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You can search the entire site. or go to the recent opinions, or the chronological or subject indices. Law Offices of James B. Gottstein v. State, Dept. of Natural Resources, Division of Oil & Gas (1/22/2010) sp-6452

Law Offices of James B. Gottstein v. State, Dept. of Natural Resources, Division of Oil & Gas (1/22/2010) sp-6452, 223 P3d 609

     Notice:   This opinion is subject to correction  before
     publication  in  the  Pacific  Reporter.   Readers  are
     requested to bring errors to the attention of the Clerk
     of  the  Appellate  Courts, 303  K  Street,  Anchorage,
     Alaska 99501, phone (907) 264-0608, fax (907) 264-0878,
     e-mail corrections@appellate.courts.state.ak.us.


            THE SUPREME COURT OF THE STATE OF ALASKA

LAW OFFICES OF JAMES B. )
GOTTSTEIN, )
) Supreme Court No. S- 12942
Appellant,)
) Superior Court Nos. 3AN- 06-06003 CI
vs. ) 3AN-06- 08094 CI
)
STATE OF ALASKA, DEPARTMENT)
OF NATURAL RESOURCES,)
DIVISION OF OIL & GAS,)
)
Appellee.)
)
MONTE J. ALLEN and    )
DANIEL K. DONKEL,              )
                               )   Supreme Court No. S-13096
               Appellants,     )
                                )    Superior Court Nos.  3AN-05-
09272 CI
     vs.                        )                    3AN-06-08419
CI
                               )
STATE OF ALASKA, DEPARTMENT    )   O P I N I O N
OF NATURAL RESOURCES,          )
DIVISION OF OIL & GAS,             )     No.  6452 - January  22,
                                   2010
                               )
               Appellee.       )
                               )


          Appeal  from the Superior Court of the  State
          of    Alaska,   Third   Judicial    District,
          Anchorage, Craig F. Stowers, Judge.

          Appearances:  James B. Gottstein, Law Offices
          of   James   B.  Gottstein,  Anchorage,   for
          Gottstein  Appellant, Christopher  M.  Brecht
          and  William  M. Bankston, Bankston  Gronning
          OHara, P.C., Anchorage, for Donkel and  Allen
          Appellants.    Richard   J.   Todd,    Senior
          Assistant Attorney General, Anchorage,  Talis
          J.  Colberg,  Attorney General, Juneau,   for
          Appellee.

          Before:    Fabe,  Chief  Justice,   Eastaugh,
          Carpeneti, Winfree, and Christen, Justices.

          WINFREE, Justice.


I.   INTRODUCTION
          Interest  holders in an oil and gas lease  appealed  to
the superior court from three final agency decisions relating  to
the  lease.  The superior court affirmed the agency decisions and
the  interest  holders separately appealed to us,  arguing  that:
(1)  they  were wrongfully denied an agency hearing on the  first
agency  decision; (2) the first agency decision  is  insufficient
for appellate review and otherwise lacks sufficient findings or a
reasonable  basis; (3) the other agency decisions should  be  set
aside  because of the deficiencies in the first agency  decision;
and  (4) the superior court should have conducted a trial de novo
on  the  agency decisions.  We consolidated the separate  appeals
and  now address the appellants contentions below, affirming  the
superior courts decision to uphold the agency decisions without a
trial de novo.
II.  FACTS AND PROCEEDINGS
     A.   Facts and Administrative Proceedings
          This  case  arises from a Cook Inlet oil and gas  lease
issued  by  the State of Alaska, Department of Natural  Resources
(DNR), Division of Oil and Gas (DO&G), designated ADL 369116.
          In  1964 DO&G certified a well on what later became ADL
369116  as capable of producing gas in paying quantities.  Rather
than  comply with an order to place the lease in production,  the
lessee  instead plugged and abandoned the well and let its  lease
expire.  DO&G issued another lease for the area in 1981, but that
lessee relinquished the lease after three years.
          After  competitive bidding, DO&G awarded ADL 369116  to
Danco Inc. effective September 1, 1986.  The lease gave Danco the
exclusive  right  to drill for, extract, remove, clean,  process,
and  dispose of oil, gas and associated substances for an initial
primary term of 10 years . . . .1
          In  1988  Danco  assigned one hundred  percent  of  the
working  interest2  in  ADL 369116 to Amoco  Production  Company,
subject  to  a  reserved overriding royalty interest.3   In  1990
Danco  assigned a portion of its overriding royalty  interest  to
Monte  Allen.   Also in 1990, Amoco assigned its  entire  working
interest  in  ADL  369116  to  Union Oil  Company  of  California
(Unocal).  In 1994 Unocal assigned the entire working interest in
ADL  369116  back to Danco.  No actual exploratory or development
efforts were undertaken on ADL 369116 between 1986 and 1994.
          In  1995, about one year before the expiration  of  ADL
          369116s August 31, 1996, primary term, Danco and Unocal agreed to
create  a  working unit4 covering ADL 369116 and Unocals adjacent
lease  ADL 17595.5  As a part of this agreement Danco re-assigned
its  entire  working interest in ADL 369116 to Unocal.   By  this
time  portions  of  Dancos overriding royalty interest  had  been
assigned not only to Allen, but also to Dancos president,  Daniel
Donkel, and other individuals in varying proportions.  All of the
assignees consented to the proposed unit agreement.  In June 1996
Unocal  proposed a standard-form unit agreement6 to  combine  the
two  leases into the North Middle Ground Shoals Unit (NMGS Unit),
except that the term of the proposed unit agreement was two years
instead of the standard five years.
          On  August 30, 1996, the day before ADL 369116s primary
term  was  due  to  expire,  the DNR Commissioner  (Commissioner)
approved  the  formation  of the NMGS Unit.7   This  indefinitely
extended  the  lease  term for the life of the  unit  agreement.8
Under   the  NMGS  Units  initial  plan  of  development,  Unocal
committed to (1) continue existing production from ADL 17595, and
(2) drill, by August 31, 1998, an exploratory well from the Baker
Platform  on  ADL 17595 to determine whether the  Shallow  Tyonek
Formation  gas  reserve  extended  to  ADL  369116,  which  would
indicate  that  ADL 369116 might contribute to gas production  in
paying quantities.
          In  January 1998 Unocal requested an extension  of  the
August 31, 1998, deadline for completing the exploration required
under  the NMGS Unit agreement.  Unocal had drilled the  required
exploratory  well  from  the  Baker Platform  in  1997,  but  was
concerned  that it could not test the well nor justify allocation
of  production  to ADL 369116 by the August 31,  1998,  deadline.
Unocal  agreed  that  in  exchange for the  extension,  it  would
acquire  a three-dimensional seismic survey of the NMGS  Unit  by
August  31, 1998, and, by December 31, 1999, drill an exploratory
well on ADL 369116 to determine whether the Hemlock Formation oil
reserve extended under that lease area.
          In  February  1998 the extension was granted  with  the
specific  conditions that if the seismic survey of the NMGS  Unit
was not completed by the deadline, or the new exploratory well on
ADL  369116 was not drilled by the deadline, ADL 369116 would  be
terminated  and  eliminated from the  NMGS  Unit.   DO&G  allowed
Unocal  to  complete its testing program for the exploratory  gas
well  from  the  Baker Platform and to apply to establish  a  gas
participating area9 with production allocated to ADL 369116,  but
DO&G  expressly  advised  Unocal that  those  actions  would  not
satisfy  the  obligation  to drill the exploratory  well  on  ADL
369116.
          Unocal  claimed  it  completed the required  NMGS  Unit
seismic  survey  by  August 31, 1998.   In  October  1998  Unocal
applied  to  DO&G  to  form  the  Shallow  Tyonek  Gas  Reservoir
Participating  Area.   The application proposed  a  participating
area  covering both leases in the NMGS Unit.  In June  1999  DO&G
approved  the application for a participating area that  included
portions of ADL 17595 but excluded all of ADL 369116.  DO&G found
the  presented data failed to support Unocals contention that gas
reserves  under  ADL 369116 could be reached by  wells  from  the
          Baker Platform on ADL 17595.  DO&G noted that if Unocal fulfilled
its  commitment to drill the exploratory well on  ADL  369116  by
December  31,  1999,  it  might acquire additional  gas  reserves
information  justifying expansion of the  participating  area  to
cover some or all of ADL 369116.  DO&G also stated that if Unocal
failed to meet its drilling obligation by December 31, 1999,  ADL
369116 would expire and be eliminated from the NMGS Unit.
          In  July 1999 Unocal appealed DO&Gs decision to exclude
ADL  369116 from the participating area to the Commissioner.   In
August  1999  Unocal proposed an amended plan of exploration  for
the  NMGS  Unit,  requesting more time  to  evaluate  the  three-
dimensional seismic survey and to drill the exploratory  well  on
ADL  369116.   DO&G denied the request in early  September  1999.
DO&G   explained   that   (1)  despite   Unocals   October   1998
representation that it had completed a NMGS Unit seismic  survey,
Unocal  failed to include a survey interpretation in its  October
1998  participating area application, and (2) in the August  1999
request  to  amend  the plan of exploration,  Unocal  claimed  it
lacked  access to that seismic survey and needed three additional
years  to  obtain  and evaluate the seismic data  and  drill  the
exploratory  well on ADL 369116.  DO&G concluded by stating  that
[t]he  lease  has now been in effect for thirteen years  with  no
evaluation of its hydrocarbon reserves and DNR is not willing  to
extend  the  lease  term  to  more  than  fifteen  years  without
exploration  of  the  lease area.  DO&G reiterated  the  critical
date, December 31, 1999, by which Unocal was required to drill an
exploratory well to maintain ADL 369116 as part of the NMGS  Unit
and avoid ADL 369116s expiration.
          In  early  November 1999 Unocal again applied to  amend
the  NMGS  Unit plan of exploration and extend the  term  of  ADL
369116.   Unocal again asserted that it had fulfilled its seismic
survey   obligation  under  the  1998  amendment  and   extension
agreement for the NMGS Unit.  But Unocal admitted it had not met,
and would not meet, the December exploratory well deadline due to
[c]hanging  economic, logistical and current events,  which  were
beyond Unocals control . . . .
          Unocal  explained that when it asked  in  1998  for  an
extension of ADL 369116s term, it was relying on another companys
plan  to  bring  a  jack-up  rig to Cook  Inlet  and  conduct  an
extensive  seismic program in the inlet.  Unocal  stated  it  had
planned  to  participate in the seismic program and,  subject  to
analysis of its seismic survey, had been prepared to use the jack-
up  rig  to  drill the required exploratory well on  ADL  369116.
Although  Unocal  did  not explain why the jack-up  rig  had  not
materialized, it stated that given advances in technology another
platform method of drilling might better suit the area, that  the
other  company planned to use this new platform method  elsewhere
in Cook Inlet, and that until the new platform method of drilling
was  tested  it would be unwise for Unocal to commit  to  another
platform  for  [the  NMGS  Unit].  Unocal  proposed  yet  another
extension framework:
          Unocal proposes that the Division of Oil  and
          Gas  approve  a  revised Plan of  Exploration
          with the following terms and conditions.   If
          Unocal  fails  to meet any of  the  following
          conditions, Unocal will surrender ADL-369116,
          on  the  date that Unocal fails to  meet  the
          condition.
          
