Hakala v. Atxam Corp.

This appeal involves the statutory interpretation of the phrase “a primary place of business,” as contained in § 14(c)(1) of the Alaska Native Claims Settlement Act (ANCSA), 43 U.S.C. § 1613 (c)(1) (1986). Section 14(c)(1) requires a village corporation, upon receiving its interim conveyance of land from the federal government, to reconvey to the occupant any land used, as of December 18, 1971, as “a primary place of business.” Since 1969, George Kitchen, later with help from Steven Hakala, guided brown bear hunts on the Canoe Bay lands to which Atxam, a village corporation, now has title. They frequently started and ended their hunts at one particular site, where they erected a small cabin. Kitchen and Hakala claim that, since the cabin and the surrounding lands were “a primary place of business,” Atxam must reconvey title to them pursuant to § 14(c)(1). Kitchen and Hakala appeal the trial court’s grant of summary judgment in favor of Atxam. We conclude that Kitchen and Hakala’s cabin site was “a primary place of business.”

I.

For at least the last 30 years, George Kitchen has made a living as an air taxi pilot and hunting guide. In the fall of 1967, Kitchen began professionally guiding in the Canoe Bay area of the Alaska Peninsula, roughly halfway between the Bering Sea and the Pacific Ocean. Kitchen and his clients hunt predominantly brown bear and some caribou in this area. In 1969, Kitchen erected a prefabricated metal structure on the Canoe Bay site to serve as the base camp for his bear hunting operations. In his deposition, Kitchen described it as ten feet by twelve feet, “a garage type deal made out of more of a plastic than metal,” with no windows. After bears and strong winds tore down the structure, Kitchen re-erected similar prefabricated metal structures in 1970 and again in 1971 or 1972.

In 1974, Kitchen and Steven Hakala, a stepson, built a permanent structure made of plywood to serve as the base camp for the guiding operations.[1] The cabin is a one- room structure, 16 by 20 feet in dimension and contains an oil stove for heat, a cooking stove, five bunks, electric lights and various other pieces of furniture. An outhouse, also built in 1974, stands approximately 20 yards from the cabin. A bush airstrip which Kitchen uses when he flies in customers and supplies, is also located near the cabin.

Kitchen holds a guiding license which he obtained in 1958, and an exclusive area permit which he obtained in 1973 when the State of Alaska first allocated such permits. The exclusive area permit grants Kitchen exclusive rights to guide paying customers in the exclusive area of approximately 400 square miles.[2] In addition to his guiding operations in the Canoe Bay area, Kitchen also ran an air taxi business in the early 1970s and guided out of Teller, Kotzebue, and in the Wrangell and Talkeetna Mountains.

Kitchen’s guiding operations in the Canoe Bay area have typically proceeded as follows: Kitchen takes a maximum of six clients at a time and all necessary supplies into the cabin in the Canoe Bay area, by making several trips back and forth by plane. Although the majority of the time he uses the Canoe Bay cabin as the base camp, Kitchen occasionally uses a cabin at Minos Creek — about twenty miles away — as the base camp. From the base camp, Kitchen guides the group of hunters in the wilderness areas surrounding the base camp, setting up smaller “spike camps” wherever brown bears are spotted. Kitchen’s strategy is to hunt wherever the hunting is good.

Brown bear season was limited to a two-week period of time in May and a two-week period of time in October.[3] As a result, Kitchen’s use of the cabin and its environs was limited to these two-week periods of time with a couple of days added both before and after the two-week seasons to prepare for and clean up after the hunt.

Kitchen charged each hunter $4,000 for his guiding services in Canoe Bay in 1971. This price had risen to $7,000 per hunter by 1987, of which Kitchen profits $1,800 per hunter after expenses. Beginning in 1975, Hakala served as an assistant guide to Kitchen, aiding him in the guiding operations out of Canoe Bay. Kitchen and Hakala have an existing agreement that Hakala will take over Kitchen’s guiding operations when Kitchen, presently 72 years of age, retires.

Atxam Corporation is a Village Corporation. The United States government conveyed title to 12,500 acres in the Canoe Bay area to Atxam by Interim Conveyance No. 159 pursuant to § 14(a)(1) of ANCSA. The interim conveyance is subject to a number of exceptions and easements. Kitchen’s cabin is located on land described in the interim conveyance, to which Atxam presently has title. Accordingly, Atxam sued Kitchen and Hakala in superior court claiming that Kitchen and Hakala have committed and continue to commit a trespass by erecting a cabin on Atxam’s property and by leading hunting expeditions on Atxam’s lands. Atxam sought a permanent injunction against future trespasses, possession of the property and money damages. Kitchen and Hakala claim that they are entitled to have the area upon which the cabin is situated and the hunting areas they use in their guiding operations reconveyed to them under § 14(c)(1) of ANCSA.

After filing its complaint in the Superior Court, Third Judicial District, Atxam moved for partial summary judgment. The superior court granted Atxam’s motion for partial summary judgment, ordered Kitchen and Hakala to give possession of the cabin to Atxam, extinguished any claim that Kitchen and Hakala had to the lands described in the interim conveyance, and enjoined Kitchen and Hakala from entering upon or hunting on the land described in the interim conveyance. Atxam then moved the court to dismiss its claim for a money judgment for past trespasses and for entry of final judgment based on the court’s prior partial summary judgment order. The superior court granted Atxam’s motion and entered final judgment consistent with the summary judgment order. Kitchen and Hakala appeal from the superior court’s grant of partial summary judgment.

II.

The primary issue in this appeal concerns how the court should interpret the phrase “a primary place of business” as contained in § 14(c)(1) of ANCSA. In defending themselves against Atxam’s trespass claim, Kitchen and Hakala claim that they are entitled to have certain portions of Atxam’s land, which they have used as “a primary place of business,” reconveyed to them pursuant to § 14(c)(1) of ANCSA. Atxam’s interim conveyance explicitly states that it is subject to the reconveyance clause in § 14(c) of ANCSA which reads in pertinent part as follows:

Each patent issued pursuant to subsections (a) and (b) of this section shall be subject to the requirements of this subsection. Upon receipt of a patent or patents:

(1) the Village Corporation shall first convey to any Native or non-Native occupant, without consideration, title to the surface estate in the tract occupied as of December 18, 1971 . . . . as a primary place of residence, or as a primary place of business, or as a subsistence campsite, or as headquarters for reindeer husbandry; . . . .

(Emphasis added.) 43 U.S.C. § 1613(c)(1).

To date, no case has interpreted § 14(c)(1), and the legislative history of the Act provides no insight into this particular section. Both sides have provided the court with their interpretations of the phrase “a primary place of business,” neither of which wholly lacks merit.

The first step in interpreting an ambiguous phrase in a statute is to “construe[] [it] in light of the purpose of the enactment.” Commercial Fisheries Entry Comm’n v. Apokedak, 680 P.2d 486, 489-90 (Alaska 1984). Another rule of construction instructs the court to give effect to the plain meaning of the language. Wilson v. Municipality of Anchorage, 669 P.2d 569, 571-72 (Alaska 1983).

In the introductory section of ANCSA entitled “Congressional findings and declaration of policy,” Congress sets out the purposes of the Act:

Congress finds and declares that —
(a) there is an immediate need for a fair and just settlement of all claims by Natives and Native groups of Alaska, based on aboriginal land claims;
(b) the settlement should be accomplished rapidly, with certainty, in conformity with the real economic and social needs of Natives, without litigation, with maximum participation by Natives in decisions affecting their rights and property, . . . .

43 U.S.C. § 1601. In ANCSA, Congress reiterated the United States’ policy of giving Native tribes “title to a portion of the lands which they occupied.” House Comm. on Interior and Insular Affairs, Alaska Native Claims Settlement Act of 1971, H.R. Rep. No. 523, 92d Cong., 1st Sess., reprinted in 1971 U.S. Code Cong. & Admin. News 2192, 2193.

Furthermore, Congress was sensitive to the impoverished condition of Natives and the lack of opportunity Natives have to improve their condition. Id. at 2196. Courts have adopted the policy of construing ambiguities in ANCSA in favor of Natives. United States v. Atlantic Richfield Co., 612 F.2d 1132, 1138-39 (9th Cir. 1980); Alaska Public Easement Defense Fund v. Andrus, 435 F. Supp. 664, 670 (D. Alaska 1977).

We do not, however, believe that Congress intended under ANCSA to convey lands to native corporations to the exclusion of those who had previously utilized the lands in an established, legal and routine fashion. Otherwise, we can find no reason for Congress to have included the reconveyance clause in § 14(c)(1). Thus, we believe that in § 14(c)(1), Congress intended to protect the existing rights of those using lands which would later become subject to an interim conveyance under ANCSA. Accordingly, we adopt an interpretation of the phrase “a primary place of business” which effectuates Congress’ intent to protect a wide array of existing legitimate businesses.

Kitchen and Hakala urge the court to adopt a common-sensical interpretation of “a primary place of business.” In essence, Kitchen and Hakala argue that since the cabin site served as the base camp of their guiding operations, the cabin site must have been Kitchen’s “primary place of business” on the relevant date, December 18, 1971.

Kitchen and Hakala argue that it is significant that Congress chose to use the indefinite article “a” instead of the definite article “the” to precede “primary place of business” in § 14(c)(1) of ANCSA. Kitchen and Hakala argue that in utilizing the article “a” Congress must have meant “that the primary place of business in question does not have to be the only place of business of an individual.” (Emphasis in original.) See Brooks v. Zabka, 168 Colo. 265, 450 P.2d 653, 655 (Colo. 1969) (“the definite article ‘the’ particularizes the subject which it precedes . . . . [and] is a word of limitation as opposed to the indefinite or generalizing force of ‘a'”).

Kitchen and Hakala’s argument requires further development. We recognize that a person can engage in more than one type of business. In fact, Alaskan residents, known for their independent and often untraditional ways of life, often do not engage in just one type of business. Instead, many Alaskans make a living from several different businesses such as fishing, hunting, guiding or some combination of these and other activities. We find that for each business in which a person engages, there can be only one primary place of business.[4] The primary place of any business is that place which serves as the center of activity for that business.

We turn now to Atxam’s proposed interpretation of a “primary place of business” which is more quantitative than Kitchen and Hakala’s. Atxam suggests the fulfillment of three requirements for a finding of “a primary place of business.” First, Atxam would require that the place of business be improved and not an “undeveloped piece of raw wilderness.” Second, Atxam would require some kind of permanent structure. Third, Atxam would require that the  place be used at least six months out of the year for business. Atxam’s definition goes too far. A set of rigid and arbitrary requirements would only serve to defeat Congress’ intent of protecting the valid and existing rights of those previously using the lands in question.

In interpreting the phrase “a primary place of business,” we are particularly mindful of the statutory context in which that phrase appears. Most of the lands subject to conveyance under ANCSA are remote lands, outside the confines of cities, towns and villages. In drafting § 14(c)(1), Congress must have had in mind those particular lands, and the nature of the particular  businesses that are ordinarily conducted on those lands. Much of that business is seasonal, and involves the use of structures that can hardly be considered permanent. [5] Atxam’s proposed requirements of a permanent structure and six months’ occupancy simply are not consonant with the realities of the businesses that Congress must have had in mind — namely, businesses conducted on rural or remote lands.[6] We are unwilling to adopt such a restrictive definition.

Since the facts in this case are undisputed, summary judgment is a proper procedure with which to resolve this case.[7] See Alaska R. Civ. P. 56(c). However, we believe that the undisputed facts dictate a result contrary to the result arrived at by the trial court. The facts indicate that Kitchen used the cabin and the immediate, surrounding area as the base for his brown bear guiding operations. Kitchen was a registered guide and had a state license to hunt in the area. He has guided out of the Canoe Bay area and, in particular, out of the cabin site in question, since 1969. Before Atxam received title to the lands, Kitchen legally operated his business out of the area. It seems clear to us that the reconveyance clause in ANCSA sought to protect existing uses of land such as Kitchen’s. Since the cabin was the nucleus of his guiding business, we conclude that it was a primary place of business.

We hold that, pursuant to § 14(c)(1), Atxam must reconvey the site of the cabin and curtilage to Kitchen because it was “a primary place of business” in 1971. We remand to the trial court to determine the size of the curtilage; that is, a reasonable area surrounding the cabin which Kitchen needs so that he can use the cabin as his own.[8] Additionally, Kitchen and Hakala are allowed to use the public easements, namely the coastline easement and the bush airstrip easement, contained in the interim conveyance to the same extent as the public.[9] However, we do not authorize Kitchen or Hakala to hunt on any of Atxam’s lands which are not in the designated curtilage or subject to the public easements without first getting permission from Atxam. To this extent, we affirm the trial court’s injunction, which enjoins Kitchen and Hakala from entering upon, crossing over or hunting on Atxam’s lands, as an appropriate remedy for a continuing trespass. See Sundquist v. Halloran, 5 Alaska 594, 600 (D. Alaska 1917) (legal remedy of money damages is inadequate and issuance of injunction proper in continuing trespass action due to the necessity of a multiplicity of suits).

The judgment of the superior court is REVERSED and this case is REMANDED for further proceedings consistent with this opinion.


Dissent by: RABINOWITZ

Dissent

RABINOWITZ, Justice, dissenting.

I agree with the majority’s acknowledgement that ANCSA was intended to benefit Natives, and that courts, to that end, have adopted the policy of construing ambiguities in favor of Natives. For that reason I cannot agree with the majority’s expansive interpretation of “a primary place of business,” which requires reconveyance of Native lands “to protect a wide array of existing . . . . businesses.”

Furthermore, even assuming arguendo that the majority’s interpretation of “a primary place of business” as “that place which serves as the center of activity for [a] business” comports with Congress’ intent, it does not support the result reached in this case. Although Hakala may have had separate primary places of business for his guiding and air taxi businesses, the cabin at issue here was not the primary place of business for his guiding business. In 1971, the determinative year for purposes of reconveyance, Hakala guided twenty parties. Only two of those twenty parties were guided out of the Canoe Bay cabin. I fail to see how a cabin that served as a base for only one-tenth of the activities of Hakala’s guiding business can be “the center of activity for that business” or the “nucleus of his guiding business” for purposes of Section 14(c)(1). I therefore dissent.

Buettner v. Kavilco, Inc.

Mark Buettner and Henry G. Hamar brought a quiet title action against Kavilco, Inc., an Alaska native village corporation, claiming title to property under section 1613(c)(1) of the Alaska Native Claims Settlement Act. The district court granted summary judgment in favor of Kavilco, holding that Buettner’s and Hamar’s rights were governed wholly by section 1613(g) of the Act, to the exclusion of section 1613(c)(1). We reverse and remand.

I

FACTS

On July 13, 1971, Mark Buettner obtained a revocable and non-transferable special use permit from the United States Forest Service. The permit granted Buettner permission to build a year-round residence on Lot 7 of the Happy Harbor Residence Group, located on Kasaan Island near Ketchikan, Alaska. The permit, while renewable, expires December 31, 1990.

During the summer of 1971, Buettner and his wife began clearing the Happy Harbor lot and constructing their cabin. Meanwhile, they lived aboard a small cabin cruiser moored in the harbor nearby. By late October, winter was coming on. The Buettners had not completed their cabin, and a combination of the weather and dwindling finances forced them to leave for the winter. They returned to Happy Harbor in the spring of 1972 and finished building the cabin.

On March 13, 1972, Henry Hamar and his wife purchased a cabin located on Lot 8 of the Happy Harbor Residence Group from Carl Porter. The cabin had been used by Porter as his home since the winter of 1969-1970, also pursuant to a United States Forest Service special use permit. The Hamars obtained their own special use permit for Lot 8 in May of 1972. Their permit expires on December 31, 1991.

The native village of Kasaan is located on a separate island approximately five miles from Happy Harbor. Kavilco, Inc. is the native corporation for the village of Kasaan. In December of 1971, Congress passed the Alaska Native Claims Settlement Act, 43 U.S.C. §§ 1601-1629e (1986 & Supp. 1988) (“ANCSA”), which extinguished aboriginal land claims of Alaskan Natives and gave Alaska native corporations the right to select areas of public lands. Kavilco later selected as part of its land allotment under ANCSA the lots located at Happy Harbor. On December 4, 1979, the United States issued a land patent to Kavilco which included the Happy Harbor lots. This patent was issued subject to Buettner’s and Hamar’s special use permits under 43 U.S.C. § 1613(g).

In January 1980, the Forest Service transferred administration of the special use permits to Kavilco pursuant to 43 U.S.C. § 1613(g). Kavilco chose to administer the permits by sending new lease agreements to the permittees. These lease agreements increased the permittees’ rent. Buettner and Hamar refused to sign the new leases and instead sent Kavilco checks for the amounts required by the special use permits. Kavilco rejected the checks and unsuccessfully attempted forcible entry and detainer proceedings against Buettner and Hamar. On January 25, 1983, Buettner and Hamar commenced a quiet title action in Alaska state court. Kavilco removed the case to federal district court on the basis of federal question jurisdiction under 28 U.S.C. § 1441(b). The district court granted summary judgment in favor of Kavilco. Buettner and Hamar appeal.

II

ANALYSIS

A. Standard of Review

We review a grant of summary judgment de novo. Ford v. Manufacturers Hanover Mortgage Corp., 831 F.2d 1520, 1523 (9th Cir. 1987). Viewing the evidence in the light most favorable to the nonmoving party, we must determine whether there are any triable issues of material fact and whether the district court correctly applied the relevant substantive law. Ashton v. Cory, 780 F.2d 816, 818 (9th Cir. 1986). Questions of statutory interpretation are subject to de novo review. Mada-Luna v. Fitzpatrick, 813 F.2d 1006, 1011 (9th Cir. 1987).

B. Interpretation of ANCSA §§ 1613(c)(1) and 1613(g)

This appeal arises out of what the district court perceived as a tension between two subsections of ANCSA § 1613. Buettner and Hamar rely on ANCSA § 1613(c)(1), which provides:

Each patent issued pursuant to subsections (a) and (b) of this section shall be subject to the requirements of this subsection. Upon receipt of a patent or patents:

(1) the Village Corporation shall first convey to any Native or non-Native occupant, without consideration, title to the surface estate in the tract occupied as of December 18, 1971 . . . as a primary place of residence, or as a primary place of business, or as a subsistence campsite, or as a headquarters for reindeer husbandry.

43 U.S.C. § 1613(c)(1). Buettner and Hamar argue that they occupied Lots 7 and 8 as their primary residences as of December 18, 1971, and, therefore, section 1613(c)(1) mandates that Kavilco convey title to these lots to them.

Kavilco contends that section 1613(g), rather than section 1613(c)(1), controls Buettner’s and Hamar’s claims. Section 1613(g) provides in pertinent part:

All conveyances made pursuant to this chapter shall be subject to valid existing rights. Where, prior to patent of any land or minerals under this chapter, a lease, contract, permit, right-of-way, or easement . . . has been issued for the surface or minerals covered under such patent, the patent shall contain provisions making it subject to the lease, contract, permit, right- f-way, or easement, and the right of the lessee, contractee, permittee, or grantee to the complete enjoyment of all rights, privileges, and benefits thereby granted to him. Upon issuance of the patent, the patentee shall succeed and become entitled to any and all interests of the State or the United States as lessor, contractor, permitter, or grantor, in any such leases, contracts, permits, rights-of-way, or easements covering the estate patented. . . . The administration of such lease, contract, permit, right-of-way, or easement shall continue to be by the State or the United States, unless the agency responsible for administration waives administration.

43 U.S.C. § 1613(g). The district court concluded that the Forest Service special use permits held by Buettner and Hamar were “valid existing rights” governed by section 1613(g). Further, the district court held that this precluded Buettner and Hamar from obtaining title to Lots 7 and 8 under section 1613(c)(1).

We disagree. A straightforward reading of section 1613(c)(1) does not preclude claimants like Buettner and Hamar from claiming rights under it. In cases involving statutory construction, “our starting point must be the language employed by Congress,” Reiter v. Sonotone Corporation, 442 U.S. 330, 337, 60 L. Ed. 2d 931, 99 S. Ct. 2326 (1979), and we assume “that the legislative purpose is expressed by the ordinary meaning of the words used.” Richards v. United States, 369 U.S. 1, 9, 7 L. Ed. 2d 492, 82 S. Ct. 585 (1962). Thus, “absent a clearly expressed legislative intention to the contrary, that language must ordinarily be regarded as conclusive.” Consumer Product Safety Commission v. GTE Sylvania, Inc., 447 U.S. 102, 108, 64 L. Ed. 2d 766, 100 S. Ct. 2051 (1980). The plain language of ANCSA § 1613(c)(1) requires conveyance of title to the surface estate to anyone occupying the land “as a primary place of residence” on the magic date of December 18, 1971. This section does not exclude Buettner and Hamar because of their permittee status.

Moreover, as permittees, Buettner and Hamar were entitled to occupy the land although it was owned by someone else. One who does not own land but who occupies it is either there with permission or without it. It would be an odd statute indeed which conferred rights to obtain a deed on persons occupying property without permission, but which denied these rights to lawful occupants. Consistent with this view, we recently held in Donnelly v. United States, 841 F.2d 968 (1988), that “trespassers could not take advantage of § 1613(c)(1).” Id. at 975. Also, section 1613(c)(1) does not apply to homesteaders because they are specifically covered by section 1621(b). If trespassers and homesteaders are beyond the reach of section 1613(c)(1), the section must apply to some other class of persons. We hold that permittees such as Buettner and Hamar are within this class. Thus, the district court erred in concluding that because Buettner and Hamar held permits for the occupancy of their lots they were precluded from asserting title claims under ANCSA § 1613(c)(1).

We discern no inconsistency between this plain reading of section 1613(c)(1) and the provisions of section 1613(g). The latter section applies to lessees, contractees, permittees, and grantees of rights-of-way and easements. It is true that a person with rights under section 1613(g) might also have rights under section 1613(c)(1). On the other hand, persons having rights under section 1613(g) will not necessarily come within the scope of section 1613(c)(1). For example, United States Forest Service special use permit-holders who did not occupy their sites as a primary residence on December 18, 1971, would be protected only by section 1613(g).

Finally, we note that our interpretation of section 1613(c)(1) comports with that given it by the Alaska Supreme Court. In Hakala v. Atxam Corporation, 753 P.2d 1144 (Alaska 1988), the Alaska court analyzed the “primary place of business” clause of section 1613(c)(1) in considering the claim of hunting guides who used a cabin site as their primary place of business. The Alaska court opined that while ANCSA was designed to protect rights of Alaska Natives, Congress did not intend “to convey lands to native corporations to the exclusion of those who had previously utilized the lands in an established, legal and routine fashion. Otherwise, [there was no discernible] reason for Congress to have included the reconveyance clause in [section 1613(c)(1)].” Id. at 1147. United States Forest Service permittees like Buettner and Hamar hold long-term, renewable permits. They are required to build and live in their residences. They thus appear to be the logical beneficiaries of section 1613(c)(1). Like the Alaska Supreme Court, we discern “no [other] reason for Congress to have included the reconveyance clause in [section 1613(c)(1)].”

But our holding that Buettner and Hamar may be able to assert rights under section 1613(c)(1) does not mean that they are entitled to prevail in this case. As to Buettner, the district court will have to determine whether, in light of all the relevant facts, he occupied Happy Harbor Lot 7 as his primary residence on December 18, 1971. There is some evidence that the Buettners intended to make this lot their principal residence even though they were temporarily absent from the cabin site on December 18, 1971. By that time they had constructed part of their cabin on the site. When they traveled south for the winter, they allegedly left almost all of their possessions at Happy Harbor. While they were gone they did not establish any other residence. They returned to Happy Harbor as soon as it was feasible for them to do so. When they did return, they finished their cabin and took up permanent residence. Whether these facts, together with such other facts as may be developed at trial, will be sufficient to satisfy the requirements of ANCSA § 1613(c)(1) is something the trial court will have to determine.

As to Hamar, it is clear that he did not occupy Lot 8 on December 18, 1971. But it appears that his predecessor, Porter, did. The trial court did not reach the question whether Hamar could take advantage of Porter’s December 18, 1971 occupancy, or whether apart from any “tacking” considerations this might involve, Porter would be entitled to a deed to Lot 8 in his own right based upon his claim of occupancy on December 18, 1971, and if so, whether Porter would be required to convey title to Hamar. These questions should be resolved by the district court as it considers Hamar’s claim. To do so it would appear that Porter is a necessary party and should be joined in the action. See Fed. R. Civ. P. 19(a)(1).

REVERSED AND REMANDED.

Seldovia Native Ass’n v. Lujan, 904 F.2d 1335 (9th Cir. 1990)

The Seldovia Native Association (SNA) filed this action for declaratory and injunctive relief on January 12, 1981. An amended complaint was filed on April 17, 1987. SNA sought a declaration that the construction of the Alaska Native Claims Settlement Act (ANCSA), 43 U.S.C. §§ 1601-1629e, adopted by the Secretary of the Interior (the Secretary) was invalid. The Secretary’s construction of ANCSA validated the State of Alaska’s grant of leases with purchase options on lands subsequently claimed by SNA pursuant to ANCSA.

