JAMES P. MCGLINCHY d/b/a M&M CONSTRUCTORS, Appellant,
STATE OF ALASKA, 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, No. 4FA-11-02830 CI Michael A. MacDonald, Judge.
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.
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,  "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." But in order to be "free and open to exploration and purchase, " the mineral or mineral deposit in question must be subject to "location."  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." 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, " or (2) deposits with a "distinct and special value." 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, 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 "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 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 ...