mcglinchy v. state, dept. of natural resources, alaska (2015)

7/25/2019 McGlinchy v. State, Dept. of Natural Resources, Alaska (2015)

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Notice: This opinion is subject to correction before publication in the PACIFICREPORTER.

Readers are requested to bring errors to the at tention of the Clerk of the Appel late Courts,

303 K Street, Anchorage, Alaska 99501, phone (907) 264-0608, fax (907) 264-0878, em ail

[email protected].

THESUPREMECOURTOFTHESTATEOFALASKA

JAMESP.MCGLINCHYd/b/a

M&MCONSTRUCTORS,

Appellant,

v.

STATEOFALASKA,DEPARTMENTOFNATURAL

RESOURCES,andDANIELS.

SULLIVAN,COMMISSIONEROF

NATURALRESOURCES,

Appellees.

)

)

)

)

)

)

)

))

)

)

)

)

)

)

SupremeCourtNo.S-15277

SuperiorCourtNo.4FA-11-02830CI

OPINION

No.7028August7,2015

Appeal from the Superior Court of the State of Alaska,FourthJudicialDistrict,Fairbanks,MichaelA.MacDonald,

Judge.

Appearances:JosephW.Sheehan,LawOfficeofJosephW.

Sheehan, Fairbanks, for Appellant. Ashley C. Brown,

Assistant Attorney General, Anchorage, and Michael C.

Geraghty,AttorneyGeneral,Juneau,forAppellees.

Before:Fabe,ChiefJustice,Winfree,Stowers,Maassen,and

Bolger,Justices.

STOWERS,Justice.


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I. INTRODUCTION

M&MConstructorssubmittedapermitapplicationtotheDepartmentof

NaturalResources(DNR)tomineamineraldepositforuseasconstructionrock.DNR

deniedM&Mspermitapplicationbecauseitconcludedthatthemineraldepositwas

commonvarietystone.UndertheCommonVarietiesAct,1 commonvarietiesofstone

arenotsubjecttolocation,meaningtheycannotbepermittedthroughthemininglaws

locationprocess.M&Mappealedtothesuperiorcourt,arguingthatDNRwrongly

denied its permit application and alsodenied itprocedural due process. After the

superiorcourtaffirmed,M&Mappealedtothiscourt.WeaffirmbecauseM&Mseeks

tomineforcommonvarietystonethatiswellwithintheambitoftheCommonVarieties

Act,anditreceivedampledueprocessintheDNRproceeding.

II. FACTSANDPROCEEDINGS

M&M,ownedbyJamesP.McGlinchy,istheleaseholderofamineral

depositatFlagHill,locatedapproximately45milessouthofFairbanks.M&Mplanned

todeveloptheFlagHilldeposittosupplymaterialsforanearbyAlaskaRailroadproject.

M&MsubmittedaPlanofOperationstoDNRinMay2010requestingapermittomine

thelandunder30U.S.C.22,theGeneralMiningLawof1872.

The1872MiningLawprovidesthatallvaluablemineraldepositsinlands

belongingtotheUnitedStates...shallbefreeandopentoexplorationandpurchase.2

1 ActofJuly23,1955,ch.375,69Stat.367(1955)(codifiedasamendedat

30U.S.C.601-615(2012)).

2

ActofMay10,1872,ch.152,17Stat.91(1872)(codifiedasamendedat30U.S.C.22(2012)).Alaskaappliesfederalmininglawintheabsenceofaspecific

state statute. See AS 38.05.185(c);AU Intl, Inc. v. State, Dept of Natural Res.,

971P.2d1034,1039(Alaska1999)(recognizingthatcertainstatestatutesgovernrights

in mineral deposits on state lands and [b]ecause the relevant state statute clearly

(continued...)

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Butinordertobefreeandopentoexplorationandpurchase,themineralormineral

depositinquestionmustbesubjecttolocation.3 TheCommonVarietiesAct,passed

in1955,limitswhatmineralsarelocatable,providingthat[n]odepositofcommon

varietiesofsand,stone,gravel,pumice,pumicite,orcindersandnodepositofpetrified

woodshallbedeemedavaluablemineraldeposit.4However,theCommonVarieties

Actdoesnotbarlocationofeither(1)claimsbasedupondiscoveryofsome other

mineral occurringinorinassociationwith[acommon]deposit,5or(2)depositswith

adistinctandspecialvalue.6M&Mreferstotheseexceptionsastheconstituent

mineralstheoryandtheuncommonvarietytheory.

In its Plan of Operations M&M asserted that the Flag Hill rock was

locatablebecauseiteitherwas(1)comprisedofvaluablemineralsduetotheinterlocking

structureofitsconstituentminerals,augiteandplagioclase,or(2)anuncommonvariety

ofstonewith adistinct and special value. M&MretainedTerryS. Maley, anoted

geologistformerlyemployedbytheBureauofLandManagement,andTomBundtzen,

2(...continued)

addressesthesubjectofabandonmentofstateclaims,weneednotconstrueourstatute

inaccordancewith theusages andinterpretationsapplicable tothe federalmining

laws).Thepartiesagreethatfederallawcontrolshereandweconcur.

3 See United States v. Bienick,14IBLA290,293(1974)(Notallmaterials

whichcanberemovedfromtheearthandsoldataprofitarelocatableunderthemining

laws.);BLACKSLAW DICTIONARY1082(10thed.2014)(defininglocationas[t]he

actofappropriatingaminingclaim).

4 30U.S.C.611.

5 Id.(emphasisadded).

6 Id.

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President of Pacific Rim Geological Consulting, Inc., to help prepare supporting

materialsforsubmissiontoDNR.

DNRformedanadvisorycommitteetoinvestigatethelocatabilityofthe

FlagHillrockandperformasiteinspection. Aftercarefuldeliberationthecommittee

recommendedthatDNRdenyM&Msapplication.Itconcludedthattheconstituent

minerals,augiteandplagioclase,werenotvaluablemineralsand,evenif theywere,

M&MplannedtomineFlagHillforthehostrockforuseinconstruction;itdidnotplan

tousetheaugiteandplagioclaseapartfromthehostrock.Thecommitteealsoconcluded

thattheFlagHillrockwascommonvarietyrockundertheCommonVarietiesActand

thereforenonlocatable.DNRsentadeniallettertoM&MinJuly2010.

