Opinion ID: 2829639
Heading Depth: 1
Heading Rank: 3

Heading: Benchoff’s Appeal To The Superior Court

Text: In late June 2013 Benchoff and Pacifica Marine, Inc., a company to which Benchoff had assigned some of his leasing rights,3 appealed the Commissioner’s Decision on Remand to the superior court. Pacifica Marine alleged that the Commissioner’s decision lacked substantial support in the record, contained errors of law, and included application of law to facts that was either unsupported by the evidence or without a reasonable basis in the law. Pacifica Marine’s reply brief requested a trial de novo under Alaska Rule of Appellate Procedure 609(b). Solomon Gold cross-appealed “for protective purposes,” but largely operated as an appellee. The State also filed a brief as an appellee. In January 2014 Superior Court Judge Jack Smith issued an order largely deciding Pacifica Marine’s points on appeal. The superior court determined that there was substantial evidence to support the Commissioner’s finding that the instructions were clear. It acknowledged that there was “conflicting evidence regarding the clarity of the instructions,” but it determined that this did not change the substantial evidence finding because it was not the court’s job to “reweigh the evidence or choose between competing inferences, but only to determine whether such evidence exists.” The superior court also concluded that the Commissioner’s interpretation of the Department’s regulations was largely reasonable and not arbitrary. The superior court determined that the Commissioner’s interpretation as to excusable inadvertence had 3 We hereafter refer to these parties as Pacifica Marine, collectively. -11- 7035 a reasonable basis. But the court concluded that Alaska caselaw had established that “a variance is only material ‘if it gives the bidder a substantial advantage over other bidders and thereby restricts or stifles competition.’ ” It rejected as “semantic” the State and Solomon Gold’s arguments that this definition of materiality was limited to responsiveness in the procurement context, while this case concerned completeness in the mineral lease context. The superior court concluded that the definition of “materiality” was not the crux of the case because the fact that the Commissioner was empowered to accept noncomplying bids if he found the omission immaterial or due to excusable inadvertence did not mean he was required to. Nothing in the regulations precluded “the Commissioner’s stated policy . . . to reject bids where bidders wholly fail to submit an SOQ form.” The one point that troubled the superior court was the Department’s acceptance of Kerr’s bid for Tract 3 despite his noncompliance. The court found it “unclear from the record why the agency accepted Kerr’s bid, as accepting a bid from a bidder who failed to submit an SOQ form appears to be contrary to the Commissioner’s stated policy.” (Emphasis in original.) It thus “require[d] more information regarding Kerr’s bid, his SOQ form, and the process by which his bid was accepted,” and invited the Department to file supplemental information, with Pacifica Marine entitled to respond. The Department filed an affidavit from Bill Cole, one of the Department employees who had been present at the Nome auction and the employee who sent Kerr the lease for Tract 3. Cole stated that although in September 2011 he had known that Kerr had not submitted a statement of qualifications, he “had forgotten this information by January 2012,” when he offered Kerr the lease. Cole concluded that the “notice of -12- 7035 successful bid to Mr. Kerr for Lease Tract 3 was mistakenly issued. I had no intention to offer Lease Tract 3 to a bidder for whom DNR did not have an SOQ form on file.” Pacifica Marine filed a brief arguing that the Commissioner’s decision had been arbitrary because it failed to consider the disparate treatment of Tracts 1 and 3. It attached two affidavits. One was from Krause, the other Department employee present at the Nome auction. Krause testified that when he signed the lease to Tract 3 on behalf of the Department he “was aware that Mr. Kerr had not submitted an initial SOQ prior to or at the auction,” but “believed however that he [Kerr] had remedied this SOQ filing shortly after receiving Mr. Cole’s letter. I intentionally would not have signed this lease if I did not think my office had a valid SOQ document at this point in time for Mr. Kerr.” The second affidavit was from Kerr. Kerr recounted a phone call with Krause, “[s]ometime prior to receiving and signing the lease,” during which “Mr. Krause explained that DNR’s not having received my SOQ at the auction would not prevent the award as it would Mike Benchoff and Scott Meisterheim because I was a second-place bidder not a first-place bidder.” The State filed a brief arguing that Tract 3 was not before the Commissioner and should play no role, and that the superior court should not consider the affidavits Pacifica Marine had included because they were outside the administrative record. The State further argued that Pacifica Marine had not made out a claim of selective enforcement because it had not shown a deliberate or intentional plan to discriminate. Solomon Gold also filed a brief making similar arguments and noting that when Kerr was offered the lease the Department’s latest statement had been the Director’s Determination, which was “extremely forgiving towards incomplete bids.” In June 2014 the superior court issued another order affirming the Commissioner’s decision. The court stated that it would only consider the supplemental affidavits “to the extent that they help inform the Court as to what the Commissioner -13- 7035 considered (or did not consider) when making his decision.” Because the supplemental record indicated that the grant of the lease to Kerr was a mistake rather than a exemption from the “strict policy” for second-place bidders, the Commissioner’s decision not to accept Meisterheim’s and Benchoff’s noncomplying bids was not arbitrary and capricious, unreasonable, or an abuse of discretion. Finally, the superior court ruled that Pacifica Marine had waived its selective enforcement and equal protection claims by only raising them in a footnote in the opening brief. The court went on to conclude that “even if not waived, appellants have not asserted a prima facie claim of an equal protection violation or selective enforcement,” because such claims require evidence of a deliberate and intentional plan. Pacifica Marine appeals.