  7661a(d).

     35    Former AS 46.14.250(h).

     36    See 42 U.S.C.  7661a.

     37       Other   participants   included,   among    others,
environmental groups, the Department of Defense, and  the  state.
Letter  from  the Air Quality Legislative Working Comm.  to  John
Sandor, Commr, Alaska Dept of Envtl. Conservation, attach. #4  at
6 (Dec. 28, 1992).

     38     Letter from the Air Quality Legislative Working Comm.
to  John  Sandor,  Commr,  Alaska Dept  of  Envtl.  Conservation,
attach. #4 at 6 (Dec. 28, 1992).

     39     Transcript  of Air Quality Legislative Working  Comm.
Meeting #6 at 58 (Nov. 17, 1992).

     40    Letter, supra note 38, attach. #4 at 7.

     41    Mathews v. Eldridge, 424 U.S. 319, 335 (1976).

     42    Midgett v. Cook Inlet Pre-Trial Facility, 53 P.3d 1105,
1111 (Alaska 2002).

     43    Id.

     44    Varilek v. City of Houston, 104 P.3d 849, 85355 (Alaska
2004) (remanding to superior court to determine whether landowner
was indigent).

     45    See id.

     46     See  Javed  v.  Dept of Pub. Safety,  Div.  of  Motor
Vehicles,  921 P.2d 620, 625 (Alaska 1996) (holding that  statute
prohibiting   accused   in   license  revocation   hearing   from
introducing  evidence that he was not driving at time  of  arrest
violated due process as applied to accused and others like  him);
Bush  v. Reid, 516 P.2d 1215, 121520 (Alaska 1973) (holding  that
statute  barring  parolees  from bringing  civil  suits  violated
parolees  due  process rights by prohibiting  him  from  bringing
personal injury action).

     47     We acknowledge the possibility that an administrative
procedure  could  alter the litigating position  of  a  class  of
litigants  so  drastically as to render  the  procedure  facially
invalid.  But in this case, Alyeska has not demonstrated that its
due  process right of access to the courts was harmed, let  alone
that  no  set of circumstances exists under which the [provision]
would  be  valid  or that the provision does not have  a  plainly
legitimate  sweep.  See Treacy v. Municipality of  Anchorage,  91
P.3d 252, 260 n.14 (Alaska 2004).

     48     Malvo  v. J.C. Penney Co., 512 P.2d 575, 587  (Alaska

     49    Id. at 58687.

     50    Id. at 587.

     51    18 AAC 15.190.

     52    Malvo, 512 P.2d at 587 (emphasis added) (quoting Boddie
v. Connecticut, 401 U.S. 371, 380 (1971)).

     53    Id. at 588.

     54    See former AS 46.14.240; former 18 AAC 50.400 (2003).

     55     Amerada  Hess  Pipeline Corp. v. Alaska  Pub.  Utils.
Commn, 711 P.2d 1170, 1174-75 (Alaska 1986).

     56    Id. at 1175, 1179.

     57    Id. at 1178.

     58    Id. at 1179.

     59     Matanuska Maid, Inc. v. State, 620 P.2d  182,  192-93
(Alaska 1980) (citations omitted).

     60    Amerada Hess, 711 P.2d at 1179.

     61    18 AAC 15.190 states:

          Fee review.

          (a)   An  applicant for a permit or  approval
          who  is  authorized  by a provision  of  this
          title  to seek a review of a fee decision  of
          the department under this section may, within
          30 days of receipt of the fee invoice, make a
          written  request  that the  director  of  the
          division  issuing  the  invoice  review   the
          matter.  The  applicant  need  not  pay   the
          disputed  fee  until the  director  issues  a
          final decision under (b) of this section, and
          the department will not charge interest while
          the  director considers the request  for  fee
          (b)   A  request  for  fee  review  must   be
          accompanied by a written discussion that sets
          out the reasons why the fee or computation is
          disputed  and how it should be adjusted.  The
          director  of the department division  issuing
          the invoice shall issue a written decision on
          the  disputed  invoice within 30  days  after
          receiving  the  request  for  fee  review.  A
          decision  made under this subsection  is  the
          final agency decision. A person aggrieved  by
          that  decision may appeal it to the  superior
          court in accordance with the Alaska Rules  of
          Appellate Procedure.
     62    Amerada Hess, 711 P.2d at 1180.

     63    See 18 AAC 15.190.

     64    AS 44.62.640(a)(3).

     65    See AS

     66    Messerli v. Dept of Natural Res., State, 768 P.2d 1112,
1117 (Alaska 1989), abrogated on other grounds by Olson v. State,
Dept of Natural Res., 799 P.2d 289, 29293 (Alaska 1990).

     67     Kenai  Peninsula Fishermans Coop. Assn v. State,  628
P.2d 897, 905 (Alaska 1981).

     68     Alaska Ctr. for the Envt v. State, 80 P.3d 231, 24344
(Alaska 2003).

     69    Id. at 244.

     70    Id. (quoting Usibelli Coal Mine, Inc. v. State, Dept of
Natural Res., 921 P.2d 1134, 1149 n.24 (Alaska 1996)).

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