M&Mappealedandrequestedahearing,whichtheCommissionerofDNR

granted.Overthenexttwomonthsthepartiesexchangedcontentiousemails: M&M

arguedthatthehearingshouldbelongerthanoriginallyplannedandthatDNRshould

be requiredtopresent itscase first. The partiesalso arguedoverthedisclosureofa

committeecommunicationsfileintheadministrativerecord,whichwasbeingheldby

DNRforprivilegereview.Thehearingofficerdeniedmostoftheserequestsbutallowed

anextrahourforquestioningwitnesses.Andthepartieseventuallyagreedthatthe

hearingshouldgoforwardasscheduledevenwithoutthecommunicationsfileandthat

M&Mcouldsupplementitsappealafterthefilewasproduced.

Theone-dayhearingwasheldinJanuary2011. Bundtzentestifiedthatthe

FlagHillrockmettheengineeringspecificationsforriprapandrailroadballast.Andhe

testifiedregardingwhatqualitieshethoughtmadetheFlagHillrockunique.Thesewere

mainly[s]uperiorLosAngelesabrasionlossnumbers,goodT13degradations,low

waterabsorption,veryacceptablesodiumsulfatesoundnesstests,and...a[high]coarse

riprappotential.MaleytestifiedthathebelievedtheFlagHillrockwasaverystrong

caseforlocatabilitybecauseithadauniquecombinationofproperties:hedidnot

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think[hehad]seensomanypropertiesthatcoulddosomuchforengineeringspecs...

inarockforthispurpose.McGlinchytestifiedthattherewouldbeamarketforthe

productsinFairbanksandthesurroundingarea.

WitnessesforDNRtestifiedatlengthregardingFlagHillspotentialyield,

jointspacing,andcoresamples. OnewitnesstestifiedthatFlagHillwasnotuniquein

being able to meet the technical specifications for aggregate, ballast, and riprap; he

thought[a]lotofsitescertainlyalotofsitesmeetmeetthecriteria.Another

witnesstestifiedthatchemicallythisplotissimilartoanumberofintrusionsacrossthe

InteriorofAlaska,aswellaselsewhereinAlaska.Andthewitnesstestifiedthat

[m]ineralogically . . . this deposit, the quartz monzodiorite is similar in mineral

compositiontootherrocksofthatchemistry,andeventhetexture...theinterlocking

plagioclaseandaugitearecommontorocksofthistype.Thewitnessnotedthatother

nearbyrockdepositshavehigherspecificgravitiesandthataugiteandplagioclaseas

occurringinthedeposithavenomarketvalueevenweretheytobeextractedand

marketed.

A month after the hearing DNR produced the contents of the

communications file. Thesewere mainly emails between the committee members

regardingtransportationtoFlagHill,scheduling,anddraftsofthecommitteereport.

M&Msupplementeditsappealwithabriefstatement,arguingthatthenewmaterials

weresoimportantthatitwouldhave conducted itsappealdifferentlyhadtheybeen

releasedbeforethehearing.Asrelevant,M&MarguedthatDNRknewsomeofthe

othermineraldepositsintheareacouldnotmeettheengineeringspecificationsforthe

AlaskaRailroadproject.

The hearing officer transmitted his report and recommendation to the

CommissionerinJune2011. HeconcludedthattheFlagHillrockwasnot locatablefor

itshighconcentrationofaugiteandplagioclase.HeexplainedthatM&Mwasmore

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specificallyarguing[theFlagHillrock]shouldbedeemedlocatablebecauseofthe

physicalpropertiesthismineralogyandtexturemanifestinthe...rock,nottheminerals

themselves.(Emphasisinoriginal.)AndhenotedthatseveralofM&Mswitnesses

testifiedthatM&Mhadnointentionofextractingorusingtheaugiteandplagioclasein

therock.ThehearingofficeralsoreviewedtheconflictingevidenceprovidedbyM&M

andDNRandfoundthatthefavorablejointspacingarguedbyM&Mwasnotsupported

by the evidence. The hearing officer compared the rock to other sites with similar

mineralogyandfoundthatitdidnothaveauniquepropertythatcouldgiveitadistinct

andspecialvalue.InSeptember2011theCommissioneradoptedthehearingofficers

ultimateconclusionthattheFlagHillrockwasneither(1)valuableforitsconstituent

mineralsnor(2)unique,andhedeniedM&Msappeal.

M&Mappealedthe Commissionersfinaldenial to thesuperiorcourt,

arguingthatthehearingofficerhadmisappliedthelawanddeniedM&Mdueprocess.

Thesuperiorcourtaffirmed.Itconcludedthatbecause[t]heapplication...[was]based

onthevalueofthehostrock,notthevalueofitsconstituentminerals,theconstituent-

mineralstheorydidnotapply.Thecourtexplainedthat[b]ecause[therock]istobe

usedasfill,aggregate,riprap,ballast[,]andbase,asamatteroflaw,theFlagHillrock

cannot fall within the uncommon variety exception. The superior court also

concludedthatM&Mreceiveddueprocess.M&Mappeals.

III. STANDARDOFREVIEW

In administrative appeals, we directly review the agency action in

question.7Wereviewquestionsoffactforsubstantialevidence,whichissuchrelevant

7 Brown v. Pers. Bd. for City of Kenai,327P.3d871,874(Alaska2014)

(quoting Grimmett v. Univ. of Alaska, 303P.3d 482, 487 (Alaska2013)) (internal

quotationmarksomitted).

