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You can search the entire site. or go to the recent opinions, or the chronological or subject indices. Harrod v. State, Dept. of Revenue (7/22/2011) sp-6582

Harrod v. State, Dept. of Revenue (7/22/2011) sp-6582, 255 P3d 991

        Notice: This opinion is subject to correction before publication in the PACIFIC  REPORTER. 
        Readers are requested to bring errors to the attention of the Clerk of the Appellate Courts, 
        303 K Street, Anchorage, Alaska 99501, phone (907) 264-0608, fax (907) 264-0878, email 
        corrections@appellate.courts.state.ak.us. 

                 THE SUPREME COURT OF THE STATE OF ALASKA 

IAN and PEGGY HARROD,                              ) 
                                                   )   Supreme Court No. S-13586 
                        Appellants,                ) 
                                                   )   Superior Court No. 4FA-07-01224 CI 
        v.                                         ) 
                                                   )   O P I N I O N 
STATE OF ALASKA,                                   ) 
DEPARTMENT OF REVENUE,                             )   No. 6582 - July 22, 2011 
                                                   ) 
                        Appellee.                  ) 
                                                   ) 

                Appeal   from     the  Superior   Court   of   the  State  of   Alaska, 
                Fourth Judicial District, Fairbanks, Michael A. MacDonald, 
                Judge. 

                Appearances:      Ian   and   Peggy   Harrod,   pro   se,   Fairbanks, 
                Appellants.  Stuart W. Goering, Assistant Attorney General, 
                Anchorage, Michele Kane, Assistant Attorney General, and 
                Daniel S. Sullivan, Attorney General, Juneau, for Appellee. 

                Before:   Carpeneti, Chief Justice, Fabe, Winfree, Christen, 
                and Stowers, Justices. 

                CHRISTEN, Justice. 

I.      INTRODUCTION 

                In 2005 the Department of Revenue denied Permanent Fund Dividends to 

Ian and Peggy Harrod and their children.           The Harrods appealed to the superior court 

where     they  argued    that  the  Department      lacked   the  authority    to  adopt   residency 

requirements for the dividend program, that the denial of their applications violated both 

----------------------- Page 2-----------------------

the United States and Alaska Constitutions, that their 2002 and 2003 Permanent Fund 

Dividend applications were wrongfully denied, and that the Administrative Law Judge 

who heard this administrative appeal abused his discretion by failing to provide a second 

hearing.   The superior court affirmed the denial of the dividends.  Having reviewed the 

parties' arguments and the record on appeal, we affirm the superior court's decision. 

II.     FACTS AND PROCEEDINGS 

               In 1967 large oil reserves were discovered on state-owned land in Prudhoe 
Bay, resulting in a substantial increase in state revenue.1       It was decided that a portion 

of income from oil reserves and other natural resources should be invested to maximize 
long-term     revenue    from   the  state's  natural   resources,2   and   in  1976   the  Alaska 

Constitution was amended to establish the Alaska Permanent Fund.3                The amendment 

requires 25% of the state's mineral income to be deposited into the Permanent Fund.4 

               In 1980, the legislature enacted a program to annually distribute a portion 

of   the  Permanent     Fund's   earnings   directly  to  Alaska   residents   who   meet   certain 
eligibility requirements.5  These earnings are distributed in the form of dividends (PFDs). 

The Department of Revenue (DOR) administers the dividend program.6 

               Ian and Peggy Harrod moved to Adak in 1987 in conjunction with Ian's 

military service.    In 1992 Ian was reassigned to a location outside of Alaska but the 

        1      Zobel v. Williams, 457 U.S. 55, 56 (1982).
 

        2      Id. at 57.
 

        3
     Alaska Const. art. IX,  15. 

        4      Id. 

        5      AS 43.23.005(a); Zobel, 457 U.S. at 57. 

        6      AS 37.13.040. 

                                                -2-                                           6582
 

----------------------- Page 3-----------------------

Harrods continued receiving   PFDs for the years 1993 through 1996 pursuant to the 

active duty "allowable absence" provision of AS 43.23.008(a)(3).                    This statute permits 

active duty members of the military, and their families, to receive PFDs while stationed 

out of state as long as other conditions are met. 

                 From 1997 through 2000, the Harrods continued to reside outside of Alaska 

and   they   did   not   apply   for   PFDs. In   2001,   the   Harrods   applied   for   PFDs   but   their 

applications were denied.        Because the Harrods had been absent from Alaska for more 

than   five   years,   a   presumption   arose   under   15   Alaska   Administrative   Code   (AAC) 

23.163(f) (2010) that the Harrods did not intend to return to Alaska and remain here. 

DOR applied this presumption, determined the evidence the Harrods offered did not 

rebut it, and denied their 2001 PFD applications.                The Harrods pursued an informal 

appeal and DOR changed course.              After a hearing, DOR decided that the Harrods did 

have the requisite intent to return to Alaska and it distributed PFDs to them for 2001. 