          1.   Unocal will complete a post-stack  merge
               and re-migration of Baker 3D and NMGS 3D
               seismic by December 31, 2000, to improve
               the  imaging  and regional understanding
               of the geology.
               
          2.   Unocal or its co-working interest owner,
               Forcenergy, will by December  31,  2000,
               set  a  new exploration platform at  the
               Redoubt  Shoals  Unit to  test  the  new
               platform application in Cook Inlet.
               
          3.   Unocal  and Forcenergy, will by December
               31,  2001, commit to either the  orderly
               procurement of a new platform,  or  move
               the Osprey platform, or other Cook Inlet
               Platform  to the [NMGS Unit].   We  will
               however,   through  this  time   period,
               continue  to  analyze  the  application,
               availability and viability  of  using  a
               jack-up or floating vessel.
               
          In   January   2000,   after  giving   Unocal   several
opportunities  to  provide  additional  information   about   gas
reserves  under ADL 369116, the Commissioner (then John  Shively)
affirmed   DO&Gs  decision  to  exclude  ADL  369116   from   the
participating area.  Without specifically responding  to  Unocals
November 1999 extension request, DO&G issued a notice terminating
ADL 369116 and the NMGS Unit.
          Unocal  did not appeal to the superior court  from  the
Commissioners  final  decision on  the  participating  area,  but
Donkel  and  other  overriding royalty interest  holders  in  ADL
369116  did, arguing that (1) they were entitled to, but did  not
receive,  notice  and an opportunity to be  heard  prior  to  the
Commissioners  decision, and (2) there was insufficient  evidence
to   support  the  decision  to  exclude  ADL  369116  from   the
participating  area.   Because the ultimate  consequence  of  the
Commissioners  decision was the termination  of  ADL  369116  and
because  DNR indicated it intended to include that lease area  in
an  upcoming lease sale, Donkel and the other overriding  royalty
interest holders moved for and received from the superior court a
stay of the Commissioners decision.
          In  August 2000 DO&G violated the superior courts  stay
order  by including a portion of ADL 369116 in a competitive  oil
and  gas  lease  sale.   In April 2001 DO&G  issued  a  partially
conflicting lease to Richard Wagner.  After realizing its  error,
DO&G  revoked  Wagners  lease  in June  2001.   Wagner  gave  the
Commissioner  a one-page notice of appeal, stating an  intent  to
submit  additional written material to the Department  within  20
calendar  days  after  the filing of this appeal.   Wagner  never
filed additional materials and his putative appeal lay dormant.
          In  March 2002 the superior court decided the appeal in
favor of Donkel and the other overriding royalty interest holders
on  the issue of notice, remanding the case to DO&G to reconsider
whether  the  .  .  . Participating Area originally  proposed  by
Unocal should be approved.  The parties then reached a settlement
agreement  that  was approved by the superior court  in  December
2002.
          The settlement agreement specifically required DO&G  to
reinstate  ADL  369116 and to redefine the NMGS Unit  to  include
both ADL 17595 and ADL 369116, which it did effective December 2,
2002.   ADL 369116s lease term was therefore extended, but Unocal
was  required to:  (1) commit to drilling an exploratory oil well
on  ADL 369116 by October 31, 2003; (2) begin drilling that  well
by  December 31, 2004; and (3) complete, suspend, or abandon that
well by December 31, 2005.  If either the commitment to drill  or
the  commencement  of  drilling  did  not  occur  by  the  stated
deadlines, Unocal was to transfer its working interest to  Donkel
and  others.  If the ultimate drilling deadline was not met,  ADL
369116 was to terminate on December 31, 2005.
          In  August  2003 Unocal submitted to DO&G  its  revised
NMGS  Unit  plan  of  development and operations  for  June  2003
through  May 2004 (2003 POD).  Unocal stated that the  NMGS  Unit
has  reached its economic limit and is depleted.  Unocal  further
stated  its intention to remove the drilling rig from the  [Baker
Platform,]  shut  in  all  producing  wells,  clean  the  surface
equipment  .  .  . leave all producing and water injection  wells
shut-in  as  is, and light house the facility by October  2003.10
Unocal  described its past efforts to market the  Baker  Platform
and related facilities and stated that additional development was
unwarranted based on this experience.  Unocal did state  that  it
was  continuing  to  analyze  and  explore  the  feasibility   of
mobilizing a drill ship for the test well still required for  ADL
369116,  which  it acknowledged must occur for Unit  maintenance.
DO&G approved Unocals 2003 POD in late August 2003.
          In October 2003, in accordance with the 2002 settlement
agreement,  Unocal  notified DO&G that it  would  not  commit  to
drilling  on  ADL  369116 and that its working interest  in  that
lease  was  being  assigned to Donkel, Robert  Bolt,  and  George
Kasper.   Unocal  noted that it was aware of  both  the  drilling
deadline  for ADL 369116 and the prospective December  31,  2005,
termination of ADL 369116 if drilling did not occur, and  further
represented that it was providing this information to its working
interest assignees.  ADL 369116 remained a part of the NMGS  Unit
and Unocal retained both its status as the NMGS Unit operator and
its working interest in ADL 17595.
          In  February 2004 Unocal submitted to DO&G its proposed
NMGS  Unit plan of development and operations for the period from
June  2004  through May 2005 (2004 POD).  Unocal  noted  that  no
development  activity occurred in 2003, the  Baker  Platform  was
decommissioned and presently in lighthouse mode, and it  did  not
intend  to  perform any development activities  during  the  plan
period.   Unocal stated that the entire working interest  in  ADL
369116  had been assigned to Donkel, Bolt, and Kasper,  and  that
          they were advised of the December 31, 2005, drilling deadline.
Unocal  concluded by stating that the new working interest owners
.  .  .  have not advised the Operator (Unocal) of any  plans  to
drill  the Initial Test Well during this Plan period.11   In  May
2004  DO&G approved Unocals 2004 POD for the NMGS Unit, reminding
Unocal:  If the Initial Test Well is not drilled as specified  in
the  Court  Order, the NMGS Unit Agreement and  ADL  369116  will
automatically terminate effective December 31, 2005.
          In June 2004 attorney James B. Gottstein wrote a letter
to  the  Commissioner (then Thomas Irwin) on  behalf  of  Donkel,
Bolt, and Kasper:  (1) complaining that DO&Gs letter had not been
sent   to  the  new  working  interest  holders  of  ADL  369116;
(2) stating that if the termination reminder was a final decision
on  the  termination of ADL 369116, the working interest  holders
were appealing that decision; and (3) alleging past bad faith  by
DO&G  in failing to correct its lease of a portion of ADL  369116
to  Wagner.   As  to  the Wagner lease issue,  Gottstein  further
stated:
          The   problem  is  real  because  it  is   my
          understanding  a  company decided  against  a
          drilling program in Cook Inlet to include ADL
          369116  because of the cloud on title created
          by  the  Division.  My understanding is  that
          not  only  was ADL 369116 affected, but  that
          drilling  of  another lease is not  occurring
          because  of  the  continuing  cloud  on   ADL
          369116s title created by the Division.[12]
          
