Opinion ID: 1427180
Heading Depth: 2
Heading Rank: 2

Heading: The Independent Judgment Test Is the Proper Standard of Review of the Hearing Examiner's Order.

Text: The ATC argues that this court should use the reasonable basis test to review the hearing examiner's decision in the instant case. Although the ATC recognizes that the question before this court is one of statutory construction, the ATC asserts that the question of whether one may operate a supplemental base of operations without prior approval is a matter of fundamental policy concern which goes to the integrity of the Air Commerce Act, AS 02.05. The ATC asserts that if fundamental policy or the particularized expertise or experience of an agency is involved in an agency decision, the courts shall review the decision under the `reasonable basis' test. AIRPAC argues that the independent judgment test should be applied instead of the reasonable basis test because the issue on appeal involves only the construction of a statute. Because this court has held that the independent judgment test is appropriate for statutory interpretation issues and that the reasonable basis test is appropriate where the agency action resembles executive action or involves policy considerations, AIRPAC argues that the independent judgment test must be applied to the case at bar. We have had a number of opportunities to decide which of these standards of review is applicable when reviewing administrative rulings. In Earth Resources Company of Alaska v. State, Department of Revenue, 665 P.2d 960 (Alaska 1983), we stated that: The issue becomes, then, what standard of review must be used by an appellate court reviewing an administrative ruling... . This court has distinguished between the rational basis standard for questions of law involving agency expertise and the substitution of judgment standard for questions of law where no expertise is involved. The rational basis test may be applied in two circumstances. First, it is applied where the agency is making law by creating standards to be used in evaluating the case before it and future cases. [Citations omitted] Second, it is applied when a case requires resolution of policy questions which lie within the agency's area of expertise and are inseparable from the facts underlying the agency's decision. [Citations omitted] The rational basis test requires a reviewing court to consider factors of agency expertise, policy, and efficiency when reviewing discretionary decisions. Thus, it is a more deferential standard than the substitution of judgment standard; the court merely seeks to determine whether the administrative agency's decision is supported by the facts and has a reasonable basis in law. Kelly v. Zamarello, 486 P.2d 906, 918 (Alaska 1971). The substitution of judgment standard is applied where the questions of law presented do not involve agency expertise and, thus, a court need not take the deferential stance embodied in the rational basis test. Kelly v. Zamarello, 486 P.2d 906, 916 (Alaska 1971). The standard is appropriate where the knowledge and experience of the agency is of little guidance to the court or where the case concerns statutory interpretation or other analysis of legal relationships about which courts have specialized knowledge and experience. Id. Application of this standard permits a reviewing court to substitute its own judgment for that of the agency's, even if the agency's decision had a reasonable basis in law. See Rogers Construction Co. v. Hill, 235 Or. 352, 384 P.2d 219, 221-22 (Or. 1963). Id. at 964-65. In the case at bar, the agency is not creating standards; policy questions, which are within the ATC's area of expertise and which are within the ATC's area of expertise and which are inseparable from facts underlying the agency's decision, are not raised. This case turns on pure questions of statutory construction. It is the courts which have the specialized knowledge and experience in statutory construction and we need not defer to an agency's construction of a statute. [6]