McGlinchy v. State, Dept. of Natural Resources ( 2015 )

Notice: This opinion is subject to correction before publication in the P ACIFIC R EPORTER .
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, email
corrections@akcourts.us.
THE SUPREME COURT OF THE STATE OF ALASKA
JAMES P. MCGLINCHY d/b/a )
M&M CONSTRUCTORS, ) Supreme Court No. S-15277
)
Appellant, ) Superior Court No. 4FA-11-02830 CI
)
v. ) OPINION
)
STATE OF ALASKA, ) No. 7028 – August 7, 2015
DEPARTMENT OF NATURAL )
RESOURCES, and DANIEL S. )
SULLIVAN, COMMISSIONER OF )
NATURAL RESOURCES, )
)
Appellees. )
)
Appeal from the Superior Court of the State of Alaska,
Fourth Judicial District, Fairbanks, Michael A. MacDonald,
Judge.
Appearances: Joseph W. Sheehan, Law Office of Joseph W.
Sheehan, Fairbanks, for Appellant. Ashley C. Brown,
Assistant Attorney General, Anchorage, and Michael C.
Geraghty, Attorney General, Juneau, for Appellees.
Before: Fabe, Chief Justice, Winfree, Stowers, Maassen, and
Bolger, Justices.
STOWERS, Justice.
I. INTRODUCTION
M&M Constructors submitted a permit application to the Department of
Natural Resources (DNR) to mine a mineral deposit for use as construction rock. DNR
denied M&M’s permit application because it concluded that the mineral deposit was
common variety stone. Under the Common Varieties Act,1 “common varieties” of stone
are not subject to “location,” meaning they cannot be permitted through the mining law’s
location process. M&M appealed to the superior court, arguing that DNR wrongly
denied its permit application and also denied it procedural due process. After the
superior court affirmed, M&M appealed to this court. We affirm because M&M seeks
to mine for common variety stone that is well within the ambit of the Common Varieties
Act, and it received ample due process in the DNR proceeding.
II. FACTS AND PROCEEDINGS
M&M, owned by James P. McGlinchy, is the leaseholder of a mineral
deposit at Flag Hill, located approximately 45 miles south of Fairbanks. M&M planned
to develop the Flag Hill deposit to supply materials for a nearby Alaska Railroad project.
M&M submitted a Plan of Operations to DNR in May 2010 requesting a permit to mine
the land under 30 U.S.C. § 22, the General Mining Law of 1872.
The 1872 Mining Law provides that “all valuable mineral deposits in lands
belonging to the United States . . . shall be free and open to exploration and purchase.”2
1
Act of July 23, 1955, ch. 375, 69 Stat. 367 (1955) (codified as amended at
30 U.S.C. §§ 601-615 (2012)).
2
Act of May 10, 1872, ch. 152, 17 Stat. 91 (1872) (codified as amended at
30 U.S.C. § 22 (2012)). Alaska applies federal mining law in the absence of a specific
state statute. See AS 38.05.185(c); AU Int’l, Inc. v. State, Dep’t of Natural Res.,
971 P.2d 1034, 1039 (Alaska 1999) (recognizing that certain state statutes govern rights
in mineral deposits on state lands and “[b]ecause the relevant state statute clearly
(continued...)
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But in order to be “free and open to exploration and purchase,” the mineral or mineral
deposit in question must be subject to “location.”3 The Common Varieties Act, passed
in 1955, limits what minerals are locatable, providing that “[n]o deposit of common
varieties of sand, stone, gravel, pumice, pumicite, or cinders and no deposit of petrified
wood shall be deemed a valuable mineral deposit.”4 However, the Common Varieties
Act does not bar location of either (1) claims “based upon discovery of some other
mineral occurring in or in association with [a common] deposit,”5 or (2) deposits with
a “distinct and special value.”6 M&M refers to these exceptions as the “constituent
minerals” theory and the “uncommon variety” theory.
In its Plan of Operations M&M asserted that the Flag Hill rock was
locatable because it either was (1) comprised of valuable minerals due to the interlocking
structure of its constituent minerals, augite and plagioclase, or (2) an uncommon variety
of stone with a distinct and special value. M&M retained Terry S. Maley, a noted
geologist formerly employed by the Bureau of Land Management, and Tom Bundtzen,
2
(...continued)
addresses the subject of abandonment of state claims, we need not construe our statute
in accordance with the ‘usages and interpretations’ applicable to the federal mining
laws”). The parties agree that federal law controls here and we concur.
3
See United States v. Bienick, 14 IBLA 290, 293 (1974) (“Not all materials
which can be removed from the earth and sold at a profit are locatable under the mining
laws.”); BLACK ’S LAW D ICTIONARY 1082 (10th ed. 2014) (defining “location” as “[t]he
act of appropriating a mining claim”).
4
30 U.S.C. § 611.
5
Id. (emphasis added).
6
Id.-3- 7028
President of Pacific Rim Geological Consulting, Inc., to help prepare supporting
materials for submission to DNR.
DNR formed an advisory committee to investigate the locatability of the
Flag Hill rock and perform a site inspection. After careful deliberation the committee
recommended that DNR deny M&M’s application. It concluded that the constituent
minerals, augite and plagioclase, were not valuable minerals and, even if they were,
M&M planned to mine Flag Hill for the host rock for use in construction; it did not plan
to use the augite and plagioclase apart from the host rock. The committee also concluded
that the Flag Hill rock was common variety rock under the Common Varieties Act and
therefore nonlocatable. DNR sent a denial letter to M&M in July 2010.
