Appeal from the Superior Court No. 3AN-13-08917 CI of the State of Alaska, Third Judicial District, Anchorage, John Suddock, Judge.
Robin O. Brena, Laura S. Gould, and Jon S. Wakeland, Brena, Bell & Clarkson, P.C., Anchorage, for Appellant.
Mary Hunter Gramling, Assistant Attorney General, and Craig W. Richards, Attorney General, Juneau, for Appellee State of Alaska. No appearance by Appellees North Slope Borough and Fairbanks North Star Borough.
Before: Stowers, Chief Justice, Fabe, Winfree, Maassen, and Bolger, Justices.
Under a Department of Revenue regulation, all appeals of oil and gas property tax valuation must be heard by the State Assessment Review Board (SARB), while appeals of oil and gas property taxability must be heard by the Department of Revenue (Revenue). Three municipalities challenged this regulation, arguing that it contradicts a statute that grants SARB exclusive jurisdiction over all appeals from Revenue's "assessments" of oil and gas property. The superior court upheld the regulation as valid, concluding that it was a reasonable interpretation of the statute. But we conclude that the regulation is inconsistent with the plain text, legislative history, and purpose of the statute; therefore, we reverse the superior court's judgment.
II. FACTS AND PROCEEDINGS
A. Regulatory Background
The Alaska Constitution grants the legislature the authority to set "[standards for the appraisal of all property assessed by the State or its political subdivisions." In 1973 the legislature used this authority to establish an overarching regime for the statewide assessment of oil and gas property in order to levy ad valorem taxes. Under this statewide regime, codified at AS 43.56, the State taxes oil and gas property at 20 mills, and municipalities are permitted to tax oil and gas property located within their boundaries at the same rate as they do local property. But the State, through Revenue, manages this assessment process, determining whether property is taxable under AS 43.56 and, if so, its taxable value.
The assessment process begins each year in January when oil and gas property owners file returns listing and describing their taxable oil and gas properties.Revenue may then choose to investigate any information included or omitted on the return. It must also make an initial taxability determination whether an asset is properly deemed taxable oil and gas property under the statute. Revenue then ascribes a valuation to the property, which becomes prima facie evidence of the property's full value. Next, Revenue issues an assessment roll listing all taxable oil and gas property for that year and its assessed value. On or around March 1 of each year, Revenue sends an assessment notice to each owner whose property is included on the assessment roll, and a copy of the notice to each relevant municipality. The statutory scheme provides both taxpayers and affected municipalities with a series of appeals of this preliminary assessment, first to Revenue,  then to SARB,  then to the superior court for a trial de novo. Revenue must then issue a final assessment roll by June 1 of each year.
After the legislature initially established this assessment scheme, all appeals of Revenue's oil and gas property tax assessments were heard by SARB. In 1986 Revenue promulgated a more detailed framework to govern these appeals. Under this framework, appeals of Revenue's valuation of a property proceed on a separate track from appeals of Revenue's determination that a property is taxable under AS 43.56. A property owner or municipality appealing Revenue's valuation of oil and gas property must appeal first to Revenue; Revenue issues an informal conference decision, which can be appealed to SARB. SARB's decision can then be appealed to the superior court for a trial de novo. In contrast, a property owner or municipality appealing Revenue's determination whether property is taxable under AS 43.56 must also appeal to Revenue, which issues an informal conference decision; but an appeal from this informal conference decision is heard by a hearing officer appointed by the Commissioner of Revenue, not by SARB. The hearing officer's decision can then be appealed to the superior court,  but the decision to grant a trial de novo is left to the discretion of the superior court judge.
This regulation also modified who is granted party status in such appeals. Previously, both property owners and affected municipalities were afforded party status in all appeals, while the new regulation affords affected municipalities different rights depending on what the appeal concerns: in valuation appeals before SARB both property owners and the relevant municipality have party status,  but in taxability appeals before Revenue only the appellant is afforded party status.
The Trans-Alaska Pipeline System (TAPS) is an 800-mile-long oil pipeline system that connects the North Slope oil fields to a shipping terminal in Valdez. En route it crosses through the North Slope Borough (NSB), the Fairbanks North Star Borough (FNSB), and the City of Valdez. In February 2013 Revenue issued a notice of assessment for oil and gas property held by the TAPS owners for Assessment Year 2013. The TAPS owners appealed this notice of assessment, objecting both to Revenue's assessed value of the property and its determination that certain pieces of property were taxable as oil and gas property under AS 43.56.
The TAPS owners' two appeals proceeded simultaneously on two separate tracks: Revenue issued an informal conference decision on the valuation appeal, which the owners appealed to SARB, then further appealed to the superior court for a trial de novo. The affected municipalities also cross-appealed SARB's decision on the valuation appeal to the superior court. Revenue issued a separate, confidential informal conference decision on the TAPS owners' taxability appeal, dismissing the appeal for lack of jurisdiction after it found that the appeal actually raised issues of valuation, which "are within the exclusive jurisdiction of . . . SARB under AS 43.56.120 [and] [AS 43.56]. 130."
The TAPS owners appealed this decision to the Commissioner for a formal conference. The TAPS owners and the State then jointly filed a stipulation and motion requesting that the decision dismissing the taxability appeal for lack of jurisdiction be adopted as the final administrative decision of Revenue for purposes of further appeal to the superior court. The TAPS owners also filed an unopposed motion to stay the taxability appeal pending resolution of their separate valuation appeal by the superior court,  which the hearing officer granted.
After repeatedly attempting but failing to obtain information regarding the status of the TAPS owners' taxability appeal, the affected municipalities filed complaints for declaratory and injunctive relief with the superior court. NSB first filed, then Valdez and FNSB (collectively "the intervenors") successfully intervened in the case without opposition, and jointly filed a separate complaint. The municipalities all challenged the validity of 15 AAC 56.015(b)-(d), Revenue's regulation governing taxability appeals from assessments of oil and gas property; they argued that this regulation impermissibly delegates the authority to decide taxability appeals to Revenue, contravening the statute's grant of authority to SARB to hear all appeals from initial assessments of such property.
The intervenors then filed a motion for summary judgment, on which the superior court ruled in a consolidated order, denying the municipalities' requests to invalidate the regulation. The court conceded that Revenue's interpretation was not the only or even the most reasonable interpretation but nonetheless concluded that the regulation was a permissible interpretation of ...