Yamaha Corp. of America v. State Board of Equalization

Opinion

BROWN, J.

For more than 40 years, the State Board of Equalization (Board) has made available for publication as the Business Taxes Law Guide summaries of opinions by its attorneys of the business tax effects of a wide range of transactions. Known as “annotations,” the summaries are prompted by actual requests for legal opinions by the Board, its field auditors, and businesses subject to statutes within its jurisdiction. The annotations are *5brief statements—often only a sentence or two—purporting to state definitively the tax consequences of specific hypothetical business transactions.1 More extensive analyses, called “back-ups,” are available to those who request them.

Facts

The taxpayer here, Yamaha Corporation of America (Yamaha), sells musical instruments nationwide. It purchased a quantity of these outside California without paying tax (“extax”), stored them in its resale inventory in a California warehouse, and eventually gave them away to artists, musical equipment dealers and media representatives as promotional gifts. Delivery was made by shipping the instruments via common carrier, either inside or outside California. Yamaha made similar gifts of brochures and other advertising material. Following an audit, the Board determined Yamaha had used the musical instruments and promotional materials in California and was thus subject to the state’s use tax, an impost levied as a percentage of the property’s purchase price. (See Rev. & Tax. Code, § 6008 et seq.) Yamaha paid the taxes determined by the Board to be due (about $700,000) under protest and then brought this refund suit. Although it did not contest the tax assessed on property given to California residents, Yamaha contended no tax was due on the gifts to out-of-state recipients.

The superior court decided Yamaha’s out-of-state gifts were excluded from California’s use tax, and ordered a refund. That disposition, however, was overturned by the Court of Appeal. Casting the issue as whether Yamaha’s promotional gifts had occurred in California or in the state of the donee, the Court of Appeal looked to an annotation in the Business Taxes Law Guide. According to the guide, gifts are subject to California’s use tax *6“[w]hen the donor divests itself of control over the property in this state.”2 (2A State Bd. of Equalization, Bus. Taxes Law Guide, Sales & Use Tax Annots., supra, Annot. No. 280.0040, p. 3731). Adopting that annotation as dispositive, the Court of Appeal reversed the judgment of the superior court and reinstated the Board’s tax assessment. We granted Yamaha’s petition for review and now reverse the Court of Appeal’s judgment and order the matter returned to that court for further proceedings consistent with our opinion.

Discussion

I

The question is what legal effect courts must give to the Board’s annotations when they are relied on as supporting its position in taxpayer litigation. In the broader context of administrative law generally, the question is what standard courts apply when reviewing an agency’s interpretation of a statute. In effect, the Court of Appeal held the annotations were entitled to the same “weight” or “deference” as “quasi-legislative” rules.3 The Court of Appeal adopted the following formulation: “[A] long-standing and consistent administrative construction of a statute by an administrative agency charged with its enforcement and interpretation is entitled to great weight unless it is either ‘arbitrary, capricious or without rational basis’ [citations], *7or is ‘clearly erroneous or unauthorized.’ [Citation.] Opinions of the administrative agency’s counsel construing the statute,” the court went on to say, “are likewise entitled to consideration. [Citations.] Especially where there has been acquiescence by persons having an interest in the matter,” the court added, “courts will generally not depart from such an interpretation unless it is unreasonable or clearly erroneous.” As this extract from the Court of Appeal opinion indicates, the court relied on a skein of cases as supporting these several, somewhat inconsistent, propositions of administrative law.

