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You can search the entire site. or go to the recent opinions, or the chronological or subject indices. Pacifica Marine, Inc. v. Solomon Gold, Inc. (8/21/2015) sp-7035

Pacifica Marine, Inc. v. Solomon Gold, Inc. (8/21/2015) sp-7035

         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, email  

                                                                                    

         corrections@akcourts.us.  



                   THE SUPREME COURT OF THE STATE OF ALASKA  



PACIFICA MARINE, INC. and                             )  

MIKE BENCHOFF,                                        )        Supreme Court No. S-15619  

                                                      )  

                           Appellants,                )        Superior Court No. 3AN-12-07847 CI  

                                                      )  

         v.                                           )       O P I N I O N  

                                                      )  

SOLOMON GOLD, INC. and                                )       No. 7035 - August 21, 2015  

STATE OF ALASKA,                                      )  

DEPARTMENT OF NATURAL                                 )  

RESOURCES,                                            )  

                                                      )  

                           Appellees.                 )  

                                                      )  



                  Appeal from the Superior Court of the State of Alaska, Third  

                                                                                 

                  Judicial District, Anchorage, Jack Smith, Judge.  



                  Appearances:    Adam  W.  Cook,  Birch  Horton  Bittner  &  

                  Cherot, Anchorage, for Appellants.   Jennifer M. Coughlin,  

                                                                     

                  K&L Gates, LLP, Anchorage, for Appellee Solomon Gold,  

                  Inc.    Ashley      C.    Brown,       Assistant      Attorney       General,  

                  Anchorage,  and  Craig  W.  Richards,  Attorney  General,  

                  Juneau, for Appellee State of Alaska.  



                  Before: Fabe, Chief Justice, Winfree, Stowers, Maassen, and  

                                                                                 

                  Bolger, Justices.  



                  FABE, Chief Justice.  


----------------------- Page 2-----------------------

I.        INTRODUCTION  



                                                              

                    A bidder for mineral leases failed to turn in a required form that would have  



                                                                                       

demonstrated that he was a citizen older than 18 and thus qualified to bid.  The Director  



of  the  Department  of  Natural  Resources'  Division  of  Mining,  Land  &  Water  later  



                                                                                                      

allowed   the   bidder   to   remedy   the   omission,   but   on   appeal   the   Department's  



                        

Commissioner  determined  that  the  bidder's  omission  was  not  immaterial  or  due  to  



excusable inadvertence and reversed the Director.  As a result, the bidder lost his leases.  



                                                                                                                

The bidder unsuccessfully appealed to the superior court and now appeals to this court.  



                                                                              

Because the Commissioner's factual findings were based on substantial evidence in the  



                                                                                                       

record, his interpretations of regulations were not legally erroneous, and his application  



               

of law to facts was not arbitrary, unreasonable, or an abuse of discretion, we affirm.  We  



                                                                    

also conclude that the superior court did not abuse its discretion by declining to order a  



trial de novo.  



II.       FACTS AND PROCEEDINGS  



          A.        Background  



                                        

                    In 2011  the  Department of Natural Resources (Department) decided to  



auction mining leases for 20,000 acres of tide and submerged lands offshore of Nome.  



                                                                             

Public notice was published in newspapers and on the Department's website in August.  



                                                                             

The  online  notice  stated  that  the  auction  was  happening  "[i]n  accordance  with  



                                                 

AS 38.05.250 and the attendant regulations in 11 AAC 86 and 11 AAC 82."  The notice  



                                                                                                                    

specifically provided that "[u]nder 11 AAC 82.435 each bidder at the sale must also  



                                                                               

provide a statement of their qualifications to acquire and hold mineral rights in the State  



of Alaska."  



                                                                 

                    Alaska Administrative Code, title 11, section 82.435 provides that "[e]ach  



bidder at a sale by public auction shall deposit with the commissioner or other officer  



                               

conducting the sale the deposit and information required by 11 AAC 82.425 - 11 AAC  



                                                               -2-                                                         7035
  


----------------------- Page 3-----------------------

                                                                                   

82.430."  The referenced range of regulations includes 11 AAC 82.428, which provides  



that "[b]efore the date of a competitive lease sale, a bidder must comply with 11 AAC  



82.200 and 11 AAC 82.205."  Section 82.200 limits lease ownership to persons who  



                                                                        1  

                                                                           Section 82.205 provides that "[a]n  

have reached the age of majority and corporations. 



individual,  in  order  to  be  qualified  to  apply  for,  obtain,  or  transfer  an  interest  in  a  



                                                                                        

[mineral lease], shall submit to the department . . . a signed, dated statement including  



                                                                                                    

the applicant's name, address, telephone number, and a certification that the applicant  



is of the age of majority, . . . [and] a signed, dated statement including the applicant's  



                                                                                 

name, address, telephone number, and certification that the applicant is a citizen of the  

United States, or is an alien qualified under AS 38.05.190."2  



                                    

                   The online notice of the auction included links to several forms, including  



                                                                                          

the outcry bid form and the statement of qualifications form.  The outcry bid form was  



one page.  In the middle of the page, the following appeared:  



                   **IMPORTANT INFORMATION - PLEASE READ
  



                   Submit  this  form  and  the  minimum  bid  amount  in  the
  

                                                                                      

                   enclosed   envelope   immediately   following   winning   the
  

                   bid. . . . 
 



                   . . . .
  



                   You  must  submit  at  least  one  completed  copy  of  the
  

                   Statement of Qualification[s] form for any tract or tracts bid  

                   upon.  You may attach the Statement of Qualifications form  

                   to this Bid Form, or submit it immediately prior to the auction  

                                                                                       

                   on September 28th.  



          1        See   11  Alaska  Administrative  Code  (AAC)  82.200  (2015).    These  



qualifications are also required for other types of leases, exploration licenses, or permits.  

Legal guardians or trustees of qualified individuals and associations of entities can also  

                                                                                 

acquire these interests.  



          2        11 AAC 82.205(a)-(b).  



                                                            -3-                                                      7035
  


----------------------- Page 4-----------------------

                                                                                                             

The statement of qualifications form was three pages; one was the actual form a bidder  



                  

fills out to certify his age and citizenship, while the other two provided instructions.  



Under the heading "How To File," the instructions read, in part:  



                    If you are submitting this statement in support of an outcry  

                    bid, you must provide all documents at the time of bidding.  



          B.	       The Auction  



                                                                                                                         

                    The auction was held in Nome on September 28, 2011. Blank copies of the  



       

bid and statement of qualifications forms that had been identified in the notice were  



available.  The sign-in sheet had three columns, one for bid number, another for bidder  



                                                           

name and address, and a third that read "Qualification Statement Filed? (yes/no)."  Two  



                                                                                                                    

of the bidders relevant to this appeal, Scott Meisterheim and Ken Kerr, wrote "Yes" in  



                                                                                      

the third column next to their names on the sign-in sheet.  Mike Benchoff, the appellant  



here, left that space blank.  



