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Longwith v. Dept of Natural Resources (12/11/92), 848 P 2d 257
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NOTICE: This opinion is subject to
formal correction before publication in the
Pacific Reporter. Readers are requested to
bring typographical or other formal errors to
the attention of the Clerk of the Appellate
Courts, 303 K Street, Anchorage, Alaska
99501, in order that corrections may be made
prior to permanent publication.
THE SUPREME COURT OF THE STATE OF ALASKA
B. C. LONGWITH, )
) Supreme Court No. S-4476
Appellant, )
)
v. ) Superior Court No.
) 4FA-89-513 CIVIL
STATE OF ALASKA, DEPARTMENT )
OF NATURAL RESOURCES, )
TRUSTEES FOR ALASKA, )
NORTHERN ALASKA ENVIRONMENTAL ) O P I N I O N
CENTER, CHENA HOT SPRINGS )
ROAD RESIDENTS ASSOCIATION, )
JAMES C. WEIDNER, and )
STEVE SUNDERLIN, )
)
Appellees. ) [No. 3903, December 11, 1992]
______________________________)
Appeal from the Superior Court of the
State of Alaska, Fourth Judicial District,
Fairbanks,
Jay Hodges, Judge
Appearances: Robert John, Law Offices
of William R. Satterberg, Jr., Fairbanks, for
Appellant. Sharon Sturges, Randall Weiner,
Trustees for Alaska, Anchorage, Stephan
Williams, Fairbanks, for Appellees Trustees
for Alaska, et. al. Cameron Leonard,
Assistant Attorney General, Fairbanks, and
Charles E. Cole, Attorney General, Juneau,
for Appellee State of Alaska, Department of
Natural Resources.
Before: Rabinowitz, Chief Justice,
Burke, Matthews, Compton, and Moore,
Justices.
RABINOWITZ, Chief Justice.
INTRODUCTION
This case concerns the grant by the Commissioner of
the Department of Natural Resources of preference rights to B.C.
Longwith. Longwith was a "winner"of a parcel of land in the
Potlatch Ponds land lottery, which was permanently enjoined in
State v. Weidner, 684 P.2d 103 (Alaska 1984). After the lottery
was enjoined, the Commissioner granted Longwith preference rights
to the same parcel that he "won"in the lottery and Trustees for
Alaska challenged the grant of preference rights in the superior
court.
FACTS AND PROCEEDINGS
In 1980, the State Department of Natural Resources
(DNR) offered approximately 14,000 acres of land located within
the Fairbanks North Star Borough (Borough) for disposal as
agricultural lands. The lottery sale was known as the Potlatch
Ponds lottery and was designed to dispose of 61 parcels of state
land to lottery "winners"for agricultural use. Weidner and
other landowners in the Potlatch Ponds area, as well as a local
residents' association, sought a preliminary injunction to
prevent the lottery sale. The superior court granted the
preliminary injunction but allowed the Department of Natural
Resources to go forward with the lottery to identify the
"winners" for administrative efficiency and convenience pending
the outcome of the challenge to the lottery sale. The superior
court's order granting the preliminary injunction expressly
provided that the State could not transfer or convey any right,
interest or title in the properties to successful applicants
pending the outcome of the litigation and that successful
applicants would receive no rights or interests in the lottery
parcels. In accordance with this order, the lottery was held and
successful applicants identified. State v. Weidner, 684 P.2d
103, 107 (Alaska 1984). Thereafter, the superior court granted
summary judgment in favor of Weidner on five issues and
permanently enjoined the disposal of the Potlatch Ponds parcels.1
On appeal, we affirmed the superior court's grant of summary
judgment and its entry of a permanent injunction. Id. at 114.
We held that the DNR's failure to comply with the Borough's
planning requirements and the statutory requirements of a fair
market value sale invalidated the Potlatch Ponds lottery.
Weidner, 684 P.2d at 111, 112-113. The superior court's grant of
summary judgment on the issue of whether improper legislative
influence tainted the DNR's classification of the lands as
agricultural lands and the subsequent disposal of the lands was
reversed because we determined that genuine issues of material
fact existed concerning this issue of alleged improper
legislative interference. Id. at 108.
