Case Title: ALASKA TRANSP. COM'N v. Gandia

Citation: 602 P.2d 402

Docket Number: 3469

State: alaska

Court: Alaska Supreme Court

Date: 1979-11-09T00:00:00Z

Document:
602 P.2d 402 (1979) ALASKA TRANSPORTATION COMMISSION, Appellant, v. Ramon F. GANDIA, d/b/a Nome Flying Service and Neil Foster, d/b/a Foster Aviation, Appellees. No. 3469. Supreme Court of Alaska. November 9, 1979. Douglas A. Hebbel, G. Charles Schmidt, Asst. Attys. Gen., Anchorage, Avrum M. Gross, Atty. Gen., Juneau, for appellant. H. Russel Holland, Holland & Thornton, Anchorage, for amicus curiae, ERA Helicopters, Inc. No appearance for appellees. Before RABINOWITZ, C.J., and CONNOR, BOOCHEVER, BURKE and MATTHEWS, JJ. BURKE, Justice. This is an appeal by the Alaska Transportation Commission (ATC) from an order of the superior court requiring a rehearing of certain of its proceedings, for alleged violations of the Administrative Procedure Act (AS 44.62.010-650) and due process requirements of the Alaska and United States Constitutions. We hold that the Commission's use of a hearing officer, without the presence of the individual commissioners, violates neither the applicable state statutes nor constitutional due process. Lloyd Franklin Hardy, d/b/a Seward Peninsula Flying Service,[1] filed with the ATC *403 an application for original air taxi authority with a base of operations at Nome. Ramon Gandia, Neil Foster, and several others representing various airline companies protested the application. A hearing was held in Nome before ATC hearing officer William Bedsworth. None of the individual commissioners were present at the hearing. On December 15, 1975, the Commission, in a 3-0 decision, granted Hardy's application. The Commission's deliberative process included a review of all documentary evidence, consideration of draft findings of fact and conclusions of law prepared by the hearing officer, and consideration of oral comments made by the hearing officer, who did not prepare a proposed final order because he was unable to make up his mind. No transcript of the hearing before the hearing officer had been prepared, nor did the commissioners listen to the hearing tapes. The hearing officer's draft findings of fact and conclusions of law were not submitted to the parties. Subsequent to the order granting the application, Gandia and Foster filed motions for reconsideration with the Commission. The motions were denied, and Gandia and Foster appealed to the superior court. Superior Court Judge Victor D. Carlson remanded the matter for a new hearing, requiring that the ATC comply with the following procedures: The Commission filed a motion for a rehearing, together with a request for a clarification of the decision. The superior court denied the motion. Both the ATC and applicant Hardy filed appeals with this court. Hardy thereafter settled his dispute with Gandia and Foster and withdrew his application and the case was subsequently dismissed. This case falls under the public interest exception to the mootness doctrine enunciated in Doe v. State, 487 P.2d 47 (Alaska 1971): Id. at 53 (footnote omitted). Though the stipulation for dismissal has rendered the issues technically moot, we believe that the superior court's order will have an effect upon future ATC proceedings with consequences for the Commission and the Alaska transportation industry as a whole; hence, we have elected to decide these issues. The superior court found that the procedures used by the ATC at its hearing violated AS 44.62.340, 44.62.500, and 42.07.161, as well as procedural due process requirements of the state and federal constitutions. AS 44.62.340 forbids the delegation of the hearing power absent express *404 statutory authorization,[2] while AS 44.62.500 requires the hearing officer to prepare a proposed decision and forbids members of the applicable government agency from voting on the decision if they have not heard the evidence.[3] However, the ATC is specifically exempted from the requirements of both AS 44.62.340 and 44.62.500, by AS 42.07.151(a) which provides: Commission proceedings are governed instead, by AS 42.07.141, which provides in pertinent part: We discussed both the exemption from the Administrative Procedure Act and the requirements of AS 42.07.141 in Mukluk Freight Lines, Inc. v. Nabors Alaska Drilling, Inc., 516 P.2d 408 (Alaska 1973), where we stated: Id. at 415 (footnote omitted; emphasis added). *405 The superior court's belief that AS 42.07.161[4] requires the presence of at least one commissioner at hearings does not take into account the provisions of AS 42.07.101, which provides: Prior to amendment in 1970, AS 47.07.101 did not provide for hearing officers as regular or special employees. See Ch. 104, § 2, SLA 1969. The Judiciary Committee report accompanying the 1970 amendment which added hearing officers to the list of regular employees noted: 3 House Journal 1245 (1970). The clear import of this language is that the legislature intended the use of hearing officers without commissioners. Since AS 44.62.340, which requires express delegation of the hearing function, does not apply to the ATC, we believe that this interpretation of the legislature's intentions is the correct one. Hearing officers could scarcely reduce the workload of the Commission if the commissioners' presence were required at every hearing. The due process requirements of an administrative hearing were established long ago in the Morgan cases: Morgan v. United States, 298 U.S. 468, 56 S. Ct. 906, 80 L. Ed. 1288 (1936) (Morgan I); and Morgan v. United States, 304 U.S. 1, 58 S. Ct. 773, 82 L. Ed. 1129, rehearing denied, 304 U.S. 23, 58 S. Ct. 999, 82 L. Ed. 1135 (1937) (Morgan II). Justice Hughes's doctrine, "The one who decides must hear," is often erroneously interpreted to mean that the ultimate decision maker must be present, but the Court rejected this construction: Morgan I, 298 U.S. at 481-82, 56 S. Ct. at 912, 80 L. Ed. at 1295. The procedural defect in the Morgan cases was not the utilization of a hearing officer and non-attendance of the decision maker, but rather