                 The Harrods applied for PFDs in 2002 and 2003 but their applications were 

denied because DOR determined they failed to rebut the presumption that they did not 

intend   to   return   to   Alaska   and   remain   in   the   state   indefinitely. In   arriving   at   this 

determination, DOR relied on evidence showing the Harrods had not moved back to 

Alaska since leaving in 1992 and that they made only infrequent and short return trips 

here in the five previous years.  The Harrods pursued an informal administrative appeal 

of the 2002 denial under 15 AAC 05.010(b)(5) (2010) but DOR upheld its decision.  The 

Harrods   did     not   seek   further   review   of   the   2002   denial,   did   not   appeal   the   2003 

administrative denial, and did not apply for PFDs in 2004. 

                 The   Harrods   were   absent   from   Alaska   for   358   days   in   2004,   but   they 

applied for PFDs in March 2005.   They again claimed eligibility under the military and 

accompanying   spouse   "allowable   absence   provision"   of   AS   43.23.008(a)(3).               DOR 

denied the Harrods' 2005 applications relying on the following facts:                   (1) the Harrods 

                                                    -3-                                              6582
 

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were denied PFDs in 2002 and 2003 because they failed to overcome the presumption 

that they no longer intended to return to and remain in Alaska; (2) the Harrods had not 

returned to Alaska to establish residency after their 2002 and 2003 applications were 

administratively denied; and (3) the Harrods had only spent a total of 14 days in Alaska 

over two visits in the five years prior to 2005.          DOR cited these facts as support for its 

conclusion   that   the   Harrods   were   not   Alaska   residents   for   PFD   eligibility   purposes 

because they did not have the requisite intent to return to Alaska and remain in the state. 

                The Harrods filed an informal administrative appeal of the 2005 denial.  To 

rebut the presumption in 15 AAC 23.163(f), they claimed they maintained "paper ties" 

to Alaska during their absence and that DOR had previously awarded them dividends 

under similar circumstances.   DOR considered the Harrods' arguments, but it upheld its 

denial of the 2005 applications, concluding the Harrods severed their residency in Alaska 

prior to the qualifying year (2004) and failed   to   reestablish their residency for PFD 

eligibility purposes. DOR's decision was based on: (1) the 2002 and 2003 denials of the 

Harrods' PFD applications; (2) the Harrods' extended absence from Alaska for more 

than five years; (3) the failure to rebut the presumption that, after a five-year absence, 

they   did   not   intend   to   return   to   and   remain   in   Alaska;   and   (4)   the   failure  to  file 

applications for PFDs in 2004.   DOR observed that even if the Harrods had applied for 

dividends in 2004, their applications likely would have been denied. 

                The Harrods appealed to the Office of Administrative Hearings, where an 
Administrative Law Judge (ALJ) affirmed DOR's decision.7                    The ALJ reasoned that 

DOR's denial of the Harrods' 2002 PFD applications established that they were not 

Alaska residents for PFD purposes after 2001 and that they had not reestablished Alaska 

        7       The ALJ granted a hearing on the appeal, but the Harrods later requested 

a second hearing to question DOR's representative.               The request for a second hearing 
was denied. 

                                                  -4-                                               6582 

----------------------- Page 5-----------------------

residency   since   that   time.  The   ALJ   relied   on   the   doctrine   of   collateral   estoppel   to 

establish the Harrods' ineligibility for PFDs in 2002 and 2003, without relitigation of that 

issue.  The ALJ ruled that the Harrods would have had to reestablish residency to obtain 

PFDs after that time.   The Commissioner of DOR adopted the ALJ's decision and order 

in   January    2007   and   the  superior   court   affirmed    the  Commissioner's       decision    in 

March 2009. In doing so, the superior court only reached the ALJ's rulings that the 2002 

and 2003 denials were binding, the Harrods had not reestablished residency, and the 

denial of the Harrods' request for a second administrative hearing before the ALJ.  The 

superior court decided the Harrods' challenges to DOR's authority to establish PFD 

eligibility requirements and to the constitutionality of the residency requirements were 

"not germane" to the issues raised in         the Harrods' appeal. 

                The Harrods now appeal to our court, arguing that the previous denials of 

their 2005 applications were in error.         Having considered the Harrods' arguments, we 

affirm the denial of the Harrods' 2005 PFD applications. 

III.    STANDARD OF REVIEW 

                We     do  not  defer   to  the  superior   court's   decision    when    it  sits  as  an 
intermediate appellate court.8      Issues of statutory interpretation ordinarily raise questions 

of law that do not involve agency expertise; under these circumstances we apply an 

independent judgment standard of review seeking to adopt the rule of law that is most 

        8       State, Pub. Emps.' Ret. Bd. v. Morton, 123 P.3d 986, 988 (Alaska 2005) 

(citing State, Dep't of Natural Res. v. Greenpeace, Inc., 96 P.3d 1056, 1061 (Alaska 
2004)); Anderson v. State, Dep't of Revenue, 26 P.3d 1106, 1108-09 (Alaska 2001). 