SNA and the federal government filed cross-motions for summary judgment. The State filed a motion to dismiss the action. On February 13, 1989, the district court granted summary judgment in favor of the federal defendants and the individual defendants. The cause of action alleged against an individual defendant sued in his official capacity as a state officer was dismissed as barred by the eleventh amendment. Final judgment was entered on March 14, 1989. SNA filed a timely notice of appeal on April 6, 1989.

We must decide whether the purchase options granted by the State of Alaska are “valid existing rights” not subject to selection by Native Alaskans under ANCSA. SNA contends that purchase options are not included within the savings provisions of ANCSA. The State maintains that in enacting ANCSA Congress intended to preserve all prior property interests, and, therefore, purchase options granted by the State of Alaska under the Alaska Statehood Act are “valid existing rights.”

Pertinent Facts

In 1958, Congress enacted the Alaska Statehood Act, Pub. L. No. 85-508, 72 Stat. 339, 340 (1958) (codified at 48 U.S.C. note prec. § 21 (1982)). The Alaska Statehood Act authorized the State of Alaska to select acreage from public lands that were “vacant, unappropriated, and unreserved at the time of their selection.” Alaska Statehood Act § 6(b), 48 U.S.C. note prec. § 21. Section 6(g) of the Alaska Statehood Act provided:

Following the selection of lands by the State and the tentative approval of such selection by the Secretary of the Interior . . . but prior to the issuance of final patent, the State is hereby authorized to execute conditional leases and to make conditional sales of such selected lands.

Id. § 6(g). Pursuant to section 6(g), the State created the “open-to-entry” (OTE) program. Alaska Stat. § 38.05.077 (1968). Under the OTE program, individuals could lease up to five acres of state land classified as “open-to-entry.” Id. § 38.05.077(3), (7). The lessees were granted an option to purchase the land. The option could be exercised by satisfying two conditions: conduct of a survey and payment to the State of the fair market value of the land as of the date of entry. Id. § 38.05.077(4), (8). These options are referred to as “conditional purchase options” or “OTE purchase options.” Under the implementing regulations, the Department of the Interior issued “tentative approval” to the State only “after determining that there is no bar to passing legal title . . . other than the need for a survey of the lands or for the issuance of patent or both.” 43 C.F.R. § 2537.3(d).

In 1959, the State filed selections for land in Kachemak Bay, near the Village of Seldovia. The Bureau of Land Management (BLM) tentatively approved these selections in 1960, 1964, and 1966. The State classified the land as “open-to-entry” under Alaska Stat. § 38.05.077. Between 1968 and 1972, the State issued OTE leases with conditional purchase options to the individual defendants in this case.

Congress passed ANCSA on December 18, 1971, to settle Alaskan Natives’ aboriginal claims to the land and resources of Alaska. H.R.Rep. No. 523, 92d Cong., 1st Sess. 1-4, reprinted in 1971 U.S.Code Cong. & Admin.News 2192, 2192-96. Section 4 of ANCSA, 43 U.S.C. § 1603, provides that all prior conveyances of land under federal law or tentative approvals under section 6(g) of the Statehood Act operated to extinguish aboriginal title at the time the conveyance was made or approval was given, and all remaining claims by Native Alaskans based on aboriginal right, title, use, or occupancy of the land were extinguished as of December 18, 1971. United States v. Atlantic Richfield Co., 612 F.2d 1132, 1134 (9th Cir.), cert. denied, 449 U.S. 888, 101 S. Ct. 243, 66 L. Ed. 2d 113 (1980). In consideration for the relinquishment of claims based on aboriginal title, Congress granted to Native Alaskans $ 962,500,000 and 40 million acres of land. Id.; see also H.R.Rep. No. 523, 92d Cong., 1st Sess. 2, reprinted in 1971 U.S.Code Cong. & Admin.News at 2193. ANCSA established a process whereby land would be withdrawn from selection by the State, made available for selection by Native Alaskans to fulfill their allotment under ANCSA, and then conveyed to Native Alaskans. See 43 U.S.C. §§ 1610(a), 1611(a)(1), 1613(a).

The land granted to Native Alaskans was to come primarily from public lands, defined as “all Federal lands and interests therein located in Alaska,” with the exception of lands used for federal installations and tentatively approved land selections made by the state pursuant to section 6(g) of the Alaska Statehood Act. 43 U.S.C. § 1602(e) (1982). Section 11(a)(1) of ANCSA provides that certain public lands surrounding Native Alaskan Villages are withdrawn from all forms of appropriation under the public land laws and from selection under the Alaska Statehood Act:

The following public lands are withdrawn, subject to valid existing rights, from all forms of appropriation under the public land laws, including the mining and mineral leasing laws, and from selection under the Alaska Statehood Act, as amended:

(A) The lands in each township that encloses all or part of any Native village identified pursuant to subsection (b) of this section;

(B) The lands in each township that is contiguous to or corners on the township that encloses all or part of such Native village; and

(C) The lands in each township that is contiguous to or corners on a township containing lands withdrawn by paragraph (B) of this subsection.

The following lands are excepted from such withdrawal: lands in the National Park System and lands withdrawn or reserved for national defense purposes other than Naval Petroleum Reserve Numbered 4.

Id. § 1610(a)(1). Some of the land available for conveyance to Native Alaskans was to come from tentatively approved land. 43 U.S.C. § 1610(a)(2). Section 11(a)(2) provides that tentatively approved land described in section 11(a)(1) was withdrawn from further appropriation and from the creation of new third-party interests by the State:

All lands located within the townships described in subsection (a)(1) hereof that have been selected by, or tentatively approved to, but not yet patented to, the State under the Alaska Statehood Act are withdrawn, subject to valid existing rights, from all forms of appropriation under the public land laws, including the mining and mineral leasing laws, and from the creation of third party interests by the State under the Alaska Statehood Act.

Id. § 1610(a)(2). (emphasis added). As a result, the State could not grant OTE leases under section 6(g) of the Statehood Act after the passage of ANCSA. Rights previously granted, however, were protected as “valid existing rights.” See Id. §§ 1610(a)(1)-(2).

ANCSA established Native Village corporations to hold, manage, and distribute lands granted pursuant to ANCSA on behalf of Native Alaskan Villages. Id. §§ 1602(j), 1607. Section 12(a)(1) allowed the Native Village corporations up to three years after December 18, 1971, to select land withdrawn under section 11(a). Id. § 1611(a)(1). Section 12(a)(1) provides, in pertinent part:

During a period of three years from December 18, 1971, the Village Corporation for each Native village identified pursuant to section 1610 of this title shall select, in accordance with rules established by the Secretary, all of the township or townships in which any part of the village is located, plus an area that will make the total selection equal to the acreage to which the village is entitled under section 1613 of this title. The selection shall be made from lands withdrawn by section 1610(a) of this title. . . .

43 U.S.C. § 1611(a)(1).

Section 14(a) provides that, upon proper selection of withdrawn lands, the Secretary must convey to the Native Village corporation a patent to the surface estate for that land. Id. § 1613(a). All such conveyances to Native Village corporations are subject to valid existing rights:

All conveyances made pursuant to this chapter shall be subject to valid existing rights. Where, prior to patent of any land or minerals under this chapter, a lease, contract, permit, right-of-way, or easement (including a lease issued under section 6(g) of the Alaska Statehood Act) has been issued for the surface or minerals covered under such patent, the patent shall contain provisions making it subject to the lease, contract, permit, right-of-way, or easement, and the right of the lessee, contractee, permittee, or grantee to the complete enjoyment of all rights, privileges, and benefits thereby granted to him. Upon issuance of the patent, the patentee shall succeed and become entitled to any and all interests of the State or the United States as lessor, contractor, permitter, or grantor, in any such leases, contracts, permits, rights-of-way, or easements covering the estate patented, and a lease issued under section 6(g) of the Alaska Statehood Act shall be treated for all purposes as though the patent had been issued to the State. The administration of such lease, contract, permit, right-of-way, or easement shall continue to be by the State or the United States, unless the agency responsible for administration waives administration. In the event that the patent does not cover all of the land embraced within any such leases, contract, permit, right-of-way, or easement, the patentee shall only be entitled to the proportionate amount of the revenues reserved under such lease, contract, permit, right-of-way, or easement by the State or the United States which results from multiplying the total of such revenues by a fraction in which the numerator is the acreage of such lease, contract, permit, right-of-way, or easement which is included in the patent and the denominator is the total acreage contained in such lease, contract, permit, right-of-way, or easement.

Id. § 1613(g). The Secretary is authorized to issue regulations necessary to carry out the purposes of ANCSA. Id. § 1624.

In May 1974, SNA submitted selections for lands surrounding the Village of Seldovia pursuant to 43 U.S.C. § 1611(a). These selections did not include the OTE lands. In September 1974, the BLM notified SNA that SNA was required to select the OTE lands to ensure the “compactness” of SNA’s selection.

In October 1975, the BLM vacated its tentative approval of the OTE lands and approved their conveyance to SNA, subject to valid existing rights. This decision was appealed by SNA, the State, and several individual lessees to the Alaska Native Claims Appeals Board (ANCAB). ANCAB ruled that, although the OTE leases were protected by section 14(g), 43 U.S.C. § 1613(g), the purchase options did not survive conveyance to Native Alaskans. Appeal of Alaska and Seldovia Native Ass’n, Inc., 84 Interior Dec. 349, 375-77 (1977), 2 ANCAB 1, VLS 75-14, 75.15.

ANCAB’s ruling conflicted with an earlier decision of the Interior Board of Land Appeals, State of Alaska, 19 I.B.L.A. 178 (1975). To resolve this conflict, the Secretary issued Secretarial Order No. 3016 (S.O. 3016), 85 Interior Dec. 1 (1977). The Secretary concluded that conditional purchase options are valid existing rights under section 14(g) of ANCSA, 43 U.S.C. § 1613(g). Id. at 18. As a result, a lessee’s right to exercise a purchase option is enforceable against a Native Village corporation. Id. The Secretary determined that S.O. 3016 was not intended to disturb any final administrative decision. Id. at 1.

In April 1978, BLM entered an order conveying the OTE land to SNA. BLM determined that S.O. 3016 did not apply to the controversy between SNA and the lessees because its prior administrative decision was final. The State of Alaska appealed this decision to ANCAB.

Several Native Village corporations became concerned that S.O. 3016 could lead to a divestment of lands they had selected that were subject to conditional purchase options. Pursuant to their request, the Secretary reconsidered S.O. 3016. On November 20, 1978, the Secretary issued Secretarial Order No. 3029 (S.O. 3029), 43 Fed.Reg. 55287 (1978). The Secretary concluded that purchase options are valid existing rights under section 11(a)(2), 43 U.S.C. § 1610(a)(2). Accordingly, the Secretary determined that OTE lands were not available for Native Alaskan selection. 43 Fed.Reg. at 55288-89, 55291. The Secretary left open the possibility of the retroactive application of S.O. 3029. Id. at 55287. In response, ANCAB suspended proceedings in the State of Alaska’s appeal. Order of Suspension, ANCAB VLS 78-41 (January 31, 1979).

On March 27, 1980, the Secretary decided that S.O. 3029 applied retroactively to the OTE lands involved in Appeals of Alaska and Seldovia Native Association, Inc., 84 Interior Dec. 349 (1977). Valid Existing Rights Under the Alaska Native Claims Settlement Act: Departmental Manual Release No. 2246, 601 DM 2 (March 27, 1980). Pursuant to this decision, ANCAB ordered BLM to “reinstate tentative approval of the State’s selection of such land so that the State of Alaska is able to grant title to [OTE leaseholders holding purchase options] as contemplated by Order No. 3029.” Appeal of Alaska, 87 Interior Dec. 366, 367 (1980), 5 ANCAB 4, VLS 78-41.

In this action for injunctive and declaratory relief, SNA challenges the Secretary’s interpretation of section 11(a)(2). Relying on this interpretation, the district court entered an order granting summary judgment to the federal defendants and the individual defendants. The district court dismissed the claims against the individual state officer as barred by eleventh amendment.

Standard of Review

An order entering summary judgment is reviewed de novo. Kruso v. International Tel. & Tel. Corp., 872 F.2d 1416, 1421 (9th Cir. 1989). This court must determine, viewing the evidence in the light most favorable to SNA, whether there are any genuine issues of material fact and whether the district court correctly applied the substantive law. Tzung v. State Farm Fire & Cas. Co., 873 F.2d 1338, 1339-40 (9th Cir. 1989). Whether the eleventh amendment immunizes a state from suit is a question of law that we also review de novo. BV Engineering v. University of Cal., Los Angeles, 858 F.2d 1394, 1395 (9th Cir. 1988), cert. denied, 489 U.S. 1090, 109 S. Ct. 1557, 103 L. Ed. 2d 859 (1989).

Discussion

The district court accepted the Secretary’s interpretation of “valid existing rights” under ANCSA as including open-to-entry leases with conditional purchase options. Accordingly, the district court concluded that land subject to the OTE leases was not available for selection by SNA under section 11(a)(2) of ANCSA, 43 U.S.C. § 1610(a)(2). In this appeal, SNA argues that OTE purchase options do not survive selection by Native Village corporations because they are not “valid existing rights under ANCSA.”

In considering the administrative construction of statutes that an agency administers, the court must first determine whether “‘Congress has directly spoken to the precise question at issue.'” Tyonek Native Corp. v. Secretary of Interior, 836 F.2d 1237, 1239 (9th Cir. 1988) (quoting Chevron U.S.A. v. Natural Resources Defense Council, 467 U.S. 837, 842, 81 L. Ed. 2d 694, 104 S. Ct. 2778 (1984)). “‘If the intent of Congress is clear,'” the court must give effect to that intent. Id. (quoting Chevron U.S.A. v. Natural Resources Defense Council, 467 U.S. at 842). “‘If the statute is silent or ambiguous with respect to the specific issue, the question for the court is whether the agency’s answer is based on a permissible construction of the statute.'” Id. (quoting Chevron U.S.A. v. Natural Resources Defense Council, 467 U.S. at 843). The court’s starting period thus “‘must be the language employed by Congress.'” Buettner v. Kavilco, Inc., 860 F.2d 341, 343 (9th Cir. 1988) (quoting Reiter v. Sonotone Corp., 442 U.S. 330, 337, 60 L. Ed. 2d 931, 99 S. Ct. 2326 (1979)).

A. The Plain Language of ANCSA

When construing statutory language, “we assume ‘that the legislative purpose is expressed by the ordinary meaning of the words used.'” Id. (quoting Richards v. United States, 369 U.S. 1, 9, 7 L. Ed. 2d 492, 82 S. Ct. 585 (1962)). We determine the plain meaning of a statute by looking “to the particular statutory language at issue, as well as the language and design of the statute as a whole.” K Mart Corp. v. Cartier, Inc., 486 U.S. 281, 291, 100 L. Ed. 2d 313, 108 S. Ct. 1811 (1988). “Absent a clearly expressed legislative intention to the contrary, that language must ordinarily be regarded as conclusive.” Consumer Product Safety Comm’n v. GTE Sylvania, Inc., 447 U.S. 102, 108, 64 L. Ed. 2d 766, 100 S. Ct. 2051 (1980).

Congress did not define the meaning of “valid existing rights” in the text of ANCSA. To clarify Congress’ intent in using this term, we turn to an examination of the legislative history. Blum v. Stenson, 465 U.S. 886, 896, 79 L. Ed. 2d 891, 104 S. Ct. 1541 (1984).

B. The Legislative History of ANCSA

ANCSA’s legislative history does not demonstrate that Congress intended that land subject to conditional purchase options granted under the Alaska Statehood Act was available for selection by a Native Village corporation. To the contrary, the legislative history of ANCSA supports the conclusion that conditional purchase options are “valid existing rights.” The Conference Report of the House and Senate Committees on Interior and Insular Affairs states that “all valid existing rights, including inchoate rights of entrymen and mineral locators, are protected.” Conf. Rep. No. 746, 92d Cong., 1st Sess. 4, reprinted in 1971 U.S.Code Cong. & Admin.News 2192, 2250. A conditional purchase option would appear to be such an inchoate right. Because conditional purchase options are not expressly referred to in either the statute or its legislative history, however, we turn to an examination of the Secretary’s construction of “valid existing rights.”

C. Administrative Construction of “Valid Existing Rights”

The district court accepted as reasonable the Secretary of the Interior’s construction of “valid existing rights” under ANCSA. The appellees assert that this deference to the Secretary’s interpretation of ANSCA was error, relying on the canon of statutory construction that “statutes benefiting Native Americans should be construed liberally in their favor.” Tyonek Native Corp. v. Secretary of the Interior, 836 F.2d at 1239 (citing Three Affiliated Tribes of the Fort Berthold Reservation v. Wold Eng’g, 467 U.S. 138, 149, 81 L. Ed. 2d 113, 104 S. Ct. 2267 (1984)). We recently rejected the application of this canon to ANCSA. We stated in Haynes v. United States, 891 F.2d 235 (9th Cir. 1989) that “while this court has recognized this canon of construction, . . . it has also declined to apply it in light of competing deference given to an agency charged with the statute’s administration.” Id. at 239.

“To the extent necessary for decision and when presented, the reviewing court shall decide all relevant questions of law [and] interpret constitutional and statutory provisions. . . .” 5 U.S.C. § 706 (1988). Although the judiciary is the final arbiter of issues of statutory construction, an administrative agency’s interpretation of a statute it is charged with administering is accorded substantial deference. Haynes v. United States, 891 F.2d at 238-39. We have previously stated that “the principal responsibility for administering the [ANCSA] lies with the Secretary and his interpretations of the statutes are entitled to ‘great weight’ upon judicial review.” Doyon, Ltd. v. Bristol Bay Native Corp., 569 F.2d 491, 496 (9th Cir.), cert. denied, 439 U.S. 954, 58 L. Ed. 2d 345, 99 S. Ct. 352 (1978); see also City of Angoon v. Hodel, 803 F.2d 1016, 1026 (9th Cir. 1986) (deference is given to Secretary’s interpretation of ANCSA), cert. denied, 484 U.S. 870, 98 L. Ed. 2d 148, 108 S. Ct. 197 (1987). “The court need not conclude that the agency construction was the only one it permissibly could have adopted to uphold the construction, or even the reading the court would have reached if the question initially had arisen in a judicial proceeding,” but only that the agency’s interpretation is reasonable and is not contrary to congressional intent. Chevron U.S.A. v. Natural Resources Defense Council, 467 U.S. at 843 n.11 (citations omitted).

1. Reasonableness of the Secretary’s Construction

The Secretary decided in S.O. 3029 that, if lands tentatively approved for state selection had been leased with an option to buy by the State of Alaska under the state’s open-to-entry program prior to the enactment of ANCSA, those lands were withdrawn from Native Alaskan selection as valid existing rights under section 11(a)(2). Secretarial Order No. 3029, 43 Fed.Reg. 55287, 55287-88 (1978). Because the open-to-entry leases are rights leading to the acquisition of title, the Secretary determined that these lands should be excluded from Native Alaskan selection, consistent with 43 C.F.R. 2650.3-1(a). Id. at 55291.

A. OTE Purchase Options are “Valid Existing Rights” Under ANCSA

The Secretary’s construction of “valid existing rights” is consistent with judicial interpretation of section 11(a)(1), 43 U.S.C. § 1610(a)(1). In Aleknagik Natives Ltd. v. United States, 806 F.2d 924 (9th Cir. 1986), we reviewed the Secretary’s construction of “valid existing rights” under section 11(a)(1). The Secretary had determined that townsite land in Alaska that had been segregated, but not yet subdivided and distributed, was not available for Native Alaskan selection under section 11(a)(1). We held that a municipality’s right to the land did not vest at the time of segregation, because it was contingent upon other occupants not taking up those lands under the townsite laws and on the completion and approval of a subdivisional survey.

Aleknagik Natives, Ltd. v. United States, 635 F. Supp. 1477 at 1489 (D. Alaska 1985). The Secretary concluded that the municipalities had an entitlement to the lands under the townsite laws from the time the lands were segregated from the public domain, thus creating “valid existing rights” under section 11(a)(1). Id. In accepting the Secretary’s construction, we stated:

The term “valid existing rights” does not necessarily mean present possessory rights, or even a future interest in the property law sense of existing ownership that become possessory upon the expiration of earlier estates. Legitimate expectations may be recognized as valid existing rights, especially where the expectancy is created by the government in the first instance.

Aleknagik Natives Ltd. v. United States, 806 F.2d at 926-27. Similarly, the holders of conditional purchase options granted under the Alaska Statehood Act have legitimate expectations in obtaining title to land that should be protected as “valid existing rights.”

The Secretary’s construction is based upon 43 C.F.R. § 2650.3-1(a), which draws a fundamental distinction between temporary rights, such as leases, and rights leading to the acquisition of title, such as purchase options. This construction is consistent with the Supreme Court’s interpretation of the phrase in the context of the federal homestead laws. In Stockley v. United States, 260 U.S. 532, 67 L. Ed. 390, 43 S. Ct. 186 (1923), a Presidential Order withdrew from appropriation under the Homestead laws certain lands, “subject to existing valid claims.” Id. at 536. The Supreme Court found that a homesteader’s lawful entry upon land subject to homesteading was excepted from this withdrawal order. Id. at 544. The Supreme Court explained:

Obviously this means something less than a vested right, such as would follow from a completed final entry, since such a right would require no exception to insure its preservation. The purpose of the exception evidently was to save from the operation of the order claims which had been lawfully initiated and which, upon full compliance with the land laws, would ripen into a title.

Id. Because the preliminary entry gave the entryman an exclusive right to possession, his inchoate right to proceed to patent was protected. Id. Just like a homesteader’s preliminary entry, the grant of a conditional purchase option ripens into title upon compliance with the State of Alaska’s land laws. See Alaska Stat. § 38.05.077 (option to purchase tentatively approved land may be exercised by causing survey to be made of entry and paying negotiated price). The Supreme Court’s analysis in Stockley supports the conclusion that a grant of a conditional purchase option is a “valid existing right.”

OTE conditional purchase options thus satisfy the requirements of a valid existing right. Because they are granted by the State of Alaska pursuant to an Act of Congress, they create legitimate expectations of property interests. In addition, they are rights leading to the acquisition of title. We conclude, therefore, that the Secretary’s construction of “valid existing rights” under ANCSA to include OTE conditional purchase options is reasonable.

b. Land Subject to OTE Purchase Options is Excluded from Native Selection

The Secretary determined that land subject to OTE purchase options is excluded from Native Alaskan selection under section 11(a)(2), 43 U.S.C. § 1610(a)(2). Secretarial Order No. 3029, 43 Fed.Reg. at 55291. This interpretation is based on the language of 43 C.F.R. § 2650.3-1(a), which excludes from any conveyance of land selected by Native Alaskans any “lawful entries or entries which have been perfected under, or are being maintained in compliance with, laws leading to the acquisition of title.” The Secretary’s interpretation is reasonable. It avoids the necessity of reconveying land selected by Native Alaskans under ANCSA to an option holder because he has a valid existing right. It also protects the Native Alaskans’ rights to their full allotment of land under section 1613 of ANCSA.

In Lee v. United States, 629 F. Supp. 721 (D.Alaska 1985), aff’d on other grounds, 809 F.2d 1406 (9th Cir. 1987), cert. denied, 484 U.S. 1041, 98 L. Ed. 2d 859, 108 S. Ct. 772 (1988), the district court reviewed the Secretary’s construction of section 22(b). Section 22(b) protects claims made under the federal homestead laws. 43 U.S.C. § 1621(b). As a result, there was no dispute that these claims were “valid existing rights” under ANCSA. The plaintiffs, however, contended that lands subject to homestead claims were not excluded from Native Alaskan selection under section 11(a)(1), but were conveyed as “subject to” lands under section 14(g). The Secretary construed section 11(a)(1) to require the exclusion of these lands from Native Alaskan selection, even if the claimant had not yet fulfilled all the requirements of federal law to receive a patent. See 43 U.S.C. § 1621(b). The district court found that this construction was reasonable because “‘all conveyances issued under the act shall exclude any lawful entries or entries which have been perfected under, or are being maintained in compliance with, laws leading to the acquisition of title.'” Lee v. United States, 629 F. Supp. at 731 (quoting 43 C.F.R. § 2650.3-1(a)). Because the Secretary determined the validity of all homestead claims, and because valid homestead claims would defeat Native Alaskans’ ownership rights, land subject to homestead claims was excluded from selection by and conveyance to Native Alaskans. Id. at 731-32; see also Aleknagik Natives, Ltd. v. United States, 635 F. Supp. at 1488-90 (employing similar reasoning to exclude federal townsite lands from selection under section 11(a)(1), 43 U.S.C. § 1610(a)(1)).

