Court Opinion

ID: 9847149
Source: CourtListenerOpinion
Date Created: 2023-09-24 03:54:48.077298+00
Date Added: 2024-06-11T09:17:01.957060
License: Public Domain

RABINOWITZ, Justice,
with whom ERWIN and BURKE, Justices, and DIMOND, Justice Pro Tern, join.
While I agree with Justice Connor’s treatment of the laches question and the appellants’ contention based on AS 38.05.-345, I dissent from his analysis of appellants’ second claim on the merits. That claim was that the sale was unlawful because it was not preceded by a reasoned finding made by the Director of the Division of Lands that the sale would best serve the interests of the state. Resolution of this claim requires review of relevant constitutional measures as well as statutory language. The framers of our state constitution were united in the view that the lands and other natural resources of this abundant state are among its most prized assets. Although favoring productive use of these resources, the framers believed that development should proceed only when it benefited the people of the state and only in compliance with applicable constitutional and statutory processes. This philosophy they wrote into our constitution:
It is the policy of the State to encourage the settlement of its land and the development of its resources by making them available for maximum use consistent with the public interest.1
* ‡ * ⅜ ‡ ‡
Subject to the provisions of this section, the legislature may provide for the sale or grant of state lands, or interests therein, and establish sales procedures. All sales or grants shall contain such reservations to the State of all resources as may be required by Congress or the State and shall provide for access to these resources. Reservation of access shall not unnecessarily impair the owners’ use, prevent the control of trespass, or preclude compensation for damages.2
No disposals or leases of state lands or interests therein, shall be made without prior public notice and other safeguards of the public interest as may be prescribed by law.3
In fulfillment of this constitutional mandate, the legislature has enacted in the Alaska Land Act a number of procedural safeguards to insure wise utilization of our *31valuable lands.4 One of these is AS 38.-05.035 (a) (14), which provides:
The director shall . ******
(14) when he finds that the interests of the state will be best served, he may, with the consent of the commissioner, approve contracts for the sale, lease, or other disposal of available lands, resources, property or interest in them.

Appellants contend that prior to any disposition of state lands the legislature has imposed in AS 38.05.035(a) (14) a procedural prerequisite, namely, a reasoned evaluation of the wisdom of a proposed disposition of land and a determination that the disposition is in the best interests of the state. Although appellants concede that the Director is not required by this statute to hold public hearings, they insist that he is required to make a written finding or at least establish a record which demonstrates the basis for his decision that a particular sale of oil and gas leases best serves the interests of the state.
The appellees respond with the contention that the decisions and actions which culminated in the sale of the Kachemak Bay leases are not reviewable and were factually prompted by considerations of public policy. In their arguments before this court, the oil companies emphasize the broad discretion conferred upon the Director in determining the public interest, insisting that the very breadth of that discretion insulates his decisions from judicial review. More particularly, the appellees assert that “[tjhere is simply no statutory authority nor any judicially manageable substantive standards for judicial review of the purely executive policy decisions made and actions taken in this case.”
Appellees are unquestionably correct in their assertion that the Director enjoys broad discretion in deciding whether to approve a sale, lease or other disposal of state lands, but this misconceives the nature of appellants’ claim. The argument is not that the Director made a substantive error in determining whether or not Alaska’s interests would be best served by the Kachemak Bay sale, but that the Director never considered the question at all. It is a claim of procedural error. The issue of reviewability therefore is whether our courts can review the performance of administrative tasks by an executive agent to ensure compliance with specific procedural safeguards imposed by the legislature in accordance with Alaska’s constitutional mandates. Our prior decisions have established both the judicial power and responsibility to undertake such review.
Among the procedural safeguards applicable to the leasing of public lands are those found in AS 38.05.075 and the regulations enacted pursuant to AS 38.05.-020(b)(1), considered in Alyeska Ski Corp. v. Holdsworth, 426 P.2d 1006 (Alaska 1967). In that case we examined whether an unsuccessful bidder could obtain judicial review of an auction of leaseholds on state lands allegedly conducted in violation of *32these statutory and regulatory procedures.5 Holdsworth held that the management by the Director of an auction pursuant to AS 38.05.075, and the supervision of that sale by the Commissioner of Natural Resources, was subject to judicial review. Our rationale emphasized that paramount responsibility of the judiciary to guarantee compliance with the law:
We reach this conclusion in light of the text of section 10, article VIII of the Alaska constitution which prohibits leasing of state owned lands unless made pursuant to public notice and other limitations imposed by law. This article of our constitution reflects the framers’ recognition of the importance of our land resources and of the concomitant necessity for observance of legal safeguards in the disposal or leasing of state lands. Neither the minutes of our constitutional convention nor the legislature history of the Alaska Land Act demonstrates that it was intended to make unreviewable leasing decisions of the director and the commissioner

