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Defender of the Fund v Rongelap Atoll Local Distribution Authority [1992] MHSC 15; 1 MILR (Rev) 289 (20 November 1992)

1 MILR (Rev.) 289

IN THE SUPREME COURT
REPUBLIC OF THE MARSHALL ISLANDS

S.Ct. CIVIL NO. 92-01
(NCT No. 27-001)

DEFENDER OF THE FUND, JOHNSAY RIKLON, et al.,
Complainants-Appellees,

-v-

THE RONGELAP ATOLL LOCAL DISTRIBUTION AUTHORITY,
Respondent-Appellant.

ORDER DECLINING TO ENTERTAIN APPEAL

NOVEMBER 20, 1992

ASHFORD, C.J.

SUMMARY:

A Special Tribunal of the Marshall Islands Nuclear Claims Tribunal held that an assignment by the Rongelap Atoll Local Distribution Authority, of future payments to be made to Rongelap under Section 177 of the Compact of Free Association, was void for lack of a quorum at the meeting authorizing the assignment. On appeal, the full Nuclear Claims Tribunal found that the defect had been cured at a subsequent meeting, but that the assignment was void for failure to give advance public notice of the proposed assignment as required by the Nuclear Claims Tribunal Act 1987. The Supreme Court declined to entertain an appeal by the Rongelap Atoll Local Distribution Authority because (1) it did not appear that the Tribunal’s decision suffered from any defect which would have been grounds for appeal under the Marshall Islands Administrative Procedures Act 1979 and (2) because the issues in the case, perhaps, had been resolved by subsequent events.

DIGEST:

1. APPEAL AND ERROR – Nuclear Claims Tribunal and Special Tribunal: The Supreme Court has tentatively concluded that probably it should not entertain an appeal from the Nuclear Claims Tribunal or Special Tribunal unless it appears likely that the action appealed from suffered from one or more of the defects specified in § 17(7)(a) through (f) of the Marshall Islands Administrative Procedures Act 1979, 6 MIRC Ch. 1.

2. NUCLEAR CLAIMS TRIBUNAL – Powers and Duties – Review of Transfers of Funds: If a sound basis exists for the Tribunal to invalidate an assignment or proposed assignment of funds, independent of the question whether the purpose of the assignment is consistent with the Section 177 Agreement, the Tribunal has the duty and power to make that determination.

3. NUCLEAR CLAIMS TRIBUNAL – Rules and Procedures – Public Notice of Assignments of Funds: Section 12(d) of the Nuclear Claims Tribunal Act and § 404 of the regulations adopted by the Tribunal require each local distribution authority to put all proposed assignments of future proceeds in writing and give public notice of the same at least 75 days prior to consummation of the proposed assignment.

4. NUCLEAR CLAIMS TRIBUNAL – Same – Public Notice of Regulations: The Tribunal does not have to give advance public notice of, or to have a hearing on, proposed regulations. The regulations become effective upon adoption by affirmative vote of the Chairman and one member of the Tribunal. They are thereafter to be published and made available to the public in printed form.

5. NUCLEAR CLAIMS TRIBUNAL – Powers and Duties – Authority to Halt Distribution of Borrowed Funds: The Tribunal has broad authority with respect to local distribution authorities, including the power to halt distribution by a local distribution authority of borrowed funds representing an advance against future proceeds.

Ruling on a challenge by individual complainants and the Defender of the Fund, a Special Tribunal of the Marshall Islands Nuclear Claims Tribunal held that an assignment, by the Rongelap Atoll Local Government Council, acting in its capacity as the Local Distribution Authority for Rongelap (the "Rongelap LDA"), to American Security Bank, N.A., a national banking association in Washington, D.C., of future payments to be made to the Rongelap LDA under the Agreement Between the Government Of The United States And The Government Of The Marshall Islands For Implementation of Section 177 of the Compact of Free Association (the "Section 177 Agreement")¹, was of no force and effect. The Special Tribunal's ruling was based on the lack of a quorum of Council members at the meeting which adopted the ordinance authorizing the assignment. On appeal, the Nuclear Claims Tribunal (the "Tribunal") held that the defect was cured by a later ratification of the assignment by the Rongelap Council at a meeting at which a quorum was present. The Tribunal held that the assignment was void for another reason, however. It ruled that the Rongelap LDA had failed to give the minimum 75-day advance public notice of the proposed assignment required by § 12(d) of the Marshall Islands Nuclear Claims Tribunal Act 1987 (the "NCT Act"), 42 MIRC Ch. 1. The Rongelap LDA has asked this Court to entertain an appeal from the decision of the Tribunal, citing in its Notice of Appeal the same five points it had urged upon the Tribunal as errors committed by the Special Tribunal. In addition, a sixth ground, not specified in the Notice of Appeal, has been urged as error in the Opening Brief.