                                                  -5-                                               6582 

----------------------- Page 6-----------------------

persuasive in light of precedent, reason, and policy.9         Constitutional issues are questions 

of law subject to independent review.10 

IV.     DISCUSSION 

                The program for distributing PFDs has specific rules for:  (1) applying for 
PFDs;11      (2)  establishing     and   maintaining     residency     for   PFD    purposes;12     and 

(3) maintaining residency for PFD purposes while on allowable absences from Alaska.13 

At the administrative level, the Harrods contested the basis for DOR's decision that they 

failed to establish residency for PFD purposes.           But on appeal to our court, their brief 

included arguments that DOR lacked the authority to establish residency requirements 

for PFD eligibility and that their constitutional rights were violated by DOR.   It appears 

the ALJ may have heard these arguments, but he did not reach them.                    The arguments 

were definitely presented to the superior court, but the superior court expressly declined 

to   reach   them.  Because   it   appears   from   the   record   that   the   Harrods'   constitutional 

challenges     and   challenges    to  the  authority   of  DOR     may   have   been   raised   at  the 

administrative level, and because these arguments were certainly raised at the superior 
court level, we consider each of the Harrods' arguments in the decision we enter today.14 

        9       Temple v. Denali Princess Lodge, 21 P.3d 813, 815 (Alaska 2001). 

        10      Eagle v. State, Dep't of Revenue, 153 P.3d 976, 978 (Alaska 2007) (citing 

Laidlaw Transit, Inc. v. Anchorage Sch. Dist., 118 P.3d 1018, 1023 (Alaska 2005)). 

        11      See, e.g., 15 AAC 23.103 (2010) (application generally); 15 AAC 23.113 

(2010) (application on behalf of a child); 15 AAC 23.123 (2010) (application on behalf 
of a disabled, incompetent, or other adult). 

        12      15 AAC 23.143 (2010). 

        13      15 AAC 23.163. 

        14      See DeNardo v. Calista Corp., 111 P.3d 326, 330 (Alaska 2005) (quoting 

                                                                                       (continued...) 

                                                  -6-                                            6582
 

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        A.	     The   Alaska   Department   Of   Revenue   Has   Authority   To Determine 
                Residency For Purposes Of Permanent Fund Dividend Eligibility. 

                1.	     PFD eligibility does not depend on an applicant's domicile or 
                        citizenship. 

                The    Harrods'    brief  on   appeal   first  argues   that  the  right  to  establish 

citizenship in the United States or any of the 50 states or territories of the United States 

rests solely with the individual.   The Harrods maintain that only individuals can change 

political associations and that neither the national government nor any local government 

has the power to sever its ties with them.         To support this position, the Harrods rely on 

two United States Supreme Court cases, but neither of them is applicable to this case. 
                The Harrods cite Afroyim v. Rusk15 for the proposition that individuals, and 

not states, possess the right to determine citizenship in "any of the 50 states or various 

territories." Afroyim was a Polish immigrant who obtained United States citizenship and 
then   voted   in   an   election   for   Israel's   Knesset.16 The   Department   of   State   denied 

Afroyim's application to renew his passport, claiming that he lost his citizenship by 
voting in a foreign election.17     The United States Supreme Court reversed, reasoning: 

                [T]he   Fourteenth   Amendment   was   designed   to,   and   does, 
                protect every citizen of this Nation against a congressional 
                forcible   destruction of his citizenship, whatever his creed, 
                color, or race.  Our holding does no more than to give to this 

        14(...continued) 

Breck v. Ulmer, 745 P.2d 66, 75 (Alaska 1987)) ("We have held that 'the pleadings of 
pro se litigants should be held to less stringent standards than those of lawyers.' This 
proposition reflects a policy against finding unintended waiver of claims in technically 
defective pleadings filed by pro se litigants."). 

        15      387 U.S. 253 (1967). 

        16      Id. at 254. 

        17      Id. 

                                                  -7-	                                           6582
 

----------------------- Page 8-----------------------

                citizen that which is his own, a constitutional right to remain 
                a citizen in a free country unless he voluntarily relinquishes 
                that citizenship.18 

                The     Court's    holding    in  Afroyim   pertains    to  issues   of  United    States 

citizenship,   not   state   residency.   When   DOR   determined   that   the   Harrods   were   not 

residents of Alaska for purposes of PFD eligibility, it did not deprive the Harrods of their 

United States citizenship in violation of the Fourteenth Amendment. 
                The     Harrods    also  cite  Mitchell   v.   United   States19  in   support   of  their 

argument   that   individuals,   not   states,   have   the   power   to   sever   residency. Mitchell 

addressed contracts made during the United States Civil War and specifically addressed 

whether the plaintiff in that case was domiciled in the United States or the Confederate 
States.20   The primary question was not the state in which Mitchell was a resident but 

rather the country in which he was domiciled.   The decision denying the Harrods' PFD 

applications was based entirely on the conclusion that they were not residents of the State 

of   Alaska    for  dividend     eligibility  purposes     under   the   definitions   adopted     by  the 

legislature.   Thus, Mitchell is not helpful to the Harrods' position. 

                2.	      The Alaska Department of Revenue has the authority to create 
                         eligibility    requirements        for    PFDs     that    exceed     those    in 
                        AS 01.10.055. 

                The   Harrods   next   argue   that   DOR   lacks   authority   "to   create   eligibility 

requirements for Alaska residency exceeding those set by AS 01.10.055." 