                                               

                    Two Department employees, Kerwin Krause and Bill Cole, were present  



                                                               

at the auction.  According to the agenda of the auction, Krause announced that "[a]ll  



                                                                                                            

bidders must sign in, submit their qualification form and receive a bidder # card prior to  



bidding," and that "[y]ou must have a bidder # in order to bid."  Krause also explained  



that the outcry auction would record the three highest bids for each tract, and that "[i]n  



the event that the highest bidder does not fulfill their bid obligations, the tract will be  



offered to the second and/or third highest bidders, successively."  Although bidders were  



                                        

not supposed to receive a bid card until they had submitted a statement of qualifications  



                                                                                                        

form, Department officials did not follow this protocol, and Benchoff, Meisterheim, and  



Kerr all received bid cards.  



                                                                                                                      

                    Benchoff was the high bidder on ten tracts in the outcry auction and the  



                                                                                                                      

second-highest bidder on three.  Meisterheim was the high bidder on two tracts and the  



                                                              -4-	                                                       7035
  


----------------------- Page 5-----------------------

second-highest bidder on one.   Kerr was the second-highest bidder on two tracts and the           



third-highest bidder on four.  



          C.        Post-Auction  



                    Shortly    after  the  auction    the  Department  determined    that  Benchoff,  



Meisterheim, and Kerr had not submitted statement of qualifications forms.  They were       



notified that they had been disqualified.  Krause contacted Meisterheim and Benchoff  



and reported that "both told me they had fil[l]ed one out but neglected to turn it in." The  



Department also held a public meeting in Nome on October 19, at which participants  



                                                                             

stated that "the auction process changed over three times, creating confusion," and that  



"[i]t seemed that the bidding process was casual with nobody responsible for checking  



documents and qualifications and that there was lots of confusion in the process."  



          D.        The Director's Determination On Incomplete Bids  



                                                                                        

                    Director Brent Goodrum of the Department's Division of Mining, Land &  



Water  issued  the  first  adjudication  in  this  case,  the  Director's  Determination  on  



                                            

Incomplete Bids, in October 2011.  The Director's Determination applied to the twelve  



                                                                                                       

tracts on which either Benchoff or Meisterheim was the high bidder, the three tracts on  



which Benchoff was the second-highest bidder, and one tract on which the Director  



mistakenly listed Benchoff as the high bidder.  Kerr was the second-highest bidder on  



                                                                                                     

that last tract, Tract 3. The Director's Determination did not purport to apply to the other  



                                                                            

tract on which Kerr was the second-highest bidder, the four tracts on which Kerr was the  



                                

third-highest bidder, or the tract on which Meisterheim was the second-highest bidder.  



                    The Director referenced 11 AAC 82.445, which provides:  



                                                                                        

                    No bid may be considered unless supported by the deposit  

                                                  

                    and      information            required         by      11      AAC         82.425,  

                    11     AAC        82.428,       and      11    AAC        82.430        unless      the  

                    commissioner determines that any omission was immaterial  



                                                              -5-                                                        7035
  


----------------------- Page 6-----------------------

                                                                                          

                    or  due  to  excusable  inadvertence  and  if  the  omission  is  

                    corrected in the manner provided by notice of sale.  



                                                                                   

The Director wrote that "it appears that there may have been some misunderstandings  



                             

during the sign-in process the day of the sale that contributed to the incomplete bids.  



                                                                                     

Consequently, the omissions are determined to be due to excusable inadvertence."  He  



gave   Benchoff   and   Meisterheim   ten   days   to   file   their   completed   statement   of  



qualifications forms, and both did.  



                    The Director's Determination also stated that "[t]he department is aware  



that there are several second and third-highest bids with omissions.  Determinations  



                                                                           

regarding completeness of these bids will be made in the event that such determinations  



become necessary."  



          E.        Norm Stiles's Appeal  



                                                                                    

                    Norm Stiles was the second-highest bidder on Tract 4, one of the tracts on  



which  Meisterheim  was  the  highest  bidder.    In  November  2011  he  appealed  the  



Director's Determination to Daniel Sullivan, the Commissioner of the Department.   



          F.        An Interlude - The Murphy Tracts  



                                                                                  

                    Dan Murphy, a properly qualified bidder, was the high bidder on Tracts 1  



                                    

and 3.  He did not make timely payments on these leases, which made them available to  



                                                                                            

the second place bidders - Benchoff and Kerr, respectively.  In early January 2012 the  



Department  offered  Kerr  the  opportunity  to  lease  Tract  3.    Krause,  the  Department  



                                                              

employee who oversaw the lease auction, stated in a later affidavit that although he knew  



                    

Kerr had not submitted the required statement of qualifications at the auction, he believed  



                                                                                              

that Kerr had submitted the form shortly after being offered the opportunity to lease the  



                                                                                         

tract.  Kerr signed the lease in February, and the Department signed and executed it first  



                                      

in  late  March  2012  (by  a  non-authorized  Department  employee),  and  then  again  in  



August 2012 (by an authorized Department employee).  



                                                             -6-                                                        7035
  


----------------------- Page 7-----------------------

                   The Department did not offer Benchoff the opportunity to lease Tract 1  



after  Murphy  failed  to  make  his  payment.    The  Commissioner  later  explained  that  



"[s]ince Mike Benchoff was the #2 bidder for Tract 1, the division did not proceed with  



offering   that   tract   for   lease   because   of   the   pending   appeal"   of   the   Director's  



Determination.  



          G.       Norm Stiles's Appeal  



                                                                        

                   The Commissioner acknowledged Norm Stiles's appeal in a January 26,  



2012 letter.  The letter explained that the appeal would stay any action on not just Tract 4  



                                                                         

but also the eleven other tracts on which Benchoff or Meisterheim was the highest bidder  



                                                                                                                  

"because a decision on this appeal will affect the other tracts and the bidders for those  



                                                  

tracts."  It also explained that the decision on appeal would not apply to four tracts the  



                                                                    

Director had included because as to Tracts 1, 17, and 23 "there is no uncertainty about  



                                                                  

the completeness of the highest bid," and the other, Tract 3, "was mistakenly included."  



                   The  Commissioner's  letter  noted  that  Department  regulations  allowed  



cross-participation in appeals and stated:  



                                                                   

                   By this letter, I am notifying the three highest bidders for [the  

                   twelve  affected  tracts]  of  their  right  to  participate  in  this  

                                                                                  

                    appeal.       Participation  in  the  appeal  is  voluntary.                     The  

                                             

                    applicant/bidder  may  respond  to  the  issues  presented  in  

                    [Norm Stiles's] appeal (copy attached).  Additionally, since  

                   the   director's        October        27,   2011       decision   referred          to  

                    "omissions of the two bidders" and "some misunderstandings  

                                                                               

                    during the sign-in process the day of the sale and incomplete  

                   bids," the applicant/bidder's response should also include any  

                   information that may be relevant to the sign-in and/or bidding  

                                                                            

                   process in Nome on September 28, 2011. . . .  If nothing is  

                   received  by  [the  response  deadline],  I  will  assume  the  

                                                                                         

                    applicant/bidder has chosen not to participate in the appeal.  

