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You can search the entire site. or go to the recent opinions, or the chronological or subject indices. Gillis v. Aleutians East Borough Adobe Acrobat PDF logo (8/19/2011) sp-6591

Gillis v. Aleutians East Borough Adobe Acrobat PDF logo (8/19/2011) sp-6591, 258 P3d 118

        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 

MELVIN B. GILLIS,                                  ) 
                                                   )    Supreme Court No. S-13620 
                        Appellant,                 ) 
                                                   )    Superior Court No. 3AN-08-09398 CI 
        v.                                         ) 
                                                   )    O P I N I O N 
ALEUTIANS EAST BOROUGH and                         ) 
STATE OF ALASKA, DEPARTMENT                        ))   No. 6591 - August 19, 2011 
OF NATURAL RESOURCES,                              ) 
                                                   ) 
                        Appellees.                 ) 
                                                   ) 

                Appeal from the Superior Court of the State of Alaska, Third 
                Judicial District, Anchorage, John Suddock, Judge. 

                Appearances:        J.P.   Tangen,   Anchorage,   and   Lawrence   V. 
                Albert,   Anchorage,   for   Appellant.        Joseph   N.   Levesque, 
                Walker      &    Levesque,     LLC,     Anchorage,      for   Appellee 
                Aleutians East Borough.         John T. Baker, Assistant Attorney 
                General,     Anchorage,      and   Daniel    S.   Sullivan,   Attorney 
                General, Juneau, for Appellee State of Alaska. 

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

                WINFREE, Justice. 

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I.      INTRODUCTION 

                The superior court interpreted a statutory preference for the purchase of 

state land in a manner disqualifying an applicant.  Because the superior court correctly 

interpreted the statute, we affirm its decision. 

II.     FACTS AND PROCEEDINGS 

                 In accordance with article VIII, section 10 of the Alaska Constitution, the 

legislature enacted the Alaska Land Act shortly after statehood, providing in part "for the 
selection, acquisition, management, and disposal of Alaska lands and resources."1                  In 

1984 the legislature amended the Act,adding a provision granting those meeting certain 
requirements a preference right to purchase or lease state land.2         The provision, codified 

at AS 38.05.035(f), provides in relevant part: 

                The director shall grant a preference right to the purchase or 
                lease without competitive bid of up to five acres of state land 
                to an individual who has erected a building on the land and 
                used the land for bona fide business purposes for five or more 
                years under a federal permit or without the need for a permit 
                and, after selection by the state, under a state use permit or 
                lease, if the business produced no less than 25 percent of the 
                total income of the applicant for the five years preceding the 
                application to purchase or lease the land. 

                In   1985   the   State   of   Alaska,   Department   of   Natural   Resources   (DNR) 

promulgated   the   final   regulation   interpreting   this   preference   right,   which   remains 

unchanged and provides in relevant part: 

        1       Ch. 169, SLA 1959 (codified at AS 38.05.005-.990); Alyeska Ski Corp. v. 

Holdsworth, 426 P.2d 1006, 1009 (Alaska 1967); see also Alaska Const. art. VIII,  10 
("No disposals or leases of state lands, or interests therein, shall be made without prior 
public notice and other safeguards of the public interest as may be prescribed by law."). 

        2       Ch. 152,  20, SLA 1984 (codified at AS 38.05.035(f)).  A preference right 

allows for the purchase or lease of state land without competitive bid.               See, e.g., AS 
38.05.035(b)(2), (b)(3), (f). 

