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Ninilchik Traditional Council, et al v. Noah (12/27/96), 928 P 2d 1206
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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, telephone (907) 264-0607, fax (907) 264-
0878.
THE SUPREME COURT OF THE STATE OF ALASKA
NINILCHIK TRADITIONAL COUNCIL,)
ALASKA CENTER FOR THE ) Supreme Court No. S-6683/6733
ENVIRONMENT, GREENPEACE, )
TRUSTEES FOR ALASKA, KENAI )
PENINSULA FISHERMEN'S ) Superior Court No.
ASSOCIATION, UNITED COOK ) 3KN-93-1174 CI
INLET DRIFT ASSOCIATION, )
)
Appellants/ ) O P I N I O N
Cross-Appellees, )
) [No. 4450 - December 27, 1996]
v. )
)
HARRY NOAH, Commissioner, )
State of Alaska, Department )
of Natural Resources, JAMES )
EASON, Director, Division of )
Oil and Gas, State of Alaska, )
Department of Natural )
Resources, and STATE OF )
ALASKA, DEPARTMENT OF NATURAL )
RESOURCES, )
)
Appellees/ )
Cross-Appellants. )
______________________________)
Appeal from the Superior Court of the State of
Alaska, Third Judicial District, Kenai,
Charles K. Cranston, Judge.
Appearances: Peter Van Tuyn, Trustees for
Alaska, Anchorage, for Appellants/Cross-
Appellees. Mary Ann Lundquist, Assistant
Attorney General, Anchorage, and Bruce M.
Botelho, Attorney General, Juneau, for
Appellees/Cross-appellants.
Before: Compton, Chief Justice, Rabinowitz,
Matthews, Eastaugh, Justices, and Carpeneti,
Justice, pro tem.
EASTAUGH, Justice.
MATTHEWS, Justice, dissenting in part.
I. INTRODUCTION
This is an administrative appeal by the Ninilchik
Traditional Council, Alaska Center for the Environment, Greenpeace,
Trustees for Alaska, Kenai Peninsula Fishermen's Association, and
United Cook Inlet Drift Association (collectively NTC). They
oppose the decision of the Department of Natural Resources (DNR) to
proceed with Oil and Gas Lease Sale 78 (Sale 78 or Sale). At issue
are the procedural propriety and substantive basis of DNR's
decision to proceed with the Sale. The cross-appeal addresses the
public interest litigant status of two appellants, and a superior
court order requiring DNR to bear the cost of preparing the
administrative record on appeal. We affirm in part and reverse in
part.
II. FACTS AND PROCEEDINGS
Sale 78 encompasses nearly 403,000 acres of submerged
land and tidelands in the Upper Cook Inlet and uplands on the Kenai
Peninsula and in the lower Susitna Valley. The Sale area consists
of ninety-two tracts, all of which are in Alaska's coastal zone and
within the boundaries of the Kenai Peninsula and Matanuska-Susitna
Boroughs and the Municipality of Anchorage. The Sale area supports
a variety of wildlife and is home to important commercial, sport,
and subsistence fisheries. Oil exploration and production have
also occurred in Cook Inlet for several decades.
On September 9, 1993, DNR issued a conclusive consistency
determination (CCD) that Sale 78 was consistent with the Alaska
Coastal Management Program (ACMP), AS 46.40.010-210. DNR also
issued a best interest finding (BIF) on October 19, 1993,
determining that the Sale was in the state's best interests. On
the basis of these findings, DNR approved the decision to proceed
with Sale 78.
NTC challenged the validity of the CCD and the BIF in
superior court. The superior court stayed the Sale, finding that
NTC had demonstrated a probability of success on the merits of its
claim. In its order granting the stay the superior court ruled
that as public interest litigants, the NTC parties did not have to
bear the cost of preparing the record for the full administrative
appeal, and imposed that cost on the State. The court denied the
State's motion for rehearing on this issue.
The superior court subsequently held that the BIF and CCD
were valid, and vacated its stay of the Sale. NTC appeals and the
State cross-appeals.
III. DISCUSSION
A. The Conclusive Consistency Determination
Sale 78 must comply with the ACMP, because the Sale area
is located within Alaska's coastal zone. 6 Alaska Administrative
Code (AAC) 80.010(b) (1995). Under the ACMP, all "[u]ses and
activities"conducted in the coastal zone by State agencies must be
consistent with the standards of the ACMP and the coastal
management programs of affected coastal districts (DCMPs). 6 AAC
80.010(b). Therefore, before DNR could authorize Sale 78, it had
to make a conclusive consistency determination that the Sale was
consistent with the ACMP standards and the incorporated standards
of the affected DCMPs. 6 AAC 50.190(4), (9) (1995). NTC argues
that this conclusive consistency determination was deficient for a
number of reasons. (EN1)
1. The conclusive consistency determination's reliance
on the preliminary best interest finding
NTC contends that the September 9, 1993, CCD is invalid,
because it relies on the consistency analysis contained in the
Preliminary Best Interest Finding (PBIF) issued July 15, 1993, and
does not analyze the Sale as finalized under the final BIF issued
October 19, 1993. The PBIF includes a list of mitigation measures
prescribed by DNR which the lessees must comply with in order for
Sale 78 to be consistent with the ACMP. NTC argues that this
analysis is insufficient, because the regulations require that the
consistency analysis be conducted after imposition of all
stipulations, conditions, and modifications designed to ensure a
project's consistency with the ACMP. (EN2)
The State maintains that a CCD need not be concurrent
with the final BIF, because the BIF includes a determination that
a project is consistent with the ACMP. The State argues that it is
appropriate for DNR to make a consistency determination before
proceeding to its final BIF, because it is "not practical for DNR
to expend significant resources in making a BIF only to find later
that the disposal was not consistent with the ACMP."
