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You can search the entire site. or go to the recent opinions, or the chronological or subject indices. PLC, LLC. and MH2, LLC. v. State of Alaska, Department of Natural Resources (4/9/2021) sp-7514
Notice: This opinion is subject to correction before publication in the P ACIFIC 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@akcourts.us.
THE SUPREME COURT OF THE STATE OF ALASKA
PLC, LLC and MH2, LLC, )
) Supreme Court No. S-17500
Appellants, )
) Superior Court No. 3KN-17-00650 CI
v. )
) O P I N I O N
STATE OF ALASKA, )
DEPARTMENT OF NATURAL ) No. 7514 - April 9, 2021
RESOURCES, )
)
Appellee. )
)
A
ppeal from the Superior Court of the State of Alaska, Third
Judicial District, Kenai, Jennifer K. Wells, Judge.
Appearances: William M. Bankston and Suzanne A. Adler,
Bankston Gronning Brecht P.C., Anchorage, for Appellants.
Jason Hartz and Emily A. Feenstra, Assistant Attorneys
General, Anchorage, and Kevin G. Clarkson, Attorney
General, Juneau, for Appellee.
Before: Bolger, Chief Justice, Winfree, Maassen, and
Carney, Justices. [Borghesan, Justice, not participating.]
BOLGER, Chief Justice.
I. INTRODUCTION
PLC, LLC, as well as its co-party MH2, LLC, (collectively PLC) holds an
overriding royalty interest in a State oil and gas lease in the Ninilchik Unit. The unit
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operator applied to expand a subset of that unit called the Falls Creek Participating Area.
After some back and forth over the extent of the expanded area, the Department of
Natural Resources (DNR) approved the expansion. The lease area in which PLC holds
royalty interests was included in the original application by the unit operator, but it was
left out of the approved application. PLC appealed the decision to DNR's Commissioner
(the Commissioner), who dismissed the appeal on the grounds that PLC lacked standing.
PLC appealed to the superior court, which affirmed the Commissioner's
decision. Because PLC has a financial stake in DNR's decision whether to approve the
unit operator's proposal for unit expansion to include the PLC-associated lease, we
conclude PLC has standing, reverse the superior court decision, and remand to the
agency for further consideration consistent with this opinion.
II. FACTS AND PROCEDURAL HISTORY
A. The Expansion Of The Falls Creek Participating Area
PLC holds an overriding royalty interest (ORRI) in ADL 384314, a State
oil and gas lease (PLC's lease). This interest entitles PLC to a percentage of royalties
from the oil and gas produced by the lease at the surface, when and if the lease becomes
productive.1
PLC's lease is part of the Ninilchik Unit operated by Hilcorp Alaska, LLC.
The unit is made up of three participating areas. Each participating area consists of the
acreage above a hydrocarbon reservoir and includes the leases contained in that acreage.2
As the reservoir is explored and hydrocarbons extracted, the participating area expands
1 See Gottstein v State, Dep't of Nat. Res. , 223 P.3d 609, 611 n.3 (describing
royalty payments and ORRIs).
2 11 Alaska Administrative Code (AAC) 88.185(26) (2021); 11 AAC
83.351(a) (2018).
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3
and contracts to better match the reservoir that lies below. To expand or contract a
4
participating area, the unit operator must apply to DNR for approval.
In 2016 Hilcorp applied to expand the Falls Creek Participating Area,
including an 80-acre portion of PLC's lease in the proposed expansion. Hilcorp stated
that "[o]nly acreage that has been proven to contribute to the production of natural gas
has been included in this application." DNR opened the issue to public comment, and
PLC submitted a letter to DNR. PLC requested that DNR expand the area even further,
to encompass more than the 80 acres of PLC's lease already included in Hilcorp's
proposal. In support of its argument that the participating area should be further
expanded, PLC attached various reports and geological information to its comment.
WhenreviewingHilcorp's application,DNRappliedamethodtodetermine
the likelihood of hydrocarbon presence under the expanded participating area that was
differentthan Hilcorp's method. DNRproposed modifications to theexpansionto reflect
the areas its methodology identified as likely to contain hydrocarbons. Hilcorp agreed
to the modifications and submitted a revised application, which DNR approved in May
2017. The approved application did not include the 80 acres from PLC's lease. DNR's
justification was that those 80 acres, despite being included in Hilcorp's original
expansion application, were not "reasonably estimated to be capable of producing"
natural gas in paying quantities.
