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You can search the entire site. or go to the recent opinions, or the chronological or subject indices. Alaskan Crude Corporation v. State, Alaska Oil and Gas Conservation Commission (8/30/2013) sp-6817

Alaskan Crude Corporation v. State, Alaska Oil and Gas Conservation Commission (8/30/2013) sp-6817

         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  



ALASKAN CRUDE CORPORATION                               )  

and JAMES W. WHITE,                                     )  

                                                        )    Supreme Court No. S-14148  

                          Appellants,                   )  

                                                        )    Superior Court No. 3AN-07-11471 CI  

         v.                                             )  

                                                        )    O P I N I O N  

STATE OF ALASKA, ALASKA OIL                             )  

AND GAS CONSERVATION                                    )  

                                           

COMMISSION,                                             )  

                                                        )    No. 6817 - August 30, 2013  

                          Appellee.                     )  

                                                        )  



                 Appeal from the Superior Court of the State of Alaska, Third  

                                                             

                 Judicial District, Anchorage, John Suddock, Judge.  



                 Appearances:   Heather   Gardner,   Shortell   Gardner   LLC,  

                 Anchorage, for Appellants.  Thomas A. Ballantine, Assistant  

                                                                  

                 Attorney  General,  Anchorage,  and  Michael  C.  Geraghty,  

                 Attorney General, Juneau, for Appellee.  



                 Before: Fabe, Chief Justice, Winfree, Stowers, Maassen, and  

                                                                                

                 Bolger, Justices.   



                 MAASSEN, Justice.  



I.       INTRODUCTION  



                 Alaskan Crude Corporation submitted an application to the Alaska Oil and  

                                                                                                         



Gas Conservation Commission to reopen the Burglin 33-1 well, a suspended well on the  



North Slope, to explore for oil and gas.  Arguing that it was highly unlikely that oil from  

                                                                              


----------------------- Page 2-----------------------

the well would rise to the surface unassisted, Alaskan Crude made a series of requests  

                              



to the Commission to be exempted from oil discharge response requirements or, in the  

                                      



alternative,  to  have  the  requirements  reduced.    The  Commission  made  successive  



reductions to the technical flow-rate assessments and the response planning standards  



that it recommended to the Alaska Department of Environmental Conservation for use  

                                                                       



in setting Alaskan Crude's discharge response requirements.  The Commission declined,  

                                                                     



however, to classify the Burglin 33-1 well as a gas facility, which would have exempted  



Alaskan Crude entirely from such requirements.  Alaskan Crude appealed to the superior  

                        



court, challenging the Commission's recommended response planning standards and its  



well  classification.    The  superior  court  affirmed.    Alaskan  Crude  appeals  from  the  



superior court's decision, including its award of attorney's fees to the Commission.  We  

                                                                                                                           



affirm.  



II.       FACTS AND PROCEEDINGS  



          A.        Initial Application And Approval To Reopen The Burglin 33-1 Well  



                    The Burglin 33-1 well, located on the North Slope, was drilled, tested, and  



then suspended in the 1980s. Alaskan Crude Corporation, a small operator, later initiated  

                                                                                                              



plans to reopen the well.  In January 2006 Alaskan Crude submitted a sundry approvals  

                                      



application to the Alaska Oil and Gas Conservation Commission (the Commission) to  

                                             



reopen  and  test  the  Burglin  33-1  well.    In  February  2006  Alaskan  Crude  filed  an  

                                                     



application with the Department of Natural Resources (DNR) for a unified lease area,  

                   



called the Arctic Fortitude Unit, that encompassed the Burglin 33-1 well.  Alaskan Crude  

                                                                                                           



stated  its  intent  to  reenter  the  Burglin  33-1  well  to  test  for  "hydrocarbon  bearing  



sandstones."   In its applications and other communications with the Commission and  

                      



DNR, Alaskan Crude indicated an interest in reentering geologic strata known as the  



                                                              -2-                                                       6817
  


----------------------- Page 3-----------------------

                                                                                                 

Ugnu and West Sak formations.  Both the sundry application and the Arctic Fortitude  



Unit application were approved.  



