OPINION
BURKE, Justice.
This case concerns the regulatory authority of the Alaska Public Utilities Commission (APUC) under the Pipeline Act, AS 42.06.140-.640. In short, we must determine whether the APUC has jurisdiction to regulate the transportation of crude and refined oil through Kenai Pipe Line Company's (KPL) marine terminal facilities. The APUC concluded that it had jurisdiction over all movements of oil, crude and refined. The superior court affirmed the APUC's decision as to the movement of crude oil, but reversed as to the movement of refined oil, holding that "refined oil" was not "oil" within the meaning of the Pipeline Act. Both the APUC and Tesoro Alaska Petroleum Company (Tesoro) appeal from that portion of the superior court's order which held that the APUC did not have regulatory authority over KPL's refined oil transport operations.
FACTUAL AND PROCEDURAL BACKGROUND
A. Statement of Facts
The relevant facts are largely undisputed.
KPL is involved in the transportation of crude and refined oil on the Kenai Peninsula. It performs this function through two divisions: a crude oil pipeline division and a marine terminal division. The headquarters of both divisions is Nikiski, Alaska. At the heart of the present dispute is the movement of oil through KPL's Nikiski facilities. Thus, a detailed description of these facilities and the movement of oil through them is necessary.
KPL's pipeline division consists of two main trunk lines and a receiving tank (T-401). The trunk lines carry crude oil to Nikiski from two Cook Inlet production areas, the Middle Ground Shoals production unit, and the Swanson River and Soldotna Creek production units (East Side Production Units). At Nikiski, the crude oil is (or has been) supplied to two separate refineries (Refineries): one owned and operated by Tesoro, and the other by Chevron USA, Inc. (Chevron). The crude oil is transported
KPL also owns and operates a marine terminal. This facility consists of a wharf, four storage tanks (T-402, T-405, T-407 and T-408), several hundred lineal feet of crude oil lines, a ballast system, a pump station, meters and an office/shop building. These tanks and facilities are also interconnected with the feeder pipelines that run to the Refineries. The APUC's regulation of this marine terminal facility is at issue in these appeals.
Tank T-401 of KPL's pipeline division is interconnected with the tanks and lines of KPL's marine terminal. Thus, KPL has the physical facilities and ability to transfer East Side Production Unit oil from tank T-401 to its marine terminal. KPL can also transfer this oil directly from its main trunk lines to the marine terminal facilities without passing through tank T-401. Presently, however, these interconnections are not used and have not been since 1975.
The movement of oil at KPL's marine terminal can be broken down into three categories: (1) the outward movement of crude oil, (2) the inward movement of crude oil, and (3) the outward movement of refined oil. Each of these movements is more particularly described below.
1. The Outward Movement of Crude Oil
The first movement of oil at issue here involves the outward movement of crude oil originating from the East Side Production Units. In the past, East Side crude oil was transported through KPL's main trunk lines and marine terminal facilities to oil tankers at KPL's wharf. The tankers would then carry the crude oil to other locations for refining.
2. The Inward Movement of Crude Oil
KPL's marine terminal facility is also used to receive crude oil from tankers for transportation to the Refineries. The bulk of this oil is Alaska North Slope (ANS) crude oil from the Valdez terminal of the Trans-Alaska Pipeline System. However, Tesoro also receives some crude oil from production fields on the west side of Cook Inlet, and occasionally from foreign sources.
The ANS crude oil is off-loaded from tankers at KPL's marine terminal, transported via the facility's pump station to the storage tanks (tanks T-402, T-405, T-407, and T-408), and withdrawn as needed by the Refineries. The crude oil from other sources is transferred to the Tesoro refinery via a line owned by Chevron which runs over KPL's marine terminal and connects with a line owned by Tesoro.
3. The Outward Movement of Refined Oil
The third movement of oil involves the outward transportation of "clean" and "residual"
Clean refined oil is transported from the Refineries through KPL's marine terminal via two 14-inch "clean product lines" which are owned by Chevron and connected to Tesoro's refinery.
KPL charges shippers a service fee for loading refined products at its marine terminal. This untariffed fee
B. Current Tariffs Regulating KPL's Marine Terminal Facility
Prior to 1972, pipelines and pipeline facilities such as KPL's were not regulated by the state. In 1972, however, the Alaska Legislature passed the Alaska Pipeline Commission Act, ch. 139, § 1, SLA 1972, codified at AS 42.06. This act created the Alaska Pipeline Commission
Among other things, this Act requires that the services offered by pipeline carriers be governed by tariffs, which must be just, reasonable, and nondiscriminatory. AS 42.06.360-.380.
