State, Dept. of Natural Resources v. Universal Ed. Soc., Inc.
| Decision Date | 25 August 1978 |
| Docket Number | No. 3324,3324 |
| Parties | STATE of Alaska, DEPARTMENT OF NATURAL RESOURCES, Appellant, v. UNIVERSAL EDUCATION SOCIETY, INC., Appellee. |
| Court | Alaska Supreme Court |
Jeffrey B. Lowenfels, Asst. Atty. Gen., Anchorage, Avrum M. Gross, Atty. Gen., Juneau, for appellant.
Gordon Schadt, Birch, Horton, Bittner & Monroe, Anchorage, for appellee.
Before BOOCHEVER, C. J., and RABINOWITZ, CONNOR, BURKE and MATTHEWS, JJ.
This case arises from an appeal to the superior court from a decision by the Commissioner of Natural Resources ("Commission" hereinafter) refusing to convert an offshore prospecting permit to a mining lease. The court found that regulations 1 employed by the Division of Lands ("Division" hereinafter) in determining whether to grant an offshore mining lease to Universal Education Society, Inc. ("Universal" hereinafter) did not comport with the requirements of fundamental due process because they failed to state with sufficient particularity the standards to be met in order to satisfy the Director of the Division ("Director" hereinafter) that a workable mineral deposit is present within the land. The court also found that a letter sent to Universal may have cured any due process defects by putting Universal on notice of the requirements. The court held that if an identical letter had been sent to every offshore mining lease applicant the letter would cure the due process defects. However if the Division had sent the letter only to some applicants, the court ordered that Universal be granted a lease immediately.
Because of the number of appeal proceedings involved, the following chronology will be useful in understanding the case. On October 2, 1974, Universal's attorney requested information regarding the conversion of an offshore prospecting permit to a mining lease pursuant to AS 38.05.250(b). 2 The Division responded by letter on October 8, 1974, informing Universal that the Director must be shown (a) that a workable, locatable mineral deposit has been discovered and (b) the limits of the deposit. On November 6, 1974, Universal formally notified the Division of its desire to convert its prospecting permits to 55 year lease permits. On November 8, 1974, the Division sent Universal a notice by certified mail entitled "Showing of Workable Deposits Required." The notice essentially set forth the same requirements discussed in the October 8, 1974, letter. 3 In response to the notice, Universal on December 6, 1974, submitted a letter and exhibits stating that the information was "in partial fulfillment of the requirements" for converting the prospecting permits to mining leases. The Division replied on December 10, 1974, by a second certified notice reiterating the requirement that the application be substantiated by specific geologic and engineering data as to "the type, grade, quantity, extent, and character of the mineral deposits" as well as information about the location, depth, volume, value and description of each sample submitted. In response to the second notice, Universal submitted a brief letter with some general information. 4
On February 26, 1975, the Division issued its decision denying the conversion. In its decision the Division cited Universal's failure to provide it with the specific information which had been requested by three different communiques as the reason for the denial.
On March 14, 1975, Universal applied to the Division for reconsideration of its application and requested oral argument with the reconsideration request. On April 29 1975, Universal's President, Paul D. Montague, and its attorney, Barry Donnellan, presented their oral arguments to the Director of the Division, Michael C. T. Smith. On May 5, 1975, Mr. Smith's decision was issued affirming the February 26, 1975, denial.
On May 22, 1975, pursuant to 11 AAC 88.155(a), 5 Universal submitted an application to the Commissioner of Natural Resources for reconsideration of the May 5, 1975, decision by the Director of the Division. On July 11, 1975, W. T. Elsing, as attorney for Universal, submitted a brief in support of Universal's appeal that contained additional information on the proposed mining site. 6 The record on appeal reveals that prior to forwarding Universal's application to the Commissioner, the Division did in fact review the additional data presented in Mr. Elsing's brief and found that it failed to supply the application with the specificity required under 11 AAC 86.530.
On September 26, 1975, the Commissioner rendered his decision affirming the May 5, 1975, denial by the Director. Universal's petition for reconsideration of the Commissioner's decision was denied and on December 11, 1975, Universal petitioned for judicial review.