          B.       Oil Discharge Prevention Requirements  



                                                                                                     

                   Alaska Statute 46.04.030(b) provides that the operator of an oil exploration  



                                                                                                                      

facility must hold an approved oil discharge prevention and contingency plan.  The  



                                                                  1  

regulations governing such contingency plans                                    

                                                                    include 18 AAC 75.434, which lays out  



                                                                   

the oil discharge response requirements for oil exploration and production facilities.  The  



regulation sets a response planning standard (RPS), which is the amount of oil that an  



operator must be equipped to contain or control and clean up in the event of a discharge.2  



The  regulation's  stated  RPS  may  be  reduced  if  an  operator  demonstrates  to  the  



Commission and to the Alaska Department of Environmental Conservation (ADEC) that  



                                      3  

a reduction is appropriate.                                               

                                         ADEC is charged by regulation with deciding whether to  



reduce the RPS, but it may consult with the Commission in reaching its decision.4  



                                                                                                   

                   Alaska Statutes 46.04.050(c) and 31.05.030(l) exempt certain exploration  



                                                                                             

facilities from these oil discharge prevention requirements.  A well is not eligible for  



                                                                                                       5 

                                                                                          

exemption,  however,  unless  it  is  a  "natural  gas  exploration  facility,"   defined  as  "a  



          1        See  18 Alaska Administrative Code (AAC) 75.400 et seq. (2013).  



          2        An operator must be equipped to contain or control and clean up 16,500  



barrels within the first 72 hours. 18 AAC 75.434(a)-(b).  This is sometimes referred to  

                                                     

as the "default" RPS.  The regulatory standard also requires the capability to deal with  

                                                                                                             

"an  additional  5,500  barrels  for  each  of  12  days  beyond  72  hours."    18  AAC  

                                                                 

75.434(b)(2).  



          3         18 AAC 75.434(b)(2).  



          4         18 AAC 75.434(f)(2).  



          5        AS 46.04.050(c); AS 31.05.030(l).  



                                                            -3-                                                      6817
  


----------------------- Page 4-----------------------

platform, facility, or structure that . . . is used solely for the exploration for natural gas."6  

                                                                     



Another prerequisite for exemption is a determination by the Commission "that evidence  

                                                       



obtained through evaluation demonstrates with reasonable certainty that all of the wells  

                                                                                                         



at a natural gas facility will not penetrate a formation capable of flowing oil to the ground  

                                                                 



surface."7  



          C.        Alaskan Crude's Request For An RPS Reduction  



                                                                              

                    In April 2007 Alaskan Crude asked ADEC for an 85% reduction in the  



                                                                                

default RPS for the Burglin 33-1 well, asserting that the flow of oil from the well was so  



                                                                                                      

limited  that  it  could  not  reach  the  surface  without  mechanical  assistance.    ADEC  



consulted with the Commission.  On June 26, 2007, the Commission determined that the  



Ugnu and West Sak formations "are highly unlikely to produce liquid hydrocarbons to  

                                                                                                  



the surface in amounts greater than 825 barrels of oil per day [bopd]" and noted that this  

                                                                                                                         



was the maximum reduction to the RPS that could be allowed under ADEC regulations.  

                                                 



On July 2, 2007, ADEC adopted this RPS recommendation and reduced the default RPS  

                                                         



(16,500 barrels within 72 hours, or 5,500 bopd) by 85% to 825 bopd, as Alaskan Crude  



had requested.  



                    In its June 26 decision, the Commission also rejected Alaskan Crude's  



request that the Burglin 33-1 well be classified as a gas facility, "because there are signs  

                                                                                                 



of oil in the cores and the Ugnu and West Sak Formations are known to contain movable  

                                                                                        



oil elsewhere on the North Slope."  The Commission further determined, however, that  

                                                                                  



"in  accordance  with  AS  31.05.030(l)  .  .  .  it  has  been  demonstrated  with  reasonable  

                         



          6         AS 46.04.050(c).  



          7         Id.  



                                                                -4-                                                         6817  


----------------------- Page 5-----------------------

certainty that exploratory or development wells drilled in this area will not encounter  

               



liquid hydrocarbon bearing sands in the Ugnu or West Sak Formation[s]."  



          D.	       Alaskan Crude's Request For Reconsideration Of The June 26, 2007  

                    Decision  



                    Alaskan Crude asked the Commission to reconsider its determination that  



the Burglin 33-1 well could not be classified as a gas facility, arguing that it had only  

                                                                    



applied for a permit to drill and test a gas well and the RPS requirements therefore should  

                                                                        



not have been considered relevant.  The Commission granted reconsideration.  It sent  

                                                                                                                      



Alaskan Crude notice of a rehearing scheduled for September 6, 2007, published notice  



of the hearing, and requested comments from the public.  



                    ADEC submitted its own comments to the Commission in advance of the  



hearing.  It offered a revised interpretation of 18 AAC 75.430(c), which provides that "in  

                                                                               



no case will the department reduce the response planning standard below an amount  

                                                                          



equal to (1) 15 percent of the response planning standard applicable to . . . an exploration  

                                                                                                          



or production facility."  ADEC had previously interpreted this provision "to mean that  

                                                                                                            



the lowest possible RPS volume for an exploration facility is 15 percent of 5,500 bopd,  

                                                                                                              



or 825 bopd."  Now, however, the department interpreted the 15%  limitation as applying  

     



only to any additional reductions granted after the RPS was set under 18 AAC 75.434(b).  

