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N. Alaska Env. Center, et al v. Dept of Natural Resources (4/23/93), 851 P 2d 1340
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Notice: This is subject to formal correction before
publication in the Pacific Reporter. Readers are
requested to bring typographical or other formal errors
to the attention of the Clerk of the Appellate Courts,
303 K Street, Anchorage, Alaska 99501, in order that
corrections may be made prior to permanent publication.
THE SUPREME COURT OF THE STATE OF ALASKA
TRUSTEES FOR ALASKA, NORTHERN )
ALASKA ENVIRONMENTAL CENTER, THE ) Supreme Court No. S-4591
SIERRA CLUB, THE NATIONAL PARKS )
AND CONSERVATION ASSOCIATION, AND ) Trial Court No.
THE WILDERNESS SOCIETY, ) 3AN-87-7649 Civil
)
Appellants, ) O P I N I O N
)
v. )
)
STATE OF ALASKA, DEPARTMENT OF )
NATURAL RESOURCES; STATE OF ALASKA )
OFFICE OF MANAGEMENT AND BUDGET, )
)
Appellees. ) [No. 3945 - April 23,
1993]
___________________________________)
Appeal from the Superior Court of the
State of Alaska, Third Judicial District,
Anchorage,
Peter Michalski,
Judge.
Appearances: Randall M. Weiner,
Trustees for Alaska, Anchorage, for
Appellants. Douglas S. Parkinson, Assistant
Attorney General, Anchorage, Charles E. Cole,
Attorney General, Juneau, for Appellees.
Carl J.D. Bauman, Clyde E. Sniffen, Jr.,
Hughes, Thorsness, Gantz, Powell & Brundin,
Anchorage, for Amici Curiae ARCO Alaska,
Inc., BP Exploration (Alaska) Inc., Chevron
U.S.A., Inc., and Phillips Petroleum Company.
Before: Rabinowitz, Chief Justice,
Burke, Matthews, Compton, and Moore,
Justices.
MATTHEWS, Justice.
INTRODUCTION
The appellants in this administrative appeal are five
environmental groups ("Trustees"). Trustees sued the State chal
lenging the State's sale of oil and gas leases in Camden Bay,
Alaska ("Sale 50"). The State's Department of Natural Resources
("DNR") determined that Sale 50 is consistent with the Alaska
Coastal Management Program ("ACMP"), AS 46.40.010-210. Trustees
alleged that DNR's consistency determination is inadequate. The
superior court disagreed and upheld DNR's consistency
determination. Trustees appeal.
This is the second time this case has come before us.
In our previous opinion in this case, Trustees for Alaska v.
State, Department of Natural Resources, 795 P.2d 805 (Alaska
1990) ("Trustees I"), we stated the facts as follows:
The state held Sale 50 on June 30,
1987. The oil and gas development rights to
118,147 acres of offshore state land in
Camden Bay, 35 tracts in all, were offered
and sold. Camden Bay is located on the
northern coast, west of Kaktovik and north of
the Arctic National Wildlife Refuge ("ANWR").
Trustees challenged the decision of
the Department of Natural Resources ("DNR")
to proceed with Sale 50. This decision was
reflected in DNR's Final Best-Interests
Finding. On June 1, 1987, Trustees filed a
motion with DNR to reconsider its Sale 50
decision. DNR did reconsider, but declined
to change its decision. Trustees filed suit.
Their motion for a preliminary injunction was
denied, and Sale 50 proceeded as scheduled on
June 30, 1987.
In July 1987, Trustees agreed to
dismiss their prior action for declaratory
relief, and instead brought this
administrative appeal. The trial court
upheld Sale 50 in every respect. Trustees
now appeal.
. . . .
The Alaska Coastal Management
Program ("ACMP") protects numerous
environmental and cultural values in Alaska's
coastal zone. When a project requires two
or more state or federal permits, leases, or
authorizations, the Office of Management and
Budget (OMB) must render a finding as to
whether the project is consistent with the
ACMP. In this case, however, DNR performed
the consistency review.