                                                              



                                                             -7-                                                       7035
  


----------------------- Page 8-----------------------

                                                                    

Solomon Gold, Inc., the second-highest bidder on four tracts for which Benchoff was the  



                                                     

highest bidder and an appellee here, participated in the appeal by a February letter to the  



Commissioner.  Meisterheim and Benchoff did not submit any response.  



                   Subsequently  Stiles  and  Meisterheim  reached  an  agreement  whereby  



Meisterheim agreed to withdraw his successful bid on Tract 4 in exchange for Stiles's  



withdrawing his appeal.  They communicated this to the Commissioner, who accepted  



their agreement and notified all parties that the appeal had been closed.  



                   Solomon Gold appealed the Commissioner's decision to close the appeal  



                                                                                                       

to the superior court.  Ultimately Solomon Gold and the Commissioner stipulated to an  



August 2012 order remanding the matter to the Commissioner for a decision on the  



                                                          

merits.  This order "reinstated" the stay as to twelve tracts:  the ten on which Benchoff  



                                                                                                            

was the original high bidder, the one remaining on which Meisterheim was still the high  



                                                                            

bidder, and Tract 1, the tract for which Murphy was originally the high bidder but, due  



to his failure to pay, Benchoff was now in position to lease.  



          H.       The Commissioner's Decision On Remand  



                                                                                                      

                   In early June 2013 the Commissioner issued his Decision on Remand.  He  



"decided the October 27, 2011 Director's Determination was in error," and therefore  



rejected Meisterheim's and Benchoff's bids for the twelve tracts in the remand order.  



                   The Commissioner's Decision on Remand first laid out the factual and  



                                                                                               

procedural history of the lease auction and subsequent litigation.  He quoted from three  



                    

responses he had received to his January 26, 2012 letter that described the Nome auction.  



                     

Two felt that the instructions were "abundantly" or "very" clear, while the third noted  



                         

the potential for "confusion" amid "the extreme excitement of the day of the auction."  



                   Turning to the merits the Commissioner "decide[d] that the October 27,  



2011 Director's Determination was in error because it was contrary to the applicable law.  



                                                                                 

The applicable regulations require that a bidder submit qualification statements before  



                                                            -8-                                                      7035
  


----------------------- Page 9-----------------------

or  at  the  public  auction."    He  distilled  the  statutory  and  regulatory  requirements  as  



follows:  



                     11  AAC  82.428  and  11  AAC  82.435  require  a  bidder  to  

                                                                        

                     submit the qualifications information described in 11 AAC  

                     82.200  and  11  AAC  82.205  before  or  at  a  competitive  

                                                                                   

                     mineral lease sale or auction.  Under AS 38.05.250(b), the  

                     lease can only be offered to the qualified person who offers  

                     the highest bid. (Emphasis in original.)  



                     The Commissioner determined that "the information in the DNR record  

                                                                        



does not support the director's finding of excusable inadvertence" under 11 AAC 82.445.  



The Commissioner noted that the public notice for the auction had documented the need  

                                                                          



for every bidder to submit a statement of qualifications at the sale.  He noted that the  

       



agenda demonstrated that Krause verbally announced that requirement.  He noted that  



the sign-in sheet included a column that asked whether the bidder had submitted the  



qualifications form, and that Meisterheim had written "yes" and Benchoff had left the  

                                               



space blank. And he noted that Krause wrote an email after the auction that reported that  

                             



both Meisterheim and Benchoff had told him that they filled out the missing form but  

                                                                                                  



neglected to turn it in.  The Commissioner thus announced his findings:  



                     Reviewed in its entirety, I find that the DNR record does not       

                     support the director's conclusion that Scott Meisterheim's   

                     and  Mike  Benchoff's  failure  to  each  submit  the  required  

                     Statement of Qualifications form prior to bidding at the Nome  

                                                                 

                     auction  on  September  28,  2011  was  due  to  "excusable  

                                                                                            

                     inadvertence."  The record shows that all bidders had ample  

                                                      

                     notice  that  the  form  was  required  prior  to  bidding  at  the  

                                                                                            

                     Nome  auction.              While  a  minor  technical  omission  on  a  

                                                 

                     Statement  of  Qualifications  form,  such  as  an  incomplete  

                     address or phone number, might be viewed as immaterial or  

                                                  

                     due to excusable inadvertence under 11 AAC 82.445, there  

                     is no analysis in the Director's decision or apparent basis in  

                                                                       

                     the  record  to  conclude  that  failing  entirely  to  submit  a  

                     Statement  of  Qualifications  form  is  immaterial  or  due  to  

                                            



                                                                  -9-                                                           7035
  


----------------------- Page 10-----------------------

excusable inadvertence.  Contemporaneous information in the  

form      of    Kerwin       Krause's       October       13,    2011      email  

documented   that   both   Scott   Meisterheim   and   Michael  

Benchoff  admitted  they  did  not  submit  their  Statement  of  

Qualifications  forms  at  the  Nome  auction.    Finally,  when  

given the opportunity to explain what happened at the Nome  

                                                     

auction by responding to my January 26, 2012 letter, Scott  

                                                            

Meisterheim and Michael Benchoff did not reply.  



         Even if it could be construed that Scott Meisterheim's  

and Michael Benchoff's failure to submit their Statement of  

                   

Qualifications forms prior to bidding at the Nome auction  

was somehow due to "inadvertence,"16 

                                                      the Director erred by  

finding that inadvertence was excusable since (as discussed  

in   Point     #2)    department         regulations       require     that    the  

qualifications statement information must be submitted prior  

                                   

to or at a competitive mineral lease sale and is a prerequisite  

                                                  

that demonstrates a bidder is qualified to both apply for (bid)  

                                         

and acquire mining rights in Alaska.  



         There was "inadvertence" by department staff at the  

Nome auction since Scott Meisterheim and Michael Benchoff  

were given bid # cards that enabled them to make several  

outcry  bids,  without  verification  by  department  staff  that  

Scott   Meisterheim   and   Michael   Benchoff   had   in   fact  

submitted  their  Statement of Qualifications  forms  prior  to  

                                          

bidding - a mistake that was not discovered until after the  

auction when department staff returned to Anchorage.  But  

            

the staff error does not alleviate the bidder's responsibility to  

                                                  

comply with the law and submit the required qualifications  

information, a requirement for which all bidders had notice  

prior to the Nome auction, nor is it grounds to disadvantage  

                                               

the other competing bidders who complied with the law and  

                                                                         

properly submitted their Statement of Qualifications forms  

prior to the bidding.  



____________________  

16       "Inadvertence"  is  defined  as  "the  fact  or  action  of  



being inadvertent; inattention."  "Inadvertent" is defined as  

                                                                     



                                       -10-                                                   7035
  


----------------------- Page 11-----------------------

                     "not turning the mind to a matter; inattentive; unintentional."  

                      Webster's Ninth New Collegiate Dictionary, 1983.  



The  Commissioner  therefore  vacated  the  Director's  Determination  and  rejected  



Meisterheim's and Benchoff's bids for the twelve tracts.  



