Opinion ID: 822846
Heading Depth: 2
Heading Rank: 1

Heading: The State’s Material Site Right-Of-Way

Text: On June 6, 1960, the Department of Public Works submitted an application to BLM for a material site easement at milepost 118.5 of the Denali Highway near Cantwell. The State intended to use the 14-acre site to obtain gravel for highway construction. On September 26, 1961, BLM approved the application and granted the State a right-of-way. The grant, F-026069, listed the permitted use for the right-of-way as “[r]oad building material site,” listed the expiration date as “[n]one,” and listed the rental amount as “[n]one.” The grant’s map was labeled “material site easement.” The BLM decision granting the right-of-way indicated it was issued pursuant to “Section 17 -3- 6745 of the Federal Highway Act of November 9, 1921 (42 Stat. 216; 23 U.S.C. 18)”3 and subject to specified federal regulations. B. BLM Waives Administration Of The Material Site. ANCSA was enacted on December 18, 1971.4 Ahtna is one of the 13 Alaska Native Regional Corporations organized under the terms of ANCSA. Pursuant to ANCSA, on October 23, 1981, the United States conveyed the surface and subsurface estates encompassing certain of the State’s material site rights-of-way to Ahtna through Interim Conveyance 443 (I.C. 443). This conveyance stated that it was “subject to” the “[r]ights-of-way for Federal Aid material sites” and specifically listed F-026069 as one of these rights-of-way. There are at least 61 state material sites on Ahtna’s land including F- 026069. 3 42 Stat. 212 (1921) provides that the Act may be cited as the “Federal Highway Act.” We have previously referred to the Act as the “Federal-Aid Highway Act” in Tetlin Native Corporation v. State, 759 P.2d 528 (Alaska 1988), where we addressed a similar material site easement granted under the Act, but under a different federal regulation than that which is at issue in this case, as we discuss later in this opinion. We explained in Tetlin that “[s]hortly after statehood the State of Alaska . . . proceeded to obtain interests to material site easements or rights-of-way across land held by the United States government. The material site easements are a source of sand and gravel for highway construction and maintenance.” Id. at 530. We also noted that “[t]he Federal-Aid Highway Act of 1921 was repealed by the Highway Act of August 27, 1958, Pub. L. No. 85-767, 72 Stat. 919. However § 17 of the 1921 Act was replaced with a near verbatim provision in the 1958 Act, 23 U.S.C. § 317 (1982).” Id. at 530 n. 2. The parties and the superior court in this case also used the term “Federal-Aid Highway Act,” and for purposes of consistency, we use that term in this opinion as well. 4 Pub. L. No. 92-203, 85 Stat. 688 (1971) (codified at 43 U.S.C. §§ 1601-1629h (2006)). -4- 6745 Section 14(g) of ANCSA addresses the preservation of existing rights on lands conveyed to an Alaska Native Corporation and waiver of federal government administration. It states in part: All conveyances made pursuant to this chapter shall be subject to valid existing rights. Where, prior to patent of any land or minerals under this chapter, a[n] easement . . . has been issued for the surface or minerals covered under such patent, the patent shall contain provisions making it subject to the . . . easement, and the right of the . . . grantee to the complete enjoyment of all rights, privileges, and benefits thereby granted to him. Upon issuance of the patent, the patentee shall succeed and become entitled to any and all interests of the State or the United States as . . . grantor, in any such . . . easements covering the estate patented . . . . The administration of such . . . easement shall continue to be by the State or the United States, unless the agency responsible for administration waives administration.[5] When implementing Section 14(g) of ANCSA, the United States Department of the Interior promulgated a regulation making waiver of administration mandatory when the material site was entirely within the conveyance: Leases, contracts, permits, rights-of-way, or easements granted prior to the issuance of any conveyance under this authority shall continue to be administered by the State of Alaska or by the United States after the conveyance has been issued, unless the responsible agency waives administration. Where the responsible agency is an agency of the Department of the Interior, administration shall be waived when the conveyance covers all the land embraced within a lease, contract, permit, right-of-way, or easement, unless there is a finding by the Secretary that the interest of the United States 5 Pub. L. No. 92-203, § 14(g), 85 Stat. at 704 (codified at 43 U.S.C. § 1613(g)). -5- 6745 requires continuation of the administration by the United States.