Id. at 806, 811 (footnotes omitted; citations omitted). Trustees
argued that the State's approval of Sale 50 was improper both
because the wrong state agency made the State's consistency
determination, id. at 811, and because the determination was
inadequate. We agreed with Trustees' first argument. Since the
project required more than two leases, we held that OMB was
required to make the consistency review and that it could not
delegate this statutory duty to DNR. Id. at 811-12. We remanded
this case for the superior court to order OMB to perform a
consistency review.1 Id. at 812. Consequently, we did not
address the adequacy of DNR's consistency determination. Id. at
812 n.13.
In accord with our decision, the superior court ordered
OMB to perform a consistency determination. However, the legisla
ture subsequently amended AS 44.19.145(11) to permit DNR to make
consistency determinations. This change was made retroactive to
March 11, 1984. DNR thus became the appropriate agency to make
the consistency determination in the present case. Consequently,
the superior court vacated its order requiring OMB to make a
consistency determination. Trustees again appeal the adequacy of
DNR's consistency determination.2
DISCUSSION
A. Record Support for the Consistency Finding
6 AAC 80.010(b) requires that "uses and activities"
conducted by state agencies in coastal areas must be "consistent"
with the standards of the ACMP.3 In Hammond v. North Slope
Borough, 645 P.2d 750, 761 (Alaska 1982), we recognized that by
implication this regulation requires that a state agency may only
authorize a use or activity in a coastal area if it finds that
the use or activity is consistent with ACMP standards.
Trustees contend that DNR's consistency determination
is without adequate support in the record with respect to ACMP
standards concerning (1) geophysical hazards, (2) historic, pre-
historic, and archeological resources, and (3) transportation and
utilities. We examine this argument as it pertains to each of
those standards.
1. Geophysical Hazard Areas
The ACMP regulation applicable to geophysical hazard
areas provides:
(a) Districts and state agencies
shall identify known geophysical hazard areas
and areas of high development potential in
which there is a substantial possibility that
geophysical hazards may occur.
(b) Development in areas
identified under (a) of this section may not
be approved by the appropriate state or local
authority until siting, design, and
construction measures for minimizing property
damage and protecting against loss of life
have been provided.
6 AAC 80.050.
There are thus two potentially applicable regulatory
commands. The first is that areas with known or substantially
possible geophysical hazards be identified. The second is that
development in such areas not be approved unless adequate
protective measures have been provided.
Trustees are concerned specifically with those
geophysical hazards associated with earthquakes. Trustees argue
that DNR's failure to identify specific faults in Camden Bay
"makes it impossible to tailor a sale to reduce the seismic risks
by, for example, excluding lease tracts along major fault lines."
Trustees' argument continues:
If a company purchases a lease in a
seismically active area, undertakes the
expense of exploration, and determines that
producible quantities of oil are present,
both DNR and the company may find it
difficult to slow the momentum to produce.
With geophysical hazard areas identified
before the sale, both DNR and the oil
companies would be able to internalize the
added risks, thereby increasing the likeli
hood that sales, explorations and production
will occur in more seismically stable areas.
DNR replies that it identified the entire Sale 50 area
as a geophysical hazard area.4 DNR thus argues that 6 AAC 80.050
will be complied with so long as development is not approved
until siting, design and construction measures for minimizing
property damage and protecting against loss of life have been
provided for. In addition, the leases stipulate that the lessees
must submit a detailed plan of operations for approval before
conducting exploratory or development work. These plans must
identify specific measures to meet specific geophysical hazards
which may exist at the development site.
Trustees counter that identification of the entire sale
area as an area of known geophysical hazard makes a mockery of
the regulation and that DNR should undertake seismic studies
prior to the sale to identify particular areas having special
hazards.
The regulation does not support Trustees' contention
that DNR should have undertaken seismic studies to determine
areas of particular hazard within the sale area. The regulation
limits the duty of the appropriate state agency to identifying
known or, as to areas of high development potential,
substantially possible hazard areas. This clearly implies a duty
to conduct a survey of available sources concerning hazards in
the sale area and to report the results of such a survey, but it
excludes a requirement to conduct field studies.
DNR's summary statement that the entire Sale 50 area is
a "known geophysical hazard"does not satisfy the regulatory
requirements. We have already recognized that Sale 50 triggered
the regulatory requirement of a "conclusive" ACMP consistency
determination. Trustees I, 795 P.2d at 811-12. DNR therefore
had the duty to determine whether the sale of oil and gas leases
was consistent with the ACMP.
