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You can search the entire site. or go to the recent opinions, or the chronological or subject indices. Chalovich v. State, Dept. of Natural Resources (12/30/2004) sp-5857

Chalovich v. State, Dept. of Natural Resources (12/30/2004) sp-5857

     Notice:   This opinion is subject to correction  before
     publication  in  the  Pacific  Reporter.   Readers  are
     requested to bring errors to the attention of the Clerk
     of  the  Appellate  Courts, 303  K  Street,  Anchorage,
     Alaska 99501, phone (907) 264-0608, fax (907) 264-0878,
     e-mail corrections@appellate.courts.state.ak.us.


            THE SUPREME COURT OF THE STATE OF ALASKA

TOM CHALOVICH,                          )
                              )    Supreme Court No. S-10977
             Appellant,                 )
                              )    Superior Court No.
     v.                       )    3AN-02-9530 CI
                              )
STATE OF ALASKA,                             )    O P I N I O N
DEPARTMENT OF NATURAL         )
RESOURCES, TOM IRWIN,                   )    [No. 5857 - December
                                   30, 2004]
COMMISSIONER, and HAROLD F.   )
PARKER,                                           )
                              )
             Appellees.                 )
_______________________________    )


          Appeal  from the Superior Court of the  State
          of    Alaska,   Third   Judicial    District,
          Anchorage, John Reese, Judge.

          Appearances:   J.P.  Tangen,  Anchorage,  for
          Appellant.  Lawrence Z. Ostrovsky,  Assistant
          Attorney  General, Anchorage,  and  Gregg  D.
          Renkes,   Attorney   General,   Juneau,   for
          Appellee State of Alaska.  Harold F.  Parker,
          pro se, Anchorage.

          Before:   Bryner,  Chief  Justice,  Eastaugh,
          Fabe,  and  Carpeneti,  Justices.  [Matthews,
          Justice, not participating.]

          CARPENETI, Justice.

I.   INTRODUCTION

          Tom   Chalovich  appeals  a  final  decision   by   the

Department  of Natural Resources (DNR) finding that he  abandoned

his  state  mining claims by failing to timely make a payment  in

lieu of annual labor as required by 11 Alaska Administrative Code

(AAC)   86.220(h).   Chalovich  attacks  the  validity  of   this

regulation on the grounds that it is inconsistent with the Alaska

Land  Act,1 arbitrary, and unconstitutional.  He also claims that

11 AAC 86.107(g), which prevents DNR from refunding cash payments

made in lieu of annual labor, has resulted in an unconstitutional

taking  because  the  department has not refunded  payments  made

since  his  claims were deemed abandoned.  Because we  find  that

Chalovich  timely  paid cash in lieu of annual labor  by  placing

payment  in  the mail by the regulatory deadline, we reverse  the

determination that he abandoned his claims.

II.  FACTS AND PROCEEDINGS
     
          Tom  Chalovich purchased five mining claims in November

1997  from  Carol Brown.  Two of these claims, Akland  2-3,  were

staked  over  claims  previously held by  Dennis  Brown,  Carol's

husband, and his mining partner, Harold Parker, that were  deemed

abandoned  by DNR.  Another claim, Akland 8, covered  a  previous

claim  staked  by  Dennis Brown and Parker and  never  abandoned.

Because Parker asserted a competing interest in Akland 2  and  8,

Chalovich  filed  suit  to quiet title in August  1998.   Through

decisions  by the superior court in October 1999 and  July  2002,

Chalovich  successfully quieted title in Akland Nos. 2-5,  though

his  complaint  regarding  Akland No.  8  was  dismissed  without

prejudice  on  Chalovich's motion pending  his  appeal  of  DNR's

determination  that  he did not perform annual  labor2  for  this

claim  in  2000.   The department had initially  determined  that

Chalovich  abandoned3 all five claims because he  made  the  2000

cash-in-lieu-of-labor payment on November 29, 2000, nearly  three

months  after the September 1 deadline, but the department  later

determined  that  a survey conducted on Akland  claims  Nos.  2-5

would qualify as annual labor for those claims.

          While  the  quiet title litigation was pending  in  the

superior court, Parker went to the DNR offices in January 2002 to

review  Chalovich's  annual labor affidavits  for  the  contested

claims, and he discovered that the 1999 cash-in-lieu payment  for

these  claims  was  also received by DNR after  the  September  1

          deadline.  The payment was postmarked on that date, but it was

not  received  by  DNR  until September 3.  Parker  related  this

information  to DNR Mineral Property Manager Kerwin  Krause,  who

informed  Chalovich in January 2002 that his claims  were  deemed

abandoned by operation of law as of September 1, 1999 pursuant to

11  AAC  86.145(a)(2) and (4), because his payment  was  received

after  the  regulatory deadline.4  Though DNR  does  not  usually

allow administrative appeals of events that occur by operation of

law,  such  as abandonment of mining claims under AS  38.05.265,5

Krause  permitted  Chalovich  to  appeal  his  decision  to   the

commissioner.   Both  Chalovich  and  Parker  appealed   Krause's

decision.