                Alaska Statute 01.10.055 establishes the requirements for Alaska residency, 

but this statute allows the DOR to establish through regulation a longer minimum period 

        18      Id. at 268. 

        19      88 U.S. 350 (1874). 

        20      Id. at 352-53. 

                                                   -8-                                                6582 

----------------------- Page 9-----------------------

for "maintaining a principal place   of   abode   in the state" or require "other proof" to 

demonstrate "the intent to remain in the state indefinitely and to make a home in the 
state."21  Alaska Statute 43.23.015(a) requires DOR to adopt regulations "for determining 

the eligibility of individuals for permanent fund dividends."                We have repeatedly held 

that   "the   residency   requirement   for   PFD   eligibility   may   differ   from   other   residency 
requirements"22 and that "[t]he legislature has given broad discretion to the commissioner 

        21       AS 01.10.055 provides: 

                 (a)  A   person    establishes    residency     in  the  state   by  being 
                 physically present in the state with the intent to remain in the 
                 state indefinitely and to make a home in the state. 

                 (b) A person demonstrates the intent required under (a) of 
                 this section 

                         (1) by maintaining a principal place of abode in 
                         the   state   for   at   least   30   days  or for a   longer 
                         period if a longer period is required by law or 
                         regulation; and 

                         (2) by providing other proof of intent as may be 
                         required     by   law    or  regulation,    which     may 
                         include   proof   that   the   person   is   not   claiming 
                         residency outside the state or obtaining benefits 
                         under a claim of residency outside the state. 

                 (c) A person who establishes residency in the state remains a 
                 resident during an absence from the state unless during the 
                 absence the person establishes or claims residency in another 
                 state, territory, or country, or performs other acts or is absent 
                 under   circumstances       that   are   inconsistent   with   the   intent 
                 required under (a) of this section to remain a resident of this 
                 state.  (Emphasis added). 

        22       Eagle v. State, Dep't of Revenue, 153 P.3d 976, 980 (Alaska 2007) (quoting 

State, Dep't of Revenue v. Andrade, 23 P.3d 58, 71-72 (Alaska 2001)) (internal quotation 
                                                                                           (continued...) 

                                                    -9-                                               6582
 

----------------------- Page 10-----------------------

to determine the factors which define a permanent resident."23             The Harrods' argument 

that DOR lacks the authority to establish PFD eligibility requirements that are more 

stringent than the residency requirements in AS 01.10.055 is incorrect. 

        B.	     It Was Not Error To Decide The Harrods Did Not Qualify For PFDs 
                In 2005. 

                In their administrative appeal, the Harrods argued that DOR erred when it 

decided that they were not eligible for PFDs in 2005.              In reaching this decision, DOR 

first considered that the Harrods' 2002 and 2003 applications had been denied, and then 

considered whether the Harrods had reestablished eligibility since that time. 

                Alaska Statute 43.23.095(7) defines "state resident" for PFD eligibility 

purposes: 

                [A]n individual who is physically present in the state with the 
                intent    to   remain    indefinitely    in   the   state   under    the 
                requirements   of   AS   01.10.055   or,   if   the   individual   is   not 
                physically present in the state, intends to return to the state 
                and remain indefinitely in the state under the requirements of 
                AS 01.10.055. 

                Generally, applicants for PFDs must attest that they were present in the 
State of Alaska during a qualifying year,24 but the legislature has directed that PFDs shall 

        22(...continued) 

marks omitted); see also Schikora v. State, Dep't of Revenue, 7 P.3d 938, 941-42 (Alaska 
2000); Brodigan v. State, Dep't of Revenue, 900 P.2d 728, 733 n.12 (Alaska 1995). 

        23      Andrade, 23 P.3d at 72 (quoting Church v. State, Dep't of Revenue, 973 

P.2d 1125, 1129 (Alaska 1999)) (internal quotation marks omitted); see also State, Dep't 
of Revenue v. Cosio, 858 P.2d 621, 625 (Alaska 1993). 

        24      AS 43.23.005 requires DOR to determine whether a PFD applicant was a 

resident of Alaska for PFD eligibility purposes on the date of the dividend application 
and during the qualifying year. 

                                                 -10-	                                           6582
 

----------------------- Page 11-----------------------

be distributed to people who are absent from Alaska for certain allowable reasons.25 

Allowable absences include military service, absence due to status as the spouse or 

dependent of a military service member who is stationed out of state, and absence due 
to service as a member of the United States Congress.26 

                 1.	     15 AAC 23.163(f) establishes a rebuttable presumption that the 
                         Harrods      were    ineligible    for  PFDs     five  years    after   they   left 
                         Alaska. 

                 The Harrods argue that their absence from Alaska was due to  Ian's service 

in the United States military and that this is an "allowable absence" for purposes of PFD 
eligibility.27  We agree that military service is an "allowable absence" for purposes of 

PFD eligibility under AS 43.23.008(a)(3), but the grace period afforded by this exception 

is not without limitation.      Because the Harrods' argument overlooks an important part 

of the PFD statutory and regulatory scheme, it ultimately fails. 