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evidenceasareasonablemindmightacceptasadequatetosupportaconclusion.8We

need only determine whether such evidence exists, and do not choose between

competinginferences.9 Questionsoflawthatinvolveagencyexpertisearereviewedfor

areasonablebasis.10 Questionsoflawthatdonotinvolveagencyexpertisearereviewed

under the substitution of judgment standard.11 Questions of due process present

constitutionalissuesthatwereviewdenovo. 12

M&M argues that [t]he Hearing Officer, the Commissioner, and the

superiorcourt...misappliedthe...law,andthereforeweshouldreviewtheentire

agencydecisionunderthesubstitutionofjudgmentstandard.Wehaveheldthatthe

substitutionofjudgmentstandardisappropriatewherethecaseconcernsstatutory

interpretation or other analysis of legal relationships about which the courts have

specializedknowledgeandexperience.13 In City of Nome v. Catholic Bishop of

Northern Alaska weheldthatbecauseourdecisionrequire[d]interpretationofstatutory

and case law,we [did]not defer to the Citys administrative expertise.14Andin

8

Id. (quotingGrimmett,303P.3dat487)(internalquotationmarksomitted).9 Handley v. State, Dept of Revenue,838P.2d1231,1233(Alaska1992).

10 May v. State, Commercial Fisheries Entry Commn,175P.3d1211,1215

(Alaska2007).

11 Id.

12 Brown,327P.3dat874(quotingGrimmett,303P.3dat487)(internal

quotationmarksomitted).

13 Tesoro Alaska Petrol. Co. v. Kenai Pipe Line Co.,746P.2d896,903

(Alaska1987)(quotingEarth Res. Co. of Alaska v. State, Dept of Revenue,665P.2d

960,965(Alaska1983)).

14 707P.2d870,876(Alaska1985).

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Thurston v. Guys With Tools, Ltd.,weheldthatwhethertheagencyappliedthecorrect

legalstandardwasaquestionoflawthat[did]notinvolveagencyexpertise.15Thus,

we will review the narrow issue of the correct application of the law under the

substitutionofjudgmentstandard.Butwewillreviewthehearingofficersconclusion

thatthedepositatissuewasnotlocatableforareasonablebasis. 16

IV. DISCUSSION

Thisappealpresentstwoissues:whetherthemineraldepositatFlagHill

islocatableandwhetherM&Mreceivedproceduraldueprocess.

A. The Hearing Officers Decision That The Flag Hill Rock Is Not

LocatableHasAReasonableBasis.

1. Legalbackground

Alaskagenerallyappliesfederalmininglaw.17 TheGeneralMiningLaw

of 1872, as discussed above, provides that all valuable mineral deposits in lands

belongingtotheUnitedStates...shallbefreeandopentoexplorationandpurchase.18

Amineraldepositmaybeavaluablemineraldepositifitmeetstheprudentmantest

andthemarketabilitytest. 19 Theprudentmantestaskswhetherthediscovereddeposits

[are]ofsuchacharacterthatapersonofordinaryprudencewouldbejustifiedinthe

furtherexpenditureofhislaborandmeans,withareasonableprospectofsuccess,in

15 217P.3d824,827(Alaska2009).

16 May, 175 P.3d at 1215. This question involves considerable agency

expertise.See, e.g.,AS38.05.300(a)(Thecommissionershallclassifyforsurfaceuse

landinareasconsidered necessary and proper.(emphasisadded)).

17 See AS38.05.185(a),(c).

18 30U.S.C.22(2012).

19 Copar Pumice Co. v. Tidwell,603F.3d780,785(10thCir.2010);see also

TERRYS.MALEY,MINERALLAW 341,526,586(6thed.1996).

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developingavaluablemine.20 Themarketabilitytestaskswhetherthemineralcanbe

extracted,removed[,]andmarketedataprofit. 21

But[n]otallmaterialswhichcanberemovedfromtheearthandsoldat

aprofitarelocatableundertheminerallaws.22Itisthepurposeofminerallawsto

reservefromdispositionandtodevotetomineralsaleandexploitationonlysuchlands

aspossessmineraldepositsofspecialorpeculiarvalueintrade,commerce,manufacture,

science,orthearts.23 Thus,commonmineralssuchasclay,peat,commonorinferior

limestone,andcommonrockhavenotbeenconsideredvaluablemineralsunder

30U.S.C.22,24 with one exception: before1955, materials thatmet engineering

specificationsforroadbeds,railroads,airportrunways,foundationsforlargebuildings,

bridges[,]andotherstructuresweresometimesconsideredvaluableminerals.25

After the Common Varieties Act of 1955, [n]o deposit of common

varietiesofsand,stone,gravel,pumice,pumicite,orcindersandnodepositofpetrified

wood[may]bedeemedavaluablemineraldepositwithinthemeaningofthemininglaws

oftheUnitedStates.26 Evenifthedepositpreviouslywassubjecttolocationbecause

itmetengineeringrequirementsforcompaction,hardness,soundness,stability,favorable

20 United States v. Coleman,390U.S.599,602(1968)(quoting Castle v.

Womble,19Pub.LandsDec.455,457(1894)).

21 Id. at600(internalquotationmarksomitted).

22 United States v. Bienick,14IBLA290,293(1974).

23 Id. at297-98(Stuebing,member,concurring).

24 Id.at297(collectingcases).

25 Id. at298 (citingUnited States v. Mattey,67InteriorDec.63(1960);

Stephen E. Day, Jr.,50Pub.LandsDec.489(1924)).

26 30U.S.C.611(2012).

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gradation,non-reactivityandnon-hydrophillicqualitiesin roadbuildingandsimilar

work, after the Common Varieties Act these materials were treated as common

varieties, and therefore [were] not locatable, because materials which meet these

standardsarecommon,abundant[,]andofwidespreadoccurrence.27Thus,evenif

commonvarietystonewasconsideredlocatablebefore1955becauseitmetengineering

specifications,aftertheCommonVarietiesActitnolongerwaslocatable. 28

ButtheCommonVarietiesActdoesnotapplytobarlocationofeither

(1)claimsbasedupondiscoveryofsome other mineral occurringinorinassociation

29 30with[acommon]deposit, or(2)depositswithadistinctandspecialvalue. M&M

arguesthatFlagHillrockislocatableunderboththeories.M&Malsoarguesthatthe

hearingofficermisappliedthelaw.

2. The constituent minerals theory does not apply because

M&MplanstomineFlagHillfortherockasatotality.