          While  Chalovich  claimed that  DNR  should  treat  his

payment  as  timely,  he also argued that 11  AAC  86.220(h)  was

arbitrary and inconsistent with other regulatory deadlines,  that

forfeiture  was an unreasonably harsh penalty for  late  payment,

and  that   DNR would be unjustly enriched if it did  not  refund

payments he made after his claims were forfeited on September  1,

1999.   He  requested a hearing on his appeal.   Parker  objected

that  Chalovich had no right to appeal Krause's decision  because

his  claims were forfeited by operation of law.  Commissioner Pat

Pourchot  issued  a  final decision in  July  2002  denying  both

appeals.   Pourchot upheld the department's decision  because  it

was  made  pursuant  to  a  validly adopted  regulation,  and  he

rejected Chalovich's request for a hearing because there were  no

disputed questions of fact.  He did not address Chalovich's claim

that  the  department  had no right to retain  the  annual  labor

payments  made  since September 1, 1999.  While  Pourchot  agreed

with  Parker  that the department's January 2002 decision  should

not have been appealable, he noted that no harm resulted since he

was denying Chalovich's appeal.

          Chalovich appealed the commissioner's decision  to  the

superior  court  in  August 2002, and Parker filed  a  motion  to

dismiss  the appeal on the grounds that DNR should have  rejected

          Chalovich's appeal since forfeiture occurs as a matter of law.

The  superior  court  granted Parker's motion  in  January  2003,

holding  that  because  Chalovich  failed  to  comply  with   the

provisions  of  AS  38.05.265,  his  claims  were  forfeited   by

operation of law and he had no right to an administrative appeal.

The  superior court denied Chalovich's motion for reconsideration

in February 2003.  Chalovich appeals.

III. STANDARD OF REVIEW

          When  the superior court acts as an intermediate  court

of  appeal, we independently review the underlying administrative

decision.6   This  case presents no disputed  questions  of  fact

since  the parties agree that Chalovich mailed payment to DNR  on

September  1 and that it was received on September 3.  We  review

questions  of  law, including the interpretation of statutes  and

regulations, using our independent judgment.7  When an agency has

adopted  regulations  under a delegation of  authority  from  the

legislature  using  the process prescribed by the  Administrative

Procedures  Act, we presume that the regulations  are  valid  and

place  the burden of proving otherwise on the challenging party.8

We limit our inquiry to whether the regulation is consistent with

and  reasonably  necessary  to carry  out  the  purposes  of  the

statutory  provisions, and whether the regulation  is  reasonable

and not arbitrary.9

          In  making the consistency determination, we apply  our
independent  judgment unless the issue involves agency  expertise
or  the determination of fundamental policy questions on subjects
committed  to an agency's discretion, in which case we  employ  a
rational basis standard and defer to an agency's determination so
long as it is reasonable.10  "Whether the regulation is necessary
to    implement   the   statute   involves   fundamental   policy
determinations  which we review on a rational basis  standard."11
We also use a deferential standard to conduct the "reasonable and
not arbitrary review."12
IV.  DISCUSSION

     A.   11  AAC  86.220(h) Validly Requires Payment in Lieu  of
     Annual  Labor  by  September 1, but a Postmark  Is  Evidence
          of Timely Payment.
          
          DNR  found that Chalovich abandoned his claims  because

it  received  his  1999  payment two days  after  the  regulatory

deadline  of September 1, 1999.  Chalovich acknowledges that  his

payment  was  not received by DNR by September 1, but  he  claims

that the deadline is arbitrary and that the penalty of forfeiture

is unduly harsh and unconstitutional.13  Because Chalovich has not

challenged  the procedure by which this regulation  was  adopted,

our  inquiry  is limited to whether the regulation is  consistent

with  and reasonably necessary to carry out the purposes  of  the

statutory  provisions, and whether the regulation  is  reasonable

and not arbitrary.14

          Chalovich  challenges the validity  of  three  separate

aspects  of 11 AAC 86.220(h):  he challenges the date for payment

of   cash-in-lieu  of  labor  as  being  inconsistent   with   AS

38.05.210(a);  he  claims that the penalty for  late  payment  is

excessive;  and  he argues that the requirement that  payment  be

received,  rather than postmarked, by the deadline is  arbitrary.

While  we uphold the challenged regulation to the extent that  it

requires  performance  of labor by September  1,  we  agree  with

Chalovich  that it is unreasonable to require actual  receipt  of

payment rather than treating a postmark as the date of payment.

          1.   Annual  labor  is  required to  maintain  a  state

               mining claim.