          In  August  2004  DO&G responded to  Gottstein  at  the
request  of  the Commissioner.  DO&G clarified that (1)  its  May
2004  decision was an approval of Unocals 2004 POD for  the  NMGS
Unit,  not  a  termination of ADL 369116, and (2) notice  of  the
approval  was  given only to Unocal because Unocal was  the  NMGS
Unit   operator  and  therefore  represented  the  other  working
interest holders in the NMGS Unit.13  DO&G also reminded Gottstein
that  it had revoked Wagners lease in June 2001 after DO&G became
aware  of its mistake.  Later that month the Commissioner  issued
Wagner  a letter formally upholding DO&Gs 2001 revocation of  his
lease  and  giving notice of the right to appeal to the  superior
court within thirty days.  Wagner took no further action.
          In  October  2004 Unocal requested that the Alaska  Oil
and  Gas  Conservation Commission (AOGCC) approve the abandonment
of  wells  from the Baker Platform on ADL 17595.14  Unocal  noted
that  oil  and  gas production from the Baker Platform  had  been
suspended  since August 2003 and that alternatives for  returning
the wells to production had been unsuccessful.  Unocal proposed a
formal  abandonment  plan.  AOGCC replied that  the  formal  plan
appeared  to  comply  with relevant regulations,  but  encouraged
Unocal  to explore options to transfer the facilities to  another
operator.
          In  February 2005 Unocal submitted to DO&G its proposed
plan  of  development and operations for the NMGS  Unit  for  the
period from June 2005 through May 2006 (2005 POD).  Unocal stated
that  there had been no developmental drilling in the  NMGS  Unit
          during the 2004 plan year, Unocal did not intend to perform any
development activities during the 2005 plan year, and  the  Baker
Platform  had been decommissioned during the 2002 plan  year  and
was  in  lighthouse  mode.  After noting the December  31,  2005,
deadline for drilling the exploratory well on ADL 369116,  Unocal
stated that the three working interest holders of ADL 369116  had
not  advised  the  Operator (Unocal) of any plans  to  drill  the
Initial Test Well during this Plan period.15  Unocal stated  that
it had been unable to find an operator or purchaser for the Baker
Platform  and related facilities and that it intended  to  follow
its  abandonment plan, ultimately removing the Baker Platform  if
necessary.
          DO&G  approved Unocals 2005 POD for the  NMGS  Unit  in
late  March 2005.  DO&G reiterated the 2002 settlement  agreement
term  requiring  the  initial test  well  on  ADL  369116  to  be
completed  by December 31, 2005, or ADL 369116 and the NMGS  Unit
would   terminate  effective  that  date.   But  DO&G   expressly
acknowledged  that  if  Donkel, Bolt, and  Kasper  fulfilled  the
drilling  commitment by December 31, 2005,  the  NMGS  Unit  (and
therefore ADL 369116) would not automatically terminate.16
          In  April 2005 Donkel and Allen separately appealed  to
the  Commissioner from DO&Gs approval of Unocals 2005 POD for the
NMGS  Unit,  identically claiming that:  (1) the plan to  abandon
the  Baker  Platform  and  its related facilities  would  have  a
negative  impact on the rights and interests and  opportunity  to
explore,  drill  and develop ADL 369116; and  (2)  the  partially
conflicting Wagner lease had unreasonably and unfairly  disrupted
and  interfered  with  the working interest  holders  ability  to
fulfill  the  drilling commitment.  They noted,  as  to  disputed
material  facts, that [w]ithout the ability to review information
and data consulted and relied upon in connection with the various
abandonment activities, satisfaction and compliance with  various
criteria  in  11 AAC  83.303 can not be confirmed and verified.17
They  requested a hearing and a two-year extension of ADL 369116s
lease term.
          Within days of the appeals the Commissioner denied  the
hearing  requests  by  noting that all of  the  information  DO&G
consulted  and relied upon in approving the NMGS Units  2005  POD
was  public  record and available for review at  DO&Gs  Anchorage
office  during  regular office hours.  Neither Donkel  nor  Allen
responded  in  any fashion.  In May 2005 the Commissioner  denied
the  appeals on their merits.  The Commissioner stated  that  the
status  of  the  Baker Platform did not adversely  influence  the
ability  to  drill the required exploratory well  on  ADL  369116
because:   (1) the Baker Platform was too far away to support  an
exploratory  oil  well into ADL 369116; (2)  even  if  the  Baker
Platform  were  close enough to support an exploratory  oil  well
into  ADL  369116, DO&G lacked the authority to compel Unocal  to
make  the Platform available for that purpose; and (3) under  the
2005  POD  the Baker Platform was to remain in place for  several
more  years.  The Commissioner also stated that the Wagner appeal
in  no way interfered with the right to seek agency approval  for
operations  on  ADL  369116  after Unocal  assigned  the  working
interest  in  that  lease  to Donkel  and  his  colleagues.   The
          Commissioner concluded that DO&G appropriately considered the
criteria in 11 AAC 83.303 in its evaluation of the 2005  POD  and
that  approval  of  the 2005 POD was necessary and  advisable  to
protect the public interest.
          In  June 2005 Gottstein, on behalf of Donkel and Allen,
confirmed  DO&Gs  attorneys clarification that the  Commissioners
decision  did not terminate ADL 369116.  Gottstein advised  DO&Gs
attorneys that the entire working interest in ADL 369116  was  in
the  process of being assigned to Renaissance Resources and  that
Renaissance  Resources  would  be submitting  a  lease  extension
proposal.    Gottstein  also  gave  notice  of  his  receipt   of
assignments of overriding royalty interests in ADL 369116.18
          Days later Renaissance Resources requested an extension
of  ADL 369116 beyond the upcoming December 31, 2005, termination
date.  Renaissance Resources admitted it was unable to commit  to
any meaningful expenditure at this time but asserted that if DO&G
denied  the  extension  the  owners  of  the  overriding  royalty
interest  will  pursue legal remedies that could  jeopardize  any
potential  investment  for the foreseeable  future  and  preclude
leasing  at  the  next sale.  At about the same time  Donkel  and
Allen  appealed  to  the  superior court from  the  Commissioners
decision  approving Unocals NMGS Unit 2005 POD and denying  their
requested remedial extension of ADL 369116.
          In  August  2005  DO&G deferred Renaissance  Resourcess
lease extension request, expressing a willingness to consider  it
if  Renaissance submits written documentation of its progress  to
mobilize  a  rig  to develop the lease.  In early  December  2005
Renaissance  Resources  requested a  two-year  extension  of  ADL
369116, claiming to be confident that activity will occur on ADL-
369116 in the next two (2) years and noting that Donkel and Allen
had  agreed  to  withdraw  their appeal  if  the  extension  were
granted.  Pointing out that Renaissance has not proposed  a  plan
of  development  with specific milestones and there  is  no  firm
commitment  to  explore  the  lease, DO&G  denied  the  extension
request on December 22, 2005.  Renaissance Resources appealed the
denial to the Commissioner in January 2006.
          Also  in January 2006 DO&G notified Unocal that because
ADL 369116 terminated effective December 31, 2005, for failure to
drill  the  exploratory well required by the terms  of  the  2002
settlement  agreement, the NMGS Unit terminated  as  well.19   In
early February 2006 Donkel and Allen appealed to the Commissioner
from  DO&Gs  decision to terminate ADL 369116 and the NMGS  Unit.
Requesting  a  hearing, they raised four points in their  appeal:
(1)  ADL  369116s  termination was  the  subject  of  Renaissance
Resourcess  appeal to the Commissioner from DO&Gs denial  of  the
requested lease term extension; (2) [i]ssues concerning the terms
and  provisions of the [earlier settlement agreement] relied upon
for  the termination of ADL 369116 were the subject of Donkel and
Allens appeal to the superior court from the approval of the 2005
POD  for  the  NMGS Unit; (3) ADL 369116 could not be  terminated
because  there was a well on the lease area capable of  producing
in  paying quantities (apparently referring to the well that DO&G
had  certified  in  1964 and that the original lessee  had  later
plugged and abandoned); and (4) termination of the NMGS Unit  and
          ADL 369116 was not in the States best interest.
          In  late February 2006 the Commissioner affirmed  DO&Gs
denial of Renaissance Resourcess request for an extension of  ADL
369116s lease term.  The Commissioner noted that even though  gas
had been discovered in the lease area in 1964, no exploration  or
development had taken place since ADL 369116 was issued in  1986.
He  concluded it was not in the States best interest to grant  an
additional  lease  term  extension  in  the  absence  of  a  firm
commitment  to  develop  diligently the  known  gas  accumulation
underlying the lease area.
          In early March 2006 Gottstein executed and recorded his
assignments of overriding royalty interests in ADL 369116 but did
not  submit them to DO&G for approval.  Gottstein wrote a  letter
to  the Commissioner the day after recording his interests in ADL
369116,  advising  of his participation on my own  behalf  as  an
overridding  royalty interest owner and stating that  Renaissance
Resources  is  very close to putting together the  financing  and
other arrangements to be able to commit to drilling a well on ADL
369116.   Gottstein pointed to the pending superior court  appeal
from  the  Commissioners approval of the 2005 POD  for  the  NMGS
Unit,  suggested  ADL 369116 would be tied up in  litigation  for
several  years, alleged prior bad faith by DO&G with  respect  to
the  Wagner lease issue, and requested the Commissioner grant  an
extension of ADL 369116.  Gottstein stated that in the absence of
an extension of ADL 369116, he would appeal to the superior court
from   the  denial  of  Renaissance  Resourcess  lease  extension
request.   Renaissance Resources did not appeal to  the  superior
court from the Commissioners decision upholding the denial of its
requested lease extension.  Gottstein did.
          In  April  2006  the  Commissioner denied  Donkels  and
Allens  appeals  and  affirmed DO&Gs  January  2006  decision  to
terminate ADL 369116, and consequently the NMGS Unit, without the
requested  hearing.   The  Commissioner focused  on  the  working
interest  holders  failure  to  drill  the  exploratory  well  as
required  by  the  terms  of  the 2002 settlement  agreement  and
concluded  that  failure sufficiently supported  terminating  ADL
369116.   The  Commissioner did not reach the dispute  about  the
existence  of  a well capable of producing in paying  quantities,
but did note that it was in the States best interest to terminate
ADL  369116  and allow it to be re-offered to a party that  might
follow through with exploring and developing the lease.
          Gottstein, and then Donkel and Allen together, appealed
to  the  superior court from the Commissioners April  2006  final
agency decision to terminate ADL 369116.
     B.   Superior Court Proceedings
          In  June 2005 Donkel and Allen filed their appeal  from
the  Commissioners May 2005 final agency approval of Unocals 2005
POD  for  the NMGS Unit and denial of their request to remedially
extend  ADL  369116  for  two years.  Donkel  and  Allen  claimed
thirteen  points on appeal, alleging violations of  their  Alaska
rights  of  due  process, entitlements to an agency  hearing,  an
erroneous  decision by the Commissioner, abuse of  discretion  by
DO&G, wrongful inducement by omission of material fact, violation
of  lease  terms by DO&G, harm as a result of the  Wagner  lease,
violations  of  rights  to an impartial tribunal,  violations  of
Alaskas constitutional provision allowing for development of  the
States  resources,  violations  of  separation  of  powers,   and
arbitrary and capricious decisions by DO&G.
          In  March  2006  Gottstein filed his  appeal  from  the
Commissioners   February  2006  final  agency  decision   denying
Renaissance  Resourcess request for an extension of  ADL  369116.
His points on appeal were as follows:
     1.   The  Decision to terminate Lease  ADL  369116
          should  be  reversed and vacated because  the
          Appellee  violated  its implied  covenant  of
          good   faith  and  fair  dealing  under   the
          settlement  agreement in Donkel  et.  al.,  v
          Alaska  Dept.  of Natural Resources,  3AN-00-
          3616 CV.
          
     2.   The   Decision  did  not  comport  with   the
          requirements of due process.
          
          In  May  2006  Gottstein  filed  his  appeal  from  the
Commissioners  April 2006 final agency decision  terminating  ADL
369116.   Also  in May 2006 Donkel and Allen filed  their  appeal
from   the   Commissioners  April  2006  final  agency   decision
terminating  ADL 369116.  The points on appeal in both  instances
were as follows:
     1.   The  Decision to terminate Lease  ADL  369116
          should  be  reversed and vacated because  the
          Appellee  violated  its implied  covenant  of
          good   faith  and  fair  dealing  under   the
          settlement  agreement in Donkel  et.  al.,  v
          Alaska  Dept.  of Natural Resources,  3AN-00-
          3616 CV.
          
