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AU International Inc & Caldera Corp v. State of Alaska, DNR (1/22/99), 971 P 2d 1034
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) 264-0608, fax (907) 264-0878.
THE SUPREME COURT OF THE STATE OF ALASKA
AU INTERNATIONAL, INC., and )
CALDERA CORPORATION, ) Supreme Court No. S-8087
Appellants, ) Superior Court No.
) 3AN-95-10181 CI
) O P I N I O N
STATE OF ALASKA, DEPARTMENT )
OF NATURAL RESOURCES, ) [No. 5071 - January 22, 1999]
Appeal from the Superior Court of the State of
Alaska, Third Judicial District, Anchorage,
Harold M. Brown, Judge.
Appearances: Ann M. Bruner, Bogle & Gates
P.L.L.C., Anchorage, for Appellants. Lawrence
Z. Ostrovsky, Assistant Attorney General, Anchorage, and Bruce M.
Botelho, Attorney General, Juneau, for Appellee.
Before: Matthews, Chief Justice, Eastaugh,
Fabe, and Bryner, Justices. [Compton,
Justice, not participating.]
Alaska Statute 38.05.265 provides that failure to
properly record a statement of annual labor for state mining claims
"constitutes abandonment of all rights acquired under the mining
claim . . . involved." Owners of 1,039 state mining claims filed
a statement of annual labor for only four of those claims, and
failed to identify the remaining 1,035 claims by name and claim
number. Did their failure constitute an abandonment of the 1,035
claims even if the owners did not intend to abandon them? Because
we conclude that intent is irrelevant under the statute, and
because the owners here did not comply with the statute or the
pertinent regulation, we hold that the claims were abandoned as a
matter of law. We therefore affirm the judgment below.
II. FACTS AND PROCEEDINGS
In 1990 AU International, Inc., and Caldera Corporation
acquired an interest in 1,039 state mining claims near Beluga
Point. Caldera is an affiliate of AU International and has an
interest in some of those claims. We refer to the owners
collectively as Caldera. From 1990 to November 30, 1994, Caldera
properly maintained its claims. It alleges it "expended over
$750,000 to develop and improve"its claims.
On November 30, 1994, a Caldera representative went to
the Alaska Department of Natural Resources (DNR) offices for the
purpose of filing a statement of annual labor, as required by AS
38.05.210(b). [Fn. 1] November 30 was the last day for doing so.
[Fn. 2] The representative had only enough money to pay the filing
fees for four of the 1,039 claims. Caldera claims that a change in
fees surprised its representative when he went to DNR late in the
afternoon of November 30. The representative then recorded an
affidavit listing four of the 1,039 claims. The affidavit did not
list or describe the remaining 1,035 claims by claim name or claim
number. Caldera asserts that its representative intended to amend
the affidavit to add the other claims later.
In July 1995 Caldera attempted to record an amended
affidavit of annual labor for the 1,035 claims and to pay any
necessary fees. DNR informed Caldera that its failure to properly
record an affidavit by November 30, 1994, had resulted in automatic
abandonment of those claims. As DNR notes, "[u]nder most
circumstances, the holder of a mining claim can relocate abandoned
mining claims one year after abandonment." See AS 38.05.265.
Caldera, however, cannot relocate its claims because they were
located in an area that has been designated as a state game refuge
and has been permanently closed to mineral entry.
Caldera argues that a certificate of substantial
compliance is unnecessary; it maintains that it can amend its
affidavit of annual labor under AS 38.05.210(c). Nevertheless,
Caldera sought a certificate of substantial compliance, apparently
on advice from DNR. DNR stated that it would consider Caldera's
request if Caldera could document the $135,000 in expenses it
reported for the 1994 labor year. After reviewing the financial
records submitted by Caldera, DNR concluded that Caldera had only
spent about $65,000 on its claims in the 1994 labor year. DNR
noted that, even if excess labor from previous years were applied,
annual recording would still be required. In October 1995 DNR
denied Caldera's request for a certificate of substantial
Caldera requested reconsideration of DNR's October 1995
decision, requested permission to file an amended affidavit of
annual labor, and requested a hearing. The Commissioner denied
Caldera's request for reconsideration, stating that Caldera's
claims were "abandoned by action of law, and that no compelling
evidence of substantial compliance has been provided in support of
a Certificate." The Commissioner also decided that Caldera could
not record an amended affidavit and was not entitled to a hearing.
Caldera appealed the Commissioner's decision to the
superior court, which affirmed.