To comply with these statutory mandates, KPL filed tariffs establishing rates and rules for the intrastate services it offered. At the beginning of this proceeding, KPL had in force two tariffs governing services provided at its marine terminal facility. The tariff referred to as APC No. 5 establishes rates and regulations for the transportation of crude oil from the East Side Production Units to "pipelines of others" or to "ships' rails" at KPL's marine terminal. This tariff sets different rates depending on the origin and destination of the crude oil. APC No. 5 was approved by the Alaska Pipeline Commission on November 27, 1978, effective as of July 1, 1978.
The second tariff in force is APC No. 3. Under this tariff, KPL receives crude petroleum from tankers at its marine terminal, stores it, and delivers it to "pipelines of others" at Nikiski. The charge for this service is provided in the tariff. APC No. 3 has been in effect since August 15, 1975.
It is KPL's attempt to revise these tariffs which underlies the current dispute.
C. Proceedings Below
The present controversy began over five years ago when KPL, by letter dated August 11, 1982 and designated "Tariff Advice Letter No. 3," attempted to cancel its existing tariffs concerning the movement of crude oil through its marine terminal facility. KPL premised its tariff revisions on the assertion that the APUC lacked jurisdiction to regulate KPL's marine terminal facility because the facility (1) is not a "pipeline" or "pipeline facility" under the Pipeline Act, (2) is independent of KPL's other pipeline facilities, and (3) is not currently being used to transport crude oil from "point to point."
With its letter, KPL filed revised tariff documents which in pertinent part can be summarized as follows:
In October, 1982, the APUC suspended KPL's proposed tariff revisions pending further proceedings.
Before the APUC acted on its staff's recommendations, Tesoro petitioned the APUC for leave to intervene in the proceedings for the purpose of arguing the issue of APUC's jurisdiction. Tesoro was allowed such intervention, and briefing was ordered. After extensive briefing by the parties, the APUC issued a bench order announcing its decision in May, 1984. A full explanation of the APUC's reasoning followed in "Order No. 9," issued December 3, 1984. In this order, the APUC concluded:
Accordingly, the APUC rejected KPL's tariff revisions, which would have had the effect of removing KPL's marine terminal facility from APUC regulation, and ordered KPL to file an additional tariff establishing rates for the services it provides in transporting refined products. Specifically, the APUC found:
In reaching the above conclusions, the APUC separately discussed the basis for jurisdiction over each of the three "movements" of oil involving KPL's marine terminal. With regard to the outward movement of crude oil, the APUC rejected KPL's argument that the statutory definition of pipeline did not include the marine terminal facility, and concluded that it had jurisdiction over any intrastate movements of crude oil. The APUC noted that, in the past, KPL had recognized its common carrier obligation to accept intrastate shipments of crude oil without discrimination by continuously maintaining an intrastate tariff, and that KPL had not followed the required procedure or established the justification for abandonment.
The APUC's conclusion that KPL's marine terminal facility is within the statutory definition of "pipeline" or "pipeline facility" also settled the question of jurisdiction over the inward movement of crude oil. It rejected KPL's claim that the "point to point" transportation of oil referred to in the statutory definitions means transportation originating at the wellhead. In so doing, the APUC emphasized that KPL was not free to terminate its established common carrier obligation at will.
Finally, with respect to the movement of refined oil, the APUC rejected KPL's arguments that the commission lacks jurisdiction over the shipment of refined oil by pipeline absent a right-of-way lease executed under AS 38.35. The APUC simply concluded that "[t]he definition of oil in AS 42.06.630(7) plainly includes all oil products, whether refined or naturally occurring."
KPL petitioned for reconsideration of the APUC's order. This request was denied as a matter of law pursuant to 3 AAC 48.105 (eff. 1/13/73; am. 6/29/84).
In March, 1985, KPL appealed the APUC's decision to the superior court, arguing that the APUC's order was discriminatory, clearly erroneous, and constituted an abuse of discretion. KPL further argued that APUC regulation of its marine terminal facility constituted an unlawful taking and violated due process, equal protection, and the Alaska Administrative Procedure Act.
After briefing and oral argument, the superior court, Judge Michael White, pro tem, presiding, entered its Decision on Appeal on July 30, 1986. Applying an "independent judgment" standard of review, the superior court upheld the APUC's jurisdiction over the outward and inward movement of crude oil at KPL's marine terminal. However, the court reversed the APUC's decision that it had regulatory authority over the services KPL provides for the movement of refined oil, reasoning that refined oil is not "oil" as defined in AS 42.06.630(7).