                 The Harrods left Alaska in 1992 because Ian was assigned by the military 

to   a   location   outside   the   state. They   remained   eligible   for   PFDs   for   several   years 

thereafter   because   of   the   "allowable   absence"   provision   in   AS   43.23.008(a)(3)   for 

military service members.         But Alaska law only permits military service members who 

leave Alaska to continue claiming Alaska residency for PFD eligibility purposes for five 

        25	      AS 43.23.008. 

        26	      AS 43.23.008(a)(3) and (9). 

        27       The Harrods' brief does not expressly include the argument that DOR erred 

when     it  determined     they    were   ineligible    during   the   2004    qualifying    year.     We 
nevertheless   consider   this   argument   because:        (1)   it   was   the   focus   of   the   Harrods' 
arguments   to   the   ALJ   and   in   the   superior   court;   (2)   it   was   the   focus   of   Ian's   oral 
argument to our court; (3) the State did not argue that it was waived; and (4) pro per 
litigants are held to a less strict standard.        See Gilbert v. Nina Plaza Condo Ass'n, 64 
P.3d 126, 129 (Alaska 2003) ("It is well settled that in cases involving a pro [per] litigant 
the . . . court must relax procedural requirements to a reasonable extent."). 

                                                   -11-	                                             6582
 

----------------------- Page 12-----------------------

years.   After   that,   15   AAC   23.163(f)   creates   a   rebuttable   presumption   that   service 

members who have not returned to Alaska are no longer residents for PFD purposes - 

they are presumed not to have the intention to return to Alaska and remain in the state 
indefinitely.28 

                We find no error in the ALJ's decision to rely on the doctrine of collateral 

estoppel to avoid relitigation of whether the Harrods were ineligible for PFDs in 2002 

and 2003. 15 AAC 23.163(f) established a rebuttable presumption that the Harrods were 

ineligible for PFDs and it was undisputed that the Harrods did not return to Alaska 

during the 2004 qualifying year or otherwise reestablish their residency.              The ALJ did 

not err by affirming the denial of the Harrods' 2005 PFD applications. 

                2.      The Harrods' PFD applications for 2002 and 2003 were denied. 

                The Harrods' 2001 PFD applications were denied because they had been 

absent from Alaska for more than five years.           The Harrods pursued an informal appeal 

of that decision, supplying evidence of the "paper ties" they had with Alaska such as 

maintaining a bank account and voter registration status here, and holding Alaska fishing 

        28      15 AAC 23.163(f) provides: 

                An individual whose absence or combination of absences, 
                under      a   provision     of    AS     43.23.008      other    than 
                AS 43.23.008(a)(9)-(10) and (13), . . . totals more than five 
                consecutive years is presumed not to have the intent to return 
                to Alaska and remain indefinitely in Alaska.         In such a case, 
                the individual is not eligible for a dividend payment unless 
                the individual provides . . . documentation that demonstrates 
                to the department's satisfaction an intent at all times during 
                the   absence   or   absences   to  return  to  Alaska    and  remain 
                indefinitely in Alaska. 

15 AAC 23.163(g) and (h) specify the factors DOR shall consider, and the weight to be 
given to the factors, when deciding whether an individual who has been absent from 
Alaska for more than five years has rebutted this presumption. 

                                                 -12-                                           6582
 

----------------------- Page 13-----------------------

and driver's licenses.      Ian argued that unavoidable circumstances had prevented the 
Harrods from returning to Alaska for at least 30 days in the previous five years,29 and he 

was   successful   in   convincing   a   DOR   hearing   officer   that   they   intended   to   return   to 

Alaska   and   remain   here   indefinitely.    The   hearing   officer   awarded   six   PFDs   to   the 

Harrod family for the year 2001. 

                In this appeal, the Harrods argue that the same evidence they relied upon 

to overcome the rebuttable presumption in 2001 must also be sufficient to overcome the 

presumption   for 2005.        We disagree; the ALJ's decision   to   affirm   the denial of   the 

Harrods' 2005 applications did not rely on findings regarding the sufficiency of the 

Harrods' "paper ties" to Alaska.   Instead, the ALJ decided the Harrods were not eligible 

for 2005 dividends because they were determined to lack residency status in 2002 and 

2003, they did not appeal those decisions, and they did not reestablish residency in 
subsequent years.30 

                The Harrods' 2002 and 2003 PFD applications were denied due to the 

rebuttable presumption found in 15 AAC 23.163(f).  The Harrods pursued an informal 

appeal for 2002, but DOR denied it. DOR's written notice of denial included notification 

that the Harrods had 30 days to file a Request for Formal Hearing appeal.                  A form for 

requesting such a hearing was enclosed with the DOR's written decision.  It gave notice 

        29      The presumption in   15 AAC 23.163(f) is usually deemed unrebutted if 

applicants have not returned to Alaska for at least 30 days within the previous five years. 
See    15  AAC     23.163(h).    The    hearing    officer  who    considered     the  Harrod's     2001 
administrative appeal found that they were "23 days shy of the 30-day benchmark." 