We reach a different conclusion. An agency interpretation of the meaning and legal effect of a statute is entitled to consideration and respect by the courts; however, unlike quasi-legislative regulations adopted by an agency to which the Legislature has confided the power to “make law,” and which, if authorized by the enabling legislation, bind this and other courts as firmly as statutes themselves, the binding power of an agency’s interpretation of a statute or regulation is contextual: Its power to persuade is both circumstantial and dependent on the presence or absence of factors that support the merit of the interpretation. Justice Mosk may have provided the best description when he wrote in Western States Petroleum Assn. v. Superior Court, supra, 9 Cal.4th 559, that “ ‘The appropriate degree of judicial scrutiny in any particular case is perhaps not susceptible of precise formulation, but lies somewhere along a continuum with nonreviewability at one end and independent judgment at the other.’ [Citation.] Quasi-legislative administrative decisions are properly placed at that point of the continuum at which judicial review is more deferential; ministerial and informal actions do not merit such deference, and therefore lie toward the opposite end of the continuum.” (Id. at pp. 575-576; see also Bodinson Mfg. Co. v. California E. Com. (1941) 17 Cal.2d 321, 325-326 [109 P.2d 935] [An “administrative interpretation . . . will be accorded great respect by the courts and will be followed if not clearly erroneous. [Citations.] But such a tentative . . . interpretation makes no pretense at finality and it is the duty of this court ... to state the true meaning of the statute finally and conclusively, even though this requires the overthrow of an earlier erroneous administrative construction. [Citations.] The ultimate interpretation of a statute is an exercise of the judicial power . . . conferred upon the courts by the Constitution and, in the absence of a constitutional provision, cannot be exercised by any other body.”].)

Courts must, in short, independently judge the text of the statute, taking into account and respecting the agency’s interpretation of its meaning, of course, whether embodied in a formal rule or less formal representation. Where the meaning and legal effect of a statute is the issue, an agency’s interpretation is one among several tools available to the court. Depending *8on the context, it may be helpful, enlightening, even convincing. It may sometimes be of little worth. (See Traverso v. People ex rel. Dept. of Transportation (1996) 46 Cal.App.4th 1197, 1206 [54 Cal.Rptr.2d 434].) Considered alone and apart from the context and circumstances that produce them, agency interpretations are not binding or necessarily even authoritative. To quote the statement of the Law Revision Commission in a recent report, “The standard for judicial review of agency interpretation of law is the independent judgment of the court, giving deference to the determination of the agency appropriate to the circumstances of the agency action.” (Judicial Review of Agency Action (Feb. 1997) 27 Cal. Law Revision Com. Rep. (1997) p. 81, italics added.)

II

Here, the Court of Appeal relied on language from its prior cases suggesting broadly that an agency interpretation of a statute carries the same weight—that is, is reviewed under the same standard—as a quasi-legislative regulation. Unlike the annotations here, however, quasi-legislative rules are the substantive product of a delegated legislative power conferred on the agency. The formulation on which the Court of Appeal relied is thus apt to lead a court (as it led here) to abdicate a quintessential judicial duty— applying its independent judgment de novo to the merits of the legal issue before it. The fact that in this case the Court of Appeal determined Yamaha’s tax liability by giving the Board’s annotation a weight amounting to unquestioning acceptance only compounded the error.

We derive these conclusions from long-standing administrative law decisions of this court. Although the web making up that jurisprudence is not seamless, on the whole it is both logical and coherent. In Culligan Water Conditioning v. State Bd. of Equalization (1976) 17 Cal.3d 86 [130 Cal.Rptr. 321, 550 P.2d 593] (Culligan), the taxpayer sued for a refund of sales and use taxes paid under protest on ion-exchange equipment used to condition water and leased to residential subscribers: Because it came from a service business rather than the rental of property, the taxpayer contended, the income was not subject to the Sales and Use Tax Law. In refund litigation, the Board relied on an affidavit of its assistant chief counsel characterizing the transactions as leases taxable under the Sales and Use Tax Law. The trial court rejected the Board’s position, calling it an unwarranted extension of the words of the statute, and awarded judgment to the taxpayer. (17 Cal.3d at p. 92.)

Justice Sullivan began his opinion for a unanimous court by asking what was “the appropriate standard of review applicable to the [use tax] assessment against” the taxpayer. (Culligan, supra, 17 Cal.3d at p. 92.) The Board *9contended its assessment was based on an “administrative classification” and could be judicially overturned only if it was “arbitrary, capricious or without rational basis.” (Ibid.) Our opinion pointed out, however, that the basis for the Board’s tax assessment “was not embodied in any formal regulation or even interpretative ruling covering the water conditioning industry as a whole.” (Ibid.) Instead, its basis “was nothing more than the Board auditor’s interpretation of two existing regulations.” (Ibid.) “If the Board had promulgated a formal regulation determining the proper classification of receipts derived from the rental of exchange units . . . and the regulation had been challenged in the [refund] action,” our Culligan opinion went on to say, “the proper scope of reviewing such regulation would be one of limited judicial review as urged by the Board. [Citations.]” (Ibid., italics added.)