1. Standard of review
When an appeal is taken from a decision of the superior
court sitting as an intermediate appellate court reviewing an
administrative ruling, we independently review the merits of the
administrative decision and give no deference to the superior
court's decision. [Fn. 3]
Because the question of whether Caldera is deemed to have
abandoned its claims for failure to comply with AS 38.05.265 is a
legal question involving no agency expertise, we apply the
substitution of judgment standard of review. [Fn. 4]
Although the question "[w]hether an abandonment has
occurred is to be determined by the trier of fact from all the
facts and circumstances of the particular case,"[Fn. 5] there is
no genuine fact dispute about what Caldera did on November 30. Any
question whether a fact dispute about Caldera's intentions on
November 30 is material to the issues on appeal is a question of
law to which we apply the substitution of judgment standard.
2. Did Caldera abandon the other 1,035 claims?
Caldera argues that it did not abandon its claims because
abandonment requires a subjective intent to abandon, coupled with
an external and objective act by which that intent is carried into
effect. Caldera contends that the evidence shows that Caldera did
not intend to abandon its claims; rather, it planned to amend its
affidavit to include the other 1,035 claims, and it sought a
certificate of substantial compliance.
DNR responds that, although federal mining law requires
an intent to abandon, Alaska law does not. It reasons that,
because Alaska law is clear and contains no gaps, the court need
not apply federal law to this case. DNR argues that AS 38.05.265
"explicitly provides for abandonment when a statement of annual
labor is not properly recorded." It further reasons that, even if
this court chooses to look to federal law for guidance, federal
courts construe the federal recording requirements strictly, and
failure to record results in an abandonment under federal law as
Owners of state mining claims must meet certain
requirements for each labor year, which begins at noon on September
1. [Fn. 6] Owners must perform annual labor worth at least $100
per year per claim, or make a cash payment of $100 to the state.
[Fn. 7] During the labor year, or within ninety days after it ends
(and thus, by November 30), the owners also must record "a signed
statement setting out the information, . . . concerning the annual
labor of the preceding year, any labor in excess of that required
for the preceding year, and any payment of cash instead of annual
labor."[Fn. 8] Owners have two years in which to amend a sworn
statement of annual labor. [Fn. 9]
Alaska Statute 38.05.265 provides that failure to record
a statement of annual labor constitutes abandonment of all rights
acquired under the claims. [Fn. 10] Per statute and regulation, a
statement of annual labor that does not accurately set out the
"essential facts"is void, has no effect, and may not be amended.
[Fn. 11] By regulation, the "essential facts"include "the name or
number of the mining claim, leasehold location, or mining lease."
DNR concluded that the 1,035 claims "are abandoned by
action of law." DNR noted, "[w]hile there are other essential
facts identified in the regulation, there is arguably no fact more
fundamental to the Affidavit of Labor than the identification of
the claims to which it applies." It concluded that, under 11 AAC
86.220(g), Caldera's affidavit of annual labor was void as to the
1,035 claims omitted from it, and Caldera could not amend the
affidavit to include those claims. DNR explained that, if Caldera
attempted to simply file a new affidavit, "the claims would be
considered abandoned for failure to properly (timely) record the
affidavit under AS 38.05.265." DNR concluded that Caldera's only
possible remedy was a certificate of substantial compliance.
The superior court applied state law to this dispute. It
reasoned that AS 38.05.265 expressly requires abandonment if the
owner has not properly recorded an affidavit of annual labor by
November 30, that "neither the courts nor the Commissioner may
ignore the legislative intent expressed [in that statute],"and
that Caldera had abandoned its claims as a matter of law.
We agree. By statute, the failure to record a statement
of annual labor constitutes abandonment, without regard to intent.
[Fn. 13] Caldera's affidavit contained the "essential facts,"the
name and claim number, for only four of its 1,039 claims. The
affidavit was therefore void and had no effect as to the other
Citing Kile v. Belisle, 759 P.2d 1292 (Alaska 1988),
Caldera notes that we have stated that "[a]bandonment is the
intentional relinquishment of a mining claim."[Fn. 14] Kile,
however, involved an ownership dispute over claims located by state
claimants "more or less on top of"federal claims staked many years
earlier. [Fn. 15] The question before us was whether the federal
claims had been abandoned, and we applied federal law to that
question. [Fn. 16] Kile did not involve allegations that claimants
failed to satisfy a statute that deemed the failure to comply to be
abandonment, and instead tacitly noted the difference between
failing to perform the annual labor and failing to file the
statement of annual labor. [Fn. 17]
Similarly, Caldera cites Miscovich v. Tryck, 875 P.2d
1293 (Alaska 1994), and Dodge v. Wilkinson, 664 P.2d 157 (Alaska
1983), for the proposition that intent to abandon is required. [Fn.