     2.   The   Decision  did  not  comport  with   the
          requirements of due process.
          
     3.   The Division failed to follow its regulations
          and/or rules.
          
In June 2006 the four appeals were consolidated for all purposes.
          Before  consolidation Donkel and Allen filed an opening
brief  in  their 2005 appeal and Gottstein moved for a  trial  de
novo  in  one  of his appeals.  After consolidation the  superior
court   denied  Gottsteins  motion  for  a  trial  de  novo   and
established  a briefing schedule.  Gottstein informed  the  court
that  he would not be filing an opening brief, intending instead,
if  necessary  and determined desirable, when ripe,  to  file  an
appeal to the Alaska Supreme Court with respect to the denial  of
[his] motion for a de novo trial.  Donkel and Allen then informed
the  court that they had filed their opening brief in their  2005
appeal  and  would not be filing anything further as  an  opening
brief.
          DNR  subsequently filed a motion to dismiss  Gottsteins
appeals  and  Donkel  and  Allens  2006  appeal  for  failure  to
prosecute.   Gottstein  opposed  dismissal,  conceding  that  his
earlier  notice about not filing a brief was unclear but claiming
an  intent  to rely on the brief submitted by Donkel  and  Allen.
The  superior  court  granted the motion  to  dismiss  Gottsteins
appeals  and later awarded $1,000 in attorneys fees in  favor  of
DNR  and  against Gottstein because Mr. Gottstein, by  appealing,
caused  [DNR]  to incur substantial attorneys fees  ($24,559.55),
but  Mr.  Gottstein failed to prosecute the appeal.  The superior
court denied the motion to dismiss Donkel and Allens 2006 appeal,
permitting  Donkel and Allen to rely on their 2005 opening  brief
for  their  2006  appeal but not allow[ing] them to  expand  upon
their arguments.
          Despite  the  many issues raised in their statement  of
points on appeal, Donkel and Allens opening brief for their  2005
appeal  was  limited to three issues regarding the  Commissioners
May  26,  2005, final agency decision approving Unocals 2005  POD
for  the  NMGS Unit.  The issues briefed were whether:   (1)  the
Commissioner  violated  11 AAC 02.050(a)20  or  the  due  process
protections of Article 1, section 7 of the Alaska Constitution by
denying  Donkel  and  Allen  a  hearing;  (2)  the  Commissioners
approval  of the 2005 POD met the criteria set forth  in  11  AAC
83.303 in accordance with the States best interest;21 and (3) the
Commissioners  denial  of  Donkels and  Allens  requests  for  an
extension  of ADL 369116s lease term breached express or  implied
terms  of  the ADL 369116 lease agreement or the 2002  settlement
agreement.
          The only issue Donkel and Allen briefed that was common
to  the points on appeal they and Gottstein raised in their  2006
appeals  was  whether  the Commissioners refusal  to  extend  ADL
369116s  lease term violated implied terms of the 2002 settlement
agreement.   Thus  no  briefing was submitted  to  support  their
appeal  points regarding violations of DNR rules and  regulations
or  due process rights in connection with the Commissioners  2006
final agency decisions (1) denying Renaissance Resourcess request
for  an  extension of ADL 369116s lease term and (2)  terminating
ADL 369116.
          The  superior court upheld the Commissioners  decisions
to:   (1) not hold a hearing for Donkels and Allens appeals  from
DO&Gs approval of the 2005 POD; (2) affirm DO&Gs approval of  the
2005 POD; and (3) deny Donkels and Allens 2005 requests for a two-
year extension of ADL 369116.  The superior court found all other
issues waived either because they were not asserted at the agency
level, or were not briefed to the court.  Donkel and Allen  moved
for  reconsideration, but the superior court affirmed its earlier
decision.
          Donkel  and  Allen  appealed to us  from  the  superior
courts  decision, as did Gottstein.  We consolidated the appeals,
and now address the following issues raised and briefed by Donkel
and  Allen  and  by  Gottstein, specifically  whether:   (1)  the
Commissioner  erred  in  not holding an evidentiary  hearing  for
Donkels  and Allens appeals from DO&Gs approval of the  2005  POD
for  the NMGS Unit; (2) the Commissioner erred in affirming DO&Gs
approval  of  the  2005  POD and in denying  Donkels  and  Allens
remedial  requests  for an extension of ADL 369116s  lease  term;
(3)  the superior court erred in denying Gottsteins motion for  a
trial  de  novo; and (4) the superior court erred  in  dismissing
          Gottsteins appeals or in awarding $1,000 in attorneys fees
against Gottstein and in favor of DNR.22
III. STANDARD OF REVIEW
          Because  the  superior court acts  as  an  intermediate
court  of  appeals  in administrative decisions we  independently
review the merits of the administrative decision.23  We recognize
four standards to review administrative decisions.24  We apply  a
substantial evidence standard to questions of fact, a  reasonable
basis standard to questions of law involving agency expertise,  a
substitution  of  judgment  standard  to  questions  of  law  not
involving  agency expertise, and a reasonable and  not  arbitrary
standard  to  an agencys interpretation of its own regulations.25
We  will  affirm  an  agencys factual findings  if  supported  by
substantial evidence,26 but what constitutes substantial evidence
presents a question of law requiring de novo review.27
IV.  DISCUSSION
     A.   The  Commissioner Was Not Required To  Hold  a  Hearing
          Before  Deciding Donkels and Allens Appeals from  DO&Gs
          Approval of the 2005 POD.
          
          Donkel  and Allen argue the Commissioner violated  both
their  due  process rights and a DNR regulation28 by  failing  to
conduct  a hearing before issuing his May 26, 2005, final  agency
decision  affirming DO&Gs approval of the 2005  POD  and  denying
their requested remedy of an extension of ADL 369116s lease term.
Critical  to  the  analysis  of Donkel  and  Allens  argument  is
recognizing what DO&G first decided and what then was the subject
on appeal to the Commissioner.
            Unocals proposed 2005 POD described continued winding-
down  of  the NMGS Unit because the unit had reached its economic
limit  and  was  depleted, Unocal had been unable to  market  the
Baker Platform and related facilities, the Baker Platform was  in
lighthouse  mode,  and Unocal did not intend  to  pursue  further
exploratory  efforts in the NMGS Unit.  Unocal had  assigned  the
working  interest in ADL 369116 to Donkel, Bolt,  and  Kasper  in
late  2003  and noted in both the 2004 POD and the proposed  2005
POD  that  the  obligation to drill an exploratory  well  on  ADL
369116 rested with the new working interest holders.  Unocal  had
not  requested an extension of ADL 369116s lease term in the 2003
POD  or  the  2004 POD, and did not request an extension  of  ADL
369116s lease term in the proposed 2005 POD.
          In  short, DO&G was not asked to consider and  did  not
consider  an  extension of ADL 369116s lease term  in  connection
with  its  consideration of the proposed 2005 POD  for  the  NMGS
Unit.   DO&Gs approval of the 2005 POD expressly stated  that  if
the  working  interest  holders of  ADL  369116  fulfilled  their
drilling commitment by December 31, 2005, the NMGS Unit would not
automatically terminate on that date as set forth in the terms of
the 2002 settlement agreement.
          Donkel  and  Allen  did  not participate  in  the  DO&G
proceedings, but they nonetheless filed identical appeals to  the
Commissioner  from the approval of the 2005 Plan  of  Development
for the NMGS Unit as set forth in the March 31, 2005, decision by
[DO&G].29   Donkel  and  Allen appealed DO&Gs  decision  for  two
          reasons.  First, they asserted that the plan to abandon the Baker
Platform  and  its  related facilities  would  have  a  material,
negative  impact  on  their rights and interests,  including  the
opportunity to develop ADL 369116.  Second, they asserted that  a
cloud  on  title  due to DO&Gs issuing and subsequently  revoking
Wagners  lease  interest in a portion of ADL 369116  unreasonably
and  unfairly disrupted and interfered with the working  interest
holders  ability  to comply with the drilling commitments.   Both
claimed  they  lacked the ability to review the  information  the
Commissioner relied upon in reaching his decision, and thus  were
unable  to verify his decision or assert disputed material facts.
Donkel  and Allen requested an oral hearing and, as a  remedy  on
appeal, an extension of ADL 369116s lease term.
          Responding  directly  to Donkel  and  Allen  about  the
failure  to  allege  a  specific material fact  dispute  and  the
possible  need  for a hearing, the Commissioner promptly  advised
that all of the information that [DO&G] consulted and relied upon
in  approving the 2005 POD is available in the public record [and
may  be reviewed at DO&Gs] Anchorage office during regular office
hours.    Therefore,  request  for  hearing   is   denied.    The
Commissioner  further  stated  that  he  would  make  a  decision
[f]ollowing  review  of the case file, applicable  law,  and  any
other pertinent documents . . . .
          Donkel  and  Allen did not subsequently object  to  the
Commissioners  response  or  give  notice  of  specific  disputed
material  facts that warranted a hearing, nor did  they  seek  to
submit additional material to support their cursory appeals.   At
no  time before the hearing did Donkel or Allen make any kind  of
showing  about  disputed  issues of  material  fact  or  specific
evidence they might present.  Even after the Commissioner  issued
his  decision, Donkel and Allen failed to take advantage of their
opportunity  to submit additional information with a request  for
reconsideration.30
          Under  these  circumstances  we  cannot  conclude   the
Commissioner  violated Donkels and Allens due process  rights  or
the  DNR  regulation providing for a hearing to resolve  disputed
issues of fact.
          As  to due process, the superior court correctly stated
that  DO&Gs  approval  of  the  2005  POD  did  not  involve  the
deprivation  of any property interest held by Donkel  and  Allen.
Although  due  process requires notice and an opportunity  to  be
heard  prior  to  governmental  deprivation  or  infringement  of
valuable  property rights,31 this constitutional protection  does
not  automatically  attach to every governmental  action  without
consideration of what rights are at stake and how they  might  be
affected.32  DO&Gs approval of the 2005 POD neither deprived  nor
infringed  on Allens overriding royalty interest in  ADL  369116.
Nor  did  DO&Gs approval of the 2005 POD deprive or  infringe  on
Donkels  working interest or his overriding royalty  interest  in
ADL  369116.  Donkels and Allens property interests in ADL 369116
were unchanged after DO&Gs approval of the 2005 POD.  The working
interest  holders had the same right to develop ADL 369116  after
DO&Gs  approval  of  Unocals 2005 POD as  they  had  before  that
approval  the 2005 POD merely reaffirmed that Unocal would not be
          responsible for developing ADL 369116 in the coming year.  Simply
put,  and as the superior court concluded, neither DO&Gs approval
of  the  2005 POD nor the Commissioners consideration of  whether
that  approval  should  be  affirmed or reversed  implicated  due
process protections for Donkel and Allen.
          Donkel  and  Allen  appear to believe  that  by  merely
asserting  the right to a lease extension as a remedy  for  DO&Gs
approval  of  the 2005 POD, which was unrelated  to  whether  the
drilling  requirements  for  ADL 369116  should  be  enforced  or
modified  or  whether  the lease term for ADL  369116  should  be
extended,  they  have a valuable property  right  at  stake.   We
disagree.  But even if due process protections could be  invoked,
there  can be no dispute that Donkel and Allen had actual  notice
of   DO&Gs  approval  of  the 2005 POD  and  were  heard  by  the
Commissioner  before he issued the final agency decision.   Full-
scale evidentiary hearings are not required for every occasion to
which due process applies,33 and Donkel and Allen do not persuade
us  that  the record hearing afforded to them by the Commissioner
violated any applicable due process.
          In White v. State, Department of Natural Resources34 we
noted  that  neither due process nor 11 AAC 02.050(a) requires  a
hearing  if  there is no dispute.  We reiterated that although  a
hearing
          is  normally  one of the basic components  of
          due  process, it is subject, at least in  the
          area  of administrative law, to the exception
          that one need not hold a hearing if there  is
          nothing  to  hold a hearing about;  or,  more
          precisely,    there   is   no    requirement,
          constitutional or otherwise, that there be  a
          hearing  in  the  absence of substantial  and
          material    issues    crucial    to     (the)
          determination.[35]
          