        30      The argument that it was an abuse of discretion for DOR to determine that 

the   Harrods'   "paper   ties"   to   Alaska   did   not   overcome   the   presumption   in   15   AAC 
23.163(f) also fails. The regulatory scheme adopted by DOR makes clear that the burden 
to overcome this presumption rested with the Harrods. The Harrods have not shown that 
DOR considered factors other than those specified in 15 AAC 23.163(g) or that DOR 
improperly weighed the factors specified by regulation. 

                                                  -13-                                            6582
 

----------------------- Page 14-----------------------

that   the   Harrods   had   30   days   to   request   further   review,31 but   the   Harrods   did   not 

respond.32    The 2002 denial became a final decision 30 days later.33 

                3.	     It was not error to rely on the doctrine of collateral estoppel to 
                        establish that the Harrods were ineligible for PFDs in 2002 and 
                        2003. 

                The doctrine of collateral estoppel generally prevents the relitigation of an 
issue previously adjudicated.34       In this case, the ALJ relied on the doctrine of collateral 

estoppel to establish that the Harrods were ineligible for PFDs in 2002 and 2003.  The 

Harrods briefly objected to the application of the doctrine during oral argument, but we 

find no error in the ALJ's decision to rely on it. 

                To determine the applicability of the doctrine of collateral estoppel, this 
court engages in a three-part inquiry.35      First, collateral estoppel must be asserted against 

        31	     15 AAC 05.030(a) (2010): 

                The department will hold a formal hearing if a request for a 
                formal hearing conforming to the requirements of 15 AAC 
                05.010(a) is filed. If a request for a formal hearing follows an 
                informal conference, it must be filed within 30 days after the 
                date the informal conference decision is issued, and must be 
                filed   in   accordance   with   the   appeal   form   provided   by   the 
                department. 

        32      At the administrative hearing the Harrods claimed that they appealed the 

2002 and 2003 denials. The ALJ gave the Harrods roughly 45 days to provide proof that 
they filed appeals in those years, but the Harrods did not file proof of appeal. 

        33      Hikita v. Nichiro Gyogyo Kaisha, Ltd., 85 P.3d 458, 462 (Alaska 2004) 

(citing Blue Hen Lines, Inc. v. Turbitt, 787 A.2d 74, 78 (Del. 2001)). 

        34      Latham v. Palin, 251 P.3d 341, 345 n.10 (Alaska 2011) (internal citations 

omitted). 

        35      Id. at 344 n.4. 

                                                  -14-	                                           6582
 

----------------------- Page 15-----------------------

the party, or one in privity with the party, to the first action.36              The Harrods and DOR 

were   the   parties   to   the   2002   administrative   appeal   and       to  the   denial  of  the   2003 

application; this satisfies the first prong of the three-part collateral estoppel inquiry. 

                 Second, the issue to be precluded from re-litigation must be identical to that 
decided in the first action.37      Here, the ALJ applied the doctrine to preclude relitigation 

of the Harrods' PFD eligibility for the years 2002 and 2003.                    These are precisely the 

same issues resolved by the Harrods' 2002 informal administrative appeal, and by the 

denial of their 2003 applications.   The identical nature of the issues satisfies the second 

prong of the three-part collateral estoppel test. 

                 Third,   the   doctrine   of   collateral   estoppel   requires   that   the   issue   to   be 
precluded from relitigation must have been resolved by a final judgment on the merits.38 

This   court   has   held   that   "[p]rinciples   of   finality   may   be   applied   to   the   decisions   of 

administrative agencies if, after case-specific review, a court finds that the administrative 

decision     resulted    from    a  procedure     that   seems   an   adequate     substitute   for   judicial 

procedure and that it would be fair to accord preclusive effect to the administrative 
decision."39    An informal appeal allows parties to present arguments and facts to contest 

the denial and results in a written decision.40             This court has also held that collateral 

estoppel may be applied to an administrative decision if the decision is one "rendered 

         36      Id.
 

         37      Id.
 

         38      Id.
 

        39       Matanuska Elec. Ass'n v. Chugach Elec. Ass'n, Inc., 152 P.3d 460, 468 

(Alaska 2007) (quoting State, Child Support Enforcement Div. v. Bromley, 987 P.2d 183, 
192 (Alaska 1999)). 

         40      15 AAC 05.020 (a)-(b) (2010). 

                                                     -15-                                               6582
 

----------------------- Page 16-----------------------

pursuant to an exercise of primary jurisdiction."41      DOR has primary jurisdiction to 

adjudicate PFD appeals under AS 43.23.015(g), and our review of the record convinces 

us that the doctrine of collateral estoppel is appropriately applied to the 2002 and 2003 

denials.  Because the doctrine of collateral estoppel allowed the ALJ to determine that 

the Harrods were ineligible for PFDs in 2002 and 2003, the ALJ correctly concluded that 

the Harrods must reestablish Alaska residency in order to be eligible to receive PFDs. 

              4.	     The    Harrods    did   not  return   to  Alaska    during   the   2004 
                      qualifying year. 

              At oral argument before our court, the Harrods argued that a person who 

establishes residency in Alaska is presumed to maintain that status during absences from 

the state unless the person claims residency elsewhere (which the Harrods did not do) or 

the person performs other acts or is absent under circumstances that are not consistent 

with the intent required by AS 01.10.055 to remain a resident of Alaska.  Five years after 

their 1992 departure from Alaska, a rebuttable presumption arose that the Harrods did 
not intend to return and remain here indefinitely.42 Because the Harrods did not establish 

residency for PFD purposes in Alaska during the 2004 qualifying year and were not able 

to show that their absence was for an allowable reason under the applicable statutory 

scheme, DOR did not err when it denied the Harrods' 2005 PFDs. 

