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Newmont Alaska Ltd. V State Dept of Natural Resources (05/18/2001) sp-5413
Newmont Alaska Ltd. V State Dept of Natural Resources (05/18/2001) sp-5413
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
NEWMONT ALASKA LIMITED, )
) Supreme Court No. S-9323
Appellant, )
) Superior Court No.
v. ) 3AN-98-9774 CI
)
DONALD JAMES McDOWELL; ) O P I N I O N
ERIK HANSEN; ESTATE OF )
JOHN REGAN; and GREAT ) [No. 5413 - May 18, 2001]
AMERICAN MINERALS )
EXPLORATION, INC., )
)
Appellees, )
______________________________)
)
STATE OF ALASKA, DEPARTMENT )
OF NATURAL RESOURCES, ) Supreme Court No. S-9333
)
Appellant, )
)
v. )
)
DONALD JAMES McDOWELL; )
ERIC HANSEN; ESTATE OF )
JOHN REGAN; and GREAT )
AMERICAN MINERALS )
EXPLORATION, INC., )
)
Appellees. )
______________________________)
Appeal from the Superior Court of the State of
Alaska, Third Judicial District, Anchorage,
Sigurd E. Murphy, Judge pro tem.
Appearances: Joseph J. Perkins, Jr. and
Barbara F. Fullmer, Guess & Rudd, P.C., Anchorage, for Appellant
Newmont Alaska Limited. Louis Agi, Assistant Attorney General,
Anchorage, and Bruce M. Botelho, Attorney General, Juneau, for
Appellant State of Alaska. James N. Reeves, Dorsey & Whitney, LLP,
Anchorage, for Appellees.
Before: Fabe, Chief Justice, Matthews,
Eastaugh, and Bryner, Justices. [Carpeneti, Justice, not
participating.]
FABE, Chief Justice.
I. INTRODUCTION
Mining claimants who miss rent deadlines automatically
lose their claims. But claimants whose rent is "deficient but
otherwise timely paid" are entitled to notice and an opportunity to
cure the deficiency under AS 38.05.265. Jerry Clay owed two years'
rent simultaneously. He paid an amount equal to the first year's
rent plus four hundred dollars. Because this four hundred dollar
surplus constitutes deficient but timely payment of the second
year's rent, we conclude that Clay is entitled to an opportunity to
cure the deficiency under AS 38.05.265.
II. FACTS AND PROCEEDINGS
Miners who "locate" state lands by staking claims to them
must pay the first year's rent on their claims within ninety days.
[Fn. 1] This payment establishes the claim through the following
September 1, at which point rent is due for the next rental year.
[Fn. 2] Claimants who wish to maintain their claims must pay rent
for the second year between September 1 and December 1, or the
Department of Natural Resources (DNR) will consider the claims
abandoned. [Fn. 3]
For claimants who locate land in June, July, or August,
these requirements create overlapping payment obligations: rent for
Year One and rent for Year Two are both due between September 1 and
December 1. Although DNR sends courtesy notices to most claimants
when rent is due, at the time of this case the agency was unable to
generate notices for the claimants affected by this overlap.
Appellant Newmont Alaska, Ltd. (Newmont) is the successor
in interest to Jerry Clay. Clay and his business partners were the
original locators of most of the 224 claims at issue in this case.
Clay and the others initially held title to the claims through two
Nevada corporations, of which the men were officers and principal
shareholders. But in August of 1997 they re-staked the claims in
the name of Clay as a private individual. In November Clay
recorded and paid rent on the 224 claims staked in August, as well
as on twenty additional claims staked in September. The September
claims are not at issue in this case, but are relevant to the legal
questions raised.
Clay's November payment should have included:
$20 for each of the 224 August claims, as rent for 1996-
1997 (Year One);
$20 for each of the 224 August claims, as rent for 1997-
1998 (Year Two);
$20 for each of the twenty September claims, as rent for
1997-1998 (Year Two for purposes of this case, but the first year
in which Clay paid rent on these claims).
Therefore, his total payment should have been $9,360.
However, when Clay went to the recording office to pay
his rent due, a DNR agent told Clay that he owed only $4,880. This
figure reflected one year's rent of $20 for each of the 244 total
claims. But Clay should actually have paid two years' rent on the
224 August claims and one year's rent on the twenty September
claims, for a total of $9,360. According to Clay, the DNR agent
assured him that his $4,880 payment covered all rent owed. Clay
apparently wrote "1st yr rental" on his check. He received a
receipt for "rental payment for 244 claims."
DNR applied the payment to Clay's Year Two rent. It
therefore determined that Clay had failed to pay for Year One, and
had abandoned the claims. At the end of January 1998, DNR sent
Clay decision letters to notify him that his claims were
"considered abandoned effective December 2, 1997."