The ACMP has, among its objectives, protecting numerous
environmental and cultural values in Alaska's coastal zone. AS
46.40.020. As we have elsewhere had occasion to note, the ACMP's
standards are extremely protective of the environment. Hammond,
645 P.2d at 761. Offshore areas are among the habitats subject
to the Alaska coastal management program. 6 AAC 80.130(a)(1).
Such habitats "must be managed so as to maintain or enhance the
biological, physical, and chemical characteristics of the habitat
which contribute to its capacity to support living resources."
6 AAC 80.130(b) (emphasis added). Uses or activities that fail
to maintain or enhance the habitat's capacity to support living
resources may be authorized only if several stringent additional
conditions are met.5 6 AAC 80.130(d).
Given these strongly protective standards, it cannot be
said that the decision to sell leases will invariably and
automatically be consistent with the ACMP. The geophysical
hazards in a given area could be such as to make any use or
activity inconsistent with the ACMP. Where detailed knowledge is
available, indiscriminate and conclusory identification of an
entire sale area as a geophysical hazard area does not suffice to
comply with 6 AAC 80.050(a).6
In addition, deferring a careful and detailed look at
particularized geophysical hazards to later stages of the develop
ment process, as DNR evidently intends, entails certain practical
risks.7 First, DNR's method means that particularized
geophysical hazards will be considered on a lease-site-by-lease-
site basis. This may tend to mask appreciation of any cumulative
environmental threat that would otherwise be apparent if DNR
began with a detailed and comprehensive identification of those
hazards.8 Second, as we noted in Trustees for Alaska v. Gorsuch,
835 P.2d 1239, 1246 n.6 (Alaska 1992), the more segmented an
assessment of environmental hazards, the greater the risk that
prior permits will compel DNR to approve later, environmentally
unsound permits.
In light of these considerations, and given the plain
language of the regulation, we conclude that this case must be
remanded to DNR with instructions to identify and report on known
and, as to areas of high development potential, substantially
possible areas of geophysical hazards within Sale 50.
2. Historic, Pre-Historic and Archeological
Resources
The applicable standard pertaining to historic, pre-
historic and archeological resources (henceforth, archeological
sites) is 6 AAC 80.150. 6 AAC 80.150 provides:
Districts and appropriate state agencies
shall identify areas of the coast which are
important to the study, understanding, or
illustration of national, state, or local
history or prehistory.
The regulation therefore directly commands state agencies to
identify areas of the coast that are important to the study,
understanding, or illustration of relevant history or prehistory.
Although the record includes a number of studies identi
fying onshore archeological sites adjacent to the sale area, DNR
did not conduct cultural resource surveys regarding archeological
sites within the sale area. Instead, it delegated this task to
the Sale 50 lessees, and required them to carry it out if and
when they explored and developed the leased sites.9
DNR defends its decision to delegate and postpone
identifying archeological sites as follows. It argues that 6 AAC
80.150 does not require it to identify such sites prior to a
lease sale. Instead, DNR reads the regulation as leaving it the
discretion to determine "how and when such identification must
take place." Its decision not to identify archeological sites at
the lease sale stage was appropriate because "[t]he existence of
. . . such resources on offshore areas is unlikely,"because DNR
and the Sale 50 leases stipulated that the lessee would "report
the discovery of any such resources and . . . make every
reasonable effort to protect them . . . until instructed by DNR,"10
and because any development of the leased sites will be subject
to an independent ACMP consistency review. Finally, DNR argues
that it would be poor public policy for a court to require it "to
conduct and pay for detailed studies prior to merely conducting
an oil and gas lease sale which authorizes no activity to take
place on the leased tracts."
DNR's decision to defer identification of archeological
sites does not comply with 6 AAC 80.150. The regulation clearly
requires the identification of archeological sites, but it does
not state when they are to be identified. In the context of an
oil lease sale, there are a number of possible ways that the
regulation may be interpreted. Identification may be required:
1) before any sale; 2) at the time permits for exploration
activity are sought; or 3) at the time permits for development
are sought. There are also at least two possible levels of
identification: 1) identification of known sites, necessitating
only literature surveys and personal contact with individuals who
may have knowledge concerning such sites; and 2) identification
of unknown sites, necessitating field surveys and exploration.
