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Moore v. State, Dept of Natural Resources (11/26/99) sp-5209
Moore v. State, Dept of Natural Resources (11/26/99) sp-5209
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
MONTY D. MOORE, )
) Supreme Court No. S-8624
Appellant, )
) Superior Court No.
v. ) 3AN-97-3992 CI
)
STATE OF ALASKA, DEPARTMENT )
OF NATURAL RESOURCES; and )
AMERICAN COPPER & NICKEL CO., )
INC., ) O P I N I O N
)
Appellees. ) [No. 5209 - November 26, 1999]
______________________________)
Appeal from the Superior Court of the State of
Alaska, Third Judicial District, Anchorage,
Sigurd E. Murphy, Judge pro tem.
Appearances: Thomas E. Meacham, Anchorage, for
Appellant. Lawrence Z. Ostrovsky, Assistant Attorney General,
Anchorage, and Bruce M. Botelho, Attorney General, Juneau, for
Appellee State of Alaska, Department of Natural Resources. Joseph
J. Perkins, Jr. and Barbara F. Fullmer, Guess & Rudd P.C.,
Anchorage, for Appellee American Copper & Nickel Company, Inc.
Before: Matthews, Chief Justice, Eastaugh,
Fabe, Bryner, and Carpeneti, Justices.
CARPENETI, Justice.
I. INTRODUCTION
Pacific Rainier, Inc. (PRI) located and recorded mining
claims on state-selected federal land. At the time, the federal
government had not conveyed the land. Upon determining that PRI
was not qualified to do business in Alaska, and thus not allowed to
acquire mining rights in this state, the Commissioner of the
Department of Natural Resources voided PRI's claims. The superior
court upheld the commissioner's decision. The president of PRI,
Monty D. Moore, appealed to this court, arguing that a locator on
state-selected federal lands does not acquire mining rights
voidable by the state because the state has no rights to convey
until the federal government tentatively approves the transfer. In
addition, Moore argues that such rights accrue by operation of law
upon tentative approval by the federal government, and under Alaska
law he has two years after that approval to qualify to do business
in Alaska and thus acquire the rights. We disagree. Because a
locator acquires mining rights at the time of location, and the
commissioner properly voided the rights PRI acquired, we affirm.
II. FACTS & PROCEEDINGS
In early 1996, PRI located and recorded certificates of
location under state law [Fn. 1] to more than 200 mining claims and
prospecting sites on land north of Denali Highway near Paxson. The
locations were made on federal land that the state had selected
pursuant to Section 6 of the Alaska Statehood Act; [Fn. 2] however,
the federal government had not yet "tentatively approved"[Fn. 3]
the state's land selection or transferred patent.
Later that year, American Copper & Nickel Company, Inc.
(ACNC), a company claiming to have located, staked, and recorded
many of PRI's locations before PRI had, informed the Division of
Mining that PRI was not a corporation qualified to do business in
Alaska and therefore was not qualified to acquire exploration and
mining rights under Alaska law. ACNC requested that the division
resolve the issue as soon as possible because the conflicting
claims were causing investors to withhold financing for ACNC's
drilling program. [Fn. 4] Shortly thereafter, the division
director nullified and voided PRI's claims on the grounds brought
forward by ACNC.
Moore appealed this decision to the Commissioner of the
Department of Natural Resources (commissioner) and ACNC intervened.
[Fn. 5] Moore argued, among other things, that no rights were
transferred from the state to PRI that were presently voidable by
the state because PRI's selections were on federal lands. As such,
he contended, the state had no mining rights to convey at the time
of location, and thus there were no rights to void. Moore further
asserted that under Alaska law, he had two years after the federal
government tentatively approved the state's land selection to
qualify to do business in Alaska and to obtain the mining rights to
the locations.
In March 1997, the commissioner upheld the division
director's decision, primarily on the basis that PRI was not
qualified to engage in business in Alaska. In addition, the
commissioner held that mining rights can be established on state-
selected lands prior to tentative approval by the federal
government, and that such claims are subject to Alaska mining laws.