                                                 -2-                                            6591
 

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                 Upon      a  written    finding    under    AS   38.05.035(e)      that   the 
                 interests   of   the   state   will   best be   served,   the   director   will 
                 grant a preference right to lease without competitive bid, or 
                 purchase at appraised fair market value, up to five acres of 
                 state land to an applicant who submits written proof 

                          (1)   of   entering   the   land   while   the   land   was   under 
                 federal jurisdiction; 

                          (2) of erecting and using, for at least five years while 
                 the land was under federal jurisdiction, a building erected 
                                                                                         [  ] 
                 under any authorization required under federal law . . . . 3 

                 Melvin Gillis, a professional sport hunting and fishing guide, obtained a 25- 

year lease of five acres of state land in April 1989.  Gillis built a lodge on the land, and 

the   operation   of   the   lodge   and   his   guiding   business   provide   his   principal   source   of 

income. 

                 In June 2005 DNR conveyed lands, including the land Gillis leased, to 

Aleutians   East   Borough.         DNR   also   transferred   its   interest   in   Gillis's   lease   to   the 

Borough. Gillis offered to purchase the land in November 2005. The Borough Assembly 

rejected Gillis's offer but proposed a new lease agreement.                   Gillis did not execute the 

proposed lease, and in 2007 he claimed he was eligible to purchase the land under AS 

38.05.035(f). The Borough maintained Gillis did not qualify for a preference right under 

subsection .035(f) because his lease commenced after the federal government transferred 

the land to the state.   In 2008 Gillis reiterated his preference-right claim. 

                 The Borough then filed a declaratory judgment action, asking the superior 

court to determine whether Gillis qualified for a preference right to purchase the land 

under subsection .035(f).  Gillis counterclaimed against the Borough, filed a third-party 

complaint against DNR, and moved for partial summary judgment against both parties. 

The Borough and DNR cross-moved for summary judgment.                              At issue was whether 

         3       11 Alaska Administrative Code (AAC) 67.053(a)(1)-(2) (2005). 

                                                      -3-                                                  6591 

----------------------- Page 4-----------------------

subsection   .035(f)   required   an   applicant  to   enter   land   while   it   was   under   federal 
ownership as a condition of the preference right.4 

                The superior court concluded that the plain meaning of subsection .035(f) 

required an applicant to enter land when it was under federal ownership before the 

federal government conveyed the land to the state. The court noted the legislative history 

indicated subsection .035(f) was remedial and intended "for a limited class of people." 

The court also noted DNR's implementing regulation tracked subsection .035(f)'s plain 

meaning.  The court entered summary judgment in favor of the Borough and DNR. 

                Gillis appeals. 

III.    STANDARD OF REVIEW 

                We review an agency's interpretation of a statute using our independent 

judgment   when   "the   agency's   specialized   knowledge   and   experience   would   not   be 
particularly probative on the meaning of the statute."5         "We will adopt the rule of law that 

is most persuasive in light of precedent, reason, and policy after considering the plain 

meaning   of   the   statute,   the   legislative   purpose   of   the   statute,   and   the   intent   of   the 
statute."6 

IV.     DISCUSSION 

        4       We adopt the parties' use of various phrasings of "entry" to mean erecting 

a building and using the land for a business purpose as required under AS 38.05.035(f). 

        5       Matanuska-Susitna   Borough   v.   Hammond,   726   P.2d   166,   175   (Alaska 

 1986);see Longwith v. State, Dep't of Natural Res., 848 P.2d 257, 260 n.5 (Alaska 1992) 
("[T]he interpretation of the statutory requirements for the grant of preference rights does 
not involve agency expertise." (citing Madison v. Alaska Dep't of Fish & Game, 696 
P.2d 168, 173 (Alaska 1985); Kelly v. Zamarello, 486 P.2d 906, 917 (Alaska 1971))). 

        6       Bradshaw v. State, Dep't of Admin., Div. of Motor Vehicles, 224 P.3d 118, 

 122 (Alaska 2010) (citingRubey v. Alaska Comm'n on Postsecondary Educ., 217 P.3d 
413, 415 (Alaska 2009)). 

