Opinion ID: 2624056
Heading Depth: 3
Heading Rank: 2

Heading: Former AS 46.14.240 Allowed the Department To Recover the Costs of an Administrative Appeal.

Text: Alyeska argues that the permitting system in place when it appealed the air quality permits did not authorize the department to recover its appeal costs directly from Alyeska. The Clean Air Act sets national standards for the reduction of air pollution but allows states to largely control the process by which those standards are met. [9] Under Title V of the Act, participating states must issue to each stationary source permits setting out all the regulatory requirements to which the source is subject. [10] State permitting programs must meet specific requirements set out in the Act. [11] If a state fails to meet these requirements, the federal government may impose sanctions and even assume direct control over permitting in the state. [12] The Act requires that industry, not state government, bear the costs of the permitting program. [13] Congress imposed the cost-recovery requirement because it determined that states were not adequately funding their clean air programs. [14] It also wished to force sources of pollution to internalize the cost of such pollution. [15] Hence, the Act requires the EPA to promulgate regulations mandating that state permitting programs include [a] requirement under State or local law or interstate compact that the owner or operator of all sources subject to the requirement to obtain a permit under this subchapter pay an annual fee, or the equivalent over some other period, sufficient to cover all reasonable (direct and indirect) costs required to develop and administer the permit program requirements of this subchapter, . . . including the reasonable costs of  (i) reviewing and acting upon any application for such a permit. . . . [ [16] ] Alaska has created a permitting program under the Act. [17] Alaska recoups the costs of its permitting program from industry through two types of fees: permit administration fees and emission fees. [18] Although the Alaska legislature has since amended the state statute authorizing permit administration fees, [19] the statute at the time of Alyeska's administrative appeals defined permit administration fees in relevant part as: fees assessed to recover costs incurred by the department and other state or local governmental agencies, to the extent required under 42 U.S.C. 7661a(b)(3)(A) and federal regulations implementing that provision, for the following services to a specific stationary source that are performed in order to implement the permit program established under this chapter: . . . (3) receiving, reviewing, preparing, processing, and issuing permits, permit amendments, modifications, reopenings, renewals and revocations, and reissuance. . . . [ [20] ] In its regulations in force at the time of the controversy, the department set the permit administration fee rate at $78 per hour of staff time. [21] The regulations did not elaborate on what specific department services were chargeable as permit administration fees. [22] All stationary emissions sources must also pay emission fees, which former AS 46.14.250(h) defined as fees assessed to recover costs incurred by the department and other state or local governmental agencies, to the extent required under 42 U.S.C. 7661a(b)(3)(A) and federal regulations implementing that provision, for execution of the permit program established under this chapter that are generally not associated with service provided to a specific facility . . .; the costs may include rent, utilities, permit program management, administrative and accounting services, and other costs as identified by the department in regulations.[ [23] ] Unlike the permit administration fees, the emission fees are dispersed among all permit holders on the basis of each facility's estimated assessable emissions. [24] Alyeska argues that under the version of AS 46.14.240(c) that applies in this case the department was not authorized to recover the costs of defending an administrative appeal through permit administration fees. It suggests that the department could have more appropriately recovered these costs through emission fees. In interpreting a statute we consider its language, its purpose, and its legislative history, in an attempt to give effect to the legislature's intent, with due regard for the meaning the statutory language conveys to others. [25] In considering legislative history we follow the maxim that the plainer the language, the more convincing contrary legislative history must be. [26] To prevail, Alyeska must explain why the plain text of the statute should not govern the outcome of this case. Former AS 46.14.240(c)(3) specifically allowed the department to recoup, through permit administration fees, the costs of reviewing . . . permits. An administrative appeal of permit terms would seem to fall squarely within the ambit of reviewing the permit. Alyeska advances several arguments against this plain reading of the statute. It first contends that the term reviewing, read in the overall context of receiving, reviewing, preparing, processing, and issuing permits, cannot include adjudication of a permit because reviewing is listed before issuing. [27] It argues that the order of the terms suggests that each term should be limited chronologically to a particular stage in the process of approving a permit application. Hence, reviewing a permit by the department must be completed before preparing, processing, and issuing can occur. [28] It is not obvious that the terms are in chronological order. Although it is true, for example, that receiving a permit application must precede issuing the permit, it is less clear that preparing must precede processing or must follow reviewing. But even assuming that the terms are listed in the order in which the agency generally starts a particular stage of the permitting process, it does not follow that the legislature intended to specify a rigid sequence that prevented one activity from beginning before a previous one ended. [R]eviewing, preparing, and processing are all functions that one would expect might continue throughout the permitting process. Nothing in the statute suggests that these functions necessarily end upon issuing the permit. Thus, reviewing is best interpreted as referring to not only the department's initial review when it