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Reichmann v. Dept. of Natural Resources (5/31/96), 917 P 2d 1197
NOTICE: This opinion is subject to correction before publication in
the Pacific Reporter. Readers are requested to bring errors to the
attention of the Clerk of the Appellate Courts, 303 K Street,
Anchorage, Alaska 99501, phone (907) 264-0607, fax (907) 276-5808.
THE SUPREME COURT OF THE STATE OF ALASKA
MARGARET E. REICHMANN, )
) Supreme Court No. S-6664
) Superior Court No.
v. ) 4FA-93-1518 CI
STATE OF ALASKA, DEPARTMENT ) O P I N I O N
OF NATURAL RESOURCES, )
) [No. 4355 - May 31, 1996]
Appeal from the Superior Court of the State of
Alaska, Fourth Judicial District, Fairbanks,
Ralph H. Beistline, Judge.
Appearances: Robert John, Fairbanks, for
Appellant. Cameron M. Leonard, Assistant
Attorney General, Fairbanks, and Bruce M.
Botelho, Attorney General, Juneau, for
Before: Compton, Chief Justice, Rabinowitz,
Matthews and Eastaugh, Justices, and Shortell,
Justice pro tem.
Margaret Reichmann applied for a preference right to
purchase a five-acre tract of land from the State. The Department
of Natural Resources (DNR) denied her request. Reichmann now
appeals that denial. She contends that the DNR's decision was
based on an invalid regulation, violated her right to equal
protection of the laws, and constituted an abuse of discretion.
II. FACTS AND PROCEEDINGS
In 1957 Herman Reichmann placed a cabin on a tract of
land on the north end of Summit Lake. In November of that year,
Vestaine Reichmann, Mr. Reichmann's first wife, filed with the
United States Bureau of Land Management a small tract application
for the land. Mr. Reichmann allegedly used the site as a residence
and business headquarters between 1957 and 1961. In July of 1960
Vestaine's small tract application was returned because the land
had not yet been classified for small tract disposal. From 1961 to
the present the Reichmann family has used the land for recreational
Margaret Reichmann is Herman Reichmann's second wife;
they met in 1974 and married in 1977. Mr. Reichmann died in 1990
and left his interest in the site to Margaret Reichmann. In July
of 1992 Margaret Reichmann filed an application for preference
rights to purchase the site pursuant to AS 38.05.035(b)(5). The
application was denied on February 27, 1993. Margaret Reichmann
then requested reconsideration, which was also denied. She
appealed to the superior court, which affirmed the decision of the
DNR. Margaret Reichmann now appeals from the superior court's
A. Did the DNR Abuse Its Discretion by Failing to Grant a
Preference Right to Margaret Reichmann? (EN1)
Alaska Statute 38.05.035(b)(5) provides:
The director may
when the Director determines it is in the
best interest of the state and will avoid
injustice to a person or the heirs or
devisees of a person, dispose of land, by
direct negotiation to that person who
presently uses and who used and made
improvements to that land before January
3, 1959 or to the heirs or devisees of
the person; the amount paid for the land
shall be its fair market value on the
date that the person first entered the
land, as determined by the director; a
parcel of land disposed of under this
paragraph shall be of a size consistent
with the person's prior use, but may not
exceed five acres[.]
The four reasons that were given by the Director of the
DNR for his denial of Margaret Reichmann's application for a
preference right to purchase are as follows:
1. The site has not been used for residential
or commercial purposes.
2. Mr. Reichmann did not obtain proper
authorization before entering upon and
improving the land, nor was he diligent in
3. The land is not available for disposal.
The CRBAP identifies Summit Lake as a
recreational lake, and state-owned land around
these lakes are to be managed to retain
primarily a natural character. Further, the
site is within 200 feet of the shoreline and
public ownership is to be retained in order to
protect access and other public concerns.
4. No injustice will be caused the applicant
by the denial of the preference right grant,
as the land can be used for recreational
purposes without ownership thereof, but
without benefit of the cabin.
The Director concluded that it was not in the best interest of the
state to grant a preference right to Margaret Reichmann under AS
38.05.035(b)(5). Margaret Reichmann challenges each of these
reasons and the Director's overall best interest determination on
one or more grounds.
Since we are of the view that the Director's third reason
standing alone is dispositive of this appeal, we now address this
The DNR is required to formulate management plans
governing the development and utilization of state lands. AS
38.04.065. The Summit Lake area is encompassed within the Copper
River Basin Area Plan (Plan). The area immediately surrounding
Summit Lake falls within subunit 28A. The Plan identifies the
Summit Lake area as a valuable recreational area, and recommends
that Unit 28
should be retained in public ownership and
managed for multiple use with emphasis on
public recreation and protection of salmon
habitat . . . . All land uses around the lake
and its anadromous tributaries should occur in
a manner that ensures protection of these
waters for recreation and fish.