                                                  -4-                                            6591
 

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

        A.      Plain Meaning And In Pari Materia 

                Gillis argues that AS 38.05.035(f)'s plain meaning does not require an 

applicant to enter land while it is under federal ownership to qualify for the preference 

right.    According to Gillis subsection .035(f) fails to "stat[e] that entry under federal 

tenure is required whereas [it] does say that entry under a state use permit or lease is 

required." He asserts that subsection .035(f) "deals with federal permitting only and does 

not address the underlying land status."           Gillis maintains that because he entered state 

land   and   otherwise   met   the   conditions   of   subsection   .035(f),   he   is   eligible   for   the 

preference right. 

                We disagree.   The plain language of AS 38.05.035(f) requires an applicant 

to have entered land while it was under federal ownership to qualify for the preference 

right.   Subsection .035(f)'s crucial language is:  "erected a building on the land and used 

the land . . . under a federal permit or without the need for a permit and, after selection 

by the state, under a state use permit or lease."  Because the federal government owned 

and   administered   all   land   available   for   state   selection,   land   remained   under   federal 
ownership until selected by the state.7         The legislature's use of the conjunction "and," 

combined with the phrase "after selection by the state," indicates that the subsection 

applies to an applicant who, along with obtaining the necessary federal permits, erected 

a building on and used what was then federal land and continued using that land after 

state selection. Gillis's interpretation ignores the subsection's conjunction before the 

temporal requirement; his interpretation would be more appropriate if the statute said "or, 

after selection by the state" instead of "and, after selection by the state." 

                Gillis next argues that AS 38.05.035(f) should be interpreted in pari materia 

        7       See generally Alaska Statehood Act, Pub. L. No. 85-508,  6(a), 72 Stat. 

339, 340-43 (1958), reprinted in 48 U.S.C. ch. 2 (2006) (granting Alaska right to select 
"public lands of the United States in Alaska" for state land). 

                                                   -5-                                                6591 

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

with   the   Alaska   Land   Act's   other   preference-right   provisions.8      Gillis   asserts   the 

legislature knew how to require federal tenure as an element for a preference right when 

it   used   the   phrase   "federal    land   subsequently     acquired    by   the   state"  in   AS 
38.05.035(b)(3)9 and provided for entry onto land "before January 3, 1959," the date of 

Alaska statehood, in AS 38.05.035(b)(5),10 both enacted before subsection .035(f).11 

Gillis argues this language's absence from subsection .035(f) favors his interpretation. 

                Assuming these preference rights should be read in pari materia, we find 

Gillis's argument unpersuasive.        The legislature employed inconsistent terminology to 

convey preference right conditions and temporal requirements, such as when it required 

        8       We generally construe statutes together, or in pari materia, when they are 

"enacted at the same time or deal with the same subject matter."             Underwater Constr., 
Inc. v. Shirley, 884 P.2d 150, 155 (Alaska 1994). 

        9       AS 38.05.035(b)(3) provides in relevant part: 

                The director may . . . grant a preference right to a claimant 
                who shows bona fide improvement of state land or of federal 
                land subsequently acquired by the state and who has in good 
                faith sought to obtain title to the land but who, through error 
                or omission . . . has been denied title to it. 

        10      AS 38.05.035(b)(5) provides in relevant part: 

                The director may . . . when the director determines it is in the 
                best interest of the state and will avoid injustice to a person 
                or the heirs or devisees of a person, dispose of land, by direct 
                negotiation to that person who presently uses and who used 
                and made improvements to that land before January 3, 1959, 
                or to the heirs or devisees of the person. 

        11      Ch. 194,  1, SLA 1968 (codified at AS 38.05.035(b)(5)); Ch. 58,  1, SLA 

1965 (codified at AS 38.05.035(b)(3)). 