M&MarguesthattheFlagHillrockisnotsubjecttotheCommonVarieties

Actbecausethemineralsaugiteandplagioclasearevaluableconstituentminerals.

M&Mmakesthisargumenteventhoughitadmittedlyplanstousethehostrockasa

whole.Thehearingofficerconcludedthattheconstituent-mineralsexceptiondidnot

applybecausetherocksvaluetoM&Misin therock,not theconstituentminerals,

augiteandplagioclase.Healsoagreedwiththecommitteethataugiteandplagioclase

havelittleornomarketvalueevenweretheytobeconsideredvaluableconstituent

minerals.

27 Bienick,14IBLAat298(Stuebing,member,concurring).

28 Id..

29 30U.S.C.611(emphasisadded).

30 Id.

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Ifthematerialislocatedonly forthevalueofaconstituentelementofthe

sand,gravel,orstone,theCommonVarietiesActdoesnotapply,andthematerialis

locatable.31EvenM&Msexpert,TerryS.Maley,agreeswiththisproposition.Maleys

treatiseexplains,Ingeneral,iftherockisvaluableforonlyanindividualmineralor

elementsuchasgold,silver,feldspar,mica,etc.itisnotacommonvarietyquestionand

30U.S.C.611doesnotapply;however,iftheentirerockisusedandtheconstituent

elementsormineralsarerelativelyunimportant,then30U.S.C.611mayapply. 32

In United States v. Bunkowski the claimants sought location basedon

gypsitetobeusedasasoilconditioner.33TheInteriorBoardofLandAppeals(the

Board)heldthat[s]incethematerialhereisvaluedandusedonlyforitsconstituent

gypsum,itmaynotbenecessarytodeterminewhetherthedepositisanuncommon

varietyofsand,gravel[,]orstone.34ButinUnited States v. BealtheBoardheldthat

rockcontainingfeldspar,anotherwisevaluableconstituentmineral,constitutedcommon

varietystonewhentherockwasusedforornamentalorlandscapingpurposes. 35 Maleys

treatise identifies the controlling language fromBeal as stating, For its use as

31 United States v. Bunkowski,5IBLA102,113(1972)(emphasisadded)

(citingUnited States v. Pierce,75InteriorDec.270,279(1968));Pierce,75Interior

Dec.at279([I]ndeterminingwhetheraparticularmaterialfallswithinthepurviewof

thecommonvarietiesprovision,itisnecessarytodeterminewhetherthematerialasa

totalityhasvalueorwhetheronlyaconstituentelementofthematerialhasvalue.).

32 MALEY,supranote19,at592.

33 5IBLAat106-07.Gypsitecanbespreadonalkalisoilsinordertoimprove

cropyieldbychangingthecompositionofthesoilthroughachemicalreaction.Id. at107,114-15.

34 Id. at113.

35 23IBLA378,395(1976).

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landscapingorbuildingstone,thefeldsparonthesubjectclaim...issimplygroundinto

rockformandthefeldsparelementinthefinalproductisofnosignificance. 36 Aclassic

exampleisgraniticrockcomposedofquartzandothermineralsusuallyfoundingranite.

Ifthegraniteisusedforconstructionpurposes,then[t]hereisnodoubtthattherock

wouldconstituteastonewithinthemeaningofthecommonvarietiesprovision. 37 But

ifthesamerockcontainedgoldandtheminerintendedtoonlyminetherockforthe

gold,thenthedepositwouldnotbeastoneandwouldnotbesubjecttotheCommon

VarietiesAct.38

ItisuncontestedthatM&MplanstomineFlagHillforthehostrockand

use it for constructionpurposes. M&Msappellate brief saysit bestwhen it asks,

[W]hywouldanyonewanttoextractthemineralsanddestroythevalueoftherock?

ThistellingstatementdemonstratesthattheFlagHillrockisvaluabletoM&Mforthe

hostrockandnotfortheconstituentminerals,augiteandplagioclase.Theclaimisnot

basedonsomeothermineral39itisbasedonthehostrockitself,liketheexample

usedinPierce andthesituationpresentedinBeal. Thehearingofficersconclusionthat

theconstituent-mineralstheorydoesnotapplyhasareasonablebasis. 40

36 MALEY,supranote19,at594;see also Pierce,75InteriorDec.at279-80.

37 Pierce,75InteriorDec.at279-80.

38 Id.at280.

39 30U.S.C.611(2012).

40

M&MarguesthatthehearingofficerwronglyrelieduponthefactthatM&Mdidnotplantoremovetheaugiteandplagioclase. Butthisargumentmissesthe

pointof the hearing officers decision. Thedistinction madewas not dependant on

whetherthemineralswereremovedfromthehostrock;itwasadeterminationofwhat

abouttherockwasvaluabletoM&M.Ingypsitecasesthegypsiteisnotremoved

(continued...)

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M&Malsoarguesthatthehearingofficerusedsometerminologythatis

morefrequentlyusedinthetestforuncommonvarieties.AlthoughM&Miscorrect,we

believethiswasbecausethehearingofficerwasalsoaddressingthemarketabilityand

prudentmantests.Essentially,thehearingofficerwasaskingwhether,ifaugiteand

plagioclasewerehypotheticallythetargetof themining, therewouldbeamarketfor

thesemineralssuchthattheywouldpasstheprudentmanandmarketabilitytests.And

hewasrequiredtousesomeofthistypeoflanguagetosetthecontextfortheremainder

ofthedecision. HisanalysisreasonablytacklesthemainissuewhethertheFlagHill

rockisvaluabletoM&Masawholeoronlyforsomeconstituentelementofitsmatrix.

Weconcludethatthehearingofficercorrectlyappliedthelaw.