          I.         Benchoff's Appeal To The Superior Court  



                     In late June 2013 Benchoff and Pacifica Marine, Inc., a company to which  



                                                                                   3  

Benchoff  had  assigned  some  of  his  leasing  rights,   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  


----------------------- Page 12-----------------------

                              

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
  


----------------------- Page 13-----------------------

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
  


----------------------- Page 14-----------------------

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.  



III.      STANDARD OF REVIEW  



                                                                       

                   "Where the superior court acts as an intermediate court of appeal for an  



                                      

administrative   decision,   we   directly   and   independently   review   the   underlying  

administrative decision."4  



                   "We recognize four standards to review administrative decisions.  We apply  



                                                                     

a  substantial  evidence  standard  to  questions  of  fact,  a  reasonable  basis  standard  to  



questions  of  law  involving  agency  expertise,  a  substitution  of  judgment  standard  to  



questions of law not involving agency expertise, and a reasonable and not arbitrary  

standard to an agency's interpretation of its own regulations."5  



          4         Vonder  Haar v. State, Dep't of Admin., Div. of Motor Vehicles , 349 P.3d  



173,   177  (Alaska  2015)  (quoting  Conkey   v.   State,   Dep't   of   Admin.,   Div.   of  Motor  

Vehicles, 113 P.3d 1235, 1237 (Alaska 2005)).  



          5  

                                                        

                    Gottstein v. State, Dep't of Natural Res., 223 P.3d 609, 620 (Alaska 2010)  

(footnote omitted).  



                                                            -14-                                                       7035
  


----------------------- Page 15-----------------------

                                                                                                  

                    Under the substantial evidence standard, "findings will be upheld so long  



as there is enough relevant evidence to allow a reasonable mind to adequately support  



such  a  conclusion.    We  will  not  reweigh  conflicting  evidence,  determine  witness  



credibility,  or  evaluate  competing  inferences  from  testimony,  as  these  functions  are  

reserved to the agency."6  



                                                                                     

                    "When applying the reasonable basis test, we 'seek to determine whether  



                                                                                     

the agency's decision is supported by the facts and has a reasonable basis in law, even  



                                                                                                 7  

if we may not agree with the agency's ultimate determination.' "    



                                                                                            

                    "We will defer to [an agency's interpretation of its own regulations] unless  



                                                                                                              8 

                                                                                                                 "[O]nce the  

its interpretation is plainly erroneous and inconsistent with the regulation." 



                                                                                                                           

interpretation of the regulations is resolved, the [agency's] application of the 'law' to the  



                                                                                                  

particular  factual  circumstances  .  .  .  is  a  matter  committed  to  the  [agency's]  sound  



discretion.  Consequently, 'our scope of review is limited to whether the decision was  



                                                                              9  

arbitrary, unreasonable or an abuse of discretion.' "   



          6         Vonder   Haar ,  349  P.3d   at  177  (internal  quotation  marks  and  footnote  



omitted) (quoting McKitrick v. State, Pub. Emps. Ret. Sys. , 284 P.3d 832, 837 (Alaska   

2012)).  



          7  

                               

                    Davis Wright Tremaine LLP v. State, Dep't of Admin. , 324 P.3d 293, 299  

              

(Alaska 2014) (quoting Tesoro Alaska Petroleum Co. v. Kenai Pipe Line Co., 746 P.2d  

896, 903 (Alaska 1987)).  



          8  

                                                                          

                    Id. at 299 (quoting Kuzmin v. State, Commercial Fisheries Entry Comm'n ,  

                                                    

223 P.3d 86, 89 (Alaska 2009)); see also id. at 301 ("[I]t is well established that an  

                                                                           

agency's interpretation of its own regulations is reviewed under the reasonable basis  

standard; this standard 'recognizes that the agency is best able to discern its intent in  

promulgating the regulation at issue.' " (quoting Rose v. Commercial Fisheries Entry  

Comm'n, 647 P.2d 154, 161 (Alaska 1982))).  



          9         Rose , 647 P.2d at 161 (quoting State, Dep't of Admin. v. Bowers Office  



                                                                                                              (continued...)  



                                                              -15-                                                         7035
  


----------------------- Page 16-----------------------

                   "We review the superior court's decision whether to order a de novo trial  

                                                                                     10  "We will find an abuse  

                                                                                          

or a de novo examination of the record for abuse of discretion." 

of discretion when the decision on review is manifestly unreasonable."11  



IV.	     DISCUSSION  



         A.	       The Commissioner's Findings Of Fact Are Supported By Substantial  

                                                   

                  Evidence.  



                   The Commissioner's Decision on Remand made only limited findings of  



fact, all of which are supported by substantial evidence.  The Commissioner found that  



"[t]he record shows that all bidders had ample notice that the form was required prior to  



bidding at the Nome auction."  He cited four sources in the administrative record to  



directly     support      this    finding:      the    public     notice,     which      stated     that    "[u]nder  



11  AAC  82.435  each  bidder  at  the  sale  must  also  provide  a  statement  of  their  



qualifications to acquire and hold mineral rights in the State of Alaska"; the auction  



agenda, which records Krause's verbal instruction prior to the auction that "[a]ll bidders  



                                                                                           

must sign in, submit their qualification form and receive a bidder # in order to bid"; the  



            

sign-in sheet's reference to whether a bidder had filed his statement of qualifications,  



which  Benchoff  left  blank;  and  Krause's  October  13,  2011  email  report  that  both  



                                                                       

Meisterheim and Benchoff had told him that they filled out the forms but neglected to  



                                                                                                  

turn them in.   Earlier in the Decision on Remand the Commissioner also cited three  



                                                                                          

bidders who wrote in to describe the auction environment.  One of these bidders wrote  



         9(...continued)  



Prods., Inc., 621 P.2d 11, 13 (Alaska 1980)); see also Griffiths v. Andy's Body & Frame,  

                                                                                         

Inc. , 165 P.3d 619, 623 (Alaska 2007).  



         10        Treacy v. Municipality of Anchorage, 91 P.3d 252, 270 (Alaska 2004).  



         11       Ranes & Shine, LLC v. MacDonald Miller Alaska, Inc. , __ P.3d ___, Op.  



No. 7003 at 7, 2015 WL 1958657, at *3 (Alaska May 1, 2015).  