                                                                                           



While this revised interpretation did not set a minimum RPS value, ADEC observed that  

                                                                



as a general matter an RPS of zero would not be appropriate, since "routine spills" or  

                                                                                                                  



other "emergency events, such as mechanical failures," could occur regardless of the  



likelihood  of  "a  catastrophic  well  event,"  and  an  operator  would  be  expected  to  be  



prepared for these other emergencies.  



                    Alaskan Crude did not appear for the scheduled hearing.  



                                                             -5-	                                                      6817
  


----------------------- Page 6-----------------------

         E.        Other Order 51  



                   On October 1, 2007, the Commission issued Other Order 51.  The Order  



confirmed the Commission's prior determination that the Burglin 33-1 well could not be  

                     



classified as a gas facility, and it withdrew the Commission's earlier conclusion, stated  

                                       



in its June 26, 2007 letter, that " 'it has been demonstrated with reasonable certain[t]y  



that  exploratory  or  development  wells  drilled  in  this  area  will  not  encounter  liquid  

                                                                                                  



hydrocarbon bearing sands in the Ugnu or West Sak Formation[s].' "  Assuming that  



Alaskan Crude was requesting, as an alternative to the designation of the Burglin 33-1  



well as a gas facility, a reconsideration of the RPS of 825 bopd, the Commission applied  

                                                                          



ADEC's  amended  interpretation  of  18  AAC  75.430(c)  and  further  reduced  its  RPS  



recommendation to 600 bopd for reentry of the Ugnu and West Sak formations.  



         F.	       Alaskan  Crude's  Request  For  Reconsideration  Of  Other  Order  51  

                   And Simultaneous Request For An Ugnu-Only RPS Recommendation  



                   Alaskan Crude asked the Commission to reconsider Other Order 51 and  



also asked for a new RPS assessment that would apply only to the Ugnu formation.  

                                                               



While acknowledging that its initial sundry application had indicated its intent to open  

                                                                                                                



the Burglin 33-1 well to a depth that included both the West Sak and Ugnu formations,  

                                                                                      



Alaskan Crude now informed the Commission that it intended to submit a revised sundry  

                                                                                                     



application that would implicate Ugnu only.  



                   On October 24, 2007, the Commission denied the request to reconsider  



Other Order 51 on grounds that Alaskan Crude had failed to identify any "ambiguities  



or errors in  the order."  The Commission did agree, however, to treat the request to  

                  



reconsider as an application for an Ugnu-only RPS recommendation; five days later the  

                                              



Commission  recommended  115  bopd  for  Alaskan  Crude's  Ugnu-only  proposal,  



                                                           -6-	                                                   6817
  


----------------------- Page 7-----------------------

                                                                                                                                         

notwithstanding the fact that the company had yet to submit its more limited sundry  



application.8  



             G.          Alaskan Crude's Appeals  



                         Alaskan  Crude  appealed  to  the  superior  court,  challenging  both  the  



Commission's well classification and its RPS recommendations. The superior court held  

                                                                                                                                                   



that the Commission has the authority to determine whether a well is a "natural gas  



exploration facility" and affirmed the Commission's determination that the Burglin 33-1  

                        



well  was  not.    The  court  also  held  that  Alaskan  Crude  failed  to  present  evidence  

                                                                         



"controverting  the  facially  sufficient  data  upon  which  the  [Commission]  relied"  in  



determining its RPS recommendations.  The court declined to address Alaskan Crude's  

                                                                                                                                      



constitutional argument - that the State had violated article VIII, section 1 of the Alaska  

                                                                                                                                                  



Constitution  by  failing  to  exempt  low-volume  oil  wells  from  discharge  prevention  



requirements9                                                                                 

                           - on grounds that Alaskan Crude had neither raised the issue below nor  



                                                    

created a factual record in support of it.  The superior court awarded attorney's fees to  



the Commission.  



                         Alaskan Crude appealed to this court, challenging the Commission's well  

                                                        



classification and RPS recommendations and the superior court's award of attorney's  



fees.  Alaskan Crude also argues that the Commission's decisions were arbitrary and  



capricious and failed to prevent waste.  



             8           The record does not disclose whether Alaskan Crude ever filed such an  



application.  



             9           Article VIII, section 1 of the Alaska Constitution provides: "It is the policy                                   



of the State to encourage the settlement of its land and the development of its resources   

by making them available for maximum use consistent with the public interest."  