In our view the regulation is most reasonably interpreted to
require, among other things, the identification of known
archeological sites at the initial sale stage. Our reasons
parallel those set forth above concerning the need to identify
geophysical hazards.
Protection and preservation of archeological sites is
an objective of the ACMP. The statute requires that the ACMP
shall be consistent with the following
objectives:
. . . .
(5) the protection and management of significant
historic, cultural, natural and aesthetic values and
natural systems or processes within coastal area[.]
AS 46.40.020. It may be that a particular area is so rich in
archeological values that it could not be sold consistently with
the ACMP. Further, reliance on the lessees to separately
evaluate each lease on a site-by-site basis runs the risk of
undervaluing the cumulative cultural significance of the region
as a whole. Moreover, the lessees may have a conflict of
interest that leads to the underreporting of archeological sites,
since the presence of a site on a leasehold may make its
development more difficult and costly. These possibilities may
be remote in the context of an offshore lease sale. However,
compliance with the identification requirement at the sale stage
is not difficult, and our decision in this case will apply to
future cases where archeological sites may be more abundant.
Our holding that 6 AAC 80.150 requires identification
of known archeological sites before a lease sale does not mean
that more intensive duties are not required by this regulation at
later stages of development. Nor does it mean that archeological
sites are necessarily of overriding importance under the ACMP.
What it does mean is that a regulation that calls for the State
to identify areas that are important archeologically cannot be
ignored when the State takes a significant step in committing an
area to a particular type of development. DNR must
comprehensively survey the known data, set out the results, and
state its conclusions. As it has not done so in this case, a
remand to DNR is necessary.
3. Transportation Routes and Utility Sites
The applicable regulation concerning transportation and
utilities provides:
(a) Transportation and utility
routes and facilities in the coastal area
must be sited, designed, and constructed so
as to be compatible with district programs.
(b) Transportation and utility
routes and facilities must be sited inland
from beaches and shorelines unless the route
or facility is water-dependent or no feasible
and prudent inland alternative exists to meet
the public need for the route or facility.
6 AAC 80.080. DNR's decision to sell oil leases in Camden Bay
unquestionably did not directly violate 6 AAC 80.080. Until
exploration is proposed and, in all likelihood, until and unless
a commercially exploitable discovery is made, there will be no
occasion for siting, designing or constructing transportation and
utility routes. Consequently, the decision to sell oil leases
cannot be inconsistent with this standard and DNR's consistency
determination may not be found to have been erroneous on that
ground.
B. Adequacy of DNR's Mitigation Measures
Trustees' second major argument is that DNR's
consistency determination is inadequate because it lacks "an
objective evaluation of whether the mitigation measures [proposed
by DNR for inclusion in the leases] will work under the
conditions prevalent in the Camden Bay area, and whether, even if
they work, the activity will then be consistent with the coastal
management program." In short, Trustees argue that DNR was
arbitrary and capricious because it never addressed the
effectiveness of the mitigating measures on which it relied to
conclude that the sale is consistent with ACMP standards.
DNR responds that "DNR's mitigation measures are
arguably not even required at the lease sale stage, but even if
required, are as thorough and forward-looking as they can be as a
practical matter at the lease sale stage."
We have already noted that DNR erred in failing to
discharge its responsibility to identify known geophysical hazard
areas and archeological sites prior to the lease sale. Trustees
seek to impose an additional duty, requiring DNR to evaluate the
effectiveness of mitigating measures before even receiving
detailed development proposals. We find DNR's position
reasonable. In our view, DNR's mitigation measures provide
sensible guidelines to minimize the harmful effects of oil and
gas development. Most importantly, the lessees cannot develop
their leases until they submit detailed plans, which must satisfy
the ACMP regulations. If the plans do not satisfy the ACMP
regulations, DNR can impose additional mitigation measures that
assure that the regulations are complied with. Thus we reject
Trustees' argument to the extent that it would tie the
reasonableness of DNR's consistency determination to its
developing and assessing detailed mitigation measures even before
knowing which activities it needs to mitigate.
C. DNR's Findings under 6 AAC 80.130(d)
As part of its consistency determination, ACMP also
requires DNR to determine whether the proposed development would
"maintain and enhance"the coastal habitat. 6 AAC 80.130(b),(c).