The issue is one of timing. The regulations implementing
the ACMP define a CCD as
a document issued by the coordinating agency
containing a brief description of the project,
and the findings of the consistency review
together with any stipulations, conditions, or
modifications to the project which must be
attached to the applicable permits, and a
brief justification for those necessary
modifications, conditions, or stipulations.
6 AAC 50.190(9)(A) (1995). The modifications, conditions, and
stipulations prescribed within the CCD are intended to achieve and
maintain a project's consistency with the ACMP. When DNR adopts
and subsequently amends operation permit terms prescribing
mitigation measures to ensure a project's consistency with the
ACMP, the agency should not have to review the project again for
consistency following compliance with those measures.
The September 9, 1993, CCD expressly makes its finding of
consistency "subject to the stipulations and plan of operations
permit terms outlined in the mitigation measures proposed in the
July 15, 1993 [PBIF] and [the] ACMP Consistency Analysis as
amended."(EN3) Therefore, because the finding of consistency was
directly subject to these measures, we conclude that DNR could rely
on the PBIF in issuing its CCD and that the CCD need not be
concurrent with the final BIF in order to be valid.
2. The coastal development standard
a. Application of the standard at the lease sale
stage
NTC also argues that DNR's CCD is invalid because it did
not satisfy the coastal development standard. NTC contends that in
its CCD DNR failed to determine specifically which activities are
water-dependent, and then failed to give priority to any water-
dependent uses and activities, particularly fishing, as required by
the regulations.
The State responds that it properly applied the coastal
development standard and prescribed general mitigation measures at
the lease sale stage. (EN4) The State argues that it could not
make a specific determination that a lessee's proposed activities
would be "water-dependent"or "water-related"at this stage, (EN5)
because it could not know whether the tract to be developed was
located onshore or offshore. (EN6) A more focused application of
the coastal development standard is reserved until lessees seek
specific permission to undertake exploration. (EN7)
The ACMP coastal development standard provides:
In planning for and approving development in
coastal areas, districts and state agencies
shall give in the following order, priority
to:
(1) water-dependent uses and activities;
(2) water-related uses and activities; and
(3) uses and activities which are neither
water-dependent nor water-related for which
there is no feasible and prudent inland
alternative to meet the public need for the
use or activity.
6 AAC 80.040(a) (1995). (EN8)
In applying the coastal development standard, DNR
impliedly found that lessees' proposed activities at the lease sale
stage were either water-dependent or water-related. In accordance
with this finding, DNR proposed more than twenty general mitigation
measures "designed to prevent significant interference with other
water-dependent and water-related activities . . . ." (Emphasis
added.)
In Trustees for Alaska v. State, Department of Natural
Resources, 851 P.2d 1340, 1346-47 (Alaska 1993) (Camden Bay II),
Trustees challenged an oil and gas lease sale CCD on the basis that
DNR did not make an objective determination that the mitigation
measures prescribed to ensure the sale's consistency with the ACMP
would be effective. This court rejected that argument, holding
that it was reasonable for DNR to prescribe general mitigation
measures at the lease sale stage. Id. at 1347. The court
explained:
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.
Id.
In this case, DNR prescribed general mitigation measures
which provide "sensible guidelines"to minimize the effects of
development on "other water-dependent and water-related
activities." These measures include Term 13, which "authorizes the
director to restrict lease-related use to prevent unreasonable
conflicts with subsistence and commercial fishing operations."
Because DNR determined that the proposed activities were
either water-dependent or water-related, and 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, we find that the coastal development standard is
satisfied at this stage of the project. (EN9)
b. Priority of water-dependent uses
NTC argues that even if a general analysis is appropriate
at this stage, the CCD is still invalid because DNR failed to give
priority to water-dependent uses, particularly fishing. NTC argues
that oil and gas leasing activity is not a water-dependent use,
because of the availability of techniques such as directional
drilling, which can provide access to oil and gas deposits from
land. (EN10) NTC contends that fishing and oil and gas exploration
and development are in direct and irreconcilable conflict, and that
because oil and gas lease activities rank lower than marine fishing
and marine transportation in the hierarchy of uses, oil and gas
development cannot occur.
The State responds that directional drilling and other
land-based methods of accessing offshore tracts are necessarily
utilized "adjacent to"Cook Inlet and, therefore, are "water-
dependent." The State further argues that oil and gas development
and fishing do not necessarily conflict, and that one activity need
not exclude the other. The State argues that NTC's all-or-nothing
approach is contrary to the core purpose of the ACMP and Alaska's
constitutional mandate for the management of State lands, (EN11)
and that giving priority to one use over another does not mean
altogether abandoning any use that conflicts with the preferred
use.
The ACMP envisions management of the coastal zone for
multiple uses. See AS 46.40.020(4). Multiple use management is
inconsistent with simply identifying "conflicts"among uses and
then applying a hierarchy of uses to exclude lesser ranking uses;
instead, it inherently contemplates harmonizing competing uses
whenever possible. AS 46.40.020(4) (providing that management of
coastal land and water uses will "generally"give priority to those
which are economically or physically dependent on coastal location,
thus implying that other uses are not excluded). DNR has done this
to the extent it reasonably could at the lease sale stage. It will
have to do so again at the exploration and development stages, if
they are reached. Consequently, we find that DNR's CCD for Sale 78
conforms with the ACMP coastal development standard.
