Opinion ID: 2604579
Heading Depth: 3
Heading Rank: 3

Heading: District Identification

Text: Alaska Statute 38.05.855(a) requires DNR to identify districts in the state within which sites may be selected for aquatic farming. KBW argues that DNR failed to implement this first requirement. Whether DNR properly identified districts turns on competing interpretations of the statute. We conclude that DNR failed to comply with the provisions of AS 38.05.855(a) when identifying farm districts. DNR argues that AS 38.05.855(a) is a procedural rather than substantive measure. It likens the district identification requirement to a management tool to smooth the aquatic farm application paper flow. Under this reasoning, districts are drawn for administrative convenience; classifying incoming applications by geographic areas enables DNR to process numerous applications for the same area at one time. This interpretation of AS 38.05.855(a) relegates any substantive decisions about which areas are suitable for aquatic farming to a post-districting stage. DNR concludes that its publication of maps of farm districts in Southcentral and Southeast Alaska satisfied the requirements of AS 38.05.855(a). By contrast, KBW argues that the Act requires a four-step process (sections (a)-(d)) and that each step is a distinct decision. It reasons that the first step, district identification, requires a formal determination of what areas may appropriately be devoted to aquatic farming.
Alaska Statute 38.05.855 uses the term identify to direct action that shall be taken by the Commissioner regarding districts and sites. AS 38.05.855(a), (d). Identification suggests a conscious act and determination. DNR simply designated all of Southcentral and Southeast Alaska as districts. It failed to explicitly close any portion of these regions to aquatic farming. In reality it relied on existing general land use plans, which were created without consideration of aquatic farming, and delegated specifying which areas are suitable for farming to the permitting stage. Further, DNR chose to open all of both regions despite extensive testimony from various groups that particular areas should be closed to farming. [3] There is no documentary proof that this decision was reached after weighing and analyzing the evidence presented. [4] District identification pursuant to AS 38.05.855(a) is both a procedural and substantive step. It has a procedural aspect because it allows DNR to categorize applications for permits according to geographic region. It also involves an important substantive policy decision because it requires DNR to identify districts within which farmsites may be selected. The may be selected language indicates that DNR must distinguish between those areas of Alaska that will be open to farming and those that will be closed. DNR cannot reasonably make this decision without analyzing facts relevant to the suitability of various areas of Alaska to aquatic farming. By simply publishing maps of aquatic farm districts based on general land use plans, DNR neglected its responsibilities under AS 38.05.855(a).
DNR's actions implicate concerns similar to those raised in Thane Neighborhood Ass'n v. City & Borough of Juneau, 922 P.2d 901 (Alaska 1996). In Thane Neighborhood, the City and Borough of Juneau Planning Commission (Commission) used a phased approach in approving a large mine permit. First, the Commission withheld approval of certain parts of the project pending further information and approved the remainder of the project. Second, the Commission approved the permit but required further information on certain matters. Third, the Commission imposed a condition that the permittee obtain necessary permits from other agencies. Thane Neighborhood, 922 P.2d at 905. We concluded that the Commission should not have granted the mine permit while excepting major portions of the project. Id. at 909. Phasing was disfavored because (1) it can result in disregard of the cumulative potential environmental impacts of a project, and (2) permit conditions may not serve as a substitute for an initial prepermitting analysis that can be conducted with reasonably obtainable information. Id. at 908 (citing Kuitsarak Corp. v. Swope, 870 P.2d 387, 396 n. 27 & 30 (Alaska 1994); Trustees for Alaska v. State, Dep't of Natural Resources, 851 P.2d 1340, 1344, 1346 (Alaska 1993); Trustees for Alaska v. Gorsuch, 835 P.2d 1239, 1246 (Alaska 1992)). The reasoning of Thane Neighborhood applies to this case. DNR identified five districts in Southcentral Alaska and six in Southeast Alaska. In contravention of AS 38.05.855, it made no other district identifications and no site identifications. In addition, it used existing DNR area plans to delineate the districts, rather than develop a plan specific to aquatic farming. DNR pursued no other steps in the farmsite identification process, leaving all remaining determinations to the permitting stage. Such action effectively merged the provisions of AS 38.05.855, which were then merged with AS 38.05.856's rules for evaluating permit applications. The statutes mandate identification of districts pursuant to subsection 855(a) and a subsequent determination of appropriate site locations under subsections 855(b)-(d) and 856(e). Because sites are a subset of districts, siting decisions can be made only once the district is identified. In short, DNR collapsed the identification and permit processes. As with phasing, such combination of the statutes precludes any analysis of the overall impact on the affected areas; it limits in-depth consideration of possible negative consequences to the evaluation individual permit applications. The result is that cumulative potential environmental and economic impacts cannot be weighed. See Gorsuch, 835 P.2d at 1246 (DNR may not ignore cumulative effects of mining and related support facilities by unreasonably restricting its jurisdiction or by permitting facilities separately.... If DNR determines that the cumulative impact is problematic, the problems must be resolved before the initial permit is approved.). We construe AS 38.05.855 as requiring DNR to make discrete decisions about the appropriateness of aquatic farming in certain areas before considering any individual permit applications. While the enabling legislation seeks to promote aquatic farming, [5] it also protects other important interests by placing statutory limits on development. To comply with the statute, DNR must identify districts and then consider, pursuant to agency consultations, preliminary findings, notice, hearings, and final written findings, what sites within those districts can be developed for aquatic farming. AS 38.05.855(c)-(d). Only once DNR examines the needs of the communities and the state, identifies districts and sites based on those needs, and imposes appropriate restrictions can the agency consider issuing individual permits pursuant to AS 38.05.856. Alaska Statute 38.05.856(e) states that the commissioner shall adopt regulations ... [that provide] for the consideration of ... whether the proposed use of a site is compatible with the traditional and existing use of the area in which the site is located. Logically, such regulations can be implemented only after sites have been identified. [6] In Trustees for Alaska v. State, Department of Natural Resources, while examining a state decision to issue oil and gas leases for compliance with coastal management regulations, we emphasized the dangers of limiting environmental impact review to the individual permitting stage: [D]eferring a careful and detailed look at particularized geophysical hazards to later stages of the development process, as DNR evidently intends, entails certain practical risks. First ... [it] means that particularized geophysical hazards will be considered on a lease-site-by-lease-site basis. This may tend to mask appreciation of any cumulative environmental threat that would otherwise be apparent if DNR began with a detailed and comprehensive identification of those hazards. Second, ... the more segmented an assessment of environmental hazards, the greater the risk that prior permits will compel DNR to approve later, environmentally unsound permits. 851 P.2d at 1344. Both concerns are raised by DNR's implementation of the aquatic farm legislation. Restricting the review and investigation process to individual applications precludes cumulative impact analysis. In addition, because allocation of aquatic farming sites [is to] be made with full consideration of established and ongoing activities in an area, DNR's segmented process, by only considering the past use of the relevant limited area, would have resulted in a tendency toward reissuance. Ch. 145 § b(2), SLA 1988.