B. Appeal To The Commissioner
PLC appealed the decision to the Commissioner in June 2017, arguing the
methodology first used by Hilcorp to determine the participating area was more accurate
than that used by DNR, and DNR was therefore wrong to not approve the original
3 11 AAC 83.351(c).
4 Id.
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application. PLC also argued that DNR had erred and violated 11 AAC 83.351(c) by
modifying the expansion plan to exclude PLC's lease, because Hilcorp had asserted
5 PLC argued
PLC's acreage was "proven to contribute" to the production of natural gas.
Hilcorp's well files supported this assertion of productivity; it specifically pointed to the
Falls Creek #6 well, which PLC claimed was drilled diagonally into its lease and which
Hilcorp had reported to be producing natural gas.
The Commissioner denied PLC's appeal in July 2017, reasoning an ORRI
holder like PLC held a "nonpossessory interest in a percentage of a production at the
surface, free of costs," and thus lacked standing to appeal a decision regarding unit
expansion. The Commissioner did not address PLC's substantive arguments. The
Commissioner explained:
If and when the operator chooses to produce from [PLC's
lease], PLC/MH2 will then have a right to a share of that
production. But as a nonpossessory interest in production, an
ORRI does not provide PLC/MH2 with an interest in whether
the operator produces from that lease as part of one particular
participating area or another.
C. Appeal To The Superior Court
PLCappealed to the superior court, which agreed that PLC lacked standing
to appeal to the Commissioner. The superior court reasoned that PLC was not
6 but that PLC would be "if the participating area was
"aggrieved by" DNR's actions
5 11 AAC 83.351(c) provides: "A participating area must be expanded to
include acreage reasonably estimated through use of geological, geophysical, or
engineering data to be capable of producing or contributing to the production of
hydrocarbons in paying quantities . . . ."
6 AS 44.37.011(b) ("If a person is aggrieved by a decision of the Department
of Natural Resources . . . the person may appeal to the commissioner.").
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being contracted." The superior court concluded that ORRI holders lack standing to
appeal an expansion of the participation area.
The superior court struck a document from the appeal record that PLC had
attached to its brief as "Appendix A." Appendix A, entitled "the Report of Sundry Well
Operations,"containedpubliclyavailabledatafromtheAlaskaOil and Gas Conservation
Commission (AOGCC). DNR moved to strike the appendix because it was not part of
the administrative record, arguing that it was "never submitted to or considered by the
agency." PLC suggested the Appendix A data contradicted DNR's conclusion that
hydrocarbons were not being extracted fromthe area under its lease. PLC contended that
considering the information in Appendix A was proper and necessary because similar
information from a confidential geological report submitted by Hilcorp to DNR was
missing from the record. But the superior court granted the State's motion to strike.
D. Allegations Of Impropriety
Shortly after the superior court's order, but while DNR's motion for
attorney's fees was still pending, the State Department of Law received an application
for employment from the superior court judge's law clerk. The application included a
draft copy of the superior court's decision as a writing sample. The writing sample was
nearly identical to the final superior court decision. The Department of Law provided
a copy of the writing sample to counsel for PLC.
PLCrequested a hearing and discovery, arguing the law clerk's submission
created the appearance of impropriety. The superior court then issued a notice to the
parties, with an attached affidavit from the superior court judge. The judge apologized
for conduct calling into question the integrity of the judiciary but denied any ex parte
contact. She explained she had given the law clerk permission to use the decision as a
writing sample because all disputed issues had been resolved and the decision was a
matter of public record. The judge asserted her clerk did not apply for these particular
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positions until after drafting the opinion, and the judge did not know of the applications
when she issued the opinion. The judge emphasized that while opinion writing is
"always a collaborative process," she was "solely responsible for this opinion" and did
not delegate her analysis or decision-making.
PLC withdrew its motion for a hearing and filed a motion for relief from
7 PLC noted the law clerk had redacted party names from draft orders used as
judgment.
writing samples for previous job applications to the Department of Law, but did not do
so here. PLC highlighted three typographical errors in the draft decision uncorrected in
the final decision, as well as one corrected with white-out, suggesting the superior court
judge may not have properly reviewed the opinion before signing it. The superior court
denied PLC's motion for relief from judgment.
PLC now appeals.
III. STANDARD OF REVIEW
In an administrativeappeal, wereview the agency decision directly without
deference to the superior court's decision.8
We review the superior court's decisions
appealed here -the motion to strike for improper supplementation of the administrative
7 PLCtitled its request for relief as a "motion for relief fromjudgment" under
Alaska Civil Rule 60. But as the superior court was hearing the case as an appellate
court, this matter more closely resembles a "petition for rehearing" under Alaska
Appellate Rule 506. See Alaska R. App. P. 601(c) ("On any point not addressed in Part
Six, procedure in appeals to the superior court shall be governed by the provisions of
Parts Two and Five of these rules.").