3. TheFlagHillrockisnotanuncommonvarietyrock.

M&M alternativelyargues that theFlagHill rockis notsubject to the

CommonVarietiesActbecauseitisanuncommonvarietyduetofavorablejoint

spacing,highdensity,andbecauseitmeetsengineeringspecifications. TheCommon

Varieties Act provides that [n]o deposit ofcommon varieties of sand, stone, [or]

gravel...shallbedeemedavaluablemineraldeposit.41 But[c]ommonvarietiesdo

notincludedepositsthathavesomepropertygiving[them]distinctandspecialvalue.42

Inordertodeterminewhetheranotherwisecommondeposithasadistinctandspecial

value,weapplythefivetestsannouncedbyMcClarty v. Secretary of the Interior:

40(...continued)

because removal is not necessary for the gypsite to work as a soil conditioner. See

United States v. Bunkowski,5IBLA102,111-12(1972). Here,M&Mplanstousethe

rockforconstructionitisseekingtoextractandsellthehostrock,nottheaugiteandplagioclase.

41 30U.S.C.611(emphasisadded).

42 Id.

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(1) theremustbea comparison of the mineral deposit in

question with other deposits of such minerals generally;

(2) the mineral deposit in question must have a unique

property; (3) the unique property must give the deposit a

distinctandspecialvalue;(4)ifthespecialvalueisforuses

towhichordinaryvarietiesofthemineralareput,thedeposit

musthavesomedistinctandspecialvalueforsuchuse;and

(5)thedistinctandspecialvaluemustbereflectedbythe

higher price which the material commands in the market[ ]place.43

Ifthemineraldepositdoesnothaveauniquephysicalpropertyundertest2,thenthe

rockisacommonvarietyrocksubjecttotheCommonVarietiesAct. 44

a. McClarty test 1: comparison to other types of such

mineralsgenerally

Thehearingofficerheldthat[u]nderMcClartytest1,theother mineral

deposits thatshouldbecomparedwith[theFlagHillrock]areothersiteswithsimilar

mineralogy(i.e.,diorites,diabase,basalt,gabbro,quartzmonzodiorites,etc.)thatcould

bequarriedforrockthatisanaggregateofthosesuch minerals generally.(Emphasis

inoriginal.)Thehearingofficerfoundthatwhensiteswithsuchmineralsgenerallyas

compared to the [Flag Hill rock] were plotted together, they all have relatively

comparablephysicalproperties.Inmakinghiscomparison,thehearingofficermainly

used sites M&M itself had proffered as a reasonable comparison in its Plan of

Operations.

43 408F.2d907,908(9thCir.1969).

44 See, e.g.,United States v. Smith,66IBLA182,189(1982).

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M&Marguesthatthehearingofficerconsideredthewrongtypesofmineral

depositsanddepositsthatweretoofaraway.45M&Marguesthatthehearingofficer

shouldhavecomparedtheFlagHillstonetorunofthemillstoneandbynotdoingso

rantheriskofcomparingittootheruncommonvarieties.AndM&Marguesthat

because the proposeduse of the rockisconstructionabulkuse the hearing

officer should have limited the comparisons to those deposits within 50 miles of

Fairbanks.

InUnited States v. Stacey & Jacksontheadministrativelawjudgenotedthat

akeyissueindeterminingwhetherthe...stoneiscommonoruncommonvarietyis

whetherthe[appellants]depositshouldbe comparedtosimilardepositsofstoneor

commonvarietydepositsofstonegenerally.46Heconcludedthatthestoneshouldbe

comparedtosimilardepositsofstoneratherthancommonvarietydepositsgenerally,47

because(1)itsusefallsunderthecategoryofbuildingpurposeswhicharetypicalof

commonvarietyminerals,(2)[thestone]graywackeiscommonlyfoundinsouthern

Alaskaandworldwide,and(3)thevalueof[thistypeof]stonedependsonincidental

factorsliketheproximityofthedeposittoprospectiveconsumers,localneeds,andthe

45 M&Malso argues that the hearing officershould not haveconsidered

undevelopeddeposits.ButeventhequotethatM&Musestosupportitspoint,from

United States v. Smith,explicitlystatesthatthecomparisonmaybemadewithactive

quarriesandexposed outcrops.66IBLAat189(emphasisadded).Maleystreatiseis

inaccord.See MALEY,supranote19,at601(citingSmith,66IBLAat189).

46 171IBLA170,177(2007)(alterationinoriginal)(internalquotationmarks

omitted).

47 Id.(internalquotationmarksomitted).

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like,ratherthanonanygenerallyrecognizedvalue.48OnappealtheBoardfoundno

errorinthisapplication.49

WeagreewiththeanalysisfromStacey & Jacksonandconcludethatthe

comparisonsitesthehearingofficerchosewerereasonable.BecausetheFlagHillrock

will beused as construction rock, and there was testimony that there were similar

depositsintheareaandthroughoutAlaska,thehearingofficerpermissiblycomparedit

tosimilardeposits.50Moreover,thehearingofficercomparedtheFlagHillrocktoother

depositshavingthesamegeneralmineralogyhedidnotspecificallycompareitto

depositshavingthesamepercentagesofaugiteandplagioclase,ortodepositswithonly

theinterlockingtexturethatM&MarguesmakestheFlagHillrockunique.Weholdthat

hischoiceofcomparisonsiteswithsimilarmineralogywasreasonable.

M&Malsoarguesthatthehearingofficershouldhaveconsideredonly

depositswithina50-mileradiusofFairbanks,butthisargumentisunsupportedbycase

law.Onlyonecase,United States v. McCormick,supportsM&Msspecific50-mile

rule.51Inthatcasethecomparisonwasconfinedto50milesfromFlagstaff,Arizona,the

48 Id.

49 Id.at179.

50 See Brubaker v. Morton,500F.2d200,202-03(9thCir.1974)(holdingthat

coloredroofstonewasproperlycomparedtoothercoloredstone);see also United States

v. Dunbar Stone Co.,56IBLA61,64-66(1981)(comparingtootherschistinthearea);

cf. Alyeska Pipeline Serv. Co. v. Anderson,629P.2d512,521(Alaska1981)(declining

togiveaninstructionaboutuniquenessinrelationtoabundancebecauseitwasnotproventhattherewereabundantnearbydepositsofsimilarstonethroughoutthearea).

51 27IBLA65,69(1976).M&MalsocitesAnderson,629P.2dat521,but

that case mainly discusses proximity and uniqueness underMcClarty test 2, not

comparisonunderMcClartytest1.See Anderson,629P.2dat521-22.

