OPINION
COATS, Chief Judge.Kevin L. Garner was convicted of manslaughter, a class A felony, and faced a presumptive term of imprisonment of seven to eleven years.1 Garner was also convicted of driving under the influence, a misdemeanor with a one-year maximum sentence.2
*1047Superior Court Judge Randy M. Olsen found the non-statutory mitigating factor that Garner had exceptional rehabilitative prospects. He referred Garner's case to the three-judge sentencing panel.
A majority of the three-judge panel also concluded that Garner possessed extraordinary potential for rehabilitation. But the panel concluded that "even after considering the non-statutory mitigating factor ... we do not find the presumptive term to be manifestly unjust in this case." The panel remanded the case to Judge Olsen to impose a sentence within the presumptive range.
On remand, Judge Olsen imposed a seven-year term for the manslaughter conviction, which was at the bottom of the presumptive range available to him. He also imposed a consecutive sentence of twelve months with ten months suspended for the driving under the influence conviction.
We affirmed Garner's convictions in a prior decision.3 We asked for further briefing on Garner's contention that the three-judge panel erred when it refused to impose sentence and remanded the case to Judge Olsen for sentencing.4 Garner's contention is that once the three-judge panel found the non-statutory mitigator that he had exceptional prospects for rehabilitation, the question before the panel was not whether the presumptive term was manifestly unjust. The question before the panel was, rather, whether manifest injustice would result from failure to consider his exceptional prospects for rehabilitation in imposing sentence. Garner contends that the panel did not answer this question.
Both parties have submitted briefs of excellent quality which have been very helpful to this court.
Discussion
Garner was convicted of manslaughter and faced a presumptive term of seven to eleven years. Garner did not prove any statutory factors in mitigation. Had Garner established a factor in mitigation, Judge Olsen would have had the authority to impose a sentence "below the presumptive range as long as the active term of imprisonment [was] not less than 50 percent of the low end of the presumptive range...."5 In other words, had Garner established a statutory mitigating factor, Judge Olsen would have had the authority to reduce the presumptive range to a minimum of three and one-half years. But since Garner did not establish a statutory mitigating factor, Judge Olsen had no legal authority to impose a sentence of less than seven years of imprisonment.
Instead, Garner established the non-statutory mitigating factor that he had exceptional prospects for rehabilitation. Alaska Statute 12.55.165(a) directs a sentencing judge to refer a case to the three-judge panel for sentencing if the judge determines by clear and convincing evidence that manifest injustice would result from the failure to consider a non-statutory mitigating factor. In Kirby v. State,6 we explained the duty of the sentencing court in these cireumstances:
[O]nce the court finds the mitigating factor of unusual prospects for rehabilitation in the case of a first [felony] offender, it should evaluate the factor's impact on an appropriate sentence in the same way it would evaluate a statutory mitigating factor that had been established by clear and convincing evidence. The court should consider it in light of the totality of the cireumstances and in light of the Chaney sentencing criteria to determine whether the presumptive term should be adjusted. The court should deny referral to the three-judge panel only when it concludes that no adjustment to the presumptive term is appropriate in light of the factor.7
Alaska Statute 12.55.175 governs the three-judge sentencing panel's consideration of a case. Once an individual sentencing *1048judge refers a case to the three-judge panel, the panel must independently decide whether to provide relief from the normal rules of presumptive sentencing.8 It must do so in two discrete situations: where the panel determines by clear and convincing evidence either (1) that manifest injustice would result from the failure to consider a non-statutory aggravating or mitigating factor; or (2) that manifest injustice would result from imposition of a sentence within the presumptive range after adjustment for statutory aggravating and mitigating factors.9
In Horapat v. State, we explained that a different test applies in each situation.10 When a defendant seeks referral to the three-judge panel on the theory that the lowest possible sentence permissible under the presumptive sentencing law is too severe, "[the question to be answered is whether this lowest allowed sentence would still be clearly mistaken under the [Chaney sentencing criteria and AS 12.55.0051." 11 We pointed out that a different test applies when a defendant seeks referral to the three-judge panel on the theory that it would be manifestly unjust to fail to consider a non-statutory mitigating factor:
In contrast, when a defendant seeks referral to the three-judge panel on the theory that it would be manifestly unjust to fail to consider a non-statutory mitigating factor ... the sentencing judge must perform a different analysis. Here, the question is whether, because of the presence of this non-statutory mitigator, it would be manifestly unjust to fail to make some adjustment (albeit small) to the sentence allowed by the presumptive sentencing law.12
When sentencing is referred to the three-judge panel based on the single judge's finding of a non-statutory mitigating factor, the panel must independently decide whether the defendant has established by clear and convincing evidence that the non-statutory mitigating factor applies If the panel agrees that the non-statutory mitigating factor applies and that "it would be manifestly unjust to fail to make some adjustment (albeit small) to the sentence allowed by the presumptive sentencing law," the three-judge panel must then assess the proper sentence, applying the Chaney sentencing criteria and taking the mitigating factor into consideration.13
If the sentence the three-judge panel would impose is outside the range of sentences the sentencing judge is authorized to impose, the panel must retain jurisdiction and impose a sentence under AS 12.55.175(c) or (e).