That was not the case in Culligan, however. Instead of adopting a formal regulation, the Board and its staff had considered the facts of the taxpayer’s particular transactions, interpreted the statutes and regulations they deemed applicable, and “arrived at certain conclusions as to plaintiff’s tax liability and assessed the tax accordingly.” (17 Cal.3d at p. 92.) Far from being “the equivalent of a regulation or ruling of general application,” the Board’s argument was “merely its litigating position in this particular matter.” (Id. at p. 93.) In an important footnote to its opinion, the Culligan court disapproved language in several Court of Appeal decisions “indicating that the proper scope of review of such litigating positions of the Board (announced either in tax bulletins or merely as the result of an individual audit) is to determine whether the Board’s assessment was arbitrary, capricious or had no reasonable or rational basis.” (Id. at p. 93, fn. 4.)

Although the Court of Appeal in this case cited Culligan, supra, 17 Cal.3d 86, it regarded American Hospital Supply Corp. v. State Bd. of Equalization (1985) 169 Cal.App.3d 1088 [215 Cal.Rptr. 744] (American Hospital) as the decisive precedent. The question there was whether disposable paper menus, used for patients’ meals in hospitals, were subject to the sales tax. In concluding they were, the Court of Appeal relied on a ruling of Board counsel interpreting a quasi-legislative regulation of the Board. “Interpretation of an administrative regulation,” the court wrote, “like [the] interpretation of a statute, is a question of law which rests with the courts. However, the agency’s own interpretation of its regulation is entitled to great weight.” (Id. at p. 1092.) The Board’s interpretation could be overturned, the opinion went on to state, only if it was “ ‘arbitrary, capricious or without rational basis.’ ” (Ibid.)

The American Hospital opinion also rejected the taxpayer’s contention that because the rule at issue was only an interpretation and not a quasi-legislative rule, it was not entitled to deference. (American Hospital, supra, *10169 Cal.App.3d at p. 1092.) Instead, the court read Culligan as standing for the opposite proposition. Because we had said the rule at issue there did not cover an entire industry, the Court of Appeal reasoned Culligan had held in effect that it was nothing more than a “ ‘litigating position’ ” and could be ignored. (169 Cal.App.3d at p. 1093.) On that basis, American Hospital concluded that because the Board’s position on the taxability of paper menus was embodied in a “formal regulation” and covered the entire hospital industry, it was entitled to the same deference as a quasi-legislative rule: “[It] must prevail because it is neither ‘arbitrary, capricious or without rational basis’ (Culligan Water Conditioning v. State Bd. of Equalization, supra, 17 Cal.3d 86, 92) nor is it ‘clearly erroneous or unauthorized’ (Rivera v. City of Fresno [(1971)] 6 Cal.3d 132, 140 [98 Cal.Rptr. 281, 490 P.2d 793]).” (Ibid.)

We think the Court of Appeal in American Hospital, supra, 169 Cal.App.3d 1088, and the Court of Appeal in this case by relying on it, failed to distinguish between two classes of rules—quasi-legislative and interpretive—that, because of their differing legal sources, command significantly different degrees of deference by the courts. Moreover, American Hospital misread our opinion in Culligan when it identified the feature that distinguishes one kind of rule from the other. Although the Court of Appeal here did not rely on other prior cases as much as on American Hospital, it cited several that appear to perpetuate the same confusion. (See Rizzo v. Board of Trustees (1994) 27 Cal.App.4th 853, 861 [32 Cal.Rptr.2d 892]; DeYoung v. City of San Diego (1983) 147 Cal.App.3d 11, 18 [194 Cal.Rptr. 722]; Rivera v. City of Fresno (1971) 6 Cal.3d 132, 140 [98 Cal.Rptr. 281, 490 P.2d 793].)