                                                         -16-	                                                  7035
  


----------------------- Page 17-----------------------

                                         

that the "instructions were made abundantly clear" and that "[t]here was no basis for any  



misunderstanding"; another wrote that "[t]he documents, instructions, and process to  



                                                                                                 

participate in the sale were very clear" and that the auction "was handled professionally  



and clearly"; and the third differed, writing that "[t]here may well have been confusion  



                                                                           

even for educated people," because "[w]hat might appear to be simple instructions under  



                                                    

ordinary circumstances may have been adversely affected by the extreme excitement of  



                                                                                               

the day of the auction."  Finally, the Department's regulations require the statement of  

qualifications to be filed "[b]efore the date of a competitive lease sale."12  



                                                                                                       

                    This is "enough relevant evidence to allow a reasonable mind to adequately  

support"13 the Commissioner's conclusion that "all bidders had ample notice that the  



                                                                                        

form was required prior to bidding at the Nome auction."  This court "will not reweigh  



                                                                                                           14  

conflicting evidence" when applying the substantial evidence standard.                                          



                    Moreover, although Pacifica Marine criticizes the instructions for being  



                                                                                                

generally "confusing" and "contradictory," it does not cite any evidence that Benchoff  



                                       

personally was either not on notice of the requirement or confused by it.  Pacifica Marine  



and Benchoff have never argued that the Department lost Benchoff's properly filed  



statement of qualifications form, or that a Department employee told him he did not have  



                                    

to file the form, or that he followed the instructions on the outcry bid form that allowed  



                                                                   

the form to be attached to the bid.  The State points out that in Pacifica Marine's brief to  



                                                                                           

the superior court it argued that "[i]f Mr. Benchoff's failure to submit an SOQ was due  



          12        11 AAC 82.428 (emphasis added).  



          13        Vonder  Haar v. State, Dep't of Admin., Div. of Motor Vehicles , 349 P.3d  



173, 179  (Alaska 2015) (quoting                  McKitrick v. State, Pub. Emps. Ret. Sys. , 284 P.3d 832,   

837 (Alaska 2012)).  



          14        Id. (quoting McKitrick , 284 P.3d at 837).  



                                                              -17-                                                         7035
  


----------------------- Page 18-----------------------

                                               

to anything other than his own carelessness there is nothing in the record that says so."  



In that brief Pacifica Marine also affirmed that Benchoff "told DNR that in the midst of  



the excitement he had completed an SOQ but simply neglected to include it with his  



paperwork during sign-in," citing Krause's email.  



                    Pacifica Marine also questions "[t]he Commissioner's factual conclusion  



                                                               

that  Mr.  Meisterheim  and  Mr.  Benchoff  were  the  only  successful  bidders  to  fail  to  



                                                             

comply with the SOQ requirement." The Commissioner did not reach such a conclusion,  



except perhaps by implication.  Instead, he recounted that not only Meisterheim and  



                                                                                  

Benchoff but also Kerr failed to file the required form.  The Commissioner's Decision  



      

on  Remand only dealt with the twelve tracts that were listed in the superior court's  



                                                                                                                     

remand order of August 30, 2012.  The Commissioner did not make findings as to other  



         15  

tracts. 



                    Pacifica Marine's final argument regarding the  Commissioner's factual  



findings is that they were incomplete.  "Where an agency fails to consider an important  

factor  in  making  its  decision,  the  decision  will  be  regarded  as  arbitrary."16                                 The  



                                           

"important factors" Pacifica Marine seeks to have considered are why Kerr was granted  



                                           

a  lease  and  "the  testimony  of  the  non-compliant  bidders."    The  Kerr  issue  may  be  



relevant to determining whether the Commissioner applied the policies arbitrarily or  



unreasonably, but the Department's treatment of Kerr was not an "important factor" in  



                                                                                                          

making its decision as to Benchoff.  In the cases Pacifica Marine cites, agencies failed  



          15         Benchoff also suggests that Tract 3 went to Kerr "only after DNR rejected              



a first-place bid on that tract by Mr. Benchoff," but this is contradicted by the record.  

Benchoff was never the high bidder for Tract 3; he was just mistakenly listed as such by  

                                                                                                                     

the Department for a period.  



          16        See Se. Alaska Conservation Council, Inc. v. State, 665 P.2d 544, 548-59  



(Alaska 1983) (citing State, Dep't of Transp. & Pub. Facilities v. 0.644 Acres, More Or  

                                                                                                

Less , 613 P.2d 829, 833 (Alaska 1980)).  



                                                             -18-                                                       7035
  


----------------------- Page 19-----------------------

                                                                                     17  

                                                                                                                                

to consider the direct effects of their actions.                                          Kerr's actions had no bearing on the  



Commissioner's factual finding that Benchoff had adequate notice of the requirement  



                                                                                                                       

that he submit a statement of qualifications form before bidding.  As to the second factor,  



                                                                                                        

"the testimony of the non-compliant bidders," Benchoff did not provide a response to the  



                                                                                                                                       

Commissioner's January 26, 2012 invitation to participate in the appeal.  That letter was  



                                                                                                                                

clear that although "[p]articipation in the appeal is voluntary," if the Commissioner did  



not  receive  a  response  he  would  "assume  the  applicant/bidder  has  chosen  not  to  



participate in the appeal."  



                         In  Gottstein v. State, Department of Natural Resources we affirmed an  



agency  decision  that  had  been  made  after  the  Commissioner  denied  the  appellants'  



                                         18  

                                                                                                                                     

request for a hearing.                         We held that the denial had not violated the appellants' due  



process rights or Department regulations, as the parties requesting a hearing had not  



presented the Commissioner with evidence of a dispute of material fact, as opposed to  



                              19  

                                                                                                                                             

merely theories.                   In the instant case, Pacifica Marine and Benchoff never requested a  



                                                                                                          

hearing  or  presented  any  evidence  in  response  to  the  Commissioner's  invitation  to  



                                   

participate in  the  appeal, nor did they request that the Commissioner reconsider his  



                                                                

Decision on Remand and include evidence in support of that request.  Their arguments  



about an incomplete record are less compelling than those we rejected in Gottstein.  



             17          See Arkanakyak v. State, Commercial Fisheries Entry Comm'n                                                            , 759 P.2d  



513, 517 (Alaska 1988) (agency did not consider whether language barriers prevented   

non-English speaking Alaska Native from satisfying legal requirements);  0.644 Acres,  

613 P.2d at 831-33 (agency did not consider effect of new construction on adjacent   

property despite statutory requirement that it consider and minimize private injury).  



             18          See 223 P.3d 609, 621-22 (Alaska 2010).  



             19          See id. at 623.  



                                                                             -19-                                                                       7035
  


----------------------- Page 20-----------------------

                    In sum, substantial evidence supported the Commissioner's finding of fact  



                                                                                     

that there was adequate notice of the requirement that the statement of qualifications be  



turned in prior to the auction.  



                                                                                                              

          B.	       The Commissioner's Interpretation Of 11 AAC 82.445  Was Not A  

                    Legal Error.  



                                                                                                              

                    11  AAC  82.445  forbids  consideration  of  incomplete  bids  "unless  the  



commissioner  determines  that  any  omission  was  immaterial  or  due  to  excusable  



                            20  

                                              

inadvertence . . . ."           Pacifica Marine argues that the Commissioner's interpretation of  



the regulations lacked a reasonable basis and must be reversed.  