M&M appealed and requested a hearing, which the Commissioner of DNR
granted. Over the next two months the parties exchanged contentious emails: M&M
argued that the hearing should be longer than originally planned and that DNR should
be required to present its case first. The parties also argued over the disclosure of a
“committee communications” file in the administrative record, which was being held by
DNR for privilege review. The hearing officer denied most of these requests but allowed
an extra hour for questioning witnesses. And the parties eventually agreed that the
hearing should go forward as scheduled even without the communications file and that
M&M could supplement its appeal after the file was produced.
The one-day hearing was held in January 2011. Bundtzen testified that the
Flag Hill rock met the engineering specifications for riprap and railroad ballast. And he
testified regarding what qualities he thought made the Flag Hill rock unique. These were
mainly “[s]uperior Los Angeles abrasion loss numbers, good T13 degradations, low
water absorption, very acceptable sodium sulfate soundness tests, and . . . a [high] coarse
riprap potential.” Maley testified that he believed the Flag Hill rock was “a very strong
case” for locatability because it had a “unique combination of properties”: he did not
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“think [he had] seen so many properties that could do so much for engineering specs . . .
in a rock for this purpose.” McGlinchy testified that there would be a market for the
products in Fairbanks and the surrounding area.
Witnesses for DNR testified at length regarding Flag Hill’s potential yield,
joint spacing, and core samples. One witness testified that Flag Hill was not unique in
being able to meet the technical specifications for aggregate, ballast, and riprap; he
thought “[a] lot of sites — certainly a lot of sites meet — meet the criteria.” Another
witness testified that “chemically this plot is similar to a number of intrusions across the
Interior of Alaska, as well as elsewhere in Alaska.” And the witness testified that
“[m]ineralogically . . . this deposit, the quartz monzodiorite is similar in mineral
composition to other rocks of that chemistry, and even the texture . . . the interlocking
plagioclase and augite are common to rocks of this type.” The witness noted that other
nearby rock deposits have higher specific gravities and that augite and plagioclase — as
occurring in the deposit — have no market value even were they to be extracted and
marketed.
A month after the hearing DNR produced the contents of the
communications file. These were mainly emails between the committee members
regarding transportation to Flag Hill, scheduling, and drafts of the committee report.
M&M supplemented its appeal with a brief statement, arguing that the new materials
were so important that it would have conducted its appeal differently had they been
released before the hearing. As relevant, M&M argued that DNR knew some of the
other mineral deposits in the area could not meet the engineering specifications for the
Alaska Railroad project.
The hearing officer transmitted his report and recommendation to the
Commissioner in June 2011. He concluded that the Flag Hill rock was not locatable for
its high concentration of augite and plagioclase. He explained that “M&M was more
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specifically arguing [the Flag Hill rock] should be deemed locatable because of the
physical properties this mineralogy and texture manifest in the . . . rock,” not the minerals
themselves. (Emphasis in original.) And he noted that several of M&M’s witnesses
testified that M&M had no intention of extracting or using the augite and plagioclase in
the rock. The hearing officer also reviewed the conflicting evidence provided by M&M
and DNR and found that the favorable joint spacing argued by M&M was not supported
by the evidence. The hearing officer compared the rock to other sites with similar
mineralogy and found that it did not have a unique property that could give it a distinct
and special value. In September 2011 the Commissioner adopted the hearing officer’s
ultimate conclusion that the Flag Hill rock was neither (1) valuable for its constituent
minerals nor (2) unique, and he denied M&M’s appeal.
M&M appealed the Commissioner’s final denial to the superior court,
arguing that the hearing officer had misapplied the law and denied M&M due process.
The superior court affirmed. It concluded that because “[t]he application . . . [was] based
on the value of the host rock, not the value of its constituent minerals,” the constituent-
minerals theory did not apply. The court explained that “[b]ecause [the rock] is to be
used as fill, aggregate, riprap, ballast[,] and base, as a matter of law, the Flag Hill rock
cannot fall within the ‘uncommon variety’ exception.” The superior court also
concluded that M&M received due process. M&M appeals.
III. STANDARD OF REVIEW
“In administrative appeals, we directly review the agency action in
question.”7 We review questions of fact for substantial evidence, which is “such relevant
7
Brown v. Pers. Bd. for City of Kenai, 327 P.3d 871, 874 (Alaska 2014)
(quoting Grimmett v. Univ. of Alaska, 303 P.3d 482, 487 (Alaska 2013)) (internal
quotation marks omitted).
-6- 7028
evidence as a reasonable mind might accept as adequate to support a conclusion.”8 “We
need only determine whether such evidence exists, and do not choose between
competing inferences.”9 Questions of law that involve agency expertise are reviewed for
a reasonable basis.10 Questions of law that do not involve agency expertise are reviewed
under the substitution of judgment standard.11 “Questions of due process present
constitutional issues that we review de novo.”12
M&M argues that “[t]he Hearing Officer, the Commissioner, and the
superior court . . . misapplied the . . . law,” and therefore we should review the entire
agency decision under the substitution of judgment standard. We have held that the
substitution of judgment standard is appropriate “where the case concerns ‘statutory
interpretation or other analysis of legal relationships about which the courts have
specialized knowledge and experience.’ ”13 In City of Nome v. Catholic Bishop of
Northern Alaska we held that because “our decision require[d] interpretation of statutory
and case law, we [did] not defer to the City’s administrative expertise.”14 And in
8
Id. (quoting Grimmett, 303 P.3d at 487) (internal quotation marks omitted).