       C.	    The Allowable Absence For Members Of Congress And Their Staff Is 
              Not   A   Violation   Of   The   Equal   Protection   Clause  Of   The   Alaska 
              Constitution. 

              The     Harrods   argue   that  15   AAC     23.163(f)   violates  the  Alaska 

Constitution's    equal  protection  clause.   This   regulation,  in  conjunction  with   the 

       41     Holmberg v. State, Div. of Risk Mgmt., 796 P.2d 823, 825 (Alaska 1990) 

(citing Jeffries v. Glacier State Tel. Co., 604 P.2d 4, 9 n.15 (Alaska 1979)). 

       42      15 AAC 23.163(f). 

                                            -16-                                         6582 

----------------------- Page 17-----------------------

"allowable absence" provisions in AS 43.23.008(9)-(10), allows members of Congress and 

their staff to qualify for PFDs even though they may be physically absent from the state 

for more than 180 days, and even though their "allowable absence" may extend for more 

than five years.  The Harrods claim that any individual with any absence for any reason 

should be treated the same for permanent fund eligibility purposes. 

                We have held "[a] party raising a constitutional challenge to a statute bears 

the    burden    of   demonstrating       the   constitutional    violation.      A   presumption       of 
constitutionality applies, and doubts are resolved in favor of constitutionality."43 

                We   have   adopted   a   "flexible   'sliding   scale'   test"   for   reviewing   equal 
protection    claims.44     First,   we    determine    "what     weight    should    be  afforded    the 

constitutional interest impaired by the challenged enactment.  The nature of this interest 
is the most important variable in fixing the appropriate level of review."45               Second, we 

examine "the purposes served by a challenged statute.  Depending on the level of review 

determined, the state may be required to show only that its objectives were legitimate, 

at the low end of the continuum, or, at the high end of the scale, that the legislation was 
motivated by a compelling state interest."46          Third, "an evaluation of the state's interest 

in the particular means employed to further its goals must be undertaken."47 

        43      State, Dep't of Revenue v. Andrade, 23 P.3d 58, 71 (Alaska 2001) (quoting 

 Baxley v. State, 958 P.2d 422, 428 (Alaska 1998)). 

        44      State v. Anthony, 810 P.2d 155, 157 (Alaska 1991) (citing State v. Erickson, 

574 P.2d 1, 11-12 (Alaska 1978)). 

        45      Id.   (quoting  Alaska   Pac.   Assurance   Co.   v.   Brown ,   687   P.2d   264,   269 

(Alaska 1984)). 

        46      Id. (quoting Brown, 687 P.2d at 269). 

        47      Id. 

                                                  -17-                                             6582
 

----------------------- Page 18-----------------------

                 We     have   previously     held   that   PFDs   are  not   "basic   necessities"     or  a 
"fundamental right."48       Instead, "[a PFD] is merely an economic interest and therefore 

is   entitled   only    to  minimum       protection     under    our   equal    protection    analysis."49 

Restrictions on economic interests are reviewed at the "low end of the sliding scale."50 

Our review is therefore limited to considering whether this regulation was designed to 

achieve a legitimate governmental objective and whether it bears a fair and substantial 
relationship   to   accomplishing   that   objective.51       At   this   level   of   review,   we   do   not 

determine   whether   a   regulation   "is   perfectly   fair   to   every   individual   to   whom   it   is 
applied."52     We   have   reviewed   and   upheld   the   purpose   and   means   served   by   PFD 

eligibility schemes in numerous cases.53 

                 Here,   DOR   argues   that   the   goal   of   15   AAC   23.163(f)   is   to    ease   the 

administrative   burden   of   processing   PFD   applications   by   decreasing   paperwork   of 

applicants whose jobs require proof of Alaska residency or where proof can be obtained 

through other means.         The state processes more than 600,000 PFD applications each 

        48       Id. at 158 (internal citations omitted). 

        49       Id. (citing Wilson v. Municipality of Anchorage,669 P.2d 569, 572 (Alaska 

1983)). 

        50       Id. 

        51       See Schikora v. State, Dep't of Revenue, 7 P.3d 938, 944-45 (Alaska 2000); 

Underwood v. State, 881 P.2d 322, 325 (Alaska 1994) (citing State, Dep't of Revenue, 
Permanent Fund Dividend Div. v. Cosio, 858 P.2d 621, 629 (Alaska 1993)). 

