Court Opinion

ID: 9541642
Source: CourtListenerOpinion
Date Created: 2023-08-07 16:27:21.930043+00
Date Added: 2024-06-11T15:04:15.220899
License: Public Domain

EASTAUGH, Justice,
with whom CARPENET1, Justice, joins, dissenting.
I. INTRODUCTION
Because I think the Department-of Natural Resources (DNR) had authority to require the Jerrels to mark their horses visibly and permanently, I dissent.
The Jerrels kept about thirty-five horses on DNR grazing leaseholds. DNR received complaints alleging that the Jerrels allowed their horses to run wild through the countryside, destroying neighbors’ lawns and fields, breaking fences, endangering traffic, instigating threatening situations, imperiling children, and possibly causing a shootout and a death.
In response to the complaints, DNR, through its Division of Land and Water Management, invoked 11 Alaska Administrative Code (AAC) 60.070 (1970) and required the Jerrels to mark their horses by means plainly distinguishable at twenty feet. DNR eventually terminated the Jerrels’ leases because they failed to mark their horses. After a hearing, DNR concluded that even absent the twenty-foot visibility requirement, only branding provided a sufficient means of identification. The Jerrels again failed to comply and DNR affirmed the termination.
This court reverses, holding that the DNR’s Division, of Land and Water Management’s “ad hoc interpretation of the livestock marking requirement is a regulation that was not adopted in accordance with the Administrative Procedure Act.”1 The court also rejects DNR’s alternative argument that it permissibly terminated the leases because the Jerrels did not mark their horses in any fashion.2
I disagree with both of the court’s conclusions.
II. DISCUSSION
A. Standard of Review
Whether agency action is a regulation is a question of law that does not involve agency expertise.3 We therefore substitute our judgment for that of the agency.4 An agency’s interpretation of its own regulation, however, is reviewed under a reasonable basis standard and is normally given effect unless it is plainly erroneous or inconsistent with the regulation.5 And we describe an agen*146cy’s discretionary decision that does not require formal procedures as “quasi-executive” and apply an abuse of discretion standard.6
B. DNR’s Action Was Not a “Regulation.”
Did DNR’s interpretation of its requlation offend the Administrative Procedure Act [APA]? The answer lies in whether the interpretation was itself a “regulation.”7
The statutory authority for the state’s governance of its leased grazing lands lies in AS 38.05.020, which permits DNR’s commissioner to “establish reasonable procedures and adopt reasonable regulations necessary to carry out” the lands chapter, and AS 38.05.070, which requires the director of DNR’s Division of Lands (now the Division of Land and Water Management) to determine the limitations, conditions, and terms of state leases.
Those two statutes gave DNR authority to determine reasonable lease conditions and to adopt reasonable regulations. DNR duly promulgated the regulation disputed here, 11 AAC 60.070, some seventeen years before the present dispute arose. The first sentence of that regulation states that all livestock on a state grazing lease “shall be properly identified” and that the identification shall be registered in accordance with AS 03.40.010-270. The second sentence delegates discretion to the division director who, under his proprietary authority, “may require” that livestock on a state grazing lease “be tagged, dyed, or otherwise marked as a control on numbers permitted on a lease in accordance with the annual operating plan.”8
All four of the Jerrels’ leases required the leaseholder to comply with regulations promulgated under the lands chapter.
When applying 11 AAC 60.070 to the Jer-rels, the division stated that to be “properly identified,” the Jerrels’ range horses must be identifiable at a distance of twenty feet. The court here decides that the division’s application of 11 AAC 60.070 to the Jerrels was a “regulation.” In doing so, it states that “DNR developed the visibility requirement precisely in order to interpret, make specific, and implement the statutory requirement that a mark or brand ‘show[ ] distinctly.’ ”9 But I think more analysis is required to decide the issue presented. In numerous cases we have undertaken a more analytical approach before deciding whether an agency’s action is a regulation that must be promulgated under the APA.10 Today’s opinion fails to note the substantive distinctions between agency action that is regulatory and agency action that simply interprets an existing regulation and applies that regulation to the circumstances at hand. It also fails to note the distinction between the regulatory authority of DNR and the proprietary authority of the DNR division charged with managing these leases. To adequately analyze DNR’s action here, we must address those distinctions.