18] Dodge involved a dispute between John Dodge, who located claims
on federal public land in 1977, and Frederick Wilkinson, who
contended that he had located claims in the same area in 1976. [Fn.
19] Dodge did not argue that Wilkinson had abandoned the claims;
instead, he argued that Wilkinson had forfeited them by failing to
maintain boundary markings on the ground. [Fn. 20] Dodge,
therefore, did not discuss the question of abandonment of state
claims on state land. In Miscovich the original miner located and
staked claims in the 1930s and 1940s under federal mining law. [Fn.
21] In the 1980s another miner staked state mining claims on the
same land. [Fn. 22] We applied Kile, Dodge, and federal statutes
to the dispute that resulted. [Fn. 23] Because Kile, Dodge, and
Miscovich do not discuss AS 38.05.265, or the possible abandonment
of state claims on state land, they do not control Caldera's case.
Citing AS 38.05.185(c), Caldera urges us to apply federal
law to this case. Alaska Statute 38.05.185(c) provides: "Unless
otherwise provided, the usages and interpretations applicable to
the mining laws of the United States as supplemented by state law
apply to AS 38.05.185-38.05.275." But the parties acknowledge that
Caldera's claims are state claims on state land. Alaska Statute
38.05.185(a) provides that specified statutes, including AS
38.05.265, govern the "acquisition and continuance"of rights in
mineral deposits on state land. [Fn. 24] Because the relevant
state statute clearly addresses the subject of abandonment of state
claims, we need not construe our statute in accordance with "usages
and interpretations"applicable to the federal mining laws.
Requiring an element of intent would be inconsistent with the clear
language of AS 38.05.265.
B. Certificate of Substantial Compliance
1. Standard of review
The Commissioner has discretion to decide whether to
issue a certificate of substantial compliance. [Fn. 25] We
therefore review the Commissioner's decision for abuse of
discretion. "Where, as here, the question is as to the merits of
agency action on matters committed to agency discretion, our scope
of review is limited to whether the decision was arbitrary,
unreasonable or an abuse of discretion."[Fn. 26] If the decision
on the certificate of substantial compliance rests on factual
findings, we review those findings for substantial evidence. [Fn.
2. Did the Commissioner abuse his discretion?
Caldera argues that the Commissioner abused his
discretion when he denied Caldera's request for a certificate of
substantial compliance. Caldera contends that it "complied as
nearly as possible with the statutes and regulations and in doing
so ensured that the public was afforded the same protection that it
would have had [if] Caldera [had] strictly complied with the
recording requirements." It also maintains that no other claimants
asserted rights that conflicted with Caldera's. Caldera argues
that the Commissioner erroneously required it to prove the value
and type of labor performed, and to show that circumstances beyond
its control caused its failure to comply with the statute.
Caldera, therefore, asserts that the Commissioner erred by imposing
a higher standard for substantial compliance than the statute
The State responds that the Commissioner's decision was
well within the broad discretion that AS 38.05.185(b) accords him.
The State argues that Caldera could and should have determined the
recording fees before the afternoon of November 30, 1994. The
State argues that the fees have not changed since 1991. The State
contends that the Commissioner had the authority to request
additional information regarding Caldera's claimed annual labor,
and that Caldera did not attempt to correct its filing error
In affirming, the superior court reasoned that AS
38.05.185(b) "confers a great deal of discretion on the
Commissioner"to determine whether the conditions have been met.
The court noted that Caldera failed to comply with the provisions
of Alaska mining law as nearly as possible because Caldera failed
to learn the proper amount of fees and failed to attempt to correct
its mistake until seven months later. The court concluded that the
Commissioner's decision was neither arbitrary nor capricious, and
that the Commissioner did not abuse his discretion.
We agree with the superior court's analysis. Caldera
failed to provide essential facts for the 1,035 claims.
Furthermore, Caldera did not show that circumstances beyond its
control prevented it from filing properly. Accordingly, we
conclude there was substantial evidence to support the
Commissioner's conclusion that Caldera did not comply "as nearly as
possible under the circumstances of the case."[Fn. 28]
C. Due Process
1. Standard of review
Ordinarily, we apply our independent judgment to a due
process claim because it raises a question of law that does not
involve agency expertise. [Fn. 29] The superior court applied that
standard, and the parties argue that we should apply it as well.