        52       Eldridge v. State, Dep't of Revenue, 988 P.2d 101, 104 (Alaska 1999). 

        53       See, e.g., Schikora, 7 P.3d at 944-45; Church v. State, Dep't of Revenue, 

973 P.2d 1125, 1130-31 (Alaska 1999); Brodigan v. State, Dep't of Revenue, 900 P.2d 
728, 734 n.13 (Alaska 1995). 

                                                    -18-                                              6582
 

----------------------- Page 19-----------------------

year.54  Reducing the burden of individually examining PFD applications is a legitimate 

governmental objective, and allowing people who are serving in Congress - some of 
whom are elected to terms exceeding five years55  - to establish residency by proof of 

their employment, without having to individually determine whether each applicant has 

a   subjective   intent   to   return   to   Alaska,   bears   a   fair   and   substantial   relationship   to 

accomplishing the objective of easing the burden of processing PFD applications.  The 

Harrods      have   not   shown     that  the  "allowable     absence"     provision    for   Alaska's 

congressional delegation violates their right to equal protection. 

        D.      The Harrods Do Not Have Standing To Challenge AS 43.23.005(a)(4). 
                In addition to being a state resident on the date of application,56 maintaining 

state    residency    during    the  entire   qualifying    year,57   and   meeting     several   other 

requirements,58 Alaska law requires that applicants have "been physically present in the 

state for at least 72 consecutive hours at some time during the prior two years before the 
current     dividend     year"59   to   qualify    for   a   PFD.      The     Harrods     argue    that 

AS 43.23.005(a)(4) places an unreasonable hardship solely on members of the Armed 

Forces because they are often "assigned to duty stations far from Alaska" and are unable 

to make it back to Alaska for 72 consecutive hours. This argument is unavailing because 

the Harrods were not denied 2005 dividends on the grounds they failed to meet the 

        54      Dep't    of   Revenue,    Overview      of  the  2009    Calculation,   available     at 

http://www.pfd.state.ak.us/forms/2009Forms/2009DividendCalculation.pdf. 

        55      U.S. CONST. amend. XVII. 

        56      AS 43.23.005(a)(2). 

        57      AS 43.23.005(a)(3). 

        58      AS 43.23.005(a)(1)-(7). 

        59      AS 43.23.005(a)(4). 

                                                 -19-                                            6582
 

----------------------- Page 20-----------------------

requirements of AS 43.23.005(a)(4).   In fact, DOR never contested the  Harrods' claim 

that they met the requirements of AS 43.23.005(a)(4). 

                "Standing is a rule of judicial self-restraint based on the principle that courts 
should   not   resolve   abstract   questions   or   issue   advisory   opinions."60   The   basis   for 

determining whether a party has standing is "whether the litigant is a proper party to seek 
adjudication of a particular issue."61      Although we give wide "access to judicial forums, 

a basic requirement of standing is adversity of interests."62           Here, there is no adversity 

of interest that requires us to consider the constitutionality of AS 43.23.005(a)(4) because 

this statute was not the basis for denying the Harrods' PFD applications.               The Harrods 

do not have standing to challenge the constitutionality of AS 43.23.005(a)(4). 

        E.	     The   Superior   Court   Correctly   Rejected   The   Harrods'   Attempt To 
                Broaden Their 2005 Appeal To Include The 2002 And 2003 Denials. 

                When the Harrods were denied PFDs in 2002 and 2003, they were informed 

of their right to appeal those decisions and the time period for filing those appeals.  No 

evidence appears in the record indicating that the Harrods timely filed appeals for either 

year.  In deciding the Harrods' appeal concerning their 2005 applications, the superior 

court properly denied the Harrods' arguments regarding their 2002 and 2003 applications 

because "they should have . . . raised [those arguments] in an appeal of the denial of 

those dividends." 

        60      Law Project for Psychiatric Rights, Inc. v. State, 239 P.3d 1252, 1255 

(Alaska 2010) (quoting Keller v. French,           205 P.3d 299, 302 (Alaska 2009)) (internal 
quotation marks omitted). 

        61      Id. (citing Trs. for Alaska v. State, 736 P.2d 324, 327 (Alaska 1987)). 

        62      Id. (citing Trs. for Alaska, 736 P.2d at 327). 

                                                 -20-	                                           6582
 

----------------------- Page 21-----------------------

       F.	     The Office Of Administrative Hearings Did Not Abuse Its Discretion 
               By Not Allowing A Second Hearing. 

               The Harrods requested a second hearing to question DOR's representative 

over issues already in the record. This request was denied because DOR's representative 

participated in the administrative hearing to defend DOR's position, not to serve as a fact 

witness.    The Harrods claim that they were denied due process when the Office   of 

Administrative Hearings denied their request for a second hearing. But the record shows 

that the Harrods received DOR's position statement prior to the first hearing and had the 

opportunity to submit their own evidence and testimony to rebut any of the assertions 
they believed to be inaccurate.63     The Harrods have not shown that they were denied 

notice of the issues or an opportunity to be heard on the issues pertinent to the denial of 

their   2005   PFD   applications.   It   was  not  error  to  deny   the  Harrods    a  second 

administrative hearing. 

V.	    CONCLUSION 

               For   the  forgoing   reasons  we   AFFIRM      the  superior  court's  decision 

upholding the denial of the Harrods' 2005 PFD applications. 

       63      The State's position statement was submitted to OAH and the Harrods on 

September 5, 2006.     The hearing did not take place until September 18, 2006. 

                                             -21-	                                         6582 
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