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You can search the entire site. or go to the recent opinions, or the chronological or subject indices. Denali Citizens Council v. State, Dept. of Natural Resources (2/14/2014) sp-6865

Denali Citizens Council v. State, Dept. of Natural Resources (2/14/2014) sp-6865

        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, email  

                                                                             

        corrections@appellate.courts.state.ak.us.  



                 THE SUPREME COURT OF THE STATE OF ALASKA  



DENALI CITIZENS COUNCIL,                         )  

                                                 )        Supreme Court No. S-14896  

                         Appellant,              )  

                                                 )        Superior Court No. 3AN-10-12552 CI  

        v.                                       )  

                                                 )        O P I N I O N  

STATE OF ALASKA,                                 )  

DEPARTMENT OF NATURAL                            )  

RESOURCES, and USIBELLI COAL  )  

MINE, INC.,                                      )  

                                                 )       No. 6865 - February 14, 2014  

                         Appellees.              )  

                                                 )  



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

                Judicial District, Anchorage, Andrew Guidi, Judge.  



                Appearances:    Peter  Van  Tuyn  and  Karen  E.  Schmidt,  

                Bessenyey & Van Tuyn, L.L.C., Anchorage, for Appellant.  

                Rebecca Kruse, Assistant Attorney General, Anchorage, and  

                Michael C. Geraghty, Attorney General, Juneau, for Appellee  

                Department of Natural Resources.  David J. Mayberry and  

                Kyle W. Parker, Crowell & Moring L.L.P., Anchorage, for  

                Appellee Usibelli Coal Mine, Inc.  



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

                                                                           

                Bolger, Justices.  



                BOLGER, Justice.  


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

I.       INTRODUCTION  



                                                                                                 

                  This  is  an  administrative  appeal  from  a  decision  by  the  Department  of  



Natural Resources (DNR) to grant Usibelli Coal Mine (Usibelli) a gas exploration license  



in the Healy Basin (the Healy license).   Denali Citizens Council (Denali Citizens), a  



community-based public interest group located in the Denali Borough, challenges DNR's  



                                                 

finding that issuing the license is in the best interests of the state on two grounds:  first,  



               

that DNR failed to take a "hard look" at the economic feasibility of excluding certain  



                                                                                               

residential areas and wildlife habitat from the license; and second, that DNR's treatment  



of  environmental  mitigation  measures  in  the  best  interest  finding  was  arbitrary  and  



capricious.  



                  We affirm the superior court's order upholding DNR's decision to issue the  



                                                          

gas exploration license to Usibelli because we conclude that DNR did not act arbitrarily  



in developing and publishing its best interest finding.  



II.      FACTS AND PROCEEDINGS  



         A.       Statutory Background  



                  Alaska Statute 38.05.132 authorizes the Commissioner of the Department  



                                                             

of Natural Resources (the commissioner) to issue "exploration licenses" to individuals  

                                                                                 1  Such a license gives the  

or corporations seeking to discover oil or gas on state land. 



holder the exclusive right to explore the land described in the license for oil or gas  

deposits for up to ten years,2  as well as an option to convert the exploration license into  

                                                                                      

a lease if the licensee satisfies certain requirements.3  



         1        AS 38.05.132(a).  



         2        AS 38.05.132(b)(1).  



         3        AS 38.05.132(b)(2).  



                                                        -2-                                                  6865 

                                                                                                                6865  


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

                                                                                                            

                    In considering a proposal for an exploration license, the Director of the  



                                      

Division of Oil and Gas (the director) is required to make a written finding that issuing  



                                                                             

the exploration license will be in the best interests of the state (a best interest finding or  

        4 Prior to publishing a final best interest finding (final finding or final BIF) and  

BIF).                                                      



approving a license proposal, the director must make a preliminary best interest finding  

                                                                



(preliminary  finding  or  preliminary  BIF)  available  to  the  public  and  provide  an  



                                                 5  

                                                    The final written finding, issued after the close of the  

opportunity for public comment.                                                                              



comment period, must contain a summary of public comments received by DNR and the  

                                                                                              

director's responses to those comments.6  



                    The written finding must set out "the basis for the director's preliminary or  

                                                                                         

final finding . . . that, on balance, leasing the area would be in the state's best interest."7  



                                                                        

At a minimum, the director must "consider and discuss" two categories of "facts":  first,  



                                                       

facts that are "material to issues that were raised during" the public comment period and  



                                                           

"within  the  scope"  of  the  finding,  as  determined  by  the  director;  and,  second,  facts  



                                                                                                                     

material to ten specified matters, including "the reasonably foreseeable fiscal effects of  



          4         AS 38.05.133(f). Although the statute assigns this responsibility to the  



commissioner, the commissioner delegated this duty to the director with respect to the  

                                                                                           

Healy license.  



