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Southeast Alaska Conservation Council v. State

Supreme Court of Alaska

March 13, 2009

SOUTHEAST ALASKA CONSERVATION COUNCIL and Tongass Conservation Society, Appellants,
v.
STATE of Alaska and University of Alaska, Appellees.

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Katharine S. Glover, Thomas S. Waldo, Earthjustice, Juneau, for Appellants.

J. Anne Nelson, Assistant Attorney General, Anchorage, Talis J. Colberg, Attorney General, Juneau, for Appellee State of Alaska.

James D. Linxwiler, Michael S. McLaughlin, Guess & Rudd P.C., Anchorage, for Appellee University of Alaska.

Before : FABE, Chief Justice, MATTHEWS, EASTAUGH, and CARPENETI, Justices.

OPINION

MATTHEWS, Justice.

I. INTRODUCTION

In 2000 and 2005 the legislature passed two bills (collectively, the act) conveying approximately 250,000 acres of land to the University of Alaska. The act directed that the net proceeds from the University's sale or use of the property be deposited in the University's endowment trust fund, an existing fund from which only earnings may be spent. Southeast Alaska Conservation Council and Tongass Conservation Society brought suit challenging the act, alleging that it violates article IX, section 7 of the Alaska Constitution by improperly dedicating state funds. The superior court granted summary judgment to the State and University, holding that the transfer of land and net proceeds from land under the act does not violate the dedicated funds clause and, in the alternative, that the University is exempt from that constitutional provision. The conservation groups appealed. We hold that (1) the sections of the act committing proceeds from the granted lands to the endowment trust fund are unconstitutional under the dedicated funds clause and (2) those sections are not severable from the remainder of the act, with the exception of provisions creating a research forest.

II. FACTS AND PROCEEDINGS

In March 2000 the legislature passed Senate Bill 7,[1] which allowed the University of

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Alaska to select 250,000 to 260,000 acres of land over which it would take title.[2] All " net income derived from the sale, lease, or management of the land selected by and conveyed to the University of Alaska" was to be placed and held in the University's endowment trust fund (ETF).[3] State law mandates that the principal of the ETF be held in perpetuity [4] and that " [t]he total return from the [ETF] shall be used exclusively for the University of Alaska." [5]

The following month, Governor Tony Knowles vetoed S.B. 7.[6] The legislature voted to override the veto by a margin normally sufficient to do so but below the three-fourths majority required to override vetoes of appropriation bills.[7] We ruled that the bill's provisions did not constitute appropriations, thus allowing the bill to become law; in so doing, we " decline[d] to address the question of whether S.B. 7 violates the constitutional prohibition on dedications because the matter was not fully litigated below." [8] On remand, the superior court refused to permit conservation groups to intervene to litigate the dedication issue.

In 2005 the legislature passed House Bill 130.[9] That bill amended S.B. 7, rescinding the University's right to choose the land it would receive and instead conveying " by quitclaim deed" land identified by the " University of Alaska Land Grant List 2005." [10] H.B. 130 retained the requirement that net proceeds from the land be placed in the ETF.[11]The bill also established a " University Research Forest" on certain parcels of conveyed land to be used for " advancing research into forest practices, ecology, wildlife management, and recreation." [12]

Southeast Alaska Conservation Council and Tongass Conservation Society (collectively " SEACC" ) filed suit against the State of Alaska and the University of Alaska in the superior court in April 2007. SEACC argued that the act violates article IX, section 7 of the Alaska Constitution, which mandates that " [t]he proceeds of any state tax or license shall not be dedicated to any special purpose." [13]

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Ruling on cross-motions for summary judgment, the superior court upheld the act. The court first addressed " whether the proceeds from state land are the proceeds of a tax or licence," and ruled they are not. Despite the " substantial persuasive weight" of precedent from this court suggesting a contrary conclusion, the superior court held that the language and history of the dedicated funds clause do not support a broad reading of the text. The court next considered " whether the conveyance of revenue producing land to the University, and placement of the income from such land in an endowment trust fund for the University, can be considered a dedication of state revenues," and concluded, as an alternative reason for upholding the act, that it is not. The superior court reasoned that because the University is constitutionally chartered as a " body corporate" and explicitly permitted by the constitution to hold title to its lands,[14] it " would be illogical to assume the constitution was intended ... to divorce management of the land from the ability to receive financial benefits from the land."

The State moved to reconsider, arguing that the superior court need not have ruled on the meaning of " state tax or license" and should have based its decision solely on the alternative ground. The State contended that the court's narrowing of the scope of the dedicated funds clause was legally incorrect and, as a practical matter, would have a " profound" impact on the finances of Alaska. The superior court denied the motion, noting that its original decision " expressly does not apply to oil or gas royalties" and so would not have great significance for the state budget.

SEACC filed an emergency motion for injunction pending appeal to this court. A single justice granted that motion on June 27, 2008, enjoining the State from conveying property to the University pursuant to the act and enjoining the University from disposing of property it had already received. Both the State and the University challenged the order, and, in response, we vacated the injunction prohibiting the State from conveying property to the University but left in place the injunction against the University. We also ordered that SEACC's appeal proceed on an expedited schedule.

III. STANDARD OF REVIEW

We review decisions granting summary judgment de novo and will affirm them " when there are no genuine issues of material fact and the prevailing party is entitled to judgment as a matter of law." [15]

Questions of constitutional and statutory interpretation, including analysis of the constitutionality of a statute, " are questions of law to which we apply our independent judgment." [16] We will adopt " the rule of law that is most persuasive in light of precedent, reason, and policy." [17] We presume statutes to be constitutional, and the party challenging the statute bears the burden of showing otherwise.[18]

IV. DISCUSSION

A. Article IX, Section 7 Prohibits the Dedication of Income Derived from Land Conveyed to the University of Alaska.

This case calls on us to consider once again the scope of article IX, section 7 of the Alaska Constitution, which prohibits the earmarking of state funds for ...


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