that in an adversary proceeding the Bureau of *406 Animal Industry presented to the decision maker private studies and statistics which affected the substance of the final order, without being required to furnish this information to the opposing party. Since the opposing party had been unable to see and, therefore, had no opportunity to rebut this evidence, the Court concluded that it had not been afforded a fair hearing. Morgan II, 304 U.S. at 18-19, 58 S. Ct. at 776-777, 82 L. Ed. at 1132-33. The hearing afforded in this case was a full and fair one. None of the parties has alleged that evidence was presented ex parte to the Commission or otherwise concealed from it. All evidence bearing on the Commission's ultimate decision was presented at the hearing, and the parties had an opportunity to rebut it. Under these circumstances, it cannot be said that the hearing violated due process. We turn now to that portion of the superior court's order concerning the preparation and presentation of a proposed decision to the parties. Pursuant to its authority under AS 42.07.141, the Commission has adopted 3 AAC 60.360(b), which provides: "Briefs may be filed in any proceeding by any party within 20 days after mailing of the proposed decision by the hearing officer. Any party desiring to respond to a brief will do so within 10 days of mailing of brief... ." We believe this regulation mandates the issuance of a proposed decision. Once the proposed decision has been prepared, the regulation clearly requires that it be issued to the parties who are to have an opportunity to respond. We therefore affirm that part of the superior court's order concerning the issuance of proposed decision.[5] AFFIRMED in part, REVERSED in part.[6] [1] Seward Peninsula Flying Service was formerly Arctic Aircraft Service. Thus, Hardy's application with the ATC has the business name of his organization as Arctic Aircraft Service, and the order granting the application refers to Arctic Aircraft Service; but the notice of appeal and the stipulation of withdrawal is by Hardy d/b/a Seward Peninsula Flying Service. Hardy filed a motion June 23, 1979, requesting that he be prosecuted in the name of Seward Peninsula Flying Service. [2] AS 44.62.340 provides: Delegation of power by agencies. (a) An agency listed in § 330 of this chapter may delegate the power to act, to hear and to decide, unless expressly prohibited by law. (b) In a law enacted after April 29, 1959, where the word "agency" alone is used, the power to act may be delegated by the agency, and where the words "agency itself" are used, the power to act may not be delegated unless a statute relating to that agency authorizes the delegation of its power to hear and decide. [3] AS 44.62.500 provides: Decision in a contested case. (a) If a contested case is heard before an agency (1) the hearing officer who presided at the hearing shall be present during the consideration of the case and, if requested, shall assist and advise the agency; and (2) a member of the agency who has not heard the evidence may not vote on the decision. (b) If a contested case is heard by a hearing officer alone, he shall prepare a proposed decision in a form which may be adopted as the decision in the case. A copy of the proposed decision shall be filed by the agency as a public record with the lieutenant governor and a copy of the proposed decision shall be served by the agency on each party in the case and his attorney. The agency itself may adopt the proposed decision in its entirety, or may reduce the proposed penalty and adopt the balance of the proposed decision. (c) If the proposed decision is not adopted as provided in (b) of this section the agency may decide the case upon the record, including the transcript, with or without taking additional evidence, or may refer the case to the same or another hearing officer to take additional evidence. If the case is so assigned to a hearing officer he shall prepare a proposed decision as provided in (b) of this section upon the additional evidence and the transcript and other papers which are part of the record of the earlier hearing. A copy of the proposed decision shall be furnished to each party and his attorney as prescribed by (b) of this section. The agency may not decide a case provided for in this subsection without giving the parties the opportunity to present either oral or written argument before the agency. If additional oral evidence is introduced before the agency, no agency member may vote unless he has heard the additional oral evidence. [4] AS 42.07.161 provides: Investigations and hearings. An investigation or hearing which the commission has power to undertake or to hold may be undertaken or held by or before any one or more commissioners designated for the purpose by the commission. The testimony and evidence in an investigation or hearing may be taken by the commissioner to whom the investigation or hearing has been assigned. All investigations or hearings before or by commissioners are considered to be the investigations and hearings of the commission. A determination or order of commissioners upon such an investigation or hearing, so undertaken, is not effective until approved and confirmed by the commission. Upon confirmation, the determination or order is the determination or order of the commission. [5] As we noted in Mukluk Freight Lines, Inc.: "A consistent application of these [administrative] regulations would preclude ad hoc considerations and create standards that could be judicially reviewed in accordance with the due process guarantees anticipated in AS 42.07.141(b). Furthermore, the promulgation of rules establishing administrative standards affords protection against arbitrary exercise of discretionary power." 516 P.2d at 415. Since issuance of a proposed decision is required by the Commission's own regulations, we need not address the issue whether such notice is also required as a matter of procedural due process. [6] Since Hardy has withdrawn his application for air taxi authority, we need not remand the case for further proceedings.