Like land subject to homestead claims in Lee v. United States, land subject to OTE purchase options is excluded from Native Alaskan selection by the Secretary’s application of 43 C.F.R. § 2650.3-1(a). Under ANCSA, the Secretary is directed to issue a patent to federal lands “immediately after selection by a Village corporation . . . which the Secretary finds is qualified for land benefits under this chapter.” 43 U.S.C. § 1613(a). Native Village corporations have rights to receive patents to a limited amount of land based on their census population in 1970. See id. § 1613(a). Their rights to obtain title to land withdrawn from State selection by section 11(a)(2), id. § 1610(a)(2), are even more limited. See id. § 1611(a)(1). Because OTE purchase options are valid state-created rights under section 11(a)(2), land subject to OTE purchase options would count against the Native Village corporations’ conveyance limit if available for selection by Native Alaskans. See id. § 1613(a). If the options are exercised, Native Alaskans would be divested of their fee interest in the OTE land and their allotment under ANCSA would be reduced commensurately. This result does not effect “maximum participation by Natives in decisions affecting their rights and property.” Id. § 1601(b); see also Lee v. United States, 629 F. Supp. at 731-32 (discussing the effect of including section 22(b) lands in conveyances under section 14(a)). In contrast, the exclusion of land subject to OTE purchase options, pursuant to section 11(a)(2), 43 U.S.C. § 1610(a)(2), gives Native Alaskans complete fee ownership of all land selected under ANCSA. While still subject to valid state and federal rights pursuant to section 14(g), id. § 1613(g), title to land selected by Native Alaskans will remain intact. Thus, the Secretary’s application of 43 C.F.R. § 2650.3-1(a) to exclude land subject to purchase options from Native Alaskan selection is reasonable.

c. Consistency of the Construction

SNA asserts that the Department of the Interior’s construction of “valid existing rights” with regard to OTE lands has been inconsistent. It notes that two ANCAB opinions held that purchase options are not valid existing rights under ANCSA. See Appeal of Eklutna, ANCAB VLS 75-10 (Dec. 10, 1976); Appeal of Seldovia, ANCAB VLS 75-14, 75-15 (June 9, 1977).

The Secretary’s construction of “valid existing rights,” promulgated in S.O. 3016 and re-adopted in S.O. 3019, was intended to resolve the uncertainty caused by the two ANCAB decisions cited by SNA. See Secretarial Order No. 3016, 85 Interior Dec. 1 (1977); Secretarial Order No. 3029, 43 Fed.Reg. 55287 (1978). In promulgating S.O. 3016 and S.O. 3029, the Secretary was acting within his paramount power; he was not bound by the construction formulated by a subordinate body such as ANCAB. See Ideal Basic Indus. v. Morton, 542 F.2d 1364, 1367-68 (9th Cir. 1976) (“[The Secretary] has a continuing jurisdiction with respect to these lands until a patent issues, and he is not estopped by the principles of res judicata or finality of administrative action from correcting or reversing an erroneous decision by his subordinates or predecessors in interest.”). Moreover, the Secretary’s construction of “valid existing rights” in S.O. 3016 and S.O. 3029 conformed to a long line of Interior Department decisions construing that phrase. See, e.g., Solicitor’s Opinion M-36910 (Supp.), 88 Interior Dec. 909, 912 (1981) (under Federal Land Policy and Management Act, 43 U.S.C. §§ 1701-1784, valid existing rights are “those rights short of vested rights that are immune from denial or extinguishment by the exercise of secretarial discretion”); Authority to Extend Coal Prospecting Permits: Effect of Sec. 4 of the Federal Coal Leasing Amendments Act of 1975, Solicitor’s Opinion No. M 36894, 84 Interior Dec. 415, 416-17 (1977) (“Both Congress and the Executive Branch have used the phrase ‘valid existing right’ . . . when they intended to terminate the opportunity for a person to acquire new rights, but intended to allow those who had initiated but had not fully earned a claim to continue to pursue those rights.”); Executive Withdrawal Order of November 26, 1934, as Affecting Taylor Grazing Act and Other Prior Legislation, 55 Interior Dec. 205, 210 (1935) (“All prior valid applications for entry, selection, or withdrawal should be considered as constituting valid existing rights. . . .”); Williams v. Brening, 51 Interior Dec. 225, 226 (1925) (“The withdrawal here in question saved ‘any valid existing rights in and to’ the lands so withdrawn, and a preferred right which had been earned, although not actually awarded, prior to the withdrawal is entitled to protection.”).

Even if the Secretary’s construction of “valid existing rights” is consistent with prior interpretations, SNA contends that the Secretary’s decision to exclude OTE lands from Native Alaskan selection under section 11(a)(2) is a product of this litigation. The Secretary’s exclusion of OTE lands from Native Alaskan selection, however, pre-dated this litigation. The exclusion of OTE lands from Native Alaskan selection originated in S.O. 3029, issued in 1978. See Secretarial Order No. 3029, 43 Fed.Reg. at 55291 (Secretary concludes “that lands subject to open-to-entry leases which were issued prior to December 18, 1971, and which are within a Native selection should not be included in or counted against lands conveyed to Native corporations.”).

S.O. 3029 did, however, reverse the Secretary’s conclusion in S.O. 3016 that OTE lands would be conveyed as “subject to” lands under § 14(g), 43 U.S.C. § 1613(g). See Secretarial Order No. 3016, 85 Interior Dec. 1, 8 (1977). We must examine the reversal of this interpretive rule.

When an agency reverses a prior policy or statutory interpretation, its most recent expression is accorded less deference than is ordinarily extended to agency determinations. INS v. Cardoza-Fonseca, 480 U.S. 421, 446 n.30, 94 L. Ed. 2d 434, 107 S. Ct. 1207 (1987); Watt v. Alaska, 451 U.S. 259, 273, 68 L. Ed. 2d 80, 101 S. Ct. 1673 (1981). The agency will be required to show not only that its new policy is reasonable, but also to provide a reasonable rationale supporting its departure from prior practice. See Motor Vehicle Mfrs. Ass’n of the United States v. State Farm Mut. Auto Ins. Co., 463 U.S. 29, 42, 77 L. Ed. 2d 443, 103 S. Ct. 2856 (1983) (overturning an agency reversal because the agency had provided no explanation for its change in policy); Mesa Verde Constr. Co. v. Northern Cal. Dist. Council of Laborers, 861 F.2d 1124, 1130-34 (9th Cir. 1988) (en banc) (upholding an agency reversal after finding that the previous policy had been unworkable in practice.). However, a reversal of prior policy or statutory interpretation does not wholly vitiate deference to agency determinations. NLRB v. International Ass’n of Bridge Structural and Ornamental Ironworkers, 434 U.S. 335, 351, 54 L. Ed. 2d 586, 98 S. Ct. 651 (1978). “Although the consistency of an agency’s interpretation is one relevant factor in judging its reasonableness, an agency’s interpretation . . . is nevertheless entitled to deference, so long as the agency acknowledges and explains the departure from its prior views.” Mobil Oil Co. v. EPA, 276 U.S. App. D.C. 352, 871 F.2d 149, 152 (D.C.Cir. 1989) (emphasis in original). 

The Secretary recognized that exclusion of OTE lands from Native Alaskan selection would reverse S.O. 3016. Secretarial Order No. 3029, 43 Fed.Reg. at 55291. The Secretary noted that exclusion would be consistent with 43 C.F.R. § 2650.3-1(a). Id. In addition, exclusion allows the State of Alaska to determine whether entrymen have satisfied the state law conditions for the exercise of their options. Id. “If the lessee fails to exercise the option to purchase, the affected Native corporation can either have the land conveyed as part of its original entitlement or, if the entitlement is otherwise satisfied, then by exchange.” Id. Furthermore, exclusion is consistent with the treatment of federal homestead claims under section 11(a)(1), which are essentially options to buy that can be exercised against the United States by meeting the statutory criteria. Id. Because the Secretary acknowledged and explained the modification of S.O. 3016, his construction can be accorded the same deference ordinarily given to an administrative interpretation of statutory language.

2. Retroactive Application of the Secretary’s Construction

S.O. 3029 was applied to all non-final proceedings at the date of its promulgation. Valid Existing Rights Under the Alaska Native Claims Settlement Act: Departmental Manual Release No. 2246, 601 DM 2 (March 27, 1980). SNA contends that the retroactive application of S.O. 3029 is impermissible.

SNA’s first argument is that retroactive application of S.O. 3029 is a taking without due process of law in violation of the fifth amendment. SNA asserts that its property interest in the lands at issue vested when the entrymen failed to appeal the ANCAB decision. See 43 C.F.R. § 4.5(a)(2) (giving Secretary authority to review ANCAB decision). As a result, this interest could not be taken away without payment of just compensation. See U.S. Const. amend. V.

This argument fails because SNA has no vested property right in the finality of an ANCAB decision. See Reed v. Morton, 480 F.2d 634, 642-43 (9th Cir.) (Secretary may reopen administrative decision if legal title remains in United States), cert. denied, 414 U.S. 1064, 38 L. Ed. 2d 469, 94 S. Ct. 571 (1973). As long as legal title to land remains in the United States, “there is continuing jurisdiction in the Department [of the Interior] to consider all issues in land claims.” Schade v. Andrus, 638 F.2d 122, 124-25 (9th Cir. 1981); see also Ideal Basic Indus. v. Morton, 542 F.2d at 1368 (“So long as the legal title remains in the Government, the Secretary has the power and duty upon proper notice and hearing to determine whether the claim is valid.”); cf. Best v. Humboldt Placer Mining Co., 371 U.S. 334, 337-38, 9 L. Ed. 2d 350, 83 S. Ct. 379 (1963) (discussing mining claims). Because patents to the OTE lands had not issued as of the date of S.O. 3029’s retroactive application, legal title remained in the United States despite selection by the Native Alaskans. See 43 U.S.C. § 1613(a) (1982); Reed v. Morton, 480 F.2d at 642 (“Prior to patent the Secretary retains jurisdiction over public lands.”).

SNA’s second argument is that S.O. 3029 may not be applied retroactively because it constitutes administrative rulemaking that is subject to the notice and comment provisions of the Administrative Procedure Act (APA). 5 U.S.C. § 553 (1988). Interpretive rules, however, are excepted from the procedural requirements of section 553. See 5 U.S.C. § 553(b)(A), (d)(2). Interpretive rules are rules that “‘merely clarify or explain existing law or regulations.'” Alcaraz v. Block, 746 F.2d 593, 613 (9th Cir. 1984) (quoting Powderly v. Schweiker, 704 F.2d 1092, 1098 (9th Cir. 1983)). These rules “are essentially hortatory and instructional in that they go more ‘to what the administrative officer thinks the statute or regulation means, when applied in particular, narrowly defined, situations.” Id. (quoting Gibson Wine Co. v. Snyder, 90 U.S. App. D.C. 135, 194 F.2d 329, 331 (D.C.Cir. 1952)). Substantive rules, on the other hand, “‘are those which effect a change in existing law or policy.'” Id. (quoting Powderly v. Schweiker, 704 F.2d at 1098)).

The Secretary’s decision that OTE conditional purchase options are “valid existing rights” under ANCSA did not effect a change in existing law or policy. Instead, S.O. 3029 interpreted an existing statute and “clarified the law’s terms as applied situationally.” Id. Because S.O. 3029 was an exercise of the Secretary’s interpretive authority, it was not subject to the notice and comment provisions of the APA.

SNA’s third argument is that the Secretary is equitably estopped from retroactively applying S.O. 3029. When S.O. 3016, which defined OTE purchase options as “valid existing rights” under section 14(g), was issued, representatives of SNA became concerned that it would be applied to reverse the two favorable ANCAB decisions. SNA received two responses from the Department of the Interior in response to its inquiries. The first, dated December 28, 1977, was signed by James Joseph, an Undersecretary of the Department of the Interior. It stated that the ANCAB decisions would “be implemented as originally decided,” so SNA would not be deprived of its benefits. Plaintiff’s Brief in Support of Motion for Summary Judgment, Affidavit of Fred Elvsaas, Ex. C. The second, dated March 3, 1978, was signed by Leo Krulitz, the Solicitor of the Department of the Interior. It stated that “all final prior cases were left unaffected” by S.O. 3016. Id., Ex. D. SNA contends that these communications estop the Department from applying S.O. 3029 retroactively.

This court has held that “‘”where justice and fair play require it,” estoppel will be applied against the government. . . .'” Watkins v. United States Army, 875 F.2d 699, 706 (9th Cir. 1989) (en banc) (quoting Johnson v. Williford, 682 F.2d 868, 871 (9th Cir. 1982) (quoting United States v. Lazy FC Ranch, 481 F.2d 985, 988-89 (9th Cir. 1973))). A party seeking to assert equitable estoppel against the government must establish two additional elements beyond those required for traditional estoppel: first, “‘”affirmative misconduct going beyond mere negligence”‘”; and second, a “‘”serious injustice,”‘” the imposition of liability for which will not unduly damage the public’s interest. Id. at 707 (quoting Wagner v. Director, Fed. Emergency Management Agency, 847 F.2d 515, 519 (9th Cir. 1988) (quoting Morgan v. Heckler, 779 F.2d 544, 545 (9th Cir. 1985))). Affirmative misconduct requires “an affirmative misrepresentation or affirmative concealment of a material fact by the government.” Id.

In this case, SNA cannot prove affirmative misconduct by the Department of the Interior. S.O. 3029 states:

This Order is not intended to disturb any administrative determination contained in a final decision by any duly authorized departmental official. The question of retroactive application of this Order shall be addressed by the solicitor under proceedings which shall be announced by him within 30 days of this Order’s effective date.

Secretarial Order No. 3029, 43 Fed. Reg. at 55287. By its express terms, S.O. 3029 left open the question of retroactive application. An ANCAB order suspending the proceedings in SNA’s administrative appeal informed SNA of the potential retroactive application of the S.O. 3029. See Appellant’s Opening Brief, at 47. Thus, the events reflect a change in an interpretive ruling that was ignored by SNA, rather than an affirmative misrepresentation upon which it relied.

SNA’s fourth argument is that the Secretary incorrectly applied the law of retroactivity. This court has developed a five-part analysis to balance the interests in considering the retroactive application of an administrative construction. Oil Workers Int’l Union, Local 1-547 v. NLRB, 842 F.2d 1141, 1145 (9th Cir. 1988). These factors are:

(1) whether the particular case is one of first impression, (2) whether the new rule represents an abrupt departure from well established practice or merely attempts to fill a void in an unsettled area of law, (3) the extent to which the party against whom the new rule is applied relied on the former rule, (4) the degree of the burden which a retroactive order imposes on a party, and (5) the statutory interest in applying a new rule despite the reliance of a party on the old standard.

Id.

As the district court noted, S.O. 3029 clarifies a previously unsettled area of the law, rather than representing “an abrupt departure from well-established administrative practice.” Although SNA relied on the ANCAB decisions in negotiating a land trade that included the OTE land with the State of Alaska, this agreement was not signed until May 1979 – after the publication of S.O. 3029 notified SNA that retroactive application was possible. See Plaintiff’s Brief in Support of Motion for Summary Judgment, Affidavit of Fred Elvsaas, at 7. Furthermore, this case involves a contest between two private parties. As the district court noted, “only one of these groups can succeed to title; in simple terms, one group will win and the other must lose.” As a result, the burden factor is not helpful. Finally, retroactive application is necessary to preserve the entrymen’s rights under ANCSA. Retroactive application thus effects congressional intent by preserving valid existing rights. See 43 U.S.C. §§ 1610(a), 1613(g). For these reasons, the Secretary’s retroactive application of S.O. 3029 is consistent with the legal principles set forth in Oil Workers Int’l Union, Local 1-547 v. NLRB.

In its final argument on this issue, SNA asserts that the Secretary erred in applying S.O. 3029 to the ANCAB decision involving its lands, see Appeal of Seldovia, 84 Interior Dec. 349 (1977), 2 ANCAB 1, VLS 75-14, 75-15, and not applying it to the ANCAB decision involving Eklutna Native Village Corporation’s lands. See Appeal of Eklutna, ANCAB VLS 75-10. The lands in dispute in Eklutna, however, unlike the lands in dispute in Seldovia, had already been conveyed. See Solicitor’s Opinion No. 2246, 45 Fed.Reg. 1692. As a result, the Department no longer had jurisdiction over those lands. See Schade v. Andrus, 638 F.2d at 124-25. We conclude that the Secretary did not err in applying S.O. 3029 retroactively.

II. State Selection of OTE Land

SNA contends that the selection and tentative approval of the OTE land violated the Alaska Statehood Act. SNA notes that only “vacant, unappropriated and unreserved” lands could be selected by the State of Alaska pursuant to section 6(b) of the Alaska Statehood Act, 72 Stat. 339 (1958), 48 U.S.C. note prec. § 21 (1982). SNA asserts that pursuant to section 6(b), a factual finding that lands are vacant, unappropriated and unreserved must be made before the Secretary can give tentative approval to the State of Alaska’s selection. Because such a factual finding was not made with regard to the OTE lands, SNA argues that the Secretary’s tentative approval of the State’s selection is void. SNA relies on State of Alaska v. Udall, 420 F.2d 938 (9th Cir. 1969), cert. denied, 397 U.S. 1076, 90 S. Ct. 1522, 25 L. Ed. 2d 811 (1970), and Edwardsen v. Morton, 369 F. Supp. 1359 (D.D.C. 1973), for this proposition.

SNA’s argument is unpersuasive. Alaska v. Udall involved a challenge to a selection made by the State of Alaska by a Native Village on a claim of aboriginal title. We commented in Alaska v. Udall that the enactment of ANCSA “would probably resolve all or most of the issues involved” in that litigation. 420 F.2d at 940. As the district court recognized in Edwardsen v. Morton, 369 F. Supp. at 1377-78, ANCSA extinguished all claims of “aboriginal right, title, use, or occupancy of land or water areas in Alaska.” 43 U.S.C. § 1603(c). In addition, ANCSA validated all tentative approvals of State selections made pursuant to section 6(g) of the Alaska Statehood Act. 43 U.S.C. § 1603(a). In consideration for the extinguishment of aboriginal title, Native Alaskans were granted $ 962,500,000 and approximately 40,000,000 acres of land. H.R.Rep. No. 523, 92d Cong., 1st Sess. 4, reprinted in 1971 U.S.Code Cong. & Admin.News 2192, 2195. Thus, SNA cannot assert its right to the OTE lands based on its prior use and occupancy. United States v. Atlantic Richfield Co., 612 F.2d at 1134.

III. Publication of Notice of Selection

43 C.F.R. § 2627.4(c) requires the publication of a notice of State selection of federal land. This notice must be published “in the vicinity of the land affected thereby.” 43 C.F.R. § 1824.1- (a). SNA charges that the State failed to publish a notice of the Kachemak Bay selections in the vicinity of Kachemak Bay.

Under 43 C.F.R. § 1824.1-1(a), the notice must be published in “a newspaper of established character and of general circulation.” The Bureau of Land Management has discretionary authority to determine which newspapers satisfy the publication requirement. 43 C.F.R. § 1824.1-2(a). In the instant matter, the BLM published the notice in the Anchorage Daily News and the Anchorage Times. SNA does not contend that these newspapers lack established character and of general circulation. As a result, this challenge must fail.

IV. Eleventh Amendment Bar

The allegations in SNA’s sixth cause of action described conduct by the State of Alaska contrary to state law. The complaint provides as follows:

47. The State of Alaska issued patents to the individual defendants for the “open to entry” tracts described hereinabove without receiving payment therefor of the fair market value of said tracts as required by state law.

48. The State of Alaska did not hold public hearings in the area of the “open to entry” lands in question in this case before declaring said lands as “open to entry” lands. Failure to hold such hearings was a violation of state law.

49. The procedures by which state open to entry leases and patents were issued to the individual defendants herein were so flawed that any rights held by the individual defendants are not valid existing rights within the meaning of §§ 11 and 14 of A.N.C.S.A. (43 U.S.C. §§ 1610 and 1613).

The district court dismissed this cause of action as barred by the eleventh amendment. SNA argues that this dismissal was in error because the relief requested is against the federal government: an order from the court directing “the federal government to convey the lands in question to it.” Appellant’s Opening Brief, at 43.

The eleventh amendment provides:

The judicial power of the United States shall not be construed to extend to any suit in law or equity, commenced or prosecuted against one of the United States by citizens of another state.

U.S. Const. amend. XI. Although the eleventh amendment expressly refers to suits brought against a state by citizens of another state, the Supreme Court has interpreted its language as applying to actions brought against a state by citizens of the same state. Papasan v. Allain, 478 U.S. 265, 276, 92 L. Ed. 2d 209, 106 S. Ct. 2932 (1986); Hans v. Louisiana, 134 U.S. 1, 33 L. Ed. 842, 10 S. Ct. 504 (1890). Furthermore, a corporation chartered by Congress may not sue a state. Smith v. Reeves, 178 U.S. 436, 44 L. Ed. 1140, 20 S. Ct. 919 (1900). This bar exists whether the relief sought is legal or equitable. Papasan v. Allain, 478 U.S. at 276 (citing Pennhurst State School & Hosp. v. Halderman, 465 U.S. 89, 100, 79 L. Ed. 2d 67, 104 S. Ct. 900 (1984)).

Because SNA has named the Director of Forest Land and Water Management for the State of Alaska as a defendant, rather than the State of Alaska itself or one of its agencies, the court must determine whether the limited exception to the eleventh amendment recognized in Ex Parte Young, 209 U.S. 123, 52 L. Ed. 714, 28 S. Ct. 441 (1908), applies. In Ex Parte Young, the Supreme Court concluded that the eleventh amendment did not bar a suit for equitable relief against a state official whose actions were taken under the authority of an unconstitutional state enactment. Id. at 159-60. Ex Parte Young, however, “does not foreclose an Eleventh Amendment challenge where the official action is asserted to be illegal as a matter of state law alone.” Papasan v. Allain, 478 U.S. at 277. The bar operates because a federal court’s grant of relief against state officials on the basis of state law “does not vindicate the supreme authority of federal law.” Pennhurst State School & Hosp. v. Halderman, 465 U.S. 89, 106, 79 L. Ed. 2d 67, 104 S. Ct. 900 (1984). “It is difficult to think of a greater intrusion on state sovereignty than when a federal court instructs state officials on how to conform their conduct to state law.” Id.

SNA alleged a violation of state and not federal law in its sixth cause of action. As a result, the eleventh amendment bars this action.

This court recently confronted the scope of eleventh amendment immunity to suits brought by Native Alaskans based on state-created rights against the State of Alaska. In Native Village of Noatak v. Hoffman, 896 F.2d 1157 (9th Cir. 1990), the plaintiffs, three Native Alaskan Villages, brought an action against the Commissioner of the Department of Community and Regional Affairs of the State of Alaska (the Commissioner). The plaintiffs based their action on an Alaska law that provided that “the state shall pay $ 25,000 to a Native Village government for a village which is not incorporated as a city under this title.” Id. at 1159 (citing Alaska Stat. § 29.89.050 (1980)). In their first cause of action, the plaintiffs alleged that the Commissioner was guilty of invidious racial discrimination against the individual members of the Native Alaskan Villages in violation of the federal constitution and 42 U.S.C. § 1983. Id. The plaintiffs asserted as a second cause of action that the dilution of funds available violated federal laws and policy intended to further tribal self-government. Id. The plaintiffs alleged in count three of their complaint that the Commissioner’s conduct violated 25 U.S.C. § 476. Id. The plaintiffs alleged in their fourth cause of action that their freedom of religion and association under the first amendment was violated by the Commissioner’s action. Id. slip op. at 1492. The plaintiffs also alleged several pendent state claims. The district court dismissed the action as barred by the eleventh amendment.

We reversed and remanded, holding that eleventh amendment immunity does not apply to suits brought by Native Alaskans against the State of Alaska. Id. slip op. at 1502. We construed Article I, Section 8, Clause 3 of the Constitution, as providing “consent by the states to federal jurisdiction” in suits by Indian tribes. Id. 896 F.2d at 1162 (quoting U.S. Const. art. I, § 8, cl. 3). We reasoned that, because “Indian affairs are sui generis and . . . this unique area concern[s] relations with non-foreign governmental units, the surrender of state sovereignty carried with it a surrender of immunity from suit.” Id. at 1164.

SNA, however, is not a “non-foreign governmental unit.” SNA is a Native Village corporation. ANCSA describes such an entity as “an Alaska Native Village Corporation organized under the laws of the State of Alaska as a business for profit or nonprofit corporation to hold, invest, manage and/or distribute lands, property, funds, and other assets for and on behalf of a Native Village in accordance with the terms of this chapter.” 43 U.S.C. § 1602(j). SNA’s duties are created, defined and limited by ANCSA. See, e.g., 43 U.S.C. § 1607 (organization of village corporations); id. § 1611 (selections by village corporations); id. § 1613 (conveyances to village corporations). Unlike the Native Alaskan Villages in Native Village of Noatak v. Hoffman, SNA is not a governmental unit with a local governing board organized under the Indian Reorganization Act, 25 U.S.C. §§ 461-479 (1982). Because SNA is not a governing body, it does not meet one of the basic criteria of an Indian tribe. Montoya v. United States, 180 U.S. 261, 266, 45 L. Ed. 521, 21 S. Ct. 358 (1901); cf. Navajo Tribal Utility Auth. v. Arizona Dept. of Revenue, 608 F.2d 1228, 1231 (9th Cir. 1979) (for the purposes of jurisdiction under 28 U.S.C. § 1362, “‘Native corporations are not tribes or bands.'”) (quoting Cape Fox Corp. v. United States, 456 F. Supp. 784 798 (D. Alaska 1978), rev’d in part and remanded in part, 646 F.2d 399 (9th Cir. 1981)).