          As  noted,  in order to maintain a state mining  claim,

each claim holder must perform annual labor valued at $100 on  or

for  the  benefit  of  each claim or make a cash-in-lieu  payment

instead of performing labor.15  By statute, DNR has authority  to

"establish the date of the commencement of the year during  which

the labor or improvements are to be performed."16  The department

determined  that  the labor year begins on  September  1  and  it

requires performance of all required labor by that date.17   Cash

payments in lieu of labor must be received by that date.18  Within

ninety  days  after the end of the labor year each  claim  holder

          must file an affidavit19 with the department describing, among

other  things,  the  dates and character of  labor  performed  or

improvements  made, and the amount of any cash  payment  made  in

lieu  of annual labor.20  An affidavit that does not include this

required  information is considered void and the mining claim  is

deemed  abandoned.21  The contested regulation, 11 AAC 86.220(h),

states  that  a claim is forfeited if payment is not received  by

September  1.   Because  DNR  did not  receive  Chalovich's  1999

payment  until  September  3, 1999, it  determined  that  he  had

abandoned his claims under the terms of 11 AAC 86.220(h).

          Abandonment  of  mining  claims  is  governed   by   AS

38.05.265, which states that the

          [f]ailure  to  properly  record  .  .   .   a
          statement  of annual labor . . .  constitutes
          abandonment of all rights acquired under  the
          mining   claim,   leasehold   location,    or
          prospecting site involved. . . . A  statement
          of  annual labor that does not accurately set
          out  the  essential facts is void and  of  no
          effect.
          
          Chalovich  claims that he did not violate AS  38.05.265

because  he properly recorded a statement of annual labor  within

ninety  days of the end of the labor year, and he cites as  proof

the  fact that DNR received his payment-in-lieu and affidavit  of

annual  labor  on  September 3, 1999.   Chalovich  separates  the

requirement  to perform labor from the requirement to  submit  an

affidavit  describing  such  labor, and  he  reads  AS  38.05.265

narrowly  to  impose forfeiture only for failure  to  record  the

affidavit  by November 30 - not for failure to perform the  labor

the affidavit must describe.  He also claims that payment of cash

in lieu of labor should be timely if received by November 30, the

deadline  for  receipt of affidavits of labor,  rather  than  the

September  1  deadline  for  performance  of  labor.   In  short,

Chalovich  argues that those paying cash rather  than  performing

labor  should receive an additional three months for performance,

and  that,  in any event, forfeiture is an inappropriate  penalty

for mere tardiness.

          The department responds that labor must be performed by

September  1  because  a  statement of  annual  labor  cannot  be

properly recorded if the required labor is not performed by  that

date.   Alaska Statute 38.05.265 would be meaningless, it argues,

if  a  miner  did not complete annual labor but could nonetheless

avoid  forfeiture by filing an affidavit by November  30  stating

that  no labor was performed or payment made, or that performance

was  late.   Because AS 38.05.210(a) requires annual  labor,  and

because  AS  38.05.265 deems claims abandoned if a  statement  of

labor  is  not  recorded,  the  department  argues  that  11  AAC

86.220(h) fills a statutory gap by requiring payment of the labor

substitute by the end of the mining year.  We agree with DNR that

all labor must be performed by September 1 and that forfeiture is

an appropriate penalty for late performance.  We disagree only on

the department's standard for timely performance of labor.

               1.   Annual labor must be performed by September 1.

          1.   DNR has authority to define the labor year for mining

claims.  Alaska Statute 38.05.210(a) grants authority to  DNR  to

"establish the date of the commencement of the year during  which

labor   or  improvements  are  to  be  performed"  and,   through

regulations, DNR established that the labor year runs  from  noon

on  September  1 through noon the following September  1.22   The

mining  year  is the same regardless of whether a miner  performs

labor  or  makes a cash payment.  Federal mining law defines  the

mining year using the same dates.23  There is no question that DNR

acted within its delegated authority to establish a deadline  for

annual  labor,  and the fact that federal and  state  mining  law

define the mining year using the same dates demonstrates that the

state's  choice  of September 1 is reasonable and not  arbitrary.

Even  Chalovich concedes that "DNR is well within its  rights  to

set  a  September  1  deadline for the  receipt  of  cash-in-lieu

payments."   His concern is not with the deadline for  labor  but

with  the  definition  of timeliness and  the  penalty  for  late

performance.

