      Notice: This opinion is subject to correction before publication in the P ACIFIC R EPORTER .
      Readers are requested to bring errors to the attention of the Clerk of the Appellate Courts,
      303 K Street, Anchorage, Alaska 99501, phone (907) 264-0608, fax (907) 264-0878, email
      corrections@appellate.courts.state.ak.us.



               THE SUPREME COURT OF THE STATE OF ALASKA

ELIZABETH H. ROLLINS,      )
                           )                            Supreme Court No. S-14760
              Appellant,   )
                           )                            Superior Court No. 4FA-11-01678 CI
    v.                     )
                           )                            OPINION
STATE OF ALASKA,           )
DEPARTMENT OF PUBLIC       )                            No. 6842 - November 22, 2013
SAFETY, ALCOHOLIC BEVERAGE ) 

CONTROL BOARD,             )

                           )

              Appellee.    )

                           )


              Appeal from the Superior Court of the State of Alaska,
              Fourth Judicial District, F airbanks, Michael P. McConahy,
              Judge.

              Appearances: Elizabeth H. Rollins, pro se, North Pole,
              Appellant. Harriet Dinegar Milks, Assistant Attorney
              General, and Michael C. Geraghty, Attorney General, Juneau,
              for Appellee.

              Before: Fabe, Chief Justice, Winfree, Stowers, Maassen, and
              Bolger, Justices.

              BOLGER, Justice.

I.    INTRODUCTION
              Elizabeth Rollins appeals the superior court’s decision upholding the
Alcoholic Beverage Control Board’s determination to deny her application for a waiver
of the annual operating requirement for her liquor license. Rollins argues that: (1) the
Board’s decision was not supported by the evidence; (2) she was improperly assigned
the burden of proof; (3) the hearing before the administrative law judge violated her right
to due process; and (4) the Board’s selective enforcement of its statutes violated her right
to equal protection. We conclude that Rollins properly bore the burden of proof on the
issue of whether she was entitled to a waiver, that the record supports the Board’s
decision, and that the Board proceedings did not violate her constitutional rights. We
therefore affirm the superior court’s decision to uphold the Board’s action.
II.    FACTS AND PROCEEDINGS
              Elizabeth Rollins purchased a beverage dispensary license (liquor license)
in late 1990.1 Rollins attempted to open a bar on a property she owned on Old
Richardson Highway, but was, for several years, unsuccessful.2             Alaska Statute
04.11.330(a)(3) contains a requirement that an applicant for renewal of a liquor license
must operate the licensed premises “for at least 30 eight-hour days during each of the two
preceding calendar years . . . .” Each year from 1991 through 1994, Rollins applied for
a waiver of the 30-day annual operating requirement for varying reasons.3 Each year the
Board granted Rollins a waiver.4
              In December 1995, Rollins applied for her fifth waiver of the annual
operating requirement. In her application Rollins explained that she attempted to open

       1
            Rollins v. State, Dep’t of Revenue, Alcoholic Beverage Control Bd., 991
P.2d 202, 205 (Alaska 1999).
       2
              Id.
       3
             Id. at 205-06 (detailing Rollins’s struggles to complete the renovations
required to obtain the permits necessary to open the bar and her attempts to sell the
property and open the bar at another location).
       4
              Id. at 205.

                                            -2-                                       6842

the bar, but needed extensive renovations in order to receive a health permit, and she
could not complete those renovations by December 1, 1995. The Board denied her
request for a waiver under the regulation governing a third or subsequent consecutive
application for a waiver.5 Because a waiver was required to renew her license, the Board
also denied the renewal of her liquor license. Rollins appealed.
             In Rollins v. State, Department of Revenue, Alcoholic Beverage Control
Board, we upheld the superior court’s decision upholding the Board’s determination that
the Board had the authority to enact the regulation governing consecutive applications
for waiver and held that the Board’s decision was supported by substantial evidence.6
However, we granted Rollins leave to file an Alaska Civil Rule 60(b)(3) motion for relief
from judgment based on a misrepresentation the Board had made in the superior court.7
On remand, the superior court granted Rollins relief from its earlier judgment and
reversed the Board’s denial of the waiver application. In 2003, the Board sent Rollins
a letter proposing terms for a settlement (the 2003 settlement). Rollins agreed to the
terms outlined in the letter. According to the terms, the Board would grant her a fifth
consecutive waiver “with the express warning that it is a final waiver of the operating
requirement and no future waivers will be granted for this license.” The letter also