3. The habitats standard
NTC also contends that the CCD is invalid because it did
not satisfy the habitats standard of the ACMP. The habitats
standard provides that coastal area 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); see also 6 AAC
80.130(c) (1995). DNR may permit uses or activities which do not
maintain and enhance the coastal habitat only if it finds
(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];
(3) all feasible and prudent steps to
maximize conformance with [this section's
standards] will be taken.
6 AAC 80.130(d) (1995).
DNR found in its consistency analysis that "if oil and
gas deposits are discovered in the proposed sale area, there may be
uses or activities in the sale area which will not 'maintain or
enhance the biological, physical, and chemical characteristics' of
the coastal habitat in which they are located." Accordingly, DNR
was required to perform the three-part analysis under 6 AAC
80.130(d). DNR found that each element necessary to satisfy the
analysis was present. NTC charges that each of these findings was
inappropriate and, therefore, that DNR violated the habitats
standard. This court's "review is limited to ensuring that DNR's
decision was not arbitrary, capricious, or unreasonable." Camden
Bay II, 851 P.2d at 1347.
a. Significant public need
DNR found that the first part of the test was satisfied,
as there is a significant public need for the proposed oil and gas
lease sale. DNR found that there was a public need for the revenue
from the Sale, which would help offset projected revenue declines.
DNR also found that proceeds from the Sale would provide much-
needed local revenue, and that there was a significant public need
for jobs that would be created by exploration and, if it occurs,
development.
In Trustees for Alaska v. State, Department of Natural
Resources, 795 P.2d 805 (Alaska 1990) (Camden Bay I), we discussed
the benefits to the State of oil and gas lease development in the
context of a BIF for an oil and gas lease sale. In that BIF, DNR
discussed the State's dependence on petroleum-related income, and
the long-range goal of the State of utilizing the oil and gas lease
program to provide the basis for a stable and prosperous economy.
Id. at 810. It found that the State would benefit from the bonus
payments received from oil companies for the privilege of leasing
whether or not actual deposits are discovered, and that if actual
development does occur, it will make it more economically feasible
for other companies in the area to develop existing oil deposits.
Id. Consequently, we held that DNR's decision that the sale was in
the best interests of the State was not arbitrary or capricious.
Id. at 809-10.
In accordance with the holding in Camden Bay I, we
conclude that DNR properly determined that there is a significant
public need for oil and gas lease Sale 78. The first element of
the 6 AAC 80.130(d) analysis is therefore satisfied.
b. Feasible and prudent alternative
DNR also found that the second element of the 6 AAC
80.130(d) analysis was satisfied, because there is no feasible and
prudent alternative available to meet the public need for the
proposed oil and gas lease sale. (EN12) The State maintains that
while it might be feasible to offer less promising areas for lease,
it would not be prudent because potential lessees have expressed an
interest in the Sale 78 area. NTC argues that DNR failed to
demonstrate that there is no feasible and prudent alternative to
Sale 78.
In Camden Bay I, DNR based its finding that the sale was
in the State's best interest in part on the fact that if
development occurred it would make development of existing oil
deposits near the sale area economically feasible. 795 P.2d at
810. In Camden Bay II, DNR found that industry interest in the
area was significant, and concluded that it would not be prudent to
lease areas of lesser potential. Accordingly, we found that DNR
had articulated sufficient support for its finding that no feasible
and prudent alternative existed for the proposed sale. 851 P.2d at
1348.
In this case, DNR also considered economic factors in
determining the existence of a feasible and prudent alternative,
including the prudence of offering the area selected for
development as opposed to another area. DNR found that
[t]he only feasible alternative to offering
lands in the coastal zone is to offer lands
outside of the coastal zone. Given the public
need for oil and gas revenues, however, this
is not a prudent alternative in Alaska because
most of the prospective acreage and facilities
infrastructure lies in coastal areas.
Because DNR had a reasonable basis for finding that there was no
feasible and prudent alternative available, we hold that DNR
satisfied the second part of the tripartite test.
c. Feasible and prudent steps to maximize
conformance with the habitats standard
Finally, DNR found that the third element of the
tripartite analysis was met as it had taken all "feasible and
prudent steps to maximize conformance of the sale with 6 AAC
80.103(b) and (c) at the lease sale stage." DNR based this finding
on its determination that the mitigation measures prescribed in the
lease provide adequate support for the habitats standard. NTC
charges that DNR improperly found that all feasible and prudent
steps to maximize conformance with the habitats standard had been
required.
In Camden Bay II DNR identified twenty lease stipulations
expressly designed to achieve maximum compliance with the goals of
maintaining and enhancing the coastal habitat. Camden Bay II, 851
P.2d at 1347. DNR found that the lease terms and stipulations
complied with ACMP standards and minimized the sale's impact on the
environment. Id. at 1348. The court held that this analysis was
sufficient to support DNR's finding of compliance with the habitats
standard. Id.
In this case, DNR found that
[t]he proposed permitting terms and lease
stipulations represent all feasible and
prudent steps necessary to maximize
conformance of the sale with 6 AAC 80.130(b)
and (c) at the lease sale stage. Additional
measures may be identified and imposed when
specific development activities are reviewed
for consistency with the ACMP through the
permitting process.