The department, however, has the discretion to decide
whether to hold a hearing or not. [Fn. 30] Because this matter is
addressed to the agency's discretion, our review "is limited to
whether the decision was arbitrary, unreasonable or an abuse of
2. Caldera's right to a hearing
DNR "will, in its discretion, hold a hearing when
questions of fact must be resolved."[Fn. 32] Caldera argues that
the Commissioner denied Caldera's due process rights by refusing to
allow a hearing before terminating its property rights in its
claims. [Fn. 33] It argues that factual issues existed regarding
its intent and its possible substantial compliance, and that the
Commissioner should have allowed it to present evidence on those
The State argues that Caldera raised no issues of fact in
its request for agency reconsideration; it contends that Caldera
raised only issues of law and policy, and that the facts of the
case were undisputed. The State further argues that Caldera had
ample opportunity to "present evidence and argue its case"to DNR.
The superior court agreed with the State, finding no
factual issues relevant to the issue of whether Caldera had
abandoned its claims by failing to file the requisite affidavits.
It also concluded that Caldera had received an adequate opportunity
to present its case in writing, and that there was no due process
Caldera identifies three specific alleged fact disputes
which, it argues, required a hearing: (1) whether Caldera intended
to abandon the claims, (2) whether Caldera had fulfilled the annual
labor requirements for the claims, and (3) whether Caldera was
deprived of access to its claims. None of these possible disputes,
however, is material to the question of whether Caldera
substantially complied with the recording statutes. The only issue
relevant to that narrow question is whether Caldera timely filed a
statement of annual labor substantially containing the essential
facts for these claims. [Fn. 34] There is no dispute that Caldera
did not, nor is there any material dispute about the circumstances
of its failure. Because there was no dispute over the facts
relevant to the issue of substantial compliance with the recording
statutes, we conclude that the Commissioner did not abuse his
discretion in not granting Caldera a hearing.
D. Caldera's Access to the Claims
Finally, Caldera argues that the Commissioner had the
discretion to excuse Caldera from making rental payments and
performing annual labor for one year, because Caldera did not have
access to its claims for the year. [Fn. 35] Caldera argues that,
from 1995 to 1997, it could not have performed any labor on the
1,035 claims at issue in this appeal because the Division had
informed Caldera that the claims were abandoned. It also argues
that the Commissioner could have excused "Caldera from paying rent
and performing annual labor on the four claims that remained in
good standing after 1994 because Caldera did not have access to the
Because Caldera abandoned the 1,035 claims by failing to
file the statement of annual labor, the issue of its access to
those claims is moot. We decline to address Caldera's argument
regarding access to the four claims that remained in good standing
because Caldera has raised it for the first time in its reply
brief. [Fn. 36] Neither the statement of points on appeal nor
Caldera's opening brief gives notice that access to those four
claims was an issue on appeal. The State's brief did not address
the issue of access to the four claims; it apparently thought,
justifiably, that Caldera's opening brief referred only to its
access to the 1,035 allegedly abandoned claims. The superior court
entered no findings on whether Caldera was denied access to the
four claims. We therefore consider the issue waived.
We conclude that Caldera's failure to properly record
constitutes abandonment of 1,035 of its 1,039 claims. We therefore
AFFIRM the decision of the superior court affirming the
Although AS 38.05.210 requires a "statement"of annual labor,
per regulation promulgated by DNR, the statement must be in
affidavit form. See 11 Alaska Administrative Code (AAC) 86.220(c).
We will refer interchangeably to the "statement"or "affidavit"of
AS 38.05.210(b) states in part:
During the year in which annual labor is
required or within 90 days after the close of that year, the owner
of the mining claim . . . or some other person having knowledge of
the facts shall record with the recorder of the district in which
the claim . . . is located a signed statement setting out the
information, as may be required by the commissioner, concerning the
annual labor of the preceding year, any labor in excess of that
required for the preceding year, and any payment of cash instead of
The labor year begins on September 1. 11 AAC 86.220(a).
See Handley v. State, Dep't of Revenue, 838 P.2d 1231, 1233
See Douglas v. State, Dep't of Revenue, 880 P.2d 113, 114
Kile v. Belisle, 759 P.2d 1292, 1295 (Alaska 1988) (citing
United States v. Eaton Shale Co., 433 F. Supp. 1256, 1274 (D. Colo.
11 AAC 86.220(a).
See AS 38.05.210(a).