In 1985, the Director of the Division of Land and Water
Management (Director) determined that because the DNR "precluded
the apparent 'winners' from participating in lotteries held after
the Potlatch Ponds lottery,"each winner who had not relinquished
a claim would be accorded "the right to apply for a preference
right of purchase for the agricultural interests to the Potlatch
Ponds parcel each originally claimed, or another parcel of
similar size or value, pursuant to AS 38.05.035(b)(2)." The
Commissioner, in implementing the Director's decision, concluded
that the DNR would not reoffer the Potlatch Ponds parcels. In
her March 25, 1987 decision, the Commissioner stated:
This decision is based on the following
uncertainties and factors:
a. Reassessment of soils within
the area by the Soil Conservation
Service identified potentially serious
problems for proper land development.
b. Unforeseen regulatory
requirements due to wetlands
designations by the Corps of Engineers,
such as the cumulative impact studies to
show the results from road development,
clearing, drainage, and farm development
of the parcels.
c. Mental Health lands within the
disposal area are unavailable because,
due to the Weiss Decision, they must be
managed differently than state general
selection lands.
d. Future obligations to the
State for road construction and
maintenance.
e. Fairbanks North Star Borough
survey requirements for legal and
buildable access which is estimated at
$600,000.
f. Budgetary reductions and lack
of capital improvement funds.
This decision adopted a procedure to implement the preference
right application process and delegated authority to grant or
deny preference rights pursuant to AS 38.05.035(b)(2) to the
Northern Regional Manager of the Division of Land and Water
Management (Manager).
In April 1987, B.C. Longwith, a "winner" in the
Potlatch Pond lottery received notice from the Manager that the
Potlatch Ponds agricultural lands would not be reoffered as a
project, but that he was entitled to apply for a preference right
to "the agricultural interests to the Potlatch Ponds parcel . . .
originally claimed"or an alternative parcel of state land. In
response, Longwith requested a preference right to the agricul
tural interests to the Potlatch Ponds parcel for which his name
was drawn in the invalidated land sale lottery. The Director
denied Longwith's application for preference rights to the
original Potlatch Ponds parcel, concluding that the disposal of
the parcel "is not in the state's best interest because
development of the parcel as required does have the potential to
create serious environmental impacts to the parcel and
development of access will disturb wetlands."2 The decision
allowed Longwith to amend his application for a preference right
to an alternative parcel of state land. Longwith did not amend
his application and filed an appeal of the Director's denial of a
preference right to the Potlatch Ponds parcel with the
Commissioner of the DNR.
In a decision dated April 6, 1988, Commissioner Brady
of the DNR reversed the Director's decision that conveyance of
the Potlatch Ponds parcel to Longwith was not in the State's best
interests and directed the Division to convey agricultural
interests in that parcel to Longwith. Trustees for Alaska
("Trustees") then appealed the Commissioner's decision to the
superior court.3 Upon the DNR's motion, Longwith and Marlene
Robinson were joined as appellees.4 The superior court
subsequently invalidated the Commissioner's grant of preference
rights in the Potlatch Ponds lands that Longwith and Robinson
"won," finding that Commissioner Brady abused her discretion by
relying on a classification for an invalidated land lottery. The
superior court also held that the Commissioner erred in granting
Longwith and Robinson residency discounts because the statutory
provision allowing these discounts was repealed and because the
provision contravened the clear legislative intent that
preference rights be granted at fair market value only. Longwith
appeals.
In his appeal to this court Longwith argues that the
Commissioner did not abuse her discretion by granting him
agricultural preference rights. Trustees reply that the superior
court correctly ruled that the Commissioner's preference rights
decision was arbitrary and capricious. Trustees also advance
several alternative bases for affirming the superior court's
decision invalidating the preference rights conveyance to
Longwith. The most significant of these alternative arguments is
that Longwith incurred no inequitable detriment and that any
inequitable detriment incurred by Longwith was due solely to his
own actions and decisions.
DISCUSSION
II. DID THE COMMISSIONER ABUSE HER DISCRETION BY GRANTING
LONGWITH PREFERENCE RIGHTS TO THE LANDS IN QUESTION?
A. Was the Commissioner correct in concluding
that Longwith was entitled to preference rights?