In accordance with this finding DNR proposed more than twenty terms
and stipulations to minimize the Sale's impact on the environment.
(EN13) For example, Term 2 requires the "use of vehicles which do
not damage the vegetation or ground surface [during exploration].
The term restricts road construction during exploration by
requiring the use of existing road systems, port facilities, or air
services whenever feasible." Also, Term 9 "regulates the siting
and construction of pipelines to prevent obstruction to marine
navigation and fishing operations, and to provide protection from
climatic conditions, tides, currents, and geophysical hazards."
It is clear from the detailed and particular nature of
these stipulations that DNR took a "hard look"at the feasible and
prudent steps necessary to minimize the impact of the Sale on the
habitat. Therefore, we hold that DNR's analysis demonstrates a
reasonable basis for its finding that all feasible and prudent
steps to maximize conformance with the habitats standard have been
taken.
4. Consistency with local district management programs
Finally, NTC charges that the CCD is invalid because DNR
failed to comply with the relevant DCMPs -- for the Kenai Peninsula
Borough (Kenai), the Matanuska-Susitna Borough (Mat-Su), and the
Municipality of Anchorage (Anchorage). NTC argues that DNR is
obligated to make an independent determination that the Sale is
consistent with each DCMP, and that DNR failed to apply the
requirements of the DCMPs to the Sale.
a. District concurrence
Under the ACMP, DNR must find that Sale 78 is consistent
with the Kenai, Mat-Su, and Anchorage DCMPs. The ACMP regulations
provide:
Uses and activities conducted by state
agencies in the coastal area must be
consistent with the applicable district
program and the standards contained in this
chapter.
6 AAC 80.010(b) (emphasis added). An agency can authorize a use or
activity in the coastal zone only if "the agency finds that the use
or activity is consistent with the applicable district program."
Id. The State argues that DNR could rely on the districts'
concurrence with its consistency determination as the basis for its
finding that Sale 78 was "consistent with the applicable district
program[s]."
Agencies give substantial deference to a district's
interpretation of its CMP requirements. According to ACMP
regulation 6 AAC 50.120(a) (1995), an agency rendering a CCD should
give deference to the comments of "affected coastal districts with
approved programs." The regulation observes that "[a] coastal
resource district whose district program has been incorporated into
the ACMP is considered to have expertise in the interpretation and
application of its program." 6 AAC 50.120(a). Because the
regulations mandate such deference to the districts themselves, DNR
can rely on the concurrence of coastal districts as one basis for
its conclusion that a sale is consistent with the DCMPs. (EN14)
This deference does not, however, relieve DNR of the duty to
independently determine that the Sale is consistent with the
affected DCMPs. 6 AAC 80.010(b).
b. DNR's application of the district CMPs
If an affected coastal district does not expressly concur
in DNR's CCD, DNR must apply the local DCMPs to the extent it
reasonably can at the lease sale stage. See 6 AAC 50.120(a)
(1995).
(1) The Kenai district CMP
The Kenai district expressed its concurrence by letter.
Therefore, DNR could properly rely on the district's express
finding that the Sale is consistent with its CMP. Nonetheless, and
despite the deference DNR owes to the findings of a local district,
6 AAC 80.010(b) required DNR to determine independently that the
Sale is consistent with the Kenai DCMP. The record does not
indicate that DNR made any such determination. Instead, DNRþs
final finding is arguably inconsistent with the Kenai DCMP
requirement that the cumulative effects of a consistency
determination be examined. DNR stated that Cook Inlet was a
þmature petroleum provinceþ but did not address possible effects of
the federal Cook Inlet leasing program or a coal processing
project. Further, DNRþs lease stipulations may squarely conflict
with the express terms of the DCMPþs mitigation standard.
We remand to DNR with directions to independently
determine whether the Sale is consistent with the Kenai DCMP.
(2) The Anchorage district CMP
The Municipality of Anchorage did not expressly concur in
DNR's CCD for Sale 78. Therefore, 6 AAC 80.010(b) required DNR to
apply the Anchorage DCMP standards to the Sale tracts within the
Municipality of Anchorage to be consistent with the ACMP.
NTC argues that DNR failed to comply with the Anchorage
DCMP because it failed to prefer development of tracts in "areas
already developed." According to NTC, DNR failed to comply with
this goal because, instead of looking at the specific areas in
question, it considered the entire Cook Inlet as one developed
area. The State responds that this approach is appropriate, as the
tracts within the Municipality of Anchorage are designated by the
DCMP as "Class IV waters." Class IV waters are classified under
"utilization environment,"which comprises areas recognized as
being potentially suitable for future growth and development. The
State argues that the "preference for 'development within already
developed areas' is embodied in the classification of Class IV
waters."
Based on the Anchorage DCMP, the designation of an area
as Class IV waters does not appear to mean that all parts of that
area are in fact already developed; it means that they are subject
to development. DNR discussed the Anchorage DCMP briefly, but
nowhere considered the DCMP's goal that "[e]mphasis should be given
to development within already developed areas." Consequently, DNR
did not comply with the Anchorage DCMP. We remand to DNR with
instructions to consider the Anchorage DCMP's goal of
"emphasi[zing] . . . development within already developed areas."