It is a “black letter” proposition that there are two categories of administrative rules and that the distinction between them derives from their different sources and ultimately from the constitutional doctrine of the separation of powers. One kind—quasi-legislative rules—represents an authentic form of substantive lawmaking: Within its jurisdiction, the agency has been delegated the Legislature’s lawmaking power. (See, e.g/, 1 Davis & Pierce, Administrative Law, supra, § 6.3, at pp. 233-248; 1 Cooper, State Administrative Law (1965) Rule Making: Procedures, pp. 173-176; Bonfield, State Administrative Rulemaking (1986) Interpretive Rules, § 6.9.1, pp. 279-283; 9 Witkin, Cal. Procedure (4th ed. 1997) Administrative Proceedings, § 116, p. 1160 [collecting cases].) Because agencies granted such substantive rulemaking power are truly “mating law,” their quasi-legislative rules have the dignity of statutes. When a court assesses the validity of such rules, the scope of its review is narrow. If satisfied that the rule in question lay within the lawmaking authority delegated by the Legislature, and that it *11is reasonably necessary to implement the purpose of the statute, judicial review is at an end.

We summarized this characteristic of quasi-legislative rules in Wallace Berrie & Co. v. State Bd. of Equalization (1985) 40 Cal.3d 60, 65 [219 Cal.Rptr. 142, 707 P.2d 204] (Wallace Berrie): “ ‘[I]n reviewing the legality of a regulation adopted pursuant to a delegation of legislative power, the judicial function is limited to determining whether the regulation (1) is “within the scope of the authority conferred” [citation] and (2) is “reasonably necessary to effectuate the purpose of the statute” [citation].’ [Citation.] ‘These issues do not present a matter for the independent judgment of an appellate tribunal; rather, both come to this court freighted with [a] strong presumption of regularity . . . .’ [Citation.] Our inquiry necessarily is confined to the question whether the classification is ‘arbitrary, capricious or [without] reasonable or rational basis.’ (Culligan, supra, 17 Cal.3d at p. 93, fn. 4 [citations].)”4

It is the other class of administrative rules, those interpreting a statute, that is at issue in this case. Unlike quasi-legislative rules, an agency’s interpretation does not implicate the exercise of a delegated lawmaking power; instead, it represents the agency’s view of the statute’s legal meaning and effect, questions lying within the constitutional domain of the courts. But because the agency will often be interpreting a statute within its administrative jurisdiction, it may possess special familiarity with satellite legal and regulatory issues. It is this “expertise,” expressed as an interpretation (whether in a regulation or less formally, as in the case of the Board’s tax annotations), that is the source of the presumptive value of the agency’s views. An important corollary of agency interpretations, however, is their diminished power to bind. Because an interpretation is an agency’s legal opinion, however “expert,” rather than the exercise of a delegated legislative power to make law, it commands a commensurably lesser degree of judicial deference. (Bodinson Mfg. Co. v. California E. Com., supra, 17 Cal.2d at pp. 325-326.)

In International Business Machines v. State Bd. of Equalization (1980) 26 Cal.3d 923 [163 Cal.Rptr. 782, 609 P.2d 1], we contrasted the narrow *12standard under which quasi-legislative rules are reviewed—“limited,” we wrote, “to a determination whether the agency’s action is arbitrary, capricious, lacking in evidentiary support, or contrary to procedures provided by law” (id. at p. 931, fn. 7)—with the broader standard courts apply to interpretations. The quasi-legislative standard of review “is inapplicable when the agency is not exercising a discretionary rule-making power, but merely construing a controlling statute. The appropriate mode of review in such a case is one in which the judiciary, although taking ultimate responsibility for the construction of the statute, accords great weight and respect to the administrative construction. [Citation.]” (Ibid., italics added; see also California Assn. of Psychology Providers v. Rank (1990) 51 Cal.3d 1, 11 [270 Cal.Rptr. 796, 793 P.2d 2] [“courts are the ultimate arbiters of the construction of a statute”]; Dyna-Med, Inc. v. Fair Employment & Housing Com. (1987) 43 Cal.3d 1379, 1389 [241 Cal.Rptr. 67, 743 P.2d 1323] [“The final meaning of a statute . . . rests with the courts.”]; Morris v. Williams (1967) 67 Cal.2d 733, 748 [63 Cal.Rptr. 689, 433 P.2d 697] [“ ‘final responsibility for the interpretation of the law rests with the courts’ ”].)