AS 38.05.210(c) provides, in part:
The statement of annual labor . . . may be
amended within two years of the date by which the annual labor
statement was required to be recorded. An amended statement shall
be recorded for record in the same manner as the original
statement. Additional labor claimed in an amended statement may
not be applied against labor required to be done during a
AS 38.05.265, as amended in 1997, provides in part:
Failure to properly record a certificate of
location or a statement of annual labor, pay any required annual
rental, pay any required production royalty, or keep location
boundaries clearly marked . . . constitutes abandonment of all
rights acquired under the mining claim, leasehold location, or site
involved, and the claim, location, or site is subject to relocation
by others. A locator or claimant of an abandoned location or a
successor in interest may not relocate the location until one year
See AS 38.05.265 ("A statement of annual labor that does not
accurately set out the essential facts is void and of no effect.");
11 AAC 86.220(c), .220(g) ("[A]n affidavit that does not set out
the essential facts is void under AS 38.05.265 and may not be
11 AAC 86.220(c)(1) provides:
(c) During each year in which the performance
of annual labor is required, or within 90 days after the close of
that annual labor year, the owner of each mining claim, leasehold
location, or mining lease on state land or some other person having
knowledge of the facts, shall make and file for record an
affidavit. The affidavit must describe the performance of the labor
or the making of improvements for the immediately preceding
assessment year and any cash payment made instead of performing
labor. The affidavit must describe any labor in excess of that
required for the preceding year that is to be applied to the
subsequent year or years. The affidavit must contain the following
(1) the name or number of the mining
claim, leasehold location, or mining lease . . . .
See AS 38.05.265.
Kile, 759 P.2d at 1295 (emphasis added).
Id. at 1293-94.
See id. at 1295-96.
See id. at 1296 n.13.
See Miscovich v. Tryck, 875 P.2d 1293, 1296 (Alaska 1994);
Dodge v. Wilkinson, 664 P.2d 157, 159 n.3 (Alaska 1983).
See Dodge, 664 P.2d at 157-58.
See id. at 159.
See Miscovich, 875 P.2d at 1296.
See id. at 1297.
See id. at 1298-1300 & n.2-3.
AS 38.05.185(a) provides, in part: "The acquisition and
continuance of rights in and to deposits on state land of minerals,
which on January 3, 1959, were subject to location under the mining
laws of the United States, shall be governed by AS 38.05.185-
AS 38.05.185(b) and 11 AAC 86.125 are nearly identical
provisions authorizing the Commissioner to grant a certificate of
substantial compliance. AS 38.05.185(b) provides:
The failure on the part of a mining lessee or
a locator to comply strictly with AS 38.05.185-38.05.275 and
regulations adopted under those sections does not invalidate the
rights of a mining lessee or a locator if it appears to the
satisfaction of the commissioner that the mining lessee or the
locator complied as nearly as possible under the circumstances of
the case, and that no conflicting rights are asserted by any other
North Slope Borough v. LeResche, 581 P.2d 1112, 1115 (Alaska
1978) (footnote omitted).
See Handley v. State, Dep't of Revenue, 838 P.2d 1231, 1233
See AS 38.05.185(b).
See State, Dep't of Revenue v. Merriouns, 894 P.2d 623, 625
(Alaska 1995); Keane v. Local Boundary Comm'n, 893 P.2d 1239, 1241
See 11 AAC 02.050(a) ("The department will, in its discretion,
hold a hearing when questions of fact must be resolved.").
North Slope Borough, 581 P.2d at 1115 (footnote omitted).
11 AAC 02.050(a).
Article I, section 7 of the Alaska Constitution provides, in
part: "No person shall be deprived of life, liberty, or property,
without due process of law." The Fourteenth Amendment to the
United States Constitution provides, in part: "No State shall . .
. deprive any person of life, liberty, or property, without due
process of law." U.S. Const. amend. XIV, sec. 1.
See AS 38.05.210(b), .265; 11 AAC 86.220(a), (c), (g).
In denying Caldera's request for reconsideration, the
Commissioner stated that "Caldera requested an extension of time to
pay rental and file the assessment affidavit for the assessment and
rental years ending November 30, 1995. I have no authority to
grant such a[n] extension. Therefore, the request is denied."[Fn.
See Conam Alaska v. Bell Lavalin, Inc., 842 P.2d 148, 158
(Alaska 1992); see also Alaska R. App. P. 212(c)(3) (stating that
a reply brief "may raise no contentions not previously raised in
either the appellant's or appellee's briefs"); Winn v. Mannhalter,
708 P.2d 444, 449 (Alaska 1985) (stating, "we may consider [an
issue not listed in the statement of points on appeal] if it is
raised at trial, adequately briefed on appeal, and the court and
counsel are sufficiently apprised of the issue presented")
The Commissioner also noted "that only four claims from this
group are currently in good standing. As previously stated, the
affidavit of labor and rental for these claims must be filed and
paid by November 30, 1995 for them to remain in good standing."