(3) The Mat-Su district CMP
The Mat-Su Borough did not expressly concur in DNR's CCD
for Sale 78. Therefore, DNR also had to apply the Mat-Su DCMP
standards to tracts within that borough for the Sale to be
consistent with the ACMP.
NTC argues that, among other things, DNR failed to comply
with the Mat-Su DCMP's mitigation technique requirements. The
State replies that DNR reasonably addressed the mitigation concerns
of the Mat-Su DCMP at the lease sale stage, and will apply the
requirements more specifically at the exploration and development
stages.
Coastal Habitats Standard 6 of the Mat-Su DCMP provides
that
[m]itigation techniques . . . shall include
replacing stream bank vegetation where
possible [and] creation of oil and grease
separators prior to road development runoff
entering rivers, lakes, and streams, creation
of settlement systems prior to development
runoff entering stream corridors thereby
decreasing sedimentation.
Lease Term 21 addressed this mitigation standard, and
provides in relevant part:
At the option of the state, all improvements
such as roads, pads, and wells must either be
abandoned and the sites rehabilitated by the
lessee to the satisfaction of the state, or be
left intact and the lessee absolved of all
further responsibility as to their
maintenance, repair, and eventual abandonment
and rehabilitation.
However, this lease term is vague and standardless, and gives DNR
the discretion not to require revegetation at a later stage. It
therefore does not satisfy the Mat-Su mitigation technique
requirements. Accordingly, we remand to DNR with instructions to
consider the Mat-Su DCMP's mitigation standard in rendering its
CCD.
B. The Best Interest Finding
NTC asserts that DNR improperly issued its BIF, as direct
conflicts will inevitably arise between oil and gas exploration and
development activities and fishing in parts of the Sale area. NTC
argues that DNR failed to "resolve"these conflicts in its BIF,
and instead improperly deferred imposing restrictions which could
address these conflicts until the exploration and development
stages.
The State responds that DNR considered potential
conflicts between fishing and any future oil and gas development to
the extent reasonably possible at the lease sale stage, and that it
did not defer the resolution of such conflicts until the future.
This court reviews DNR's best interest determination
"only to the extent necessary to ascertain whether the decision has
a 'reasonable' basis,"and to ensure that it "was not arbitrary,
capricious, or prompted by corruption." Camden Bay I, 795 P.2d at
809 (quoting Hammond v. North Slope Borough, 645 P.2d 750, 758, 759
(Alaska 1982)). "If an agency does not consider an important
factor, its decision is regarded as arbitrary, and those important
factors which it did consider, must be discussed in the decisional
document." Camden Bay I, 795 P.2d at 811.
Before DNR can approve the disposal of State land, the
Commissioner, or the director of the DNR division with jurisdiction
over the disposition in question acting with the consent of the
Commissioner, must make a "written finding that the interests of
the state will be best served"by such action. AS 38.05.035(e).
(EN15) In this case, the Director of the Division of Oil & Gas,
James Eason, determined that Sale 78 would be in the State's best
interest. (EN16)
In approving the Sale, DNR considered and addressed
potential conflicts between fishing and oil and gas exploration and
development at the lease sale stage. The BIF contains a separate
section entitled "Current and Projected Uses in the Sale Area,
Including Uses and Values of Fish and Wildlife." This section
discusses the fisheries the lease area supports and their
importance and value, including the salmon set and drift net
fisheries. At numerous points throughout the BIF, DNR recognized
the possibility that oil and gas activities might conflict with
these fisheries. DNR prescribed specific mitigation measures in
the BIF to minimize the impact of these potential conflicts. (EN17)
DNR also discussed its belief that fisheries would be sufficiently
protected through application of various statutory and regulatory
authorities designed to minimize the negative impacts of oil and
gas activities, including the ACMP, at the time lessees seek
permission to undertake specific activities. (EN18)
DNR is not required to "resolve"all potential conflicts,
but it must address them and, to the extent permitted by available
knowledge, prescribe measures to minimize them. DNR attempted to
harmonize conflicting uses so that both fishing and oil and gas
activity could take place; however, it was not required to give an
absolute priority to one over the other.
Because DNR considered the potential conflicts between
fishing and oil and gas activities in reaching its decision that
Sale 78 is in the State's best interest, and because it discussed
these factors in its decisional document, we hold that DNR gave the
necessary hard look in issuing its BIF. Therefore, we AFFIRM the
superior court's holding that the BIF was valid.
C. The Superior Court's Public Interest Litigant Status
Determination and Order that DNR Bear the Costs of
Preparing the Record for Appeal
1. Public interest litigant status
The State cross-appeals from the superior court's
determination that United Cook Inlet Drift Association (UCIDA) and
Kenai Peninsula Fishermen's Association (KPFA) are public interest
litigants. (EN19) This court reviews a trial court's finding as to
a litigant's public interest status under the abuse of discretion
standard. Keane v. Local Boundary Comm'n, 893 P.2d 1239, 1250
(Alaska 1995).
The State argues that UCIDA and KPFA had an economic
incentive to appeal the superior court's decision, and therefore do
not qualify as public interest litigants. The State contends that
the superior court abused its discretion by ignoring this economic
interest, based on its finding that a public right was being
litigated. (EN20) NTC asserts that UCIDA and KPFA are public
interest litigants under Alaska law.
In Kodiak Seafood Processors Ass'n v. State, 900 P.2d
1191 (Alaska 1995), we considered four factors in determining the
public interest litigant status of a party:
(1) Is the case designed to effectuate strong
public policies?