Whether judicial deference to an agency’s interpretation is appropriate and, if so, its extent—the “weight” it should be given—is thus fundamentally situational. A court assessing the value of an interpretation must consider a complex of factors material to the substantive legal issue before it, the particular agency offering the interpretation, and the comparative weight the factors ought in reason to command. Professor Michael Asimow, an administrative law adviser to the California Law Revision Commission, has identified two broad categories of factors relevant to a court’s assessment of the weight due an agency’s interpretation: Those “indicating that the agency has a comparative interpretive advantage over the courts,” and those “indicating that the interpretation in question is probably correct.” (Cal. Law Revision Com., Tent. Recommendation, Judicial Review of Agency Action (Aug. 1995) p. 11 (Tentative Recommendation); see also Asimow, The Scope of Judicial Review of Decisions of California Administrative Agencies (1995) 42 UCLA L.Rev. 1157, 1192-1209.)

In the first category are factors that “assume the agency has expertise and technical knowledge, especially where the legal text to be interpreted is technical, obscure, complex, open-ended, or entwined with issues of fact, policy, and discretion. A court is more likely to defer to an agency’s interpretation of its own regulation than to its interpretation of a statute, since the agency is likely to be intimately familiar with regulations it authored and sensitive to the practical implications of one interpretation over another.” (Tentative Recommendation, supra, at p. 11.) The second group of *13factors in the Asimow classification—those suggesting the agency’s interpretation is likely to be correct—includes indications of careful consideration by senior agency officials (“an interpretation of a statute contained in a regulation adopted after public notice and comment is more deserving of deference than [one] contained in an advice letter prepared by a single staff member” (Tentative Recommendation, supra, at p. 11)), evidence that the agency “has consistently maintained the interpretation in question, especially if [it] is long-standing” (ibid.) (“[a] vacillating position ... is entitled to no deference” (ibid.)), and indications that the agency’s interpretation was contemporaneous with legislative enactment of the statute being interpreted. If an agency has adopted an interpretive rule in accordance with Administrative Procedure Act provisions—which include procedures (e.g., notice to the public of the proposed rule and opportunity for public comment) that enhance the accuracy and reliability of the resulting administrative “product”—that circumstance weighs in favor of judicial deference. However, even formal interpretive rules do not command the same weight as quasi-legislative rules. Because “ ‘the ultimate resolution of . . . legal questions rests with the courts’ ” (Culligan, supra, 17 Cal.3d at p. 93), judges play a greater role when reviewing the persuasive value of interpretive rules than they do in determining the validity of quasi-legislative rules.

A valuable judicial account of the process by which courts reckon the weight of agency interpretations was provided by Justice Robert Jackson’s opinion in Skidmore v. Swift & Co. (1944) 323 U.S. 134 [65 S.Ct. 161, 89 L.Ed. 124] (Skidmore), a case arising under the federal Fair Labor Standards Act. The question for the court was whether private firefighters’ “waiting time” was countable as “working time” under the act and thus compensable. (323 U.S. at p. 136 [65 S.Ct. at p. 163].) “Congress,” the Skidmore opinion observed, “did not utilize the services of an administrative agency to find facts and to determine in the first instance whether particular cases fall within or without the Act.” (Id. at p. 137 [65 S.Ct. at p. 163].) “Instead, it put this responsibility on the courts. [Citation.] But it did create the office of Administrator, impose upon him a variety of duties, endow him with powers to inform himself of conditions in industries and employments subject to the Act, and put on him the duties of bringing injunction actions to restrain violations. Pursuit of his duties has accumulated a considerable experience in the problems of ascertaining [the issue in suit] and a knowledge of the customs prevailing in reference to their solution. ... He has set forth his views of the application of the Act under different circumstances in an interpretative bulletin and in informal rulings. They provide a practical guide to employers and employees as to how the office representing the public interest in its enforcement will seek to apply it. [Citation.]” (Id. at pp. 137-138 [65 S.Ct. at p. 163].)