In  White  an  assignee of an oil and gas lease appealed  to  the
Commissioner from DO&Gs refusal to approve his assignment because
the  lease  had already terminated.36  The assignee  asserted  on
appeal  that  one  of  the  lease  conditions  for  an  automatic
extension  had been met, but the Commissioner denied  the  appeal
without a hearing.37  When the appeal reached us DNR argued  that
the assignee was raising a theory that had not been raised to the
Commissioner.38  We noted that the assignee had stated in filings
to  the  Commissioner  that he would present  specific  testimony
about  disputed  factual matters that ultimately underpinned  his
later theory.39  We held there was a factual dispute about whether
the  condition had been met and that the Commissioner had  abused
his discretion by not granting a hearing under 11 AAC 02.050(a).40
          Donkel  and  Allen  presented  the  Commissioner   with
theories;  they  did  not  show they could  present  evidence  to
support them or to contradict the evidence considered by DO&G  in
approving  the  2005  POD.   Donkel  and  Allen  argue  that  the
Commissioner should have, on his own, considered Gottsteins  June
2004  letter in combination with Donkels and Allens stated  bases
for  appeal.   They  contend  the Commissioner  then  would  have
          recognized an issue of disputed material fact about harm to the
working  interest holders from the Wagner cloud on title  between
2001  and September 2004.  The two passages are as follows, first
from  Gottsteins June 2004 letter on behalf of Donkel  and  Allen
seeking  to  clarify  whether DO&Gs  approval  of  the  2004  POD
constituted a decision to terminate ADL 369116:
          The [Wagner lease] problem is real because it
          is my understanding a company decided against
          a  drilling program in Cook Inlet to  include
          ADL  369116  because of the  cloud  on  title
          created by the Division.  My understanding is
          that  not  only was ADL 369116 affected,  but
          that   drilling  of  another  lease  is   not
          occurring because of the continuing cloud  on
          ADL 369116s title created by the Division.
          
and then from Donkels and Allens appeals:

          The ability of the working interest owners in
          ADL 369116 to fulfill the drilling commitment
          of   the   Initial   Test   Well   has   been
          unreasonably   and  unfairly  disrupted   and
          interfered  with due to the  cloud  on  title
          arising  from  the  delay and  bad  faith  in
          initial selling and then actions to terminate
          any  interest of Rick Wagner in  ADL  389508,
          covering a part of ADL 369116.
          
          First, we note it was incumbent on Donkel and Allen  to
present the Commissioner sufficient information to conclude there
was  a  dispute about an issue of material fact  it was  not  the
Commissioners duty to guess what Donkel and Allen were  referring
to and to scour DO&Gs files to determine whether a disputed issue
of  material  fact  existed  to support  their  hearing  request.
Second,   these   two   vague  and  conclusory   statements   are
insufficient  to  raise a material factual  issue   the  decision
before  the Commissioner was whether to affirm DO&Gs approval  of
the  2005  POD,  not  some other action by DO&G  implicating  ADL
369116s  lease term.  Finally, after the Commissioner issued  his
decision  neither  Donkel nor Allen made an  offer  of  proof  to
either  the Commissioner or the superior court as to any specific
evidence  that could support their otherwise vague and conclusory
allegations  of harm.  Even at oral argument before  us,  neither
Gottstein  nor  counsel  for Donkel  and  Allen  could  point  to
anything in the record other than the two statements noted  above
to support their argument that the Wagner cloud on title actually
affected  any  working  interest holders  ability  to  drill  the
required exploratory well on ADL 369116 by December 31, 2005.
          We   therefore  affirm  the  superior  courts  decision
upholding  the  Commissioners denial of an oral  hearing  on  the
appeal from DO&Gs approval of the 2005 POD.
     B.   The Commissioner Had a Reasonable Basis To Affirm DO&Gs
          Approval of Unocals 2005 POD for the NMGS Unit.
          
          1.   The Commissioners decision
               
          The  Commissioner  made specific findings  on  the  two
articulated  bases  for  Donkels and Allens  appeals  from  DO&Gs
approval of the NMGS Unit 2005 POD.  He first found that the 2005
POD  would  not have a negative influence on ADL 369116s  working
interest  holders ability to drill the required exploratory  well
by December 31, 2005:
          Abandonment of the Baker Platform
          
               The   working  interest  owners  in  ADL
          369116  have a commitment to drill an Initial
          Test Well by the end of 2005.  Removal of the
          Baker   Platform   will   not   impact    the
          [Appellants]   ability   to    explore    for
          hydrocarbons   within   their   lease.    The
          boundary  of  ADL 369116 is over three  miles
          from  the  Baker Platform; too  far  away  to
          support  an exploration well with  a  bottom-
          hole location on ADL 369116.  In 1997, Unocal
          drilled a highly deviated well, Baker #32, to
          a  true-vertical  depth  of  4,761  feet  and
          produced  gas  from the STGR.   However,  the
          bottom-hole  location of Baker #32  is  about
          2.12 miles from the southern boundary of  ADL
          369116.
          
               Even  if  a  well could be drilled  from
          Baker  Platform to ADL 369116, DNR  does  not
          have  the authority to compel Unocal to  make
          the   Baker   platform   available   to   the
          Appellants.    This   appeal   is   not   the
          appropriate  forum for Appellants  to  obtain
          approval    to    use   Unocal    facilities.
          Appellants  need to contact Unocal  regarding
          the use of Unocals facilities.
          
               Under  Unocals plan, the Baker  Platform
          will  remain in place for several more years.
          The  AOGCC approved Unocals proposed schedule
          to  plug  and abandon the wells on the  Baker
          Platform over the next three years.  However,
          the  AOGCC and Unocal have not yet agreed  on
          the  procedures necessary to plug and abandon
          the wells.  The Baker Platform will remain in
          place until all of the wells are plugged  and
          abandoned  to the satisfaction of  the  AOGCC
          and perhaps even longer.  All of the original
          Cook   Inlet  Platforms  remain   in   place,
          although  several are shut-in.  The  lessees,
          the  Division, and various state and  federal
          agencies   are   developing  guidelines   and
          drafting  regulations to  implement  platform
          abandonment.   It may take several  years  to
          complete  this  process before  the  platform
          owners can remove the platforms.
          
          Second,  the  Commissioner also found that  the  Wagner
appeal  in no way interfered with the right to seek approval  for
drilling  operations on ADL 369116 after Unocal  re-assigned  the
entire  working interest in the lease to Donkel, Bolt, and Kasper
in late 2003.
          The   Commissioner  concluded  that:   (1)   DO&G   had
appropriately  considered the criteria in 11 AAC  83.303  in  its
evaluation  of Unocals proposed 2005 POD; (2) [n]either  issuance
of [the lease] to Wagner nor termination of that lease interfered
with  the Appellants rights [and the] working interest owners  of
ADL  369116  were  free and are still free and able  to  exercise
their  right to fulfill the Initial Test Well drilling commitment
set out in the [2002 settlement] or otherwise develop ADL 369116;
and  (3) approval of the 2005 POD was necessary and advisable  to
protect the public interest.
          2.   The Baker Platform issue
          Donkel  and  Allen  argue that  they  were  denied  the
opportunity  to  present  evidence of  the  2005  PODs  potential
adverse  consequences on plans to develop ADL  369116,  that  the
Commissioner  therefore  did not have the  necessary  information
before him to make an informed decision, and, specifically,  that
the  Commissioner did not fully appreciate the effect  abandoning
the  Baker  Platform would have on ADL 369116s  working  interest
holders.
          Donkel  and  Allens  arguments to us  differ  from  the
arguments  they  made to the superior court.  There  they  argued
that  decommissioning the Baker Platform as set forth in the 2005
POD  legally resulted in terminating the NMGS Unit.  Thus  Donkel
and Allen stated they were objecting to the . . . approval of the
cessation  of  unit production and asserted the Commissioner  had
not diligently inquired into Unocals claim that the NMGS Unit was
no longer capable of producing oil and gas in paying quantities.
          Nothing  in  the  record  supports  Donkel  and  Allens
assertion  that  they  were prevented from submitting  supporting
evidence  to  the  Commissioner.  They simply chose  to  rely  on
cursory statements of appeal that facially failed to give rise to
the need for an evidentiary hearing.  Donkel and Allens assertion
to  the  superior  court that approval of the  2005  POD  somehow
terminated the NMGS Unit was similarly incorrect  DO&G  expressly
stated  in  its  approval  of the 2005 POD  that  the  NMGS  Unit
remained  in place pending fulfillment of the December 31,  2005,
drilling obligation for ADL 369116.
          During  the  pendency of Donkels and Allens appeals  to
the  Commissioner, the working interest in ADL 369116  was  being
assigned  to Renaissance Resources.  The assignment was effective
August  1,  2005, but even before that time Renaissance Resources
was  in  contact  with DO&G about an extension  of  the  drilling
obligation  for  ADL  369116.   Renaissance  Resourcess  drilling
proposals  for  ADL  369116 had nothing  to  do  with  the  Baker
Platform.  And if the Baker Platform were somehow critical to the
development of ADL 369116, Unocal was, as Donkel and Allen had to
have  known,41 actively seeking an operator or purchaser  of  the
Baker Platform and its related facilities  Renaissance Resources,
or   Donkel  and  Allen,  could  have  negotiated  some  kind  of
arrangement with Unocal.42
          Finally,  the superior courts explanation for affirming
the  Commissioners findings and conclusions on the Baker Platform
issue sufficiently covers the arguments made in that court and in
this court:
               The  [facts] clearly demonstrate[ ] that
          as  of  August 2003, [DO&G] had approved  the
          Revised   2003  POD  and  Unocals  plans   to
          decommission   the   Baker   Platform.     If
          Appellants wished to challenge that approval,
          they  should have done so in 2003.   Further,
          [DO&G] approved Unocals 2004 POD in May 2004.
          Again, if Appellants wished to challenge that
          decision,  they  should  have  done   so   in
          2004. . . . Unocal suspended production  from
          the   NMGS  Unit  under  the  2002  Plan   of
          Development  and  decommissioned  the   Baker
          Platform,  located on ADL  17595.   All  that
          Unocal  proposed in 2005, and  all  that  the
          [AOGCC]   approved,  and  all   that   [DO&G]
          approved,  was entirely consistent  with  the
          terms  (especially paragraph 7) of the  Court
          Order   Approving  Settlement   and   [DO&Gs]
          previous  approval of Unocals 2003  and  2004
          PODs.
          