The commissioner upheld this decision on reconsideration. Moore
then appealed to the superior court, which affirmed the decision.
This appeal followed.
III. STANDARD OF REVIEW
This case raises questions of law concerning the
application of state mining laws. Because resolution of these
questions does not require agency expertise, we employ the
substitution of judgment test. [Fn. 6] However, we give "some
weight"to any long-standing agency statutory interpretation. [Fn.
7] On questions of law, the duty of this court "is to adopt the
rule of law that is most persuasive in light of precedent, reason
and policy."[Fn. 8]
IV. DISCUSSION
A. Statutory Framework
Under Alaska law, mining rights on state lands are
acquired through the process of "location."[Fn. 9] This process
entails the discovery and marking of the claim, the posting of a
notice at the claim site, and the recording of a certificate of
location. [Fn. 10] Through location, a locator acquires a mining
claim priority against subsequent locators to the selected claims.
[Fn. 11]
Locations may be made on state-selected lands prior to
the federal government's actual conveyance of the land to the
state. [Fn. 12] State-selected land is land for which the
state has filed a selection application with the United States
under Section 6 of the Alaska Statehood Act, regardless of the
validity or effect of the application, if the selection has not
been rejected or relinquished. [Fn. 13] However, because the state
does not have management authority over the land until tentative
approval, the location is made at the locator's risk. [Fn. 14]
Nevertheless, locators of claims on state-selected land still
acquire prior rights against subsequent locators; these prior
rights, upon the land's conveyance, mature into mining claims,
leasehold locations, or prospecting sites. [Fn. 15]
Finally, in order for a foreign corporation to locate a
mining claim in Alaska, it must be qualified to do business in the
state. [Fn. 16] To qualify, a foreign corporation must obtain a
certificate of authority by registering with the Alaska Department
of Commerce and Economic Development. [Fn. 17] However, an
unqualified corporation that acquires an interest in exploration or
mining rights by operation of law has two years to become qualified
or to dispose of the interest to a qualified person. [Fn. 18]
B. PRI Acquired Mining Interests That Were Properly Voidable
by the State.
PRI took the proper steps to locate claims and thus
acquire mining rights on locations near Paxon. As previously
discussed, these rights are in the nature of a priority against
subsequent locators. [Fn. 19] Because the claims were on state-
selected land that had not been conveyed by the federal government,
PRI was an "at-risk"locator whose priority rights were contingent
upon the federal government's tentative approval of the land
selection. [Fn. 20]
However, when the Division of Mining learned that PRI was
not qualified to do business in Alaska because it failed to
register with the Department of Commerce and Economic Development,
the division voided and nullified PRI's mining claim priority
rights. This extinguished any current or future claim based upon
the voided locations. Moore does not challenge the division's
finding that PRI was not qualified to conduct business in Alaska.
[Fn. 21]
Nevertheless, Moore argues -- in spite of unambiguous
statutory language to the contrary -- that the commissioner erred
as a matter of law in holding: (1) that a locator on state-selected
lands acquires mining rights at the time of location, which would
be subject to nullification for the locator's failure to be
qualified to do business in the state; and (2) that Moore would not
acquire mining rights by operation of law when the federal
government tentatively approved the state-selected lands, and thus
have two years from that time to qualify to do business in the
state. He contends that because the state has no property interest
in state-selected federal lands until tentative approval, the state
has no interest to presently convey. According to Moore, the state
only conveys an "ephemeral option"to "stand in line,"or a "claim
in waiting,"which becomes a mining right by operation of law upon
tentative approval. Thus, Moore contends that upon tentative
approval PRI would acquire an interest in mining rights by
operation of law and would then have two years to become qualified
or to dispose of this interest to a qualified person. [Fn. 22] We
disagree.