                                                                                         

                    The  Commissioner  did  not  explicitly  define  what  makes  an  omission  



"immaterial  or  due  to  excusable  inadvertence"  in  his  decision,  but  he  did  contrast  



                                                                                          

Benchoff's failure to submit his Statement of Qualifications form with other omissions  



                                                                                                              

that might be excusable under 11 AAC 82.445:  "While a minor technical omission on  



a Statement of Qualifications form, such as an incomplete address or phone number,  



might be viewed as immaterial or due to excusable inadvertence under 11 AAC 82.445,  



                                                                                                     

there is no analysis in the Director's decision or apparent basis in the record to conclude  



                                                                                                                       

that failing entirely to submit a Statement of Qualifications form is immaterial due to  



                                                                    

excusable inadvertence."  He also wrote that Benchoff's inadvertence, if any, was not  



excusable "since . . . department regulations require that the qualifications statement  



information must be submitted prior to or at a competitive mineral lease sale."  



          20        The  regulation  arguably  commits  to  the  Commissioner's  discretion  the  



choice of whether to make a determination of materiality or excusable inadvertence, and  

                                                                                       

arguably only allows omissions to be "corrected in the manner provided by notice of  

                                                                              

sale."  But these were not the grounds the Commissioner relied on in his Decision on  

                                        

Remand, and because we affirm the merits of that decision we do not evaluate those  

                                                                                                

alternative grounds by which it might be affirmed.  



                                                             -20-	                                                      7035
  


----------------------- Page 21-----------------------

                    Pacifica Marine criticizes this latter determination, which it argues erected  



                                                                 

a rule "that the SOQ requirement could not be excused under any circumstances."  This,  



                                               

it argues, is counter to the text of 11 AAC 82.445, which allows the Commissioner to  



                                                                   

excuse that requirement under at least some circumstances.  But both this paragraph of  



the Commissioner's Decision on Remand and his discussion more generally focused on  



                                                               

the "failure to submit" the required forms.  The part of the regulations the Commissioner  



recounted was the timing ("must be submitted prior to or at a competitive mineral lease  



sale")  rather  than,  for  example,  the  information  the  regulations  required  bidders  to  



                                                                                                     

provide.  A rule that the failure to submit a form at all will not be deemed excusable  



                     

inadvertence does not mean that other omissions, such as a failure to check a required  



                                                                                                            

box  or  the  entry  of  an  incomplete  address,  could  not  be  found  to  be  excusable  



                       

inadvertence. Therefore the Commissioner's interpretation did not read 11 AAC 82.445  



out of existence, as Pacifica Marine argues.  



                    Although         the    Commissioner            did     not    explicitly       define      "excusable  



                                                                        

inadvertence," the parties agree that the Black's Law Dictionary definition of excusable  



neglect provides a reasonable definition:  



                                                                        

                    A  failure  -  which  the  law  will  excuse  -  to  take  some  

                                                                                             

                    proper step at the proper time (esp. in neglecting to answer a  

                    lawsuit)   not   because   of   the   party's   own   carelessness,  

                    inattention, or willful disregard of the court's process, but  

                    because  of  some  unexpected  or  unavoidable  hindrance  or  

                                  

                    accident or because of reliance on the care and vigilance of  

                    the  party's  counsel  or  on  a  promise  made  by  the  adverse  

                            [21] 

                    party.  



                    The State and Solomon Gold argue that Benchoff's failure was due to his  

                                    



own  "carelessness  or  inattention"  to  the  notices  of  the  statement  of  qualifications  



          21        BLACK 'S LAW DICTIONARY  1195-96 (10th ed. 2014).  



                                                             -21-                                                           7035  


----------------------- Page 22-----------------------

requirement that the Commissioner documented.  Pacifica Marine, in contrast, argues  



                                                

that the fact that Benchoff was given a bid card without filing the required form was an  



                     

"unexpected  hindrance  or  accident"  and  that  the  Commissioner  was  obligated  to  



investigate whether the Department "induced a bidder into failing to submit an SOQ."  



                                          

                    The State and Solomon Gold have the better argument.  The Commissioner  



                                                                                                              

did not ignore the evidence that Department employees improperly gave Benchoff a bid  



                                                                                                        

card:  He labeled this "inadvertence," "a mistake," and "staff error."  But he did rule that  



                                                                                                         

this error "does not alleviate the bidder's responsibility to comply  with the law and  



submit the required qualifications information, a requirement for which all bidders had  



                                                                                                 

notice prior to the Nome auction."  By focusing on the fact that Benchoff was on notice  



                                              

of  the  requirements  prior  to  the  auction  and  therefore  prior  to  any  staff  error,  the  



Commissioner implicitly addressed and rejected Pacifica Marine's argument that the  



Department's mistakes at the auction were responsible for Benchoff's actions.  



                    The  Commissioner's  decision  is  thus  consistent  with  a  definition  of  



                                                                                     

"excusable inadvertence" that Pacifica Marine agrees is reasonable.  Particularly in light  



                                                                                                     

of the decision of Pacifica Marine and Benchoff not to participate in the appeal when it  



                                                                                     

was before the Commissioner or seek reconsideration, and the corresponding absence  



             

of  any        evidence  of  actual  reliance  on  Department  employees'  misstatements  by  



Benchoff,  the  Commissioner's  determination  that  "excusable  inadvertence"  did  not  



                                          

include failing to turn in a form required by regulations, the public notice, the sign-in  



sheet, and the verbal instructions delivered at the auction had a reasonable basis.  



                                                        

                    The reasonableness of the Commissioner's definition of "materiality" is a  



              

slightly  more  complicated  matter.    As  the  superior  court  noted,  we  have  defined  



                                                                                                               

materiality  in  other  bidding  contexts.    For  example,  in  Chris  Berg,  Inc.  v.  State,  



                                                                                                                         

Department of Transportation & Public Facilities we explained that a variance in a bid  



to win a construction project "is material if it gives the bidder a substantial advantage  



                                                              -22-                                                         7035
  


----------------------- Page 23-----------------------

                                                                                               22  

over other bidders and thereby restricts or stifles competition."    Because the mistake  



                                                                                                

in that case - the placement of the price information for one item one line below its  



                                            

proper location - was "[a] minor technical defect or irregularity which does not and  



                          

could not affect the substance of a low bid in any way," we held that it was immaterial  

and thus that rejecting the bid on that basis was an abuse of the agency's discretion.23  



                    The Commissioner's decision, in contrast, did not define "materiality" in  

                                                                                                            



terms of "substantial advantage."  Instead the Commissioner focused on the magnitude  

                                                                                             



of the omission, ruling that Benchoff's failure to turn in the required form at all was  

           



material, even if it was possible that a smaller omission, "such as an incomplete address  

                                                                                                      



or phone number," might have been immaterial.  



                                                         

                    Pacifica Marine argues that the definition of "materiality" recognized in  



earlier cases must apply in this case as well.  In both the procurement context and the  



             

leasing  context the government's objectives are largely similar:  "to promote honest  

                                               24 and to maximize the use of public resources by getting  

competition on an equal basis,"                                                  



the best deal possible while also minimizing the effort agencies are forced to expend  



addressing and correcting bid variances and omissions.  The similarity of the interests  



                                                                                                             

at  play  in  the  government  procurement  and  leasing  contexts  argues  in  favor  of  a  



consistent definition of materiality.  