*14No statute prescribed the deference federal courts should give the administrator’s interpretive bulletins and informal rulings, and they were “not reached as a result of . . . adversary proceedings.” (Skidmore, supra, 323 U.S. at p. 139 [65 S.Ct. at p. 164].) Given those features, Justice Jackson concluded, the administrator’s rulings “do not constitute an interpretation of the Act or a standard for judging factual situations which binds a . . . court’s processes, as an authoritative pronouncement of a higher court might do.” {Ibid., italics added.) Still, the court held, the fact that “the Administrator’ s policies and standards are not reached by trial in adversary form does not mean that they are not entitled to respect.” (Id. at p. 140 [65 S.Ct. at p. 164].) “We consider that the rulings, interpretations and opinions of the Administrator under this Act, while not controlling upon the courts by reason of their authority, do constitute a body of experience and informed judgment to which courts and litigants may properly resort for guidance.” (Ibid.)

The parallels between the statutory powers and administrative practice of the Board in interpreting the Sales and Use Tax Law, and those of the federal agency described in Skidmore, are extensive. As with Congress, our Legislature has not conferred adjudicatory powers on the Board as the means by which sales and use tax liabilities are determined; instead, the validity of those assessments is settled in tax refund litigation like this case. (Rev. & Tax. Code, § 6933.) Like the federal administrator in Skidmore, the Board has not adopted a formal regulation under its quasi-legislative rulemaking powers purporting to interpret the statute at issue here. As in Skidmore, however, the Board and its staff have accumulated a substantial “body of experience and informed judgment” in the administration of the business tax law “to which the courts and litigants may properly resort for guidance.” (323 U.S. at p. 140 [65 S.Ct. at p. 164].) Some of that experience and informed judgment takes the form of the annotations published in the Business Taxes Law Guide.

The opinion in the Skidmore case and Professor Asimow’s account for the Law Revision Commission—together spanning a half-century of judicial and scholarly comment on the characteristics and role of administrative interpretations—accurately describe their value and the criteria by which courts judge their weight. The deference due an agency interpretation—including the Board’s annotations át issue here—turns on a legally informed, commonsense assessment of their contextual merit. “The weight of such a judgment in a particular case,” to borrow again from Justice Jackson’s opinion in Skidmore, “will depend upon the thoroughness evident in its consideration, the validity of its reasoning, its consistency with earlier and later pronouncements, and all those factors which give it power to persuade, if lacking power *15to control.” (Skidmore, supra, 323 U.S. at p. 140 [65 S.Ct. at p. 164], italics added.)

As we read the brief filed by the Attorney General, the Board does not contend for any greater judicial weight for its annotations. Its brief on the merits states that “Yamaha is correct that the annotations are not regulations, and they are not binding upon taxpayers, the Board itself, or the Court. Nevertheless, the annotations are digests of opinions written by the legal staff of the Board which are evidentiary of administrative interpretations made by the Board in the normal course of its administration of the Sales and Use Tax Law .... [T]he annotations have substantial precedential effect within the agency. [¶] The interpretation represented in [the] annotations is certainly entitled to some consideration by the Court.”

We agree.

Conclusion

In deciding this case, the Court of Appeal gave greater weight to the Board’s annotation than it warranted. Although the standard used by the Court of Appeal was not the correct one and prejudiced the taxpayer, regard for the structure of appellate decisionmaking suggests the case should be returned to the Court of Appeal. That court can then consider the merits of the use tax issue and the value of the Board’s interpretation in light of the conclusions drawn here. To the extent language in Rizzo v. Board of Trustees, supra, 27 Cal.App.4th at page 861, DeYoung v. City of San Diego, supra, 147 Cal.App.3d at page 18, and Rivera v. City of Fresno, supra, 6 Cal.3d at page 140, is inconsistent with the foregoing views, it is disapproved. We express no opinion on the merits of the underlying question of Yamaha’s use tax liability.

Disposition

The judgment of the Court of Appeal is reversed and the cause is remanded to that court for further proceedings consistent with this opinion.

George, C. J., Kennard, J., Baxter, J., and Chin, J., concurred.