          5         AS 38.05.035(e)(5).  



          6         AS 38.05.035(e)(7).  



          7         AS 38.05.035(g)(2). The legislature has determined that it is "in the best  

                                                                                  

interests of the state . . . to encourage an assessment of its oil and gas resources" so as to  

                                                                                       

"minimize          the    adverse        impact       of    exploration,         development,           production,          and  

transportation activity";  and "to offer acreage for oil and gas leases or for gas only  

                                       

leases." AS 38.05.180(a)(2).  



                                                                3                                                         6865
  


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

       

the  lease  sale  and  the  subsequent  activity"  and  "lease  stipulations  and  mitigation  



                 8  

measures."   



                                                                                                    

                    Any person who participated in the public comment process by submitting  



                                                                                          

a  written  comment and  who  is  "aggrieved"  by  the  final BIF  may  file  a  request  for  



          8	        AS 38.05.035(g)(1). The director must also consider and discuss  



                          

                    (i)	      property descriptions and locations;  



                           

                    (ii)	     the petroleum potential of the sale area, in general terms;  



                    (iii)	     fish and wildlife species and their habitats in the area;  



                                                                                                  

                    (iv)	     the current and projected uses in the area, including  

                              uses and value of fish and wildlife;  



                                                                                        

                    (v)	      the governmental powers to regulate the exploration,  

                                                                                                       

                               development, production, and transportation of oil and  

                               gas or of gas only;  



                                                                                                         

                    (vi)	     the reasonably foreseeable cumulative effects of exploration,  

                               development, production, and transportation for oil and gas  

                               or  for  gas  only  on  the  sale  area,  including  effects  on  

                                                                                      

                               subsistence uses, fish and wildlife habitat and populations  

                               and their uses, and historic and cultural resources;  



                               . . . .  



                                                                   

                    (viii)	  the method or methods most likely to be used to transport oil  

                               or   gas   from   the   lease   sale   area,   and   the   advantages,  

                               disadvantages, and relative risks of each; [and]  



                               . . . .  



                                                                                                        

                    (x)	      the       reasonably           foreseeable            effects       of exploration,  

                               development,  production,  and  transportation  involving  oil  

                               and gas or gas only on municipalities and communities within  

                                                                                       

                               or adjacent to the lease sale area . . . .  



          AS 38.05.035(g)(1)(B).  



                                                                 4	                                                         6865  


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

                                                                                       9  

reconsideration  of  the  finding  with  the  commissioner.     An  adverse  decision  on  



                                                                                            10  

                                                                                                Points on appeal in the  

reconsideration may then be appealed to the superior court. 



superior  court  are  limited  to  those  presented  to  the  commissioner  in  the  request  for  



                         11  

                                                                                       

reconsideration.             The party seeking judicial review of a best interest finding has the  

burden of proving that the finding is invalid.12  



          B.        Facts  



                                                                                                                

                    Usibelli submitted a gas-only exploration license proposal to DNR in April  



                                

2004.  The proposal covered 208,630 acres in the Healy area, including land west of the  



Nenana River and adjacent to Denali National Park.  



                                                               

                    In  November  2004,  DNR  provided  notice  of  its  intent  to  evaluate  the  



                                           

proposal and sought public comment in January 2005.  Denali Citizens, a  "non-profit  



citizens  group  .  .  .  with  a  mission  of  supporting  sound  planning  and  sustainable  



                          

development in  the Denali Borough," responded.  It noted that the license included  



                                                                                  13  

                                                                                                         

residential areas and the wildlife-rich Wolf Townships                               area west of the Nenana River,  



                                                                                    

and asked DNR to consider excluding some of these areas from the license.  Denali  



                                                     

Citizens also requested that DNR address noise mitigation and facility siting in its best  



interest finding.  



                    In  August  2005,  DNR  issued  a  "Preliminary  Best  Interest  Finding"  



concluding that issuing the Healy license would be in the best interests of the state.  The  



          9         AS 38.05.035(i). 
 



          10        AS 38.05.035(l). 
 



          11        Id.
  



          12        AS 38.05.035(m).
  



          13        The "Wolf Townships" are located near the northeast corner   of Denali
  



National Park and are surrounded by park lands.  The Denali Caribou Herd uses the Wolf     

Townships as an overwintering ground.  

                                                                 5                                                             6865  


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

preliminary finding addressed the reasonably foreseeable effects of the proposed license,   



including statewide and local fiscal effects and cumulative effects on the area's fish and       

            14   It also described proposed measures "to mitigate the potential adverse social  

wildlife.           



and  environmental  effects  of  specific  license  related  activities."    These  mitigation  



                                                                                  

measures included specific standards addressing noise, such as a noise monitoring plan  



                                                                         

requirement and maximum ambient noise limits, as well as restrictions on the siting of  



                                                  

exploration equipment, such as a minimum setback requirement.  Usibelli would also be  



required to obtain the consent of every landowner in a residential subdivision before  



constructing  drill  pads  or  compressor  stations  on  any  plot  within  that  subdivision.  