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centerofthemarketareaservedbytheseseveraldeposits.52TheBoardgavenoreason

for its limitation of 50 miles. As DNR notes,McClarty does not address the

geographicalrangeforthecomparison.53Casesusesuchterminologyasthroughoutthe

area54andthroughouttheregion.55

InUnited States v. HeldmanadepositinSouthDakotawastobeusedfor

decorative,landscaping[,]andprecastwork56bulkuseslikeM&Mplansforthe

FlagHillrock.Despitetheusesbeingbulk,theBoarddiscussedsimilardepositsasfar

away as Colorado.57 This directly counters M&Ms argument regarding haulage

distance. AndinUnited States v. SmiththeBoardnotedthattherewasacomparison

of appellants material with other deposits in the area.58 The Board then mainly

comparedthedepositlocatedonthenortheastsideoftheKenaiPeninsulatoothers

ontheKenaiPeninsulaandintheChugachmountainrange.59Here,thehearingofficer

mainlyusedthesitesthatM&Mitselfproffered. Weconcludethatthehearingofficers

decisionnottoadoptM&Ms50-milelimithadareasonablebasis.

52 McCormick,27IBLAat69.

53 See McClarty v. Secy of Interior,408F.2d907,908-10(9thCir.1969)

(providingnoguidanceonthedistancetobeconsidered).

54 See United States v. Heden,19IBLA326,339(1975);see also United

States v. Smith,66IBLA182,185(1982).

55 See Pitkin Iron Corp. v. Kempthorne,554F.Supp.2d1208,1214(D.Colo.

2008).

56 14IBLA1,7(1973).

57 Id.at6.

58 66IBLAat185.

59 See id. at185-89.

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b. McClartytest2:uniqueproperty

M&MarguesthattheFlagHillrockisuniquebecauseofhigherspecific

gravity, the fine graineduniform distributionof augiteand feldspar grains, and

[f]avorable[j]ointand[f]racture[d]ensity.60Thehearingofficerconcludedthatthese

qualitiesdidnotmaketherockunique.Henotedthathighpercentagesofaugiteand

plagioclaseandophitictexturearenotuniquein[thistypeofrock].Andhefoundthat

theredoesappeartobeanumberofotheroccurrencesofthismineralogyidentifiedby

geologicmappingwithininteriorAlaska. HealsofoundM&Msclaimsofhighyield

duetofavorablejointdensityunsupportedbytheevidence.

Thehearingofficersfindingsaresupportedbysubstantialevidence.There

wastestimonyduringthehearingthattheallegeduniquepropertiesoftheFlagHill

60 M&Malsoargues that the rock is unique because of its location and

because it meets engineering specifications. Although M&M urges us to consider

proximitytomarketinmakingtherockunique,thisisaninappropriateconsideration.

TheBoardhasrepeatedlyheldthatextrinsicfactorssuchasaccesstohighway[s]and

proximity to market, although they may give a deposit a competitive edge in the

marketplace,donotqualifyasuniquepropertiesofthedepositwhichgivethedeposit

adistinctandspecialvalue.Rather,thedistinctandspecialvaluemustbeinherentintheuniquequalityofthedeposititself.United States v. Henri,104IBLA93,98-99(1988)

(quotingSmith,66 IBLAat 188) (internalquotation marksomitted). The FlagHill

deposit cannot be unique because of its location or because it meets engineering

specifications;rather,thedepositmustbeuniquebecauseofitsparticlesizeorsome

otherphysicalfeature. See United States v. Multiple Use, Inc.,120IBLA63,90-91

(1991)(IfpumicemeetstheASTMstandardforuseasalightweightaggregate,thatfact

doesnomorethanestablishtheabilitytomarketanduseitasanaggregate.);United

States v. Guzman,18IBLA109,125(1974)([T]heDepartmenthasconsistentlyheld

thatdepositsofsandandgravelsuitableforallconstructionpurposes,whichmaybesuperiortootherdepositsofsandandgravelfoundintheareabecauseitisfreeof

deleterious substances, and because of hardness, soundness, stability, favorable

gradation,nonreactivity[,]andnonhydrophilicqualities,butwhichisusedonlyforthe

samepurposesasotherwidelyavailable,butlessdesirabledepositsofsandandgravel

are,nonetheless,acommonvarietyofsandandgravel.).

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rock were common in rockswiththat type ofmineralogicalquality generally, that

chemicallythisplotissimilartoanumberofintrusionsacrosstheInteriorofAlaska,

aswellaselsewhereinAlaska.Andtherewastestimonythat[m]ineralogically...

thisdeposit,thequartzmonzodioriteissimilarinmineralcompositiontootherrocksof

thatchemistry,andeventhetexture...[is]commontorocksofthistype.Onewitness

notedthatothernearbyrockdepositshadhigherspecificgravities.Andawitnessfrom

theAlaskaDepartmentofTransportationtestifiedthatFlagHillwasnotuniqueinbeing

able to meet the technical specifications for aggregate, ballast, and riprap and that

certainlyalotofsitesmeet...thecriteria.Therewasalsoconsiderabletestimony

regardingthejointspacingoftherock,withnumerousDNRwitnessestestifyingthat

M&Msforecastsforyieldsandjointspacingwereunreasonable.

Giventhisevidence,weconcludethehearingofficersdecisionthatthe

FlagHillrockdidnothaveauniquephysicalqualityunderMcClarty2isreasonable.