Agency action creates a regulation when it establishes a future course of conduct, has the effect of a standard of general application, or makes an addition of substance to an existing policy or regulation.11 But agency *147action does not create a regulation when it implements existing policy decisions and is not plainly erroneous or inconsistent with an existing regulation.12 And agency action does not constitute a regulation when it merely conditions an existing right.13
The agency’s action here was not the equivalent of a new regulation. The division did not create a standard of general application when it wrote its June 28, 1990, letter to the Jerrels, or at any later time in dealing with the Jerrels. The June 28 letter simply stated that the division “requires (regardless of the method used) that your mark must be plainly distinguishable from a distance of 20 feet.” It referred to “your” mark, not the marks of all leaseholders. It did not publish that letter and there is no evidence it has since relied on it with respect to other leaseholders, or has treated it as having general application. Rather, as the court acknowledges, the marking requirement was in response to circumstances specific to the Jerrels’ horses, namely the complaints of neighbors that the horses were loose and created hazards.14
Moreover, the marking requirement applied to the Jerrels did not establish a future course of conduct; DNR did not issue a directive requiring all leaseholders to brand them livestock or adhere to a twenty-foot visibility standard, regardless of their livestock’s history or characteristics. Instead, the agency simply applied existing agency policy — that all livestock on state grazing leases be marked for identification — to the circumstances presented; It did not intimate ■that it would impose the same technical requirements on all leaseholders, regardless of circumstances. Indeed, a twenty-foot visibility might be needless for docile and easily gathered species, and insufficient for beasts more feral than the Jerrels’. And hot-branding would be useless for species with long coats. The very reason why the division even acted here, to deal with claims that these leaseholders’ animals were dangerous and destructive, suggests a case-specific interpretation of the existing marking regulation. And the court’s own characterization of the interpretation as “ad hoc”15 is at odds with an intent to adopt a twenty-foot visibility requirement of general application.
For similar reasons, I disagree with the court’s assertion that the division’s action was a regulation because it affected the public.16 Its “ad hoc” interpretation17 was adopted for a specific purpose. The interpretation tailored to the Jerrels’ livestock does not affect the public. DNR’s directive here was not directed to the public, but to the Jerrels only: the twenty-foot visibility requirement was expressed in an agency letter sent only to the Jerrels; branding was recommended as a result-of the Jerrels’ individualized agency hearing; and DNR Commissioner Noah affirmed that recommendation after reviewing the Jerrels’ particular circumstances. DNR did not publish or communicate to the public either the twenty-foot visibility requirement or the branding requirement. And DNR did not require other leaseholders or “the public” to abide by ei*148ther standard. DNR’s actions do not govern the actions of any individuals aside from the Jerrels.18
DNR’s existing policy, reflected in 11 AAC 60.070, requires identification “so that the brand or mark shows distinctly.”19 It requires all livestock on a state grazing lease to be “properly identified.”20 Requiring the Jerrels to brand or visibly mark their horses is neither plainly erroneous nor inconsistent with that regulation.
Under the regulation and the terms of their lease, the Jerrels were already obliged to identify their livestock. Requiring branding, as opposed to allowing a different type of marking, did not affect or add to the substance of that obligation. Requiring branding merely altered the way in which the Jerrels had to satisfy that obligation. The regulation gave the division discretion to require an adequate method of marking. This discretion allowed the division to administer state leases and to prevent activities on its leaseholds from harming the public. It also gave the division the flexibility to respond to specific circumstances arising on state leases.