                                                                                      

                    The State and Solomon Gold argue that the Commissioner's interpretation  



                                                                                                          

of  "materiality"  should  be  accepted  so  long  as  it  has  a  reasonable  basis,  even  if  it  



          22        680 P.2d 93, 94 (Alaska 1984).  



          23        See id.  



          24        Lower Kuskokwim Sch. Dist. v. Found. Servs., Inc. , 909 P.2d 1383, 1386   



(Alaska 1996) (quoting McBirney & Assocs. v.                              State , 753 P.2d 1132, 1136 (Alaska   

1988)).  



                                                              -23-                                                         7035
  


----------------------- Page 24-----------------------

                                                                                                                

conflicts with the definition of materiality we have previously announced.  They point  



       

out  that  cases  like  Chris  Berg  addressed  bid  "responsiveness"  in  the  context  of  



government procurement, while this case addresses bid "completeness" in the context  



of government leasing.  Because the term arises in a different context, they argue, the  



                                                                       

Commissioner's interpretation is entitled to the same deference it would receive had we  



                                                                                          

not interpreted "materiality" in any of our prior cases. In this case the term "immaterial"  



appears in a Department regulation, and as a general matter "[w]e review an agency's  



                                                 

interpretation and application of its own regulations using the reasonable basis standard  

of review."25  



                    The deference due to an agency interpretation of a term that has already  



                                                                                    26  

                                                                                        It is also a question that we  

been interpreted by the courts is a complicated question. 



do not need to settle to decide this case because, as the State points out, the failure to  



                                             

submit a timely Statement of Qualifications form could "give[] the bidder a substantial  



                                                                                                            27  

advantage over other bidders and thereby restrict[] or stifle[] competition."                                   Along with  



forms like the Statement of Qualifications, bidders at public auctions must provide a  



          25        Davis Wright Tremaine LLP v. State, Dep't of Admin.                            , 324 P.3d 293, 299  



(Alaska 2014).  



          26        See, e.g., King v. Alaska State Hous. Auth. , 512 P.2d 887, 892-93 (Alaska  

                                                                                     

 1973) (determining that a bidder's failure to timely submit a deposit was not material  

without  reference  to  deferring  to  agency  view,  but  also  suggesting  that  "reasonable  

basis" standard  of review applied).   Cf. Nat'l Cable & Telecomm. Ass'n v. Brand X  

                             

Internet Servs. , 545 U.S. 967, 982 (2005) (holding that, under federal law, "[a] court's  

                                                                                                                

prior judicial construction of a statute trumps an agency construction otherwise entitled  

to Chevron deference only if the prior court decision holds that its construction follows  

                                  

from  the  unambiguous  terms  of  the  statute  and  thus  leaves  no  room  for  agency  

discretion").  



          27        Chris Berg, 680 P.2d at 94.  



                                                             -24-                                                        7035
  


----------------------- Page 25-----------------------

            28  

deposit.          Following  the  auction  these  deposits  are  returned  to  "all  unsuccessful  

                                                                                    

              29   The  State  reasons  that  if  Benchoff  failed  or  refused  to  ever  submit  a  

bidders."                  



Statement of Qualifications form he would have become an "unsuccessful bidder" and  

                                                        



thus entitled to the return of his bid deposit.  This would be a luxury unavailable to other  



                                                 

high bidders, who would forfeit their deposits if they were unable to assemble the funds  



                                                 30  

                                                     Thus, as the State pointed out at oral argument, a  

to cover the full purchase price. 



determination that the failure to file a Statement of Qualifications form is immaterial  



                                              

would encourage bidders not to file the form until, in the days and weeks following an  



auction, they had acquired adequate financing to pay the full cost of the leases.  



                    We  thus  agree  with  the  State  that  the  failure  to  submit  a  Statement  of  



                                                                                                               

Qualifications form is material under either of the proposed definitions of the term.  We  



                                                            

therefore hold that the Commissioner's interpretation of 11 AAC 82.445 was not a legal  



error.  



                                                                               

          C.	       The Commissioner's Application Of The Regulations To The Facts Of  

                                                        

                    This  Case  Was  Not  Arbitrary,  Unreasonable,  Or  An  Abuse  Of  

                    Discretion.  



                                                                                                         

                    For the reasons discussed above, the Commissioner did not act arbitrarily  



                                                                                                          

or  unreasonably  or  abuse  his  discretion  when  directly  applying  11  AAC  82.445  to  



                                                                                       

Benchoff's  omission.    The  Commissioner  determined  that  the  requirements  were  



                                                                                                

sufficiently  clear  prior  to  the  auction  that  Benchoff's  failure  to  submit  the  required  



                                                                       

Statement of Qualifications form could not be attributed to any confusion on the day of  



                                                                                                

the auction and thus was not due to excusable inadvertence. He also determined that the  



          28        11 AAC 82.435.  



          29        11 AAC 82.475.  



          30        Indeed,  the  State   represented  at  oral  argument  that  in  this  case  the  



Department did return Benchoff's bid deposit.  



                                                              -25-	                                                        7035
  


----------------------- Page 26-----------------------

                                                  

omission  was  too  significant  to  be  deemed  immaterial,  and  as  discussed  above  the  



                                                                                      

omission could have provided Benchoff with a substantial advantage over other bidders.  



None of these determinations was arbitrary, unreasonable, or an abuse of discretion.  



                    But  Pacifica  Marine  argues  that  the  Commissioner's  application  of  the  



                                                                                     

regulations was flawed not solely due to his treatment of Benchoff's omission, but also  



                 

due to the Department's inconsistent treatment of another bidder who failed to submit  



                                                                              31  

the required Statement of Qualifications, Ken Kerr.                               As the superior court noted, a  



                                                                                                

haphazard application of the regulations might demonstrate that the Commissioner had  



                                                                                                     

acted arbitrarily or unreasonably by holding Benchoff to a different standard than other  



bidders.  



                                                                                                       

                    Pacifica Marine's invocation of Kerr's interactions with the Department is  



arguably improper because those interactions were not before the Commissioner when  



                                                                           

he issued his Decision on Remand.  Alaska Rule of Appellate Procedure 604(b) provides  



                                                                                                      

that the record on appeal from an administrative agency "consists of the original papers  



                                                                           32  

                                                                                We have stated that when courts  

and exhibits filed with the administrative agency." 



                                                                           

hear appeals from agency decisions, "the record on appeal in such cases properly consists  



          31        In Pacifica Marine's appeal to the superior court it also alleged that the  



Department's  actions  amounted  to  selective  enforcement  and  thus  a  violation  of  

Benchoff's  right  to  equal  protection,  a  claim  the  superior  court  rejected.    Although  

                                                                                                   

Pacifica Marine's statement of points on appeal to this court included an allegation of an  

                                           

equal protection violation, its briefing locates the arguments about selective enforcement  

within the larger argument that the Commissioner's application of 11 AAC 82.445 was  

                                                                                                        

arbitrary, unreasonable, or an abuse of discretion, rather than advancing an independent  

equal protection claim.  