9
Handley v. State, Dep’t of Revenue, 838 P.2d 1231, 1233 (Alaska 1992).
10
May v. State, Commercial Fisheries Entry Comm’n, 175 P.3d 1211, 1215
(Alaska 2007).
11
Id.12
Brown, 327 P.3d at 874 (quoting Grimmett, 303 P.3d at 487) (internal
quotation marks omitted).
13
Tesoro Alaska Petrol. Co. v. Kenai Pipe Line Co., 746 P.2d 896, 903
(Alaska 1987) (quoting Earth Res. Co. of Alaska v. State, Dep’t of Revenue, 665 P.2d
960, 965 (Alaska 1983)).
14
707 P.2d 870, 876 (Alaska 1985).
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Thurston v. Guys With Tools, Ltd., we held that whether the agency “applied the correct
legal standard” was a “question of law that [did] not involve agency expertise.”15 Thus,
we will review the narrow issue of the correct application of the law under the
substitution of judgment standard. But we will review the hearing officer’s conclusion
that the deposit at issue was not locatable for a reasonable basis.16
IV. DISCUSSION
This appeal presents two issues: whether the mineral deposit at Flag Hill
is “locatable” and whether M&M received procedural due process.
A. The Hearing Officer’s Decision That The Flag Hill Rock Is Not
Locatable Has A Reasonable Basis.
1. Legal background
Alaska generally applies federal mining law.17 The General Mining Law
of 1872, as discussed above, provides that “all valuable mineral deposits in lands
belonging to the United States . . . shall be free and open to exploration and purchase.”18
A mineral deposit may be a “valuable mineral deposit” if it meets the “prudent man” test
and the marketability test.19 The prudent man test asks whether the “discovered deposits
[are] of such a character that ‘a person of ordinary prudence would be justified in the
further expenditure of his labor and means, with a reasonable prospect of success, in
15
217 P.3d 824, 827 (Alaska 2009).
16
May, 175 P.3d at 1215. This question involves considerable agency
expertise. See, e.g., AS 38.05.300(a) (“The commissioner shall classify for surface use
land in areas considered necessary and proper.” (emphasis added)).
17
See AS 38.05.185(a), (c).
18
30 U.S.C. § 22 (2012).
19
Copar Pumice Co. v. Tidwell, 603 F.3d 780, 785 (10th Cir. 2010); see also
TERRY S. M ALEY , M INERAL LAW 341, 526, 586 (6th ed. 1996).
-8- 7028
developing a valuable mine.’ ”20 The marketability test asks whether the mineral can be
“extracted, removed[,] and marketed at a profit.”21
But “[n]ot all materials which can be removed from the earth and sold at
a profit are locatable under the mineral laws.”22 “It is the purpose of mineral laws to
reserve from disposition and to devote to mineral sale and exploitation only such lands
as possess mineral deposits of special or peculiar value in trade, commerce, manufacture,
science, or the arts.”23 Thus, common minerals such as clay, peat, “common or inferior
limestone,” and “common rock” have not been considered “valuable minerals” under
30 U.S.C. § 22,24 with one exception: before 1955, materials that met engineering
specifications for “road beds, railroads, airport runways, foundations for large buildings,
bridges[,] and other structures” were sometimes considered valuable minerals.25
After the Common Varieties Act of 1955, “[n]o deposit of common
varieties of sand, stone, gravel, pumice, pumicite, or cinders and no deposit of petrified
wood [may] be deemed a valuable mineral deposit within the meaning of the mining laws
of the United States.”26 Even if the deposit previously was “subject to location because
it met engineering requirements for compaction, hardness, soundness, stability, favorable
20
United States v. Coleman, 390 U.S. 599, 602 (1968) (quoting Castle v.
Womble, 19 Pub. Lands Dec. 455, 457 (1894)).
21
Id. at 600 (internal quotation marks omitted).
22
United States v. Bienick, 14 IBLA 290, 293 (1974).
23
Id. at 297-98 (Stuebing, member, concurring).
24
Id. at 297 (collecting cases).
25
Id. at 298 (citing United States v. Mattey, 67 Interior Dec. 63 (1960);
Stephen E. Day, Jr., 50 Pub. Lands Dec. 489 (1924)).
26
30 U.S.C. § 611 (2012).
-9- 7028
gradation, non-reactivity and non-hydrophillic qualities in road building and similar
work,” after the Common Varieties Act “these materials were treated as common
varieties, and therefore [were] not locatable, because materials which meet these
standards are common, abundant[,] and of widespread occurrence.”27 Thus, even if
common variety stone was considered locatable before 1955 because it met engineering
specifications, after the Common Varieties Act it no longer was locatable.28
But the Common Varieties Act does not apply to bar location of either
(1) claims “based upon discovery of some other mineral occurring in or in association
with [a common] deposit,”29 or (2) deposits with a “distinct and special value.”30 M&M
argues that Flag Hill rock is locatable under both theories. M&M also argues that the
hearing officer misapplied the law.