Tesoro, claiming to be the "prevailing party," moved for an award of costs and attorney's fees. KPL opposed, and simultaneously moved that it be awarded attorney's fees. Subsequently, superior court judge Peter Michalski entered an order awarding Tesoro $675.37 in costs and $10,922.80 in attorney's fees, and entered a final judgment for that amount. These appeals followed.
THE APPROPRIATE STANDARD OF REVIEW
Initially, we must determine the appropriate standard of review in this case. Tesoro argues that we should apply a "reasonable basis" standard because the issues raised in these cases involve agency expertise and fundamental policy considerations in an area where the administrative agency has been granted broad regulatory authority. KPL and the APUC, meanwhile, contend that this case involves questions of pure statutory construction within the special competency of the courts, and therefore
At the outset, we note that when the superior court acts as an intermediate court of appeal, no deference is given to the lower court's decision. Amerada Hess Pipeline Corp. v. Alaska Public Utilities Comm'n, 711 P.2d 1170, 1175 (Alaska 1986); National Bank of Alaska v. State, Department of Revenue, 642 P.2d 811, 816 (Alaska 1982); State v. Lundgren Pacific Construction, 603 P.2d 889, 892 (Alaska 1979). Instead, we independently scrutinize directly the merits of the administrative determination. State, Alcoholic Beverage Control Board v. Decker, 700 P.2d 483, 484 n. 4 (Alaska 1985); Union Oil of California v. Department of Revenue, 560 P.2d 21, 23 n. 5 (Alaska 1977); Jager v. State, 537 P.2d 1100, 1106 (Alaska 1975).
We have articulated two standards under which this court will review agency interpretation of statutory terms (i.e., questions of law). One is the rational basis standard, under which we defer to the agency's determination so long as it is reasonable. E.g., National Bank of Alaska, 642 P.2d at 815. The other is the independent judgment standard under which the court makes its own interpretation of the statute involved. Id.
The rational basis test is used where the questions at issue implicate special agency expertise or the determination of fundamental policies within the scope of the agency's statutory function. See, e.g., Matanuska-Susitna Borough v. Hammond, 726 P.2d 166, 175-77 (Alaska 1986) (agency's interpretation of "population" for state revenue-sharing and tax limitation purposes).
Earth Resources v. State, Department of Revenue, 665 P.2d 960, 964 (Alaska 1983) (citations omitted). When applying the rational basis test, we merely seek to determine whether the agency's decision is supported by the facts and has a reasonable basis in law, even if we may not agree with the agency's ultimate determination. E.g., Kelly v. Zamarello, 486 P.2d 906, 918 (Alaska 1971). See generally cases cited supra note 11.
The substitution of judgment standard is applied where the questions of law presented do not involve agency expertise or where the agency's specialized knowledge and experience would not be particularly probative as to the meaning of the statute. E.g., Matanuska-Susitna Borough, 726 P.2d at 175; Glacier State Telephone v. Alaska Public Utilities Comm'n, 724 P.2d 1187, 1189 n. 1 (Alaska 1986). As we recently observed in Earth Resources:
665 P.2d at 965 (emphasis added) (quoting Kelly, 486 P.2d at 916). Application of this standard permits a reviewing court to substitute its own judgment for that of the agency even if the agency's decision had a reasonable basis in law. Id.
The issues in this case all revolve around questions of statutory interpretation requiring the application and analysis of various canons of statutory construction.
Union Oil of California, 560 P.2d at 23 (footnote omitted).
Because this case involves statutory interpretation, we conclude that the independent judgment test is the appropriate standard of review. Accordingly, we need not defer to the interpretation of the APUC, but must independently consider the meaning of the statutes involved. With this in mind, we turn to the merits of these appeals.
DISCUSSION
A. Tesoro's and APUC's Appeals
The APUC determined, in relevant part, that "[t]he definition of oil in AS 42.06.630(7) plainly includes all oil products, whether refined or naturally occurring." (emphasis added). Based on this determination, the APUC concluded that it had regulatory authority under the Pipeline Act over "any service that [KPL] performs in connection with intrastate shipments of crude oil or petroleum products." Thus, the issue we must resolve is whether the APUC was correct in its conclusion that refined oil is within the definition of oil contained in AS 42.06.630(7).
Our starting point in this inquiry is the language of the statute itself construed in light of the purposes for which it was enacted. Commercial Fisheries Entry Comm'n v. Apokedak, 680 P.2d 486, 489-90 (Alaska 1984). Alaska Statute 42.06.630(7) defines oil for the purposes of the Pipeline Act:
(Emphasis added).