Onlyonecasehasfoundthatconstructionrockhasauniquephysicalproperty61andthat

caseisconsideredanoutlier.62Inthatcase,United States v. McCormick,theunique

physicalpropertythatwasallegedwasthat[t]hestoneha[d]beencrushedbytheforces

ofnatureinsuchawaythat80to95percentisofthepropersizeforvarioususesinroad

construction and paving projects.63 The deposit was also roughly stratified and

naturallysortedtoanextentthatdoesnotexistonanyothermaterialsourcesinthe

61 See United States v. McCormick,27IBLA65,69(1976).

62 SeeMALEY,supranote19,at614-16.

63 McCormick,27IBLAat68.

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area.64TheBoardconcludedwithoutexplanationthatthesubjectdepositispossessed

oftherequisitedistinctandspecialproperties. 65

Unique properties are found more commonly, although still without

regularity,inbuilding-stonecaseswherethephysicalpropertiesoftherockaresuchthat

itcanbepalletizedandshippedwithnoextraeffort.InUnited States v. McClartythe

Board found that a deposit ofbuilding stonehad uniqueproperties because it had

naturalfracturingandflatsurfacecrosssectioningthatmadealmostnoadditionalwork

necessaryduringremoval.66Noblastingwasrequiredandlittlesortingwasnecessary;

therockcouldjustbepriedout,palletized[,]andshippedwithoutfurtherprocessing. 67

Acontractortestifiedthathehadsaved12dayslaborbylayingitinsteadofother

varietiesbecauseitwassoeasytoworkwith.68InUnited States v. PopetheBoardfound

thatanotherdepositofbuildingstonewasuniqueforalmostthesamereasonsasin

McClarty:Theresnopreparationnecessary;itsmerelyloadedonthetruckandtaken

tothesite,thelandscapesiteorthebuildingsite,asitwere,andusedexactlyasitcomes

fromthequarry,noblasting,nobarringlooseisnecessary.69Inbothofthesecasesthe

stonewassouniquethatitessentiallyrequirednoefforttomine.

64 Id.

65 Id. (quoting 43 C.F.R. 3711.1(b) (1975) (removed in 2003)).

43 CFR 3711.1(b), a former Bureau of Land Management regulation, excepted

mineralsthatwerecommerciallyvaluableforuseinamanufacturing,industrial,or

processingoperation.

66 17IBLA20,32-33(1974).

67 Id.

68 Id. at37.

69 25IBLA199,204-05,207(1976).

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TheFlagHillrockmeetsengineeringspecifications,andfromthetestimony

attrialitappearsthattherockwouldhavebeenverysuitablefortheAlaskaRailroad

project. But merely being very good rock does not make a rock unique.70Unlike

McCormickorMcClarty,heretherewasnoqualitythatclearlysettherockapartfrom

otherverygoodrockthatalsometengineeringspecifications.Weconcludethereisa

reasonablebasisforthehearingofficersrulingthattheFlagHillrockdoesnothavea

uniquephysicalproperty.Becauseweagreewiththehearingofficeronthispoint,we

neednotaddresstheremainingthreeMcClarty tests.71 TheFlagHillmineraldepositis

commonvarietystonesubjecttotheCommonVarietiesActandthereforenotsubjectto

location.

B. M&MReceivedDueProcess.

M&Marguesthatitsdueprocessrightswereviolatedbecausethehearing

wasnotlongenough,oneofitsexpertswasunabletotestifyontheapplicationoffederal

minerallaw,anditdidnotreceiveDNRscommunicationsfileuntilafterthehearing.72

70 See United States v. Dunbar Stone Co.,56IBLA61,65(1981)(But

simply because this may beuncommonly good schistdoesnot necessarily make ituncommonlygoodstone.(emphasisremoved)).

71 Ifthestonedoesnothaveauniqueproperty,thenitcannothaveadistinct

andspecialvaluethatflowsfromitsuniqueness.See United States v. Verdugo & Miller,

Inc.,37IBLA277,303(1978)([T]hestone isnotuniqueandthereforedoesnothave

adistinctandspecialvalue.);see also United States v. Fisher,115IBLA277,286

(1990) (assuming arguendo a unique quality); United States v. Thomas, 90 IBLA

255,262(1986)(Evenifweacceptthattheparticularcolorofthestoneisunique,

appelleeshavepresentednoevidencethatbyvirtueofitscolorredsandstonewould

commandahigherpriceinthemarket.);United States v. Smith,66IBLA182,188-89(1982)(findingnouniquequality).

72 M&MalsoarguesthatitwasdenieddueprocessbecauseDNRrefus[ed]

tofollowFederalMiningLaw,whichrequiresDNRtobeartheburdentoestablish

(continued...)

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ThethresholdquestioniswhetherthedenialofM&Msapplicationtriggers

due process protections. Due process rights do not automatically attach to every

governmentalactionwithoutconsiderationofwhatrightsareatstakeandhowthey

might be affected.73 Before proceeding, we must determine whether there is a

deprivationofanindividualinterestofsufficientimportancetowarrantconstitutional

protection.74Weconcludethatthedenialofanapplicationtodevelopamineralslease

triggersdueprocessprotectionsbecausethesituationissufficientlyanalogoustothe

denial of a permit.75 While the Department did not terminate M&Ms underlying

mineralslease,76M&Marguesthattheonlypurposeofthemineralsleasewastomine

72(...continued)

prima facie the invalidity of the claim. M&Margues that DNRshould have been

requiredtoproceedfirstatthehearing.Butfederalmininglawappliesonly[u]nless

otherwiseprovidedandassupplementedbystatelaw.See AS38.05.185(c).State

law provides guidance on administrative appeals . . . of a decision in an

administrativeappealtothecommissionerofnaturalresources.AS44.37.011(a).

Specifically for DNR, in hearings in cases where facts must be resolved

11AlaskaAdministrativeCode02.050applies. Theseprovisionsdonotmandatethat

DNRproceedfirst.

73 Gottstein v. State, Dept of Natural Res.,223P.3d609,622(Alaska2010).

74 Heitz v. State, Dept of Health & Soc. Servs.,215P.3d302,305(Alaska

2009)(quotingBostic v. State, Dept of Revenue, Child Support Enforcement Div.,

968P.2d564,568(Alaska1998))(internalquotationmarksomitted).

75 Cf. Estate of Miner v. State, Commercial Fisheries Entry Commn,635P.2d

827,832(Alaska1981)(propertyinterestinanentrypermitfordrift-netsalmonfishing

inBristolBay).