2. The “constituent minerals” theory does not apply because
M&M plans to mine Flag Hill for the rock as a totality.
M&M argues that the Flag Hill rock is not subject to the Common Varieties
Act because the minerals augite and plagioclase are “valuable constituent minerals.”
M&M makes this argument even though it admittedly plans to use the host rock as a
whole. The hearing officer concluded that the constituent-minerals exception did not
apply because the rock’s value to M&M is in the rock, not the constituent minerals,
augite and plagioclase. He also agreed with the committee that augite and plagioclase
“have little or no market value” even were they to be considered valuable constituent
minerals.
27
Bienick, 14 IBLA at 298 (Stuebing, member, concurring).
28
Id..
29
30 U.S.C. § 611 (emphasis added).
30
Id.-10- 7028
“If the material is located only for the value of a constituent element of the
sand, gravel, or stone,” the Common Varieties Act does not apply, and the material is
locatable.31 Even M&M’s expert, Terry S. Maley, agrees with this proposition. Maley’s
treatise explains, “In general, if the rock is valuable for only an individual mineral or
element such as gold, silver, feldspar, mica, etc. it is not a common variety question and
30 U.S.C. 611 does not apply; however, if the entire rock is used and the constituent
elements or minerals are relatively unimportant, then 30 U.S.C. 611 may apply.”32
In United States v. Bunkowski the claimants sought location based on
gypsite to be used as a soil conditioner.33 The Interior Board of Land Appeals (the
Board) held that “[s]ince the material here is valued and used only for its constituent
gypsum, it may not be necessary to determine whether the deposit is an uncommon
variety of sand, gravel[,] or stone.”34 But in United States v. Beal the Board held that
rock containing feldspar, an otherwise valuable constituent mineral, constituted common
variety stone when the rock was used for ornamental or landscaping purposes.35 Maley’s
treatise identifies the controlling language from Beal as stating, “For its use as
31
United States v. Bunkowski, 5 IBLA 102, 113 (1972) (emphasis added)
(citing United States v. Pierce, 75 Interior Dec. 270, 279 (1968)); Pierce, 75 Interior
Dec. at 279 (“[I]n determining whether a particular material falls within the purview of
the common varieties provision, it is necessary to determine whether the material as a
totality has value or whether only a constituent element of the material has value.”).
32
M ALEY , supra note 19, at 592.
33
5 IBLA at 106-07. Gypsite can be spread on alkali soils in order to improve
crop yield by changing the composition of the soil through a chemical reaction. Id. at
107, 114-15.
34
Id. at 113.
35
23 IBLA 378, 395 (1976).
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landscaping or building stone, the feldspar on the subject claim . . . is simply ground into
rock form and the feldspar element in the final product is of no significance.”36 A classic
example is granitic rock composed of quartz and other minerals usually found in granite.
If the granite is used for construction purposes, then “[t]here is no doubt that the rock
would constitute a ‘stone’ within the meaning of the common varieties provision.”37 But
if the same rock contained gold and the miner intended to only mine the rock for the
gold, then the deposit would not be a “stone” and would not be subject to the Common
Varieties Act.38
It is uncontested that M&M plans to mine Flag Hill for the host rock and
use it for construction purposes. M&M’s appellate brief says it best when it asks,
“[W]hy would anyone want to extract the minerals and destroy the value of the rock?”
This telling statement demonstrates that the Flag Hill rock is valuable to M&M for the
host rock and not for the constituent minerals, augite and plagioclase. The claim is not
based on “some other mineral”39 — it is based on the host rock itself, like the example
used in Pierce and the situation presented in Beal. The hearing officer’s conclusion that
the constituent-minerals theory does not apply has a reasonable basis.40
36
M ALEY , supra note 19, at 594; see also Pierce, 75 Interior Dec. at 279-80.
37
Pierce, 75 Interior Dec. at 279-80.
38
Id. at 280.
39
30 U.S.C. § 611 (2012).
40
M&M argues that the hearing officer wrongly relied upon the fact that
M&M did not plan to remove the augite and plagioclase. But this argument misses the
point of the hearing officer’s decision. The distinction made was not dependant on
whether the minerals were removed from the host rock; it was a determination of what
about the rock was valuable to M&M. In gypsite cases the gypsite is not removed
(continued...)
-12- 7028
M&M also argues that the hearing officer used some terminology that is
more frequently used in the test for uncommon varieties. Although M&M is correct, we
believe this was because the hearing officer was also addressing the marketability and
prudent man tests. Essentially, the hearing officer was asking whether, if augite and
plagioclase were hypothetically the target of the mining, there would be a market for
these minerals such that they would pass the prudent man and marketability tests. And
he was required to use some of this type of language to set the context for the remainder
of the decision. His analysis reasonably tackles the main issue — whether the Flag Hill
rock is valuable to M&M as a whole or only for some constituent element of its matrix.
We conclude that the hearing officer correctly applied the law.