Common rules of grammar lead to the conclusion that the term "its products" refers back to the antecedent "crude oil" despite the intervening language. Thus, oil, as defined by AS 42.06.630(7), includes crude oil and crude oil products. The main dispute is whether the phrase "its products" in the definition includes refined oil.
Tesoro and the APUC argue that it does. They contend that the plain language of AS 42.06.630(7) and a comparison of this statute with contemporaneous legislation show that refined petroleum products were intended to be included in the definition of oil. They rely on a number of canons of statutory interpretation to bolster their position.
KPL, meanwhile, argues that the definition of oil in AS 42.06.630(7) includes only those oil products which originate naturally at the wellhead. KPL asserts that the definitions of oil and products under the Right-of-Way Leasing Act, AS 38.35, evidence
The goal of statutory construction is to give effect to the legislature's intent, with due regard for the meaning the statutory language conveys to others. State v. Alex, 646 P.2d 203, 208 & n. 4 (Alaska 1982). In this respect, we have repeatedly stated that unless words have acquired a peculiar meaning, by virtue of statutory definition or judicial construction, they are to be construed in accordance with their common usage. Division of Elections v. Johnstone, 669 P.2d 537, 539 (Alaska 1983), cert. denied, 465 U.S. 1092, 104 S.Ct. 1580, 80 L.Ed.2d 114 (1984); Wilson v. Municipality of Anchorage, 669 P.2d 569, 571-72 (Alaska 1983); State, Department of Revenue v. Debenham Electric Supply, 612 P.2d 1001, 1002 (Alaska 1980). See also AS 01.10.040.
In common usage the products of crude oil would certainly seem to include refined oil. If asked to name a product of crude oil, a reasonable person would surely think of refined products. Indeed, such an individual would likely be at a loss to name a product of crude oil "occurring naturally at the wellhead," which is KPL's strained interpretation.
In addition, the technical definition used in the oil industry of the phrase "its products," in reference to the word oil, generally includes refined oil. See H. Guthrie, Petroleum Products Handbook (1960) (discussing at length crude oil products including gasoline, diesel fuels, heating oils, and other types of refined oil); H. Williams & C. Meyers, Oil & Gas Terms: Annotated Manual of Legal Engineering Tax Words & Phrases 305 (1964) (defining product to include refined oil). Moreover, it is unusual for a technical definition of oil to include the word "product" when referring only to crude oil. See R. Langenkamp, Handbook of Oil Terms and Phrases 89 (1974); Williams & Meyers, supra, at 259.
The legislative development of the definition of oil also supports the position that "products" was intended to include refined oil. As originally enacted in 1972, the definition of oil in AS 42.06.630(7) clearly did not include refined oil. That original definition read:
Ch. 139, § 1(8), SLA 1972. In 1973, the legislature amended the definition to its current status. Of particular significance is the setting in which this amendment occurred.
In 1973, a special session of the legislature was convened to deal with numerous oil and pipeline-related measures. Eight acts were passed at this special session, four of which contained a definition of oil. In two of the acts, the word oil was defined as follows:
Am. to Right-of-Way Leasing Act, ch. 3, § 22(6), FSSLA 1973 (now codified at AS 38.35.230(6)); Common Purchaser Act, ch. 7, § 1, FSSLA 1973 (now codified at AS 31.15.050(3)). In a third act, the very same
This difference in language must have some significance, for "[t]here is a presumption that every word, sentence, or provision was intended for some useful purpose, has some force and effect, and that some effect is to be given to each, and also that no superfluous words or provisions were used." Alaska Transportation Comm'n v. Airpac, Inc., 685 P.2d 1248, 1253 (Alaska 1984) (quoting 82 C.J.S. Statutes § 316 (1953)). See also City of Homer v. Gangl, 650 P.2d 396, 399 (Alaska 1982) (presumption that legislature has not used superfluous words); City and Borough of Juneau v. Thibodeau, 595 P.2d 626, 634 (Alaska 1979). If the term "its products" is construed to mean only the "products" of crude oil occurring naturally at the wellhead, the term is rendered superfluous.
