Summary
The Massachusetts Supreme Judicial Court considered whether amended regulations defining the outstanding credit balance exemption under the Commonwealth's abandoned property laws could be applied retroactively to Biogen's uncashed accounts payable checks. The court held that the original regulations reasonably encompassed such checks and that the amended regulations could not be applied retroactively because doing so would impose a new liability on Biogen. The judgment of the Superior Court was affirmed.
Topics
Practice areas
Questions Presented
- Whether the 2001 regulations governing the outstanding credit balance exemption under G. L. c. 200A, § 5, reasonably included uncashed accounts payable checks that originated as credit balances.
- Whether the Treasurer was bound by the predecessor Treasurer's internal policy interpreting the 2001 regulations to exempt qualifying uncashed accounts payable checks.
- Whether the Treasurer's 2004 amended regulations could be applied retroactively to Biogen's checks issued from 1984 through 2004.
Holdings
- The 2001 regulations reasonably interpreted the ambiguous statutory phrase "outstanding credit balances" to include uncashed accounts payable checks that originated from credit balances between businesses in the ordinary course of business.
- The Treasurer was required to abide by the predecessor Treasurer's internally promulgated policy applying the outstanding credit balance exemption to qualifying uncashed accounts payable checks.
- The 2004 amended regulations could not be applied retroactively to Biogen's uncashed accounts payable checks because they changed substantive rights and imposed a new liability where the prior regulations and policy exempted the checks.
Key quotations
“Although courts give the force of law only to formal agency regulations, administrative agencies must abide by their own internally promulgated policies.” (186)
“Because the outstanding credit balance exemption is susceptible of multiple, rational interpretations, we conclude that the words “outstanding credit balances” are ambiguous and thus properly the subject of agency rule making.” (188)
“In essence, because the credit balance exemption under the original regulations applied to uncashed accounts payable checks, the amended regulations effectively impose a new liability on Biogen to surrender those funds to the Treasurer.” (191)
Factual background
Biogen issued uncashed accounts payable checks over the period from 1984 through 2004. The Treasurer's auditor concluded that $781,251.34 in such checks should have been reported as abandoned property. The Treasurer's 2001 regulations broadly defined credit balances and exempted qualifying balances between vendors or commercial customers, while 2004 amendments narrowed the definition and excluded the checks at issue. Evidence indicated that the predecessor Treasurer had an internal policy applying the exemption to uncashed accounts payable checks when they originated from credit balances.
Procedural history
The Treasurer's independent auditor determined that Biogen should have reported $781,251.34 in uncashed accounts payable checks as abandoned property under G. L. c. 200A. Biogen challenged the application of the Treasurer's 2004 amended regulations, arguing that the 2001 regulations and the predecessor Treasurer's policy exempted the checks. A deputy treasurer and the Treasurer's designee upheld the audit. The Superior Court allowed Biogen's motion for judgment on the pleadings, vacated the agency decision, and entered judgment for the Commonwealth on an uncontested portion of the audit. The Treasurer appealed, and the Supreme Judicial Court affirmed.