In light of the constitutional, statutory, and regulatory provisions alluded to, we -conclude that it was not intended that Alaska’s courts be divested of their constitutionally vested duty to insure compliance with the laws of Alaska.6
*33Subsequent decisions have reaffirmed this court’s commitment to that constitutional responsibility. In K & L Distributors, Inc. v. Murkowski, 486 P.2d 351 (Alaska 1971), we recognized limited judicial review of the decisions of the Commissioner of Economic Development in the face of a statute expressly ascribing finality to his actions. The rationale of Mur-kowski was that the constitutionally vested duty of this court required judicial review to ascertain whether the applicable rules of law and procedure were observed.7 The judicial review undertaken in Murkowski was a scrutiny of administrative compliance with procedural norms, not a de novo evaluation of the wisdom of the substantive executive-administrative decisions reached. Beyond fulfilling this court’s constitutional responsibility, judicial review which focuses upon compliance with administrative procedures comports with considerations of Alaska’s allocation of governmental powers among separate branches, and with notions of judicial competence. These functional considerations were noted in United States Smelting, Refining & Mining Co. v. Local Boundary Commission, 489 P.2d 140 (Alaska 1971), a case reviewing the procedures of the executive agency exercising annexation powers. We remarked:
[E]ven in light of purported administrative finality Murkowski permits judicial review of an administrative decision to ascertain whether the ‘applicable rules of law and procedure where observed.’ . . . Without doubt there are questions of public policy to be determined in annexation proceedings beyond the province of the court. Examples are the desirability of annexation, as expressed in published standards. Judicial techniques are not well adopted to resolving these questions. In that sense, these may be described as ‘political questions,’ beyond the compass of judicial review. But other annexation issues, such as whether statutory notice requirements were followed, are readily decided by traditional judicial techniques. Mur-kowski clearly permits this latter type of review.8
More recently, in State v. Aleut Corp., 541 P.2d 730 (Alaska 1975), a claim quite similar to the one at hand was advanced, namely, that during the course of a public land auction the Division of Lands had failed to comply with a procedural safeguard expressly required by the Alaska Land Act.9 In Aleut we expressly rejected a deferential standard of review, which would have sustained the administrators’ action if it appeared there had been a “reasonable basis” for their belief that they had complied with the procedural requirements of the Act. In articulating the appropriate standard of review, we held that this court would exercise its own independent judgment as to whether the administrative agency hkd complied with the legislature’s intent, observing that
. when determining questions of whether proper procedures were observed, whether the administrative agency has acted within the scope of its authority, or whether an agency’s interpretation of regulations is consistent with the statutes on which they are based, we are not faced with problems involving specialized knowledge or administrative expertise.10
This court is by no means alone in its view that judicial review must be provided to ensure that administrative actions com*34ply with the procedural prerequisites imposed by legislation. Federal courts have' stood ready to scrutinize agency conduct, particularly when, as here, a challenge to that conduct raises the claim that environmental concerns have been disregarded. Perhaps the leading federal case remains Citizens to Preserve Overton Park v. Volpe, 401 U.S. 402, 91 S.Ct. 814, 28 L.Ed. 2d 136 (1971), a challenge to a federal highway project which had been routed through public park lands. The Secretary of Transportation had authorized construction of the project, although applicable legislation permitted him to approve such a route only if no “feasible and prudent” alternate route existed and there had been “all possible planning to minimize harm” to the park.11 The challenging litigants, private citizens and conservation organizations, contended (among other things) that the Secretary had failed to exercise his independent judgment prior to authorizing the construction, contrary to Congressional intent. In response to a contention by the Secretary that the exercise of his discretionary powers was unreviewable, the United States Supreme;, Court held that limited judicial review was in fact available. Among the issues subject to review was the question whether the Secretary had properly understood the confines of his authority and had consciously undertaken the required evaluation prior to granting authorization.12
Congressional use of procedural safeguards as a check on administrative actions perháps reached its zenith in the National Environmental Policy Act of 1969 (NEPA), 42 U.S.C. § 4321 et seq. (1970). NEPA prescribes certain procedural measures to ensure that environmental values are respected. Among these are the Section 102 requirements that all federal agencies consider environmental amenities in their decision-making processes13 and file detailed environmental impact statements when undertaking “major Federal actions.” 14 Although the federal courts remain sharply divided whether they may review the substantive merits of the conclusions reached in an environmental impact statement,15 all agree that they may review compliance with the procedural obligations of the Act. In the words of one early decision to this effect,
*35. Section 102 of NEPA mandates a particular sort of careful and informed decisionmaking process and creates judicially enforceable duties. The reviewing courts probably cannot reverse a substantive decision on its merits, under Section 101, unless it be shown that the actual balance of costs and benefits that was struck was arbitrary or clearly gave insufficient weight to environmental values. But if the decision was reached procedurally without individualized consideration and balancing of environmental factors — conducted fully and in good faith — it is the responsibility of the courts to reverse. As one District Court has said of Section 102 requirements : ‘It is hard to imagine a clearer or stronger mandate to the Courts.’16