First, we note that Moore appears to be dissecting the
right of priority against subsequent locators out of the "bundle of
sticks"comprising mining rights. However, a priority right is
intertwined within that bundle. For this reason, Moore's argument
is fatally flawed. If there is no mining right for the state to
void, there is no mining right for the state to convey, including
a mining claim priority contingent upon the ultimate conveyance of
the land. Thus, Moore's locations on state-selected land would be
worthless. In reality, the term "mining rights"is used both in AS
38.05.275(a) and in AS 38.05.190 and it means the same thing in
both sections. Moore would have acquired "mining rights"under
subsection 275(a) on state-selected land except that subsection
190(a) prohibits corporations not qualified to do business in
Alaska from acquiring "mining rights." Since Moore's acquisition
of "mining rights"would have been by location, not by operation of
law, the operation of law exception of subsection 190(b) does not
apply.
Second, the state does in fact have conveyable property
interests in state-selected land prior to tentative approval by the
federal government, albeit interests contingent upon that approval.
The United States Supreme Court has held that where a state follows
all of the appropriate selection procedures to perfect its land
selection claims, it generally acquires vested rights in the
selected land at the time of selection. [Fn. 23] To this end, the
Court stated:
[I]t is . . . well settled that a claimant to
public land who has done all that is required under the law to
perfect his claim acquires rights against the government and that
his right to a legal title is to be determined as of that time, and
also that this rule is based upon the theory that by virtue of his
compliance with the requirements he has an equitable title to the
land; that in equity it is his and the government holds it in trust
for him. But it is said that, as the selection is subject to the
approval of the Secretary of the Interior, no right can become
vested, nor equitable title be acquired, thereunder, unless and
until his approval is had, and therefore that the rule just stated
is not applicable here. To this we cannot assent. The words
relied upon are not peculiar to this land grant, but are found in
many others. Their purpose is to cast upon the Secretary the duty
of ascertaining whether the selector is acting within the law, in
respect of both the lands relinquished and the land selected, and
of approving or rejecting the selection accordingly. [Fn. 24]
Alaska case law also supports the proposition that the
state acquires present, conveyable rights in lands selected by the
state prior to tentative approval or conveyance by the federal
government. In Sabo v. Horvath, [Fn. 25] we held that a grantor
who had not yet received his patent under the Alaska Homesite Act
[Fn. 26] nevertheless had a sufficient interest to convey the land
by quitclaim deed. [Fn. 27] We reasoned that Congress's silence on
the issue of alienability in the Act was "quite significant"
because Congress "knew how specifically to prohibit alienation."
[Fn. 28] We stated that though "various other events were
necessary prior to the issuance of patent,"the grantor had
"complied with a substantial portion of his obligation under the
statute and regulations. . ."and the "mere fact that steps
remained [to be taken] before issuance of [a] patent . . ."did not
preclude "the existence of an alienable right, where there has been
basic compliance with the statutory demands."[Fn. 29] Our
reasoning in Sabo applies here.
Like the Homesite Act, the Statehood Act does not
expressly prohibit the creation of any third-party interests in
state-selected land prior to tentative approval by the federal
government. [Fn. 30] The state may not execute conditional leases
or make conditional sales of such selected lands, but it is not
expressly prohibited from establishing priority rights in third-
persons through location. [Fn. 31] Moreover, upon selection of
lands, the state has complied substantially with applicable laws
and regulations. Generally, all that remains to be done is a land
survey, as well as review and approval by the federal government.
[Fn. 32] The rights the state acquires do not ensure tentative
approval or ultimate transfer of these lands, but they are more
than mere expectancies. The state itself would have to take some
action before it would lose the right to patent of selected land.
[Fn. 33]
In sum, the state has a present, substantial interest in
state-selected lands prior to tentative approval by the federal
government. Moreover, state law expressly grants prior rights to
locators against subsequent locators on state-selected lands. [Fn.