KBW also argues [7] that the identification of aquatic farm districts under the Act constitutes a regulation subject to the APA. [8] The APA establishes the minimum procedural requirements for the adoption of administrative regulations. See AS 44.62.280. Whether the agency action is a regulation is a question of law that does not involve agency expertise. We have repeatedly rejected agencies' attempts to avoid the strictures of the APA by claiming their actions were general guidelines or policy statements, rather than regulations. See Gilbert v. State, Dep't of Fish & Game, 803 P.2d 391, 395-97 (Alaska 1990); Kenai Peninsula Fisherman's Co-op. v. State, 628 P.2d 897, 904-06 (Alaska 1981). Nonetheless, while the definition of regulation under the APA is broad, it does not encompass every agency practice or decision. Indicia of a regulation include: (1) whether the practice implements, interprets or makes specific the law enforced or administered by the state agency, and (2) whether the practice affects the public or is used by the agency in dealing with the public. Kodiak Seafood Processors Ass'n v. State, 900 P.2d 1191, 1197 (Alaska 1995); Gilbert, 803 P.2d at 396. In Batterton v. Marshall, 648 F.2d 694, 707 (D.C. Cir.1980), the Court of Appeals for the District of Columbia observed: [M]any merely internal agency practices affect parties outside the agency  often in significant ways.... [E]ven office hours ... necessarily require conformity on the part of the public. A useful articulation of the exemption's critical feature is that it covers agency actions that do not themselves alter the rights or interests of the parties, although it may alter the manner in which the parties present themselves or their viewpoints to the agency. (Footnotes and internal quotations omitted.) The Batterton court also stated, The essential purpose of according ... notice and comment opportunities is to reinforce public participation and fairness to affected parties after governmental authority has been delegated to unrepresentative agencies. Id. at 703. DNR's district identification decision affects the public in the limited manner discussed in Batterton. Whether DNR's identification of aquatic farm districts constituted a regulation as that term is defined in the APA presents a close question. As noted above, districting pursuant to AS 38.05.855(a) has both procedural and substantive aspects. However, district identification does not alter the rights of the parties, does not deprive any party of a fair opportunity for public participation, embodies no finding as to a particular application and does not establish criteria by which particular applications should be evaluated. Agencies often make discretionary decisions not requiring formal procedures. Olson v. State, Dep't of Natural Resources, 799 P.2d 289, 292 (Alaska 1990). We have described an agency's discretionary decision that does not require formal procedures as `quasi-executive[.]' Kodiak Seafood Processors, 900 P.2d at 1197. We review such decisions only for an abuse of discretion. Id. DNR regularly makes decisions that are quasi-executive in nature and do not constitute regulation under the APA even when one or more indices of a regulation are present. See Olson, 799 P.2d at 292. For instance, the Commissioner does not identify by regulation those lands made available for oil and gas leases, mineral leases, or timber sales. See AS 38.05.180(b), AS 38.05.135-175, and AS 38.05.115. The legislature's assignment of a task to an agency, such as the identification of districts at issue here, invariably involves the exercise of agency discretion. District identification is the first step in a lengthy, detailed public process of determining what aquatic farm will be allowed in what location. The legislature's established procedures under the Act do not include requiring the identification of districts by regulation. By contrast, in 1988 the legislature expressly required the Commissioner to adopt regulations establishing criteria for the approval or denial of [aquatic farm] permits, thereby addressing the last stage of the process. AS 38.05.865(e). No similar express requirement for regulations exists for the district identification process and we have no reason to believe such a requirement was intended. See Croft v. Pan Alaska Trucking, Inc., 820 P.2d 1064, 1066 (Alaska 1991) (where certain things are designated in a statute `all omissions should be understood as exclusions') (citation omitted). The superior court therefore correctly determined that the identification of aquatic farm districts under AS 38.05.855(a) does not constitute a regulation under the APA.