               2.   A mining claim is abandoned if labor is not performed by
                    September 1.
                    
          1.   Alaska Statute 38.05.210 requires both that miners perform

$100  of  annual  labor  and that they file  a  signed  statement

confirming  that they performed the required labor "[d]uring  the

year  in  which annual labor is required or within 90 days  after

the  close of that year."24  The requirement to file an affidavit

of  annual  labor has been a feature of Alaska mining  law  since

196125  and of federal mining law applicable to federal lands  in

Alaska  since  1907.26  Chalovich claims  that,  even  if  he  is

required to submit an affidavit of annual labor, nothing  in  the

statute  clearly  states that the labor must be completed  before

the  affidavit  can  be submitted.  According to  this  argument,

because AS 38.05.265 does not state that claims are abandoned  if

labor  is not performed, but rather that a "[f]ailure to properly

record  .  .  .  a  statement of annual labor . .  .  constitutes

abandonment,"  Chalovich's claims would only be forfeited  if  he

failed  to record a statement of annual labor by the November  30

deadline - irrespective of whether he even performed annual labor

or  paid cash-in-lieu.  According to Chalovich, since abandonment

technically  follows  from the failure to properly  document  the

performance of annual labor, and not from the failure to actually

perform  the required labor, "DNR just made this rule up  out  of

whole  cloth.  It is the very definition of an arbitrary  mandate

and  is  no  more appropriate than a requirement that  the  claim

owner hop on his left foot by September 1."  This argument misses

the  point  -  and it undermines the intent of AS 38.05.210(a)  -

that all miners must perform annual labor.

          While  AS  38.05.265  does not state  that  claims  are

abandoned  if labor is not performed by September 1, a regulation

to   that   effect  implements  the  intent  of   that   statute,

particularly since "[a] statement of annual labor that  does  not

accurately set out the essential facts is void and of no effect."27

Since  the labor performed or cash paid are essential facts,28  a

claim holder cannot properly set out these facts if they are  not

          actually performed.  The challenged regulation implements AS

38.05.210 by requiring payment by the end of the labor year as  a

necessary precondition to filing a statement of annual labor, and

the  penalty for non-compliance is consistent with AS  38.05.265.

If  a claim holder fails to properly record a statement of annual

labor he forfeits his claims.

          Chalovich  also argues that forfeiture is inappropriate

because the dual deadlines - September 1 for performance of labor

and  November  30  for filing a statement of labor  -  create  an

"unfair trap for the unwary."  According to Chalovich, the use of

two  deadlines is confusing, particularly since DNR requires that

payment-in-lieu  be accompanied by "a copy of  the  affidavit  of

annual  labor  or  a statement containing the  name  and  [Alaska

Division of Land] number for the mining claim."29  He claims that

the  implication of this regulation is that cash-in-lieu need not

be  paid until November 30, when the affidavit of annual labor is

due.   But  DNR's  regulations are clear and unambiguous:   Labor

must  be  performed by September 1.  If a miner  performs  actual

labor, it must be completed by September 1 but he need not submit

an  affidavit affirming its completion until November 30.   If  a

miner  opts to make a cash payment, such payment must be received

by  September  1,  and  it must be accompanied  by  documentation

sufficient  to identify the claims for which payment  is  made  -

either  the statement of annual labor or the name and ADL  number

of the claim.  The affidavit need not be submitted by September 1

so  long as payment is accompanied by the name and ADL number for

the  relevant claim.  Additionally, the deadline for  payment-in-

lieu  is  clearly  noted on the form affidavit  of  annual  labor

provided  by  DNR.  As the commissioner explained in his  written

decision,  while a claim holder does have to keep  track  of  two

different  deadlines, the overall number of claims abandoned  for

late  payment is small, with none recorded in 2001.   Since  1961

Alaska's  miners have had ninety days from the end of  the  labor

year   to  submit  an  affidavit  of  annual  labor,30  and  this

          requirement is statutory, not regulatory.31  The dual deadlines

are not a trap for the unwary.