76 See White v. State, Dept of Natural Res.,984P.2d1122,1126(Alaska

1999)(holdingthatthecancellationofaminingleaseimplicatesdueprocess);but see

State, Dept of Natural Res. v. Universal Educ. Socy, Inc.,583P.2d806,809-10(Alaska

1978)(denialofapplicationforaminingleaseisnotapropertyinterestsufficientto

(continued...)

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thestoneatissue,sofindingthestoneisnotlocatablehasthesameeffect. Weagree

withM&M.

[D]ueprocessrequiresnoticeandanopportunitytobeheardpriorto

governmentaldeprivationorinfringementofvaluablepropertyrights. 77Todetermine

whetherdueprocesswasprovided,weconsider(1)theprivateinterestthattheofficial

action affects; (2) the risk of erroneous deprivation of that interest through the

proceduresusedand theprobablevalue,ifany,ofadditionalorsubstituteprocedural

safeguards; and finally (3) the governments interest, including fiscal and

administrativeburdens,inimplementingadditionalsafeguards. 78Thecruxofdue

process is [the]opportunity to be heard and the right to adequately represent ones

interests.79

DNR provided M&M with notice of the hearing and responded toits

variouscontentionsinthemonthsbeforethehearing.Thehearingofficeraddedextra

timetoexaminewitnesseswhenM&Mobjected,andthepartieswereabletosubmit

writtenmaterialstothehearingofficerbeforeandafterthehearing. Eachsidewasable

topresentevidenceandcross-examinetheopposingsideswitnesses.Theadministrative

76(...continued)

triggerdueprocessprotections).

77 Gottstein,223P.3dat622.

78 Titus v. State, Dept of Admin., Div. of Motor Vehicles,305P.3d1271,1280

(Alaska2013)(quotingAlvarez v. State, Dept of Admin., Div. of Motor Vehicles ,249P.3d286,292(Alaska2011))(internalquotationmarksomitted).

79 Alyeska Pipeline Serv. Co. v. State, Dept of Envtl. Conservation,145P.3d

561,570-71(Alaska2006)(quotingMatanuska Maid, Inc. v. State,620P.2d182,

192-93(Alaska1980)).

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recordaloneinthecaseismorethan2,500pagesandfullydocumentedM&Msfactual

andlegalbasesforitsclaim.

WeholdthatM&Mreceivedproceduraldueprocess.Aone-dayhearing

wasappropriategiventhelimitednumberofquestionsoffactthehearingwasintended

toresolve.AndM&Mneverelaboratedwhoelseitwouldhavecalledorhownotcalling

these specific witnessesprejudiced it.80 M&Mwasnotdenieddueprocessbythe

restrictiononMaleystestimony;itisundisputedthathisprohibitedtestimonywould

havehadnobearingonanyofthefactualmattersinthecase: M&MwantedMaleyto

testifyaboutwhatthemininglawmeant.81 Butitiswellestablishedthatexpertwitnesses

arenotpermittedtotestifyonwhatthelawis.82Moreover,M&Mslegalpositionwas

welldocumentedinitshundredsofpagesofsubmissionstoDNR.

80 See Schmidt v. Beeson Plumbing & Heating, Inc.,869P.2d1170,1180

(Alaska1994)(discussingofferofproof).

81 See Barios v. Brooks Range Supply, Inc.,26P.3d1082,1088(Alaska2001)

(holdingthatbecausetheexpertcouldonlyofferthecourtanopiniononhowitshould

rule,thesuperiorcourtcorrectlyfoundthatisnotanappropriateroleforthiswitnessto

serve,regardlessofthelevelofhisexpertise);see also Specht v. Jensen,853F.2d805,

809-10 (10th Cir. 1988) (These cases demonstrate that an experts testimony is

proper...iftheexpertdoesnotattempttodefinethelegalparameterswithinwhichthe

jurymustexerciseitsfact-findingfunction.).M&Mwantedtohaveitsexperttestify

aboutfederalmininglaw,andthehearingofficerrestrictedMaleystestimonytofactual

issues.

82 See Barios,26P.3dat1088;see also In re Air Disaster at Lockerbie

Scotland on Dec. 21, 1988,37F.3d804,826-27(2dCir.1994), overruled on other

grounds by Brinks Ltd. v. South African Airways,93F.3d1022,1029(2dCir.1996);United States v. Brodie,858F.2d492,496-97(9thCir.1988), overruled on other

grounds by United States v. Morales,108F.3d1031,1037-38(9thCir.1997); Charles

Reinhart Co. v. Winiemko,513N.W.2d773,778(Mich.1994);Buzz Stew, LLC v. City

of North Las Vegas,341P.3d646,651(Nev.2015);France v. South Equip. Co.,689

S.E.2d1,14(W.Va.2010).

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M&Mfinallycomplainsthatitdidnotreceivetheunprivilegedcontentsof

DNRscommunicationsfilebeforethehearing.ButM&Mexpresslychosetoproceed

with the hearing before the communications file was released, and has failed to

adequatelydemonstratehowthelatereleaseofdocumentsprejudiced it.83

The administrative record clearly shows thatDNR, and especially the

hearingofficer,didanexemplaryjobinconductingthisappeal.M&Mreceivedample

dueprocess,clearlyevidencedbythethoughtfuladministrativedecision,thevoluminous

administrativerecord,andM&Msabilitytofilesupplementalbriefing.

V. CONCLUSION

WeAFFIRMthesuperiorcourtsdecisionaffirmingtheCommissioners

decisiondenyingM&MsPlanofOperations.WealsoAFFIRMthesuperiorcourts

conclusionthatM&Mreceiveddueprocessintheadministrativeproceedings.

83

M&MmainlyarguesthatFlagHillwastheonlysourceintheareatomeettheAlaskaRailroadspecificationsandthattheDNRknewthis.Butevenwerebothof

theseallegationstobetrue,itwouldnothaveimpactedthecase. Theuniquenessofthe

FlagHillrockhadtobedemonstratedwithoutregardtolocation . See United States v.

Henri,104IBLA93,98-99(1988). EvenhadFlagHillbeentheonlyusablerock,this

wouldnothavegivenitadistinctandspecialvalue.

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mcglinchy v. state, dept. of natural resources, alaska (2015)

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