Trustees argue that the Commissioner exceeded her
discretion in granting Longwith preference rights.5 Trustees
further argue that the statutory requirements for the grant of
preference rights should be construed strictly in accordance with
"basic public interest in appropriate use and development of
state lands" and that the "preference rights scheme is not
intended substitute for -- or allow an unfettered 'end run'
around -- the constitutional and statutory requirements for the
rational classification and disposal of state land. [sic]" See
Messerli v. Department of Natural Resources, 768 P.2d 1112, 1120
(Alaska 1989). We find Trustees' argument persuasive.
The Commissioner granted preference rights in the
instant case under AS 38.05.035(b)(2) which provides in relevant
part:
The director may
(2) grant preference rights for
the lease or purchase of state land
without competitive bid in order to
correct errors or omissions of a state
or federal administrative agency when
inequitable detriment would otherwise
result to a diligent claimant or
applicant due to situations over which
the claimant or applicant had no
control. . . .
Subsection (e) of the same provision requires that no less than
21 days before the sale "the director shall make available to the
public a written finding that sets out the facts and applicable
law upon which the determination that the sale, lease or other
disposal will best serve the interests of the state was based."
AS 38.05.035(e).
Trustees argue that the Director failed to make the
necessary findings for the conveyance of preference rights,
namely, that Longwith suffered an inequitable detriment at the
hands of DNR and that a grant of preference rights is in the best
interest of the State. In his written decision granting
preference rights to Potlatch Ponds lottery "winners," Director
Tom Hawkins made the following findings:
1. In accord with the Supreme
Court decision in Weidner v. Alaska, the
state erred in offering parcels within
the Potlatch Pond disposal because of a
failure to obtain Fairbanks North Star
Borough platting approval.
2. The claimants of the Potlatch
Pond parcels had no control over the
process which kept them from obtaining
the agricultural interest to the land.
3. Those claimants who did not
relinquish their "rights" have shown
diligence in pursuing their claim.
4. Inequity has resulted because
the state erred, invalidating the
lottery.
Trustees correctly argue that "[t]he Director's
suggestion that the invalidation of the lottery created an
undefined 'inequity' does not support the different, necessary
finding that Longwith suffered 'inequitable detriment.'"
Longwith could not have suffered any inequitable detriment from
the invalidation of the lottery because at the time his name was
chosen for a Potlatch Ponds parcel, the superior court had issued
a preliminary injunction expressly providing that the lottery
would be conducted solely for administrative efficiency and that
lottery "winners"would not acquire any rights or interests in
any Potlatch Ponds parcels as a result of the lottery.
The Director stated in his decision that "DNR precluded
the apparent 'winners' from participating in lotteries held after
the Potlatch Ponds lottery, and prior to the Supreme Court deci
sion." Thus, the key issue in the case is whether the DNR's
requirement that the lottery "winners"relinquish their "rights"
to their Potlatch Ponds parcel in order to participate in future
land disposals caused Longwith to suffer an inequitable detriment
sufficient to support a grant of preference rights under AS
38.05.035(b)(2). Trustees appropriately note that as a matter of
law, Longwith was not precluded from participating in other land
disposals because AS 38.05.057(b)(3) precludes participation only
when an individual actually "purchased"lands in a disposal.
Additionally, Trustees accurately contend that Longwith could not
have suffered an inequitable detriment because to suffer a
"detriment,"a person must have "forborne some legal right which
he otherwise would have been entitled to exercise, or that he has
given up something which he had a right to keep, or done
something which he had a right not to do"in reliance on the
promises of another. Trustees conclude that Longwith acquired no
rights to a lottery parcel and thus "did not change his legal
position based on any lawful actions of DNR." Since Longwith had
the ability to participate in other land disposals he thus did
not suffer any inequitable detriment as that term is used in AS
38.05.035(b)(2). Trustees further argue that assuming
inequitable detriment has been shown, then the statute was not
satisfied in this case. AS 38.05.035(b)(2) requires that the
inequitable detriment be due "to situations over which the
claimant or applicant had no control." The only finding of "no
control"made by the Director pertains to the invalidated lottery
process. Relying on Messerli, 768 P.2d at 1122, Longwith claims
that he was faced with a "Hobson's choice" because he was
required to forfeit his rights to participate in future state
land disposals in order to "maintain his right to pursue and
obtain any fruits of an appeal to this court." However, as
Trustees correctly point out, Messerli is inapposite because in
that case the DNR Commissioner informed Messerli that if he
litigated the Commissioner's refusal to grant him a preference
right to two specific parcels of land, he would lose his prefer
ence right to an alternative parcel selected by the Commissioner.