          The core of Chalovich's argument is that forfeiture  is

an  "abhorrent"  penalty  for  what he  characterizes  as  petty,

procedural  non-compliance.  We addressed  forfeiture  of  mining

claims  in AU International, Inc. v. State, Department of Natural

Resources,32  and agreed with DNR that the failure  to  record  a

statement  of  annual  labor that includes  all  essential  facts

constitutes  abandonment  without  regard  to  intent.33   In  AU

International, the claim holder actually performed  the  required

labor to improve its 1,035 claims, but the statement of labor  it

filed  with  DNR listed the name or claim number  for  only  four

claims.34  We held that the remaining 1,031 claims were abandoned

by  operation  of  law because the statement  of  labor  did  not

include the "essential facts" for these claims.35  By regulation,

these  essential facts include the name or number of  the  mining

claim, and the dates of performance of labor and the character of

the labor performed, or the amount of cash paid in lieu of annual

labor.36  If a claim is abandoned for failure to properly  record

its  name  or  number - even though labor was  performed  -  then

clearly  a  claim  is  abandoned if the  required  labor  is  not

actually  performed  within the labor year.  Kile  v.  Belisle,37

cited  by  Chalovich in support of his argument that  abandonment

requires intent, is not to the contrary.  In Kile, we noted  that

under federal law the failure to perform annual labor does not by

itself constitute abandonment,38 but the question in that case was

whether  federal  mining  claims had  been  abandoned.39   As  we

explained in AU International, Alaska mining law, unlike  federal

law,  requires  no  proof that a miner intended  to  abandon  his

claim,  and  a  state mining claim will be deemed  abandoned  for

failure   to  comply  with  the  requirements  of  AS   38.05.265

irrespective of the claim holder's intent.40

          Moreover,  federal  mining regulations  have  generally

been interpreted to require strict compliance with deadlines  and

          filing requirements.41  Indeed, when the federal government began

requiring  miners to submit affidavits of annual labor  in  1976,

the  Bureau of Land Management (BLM) routinely found that  miners

had  abandoned their claims if the affidavits were received after

the  filing  deadline  -  even if they were  postmarked  well  in

advance.42  While federal law now requires most miners to  pay  a

cash  "maintenance  fee" rather than perform  annual  labor,  the

failure to timely pay this fee still results in forfeiture.43

          Chalovich  may  characterize  the  Alaska  Land   Act's

procedural requirements as petty, but it is the system created by

the   legislature,  and  it  is  consistent  with  federal   law.

Chalovich  nonetheless  argues that forfeiture  violates  article

VIII,  section  1 of the Alaska Constitution, which  states  that

"[i]t  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."

But  article VIII, section 11 further states that "[c]ontinuation

of  [mineral] rights shall depend upon the performance of  annual

labor, or the payment of fees, rents, or royalties, or upon other

requirements as may be prescribed by law."  Regulations requiring

payment  of  cash  in lieu of labor by September  1  and  deeming

claims  abandoned  if payment is not received by  that  date  are

consistent  with the statutes they implement, are reasonable  and

not arbitrary, and are consistent with the Alaska Constitution.

          Fundamentally,  Chalovich seeks preferential  treatment

for  those  who  pay  cash  rather  than  perform  annual  labor.

Allowing  miners  to  pay cash-in-lieu until  November  30  would

create a fifteen month "year" for some miners and a twelve  month

year  for  others.  There is no justification for  allowing  such

disparate treatment.  The legislature requires that claim holders

perform  annual labor to maintain their state mining claims.   By

regulation, this labor must be performed between September 1  and

the  subsequent  September  1.  If  labor  is  not  performed  by

September 1 a claim holder cannot properly record a statement  of

          annual labor because he cannot accurately set out an essential

fact - that he performed annual labor as required to maintain his

claim.   Accordingly,  a  claim is  abandoned  if  labor  is  not

performed by September 1.

          2.   A  payment-in-lieu of annual labor  is  timely  if
               postmarked by September 1.
               
          Our  agreement with DNR that miners must perform annual

labor by September 1 or face forfeiture of their claims does  not

resolve  the  issue  before us, however, because  Chalovich  also

argues   that  11  AAC  86.220(h)  unreasonably  and  arbitrarily

requires  actual receipt of payment by the September  1  deadline

rather  than  accepting a postmark as the date of  payment.   DNR

acknowledges that it received payment from Chalovich on September

3,  1999  in  an envelope postmarked on September  1.   Chalovich

claims  that his payment was timely because it was mailed by  the

deadline,  and  he  argues that a rigid  requirement  of  receipt

unfairly makes miners dependent upon the efficiency of the postal

service.  While the department did not address this issue in  its

briefing,  the  commissioner stated in his  July  1,  2002  final

decision  that the requirement of actual receipt was  enacted  to

treat cash payment the same as actual labor.

          Whether it is reasonable and not arbitrary for  DNR  to

require  actual receipt of payment in lieu of annual labor  is  a

close question, but we must resolve it in favor of Chalovich.  We

reach this conclusion, despite the deferential standard of review

applicable  to  this  regulation,  for  two  reasons.   First,  a

requirement  of actual receipt is not necessary to achieve  DNR's

goal  of  equal  treatment  of all claim  holders.   Second,  the

state's  deadlines are no longer consistent with  federal  mining

law, which has adopted a modified postmark rule, and while we  do

not require consistency between state and federal mining law,  it

is  persuasive that BLM does not impose such a rigid requirement.

We address each reason in turn.

          DNR  argues  that  it is necessary  to  require  actual

receipt of cash payments by September 1 to ensure that all miners

are  treated equally.  We agree that since the $100 cash  payment

per  claim  is a substitute for the actual performance of  labor,

miners  should  face the same deadlines regardless  of  how  they

fulfill  the  labor  obligation.  But we cannot  agree  that  the

contested regulation is an  appropriate way to achieve this goal.