                                                                                -7-                                                                       6817  


----------------------- Page 8-----------------------

III.      STANDARD OF REVIEW
  



                                                                                                          

                    In  an  administrative  appeal  where  the  superior  court  has  served  as  an  



intermediate  court  of  appeal,  "we  independently  review  the  merits  of  the  agency's  



                10                                                                                                         11 

                                                                                                               

decision."          We review questions of law not involving agency expertise de novo.                                         "In  



questions  of  law  involving  the  agency's  expertise,  a  rational  basis  standard  will  be  



                                                                                                                                  12  

                                                                                                        

applied and we will defer to the agency's determination so long as it is reasonable." 



We  review  the  agency's  factual  findings  using  the  substantial  evidence  standard.13  



                                                                                                  

"Substantial evidence is defined as such relevant evidence as a reasonable mind might  



                                                                                     14 

                                             

accept as adequate to support [the agency's] conclusion."                                "We determine only whether  



such evidence exists and do not choose between competing inferences or evaluate the  



strength of the evidence."15  



                    "When the superior court acts as an intermediate appellate court, it has  



                                                                                       16  

                                                                                           

broad discretion to award reasonable attorney's fees . . . ."                              An attorney's fees decision  



          10        Powercorp Alaska, LLC v. State, Alaska Indus. Dev. & Exp. Auth.                                  , 171 P.3d  



 159, 163 (Alaska 2007).  



          11        Alyeska Pipeline Serv. Co. v. DeShong , 77 P.3d 1227, 1231 (Alaska 2003)  

                                                                                                       

(citing  DeYonge  v.  NANA/Marriott ,  1  P.3d  90,  94  (Alaska  2000);  Tesoro  Alaska  

Petroleum Co. v. Kenai Pipe Line Co. , 746 P.2d 896, 903 (Alaska 1987)).   

                                                             



          12        Id . (citing Tesoro Alaska Petroleum Co., 746 P.2d at 903).  



          13        Id . (citing DeYonge , 1 P.3d at 94).  



          14  

                                

                    Lopez v. Adm'r, Pub. Emps.' Ret. Sys. , 20 P.3d 568, 570 (Alaska 2001)  

                                                  

(quoting  Hester  v.  State,  Pub.  Emps.'  Ret.  Bd. ,  817  P.2d  472,  476  (Alaska  1991))  

(internal quotation marks omitted).  



          15        Id.  



          16  

                                    

                    Miller v. Matanuska-Susitna Borough , 54 P.3d 285, 289 (Alaska 2002)
  

                                                                                                               (continued...)
  

                                                                -8-                                                         6817
  


----------------------- Page 9-----------------------

"should not be disturbed unless it is manifestly unreasonable. "17  This standard of review  

                                                                                     



applies  to  the  determination  of  the  prevailing  party  as  well  as  to  the  amount  of  the  



award.18  



IV.	     DISCUSSION  



         A.	       The Commission Did Not Exceed Its Authority Or Err Factually In  

                  Determining That The Burglin 33-1 Well Is Not A Gas Facility.  



                  In   Other   Order   51,   the   Commission   affirmed   its   June   26,   2007  



determination  that  the  Burglin  33-1  well  is  not  a  gas  facility  for  purposes  of  AS  



46.04.050(c) and AS 31.05.030(l), the statutes exempting certain natural gas facilities  

                                                   



from the oil-discharge prevention requirements.  In challenging this finding, Alaskan  



Crude first argues that it is up to the operator, not the Commission, to determine whether  

                                   



a reopened well is an oil or gas facility.  In the alternative, Alaskan Crude argues that the  

                                   



Commission erred when it declined to classify the Burglin 33-1 well as a gas facility.  



                   1.	      The Commission has the authority to classify the Burglin 33-1  

                                                       

                            well as an oil or gas facility.  



                  As the superior court noted, Other Order 51 implicitly concluded that the  

                                                           



Commission, not Alaskan Crude, had the authority to decide whether a reopened well  



is a gas well, an oil well, or both. But Alaskan Crude contends that the operator has  



         16(...continued)  



(citing Rosen v. State Bd. of Pub. Accountancy , 689 P.2d 478, 482 (Alaska 1984)).  



         17       Id. (quoting  Cook Inlet Pipeline v. Alaska Pub. Util. Comm'n, 836 P.2d  



343, 354 (Alaska 1992)) (internal quotation marks omitted).  



         18       K & K Recycling, Inc. v. Alaska Gold Co.                 , 80 P.3d 702, 721 (Alaska 2003)  



(citing Tobeluk v. Lind, 589 P.2d 873, 878 (Alaska 1979)).  