[1] For a number of reasons, including a strong belief that more experience is needed with the kinds of appeals to be expected from the Tribunal, this Court has not identified the criteria guiding its exercise of discretion in determining whether to accept or to decline an appeal from the Tribunal.² Nor will it do so here. However, the Court has concluded that inasmuch as the Tribunal is much like an agency within the meaning of the Marshall Islands Administrative Procedures Act 1979, 6 MIRC Ch. 1, § 2(a), this Court should give weight to the provisions of § 17(7) of that Act, concerning the grounds for judicial reversal or modification of agency decisions in contested cases. At this juncture, and subject to further experience, the Court has tentatively concluded that probably it should not entertain an appeal from the Tribunal unless it appears likely that the action appealed from suffered from one or more of the defects specified in § 17(7)(a) through (f). That section provides that, on appeal, the High Court may reverse or modify the agency decision where substantial rights have been prejudiced because the decision is:

(a) in violation of constitutional or statutory provisions;

(b) in excess of the statutory property [sic – authority?] of the agency;

(c) made upon unlawful procedure;

(d) affected by other error of law;

(e) clearly erroneous in view of the reliable, probative, and substantial evidence in the whole record; or

(f) arbitrary, or capricious, or characterized by abuse of discretion or clearly unwarranted exercise of discretion.

Statements in the Appellant's Opening Brief also incline this Court to wonder whether the appeal may be moot. Evidence not in the record, but appended to the Opening Brief (Exhibit 4), demonstrates that something less than 10% of the initial loan proceeds, secured by the assignment, is currently retained by the Rongelap LDA (Op. Br., footnote 3). It also appears that the Rongelap LDA is taking, or has completed, action (consistent with the Tribunal's Decision and Order) to pay off the loan with which the Tribunal's decision was concerned (Op. Br., footnote 4). In order to provide some guidance concerning appeals, to the Tribunal and to parties appearing before it, however, this Court has carefully examined the issues raised by the Opening Brief.

Scope of the Tribunal's power and responsibility.

Appellant asserts that the issues identified in its Notice of Appeal are "underlain by the larger question of whether the full Tribunal .... failed to fulfill its statutory mandate to determine whether, based upon the 'preponderance of the evidence ... the particular assignment or proposed assignment [was] inconsistent with the Section 177 Agreement.' Section 27(10), NCT Act" (Op. Br. p. 6, emphasis added in the original).

[2] Section 27, NCT Act, outlines the procedural context for challenging an assignment or proposed assignment of funds by a local distribution authority ("LDA"). It assumes that a valid assignment has been or will be made, in requiring that the claimant prove by a preponderance of the evidence that the purpose of the assignment is inconsistent with the Section 177 Agreement. Section 27, however, does not limit the Tribunal's power and responsibility to inquire concerning the disposition of funds over which it has jurisdiction. Section 4(b) of the NCT Act states that one of the purposes of the Tribunal is to render final determination in disputes arising from distributions under Articles II and III of the Section 177 Agreement. The duty to decide such disputes is imposed by § 5(1), NCT Act, and the power to decide those disputes is expressly conferred by § 6(1), NCT Act. In other words, if a sound basis exists for the Tribunal to invalidate an assignment or proposed assignment, independent of the question whether the purpose of the assignment is consistent with the Section 177 Agreement, the Tribunal has the duty and power to make that determination.

Compliance with public notice requirement.

[3] Section 12(d) of the NCT Act requires the Tribunal to promulgate regulations requiring each LDA to put all proposed assignments of future proceeds in writing and give public notice of the same at least 75 days prior to "consummation" of the proposed assignment. These requirements are incorporated in § 404 of the Regulations adopted by the Tribunal. In this instance, public notice of the proposed loan and assignment was given by print and voice media in the period from late May through mid-June, 1989. The first transfer of Section 177 quarterly payments was made to the bank in October 1989. The Joint Statement of Undisputed and Disputed Facts filed with the Tribunal on November 5, 1990 (Op. Br., Exhibit 1, paragraph 10) states that the loan proceeds, less certain costs, were paid by the bank to the Rongelap LDA on July 21, 1990 (sic). The chronology of events in the proceedings before the Special Tribunal, however, makes it clear that the loan proceeds had probably been disbursed on July 21, 1989, as stated at page 3 of the Tribunal's Decision and Order (Op. Br., Exhibit 5).

In any event, Appellant apparently does not dispute that at least some of those funds were disbursed within the 75-day period following the giving of public notice. Appellant's Opening Brief states, at page 16, that in October 1989 Appellant was "unable to meet its loan repayment obligation .... from any other source but the Section 177 quarterly proceeds" and argues that since payment from those proceeds was not made until October 31, 1989, there was no "consummation" of the assignment until that date.