          32        Alaska R. App. P. 604(b)(1)(A).  



                                                             -26-                                                        7035
  


----------------------- Page 27-----------------------

of evidence that was either 'submitted to' or 'considered by' the administrative board."33  

                                                                                        



We  have  also  held  that,  at  least  in  modification  proceedings  involving  significant  

                                                    



previous evidence, it is error for a reviewing court to consider even evidence that is in  

                                                                                

the administrative record if it is "beyond the evidence which the Board considered."34  



                    The  administrative  record  does  not  contain  any  evidence  of  the  final  



disposition of the tracts on which Kerr bid.  The only evidence that Kerr received a lease  

                                                                                                                       



despite failing to submit a Statement of Qualifications form came via submissions to the  

                                                                                



superior court during the course of Pacifica Marine's initial appeal to that court.  This  

                                                      



evidence was thus introduced via post-decision affidavits like those we have previously  

                                                                                                    

                                   35    If  Pacifica  Marine  and  Benchoff  deemed  this  evidence  

held  "must  be  struck."       



important to the Commissioner's decision, it was imperative that they submit it for his  

                                                                                                         



consideration during the initial adjudication rather than waiting for the matter to be  



appealed before actively participating.  



                    Even if we were to consider the affidavits, they demonstrate that although  

                                                                                   



Kerr's   and   Benchoff's   bids   reached   different   resolutions,   at   no   time   did   the  

                                                                                                                   



Commissioner or other Department staff treat them differently.  When the Department  

                                                                                               



granted  Kerr  his  lease  the  most  recent  statement  from  the  Department  was  the  



                                                                                                   

October 2011 Director's Determination, under which bidders were permitted to late-file  



                                                 

their Statement of Qualifications forms.  The Director's Determination was at that point  



          33       Alvarez v. Ketchikan Gateway Borough , 28 P.3d 935, 939 (Alaska 2001)  



(quoting Oceanview Homeowners Ass'n v. Quadrant Constr. & Eng'g, 680 P.2d 793,  

798 (Alaska 1984)).  



          34       Interior Paint Co. v. Rodgers , 522 P.2d 164, 169 (Alaska 1974).  



          35        State, Dep't of Natural Res. v. Transamerica Premier Ins. Co., 856 P.2d  



766, 776 (Alaska 1993) (citing L.L.M. v. P.M. , 745 P.2d 599, 600 (Alaska 1987) and  

                                                                                                    

Alaska R. App. P. 210).  



                                                             -27-                                                       7035
  


----------------------- Page 28-----------------------

on appeal, but the Department did not issue a revised interpretation or application of  



 11 AAC 82.445 until the Commissioner's Decision on Remand in June 2013.  By then  



the Department's decision to grant Kerr his lease was final and, unlike in Benchoff's  



case,  was  not  protested  or  appealed.    Thus,  although  Benchoff  was  disqualified  for  



                                                                                                    

failing to submit a Statement of Qualifications form while Kerr was not, this difference  



did not arise from any arbitrary, unreasonable, or even inconsistent treatment by the  



Commissioner and Department.  



                                                                                                     

          D.	       The Superior Court Did Not Abuse Its Discretion By Failing To Order  

                    A Trial De Novo.  



                    Alaska Rule of Appellate Procedure 609(b)(1) provides that " [i]n an appeal  



                                                                                                          

from an administrative agency, the superior court may in its discretion grant a trial de  



novo in whole or in part."  Pacifica Marine argues that the superior court was required  



                                                                                            

in this case to hold a trial de novo because there were "signs of a significantly incomplete  



              

Agency Record."  Pacifica Marine particularly focuses on the superior court's request  



      

for supplemental information concerning the Department's treatment of Kerr, which it  



                                                              

argues amounted to "tacitly admitting that an augmented agency record would help clear  



up any concerns."  



                                                                                                           

                    In discussing the superior court's discretion to order a trial de novo when  



                                                                                         

hearing an appeal from an administrative decision, we have emphasized "that a trial de  

                                                       36   We have explained that it is an appropriate tool  

                                                                         

novo is 'a departure from the norm.' "  



if a  party  "had  been  denied  the  opportunity  to  present  to  the  [agency]  relevant  and  

       



          36        Gottstein v. State, Dep't of Natural Res.                , 223 P.3d 609, 628 (Alaska 2010)  



(quoting  S.  Anchorage  Concerned  Coal.,  Inc.   v.   Municipality  of  Anchorage  Bd.  of  

Adjustment , 172 P.3d 774, 778 (Alaska 2007)).  



                                                            -28-	                                                      7035
  


----------------------- Page 29-----------------------

                              37  

                                                                                                               

material evidence."               The one case Pacifica Marine identifies in which this court held  



        

that  a  trial  de  novo  was  required  fits  this  mold:    In  Nash  v.  Matanuska-Susitna  



                                                                                               

Borough we concluded that when an agency refused to allow a party to present witness  



                                                                           

testimony  "he  was  prohibited  from  presenting  relevant,  material  evidence,  and  was  



                                                 

thereby effectively denied due process," and therefore entitled to a trial de novo in the  

superior court.38  



                                                                          

                    This case does not present a similar due process violation, nor does Pacifica  



                                                                                                               

Marine allege one.  The Commissioner invited participation in an appeal that had stayed  



                                              

Benchoff's ability to acquire the leases to eleven tracts of land, and which, contrary to  



                                                                                                                    

Pacifica Marine's arguments in its reply brief, plainly involved more issues than "DNR  



                                     

losing its own records  after the Auction."  But Benchoff and Pacifica Marine never  



submitted an affidavit or other evidence or requested a hearing before the Commissioner,  



                                             

including  during  the  nine  months  between  the  superior  court's  remand  to  the  



Commissioner for a decision on the merits and the Commissioner's Decision on Remand.  



                                                                                                                   

                    Pacifica Marine has not identified any case in which this court has required  



                                                

a superior court to hold a trial de novo in the absence of a due process violation at the  



agency level.  The two layers of deference in this case - the superior court's deference  



to the record the Commissioner used and this court's deference to the superior court's  



          37        Keiner v. City of Anchorage , 378 P.2d 406, 409 (Alaska 1963); see also  



Treacy v. Municipality of Anchorage, 91 P.3d 252, 270 (Alaska 2004) ("A trial de novo  

                                                                                                                         

is  particularly  appropriate  when  certain  issues  are  not  within  the  expertise  of  the  

reviewing  body  or  when  the  present  record  is  inadequate.  A  trial  de  novo  is  also  

appropriate when the procedures of the administrative body are inadequate, for instance  

                                                                                            

when they do not provide due process, when the agency was biased, or when the agency  

                                                                                            

excluded  important  evidence.    Normally,  however,  a  court  will  review  an  agency  

                                                                                       

decision on the record." (footnotes omitted)).  



          38        239 P.3d 692, 701 (Alaska 2010).  



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----------------------- Page 30-----------------------

discretion in granting a trial de novo - demonstrate that the superior court's refusal to          



grant a trial de novo was not an abuse of discretion.  



V.              CONCLUSION  



                               We AFFIRM the superior court's decision to affirm the Commissioner's  



decision.  



                                                                                                       -30-                                                                                     7035
  

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