                                                          -9-                                                    6817  


----------------------- Page 10-----------------------

                                                                           19 

                                                                               

discretion to decide how to classify a reopened well.                          We review this question using our  

independent judgment. 20  



                    Alaskan Crude relies on 20 AAC 25.990(70) for the proposition that an  



                                                                                                        

operator   may          determine   how            to   reenter   a   suspended             well.       The      regulation  



provides:  " 'suspend' means to plug a well in accordance with 20 AAC 25.110 and to  



                                                                                         

reserve the option later to re-enter and (A) redrill the well; or (B) complete the well as  



                                           21  

                                                                                                         

an oil, gas, or service well."                 While the regulation does reserve to the operator the  



options of reentering and redrilling the well or reentering and completing the well, we  



do not read it as extending to the operator the exclusive authority to determine how the  



well is to be classified on reentry, particularly as such a reading could severely limit the  



ability of the regulatory bodies to perform their statutory functions.  



                    Neither AS 46.04.050(c) nor AS 31.05.030(l) explicitly grants the authority  



                                                                                                            22  

to determine a well's classification to the Commission or to the operator.                                        However,  



          19        The Commission contends that Alaskan Crude's argument on this point is  



so cursory that it should be deemed waived.  "Where a point is not given more than a  

cursory statement in the argument portion of a brief, the point will not be considered on  

                                                                                                             

appeal."  Wirum & Cash, Architects v. Cash, 837 P.2d 692, 713-14 (Alaska 1992) (citing  

                                      

State v. O'Neill Investigations, Inc., 609 P.2d 520, 528 (Alaska 1980); Fairview Dev.,  

                         

Inc. v. City of Fairbanks , 475 P.2d 35, 36 (Alaska 1970)). We do not find waiver, given  

                                                                                                      

that Alaskan Crude provided a legal theory in support of this argument and cited to a  

                     

regulatory provision.  



          20  

                           

                    See Alaska Pub. Utils. Comm'n v. Municipality of Anchorage, 902 P.2d  

                                                                                                              

783, 785 (Alaska 1995) (citing Tesoro Alaska Petroleum Co. v. Kenai Pipe Line Co., 746  

                                                                                    

P.2d 896, 903 (Alaska 1987)) (applying the substitution of judgment standard of review  

to the issue of whether the Alaska Public Utilities Commission has authority to order a  

refund, because it is a question of law not involving agency expertise).  



          21        20 AAC 25.990(70).  



          22  

                                                                  

                    AS 31.05.030(f) does provide that "[t]he commission may classify a well  

                                                                                                            (continued...)  

                                                             -10-                                                       6817  


----------------------- Page 11-----------------------

we have held that other administrative agencies have implied powers, relying on the  



                                                                                                     

premise that implied powers are sometimes necessary to the exercise of those powers that  



                                                      23  

                                                           In Glacier State Telephone Co. v. Alaska Public  

the legislature has expressly granted. 



Utilities Commission, for example, we held that the Alaska Public Utilities Commission's  



                                                                                                           

powers to set rates and make regulations necessarily included the power to determine the  



                                                                           24  

                                                                               In the instant case, AS 31.05.030(l)  

methodology for computing revenue requirements. 



                                                                                                              

and AS 46.04.050(c) set out certain explicit powers of the Commission, including the  



                                                     

power to determine whether a well at a natural gas exploration facility meets criteria that  



                                            

exempt it from oil discharge prevention requirements.  As in Glacier State, the implied  



                                                                         

power that the Commission asserts - the power to determine what constitutes a natural  



          22(...continued)  



or a specific portion of a well as an exploratory, development, service, or stratigraphic  

                                                      

test well and may classify a development well as an oil or gas well for purposes material  

              

to the interpretation or enforcement of this chapter."  Whether the Commission may  

classify an exploratory well as an oil or gas well is not specifically addressed in the same  

                                                                                

statute.  One could argue that the Commission therefore lacks such authority.  See State,  

                                                                                                    

Dep't  of  Revenue  v.  Deleon ,  103  P.3d  897,  900  (Alaska  2004)  ("The  principle  of  

               

expressio  unius  est  exclusio  alterius  directs  the  court  to  presume  that  a  statute  

                                                                                             

designating only certain powers excludes those not specifically designated . . . ." (citing  

                                                                                                                      

Croft v.  Pan Alaska Trucking, Inc., 820 P.2d 1064, 1066 (Alaska 1991))).   But  the  

                                                                                                                      

principle of exclusio unius est exclusio alterius does not apply if it would contravene the  

statute's  purposes. Ellingstad  v.  State,  Dep't  of  Natural  Res. ,  979  P.2d  1000,  1006  

(Alaska 1999) (citing Sonneman v. Hickel, 836 P.2d 936, 939 (Alaska 1992)).  



          23        Blanas v. Brower Co., 938 P.2d 1056, 1061-62 (Alaska 1997) (quoting  



                                                                                           

Greater  Anchorage  Area  Borough  v.  City  of  Anchorage,  504  P.2d  1027,  1033-34  

(Alaska  1972))  (holding  that  the  Alaska  Worker's  Compensation  Board's  express  

adjudicatory power implicitly and necessarily confers on it the "authority to set aside  

                                                                                                  

[a compromise and release] for fraud").  See also, e.g., Monzulla v. Voorhees Concrete  

                                                                                                 

Cutting, 254 P.3d 341, 345-47 (Alaska 2011); Wausau Ins. Cos. v. Van Biene, 847 P.2d  

584, 586-88 (Alaska 1993).  