768 P.2d at 1122. This situation resulted in an inequitable
detriment because in order to exercise his right to appeal,
Messerli was required by the Commissioner to waive his preference
right.6 In the instant case, Longwith was faced with a choice of
whether to pursue his winning status in the Potlatch Ponds
parcel, to which he had no "right,"or to participate in future
land disposals. As Trustees note Longwith voluntarily made the
decision to forego participation in subsequent lotteries (with no
assurance that he would be a winner in any of these subsequent
lotteries) and that "any resulting detriment was solely due to
his own actions."
Thus, we conclude that the Commissioner abused her
discretion in granting preference rights to Longwith. On the
basis of the preceding discussion we hold that Longwith failed to
meet two separate criteria of AS 38.05.035(b)(2) for the granting
of preference rights. More particularly, Longwith did not
sustain an "inequitable detriment"since the superior court, at
the outset, ruled that the lottery "winners"(determined only for
purposes of administrative efficiency) did not acquire any rights
or interests in any Potlatch Ponds parcels as a result of the
invalidated lottery. Further, with full knowledge of the
superior court's ruling Longwith, who was not precluded from
participating in any subsequent land lotteries, made the decision
to refrain from participating in future lotteries in the hope
that his winning status would be affirmed on appeal. In terms of
AS 38.05.035(b)(2) this is clearly a situation over which
Longwith had in fact exercised control since he made the choice
not to participate in future land lotteries after he had been
apprised of the superior court's ruling that he had no interest
in the Potlatch Ponds parcels.
II. DO TRUSTEES HAVE STANDING TO CHALLENGE THE COMMISSIONER'S
GRANT OF PREFERENCE RIGHTS?
Given our holding that the Commissioner abused her
discretion in granting preference rights to Longwith in the
Potlatch Ponds acreage in question we need address only one
additional issue. Longwith challenges Trustees' standing to
question "the Commissioner's decision to grant Longwith an
agricultural interest in the Potlatch Ponds parcel." Trustees
reply, first, that because the issue of standing was not raised
in the superior court, it should not be heard on appeal. Second,
Trustees argue that they have standing "both as participants in
the administrative process and on public interest grounds." We
have interpreted standing broadly to allow access to the courts
where the party has "a sufficient personal stake in the outcome
of the controversy." Moore v. State, 553 P.2d 8, 23 (Alaska
1976); see also Gilman v. Martin, 662 P.2d 120 (Alaska 1983);
Trustees for Alaska v. State, 736 P.2d 324 (Alaska 1987), cert.
denied, 486 U.S. 1032 (1988); Weidner v. State, 684 P.2d 103, 110
(Alaska 1984).
Longwith relies on Hoblit v. Commissioner of Natural
Resources, 678 P.2d 1337 (Alaska 1984), which held that Hoblit
did not have standing to challenge the DNR's grant of a
preference right to 20 acres of land as a taxpayer because the
amount of land disposed of by the state was not "significant"
under Gilman v. Martin, 662 P.2d 120, 123 (Alaska 1984). Factual
differences exist between this case and Hoblit. The Potlatch
Ponds parcel at issue is roughly 585 acres, which is
"significant" in comparison to 20 acres. Longwith fails to
appreciate the implications of Hoblit's other holdings. Longwith
neglects to mention that we did not foreclose all bases for
standing and remanded the case to determine whether Hoblit could
demonstrate sufficient injury in his status as a neighboring
landowner or as a participant under the Administrative Procedures
Act. 678 P.2d at 1342. We reject Longwith's contention that
Trustees failed to participate in the administrative proceeding.
Study of the record discloses that Trustees participated in the
comment process through Weidner. In the instant case, Trustees
asserts the interests of local landowners, participants in the
administrative process, and the public's interest in the sound
disposition and management of State lands. Trustees contends
that the issues of this case are of particular concern to the
public, explaining, "[t]here is a strong public interest in
decisions affecting State lands, rooted in Alaska's Constitution,
which requires strict adherence to statutory requirements
governing the grant of preference rights to State lands."7
Review of the record fully supports the grounds Trustees have
advanced in support of standing. We therefore hold that Trustees
has demonstrated a sufficient stake in the outcome of this case
to confer standing. See Weidner v. State, 684 P.2d at 110;
Trustees for Alaska v. State, 736 P.2d at 327-29; Gilman v.