Clay appealed the decision letters to the DNR division
director. He argued that he was entitled to notice and opportunity
to cure his deficient payments under AS 38.05.265. The statute
provides that non-payment results in abandonment, while deficient
but timely payment is curable. The division director found that
Clay's payment of $4,880 was a deficient but timely partial payment
under AS 38.05.265. Therefore, the director reversed the
abandonment determination of the decision letters.
The director's decision provided that any adversely
affected persons could seek reconsideration of the decision.
Several parties -- the "December claimants," who are appellees in
this case or were predecessors in interest to appellees in this
case -- sought reconsideration. These parties had staked new
claims to the disputed sites beginning on December 2, 1997 -- the
day that Clay's claims expired for abandonment and many weeks
before Clay received notice from DNR. [Fn. 4] Their claims could
only be valid if Clay's were legally extinguished. [Fn. 5]
DNR Commissioner John Shively's final decision on
reconsideration affirmed the division director, holding that Clay
had not abandoned the claims. The commissioner found that summer
claim locators are likely to underpay because they are confused by
overlapping rental obligations, and noted that no statutory or
regulatory language specifically requires DNR to apply payment
exclusively to the first year in such cases. He based his holding
on the legal conclusion that payment of one year's rent when two
years' rent was due constituted deficient but timely payment under
AS 38.05.265.
The December claimants appealed. Superior Court Judge
Sigurd E. Murphy reversed DNR's decision, holding that Clay had
fully paid rent for Year One, but paid no rent for Year Two, and
therefore abandoned the 224 August claims under the plain language
of the statute. This case is a consolidated appeal by DNR and
Newmont from that decision. The named private parties are now
Newmont (Clay's successor in interest) and McDowell (named
representative of the December claimants).
III. STANDARD OF REVIEW
As we have explained: "We give no deference to the
decision of a superior court acting as an intermediate court of
appeal, and independently review the merits of an administrative
decision." [Fn. 6] We have recognized four principal standards of
review of administrative decisions. The "substantial evidence"
test is used for questions of fact. The "reasonable basis" test is
used for questions of law involving agency expertise. The
"substitution of judgment" test is used for questions of law where
no expertise is involved. The "reasonable and not arbitrary" test
is used for review of administrative regulations. [Fn. 7]
IV. DISCUSSION
A. Clay's Payment Was Deficient but Timely.
Alaska Statute 38.05.265 provides that "[f]ailure to
. . . pay any required annual rental . . . as required by [statute]
and by regulations adopted under these sections constitutes
abandonment," but that "[i]f an annual rental or a royalty payment
is deficient but is otherwise timely paid, abandonment does not
result." [Fn. 8] The parties urge us to resolve the question
whether payment of one year's rent when two years' rent is due
constitutes deficient but timely payment under the statute.
However, that question is not before us in this case, because Clay
actually paid more than one year's rent. [Fn. 9]
The DNR division director found that Clay paid $4,880 in
rent. Newmont does not challenge this finding or suggest that it
is unsupported by substantial evidence. Clay's total rent
obligation for Year One was $20 for each of 224 claims, or $4,480.
[Fn. 10] By paying $4,880, Clay paid his first year's rent in
full, and paid an additional $400.
Because Clay paid $400 when $4,880 was due for Year Two,
his payment was deficient. [Fn. 11] Because he paid on November
24, 1997 rent that was due on or before November 30, 1997, his
payment was timely. [Fn. 12] We hold that Clay's rent was
"deficient but . . . otherwise timely paid" and that "abandonment
does not result" under the plain language of AS 38.05.265's cure
provision. [Fn. 13]
The apparent legislative intent, based on the legislative
history of AS 38.05.265, also supports our conclusion. [Fn. 14] In
a House Resource Committee hearing, then-director of the Division
of Mining Jerry Gallagher explained that the cure provision
protects claimants who pay rent for only a portion of their annual
claims:
At the bottom of the page we've added [AS
38.05.265's cure provision]. There's going to be some cases where
we get deficient payments. Somebody gets confused about how many
claims they have, or what year they are in the [rental fee]
escalation. If . . . you make a deficient payment, we have to in
a sense give you the opportunity to make a full payment within a
certain period of time. We'll work out the details in regulation.
This reference to claimants who are "confused about how many claims
they have" suggests a legislative intent to protect claimants who
inadvertently pay for some, but not all, of their annual claims.
Clay seems to have made precisely this mistake: He paid $400 for
the claims staked in September but failed to pay for the claims
staked in August.
Although we base our holding on the statute, we note that
DNR was probably estopped from declaring the claims abandoned for
non-payment because a DNR agent told Clay that his payment was
sufficient for two years' rent. Based on the record before us,
[Fn. 15] the elements of estoppel appear to be present: (1) the
department asserted a position by conduct or words; (2) Clay acted
in reasonable reliance on the department's assertion; (3) Clay
suffered resulting prejudice; and (4) estopping the department from
declaring Clay's claims abandoned serves the interest of justice so
as to limit public injury. [Fn. 16] Therefore, an estoppel theory
would also support the conclusion that Clay is entitled to cure his
deficient rent payment.
