Allen v. ALASKA OIL AND GAS CONSERV. COM'N

147 P.3d 664
CourtAlaska Supreme Court
DecidedJuly 21, 2006
DocketS-11519
StatusPublished
Cited by3 cases

This text of 147 P.3d 664 (Allen v. ALASKA OIL AND GAS CONSERV. COM'N) is published on Counsel Stack Legal Research, covering Alaska Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Allen v. ALASKA OIL AND GAS CONSERV. COM'N, 147 P.3d 664 (Ala. 2006).

Opinion

147 P.3d 664 (2006)

Monte J. ALLEN, Dr. George Kasper, Danco International Oil & Gas, Inc., and Danco Royalty Partnership Ltd., Appellants,
v.
ALASKA OIL AND GAS CONSERVATION COMMISSION, ConocoPhillips Company, and ConocoPhillips Alaska, Inc., Appellees.

No. S-11519.

Supreme Court of Alaska.

July 21, 2006.
Rehearing Denied November 30, 2006.

*665 James B. Gottstein, Law Offices of James B. Gottstein, Anchorage, for Appellants.

Robert E. Mintz, Assistant Attorney General, Anchorage, and Scott J. Nordstrand, Acting Attorney General, Juneau, for Appellee Alaska Oil and Gas Conservation Commission.

William B. Rozell, Juneau, and Barbara F. Fullmer, ConocoPhillips Alaska, Inc., Anchorage, for Appellees ConocoPhillips Company and ConocoPhillips Alaska, Inc.

Before: BRYNER, Chief Justice, MATTHEWS, EASTAUGH, FABE, and CARPENETI, Justices.

OPINION

CARPENETI, Justice.

I. INTRODUCTION

Monte Allen, George Kasper, and Danco International Oil & Gas, Inc. (collectively Allen) obtained oil and gas exploration leases in 1986. Allen retained the overriding royalty interest while the working interest in the leases was transferred to several oil companies, eventually coming under the sole control of ConocoPhillips. Although the leases are near the state's most productive gas field, the North Cook Inlet Unit (NCIU), no oil or gas has been produced from the leases. One day before the leases were to expire, Allen petitioned the Alaska Oil and Gas Conservation Commission (commission) for a unitization order combining his leases into the NCIU and thus entitling him to a share of royalties from the NCIU.

After intervening litigation on the justiciability of the petition, the commission denied Allen's unitization petition on the merits. Upon thorough and thoughtful review, the superior court denied Allen's request for a trial de novo and then affirmed the commission's decision on appeal. Allen's appeal raises three main questions: (1) Is Allen entitled to a trial de novo as provided in AS 31.05.080? (2) Did the commission apply the proper statutory standard to Allen's unitization petition? (3) Did the commission breach any statutory duty to Allen? Because we conclude that Allen is not entitled to a trial de novo, that the commission applied the *666 proper statutory standard to Allen's petition, and that the commission did not breach any statutory duty to Allen, we affirm the judgment of the superior court.

II. FACTS AND PROCEEDINGS

A. Facts

This case comes before us after protracted litigation. Danco, Inc., entered into two ten-year oil and gas leases with the State of Alaska on September 1, 1986.[1] Danco assigned its working interest in the leases to Amoco Production Co., which in turn assigned that interest to ARCO Alaska, Inc. In 1992 Phillips Petroleum Co. obtained forty percent of the working interest in the leases from ARCO Alaska. After a series of mergers, ConocoPhillips Co. and its subsidiary, ConocoPhillips Alaska, Inc. (collectively ConocoPhillips)[2] came to own the entire working interest.[3] Danco's successor, appellant Danco International Oil & Gas, Inc., is an overriding royalty interest owner in the leases, as are co-appellants Monte Allen and George Kasper.[4]

On August 30, 1996 — the day before the leases were to expire — Allen filed a petition for compulsory unitization with the commission, asking that the commission use its authority under AS 31.05.110 to merge the leases into the existing NCIU adjacent to the south and west of the leases. Unitization would entitle Allen to a share of the oil and gas royalties for the entire unit rather than solely for its own leases.[5] The NCIU is the leading natural gas field in Alaska, having produced nearly 1.7 trillion cubic feet as of March 2005. Allen argues that estimated reserves doubled since the unit was established, indicating that gas is being produced from under his leases. The commission found that estimated reserves had not appreciably increased since 1975, eleven years before Danco purchased its interest.

The commission denied Allen's petition on the grounds that he lacked standing as an overriding royalty interest owner and that the petition was moot since the lease had expired and the commission lacked the power to order retroactive unitization. After the superior court affirmed, we reversed, holding that the overriding royalty interest made Allen an "interested person" with standing to petition for unitization,[6] and holding that "no sound reason" justified the commission's position that it had no power to order retroactive *667 unitization.[7] We remanded to the commission for a hearing on the merits of the unitization petition.[8]

B. Proceedings

On remand, the commission denied Allen's petition, issuing the final decision on February 8, 2002. ConocoPhillips, as the working interest owner, also appeared as a party before the commission. The commission found, among other things, that the leases "do not contain any portion" of the productive reservoir of the NCIU, that unitization would not advance the management of NCIU reservoirs, and that "[n]one of the statutory requirements" for compulsory unitization had been met. The commission reaffirmed its decision after a limited rehearing. Allen appealed to the superior court. Allen moved for a trial de novo but the superior court denied the motion. Allen then filed a petition for review, which we denied.[9] The superior court subsequently affirmed the commission's decision. Allen appeals.

III. STANDARD OF REVIEW

When the superior court acts as an intermediate appellate court, we undertake an independent review of the agency determination, and may affirm the decision below on any ground supported by the record.[10] We review questions of law, including statutory interpretation, using our independent judgment, and "adopt the rule of law that is most persuasive in light of precedent, reason, and policy."[11] We review agency findings of law requiring agency expertise under the reasonable basis standard.[12] We review agency findings of fact for substantial evidence.[13] Substantial evidence is "such relevant evidence as a reasonable mind might accept as adequate to support a conclusion."[14]

IV. DISCUSSION

A. Allen Is Not Entitled to a De Novo Superior Court Trial Under AS 31.05.080.

Allen argues that AS 31.05.080(b) entitles him to a de novo trial in the superior court on any legal or factual issues remaining after the disposition of this appeal. Alaska Statute 31.05.080(b) provides, in relevant part:

A party to the rehearing proceeding . . . may appeal from it to the superior court. . . . The trial upon appeal shall be without a jury, and the transcript of proceedings before the commission, including the evidence taken in hearings by the commission, shall be received in evidence by the court . . . in the same manner as if the evidence was originally offered in the superior court. . . . The court shall determine the issues of fact and of law and shall . . . enter its order either affirming or vacating the order of the commission.[[15]]

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147 P.3d 664, Counsel Stack Legal Research, https://law.counselstack.com/opinion/allen-v-alaska-oil-and-gas-conserv-comn-alaska-2006.