Martin, 662 P.2d at 123.
The superior court's invalidation of the Commissioner's
grant of preference rights to Longwith in the Potlatch Ponds land
is AFFIRMED.
_______________________________
1. As recapitulated in State v. Weidner, 684 P.2d 103, 107
(Alaska 1984) the superior court found:
[T]here was a reasonable basis for the
disposal decision by the Commissioner of the
DNR, but granted summary judgment in favor of
Weidner on five issues, holding: (1) the DNR,
contrary to AS 38.04.065 (Supp. 1980), failed
to develop land use plans prior to classifi
cation of the land as agricultural; (2) the
lottery contravened the disposal schedule
mandated by AS 38.05.047 (Supp. 1980); (3)
the Commissioner's classification decision
was subject to improper legislative
interference and, therefore, was not an
independent, reasoned decision; (4) the DNR
violated borough subdivision requirements;
and (5) the sale violated AS 38.05.300 (Supp.
1980), by closing certain parcels larger than
640 acres to multiple purpose use. The court
denied Weidner's claim that the $100 per acre
figure set by the state violated the prohibi
tion against disposing of state land for less
than its fair market value. Intervention by
the lottery winners was denied except as to
count IV of Weidner's complaint.
(Footnote omitted.)
2. The Director explained the denial of preference rights
in the Potlatch Ponds parcel as follows:
1. The disposal of the
agricultural rights on this parcel to
Longwith is not in the state's best
interest because development of the
parcel as required does have the
potential to create serious
environmental impacts to the parcel and
development of access will disturb
wetlands.
2. No injustice will be caused
Mr. Longwith by not granting him a
preference right on this parcel, as
there is [sic] other state agricultural
lands available as well as fee simple
parcels as identified in the selection
pool available to each Potlatch Ponds
parcel winner who participated in this
preference right option.
3. Mr. Longwith qualifies for a
preference right and is hereby allowed
to amend his application within 60 days
of receipt of this decision, to choose
an available alternate parcel of state
land from the May 9, 1987 Potlatch Pond
Selection Pool List.
3. Trustees appealed on behalf of itself, Northern Alaska
Environmental Center, Chena Hot Springs Road Residents'
Association, James C. Weidner and Steve Sunderlin.
4. The appeal in the superior court also concerned the
preference rights granted to Marlene Robinson, another lottery
"winner." Robinson was denied a preference right to her Potlatch
Ponds parcel by the Director. Robinson appealed, and like
Longwith, was later granted her parcel by the Commissioner.
However, neither Robinson nor the DNR appealed the superior
court's decision invalidating the grant of preference rights in
the Potlatch Ponds parcel.
5. Whether to grant a preference right is within the
discretion of the director, as provided in AS 38.05.035(b)(2),
and is thus subject to review under the arbitrary and capricious
or abuse of discretion standard. Olson v. State, Dept. of
Natural Resources, 799 P.2d 289, 293 (Alaska 1990). However, the
interpretation of the statutory requirements for the grant of
preference rights does not involve agency expertise. This court
reviews issues of statutory interpretation under the substitution
of judgment standard. Madison v. Alaska Dept. of Fish and Game,
696 P.2d 168, 173 (Alaska 1985); Kelly v. Zamarello, 486 P.2d
906, 917 (Alaska 1971).
6. Longwith argues that in Olson v. State, DNR, 799 P.2d
289 (Alaska 1990), this court distinguished the DNR'S grant of
preference rights in Olson, stating in dicta that:
The only one of these decisions which
might conflict with the DNR decisions in the
Olsons' cases is the decision in the Potlatch
Ponds case. . . . While the lottery winners
had no legal rights in their property and no
investment of time or money, it appears that
during the four years that the legal
challenge to the lottery was pending DNR
prevented them from participating in other
lotteries without first relinquishing their
Potlatch Ponds parcels.
799 P.2d at 294. However, this statement is not dispositive in
that it defines inequitable detriment too broadly, and gives
insufficient weight to the fact that the Potlatch Ponds
participants suffered no inequitable detriment because they
acquired no rights in lottery parcels that they could be required
to waive.
7. Article VIII, 10 of the Alaska Constitution provides:
No disposals or leases of state lands,
or interests therein, shall be made without
prior public notice and other safeguards of
the public interest as may be prescribed by
law.
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