B. McDowell Is Not Entitled to Attorney's Fees.
The superior court awarded costs and attorney's fees to
McDowell's predecessor, Golden Phoenix. Because we reverse the
superior court's judgment, we reverse this award as well. [Fn. 17]
V. CONCLUSION
Because his payment constituted partial, deficient
payment of rent, Clay was entitled to an opportunity to cure the
deficiency under AS 38.05.265, and the decision of the superior
court is therefore REVERSED.
FOOTNOTES
Footnote 1:
See 11 Alaska Administrative Code (AAC) 86.215(f) (1999).
This regulation was updated in 1998 and 1999; Clay's payment is
governed by former 11 AAC 86.215(f) (1990). However, for purposes
of this case, the current and former regulations are
interchangeable.
Footnote 2:
See id.
Footnote 3:
See 11 AAC 86.221(d) (dates) & 11 AAC 86.221(e) (abandonment);
AS 38.05.265.
Footnote 4:
The December claimants apparently include a former employee of
Clay's, who was present when Clay made his deficient rent payment
to DNR.
Footnote 5:
See AS 38.05.275; 11 AAC 86.135(a).
Footnote 6:
Blanas v. Brower Co., 938 P.2d 1056, 1059 (Alaska 1997)
(citing Handley v. State, Dep't of Revenue, 838 P.2d 1231, 1233
(Alaska 1992)).
Footnote 7:
See id. (citing Jager v. State, 537 P.2d 1100, 1107 n.23
(Alaska 1975)).
Footnote 8:
Former AS 38.05.265. This statute has been updated since
1997. However, the language relevant to this case is the same in
both the former and current statutes.
Footnote 9:
DNR argues that payment of only one year's rent when two
years' rent is due constitutes deficient but timely payment for
purposes of AS 38.05.265. Although we do not resolve this
question, our holding does not suggest that DNR is precluded from
adopting such a rule. Nor do we address the question, not raised
by the facts of this case, whether such a policy must be
implemented as a regulation under the Administrative Procedure Act.
AS 44.62.010-.950. Compare Jerrel v. State, Dep't of Natural
Resources, 999 P.2d 138, 143 (Alaska 2000) (agency policies which
implement the law administered by the agency and which are used by
the agency in dealing with the public must be enacted pursuant to
Administrative Procedure Act guidelines) with Olson v. State, Dep't
of Natural Resources, 799 P.2d 289, 292 (Alaska 1990)
(discretionary agency decisions do not require formal implementing
procedures).
Footnote 10:
See former AS 38.05.211(a).
Footnote 11:
Clay had 244 claims in Year Two, and owed $20 for each claim.
See AS 38.05.211(a); former 11 AAC 86.221(b) (1996).
Footnote 12:
See former 11 AAC 86.221(d) (1996) ("[t]he rental payment for
each subsequent rental year is due on September 1 and must be paid
on or before November 30").
Footnote 13:
Common law principles also support the conclusion that Clay
partly paid rent for Year Two. Although we do not hold that common
law debtor-creditor principles govern interpretation of the Alaska
Land Act, see State for Use & Benefit of Palmer Supply Co. v. Walsh
& Co., 575 P.2d 1213, 1218 (Alaska 1978) (declining to apply common
law debtor-creditor principles to case arising under statute which
protects providers of labor or material for state public works), we
note that Clay and his successor in interest would probably prevail
under common law. Following common law principles, Clay's payment
should be applied first to his oldest debts, and then equally among
accounts of the same age. See 60 Am. Jur. 2d Payment sec. 114, at
958
(1987). Clay's payment would therefore apply first to Year One;
the remaining $400 would then apply to rent for Year Two.
Footnote 14:
Where statutory language is not sufficiently plain, we discern
legislative intent by looking to both statutory provisions and
legislative history. See Peninsula Mktg. Ass'n v. State, 817 P.2d
917, 922 (Alaska 1991).
Footnote 15:
The sufficiency of the record on this point is unclear. DNR
declined to hold an evidentiary hearing regarding its agent's
representations to Clay at the time of payment, because its
decision was "not based primarily on representation that may have
been made to Clay by the division." McDowell argues that the
record contains insufficient evidence to support a finding that
Clay was confused, but does not challenge the division director's
finding that a DNR agent told Clay that $4,880 would cover all rent
obligations.
Footnote 16:
See State, Dep't of Commerce & Econ. Dev., Div. of Ins. v.
Schnell, 8 P.3d 351, 356 (Alaska 2000).
Footnote 17:
See Alaska R. Civ. P. 82.