The pamel's sentencing discretion under AS 12.55.175(c) and (e)
As it was originally designed, the three-judge panel had wide sentencing discretion. This discretion has been limited to some degree by the legislature and by case law. For example, in cases where the panel concludes that a non-statutory mitigating factor should be considered when sentencing a defendant, AS 12.55.175(c) apparently gives the panel the discretion to impose "any definite term of imprisonment." But in State v. Price,14 this court held that, despite the broad wording of AS 12.55.175(c), when the three-judge panel adjusts a defendant's sentence because of a non-statutory mitigating factor, the panel is limited to the same scope of adjustment that an individual sentencing judge could make for a statutory mitigating factor under AS 12.55.155(a).15
In other words, if the low end of the applicable presumptive sentencing range is more than four years, the three-judge panel can only adjust the defendant's sentence *1049down to fifty percent of the low end of the presumptive range.16 In Garner's case, this means that, even if the three-judge panel agreed with Garner's sentencing judge that Garner had an extraordinary potential for rehabilitation, the panel could not reduce Garner's sentence below three and one-half years to serve based on this non-statutory mitigator-because the low end of the applicable presumptive range was seven years.
In Price, we also held that, despite this limitation on the three-judge panel's authority to reduce a sentence based on a non-statutory mitigator, the panel could lower the defendant's sentence even further if the panel separately concluded that even this reduced sentence would be manifestly unjust.17 But in 1992, the legislature modified this aspect of Price by enacting AS 12.55.175(e).18
Alaska Statute 12.55.175(e) governs situations where the three-judge panel retains Jurisdiction on the basis of the non-statutory mitigating factor that the defendant has extraordinary potential for rehabilitation. It declares that the panel "shall sentence the defendant within the presumptive range required under AS 12.55.125 or as permitted under AS 12.55.155." 19 Both Garner and the State agree, based on the legislative history of this provision, that the intent of this provision was (1) to re-affirm the three-judge panel's authority to reduce the defendant's sentence based on this non-statutory miti-gator according to the rules codified in AS 12.55.155(a), but (2) to take away the additional authority recognized in Price-i.e., the authority to reduce the defendant's sentence even further if the panel concludes that a greater reduction is necessary to avoid manifest injustice. Instead, the statute grants the panel the authority to make the defendant eligible for discretionary parole during the second half of the reduced sentence if the defendant completes certain rehabilitation programs.20
We have independently examined the text and legislative history of this statute, and we conclude that it supports the parties' position. We therefore adopt this interpretation of the statute.
Garner's case is governed by AS 12.55.175(e) because his case was referred to the three-judge panel on the basis of the non-statutory mitigating factor that he has extraordinary potential for rehabilitation. This means that the three-judge panel had no authority to reduce Garner's sentence to less than three and one-half years to serve (fifty percent of the low end of the applicable presumptive range), even if the three-judge panel concluded that such a sentence would be manifestly too severe. However, the statute allowed the three-judge panel to make Garner eligible for discretionary parole during the second half of his sentence if he completed certain rehabilitation programs.
We affirm the decision of the three-judge panel
A majority of the three-judge panel concluded that Garner established the non-statutory mitigating factor that he had exceptional prospects for rehabilitation. But the panel concluded that, even after considering the non-statutory mitigating factor, the presumptive term was not manifestly unjust in this case. The panel's decision makes it clear that it considered Garner's exceptional prospects for rehabilitation and concluded that, even considering this non-statutory mitigating factor, it would not be manifestly unjust to fail to make some adjustment to the range of sentences allowed by the presumptive sentencing law. We thus conclude that the panel applied the correct test in declining to accept jurisdiction. We affirm the panel's decision.
Conclusion
The judgment of the three-judge panel is AFFIRMED.
MANNHEIMER, Judge, with whom BOLGER, Judge, joins, concurring.
. AS 11.41.120(b); AS 12.55.125(c)(2)(A).
. AS 28.35.030(b); AS 12.55.135(a).
. Garner v. State, Memorandum Opinion & Judgment No. 5690 (Alaska App. Mar.30, 2011), 2011 WL 1229149, at *1.
. Id. at *9.
. AS 12.55.155(a)(2).
. 748 P.2d 757 (Alaska App.1987).
. Id. at 765; see also Harapat v. State, 174 P.3d 249, 254-55 (Alaska App.2007).
. See AS 12.55.175(b).
. Id.
. Harapat, 174 P.3d at 253-56.
. Id. at 254.
. Id.; see also Bossie v. State, 835 P.2d 1257, 1258-59 (Alaska App.1992) (upholding trial court's refusal to send to three-judge panel based on its finding that any sentence below the presumptive range would be clearly mistaken).
. Harapat, 174 P.3d at 254 (citing Kirby, 748 P.2d at 765).
. 740 P.2d 476 (Alaska App.1987).
. Id. at 482.
. AS 12.55.155(a)(2).
. Price, 740 P.2d at 482.
. 1992 Alaska Sess. Laws ch. 79, § 28 (codified as amended at AS 12.55.175(e)(1)-(3)).
. AS 12.55.175(e)(1).
. AS 12.55.175(e)(3).