(2) If the Plaintiff succeeds will numerous
people receive benefits from the lawsuit?
(3) Can only a private party have been
expected to bring the suit?
(4) Would the purported public interest
litigant have sufficient economic motive to
file suit even if the action involved only
narrow issues lacking general importance?
Id. at 1198. In that case, the State argued that the superior
court abused its discretion by not directly addressing the fourth
criterion in its determination that the Kodiak Seafood Processors
Association (KSPA) was a public interest litigant. The State
claimed that KSPA had sufficient economic incentive to bring an
action, because its members could suffer "irreparable economic
harm"if the scallop dredging at issue was allowed in a closed
area. Id.
We rejected the State's argument, and held that the
superior court had not abused its discretion. We stated that "[i]t
is true that KSPA's members have a significant stake in the crab
and bottom fish fisheries around Kodiak. However, possessing an
economic interest does not necessarily destroy a party's capacity
to be a public interest litigant." Id. We found that the
potential economic benefit to KSPA from the litigation was
indirect. We also found that the fact that KSPA sought only
equitable relief and not damages indicated that economic motivation
was not a significant factor in bringing the case. Id. at 1199.
Based on these findings, we held that the superior court did not
abuse its discretion in determining that KSPA was a public interest
litigant. Id.
In this case, as in Kodiak Seafood Processors, any
economic benefit to the parties from the litigation is indirect.
The superior court found that
[w]hile it is true that the appellant's [sic]
include fishing organizations . . . it is
public rights that are at stake here. The
fact that an organization may have an economic
interest in whether or not tracts of land are
sold to oil companies, does not obscure the
fact that it is a public right being
litigated.
Similarly, the parties here have made no claim for monetary
damages, indicating that economic motivation was not a significant
factor in bringing the claim. Therefore, in accordance with Kodiak
Seafood Processors, we hold that the superior court did not abuse
its discretion in finding that KPFA and UCIDA were public interest
litigants.
2. Cost of preparing the record for appeal
The State argues that the superior court, having
determined public interest litigant status at the onset of
litigation, erred in requiring the State to bear the cost of
preparing the administrative record on appeal. NTC argues that the
superior court did not err, but rather exercised its broad
discretion under Appellate Rule 521 to relax the application of
Appellate Rule 604 in this case.
We need not address this issue. Because we reverse and
remand, NTC must be considered the prevailing party on appeal. The
issue is consequently moot.
IV. CONCLUSION
We AFFIRM the superior court's holding that DNR could
rely on its preliminary best interest finding in its conclusive
consistency determination. We also AFFIRM the superior court's
holding that the conclusive consistency determination satisfied the
coastal development standard at this stage, and the superior
court's finding that DNR satisfied the habitats standard. However,
we REVERSE the superior court's holding that all of the district
coastal management programs were properly met. Accordingly, we
REMAND to DNR with instructions to consider the district coastal
management programs of the Kenai Peninsula Borough, the
Municipality of Anchorage, and the Matanuska-Susitna Borough in
issuing its consistency analysis.
We AFFIRM the superior court's holding that DNR's best
interest finding for the Sale was adequate.
As to the cross-appeal, we AFFIRM the superior court's
holding that KPFA and UCIDA were public interest litigants. We do
not address the claim that the court erroneously imposed the cost
of preparing the appellate record on the State, as the issue is
moot.MATTHEWS, Justice, dissenting in part.
I dissent from one aspect of today's opinion.
Part III.A.2 of the opinion discusses the coastal development standard applicable
at the lease sale stage. The standard in question is embodied in 6 AAC 80.040(a). It mandates
that in planning for and approving development in coastal areas priority shall be given in the
following order to
(1) water-dependent uses and activities;
(2) water-related uses and activities; and
(3) uses and activities which are neither water-dependent nor
water-related for which there is no feasible and prudent inland
alternative to meet the public need for the use or activity.
DNR did not address the question whether undersea leases accessible by
directional drilling from shore were water-dependent uses. Under the definition of water-
dependency, the critical inquiry is whether onland directional drilling can be conducted far
enough back from the shore so that it is not "adjacent"to the shore. (EN1) Given the priorities
expressed in 6 AAC 80.040(a), in areas of conflict DNR may not permit nonwater-dependent
activities which conflict with existing water-dependent activities. This means that DNR has a
duty to require nonadjacent directional drilling where nonadjacent directional drilling is feasible.
DNR concedes that, if feasible, directional drilling should be required, but states
that there was no reason to require this at the lease sale stage since it can, in some fashion, be
imposed later. I quote from footnote 19 of DNR's brief:
Therefore, if it is feasible and prudent to access oil and gas
deposits within the fishing corridor by directional drilling activity,
the law requires directional drilling. To require DNR to repeat in
its mitigation measures laws that apply with specificity in the
future when an actual activity is proposed, is irrational.
Today's opinion notes DNR's concession, Slip Op. at n.10, expresses the view that it would be
preferable "that the lease or mitigation measures expressly mandate nonadjacent directional
drilling when possible,"Slip Op. at n.9, but holds that DNR was not required to impose such
lease or mitigation measures at the lease sale stage.
I disagree. DNR is required to take "all feasible and prudent steps to maximize"
the biological and physical habitat of the inlet when permitting activities such as oil exploration,
drilling and extraction, which are potentially degrading to the environment. 6 AAC 80.130(d).