Of considerable importance to the resolution of the merits of the
Director's decision is the fact that the primary land use
designations for Summit Lake are those of public recreation, water
resources, and wildlife habitat, while land offerings and remote
cabins are in turn designated prohibited surface uses.
These designations are in accordance with legislative
policy which establishes that
[s]pecial care shall be taken to preserve
public access to public water and to retain
state ownership of sufficient land which
combine high value for recreation and other
public purposes with accessibility to settled
Alaska Statute 38.04.005(b). (EN2)
As noted previously, the Director decided that public
ownership should be retained in the subject parcel to protect the
public's access to Summit Lake and "other public concerns."(EN3)
Nonetheless, Margaret Reichmann claims that her "recreational use
. . . is entirely consistent with the state's recreational
designation." The State's reply is that "[p]rivate ownership of
the shore of Summit Lake is not consistent or compatible with
public recreation on and around the lake." In light of the
statutory provisions, regulations, and portions of the Plan alluded
to above, we agree with the State's position.
We therefore hold that the Director's discretionary
decision to deny Margaret Reichmann a preference right to purchase
the property in question has a reasonable basis in law and on the
record, and is neither arbitrary nor capricious. (EN4)
Consequently we affirm the Director's discretionary denial of a
preference right to Margaret Reichmann for the reason advanced by
the Director that the property in question is not available for
B. Does Disparate Treatment of Residential and Recreational
Users in the Context of Granting (b)(5) Preference Rights
Violate Equal Protection Guarantees? (EN6)
Margaret Reichmann also makes the claim that a policy of
distinguishing recreational users from residential users for
purposes of granting (b)(5) privileges violates her "rights to
equal treatment and opportunity under the law as guaranteed by the
Fourteenth Amendment and by Article I, 1 of the Alaska
Constitution, in particular with respect to the use and disposal of
natural resources as guaranteed by Article VIII, 17 of the Alaska
Constitution." Any claim not based specifically upon article VII,
section 17 clearly lacks merit since "recreational land users"is
not a suspect classification for equal protection purposes, and
treating this group differently when allocating public lands cannot
credibly be characterized as irrational.
The "uniform application"clause claim need detain us
only slightly longer. Article VII, section 17 provides:
Laws and regulations governing the use or
disposal of natural resources shall apply
equally to all persons similarly situated with
reference to the subject matter and purpose to
be served by the law or regulation.
Margaret Reichmann claims that the interpretation of this clause in
Gilbert v. State, Dep't of Fish and Game, 803 P.2d 391, 398 (Alaska
1990), requires us to apply "heightened scrutiny . . . in
evaluating the government conduct at issue."
We agree with the superior court's rejection of this
argument. As the superior court observed, this court has recently
held that "[s]ince sport and commercial users are not similarly
situated, the uniform application clause is not implicated [by
distinctions drawn between them]." Tongass Sport Fishing Ass'n v.
State, 866 P.2d 1314, 1318 (Alaska 1994). Similarly, residential
and recreational users are not similarly situated for uniform
application clause purposes, and the superior court was correct to
conclude that "heightened scrutiny under art. VII, 17 does not
apply." Since heightened scrutiny does not apply in this case, the
distinction drawn between residential and recreational users passes
C. Is the Residential/Recreational Use Distinction in the
DNR's PPM an Invalid Regulation under the AAPA? (EN7)
One of Margaret Reichmann's central contentions is that
certain criteria listed in Section 539-3503 of the DNR Procedures
Manual (PPM) are "regulations"for purposes of the Alaska
Administrative Procedures Act (AAPA), AS 44.62.010 et seq., and,
accordingly, are not valid without proper promulgation. The only
criterion that appears to be relevant to the disposition of her
claim is listed in the PPM as one "that should be considered in
making the best interest determination for a discretionary
preference right grant." It is phrased thus: "b. Is the
applicant's use non-recreational?" It appears from the record that
the Director relied, in some measure, on this criterion in
rejecting Margaret Reichmann's application. (EN8)
Under the AAPA, the term "■regulation■ encompasses many
statements made by administrative agencies, including policies and
guides to enforcement." Kenai Peninsula Fisherman's Coop. Ass'n,
Inc. v. State, 628 P.2d 897, 905 (Alaska 1981). "Indicia for
identifying a 'regulation' include (1) whether the practice
implements, interprets or makes specific the law enforced or
administered by the state agency, and (2) whether the practice
'affects the public or is used in dealing with the public.'"
Gilbert, 803 P.2d at 396 (quoting Kenai, 628 P.2d at 905).