               The   gist   of  Appellants  substantive
          argument  on  appeal to the Commissioner  was
          their assertion that the plans to abandon the
          Baker   Platform  would  have   a   material,
          negative  impact  on their rights,  interest,
          and   opportunity  to  explore,  drill,   and
          develop   ADL   369116.    The   Commissioner
          rejected this argument[.]
          
          . . . .

               The  facts  recited by the  Commissioner
          are   undisputed.   The  factual  conclusions
          drawn  by  the Commissioner from these  facts
          are  reasonable and within the  expertise  of
          his   agency.    As  such,   they   are   due
          considerable    deference.      The     legal
          conclusions the Commissioner reached are also
          within  the range of subject matter expertise
          committed   to   the   agency.    They    are
          reasonable, and are affirmed.
          
          We  agree  with  the  superior  court  and  affirm  its
decision to uphold the Commissioners findings and conclusions  on
this issue.
          3.   The Wagner cloud on title issue
          Donkel and Allen focus most of their attention on  this
issue, arguing that the Commissioner erred as a matter of law  or
abused  his  discretion  by not granting  their  request  for  an
extension of ADL 369116s lease term.  They assert that:  (1)  the
putative  Wagner  lease was a cloud on title to ADL  369116  from
2001  through September 2004;43 (2) DO&Gs failure to remove  that
cloud  on  title in a timely fashion was a breach of  express  or
implied  contract  terms in either or both the ADL  369116  lease
agreement and the 2002 settlement agreement; and (3) the cloud on
title adversely affected their ability to drill the required well
on  ADL 369116 by December 31, 2005, specifically that the  delay
jeopardized   Appellants  ability  to  mobilize   the   necessary
investment  and  drilling  equipment by  the  December  31,  2005
deadline.
          The fundamental flaw in this argument is that there  is
no  evidence  in  the record to support the contention  that  the
Wagner  lease  adversely affected development and drilling  plans
for  ADL 369116.  The superior court stated that Appellants  make
no  real  showing  that  they were in any  way  harmed  by  [the]
erroneous lease to Wagner.  When asked at oral argument before us
to  specify  evidence showing harm, neither Gottstein nor  Donkel
and  Allens  attorney  could point to  any  evidence  other  than
Gottsteins June 2004 letter about his understandings of  problems
and  Donkels and Allens conclusory allegations of harm  in  their
appeal papers to the Commissioner.
          We  note  that Unocals 2004 POD (submitted in  February
2004  for  June 2004 through May 2005) stated that Donkel,  Bolt,
and  Kasper had not given Unocal any indication of plans to drill
the  required  exploratory well on ADL 369116.  Such  notice  was
required  under  the  NMGS Unit agreements.   Without  an  actual
showing  of  harm,  specifically some evidence that  an  investor
refused to participate or an entity refused to commit to drilling
because  of the Wagner lease, we cannot say that the Commissioner
erred  by finding that the Wagner lease had no adverse effect  on
the  right  and  ability  to drill the exploratory  well  on  ADL
369116.
          Moreover  DO&G was not asked to consider, and  did  not
consider,  whether  ADL  369116s lease term  should  be  extended
because  of  the  Wagner  lease, or for any  other  reason.   The
proposed 2005 POD had no influence on the drilling commitment for
ADL   369116   Unocal  already  had  declined  to  fulfill   that
commitment  and  had  assigned the  leases  working  interest  to
Donkel,  Bolt,  and  Kasper.  Thus another  fundamental  flaw  in
Donkel   and   Allens   argument  is   that   the   Commissioners
consideration  of the Wagner lease issue was limited  to  how  it
might  influence his decision to affirm or reject DO&Gs  approval
of  Unocals  2005  POD.  After concluding that the  Wagner  lease
issue had no bearing on the 2005 POD approval, no remedial action
by  the  Commissioner  including the requested extension  of  ADL
369116s lease term  was warranted.
          We  agree  with  the  superior  court  and  affirm  its
decision upholding the Commissioners findings and conclusions  on
this issue.
          4.   The best interest issue
          Donkel  and  Allen  argue to us that  the  Commissioner
failed to identify which criteria listed in 11 AAC 83.303(b),44 if
any,  he  considered before rendering his final agency  decision.
Donkel and Allen did not argue to the Commissioner that DO&G  had
          failed to consider or identify the criteria it considered in
approving  the  2005 POD; they instead gave two specific  reasons
for  their  appeal  of  the  2005  POD,  which  the  Commissioner
addressed.
          But  Donkel and Allen now contend that DO&Gs March  31,
2005,  approval letter and the Commissioners May 26, 2005,  final
decision  do not permit intelligent appellate review.  They  urge
us  to  remand  to the agency for better findings supporting  the
conclusion  that  approval  of the  2005  POD  was  in  the  best
interests of the State.  They also contend that because  oil  and
gas  reserves  remain under the NMGS Unit, removal of  the  Baker
Platform and the cessation of drilling in the NMGS Unit  are  not
in   the   best  interests  of  the  State.   This  argument   is
unpersuasive.
            As  early as August 2003, shortly before Unocal  gave
its October 2003  notice that it would not commit to drilling the
required  exploratory well on ADL 369116 and  then  assigned  the
working  interest in ADL 369116 to Donkel, Bolt, and Kasper,  the
plan  for  the NMGS Unit was to wind it down.  At that time  DO&G
approved Unocals plan to remove the drilling rig from the  [Baker
Platform,]  shut  in  all  producing  wells,  clean  the  surface
equipment  . . . , leave all producing and water injection  wells
shut-in  as  is,  and light house the facility by  October  2003.
Donkel  and  Allen did not appeal from the approval of  the  2003
POD.   In May 2004 DO&G approved Unocals plan to discontinue  its
exploratory operations in the NMGS Unit and to maintain the Baker
Platform  in  lighthouse mode.  Donkel and Allen did  not  appeal
from  the approval of the 2004 POD.  In October 2004 Unocal  gave
the AOGCC notice of its plan to ultimately abandon wells from the
Baker  Platform.  There is no evidence in the record that  Donkel
and Allen raised any concerns or objections with the AOGCC.
          It  is  from this posture that DO&Gs review of  Unocals
proposed   2005  POD  must  be  considered,  with   the   further
understanding that the proposed 2005 POD:  (1) covered  only  the
time  period  from  June 2005 through May 2006; (2)  contemplated
only  the  continuing  status of lighthouse  mode,  not  imminent
removal  of the Baker Platform; and (3) expressly noted  that  if
the  exploratory well on ADL 369116 was drilled by  December  31,
2005,  the NMGS Unit would continue in existence.  DO&G  and  the
Commissioner  considered all of the specific factors  of  11  AAC
83.303(b) when the 2005 POD was approved:  (1) the known reserves
underlying  the unit (11 AAC 83.303(b)(2)); (2) prior exploration
in  the unit (11 AAC 83.303(b)(3)); (3) Unocals future plans  for
the  unit,  acknowledged by the AOGCC (11 AAC 83.303(b)(4));  and
(4)  the  environmental  and  economic  costs  and  benefits   of
maintaining  the  status  quo pending  results  of  the  required
drilling on ADL 369116 (11 AAC 83.303(b)(1), (5)).
          We  can  discern  the  agencys consideration  of  these
factors  from the record and do not need to remand for additional
or  more specific findings.  DO&G and the Commissioner considered
the  criteria  of  11  AAC 83.303(b) and the  record  reflects  a
reasonable  basis for the Commissioners conclusion that  approval
of  the  2005 POD was in the States best interest.  We  therefore
affirm  the  superior courts decision upholding the Commissioners
decision on this issue.
          5.   The 2006 final agency decision
               
          Donkel and Allen argue that the Commissioner also erred
in  his  April 2006 final agency decision terminating ADL  369116
and  the  NMGS Unit for failure to have the required  exploratory
well drilled on the lease by December 31, 2005.
          This  decision  was  the subject of Donkel  and  Allens
second  appeal to the superior court.  Donkel and Allen  did  not
file  a  brief  for their second  appeal, advising  the  superior
court  that they would rely on the arguments raised in the  brief
they filed for their appeal from the Commissioners May 2005 final
decision  affirming DO&Gs approval of Unocals 2005  POD  for  the
NMGS Unit.  The superior court allowed Donkel and Allen to do so,
but  without  the ability to raise new arguments.   The  superior
court  denied Donkel and Allens appeal on all of the issues  they
raised  and  rejected all other issues as waived for  failure  to
raise  them at the agency level or to brief them at the  superior
court level.
          Donkel  and  Allen now suggest it is not clear  whether
the  superior  court intended its decision to  dispose  of  their
appeal  from  the Commissioners April 2006 final agency  decision
terminating  ADL 369116 and the NMGS Unit.  They argue  that  for
all  the reasons set forth in their appeal from the Commissioners
May  2005 final agency decision on Unocals 2005 POD for the  NMGS
Unit,   the   Commissioners  May  2006  final   agency   decision
terminating ADL 369116 should be reversed.
          Because  we  affirm the Commissioners  May  2005  final
agency decision as to all issues raised by Donkel and Allen,  and
those  are the only issues raised in connection with their appeal
from  the Commissioners April 2006 final agency decision  on  the
termination  of  the ADL 369116 and the NMGS Unit,  we  therefore
affirm  the  superior courts decision upholding the Commissioners
April 2006 final agency decision as well.
     C.   The  Superior Court Did Not Err in Denying a  Trial  De
          Novo.
          Gottstein  requested a trial de novo  in  the  superior
court  under  Alaska  Rule  of Appellate  Procedure  609(b)(1),45
asserting  that  (1)  DNR is disqualified as the  decision  maker
because  it  is  acting  in  its  proprietary  capacity  as   the
owner/lessor of the property involved and (2) there was  evidence
of  DNRs  bad  faith in continuing to cloud title on  ADL  369116
through the failure to finish terminating the Wagner lease.
          Appellate Rule 609(b)(1) leaves the decision to grant a
trial  de  novo  to the discretion of the superior  court.46   We
review  a  decision  to  deny  a  trial  de  novo  for  abuse  of
discretion, which is found only when we are left with a  definite
and  firm  conviction after reviewing the whole record  that  the
[superior]  court erred in its ruling. 47  We have noted  that  a
trial de novo is
          a  departure from the norm.  A court normally
          reviews  an  agencys decision on the  record.
          While Appellate Rule 609 affords the superior
          court  discretion to conduct a trial de novo,
          it  is  rarely  warranted.   This  court  has
          upheld  or  directed application of  de  novo
          review  where certain issues are  not  within
          the  expertise of the reviewing  body;  where
          the  agency record is inadequate;  where  the
          agencys procedures are inadequate or  do  not
          otherwise  afford due process; or  where  the
          agency   was  biased  or  excluded  important
          evidence in its decision-making process.[48]
          
