January 19, 2017
Honorable Joseph P. Borg
Director
Alabama Securities Commission
Post Office Box 304700
Montgomery, Alabama 36130
State Departments and Agencies ? Securities Commission – Fees
Fees levied or assessed by the Alabama Securities Commission can only be increased without legislative action if those fees are retained to fund its operations and programs.
A fee increase made pursuant to section 41-1-11 of the Code of Alabama is considered a ?rule? and is subject to the Alabama Administrative Procedure Act?s notice and hearing requirements.
Dear Mr. Borg:
This opinion of the Attorney General is issued in response to your request.
QUESTIONS
(1) May the Alabama Securities Commission (?Commission?), pursuant to section 41-1-11 of the Code of Alabama, increase fees without legislative action?
(2) ??If so, would the Commission retain the fee increases on those provisions in the Alabama Securities Act which are statutorily designated to the general fund?
FACTS AND ANALYSIS
The Alabama Securities Commission is a state agency that enforces laws ?governing the issuance, sale, and other transactions relative to securities.?? Ala. Code ??8-6-50 (2002).? A state agency?s actions should be within ?its statutory and constitutional powers.?? Ex parte Ala. Bd. Of Nursing, 835 So. 2d 1010, 1012 (Ala. 2001).? The Commission is statutorily authorized to charge fees for the following:? initial and renewal registration for dealers, agents, investment advisors, and representatives [Ala. Code ??8-6-3(h) (Supp. 2015)]; registration of securities [Ala. Code ??8-6-8(d) (Supp. 2015)]; application for exemption from full registration of security transactions [Ala. Code ??8-6-11(c) (Supp. 2015)]; a filing fee to accompany a notice of intent to sell a security issued by an open-end management investment company or unit investment trust [Ala. Code ??8-6-10(11)(a)(2) (Supp. 2015)]; and a filing fee to accompany a notification of intent to issue industrial revenue bonds [Ala. Code ??8-6-115 (2002)].
Section 41-1-11 of the Code of Alabama reads as follows:
(a) Any state agency that statutorily levies or assesses fees retained by the agency to fund its operations or programs may increase the fee by the percentage increase in the Consumer Price Index for all urban consumers as published by the U.S. Department of Labor, Bureau of Labor Statistics from the end of December in the tenth year preceding the year in which the fee increase is to be effective or from the end of December in the last year the fee was increased, whichever period is shorter, to the end of the month proceeding the month in which the fee increase is to be effective, rounded down to the nearest dollar.? Thereafter, every five years the agency may repeat this process using the Consumer Price Index for the previous five years forward to the date of the requested change.? The change may not exceed an increase of two percent per year.
(b) Any change in a fee schedule pursuant to this section is a rule for purposes of the Alabama Administrative Procedure Act.
(c) If an increase is adopted, the assessed increase of the fee shall be retained by the agency to fund its operations or programs under the control of the agency.
(d) The provisions of this section shall not apply in any manner to the Alabama Public Service Commission, the State Parks Division of the Department of Conservation and Natural Resources, or the State Banking Department.
Ala. Code ??41-1-11 (Supp. 2015) (emphasis added).
Under the established rules of statutory construction, ?words used in a statute must be given their natural, plain, ordinary, and commonly understood meaning, and where plain language is used, a court is bound to interpret that language to mean exactly what it says.?? Ex parte Cove Properties, Inc., 796 So. 2d 331, 333-34 (Ala. 2000) (citations omitted).? The plain language of section 41-1-11 affirms that it only applies to state agencies (other than those prohibited by subsection (d) authorized by statute to levy or assess fees that fund the agency?s operations or programs.? ?Levy,? according to Black?s Law Dictionary, means ?[t]o impose or assess (a fine or a tax) by legal authority.?? Black’s Law Dictionary 1047 (10th ed. 2014).? All fees at issue are levied or assessed by the Commission pursuant to statutory authority. Ala. Code ???8-6-3(h) (Supp. 2015); 8-6-8(d) (Supp. 2015); 8-6-11(c) (Supp. 2015); 8-6-10(11)(a)(2) (Supp. 2015); 8-6-115 (2002).
When a statute requires an agency to levy or assess fees, but does not specify a fund for deposit, the collected fees are deposited into the state general fund.? Ala. Code ??41-4-92 (2013); opinion to Honorable Frank W. Gregory, Administrative Director of Courts, Administrative Office of Courts, dated April 26, 1996, A.G. No. 96-00196.? Accordingly, fees levied or assessed by the Commission that are deposited into the general fund are not used to fund the agency?s operations or programs and do not comply with section 41-1-11.
Fees levied or assessed by the Commission for initial and renewal registration for investment advisors and representatives, application for exemption from full registration of security transactions, notice of intent to sell a security issued by an open-end management investment company or unit investment trust, and notification of intent to issue industrial revenue bonds can be increased because the fees are deposited in the Alabama Securities Commission Fund in the State Treasury for its use in the administration of its responsibilities.? Ala. Code ???8-6-3(h) (Supp. 2015); 8-6-11(c) (Supp. 2015); 8-6-10(11)(a)(2) (Supp. 2015); 8-6-115 (2002).? The Commission cannot, however, increase fees under section 41-1-11 for the regulation of securities or for the initial and renewal registration of dealers and agents because those statutes do not specify a fund for deposit and are, therefore, deposited into the general fund.? Ala. Code ???8-6-8(d) (Supp. 2015); 8-6-3(h) (Supp. 2015); 41-4-92 (2013).
An increase in the fee schedule adopted pursuant to section 41-1-11(b) ?is a rule for purposes of the Alabama Administrative Procedure Act.?? Ala. Code ??41-1-11(b) (Supp. 2015).? This Office has held that an agency, when promulgating rules and regulations, shall follow the procedures set forth in the Alabama Administrative Procedure Act, whether or not that agency is specifically subject to the Act.? Opinion to Honorable Phillip Fretwell, President, State of Alabama Building Commission, December 28, 1982, A.G. No. 83-00127; see also, Ala. Code ??41-22-2(a) (2013) (the Alabama Administrative Procedure Act ?provide[s] a minimum procedural code for the operation of all state agencies when they take action affecting the rights and duties of the public.?).? Thus, a rule promulgated by the Commission pursuant to section 41-1-11 must comply with the Act?s notice and hearing requirements for adopting rules.
Any increase in the fee schedule adopted through section 41-1-11 must be used to fund operations or programs under the Commission?s control.? Ala. Code ??41-1-11(c) (Supp. 2015).? The Commission is prohibited from relying on section 41-1-11 to increase fees that are returned to the general fund after being levied or assessed.
CONCLUSION
Fees levied or assessed by the Alabama Securities Commission can only be increased without legislative action if those fees are retained to fund its operations and programs.
A fee increase made pursuant to section 41-1-11 of the Code of Alabama is considered a ?rule? and is subject to the Alabama Administrative Procedure Act?s notice and hearing requirements.
I hope this opinion answers your questions.? If this Office can be of further assistance, please contact Wes Shaw of my staff.
Sincerely,
LUTHER STRANGE
Attorney General
By:
- WARD BEESON, III
Chief, Opinions Section
LS/RWS/as
2255824/194654