The requirement that all feasible and prudent steps be taken is not inherently flexible. If there
is a feasible and prudent step which would tend to protect the environment, that step must be
taken.
The leases issued by DNR could require nonadjacent directional drilling when
such drilling is feasible from a technical and economic standpoint. Inclusion of such a
requirement would forestall claims by lessees that this is not a requirement that they have
bargained for, and thus would reduce the chances that conventional drilling will take place where
directional drilling is feasible. By failing to impose a requirement of directional drilling when
feasible DNR has violated the "all feasible and prudent steps"command of 6 AAC 80.130(d).
On remand I would add the following instruction:
DNR should insert in the leases a clause that nonadjacent
directional drilling will be required where feasible. If a particular
lessee does not agree to this clause, the affected lease should be
rescinded.
ENDNOTES:
1. The decision to delete a number of tracts from the Sale after the CCD was issued does
not affect the structure of the Sale so as to implicate ACMP consistency concerns. NTC does
not allege that any other changes to the structure of the Sale between the date of the CCD
(September 9) and the date of the BIF (October 19) raise consistency concerns.
2. In effect, NTC argues that DNR cannot permit staged activities, but must impose all
mitigation measures at the outset, including those that arguably apply only at the subsequent
stages of operation and development, regardless of whether those stages are ever reached. We
rejected a similar argument in Trustees for Alaska v. State, Department of Natural Resources,
851 P.2d 1340, 1347 (Alaska 1993) (Camden Bay II).
We assume that DNR will impose appropriate measures to ensure compliance with the
ACMP at each subsequent stage. If not, we assume that NTC or like public interest litigants
will have sufficient incentive to demonstrate that DNR has failed to satisfy the requirements of
the ACMP at that time.
3. On September 3, 1993, DNR issued a proposed CCD for Sale 78. This CCD responded
to public comment on the PBIF, and included amendments to the proposed mitigation measures
in order to increase protection of the coastal environment. Receiving no objection to the
proposed CCD from the reviewing State agencies and the affected coastal districts, DNR issued
the final CCD on September 9, 1993.
4. The State halfheartedly argues that this standard did not apply at all at the lease sale
stage. This argument is without merit. The specific standards of the ACMP have been applied
to earlier oil and gas lease sales. See Camden Bay II, 851 P.2d at 1342-48.
5. "Water-dependent"is defined as a "use or activity which can be carried out only on, in,
or adjacent to water areas because the use requires access to the water body." 6 AAC
80.900(17) (1995). "Water-related"is defined as "a use or activity which is not directly
dependent upon access to a water body, but which provides goods and services that are directly
associated with water-dependence and which, if not located adjacent to water, would result in
a public loss of quality in the goods or services offered." 6 AAC 80.900(18) (1995).
6. The State argues that any future developments would nevertheless be water-dependent or
water-related.
7. The State argues that scrutiny of such projects at discrete phases is contemplated by the
ACMP. The term "project"is defined by the regulations as
an activity or use which will be located in or may affect the coastal
zone of Alaska and which is subject to consistency review under
sec. 307 of the Coastal Zone Management Act of 1972, as
amended (16 U.S.C. sec. 1456), or which requires the issuance of
one or more state permits; when a land or water activity is
developed or authorized in discrete phases, and each phase
requires agency decisions regarding permits, each phase is
considered a "project."
6 AAC 50.190(14) (1995) (emphasis added).
The legislature has subsequently enacted a statute expressly authorizing consistency
determinations for phased uses and activities. AS 46.40.094, enacted by ch. 38, sec. 8, SLA
1994.
8. In a publication on the ACMP, the State of Alaska Office of Coastal Management
commented that the purpose of the coastal development standard was that
[r]ather than being specific to a use, this standard addresses the
problems of limited waterfront space and the effects of dredging
and filling. Subsection (a) establishes priorities for the limited
amount of waterfront space. The standard can be applied to
specific use proposals by determining whether a proposed use is
water-related or water-dependent and whether a reasonable inland
alternative exists.
Office of Coastal Management, State of Alaska & Office of Coastal Zone Management, U.S.
Dep't of Commerce, State of Alaska Coastal Management Program and Final Environmental
Impact Statement 56 (1979).
9. Although it would be preferable, as NTC proposes, that the lease or mitigation measures
expressly mandate nonadjacent directional drilling when possible, the failure to do so does not
render the mitigation measures ineffective in this case.
10. We note that the State appears to concede that directional drilling, if feasible and prudent,
should be required, but that this requirement can be added later. The State admits that "if it is
feasible and prudent to access oil and gas deposits within the fishing corridor by directional
drilling activity, the law requires directional drilling." Given the State's concession, a failure
by DNR to impose this specific measure when actual activity is proposed would presumably
warrant judicial relief.
11. Alaska's Constitution expresses a policy of encouraging development of the State's
resources "by making them available for maximum use consistent with the public interest."
Alaska Const. art. VIII, sec. 1. The constitution charges the legislature with "provid[ing] for
the utilization, development, and conservation of all natural resources belonging to the State,
including land and waters, for the maximum benefit of its people." Alaska Const. art. VIII, sec.
2. The legislature is authorized to provide for leasing of State lands for exploration, "subject
to reasonable concurrent uses." Alaska Const. art. VIII, sec. 8. These constitutional provisions
contemplate management of State land for multiple uses.