3. The Flag Hill rock is not an uncommon variety rock.
M&M alternatively argues that the Flag Hill rock is not subject to the
Common Varieties Act because it is an “uncommon variety” due to favorable joint
spacing, high density, and because it meets engineering specifications. The Common
Varieties Act provides that “[n]o deposit of common varieties of sand, stone, [or]
gravel . . . shall be deemed a valuable mineral deposit.”41 But “[c]ommon varieties” do
not include deposits that have “some property giving [them] distinct and special value.”42
In order to determine whether an otherwise common deposit has a “distinct and special
value,” we apply the five tests announced by McClarty 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, 5 IBLA 102, 111-12 (1972). Here, M&M plans to use the
rock for construction — it is seeking to extract and sell the host rock, not the augite and
plagioclase.
41
30 U.S.C. § 611 (emphasis added).
42
Id.-13- 7028
(1) there must be a 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
distinct and special value; (4) if the special value is for uses
to which ordinary varieties of the mineral are put, the deposit
must have some distinct and special value for such use; and
(5) the distinct and special value must be reflected by the
higher price which the material commands in the market
place.[43]
If the mineral deposit does not have a unique physical property under test 2, then the
rock is a common variety rock subject to the Common Varieties Act.44
a. McClarty test 1: comparison to other types of such
minerals generally
The hearing officer held that “[u]nder McClarty test 1, the other mineral
deposits that should be compared with [the Flag Hill rock] are other sites with similar
mineralogy (i.e., diorites, diabase, basalt, gabbro, quartz monzodiorites, etc.) that could
be quarried for rock that is an aggregate of those such minerals generally.” (Emphasis
in original.) The hearing officer found that when sites with “such minerals generally as
compared to the [Flag Hill rock]” were plotted together, “they all have relatively
comparable physical properties.” In making his comparison, the hearing officer mainly
used sites M&M itself had proffered as a “reasonable comparison” in its Plan of
Operations.
43
408 F.2d 907, 908 (9th Cir. 1969).
44
See, e.g., United States v. Smith, 66 IBLA 182, 189 (1982).
-14­ 7028
M&M argues that the hearing officer considered the wrong types of mineral
deposits and deposits that were too far away.45 M&M argues that the hearing officer
should have compared the Flag Hill stone to “run of the mill” stone and by not doing so
ran the risk of comparing it to other uncommon varieties. And M&M argues that
because the proposed use of the rock is construction — a “bulk use” — the hearing
officer should have limited the comparisons to those deposits within 50 miles of
Fairbanks.
In United States v. Stacey & Jackson the administrative law judge noted that
“a key issue in determining whether the . . . stone is common or uncommon variety is
whether the [appellants’] deposit should be compared to similar deposits of stone or
common variety deposits of stone generally.”46 He concluded that the “stone should be
compared to similar deposits of stone rather than common variety deposits generally,”47
because (1) its use “falls under the category of building purposes which are typical of
common variety minerals,” (2) “[the stone] graywacke is commonly found in southern
Alaska and worldwide,” and (3) “the value of [this type of] stone depends on incidental
factors like the proximity of the deposit to prospective consumers, local needs, and the
45
M&M also argues that the hearing officer should not have considered
undeveloped deposits. But even the quote that M&M uses to support its point, from
United States v. Smith, explicitly states that the comparison may be made with “active
quarries and exposed outcrops.” 66 IBLA at 189 (emphasis added). Maley’s treatise is
in accord. See M ALEY , supra note 19, at 601 (citing Smith, 66 IBLA at 189).
46
171 IBLA 170, 177 (2007) (alteration in original) (internal quotation marks
omitted).
47
Id. (internal quotation marks omitted).
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like, rather than on any generally recognized value.”48 On appeal the Board found no
error in this application.49
We agree with the analysis from Stacey & Jackson and conclude that the
comparison sites the hearing officer chose were reasonable. Because the Flag Hill rock
will be used as construction rock, and there was testimony that there were similar
deposits in the area and throughout Alaska, the hearing officer permissibly compared it
to similar deposits.50 Moreover, the hearing officer compared the Flag Hill rock to other
deposits having the same general mineralogy — he did not specifically compare it to
deposits having the same percentages of augite and plagioclase, or to deposits with only
the interlocking texture that M&M argues makes the Flag Hill rock unique. We hold that
his choice of comparison sites with similar mineralogy was reasonable.
M&M also argues that the hearing officer should have considered only
deposits within a 50-mile radius of Fairbanks, but this argument is unsupported by case
law. Only one case, United States v. McCormick, supports M&M’s specific 50-mile
rule.51 In that case the comparison was confined to 50 miles from Flagstaff, Arizona, the
48
Id.
49
Id. at 179.
50
See Brubaker v. Morton, 500 F.2d 200, 202-03 (9th Cir. 1974) (holding that
colored roof stone was properly compared to other colored stone); see also United States
v. Dunbar Stone Co., 56 IBLA 61, 64-66 (1981) (comparing to other schist in the area);
cf. Alyeska Pipeline Serv. Co. v. Anderson, 629 P.2d 512, 521 (Alaska 1981) (declining
to give an instruction about uniqueness in relation to abundance because it was not
proven that there were “abundant nearby deposits of similar stone throughout the area”).
51
27 IBLA 65, 69 (1976). M&M also cites Anderson, 629 P.2d at 521, but
that case mainly discusses proximity and uniqueness under McClarty test 2, not
comparison under McClarty test 1. See Anderson, 629 P.2d at 521-22.