                   However, the director would have discretion to grant exceptions to these  



mitigation measures  



                                                                            

                   upon  a  showing  by  the  licensee  that  compliance  with  the  

                                                                                           

                   mitigation  measures  is  not  feasible  or  prudent,  or  that  the  

                   licensee will undertake an equal or better alternative to satisfy  

                   the intent of the mitigation measure.  



The  preliminary  finding  defines  "[f]easible  and  prudent"  as  "consistent  with  sound  



engineering  practice  and  not  causing  environmental,  social,  or  economic  costs  that  



outweigh the public benefit to be derived from compliance with the standard."  



                                                                                                           

                   Upon issuing the preliminary finding, DNR provided public notice, sought  



                                                                                            

public comment, and conducted two public meetings during the comment period.  Denali  



Citizens submitted comments in response to the preliminary finding, asserting that the  



                                                                                                       

finding failed to address its concerns about the scope of the proposed license area and  



                            

that the proposed mitigation measures were inadequate.  It again requested that DNR  



exclude sensitive areas west of the Nenana River from the license.  



          14       See  AS 38.05.035(g)(1)(B) (listing matters that must be addressed in a  



preliminary finding).  

                                                              6                                                           6865  


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

                                                                                                     

                   In June 2010, DNR issued a final best interest finding, concluding that it  



                                                              

was in the state's best interests to issue the exploration license.  The final finding did not  



                                       

remove any acreage from the license proposal.  In response to Denali Citizens' request  



that areas west of the Nenana River be excluded from the license, DNR wrote:  



                                                           

                   Removing the area west of the Nenana River from the license  

                    area  may  make  the  project  economically  unfeasible.    The  

                   imposition  of  mitigation  measures  to  avoid,  minimize,  or  

                   mitigate potential impacts is preferable to removing a large  

                    acreage  from  the  license  area.    As  specific  projects  are  

                   proposed, additional mitigation measures may be imposed.  

                                    

                    Given these measures, license advisories, and existing laws  

                                                      

                    and regulations, removing the area west of the Nenana River  

                                                                                   

                    from the license area is unnecessary.  



With respect to specific concerns regarding the Wolf Townships, DNR noted that the  



Wolf Townships are not part of Denali National Park and that mitigation measures would  



provide adequate protection for wildlife in the area.  



                   The  final  finding  also  modified  several  mitigation  measures.    DNR  



substantially   revised   the   noise   standards,   removing   the   noise   monitoring   plan  



requirement and the maximum ambient noise limits prescribed in the preliminary finding.  



               

The final BIF provided that "[m]easures to be used to mitigate potential noise impacts  



                         

associated with facilities and compressor stations will be considered on a site-specific  



                                                                       

basis."    DNR  also  eliminated  the  requirement  that  Usibelli  obtain  consent  from  all  



             

surface property owners within a residential subdivision before constructing any drill  



pads or compressor stations in the subdivision.  The setback requirements remained  



                        15 

                                                               

largely the same.           Finally, DNR modified the blanket exception to mitigation measures:  



          15       The preliminary finding required setbacks from residential structures of at  

                                                        

least 500 feet for drill pads and at least 1,500 feet for compressor stations.  The final  

finding  expanded  the  application  of  these  setback  requirements  to  "community  or  

institutional building[s]."  

                                                              7                                                           6865  


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

                                                                                                         

the final finding allowed for exceptions to mitigation measures "upon a showing by the  



                                                                                       

licensee that compliance with the mitigation measure is not practicable."  The final BIF  



                                                                                         

defines "[p]racticable" as "feasible in light of overall project purposes after considering  



cost, existing technology, and logistics of compliance with the mitigation measures."  



                   Denali Citizens filed a request for reconsideration of the final BIF with the  



commissioner.  The commissioner granted the request and affirmed.  With respect to  



                                                                     

Denali Citizens' objection to the decision not to exclude the area west of the Nenana  



River from the license, the commissioner determined that mitigation measures adequately  



addressed  concerns  about  facility  siting,  the  protection  of  wildlife  and  habitat,  and  



                                                                                                     

conflicts with recreational activities.  The commissioner also noted, in response to Denali  



Citizens' observation that the Wolf Townships had been classified as widlife habitat and  



                                                                                              16 

                                                                                                 that the Plan allows  

public recreation land in the Tanana Basin Area Plan (the Plan), 



oil and gas leasing throughout the license area.  