12. It appears that "feasible prudent"in 6 AAC 80.130(d)(2) should read "feasible and
prudent." The parties quibble over the omission of the word "and." However, the omission of
that word in 6 AAC 80.130(d)(2) appears to be nothing more than a drafting or transcription
error.
13. NTC argues that DNR should have prescribed further measures, such as directional
drilling, to eliminate potential adverse impacts on other resources. Requiring a term stating that
onshore drilling will be required when it is "feasible and prudent"is premature at this stage.
Such a term should be considered at the development stage, when an accurate assessment of the
feasibility of directional drilling, based on current technology and geographical limitations, can
be made. Currently,
[a]ccording to petroleum engineers on staff with the DO&G,
directional drilling techniques now make it possible to reach up to
15,000 feet, almost three-miles, horizontally from the actual drill
site . . . . This may vary according to where the actual oil deposit
is located, how deep the well is drilled and the type of geology or
rock that had to be drilled through to reach the deposit.
It may be that measures even more protective than directional drilling will be required and
available at the development stage. Although it would be preferable to include such
requirements conditionally in the mitigation measures, the failure to do so is not fatal to DNR's
finding. See supra note 9.
Judicial review of the adequacy of measures prescribed by DNR prior to development
or operation will ultimately determine whether those measures fail to require all feasible and
prudent steps to maximize conformance with the ACMP.
14. The State also argues that a district's failure to object can be considered as a
concurrence. The State cites 6 AAC 50.070(j) (1995) which provides:
If . . . an affected coastal resource district with an approved
program . . . does not concur with the proposed consistency
determination, it may request elevation of the review by submitting
a written statement which describes its concerns and includes a
proposed alternative consistency determination which would meet
its concerns.
We do not find this argument persuasive. A district's failure to object does not amount to an
express concurrence that a sale complies with the DCMP.
15. The legislature has since specified that a preliminary or final best interest finding must
consider and discuss
(1) . . . facts that are known to the director at the time of
preparation of the finding and that are
(A) material to issues that were raised during the period
allowed for receipt of public comment, whether or not material to
a matter set out in (B) of this paragraph, and within the scope of
the administrative review established by the director under (e)(1)
of this section; or
(B) material to the following matters:
(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 oil and gas
exploration, development, production, and transportation;
(vi) the reasonably foreseeable cumulative effects of oil and gas
exploration, development, production, and transportation on the
sale area, including effects on subsistence uses, fish and wildlife
habitat and populations and their uses, and historic and cultural
resources;
(vii) lease stipulations and mitigation measures, including any
measures to prevent and mitigate releases of oil and hazardous
substances, to be included in the leases, and a discussion of the
protections offered by these measures;
(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;
(ix) the reasonably foreseeable fiscal effects of the lease sale
and the subsequent activity on the state and affected municipalities
and communities, including the explicit and implicit subsidies
associated with the lease sale, if any;
(x) the reasonably foreseeable effects of oil and gas
exploration, development, production, and transportation on
municipalities and communities within or adjacent to the lease sale
area; and
(xi) the bidding method or methods adopted by the
commissioner under AS 38.05.180; and
(2) the basis for the director's preliminary or final finding, as
applicable, that, on balance, leasing the area would be in the
state's best interest.
AS 38.05.035(g), enacted by ch. 38, sec. 3, SLA 1994 (effective Aug. 7, 1994).
16. Eason explained his decision as follows:
The state's interests in development of its petroleum resources is
vital to its wellbeing and to the support of all its citizens in
maintaining the quality of their life. With the mitigation measures
imposed on leases and plans of operations, the petroleum resources
of the sale area can most likely be explored and developed without
significantly affecting fish and wildlife populations or traditional
human uses. The state has sufficient authority from general
statutory and regulatory empowerments, the lease contract, lease
stipulations, and plan of operations permit terms to ensure that
lessees conduct their activities safely and in a manner that protects
the integrity of the environment and maintain opportunities for
subsistence uses.
On the basis of the foregoing findings, applicable laws and
regulations, and the documents reviewed during preparations for
Sale 78, I conclude that, all things considered, the potential
benefits of the sale outweigh the possible adverse impacts, and that
Oil and Gas Lease Sale 78, Cook Inlet, will best serve the interests
of the state of Alaska.
17. For example, in response to a public comment that oil and gas leasing was incompatible
with fishing because offshore oil platforms and underwater pipelines would interfere with fishing
boats, DNR explained:
This possible conflict is addressed by Term 13 which states the
director may restrict lease-related uses to prevent conflicts with
subsistence and commercial fishing operations. In enforcing this
term the division, during review of plans of operation, will work
with other agencies and the public to assure that potential conflicts
are identified and avoided to the fullest extent possible. Available
options include alternative site selection, requiring directional
drilling, buried pipelines, and seasonal drilling restrictions. Plans
of operation are subject to the [Kenai district] CMP. Proposed
operations will be evaluated and restrictions will be applied on a
case-by-case basis depending on the specific activity proposed, its
location and the time of year it will take place.
18. DNR also considered establishing seasonal restrictions or surface entry restrictions to
avoid conflicts between fishing and oil and gas activities.
19. The State does not challenge the public interest litigant status of the remaining
Appellants.
20. The State concedes that the first three requirements for public interest litigant status are
satisfied, but argues that the fourth is not.
ENDNOTES (Dissent):
1. "Water-dependent"is a "use or activity which can be carried out only on, in, or adjacent
to water areas because the use requires access to the water body." 6 AAC 80.900(17).
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