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“center of the market area served by these several deposits.”52 The Board gave no reason
for its limitation of 50 miles. As DNR notes, McClarty does not address the
geographical range for the comparison.53 Cases use such terminology as “throughout the
area”54 and “throughout the region.”55
In United States v. Heldman a deposit in South Dakota was to be used for
“decorative, landscaping[,] and precast work”56 — bulk uses like M&M plans for the
Flag Hill rock. Despite the uses being bulk, the Board discussed similar deposits as far
away as Colorado.57 This directly counters M&M’s argument regarding haulage
distance. And in United States v. Smith the Board noted that “there was a comparison
of appellants’ material with other deposits in the area.”58 The Board then mainly
compared the deposit — located on the northeast side of the Kenai Peninsula — to others
on the Kenai Peninsula and in the Chugach mountain range.59 Here, the hearing officer
mainly used the sites that M&M itself proffered. We conclude that the hearing officer’s
decision not to adopt M&M’s 50-mile limit had a reasonable basis.
52
McCormick, 27 IBLA at 69.
53
See McClarty v. Sec’y of Interior, 408 F.2d 907, 908-10 (9th Cir. 1969)
(providing no guidance on the distance to be considered).
54
See United States v. Heden, 19 IBLA 326, 339 (1975); see also United
States v. Smith, 66 IBLA 182, 185 (1982).
55
See Pitkin Iron Corp. v. Kempthorne, 554 F. Supp. 2d 1208, 1214 (D. Colo.
2008).
56
14 IBLA 1, 7 (1973).
57
Id. at 6.
58
66 IBLA at 185.
59
See id. at 185-89.
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b. McClarty test 2: “unique property”
M&M argues that the Flag Hill rock is unique because of “higher specific
gravity,” “the fine grained uniform distribution of augite and feldspar grains,” and
“[f]avorable [j]oint and [f]racture [d]ensity.”60 The hearing officer concluded that these
qualities did not make the rock unique. He noted that “high percentages of augite and
plagioclase and ophitic texture are not unique in [this type of rock].” And he found that
“there does appear to be a number of other occurrences of this mineralogy identified by
geologic mapping within interior Alaska.” He also found M&M’s claims of high yield
due to favorable joint density unsupported by the evidence.
The hearing officer’s findings are supported by substantial evidence. There
was testimony during the hearing that the alleged “unique” properties of the Flag Hill
60
M&M also argues that the rock is unique because of its location and
because it meets engineering specifications. Although M&M urges us to consider
proximity to market in making the rock unique, this is an inappropriate consideration.
The Board has repeatedly held that “ ‘extrinsic’ factors such as access to highway[s] and
proximity to market, although they may give a deposit a competitive edge in the
marketplace, do not qualify as unique properties of the deposit which give the deposit
a distinct and special value. Rather, the distinct and special value must be inherent in the
unique quality of the deposit itself.” United States v. Henri, 104 IBLA 93, 98-99 (1988)
(quoting Smith, 66 IBLA at 188) (internal quotation marks omitted). The Flag Hill
deposit cannot be unique because of its location or because it meets engineering
specifications; rather, the deposit must be unique because of its particle size or some
other physical feature. See United States v. Multiple Use, Inc., 120 IBLA 63, 90-91
(1991) (“If pumice meets the ASTM standard for use as a lightweight aggregate, that fact
does no more than establish the ability to market and use it as an aggregate.”); United
States v. Guzman, 18 IBLA 109, 125 (1974) (“[T]he Department has consistently held
that deposits of sand and gravel suitable for all construction purposes, which may be
superior to other deposits of sand and gravel found in the area because it is free of
deleterious substances, and because of hardness, soundness, stability, favorable
gradation, nonreactivity[,] and nonhydrophilic qualities, but which is used only for the
same purposes as other widely available, but less desirable deposits of sand and gravel
are, nonetheless, a common variety of sand and gravel.”).
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rock were common in rocks with that type of mineralogical quality generally, that
“chemically this plot is similar to a number of intrusions across the Interior of Alaska,
as well as elsewhere in Alaska.” And there was testimony that “[m]ineralogically . . .
this deposit, the quartz monzodiorite is similar in mineral composition to other rocks of
that chemistry, and even the texture . . . [is] common to rocks of this type.” One witness
noted that other nearby rock deposits had higher specific gravities. And a witness from
the Alaska Department of Transportation testified that Flag Hill was not unique in being
able to meet the technical specifications for aggregate, ballast, and riprap and that
“certainly a lot of sites meet . . . the criteria.” There was also considerable testimony
regarding the joint spacing of the rock, with numerous DNR witnesses testifying that
M&M’s forecasts for yields and joint spacing were unreasonable.
Given this evidence, we conclude the hearing officer’s decision that the
Flag Hill rock did not have a “unique physical quality” under McClarty 2 is reasonable.
Only one case has found that construction rock has a unique physical property 61 and that
case is considered an outlier.62 In that case, United States v. McCormick, the unique
physical property that was alleged was that “[t]he stone ha[d] been crushed by the forces
of nature in such a way that 80 to 95 percent is of the proper size for various uses in road
construction and paving projects.”63 The deposit was also “roughly stratified and
naturally sorted to an extent that does not exist on any other material sources in the
61
See United States v. McCormick, 27 IBLA 65, 69 (1976).