                                                                                                                  

                   With respect to Denali Citizens' claim that mitigation measures had been  



weakened or eliminated in the final finding, the commissioner wrote that  



                                                             

                   The intent of changes to the mitigation measures concerning  

                             

                   noise and buffers around residential areas was not to weaken  

                                                                         

                   protections, but to ensure flexibility while not unnecessarily  

                                                                         

                   restricting the licensee's activities.  Specifically disallowing  

                    drill  pads  and  compressor  stations  in  subdivisions  and  

                    stipulating  specific  noise  thresholds  may  be  unnecessarily  

                   restrictive,       especially        when       lots     are    unoccupied           or  



          16       The   Tanana   Area   Basin    Plan,   adopted   pursuant   to   AS   38.04.065,  



"determines  major  land  uses  on  state  lands  within  the  planning  area,  describes  

management intent, and sets management guidelines for various resources" in the Tanana  

Basin       Planning        Area.       See      Tanana        Basin       Area       Plan,      1-5,     available        at  

                                                                         

http://dnr.alaska.gov/mlw/planning/areaplans/tanana/pdf/ch_1.pdf.  The town of Healy  

                                                                                                                   

and other lands covered by the proposed exploration license are included in the Planning  

                                                                                            

Area.  See id.  at 1-3 to 1-4.   The Wolf Townships are included in Subunit  4E1,  the  

                                                                                                     

Stampede Trail Management Unit.  

                                                              8                                                           6865  


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

                                                                                   

                  undeveloped, perhaps for long periods of time.  Requiring the  

                  consent of all property owners in a subdivision could result  

                  in drill pads and compressor stations not being allowed in  

                  subdivisions at all.  



The commissioner also asserted that the mitigation measures in the final finding were  



"stronger, more protective, and more detailed than mitigation measures for most other  



[state gas leases or licenses]."  



                  Denali Citizens appealed DNR's decision to the superior court, and the  



                                                                                          

court affirmed.  The court concluded that DNR had a reasonable basis to grant Usibelli  



                                 

the exploration license without reducing its size because:  (1) the license area was within  

the  parameters  established  by  statute;17  (2)  the  license  area  was  consistent  with  the  



                                                                      

exploration licensing statute's purpose, that is, to encourage exploration in areas with  



low or unknown potential; and (3) given this purpose, it was reasonable for DNR to  



conclude that a larger license area subject to mitigation measures was more consistent  



                                                                               18  

                                                                                   With respect to mitigation  

with the state's best interests than a smaller license area. 



                                                  

measures, the court held that it was premature to consider the adequacy of the measures  



imposed  in  the  final  finding.    Alternatively,  the  court  concluded  that  the  proposed  



mitigation measures were not arbitrary.  This appeal followed.  



         17       AS  38.05.132(c)(2)  (providing  that  exploration  license  area  must  be  



between 10,000 and 500,000 acres and "must be reasonably compact and contiguous").  



         18       See  AS  38.05.180(a)(2)  (It  is  "in  the  best  interests   of   the   state  .  .  .  to  



encourage an assessment of its oil and gas resources" so as to "minimize the adverse  

impact of exploration, development, production, and transportation activity"; and "to  

offer acreage for oil and gas leases or for gas only leases.").  

                                                           9                                                       6865  


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

III.      STANDARD OF REVIEW 
 



                    In an administrative appeal, we "independently review the merits of the  



                                                     19  

                                                                                                              

underlying administrative decision."                     When an agency decision, such as a best interests  



                            

finding,  involves  "administrative  expertise  as  to  either  complex  subject  matter  or  



                                                                                 

fundamental policy formulations," the reviewing court need only determine whether the  



                                                   20  

decision had a "reasonable basis."                     Under this standard, the BIF will survive judicial  



                                                                                                 21  

                                                                                                     Although this is a  

review so long as it is not "arbitrary, capricious, or unreasonable." 



                                                                                                       

deferential standard, the reviewing court must "ensure that DNR has taken a hard look  

at the salient problems and has genuinely engaged in reasoned decision making,"22 and  



                                                             

that the best interest finding includes a discussion of all the important factors DNR  

considered.23  



          19        State, Dep't of Health & Soc. Servs. v. N. Star Hosp ., 280 P.3d 575, 579  



(Alaska 2012) (internal citation and quotation marks omitted).  



          20        Hammond v. N. Slope Borough                  , 645 P.2d 750, 758 (Alaska 1982); see also  



Kachemak Bay Conservation Soc'y. v. State, Dep't of Natural Res.                                 , 6 P.3d 270, 275-76  

(Alaska 2000) (Kachemak Bay).  



          21        Ninilchik Traditional Council v. Noah , 928 P.2d 1206, 1213 (Alaska 1996).  



          22        Kachemak Bay, 6 P.3d at 275 (internal quotation marks omitted).  



          23  

                                                                 

                    Trs. for Alaska v. State, Dep't of Natural Res., 795 P.2d 805, 811 (Alaska  

 1990) (Camden Bay I).  

                                                              10                                                           6865  


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

IV.       DISCUSSION
  

                   Denali Citizens challenges the Healy BIF on two grounds.24  First, it argues  



that DNR inadequately addressed the economic feasibility of reducing the size of the  



                                                                                                                

Healy license.  Second, it argues that DNR's treatment of mitigation measures in the final  



BIF was arbitrary and capricious.  