[6] BLM waived its administration of all of the rights-of-way contained in I.C. 443, including material site F-026069, on September 6, 1984. The waiver reiterated that I.C. 443 was “subject to” rights-of-way that had been granted to the State of Alaska. The waiver did not provide an expiration date, instead describing the rights-of-way as “[p]erpetual.” The waiver also stated: Pursuant to law, the grantee is entitled to all rights, privileges, and benefits granted by the terms of the grants during the term of the grants until they expire, are relinquished, or are modified by mutual consent of Ahtna, Incorporated and the State of Alaska, Department of Transportation and Public Facilities. Ahtna, Incorporated is entitled to any and all interests previously held by the United States as grantor in any such grants within the conveyance boundaries. There are no rental, or other revenues associated with these rights-of-ways. The State appealed BLM’s waiver decision to the Interior Board of Land Appeals (IBLA), arguing that BLM’s waiver of its administration of these rights-of-way did not transfer administration of the rights-of-way to the Native Corporation. However, in State of Alaska I, the IBLA panel majority held that even though the words “transfer” or “assign” do not appear in Section 14(g) of ANCSA or the implementing regulations, the “effect of such a waiver is to accomplish a transfer of [administration of outstanding rights-of-way] to the Native corporation to which the land has been conveyed.”7 The IBLA stated, “If [the United States] elects to waive its right of administration, that 6 43 C.F.R. § 2650.4-3 (1973). 7 State of Alaska, 86 IBLA 268, 271 (May 10, 1985) (State of Alaska I). -6- 6745 function must naturally flow to, and be reposed in the owner of the land. There can be no other logical consequence.”8 The IBLA further explained: [S]uch waiver and resultant transfer have not in any case impaired or diminished the State’s “complete enjoyment” of its legal rights under the lease or right-of-way held by it. It still enjoys the same right to use the same land in the same manner under the same terms and conditions as before.[9] Administrative Law Judge Franklin D. Arness issued a vigorous dissent to this opinion. Judge Arness argued there was “no authority” for the majority’s holding that the waiver of administration by BLM “automatically results in a transfer of administration of an affected lease or right-of-way to the Native corporation which has been granted the servient estate.”10 Judge Arness asserted that because the rights-of-way at issue were created pursuant to the Federal-Aid Highway Act, that statute’s framework for administering the rights-of-way applied.11 Under the Act, the Secretary of Transportation determined what lands may be appropriated as rights-of-way and material sites, and filed a map identifying those lands with “the Secretary of the Department supervising the administration of such lands or interests in lands” (in this case the Department of the Interior).12 The administering Secretary in turn had to affirmatively 8 Id. at 272. 9 Id. 10 Id. at 275 (Arness, ALJ, dissenting). 11 Id. at 276 (discussing 23 U.S.C. § 317 (1982)). 12 23 U.S.C. § 317 (1982). -7- 6745 reject the map, or else the Secretary of Transportation could transfer that land to the State highway department.13 Further, 23 U.S.C. § 317(c) states: If at any time the need for any such lands or materials for such purposes shall no longer exist, notice of the fact shall be given by the State highway department to the Secretary [of Transportation] and such lands or materials shall immediately revert to the control of the Secretary of the Department from which they had been appropriated [here, the Department of the Interior]. Thus, Judge Arness concluded that the Secretary of Transportation has “primary control” over the rights-of-way until the State notifies the Secretary that it intends to terminate the 13 23 U.S.C. § 317(a) and (b) (1982) stated: (a) If the Secretary [of Transportation] determines that any part of the lands or interests in lands owned by the United States is reasonably necessary for the right-of-way of any highway, or as a source of materials for the construction or maintenance of any such highway adjacent to such lands or interests in lands, the Secretary shall file with the Secretary of the Department supervising the administration of such lands or interests in lands a map showing the portion of such lands or interests in lands which