SC Administrative Law Court Decisions

The South Carolina Department of Revenue (DOR) filed a Motion to Amend under SCRCP 59(e).⁽¹⁾

The motion seeks five rulings as amendments to the original order of February 25, 1998:

1. Amend the order to hold that no Class III machine may be operated on the premises here in dispute for six months from the date of the order.

2. Amend the order to state that DOR is entitled to great deference and should not be overruled absent compelling reason.

3. Amend the order to state that DOR's interpretation is reasonable and Andrews and Piedmont failed to offer compelling reasons to overturn DOR's interpretation.

4. Amend the order to state that DOR has consistently applied its interpretation of S.C. Code Ann. § 12-21-2804(A) (Supp. 1997).

5. Amend the order to show that failing to give deference to DOR results in "pandemonium as law enforcement, [DOR], and the regulated business would have no idea as to what rules to follow . . ." and that "a regulated business could find itself attempting to comply with six different interpretations of a statute as each [ALJ] overturned the [DOR]'s construction at will to follow his or her whims."

A. No New Issue Raised

A party cannot use a motion to alter or amend a judgment to present an issue that could have been raised prior to the judgment but was not so raised. Anderson Memorial Hosp., Inc. v. Hagen, 313 S.C. 497, 443 S.E.2d 399 (Ct. App.1994). DOR, however, is not raising any new issue by its motion. Rather, DOR is essentially asserting the order failed to apply certain aids in statutory construction in determining the meaning ascribed to the six month prohibition imposed by S.C. Code Ann. § 12-21-2804(A) (Supp. 1997). Accordingly, no new issue is raised by DOR's motion.⁽²⁾

B. Rulings Considered

DOR's requested rulings either seek a reversal or provide grounds that support a reversal of the February 25, 1998. That order holds that the six month revocation applies to the machines but not to locations.

1. Reconsideration Not Warranted

In the absence of specific prohibition, a party may seek to have the adjudicator change its decision. See Kiawah Resort Associates v. South Carolina Tax Com'n, 318 S.C. 502, 458 S.E.2d 542 (1995) (nothing in the APA prohibits or prevents a party from seeking reconsideration or requesting a rehearing). While permissible, the power to reconsider should be exercised only when there is justification and good cause. See Bennett v. City of Clemson, 293 S.C. 64, 358 S.E.2d 707 (1987) (good cause may be based on the presence of newly discovered evidence, fraud, surprise, mistake, inadvertence or change in conditions); see ALJD Rule 29C (basis for reconsideration found in SCRCP 60(B) 1 through 5 as being mistake, inadvertence, surprise, excusable neglect; newly discovered evidence; fraud, misrepresentation, or other misconduct of an adverse party; void judgment; or the judgment has been satisfied, released, or discharged). Here, while no grounds justify reconsideration, each of the rulings requested by DOR are ruled upon in this order.

2. Specific Consideration of Rulings Sought

DOR's motion essentially presents three positions. First, DOR believes the facts are well established that it has consistently applied its interpretation of S.C. Code Ann. § 12-21-2804(A) (Supp. 1997). Second, under such circumstances, DOR believes that its position is reasonable and should be accorded great deference. Third, in deciding whether to deviate from DOR's position, compelling reasons must be established.

a. Consistently Applied Position

No doubt exists that DOR has consistently applied its position. Judicial notice is taken of the published decisions of the Administrative Law Judge Division and of the numerous instances in which DOR has advanced this position in hearings before the Division. DOR has consistently viewed S.C. Code Ann. § 12-21-2804(A) as imposing a six month prohibition on the use of any Class III machine at the offending location.

However, judicial notice is also taken of the extensive opposition to DOR's view. In hearings before the Division, license holders routinely and repeatedly object to DOR's position. The validity of that position is now pending in the S.C. Supreme Court in the case of Gateway Enterprise, Inc., v. DOR. Thus, the position of DOR is not one which has found routine acceptance by the affected public. On the contrary, DOR's position is far from a settled view.

b. Deference To DOR's Position

The issue in interpreting a statute is what did the legislature intend. Laird v. Nationwide Ins. Co., 243 S.C. 388, 395 S.E.2d 206 (1964). Depending upon the nature of the language under review, an agency's view may or may not be entitled to deference.

i. Plain Meaning

No deference to an agency's position is warranted where the language presents a clear meaning. Glens Falls Insurance Co. v. City of Columbia, 242 S.C. 237, 130 S.E.2d 573 (1963) (no occasion arises for considering an agency's position where the language of the statute is plain and unambiguous and conveys a clear and definite meaning). Further, and of particular significance to this case, the clear and definite meaning will always be applied despite an agency's contrary but consistently followed position. Davidson v. Eastern Fire & Cas. Ins. Co., 245 S.C. 472, 141 S.E.2d 135 (1965) ("An uninsured motorist endorsement that contravenes the requirements of the statute is, to that extent, invalid, regardless of the Department's approval of it.").

Here, the February 25, 1998 order found the statute in dispute was plain and unambiguous. The order holds that the plain language of § 12-21-2804(A) imposes a six month prohibition on either DOR issuing or an owner acquiring licenses on those Class III machines that were in an establishment at the time any machine in that establishment was revoked. Thus, having found the plain meaning of the statute establishes legislative intent, no deference to DOR's position was required.

ii. Ambiguous Meaning

The order held the statute was clear. However, the order further addressed the result that would follow from finding an ambiguity in the statute. Under that examination, the order found that even resort to rules of construction supported the view that the revocation affected the machines but not the location. While the order does not mention deference to DOR's position, in examining the rules of construction, deference was considered but found not to have been a meaningful indicator of legislative intent when compared to other more significant indicators.