            In  ConocoPhillips  Alaska, Inc.  v.  State,  DNR  we
implicitly  rejected  the argument that  DNR  has  a  proprietary
interest  in leasing land for oil and gas development that  would
disqualify it as an impartial decision-maker.49  We reiterate here
that DNRs regulatory oversight of State leases is insufficient to
show  actual  or probable bias in connection with  DNR  decisions
involving  private interests in those leases.  We also  reiterate
that  agency personnel are presumed to be impartial until a party
shows  actual bias or prejudgment.50  Commissioner Irwin was  not
the  Commissioner  when:  (1) ADL 369116  was  terminated  as  of
December 31, 1999; (2) the Wagner lease was issued and revoked in
2001;  or (3) the termination of ADL 369116 was reversed  by  the
2002  settlement  of  Donkels appeal from Commissioner  Shiveleys
decision  affirming  DO&Gs denial of Unocals  application  for  a
participating area covering ADL 396116.  Even accepting  at  face
value Gottsteins unsubstantiated allegations of bad faith on  the
part  of  some  DNR personnel with respect to the  Wagner  lease,
Gottstein  has  made  no  showing that  Commissioner  Irwin,  who
decided  the  appeals  from  DO&G, prejudged  any  facts  or  was
motivated by actual bias against Gottstein, Donkel, or  Allen  in
connection  with  any  of  the three final  agency  decisions  on
appeal.
          There  is no basis to conclude that the superior  court
abused its discretion in denying Gottsteins motion for a trial de
novo.   We therefore affirm the superior courts decision on  this
issue.
     D.   The   Dismissal  of  Gottsteins  Appeals  Was  at  Most
          Harmless Error; We Affirm the Attorneys Fee Award.
          
          After   his  motion  for  trial  de  novo  was  denied,
Gottstein  gave notice that he did not intend to file any  briefs
on the merits of his appeal issues but instead would, if and when
appropriate,  appeal the trial de novo issue to us.   When  faced
with  the  later  motion  to dismiss  his  appeals  for  lack  of
prosecution,  Gottstein then stated an intent to rely  on  Donkel
and  Allens briefing to support his appeal points.  The  superior
court  nonetheless dismissed Gottsteins appeals  for  failure  to
prosecute.
          Gottstein  argues  that  the superior  court  erred  in
dismissing his appeals when he was prosecuting them by filing the
trial  de  novo motion and relying on Donkel and Allens briefing.
We  do  not  need to decide this issue because even if Gottsteins
appeals  should  not have been dismissed, they  were  voluntarily
limited  to  the issues raised and briefed by Donkel  and  Allen.
          The superior court denied Donkel and Allens appeals and we agree
with  the  superior  courts decision.  Therefore,  any  error  in
dismissing Gottsteins appeals was harmless.
          Gottstein  also  argues  that  it  was  an   abuse   of
discretion  for the superior court to enhance the attorneys  fees
award  in  favor  of DNR and against him because of  his  alleged
failure  to  prosecute  his appeals.  After  the  superior  court
disposed  of Donkel and Allens appeals, it awarded DNR $1,000  in
attorneys  fees  against Gottstein, stating that the  amount  was
chosen  because Mr. Gottstein, by appealing, caused the State  to
incur  substantial attorneys fees ($24,559.55), but Mr. Gottstein
failed  to  prosecute  the appeal.  Despite the  superior  courts
language, the nominal amount of the attorneys fees award does not
reflect an enhancement for the alleged failure to prosecute.   In
context,  the superior court was explaining that because  of  the
substantial  proceedings regarding the requested trial  de  novo,
DNR  was a prevailing party entitled to a discretionary fee award
under  Appellate Rule 508(e) notwithstanding the general rule  of
Appellate Rule 508(a) that attorneys fees not be awarded when  an
appeal  is  dismissed.  We affirm the superior  courts  award  of
$1,000 in attorneys fees in favor of DNR and against Gottstein.
V.   CONCLUSION
          We AFFIRM the superior courts decision.
_______________________________
     1     The  following summarizes conditions under  which  the
lessee  could  have  extended  the  primary  term  or  entered  a
secondary  term:   (a)  oil  or  gas  being  produced  in  paying
quantities from the lease area; (b) the lease being committed  to
and   remaining  in  a  state-approved  unit  agreement;   (c)(1)
commencing drilling by the end of the primary term and continuing
drilling  with  reasonable  diligence (well  completion  clause);
(c)(2)  commencing  diligent  drilling  or  reworking  operations
within six months of production cessation (temporary cessation of
production clause); (d) failing to produce oil or gas in an  area
that  could  produce in paying quantities if the  state  gave  no
notice  requiring production; (e) the state suspending operations
or  production in the lease area; or (f) failing to produce or to
perform  specific  actions  because of an  unanticipated  natural
cause (force majeure clause).

     2    An agency regulation explains:   working interest means
the  interest  held  in  lands by virtue of  a  lease,  operating
agreement, fee title or otherwise, under which the owner  of  the
interest  is  vested with the right to explore for,  develop  and
produce  minerals; the right delegated to a unit  operator  by  a
unit   agreement   is   not  a  working  interest.    11   Alaska
Administrative Code (AAC) 88.185(32).

     3    An agency regulation explains:   royalty interest means
a  basic royalty or overriding royalty in the production  of  oil
and  gas.  11 AAC 83.295(27).  An overriding royalty interest  is
  a  percentage  of the gross production payable to  some  person
other  than  the  lessor or persons claiming  under  the  lessor.
Allen v. Alaska Oil & Gas Conservation Commn, 1 P.3d 699, 700 n.1
(Alaska 2000) (quoting 38 Am. Jur. 2d Gas & Oil  215 (1999)).

     4     Agency  regulations explain:   unit means a  group  of
leases  covering all or part of one or more potential hydrocarbon
accumulations,  or  all  or  part of  one  or  more  adjacent  or
vertically separate oil or gas reservoirs, which are subject to a
unit  agreement and  unit agreement means the agreement  executed
by  the  State  of Alaska, working-interest owners,  and  royalty
owners  creating  the unit.  11 AAC 83.395  (7)  -(8).   We  have
further explained:  [u]nit agreements and participating areas are
organizational  schemes  approved by the  Department  of  Natural
Resources to efficiently extract oil from a common reservoir that
is  the subject of multiple leases.  ConocoPhillips Alaska,  Inc.
v.  State,  Dept of Natural Res., 109 P.3d 914, 917 n.16  (Alaska
2005).

     5     In  1962 DO&G certified a well from the Baker Platform
on  ADL  17595  as  capable of producing  in  paying  quantities.
Commercial  oil  production from the Hemlock  Formation  and  the
Lower  Tyonek  Formation  began  in  1966,  and  commercial   gas
production from the Shallow Tyonek Formation began in 1982.

     6     11 AAC 83.326 (mandating that a unit agreement must be
executed  on,  or in a manner consistent with, a  standard  state
unit  agreement  form and that the Commissioner will  modify  the
standard  form only upon request and when reasonably required  to
meet the needs and requirements of the particular unit).

     7     Unocal  was designated the unit operator and  accepted
the  obligation to conduct the unit operations and  explore  for,
develop,  and produce oil and gas.  Although Unocal already  held
the  working interest in both ADL 17595 and ADL 369116, under the
unit  agreement the working interest holders delegated to  Unocal
the  exclusive  rights  and obligations of the  Working  Interest
Owners  to explore for, develop, and produce oil and gas  in  the
NMGS Unit.  However, this delegation was expressly subject to the
lessees obligation to comply with all lease terms.

     8    See note 1, above.

     9    An agency regulation defines participating area as that
part  of  an  oil and gas lease unit area to which production  is
allocated  in the manner described in a unit agreement.   11  AAC
88.185(21).   Another agency regulation, 11 AAC 83.351,  provides
in pertinent part:

          The  participating area may include only  the
          land  reasonably  known to  be  underlain  by
          hydrocarbons   and   known   or    reasonably
          estimated    through   use   of   geological,
          geophysical,  or  engineering  data   to   be
          capable  of  producing  or  contributing   to
          production   of   hydrocarbons   in    paying
          quantities.   If any portion of  a  lease  is
          included in a participating area formed under
          a unit agreement, the entire leased land will
          be  committed to the unit and the lease  will
          not  be severed.  Under 11 AAC 83.371(a), the
          unit  operator  also  shall  submit  to   the
          commissioner  for  approval  of  a   proposed
          division  of interest or formula setting  out
          the percentage of production and costs to  be
          allocated to each lease or portion  of  lease
          within the participating area.  Upon approval
          by the commissioner, the area of productivity
          constitutes a participating area.
          
See  also  Exxon  Corp. v. State, 40 P.3d 786,  788  n.4  (Alaska
2001);  see  generally  note 4, above  (defining  unit  and  unit
agreement).