In  fact,  for  reasons  that we explain  below,  the  regulation

actually  undermines DNR's goal of equal treatment.  Further,  by

requiring  actual  receipt  of  payment  by  September   1,   the

department unnecessarily exposes miners to risk of forfeiture due

solely to the vagaries of the postal service.44

          This  regulation  is  starkly different  from  the  one

proposed by DNR in 1989 when it revised the mining regulations in

response to the legislature's amendment of AS 38.05.210 to  allow

payment in lieu of labor.  As originally proposed, the regulation

treated as timely cash payments made within ninety days after the

end  of  the  labor year.45  After a citizen commented  that  the

regulation  effectively provided some miners with  an  additional

ninety  days  to complete annual labor, DNR adopted  the  current

regulation  which requires receipt of payment on  September  1.46

The record shows that the department appropriately considered the

public comment and made changes to its proposed regulations in an

effort  to ensure that all miners had the same amount of time  to

complete their annual labor requirements.

          Unfortunately, in attempting to resolve  one  potential

inequity,  DNR created another.  There is no apparent  reason  to

impose forfeiture on a miner who mails a payment of cash in  lieu

of  labor  on September 1 so long as the date of mailing  can  be

verified  through  a  postmark.  Such a miner  would  receive  no

advantage  over  one  who  actually  performs  labor,  nor  would

acceptance  of  a postmark as evidence of performance  create  an

unreasonable  delay  in notifying DNR that labor  was  performed.

This  is  particularly true since miners who  physically  perform

labor  need  not  inform  the  state of  such  performance  until

November  30.47   If  anything, the department's  requirement  of

          physical receipt means that a miner making a cash-in-lieu payment

must  make  the payment well in advance of the deadline  in  case

delivery  of  his payment is delayed by the postal service.   The

likelihood  of  such an occurrence is non-negligible  since  most

miners  are  likely to mail payments or affidavits to DNR  rather

than  deliver them in person.48  If cash-in-lieu is a  substitute

for annual labor, miners who pay it should have the same time  to

perform   as   miners   who   actually  perform   annual   labor.

Accordingly, we hold that a miner who mails payment on or  before

September 1, and who can verify the date of such mailing  through

a  postmark, has performed annual labor by the end of the  mining

year.

          We  find further support for our decision today in  the

law  applicable to federal mining claims.  While  Alaska  is  not

required to adopt the same regulations as the federal government,

it  is  persuasive that BLM has adopted a modified postmark  rule

precisely to avoid unwarranted forfeiture of mining claims due to

delays  by  the  postal service.  In 1982  the  BLM  amended  its

regulations  to  treat  as  timely  annual  filings   that   were

postmarked by the deadline so long as they were received  by  DNR

within  twenty days of the (then) December 30 filing  deadline.49

This  amendment did not completely change the receipt rule  to  a

postmark  rule,  because filings received  after  the  twenty-day

period  were still rejected even if postmarked by December  30.50

These regulations were subsequently amended to provide a fifteen-

day  grace  period51 and to govern payment of annual  maintenance

fees,52 which are due by September 1.53

          The  legislative  history of the 1982 amendments  shows

that  BLM  made  the changes to "save a large  number  of  mining

claimants  from  the loss of their claims due to  delays  in  the

mails   over  the  holiday  season."54   BLM  noted  that  strict

application  of the existing regulation had led to  the  loss  of

claims  due  solely  to "the heavy volume  of  holiday  mail  and

unusual delays in delivery times," with "annual proofs of labor .

          . . postmarked two or three weeks prior to the statutory December

30th  deadlines  [being] delivered to the proper  BLM  office  in

January, which is after the filing deadline."55  But BLM was  not

worried  solely about holiday-related mail delays because federal

regulations  now  provide  for  a fifteen-day  grace  period  for

payment of the annual maintenance fee, which is due on or  before

September 1.

          Thus when DNR amended its regulations in 1990 to permit

payment in lieu of annual labor and to require actual receipt  of

payment  by  the  September  1  deadline,56  federal  regulations

permitted  a twenty-day "grace period" during which an  affidavit

of  labor  postmarked  by the due date of December  30  could  be

received  by  BLM and still be treated as timely filed.57   While

consistency between state and federal mining law is not required,

we  find it persuasive that the federal government has recognized

the  injustice  of allowing a miner's claims to be forfeited  due

solely to problems with mail delivery.

          Because  requiring receipt of payment-in-lieu  violates

DNR's  stated goal of equal treatment, because DNR's  regulations

impose   inconsistent  and  possibly  confusing   standards   for

timeliness, and because the federal government has adopted a less

rigid   standard,   we   find  that  the  challenged   regulation

unreasonably fails to treat as timely a payment postmarked by the

regulatory deadline of September 1.

     B.   Chalovich's Challenge to AS 11 AAC 86.107(g) Is Moot.

          Chalovich  also  challenges  the  validity  of  11  AAC

86.107(g), which prohibits DNR from making a refund of a  payment

of  cash  in lieu of annual labor, and argues that the department

had  no  right  to payment after his claims were  abandoned.   He

asserts  that  if  he  had  no interest  in  these  claims  after

September 1, 1999 then DNR had no right to retain the payment  it

received  on September 3 or other payments made since that  time.