34] Recorded certificates of location memorialize an appropriation
of a valuable property right from the state. [Fn. 35] These rights
become mining claims when the federal government conveys the
selection to the state. [Fn. 36] It is incorrect to assert these
rights are merely "ephemeral claims in waiting." Rather, they are
present, contingent rights in real property which may ripen, by
successive steps, into a patent. [Fn. 37] "Each of [the] steps,
including the issuance of the patent, relates back and includes the
original and primary location."[Fn. 38] Thus, PRI, as a locator
of state-selected lands, acquired mining rights at the time of
location.
Because the commissioner, acting within his authority,
[Fn. 39] was entitled to find that PRI was not qualified to conduct
business in Alaska and thus not qualified to acquire mining rights
under AS 38.05.190(a), his decision voids and nullifies PRI's
mining rights.
C. The Superior Court Did Not Abuse Its Discretion in
Awarding Costs and Attorney Fees.
Moore also argues that because the superior court erred
in its determination that the state and ACNC had prevailed on the
merits, it erred in awarding costs and attorney fees against PRI.
Because we affirm the decisions of the commissioner and lower
court, we affirm the award of attorney fees.
V. CONCLUSION
The commissioner was correct in finding that a locator on
state-selected land acquired mining rights at the time of location.
These rights were susceptible to nullification for the locator's
failure to qualify to locate mining claims in the state. We
therefore AFFIRM the superior court's decision.
FOOTNOTES
Footnote 1:
See AS 38.05.185-275.
Footnote 2:
Pub. L. No. 85-508, sec. 6(g), 72 Stat. 339, 341-42 (1958),
reprinted in 48 U.S.C.A. note preceding sec. 21 (West 1987).
Footnote 3:
The act of issuing tentative approval constitutes the formal
transfer of land management authority from the United States to the
State of Alaska regarding any particular Statehood Act land
selections. See id.:
Following the selection of lands by the State
and the tentative approval of such selection by the Secretary of
the Interior or his designee, but prior to the issuance of final
patent, the State is hereby authorized to execute conditional
leases and to make conditional sales of such selected lands . . . .
Footnote 4:
ACNC indicated that the United States Bureau of Land
Management had given ACNC permission to conduct drilling on the
state-selected lands. The state concurred. Prior to conveyance
from the United States to the state, a locator may obtain permits
to drill from the federal land manager and other permitting
authorities with the state's concurrence. See Alaska National
Interest Lands Conservation Act sec. 906(k)(1), 43 U.S.C.A. sec.
1635(k)(1) (West 1986); see also 11 Alaska Administrative Code
86.115(a) (1999).
Footnote 5:
On appeal before this court, ACNC raises for the first time
the claim that Moore is not the locator or owner of the claims in
question, and lacks standing to assert claims on behalf of PRI.
Moore responds that because he is the president and the sole
shareholder of PRI, this court should hold that he has standing to
defend the corporation's interests in administrative and judicial
proceedings. Alternatively, Moore argues that ACNC has waived this
issue because it failed to raise it below. Moore's latter
contention is correct; failure to raise the issue of capacity to
sue below results in a waiver of that defense. See Jackson v.
Nangle, 677 P.2d 242, 250 n.10 (Alaska 1984) (citations omitted).
Footnote 6:
See Handley v. State, Dep't Of Revenue, 838 P.2d 1231, 1233
(Alaska 1992).
Footnote 7:
See Peninsula Marketing Ass'n v. State, 817 P.2d 917, 922
(Alaska 1991) (citing State, Dep't Of Revenue v. Alaska Pulp
America, Inc., 674 P.2d 268, 274 (Alaska 1983)).
Footnote 8:
Guin v. Ha, 591 P.2d 1281, 1284 n.6 (Alaska 1978).
Footnote 9:
See AS 38.05.195.
Footnote 10:
See 11 AAC 86.200-215 (1996). In addition, there are annual
rent and labor requirements. See AS 38.05.210-211; see also 11 AAC
86.215-221 (1999).