                                                                                                                           

          A.	      DNR Was Not Required To Consider The Economic Feasibility Of  

                                                               

                   Removing  The  Area  West  Of  The  Nenana  River  From  The  Healy  

                   License.  



                   Denali  Citizens  first  argues  that  the  BIF  inadequately  addressed  the  



                                                                                                                     

economic feasibility of reducing the size of the license. Despite concluding that it must  



                                    

consider  the  economic  feasibility  of  Usibelli's  license  proposal  in  the  best  interest  



                                                                          

finding, DNR merely asserted, without analysis, that reducing the size of the license  



might  "make  the  project  economically  unfeasible."    Therefore,  Denali  Citizens  



concludes, the agency failed to take a "hard look" at what it itself acknowledged is a  



salient issue.  



                                                             

                   As the commissioner wrote in his response to Denali Citizens' request for  



                                                                 

reconsideration, the economic feasibility of a license proposal is relevant to one of the  



                                                             

factors DNR is required to discuss under AS 38.05.035(g), "the reasonably foreseeable  



fiscal effects of the [license sale] and the subsequent activity on the state and affected  



                             

municipalities and communities."  Many of the economic consequences of granting a  



license will not obtain if the project is not feasible and does not occur.  Therefore, the  



director is required to consider the economic feasibility of the license proposal in order  



to  predict  accurately  the  "reasonably  foreseeable  fiscal  effects"  of  the  license  sale.  



          24  

                                                                                         

                   Denali Citizens' Statement of Points on Appeal alludes to a third argument  

                                                                         

based on Article VIII of the Alaska Constitution, but it does not develop this argument  

in its brief.  This constitutional claim is, accordingly, waived. Great Divide Ins. Co. v.  

Carpenter  ex  rel.  Reed,  79  P.3d  599,  608  n.10  (Alaska  2003)  ("Points  that  are  

inadequately briefed are considered waived.").  

                                                              11	                                                         6865  


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

                    But Denali Citizens does not fault DNR for its discussion of the economic  



                                                                                                                       

 feasibility of the license as proposed.  Rather, Denali Citizens argues that DNR's BIF is  



 arbitrary  and  capricious  because  it  fails  to  give  adequate  treatment  to  the  economic  



                                                                                                           

 feasibility of the Healy project if the area west of the Nenana River were excluded from  



                                        

 the  license.      But  there  is  no  basis  for  Denali  Citizens'  assertion  that  the  director  is  



                                                           

 required to address this separate issue.  Consideration of the economic feasibility of the  



 license  as  proposed  simply  does  not  require  consideration  of  the  feasibility  of  



 alternatives to the proposal.  Nor do the "foreseeable fiscal effects" of the Healy license  



                                                                               

 as proposed depend on the economic feasibility of reducing the size of the license.  



 Therefore,  Denali  Citizens'  assertion  that  DNR  did  not  "actually  analyze  whether  



                                                                                                     

 limiting  the  license  area  applied  for  by  Usibelli  actually  would  make  the  project  



 infeasible," even if accurate, is irrelevant.  



                

          B.        DNR's Treatment Of Mitigation Measures Was Not Arbitrary.  



                    Denali  Citizens  advances  two  distinct  arguments  challenging  DNR's  



                                                                 

 treatment of mitigation measures: first, that DNR did not adequately explain its decision  



                                                          

 to relax mitigation measures in its final finding; and second, that the mitigation measures  



 imposed in the final finding are inconsistent with the Tanana Basin Area Plan.  



                                                                                          

                    1.	       Denali  Citizens'  challenge  to  DNR's  treatment  of mitigation  

                              measures is ripe.  



                    The superior court concluded that Denali Citizens' challenge to the BIF's  



                                                               

 treatment of mitigation measures was not ripe.  The court cited our opinion in Trustees  



                                                                                                                 25  

for  Alaska  v.  State,  Department  of  Natural  Resources   ( Camden  Bay  II)                                     for  the  



 proposition that a challenge to mitigation measures is not ripe at the BIF stage, since  



 DNR cannot be expected to evaluate the efficacy of "mitigation measures even before  



          25        851 P.2d 1340, 1346-47 (Alaska 1993).  



                                                              12                                                           6865  


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

knowing which activities it needs to mitigate."26  



                                                                                                                

                        In Camden Bay II, we rejected the argument that a "detailed" assessment  



                                                                                                                       

of mitigation measures was necessary for DNR to make a finding, at the leasing stage,  



                                                                                                                        

that  issuing  a  lease  would  be  consistent  with  the  Alaska  Coastal  Management  Plan  



                 27  

(ACMP).              But this court did not hold that DNR had no obligation to consider potential  



                                                                                

mitigation measures in making that finding.  On the contrary, the Camden Bay II court  



relied in part on the fact that "DNR's mitigation measures provide sensible guidelines  



to minimize the harmful effects of oil and gas development" in holding that DNR's  



                                                                           28  

                                                                                                            

consistency determination was reasonable.                                      In other words, while DNR is not required  



                                                                                                             

to provide a detailed analysis of mitigation measures in a best interest finding, it may be  



                                                                                                  

arbitrary and capricious to conclude that issuing a lease or license is in the best interests  



                                                                                                                        

of the state if the director has not identified adequate measures to reduce impacts on  



                             29  

conflicting uses.                 