This argument is devoid of merit. It is the equivalent of claiming that a mortgage is not effective until steps to foreclose it are taken. Neither is the argument supported by the authorities cited by Appellant. The assignment was not a contract to transfer proceeds to be received in the future, it was a current assignment of those proceeds. The language employed was "hereby assigns ... to Bank all of its right ... to the Distributable Portion of all quarterly payments which are now or may hereafter become due...." (Op. Br., Exhibit 3, p. 5). The statute and Regulation make no distinction between outright assignments and assignments as security; or, for that matter, between legal assignments and equitable assignments. The contract may have been executory until loan proceeds were disbursed, but upon that event, the right of the bank to satisfaction from future Section 177 payments became vested.

Failure of the Tribunal to publish its regulations and make them available to the public in printed form.

[4] The Joint Statement of Undisputed and Disputed Facts lists as facts in dispute the claims that, to the date of that document, public notice of Chapter 3 and § 404 of the Regulations was never given, nor were they made available to the public in printed form (Op. Br., Exhibit 1, paragraphs 28 and 29). However, Appellant has not disputed the Tribunal's statement (Decision and Order, p. 3) that the Defender of the Fund, by letter of May 22, 1989 to the Rongelap LDA, set out the requirements for public notice of the proposed assignment. Indeed, in its May 19, 1989, letter to the Defender of the Fund, the Rongelap Atoll Local Government acknowledged the § 12(d), NCT Act, requirement for public notice, which it said it was "preparing to initiate" (Op. Br., attachment to Exhibit 1).

Under the Marshall Islands Administrative Procedures Act 1979, thirty days advance, detailed public notice of proposed rules must be given by posting and by radio broadcast, all interested persons must be given a reasonable opportunity to submit their views and, in certain circumstances, a public hearing must be held. 6 MIRC Ch. 1, § 4. Rules adopted do not become effective until approved by the Cabinet. 6 MIRC Ch. 1, § 6. Thereafter, they must be published in the Chief Secretary's monthly bulletin and copies must be distributed to each local government and be kept on file for public inspection. 6 MIRC Ch. 1, § 7. Despite these detailed requirements for public notice before and after adoption, failure to meet the requirements does not void any rule, but authorizes a court merely to order compliance. 6 MIRC Ch. 1, § 3(2). By contrast, the Tribunal does not have to give advance public notice of, or to have a hearing on, proposed regulations.³ The regulations become effective upon adoption by affirmative vote of the Chairman and one member of the Tribunal. 42 MIRC Ch. 1, § 10(11). While they are thereafter to be published and made available to the public in printed form, the statute does not specify when or in what manner. 42 MIRC Ch. 1, § 10(11).

Appellant has not established in the material furnished to this Court that the regulation at issue was not published and made available to the public in printed form. Even if it was not, no reason appears why that regulation should be held void, as distinct from merely ordering compliance. This is particularly true in view of the fact that the Rongelap LDA acknowledged the public notice requirement and was given express written notice of the regulation and its contents by the Defender of the Fund within a few days of signing the loan documents.

Failure of Appellees to give public notice of their complaint challenging the Rongelap LDA's assignment of funds.

Section 303(e) of the Tribunal's Regulations requires public notice to be given of complaints challenging an LDA's assignment of funds. Paragraph 34 of the Joint Statement of Undisputed and Disputed Facts cites as a fact in dispute that the public notice required by this section was not given. The Tribunal's Decision and Order, however, establishes that the notice was not given, by stating at page 18 "(w)e find that failure of the complainants to give required notice in this case does not warrant the dismissal of the Complaint."

While acknowledging the differences, pointed out by the Tribunal, between the notice provisions to which LDAs and complainants are subject, and the purposes of those notice provisions, this Court believes that the Tribunal should impose upon all parties before it, and its own staff, with equal rigidity or leniency, the burdens of complying with notice provisions of the statute and regulations. However, because of questions concerning the possible mootness and scope of this appeal earlier noted, the lack of uniformity demonstrated in this case is not sufficient, alone, to dispose this Court to entertain the appeal.⁴

Authority of Defender of the Fund to initiate complaints.