          24        724 P.2d 1187, 1189-90 (Alaska 1986).  



                                                             -11-                                                        6817  


----------------------- Page 12-----------------------

       

gas  exploration facility in the first instance - is necessary to the furtherance of its  



express powers.  



                   2.	      The Commission did not err in determining that the Burglin  

                            33-1 well is not a gas facility.  



                   We next consider whether the Commission erred when in the exercise of  



                                                                             

its authority it determined that the Burglin 33-1 well is not a gas facility.  Alaskan Crude  



                                       

focuses its argument on the question of whether movable oil in the underlying formations  



could flow unassisted to the surface. Alaska Statute 46.04.050(c) provides that "[f]or  



                                                           

purposes of [the exemption], 'natural gas exploration facility' means a platform, facility,  



or structure that, except for storage of refined petroleum products in a quantity that does  



not  exceed  10,000  barrels,  is  used  solely  for  the  exploration  for  natural  gas."    The  



determinative question is whether an operator will be using the facility to explore for oil  



as well as for gas; it is immaterial whether the oil is capable of flowing unassisted or can  



only be brought to the surface mechanically.  During 2006 and the first part of 2007,  



                                                                                                            

Alaskan Crude repeatedly represented to the Commission and DNR that it planned to  



                                                                                     

explore for oil.  Even now, it asserts on appeal that when it decided to explore only for  



gas,  it  did  so  "knowing  [it  was]  entitled  to  keep  any  oil  [it]  recover[ed]."    There  is  



substantial evidence in this history to support the Commission's conclusion that the  



Burglin 33-1 well is not a gas facility, as statutorily defined, because it was not to be  



used solely for gas exploration.  



         B.        The Commission Did Not Err In Its RPS Recommendations.  



                                                                                                            

                   Alaskan Crude also contends that the Commission's setting of a response  



                                                                                      

planning standard higher than zero bopd is in derogation of the finding in its June 26,  



2007  letter  that  prior  testing  had  not  found  oil  capable  of  flowing  unassisted  to  the  



                                                          -12-	                                                   6817
  


----------------------- Page 13-----------------------

                                                      

surface.  Alaskan Crude argues that there was no basis for the Commission's successive  



                                                                         25  

RPS recommendations of 600 and then 115 bopd.                                 



                    We conclude that the Commission did not err.   The Commission knew  



                

from past experience that parts of the West Sak formation had the capability of flowing  



                                                                                                        

oil to the surface unassisted. The Commission's analysis of testing data from the Burglin  



                                                                                                          

33-1 well from the 1980s, "when combined with a reasonable set of  rock and fluid  



properties from the Ugnu formation elsewhere on the North Slope," indicated that the  



                                                                                                            

Ugnu had the same capability.  And it was also relevant that only a small portion of the  



                                                                                                    

Ugnu and West Sak formations had been tested for such capability; we cannot fault the  

Commission for caution.26  



                    In Other Order 51, the Commission explained that its RPS recommendation  



                                       

of 600 bopd for a project implicating the Ugnu and West Sak formations was based on  



a software application analysis that incorporated average properties drawn from prior  



                                                     

testing.  To arrive at its 115 bopd flow rate analysis for the Ugnu-only proposal, the  



          25        The Commission argues that this issue is not properly before the court,  



since  it  is  ADEC,  a  non-party,  that  makes  the  final  determination  of  an  RPS;  the  

Commission only makes recommendations.  What the Commission provides, however,  

                                                                  

is not just a recommendation; it is also a technical assessment of potential flow rate,  

which should be subject to appellate review.  The Commission also argues that this issue  

should be deemed waived due to inadequate briefing.  We do not consider the issue to  

                                                                   

have been waived.  



          26        Alaskan Crude also argues that the Commission and the superior court  



failed to resolve the question of "whether the mud logs and Halliburton tests show that  

                                                

the  Ugnu  formation  at  the  interval  Appellants  sought  to  drill  in  the  Application  for  

Sundry Approvals was not capable of flowing oil to the surface." This question was  

                                                                                                     

resolved.  Both the Commission and the superior court found that there was insufficient  

                                                                                 

evidence to prove that the well would not flow to the surface, which was a sufficient  

                                    

justification for setting a non-zero RPS.  