      5
              Former 15 Alaska Administrative Code (AAC) 104.170(e) (1996) (now
numbered 3 AAC 304.170(e)) provided, in relevant part, that the Board “will, in its
discretion, deny a third or subsequent consecutive application for waiver unless the
licensee clearly shows that the licensed premises were not operated because the premises
were condemned or substantially destroyed by any cause.”
      6
             Rollins, 991 P.2d at 206-11.
      7
              Before the superior court, the Board represented that other licensees had
been treated equally to Rollins. But the Board acknowledged to a third party that it had
become stricter in enforcement, and Rollins was the first person to be affected by this
stricter enforcement. Id. at 212-13.

                                            -3-                                    6842

specified that the license may only be transferred to another licensee with an express
warning that “[t]he Board currently reviews waiver histories by license” and “[t]he
requirement that the license be operated for 30 consecutive days in the calendar year
2004 will transfer to the new licensee.”
             After the 2003 settlement, Rollins applied to transfer her license to a new
location on Old Airport Way. Rollins operated at the Old Airport Way location
beginning in August 2004. In May 2005, Rollins sold the license to Tracy Hester.
Under the agreement, Rollins retained a security interest in the license. Hester operated
the license until mid-2006 when she disappeared and became delinquent in her payments
to Rollins. Although Hester had disappeared, Rollins claims the building owner at Old
Airport Way continued to operate the license.
             Rollins commenced foreclosure proceedings on the license in October
2006. She also renewed the license. At some point in mid-2007, Rollins began
operating the license again.
             Rollins operated the license at the Old Airport Way location until May or
June 2008. After she repeatedly noticed her alcohol was missing and received reports
that the building owner had been opening the bar after hours, Rollins shut down
operations and vacated the property. However, the license remained registered to the
Old Airport Way location.
             In June 2009, Rollins saw an advertisement indicating that another bar was
moving to the Old Airport Way location. She filed an application to transfer her license
from the Old Airport Way location to “No Premises.” Around the same time, the Board
became aware that Rollins had lost the lease on the Old Airport Way location and had
not operated her license since May 2008. In a letter to Rollins sent in August 2009, the
Board informed Rollins that she “must find a suitable location and file a transfer
application, and be able to operate the license for at least 30 eight-hour days in 2009.”

                                           -4-                                     6842

The letter reminded Rollins that under the terms of the 2003 settlement letter, no future
waivers would be granted for the license.
             In an attempt to operate her license, Rollins prepared a business plan and
tried to obtain a bank loan. But the bank declined to make a loan. Rollins inquired about
leasing the premises formerly occupied by the bar that had moved to the premises she
had vacated, but she did not want to share the space with a restaurant that had already
leased part of the property. Rollins also spoke with a real estate agent about other
possible locations and placed an ad in the newspaper offering the license for sale.
             On October 21, 2009, Rollins filed an application for waiver, marking her
application as the “first waiver request.” In her application, Rollins indicated that she
planned to operate the license at the Old Richardson Highway location (the same location
that was the subject of the 1992-95 waivers), but noted that she would need to complete
renovations to convert the space into a bar and obtain the necessary permits. After the
Board voted to deny Rollins’s waiver application at a meeting in May 2010, Rollins
invoked her right to a formal hearing.
             An administrative hearing was held on November 10, 2010 in front of an
Administrative Law Judge (ALJ). Rollins represented herself at the hearing. The ALJ
issued a proposed decision affirming the Board’s denial, and the Board adopted the
decision on March 24, 2011. Rollins filed a request for reconsideration, which the Board
denied. Because Rollins’s application for waiver was denied, her application for license
renewal was also denied.8
             Rollins appealed to the superior court. The superior court upheld the
Board’s decision and rejected Rollins’s due process and selective enforcement claims.
Rollins now appeals to this court.