                        Moreover,  Denali  Citizens  is  challenging  the  process  by  which  DNR  



            26         Id. at 1347; see also AS 38.05.035(h) ("In preparing a written finding      



. . . , the director may not be required to speculate about possible future effects subject         

to future permitting that cannot reasonably be determined until the project or proposed  

use for which a written best interest finding is required is more specifically defined     

. . . .").  



            27          851 P.2d at 1347.  



            28         Id.  



            29          See Ninilchik Traditional Council v. Noah, 928 P.2d 1206, 1212 (Alaska  



                                   

 1996) (finding that DNR's determination that a project is consistent with the ACMP was  

                                 

reasonable where DNR "prescribed general mitigation measures at the lease sale stage  

to ensure that these activities do not interfere with other water-dependent and water- 

related  uses  .  .  .  .");  see  also  AS  38.05.035(g)(1)(B)  (DNR  must  discuss  "lease  

stipulations and mitigation measures" in a BIF); AS 38.05.180(a)(2)(A)(ii) (It is in the  

best interests of the state to "minimize the adverse impact of exploration, development,  

                                                                     

production, and transportation activity.").  

                                                                           13                                                                        6865  


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

                                               

determined that the mitigation measures proposed in the final BIF are in the best interests  



                                         

of the state rather than the adequacy of the mitigation measures themselves.  In addition  



to reaching reasonable conclusions, DNR must engage in a reasonable decision-making  



                                                                      30  

                                                                                                  

process while preparing a best interest finding.                          Even if it were true that a challenge to  



                                                                      

the substantive adequacy of DNR's proposed mitigation measures is premature, Denali  

Citizens' challenge to DNR's decision-making process is certainly ripe at this stage.31  



                                                                                                                 

                    In conclusion, it was error to conclude that Denali Citizens' challenge to  



                                                                                                                    

DNR's proposed mitigation measures was not ripe. But because the superior court held,  



                                             

in the alternative, that DNR's treatment of mitigation measures was not arbitrary, we will  



address the merits of Denali Citizens' argument as well.  



                                                                                                                   

                    2.	       DNR  adequately  explained  its  decision  to  change mitigation  

                              measures in the final best interest finding.  



                    Denali Citizens first challenges DNR's treatment of mitigation measures  



                                                                                                   

on the grounds that DNR failed adequately to explain its decision to adopt more relaxed  



mitigation measures in its final BIF.  



                                                                                                             

                    It is well-established in administrative law that when an agency departs  



                                                                                             

from a prior policy, it must give "a reasoned explanation . . . for disregarding facts and  



                                                                                                          32  

circumstances that underlay or were engendered by the prior policy."                                           Although the  



                                                                                        

agency "need not demonstrate to a court's satisfaction that the reasons for the new policy  



          30        Under  Alaska  law,  agencies  must  give  "reasoned  discretion  to  all  the  



material  facts  and  issues,"  Camden  Bay  I,  795  P.2d  805,  811  (Alaska  1990),  and  

"engage[]  in  reasoned  decision  making."    Kachemak  Bay,  6  P.3d  270,  275  (Alaska  

2000).  These requirements speak more to the reasonableness of the agency's decision- 

making process than to the reasonableness of its final decision.  



          31	       Cf. Kachemak Bay, 6 P.3d at 275-76.  



          32        FCC v. Fox Television Stations, Inc. , 556 U.S. 502, 516 (2009);                                   see also  



Motor Vehicle Mfrs. Ass'n of U.S., Inc. v. State Farm Mut. Auto. Ins. Co.                                     , 463 U.S. 29,  

41 (1983).  

                                                                14	                                                            6865  


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

                                                                                                       

are better than the reasons for the old one," it must  "display awareness that it is changing  



                                                                                                  33  

                                                                                                      Importantly, "the  

position" and "may not . . . depart from a prior policy sub silentio ." 



                                                                                 34  

law does not require the explanation to be exhaustive."                              



                                                        

                    The final BIF excluded several mitigation measures that were included in  



the preliminary BIF.  In particular, it eliminated a requirement that Usibelli obtain the  



consent of all the surface property owners in a residential subdivision before constructing  



facilities  within  that  subdivision  and  replaced  specific  noise  restrictions  with  a  



commitment to consider such restrictions "on a site-specific basis."  