In summary, we conclude that Native Village of Noatak v. Hoffman does not apply to a Native Village corporation organized under ANCSA. Because SNA alleges a violation of state and not federal law, the limited exception to eleventh amendment immunity recognized in Ex Parte Young is not applicable. The district court did not err in dismissing SNA’s sixth cause of action against the Director of Forest Land and Water Management for the State of Alaska because it is barred by the eleventh amendment.

CONCLUSION

Conditional purchase options are “valid existing rights” under ANCSA. The exclusion of land subject to OTE conditional purchase options from selection under section 11(a)(2) of ANCSA furthers congressional intent by protecting “valid existing rights.” A Native Village corporation is barred by the eleventh amendment from suing an Alaskan state official for violation of Alaskan law.

AFFIRMED.

 

State of Alaska v. Ahtna, Inc.

OVERVIEW

The Bureau of Land Management (“BLM”) conveyed the lands underlying 30 miles of the lower Gulkana River to Ahtna, Inc. (“Ahtna”), a native regional corporation under the Alaska Native Claims Settlement Act (“ANCSA”), 43 U.S.C.A. §§ 1601-1629(e) (West 1986 Supp. 1989). The district court set aside the conveyance, holding that segment of the Gulkana was navigable when Alaska became a State in 1959, and therefore, the underlying lands were the property of Alaska, not subject to conveyance by the federal government. Ahtna appeals. We affirm.

FACTS AND PROCEEDINGS

The facts are not disputed. The Gulkana River System (“the River” or “the Gulkana”) is composed of clear water streams located in south central Alaska. The River flows through diverse lands containing tundra, spruce forests, and lakes. It displaces 3,600 to 4,800 cubic feet per second from May to September, decreasing to 200 to 300 cubic feet per second from November through April, when the River lies frozen. The parties stipulate that the physical characteristics of the River, such as water volume, gradients, geology, and general weather, are the same as they were when Alaska became a State in 1959.

The part of the River at issue in this case is its lower 30 miles (“the lower Gulkana”), extending from Sourdough Campground (River mile 33.5) to the River’s mouth at the Copper River (mile 0). The shallowest part of the River, at mile 3.75, is normally a foot and a half deep, diminishing to a foot during low-flow season. On average, however, the River in these lower 30 miles is 125-150 feet wide and 3 feet deep.

The parties agree that today, between mile 3.75 and mile 30, and between mile 0 and mile 3.5, the River is customarily used, or is susceptible to use, by the following types of watercraft: (1) flat or round-bottom aluminum or fiberglass powerboats 16 to 24 feet long by 4 to 10 feet wide, capable of carrying loads between 900 and 2,000 lbs.; (2) inflatable rafts between 12 and 15.5 feet long by 4 to 7 feet wide, with a load capacity of 1,250 to 2,000 lbs.; and (3) square-sterned motorized freight canoes and double-ended paddle canoes 15 to 19 feet long, capable of carrying loads of 500 to 900 lbs.

In the years immediately preceding Alaska’s admission into the Union, from the 1940’s to 1959, hunters and fishermen travelled the River in powered 16 to 24-foot fiberglass and aluminum watercraft. The watercraft had a load capacity of approximately 1,000 lbs.

Most of the use of the River is recreational. On a typical busy weekend day in June or July, 20 boats will use the lower 30 miles of the River, carrying approximately 60 people.

Since the 1970’s it has been possible to take guided fishing and sightseeing trips on the River. The industry employs watercraft of the type stipulated to be customarily used in the Gulkana, that is, 20 to 24-foot long aluminum powerboats and 12 to 15.5-foot long inflatable rafts. Today, the industry employs over 400 people. Rafts usually carry five passengers and one guide, providing for a load often in excess of 1,000 lbs. Average fare is $150.00 per passenger.

On May 16, 1979, the BLM made an administrative decision finding that (1) the lower Gulkana River was not navigable, and (2) that the underlying submerged lands were federally-owned property subject to conveyance to village corporations under ANCSA.[1] Alaska v. United States, 662 F. Supp. 455, 456-57 (D.Alaska 1987). The BLM thereafter made an interim conveyance of the submerged lands of the lower Gulkana to Ahtna, a native regional corporation organized under ANCSA.[2]

The State of Alaska challenged the conveyance to Ahtna. States generally hold title to the lands underlying navigable rivers within their boundaries. Utah v. United States, 482 U.S. 193, 196, 107 S.Ct. 2318, 2320, 96 L.Ed.2d 162 (1987). Alaska maintained before the district court that the lower Gulkana was navigable, that title to the underlying lands belonged to Alaska, and that the BLM’s conveyance was therefore void. Alaska v. United States, 662 F. Supp. at 456. The parties stipulated to all the relevant facts.

The district court granted summary judgment in favor of Alaska. The court concluded that in most cases, including this one, a river functions as a “highway for commerce,” and therefore is navigable, if it is capable of transporting people or goods. Id. at 466. Since the stipulated facts showed that the lower Gulkana has been and is used for transport of goods and people, the court concluded the portions of the River here at issue were navigable. Id. at 467-68.

Ahtna appeals. The United States, which before the district court endorsed the BLM’s determinations of nonnavigability, now argues as an appellee that the lower Gulkana is navigable but for reasons other than those stated by the district court. Amicus Arctic Slope Regional Corporation joins Ahtna in support of a determination of nonnavigability. Amici, affiliates of the National Wildlife Federation, outdoor sports organizations, and several States, join the State of Alaska in support of a decision of navigability.

STANDARD OF REVIEW

The facts are undisputed. We review de novo the granting of summary judgment in favor of Alaska. Gabrielson v. Montgomery Ward Co., 785 F.2d 762, 764 (9th Cir. 1986).

DISCUSSION

I. The Navigability Determination

The several States ordinarily hold title to the lands underlying navigable rivers within their boundaries. Two sources of authority justify this rule. One is the “equal footing doctrine,” which guarantees to newly-admitted States the same rights enjoyed by the original thirteen States and other previously-admitted States. Utah v. United States, 482 U.S. at 196, 107 S.Ct. at 2320; Pollard’s Lessee v. Hagan, 44 U.S. (3 How.) 212, 228-29, 11 L.Ed. 565 (1845). One of these rights is title ownership to the lands underlying navigable rivers. Utah v. United States, 482 U.S. at 196, 107 S.Ct. at 2320; see also United States v. Alaska, 437 F.2d 1081, 1084 (9th Cir. 1971).

The second source of authority for the rule is the Submerged Lands Act of 1953. By that act, Congress vested in the States “title to and ownership of the lands beneath navigable waters within the boundaries of the respective States.” 43 U.S.C. § 1311(a) (1982). Congress explicitly provided for this rule to apply to Alaska when Alaska became a State in 1959. 48 U.S.C. Chapter 2 (“the Statehood Act”) note 6(m) prec. sec. 21 (1982).

Thus, the dispositive issue before the district court was whether the lower thirty miles of the Gulkana were navigable. If navigable, title to the submerged lands passed to Alaska at statehood, and the BLM was without power to convey the lands to Ahtna. If non-navigable, the lands remained federal and available for conveyance to Ahtna under ANCSA.

Whether a river is navigable is a federal question. United States v. Holt State Bank, 270 U.S. 49, 55-56, 46 S.Ct. 197, 199, 70 L.Ed. 465 (1926). The relevant navigability test states as follows: 

Those rivers must be regarded as public navigable rivers in law which are navigable in fact. And they are navigable in fact when they are used, or are susceptible of being used, in their ordinary condition, as highways for commerce, over which trade and travel are or may be conducted in the customary modes of trade and travel on water.

The Daniel Ball, 77 U.S. (19 Wall.) 557, 563, 19 L.Ed. 999 (1870); see, e.g., Oregon v. Riverfront Protection Ass’n, 672 F.2d 792, 794 (9th Cir. 1982).[3] Although the river must be navigable at the time of statehood, United States v. Utah, 283 U.S. 64, 75, 51 S.Ct. 438, 440, 75 L.Ed. 844 (1931) (footnote omitted), this only means that, at the time of statehood, regardless of the actual use of the river, the river must have been susceptible to use as a highway for commerce. Id. 283 U.S. at 83, 51 S.Ct. at 443.

A river’s use “need not be without difficulty, extensive, or long and continuous” for the river to be a highway for commerce. Riverfront Protection, 672 F.2d at 795 (portion of the McKenzie River found navigable when used to transport “thousands of logs,” even though shallow areas and sand bars made the transport difficult). It is not essential that the river be used for the transportation of water-borne freight by a carrier whose purpose is to make money from the transportation. Utah v. United States, 403 U.S. 9, 11, 91 S.Ct. 1775, 1776, 29 L.Ed.2d 279 (1971)(ranchers transporting own cattle from mainland to islands used the river as a highway). Indeed, it is not even necessary that commerce be in fact conducted: “The question of . . . susceptibility in the ordinary condition of the rivers, rather than of the mere manner or extent of actual use, is the crucial question. . . . The extent of existing commerce is not the test.” United States v. Utah, 283 U.S. at 82, 51 S.Ct. at 443.

Ahtna and amicus argue that the principal uses of the Gulkana have always been recreational, and that recreational uses do not support a finding of navigability. This argument is unpersuasive. The test is whether the river was susceptible of being used as a highway for commerce at statehood, not whether it was actually so used.

Under the facts of this case, we think the present use of the lower Gulkana is commercial and provides conclusive evidence of the lower Gulkana’s susceptibility for commercial use at statehood. The parties agree that in 1970 guided fishing and sightseeing trips began to be conducted with watercraft customary for that time period. A substantial industry of such transportation for profit emerged in the lower Gulkana, which industry today employs approximately 400 people. To deny that this use of the River is commercial because it relates to the recreation industry is to employ too narrow a view of commercial activity. “[N]avigability is a flexible concept and ‘[e]ach application of the [Daniel Ball test] . . . is apt to uncover variations and refinements which require further elaboration.'” Alaska v. United States, 754 F.2d 851, 854 (9th Cir. 1985) (quoting United States v. Appalachian Elec. Power Co., 311 U.S. 377, 406, 61 S.Ct. 291, 299, 85 L.Ed. 243 (1940)).

Our conclusion that the present commercial use of the lower Gulkana provides conclusive evidence of its susceptibility for commerce at statehood follows from the facts stipulated to by the parties. The parties stipulated that the River’s physical characteristics have remained unchanged since statehood. They also agreed that the watercraft customary for the River’s use at statehood included powered boats with a load capacity of approximately 1,000 lbs. We note that the rafts employed today in the guided and fishing industry have a maximum load capacity of 2,000 lbs. We therefore think that the watercraft customary at statehood could have at least supported commercial activity of the type carried on today, with minor modifications due to a more limited load capacity and rudimentary technology. We therefore conclude that the lower Gulkana was susceptible for use as a highway for commerce at statehood.

II. Reservation of the Riverbed at Statehood

Assuming the lower Gulkana was navigable at statehood, Ahtna argues on appeal that title to the underlying lands did not pass to Alaska because Congress intended to reserve title to the submerged lands of the lower Gulkana for the United States at the time Alaska became a State. Ahtna’s argument is based on note 4 of the Statehood Act, which provides:

As a compact with the United States said State[Alaska] and its people do agree and declare that they forever disclaim all right and title to any lands or other property not granted or confirmed to the State . . . under the authority of this Act, the right or title to which is held by the United States . . ., and to any lands or other property (including fishing rights), the right or title to which may be held by any Indians, Eskimos, or Aleuts (hereinafter called natives) or held by the United States in trust for said natives . . . .

48 U.S.C. note 4 prec. sec 21 (1982) (emphasis added).

According to Ahtna, note 4 meant to reserve the lands underlying Alaska’s navigable rivers because ANCSA later provided that Alaskan natives may have held title to those lands, bringing them within the reservation of note 4. See 43 U.S.C. § 1603(b)(extinguishing “[a]ll aboriginal titles, if any, and claims of aboriginal title in Alaska based on use and occupancy, including submerged land underneath all water areas . . . .”) (emphasis added).

Alaska and amici first contend that Ahtna’s argument is not properly before this court because it was raised for the first time on appeal. We discuss the merits of Ahtna’s argument because the issue is purely legal and the facts are fully developed. See Romain v. Shear, 799 F.2d 1416, 1419 (9th Cir. 1986).

Ahtna’s argument fails. The federal government has the power to convey a Territory’s lands underlying navigable waters prior to that Territory becoming a State, thereby defeating the future State’s right to the lands. Utah v. United States, 482 U.S. at 197, 107 S.Ct. at 2321. The Government could probably likewise reserve unto itself the same lands prior to statehood. See id. at 201, 107 S.Ct. at 2323. Nevertheless, “[g]iven the [federal government’s] longstanding policy of holding land under navigable waters for the ultimate benefit of the States, . . . [the Supreme Court will] not infer an intent to defeat a State’s equal footing entitlement from the mere act of reservation itself.” Id. at 202, 107 S.Ct. at 2323. The party seeking to defeat the State’s interest has to show that (1) Congress clearly intended to include land under navigable waters within the federal reservation, and (2) Congress affirmatively intended to defeat the future State’s title to such land. Id.

In Utah v. United States, the Court decided whether the federal government had effectively reserved for itself the bed of the Utah Lake by laws enacted prior to statehood. To meet the first prong of the test, the Court required clear reference to the particular lands in the respective legislation. The court noted that “‘Congress has never undertaken by general laws to dispose of’ land under navigable waters.” Id. at 203, 107 S.Ct. at 2324 (quoting Shively v. Bowlby, 152 U.S. 1, 48, 14 S.Ct. 548, 566, 38 L.Ed. 331 (1894)). The bed of Utah Lake was therefore not reserved by a law purporting to reserve “‘all the lands which may hereafter be designated or selected . . . for sites for reservoirs.'” Id. at 198, 107 S.Ct. at 2321 (quoting the Sundry Appropriations Act of 1888, 25 Stat. 505). The law’s generality was not cured by the fact that, prior to Utah’s statehood and pursuant to the reservation law, a United States Geological Survey reported the reservation of the “site of the Utah Lake” pursuant to the reservation law, but not the bed of the lake.[4] Id. at 199, 206-07, 107 S.Ct. at 2322, 2325-26. The Court concluded that other references to the bed of the lake did not unambiguously reflect congressional intent to reserve the bed of the lake, and so failed to definitely declare “or otherwise [make] very plain” Congress’ intention to reserve title to the submerged lands. Id. at 207, 107 S.Ct. at 2326 (quotation omitted).

Ahtna contends that note 4 reserves title to the lands underlying Alaska’s navigable rivers to the United States. We are not persuaded that such interpretation of note 4 could survive the first prong of the test articulated in Utah v. United States. Note 4 not only omits specific reference to the lands underlying the lower Gulkana, it also omits reference to any submerged lands. Thus, note 4 embodies too general a statement from which we could “infer an intent to defeat [Alaska’s] equal footing entitlement.” Utah v. United States, 482 U.S. at 202, 107 S.Ct. at 2323. We need not reach the issue of whether note 4 would survive the second prong of the test. See id.

CONCLUSION

We will not infer congressional intent to deprive Alaska of its title to submerged lands of navigable rivers within its boundaries based on the general language contained in note 4 of the Statehood Act. Because the lower Gulkana was susceptible for use as a highway of commerce at statehood, the lower Gulkana was navigable, and title to its submerged lands vested in Alaska at statehood.

AFFIRMED.

Kenai Peninsula Borough v. Tyonek Native Corp.

The Kenai Peninsula Borough (borough) appeals from a decision of the superior court which ruled that a tax parcel owned by the Tyonek Native Corporation (Tyonek) was exempt from taxation for 1985. The parcel consists of 385 acres located on the west side of Cook Inlet. In the early 1970’s, Tyonek leased the parcel to Kodiak Lumber Mills, which constructed substantial improvements. These include a chip mill, warehouses, a 1475-foot dock, an air strip, 15 mobile homes, 4 bunk houses, 5 houses, 6 duplexes, 3 shop buildings, an office building, a recreation hall, a mess hall, a 400,000 gallon fuel tank farm, and sewage, water and electrical utilities. Kodiak Lumber Mills used the property until it went bankrupt in 1983. Tyonek then took possession. During the period the parcel was leased to Kodiak Lumber Mills it was included on the borough tax rolls.

In 1985 Tyonek claimed that the parcel was exempt from taxation under 43 U.S.C. § 1620(d), which provides that real property conveyed to village corporations under the Alaska Native Claims Settlement Act (ANCSA) is exempt from property taxation for 20 years so long as the property is “not developed or leased to third parties”.[1] Tyonek also relied on a state statute, AS 29.45.030, which exempts from property taxation land which is exempt under 43 U.S.C. § 1620(d).[2] AS 29.45.030(m)(1) purports to define the word “developed” as used in the federal statute “unless superseded by applicable federal law” to mean “a purposeful modification of the property from its original state that effectuates a condition of gainful and productive present use without further substantial modification . . . .” We have discussed at length the legislative history of 1620(d) as well as its interaction with the Alaska National Interest Lands Conservation Act (ANILCA) and AS 29.45.030 in a companion case, Kenai Peninsula Borough v. Cook Inlet Region, Inc., 807 P.2d 487 (Alaska, March 15, 1991).

Following a hearing, the borough assessor rejected Tyonek’s claim of exemption on the grounds that although the property was no longer leased it was developed. Tyonek appealed this determination to the superior court. The superior court decided that the parcel was exempt, stating: “It is clear that [Tyonek] is entitled to a moratorium on taxation so long as the property lies unleased or otherwise unproductive and idle.” From this decision the borough appeals.

After filing its notice of appeal in this court, the borough sought a remand to the superior court for the purpose of filing a motion for relief from judgment under Alaska Civil Rule 60(b). Remand was granted. The borough contended before the superior court that new information had come to light regarding the use of the parcel which entitled the borough to relief under the fraud or misrepresentation subsection of the rule.[3]

The borough had obtained a copy of an agreement between Tyonek and Beluga Coal Company dated November 2, 1983 which was entitled “Option/Lease of KLM Facilities.” Under this agreement Beluga was paying Tyonek $ 125,000 per year for an option to lease the parcel. The option, if exercised, would allow Beluga to lease the parcel for $ 250,000 per year. The term of the option was four years and the term of the lease would be ten years with renewal rights for three additional ten-year periods. Under the agreement Tyonek was required to use the option payments to maintain the facilities in reasonable condition, and to employ two caretakers. Further, the agreement provided that if third parties used the facilities on the parcel during the term of the option and paid Tyonek for their use, option payments required to be made by Beluga should be reduced by 60 percent of the payments.

Tyonek opposed the Rule 60(b) motion on the grounds that it was untimely since the borough had known of the agreement before the court’s initial decision. Tyonek also contended that since the agreement was merely an option, it did not affect the merits of the court’s decision. The trial court denied the motion, stating that there had been an insufficient showing that fraud, misrepresentation or other misconduct had occurred. From this order as well, the borough has appealed.

In our view the superior court erred in reversing the decision of the assessor rejecting Tyonek’s claim of exemption. The critical question is whether the property was “developed” as that term was used in 43 U.S.C. § 1620(d)(1). The borough suggests as a working definition of the term that land is developed when it is converted “into an area suitable for residential or business uses.” Citing Winkelman v. City of Tiburon, 32 Cal. App. 3d 834, 108 Cal. Rptr. 415, 421 (Cal. App. 1983). Tyonek, on the other hand, argues that the definition of “developed” under the federal act is controlled by the state definition set forth in AS 29.45.030(m)(1): “‘developed’ means a purposeful modification of the property from its original state that effectuates a condition of gainful and productive present use without further substantial modification . . . .” Tyonek argues that this definition means that there must be a current actual productive use of property rather than merely a current potential productive use.

Tyonek’s argument that property to be developed must have an actual current productive use is contrary to the common understanding of the meaning of that term. It would mean, for example, that urban property on which an office building stands which is vacant because it has lost its tenant is not developed.

There is no indication that Congress in enacting section 1620(d) as part of the 1971 Native Claims Settlement Act intended “developed” to have an uncommon or specialized meaning. Whether the term applies to a given parcel will not always be easy to determine, see e.g., Kenai Peninsula Borough v. Cook Inlet Region, Inc., 807 P.2d 487 (Alaska 1991), but this case does not present a difficult question. There is no reasonable usage of the term “developed” that requires actual occupancy. The parcel here has been so extensively improved that it is necessarily developed within the meaning of section 1620(d).

The state statute, AS 29.45.030, enacted in 1983, is less clear. As noted, it defines “developed” as “a purposeful modification . . . that effectuates a condition of gainful and productive present use without further substantial modification . . . .” Whether this refers only to productive actual present uses rather than to productive potential and actual present uses is reasonably arguable. However, only the latter alternative is consistent with section 1620(d).

We construe the meaning of the term “developed” in the state statute to be consistent with the meaning of that term as used in ANCSA. We reach this conclusion for two reasons. First, AS 29.45.030(a)(7) expressly exempts only property which is also exempt under ANCSA. Second, if we were to construe the state statute to exempt property which is not exempt under ANCSA, serious and substantial questions concerning the constitutionality of this statute under the equal rights clause of the Alaska Constitution would be raised.[4] As statutes are to be construed to avoid a substantial risk of unconstitutionality where adopting such a construction is reasonable, we construe the state statute to be co-extensive with ANCSA.[5]

The only question under the state statute is whether the property “reverted to an undeveloped state” according to AS 29.45.030(n) when Kodiak Lumber Mills went bankrupt. As the property was taxable both because it was developed and because it was leased, the termination of the lease, taken alone, did not suffice to render the property tax exempt. What was required, additionally, was a tangible change such as destruction or decay of the improvements, to constitute reversion to an undeveloped state. As no such change has occurred, the property remains taxable.

Our decision that the property is developed and therefore taxable moots the borough’s appeal concerning its Rule 60(b) motion.

REVERSED and REMANDED.[6]

Kenai Peninsula Borough v. Cook Inlet Region

The Alaska Native Claims Settlement Act (ANCSA), 43 U.S.C. §§ 1601-1628 (1982), extinguished all claims of the Native people of Alaska based on aboriginal title in exchange for 962.5 million dollars and 44 million acres of public land. See United States v. Atlantic Richfield Co., 612 F.2d 1132, 1134 (9th Cir. 1980). The act authorized the creation of 13 regional and over 200 village corporations to receive this money and land.

In enacting ANCSA, Congress declared as a policy that “the settlement should be accomplished . . . without adding to the categories of properties and institutions enjoying special tax privileges . . . .” 43 U.S.C. § 1601(b). Congress did, however, provide for an exemption from real property taxation for lands conveyed under the act. The exemption was limited in time to 20 years, and in content to lands “which are not developed or leased to third parties.” 43 U.S.C. § 1620(d)(1). This case concerns the meaning of the term “developed” in the act.

PROCEDURAL HISTORY

A. Salamatof Native Association, Inc.

Salamatof Native Association, Inc. (Salamatof) is a village corporation which received land under ANCSA. At issue in this appeal are the tax years 1981 through 1985 and 161 tax parcels. Salamatof paid real property taxes to the Kenai Peninsula Borough (borough) on all parcels and appealed to the borough assessor. The assessor found that taxes for 1981 through 1983 were not protested in a timely manner and denied the appeal as to all parcels for those years. He found that taxes for 1984 and subsequent years were protested on time. On the merits, the assessor found that a number of parcels were exempt. However, he denied exemptions to some of the parcels presently before us on the grounds that the parcels were developed. As to these, the assessor stated, in relevant part:

a. That these parcels are within a platted subdivision and are capable of use for gainful and productive purposes as they are now, they are presently offered for sale; and

b. These parcels were created by subdivision plat. A subdivision plat is more than just mere surveying, and creates new legally defined parcels and rights regarding sale of the resulting parcels. A subdivision constitutes a purposeful modification of the land from its original state and in this case, makes it capable of a present productive gainful use.

Salamatof took a timely appeal of this decision to the superior court. The parties by stipulation added parcels on which the assessor made no ruling. In the superior court this case was  consolidated with the appeal of Cook Inlet Region, Inc.[1]

B. Appeal of Cook Inlet Region, Inc.

Cook Inlet Region, Inc. (CIRI) is a regional corporation under ANCSA and an Alaska business corporation. The tax years in question are 1981 through 1986 involving some 67 parcels. CIRI paid its taxes and appealed to the borough assessor. On January 27 and June 4, 1986, hearings were held before the assessor. The assessor ruled that a number of parcels were exempt, but denied exemptions as to many others. In general, the grounds for denial were that the parcels are considered developed as they are surveyed or subdivided lots capable of gainful and productive present use and need no further modification to be marketable. From this decision CIRI appealed to the superior court.

COURSE OF PROCEEDINGS IN THE SUPERIOR COURT

After procedural skirmishes and a substantial period of delay by the borough in filing its appellee’s brief, the trial court entered a written decision ruling that all the parcels, with one exception, were “clearly undeveloped” and thus tax exempt. The excepted parcel, the so-called Homer radio station property owned by CIRI, was remanded to the assessor for further proceedings. Final judgments in favor of CIRI and Salamatof were entered pursuant to Civil Rule 54(b) as to all of the parcels except the parcel containing the radio station.