      8
             See AS 04.11.330(a)(3); 3 AAC 304.170(g).

                                            -5-                                    6842
III.	   STANDARD OF REVIEW
              Where the superior court acts as an intermediate appellate court, we
“independently review the merits of the underlying administrative decision.”9 The
“substantial evidence” standard applies to questions of fact, and the “reasonable basis”
test applies to questions of law involving agency expertise.10 “We apply our independent
judgment to questions of law that do not involve agency expertise, including
constitutional questions.”11
IV.	    DISCUSSION
              Alaska Statute 04.11.330(a)(3) provides that
              an application for renewal shall be denied if . . . the applicant
              has not operated the licensed premises for at least 30
              eight-hour days during each of the two preceding calendar
              years, unless the board determines that the licensed premises
              are under construction or cannot be operated through no fault
              of the applicant.
The implementing regulation, 3 AAC 304.170(b), provides that a licensee may apply to
the board for a waiver of the operating requirement in AS 04.11.330(a)(3) and “the board
will determine whether, through no fault of the licensee or because the premises are
under construction, the licensed premises could not be operated for the required time[.]”
        A.	   The Board Did Not Err When It Assigned The Burden Of Proof To
              Rollins.


        9
            Stevens v. State of Alaska, Alcoholic Beverage Control Bd., 257 P.3d 1154,
1156 (Alaska 2011).
        10
            Rollins, 991 P.2d at 206 (quoting Handley v. State, Dep’t of Revenue, 838
P.2d 1231, 1233 (Alaska 1992).
        11
            Stevens, 257 P.3d at 1156 (quoting Squires v. Alaska Bd. of Architects,
Eng’rs, & Land Surveyors, 205 P.3d 326, 332 (Alaska 2009)) (internal quotation marks
omitted).

                                            -6-	                                   6842

              The ALJ concluded that Rollins bore the burden of proof because she
sought to change the status quo by requesting a waiver from the operating requirement.
Rollins argues that the Board should bear the burden of proof. Rollins relies on Alaska
Alcohol Control Board v. Malcolm, Inc., where this court held that in denying a renewal
of a license, the Board bears the burden of proof.12 In reaching that conclusion, this court
relied on the fact that a person who seeks renewal of a liquor license is designated as the
respondent.13 In State, Alcoholic Beverage Control Board v. Decker, however, this court
placed the burden of proof on a liquor license applicant, stating that “[o]rdinarily the
party seeking a change in the status quo has the burden of proof.”14
              After Malcolm and Decker, the Administrative Procedure Act (APA) was
amended to place the burden of proof on the respondent in certain circumstances.15
Alaska Statute 44.62.460(e) now provides:
              Unless a different standard of proof is stated in applicable
              law, the

              (1) petitioner has the burden of proof by a preponderance of
              the evidence if an accusation has been filed under
              AS 44.62.360 or if the renewal of a right, authority, license,
              or privilege has been denied;

              (2) respondent has the burden of proof by a preponderance of
              the evidence if a right, authority, license, or privilege has
              been initially denied or not issued.



       12
              391 P.2d 441, 444 (Alaska 1964).
       13
              Id. at 444.
       14
              700 P.2d 483, 485 (Alaska 1985).
       15
              Ch. 63, § 8, SLA 1995.

                                            -7-                                       6842

              In this case, Rollins initiated the administrative proceeding by filing a
waiver of operation application under AS 04.11.330(a)(3). This statute provides that an
application for renewal must be denied if “the applicant has not operated the licensed
premises for at least 30 eight-hour days during each of the two preceding calendar years,
unless the board determines that the licensed premises are under construction or cannot
be operated through no fault of the applicant[.]”16 In addition, the implementing
regulation clearly requires a licensee to make a special application for this waiver and
clearly requires the Board to make the same determination.17 Because the licensee must
apply for a waiver, and because the Board must make an affirmative no-fault
determination, it is clear that a waiver of operation is a privilege, and that the applicant
must affirmatively prove the lack of fault. Thus, the Board properly assigned the burden
of proof to the respondent in her application for a waiver.
              The ALJ also relied on a regulation associated with the APA, which
provides that “[u]nless otherwise provided by applicable statute or regulation, the burden
of proof and of going forward with evidence is on the party who requested the
hearing. . . .”18 Here it is Rollins who exercised her right to a hearing after the Board
initially denied her application for waiver. Therefore, this regulation also supports the
ALJ’s recommendation on the burden of proof. We conclude that the Board correctly
required Rollins to bear this burden.
       B.     The Board’s Decision Was Supported By Substantial Evidence.
              Under AS 04.11.330(a)(3), the Board was required to deny Rollins’s
application unless it determined that her failure to operate under the license was not her

       16
              AS 04.11.330(a)(3) (emphasis added).
       17
              3 AAC 304.170(b).
       18
              2 AAC 64.290(e).