                    On reconsideration, the commissioner explained that  



                                                     

                    The intent of changes to the mitigation measures concerning  

                             

                    noise and buffers around residential areas was not to weaken  

                                                                          

                    protections, but to ensure flexibility while not unnecessarily  

                                                                         

                    restricting the licensee's activities.  Specifically disallowing  

                    drill  pads  and  compressor  stations  in  subdivisions  and  

                                                  

                    stipulating  specific  noise  thresholds  may  be  unnecessarily  

                                                                  

                    restrictive,      especially        when       lots    are    unoccupied          and  

                                                                                 

                    undeveloped, perhaps for long periods of time.  Requiring the  

                    consent of all property owners in a subdivision could result  

                    in drill pads and compressor stations not being allowed in  

                    subdivisions at all.  



                    Denali  Citizens  alleges  that  this  explanation  "is  unsupported  by  any  



                       

analysis"  and  lacks  a  basis  in  the  record.    However,  reasonable  basis  review  is  



                                                                                                                             35  

                                     

deferential, and DNR's explanation for its change of course need not be exhaustive. 



To ask for an in-depth treatment of every conceivable sub-issue, as Denali Citizens  



          33       Fox , 556 U.S. at 515; see  also Arkema, Inc. v. EPA, 618 F.3d 1, 6 (D.C. Cir.  



2010).  



          34       Modesto Irrigation Dist. v. Gutierrez , 619 F.3d 1024, 1035 (9th Cir. 2010).  



          35        See Kachemak Bay, 6 P.3d at  292-93 (Although "DNR's  analyses are not  



                            

                                                            

exhaustive," they are sufficient to show that DNR considered the relevant issues.); see  

also Modesto Irrigation Dist., 619 F.3d at 1035.  

                                                              15                                                           6865  


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

suggests, would be to require something much more than simply "reasoned decision  



making."    Therefore,  we  conclude  that  the  commissioner's  explanation  for  DNR's  



decision  to  eliminate  the  specific  noise  and  subdivision  mitigation  measures  was  



adequate.  



                   The final BIF also adopted a different standard for granting exceptions to  



                                                                                                              

mitigation measures, providing that exceptions "will only be granted upon a showing by  



                                                                                                               

the licensee that compliance with the mitigation measure is not practicable" rather than  

                                                                                         36  Denali Citizens argues  

upon a showing that compliance is "not feasible or prudent."      



that the former standard is significantly more permissive than the latter and that DNR did  

                                                                                         



not adequately explain this change.  



                   There is substantial support for Denali Citizens' assertion that the "not  



                                                                               

feasible or prudent" standard is different from the "not practicable standard."  First, DNR  



                                                                       

defines the two terms differently.  "Feasible and prudent" is defined as "consistent with  



                                                    

sound engineering practice and not causing environmental, social, or economic costs that  



                                 

outweigh  the  public  benefit  to  be  derived  from  compliance  with  the  standard."  



"Practicable," by contrast, is defined as "feasible in light of overall project purposes after  



considering cost, existing technology, and logistics of compliance with the mitigation  



                                                                                              

measures."  The former standard appears to require the licensee to show that the public  



benefits of implementing the mitigation measure outweigh the public  ("environmental,  



           

social, or economic") costs, while the latter standard only appears to require the licensee  



to demonstrate that the private  costs of the measure to the licensee are too high.  



          36  

                               

                   Denali Citizens did not ask the commissioner to reconsider this blanket  

exception  in  its  request  for  reconsideration  of  the  final  BIF.    But  the  State  has  not  

                                                                                           

asserted that this omission restricts our consideration of this issue.  See generally AS  

38.05.035(l).  

                                                              16                                                          6865  


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

                    Second, Usibelli submitted a comment on the preliminary BIF asserting that  



                                                                                                               

the standards for exceptions for certain mitigation measures did not permit DNR to take  



into account economic considerations.  In response, DNR wrote that  



                    [e]xceptions may be granted if it is not practicable to comply  

                            

                    with the standard. The final finding uses the term practicable  

                                                                                               

                    instead of "feasible or prudent." Practicable means feasible in  

                    light  of  overall  project  purposes  after  considering  cost,  

                    existing  technology,  and  logistics  of  compliance  with  the  

                    mitigation measure.  



It is difficult to understand how this explanation is responsive to Usibelli's comment if  

                        



the new standard does not permit greater consideration of its costs.  



                    However, both Usibelli and DNR maintained at oral argument that the  



                                                                                         

revision to the blanket exception was merely cosmetic and that the new standard is no  



                                                                                                  

less stringent than the old.  We are satisfied that as long as the "not practicable" standard  



                                                                                                                              37  

                        

is applied so as to be no more permissive than the "not feasible or prudent" standard, 



                

there will have been no substantive change to the blanket exception and, therefore, no  



                                                                 

requirement that DNR provide a reasonable explanation.  In view of DNR's commitment  



to apply these standards identically, we need not address whether DNR provided an  



adequate explanation for the change in the wording of the blanket exception.  



                                                                                                                

          C.	       The Best Interest Finding Is Consistent With The Tanana Basin Area  

                    Plan.  