CIRI moved for full attorney’s fees and costs of $30,761.48 and for an award of sanctions against the borough of $2,500. Salamatof made a similar motion, requesting actual attorney’s fees of $64,258, actual costs of $4,088.92, and sanctions of $2,400.

The borough asked for and received an extension in which to oppose these motions. When this period ended it requested a further extension. While this request was pending the trial court awarded CIRI and Salamatof what they had asked for in actual attorney’s fees, costs, and sanctions, noting that no opposition had been filed.

On appeal to this court, the borough challenges the superior court’s ruling that CIRI’s and Salamatof’s property is exempt and the award of actual attorney’s fees and sanctions.[2]

FAILURE TO ASSERT AN EXEMPTION

As a threshold matter, the borough argues that neither CIRI nor Salamatof asserted that its property was exempt in a timely manner for the tax years 1981-1985. The borough relies on section 2 of Kenai Peninsula Borough (KPB) Ordinance 5.12.055, passed in 1985, which sets forth the procedure for appealing tax assessments to the borough assessor. Section 2 provides that appellants who have claimed or asserted that properties are exempt prior to the time taxes were due for that year but whose properties have been assessed by the Borough assessing staff for the 1985 assessment year and all prior assessment years, have until December 31, 1985 to appeal such assessments pursuant to the procedures established under Section 1 of the ordinance; except that no appeal right under this ordinance shall exist if the property claimed to be exempt has been the subject of a final determination of taxes due through a tax foreclosure or other legal action.

The borough argues that the taxpayers under this section were required to have asserted their exemptions prior to the yearly tax due date of August 15, and that they did not do so. The borough assessor found that Salamatof did not protest the taxation of its parcels in a timely manner for the tax years 1981-1983. The superior court reversed the assessor’s ruling on this point, stating that the ordinance “was enacted especially to deal with the taxpayers’ complaints.”

The trial court’s conclusion concerning the purpose of the ordinance is warranted in part. The ordinance was designed to accommodate the appeals of Native corporations for years prior to 1985. However, the ordinance requires as a condition of appeal that an appellant “have claimed or asserted” an exemption “prior to the time taxes were due for that year.” This condition cannot be read out of the ordinance.

There was substantial evidence to support the assessor’s ruling that Salamatof failed to object to taxation of its property in a timely fashion for the tax years 1981 through 1983. The first assertion of immunity appearing of record was made January 23, 1984, when Salamatof made a late payment of its 1983 taxes under protest. Accordingly, the assessor’s ruling should have been affirmed.[3]

Although the ordinance on which the borough relies was not enacted until 1985, statutory procedures existed prior to that time for obtaining a refund of taxes paid under protest. AS 29.45.500. Such actions were barred if not brought within one year after the due date of the tax. AS 29.45.500(b). In addition, a statutory right of appeal from assessments existed prior to the ordinance under AS 29.45.190 and AS 29.45.200(c). These, however, had to be exercised within 30 days after the date of mailing of the notice of assessment. The deadlines for both of these methods had passed by the time Salamatof first initiated action as to the tax years 1981 through 1983.

The assessor found that Salamatof’s protests were on time for the years 1984 and 1985. The ordinance only requires that taxpayers claim or assert exemptions. KPB Ordinance § 5.12.055(2). No particular form of claim or assertion is required. Since it appears that Salamatof began protesting taxation beginning January 23, 1984, prior to the time taxes were due for 1984, we conclude that the assessor’s decision that Salamatof’s protest for 1984 and 1985 were timely under the ordinance is supportable.

By the same standard, CIRI’s protests are timely for all tax years in question as it had been protesting taxation since 1981.

We thus conclude that the borough’s argument concerning the timeliness of Salamatof’s appeal for 1981 through 1983 is correct and that all of Salamatof’s property involved in this case was taxable for those years. The borough’s timeliness arguments concerning Salamatof’s property for 1984 and 1985 and CIRI’s property for all of the tax years lack merit.

STATUTORY FRAMEWORK FOR THE CLAIMS OF EXEMPTION

There are four statutes which are relevant to the exemption issue. The first is ANCSA, enacted by Congress in 1971 to extinguish Alaska Natives’ claims to aboriginal title and to grant compensation for those claims. As noted, section 21(d) of ANCSA (43 U.S.C. § 1620(d)) provided that lands conveyed under ANCSA would be tax exempt for 20 years except for developed lands or lands leased to third parties.[4]

The legislative history of section 21(d) of ANCSA has been described as “sparse.” Price, Purtich and Gerber, The Tax Exemption of Native Lands Under Section 21(d) of the Alaska Native Claims Settlement Act, 6 U.C.L.A. Alaska L. Rev. 1, 3 (1976) (hereafter “Price”). Price’s explanation of the purpose the exemption is as follows:

Section 21(d), as part of the Alaska Native Claims Settlement Act, is most clearly a provision implementing the policy of gradual adjustment to the economic mainstream. The twenty year moratorium on taxation of undeveloped and unleased land serves as a period during which the Natives can experiment in financial and real estate transactions and achieve managerial capability, without fear of immediate tax burdens arising from the ownership of vast tracts of undeveloped land. Furthermore, the tax moratorium permits the Natives to pursue a traditional subsistence lifestyle, at least temporarily, without the need to exploit hunting grounds in order to raise revenue for taxation. An exemption is also important because of the danger of foreclosure for nonpayment and the possibility of rapid movement of land ownership from Native to non-Natives.

Price at 6.

While this is an explanation for the moratorium on taxation, it does not explain the exception to the moratorium for developed or leased land. Price describes the draftsmen of ANCSA as “generally hostile to [tax] exemptions.” Id. at 5. However, “there is evidence that the moratorium on taxation was a bargained-for compensation and part of the liquidation of the Native claim.” Id. at 6.

The influential report of the Federal Field Committee for Development Planning in Alaska, Alaska Natives and the Land (U.S. Government, Anchorage, 1968) discusses the tax exemption problem as follows:

Tax exemptions could have significant fiscal implications for the state and local government. The real estate exemption of S.B. 3586, for instance, keeps all lands granted off the property tax rolls whether they are “in fee or in trust.” This provision applies as well to any minerals associated with the land grant which could otherwise be made subject to ad valorem levies where tax bodies existed. Conceivably, these sums might amount to considerable amounts of public receipts foregone. Some caution is appropriate here, however, in that too early and too much land taxation can result in confiscation of the land, which result would clearly be counter-productive to the policy resolution intended.

The problem here seems to be to distinguish among the different purposes for which land might be granted. In the case of homesites, fishing camps, and the like, or of lands granted to protect subsistence activities, maximum insurance is required against confiscation because of the owner’s inability to pay taxes. In the case of grants of commercially valuable land for income purposes, however, the point is to get them into a productive, income-earning position and, indeed, to get them on the tax rolls. To the extent that these lands are in fact capable of producing income, there is no obvious justification for keeping them off the tax rolls simply because they happen to be owned by Natives or Native groups.

Id. at 531 (emphasis in original).

From the committee standpoint at least, land capable of producing income which was selected for its income producing potential should be taxable in fairness to the state and local governments. This sentiment seems to have been carried forward to the final enactment of ANCSA, as illustrated by the Congressional declaration that there be no addition to the categories of property enjoying special tax privileges, 43 U.S.C. § 1601(b), and in the provision of section 21(d) of ANCSA itself, providing that developed or leased property is immediately taxable.

The next act of importance to this case is the Alaska National Interest Lands Conservation Act of 1980, P.L. 96-487 (ANILCA). ANILCA, so far as relevant here, amended section 21(d) to begin the running of the 20-year exemption period “from the vesting of title pursuant to the Alaska National Interest Lands Conservation Act or the date of issuance of an interim conveyance or patent, whichever is earlier . . . .”

ANILCA also created the Alaska Land Bank program. 43 U.S.C. § 1636. Under this program, private land owners, including Native corporations, could make agreements with the Secretary of the Interior so that their lands would be managed in a manner compatible with the management plan for adjoining federal lands. As to lands owned by Native corporations which were included in such agreements, ANILCA provided that there would be permanent immunity from state and local property taxes. 43 U.S.C. § 1636(d).

In addition, ANILCA expanded the tax exemption to reach property used “solely for the purposes of exploration” and added language to the first proviso of section 21(d) of ANCSA which was aimed at re-establishing tax exemption when property was no longer “leased or being developed.”[5]

In 1983 the Alaska Legislature passed Senate Bill 260 (effective January 1984), which added property exempt under ANCSA to the list of property exempt from taxation. AS 29.45.030(a)(7). The legislature then defined the meaning of the term “developed,” among other terms used in ANCSA, “unless superseded by applicable federal law” as follows:

“developed” means a purposeful modification of the property from its original state that effectuates a condition of gainful and productive present use without further substantial modification; surveying, construction of roads, providing utilities or similar actions normally considered to be component parts of the development process, but which do not create the condition described in this paragraph, do not constitute a developed state within the meaning of this paragraph; developed property, in order to remove the exemption, must be developed for purposes other than exploration, and be limited to the smallest practicable tract of the property actually used in the developed state;[6]

The last act of relevance is Public Law 100-241, 101 Stat. 1806, the Alaska Native Claims Settlement Act Amendments of 1987. This act extended the Alaska Land Bank tax exemption to all lands conveyed under ANCSA, regardless of whether they are subject to a Land Bank Agreement, “so long as such land and interests are not developed or leased or sold to third parties . . . .” 43 U.S.C. § 1636(d)(1)(A)(ii). Also, the act defines “developed” in terms which at the outset are substantially identical to the terms used in the 1983 state statute, but which go on to specify that land which is subdivided under an approved and recorded subdivision plat is “developed”.[7] 43 U.S.C. 1636(d)(2)(B)(iii).

The House explanatory statement to Public Law 100-241 discusses the term “developed” at length. The statement makes clear Congress’ intent that, whatever else the word “developed” might mean, it encompasses lots in an approved and recorded subdivision:

Land in Alaska is subdivided by the State or by local platting authorities. Action by the appropriate platting authority enables development of the subdivided property. Regardless of whether a tract of land has been physically modified from its original state, the tract is ‘developed’ from the date an approved subdivision plat is properly recorded by the landowner or his or its authorized agent.

House Explanatory Statement, 100th Cong., 1st Sess. § 11, reprinted in 1987 U.S. Code Cong. & Admin. News 3299, 3311.

(B) State and local property taxes specified in subparagraph (A) of this paragraph (together with interest at the rate of 5 per centum per annum commencing on the date of recordation of the subdivision plat) shall be paid in equal semi-annual installments over a two-year period commencing on the date six months after the date of recordation of the subdivision plat.

(C) At least thirty days prior to final approval of a plat of the type described in subparagraph (A), the government entity with jurisdiction over the plat shall notify the submitting individual, corporation, or trust of the estimated tax liability that would be incurred as a result of the recordation of the plat at the time of final approval 

….

(6) Savings.

….

(B) Enactment of this subsection shall not affect any real property tax claim in litigation on the date of enactment [February 3, 1988].

DISCUSSION OF THE MERITS

The borough argues that there is a generally accepted meaning of the term “developed” in the context of land. This meaning is, “converted into an area suitable for residential or business uses.” The borough contends that this definition encompasses land which has been platted and is ready for sale. The borough argues that Congress intended that the term “developed” would mean this in section 21(d) of ANCSA. Further, the borough argues that if the state law definition of “developed” exempts property that would not be exempt under ANCSA, state law is unconstitutional because non-Native corporation owners of property identical in character and use are not afforded the same tax exemption.

The appellees argue that in order to be “developed” under ANCSA, property must be actually productive of income rather than merely potentially productive. Appellees contend that AS 29.45.030 is consistent with ANCSA. Alternatively, they argue that there is no common or ordinary meaning of the term “developed,” that it is ambiguous, and that therefore the rule of construction that in Indian law all ambiguities must be resolved in favor of Indians should control this case and requires a construction which exempts any parcel which had not been purposefully modified and is not presently economically productive.

The meaning of the term “developed” under ANCSA is a question of federal law. Consequently, the primary consideration in determining meaning is the intent of Congress. Although it is well established that ambiguities in ANCSA are to be resolved favorably to Natives, Alaska Public Easement Defense Fund v. Andrus, 435 F. Supp. 664, 670-71 (D. Alaska 1977); People of South Naknek v. Bristol Bay Borough, 466 F. Supp. 870, 873 (D. Alaska 1979), if congressional intent is clear, we must defer to it. Hakala v. Atxam Corp., 753 P.2d 1144, 1147 (Alaska 1988).

One indication of congressional intent is the ordinary meaning of the words used in the statute. In the context of raw land,[8] the common meaning of “developed” includes subdivided property which is ready for sale. Webster’s Third New International Dictionary of the English Language, Unabridged (1968), defines “develop” in a land context as follows:

to make actually available or usable (something previously only potentially available or usable) . . . : as (1): to convert (as raw land) into an area suitable for residential or business purposes they approximately equal to several large tracts on the edge of town; also: to alter raw land into (an area suitable for building) the subdivisions that they approximately equal to were soon built up . . . .

Cases dealing with the term “developed” in the context of land confirm that “develop” connotes conversion into an area suitable for use or sale. Winkelman v. City of Tiburon, 32 Cal.App.3d 834, 108 Cal.Rptr. 415, 421 (Cal. App. 1973) (“The term ‘developed’ connotes the act of converting a tract of land into an area suitable for residential or business uses.”); Muirhead v. Pilot Properties, Inc., 258 So.2d 232, 233 (Miss. 1972) (same holding); Prince George’s County v. Equitable Trust Co., 44 Md.App. 272, 408 A.2d 737, 742 (Md. Ct. Spec. App. 1979) (“Develop [is defined as] the conversion of raw land into an area suitable for residential or business uses.”)(Quoting Webster’s New International Dictionary, (2d Ed. 1959)); Best Building Co. v. Sikes, 394 S.W.2d 57, 63 (Tex. App. 1965) (court approved trial court finding based in part on extrinsic evidence that “developed” included subdividing, building streets, and installing utilities).

The appellees’ position that in order to be developed property must actually be producing income is not supported by any generally accepted definition of the term. It would mean, for example, that a vacant office building located on a city lot is undeveloped. Since having an income producing character is not a necessary component of the word “developed” in ordinary usage, we reject the appellees’ interpretation.

At the hearing before the assessor, CIRI advocated a different definition of developed. CIRI took the view that a small tract of land was developed if profits from its sale would be maximized without further physical or legal alteration.

CIRI’s position was illustrated by Steve Planchon, its land development manager:

We do have . . . nine, ten properties . . . that we decided not to appeal . . . They’re one acre tracts. There’s something that we can’t do anything further. We can’t subdivide them, we can’t put a road in, the power isn’t there. These things are there — it’s something if a guy came to us tomorrow and said, “Listen, I’d like to sell it to you [sic],” and my boss came in and said “Well before we sell it to him, what else can we do it, you know, can we make any more money off of this piece of property?” I’d say to him no. I’d say there’s a fair market value for that piece of land. I can’t do a thing else to enhance the value. That’s a piece of property that we leave out of our appeals. . . . If my boss came in tomorrow and said we’ve got a guy in here that wants to buy that 5-acre tract and . . . he wants to develop it, he says “can you guys do anything else to enhance the property value on that?” My answer to him would be yes . . . and we take that on as land department project, enhance the values . . . . We would put in roads. We would do the subdivision design and we would carry those costs up until we sell the property and make the profit throughout the process. There’s no reason for us to give the profit away. 

…..

Seems that we’re arguing about is do you take it down to five acres. Do you take it to two acres. Do you take it to one acre. And our answer would be that, uh, from CIRI’s point of view, it’s not developed unless we can’t get an additional dollar out of it from doing something else to the property.

Mark Friedman, CIRI’s land management officer, gave another example:

And here it’s probably a good instance to look at the criteria that we’ve used to determine what should be taxed and what shouldn’t be taxed, in terms of whether the property is in a developed state or isn’t in a developed state. If we look at that one, tract 8 is in fact appropriately being taxed. We’ve got a parcel that’s 1.86 acres. There is a — there’s roads. Utilities are right on the boundary of the property. The fact is that we would not have to do anything, expend any monies to sell that property . . . as a developed state.

CIRI’s position at the hearing before the assessor is consistent with the common meaning of developed. CIRI regarded its land as developed when it had been converted into an area suitable for sale in both a legal and a practical sense. The legal sense of suitability for sale is that a parcel of land may not be divided into two or more parcels for sale without an approved and recorded plat. AS 40.15.010. See Kenai Peninsula Borough v. Kenai Peninsula Board of Realtors, Inc., 652 P.2d 471, 472 (Alaska 1982). The practical sense is that as to some parcels which legally may be sold, a knowledgeable developer desiring to maximize revenue would not sell without re-platting or making additional improvements. In our view the word “developed” as used by Congress in ANCSA includes parcels which are not only legally but practically suitable for sale under these standards.[9]

We do not mean that a particular piece of property is “developed” simply because a market exists for its sale. Although these parcels did not present this situation, it is conceivable that a Native corporation that is not itself a land developer would sell raw land that would not generally be considered developed. Land that common sense tells us is not developed does not become taxable simply by virtue of a market existing for its sale in its unimproved state; to be within this definition of “developed” the land must be practically and legally suitable for sale to the ultimate user.

It is our view that AS 29.45.030 is consistent with ANCSA with respect to the meaning of developed. The definition of developed in that statute is broad enough to include subdivided land which is ready for sale. Subdividing is legally a purposeful modification of property, for it enables separate parts of the property to be sold. Similarly, as a sale of property is a use, a subdivision which suffices to permit sales effects a gainful and productive condition.

We reach this conclusion for two reasons. First, AS 29.45.030(a)(7) expressly exempts only property which is also exempt under ANCSA. Second, if we were to construe the state statute to exempt property which is not exempt under ANCSA, serious questions concerning the constitutionality of the statute as so construed under the equal rights clause of the Alaska Constitution would be raised.[10] Because statutes are to be construed to avoid a substantial risk of unconstitutionality where adopting such a construction is reasonable, we construe the state statute to be co-extensive with ANCSA.[11]

IS SALAMATOF’S PROPERTY DEVELOPED?

Salamatof’s property can be divided into the three general categories; (1) subdivided lands in Moose Range Meadows Subdivision, (2) unsubdivided parcels in Moose Range Meadows Subdivision, and (3) two parcels in North Kenai. We discuss these below.

(1) Moose Range Meadows Subdivision

This subdivision was created by Salamatof. Its plat has been approved and recorded. Roads have been dedicated and constructed and utilities are available to the subdivision lots and Salamatof is actively marketing the property. The lots themselves have not been leveled or cleared. There are 142 Moose Range Meadows Subdivision lots involved in this appeal. As the subdivision has made these lots suitable for sale, they are developed within the meaning of section 21(d) of ANCSA.

(2) Unsubdivided parcels in Moose Range Meadows

These are four unsubdivided parcels ranging in size from 80 acres to 27 acres. They are adjacent to subdivided lots in Moose Range Meadows and they have road access. An electrical line runs along the road which they front. Since these four parcels have not been subdivided and are substantially larger than the adjacent parcels which have been subdivided, we conclude that they are not suitable for sale from the standpoint of a knowledgeable owner wishing to maximize profits and thus they should not be considered developed.

(3) North Kenai parcels

These are two vacant parcels which lie along the bluff of the eastern shore of Cook Inlet, 14 miles north of the City of Kenai. They are 36 and 42 acres in size and have no regular road access. They have not been subdivided and according to the testimony at the hearing before the assessor, cannot reasonably be made marketable until roads are installed. Since these parcels are not suitable for sale at present, they are not developed under the standards announced above.

IS CIRI’S PROPERTY DEVELOPED?

CIRI’s property is not easy to categorize. The borough breaks it down into five categories, which are somewhat overlapping. They are: (1) platted and subdivided parcels; (2) surveyed land which is divided into government lots; (3) surveyed land which has utilities available to it; (4) lake front property; and (5) the Homer radio station property. The parties’ briefs contain no comprehensive discussion of the characteristics of the parcels falling within the first four categories. Our review of the record reveals that in none of the categories is it clear that all of the property is either taxable or exempt.

With respect to the first category, platted and subdivided parcels, it appears that most of the lots owned by CIRI in the Stephenkie Subdivision are developed. However, at least two lots, 066-380-21 and 065-530-17, are substantially larger than the other lots in the subdivision and may not be suitable for sale without resubdividing.

In the second category, surveyed land which is divided into government lots, fall various township lots. CIRI claims that some of these are too large to be suitable for sale, e.g., parcel 133-120-20, a 7.9-acre parcel in the township of Kasilof, fronting the Sterling Highway. In other cases CIRI claims that they are too small and would have to be replatted with adjoining property, e.g., parcels 133-130-10 and 11, two quarter-acre lots in the Kasilof townsite.

The third category, surveyed land which has utilities available to it, seems to overlap with the second category as utilities are available to some of the land which the borough has placed in the earlier category. In any case, this category includes two 2.5-acre lots in the city of Kenai, fronted by streets and served by all utilities. (Tracts 045-070-03 and 045-210-01.) The borough argued at the hearing before the assessor that the parcels were appropriate for sale as is and CIRI contended that it would not sell the tracts without first subdividing them into parcels of one acre.

The fourth category is lake front property. Some of these are clearly suitable for sale as they are. For example, parcels 013- 042-04, 12, 20 are parcels less than two acres in size, not adjacent to other CIRI lands. CIRI acknowledged that as to these properties there could be no further steps that could be taken to improve their marketability. As to other parcels in this category, CIRI contends that they should be subdivided, e.g., parcel 012-010-14, a 5-acre tract bordering a lake and Cook Inlet, which CIRI contends it would divide into two 2.5- acre parcels.

Since the taxability or exemption of the property in these four categories was not addressed in the superior court under appropriate legal standards, a remand to the superior court for such a determination is necessary. The superior court may in turn remand some or all of these properties to the assessor if it appears that the assessor’s findings are inadequate or that he used an improper standard.

The Homer radio station property must be remanded for a different reason. This 16-acre parcel is in downtown Homer. It is served by roads and utilities and contains various structures, including several buildings, a radio tower and a network of cables and antennae. The property is used by a public radio station which pays CIRI $ 500 per year for the privilege. In our view, that portion of the property which is built on is clearly developed. A remand, however, is necessary to limit the land subject to taxation to the smallest practicable tract which is actually developed.[12] AS 29.45.030(m)(1). Even though this statute only applies to the tax years after 1984, we consider the smallest practicable tract requirement of the statute to be a sensible construction of ANCSA. The superior court is thus directed to determine the smallest practicable tract which shall be considered developed within the Homer property for all tax years involved in this case.

SANCTIONS

The superior court awarded sanctions to CIRI of $ 2,500 and to Salamatof of $ 2,400 against the borough. The corporations requested these amounts for the legal expenses expended responding to two borough motions which the corporations claimed were frivolous, and for legal expenses incurred preparing revisions to their reply briefs after the borough had changed its brief in violation of a briefing deadline.

Sanctions in administrative appeals are governed by Appellate Rule 510.[13] Part (a) of Appellate Rule 510 allows sanctions in addition to interest, costs and attorney’s fees where an appeal or a petition for review is filed merely for delay. Part (b) of Appellate Rule 510 allows the assessment of costs or attorney’s fees for any infraction of the appellate rules. Part (c) allows the assessment of a fine not to exceed $ 500 against any attorney who fails to comply with the appellate rules or any rules promulgated by the supreme court. Although the superior court did not specify under which subsection of Appellate Rule 510 it made its sanction award, the award can only be justified under subsection (b). Subsection (c) seems not to have been intended because the sanctions were directed against the borough rather than the borough attorneys. Subsection (a) speaks to delay on the part of an appellant or a petitioner. It is thus inapplicable to the dilatory conduct of the borough in this case, as the borough was the appellee.

The borough did not file a timely opposition to the corporations’ motions for sanctions. Accordingly, the borough has waived its right to object to them on appeal except on plain error grounds. In re L.A.M., 727 P.2d 1057, 1059 (Alaska 1986); A.R.C. Industries v. State, 551 P.2d 951, 961 (Alaska 1976). We have observed that plain error exists where “an obvious mistake has been made which creates a high likelihood that injustice has resulted.” Miller v. Sears, 636 P.2d 1183, 1189 (Alaska 1981).

We find that the possibility of plain error exists in this case in one respect. The trial court awarded full attorney’s fees to the corporations independent of the award of sanctions under Appellate Rule 510(b). Since 510(b) sanctions are limited to costs and attorney’s fees, there will be an impermissible double recovery of attorney’s fees if both the awards of sanctions and the awards of attorney’s fees were allowed to stand. However, at this juncture the sanction awards need not be reversed because, as noted below, the awards of attorney’s fees must be vacated. 

ATTORNEY’S FEES

The superior court awarded both corporations their actual attorney’s fees. The awards included legal expenses incurred at the administrative level at the hearings before the assessor. The corporations’ motions for attorney’s fees were combined with their motion for sanctions and were not opposed by the borough. We thus will review the awards only for plain error.