He  concedes that he has not requested a refund, but claims  that

the  plain language of the regulation would make it fruitless  to

          do so.  He asks that we find that the regulation was not

authorized by the Alaska Land Act, and that it violates  the  due

process   clauses  of  the  Alaska  and  of  the  United   States

Constitutions, as well as the principles of equity.

          We decline to reach this issue in light of our decision

                                        that   Chalovich   timely

                                        paid  cash  in  lieu   of

                                        labor  in 1999.   In  any

                                        event,  DNR  agrees  that

                                        annual  labor is required

                                        only  for  active  mining

                                        claims,  so  any  payment

                                        made  after  a  claim  is

                                        abandoned  is unnecessary

                                        and would be returned  to

                                        the miner.58

     C.   Parker's Claims Are Not Properly Before this Court.
          
          Appellee  Parker supports DNR's position and encourages

this court to find that Chalovich abandoned his mining claims  on

September  1, 1999.  He also raises several additional arguments,

one  of which we previously resolved, and the remainder of  which

are waived since Parker did not file a cross-appeal.

          Parker asks that we strike from the record two superior

court  decisions that pertain to his dispute with Chalovich  over

ownership  of  the Akland claims, because he alleges  that  these

documents  were  not part of the department's record  on  appeal.

These  decisions  are in the agency record.  While  they  provide

relevant background information about the status of these claims,

they  are  immaterial  to the resolution of the  legal  questions

raised in this case.  In any event, we previously denied Parker's

motion  to  strike these documents, and there  is  no  reason  to

address this issue a second time.

          Parker also claims that his constitutional rights  were

violated  because  the  superior court denied  his  requests  for

          attorney's fees and for monetary sanctions against Chalovich.

Because Parker, the appellee in this case, did not file a  cross-

appeal, these claims are not properly before us and will  not  be

considered.59

V.   CONCLUSION

          DNR  determined that Tom Chalovich abandoned his  state
mining claims pursuant to AS 38.05.265 because he did not perform
annual  labor as required by AS 38.05.210(a).  Because  Chalovich
timely  paid cash-in-lieu by the September 1 deadline, we REVERSE
the agency's decision that he abandoned his claims.  Accordingly,
we  need  not address the validity of 11 AAC 86.107(g).   Because
Harold  Parker  did not file a cross-appeal his  claims  are  not
properly before the court.

















                                                       
_______________________________
     1    AS 38.05.

     2     Alaska  law requires miners to perform $100  worth  of
annual  labor  on  or for the benefit of each mining  claim.   AS
38.05.210(a).  Instead of performing this labor, a miner may make
a $100 cash payment to the state.  Id.

     3      For  purposes  of  state  mining  claims,  the  terms
"abandon"  and "forfeit" are synonymous.  See AU Int'l,  Inc.  v.
State,  Dep't  of  Natural Res., 971 P.2d 1034,  1038-39  (Alaska
1999)  (failure  to  comply with filing requirements  constitutes
abandonment regardless of miner's subjective intent).   See  also
43  C.F.R.   3833.0-5(z) (2003) (terms synonymous  under  federal
mining law).

     4     This regulation states in relevant part that "[a] cash
payment  made instead of performing annual labor must be received
by  the department . . . on or before September 1st of each year.
.  .  . If cash payment . . . is not paid by the end of the labor
year,  the  mining claim or leasehold location will be considered
abandoned under AS 38.05.265."

     5     This statute deems mining claims abandoned if a  miner
fails  to  "properly  record  a  certificate  of  location  or  a
statement of annual labor, pay any required annual rental, or pay
any  required  production royalty . . . ."  Because DNR  received
Chalovich's payment-in-lieu of annual labor after the  regulatory
deadline it deemed his claims abandoned by operation of law.

          We note that, after the oral argument in this case, the
legislature amended this statute to allow a defaulting  miner  to
cure his abandonment.  Ch. 26, SLA 2004.

     6     Crivello v. Commercial Fisheries Entry Comm'n, 59 P.3d
741, 744 (Alaska 2002).

     7     Therchik  v.  Grant Aviation, Inc., 74 P.3d  191,  193
(Alaska 2003).

     8     Lakosh v. Alaska Dep't of Envtl. Conservation, 49 P.3d
1111, 1114 (Alaska 2002).

     9     Id.  (citing  Kelly v. Zamarello, 486  P.2d  906,  911
(Alaska 1971)).

     10    Id.

     11     O'Callaghan v. Rue, 996 P.2d 88, 94-95 (Alaska 2000).
Under the rational basis standard of review, we will defer to  an
agency's  determination  so long as  it  is  reasonable  and  not
arbitrary.  Mech. Contractors of Alaska, Inc. v. State, Dep't  of
Pub.   Safety,  91  P.3d  240,  244  (Alaska  2004).    "However,
`reasonable   necessity  is  not  a  requirement  separate   from
consistency.   If  it  were, courts would be  required  to  judge
whether a particular administrative regulation is desirable as  a
matter of policy'; this is a function of the agency."  Lakosh, 49
P.3d  at  1114  n.14  (quoting State, Bd.  of  Marine  Pilots  v.
Renwick, 936 P.2d 526, 531 (Alaska 1997)).