                    Denali Citizens also claims that the BIF is arbitrary and capricious because  



it  is  inconsistent  with  the  Tanana  Basin  Area  Plan.    Denali  Citizens  maintains  that  



because the Stampede Trail Management Unit - which overlaps with the section of the  



                                                                   

license adjacent to Denali National Park - is primarily classified as public recreation  



          37  

                           

                    For example, if the "not feasible or prudent" standard only permits DNR  

                                           

to weigh the public  costs of implementing a mitigation measure, DNR may not rely on  

                                          

language in its definition of "practicable" to justify the consideration of costs to Usibelli.  

                                                              17	                                                           6865  


----------------------- Page 18-----------------------

                                                         

and wildlife habitat land, oil and gas development as a "secondary use" may be permitted  



                           

in Stampede Trail only "when its occurrence will not adversely affect achieving the  

                                                                  38    The Plan also provides that "[i]mpacts on caribou  

                                                                                                                                 

objectives for the primary uses."  



from [oil and gas] exploration and development will be avoided or mitigated, especially  

                                                                     



during the calving season" and that  "[s]pecific measures [to mitigate impacts] will be  



                                                                                                                                                

determined in the leasing process."  Denali Citizens argues that DNR's failure both to  



                                                                               

protect the "primary" uses of Stampede Trail through adequate mitigation measures and  



to identify "[s]pecific measures" to protect caribou rendered its best interest finding  



arbitrary.  



                                                                        

                           We  note  initially  that  neither  the  Alaska  Statutes  nor  DNR  regulations  



                                                                                                                                                         39  

                                                                                                                                                              To the  

indicate that a regional land use plan is legally binding on the Department. 



contrary, in a case holding that a land use plan is not a regulation, we expressed doubt  

                                                                                                           

that the provisions of such a plan are enforceable against DNR.40  



                           However, even if the Plan is legally binding, the best interest finding is  

                                                                                                                                         



fully consistent with its provisions.  First, contrary to Denali Citizens' representations,  

                                                                                                                          



the Plan does not classify oil and  gas  development as a disfavored "secondary use"  

                                                                               



within Stampede Trail.  Rather, the Plan emphasizes that state land in Stampede Trail is  

                                                                       



             38            TA N A N A              BA SIN             A REA              PLA N             1-5          (1990),              available                  at  



http://dnr.alaska.gov/mlw/planning/areaplans/tanana/pdf/ch_1.pdf.  



             39            See AS 38.04.065, 11 Alaska Administrative Code 55.010-.280 (2005).  



             40            See State, Dep't of Natural Res. v. Nondalton Tribal Council                                                         , 268 P.3d 293,   



304 n.93 (Alaska 2012) ("[A]lthough it guides future DNR policy, the [Bristol Bay Area                                                                     

Plan] is likely not enforceable by the public against DNR either." (citing Norton v. S.  

 Utah Wilderness Alliance, 542 U.S. 55, 67-72 (2004))).  

                                                                                    18                                                                                   6865  


----------------------- Page 19-----------------------

                                   41  

"open to mineral entry."               Therefore, oil and gas development is generally permitted  



within the Stampede Trail Management Unit.  



                   Second, although the Plan does call for the identification of "[s]pecific  



measures" to protect the local caribou herd, such measures are to be identified in the  



                                                              42  

"leasing process," not the licensing process.                     Although Denali Citizens maintains that  



licensing  and  leasing  are  identical  for  purposes  of  the  Plan,  the  statute  creating  the  



                                                                                     43  

exploration license program makes clear that they are not.                                Therefore, DNR is not  

required to identify specific mitigation measures to protect caribou at this juncture.44  



V.        CONCLUSION  



                          

                   We  AFFIRM  the  superior  court's  order  upholding  the  decision  of  the  



Department of Natural Resources.  



         41        TANANA           BASIN        AREA         PLAN        3-132        (1990),        available         at  



http://dnr.alaska.gov/mlw/planning/areaplans/tanana/pdf/sub4e.pdf  ("[M]ineral  entry,  

coal prospecting, and leasing will be allowed . . . . This unit is open to mineral entry   

                                                                       

. . . . This unit is available for oil, gas, and coal leasing . . . .").  



         42        Id.  



         43  

                                                                                           

                   AS 38.05.132(b)(2) (An exploration license gives the licensee "the option  

                                       

to convert the exploration license for all or part of the state land . . . into an oil and gas  

               

lease  .  .  .  upon  fulfillment  of  the  work  commitments  contained  in  the  exploration  

license.") (emphasis added).  



         44        Moreover, far from ignoring impacts on caribou, the BIF provides that  



"[t]he director . . . may impose seasonal restrictions on activities located in, or requiring  

                                                                                            

travel  through  or  overflight  of,  important  moose  and  caribou  calving  and  wintering  

areas."  

                                                            19                                                         6865  

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