                                                 -6-                                            6591
 

----------------------- Page 7-----------------------

actions on or to land before statehood or state selection.12  We also distinguish subsection 

.035(f) from subsection .035(b)(3), which "grant[s] a preference right to a claimant who 

shows bona fide improvement of state land or of federal land subsequently acquired by 

the state."    Subsection .035(b)(3) does not require the applicant to act before the state 

acquires federal land and uses the conjunction "or" before the temporal requirement.  In 

comparison, subsection .035(f) does require an applicant to act prior to state selection and 
uses the conjunction "and" before the temporal requirement.13 

                We   conclude   that   evaluating   AS   38.05.035(f)   in   light   of   the   above- 

mentioned   preference   rights   supports   interpreting   the   statute   according   to   its   plain 

meaning - an applicant must have entered the land while it was under federal ownership 

to qualify for the preference right. 

        B.      Legislative History And Intent 

                On May 16, 1984, then-DNR Commissioner Esther Wunnicke testified 

before the House Committee on Finance regarding the proposed business preference 

        12      Compare AS 38.05.035(b)(5) (allowing for disposal of land when it "is in 

the best interest of the state and will avoid injustice to a person . . . who presently uses 
and who used and made improvements to that land before January 3, 1959" (emphasis 
added)), with AS 38.05.820(a) (announcing state's policy "to allow preference rights for 
the acquisition of tide and submerged land occupied or developed for municipal business, 
residential or other beneficial purposes on or before the date of admission of Alaska into 
the Union" (emphasis added)). 

        13      Compare AS 38.05.035(f) (granting "preference right to . . . an individual 

who has erected a building on the land and used the land for bona fide business purposes 
. . . under a federal permit or without the need for a permit and, after selection by the 
state, under a state use permit or lease"), with AS 38.05.035(b)(3) (granting "preference 
right to a claimant who shows bona fide improvement of state land or of federal land 
subsequently acquired by the state"). 

                                                  -7-                                             6591
 

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

right.14  Wunnicke testified that DNR "was closely involved as the Senate Resources 

Committee developed the bill."15        Wunnicke explained the proposed bill "provid[ed] for 

a new preference right that would provide an applicant . . . with an assured right to state 
land."16  Wunnicke hypothesized that an applicant would "usually [be] a sport hunting 

or   fishing   guide   who    has  had   a  lodge   on   federal  land  that  has   come    into  state 
ownership."17  Although "supportive of preference rights," Wunnicke expressed concern, 

due to timing and resource constraints, that the proposed bill would create "a new class 
of about 100 preference right applicants."18 

                Ten days later the legislature published a document explaining changes to 

the House of Representatives version of Senate Bill 375, the bill amending the Alaska 
Land Act and adding the preference right.19           According to the document, the House's 

preference right language added six provisions:           (1) a "5 acre parcel"; (2) the applicant 

"erected a building on the land"; (3) the applicant "used land for business purposes for 

5 years under federal permit or without the need for a permit"; (4) the applicant "earned 

25% of total income from the business"; (5) the applicant purchases the land at "fair 

market value"; and (6) DNR "may deny [the preference right] if [it] interferes with public 

        14      Hearing on C.S.S.B. 375 Before the House Comm. on Fin., 13th Leg. 2d 

Sess. (May 16, 1984) (testimony of Esther C. Wunnicke, Comm'r, Dep't of Natural 
Res.), available at Alaska Leg. Microfiche Collection no. 2863. 

        15      Id. 

        16      Id. 

        17      Id. 

        18      Id. 

        19      Alaska State Legislature, S.B. 375, 13th Leg. 2d Sess. (May 26, 1984), 

available at Alaska Leg. Microfiche Collection nos. 2858-59. 