A superior court acting as a court of appeal from the decision of an administrative agency has authority to make an award of attorney’s fees under Appellate Rule 508(e). Appellate Rule 601(b). Ordinarily, where such an award is made it should only partially compensate the prevailing party for attorney’s fees and be limited to attorney’s fees incurred in court, not those incurred in a prior administrative proceeding. McMillan v. Anchorage Community Hospital, 646 P.2d 857, 867 (Alaska 1982); State v. Smith, 593 P.2d 625, 630-31 (Alaska 1979); Kodiak Western Alaska Airlines, Inc. v. Bob Harris Flying Service, Inc., 592 P.2d 1200, 1204-05 (Alaska 1979); Appellate Rule 508(b), (c), and (e). However, actual costs and attorney’s fees may be awarded where authorized by statute. Further, actual costs and attorney’s fees may be awarded to a successful appellee where the court finds that the appeal is frivolous or has been brought simply for the purposes of delay. Appellate Rule 508(e). There is no explicit authority authorizing the award of actual costs and attorney’s fees in favor of an appellee for frivolous conduct of a case on the part of an appellant. However, for specific misconduct on the part of either party, actual costs and fees may be awarded under Appellate Rule 510(b).

The trial court held that the corporations were entitled to actual attorney’s fees and costs under AS 29.45.500(a) and, alternatively, that the corporations were entitled to actual attorney’s fees under Appellate Rule 508 on the grounds that “the Borough’s judicial action was replete with unexcused delay and frivolous action.” The court concluded “that the entire Borough action was motivated by bad faith.”

Alaska Statute 29.45.500(a) provides that in tax refund suits the successful taxpayer is entitled to a refund with interest plus “costs.”[14] The trial court evidently construed the term “costs” as used in this statute to include attorney’s fees. Further, the attorney’s fees included within the statute were actual attorney’s fees rather than the partial standard ordinarily contemplated under our rules. Finally, this statute was construed to apply to prior administrative proceedings as well as to proceedings in court. We do not find plain error with respect to any of these conclusions.

Nonetheless, we believe that the award of attorney’s fees should be vacated because the ultimate disposition on the merits will be substantially different than the outright reversal ordered by the superior court. See e.g., Appellate Rule 508(c) (in cases of reversal, costs shall be allowed the appellant unless otherwise ordered by the court; in cases of partial affirmance and partial reversal the court will determine which party, if any, shall be allowed costs). Further, it is apparent that the trial court’s opinion concerning the bad faith, as distinct from the dilatory conduct, of the borough was influenced by the trial court’s mistaken view as to the merits of the tax exemption issue. Finally, assuming AS 29.45.500(a) authorizes an award of actual attorney’s fees for administrative and judicial proceedings, such fees should be apportioned and not awarded for those parcels for which taxes are due.

CONCLUSION

For the above reasons we conclude:

As to Salamatof Native Association, Inc.:

1. As to all properties for the tax years 1981 through 1983, the judgment is REVERSED.

2. As to Moose Range Meadows Subdivision for the tax years 1984 through 1986, the judgment is REVERSED.

3. As to the unsubdivided parcels in Moose Range Meadows Subdivision and the North Kenai parcels for the tax years 1984 through 1986, the judgment is AFFIRMED.

4. The award of sanctions is AFFIRMED.

5. The award of attorney’s fees and costs is VACATED. As to Cook Inlet Region, Inc.:

1. As to all parcels, the judgment is REVERSED and the matter is REMANDED for further proceedings in accordance with this opinion.

2. As to sanctions, the judgment is AFFIRMED.

3. As to costs and attorney’s fees, the judgment is VACATED.

Tanacross, Inc. v. Babbitt

Tanacross, Inc., a native village, challenges the district court’s entry of summary judgment for the United States, the General Services Administration (“GSA”), the Bureau of Land Management (“BLM”), the Secretary of the Interior (“Secretary”) in his official capacity, and the Alaska State Director of the BLM in his official capacity. Tanacross claims the district court erred in holding Tok Terminal in Alaska was not available for native selection under the Alaska Native Claims Settlement Act (“ANCSA”), 43 U.S.C. § 1601 et seq., because the land was “withdrawn . . . for national defense purposes.” Tanacross also claims the Secretary was required to revoke the withdrawal of Tok Terminal by the final selection date. Tanacross further asserts there were material issues of fact which were not resolved. We affirm.

Tanacross’ selection of Tok Terminal under ANCSA was denied by BLM because the land was withdrawn for national defense purposes. According to the provisions of 43 U.S.C. § 1610(a)(1), “lands withdrawn or reserved for national defense purposes” were explicitly excepted from native selection. Tok Terminal was withdrawn for use by the Army under Public Land Order 1887 (1959).

We review an order granting summary judgment de novo. Kruso v. International Tel. & Tel. Corp., 872 F.2d 1416, 1421 (9th Cir. 1989), cert. denied, 496 U.S. 937 (1990). Taken in the light most favorable to Tanacross, we must determine whether “there are any genuine issues of material fact and whether the district court correctly applied the relevant substantive law.” Tzung v. State Farm Fire and Casualty Co., 873 F.2d 1338, 1339-40 (9th Cir. 1989).

“An administrative agency’s interpretation of a statute it is charged with administering is accorded substantial deference.” Seldovia Native Ass’n, Inc. v. Lujan, 904 F.2d 1335, 1342 (9th Cir. 1990). The agency’s interpretation is upheld if it is “reasonable and is not contrary to congressional intent.” Id.

I

Tanacross concedes that a withdrawal remains in effect until it is formally revoked, United States v. Consolidated Mines & Smelting Co., Ltd., 455 F.2d 432, 445-46 (9th Cir. 1971); Buch v. Morton, 449 F.2d 600, 607 (9th Cir. 1971), and that the withdrawal for the Department of the Army was never formally revoked. Tanacross distinguishes these cases by suggesting that the terminal had been “transferred to the GSA for disposal,” so “the withdrawal was not held by any military service and the national defense purposes exception no longer applied.” In whatever sense the land was transferred to GSA, the Army continued to hold the property despite filing the notice of intent to relinquish it. This fact is critical. Sitnasuak Native Corp., 91 I.B.L.A. 86, 91 (1986). Under both BLM and GSA regulations, the Army still held the property. 43 CFR 2374.1(c); 41 CFR 101-47.201-3(b); 41 CFR 101-47.103-7. Though GSA had authority to sell or otherwise dispose of the property, the property was not held by GSA nor was the withdrawal revoked. See Alaska Pipeline, 38 I.B.L.A. 1, 17 (1978).

Tanacross’ argument, in essence, is that while courts may be hesitant to scrutinize the actual use of a property, the Army’s authorization for GSA to dispose of the property is an objective indication of the terminal’s use which we should be willing to recognize. The clear emphasis in Consolidated Mines and Buch, however, is that nothing short of a formal withdrawal would change the land’s status, even if any change in purpose was objectively verifiable. Any other result would lead to “confusion . . . in the field of property law, a field in which certainty has undisputed advantages.” Consolidated Mines, 455 F.2d at 446. The sole fact that the land was still withdrawn by the Army is controlling, even if the Army took steps indicating it might soon get rid of the property or had no further need of it. See David W. Harper, 74 I.D. 141, 149 (1967); Tenneco Oil Co., 8 I.B.L.A. 282, 283-84 (1972).

It was not unreasonable for BLM to conclude that the land was “withdrawn . . . for national defense purposes” until the withdrawal was formally revoked.

II

Tanacross maintains BLM failed to take required steps to revoke the withdrawal so that the terminal would be available for selection. According to Tanacross, BLM should not have considered whether the land was improved because improvements on land available for selection under ANCSA are not a factor.

Tok Terminal was never available for selection under ANCSA since it was explicitly excepted from withdrawal under 43 U.S.C. § 1610(a)(1). ANCSA does not apply, so BLM must follow the provisions of the Federal Property and Administrative Services Act, 40 U.S.C. § 471 et seq., which requires BLM to assess whether the property is “not suitable for return to the public domain for disposition under the general public-land laws because such lands are substantially changed in character by improvements or otherwise.” 40 U.S.C. 472(d).

III

Tanacross also argues the withdrawal should have been revoked under the terms of a 1974 Department of Interior-GSA agreement. Section II of the agreement, which Tanacross raised in the Alaska Native Claims Appeal Board (ANCAB) proceeding, applies only to surplus real property. Because Tok Terminal was never declared surplus, Section II is not applicable here.

Tanacross now argues BLM did not follow Section III of the agreement because BLM did not make Tok Terminal available for native selection even though there was no federal program need. Tanacross waived this argument by not presenting it before ANCAB. Getty Oil v. Andrus, 607 F.2d 253, 256 (1979). The administrative record also indicates both BLM and the Coast Guard did need the property. A.R. Vol. 1 at 84. Tanacross does not deny these needs existed.

IV

Tanacross asserts summary judgment was improper because there were disputed material facts. Tanacross proposes that BLM’s intentions to make use of the land biased the agency, improperly influencing its decisionmaking. Tanacross does not suggest BLM’s determination that the terminal was substantially changed in character by improvements was erroneous. Once BLM determined the land was improved, it was proper for BLM, like any other agency, to indicate that it needed the property. Besides, the record indicates it was GSA, not BLM, that initially decided the land would be retained by the government.

Tanacross states the terminal’s use for defense purposes (past the final selection date) is still in dispute. The terminal’s actual use, as noted above, is not material to the issue whether the land was still withdrawn for national defense purposes at the time of selection.

Tanacross also asserts that BLM expedited other land dispositions so the land would be available for native selection by the final selection date. Tanacross argues that the failure to expedite the processing of Tok Terminal violates the Equal Protection and Due Process Clauses. Tanacross cannot claim that BLM was dilatory in making Tok Terminal available for native selection because the terminal was simply not available for native selection at any time.

The district court’s entry of summary judgment is AFFIRMED.

Sound Dev. v. Sherstone, Inc.

The court has heretofore entered an order remanding this case to the Superior Court for the State of Alaska.[1] So far as the court is aware, the removal of this case from state court and the motion to remand present an issue of first impression under the 1988 amendments[2] to the Alaska Native Claims Settlement Act (herein the Settlement Act or ANCSA), 43 U.S.C. § 1601, et seq.

In 1980, for the purpose of enhancing the quantity and quality of renewable resources and to facilitate land management in Alaska with respect to federal, state, and Native lands, Congress created the Alaska Land Bank Program. 43 U.S.C. § 1636. On specified terms and conditions, private property, such as that owned by Settlement Act corporations, might be made subject to the program; and, if they were, certain benefits flowed to the private land-owners, amongst which was immunity from judgments. 43 U.S.C. § 1636(c)(2)(C) (1980). In 1988, Congress revisited the benefits portion of the Alaska Land Bank Program, enacting a new subsection 1636(d), which provided in pertinent part:

(1) (A) Notwithstanding any other provision of law or doctrine of equity, all land and interests in land in Alaska conveyed by the Federal Government pursuant to the Alaska Native Claims Settlement Act [43 U.S.C.A. § 1601 et seq.] to a Native individual or Native Corporation or subsequently reconveyed by a Native Corporation pursuant to section 39 of that Act [43 U.S.C.A. § 1629e] to a Settlement Trust shall be exempt, so long as such land and interests are not developed or leased or sold to third parties from–
(i) adverse possession and similar claims based upon estoppel;
(ii) real property taxes by any governmental entity;
(iii) judgments resulting from a claim based upon or arising under–
          (I) Title 11 or any successor statute,
          (II) other insolvency or moratorium laws, or
          (III) other laws generally affecting creditors’ rights;
(iv) judgments in any action at law or in equity to recover sums owed or penalties incurred by a Native Corporation or Settlement Trust or any employee, officer, director, or shareholder of such corporation or trust, unless this exemption is contractually waived prior to the commencement of such action; and
(v) involuntary distributions or conveyances related to the involuntary dissolution of a Native Corporation or Settlement Trust.

Subsection 1636(d) contains a number of definitions which are important to this case,[3] but not to the resolution of the issue of this court’s jurisdiction. However, and pertinent to this court’s jurisdiction, subsection 1636(g) provides:

Except as expressly provided in subsection (d) of this section, no provision of this section shall be construed as affecting the civil or criminal jurisdiction of the State of Alaska.

Finally, it should be noted that the 1988 amendments to ANCSA added the following term to the several provisions already in the Settlement Act having to do with litigation:

No provision of this chapter shall be construed to constitute a jurisdictional act, to confer jurisdiction to sue, nor to grant implied consent to Natives to sue the United States or any officers with respect to the claims extinguished by the operation of this chapter. . . .”

43 U.S.C. § 1601(f).

At least for purposes of the remand motion, it is undisputed that the defendants own or have an interest in lands which are subject to the Alaska Land Bank Program. Plaintiff and the defendants entered into a memorandum of understanding regarding the harvest of Sherstone-owned timber from Eyak lands.[4] The memorandum of understanding also obligated plaintiff to construct and defendant Sherstone to pay for the construction of roads necessary to access merchantable timber sufficient to meet the logging production obligations taken on by plaintiff. This memorandum of understanding came to an end under circumstances which resulted in plaintiff filing a complaint in superior court. In the complaint, plaintiff asserts a fifth cause of action for lien foreclosure pursuant to AS 34.35. This cause of action contains no overt reference to any applicable federal law.

Relying upon Ultramar America Ltd. v. Dwelle, 900 F.2d 1412, 1414 (9th Cir. 1990), plaintiff contends that its case was not subject to removal because state law created the cause of action upon which removal was predicated, and that no disputed question of federal law is a necessary element to a well-pleaded claim for lien foreclosure. In opposing the motion, defendants in substance contend that Congress has completely preempted the field of creditor litigation over Settlement Act lands, relying chiefly upon principles set out in Oneida Indian Nation v. County of Oneida, 414 U.S. 661, 39 L. Ed. 2d 73, 94 S. Ct. 772 (1974).

It is too clear to require any extended discussion that plaintiff’s lien foreclosure cause of action constitutes a well-pleaded claim which has no federal component. As a consequence, this court has federal question jurisdiction of plaintiff’s claim under 28 U.S.C. § 1331 only if, as defendants contend to be the case, Congress has preempted the state law lien foreclosure cause of action. Such preemption could flow from one or the other of two aspects of this case.

Even though Oneida, upon which defendants rely, is not a removal case, it nonetheless involves the well-pleaded complaint doctrine and the question of whether the Oneidas’ cause of action was one under state law or federal law. The Supreme Court concluded that the Oneida case was one under federal law because it involved the occupancy of Native lands, a subject within the “exclusive province of federal law.” Oneida, 414 U.S. at 670.

Oneida, and the preemption rule which one can develop from it, is inapposite in this case. We do not deal here with the aboriginal title of Alaska Natives. Aboriginal title was expressly “extinguished” by ANCSA. 43 U.S.C. § 1603(b). In extinguishing aboriginal title to Alaska Native lands, Congress expressly found that:

The settlement should be accomplished rapidly . . . without establishing any permanent racially defined institutions, rights, privileges, or obligations, without creating a reservation system or lengthy wardship or trusteeship, and without adding to the categories of property and institutions enjoying special tax privileges or to the legislation establishing special relationships between the United States Government and the State of Alaska.

13 U.S.C. § 1601(b)

While, as discussed below, Congress has apparently retreated somewhat from the foregoing, the foregoing renders clear any uncertainty as to certain aspects of the status of Settlement Act lands. The lands in question are not reservation lands. They are not held in trust by the federal government for Alaska Natives. It is thus that the instant case is demonstrably different from Oneida.

Defendants’ second argument is equally unavailing.[5] Defendants read 43 U.S.C. § 1636(d) to effect complete preemption of a state law lien foreclosure action as to Settlement Act lands. To the court, the plain language of section 1636 says otherwise.

In other situations, such as the Labor-Management Relations Act, 29 U.S.C. §§ 141-197, § 185 and § 187, and the Employees Retirement Income Security Act, 29 U.S.C. §§ 1001 -1461, § 1132, Congress has expressly created a federal cause of action, thereby preempting state law causes of action on the same subject. Under ANCSA, however, Congress has taken precisely the opposite approach. By 43 U.S.C. § 1601, Congress has expressly negated any suggestion that the Settlement Act “constitute a jurisdictional act.”

In adopting the 1988 amendments to ANCSA, Congress was again attentive to the question of jurisdiction, providing, as quoted at length above, that subsection 1636(d) should not “be construed as affecting the civil or criminal jurisdiction of the State of Alaska.”[6] That caveat is totally at odds with defendants’ argument that any state lien foreclosure action as to Settlement Act lands is preempted or has a federal element which the plaintiff must prove, and that such action is therefore removable under 28 U.S.C. § 1331.

Finally, even the plain language of subsection 1636(d)(1)(A) fails to evince any clear intent on the Part of Congress to create a federal cause of action or otherwise foreclose any state law lien foreclosure action against Settlement Act lands.

Firstly, by necessary implication, Settlement Act lands which are “developed” are not subject to subsection 1636(d). Rather subsection 1636(d) expressly applies to Settlement Act lands which are not developed or leased or sold to third parties” (emphasis supplied). Especially in light of subsection 1636(g), the foregoing language clearly implies that Congress meant to leave state lien foreclosure actions as to developed property in status quo.

Secondly, subsection 1636(d) makes an interesting distinction between claims of adverse possession, taxes, and claims such as are the subject of this action–those based on creditors’ rights. As to adverse possession, subsection 1636(d)(1)(A)(i) would appear (although the court does not so rule) to preempt or bar even the assertion of such a claim as to undeveloped land. Similarly, subsection 1636(d)(1)(A)(ii) exempts undeveloped Settlement Act lands from real property taxes. Again, such governmental claims appear to be totally barred.

By way of contrast, undeveloped Settlement Act lands are not similarly exempted from claims based upon creditors’ rights laws. Rather, such lands are exempted only from a judgment resulting from a creditor’s claim. Subsection 1636(d)(1)(A)(iii). The clear inference is that a creditor may bring a state law claim, including one for lien foreclosure, against a Native corporation and its lands. As to developed land, subsection 1636(d) permits the lien foreclosure to go forward as discussed above. Undeveloped property, however, is expressly exempt from that judgment. Presumably the judgment can be otherwise collected from the Native corporation, but the plaintiff may not have execution of the judgment against undeveloped lands of the Native corporation defendant.

The court concludes that Congress has not preempted state law lien foreclosure actions. Rather, Settlement Act landowners have been provided with a federal defense against lien foreclosures as to undeveloped property. Removal is not permitted on the basis of a federal defense. Federal Tax Board of California v. Construction Laborers Vacation Trust for Southern California, 463 U.S. 1, 14, 77 L. Ed. 2d 420, 103 S. Ct. 2841 (1983).

For the foregoing reasons, the court has heretofore ordered a remand of this case to the Superior Court for the State of Alaska.

DATED at Anchorage, Alaska, this 23 day of 1994.

H. Russell Holland, United States District Judge

Shee Atika, Inc. v. Sealaska Corp.

Sealaska Corp. appeals the district court’s denial of its motion to enjoin Shee Atika, Inc. permanently from using Sealaska’s rock, sand, and gravel without Sealaska’s consent. Shee Atika cross appeals. We dismiss Shee Atika’s cross appeal, and affirm the district court’s order denying Sealaska’s request for an injunction.

BACKGROUND

Sealaska is a regional corporation, formed pursuant to the Alaska Native Claims Settlement Act (ANCSA), 43 U.S.C. § 1606. Shee Atika is an urban corporation formed under ANCSA, 43 U.S.C. § 1613(h)(3). Shee Atika owns the surface estate in approximately 22,000 acres on Admiralty Island, much of which is forested. The subsurface estate, including rock, sand, and gravel, is owned by Sealaska. See 43 U.S.C. §§ 1611, 1613; Tyonek Native Corp. v. Cook Inlet Region, Inc., 853 F.2d 727 (9th Cir. 1988). Despite Sealaska’s repeated demands, Shee Atika has refused to pay Sealaska for the rock it uses in building roads and other facilities necessary for harvesting timber.

In 1992, Shee Atika brought this action, seeking a declaration that it has a right to use rock, sand, and gravel from Sealaska’s subsurface estate without paying Sealaska. Sealaska counterclaimed, requesting a permanent injunction prohibiting Shee Atika and those harvesting its timber from taking rock, sand, and gravel without Sealaska’s consent.

On February 22, 1993, in response to the parties’ crossmotions for partial summary judgment, the district court denied Sealaska’s request for a permanent injunction. Thereafter, Sealaska brought this interlocutory appeal pursuant to 28 U.S.C. § 1292(a)(1). Shee Atika crossappealed.

JURISDICTION

Both Shee Atika’s cross appeal and Sealaska’s appeal are taken pursuant to 28 U.S.C. § 1292(a)(1). That statute gives us jurisdiction over:

Interlocutory orders of the district courts. . . granting, continuing, modifying, refusing or dissolving injunctions, or refusing to dissolve or modify injunctions, except where direct review may be had in the Supreme Court.

The district court’s February 22 order specifically denied Sealaska’s request for an injunction. This appeal therefore falls squarely within the language of section 1292(a)(1).[1] Relying on Carson v. American Brands Inc., 450 U.S. 79, 84, 67 L. Ed. 2d 59, 101 S. Ct. 993 (1981), however, Shee Atika argues that we do not have jurisdiction to hear Sealaska’s appeal unless Sealaska further demonstrates that the district court’s order threatens it with imminent irreparable injury.

Shee Atika’s reliance on Carson is misplaced. In Carson, the Supreme Court considered whether section 1292(a)(1) permitted appeal from an order denying the parties’ joint motion for approval of a consent decree that contained an injunction as one of its provisions. Id. at 80. Because the order did not, on its face, deny an injunction, an appeal from the order did not fall precisely within the language of section 1292(a)(1). The Court nevertheless permitted the appeal. The Court stated that, while section 1292(a)(1) must be narrowly construed in order to avoid piecemeal litigation, it does permit appeals from orders that have the “practical effect” of denying an injunction, provided that the would-be appellant shows that the order “might have a serious, perhaps irreparable, consequence.” Id. at 84.

We find nothing in Carson to suggest that the requirement of irreparable injury applies to appeals from orders specifically denying injunctions. Carson merely expanded the scope of appeals that can be taken under section 1292(a)(1), but in so doing imposed an additional requirement on appeals that do not fall directly within the meaning of the statute. Sealaska appeals from the direct denial of a request for an injunction. Carson, therefore, is simply irrelevant.[2] We conclude that we have jurisdiction over Sealaska’s appeal.

We cannot say the same for Shee Atika’s cross-appeal. The district court’s February 22 order neither denied Shee Atika an injunction, nor directed Shee Atika to do anything. To the extent that the order has the practical effect of denying Shee Atika an injunction (an argument Shee Atika does not make), Shee Atika makes no showing of irreparable injury as required by Carson. Therefore, we have no jurisdiction to entertain Shee Atika’s cross-appeal. It is dismissed.

THE MERITS

On the merits, Sealaska’s appeal is controlled by our contemporaneous decision in Koniag, Inc. v. Koncor Forest Resource Mgmt. Co., 39 F.3d 991, 1994 U.S. App. LEXIS 30645 Nos. 93-36138 & 93-36164 (9th Cir. 1994). In that case we held that, where there is no other practical source of rock, sand, and gravel necessary for the development of a surface estate granted to a village corporation under ANCSA, the subsurface is burdened by a servitude whereby its owner may not unreasonably deny the surface owner access to rock, sand, and gravel necessary for surface development.[3]

These conditions obtain here. The parties do not dispute that Shee Atika has no practical source of rock, sand, and gravel other than Sealaska’s subsurface estate. Nor do they dispute that Shee Atika’s land is valuable principally as a source of timber. Finally, they do not dispute that Shee Atika cannot harvest its timber without using rock, sand, and gravel to build roads, logging camps, and other facilities. Accordingly, Shee Atika has a right not to be unreasonably denied access to Sealaska’s rock, sand, and gravel to the extent necessary to harvest its timber. See id. Sealaska’s requested complete injunction conflicts with this right, and the district court therefore properly denied the injunction without prejudice.

No. 93-35258: DISMISSED.

No. 93-35187: AFFIRMED.

Capener v. Tanadgusix Corp.

On consideration of the appellee’s petition for rehearing, filed on October 14, 1994,

IT IS ORDERED:

1. The petition for rehearing is GRANTED in part. Changes are made on pages 15 and 34.

2. Opinion No. 4134, published on October 7, 1994, is WITHDRAWN.

3. Opinion No. 4142, is issued on this date in its place

Entered by direction of the Court at Anchorage, Alaska on November 4, 1994.


OPINION

I. INTRODUCTION

The Alaska Native Claims Settlement Act (ANCSA or the Act) enacted in 1971 (codified at 43 U.S.C. § 1601-1629a (1986)) extinguished the aboriginal title claims of the Native people of Alaska in exchange for 962.5 million dollars and 44 million acres of public land. In order to receive this money and land, the Act called for the creation of thirteen regional and over two hundred village corporations. See Kenai Peninsula Borough v. Cook Inlet Region, Inc., 807 P.2d 487, 490 (Alaska 1991).