The Supreme Court has recently confirmed this view.17
Other federal legislation has used the device of procedural safeguards to check administrative discretion when environmental concerns are at stake. Little would be gained by a lengthy review of - the numerous cases which have enforced those procedural obligations through the mechanism of judicial review.18 Suffice it to say, courts rarely hesitate to review an administrator’s actions when it is claimed that he failed to comply with procedural prerequisites expressly imposed by statute. Even the ap-pellees’ arguments suggest this understanding. In the case at bar, appellants have alleged violation of three procedural duties imposed by the Alaska Land Act: the reasoned determination requirement of AS 38.05.035(a) (14), the notice requirement of AS 38.05.345, and the joint study and review requirement of AS 38.05.305. Although appellees challenge judicial review of the claim based on AS 38.05.035(a) (14), they incongruously accept reviewability of the latter two allegations.
 We therefore hold the appellants’ contention that the Director of the Division of Lands failed to determine that the Kachemak Bay sale would best serve the interests of the state, as required by AS 38.05.035(a) (14), prior to the sale of the leases in this case, is judicially reviewable.19 The legislative procedural directive of AS 38.05.035(a) (14) requires *36of the Director an independent, reasoned evaluation of a proposed sale. Although he is not expressly obligated to make a formal written finding, he must at a minimum establish a record which reflects the basis for his decision.20
Ordinarily this court would remand the question to the superior court for a determination whether the Director of the Division of Lands, F. J. Keenan, complied with the requirements of AS 38.05.-035(a)(14) prior to the sale of the Kache-mak Bay leaseholds. In this particular case, however, a remand as to that issue is unnecessary, because the record demonstrates that the Director made no reasoned evaluation prior to the sale. The record discloses that after nominations were received from the oil industry, Pedro Den-ton, Chief of the Minerals Section of the Division, sent to Charles Herbert, Commissioner of the Department of Natural Resources, a recommendation to include large parts of Kachemak Bay in the oil and gas lease sale. A few weeks later, on October 19, 1973, Commissioner Herbert approved the proposed sale. Notice of the pending sale of the Kachemak Bay tracts was immediately given to the oil industry. In succeeding weeks the staff of the Department of Fish and Game submitted recommendations to delete the Kachemak Bay tracts from the sale, but they were apparently disregarded.
There is nothing in the record to suggest that Director Keenan played an active role in the decision-making process leading to the sale of the leases. Counsel for the State explicitly conceded in the superiori court that at no time did the Director make the reasoned determination that the sale best served the interests of the state:
And certainly as all counsel will recall when the deposition of Mr. Keenan was taken, it was admitted that there was no finding on his part, and frankly I have not considered that an issue in this case.
THE COURT: That there was no finding ?
MR. REEVES: That’s correct, that there was — well at this point, you see, I think it was fair to those of us defending this case, to assume that they’re contending that there was supposed to be some finding, some mental process, and the director stated that as far as he was concerned, there was none for him.
The deposition of Director Keenan bears out this concession.
In their briefs before this court certain defendants reaffirm this concession by arguing that the decision to approve the sale was actually made by the Commissioner of Natural Resources, the immediate superior of Director Keenan, and that the Commissioner’s approval sufficed to satisfy the requirements of AS 38.05.035(a)(14). *37It is true that the Commissioner enjoys broad powers under AS 38.05.020, including the authority to “review any order or action of the director”21 and to “exercise the powers and do the acts necessary to carry out the provisions and objectives” of the Act.22 Although the responsibility under AS 38.05.035(a) (14) for determining that a proposed sale best serves the interests of the state in the first instance falls to the Director, the legislature apparently contemplated that the Commissioner could on occasion shoulder that responsibility.23 Logically, the legislature must have had in mind that when the Commissioner, in the.exercise of his AS 38.05.020 powers, assumed this responsibility, he should do so in a clear and explicit manner. Otherwise the delineation of functions between the two offices might grow so uncertain that, with respect to a particular sale, neither official would undertake the comprehensive evaluation required by AS 38.05.035(a) (14).
Here the record suggests that Commissioner Herbert played an active role in the planning of this sale. We do not find evidence, however, that the Commissioner expressly relieved Director Keenan of his obligation to make a “best interest” evaluation. Thus, a majority of the Justices of this court conclude that this is a matter which should be explored further in the superior court. This court therefore remands this case with directions that the superior court determine whether the Commissioner lawfully assumed the obligation imposed by AS 38.05.035(a) (14) to evaluate the sale, whether his October 19, 1973, approval of the sale reflected a determination that the sale best served the interests of the state, and whether he set forth findings or a record which demonstrated the basis for that determination.