first receives a permit application, but also its review at each point when it reviews or is asked to review its work; this logically includes administrative hearings. Alyeska next argues that an administrative appeal cannot be considered reviewing by the department because once the appeal process is initiated, the department becomes an adverse party and is therefore defending rather than reviewing its work. But as we have noted, the purpose of an administrative review process is to allow an agency to correct its own errors so as to moot judicial controversies. [29] The department's more adversarial role in an administrative appeal serves the ultimate goal of ensuring that the permit is legally sound and error-free. In other words, by defending its permitting decisions during an administrative proceeding, the department is reviewing the permit, even though it is acting in an adversarial capacity. Even if we were to conclude that the text of former AS 46.14.240(c), read in isolation, is ambiguous on the question of whether the department's defense costs are recoverable, any such ambiguity disappears when the statute is read in context of federal law. Alaska created its current permitting program in response to a federal mandate. [30] The Clean Air Act requires that states recoup from industry all reasonable (direct and indirect) costs required to develop and administer the permit program requirements. [31] Because 42 U.S.C. § 7661a(b)(6) requires states to provide applicants with procedures for expeditious review of permit actions, [32] the costs of such review must be among those required to . . . administer the permit program requirements. States are therefore required to recover appeal costs under the Act. We note that the EPA reached the same conclusion in a policy guidance issued in 1993. [33] In its 1993 act creating Alaska's permitting program, the legislature identified one of the act's purposes as retain[ing] federal approval of the state's air quality control program in order to ensure the continued receipt of federal highway and air pollution control money. [34] This statement of purpose obliges us to interpret any ambiguity in the statute in a way that complies with federal requirements if it is reasonable to do so. Without specific legislative direction or history to the contrary, it is implausible to think that the legislature wished to depart from the clear requirements of the Act regarding cost recovery. Hence, we must interpret former AS 46.14.240(c) as allowing recovery of appeal costs. Alyeska suggests that an interpretation of former AS 46.14.240(c) that excludes appeal costs need not violate federal law because the department could recoup those costs via emission fees. As noted above, emission fees cover costs that are generally not associated with service provided to a specific facility, such as rent, utilities, permit program management, administrative and accounting services, and other costs as identified by the department in regulations. [35] Because federal law does not require that each permit holder pay its own costs, but only that the state recover the total costs of administering the permit program from permit holders as a group, [36] the emission fees provision could be viewed as a catch-all provision intended to recover all the costs of the permitting program that were not within the scope of the eight enumerated services set out in former AS 46.14.240(c). Alyeska points out that, unlike the provision authorizing permit administration fees, the emission fee provision allows the department to specify through regulations what costs can be recovered through emission fees. Alyeska argues that the department could have placed administrative appeal costs into this category through regulations. We are not convinced that the statutory definition of emission fees is properly understood as including appeal costs. Unlike the department's rent or utilities costs, the administrative appeal costs of defending a particular permitting decision for a particular facility are directly associated with a service provided to a specific facility. An attempt by the department to recover its appeal costs as emission fees would appear to violate former AS 46.14.250(h)'s requirement that emission fees cover costs that are generally not associated with service provided to a specific facility. By limiting emission fees to indirect costs  those not associated with service provided to a specific facility  the legislature seems to have viewed permit administration fees as the proper vehicle for collecting costs that can be traced to a specific permit holder. We also note that the legislative history of former AS 46.14.240(c) indicates a desire to require individual permit holders to internalize the costs of their own permits. The statute was drafted by a legislative working committee comprised of representatives from various stakeholders in the federal Clean Air Act, including the oil and gas industry. [37] The committee explained that the bifurcated fee system was developed on the policy premise that a cost generator is to be the cost bearer. [38] At a committee meeting, a representative of the oil and gas industry elaborated on this premise: Those people who have very complex permits, that have controversial permits, who don't do a good job on their permits, [should not] get a free ride, and everybody else pays for it. [39] The committee's understanding was that emission fees should be limited to recovering the costs of performing those functions of the permit program that benefit or assist all permit holders through execution of a state permit program. [40] These statements reinforce our conclusion that the legislature intended administrative appeal costs to be recovered through permit administration fees and not through emission fees. Because the legislature created no other fee provision that can reasonably be interpreted as allowing the recovery of appeal costs, an interpretation of subsection .240(c) that excluded such costs would seem to require a conclusion that the legislature did not intend to comply with the Act's mandate to recoup appeal costs. We are unwilling to draw such a conclusion without evidence suggesting that the drafters intended such a result. We therefore conclude that former AS 46.14.240(c) allowed the department to recover the costs of administrative appeals through permit administration fees.