DPL revocation of JGS mining permit affirmed

The Superior Court has affirmed the decision of the Department of Public Lands to revoke the mining permit issued to JG Sablan Rock Quarry Inc. which permitted the company to mine pozzolan and basalt on the island of Pagan for 20 years.

Associate Judge David A. Wiseman in his order issued on Wednesday ruled that DPL’s decision to revoke JG Sablan’s mining permit was reasonable.

“There were multiple, legitimate reasons to revoke the permit and the decision was based on substantial evidence,” Wiseman said.

Further, the judge pointed out, JG Sablan was put on notice well before the permit was actually terminated that they were in violation of the permit and facing possibly revocation.

“In fact, two other company’s permits were terminated for similar reasons but after less egregious violations. JGS cannot now assert that their permit was unreasonably revoked,” Wiseman concluded.

The CNMI government sued JGS, asking the Superior Court to declare as unconstitutional Public Law 15-21, the law that reinstated JGS’s permit to mine pozzolan. JGS filed a counter lawsuit against DPL.

In 2007, Wiseman determined that DPL afforded JGS sufficient due process before revoking the company’s mining permit because the permit terms provided sufficient process for revocation and were exclusive of those provided under the Administrative Procedure Act.

In June 2008, Wiseman issued a second order denying DPL’s second motion for summary judgment. He held that JGS did not violate Article 14 of the permit and the alleged violation could not form the basis for the revocation of their mining permit.

Wiseman then set a status conference for July 10, 2008 in order for the court to get complete record before resolving other issues.

The remaining issues discussed in this Wednesday’s decision are the following:

– Whether JGS by its inaction or action breached the terms of the permit.

– Whether the DPL should be estopped from terminating JGS’S mining permit because of the acts or omissions of its agency predecessors in interest.

– Whether the statute of limitations prevents DPL from revoking the permit.

In addition to denying that they violated the terms of the permit, JGS argued that DPL should be estopped from asserting that JGS violated the permit because it was waived by DPL’s predecessors in interest.

With respect to the inaction or action issue, Wiseman said JGS’s failure to generate revenue for more than two consecutive years (in fact, they generated no revenue for more than 10 years) “is a blatant violation of the terms of the mining permit.”

The permit, Wiseman said, clearly requires that JGS generate revenues.

He said JGS was unable to do so for more than two consecutive years.

If JGS presented evidence that they did, in fact, generate revenue—the reasonableness of the DPL Secretary John S. Del Rosario Jr.’s decision would warrant close scrutiny, Wiseman said.

“However, no such evidence was presented. Moreover, this particular violation is egregious, defeats the purpose of the permit, and is harmful to the interests of the public,” he said.

Wiseman said he is convinced that on the basis of this violation alone, which there is substantial evidence of, Del Rosario’s decision was reasonable.

The judge said the failure of JGS to submit a development plan was a violation of the mining permit.

“However, whether or not this violation, standing alone, would reasonably justify the termination of the permit is unnecessary determination in light of the other violations,” he noted.

Wiseman said he is inclined to agree with JGS that if the company wandered off its designated area in its mining operations, forfeiture of the permit may not be the proper remedy.

Wiseman said according to JGS, which DPL does not deny, the other two mining companies which held permits never lodged any complaints about JGS being in their mining territory.

Nonetheless, the judge said, the evidence strongly supports the secretary’s finding that JGS did conduct mining outside of the perimeter of Pagan’s Parcel A.

Therefore, the judge said, substantial evidence existed which showed that JGS did breach the permit in this respect and the Secretary’s conclusion that the company strayed outside of Parcel A was reasonable.

Wiseman said the secretary had also before him substantial evidence that JGS failed to pay royalties and other fees in accordance with the permit.

“Thus, revocation of the permit on this ground was reasonable,” he said.

On the acts of the predecessors issue, Wiseman said the Marianas Public Lands Authority’s decision not to terminate the permit was not an act of negligence, nor is MPLA’s acceptance of the fees from JGS.

At that time, Wiseman said, JGS concedes that MPLA had no intention of revoking the permit.

“Therefore, there is no allegation that MPLA acts were fraudulent or deceptive,” he said.

Wiseman said MPLA’s successor, DPL, determined that the failures of JGS had been overlooked by MPLA too many times and to the detriment of the CNMI.

Simply stated, the judge said, the government agency in charge of the permit decided to enforce the terms of the permit.

“This is not a showing of affirmative misconduct,” he said.

“Courts are hesitant to apply the principles of estoppel to government agencies. In light of the difficult burden JGS bears to show estoppel is appropriate and in light of the complete absence of a showing of affirmative misconduct, estoppel is not appropriate,” Wiseman said.

On the statute of limitations issue, JGS argued that the statute of limitations bars DPL from relying on many of the alleged violations as grounds for revocation of the permit.

DPL argued that the statute of limitations has no relevance to agency proceedings initiated by the Department under the permit.

Wiseman said statutes of limitations merely restrict the length of time in which a court may properly have jurisdiction over a matter after a cause of action arises.

“Statutes of limitations do not prevent a party to a contract from exercising their right to terminate the contract,” he said.

Wiseman said while DPL’s time may have expired to bring a claim for damages against JGS, DPL’s time to revoke the permit does not expire.

“There is nothing which limits the termination of the permit to a designated period of time after the infracting conduct,” he added.