Appellant's Notice of Appeal identified as one of the questions to be presented the question whether the provisions of the NCT Act authorizing the Defender of the Fund to initiate claims challenging an LDA's assignment or proposed assignment exceeds the authority of the Tribunal (sic) contemplated by the Section 177 Agreement.⁵ Appellant's Brief asserts that "the Nitijela extended the Tribunal's authority, through creation of the Office of the Defender of the Fund, to serve a prosecutorial role as well."⁶ Neither the reasoning underlying this statement nor any arguments in support of it are set forth in the Brief. Neither are there any arguments made on the question of authority stated in the Notice of Appeal. Further, both the statement and the question ignore the finite nature of the Fund⁷ and the Section 177 Agreement's recognition of the fact that the Fund would need to be protected against unfounded, excessive or spurious claims.⁸ The Court need not reach the question whether the "prosecutorial role" assigned to the Defender exceeded the Nitijela's (or the Tribunal's) authority, nor need it reach the question whether conditions precedent to initiation of a claim by the Defender of the Fund were met,⁹ because the Decision and Order this Court is asked to review were the result of proceedings initiated by individual recipients of Rongelap LDA payments, who were later joined by the Defender of the Fund and other individual complainants.¹⁰

The Tribunal's injunction against use of the loan proceeds.

Appellants assert that the Tribunal's exercise of authority over the bank loan proceeds exceeded its jurisdictional authority under the NCT Act. The theory, apparently, is that since the Tribunal was established to deal only with the Fund, it has no jurisdiction to deal with money obtained from another source by an LDA. This analysis ignores the fact that the Tribunal's injunction ran, not against the loan proceeds, but against the Rongelap LDA with respect to its use of those proceeds.

LDAs are the organizations designated to receive, distribute, invest or otherwise expend funds provided pursuant to the Section 177 Agreement or the NCT Act. NCT Act, § 2(g), as relettered by Marshall Islands Nuclear Claims Tribunal (Amendment) Act of 1989 (the "1989 Amendment"), and as amended by Marshall Islands Nuclear Claims Tribunal (Amendment) Act 1990 (the "1990 Amendment").

[5] The Tribunal has broad authority with respect to LDAs. It has the power to require them to put into writing the distribution schemes adopted by them and any proposed changes thereto (NCT Act, §§ 12(a) and (b)) and to put into writing and give notice of proposed assignments of future proceeds (NCT Act, § 12(d)). It has the duty to decide claims challenging distribution schemes and the LDAs administration of them (NCT Act, §§ 5(b) and (c)). It has the power to issue orders suspending any or all distributions by an LDA and to dissolve, place in receivership or replace an LDA (NCT Act, §§ 6(4)(g) and (h), as renumbered by the 1989 Amendment and amended by the 1990 Amendment). These powers authorize the Tribunal to halt the distribution by an LDA of borrowed funds representing an advance against future proceeds.

Conclusion.

With the possible exception that the Tribunal has lacked consistency in its interpretation of the meaning and effect of provisions for public notice, it has not been made to appear that any of the issues to be considered on appeal is prima facie a defect of the nature delineated in § 17(7) of the Marshall Islands Administrative Procedures Act 1979. Therefore, this Court declines to entertain the appeal.

S. Joshua Berger, Defender of the Fund, and William Graham, Public Advocate, for Complainants-Appellees
E. Cooper Brown for Respondent-Appellant

___________

¹Free Association Agreement. Signed June 25, 1983. Entered into force October 15, 1986. Treaties in Force, 1987.

²Final determinations by the Tribunal or the Special Tribunal may be reviewed by the Supreme Court at its discretion. 42 MIRC Ch. 1, § 6(3).

³In the promulgation of rules and regulations, the Tribunal is exempted from application of the Marshall Islands Administrative Procedures Act 1979. NCT Act, § 10(11).

⁴The Notice of Appeal filed herein did not mention the Tribunal's denial of a Motion To Intervene filed by a number of Rongelap adult residents. Hence, that matter is not considered by this Court.

⁵The question stated in the Notice of Appeal was:

"4. Whether the legislative grant of authority to the Office of the Defender of the Fund, to initiate and prosecute the underlying complaint herein on its own behalf, is inconsistent with, in violation of, and outside the scope and authority bestowed upon the Nuclear Claims Tribunal by the Section 177 Agreement to the Compact of Free Association."

⁶Op. Br. p. 12.

⁷See the Section 177 Agreement, Article I, Section 1, identifying the $150,000,000 (the "Fund") to be provided by the United States as the means to address the consequences of the Nuclear Testing Program "in perpetuity," and Section 1(d) prohibiting disbursements from the Fund (as distinguished from earnings, that is, "Annual Proceeds," of the Fund), except as "required" by the Agreement, so as to achieve "a perpetual means" of addressing needs resulting from the Nuclear Testing Program.

⁸See the Section 177 Agreement, Article IV, Section 2, recognizing that costs of proceedings before the Tribunal would include "the cost of defending the Fund."

⁹See NCT Act, § 18(b), as amended by Marshall Islands Nuclear Claims Tribunal (Amendment) Act 1990, P. L. 1990-101.

¹⁰Decision and Order, at Page 3.