. Art. VIII, sec. 1.

. Art. VIII, sec. 9.

.Art. VIII, sec. 10.

. Among these safeguards are: AS 38.05.055, which requires that sales of land be conducted by public auction and sets forth bidding and receipt procedures for such auctions ; AS 38.05.065, which establishes the terms which may be set for the sale of land following a successful bid; AS 38.05.075, which prescribes procedures for the public auction of leaseholds of public land other than for the extraction of natural resources; AS 38.05.080, which authorizes the Commissioner to override the Director and reject all leasehold bids “when the best interest of the state justifies [the] action AS 38.05.082, which establishes procedures by which the Director may lease tide and submerged lands for fisheries development; AS 38.05.120, providing for procedures for the disposal of timber and other materials on state lands; AS 38.05.135, which directs that leaseholds of mineral deposits may be sold on a competitive bid basis “when determined by the commissioner to be in the best interests of the state;” AS 38.05.145, establishing leasing procedures for leaseholds of mineral deposits; AS 38.05.305, requiring joint study and review prior to disposition of most state lands; and AS 38.05.310, which requires notice and appraisal.f

. AS 38.05.075 provides in full:
The leasing shall be made at public auction to the highest qualified bidder as determined by the director. An aggrieved bidder may appeal to the commissioner within five days for a review of the director’s determination. When a valid existing federal grazing lease is cancelled to allow state selection of the area under lease, the lessee of the lands has the preference right to lease the lands without competitive bidding for a term equal to that originally granted in the cancelled federal lease and upon terms as favorable to the lessee as those contained in the cancelled federal lease. The leasing shall be conducted by the director, or his representative, and the successful bidder shall deposit the first year’s rental, or that portion of it which the commissioner requires, in accordance with his bid. The director or his representative shall immediately issue a receipt containing a description of the land or interest leased, the price bid, and terms of the lease. The receipt shall be acknowledged in writing by the bidder. A lease, on a form approved by the attorney general, shall be signed by the lessee and, upon approval by the commissioner, shall be signed by the director.
Among the regulations involved, 11 AAC § 203.02 (1962) provided in part:
An applicant or bidder for a lease is qualified if the applicant or bidder:

(d) is acting as an agent for another and has qualified by filing with the Director, prior to the time set for the auction, a proper power of attorney or a letter of authorization creating such agency. The agent shall represent only one principal, to the exclusion of himself.
11 AAO § 302.15 (1963) provided in part:
The apparent high bidder . . . shall concurrently deposit with the Division, such portion of the minimum annual rental as the Director has indicated, plus a deposit to cover the costs of advertising, appraisal and survey in cash and/or certified check and/or cashier’s check and/or money order.
The requirement of “cash and/or certified check and/or cashier’s check and/or money order” was deleted when § 302.15 was amended in 1965.

. 426 P.2d at 1011-12 (footnotes omitted). Any attempt to distinguish Holdsworth on the grounds that that case involved an unsuccessful participant in the bidding process must be unavailing. We expressly declined to restrict the availability of judicial review that narrowly:
In reaching this conclusion, we again emphasize that here we are concerned with an unequivocal constitutional mandate requiring that all leases of state lands are to be entered into in accordance with safeguards imposed by law. This constitutional mandate, together with AS 38.05.075, furnishes a significant basis for distinguishing [a contrary] line of cases. We construe ,AS 38.05.075 as a manifestation of the legislature’s intent to authorize an aggrieved bidder to maintain an action seeking judicial review so that the public interest, in adherence to law in the disposal and leasing of state owned lands, may be vindicated. We do not intend, nor do we now hold, that an aggrieved bidder is the *33sole or exclusive party through whom these important public interests are to be secured. .
Id. at 1015 (footnote omitted).

. 486 P.2d at 357; accord United States Smelting, Refining & Mining Co. v. Local Boundary Comm’n, 489 P.2d 140, 143 (Alaska 1971).

. 489 P.2d at 143.

. It was there claimed that the state failed to comply with AS 38.05.305, which requires joint study and review of proposed land sales by the director and local authorized planning agencies prior to sale. Appellants here have raised a similar claim.

. 541 P.2d at 736.

. The legislation involved was § 4 (f) of the Department of Transportation Act of 1966, 49 U.S.C. § 1653(f) (1970), and § 18(a) of the Federal-Aid Highway Act of 1968, 23 U.S.C. § 138 (1970).

. In the words of the Supreme Court:
The court is first required to decide whether the Secretary acted within the the scope of his authority. . . . This determination naturally begins with a delineation of the scope of the Secretary’s authority and discretion. L. Jaffe, Judicial Control of Administrative Action 359 (1965). As has been shown, Congress has specified only a small range of choices that the Secretary can make. Also involved in this initial inquiry is a determination of whether on the facts the Secretary’s decision can reasonably be said to be within that range. The reviewing court must consider whether the Secretary properly construed his authority to approve the use of parkland as limited to situations where there are no feasible alternative routes or where feasible alternative routes involve uniquely difficult problems. And the reviewing court must be able to find that the Secretary could have reasonably believed that in this case there are no feasible alternatives or that alternatives do involve unique problems.
401 U.S. at 415-16, 91 S.Ct. at 823, 28 L.Ed. 2d at 153. Assuming the Secretary had in fact made the requisite determinations, the Court also approved limited review of the substantive merits of those decisions, to ensure that the choice made was not “arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law.” Id. The Overton Pork opinion relies to some extent upon the terms of the federal Administrative Procedure Act, particularly 5 U.S.C. § 706 (1970). Although the comparable state act is not applicable to the case at bar, we do not view that difference as controlling.

. 42 U.S.C. § 4332(B) (1970).

. 42 U.S.C. § 4332(C) (1970).

. National Wildlife Federation v. Morton, 393 F.Supp. 1286, 1296 n. 12 (D.D.C.1975).