The residential/recreational distinction in the PPM is
intended to provide guidance with respect to Department decisions
concerning whether or not to grant (b)(5) preference rights in a
given case. As such, it touches on implementation, interpretation,
and specification of AS 38.05.035(b)(5), which grants the Director
of the DNR the authority to dispense these rights on a case-by-case
basis. The State claims that this criterion "does not purport to
interpret the law, such as by defining key terms." Even if this is
true, (EN9) the cases do not require that a policy undertake to
specifically define key terms before it will be considered a
Additionally, the residential/recreational distinction
clearly does affect the public. It affects every potential
applicant for (b)(5) preference rights, including Margaret
Reichmann, all of whom are members of the public.
Since the residential/recreational distinction policy
appears to bear both of the Kenai indicia, and since the term
"regulation"has been read to include "policies and guides to
enforcement,"we conclude that this part of the PPM is a
The superior court avoided this result by holding that
"because these criteria are merely recommended and do not establish
mandatory rules or standards, they are not regulations under the
AAPA." This conclusion is echoed in the State's brief. It is an
argument, however, that has already been rejected by this court in
Gilbert, where a general policy that the Board of Fisheries did not
follow "in the sense that it [felt] bound to do so,"was
nonetheless held to "fall squarely within the definition of a
■regulation■ . . . ." Gilbert, 803 P.2d at 396-97. In short, we
hold that the residential/recreational distinction in the PPM is a
regulation and should have been promulgated under the AAPA.
However, in our view the invalidity of the PPM is
immaterial to the proper resolution of this appeal. The fact that
the Director listed three other reasons for denying the application
is clear indication that DNR did not consider Margaret Reichmann's
recreational use to be dispositive. As discussed earlier, the PPM
itself lists the residential/recreational distinction only as a
factor "that should be considered." Thus it does not appear to us
that DNR considered this factor in a manner that is substantially
different from the way it would have considered it absent the PPM.
The residential/recreational distinction drawn in the
DNR's PPM is a regulation for AAPA purposes and is therefore
invalid absent proper promulgation. However, since it is highly
likely that the same result would have been reached absent this
regulation, and since the result is completely compatible with the
valid part of the statutory and regulatory scheme, the invalidity
of the regulation does not require vacation of the Director's
determination in this case. The Director did not abuse his
discretion in deciding that it was not in the state's best interest
to grant Margaret Reichmann a preference right. The Director's
decision has a reasonable basis in the record and is neither
arbitrary nor capricious. Further, the decision did not violate
Margaret Reichmann's equal protection rights.
The superior court's affirmance of the Director's denial
of Margaret Reichmann's application for preference right is
1. Since (b)(5) determinations are within the discretion of the
Director of the DNR, this court reviews the decision "■only to the
extent necessary to ascertain whether the decision has a reasonable
basis,■ and to ensure that it ■was not arbitrary, capricious, or
prompted by corruption.■" Trustees for Alaska v. State, DNR, 795
P.2d 805, 809 (Alaska 1990) (citations omitted).
2. See also 11 AAC 55.020(d), which provides in part:
Land classified settlement, except tideland,
submerged land, or shoreland, may be made
available for sale, lease, or other disposal.
Tideland, submerged land, or shoreland may be
made available for lease or other less-than-
fee disposal, and management rights in such
land may be assigned to another state agency.
However, the fee interest in tideland,
submerged land, or shoreland must ultimately
be retained in state ownership . . . .
3. See also AS 38.04.015 which identifies "[t]he primary public
interests in retaining areas of state land surface in public
ownership"to include protection of "critical wildlife habitat and
areas of special scenic, recreational, scientific, or other
4. Margaret Reichmann makes an argument that the land in question
is "available for disposal"despite the fact that her use may be
non-conforming. For this proposition she cites a prior (b)(5)
determination by the DNR where another applicant was granted
preference rights in a similarly designated area.
The State argues that the prior (b)(5) determination was a
mistake. Furthermore, it concedes that "DNR could legally revise
the plan to allow a sale to Mrs. Reichmann,"but states that "to do
so would be contrary to the public interests established by the
legislature." We agree with this contention and further note that
we are not in a position to judge the merits of the state's
decision as to the state's award of a preference right of purchase
in regard to the other parcel.
5. Implicit in this holding is our conclusion that the Director
did not err in concluding that it was not in the best interests of
the state to grant a preference right to Margaret Reichmann.
Our holding makes it unnecessary to address the remaining
three grounds articulated by the Director for denying Margaret
Reichmann's request for a preference right.
6. Whether DNR's practices and policies are consistent with the
Alaska and Federal Constitutions is a question of law which this
court reviews de novo. Alaska Fish Spotters Ass'n v. State, 838
P.2d 798, 800 (Alaska 1992).
7. This is ultimately a question of statutory interpretation
which this court reviews de novo. In the Matter of T.W.R., 887
P.2d 941, 944 (Alaska 1994).
8. As noted above, the first of the four reasons that were listed
in the decision denying Margaret Reichmann's application was: "The
site has not been used for residential or commercial purposes."
9. An argument can be made that the central purpose of Section
539-3503 is to define the term "best interest"in AS