62
See M ALEY , supra note 19, at 614-16.
63
McCormick, 27 IBLA at 68.
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area.”64 The Board concluded without explanation that “the subject deposit is possessed
of the requisite ‘distinct and special properties.’ ”65
Unique properties are found more commonly, although still without
regularity, in building-stone cases where the physical properties of the rock are such that
it can be palletized and shipped with no extra effort. In United States v. McClarty the
Board found that a deposit of building stone had unique properties because it had
“natural fracturing and flat surface cross sectioning” that made almost no additional work
necessary during removal.66 No blasting was required and little sorting was necessary;
the rock could just be pried out, “palletized[,] and shipped without further processing.”67
A contractor testified that he had saved 12 days’ labor by laying it instead of other
varieties because it was so easy to work with.68 In United States v. Pope the Board found
that another deposit of building stone was unique for almost the same reasons as in
McClarty: “There’s no preparation necessary; it’s merely loaded on the truck and taken
to the site, the landscape site or the building site, as it were, and used exactly as it comes
from the quarry, no blasting, no barring loose is necessary.”69 In both of these cases the
stone was so unique that it essentially required no effort to mine.
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
minerals that were “commercially valuable for use in a manufacturing, industrial, or
processing operation.”
66
17 IBLA 20, 32-33 (1974).
67
Id.
68
Id. at 37.
69
25 IBLA 199, 204-05, 207 (1976).
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The Flag Hill rock meets engineering specifications, and from the testimony
at trial it appears that the rock would have been very suitable for the Alaska Railroad
project. But merely being very good rock does not make a rock unique.70 Unlike
McCormick or McClarty, here there was no quality that clearly set the rock apart from
other very good rock that also met engineering specifications. We conclude there is a
reasonable basis for the hearing officer’s ruling that the Flag Hill rock does not have a
unique physical property. Because we agree with the hearing officer on this point, we
need not address the remaining three McClarty tests.71 The Flag Hill mineral deposit is
common variety stone subject to the Common Varieties Act and therefore not subject to
location.
B. M&M Received Due Process.
M&M argues that its due process rights were violated because the hearing
was not long enough, one of its experts was unable to testify on the application of federal
mineral law, and it did not receive DNR’s communications file until after the hearing.72
70
See United States v. Dunbar Stone Co., 56 IBLA 61, 65 (1981) (“But
simply because this may be uncommonly good schist does not necessarily make it
uncommonly good stone.” (emphasis removed)).
71
If the stone does not have a unique property, then it cannot have a distinct
and special value that flows from its uniqueness. See United States v. Verdugo & Miller,
Inc., 37 IBLA 277, 303 (1978) (“[T]he stone is not unique and therefore does not have
a distinct and special value.”); see also United States v. Fisher, 115 IBLA 277, 286
(1990) (assuming arguendo a unique quality); United States v. Thomas, 90 IBLA
255, 262 (1986) (“Even if we accept that the particular color of the stone is unique,
appellees have presented no evidence that by virtue of its color red sandstone would
command a higher price in the market.”); United States v. Smith, 66 IBLA 182, 188-89
(1982) (finding no unique quality).
72
M&M also argues that it was denied due process because “DNR refus[ed]
to follow Federal Mining Law, which requires DNR to bear the burden to establish
(continued...)
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The threshold question is whether the denial of M&M’s application triggers
due process protections. Due process rights do “not automatically attach to every
governmental action without consideration of what rights are at stake and how they
might be affected.”73 Before proceeding, we must determine “whether there is a
deprivation of an individual interest of sufficient importance to warrant constitutional
protection.”74 We conclude that the denial of an application to develop a minerals lease
triggers due process protections because the situation is sufficiently analogous to the
denial of a permit.75 While the Department did not terminate M&M’s underlying
minerals lease,76 M&M argues that the only purpose of the minerals lease was to mine
72
(...continued)
prima facie the invalidity of the claim.” M&M argues that DNR should have been
required to proceed first at the hearing. But federal mining law applies only “[u]nless
otherwise provided” and “as supplemented by state law.” See AS 38.05.185(c). State
law provides guidance on “administrative appeals . . . of a decision in an
administrative appeal to the commissioner of natural resources.” AS 44.37.011(a).
Specifically for DNR, in hearings in cases where “facts must be resolved”
11 Alaska Administrative Code 02.050 applies. These provisions do not mandate that
DNR proceed first.
73
Gottstein v. State, Dep’t of Natural Res., 223 P.3d 609, 622 (Alaska 2010).
74
Heitz v. State, Dep’t of Health & Soc. Servs., 215 P.3d 302, 305 (Alaska
2009) (quoting Bostic v. State, Dep’t of Revenue, Child Support Enforcement Div.,
968 P.2d 564, 568 (Alaska 1998)) (internal quotation marks omitted).
75
Cf. Estate of Miner v. State, Commercial Fisheries Entry Comm’n, 635 P.2d
827, 832 (Alaska 1981) (property interest in an entry permit for drift-net salmon fishing
in Bristol Bay).
76
See White v. State, Dep’t of Natural Res., 984 P.2d 1122, 1126 (Alaska
1999) (holding that the cancellation of a mining lease implicates due process); but see
State, Dep’t of Natural Res. v. Universal Educ. Soc’y, Inc., 583 P.2d 806, 809-10 (Alaska
1978) (denial of application for a mining lease is not a property interest sufficient to
(continued...)
