ALJDEC decisions subject to certification as final
21F-T022-LAN · State Land Department · 2021-04-06
IN THE OFFICE OF ADMINISTRATIVE HEARINGS
IN THE MATTER OF THE APPEAL OF COMMISSIONER ORDER NOS. 005-2020/2021, 006-2020/2021, 007-2020/2021, AND 008-2020/2021 DENYING MINERAL EXPLORATION PERMIT APPLICATIONS NOS. 08-121065-00, 08-121066-00, 08-121067-00, AND 08-121077-00 FOR THE STATE LAND DESCRIBED THEREIN.
APPELLANT: TIMOTHY MARSH
IN THE MATTER OF DENIAL OF THE APPEAL OF COMMISSIONER ORDER NOS.020-2020/2021, 021-2020/2021, 022-2020/2021, 023-2020/2021, 024-2020/2021, AND 025-2020/2021 DENYING MINERAL EXPLORATION PERMIT NOS. 08-121352-00, 08-121353-00, 08-121354-00, 08-121355-00, 08-121356-00 AND 08-121357-00 FOR THE STATE LAND DESCRIBED THEREIN.
APPELLANT: TIMOTHY MARSH
No. 21F-T022-LAN
No. 21F-T026-LAN
ADMINISTRATIVE LAW JUDGE
DECISION
HEARING: March 17, 2021
APPEARANCES: Norman D. James, Esq. for Appellant; Paul A. Katz, Esq. for the State Land Department
ADMINISTRATIVE LAW JUDGE: Thomas Shedden
FINDINGS OF FACT
On September 2, 2020, the Arizona State Land Department issued a Notice of Hearing setting docket number 21F-T022-LAN for hearing on October 15, 2020 at the Office of Administrative Hearings in Phoenix, Arizona.
The hearing in 21F-T022-LAN was continued, and on November 9, 2020, the Department issued a Notice of Hearing setting docket number 21F-T026-LAN for hearing on December 16, 2020.
The Appellant in both matters is Timothy Marsh, Ph.D., CEO and President of Bell Copper Corporation.
By agreement of the parties, the matters were consolidated and the hearing was conducted on March 17, 2021.
Dr. Marsh appeared through counsel and testified on his own behalf.
The Department presented the testimony of Donald Haag, its Minerals Section Manager.
Dr. Marsh filed a total of eighteen applications for mineral exploration permits (“MEPs”), ten of which were denied in Orders issued by the Commissioner.
Dr. Marsh’s applications all cover land in Pinal County in the vicinity of Casa Grande, Maricopa and Stanfield.
Exhibit A-2 is a map showing the land-locations with a table showing the dates on which the eighteen applications were filed and the dates on which the applications were either granted or initially denied. That exhibit also shows the locations of two MEPs that were granted to other applicants. Appended to this Decision is a table prepared by the undersigned summarizing pertinent information about the eighteen applications.
Dr. Marsh appealed the ten denials and the two matters were noticed for hearing.
Prior to the hearing, the parties resolved seven of the pending ten appeals. See Notice of Settlement filed on February 23, 2021.
The three appeals that were not resolved were for application number 08-121065, denied in Order No. 005-2020/2021, number 08-121066, denied in Order No. 006-2020/2021, and number 08-121077, denied in Order No. 008-2020/2021.
When the matter was convened, the parties orally entered into the record the terms of settlement of the appeal for application number 08-121077.
Evidence was taken on the remaining two appeals.
Application number 08-121065 covers 160 acres in the southwest one-quarter of Section 35; Township 5 South, Range 5 East, and is in evidence as Exhibit A-4. This parcel is referred to as the land in section 35.
Application number 08-121066 covers 637.5 acres in the southwest one-quarter of Section 36; Township 5 South, Range 5 East, all except SE SE SE SE, section 36, and is in evidence as Exhibit A-9. This parcel is referred to as the land in section 36.
Application numbers 08-121065 and 08-121066 were filed on September 10, 2019. The Department issued its Orders denying the applications on July 22, 2020. Exhibit A-3 is the Commissioner Order denying application number 08-121065 and Exhibit A-8 is the Order denying number 08-121066.
The Department acknowledged that the Orders of denial were not issued within the timeframes set out in A.R.S. § 27-251(B).
The Department did not process the applications in a timely manner because it was short-staffed. In addition, based on information from the Arizona Department of Water Resources, the Commissioner was concerned about a potential water shortage in Pinal County and the Department had started taking a closer look at applications related to land in that county.
Regarding application number 08-121065, the Department provided the following three bases for denial:
Ground 1: The subsurface mineral estate has been closed under Commissioner’s Order No. 437-94/95 for Sale No. 53-53865 and by Commissioner’s Order No. 549-1991/1992.
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Ground 2: Closed in-place tailings/waste rock on surface.