The court also reasons that because the division’s visibility requirement “supplemented,” “revised,” and “made specific” the marking requirements of 11 AAC 60.070, DNR was required to follow APA procedures.21 First, as discussed above, the division’s requirement did not alter the substance of what the Jerrels were already required to do, although it specified how they were to comply with the regulation. Second, even if the division’s action were an additional requirement, 11 AAC 60.070 authorizes it to impose additional marking requirements on a lease-specific basis.22 DNR’s commissioner interpreted 11 AAC 60.070 as giving the division proprietary authority, as a lessor, to impose additional marking requirements on particular leases. He stated:
“In addition,” the regulation expressly provides for the director of the Division of Land to impose supplementary, lease-specific marking requirements. If the director decides to impose extra marking requirements on a particular lease, he must do so by giving notice to the lessee in question, not by adopting a regulation of general applicability. 11 AAC 58.580. I find that the Division of Land was within its legal rights as lessor to impose the additional requirement that whatever mark the Jerrels used must be visible at 20 feet.
Although an agency’s characterization of whether it has effectively adopted a new regulation is not entitled to deference, I agree with the commissioner’s reasoning because it accords with our previous distinctions between regulatory and non-regulatory agency action. It also accords with the distinction between delegated sovereign and proprietary authority.
The legislature delegated no sovereign authority to the division' — the entity that the court here holds created a “regulation.”23 As the commissioner noted in his decision, when the legislature gave the division responsibility for leasing state-owned land, it granted the division no powers beyond the proprietary authority available to any private landowner, including the ability to enter into and terminate contracts pertaining to those lands.24 The division was acting here in its proprietary role as the lessor of state lands.
We have described an agency’s discretionary decision that did not require formal procedures as “quasi-executive.”25 This court has previously stated that “DNR regularly makes decisions that are quasi-executive in *149nature and do not constitute regulation under the APA even when one or more indices of a regulation are present.”26 And when an agency makes quasi-executive discretionary decisions authorized by the legislature we review only for abuse of discretion.27 The court should therefore- review, the division’s action here only for abuse of discretion.
The remaining question is whether the division abused its discretion. I conclude that requiring the Jerrels to visibly mark their livestock was a reasonable and not arbitrary exercise of administrative discretion. The complaints concerning the Jerrels’ horses warranted a visibility requirement and justified the division’s conclusion that it was necessary to be able to identify the beasts from a reasonably safe distance. In requiring permanent and visible marks, the division could permissibly consider the danger that large, ill-tamed animals pose to observers trying to discern small marks, the Jerrels’ past failures to contain and account for their horses, and the need to identify the horses to determine under- or over-utilization and to create a range conservation plan. Given these circumstances, the division could justifiably' invoke the regulation and its own discretion to require visible markings in a form that prevented their removal or transfer. DNR here concluded that branding was practical because it was both permanent and visible. A practical solution to a problem is reasonable and not arbitrary.28
The court’s holding here would require DNR to promulgate a new regulation each time it deals with leaseholders who do not wish to follow state regulations or the terms of their leases. According to the court, to lawfully manage the Jerrels’ lease, DNR should have promulgated a specifically tailored regulation allowing hot-branding of horses or a specific twenty-foot visibility requirement. I would not saddle DNR with such an obligation. Such á requirement would seem to mandate promulgating immutable standards such as a ten-foot visibility requirement for Shetland ponies and sheep, a twelve-foot standard for calves, and a thirty-foot standard for longhorn steers. The legislature apparently disagreed with any such notion when it gave DNR and the division discretion to manage individual leases and to set the terms and conditions of those leases. That discretion is not unbridled, but it was not exceeded here. The court’s holding today effectively prevents agencies from interpreting their own regulations or contracts and from exercising their delegated discretion to resolve disputes, unless they promulgate new regulations filling the inevitable interstices in existing regulations.