8 Alaska Crude Corp. v. State, Dep't of Nat. Res., Div. of Oil & Gas , 261
P.3d 412, 418-19 (Alaska 2011).
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9 10 11
record, the petition for rehearing, and the award of attorney's fees - all for abuse
of discretion. We find abuse of discretion in regards to an award of attorney's fees only
where the award is "arbitrary, capricious, manifestly unreasonable, or stemmed from an
improper motive." 12
WhetherPLChas standing hingeson thedefinition ofthewords"aggrieved
by" in AS 44.37.011(b).13 We review an agency interpretation of statutory terms using
one of two standards: reasonable basis or independent judgment.14 When an agency's
adjudication of a regulated party's claim requires resolution of policy questions within
the agency's area of expertise, the reasonable basis standard applies.15 Under the
reasonable basis standard, we "give[] deference to the agency's interpretation so long as
9 Cf. Alvarez v. Ketchikan Gateway Borough, 28 P.3d 935, 938 (Alaska
2001) (reviewing denial of motion to supplement for abuse of discretion).
10 Id.
11 Griswold v. Homer Bd. of Adjustment , 440 P.3d 248, 252 (Alaska 2019).
12 Alaskan Adventure Tours, Inc. v. City & Borough of Yakutat, 307 P.3d 955,
960 (Alaska 2013) (quoting Wagner v. Wagner, 183 P.3d 1265, 1266-67 (Alaska 2008)).
13 AS 44.37.011(b) states: "If a person is aggrieved by a decision of the
Department of Natural Resources not made by the commissioner and is otherwise
eligible to seek the commissioner's review of the decision, the person may appeal to the
commissioner."
14 Matanuska-Susitna Borough v. Hammond, 726 P.2d 166, 175 (Alaska
1986).
15 Marathon Oil Co. v. State, Dep't of Nat. Res., 254 P.3d 1078, 1082 (Alaska
2011).
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16
it is reasonable." But when the agency's specialized knowledge and experience are not
particularly relevant to the issue at hand, we substitute our own judgment. 17
The State argues the reasonable basis standard of review should apply here
becausean ORRI holder's standing tochallengeaunitizationdecision isintertwined with
the management of Alaska's oil and gas resources. We agree that many aspects of oil
and gas law are so embedded with policy nuance as to require deference to agency
expertise.18 But that is not so here. Standing is a fundamental legal concept that
determines who can and cannot pursue legal claims. Even in the complicated
administrative arena of oil and gas law, we apply our independent judgment to interpret
a statutory standing requirement.19
IV. DISCUSSION
A. PLC Has Standing To Challenge DNR's Unitization Decision.
When confronted with a question of standing, we ask whether the litigant
20
In answering that
is "a 'proper party to request an adjudication of a particular issue.' "
question, we "interpret the concept [of standing] broadly" with an eye toward increased
16 Matanuska-Susitna Borough, 726 P.2d at 175.
17 Marathon Oil, 254 P.3d at 1082.
18 See id. (applying reasonable basis standard of review to DNR
Commissioner's interpretation of AS 38.05.180(aa) because whether to allow retroactive
application of certain statutory royalty provisions was within DNR's area of expertise).
19 See Allen v. Alaska Oil & Gas Conservation Comm'n, 1 P.3d 699, 701
(Alaska 2000) (applying independent judgment to interpret statutory standing
requirement to appeal AOGCC decision on compulsory unitization).
20 Trs. for Alaska v. State, Dep't of Nat. Res., 736 P.2d 324, 327 (Alaska
1987) (quoting Moore v. State, 553 P.2d 8, 23 n.25 (Alaska 1976)).
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21
access to justice. We generally recognize two types of standing: citizen-taxpayer and
22
interest-injury.
But in some highly regulated areas, like land use and resource
management, the legislature has limited standing by statute.
Alaska Statute 44.37.011(b) establishes the standing requirement for
appealing DNR decisions: "If a person is aggrieved by a decision of the Department of
Natural Resources not made by the [C]ommissioner and is otherwise eligible to seek the
[C]ommissioner's reviewofthedecision, thepersonmayappeal to the[C]ommissioner."