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the stone at issue, so finding the stone is not locatable has the same effect. We agree
with M&M.
“[D]ue process requires notice and an opportunity to be heard prior to
governmental deprivation or infringement of valuable property rights.”77 To determine
whether due process was provided, we consider “(1) the private interest that the official
action affects; (2) the risk of erroneous deprivation of that interest through the
procedures used and the probable value, if any, of additional or substitute procedural
safeguards”; and finally “(3) the government’s interest, including fiscal and
administrative burdens, in implementing additional safeguards.”78 The “crux of due
process is [the] opportunity to be heard and the right to adequately represent one’s
interests.”79
DNR provided M&M with notice of the hearing and responded to its
various contentions in the months before the hearing. The hearing officer added extra
time to examine witnesses when M&M objected, and the parties were able to submit
written materials to the hearing officer before and after the hearing. Each side was able
to present evidence and cross-examine the opposing side’s witnesses. The administrative
76
(...continued)
trigger due process protections).
77
Gottstein, 223 P.3d at 622.
78
Titus v. State, Dep’t of Admin., Div. of Motor Vehicles, 305 P.3d 1271, 1280
(Alaska 2013) (quoting Alvarez v. State, Dep’t of Admin., Div. of Motor Vehicles, 249
P.3d 286, 292 (Alaska 2011)) (internal quotation marks omitted).
79
Alyeska Pipeline Serv. Co. v. State, Dep’t of Envtl. Conservation, 145 P.3d
561, 570-71 (Alaska 2006) (quoting Matanuska Maid, Inc. v. State, 620 P.2d 182,
192-93 (Alaska 1980)).
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record alone in the case is more than 2,500 pages and fully documented M&M’s factual
and legal bases for its claim.
We hold that M&M received procedural due process. A one-day hearing
was appropriate given the limited number of questions of fact the hearing was intended
to resolve. And M&M never elaborated who else it would have called or how not calling
these specific witnesses prejudiced it.80 M&M was not denied due process by the
restriction on Maley’s testimony; it is undisputed that his prohibited testimony would
have had no bearing on any of the factual matters in the case: M&M wanted Maley to
testify about what the mining law meant.81 But it is well established that expert witnesses
are not permitted to testify on what the law is.82 Moreover, M&M’s legal position was
well documented in its hundreds of pages of submissions to DNR.
80
See Schmidt v. Beeson Plumbing & Heating, Inc., 869 P.2d 1170, 1180
(Alaska 1994) (discussing offer of proof).
81
See Barios v. Brooks Range Supply, Inc., 26 P.3d 1082, 1088 (Alaska 2001)
(holding that because the expert “could only offer the court an opinion on how it should
rule, the superior court correctly found that is not ‘an appropriate role for this witness to
serve, regardless of the level of his expertise’ ”); see also Specht v. Jensen, 853 F.2d 805,
809-10 (10th Cir. 1988) (“These cases demonstrate that an expert’s testimony is
proper . . . if the expert does not attempt to define the legal parameters within which the
jury must exercise its fact-finding function.”). M&M wanted to have its expert testify
about federal mining law, and the hearing officer restricted Maley’s testimony to factual
issues.
82
See Barios, 26 P.3d at 1088; see also In re Air Disaster at Lockerbie
Scotland on Dec. 21, 1988, 37 F.3d 804, 826-27 (2d Cir. 1994), overruled on other
grounds by Brink’s Ltd. v. South African Airways, 93 F.3d 1022, 1029 (2d Cir. 1996);
United States v. Brodie, 858 F.2d 492, 496-97 (9th Cir. 1988), overruled on other
grounds by United States v. Morales, 108 F.3d 1031, 1037-38 (9th Cir. 1997); Charles
Reinhart Co. v. Winiemko, 513 N.W.2d 773, 778 (Mich. 1994); Buzz Stew, LLC v. City
of North Las Vegas, 341 P.3d 646, 651 (Nev. 2015); France v. South Equip. Co., 689
S.E.2d 1, 14 (W. Va. 2010).
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M&M finally complains that it did not receive the unprivileged contents of
DNR’s communications file before the hearing. But M&M expressly chose to proceed
with the hearing before the communications file was released, and has failed to
adequately demonstrate how the late release of documents prejudiced it.83
The administrative record clearly shows that DNR, and especially the
hearing officer, did an exemplary job in conducting this appeal. M&M received ample
due process, clearly evidenced by the thoughtful administrative decision, the voluminous
administrative record, and M&M’s ability to file supplemental briefing.
V. CONCLUSION
We AFFIRM the superior court’s decision affirming the Commissioner’s
decision denying M&M’s Plan of Operations. We also AFFIRM the superior court’s
conclusion that M&M received due process in the administrative proceedings.
83
M&M mainly argues that Flag Hill was the only source in the area to meet
the Alaska Railroad specifications and that the DNR knew this. But even were both of
these allegations to be true, it would not have impacted the case. The uniqueness of the
Flag Hill rock had to be demonstrated without regard to location. See United States v.
Henri, 104 IBLA 93, 98-99 (1988). Even had Flag Hill been the only usable rock, this
would not have given it a “distinct and special value.”
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