Opinion ID: 2591924
Heading Depth: 4
Heading Rank: 2

Heading: Whether the CFEC applied erroneous standards in deciding the case

Text: Kuzmin argues that the CFEC determined the partnership questions in this case under erroneous standards. He contends that the CFEC failed to consider traditional partnership principles and thus did not apply the law evenhandedly to all applicants. He argues that we have expressly disapproved of using joint decision-making as a factor in the partnership test and that the CFEC should have applied the four-factor test we used in Chocknok v. State to determine when a partnership exists between spouses. [30] The CFEC does not explicitly argue that the Chocknok factors are inapplicable in this case. It argues that, to get points for Romil's landings, Kuzmin was required to both (1) satisfy the four-part Chocknok test, and (2) additionally prove under 20 AAC 05.834(c) that he was in joint control of Romil's fishing operation. The CFEC contends that Kuzmin did neither of these two things. In Chocknok, the CFEC denied two women entry permits to the Bristol Bay drift gill net fishery. [31] The issue on appeal was whether the CFEC applied improper standards in determining that the women were not partners in their husbands' respective fishing ventures and therefore not entitled to income dependence points under 20 AAC 05.630(b)(2). [32] In reversing the CFEC's decision, we declined to adopt the five-factor test the CFEC used to determine that the applicants in that case had not been in a fishing partnership with their spouses. [33] We reasoned that adopting the CFEC's test, which considered among other things joint decision-making between the spouses, would exclude the majority of married women from consideration for special circumstances income dependence points. [34] We stated that, although joint decision-making authority was an important attribute of a typical business partnership, the absence of joint control d[id] not necessarily disprove the existence of a partnership, since one partner may be given exclusive management of a partnership by agreement. [35] We then identified four factors that could be validly considered in determining the existence of a business partnership between married persons. [36] Those factors were: (1) whether there was an agreement, express or implied, to combine the spouses' property, money, effects, skills, and knowledge to carry out a business enterprise; (2) whether the partners were co-owners of a business who shared in its profits and who had a right, either express or implied, to exercise authority in the management of the enterprise; (3) whether the partners were in business; and (4) whether the business was intended to make a profit. [37] We observed that determinations of partnership between spouses will depend on the particular facts of each case.... The Commission must consider the traditional partnership factors and apply them evenhandedly to all applicants, making sure that the criteria used are not unjustly discriminatory in intent or impact. [38] Although Chocknok specifically addressed spousal partnerships, the CFEC has since indicated it would apply the Chocknok factors to any claim for income dependence points based on an alleged partnership. [39] Furthermore, although Chocknok involved the calculation of income dependence points, its reasoning would also apply to claims for participation points based on an alleged partnership. The CFEC has also developed a more specific and more rigorous test to determine whether an applicant to the Kodiak crab fishery is entitled to participation points based on his or her alleged partnership with another fisherman. [40] Under that test, co-owners of a fishing business for profit who participate as gear operators from the same vessel and are in joint control of the fishing operation are entitled to participation points based on a partner's landings. [41] Although Kuzmin suggests otherwise, this definition does incorporate some of the traditional partnership factors addressed in Chocknok, including the co-ownership, in business, and for-profit requirements. [42] But subsection .836(4) also requires the applicant to prove he or she was in joint control. Because the CFEC found Kuzmin had failed to meet his burden of proof on the joint control requirement, any consideration of the traditional partnership factors was unnecessary. Kuzmin may also be implicitly arguing that joint control is not a valid criterion on which to base a partnership determination. He contends that the CFEC has adopted a requirement that partners be in joint control of the fishing operation even though we explicitly questioned in Chocknok the validity of imposing such a requirement in a different context. We have held that, if the legislature delegates its authority to an agency to formulate policies and to act in the place of the legislature and the agency adopts a regulation under that delegation of authority, we should not examine the content of the regulation to judge its wisdom, but should exercise a scope of review not unlike that exercised with respect to a statute. [43] If a state agency has authority to adopt a regulation to implement, interpret, make specific[,] or otherwise carry out the provisions of the statute, no regulation adopted is valid or effective unless consistent with the statute and reasonably necessary to carry out the purpose of the statute. [44] Because regulations are presumptively valid, the burden of proving invalidity is on the party challenging it. [45] Kuzmin has not satisfied his burden proving the invalidity of the CFEC's regulation defining a partner as one who is in joint control. He does not argue either that a joint-control requirement is inconsistent with legislative intent or that it is not reasonably necessary to carry out the purpose of the statute. We therefore assume that the regulation is valid and hold that the CFEC did not act arbitrarily in declining to award Kuzmin participation points based on his alleged partnership with Romil.