                                                  -8-                                           6591
 

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

use by residents."20     The document noted that the preference right "would usually apply 

to hunting and fishing guides [and DNR] estimates 100 claimants statewide."21                    In early 

June 1984 the Senate Committee on Resources summarized the final version of Senate 

Bill 375, noting that it in part "[g]rants a preference right to long-term landholders who 
have derived business income from the land."22   On July 5, 1984, the Governor signed 

the bill and subsection .035(f) became effective one day later.23 

                When   examining   legislative   history we   bear   in   mind   that   the   statutory 

language's clarity places "a greater burden on . . . the party seeking to dissuade us from 
giving the statute its apparent meaning."24            But even when a statute appears facially 

unambiguous, we will examine the legislative history as it "may demonstrate that an 

ambiguity, although not apparent on the face of the statute, does exist with respect to the 
legislature's   use   of   a   particular   term."25 If   the   legislative   history   demonstrates   no 

ambiguity, then this court adheres to the statute's language and will not modify or extend 
it by judicial construct.26 

                Gillis argues that Wunnicke's testimony is not probative of legislative intent 

        20      Id. 

        21      Id. 

        22       Sen. Comm. on Res., Final Version of S.B. 375, 13th Leg. 2d Sess. (June 

4, 1984). 

        23      Ch. 152,  1-87, SLA 1984. 

        24      State, Dep't of Natural Res. v. City of Haines, 627 P.2d 1047, 1049 (Alaska 

1981). 

        25      Id. at 1049 n.6. 

        26      Id. (citing City & Borough of Juneau v. Thibodeau, 595 P.2d 626, 635 n.31 

(Alaska 1979)). 

                                                   -9-                                              6591
 

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and should not be afforded deference.27         But Wunnicke's testimony and the subsequent 

consistent legislative documentation indicate subsection .035(f) was intended to provide 

a limited preference right to a small number of people who entered federal land that later 

came into state ownership.        If subsection .035(f) constituted the general land disposal 

program Gillis argues for, we would expect a more thorough legislative debate about its 

scope and a much richer legislative history supporting Gillis's position.                This limited 

legislative history does not create an ambiguity that would require us to deviate from 

subsection .035(f)'s plain meaning. 

                Gillis challenges the superior court's determination that AS 38.05.035(f) 

serves equitable and remedial purposes as "unsupported or otherwise contradicted by 

extrinsic sources of legislative history," including Wunnicke's testimony and DNR's 

administration   of   subsection   .035(f).    Gillis   contends   the   legislature   did   not   intend 

subsection .035(f) to apply to federal land because the legislature enacted it 25 years after 

statehood.     Gillis also criticizes the superior court for its "speculative conclusion" that 

without a requirement to enter federal land the subsection would create an "expanding 

class" of applicants for preference rights. 

                Gillis's arguments are unpersuasive.         First, granting a preference right to 

applicants   who   legally   constructed   a   building  on   and   used   federal   land   serves   an 

equitable and remedial purpose - ensuring that those who did so would not lose their 

interest solely due to the land being transferred from federal to state ownership.  Second, 

1984 corresponds with the end of the 25-yearperiod granted in the Alaska Statehood Act 

        27      Gillis also discounts an Attorney General letter to the Governor interpreting 

subsection .035(f) as requiring applicants to enter federal land and recommending that 
the Governor sign the bill.  See STATE OF ALASKA, DEP'T OF LAW, OP. ATT'Y GEN., file 
no. 388-162-84 (July 3, 1984).   The superior court, however, mentioned the letter only 
to note that others thought the statute was ambiguous; it did not rely on the letter to 
support its interpretation of subsection .035(f). 

                                                 -10-                                            6591
 

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

for the state to select federal land; therefore subsection .035(f)'s reference to federal land 
and land selected by the state is logical.28   Third, we agree with the superior court that 

Gillis's interpretation of subsection .035(f), which does not require entry on federal land, 

would result in an ever-expanding class of applicants for preference rights contrary to the 

plain meaning and legislative history of subsection .035(f). 

        C.     DNR's Regulation And Decisions 

               Gillis argues that we should apply our independent judgment and not defer 
to 11 AAC 67.053,29 DNR's 1985 regulation implementing AS 38.05.035(f), because: 

(1) the regulation refers to "federal jurisdiction," which he argues is distinct from and 

broader than federal ownership; and (2) DNR did not adequately explain its previous 

denial of an application for a preference right. 