                                            -8­                                       6842
fault. Rollins argues that the ALJ erred when he ruled against her on this issue.
              At the hearing, Rollins presented little evidence regarding her efforts to
operate her license after she vacated the Old Airport Way location. Rollins testified that
between May 2008 and May 2009, she had approximately six conversations with a
potential buyer. In August 2009, she investigated the possibility of moving to another
location. Although it appears the location was equipped to operate a bar, Rollins did not
want to share the location with a restaurant that was already operating there. In October
2009, Rollins prepared a business plan and spoke with a bank about obtaining a loan, but
she did not receive the loan. Rollins also spoke with a real estate agent about other
possible locations, and she placed an ad in the newspaper offering the license for sale.
              The ALJ found that Rollins did not establish the requisite absence of fault.
First, the ALJ explained that the problems at the Old Airport Way location were within
Rollins’s control, and she did not take reasonable steps to eliminate them before she
voluntarily left in May 2008. Second, the ALJ found that Rollins did not take reasonable
steps to operate the license again in 2009. Third, the ALJ commented that Rollins failed
to show her plan to operate the license at the Old Richardson Highway location (where
she previously failed to operate the license) was feasible or that it could be accomplished
in a reasonable time. The ALJ relied on this court’s holding that the purpose of the
operating requirement was to “prevent a licensee from holding onto one of a limited
number of licenses without operating it . . . beyond a reasonable time necessary to
construct or otherwise establish premises. . . .”19 The ALJ ultimately concluded that
Rollins was not entitled to a waiver because she did not take reasonable steps to operate
the license and instead chose not to operate the license for business reasons.




       19
              Rollins, 991 P.2d at 209.

                                            -9-                                      6842
              Rollins challenges several of the ALJ’s factual findings. She argues that
the ALJ improperly speculated about measures Rollins could have taken to resolve issues
at the Old Airport Way location when he found that her actions were not reasonable.
Rollins also asserts that there were legitimate reasons to reject the alternative location
and clarifies that her advertisement for sale of the license ran in the newspaper for six
weeks.
              We note that the Board was required to deny Rollins’s application for a
waiver unless it found that the licensed premises could not be operated and that Rollins
was not at fault for this condition.20 In this appeal, we decide only whether the ALJ’s
conclusion on this issue is supported by substantial evidence.21 In deciding whether the
license was not operated through no fault of the applicant for waiver, it was appropriate
for the ALJ to consider the options available to the applicant.
              The evidence Rollins presented at the hearing showed that she did not take
reasonable steps to operate her license. Rollins admitted she voluntarily left the Old
Airport Way location in May 2008 and that her lease was still valid. She was concerned
that the building manager was operating her license after hours, but she presented no
evidence of steps she took to prevent this after-hours operation. Rollins presented no
evidence that she attempted to operate her license from May 2008 to May 2009. Rollins
did investigate other options to operate or sell the license, but ultimately rejected them.
She considered but rejected an opportunity to lease another location. Rollins tried to
obtain a loan to buy property but the bank refused.




       20
              See AS 04.11.330(a)(3).
       21
              Rollins, 991 P.2d at 206 (the “substantial evidence” test applies to questions
of fact).

                                           -10-                                       6842
              At the hearing, Rollins was asked if it was correct that she “could have
operated [the license], but . . . chose not to do that because . . . it [wasn’t] profitable
enough.” She responded, “That’s exactly right. I could not afford to do that. . . . I don’t
feel like throwing all my retirement monies away.” She explained that she couldn’t sell
the license because she wanted cash, and she couldn’t find a buyer. Based on this
evidence, the ALJ reasonably concluded that Rollins’s failure to operate the license was
the result of business decisions.
              Although in her application Rollins stated that she planned to operate the
license at the Old Richardson Highway location, she presented no evidence of actions
she had taken which would make it possible to operate a bar there. And, if her previous
attempts to operate at that location were any indication, the premises likely needed
significant renovations. We conclude that the Board’s ultimate finding — that Rollins
failed to establish that she was without fault in failing to operate her license — is
supported by substantial evidence in the record.22
       C.     Rollins Was Not Denied Due Process.
              Rollins argues that she was denied due process at the hearing. She argues
that she understood that the hearing would address the effect of the settlement letter and
whether this was her first application for waiver. Rollins also asserts that the hearing was
generally unfair and that she was “denied the right to interject and present her findings
in her own word and manner.”