When required to apply the rules of construction, the construction of a statute by an agency charged with administering that statute is entitled to most respectful consideration. Stephenson Finance Co. v. South Carolina Tax Commission, 242 S.C. 98, 130 S.E.2d 72 (1963). More particularly, however, the degree of respect rises to one of "great weight" only if the agency position "has been acquiesced in by the Legislature for a long period of time." Etiwan Fertilizer Co. v. S.C. Tax Commission, 217 S.C. 354, 60 S.E.2d 682 (1950).

Here, the Video Games Machine Act became effective July 1, 1993. Thus, even assuming DOR's position was announced, enforced or in some way made known to the Legislature from the first day the statute became effective, DOR's position is less than five years old. Such a time frame is far too short to amount to a showing of acquiescence "by the Legislature for a long period of time." Id. Hence, the short period does not show strong evidence of acquiescence by the Legislature and does not allow according "great weight" to DOR's position. Such is especially so where, as here, the agency position is challenged repeatedly by the affected public. At best, only respectful consideration is due.

The Legislature is presumed to have knowledge of its own laws. See Ingram v. Bearden, 212 S.C. 399, 47 S.E.2d 833 (1948)(a machine was definitely outlawed by prior statute and the General Assembly was deemed to be aware of that fact). Respectful consideration to DOR's position (which consideration relies upon a presumption that the Legislature has knowledge of and gives tacit approval to the agency's actions) pales in comparison to the Legislature's presumptive knowledge of its own laws. The order found that the Legislature intentionally created licensed establishments and created machine licenses. Further, the Legislature defined licensed establishments and demonstrated it clearly knew the difference between machine licenses and establishment licenses. Thus, reliance upon the Legislature's knowledge of its own laws was a far superior indicator of legislative intent than was reliance upon the respectful consideration of DOR's position.

c. Compelling Reasons

DOR asserts that its position should not be deviated from unless compelling reasons are shown and that, from DOR's point of view, no compelling reasons were presented. While others may exist, at least two compelling reasons warrant deviating from DOR's view. First, DOR's position is inconsistent with the plain meaning of the statute such that reliance upon DOR's view places far too much weight on an administrative interpretation. See Stone Mfg. Co. v. South Carolina Employment Sec. Com'n, 219 S.C. 239, 64 S.E.2d 644 (1951) citing F. W. Woolworth Co. v. United States, 2 Cir., 91 F.2d 973, 976) ("At most, administrative practice is a weight in the scale, to be considered, but not to be inevitably followed. * * * While we are of course bound to weigh seriously such rulings, they are never conclusive."). Second, a compelling reason to deviate from DOR's view is that following the position perpetuates an administrative error. Fennell v. South Carolina Tax Commission, 233 S.C. 43, 103 S.E.2d 424 (1958) (an interpretation presented by an administrative position is not so sacrosanct as to be beyond the correction of error; it need not perpetuate error.). In short, sufficient and compelling reasons exist to deviate from DOR's position.

DOR's requested rulings are addressed as follows:

1. Amend the order to hold that no Class III machine may be operated on the premises here in dispute for six months from the date of the order.

DENIED

2. Amend the order to state that DOR is entitled to great deference and should not be overruled absent compelling reason.

DENIED

3. Amend the order to state that DOR's interpretation is reasonable and Andrews and Piedmont failed to offer compelling reasons to overturn DOR's interpretation.

DENIED

4. Amend the order to state that DOR has consistently applied its interpretation of S.C. Code Ann. § 12-21-2804(A) (Supp. 1997).

DOR HAS CONSISTENTLY APPLIED ITS INTERPRETATION BUT THAT INTERPRETATION IS CONSISTENTLY CHALLENGED BY LICENSE HOLDERS.

5. Amend the order to show that failing to give deference to DOR results in "pandemonium as law enforcement, [DOR], and the regulated business would have no idea as to what rules to follow . . ." and that "a regulated business could find itself attempting to comply with six different interpretations of a statute as each [ALJ] overturned the [DOR]'s construction at will to follow his or her whims."

DENIED⁽³⁾

AND IT IS SO ORDERED.

RAY N. STEVENS

Administrative Law Judge

This 17th day of March, 1998

Columbia, South Carolina

1. ALJD Rule 52 applies the SCRCP to resolve questions not addressed by the Rules of the Administrative Law Judge Division. ALJD Rule 29C addresses motions to reconsider the decision reached but does not specifically address motions which seek rulings on matters allegedly raised but not ruled upon. Accordingly, SCRCP 59(e) is applicable, at least in part, to the current motion.

2. To the extent DOR's motion seeks to ensure its statutory construction positions raised in its motion are preserved for appeal, I conclude the positions raised are properly preserved and further I conclude this order rules on the positions raised.

3. Alas, the poor Administrative Law Judge. When agreeing with the agency, the judge is a "rubber-stamp" (so saith the losing citizen); when disagreeing with the agency, the judge is an arbitrary adjudicator acting on pure "whim" (so saith the losing agency). Against such barbs, my colleagues and I take humble shelter under the comforting words of Mark Twain: "Always do right; this will gratify some people and astonish the rest."