C. DNR Did Not Err when It Terminated the Jerrels’ Leases for Failing to Comply with 11AAC 60.070<
The court rejects DNR’s argument that the Jerrels’ total failure to mark their animals justified terminating the leases.29 The Jerrels’ failure had two effects. It prolonged the difficulties in holding them responsible for their animals. And their failure to follow any reasonable, effective alternative — a mark large enough to be read by an observer at a safe distance and permanent enough to prevent identity-switching — confirms that a permanent, visible mark was a reasonable, per-jmissible, administrative choice within the agency’s discretion.
The court asserts that DNR’s “shifting interpretations” of the meaning of the marking requirement hampered, the Jerrels’ attempts at compliance and thus that their total non-compliance must be excused.30 But DNR only “shifted” its meaning to allow the Jerrels to propose a feasible alternative. *150The Jerrels bore the responsibility for identifying some other method of equivalent visibility and permanence that would satisfy DNR’s duty to administer these leases and protect other persons and landowners. Before mandating branding, DNR allowed the Jerrels two years to propose a workable alternative. The Jerrels proposed tattooing and a plastic tagging method. After seriously considering these alternatives, the hearing officer ultimately rejected them as not sufficiently permanent or visible.31 The fact that DNR gave the Jerrels two years to come up with an alternative solution — from 1990 to 1992 — does not excuse the Jerrels’ complete failure to provide evidence that their horses had been branded. Even after the branding requirement was clarified, the Jerrels were given two more years to comply before the leases were finally terminated in 1994. The court’s opinion notes that DNR believed that the Jerrels worked with it in good faith until 1990.32 But by failing to consider the Jer-rels’ subsequent four years of promises, delays, and total non-compliance before DNR terminated the leases, the court fails to give the required deference to permissible agency action.
The court’s opinion expresses concern that DNR “singled out” the Jerrels and implies that DNR varied “the requirements of its regulations at a whim.”33 First, DNR did not single out the Jerrels. Their actions prompted individualized attention. DNR had authority to interpret its regulation as it did, and a duty to rein in the Jerrels’ animals. The record strongly suggests that DNR worked in good faith, dealing patiently with both the Jerrels and their neighbors. Second, unless DNR had absolutely no authority to interpret its regulation on a lease-by-lease basis, it seems inconsistent to reason that a requirement specific to the Jerrels could somehow be a regulation of general application.
D. The Jerrels’ Other Arguments Fail.
Given this conclusion, I would reach the Jerrels’ Open Meetings Act34 and due process arguments because they would no longer be moot.
There was no Open Meetings Act violation; DNR simply listened to public complaints about loose horses. Any information gathered by DNR as a result of those investigations was not conclusive on any issue in dispute before the hearing officer or the commissioner.
The Jerrels did not preserve their procedural due process issues at the agency stage. They first raised them in their reply brief in their superior court appeal. That is too late. They did not claim, at a time when the agency could do something about it, either that DNR gave them inadequate notice or that the hearing was deficient. I would not consider the due process issues to be so important as to establish plain error that could justify reviewing these unpreserved issues. In any event, the Jerrels received a full hearing before a hearing officer and had an opportunity to present evidence bearing on, among other things, what marks and brands might be sufficient. And they had ample opportunity following the hearing officer’s decision to fulfill the branding requirement.
IV. CONCLUSION
I would therefore affirm.