                                                             -13-                                                      6817  


----------------------- Page 14-----------------------

Commission  also  used  an  analysis  of  drill  stem  testing.    The  Commission's  RPS  

recommendations were supported by substantial evidence.27  



          C.	       Alaskan  Crude  Waived  Its  Arguments  That  The  Commission's  

                    Decisions Were Arbitrary And Capricious And Violated The Alaska  

                    Constitution, Article VIII, Section 1.  



                                                                                       

                    Alaskan Crude argues that the Commission's RPS recommendations were  



                                         

arbitrary and capricious.  It also argues that the Commission, through the decisions that  



                                                                                                               

are before us on appeal, prevented exploration in violation of article VIII, section 1 of  



                                   28  

the Alaska Constitution.                These claims are waived, since Alaskan Crude failed to raise  



                  29  

                                                          

them below.           On the merits, Alaskan Crude's arguments are unpersuasive.  Each shift  



in RPS recommendations was in response to - and largely accommodated - new  



          27        Alaskan Crude presents other evidence indicating that the formations are  



not capable of flowing oil to the surface.  It points to DNR's assessment, in its approval  

                                                              

of the Arctic Fortitude Unit, that "[n]one of the [prior] tests yielded hydrocarbons that  

would flow to the surface,"  and to the opinion of one of its consultants that there was a  

                                                                                    

low risk of uncontrolled hydrocarbon flow.  Under the substantial evidence standard,  

however, we "do not choose between competing inferences."  Lopez v. Adm'r, Pub.  

Emps.' Ret. Sys. , 20 P.3d 568, 570 (Alaska 2001) (citing Handley v. State, Dep't of  

Revenue , 838 P.2d 1231, 1233 (Alaska 1992)).  "[T]he existence of substantial evidence  

                                                                                                   

to support [appellant's] position does not in itself permit us to reverse the department's  

                                                                                                        

decision." Anderson v. State, Dep't of Revenue, 26 P.3d 1106, 1111 (Alaska 2001).  



          28        In its initial statement of points on appeal, Alaskan Crude also raised as an  



                                                 

issue whether the Commission's actions "violated [Alaskan Crude's] right to procedural  

                                                                                                                    

and substantive due process under the United States and Alaska Constitutions."  We find  

                                                                 

this issue waived, since Alaskan Crude did not discuss it in the argument section of its  

                                                                               

brief.   See Wirum & Cash, Architects v. Cash, 837 P.2d 692, 713-14 (Alaska 1992)  

            

(citing State v. O'Neill Investigations, Inc., 609 P.2d 520, 528 (Alaska 1980); Fairview  

Dev., Inc. v. City of Fairbanks , 475 P.2d 35, 36 (Alaska 1970)).  



          29        "As a general rule, an issue that was not raised in the trial court will not be  

                                                                          

considered on appeal."  Pierce v. Pierce , 949 P.2d 498, 500 (Alaska 1997).   

                                                             -14-                                                      6817  


----------------------- Page 15-----------------------

requests from Alaskan Crude.  And as discussed above, the Commission's flow rate  



assessments find adequate support in the record.  



                                                                                                             

          D.	       The Superior Court Did Not Err In Awarding Attorney's Fees To The  

                    Commission.  



                                                                                                        

                    The  Commission  initially  claimed  that  it  had  incurred  $439,849.89  in  



                                                                                        

attorney's fees, but an amended motion reduced this amount to $84,322.50 and asked for  



                                                   

an award of 20%, or $16,864.50.  The superior court awarded $10,000.  



                    Alaskan Crude first contests the superior court's determination that the  



                                                                                                   

Commission was the prevailing party.  Alaskan Crude argues that it prevailed because  



                                                                                                                  

"[a]t the time of the decision, the state had recognized the lowest RPS standard as at least  



theoretically zero barrels, as Appellant had requested."  



                               

                    "[T]he prevailing party to a suit is the one who successfully prosecutes the  



action or successfully defends against it, prevailing on the main issue, even though not  



                     

to the extent of the original contention.  He is the one in whose favor the decision or  



                                                                    30  

                                                                                                          

verdict is rendered and the judgment entered."                           In the superior court, Alaskan Crude  



challenged the Commission's RPS recommendations and classification of the Burglin 33- 



1 well and raised a constitutional challenge to the relevant statutory framework.  The  



                                                                                               

superior court upheld the Commission's RPS recommendations and well classification  



                                                                          

and declined to reach the constitutional argument.  Alaskan Crude clearly did not prevail  



on any of the main issues in the case.   