. Calvert Cliffs’ Coordinating Comm. v. United States Atomic Energy Comm’n, 146 U.S.App.D.C. 33, 449 F.2d 1109, 1115 (1971), quoting Texas Comm. on Natural Resources v. United States, 1 Envir.Repts.Cases 1303, 1304 (W.D.Tex.1970). Accord Sierra Club v. Stamm, 507 F.2d 788 (10th Cir.1974); National Helium Corp. v. Morton, 486 F.2d 995 (10th Cir. 1973) ; Environmental Defense Fund v. Corps of Engineers, 470 F.2d 289 (8th Cir.1972); Committee for Nuclear Responsibility, Inc. v. Seaborg, 149 U.S.App. D.C. 380, 463 F.2d 783 (1971).

. Aberdeen & Rockfish R. R. v. SCRAP, 422 U.S. 289, 96 S.Ct. 2336, 45 L.Ed.2d 191, 215 (1975).

. See e. g., Environmental Defense Fund v. Hardin, 138 U.S.App.D.C. 391, 428 F.2d 1093 (1970) (involving provisions of the Federal Insecticide, Fungicide, and Rodenticide Act, 7 U.S.C. § 135 et seq. (1970)); Arlington Coalition on Transportation v. Volpe, 458 F.2d 1323 (4th Cir. 1972) (involving the Federal-Aid Highway Act of 1968, 23 U.S.C. § 101 et seq. (1970), and other legislation) ; Scenic Hudson Preservation Conference v. FPC, 354 F.2d 608 (2d Cir. 1965), cert. denied, 384 U.S. 941, 86 S.Ct. 1462, 16 L.Ed.2d 540 (1966) (Federal Power Act, 16 U.S.C. § 803(a) (1970).

. Justice Connor’s conclusion to the contrary relies primarily upon a passage from Professor Davis’ Administrative Law Treatise which discusses the “presumption of regularity” afforded administrative action in Pacific States Box & Basket Co. v. White, 296 U.S. 176, 56 S.Ct. 159, 80 L.Ed. 138 (1935), and other cases. We prefer the language of a more recent Supreme Court decision, Citizens to Preserve Overton Park v. Volpe, 401 U.S. 402, 415, 91 S.Ct. 814, 28 L.Ed.2d 136, 153 (1971) (emphasis added) :
Certainly, the Secretary’s decision is entitled to a presumption of regularity. See, e. g., Pacific States Box & Basket Co. v. White, 296 U.S. 176, 185, 56 S.Ct. 159, 80 L.Ed. 138, 146 (1935). ... But that presumption is not to shield his action from a thorough, probing, in-depth review.
In addition, the discussion of the record which follows demonstrates persuasive reasons for disregarding the presumption in this particular case.

. The purpose of this record is not to enable the court to undertake an elaborate reconsideration of the substantive merits of the Director’s decision at some later date. Under the constitutional principles discussed previously, this court has neither the authority nor competence to decide whether the public interest is “best served” by a proposed disposition of land. Nonetheless, a limited review of the Director’s decision would be available simply to ensure that it was not arbitrary, capricious, or prompted by corruption. A record is necessary to facilitate this check, as illustrated by an earlier decision involving review of another discretionary executive decision. Mohil Oil Corp. v. Local Boundary Comm’n, 518 P.2d 92, 98-99 (Alaska 1974), was a challenge to a decision of the Commission to authorize incorporation of the North Slope Borough. We said (emphasis added):
[The] Commission has been given a broad power to decide in the unique circumstances presented by each petition whether borough government is appropriate. Necessarily, this is an exercise of delegated legislative authority to reach basic policy decisions. Accordingly, acceptance of the incorporation petition should be affirmed if we perceive in the record a reasonable basis of support for the Commission’s reading of the standards and its evaluation of the evidences
See also Jager v. State, 537 P.2d 1100 (Alaska 1975); Swindel v. Kelly, 499 P.2d 291 (Alaska 1972).

. AS 38.05.020(b)(3).

. AS 38.05.020(b)(4).

. The very terms of AS 38.05.035(a) (14) also evidence the legislature’s intent that the Commissioner remain involved in the Director’s determination:
(a) the director shall

(14) when he finds that the interests of the state will be best served, he may, loith the consent of the commissioner, approve contracts for the sale, lease, or other disposal of available lands. . . . (emphasis added)