               We    agree   with  Gillis  that  jurisdiction  and  ownership    carry  distinct 
meanings.30   But the consistent and longstanding manner in which DNR has applied both 

its regulation and subsection .035(f) helps resolve any possible ambiguity in either the 

subsection or regulation.     Although we agree with Gillis that we use our independent 

judgment, "we have recognized that an agency's interpretation of a law within its area 

of jurisdiction can help resolve lingering ambiguity, particularly when the agency's 

        28     See Alaska Statehood Act, Pub. L. No. 85-508,  6(a)-(b), 72 Stat. 339, 340- 

43 (1958), reprinted in 48 U.S.C. ch. 2 (2006) (requiring state to select land "within 
twenty-five years after the date of the admission of the State of Alaska into the Union"). 

        29     See supra text accompanying note 3. 

        30     "Jurisdiction" is defined as a "government's general power to exercise 

authority over all persons and things within its territory" and a "geographic area within 
which political or judicial authority may be exercised." BLACK'SLAW DICTIONARY 927- 
28 (9th ed. 2009).     "Federal jurisdiction" is defined as "[t]he exercise of federal-court 
authority."  Id. at 929.   "Ownership" is defined as "[t]he bundle of rights allowing one 
to use, manage, and enjoy property, including the right to convey it to others."         Id. at 
 1215. 

                                              -11-                                        6591
 

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

interpretation is longstanding."31       DNR denied a request for a preference right in 1986 

in part because the applicant failed to prove he entered federal land before state selection; 
DNR denied an informal request in 2008 for the same reason.32  DNR's interpretation of 

subsection .035(f) and application of 11 AAC 67.053 span decades and support our plain 

meaning interpretation. 

        D.      Absurd Results 

                Gillis   finally   argues   that   interpreting   AS   38.05.035(f)   as   requiring   an 

applicant to enter federal land creates an absurd result "because no person would ever 

qualify for the preference right." Gillis concedes that requiring entry on federally owned 

land is not by itself absurd, but argues that when considering the legislative history and 

DNR's administration of the statute the result is absurd. 

                We disagree.   We have recognized that "[i]n ascertaining the legislature's 

intent, we are obliged to avoid construing a statute in a way that leads to a glaringly 
absurd result."33    Although an interpretation nullifying a statute can sometimes produce 

an absurd result,34 interpreting this statute as requiring an applicant to have entered 

        31      Bartley v. State, Dep't of Admin., Teachers' Ret. Bd., 110 P.3d 1254, 1261 

(Alaska 2005) (citing  Union Oil Co. v. State, Dep't of Revenue, 560 P.2d 21, 23, 25 
(Alaska 1977)). 

        32      In 1986 DNR denied the applicant a preference right under subsection 

.035(f) in part because he failed to provide written proof of "occupancy of the land before 
its selection by the state." In 2008 DNR denied an informal request for a preference right 
under subsection .035(f) in part because the potential applicant  failed to provide written 
proof "that he had been using the site prior to the conveyance of th[e] land to the State." 

        33      Sherbahn       v.  Kerkove,    987   P.2d    195,   200-01    (Alaska    1999)    (citing 

Underwater Constr., 884 P.2d at 155 n.21). 

        34      See Premera Blue Cross v. State, Dep't of Commerce, Cmty. & Econ. Dev., 

Div. of Ins., 171 P.3d 1110, 1120 (Alaska 2007) (holding statutory interpretation that 
                                                                                         (continued...) 

                                                  -12-                                               6591 

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

federal   land,   thereby   limiting   the   number   of   eligible   applicants,   neither   invalidates 

subsection .035(f) nor contradicts the legislative intent of providing a narrow preference 

right. 

V.      CONCLUSION 

                We AFFIRM the superior court's interpretation of AS 38.05.035(f) and its 

summary judgment decision. 

        34      (...continued) 

rendered statute "a nullity" created absurd result). 

                                                 -13-                                             6591 
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