                                                                                         

                    We also find unpersuasive, for several reasons, Alaskan Crude's argument  



                                                                                                

that it prevailed because during the course of agency proceedings ADEC recognized for  



the first time that an RPS could theoretically be set at zero.  First, ADEC explained that  



it would be unrealistic in practice to set an RPS at zero, so the change in the agency's  



          30        Carr-Gottstein Props. v. State, 899 P.2d 136, 148 (quoting Tobeluk v. Lind,  



589 P.2d 873, 876 (Alaska 1979)) (internal quotation marks omitted).  

                                                            -15-                                                       6817  


----------------------- Page 16-----------------------

regulatory interpretation is not that significant.  And second, even with the benefit of  



                                                                                                     

ADEC's changed interpretation, Alaskan Crude did not achieve its desired outcome on  



the RPS issue, as evidenced by this appeal.  



                    Alaskan Crude also argues that the superior court's fees award was arbitrary  



and lacked explanation.  When a superior court awards attorney's fees while acting as  



                                                                                                                   

a court of appeal from the decision of an administrative agency, "ordinarily the award  



                                                                                        

'should only partially compensate the prevailing party . . . .' " for attorney's fees and be  



                                                                31  

limited to attorney's fees incurred in court.                       When awarding fees in an administrative  



appeal, "[t]he superior court need not explain its basis for awarding fees; it must only  



                         32  

explain denials."            



                                               

                    Alaskan Crude's argument that the superior court erred by awarding fees  



                                                                                              

"without substantial explanation" is thus without merit, given that the court ordinarily  



need not explain its awards at all.  Furthermore, the superior court did provide some  



                                                            

explanation for the award in this case: "The state expended enormous unfruitful time  



                                                                                 

prior to the briefing in chief.  The court estimates the appeal, which was fact-intensive  



                                             

but not particularly complex, could reasonably have been managed for $50,000, and so  



                                       

awards 20%."  The court exercised its discretion in critically analyzing the time needed  

                                                                              33  The superior court only partially  

for the appeal and constructing its award accordingly. 



          31        Kenai Peninsula Borough v. Cook Inlet Region, Inc. , 807 P.2d 487, 501  



(Alaska 1991) (citing Alaska R. App. P. 508(b), (c), (e); McMillan v. Anchorage Cmty.  

Hosp. , 646 P.2d 857, 867 (Alaska 1982); State v. Smith, 593 P.2d 625, 630-31 (Alaska  

                                                                                     

 1979); Kodiak W. Alaska Airlines, Inc. v. Bob Harris Flying Serv., Inc. , 592 P.2d 1200,  

                                                               

 1204-05 (Alaska 1979)).  



          32  

                                                                                                               

                    N. Slope Borough v. Barraza , 906 P.2d 1377, 1382 (Alaska 1995) (citing  

Rosen v. State Bd. of Pub. Accountancy , 689 P.2d 478, 480 (Alaska 1984)).  



          33  

                                                                                         

                    See Stosh's I/M v. Fairbanks N. Star Borough, 12 P.3d 1180, 1186 (Alaska  

                                                       

2000) (concluding that the superior court acted within its discretion where "it properly  

                                                                                                             (continued...)  

                                                             -16-                                                        6817  


----------------------- Page 17-----------------------

compensated  the  Commission,  and  the  billing  report  that  the  court  considered  was  



                                               

restricted  to  the  superior  court  appeal.    The  superior  court's  award  of  $10,000  in  

attorney's fees was not manifestly unreasonable and is therefore affirmed.34  



V.       CONCLUSION  



                   We AFFIRM the superior court's decision upholding the Commission's  



rulings with regard to well classification and RPS recommendations and AFFIRM the  



superior court's award of attorney's fees.  



         33(...continued)  



considered the number of hours spent by FNSB, reducing the award because the number  

of hours FNSB claimed to have spent on its case was disproportionate to its value").  



         34        Alaskan Crude also argues that there should have been a hearing on the first     



motion for attorney's fees so that it could cross-examine the attorneys who filed the  

Commission's affidavits, and that this court should consider whether the Commission's  

                                                               

initial fees motion "present[ed] a pattern of unfair treatment of Appellant."  Alaskan  

Crude offers no substantive support for these arguments, and we decline to consider them  

                                                                

other than to note that ordinarily there is no right to a hearing on the issue of attorney's  

fees.  See Nat'l Bank of Alaska v. J. B. L. & K. of Alaska, Inc., 546 P.2d 579, 591 (Alaska  

1976) (citing Urban Dev. Co. v. Dekreon, 526 P.2d 325, 329 (Alaska 1974)).  See also  

Wirum & Cash, Architects v. Cash, 837 P.2d 692, 713-14 (Alaska 1992) ("Where a point  

                       

is not given more than a cursory statement in the argument portion of a brief, the point  

                                                                                                               

will not be considered on appeal.") (quoting State v. O'Neill Investigations, Inc., 609  

P.2d 520, 528 (Alaska 1980); Fairview Dev., Inc. v. City of Fairbanks , 475 P.2d 35, 36  

                                                                           

(Alaska 1970)).  



                                                        -17-                                                          6817  

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