If the proposed development would not maintain and enhance the
coastal habitat, then it must satisfy the standards of 6 AAC
80.130(d). 6 AAC 80.130(d) provides:
Uses and activities in the coastal
area which will not [maintain and enhance the
coastal habitat] may be allowed . . . if the
following are established:
(1) there is a
significant public need for the proposed
use or activity;
(2) there is no feasible
prudent alternative to meet the public
need for the proposed use or activity
which would [maintain and enhance the
coastal habitat]; and
(3) all feasible and
prudent steps to maximize conformance
with [this section's goal of maintaining
and enhancing the coastal habitat] will
be taken.
DNR analyzed the criteria of 6 AAC 80.130(d) and concluded that
Sale 50 satisfied them. Trustees argue that DNR's analysis is
inadequate.
Our review is limited to ensuring that DNR's decision
was not arbitrary, capricious, or unreasonable. Hammond, 645
P.2d at 758-59. DNR's analysis of 6 AAC 80.130(d) satisfies this
standard. It is clear that DNR has taken a hard look at this
issue. DNR identified twenty lease stipulations expressly
designed to achieve maximum compliance with the goals of
maintaining and enhancing the coastal habitat. Even though the
Sale 50 area is entirely composed of offshore areas, DNR
recognized and sought to compensate for possible impact on such
adjacent habitats as estuaries, wetlands and tideflats, barrier
islands and lagoons, rivers, streams and lakes, and important
upland habitats. To this end, the lease terms range from general
requirements of consistency with the ACMP to specific provisions
aimed at particular problems.11
DNR also acknowledged that despite these precautions,
development would to some extent degrade the environment and thus
could not satisfy the standards contained in 6 AAC 80.130(b) and
(c). It therefore set out and discussed each part of the
tripartite 6 AAC 80.130(d) test. For each part of the test DNR
articulated its reasoning and concluded that Sale 50 met that
part of the test. It specifically concluded that there is a
significant public need to conduct the sale; that there is no
feasible and prudent alternative; and that the lease terms and
stipulations complied with ACMP standards and minimized the
sale's impact on the environment. In short, DNR's analysis
demonstrates a reasonable basis for its conclusion. Therefore we
reject Trustees argument.
CONCLUSION
This case is REMANDED to the superior court with
instructions to remand to DNR for further action in accordance
with this opinion.
THE SUPREME COURT OF THE STATE OF ALASKA
TRUSTEES FOR ALASKA, NORTHERN )
ALASKA ENVIRONMENTAL CENTER, THE ) Supreme Court No. S-4591
SIERRA CLUB, THE NATIONAL PARKS )
AND CONSERVATION ASSOCIATION, AND )
THE WILDERNESS SOCIETY, )
)
Appellants, ) O R D E R
)
v. )
)
STATE OF ALASKA, DEPARTMENT OF )
NATURAL RESOURCES; STATE OF ALASKA )
OFFICE OF MANAGEMENT AND BUDGET, )
)
Appellees. )
___________________________________)
Superior Court No. 3AN-87-7649 Civil
Before: Moore, Chief Justice,
Rabinowitz, Burke, Matthews and Compton,
Justices.
On consideration of the petition for rehearing, filed
on March 15, 1993,
IT IS ORDERED:
1. Opinion No. 3936, published March 5, 1993, is
WITHDRAWN.
2. Opinion No. 3945 is issued on this date in its
place.
3. The petition for rehearing is GRANTED to the
extent that the opinion is modified; otherwise, it is DENIED.
Entered by direction of the court at Anchorage, Alaska,
on April 23, 1993.
CLERK OF THE SUPREME
COURT
__________________________
JAN HANSEN
_______________________________
1 We also remanded for DNR to "consider the unique risks
presented by the oil transportation methods that would be
necessary if the legal status of ANWR remains unchanged." Id. at
811. DNR complied and issued supplemental findings. In the
present appeal, Trustees do not challenge the adequacy of those
findings.
2 DNR's consistency determination is one section of its
finding, made in accordance with AS 38.05.035(e), that Sale 50
would serve the State's best interest.
3 6 AAC 80.010(b) provides, in relevant part:
Uses and activities conducted by state
agencies in the coastal area must be
consistent with . . . the standards contained
in this chapter. In authorizing uses or
activities in the coastal area under its
statutory authority, each state agency shall
grant authorization if . . . the agency finds
that the use or activity is consistent with
. . . the standards contained in this
chapter.