Footnote 11:
See AS 38.05.275, which provides in part:
(a) Mining locations made on state land,
including shoreland, tideland or submerged land, or state selected
land . . . acquire for the locator mining rights . . . subject to
existing claims and to any denial of or restriction in the
tentative approval of state selection or patent of the land to the
state.
(b) In this section, "state selected land". .
. means land for which the state has filed a selection application
with the United States under Sec. 6 of the Alaska Statehood Act, as
amended, regardless of the validity or effect of the application,
if the selection described in the application has not been rejected
or relinquished . . . .
Footnote 12:
See id.; see also 11 AAC 86.115 (1999), which provides in
part:
LOCATIONS ON STATE-SELECTED LAND.
(a) A location made on state-selected land
that has not been conveyed to the state by the federal government
through tentative approval or patent is made at the locator's risk.
Because the state does not have management authority over the land
unless the selection has been conveyed and cannot authorize
exploration work or mining until that time, the locator is
responsible for obtaining any necessary permits from the federal
land manager and other permitting authorities.
(b) A location made on state-selected land in
accordance with this chapter creates prior rights against
subsequent locators and becomes a mining claim, leasehold location,
or prospecting site when the federal government conveys the
selection to the state through tentative approval or patent,
whichever occurs first, unless the conveyance restricts or bars the
location, or unless a state mineral closure is in effect on the
date of conveyance. If a state leasing restriction is in effect on
the date of conveyance, a location made before the conveyance is
subject to that restriction. If the land is closed to mineral entry
or restricted to leasing after the date of the conveyance, valid
location that was made before the conveyance is unaffected.
Footnote 13:
See AS 38.05.275(b); see also 11 AAC 86.115.
Footnote 14:
See 11 AAC 86.115.
Footnote 15:
See id.
Footnote 16:
See AS 38.05.190(a)(5).
Footnote 17:
See AS 10.06.705-735; see also 11 AAC 88.185(33).
Footnote 18:
See AS 38.05.190(b).
Footnote 19:
See AS 38.05.275.
Footnote 20:
See 11 AAC 86.115.
Footnote 21:
In Moore's appeals before the commissioner and before the
superior court, he argued that the locations were made on behalf of
Pacific Rainer Roofing, Inc., a corporation qualified to do
business in Alaska, and not PRI. However, he has abandoned this
argument on appeal before this court.
Footnote 22:
See AS 38.05.190(b).
Footnote 23:
See Wyoming v. United States, 255 U.S. 489, 497 (1921); Payne
v. New Mexico, 255 U.S. 367, 371 (1921).
Footnote 24:
Payne, 255 U.S. at 371.
Footnote 25:
559 P.2d 1038 (Alaska 1976).
Footnote 26:
43 U.S.C.A. sec. 687a (West 1986).
Footnote 27:
See Sabo, 559 P.2d at 1042.
Footnote 28:
Id.
Footnote 29:
Id.
Footnote 30:
See Alaska Statehood Act, Pub. L. No. 85-508, sec. 6(g), 72
Stat.
339, 341-42 (1958), reprinted in 48 U.S.C.A. note preceding sec. 21
(West 1987).
Footnote 31:
See id.
Footnote 32:
See id.
Footnote 33:
See id.
Footnote 34:
See AS 38.05.275; see also 11 AAC 86.115(b).
Footnote 35:
See AS 27.10.050; AS 38.05.195.
Footnote 36:
See AS 27.10.050; AS 38.05.195.
Footnote 37:
See Kile v. Belisle, 759 P.2d 1292, 1294 n.9 (Alaska 1988)
(holding state claimant had no possessory interest in location on
state-selected land where the conveyance had not received tentative
approval from BLM, but rather had gained priority rights against
subsequent locators that matured into a right of exclusive
possession upon BLM's tentative approval); see also Garside v.
Norval, 1 Alaska 19, 23 (D. Alaska 1888).
Footnote 38:
Garside, 1 Alaska at 23.
Footnote 39:
See AS 38.05.020.