it is desired to appropriate. (b) If within a period of four months after such filing, the Secretary of such Department shall not have certified to the Secretary that the proposed appropriation of such land or material is contrary to the public interest or inconsistent with the purposes for which such land or materials have been reserved, or shall have agreed to the appropriation and transfer under conditions which he deems necessary for the adequate protection and utilization of the reserve, then such land and materials may be appropriated and transferred to the State highway department, or its nominee, for such purposes and subject to the conditions so specified. -8- 6745 grant.14 Only then, Judge Arness reasoned, would the Secretary of the Interior have the authority to exercise his discretion concerning the continued existence of the grant.15 The State did not appeal the IBLA decision. In 1987 the IBLA issued another opinion, State of Alaska II, holding that waiver of administration of the rights-of-ways “shift[s] the forum for resolution of the propriety of action taken in the administration of the right-of-way from Federal to State court and bypass[es] the intermediate step of administrative adjudication by the Department [of Interior].”16 The IBLA also determined that the Native Corporation’s role as grantor of the rights-of-way “includ[es] the right to cancel” the grant.17 The State did not appeal this IBLA decision, either. C. Ahnta Attempts To Cancel The State’s Material Site Grant. In 2007 Ahtna and the State began to dispute their respective rights regarding the material sites on Ahtna’s land. On March 30, 2007, Ahtna proposed that the State relinquish any claim to the material sites to clear title for Ahtna. Ahtna also asserted that it expected to receive compensation for past removal of material from the material sites and directed the State to cease and desist entering Ahtna’s lands without the corporation’s written consent. Ahtna wrote another cease-and-desist letter but stated that it would sell material to the State at market rate. The State responded that the public should not be required to pay for a right it already held and which existed before Ahtna’s title interest was created. 14 State of Alaska I, 86 IBLA at 276 (Arness, ALJ, dissenting). 15 Id. 16 State of Alaska, 97 IBLA 229, 232 (May 11, 1987) (State of Alaska II). 17 Id. -9- 6745 The State hired a third-party contractor to crush gravel from material site F-026069 in early 2008, but Ahtna sought to prevent this work. On April 25, 2008, Ahtna sent an “official notice of cancellation” to the State stating that all material rightof-way grants including F-026069 were “null and void” having “expired and/or been abandoned.” The State responded that Ahtna did not have the authority to terminate the State’s rights and the State did not recognize the termination. Both parties agree that the State had not used F-026069 for gravel extraction for 20 years, from 1988 to 2008. D. Procedural Background On April 24, 2008, the State filed a complaint in the superior court against Ahtna to quiet title and for interference with contract. The State requested that the superior court quiet title to F-026069 in favor of the State and enter an injunction directing Ahtna to refrain from interfering with the State’s use of the material site. Ahtna filed a counterclaim seeking a judgment declaring the material site right-of-way null and void and quieting title to the subsurface estate in favor of Ahtna. The parties filed cross-motions for summary judgment; both parties agreed there were no genuine issues of material fact in the case. Superior Court Judge Michael A. MacDonald granted summary judgment to the State concluding: (1) “the State continues to hold a valid interest in Material Source Right-of-Way Grant F-026069 . . . under the Federal-Aid Highway Act;” (2) “Ahtna does not have administrative authority over the grant;” (3) if the State intends to relinquish its interest in F-026069, “the State must affirmatively abandon [its] interest in the grant and therefore Ahtna cannot unilaterally revoke the State’s interest;” and (4) “the grant cannot be deemed abandoned so long as the State operates and maintains the Denali Highway.” In reaching its conclusion that Ahtna does not have administrative authority over the grant, the superior court agreed with Administrative Law Judge Arness’s dissent in the IBLA case State of Alaska I that “[t]he BLM waiver amounts to only a giving up of the -10- 6745 administrative authority” but “does not constitute a transfer of that authority to Ahtna.” Ahtna appeals the superior court’s summary judgment rulings.