Congress included in ANCSA a number of provisions designed to protect the rights of those who have valid existing rights to land subject to conveyance under the Act. Thus conveyances to Native corporations must be made subject to the provisions of existing leases, contracts and permits. ANCSA § 14(g), 43 U.S.C. § 1613(g). Those who have made prior lawful entries for the purpose of gaining title to a homestead, a headquarters site, a trade and manufacturing site, or a small tract site are protected and entitled to a patent when they meet the requirements of the law under which they enter. ANCSA § 22(b), 43 U.S.C. § 1621(b). Similarly, those who have prior valid mining claims and locations are protected. ANCSA § 22(c), 43 U.S.C. § 1621 (c). In addition, there are provisions which require conveyances to individuals or organizations on the basis of their occupancy for a particular purpose rather than the presence of a valid existing right or a lawful entry under the public land laws. This case involves the interpretation of two such provisions, sections 14(c)(1) and (2).[1] See 43 U.S.C. § 1613(c)(1) & (2).

Section 14(c)(1) requires village corporations to reconvey land “to any Native or non-Native occupant” who occupied the land on a specific date,[2] for any one of four designated purposes: as a primary residence, a primary place of business, a subsistence campsite, or a headquarters for reindeer husbandry. Section 14(c)(2) requires village corporations to reconvey to “the occupant” land which is occupied as of December 18, 1971,[3] by a nonprofit organization. The main issue in this case is the meaning of the term “occupant” as used in these sections.

II. FACTS AND PROCEEDINGS

Lillian Capener is a missionary affiliated with the Assemblies of God Church. She and her husband, Reverend A.E. Capener, built a church, house and garage on federal land in the village of St. Paul in 1966. The Capeners entered the land under the auspices of a special use permit issued by the Bureau of Commercial Fisheries to the “Assemblies of God Home Missions Department” dated July 7, 1966. The permit was for the described purpose of “constructing, establishing, creating, and maintaining a church and parsonage, and for no other purpose whatever during the period from July 1, 1966, to June 30, 1976.” The permit provided for automatic yearly renewals after June 30, 1976, unless terminated with thirty days written notice.

Reverend and Mrs. Capener constructed the church building on Lot 1, Block 20, City of St. Paul. Their house was located on Lot 3. The Capeners added a small garage, a large garage and a basement to the house. The large garage has been used for a motorcycle rental and tourist service business since 1972 or 1973. Mrs. Capener testified that Lot 2 is used for parking and as a garden incidental to her business and home.

In 1974 the Village Corporation of St. Paul, Tanadgusix Corporation (TDX), selected property under ANCSA which encompassed the lots in question.[4] In 1979 the Bureau of Land Management issued a patent to TDX which included these lots, subject to existing permit rights and to the duty to convey if and as required by section 14(c) of ANCSA.

In September of 1980 TDX informed the Capeners and the Home Missions Department that it now administered the special use permit. TDX notified them that it was terminating the permit as of June 30, 1981, unless new lease arrangements could be made. The Home Missions Department and the Capeners refused to enter into a lease and asserted a claim under section 14(c) of ANCSA. A.E. Capener died in 1986. Lillian Capener continued to reside on the property, to conduct church services, and to operate the motorcycle rental and tourist service business.

Effective June 19, 1988, TDX purported to terminate the special use permit. On August 2, 1988, Capener and W.J. Bransford, District Superintendent of the Alaska District Council, Inc., an Assemblies of God organization, were sent notices to quit the St. Paul premises. A few days later Capener discussed the situation with Assembly of God officials in Anchorage and Missouri and was told “I could have this property to do with as I wish, as at the time, they could not afford the legal expenses. They specifically called to tell me that I could ‘sell’ it for whatever I wished and I could ‘keep the money.'” On August 10, 1988, Bransford, on behalf of the Home Missions Department and the Alaska District Council, Inc., signed a document which “disclaims all interest” in the lots and the special use permit.

On September 12, 1988, TDX filed a forcible entry and detainer action against Capener. The trial court dismissed the complaint because a question of title had been raised. TDX was allowed to amend its complaint to assert claims for ejectment and quiet title. Capener counterclaimed, contending that title ought to be quieted in her favor. She also sought a declaration that she is the lawful owner of the lots. Both parties moved for summary judgment. The trial court granted the motion of TDX, denied that of Capener, and entered a final judgment in favor of TDX on all of its claims. This appeal followed.

III. DISCUSSION

A. Section 14(c) contentions.

The major issues in this case require an understanding of the meaning and operation of sections 14(c)(1) and (2) of ANCSA. We set forth these provisions as well as section 14(c)(3) in the margin at this point.[5]

Capener relies on sections 14(c)(1) & (2) to support her right to title to the property in question. Her first argument, concerning Lots 2 and 3, is essentially a plain language argument. She contends that the literal language of 14(c)(1) only requires occupancy, as of January 19, 1979,[6] as a primary residence or primary place of business. She argues that she meets this requirement as she had occupied the house as her residence for more than eleven years as of the critical date and had used the annexed garage for her rental and tourist service business for some six years.

With respect to Lot 1, the church building, Capener contends that the Assemblies of God faith is not of a hierarchical nature and that each minister and local church is autonomous. She argues that the local church, an unincorporated nonprofit organization, has been the occupant of Lot 1 since well before the critical date under section 14(c)(2), December 18, 1971, and under a plain reading of that section is therefore entitled to a conveyance. She is its representative and should, she contends, take title as trustee.

With respect to all three lots, Capener makes an alternative claim that she is the transferee of the Home Missions Department because it “yielded any interest it might have to her in advance of the general disclaimer.”

TDX makes two arguments as to why Capener should not be considered an occupant despite her claim that she meets the literal definition of that term. First, TDX argues that the fact that the permittee was the Home Missions Department disqualifies Capener from occupant status. Second, TDX argues that even if Capener had been the permittee, she could not have received a conveyance because the permit was revocable.

Concerning Capener’s argument that the local church organization was the occupant of the church building, TDX similarly contends that the fact that the permit was issued to the Home Missions Department disqualifies any such local organization from claiming rights under section 14(c)(2) as an occupant. With respect to Capener’s claim that the Home Missions Department orally transferred the property to her, TDX contends that such a transfer would be ineffective because the Home Missions Department had no conveyable legal interest, transfer of the permit was invalid under the terms of the permit, and the transfer was barred by the statute of frauds.

B. Summary of questions presented and holdings under section 14(c).

The parties’ arguments raise at least three legal questions which require resolution in this case. They can be expressed as follows:

1. Assuming the occupancy purpose requirements of section 14(c)(1) or (2) are met, can a permittee under a revocable permit be an occupant entitled to a reconveyance?
2. Assuming the occupancy purpose requirements of section 14(c)(1) or (2) are met, can one who occupies property which is subject to a revocable permit issued to another be an occupant entitled to a reconveyance?
3. Can the right to reconveyance under section 14(c)(1) or (2) be transferred subsequent to the occupancy date set forth in the Act?

For the reasons that follow, our answers to these questions are:

1. Yes.
2. Yes, if the occupier has an equitable ownership interest in the improvement on the property on the legal occupancy date.
3. Yes.

Because questions of fact exist concerning the equitable ownership interest of Capener and the local church, and concerning whether a transfer was intended from the Home Missions Department to Capener, we reverse the judgment of the superior court and remand this case for further proceedings.

C. The trial court’s opinion.

The trial court explicitly dealt only with Capener’s argument that she was an occupant of the residence and place of business under section 14(c)(1). The court’s opinion on this point was as follows:

In its briefing, TDX correctly asserts that only the church possessed a possible § 14(c)(1) claim, a claim which has never been adjudicated and which the church has now disclaimed. Mrs. Capener occupied the land subject to the church’s rights, and the church, not Mrs. Capener, received the permit. As TDX points out, the church could have removed the Capeners from the property at any time.

TDX also points to the fact that the permit was subject to revocation, and argues that TDX validly exercised this revocation right. TDX further argues that the property could not qualify as a primary place of business, because the rental business constitutes an unlawful occupation, run in violation of the permit, and without TDX’s permission.

The Alaska Supreme Court, in interpreting § 14(c), broadly interpreted the “primary place of business” requirement. In Hakala v. Atxam, 753 P.2d 1144 (1988), the court found that Congress intended § 14(c)(1) to give title to people who “had previously utilized the lands in an established, legal and routine fashion”. Id. at 1147. The United States Court of Appeals in Donnelly v. United States, 850 F.2d 1313 (9th Cir. 1988), articulated the other side of the spectrum when it held that § 14(c)(1) could not be used to give “amnesty” for “trespassers, failed homesteaders, or land users without any vested rights prior to December 1, 1971”. Id. at 1320 (quoting the District Court). The Donnelly court added that “there was no indication of congressional intent to override the established principle that individuals could obtain no rights to withdrawn lands. . . .” Moreover, the congressional intent to provide a “just and fair settlement” of native land claims is inconsistent with an interpretation of § 14(c)(1) that could reduce the land patented to native corporations in favor of trespassers”. Id.

In Hakala, the court wanted “to protect a wide array of existing legitimate businesses” and thus granted the appellants, Hakala and Kitchen, title to a cabin and its curtilage, from which appellants had conducted guiding operations for over 15 years. Hakala, 753 P.2d at 1147, 1148. The Hakala case differs from that of Mrs. Capener, however, because in Hakala the business did not violate any permit terms. In fact, Kitchen had express authority to conduct this business because he held a permit, issued by the State of Alaska, that gave him the exclusive right to guide customers in the disputed area, as well as a guiding license. The state, by contrast, has never issued any permit, license, or similar right to Mrs. Capener. The state issued a revocable permit to the church, which had the right, at any time, to remove the Capeners and replace them with different missionaries.

Similarly, the appellants Buettner and Hamar in Buettner v. Kavilco, Inc., 860 F.2d 341 (9th Cir. 1988), personally obtained revocable special use permits from the United States Forest Service that allowed each appellant to live on Kasaan Island. The Native Corporation of Kavilco then selected this land, later attempting to revoke the permits and enter lease agreements, which the appellants refused. The court found that the appellants “as permittees . . . were entitled to occupy the land although it was owned by someone else”, thus deciding that § 14(c)(1) requires native corporations to convey title to permittees, so long as the permittee fulfills § 14(c)(1)‘s occupancy requirements. Id. at 343. (Emphasis added). Again, unlike Buettner and Hamar, Mrs. Capener does not hold a permit. Since her entitlement to occupy depended solely on the permittee-church, which could have removed her from the property at any time, she possesses a far weaker interest than did the Hakala and Buettner appellants.

In determining the issues in this case, it is helpful to examine the Congressional purpose behind the ANCSA. The Hakala court stated that Congress intended to give native tribes “title to a portion of the lands which they occupied”, noting that Congress was “sensitive to the impoverished condition of natives and the lack of opportunity natives have to improve their condition”. Hakala, 753 P.2d at 1147 (quoting House Comm. on Interior and Insular Affairs, Alaska Native Claims Settlement Act of 1971, H.R. Rep. No. 523, 92d Cong., 1st Sess., reprinted in 1971 U.S. Code Cong. & Admin. News 2191, 2193, 2196). Defendant’s analysis of § 14(c)(1) would undermine this ANCSA purpose, and would contradict the policy that courts construe the ANCSA in favor of natives where the statute contains ambiguous language. Id. at 1147.

Additionally, Secretarial Order No. 3016 and accompanying Memorandum, Valid Existing Rights Under the Alaska Native Claims Settlement Act, 85 Interior Dec. 1 (1977), sheds light on the legislative intent behind the ANCSA. The Memo defines the meaning of “valid existing rights” in § 14(g), which provides that:

All conveyances made pursuant to this Act shall be subject to valid existing rights. Where, prior to patent of any land or minerals under this Act, a lease, contract, permit, right-of-way, or easement (including a lease . . .) has been issued for the surface or minerals covered under such patent, the patent shall contain provisions making it subject to the lease, contract, permit, right-of-way, or easement, and the right of the lessee, contractee, permittee, or grantee to the complete enjoyment of all rights, privileges, and benefits thereby granted to him. Upon issuance of the patent, the patentee shall succeed and become entitled to any and all interests of the state or the United States as lessor, contractor, permittee, or grantor, in any such leases, contracts, permits, rights-of-way, or easements covering the estate patented. . . . 43 U.S.C. § 1613(g); emphasis added.

The Memo notes that the regulations distinguish between rights “leading to acquisition of title”, which the Act intends to exclude from conveyance to natives; and “rights of a temporary nature”, which the Act intends to convey, but with the condition that the right be protected “for the duration of the interest”. Id. at 5, citing 43 C.F.R. 2650.3-1(a).

The Memo- discusses the problem posed by lands which the state conveyed, leased or patented before the state had received final approval for state selection. It indicates that the position of the recipients of these types of interests should not be worsened by the passage of the ANCSA, saying that “the House Committee report reflects Congress’ concern that a lease issued by the State which on its terms was conditional on the issuance of a patent to the State not be terminated by virtue of the Native selection”. Id. at 6-7, citations omitted.

Mrs. Capener did not hold a license or permit, nor any other vested right or interest that could “lead to the acquisition of title” at the time of the Act’s passage. Because Mrs. Capener has no claim which could have ripened into a title interest had ANCSA not passed, she cannot now acquire title because the Act did pass, particularly considering the Act’s purpose of giving title to Alaska Natives. For these reasons, the court GRANTS summary judgment in plaintiff’s favor.

In terms of the legal questions presented in this case as defined in part III B, supra, the superior court thus gave a negative answer to the second question — whether one who occupies property subject to a revocable permit issued to another is entitled to a 14(c) reconveyance. Concerning the first question — can a permittee under a revocable permit be entitled to a reconveyance — the superior court gave no answer, but discussed Buettner v. Kavilco, Inc., 860 F.2d 341 (9th Cir. 1988), which indicates that this question should be answered in the affirmative.

D. Case law interpretations of section 14(c).

As the superior court’s decision points out, we interpreted one aspect of section 14(c)(1) in Hakala v. Atxam Corp., 753 P.2d 1144 (Alaska 1988), and the Ninth Circuit Court of Appeals considered this section in two cases, Donnelly v. United States, 850 F.2d 1313 (9th Cir. 1988) cert. denied by Lee v. Eklutna, Inc. & Donnelly v. Eklutna, Inc., 488 U.S. 1046, 102 L. Ed. 2d 1001, 109 S. Ct. 878 (1989), and Buettner v. Kavilco, Inc., 860 F.2d 341 (9th Cir. 1988).

In Hakala, a guide, Kitchen, and his transferee made a 14(c)(1) claim against a village corporation to a small cabin which Kitchen had erected on public lands. Hakala, 753 P.2d at 1145. The cabin served as the base camp for Kitchen’s bear hunting operations. Id. The main controversy in the case, which we resolved in favor of Kitchen, was whether the cabin was “a primary place of business” under 14(c)(1). Id. at 1146-49. Holding that Kitchen was entitled to a section 14(c)(1) reconveyance of the cabin site and surrounding curtilage we stated:

We do not . . . believe that Congress intended under ANCSA to convey lands to native corporations to the exclusion of those who had previously utilized the lands in an established, legal and routine fashion. Otherwise, we can find no reason for Congress to have included the reconveyance clause in § 14(c)(1). Thus, we believe that in § 14(c)(1), Congress intended to protect the existing rights of those using lands which would later become subject to an interim conveyance under ANCSA. Accordingly, we adopt an interpretation of the phrase “a primary place of business” which effectuates Congress’ intent to protect the wide array of existing legitimate businesses.

Id. at 1147. In reaching this conclusion, we adopted Kitchen’s “common-sensical interpretation” of the statutory term “a primary place of business.” Id.

Although the trial court in the present case stressed that Kitchen had an exclusive guiding permit from the State of Alaska, such a permit would not have given Kitchen a right to build a cabin on federal public land. Thus, in Hakala, the village corporation argued that Kitchen was a trespasser on the critical date in 1971.[7] Kitchen did not contest this assertion. Our opinion in Hakala neither resolved nor discussed the question whether Kitchen initially built his cabin on public land without a permit.

Donnelly v. United States, 850 F.2d 1313 (9th Cir. 1988), involved the case of homesteaders, the Donnellys, who located part of their homestead on public lands which had been withdrawn from entry for a possible power development project. Id. at 1315. The Donnellys’ entry took place some time in the 1950’s. In 1975 the United States filed a trespass action against the Donnellys, who counterclaimed under the Quiet Title Act, 28 U.S.C. 2409a. Id. at 1316. In 1979 the United States patented the disputed land to a village corporation against which the Donnellys filed a third-party claim under section 14(c)(1) of ANCSA. Id. The United States’ trespass action was dismissed. Id. The district court then decided the case in favor of the United States and the village corporation. Id. On appeal, the Ninth Circuit affirmed, holding: (1) that the twelve-year statute of limitations under the Quiet Title Act barred the Donnellys’ claim against the United States; and (2) the Donnellys’ 14(c) claim against the village corporation lacked merit because they were trespassers:

As the district court noted, § 14(c)(1) could not operate as “a sort of amnesty provision extending rights to individuals who are merely trespassers, failed homesteaders, or land users without any vested rights prior to December 1, 1971,” because there was no indication of congressional intent to override the established principle that individuals could obtain no rights to withdrawn lands. Moreover, the congressional intent to provide a “just and fair settlement” of native land claims is inconsistent with an interpretation of § 14(c)(1) that would reduce the land patented to native corporations in favor of trespassers.

Id. at 1320 (citation omitted). On rehearing a footnote was added recognizing that Hakala represented contrary authority:

Counsel for appellant has called to the attention of the court a decision of the Supreme Court of Alaska, Hakala and Kitchen v. Atxam Corp., 753 P.2d 1144 (1988), decided after the filing of the decision in this case, that reaches a contrary result.

Id. at 1320-21, n.9.

The Donnelly court went on to discuss the Donnellys’ contention that they were not trespassers as they had equitable title to the land. Id. at 1321. The court refused to resolve this issue, holding that it was dependent on the quiet title claim which was barred by the Quiet Title Act statute of limitations. Id.

Buettner v. Kavilco, Inc., 860 F.2d 341 (9th Cir. 1988), involved the holders of two long-term revocable Forest Service permits who built residential cabins on the land. Ultimately, the land was patented to a village corporation which sought to increase the permittees’ rent. Id. at 342. When the permittees refused to pay the increased rent, the village corporation sought to eject them. Id. The permittees countered by bringing a quiet title action which was resolved by the federal district court in favor of the village corporation. Id. On appeal the Ninth Circuit reversed, rejecting the village corporation’s argument that the permittees were bound by the terms of the permit under section 14(g) of the act.[8] Id. at 343. The Ninth Circuit held that the existence of the permits did not bar the permittees from being entitled to reconveyances under section 14(c)(1):

We discern no inconsistency between this plain reading of section [14(c)(1)] and the provisions of section [14(g)]. The latter section applies to lessees, contractees, permittees, and grantees of rights-of-way and easements. It is true that a person with rights under section [14(g)] might also have rights under section [14(c)(1)]. On the other hand, persons having rights under section [14(g)] will not necessarily come within the scope of section [14(c)(1)]. For example, United States Forest Service special use permit-holders who did not occupy their sites as a primary residence on December 18, 1971, would be protected only by section [14(g)].

Id. at 343. In reaching this conclusion, the Ninth Circuit noted that its interpretation of 14(c)(1) was in accordance with the interpretation given that section by this court in Hakala. Id.

E. Purpose of section 14(c).

In determining the meaning of a statute, we begin with an examination of the language employed construed in light of the purpose of the statute. Beck v. State, Dept. of Transp. & Public Facilities, 837 P.2d 105, 117 (Alaska 1992). The purpose of legislation can often be understood by considering the problem which the legislation was designed to address.

The overall objective of ANCSA is clear. It is the prompt and “just settlement of all claims by Natives and Native groups of Alaska, based on aboriginal land claims . . . .” ANCSA § 2, 43 U.S.C. 1601(a). In an enactment of the magnitude of ANCSA, however, there are many subsidiary, more specific purposes. The specific purpose of section 14(c) may be ascertained by an examination of the problem that section was intended to address.

The central problem was that in most of Alaska’s villages, individual Natives did not own the land on which their houses were located. More generally, the non-ownership problem also applied to non-Natives in the villages and to business and subsistence sites. The influential report to Congress of the Federal Field Committee for Development Planning in Alaska, Alaska Natives and the Land (U.S. Govt. Anchorage, 1968) (hereafter Alaska Natives and the Land) made this clear:

Another characteristic of village Alaska is that most of its people live not on land they own, but on the public domain. Two thirds of Alaska’s 7,500 village families own no land at all.

Village Alaskans own in fee less than 500 acres of 375 million acres of their Native land. These parcels of land are held by about 1,400 families who have received or petitioned for unrestricted title to their townsite lots. Under restricted title, somewhat more than 15,000 acres are held by 961 households. Most of this acreage is in 175 allotments obtained by Natives in the 62 years since the Indian Allotment Act was enacted; the remainder is in 786 townsite lots in 32 villages.

Very little acreage — in townsite lots or allotments — is in northern and western Alaska, where most Alaska Natives live.

. . . . 

Without title and without tenure, the vast majority of the rural people live on, range over, and use the public domain as they have for generations.[9]

Alaska Natives and the Land, supra p.21 at 45-46 (footnotes omitted). 

In another section the report again observed that the Alaska Native Allotment Act of 1906 and the Townsite Act of 1926 had largely failed to distribute needed land to individual Natives:

Specific land legislation passed for Alaska Natives — the Alaska Native Allotment Act of 1906 and the Townsite Act of 1926 — has failed to meet the land needs of the Native people. In the 62 years since passage of the Native Allotment Act only slightly more than 15,000 acres of land have been deeded, by restricted deed, to 175 Native allottees. And in the 42 years since the passage of the Townsite Act, only 28 Native villages have been surveyed with deeds issued to their inhabitants; and title in fee simple to less than 500 acres has been conveyed.[10]

Id. at 537. The report noted that lack of ownership contributed to the problem of inadequate housing:

While the low cash income of villagers is an important reason behind substandard dwellings in village Alaska, it is not the sole explanation. Federal programs of insured loans are not available, even to those with ability to repay, if they do not possess title to the land upon which a house is to be situated, and most Alaska villagers are landless.

Id. at 73. Discussing the economic consequences of a land claims settlement, the report stated:

The absence of title to land occupied by Natives in Alaska villages is clearly an obstacle to financing homes, businesses, and community facilities. The grant of title to these lands would just as clearly have a beneficial effect on the village economy. . . .

Grants of land title for homesites, businesses, community facilities, and special-purpose locations such as fish camps and burial grounds should not be expected to have any negative effects on general economic development. Some question might be raised about sites in existing withdrawals such as national forests. The total area of land involved is so small, however, that we can find no instance in which such transfers would subvert the purposes of the original withdrawal.

Id. at 529.

Addressing the problem of lack of individual, as distinct from collective, village land ownership is then the primary purpose of section 14(c)(1) and (2) of the Act. Arnold, supra note 1, at 250-51, describes the process of individual conveyancing under the Act as follows:

Although most of the land that is conveyed to Natives under the settlement act goes to corporations they own, perhaps 10,000 Natives are entitled by the act to become property owners as individuals. There are three ways in which this can take place: (1) by reconveyance by a village; (2) by individual application from those living at isolated locations; and (3) by obtaining an allotment filed for prior to passage of the act.

. . . . 

Most Natives who become individual landowners will receive their land by reconveyance from their village corporations.

Once village corporations receive title (patent or interim conveyance) to lands they have selected, they are, among other things, to reconvey parcels of land to individual occupants of such parcels. Specifically, they are required to give surface title at no cost to Natives and non-Natives who are using such parcels as:

. a primary place of residence;
. a primary place of business;
. a subsistence campsite, or
. a headquarters for reindeer husbandry.

Although there were about 49,000 Natives who considered their place of residence to be one of the 203 village corporations, it is not clear that all of them will receive tracts of village land. . . .

Persons who receive land from their village corporations may immediately sell or lease it. There is no restriction (as there is with stock ownership) against the sale of land. Individually held lands are subject to property taxes if they are developed or leased. . . .

Individuals receiving title do not obtain the subsurface estate. Except for the wildlife refuges and Naval Petroleum Reserve No. 4, the subsurface belongs to the regional corporation. . . .

Transfer of title to individuals is but one task of reconveyance imposed on a village corporation. It is also required to convey surface title to nonprofit organizations (such as churches) for tracts they occupy, either without cost to the organization or for what the land was worth when it was first occupied. It must also convey to the municipal, state, or federal governments surface title to lands where airports or air navigation aids are located. And it must convey to its municipal government no less than 1,280 acres of the remaining improved lands in the village; if there is no city government, this acreage is to be conveyed to the State where it would be held in trust.