It is clear that neither AS 38.05.250(b) nor 11 AAC 86.530 compels a hearing on the issue of the conversion of an offshore prospecting permit to a mining lease. In its brief below, Universal contended that due process considerations required that a "full evidentiary hearing" be conducted. The Division in its brief responded to Universal's right to hearing argument and both sides argued this point at the hearing before Judge Kalamarides. However, during that hearing Judge Kalamarides injected a new due process consideration into the case. He expressed his doubts about the regulations in question, 7 suggesting that they did not "meet with fundamental due process in that they do not set out with sufficient particularity the standards that must be met to prove to the satisfaction of the Director that a workable mineral deposit is present within the land."
In Nichols v. Eckert, 504 P.2d 1359 (Alaska 1973), we said that for the due process clause to apply "there must be state action and the deprivation of an individual interest of sufficient importance to warrant constitutional protection." Id. at 1362 (footnote omitted). We are not persuaded that Universal has such an interest. In reaching this conclusion, we look first to the due process clauses of the Alaska Constitution and the United States Constitution. 8
"Deprive" is the key word for purposes of this case. To be deprived of something, one must first possess it. Universal merely applied for a mining lease. It had no property right of which it was deprived by the Director's denial of the application. This case is easily distinguishable from McCarrey v. Commissioner of Natural Resources, 526 P.2d 1353 (Alaska 1974), in which the termination of a grazing lease was at issue. In that case we held that terminating state grazing leases without affording the lessee notice and hearing would undermine the explicit due process guarantee provided by Article I, section 7 of the Alaska Constitution. As a lessee, the appellant in McCarrey possessed a property interest in the land. Universal has no such interest.
Nor does Universal's interest approximate the interest in Herscher v. State, Dept. of Commerce, 568 P.2d 996 (Alaska 1977), where we found that the proprietary interest in a hunting guide license is of sufficient importance to warrant due process protection. The license in Herscher already had been granted so that its revocation constituted a deprivation of the individual's property right in the license. 9
Finally, we find no merit in Universal's argument that 11 AAC 86.530 is void for vagueness and therefore violative of due process requirements. Universal has failed to direct us to any case on point and instead has presented us with various cases in which criminal statutes were held to be void for vagueness. 11 AAC 86.530 lacks the punitive character of the statutes involved in cases cited by appellee. Those cases, therefore, are not persuasive.
This is not to say that Universal is not entitled to a full and fair opportunity to present its case to the Director and the Commissioner. This requirement is implicit in the provision of AS 38.05.250(b) which provides that the holder of a prospecting permit shall be granted a noncompetitive lease "for so much of the land subject to the permit as is shown to the satisfaction of the director to contain workable mineral deposits." To read this statute as requiring anything less than a full and fair opportunity for the permit holder to present his case would be unreasonable. The legislature could not have intended that the Director make his decisions in reliance on some arbitrary amount of information. The responsibility for providing the data to the Director is on the permit holder. Only with a full and fair opportunity to present his case can the permit holder receive fair consideration of his application. The benefits of a full presentation by the permit holder inure to the State as well by providing comprehensive data for the decisions made by the Director.
As we noted at the outset, there is no express statutory provision for the "full evidentiary hearing" which Universal contends it should have received. Similarly, as discussed previously, there is no deprivation such that a hearing is required by either the state or federal constitutions. In AS 38.05.250(b) the legislature directed that an offshore lease be granted to a prospecting permit holder who shows "to the satisfaction of the director" that the land subject to the permit contains "workable mineral deposits." There is no indication that the legislature intended a hearing on the question and under the circumstances a hearing would be inappropriate because there are no issues of fact. As Professor Davis has explained the distinction,
Of great consequence is the rather elementary proposition that the method of trial is designed for resolving issues of fact, and That the method of argument, not the method of trial, is normally the appropriate oral process for resolving nonfactual issues of law and policy and discretion. . . . Curiously enough, this simple proposition is often misunderstood by both agencies and courts.
The method of trial is never required except when facts...
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