4 The decisional document notes the "occurrence of numerous
faults and shallow earthquakes in the area. The magnitude of the
earthquakes ranges from 1.0 to 5.3 on the Richter scale." The
State also cites a draft environmental impact statement for a
federal sale just north of Sale 50 which indicates the presence
of numerous faults and earthquake epicenters in Camden Bay. Vol.
64:009627. The federal statement deals with faults and
earthquakes in the Camden Bay area in much greater detail than
the State's decisional document. The federal draft
environmental impact statement states:
Earthquakes indicate active movement
along the faults in the Camden Bay area and
tend to occur along the axes of anticlines
and synclines. They are part of the central
Alaska Seismic system. Most of the earth
quakes recorded since 1968 range in magnitude
from 3.0 to 4.0.
Vol. 64:009625.
5 These conditions are discussed in section C, infra.
6 In the context of a finding that a sale is in the State's
best interest, we have recognized that "the mere decision to
lease does not in itself bring about great risks to the
environment." Hammond, 645 P.2d at 759. We also noted that
because "[e]xploration and development will take place over time
. . . adjustments can be made, if and when new data is acquired
that reveals additional hazards." Id. (emphasis added). In
Hammond we also required that the consistency determination
scrupulously adhere to the regulatory requirements. We noted
that uses and activities may be allowed if approved under either
of two alternative tests. Id. at 762. The Commissioner's
consistency determination failed to make clear which of the tests
had been used. For this reason, we remanded the case to the
Commissioner with instructions to reconsider his decision and to
address the specific environmental protections encompassed in the
regulations. Id. As in Hammond, we continue to expect state
agencies to give faithful and scrupulous attention to the clear
requirements of their regulations.
7 DNR's consistency determination states:
Geophysical hazards are considered when
plans of operation are reviewed. Lessees must
submit a detailed plan of operations to the
Division of Oil and Gas for approval before
conducting any exploratory or development
operations. Plans of operations must identify the
specific measures, design criteria and
construction methods and standards that will be
employed to meet any potential geophysical hazard
that may exist at the development site. Term 3
requires consistency with ACMP.
8 We expressed the need for an early review of cumulative
environmental impacts in Trustees for Alaska v. Gorsuch, 835 P.2d
1239 (Alaska 1992). We stated that environmentally protective
purposes require that at the time DNR
reviews any . . . permit application it
consider the probable cumulative impact of
all anticipated activities which will be a
part of [the project in question], whether or
not the activities are part of the permit
under review. If DNR determines that the
cumulative impact is problematic, the
problems must be resolved before the initial
permit is approved.
Id. at 1246.
9 The consistency determination states that
Stipulation 1 requires the lessee to
report the discovery of any site, structure,
or object of historical or archeological
significance and to make every reasonable
effort to preserve and protect the site,
structure, or object until direction is given
by DNR regarding its protection. Term 22
requires that an archeological survey be
completed before an area is affected by oil
and gas activity. . . .
10 In regard to this regulation, DNR provided the following
in its consistency determination:
This standard requires that
districts and appropriate state agencies
shall identify areas of the coast which are
important to the study, understanding, or
illustration of national, state or local
history or prehistory. In recognition that
future oil and gas related activity may
result in the identification of currently
unknown resource sites, Stipulation 1
requires the lessee to report the discovery
of any site, structure, or object of
historical or archeological significance and
to make every reasonable effort to preserve
and protect the site, structure, or object
until direction is given by DNR regarding its
protection. Term 22 requires that an
archaeological survey be completed before an
area is affected by oil and gas activity.
Term 3 requires consistency with ACMP.
In another portion of its best interests finding, DNR provided
the following:
Cultural resource sites -- It is not
likely that any cultural sites would be
identified within the sale area since it is
offshore. However, no cultural resource
surveys have been conducted in the area, and
the discovery of sites, especially in the
nearshore areas, should not be ruled out.
. . . .
Lessees may discover cultural resources
as a result of activities related to Sale 50.
Stipulation 1 will [protect those resources].
11 Term 3 of DNR's consistency determination requires
consistency with the ACMP; other terms impose such requirements
as that explosives not be used in open water areas (Term 6); that
gravel be reused (Term 26); and that use of pesticide be limited
to protect peregrine falcons (Term 29).
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