Additionally, we agree with Tesoro's and the APUC's argument that the Pipeline Act and the Right-of-Way Leasing Act should be read together. Both statutes were adopted as part of a comprehensive package of legislation designed to deal with the impact on the state of the Trans-Alaska Pipeline System. They were companion acts designed to delegate to the APUC the necessary authority to regulate pipeline carriers, pipelines and pipeline facilities. They were presented and considered jointly by the legislature. The Right-of-Way Leasing Act specifically sets out what it intended by the use of the word "product:"
AS 38.35.230(8). "When the legislature uses the same term in two closely related statutes, we will normally presume that the legislature intended that term to mean the same thing in both cases." Matanuska-Susitna Borough v. Hammond, 726 P.2d 166, 180 (Alaska 1986). Applying this presumption here, we conclude that the legislature intended the phrase "its products" to include refined oil.
Finally, KPL's arguments require highly strained technical interpretations of words and phrases out of place with our duty to interpret regulatory statutes liberally. Anchorage v. Locker, 723 P.2d 1261, 1263 (Alaska 1986). We conclude that the term "its products" was intended to include refined oil within its purview, and that "oil," as defined by AS 42.06.630(7), includes refined oil. Given this conclusion, it naturally follows that the APUC has regulatory authority over the refined oil services KPL provides at its marine terminal facility. Thus, the APUC's decision is upheld.
B. KPL's Cross-Appeal
The APUC held that it had jurisdiction over the outward and inward movement of crude oil at KPL's marine terminal facility, and the superior court upheld that determination. KPL raises a myriad of arguments in its appeal of that aspect of the superior court decision.
We find little merit in KPL's argument. The interpretation of AS 42.06.630(8) that KPL suggests is hypertechnical and inconsistent with common sense. First, the KPL marine terminal facility is physically connected to the remainder of its pipeline system. It is significant that prior to 1975 the marine terminal facility could correctly be described as part of a "total system of pipe," (as KPL admitted in its trial brief) and therefore a "pipeline facility." KPL cannot be permitted to eradicate the APUC's jurisdiction over it simply by making an operational decision to change the function of one of its facilities. Moreover, it is clear that the marine terminal facility as it exists today is a "total system of pipe" as that term was undoubtedly intended by the legislature: the facility has four storage tanks, several hundred feet of oil lines, a ballast system, a pump station, meters, and an office building. KPL's marine terminal facility logically is within the definition of "pipeline facility" in AS 42.06.630(8) for the outward movement of crude oil, and thus is subject to the APUC's regulatory authority.
As for the APUC's jurisdiction over the inward movements of crude oil, we also find KPL's arguments unpersuasive. It contends that these inward movements do not involve "transportation" as that term is used in AS 42.06.630(8), and therefore the APUC lacks statutory authority to assert jurisdiction.
Again, KPL's statutory interpretation strains logic. There is absolutely no indication either in the statute itself, the legislative history, or the practice of the APUC to support KPL's contention that, for the "transportation" of the oil "from point to point" to fall within the statute, one of the "points" must be a wellhead. The parties have stipulated to the fact that incoming crude oil is "transported" from the tanker docked at the KPL wharf, through the marine terminal lines, to the terminal storage tanks. A plain reading of the statute mandates our conclusion that the inward movements of crude oil do qualify as "transportation from point to point," and thus we hold that the APUC does have jurisdiction over the inward movement of crude oil at the KPL facility.
The balance of KPL's arguments are meritless. We can find no equal protection or due process violation in the APUC's regulation of the KPL marine terminal facility. Finally, we find no abuse of discretion by the superior court in its award of attorney's fees and costs to Tesoro. Our disposition in this case leaves Tesoro the prevailing party on every issue appealed, and thus clearly entitled to attorney's fees. As those costs and fees awarded were not manifestly unreasonable, we find no basis for reversing the superior court's ruling on
CONCLUSION
We agree with the decision of the APUC, and hold that the APUC has jurisdiction to regulate all movements of crude and refined oil through KPL's marine terminal facility. Accordingly, we AFFIRM that part of the superior court's order which upheld the APUC's jurisdiction over crude oil, and REVERSE that part which determined that the APUC's does not have jurisdiction over refined oil.
FootNotes
The other cases in which we have applied the independent judgment standard of review also involve issues of statutory interpretation. See Sea-Land Services v. State, Second Injury Fund, 737 P.2d 793, 795 (Alaska 1987); National Bank of Alaska, 642 P.2d at 816; Hood v. State, Workmen's Compensation Board, 574 P.2d 811, 813 (Alaska 1978); Union Oil of California, 560 P.2d at 23-24; Cook v. Alaska Workmen's Compensation Board, 476 P.2d 29, 32 (Alaska 1970); Aleutian Homes v. Fischer, 418 P.2d 769, 776-77 (Alaska 1966); Northern Corp. v. Saari, 409 P.2d 845, 846 (Alaska 1966).
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