Two examples, drawn at random, illustrate the annotation form: “Beer Can Openers, furnished by breweries to retailers with beer, are not regarded as ‘self consumed’ by the breweries. 10/2/50.” (2A State Bd. of Equalization, Bus. Taxes Law Guide, Sales & Use Tax Annots. (1998) Annot. No. 280.0160, p. 3731.) “Bookmarks Sold For $2.00 ‘Postage And Handling’. A taxpayer located in California offers a bookmark to customers for a $2.00 charge, designated as postage and handling. Most of the orders received for the bookmark are from out of state. [^] Assuming that the charge for the bookmark is 50 percent or more of its cost, the taxpayer is considered to be selling the bookmarks rather than consuming them (Regulation 1670 (b)). Accordingly, when a bookmark is sent to a California customer through the U.S. Mail, the amount of postage shown on the package is considered to be a nontaxable transportation charge. For example, when a bookmark is sent to a California customer, if the postage on the envelope is shown as 25 cents, then the taxable gross receipts from the transfer is $1.75. If the bookmark is mailed to a customer located outside California, the tax does not apply to any of the $2.00 charge. 12/5/88.” (Id., Annot. No. 280.0185, pp. 3731-3732.)

The annotation on which the Board relied—Annotation No. 280.0040—purports to interpret section 6009.1 of the Revenue and Taxation Code, excluding from the definition of storage and use “keeping, retaining or exercising any right or power over tangible personal property for the purpose of subsequently transporting it outside the state.” Captioned “Advertising Material—Gifts,” the annotation provides that “Advertising or promotional material shipped or brought into the state and temporarily stored here prior to shipment outside state is subject to use tax when a gift of the material [is] made and title passes to the donee in this state. When the donor divests itself of control over the property in this state the gift is regarded as being a taxable use of the property. 10/11/63.” (2A State Bd. of Equalization, Bus. Taxes Law Guide, Sales & Use Tax Annots., supra, Annot. No. 280.0040, p. 3731.)

Throughout, we use the terms “quasi-legislative” and “interpretive” in their traditional administrative law senses; i.e., as indicating both the constitutional source of a rule or regulation and the weight or judicial deference due it. (See, e.g., 1 Davis & Pierce, Administrative Law (3d ed. 1994) § 6.3, pp. 233-248.) Of course, administrative rules do not always fall neatly into one category or the other; the terms designate opposite ends of an administrative continuum, depending on the breadth of the authority delegated by the Legislature. (See Western States Petroleum Assn. v. Superior Court (1995) 9 Cal.4th 559, 575-576 [38 Cal.Rptr.2d 139, 888 P.2d 1268]; cf. Tidewater Marine Western, Inc. v. Bradshaw (1996) 14 Cal.4th 557, 574-575 [59 Cal.Rptr.2d 186, 927 P.2d 296] [comparing the two kinds of rules and suggesting that while interpretive rules are not quasi-legislative in the traditional sense, “an agency would arguably still have to adopt these regulations in accordance with [Administrative Procedure Act rulemaking requirements].” The issue is not strictly presented by this case, however: Government Code section 11342, subdivision (g) declares that “[r]egulation” does not include “legal rulings of counsel issued by the . . . State Board of Equalization.”].)

In one respect, our opinion in Wallace Berrie may overstate the level of deference—even quasi-legislative rules are reviewed independently for consistency with controlling law. A court does not, in other words, defer to an agency’s view when deciding whether a regulation lies within the scope of the authority delegated by the Legislature. The court, not the agency, has “final responsibility for the interpretation of the law” under which the regulation was issued. (Whitcomb Hotel, Inc. v. Cal. Emp. Com. (1944) 24 Cal.2d 753, 757 [151 P.2d 233, 155 A.L.R. 405]; see cases cited, post, at pp. 11-12; Environmental Protection Information Center v. Department of Forestry & Fire Protection (1996) 43 Cal.App.4th 1011, 1022 [50 Cal.Rptr.2d 892] [Standard of review of challenges to “fundamental legitimacy” of quasi-legislative regulation is “ ‘respectful nondeference.’ ”].)