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Ground 3: Deficit of available water in the Pinal Active Management Area.
(As copied from Dr. Marsh’s Prehearing Brief.)
Regarding application number 08-121066, the Department provided the following five bases for denial:
Ground 1: The subsurface mineral estate has been closed under Commissioner’s Order No. 437-94/95 for Sale No. 53-53865.
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Ground 2: The land is within the city limits of Casa Grande.
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Ground 3: There is no evidence of an agreement between Dr. Marsh and the current landowner of the section.
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Ground 4: The land is across the street from an approved solar lease.
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Ground 5: Deficit of available water in the Pinal Active Management Area.
(As copied from Dr. Marsh’s Prehearing Brief.)
At the hearing, the Department confirmed that in early March 2021 it determined that the reasons given for the denials of the applications at issue did not justify the denials of those applications.
The Department changed its position based on information received during the parties’ settlement discussions, which included information Dr. Marsh provided.
After the Commissioner determined that there was no substantive impediment to granting the two applications, Department staff consulted with the Department’s attorney, who informed the staff that it was required by A.R.S. § 37-231(E) to give the owners of the surface estates the right of first refusal for the requested MEPs.
The Department informed Elim Mining (USA) Inc., owner of the land in section 35 and LKY Copper Mountain Investment, Limited Partnership, owner of the land in section 36 that the MEPs were pending and of their respective rights of first refusal.
Through a letter dated May 5, 2021, Elim Mining notified the Department of its intention to exercise the right of first refusal and file its own application for an MEP covering the land in section 35.
Through a letter dated May 8, 2021, LKY Copper Mountain notified the Department of its intention to exercise the right of first refusal and file its own application for an MEP covering the land in section 35.
Because Elim Mining and LKY Copper Mountain intended to exercise the right of first refusal, the Department orally informed Dr. Marsh that application numbers 08-121065 and 08-121066 would be denied on that basis.
The Department did not provide Dr. Marsh a written notice providing its revised basis for denying application numbers 08-121065 and 08-121066.
The Department’s position is to the effect that it could not offer Elim Mining or LKY Copper Mountain the right of first refusal until after it determined that its initial bases for denying the applications for sections 35 and 36 were not valid. The reason being that until that time the Department was not willing to grant anyone an MEP for section 35 or section 36.
Dr. Marsh argues that pursuant to A.R.S. § 27-251(A) his applications get priority over applications filed after September 10, 2019.
Pursuant to A.R.S. § 27-251(B), the Department was required to notify Dr. Marsh whether the land was open to application within forty-five days from the date the applications were filed. Because the applications at issue were filed on September 10, 2019, the notice was due by October 15, 2019. The Department did not notify Dr. Marsh of the existence of any competing applications or interests by that date.
Dr. Marsh acknowledges that A.R.S. § 37-231(E)(2) does provide surface owners with a right of first refusal, but he argues it is not applicable in this matter.
Dr. Marsh argues to the effect that although LKY Copper Mountain did own the land in section 36 when he filed application number 08-121066, LKY’s notification to the Department was not timely filed because it was not filed within the forty-five days by which the Department was required to notify Dr. Marsh of any competing interests.
Dr. Marsh argues that Elim Mining does not have a right of first refusal because it did not take ownership of the land in section 35 until after Dr. Marsh filed application number 08-121065 on September 10, 2019.
Dr. Marsh acknowledges that whoever owned the land in section 35 when he filed application number 08-121065 may have had a right of first refusal, but he argues that any such right was waived because it was not timely exercised.
Dr. Marsh asserts that based on the documents it located, Elim Mining actually owns about twenty acres in section 36, but did not include that land in its letter asserting its right of first refusal. As such, Dr. Marsh argues that his application number 08-121066 must be granted as to that parcel of land.
Dr. Marsh argues that because the Department has rescinded the reasons for denying his application numbers 08-121065 and 08-121066 and it has not provided a written denial on any other basis, those applications must be granted.
The Department references its trust obligation and argues that if it were to grant Dr. Marsh’s application numbers 08-121065 and 08-121066, it could be sued by Elim Mining and LKY Copper Mountain.
CONCLUSIONS OF LAW
Appellant bears the burden of persuasion. See A.R.S. § 41-1092.07(G)(1).
The standard of proof on all issues in this matter is that of a preponderance of the evidence. A.A.C § R2-19-119.
A preponderance of the evidence is:
The greater weight of the evidence, not necessarily established by the greater number of witnesses testifying to a fact but by evidence that has the most convincing force; superior evidentiary weight that, though not sufficient to free the mind wholly from all reasonable doubt, is still sufficient to incline a fair and impartial mind to one side of the issue rather than the other.
Black’s Law Dictionary 1373 (10th ed. 2014).