     10      In   the   context  of  Cook  Inlet  oil   and   gas
infrastructure, lighthouse mode means wells shut  in,  production
facilities   cleaned,  decommissioned  but   not   removed,   and
navigational   aids   intact.   Dept  of   Envtl.   Conservation,
Comprehensive Evaluation & Risk Assessment of Alaskas Oil  &  Gas
Infrastructure,  Proposed  Risk Assessment  Methodology,  Rev.  1
(2009)

     11    Under the unit agreement:

          Any  Working Interest Owner shall be entitled
          to drill wells on the unitized portion of its
          lease when the Unit Operator has declined  to
          drill  such wells, so long as such activities
          are  conducted  under an approved  permit  to
          drill  and  a plan approved under  Article  8
          [Plans   of  Exploration,  Development,   and
          Operations] of this Agreement.
          
          . . . .

          No  exploration, development,  or  production
          activities  may be commenced or conducted  on
          the  Unit Area except in accordance  with  an
          approved plan.
          
     12     A few days after writing this letter, Gottsteins  law
office received, as payment for legal services in another matter,
assignments  from  Donkel,  Bolt,  and  Kasper  totaling  a  1.5%
overriding  royalty  interest  in  ADL  369116.   For   ease   of
reference,  we  will refer to this interest holder as  Gottstein.
DO&G  was  not  notified of these assignments  until  June  2005;
Gottstein did not record his assignments until March 2006.

     13     The unit agreement provided that as the unit operator
Unocal  had  exclusive  control  over  unit  operations  and  was
required to notify other working interest holders of all  of  its
actions.   The unit agreement also provided that [a]ny  order  or
notice  relating  to this Agreement which is given  to  the  Unit
Operator  of record shall be deemed given to all Working Interest
Owners in the Unit Area.

     14     The AOGCC is an independent quasi-judicial agency  of
the state created by the Alaska Oil and Gas Conservation Act.  AS
31.05.005(a).   The  AOGCC, which has  authority  over  all  land
subject  to the states police power, regulates to prevent  waste,
insure   greater   recovery,  protect  correlative   rights   and
underground water, and further public health and safety.  See  AS
31.05.027;   AS   31.05.095;  AS  31.05.100;  AS  31.05.110;   AS
31.05.030.

     15    See note 11, above.

     16     Before  DO&G issued its decision, Donkel,  Bolt,  and
Kasper  assigned  their  working  interests  in  ADL  369116   to
Renaissance  Resources, Alaska, LLC.  The  assignments  were  not
approved until August 2, 2005, effective August 1, 2005.

     17    11 AAC 83.303 provides:

          (a)  The commissioner will approve a proposed
          unit  agreement for state oil and gas  leases
          if  he  makes  a  written  finding  that  the
          agreement   is  necessary  or  advisable   to
          protect  the public interest considering  the
          provisions  of  AS  38.05.180(p)   and   this
          section.  The  commissioner  will  approve  a
          proposed   unit  agreement  upon  a   written
          finding that it will
          
               (1)  promote conservation of all natural
          resources, including all or part of an oil or
          gas pool, field, or like area;
          
               (2)  promote the prevention of  economic
          and physical waste; and
          
               (3)  provide for the protection  of  all
          parties of interest, including the state.
          
          (b)  In  evaluating the above  criteria,  the
          commissioner will consider
          
               (1) the environmental costs and benefits
          of unitized exploration or development;
          
               (2)   the   geological  and  engineering
          characteristics of the potential  hydrocarbon
          accumulation   or  reservoir   proposed   for
          unitization;
          
               (3)  prior exploration activities in the
          proposed unit area;
          
               (4) the applicants plans for exploration
          or development of the unit area;
          
               (5)  the economic costs and benefits  to
          the state; and
          
               (6)    any   other   relevant   factors,
          including   measures  to   mitigate   impacts
          identified above, the commissioner determines
          necessary or advisable to protect the  public
          interest.
          
          (c)   The  commissioner  will  consider   the
          criteria in (a) and (b) of this section  when
          evaluating  each  requested authorization  or
          approval under 11 AAC 83.301 - 11 AAC 83.395,
          including
          
               (1) an approval of a unit agreement;
          
               (2)  an extension or amendment of a unit
          agreement;
          
               (3)  a  plan or amendment of a  plan  of
          exploration, development or operations;
          
               (4) a participating area; or
          
               (5) a proposed or revised production  or
          cost allocation formula.
          
     18    See note 12, above.

     19     Unocal was directed to continue its annual  plans  of
development for ADL 17595.

     20     11 AAC 02.050(a) provides that [t]he department will,
in  its discretion, hold a hearing when questions of fact must be
resolved.

     21    See note 17, above.

     22    An issue apparently not raised below, and not before us
in  this  appeal,  is  the  standing of  the  overriding  royalty
interest holders in ADL 369116 to request a lease extension or to
appeal  from  either the lease extension denial  or  termination.
See Ridge Oil Co. v. Guinn Invs., Inc., 148 S.W.3d 143, 155 (Tex.
2004)   (noting  that  an  overriding  royalty  interest   is   a
nonparticipating interest, which means that the royalty owner  is
wholly  dependent on the lessee to keep the lease alive); 38  Am.
Jur. 2d Gas & Oil  217 (2009) (An overriding royalty interest  is
subject  to  the terms of the lease upon which it is founded,  so
generally, when the lease terminates, either by its own terms  or
in  some  other  regular manner consistent with good  faith,  the
royalty itself comes to an end.); Blacks Law Dictionary 1356 (8th
ed.   2004)  (An  overriding-royalty  interest  ends   when   the
underlying  lease terminates.).  Because DNR implicitly  concedes
standing, we express no view on how the issue would be decided in
the  absence of such a concession.  See Allen v. Alaska Oil & Gas
Conservation Commn, 1 P.3d 699, 702 n.7 (Alaska 2000).

     23     Button  v. Haines Borough, 208 P.3d 194, 200  (Alaska
2009);  accord Handley v. State, Dept of Revenue, 838 P.2d  1231,
1233  (Alaska 1992) (citing Tesoro Alaska Petroleum Co. v.  Kenai
Pipe Line Co., 746 P.2d 896, 903 (Alaska 1987)).

     24    Handley, 838 P.2d at 1233.

     25    Id.; accord Bartley v. State, Dept of Admin., Teachers
Ret. Bd., 110 P.3d 1254, 1263 (Alaska 2005).

     26    Button, 208 P.3d at 200.

     27    Id.

     28     DNR  will,  in its discretion, hold  a  hearing  when
questions  of fact must be resolved.  11 AAC 02.050(a).   But  11
AAC  02.050(b)  qualifies subsection (a) by  providing  that  the
hearing  procedure  will be determined . . .  on  a  case-by-case
basis.

     29     Appeals  to the Commissioner must be in writing  and,
among  other  things,  specify:  (1) the decision  appealed;  (2)
bases  on  which  the decision is challenged; (3) material  facts
disputed  by  the appellants; (4) the requested remedy;  and  (5)
whether an oral hearing is requested.  11 AAC 02.030(a)(1),  (7)-
(10), (13).

     30    See 11 AAC 02.030(e) (allowing submission of additional
written materials, including evidence and legal argument, upon  a
request for reconsideration).

     31     Heitz v. State, Dept of Health & Soc. Serv., 215 P.3d
302, 305 (Alaska 2009) (quoting Bostic v. State, Dept of Revenue,
Child Support Enforcement Div., 968 P.2d 564, 568 (Alaska 1998)).

     32     See id. (When a party raises a due process claim,  we
first  must  determine  whether there  is  a  deprivation  of  an
individual   interest   of  sufficient  importance   to   warrant
constitutional protection. (quoting Bostic, 968 P.2d at 568)).

     33      Id.  at  308  n.30  (quoting  Haggblom  v.  City  of
Dillingham, 191 P.3d 991, 995 (Alaska 2008)).

     34    984 P.2d 1122 (Alaska 1999).

     35     Id.  at  1126 (quoting Estate of Miner v.  Commercial
Fisheries Entry Commn, 635 P.2d 827, 834 (Alaska 1981) (citations
omitted) (quoting Natl Labor Relations Bd. v. Bata Shoe Co.,  377
F.2d 821, 826 (4th Cir. 1967))).

     36    Id. at 1124.

     37    Id. at 1124-25.

     38    Id. at 1127.

     39    Id.

     40    Id. at 1126, 1128.

     41    See note 13, above.

     42    The operating agreement for the NMGS Unit provided that
if  the  working  interest  holders  in  the  unit  approved  the
abandonment  of  unit wells, objecting working  interest  holders
could  buy out the other working interest holders.  Donkel was  a
working  interest holder between December 2003 and  August  2005,
and  he and his assignee, Renaissance Resources, presumably could
have  taken  advantage of the buy-out provision of the  operating
agreement.

     43     Assuming the Wagner lease created a cloud on title to
ADL  369116, Donkel and Allen exaggerate the period  of  time  it
could  have  affected  drilling.  ADL 369116  was  reinstated  in
December  2002.  Unocal held the working interest in  ADL  369116
from December 2002 through December 2003, when the assignments to
Donkel,  Bolt,  and Kasper were approved.  No  one  asserts  that
Unocal  was dissuaded from drilling on ADL 369116 because of  the
Wagner  lease.  Any cloud on title the Wagner lease  created  was
extinguished in September 2004 when Wagners time expired  for  an
appeal  from  the  Commissioners  final  decision  approving  the
revocation  of  his  lease.  Thus the  relevant  time  period  is
December 2003 through September 2004.

     44    See note 17, above.

     45     Alaska R. App. P. 609(b)(1):  (In an appeal  from  an
administrative  agency, the superior court may in its  discretion
grant a trial de novo in whole or in part.).

     46    Id.

     47     S. Anchorage Concerned Coal., Inc. v. Municipality of
Anchorage  Bd. of Adjustment, 172 P.3d 774, 778-79 (Alaska  2007)
(quoting  Christensen  v. NCH Corp., 956 P.2d  468,  473  (Alaska
1998)).

     48    Id. at 778 (internal citations omitted).

     49    109 P.3d at 924 (noting that the proprietary issue was
raised by the appellant, but affirming the commissioners decision
without further comment); see also Conoco, Inc. v. State, Dept of
Natural  Res., No. S-4803, 1993 WL 13563632, at *2 (Alaska  1993)
([W]e have rejected the argument that DNRs involvement in oil and
gas  leasing was a proprietary function. (citing State,  Dept  of
Natural  Res.  v.  Arctic Slope Regl Corp.,  834  P.2d  134,  143
(Alaska 1991))).

     50     See  AT&T  Alascom v. Orchitt, 161  P.3d  1232,  1246
(Alaska 2007).

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