       22
             Because the ALJ treated her application as a first application for a waiver
and because the ALJ did not rely on the 2003 settlement, we do not need to address
Rollins’s arguments that her application should be treated as a first application or that the
Board cannot place “a lifetime waiver restriction on a license.”

                                            -11-                                       6842
              Rollins correctly notes that a litigant has a due process right to fair notice
of the issue to be litigated.23 But the record does not support Rollins’s argument that she
was misled about the issue to be addressed. After Rollins exercised her right to a formal
hearing, the Board filed and served a statement which framed the issue as follows:
“Should the Alcoholic Beverage Control Board grant [Rollins’s] request, dated October
21, 2009, for waiver of the AS 04.11.330 requirement to operate its alcoholic beverage
dispensary license — whether the requested waiver be viewed as a first or a sixth
waiver . . . ?”
              At a pre-hearing conference, the ALJ clarified the issue by explaining to
Rollins that the effect of the settlement letter and whether this application was the sixth
application for a waiver were topics that could be addressed. But the ALJ reiterated that
the ultimate question was “whether a waiver should be granted under the circumstances
in 2009” and explained that Rollins would need to present evidence about the
circumstances in 2009 that supported a waiver. When Rollins indicated that she did not
understand, the ALJ repeated that the Board would have to make a decision about
whether to grant a waiver “regardless of what happened in 2003 and the settlement
agreement.”
              We have explained that “due process requires that a license holder be
provided with notice and an opportunity to be heard in a meaningful, impartial
hearing.”24 Here, Rollins does not allege that there were any procedural defects in her


       23
             See Cushing v. Painter, 666 P.2d 1044, 1046 (Alaska 1983) (reversing a
final child custody decision made after a hearing scheduled to determine interim
custody).
       24
           Stevens v. State of Alaska, Alcoholic Beverage Control Bd., 257 P.3d 1154,
1160 (Alaska 2011) (quoting Rollins, 991 P.2d at 211) (internal quotation marks
                                                                        (continued...)

                                           -12-                                       6842

hearing or that it did not comply with the APA. She was given an opportunity to speak
and to present and cross-examine witnesses. When she testified, the ALJ asked questions
regarding her actions over the period from 2008 to 2009. During the questioning,
Rollins spoke freely. And at the end of his questions, the ALJ asked if there was
anything Rollins wanted to add. She replied, “Nope that’s it.”
              Rollins’s arguments that she was denied fair notice and a fair hearing are
not supported by the record. We therefore conclude that Rollins was not denied due
process.
       D.	    The Board Did Not Violate Rollins’s Right To Equal Protection By
              Engaging In Selective Prosecution.
              Rollins argues that the Board’s decision amounts to selective prosecution
because the Board has previously granted multiple waivers to other license holders. In
our previous decision in this case, we explained that “[i]n order to make a prima facie
case that the Board selectively enforced the annual operating requirement . . . Rollins
would have to show that the Board intended to discriminate against her based on an
arbitrary or unjustifiable classification.”25 As in the previous case, Rollins has failed to
offer any evidence of discriminatory intent.26
              Both the current executive director and the former executive director of the
Board testified that Rollins’s case is unique. The former attorney for the Board agreed.
Although the current executive director could not remember if the Board had ever denied
a first application for waiver, she also testified that there are situations when a first



       24
              (...continued)
omitted).
       25
              Rollins, 991 P.2d at 210.
       26
              See id.

                                           -13-	                                      6842

waiver might be rejected. Rather, the Board inquires as to the reasons for the application
in order to make the required determination under AS 04.11.330(a)(3). The Board also
considers the history of a license in evaluating whether the licensee is entitled to a
waiver. The former attorney for the Board testified that in determining whether to grant
a waiver, the Board considers whether a waiver is in the public interest.
             This testimony suggests that the Board does not automatically grant first
and second applications for waiver, and that the Board generally considers the licensee’s
history when deciding whether to grant a waiver. We conclude that Rollins has failed
to show that the Board’s decision in this case involved any arbitrary or unjust
classification that would violate her right to equal protection.
V.    CONCLUSION
             We AFFIRM the superior court’s decision to uphold the Board’s decision
denying Rollins’s application for a waiver of the annual operating requirement.




                                           -14-                                     6842