.See Op. at 139.

. See Op. at 144-145.

. See Kachemak Bay Watch, Inc. v. Noah, 935 P.2d 816, 825-26 (Alaska 1997).

. See id. at 821.

. See Board of Trade, Inc. v. State, Dep't of Labor, 968 P.2d 86, 89 (Alaska 1998).

. See Kodiak Seafood Processors Ass’n v. State, 900 P.2d 1191, 1197 (Alaska 1995) (citing Olson v. State, Dep't of Natural Resources, 799 P.2d 289, 292-93 (Alaska 1990)); see also Kachemak Bay Watch, 935 P.2d at 825.

. See AS 44.62.640(a)(3).

. 11 AAC 60.070 provides in full:
All livestock permitted on a state grazing lease shall be properly identified and such identification registered in accordance with AS 03.40.010-03.40.270. In addition, the director may require that the livestock be tagged, dyed or otherwise marked as a control on numbers permitted on a lease in accordance with the annual operating plan.

. Op. at 143.

. See, e.g., Kachemak Bay Watch, 935 P.2d 816; Usibelli Coal Mine, Inc. v. State, Dep’t of Natural Resources, 921 P.2d 1134 (Alaska 1996); Gilbert v. State, Dep't of Fish & Game, 803 P.2d 391 (Alaska 1990); State v. Northern Bus Co., 693 P.2d 319 (Alaska 1984); Kenai Peninsula Fisherman's Coop. Ass’n v. State, 628 P.2d 897 (Alaska 1981); State v. Tanana Valley Sportsmen's Ass’n, 583 P.2d 854 (Alaska 1978).

. See Gilbert, 803 P.2d at 396-97 (concluding that agency policy limiting fishery before escapement goals were met was regulation because it modified commercial fishery limits); Kenai Peninsula Fisherman's Coop., 628 P.2d at 905-06, 905 n. 20 (holding that agency classification was regulation subject to APA because it intended to regulate future conduct affecting fishery rights by *147establishing salmon use priority); Tanana Valley Sportsmen’s Ass’n, 583 P.2d at 858-59 (holding that verbal requirement of “need'' not contained in hunting regulation was addition of substance and thus regulation under APA).

. See Usibelli Coal Mine, 921 P.2d at 1148-49, 1149 n. 24 (holding that agency decision calculating royalties was not regulation because it did not involve making of policy decisions and did riot make addition of substance); Northern Bus Co., 693 P.2d at 323 (concluding that agency directive to use certain standard in awarding contracts was not regulation when agency had repeatedly required that standard and when standard was consistent with existing regulation).

. See Messerli v. Department of Natural Resources, 768 P.2d 1112, 1117-18 (Alaska 1989) (concluding that policy manual was not regulation because definitibns in manual merely conditioned already existing right), overruled on other grounds by Olson v. State, Dep't of Natural Resources, 799 P.2d 289, 292-93 (Alaska 1990) (holding that rational basis test used in Messerli was incorrect and employing abuse of discretion standard of review for discretionary acts not requiring formal procedures to allow agencies latitude to act commensurate with their discretion).

. See Op. at 143-144.

. See Op. at 139.

. See Op. at 143-144.

. Op. at 139.

. See Kodiak Seafood Processors, 900 P.2d at 1197 (agency action was not regulation when it affected only one individual).

. AS 03.40.020; see 11 AAC 60.070.

. 11 AAC 60.070.

. Op. at 144.

. See 11 AAC 60.070.

. See AS 38.05.035.

. See AS 38.05.005 (establishing Division of Lands); AS 38.05.020(b)(1) (stating that DNR Commissioner may adopt reasonable regulations); AS 38.05.035 (showing that Division of Lands director has not been delegated regulatory authority).

. See Kachemak Bay Watch, 935 P.2d at 825; Kodiak Seafood Processors, 900 P.2d at 1197.

. Kachemak Bay Watch, 935 P.2d at 825-26.

. See id. (holding that DNR’s exercise of task assigned to it by legislature invariably involved exercise of agency discretion and did not constitute regulation under APA nor abuse of discretion); Kodiak Seafood Processors, 900 P.2d at 1197-98 (holding that issuance of commercial fishing permit for closed waters to one individual was not regulation and was not abuse of discretion).

. See State v. Anderson, 749 P.2d 1342, 1346 (Alaska 1988) (holding that agency’s practical method for accomplishing its goal of safe disposal systems was reasonable and not arbitrary).

. See Op. at 144-145.

. See id.

.Although he noted that the tagging alternative "seems like a feasible method,” the hearing officer ultimately recommended that the Jerrels be required to hot brand most of their horses because “none of the other methods offers sufficient means of identification.” He recommended that the Jerrels be allowed to identify up to eight horses, whose show value would be reduced by a hot brand, with tags and permanent tattoos. These particularized alternatives were not specified by the regulation, either, and would seem to violate the same promulgation standards the court relies on today.

. See Op. at 145.

. Op. at 144.

. See AS 44.62.310-.312.