Opinion ID: 1173572
Heading Depth: 1
Heading Rank: 1

Heading: Does the Alaska Administrative Procedure Act Require a Different Result?

Text: Wien makes several arguments based on the Alaska Administrative Procedure Act, AS 44.62.010-.650, in an attempt to support its position that the department's letter to Price constituted a binding regulation which could be retroactively revoked by the agency. We find these arguments to be without merit and therefore conclude that the incorporation of federal tax law discussed above is dispositive. First, Wien relies on the definition of a regulation given in Alaska's Administrative Procedure Act in concluding that the department's letter was a binding regulation which the department could revoke only with an order of repeal issued under the APA. AS 44.62.640(a)(2) provides in relevant part: [R]egulation means every rule, regulation, order, or standard of general application or the amendment, supplement or revision of a rule, regulation, order or standard 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 which relates only to the internal management of a state agency; ... regulation includes manuals, policies, instructions, guides to enforcement, interpretative bulletins, interpretations, and the like, which have the effect of rules, orders, regulations or standards of general application, and this and similar phraseology shall 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. Wien argues that the information letter qualified as a regulation under this definition. It then maintains that although the department failed to properly promulgate the letter regulation so as to give it the effect of a valid regulation, the letter should nevertheless be binding on the agency. In reaching this conclusion, Wien relies chiefly on a series of cases holding that administrative agencies are required to follow internal procedural manuals when dealing with the public. Foremost, and typical, among these cases is Morton v. Ruiz, 415 U.S. 199, 94 S.Ct. 1055, 39 L.Ed.2d 270 (1974). In that case, the Court held that the agency there involved was required to follow a provision of its internal procedure manual which required publication of eligibility requirements for welfare benefits. The Court refused to allow the agency to enforce unpublished eligibility requirements that were adopted without compliance with the internal procedure manual. Id. at 235-36, 94 S.Ct. at 1074-75, 39 L.Ed.2d at 294. In the present case, while the letter may be a regulation as defined by AS 44.62.640 ( see State v. Tanana Valley Sportsmen's Ass'n, 583 P.2d 854, 858-59 & n. 17 (Alaska 1978) (oral instructions by department head regarding standards for issuing hunting permits were regulations, but were unauthorized and unenforceable since not properly promulgated)), this did not serve to make it binding on the department. Also, Ruiz is distinguishable since it involved the failure of the agency to follow internal decision-making procedures, while the current case involves a substantive interpretation of a statute by the department. Therefore, there are no grounds for concluding that the 1975 information letter was a binding regulation under the APA. Second, Wien contends that the 1980 adjudicatory decision of the department, in which Wien was adjudged liable for the additional taxes, was a legislative order of repeal under the APA. AS 44.62.640(a)(1). Wien further contends that since the department's decision did not follow the requirements for promulgating regulations, it was invalid, and the 1975 information letter was controlling authority until properly revoked by an effective order of repeal. This argument is tied closely to the previous discussion on the binding effect of the letter as a regulation. Since the letter had no effect as an enforceable regulation, there is no ground for requiring its repeal by an order of repeal. In addition, the 1980 decision in which the department established Wien's liability was an adjudicatory one which simply interpreted the controlling statute. As such, it could properly invalidate a regulation which was contrary to the authorizing statute. Third, Wien argues that since the 1980 decision is really a legislative order of repeal, it cannot be applied retroactively to Wien because AS 44.62.240 provides that only primarily interpretive regulations may be applied retroactively, and then only if there is a consistent prior course of conduct on the part of the agency. Wien avoids the argument that the 1980 decision was an interpretive regulation by asserting that, even if it was, the 1975 letter indicated a prior inconsistent interpretation which automatically precluded retroactive application of the 1980 decision. This argument of Wien's also has no basis. The 1980 decision was administrative adjudication, not administrative legislation. While the administrative adjudication provisions of the APA do not apply to the Department of Revenue in income tax matters, AS 44.62.330(20) (under the authority of AS 43.05.010(3), .080.; 43.20.160(c), the department has promulgated its own regulations for adjudication of income tax matters, 15 AAC 05.001-.050), AS 44.62.510(b) sets out the general rule regarding the effect of administrative adjudicatory decisions: A decision in a primarily judicial proceeding has retroactive effect in the same manner as a decision of a state court. Therefore, the 1980 adjudicatory decision was properly retroactive. The decision of the superior court is AFFIRMED. COMPTON, J., not participating.