A.R.S. § 41-1092.03 requires that an agency’s notice of appealable agency action must provide the basis for that agency’s decision.
A.R.S. § 41-1001.01 provides in part:
A. To ensure fair and open regulation by state agencies, a person:
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14. Is entitled to receive written notice from an agency on denial of a license application:
(a) That justifies the denial with references to the statutes or rules on which the denial is based as provided in section 41-1076.
(b) That explains the applicant's right to appeal the denial as provided in section 41-1076.
A.R.S. § 41-1076 provides in part:
.... If an agency denies an application for a license, the agency shall include in the written notice at least the following information:
1. Justification for the denial with references to the statutes or rules on which the denial is based.
2. An explanation of the applicant's right to appeal the denial. The explanation shall include the number of days in which the applicant must file a protest challenging the denial and the name and telephone number of an agency contact person who can answer questions regarding the appeals process.
A.R.S. § 27-251 provides in part:
A. .... Each application meeting the requirements of this section shall be stamped by the department with the time and date it is filed with the department. The application shall have priority over any other application for a mineral exploration permit involving the same state land which may be filed with the department subsequent to such time and date, and such land shall be deemed withdrawn as long as the application is pending.
B. Not less than thirty days nor more than forty-five days from the filing of the application with the department ... the department shall mail to the applicant ... a written notice designating the state land that is described in the application and that, at the time the application was filed with the department, was open to application....
A.R.S. § 37-231(E)(2) provides:
The mineral rights reserved to the state in the lands sold shall be closed to entry and location as a mineral claim or claims, but the department may issue, upon application, mineral exploration permits embracing the reserved mineral rights when such issuance is deemed in the best interest of the state, provided that the surface owner or owners shall have the first right of refusal to acquire such mineral exploration permits.
The Department did not comply with the requirement that it provide Dr. Marsh with written notice justifying its decision to deny his application numbers 08-121065 and 08-121066 based on A.R.S. § 37-231(E)(2). Consequently, section 37-231(E)(2) does not provide a basis on which those applications can be denied in this proceeding. See e.g., Carlson v. Arizona State Personnel Board, 214 Ariz. 426 (App. 2007)(agency may not change the basis for its decision without providing proper notice).
Because the Department has rescinded its stated reasons for denying Dr. Marsh’s applications and has acknowledged that MEPs can be issued for the land at issue, there is no basis in this record on which the applications may be denied.
Consequently, Dr. Marsh’s application numbers 08-121065 and 08-121066 should be granted.
RECOMMENDED ORDER
IT IS ORDERED that Timothy Marsh, Ph.D.’s mineral exploration permit application numbers 08-121065 and 08-121066 are granted.
In the event of certification of the Administrative Law Judge Decision by the Director of the Office of Administrative Hearings, the effective date of the Order will be the date of that certification.
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-137160-45720000Done this day, April 6, 2021.
/s/ Thomas Shedden
Thomas Shedden
Administrative Law Judge
Transmitted electronically to:
Lisa Atkins, State Land Commissioner
State Land Department
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Appendix
Date filed
Application
September 10, 2019
08-121065 for
160 acres in the southwest one-quarter of Section 35; Township 5 South, Range 5 East
Denied on July 22, 2020
Noticed for hearing in Docket Number
21F-T022-LAN
Not resolved, evidence taken
08-121066 for
637.5 acres in the southwest one-quarter of Section 36; Township 5 South, Range 5 East, all except SE SE SE SE, section 36
Denied on July 22, 2020
Noticed for hearing in Docket Number
21F-T022-LAN
Not resolved, evidence taken
08-121067
Denied on July 22, 2020
Noticed for hearing in Docket Number
21F-T022-LAN
Settled before the hearing
September 13, 2019
08-121073
Granted
08-121074
Granted
08-121075
Granted
08-121076
Granted
08-121077
Denied on July 22, 2020
Noticed for hearing in Docket Number
21F-T022-LAN
Settlement put on record at the hearing
08-121078
Granted
08-121079
Granted
08-121080
Granted
08-121081
Granted
February 11, 2020
08-121352
Denied on October 2, 2020
Noticed for hearing in Docket Number
21F-T026-LAN
Settled before the hearing
08-121353
Denied on October 2, 2020
Noticed for hearing in Docket Number
21F-T026-LAN
Settled before the hearing
08-121354
Denied on October 2, 2020
Noticed for hearing in Docket Number
21F-T026-LAN
Settled before the hearing
08-121355
Denied on October 2, 2020
Noticed for hearing in Docket Number
21F-T026-LAN
Settled before the hearing
08-121356
Denied on October 2, 2020
Noticed for hearing in Docket Number
21F-T026-LAN
Settled before the hearing
08-121357
Denied on October 2, 2020
Noticed for hearing in Docket Number
21F-T026-LAN
Settled before the hearing