Another text, David S. Case, Alaska Natives and American Laws (1984), recognizes that the primary purpose of section 14(c) is to convey land in settled areas to individual occupants. It states that in this respect 14(c) was intended to serve the same purpose as the townsite laws which were previously applicable to Alaska.[11]

Section 14(c) of ANCSA appears to be an alternative to the subsequently repealed Alaska townsite laws. As now amended, it requires each village corporation to deed to local residents, businesses and non-profit organizations the surface estate of those village lands they occupied as of December 18, 1971. As originally enacted, a minimum of 1,280 acres of the remaining surface estate also had to be conveyed to the incorporated municipality or to the state in trust for any future municipality, but 1980 amendments to ANCSA now permit village corporations to negotiate lower municipal grants with the state or affected municipalities.

. . . . 

Congress repealed [the 1926 Alaska Native Townsite Act] because ANCSA had made it “obsolete” . . . .

Id. at 167-168 (footnote omitted). 

F. “Occupant” as defined by the dictionary and townsite act case law.

Webster’s Third New International Dictionary offers the following definitions of the term “occupant”:

1 a : one who takes the first possession of something that has no owner and thereby acquires title by occupancy b : one who takes possession under title, lease or tenancy at will 2 a : one who occupies a particular place or premises : TENANT, RESIDENT . . . b: one who holds a particular post 3 : one who has the actual use or possession of something <<limped hurriedly to grab a table whose approx. s had scarcely risen fully to their feet . . .>

Only definitions 1a, 1b and 2a could be applicable to the present problem as the others do not refer to the occupancy of real estate. Of these, application of la is to be doubted since there is no suggestion that Congress intended the benefit of 14(c)(1) to be limited to the first occupant of a dwelling in a village as distinct from subsequent occupants. The distinction between 1b and 2a seems to be that under 1b there is a connotation that an occupant must have a legal status whereas under 2a one may be an occupant merely by virtue of residence.

Under either definition 1b or 2a Capener qualifies as an occupant. Thus if the dictionary alone were to be our guide both of the legal questions involving the meaning of “occupant” posed by this case — can a holder of a revocable permit be an occupant and can one who occupies property which is subject to a revocable permit issued to another be an occupant — would require unqualified affirmative answers. However, the townsite act cases offer further guidance in defining the term occupant.

As noted, section 14(c) is meant to address the same general purpose as the townsite laws previously governing Alaska. See Case, supra, p. 25 at 167-68. These, in turn, had their counterparts in laws governing the settlement of the western states. See Oswald v. Columbia Lumber Co., 425 P.2d 240, 241 n.1 (Alaska 1967); see also Aleknagik Natives, Ltd. v.
United States, 635 F. Supp. 1477, 1479 (D. Alaska 1985) (recognizing extension of federal townsite laws to Alaska pursuant to Townsite Act of March 3, 1891, 26 Stat. 1099, 43 U.S.C. § 732 (repealed 1976)). Generally, under these laws the “occupant” of premises on the legally relevant date was entitled to a conveyance, usually on payment of survey costs. See e.g., Townsite Act of 1867, 43 U.S.C. § 718 (repealed 1976); Oswald, 425 P.2d at 242; Johnston v. Smith, 39 Ariz. 337, 6 P.2d 891, 893 (Ariz. 1931); Singer Mfg. Co. v. Tillman, 3 Ariz. 122, 21 P. 818 (Ariz. 1889); Clark v. Titus, 2 Ariz. 147, 11 P. 312 (Ariz. 1886); Amador County v. Gilbert, 133 Cal. 51, 65 P. 130 (Ca. 1901); City of Pueblo v. Budd, 19 Colo. 579, 36 P. 599 (Colo. 1894); City of Helena v. Albertose, 8 Mont. 499, 20 P. 817 (Mont. 1889); Hall v. North Ogden City, 109 Utah 325, 175 P.2d 703 (Utah 1946); Holland v. Buchanan, 19 Utah 11, 56 P. 561 (Utah 1899); Lockwitz v. Larson, 16 Utah 275, 52 P. 279 (Utah 1898); Pratt v. Young, 1 Utah 347 (Utah 1876) aff’d Cannon v. Pratt, 99 U.S. 619, 25 L. Ed. 446 (1878). In view of the similarity of purpose between section 14(c) and the townsite laws, the meaning of “occupant” as used in these laws may be a valuable guide.[12]

The Supreme Court of Arizona in Singer Manufacturing Co. 3v. Tillman, Ariz. 122, 21 P. 818 (Ariz. 1889), laid out the definition of “occupant” and the rules defining “occupancy” for the purpose of the townsite act governing Arizona:

An “occupant,” within the meaning of the townsite law of congress, is one who is a settler or resident of the town, and in the bona fide, actual possession of the lot at the time the entry[13] is made. One who has never been in the actual possession of a lot cannot be said to be an “occupant” thereof. The occupancy referred to must be actual, and cannot be begun by agency, no one being allowed to take up lots by his agent. The occupancy may be for residence, for business, or for use, but the residence, business, or use must be by the claimant. A party having a bona fide occupancy can afterward lease the ground and still retain his right thereto, and he may sell his claim, except that no contract, either for the sale or lease, which conflicts with the requirements that the title shall be made to an inhabitant who is an occupant and has an interest, will be recognized in deciding to whom the government title shall go; and a party purchasing an interest in such property can have government title to the extent of such interest, provided he becomes an occupant, thus showing no one is entitled to or can receive government titles to a town lot unless he is in the actual, bona fide possession and occupancy of the lot.

21 P. 818, 818 (Ariz. 1889) (citations omitted.) See also Cain Heirs v. Young, 1 Utah 361, 364 (1876), rev’d on other grounds, Stringfellow v. Cain, 99 U.S. 610, 25 L. Ed. 421 (1878); Pratt v. Young, 1 Utah 347, 352-54 (1876) aff’d Cannon v. Pratt, 99 U.S. 619, 25 L. Ed. 446 (1878).

The townsite act cases interpreting the term “occupant” assume that an occupant who is merely a tenant does not qualify for a conveyance. The occupant must have a colorable claim to equitable ownership of the improvements. Singer Mfg. Co. v. Tillman, 21 P. at 818. However, the actual occupier at the legally relevant date is presumed to be entitled to a conveyance. Pratt v. Young, 1 Utah at 353, 356.

Further, the rules concerning whether an occupier had an interest sufficient to entitle the occupier to a deed as an occupant were not strict or technical.[14] Thus, in Singer Manufacturing Co. v. Tillman, Tillman initially was merely a tenant of the landlord, Mund. 21 P. at 818. Mund then gave a mortgage to third parties. Tillman did not pay rent and asked Mund to make repairs to the premises. Id. Mund refused, saying he wanted nothing further to do with the premises. Id. At this point, in the court’s view, Tillman became an occupant in his own right. Shortly thereafter,[15] entry for the purposes of the townsite act was made by the probate judge who deeded the property to Tillman as the occupant. Subsequently, the mortgagees foreclosed. The court found in favor of Tillman since the mortgagor’s (Mund’s) right was extinguished before he executed the mortgage by his failure to remain in physical occupancy.

In Pratt v. Young, Orson and Sarah Pratt were the initial occupants of a house in Salt Lake City. 1 Utah at 355, 359. In 1861 they moved and sold the house to Young and certain members of Young’s family occupied it. Id. at 359. In 1868 Sarah Pratt resumed possession of the house. Id. at 355-56, 359-60. The entry date establishing the relevant date of occupancy occurred subsequent to Sarah Pratt’s resumption of possession. Id. at 355. In a contest between Sarah Pratt and Young as to who was entitled to a deed to the house under the townsite act, Sarah Pratt prevailed. Id. at 360. She had been given possession of the house by Young “without any contract for rent or any understanding or agreement expressed or implied, that she should become or be the tenant of [Young]. . . .” Id. at 359-60. Several other cases recognize that an occupant need not comply with technical legal requirements in order to establish his or her interest in the land. See, e.g., Hall v. North Ogden City, 109 Utah 325, 175 P.2d 703, 708-711 (Utah 1946) (discussing several cases where occupancy was sufficient to give party title to land). See also Ashby v. Hall, 119 U.S. 526, 30 L. Ed. 469, 7 S. Ct. 308 (1886) (occupant’s right to land established upon entry of townsite and nothing more was necessary).

G. The meaning of “occupant” under section 14(c).

Having reviewed the language and purpose of section 14(c) and the relevant case law, we are in a position to interpret the meaning of the term “occupant.” The dictionary definition, “one who occupies a particular place or premise” captures the intended meaning accurately for most cases.[16] However, for situations involving tenancies or similar relationships this definition is inadequate. It would require a reconveyance to an occupier who is merely a tenant of the owner of the improvements. Such a person’s property interest is not strong. Further, in some cases this would be unjust to the owner of the improvements, as where the owner holds under a long-term government lease and would be protected for the term of the lease under section 14(g), while the tenant, whose sole residence is on the premises, would have a claim to title under section 14(c)(1). Moreover, case law construing the term “occupant” in the analogous townsite act context seems to be clear that one who is merely a tenant is not an occupant.

It is necessary therefore in tenancy cases to add to the dictionary definition a requirement that the occupier have an equitable interest in the improvements. The definition in such cases thus would be “one who occupies a particular place or premise and has an equitable interest in the improvements thereon.”[17] As in the townsite act cases, there should be a rebuttable presumption that the occupier on the critical date is the occupant and thus entitled to a conveyance assuming that the occupancy purpose requirements are met. In determining whether an occupier has the requisite equitable interest, technical or strict property concepts need not be adhered to. This approach is employed in the cases interpreting the townsite acts. See, e.g., Singer Mfg. Co., 3 Ariz. 122, 21 P. 818; Pratt, 1 Utah at 353 (quoted supra in note 14). It seems especially appropriate to section 14(c), since 14(c)’s purpose is to distribute individual titles to residents of Alaska villages where concepts of American property law have been little used.

We are mindful of the rule of construction that ambiguous laws affecting Natives should be construed in favor of Natives. Hakala, 753 P.2d at 1147. This rule should not be applied in favor of TDX in this case for a number of reasons. First, TDX offers no interpretation of section 14(c) which is reasonably consistent with the language of that section, or its purpose. Second, the central purpose of 14(c) was to effect the transfer of title to thousands of Alaska Natives individually. A narrow construction of 14(c) would serve to thwart rather than further that purpose.[18] Third, as section 14(c) is structured, questions of entitlement as to improved land in and around Native villages involve as competing claimants not individual occupants and village corporations, but individual occupants and municipal corporations (or the State of Alaska in trust for future municipal corporations). Under section 14(c)(3), improved land in and around Native villages which is not transferred to individual occupants under (c)(1) or (2) is to be conveyed to the municipal corporation for the village or, if there is none, to the state in trust for a future municipal corporation.

H. A permittee may be an “occupant.”

We return to the first question raised by the parties’ arguments: whether a permittee holding under a revocable permit may be entitled to a section 14(c) conveyance or whether the permittee’s rights are limited by the terms of the permit. Our answer is that the permittee may be entitled to a 14(c) conveyance.

The permittee must be an occupant within the meaning of section 14(c) — an occupier with an equitable interest in the improvements — and the purpose of the permittee’s occupancy must be one of the purposes recognized by section 14(c)(1) or (2). The Act does not impose as an additional requirement a condition that an occupant not hold under a government lease or permit. Indeed, since the Act mandates conveyances to non-Native residential occupants whose rights are based solely on the fact that they occupy dwellings built on the public domain without a permit, it would be paradoxical to deny a conveyance to residential occupants who have made permitted entries.[19] We conclude therefore that a permittee may be an occupant. The fact that the permittee may also have rights under the permit which are preserved under section 14(g) does not preclude the permittee from receiving a conveyance under section 14(c). Our conclusion on this point comports with the Ninth Circuit’s decision in Buettner.

I. An occupier of property subject to a revocable permit issued to another may be an “occupant.”

The second question raised by the parties’ arguments is whether a person who occupies property which is subject to a revocable permit issued to another may be entitled to a section 14(c) conveyance. Our answer is that such an occupier may be entitled to a conveyance, if the occupier has an equitable ownership interest in the improvements, and meets the occupancy purpose requirements of the Act. The Act does not impose additional requirements. We have concluded above that the existence of a permit is irrelevant to eligibility for a 14(c) conveyance and that the terms of an existing permit do not bar a conveyance. It follows that the fact that a permit may have been issued in the name of a non-occupant should not preclude a conveyance to an occupant who meets section 14(c) requirements.

J. The right to a reconveyance can be transferred subsequent to the legal occupancy date.

The third legal question raised by the parties’ arguments is whether an occupant entitled to a 14(c) reconveyance from a village corporation may transfer the occupant’s right to a reconveyance to a third party. The answer to this question clearly is affirmative.

An occupant’s right to a 14(c) reconveyance is an individual property right which vests on what the Ninth Circuit has called the “magic” date. Buettner, 860 F.2d at 343. Property interests are alienable in the absence of specific prohibitions on alienability. See Roger A. Cunningham, et al., The Law of Property § 2.1, at 29 (2d. ed. 1993). No such prohibitions exist in ANCSA. Moreover, under the townsite acts an occupant could transfer his interest subsequent to the legal occupancy date and prior to receipt of the deed. McKennon v. Winn, 1 Okla. 327, 33 P. 582, 585 (Okla. 1893). TDX’s argument that the permit terms prohibit the Home Missions Department from making a conveyance to Capener after the legal occupancy date lacks merit, for just as the inconsistent terms of the permit do not control an occupant’s right to a conveyance they do not deprive the occupant of the power to transfer that right.

K. Genuine issues of material fact exist which preclude summary judgment.

An affirmative burden falls on one who seeks summary judgment to establish the absence of genuine issues of material fact. Wickwire v. McFadden, 576 P.2d 986, 987 (Alaska 1978); Clabaugh v. Bottcher, 545 P.2d 172, 175 n.5 (Alaska 1976). Our resolution of the legal questions raised by the parties’ arguments makes it apparent that Capener’s right to a conveyance depends on the resolution of certain fact questions including, at least, the following:

1. Did Capener have an equitable interest in the improvements on Lot 3 on January 19, 1979? If so, is Lot 2 part of the curtilage of the house and business on Lot 3?
2. Did the local church organization have an equitable interest in the improvements on Lot 1 or Lot 3 on December 18, 1971?
3. Did the Home Missions Department transfer its interest in the property to Capener prior to executing the general disclaimer.[20]

As TDX has not negated the existence of genuine issues concerning these questions, summary judgment was improper. The judgment of the superior court must therefore be reversed and this case remanded for further proceedings.[21]

REVERSED and REMANDED.


Dissent

COMPTON, Justice, dissenting.

I am unpersuaded by this court’s analysis of Section 14 of the Alaska Native Claims Settlement Act (ANCSA). Further, I conclude that the superior court reached the correct result. Therefore I dissent.

The Assemblies of God’s entitlement to occupy and use the land was based on a Special Use Permit issued to it by the United States Department of the Interior, Fish and Wildlife Service, Bureau of Commercial Fisheries. The permit gave the Assemblies of God “the right to occupy and use [the land] for the purpose of constructing, establishing, creating, and maintaining a church and parsonage, . . . and for no other purpose whatsoever.” The permit had a ten year primary term, with automatic annual renewals unless terminated by either party by thirty days written notice. Upon expiration or termination of the permit, the Assemblies of God had the right, upon fulfillment of certain terms and conditions, to remove all structures, except those furnished by the government. If it failed to do so, any structures became property of the United States. The permit was not transferable, and no interest could accrue to a third person without permission of the Director of the Bureau of Commercial Fisheries. The only rights and liabilities created by the permit were between the United States Government and the Assemblies of God.

Lillian Capener and the late Reverend A. E. Capener were never permittees under the Special Use Permit. They did not “enter the land under the auspices of a special use permit . . . .” They entered the land under the auspices of the Assemblies of God. The Capeners’ presence on the land was as missionaries for the Assemblies of God.[1] By virtue of their mission, they had permission to use the parsonage.[2] On the “magic” dates the Assemblies of God had not terminated the Special Use Permit, nor had it divested the Capeners of their mission.

The court acknowledges that the term “occupant” is ambiguous. The fact that the court goes to such great lengths to craft its definition of “occupant” demonstrates this clearly. However, in my view the court not only crafts an incorrect definition, but also misapplies it even if correct.

I. The Court’s Definition of “Occupant” Is Unpersuasive.

The court concludes that an “occupant” is “one who occupies a particular place or premises and has an equitable interest in the improvements thereon.”[3] The first half of the definition is simply a self evident dictionary definition. The second half presumably distinguishes one kind of tenant from another kind of tenant.[4] However, the appended language does not appear to correct the problem the distinction allegedly addresses. The court remarks that the dictionary definition

would require a reconveyance to an occupier who is merely a tenant of the owner of the improvements. . . . In some cases this would be unjust to the owner of the improvements, as where the owner holds under a long-term lease and would be protected for the term of the lease under section 14(g), while the tenant, whose sole residence is on the premises, would have a claim to title under 14(c)(1). . . In the analogous townsite context [it] seems to be clear that one who is merely a tenant is not an occupant. . . .
It is necessary therefore in tenancy cases to add to the dictionary definition a requirement that the occupier have an equitable interest in the improvements.

Opinion at 30. The language appended by the court merely narrows the category of tenants who will divest their landlords; it does not eliminate the problem. Under the definition crafted by the court, the tenant (sub-lessee) of the holder of a long-term government lease (sub-lessor), who occupies the land as a primary residence or business and who has an equitable interest in improvements put on the premises with the sub-lessor’s consent, would become the owner of the property the sub-lessor leased to that tenant.

The definition employed by the court creates an impossible situation. The patent, by which the Village Corporation obtains title from the United States, is subject to the lessee/sublessor’s “complete enjoyment of all rights, privileges, and benefits thereby granted him [by the lease].” Section 14(g). The described sub-lessee is entitled to a conveyance of title from the Village Corporation “without consideration.” Section 14(c)(1). Thus the sub-lessee’s title is subject to the sub-lessor’s existing rights, which may include entitlement to rent from the sub-lessee, who is now the owner. Presumably if the sub-lessee defaults in the payment of rent, the lessee/sub-lessor may evict the person who is now the owner of the property.

I am unpersuaded that this attempted differentiation between various kinds of tenants, one of whom obtains title and the other of whom occupies in accordance with the terms of a lease which cannot be transformed into title, justifies the court’s definition of “occupant.” The definition will exacerbate the problem. A tenant by any other name will still be a tenant. The problem will be the same: the tenant’s Section 14(c)(1) rights will conflict with the United States’ lessee’s Section 14(g) rights.

The court’s definition of occupancy is flawed even when viewed only in the context of Section 14(c)(1). As used in Section 14(c)(1), “occupant” applies to four classes of activity on land: (1) primary place of residence, (2) primary place of business, (3) subsistence campsite, or (4) headquarters for reindeer husbandry. Acknowledging the inadequacy of its craftsmanship, the court restricts its definition of occupant to the first two classes of occupants. As it states, in the other categories “improvements may be either non-existent or relatively unimportant.” Opinion at 30 n.17. While that may be true, on what basis can such a definitional distinction be made between category 1 and 2 occupants on the one hand, and category 3 and 4 occupants on the other? I suggest there is none. Furthermore, given the nomadic culture of many of Alaska’s Natives, an equitable interest in improvements is a concept of questionable utility.

II. The Court Improperly Applies Its Own Definition of “Occupant.”

The court’s definition of occupant requires that the occupier of the premise have an “equitable interest in improvements.” Even under this definition, Mrs. Capener would not be entitled to a conveyance of title.

The court correctly notes that a tenant is not an occupant “in the analogous townsite act context.” Opinion at 30. The relationship between the Assemblies of God and Mrs. Capener is consistent with, and most analogous to, the relationship between landlord and tenant. The Assemblies of God and Mrs. Capener could not both occupy the land in the statutory sense. And while a tenant might have a claim to ownership of improvements under specific circumstances, the court cites no authority for the proposition that the mere existence of such a claim transforms the tenant into an occupant entitled to a conveyance of title. Furthermore, given the terms of the permit, Mrs. Capener cannot have had an equitable interest in the improvements on the land vis-a-vis the United States. The permit states that any improvements will be forfeited to the United States if not removed by the permittee, the Assemblies of God.

Whether a permit holder ever can receive title under Section 14(c) is a question that is not necessary to decide, as Mrs. Capener was not a permit holder. She was on land permitted to another, at the sufferance of another, with no expectation of ever gaining title. The only “equitable interest in improvements” that may have existed was held by the Assemblies of God.
Mrs. Capener’s sponsor, the Assemblies of God, was denied title when it tried to obtain it outside of the context of ANCSA.[5] The Assemblies of God has never pursued any ANCSA claim. It has never asserted a Section 14(g) claim to protect its valid existing rights as permittee. It has never pursued a Section 14(c)(2) claim to “[a] tract occupied . . . by a nonprofit organization,” although there appears to be no dispute that the Assemblies of God is a nonprofit organization, and that it occupied the land. Yet whatever claim the Assemblies of God may have had, its claim was either as a permittee or as a nonprofit organization which occupied the land.

III. A More Appropriate Definition of “Occupant.”

In determining the meaning of “occupant,” we are constrained to follow the rule that ambiguities in ANCSA are to be resolved in favor of Natives. Hakala v. Atxam Corp., 753 P.2d 1144, 1147 (Alaska 1988) (citing United States v. Atlantic Richfield Co., 612 F.2d 1132, 1138-39 (9th Cir. 1980); Alaska Public Easement Defense Fund v. Andrus, 435 F. Supp. 664, 670 (D.Alaska 1977)). Although the court is “mindful” of the rule, it explicitly declines to follow it.[6] I do not know what the court means by this. If there is no ambiguity, the rule does not apply. If there is an ambiguity, the court must follow the rule. The rule requires that the ambiguity must be resolved in favor of Natives. This should not mean that the Natives must provide the best resolution of the ambiguity, else the rule is meaningless. I suggest that the Natives must advance an interpretation that is reasonable. For the reasons set forth in supra note 3, I conclude they have done at least that.

Persons entitled to assert occupancy rights under the Townsite[7] and Native Townsite Acts[8] were not required to have a patent, lease, contract, permit, right-of-way, or easement. In other words, they had no Section 14(g) “valid existing rights.” The protection for such users has to come from elsewhere. It comes from Section 14(c). According to David S. Case, The Special Relationship of Alaska Natives To The Federal Government (1978),

The Native Townsite Act was administered in the same way and according to the same regulations as an earlier 1891 Act which granted citizens (usually non-Natives) the right to establish townsites in Alaska. . . . These procedures made no distinction between Native and non-Native in townsite administration. Prior to 1959, it was possible for both Natives and non-Natives to be deeded lots within the subdivided portion and to occupy land in the unsubdivided portion of the same townsite. . . . The Townsite Act was repealed in 1976, and Section 14(c) of ANCSA provides an alternative for municipalities to acquire municipal lands. However, the townsites established under the 1926 Act were not eliminated either by ANCSA or the 1976 repeal of the Native Townsite Act. . . . Non-Natives can continue to establish new occupancy rights under the 1926 Act on the same types of land for which ANCSA supposedly prohibited occupancy rights as of December 18, 1971.

Id. at 60 (citations omitted). 

ANCSA is a coherent act. Section 22(b) protects existing rights that might eventually lead to title, such as homesteads and mining claims. Section 14(g) protects the existing rights of those temporarily on the land.[9] Section 14(c) protects the rights of those without “existing rights,” such as those who but for ANCSA, and its repeal of the Native Allotment Act,[10] may have had reasonable expectations that entry could be made under the Townsite and Native Townsite Acts, following which they would obtain title.[11]

In my view a more suitable definition of occupant would be a user whose continued use 1) is not protected by another section of ANCSA, and 2) is reasonably expected to continue without interference by the United States. This definition would bring within its ambit persons living in a community which could have gained de jure status under the Townsite and Native Townsite Acts, and whose entitlement under those now repealed acts is not clear.

The concept of title to land as we understand it is one grounded in common or civil law. It is not a concept of Native culture. However, if the Native concept of continued use is kept in mind, the definition is appropriate to the purpose of ANCSA.

Congress’ use of the term “occupied” becomes more understandable when considered in the context of its traditional use in Native legislation. The term has typically been applied in the context of Native aboriginal title rights. See David S. Case, Alaska Natives and American Laws 56-75 (1984) (providing a legal history of the aboriginal title rights of Alaska Natives; “occupy” terminology occurs frequently).[12] A basic tenet of statutory construction is a presumption that words that have acquired special meaning in the law carry that meaning in new legislation. See O’Callaghan v. State, 826 P.2d 1132, 1134 (Alaska 1992). ANCSA extinguished aboriginal title in Alaska. However, the purpose of Section 14(c) is to protect existing users or occupants. The passage of ANCSA did not change the use occupants made of the land, often the very use that aboriginal title was crafted to encompass.

Finally, the practical effect of a conveyance from the Village Corporation is important to keep in mind. Unlike the regional corporations, a village’s pool of land shrinks every time land is conveyed.[13] This land was not a gift from the government, but rather was payment given in exchange for an arguably legally enforceable right. Given this historic fact, and ANCSA’s purpose, the court should not interpret ANCSA “to defeat the manifest intent of Congress.” United States v. Atlantic Richfield Co., 612 F.2d 1132, 1139 (9th Cir. 1980).