     12    O'Callaghan, 996 P.2d at 95.

     13     Because we resolve this case in Chalovich's favor  on
nonconstitutional grounds, it is unnecessary for us to reach  his
constitutional argument.

     14    Lakosh, 49 P.3d at 1114.

     15    AS 38.05.210(a).

     16    Id.

     17    11 AAC 86.220(a).

     18    11 AAC 86.220(h).

     19     Although the statutes require a "statement" of annual
labor, DNR regulations require that the statement be in the  form
of  an  affidavit.  See AS 38.05.210(b); 11 AAC  86.220(c).   The
terms are synonymous.

     20    AS 38.05.210(b); 11 AAC 86.220(c).

     21    AS 38.05.265; 11 AAC 86.220(g).

     22    11 AAC 86.220(a).

     23    30 U.S.C.  28(f) (1993); 43 C.F.R.  3833.1-5 (2003).

     24    AS 38.05.210(a), (b).

     25    Ch. 123,  5, SLA 1961.

     26    Ch. 2559,  1, 34 Stat. 1243 (1907), currently codified
at 30 U.S.C.A.  49e (2004).

     27    AS 38.05.265.

     28    11 AAC 86.220(c).

     29    11 AAC 86.220(h).

     30    Ch. 123,  5, SLA 1961.

     31    AS 38.05.210(b).

     32    971 P.2d 1034 (Alaska 1999).

     33    Id. at 1038.

     34    Id. at 1036.

     35    Id. at 1038.

     36    11 AAC 86.220(c).

     37    759 P.2d 1292 (Alaska 1988).

     38    Id. at 1296 n.13.

     39    AU Int'l, Inc., 971 P.2d  at 1038.

     40    Id. at 1038-39.

     41    See United States v. Locke, 471 U.S. 84, 101 (1985)  (
"Filing  deadlines,  like  statutes of  limitations,  necessarily
operate  harshly and arbitrarily with respect to individuals  who
fall  just  on  the other side of them, but if the concept  of  a
filing  deadline  is to have any content, the  deadline  must  be
enforced  .  .  .  . A filing deadline cannot be  complied  with,
substantially or otherwise, by filing late - even by one day.").

     42     See 2 Am. L. of Mining  45.03[2][c],  45.05[2][a][iv]
(2d  ed.  1984)  (noting that BLM regularly rejected  submissions
that  were timely postmarked but received after deadline).   See,
e.g.,  Don  A.  Chris  Coyne,  52 IBLA  1  (1981)  (mining  claim
forfeited  even though affidavit postmarked in advance of  filing
deadline and record showed that delivery delayed due to error  of
postal service).

     43    2 Am. L. Mining  45.03[2][d].

     44     Since  abandonment occurs by operation  of  law,  the
actual date of mailing is irrelevant under the regulation  and  a
miner's  claim  is  forfeited even if late  receipt  was  clearly
caused by an unreasonable delay by the postal service.

     45    See Agency Record for 11 AAC 86.220(h).

     46    Id.

     47    11 AAC 86.220(c).

     48      Prior to June 1, 2002 the only offices for in-person
payment  were  in  Anchorage and Fairbanks.   11  AAC  86.107(c).
Payments can now be made at recording district offices.  Id.   It
is  likely that the remote location of many miners requires  that
payments be mailed.

     49     2 Am. L. of Mining  45.05[2][a][iv].

     50       Id.   See also 47 Fed. Reg. 56305 (Dec. 15,  1982).
The  regulations now reflect a fifteen day "grace period"  during
which  filings  will be treated as timely so  long  as  they  are
postmarked  by  the  filing  deadline.   43  C.F.R.   3833.0-5(m)
(2003).

     51    43 C.F.R.  3830.0-5(m) (2003).

     52     43  C.F.R.   3833.1-5 (2003);  2  Am.  L.  of  Mining
45.03[2][d].

     53     43 C.F.R.  3833.1-5(b) (2003).

     54     47 Fed. Reg. 56300 (Dec. 15, 1982).

     55     47 Fed. Reg. 56302 (Dec. 15, 1982).

     56    11 AAC 86.220 (amended 5/18/90).

     57     See 2 Am. L. of Mining  44.04[12].

     58    Although the superior court's decision also found that
Chalovich was not entitled to an administrative appeal,  we  need
not consider that point because neither Parker nor DNR raises  it
in their briefing.

     59     See  McQueary v. McQueary, 902 P.2d  1326,  1327  n.3
(Alaska  1995) (citing Johnson v. Nangle, 677 P.2d 242,  247  n.3
(Alaska 1984)).