Both parties apparentlyagreethat PLC's eligibilityto appeal to the Commissioner hinges
23 This statute does not define the word "aggrieved," but
on whether PLC is "aggrieved."
the legislature has used the same word to define standing in other contexts.24 In
Griswold v. Homer Board of Adjustment we recognized that by limiting standing to those
"aggrieved" by municipal decisions, the legislature eliminated citizen-taxpayer standing
but left interest-injury standing intact.25 We therefore noted that "[d]eciding whether a
person is 'aggrieved' in a land use case . . . still resembles a traditional standing
26 Although we decided Griswold in a different regulatory context, the same
inquiry."
21 Kanuk ex rel. Kanuk v. State, Dep't of Nat. Res. , 335 P.3d 1088, 1092
(Alaska 2014).
22 Id.
23 AS 44.37.011(b); cf. 11 AAC 02.010(e) ("An eligible person affected by
a [DNR] decision . . . that the commissioner did not sign or cosign may appeal the
decision to the commissioner . . . .").
24 See, e.g., AS 29.40.060 (concerning judicial review for decisions of
municipal bodies).
25 440 P.3d 248, 252 (Alaska 2019).
26 Id. (quoting AS 29.40.060).
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analysis applies here. The State seems to agree, as it relies on the framework of
interest-injury analysis to argue that PLC is not "aggrieved."
Toestablish interest-injurystanding, alitigant must show: (1) "a'sufficient
27 and (2) "an interest which is
personal stake' in the outcome of the controversy"
adversely affected by the complained-of conduct."28 The State argues that, as an ORRI
holder, PLC has no right to participate in unit management decisions and thus lacks a
sufficient personal stake in the outcome of a participating area expansion. We disagree.
1. PLC has a sufficient personal stake because had DNR approved
the unit operator's original proposed expansion, PLC's lease
would have been included, resulting in a direct financial benefit.
An ORRI does not provide PLCany right toparticipatein unit management
decisions; under the Ninilchik unit operating agreement, the unit operator has the sole
right to apply for an expansion of a participating area. But unit operators are not the only
entities with a stake in the boundaries of a participating area. The financial result of
unitization is to distribute the profits of production from a subsurface reservoir to the
interest holders in leases overlying that reservoir.29
This includes the holders, like PLC,
of overriding royalty interests. Thus PLC's stake is clear: if acreage from its lease is
27 Keller v. French , 205 P.3d 299, 304 (Alaska 2009) (quoting Ruckle v.
Anchorage Sch. Dist. , 85 P.3d 1030, 1040 (Alaska 2004)).
28 Id. (quoting Alaskans for a Common Language, Inc. v. Kritz , 3 P.3d 906,
915 (Alaska 2000)).
29 See 11 AAC 83.371 (2018) (providing for allocation of production and
costs among leases in unit area once approved by the Commissioner).
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included in the participating area, PLC gets paid, while if its acreage is excluded, it does
30
not.
The State argues that, if gas is being produced from PLC's lease as alleged
by PLC, then PLC is entitled to payment whether or not its lease is included in the
expansion. The State suggests PLC should sue the unit operator in superior court to
recoup any missing payments. But the availability of a remedy in an alternative
proceeding does not negate standing in this proceeding. The possibility of PLC
obtaining some amount of money by pursuing a separate legal action does not negate
that, if DNR had agreed to include PLC's lease in the unit expansion, PLC would
currently be paid under an allocation formula.31
To support the State's argument that an ORRI holder has no interest in a
unitization decision, the State cites an Interior Board of Land Appeals decision, Stanley
Mollerstuen et. al.32 The Interior Board of Land Appeals held ORRI holders lacked
standing to appeal because the unit agreement in question provided the unit operator "the
exclusive right . . . of exercising any and all rights of the parties" to the agreement; the
Board observed that if ORRI holders "have a problem regarding the unit operator's
expansion of the unit, their dispute is with the unit operator."33 Mollerstuen has some
factual similarity to this case. But its general pronouncement that ORRI holders can
never have standing to contest a regulator's decisions does not square with our standing
30 See 11 AAC 83.351(c) ("A revised division of interest or formula allocating
production and costs must be submitted for approval under 11 AAC 83.371 at the time
of expansion or contraction of a participating area.").
31 See id.
32 146 IBLA 1 (1998).
33 Id. at 5.
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precedent, which emphasizes a broad interpretation of standing in favor of increased
access to justice. 34
The State asks us to follow Mollerstuen and declare that any dispute PLC
has is with Hilcorp, the unit operator. The State posits that because PLC's predecessor
long since relinquished any operating interest, PLC cannot now force Hilcorp, the
operating interest holder, to explore and produce from PLC's lease. This is correct but
not relevant. PLC does not claim Hilcorp should be forced to produce from its lease.
Indeed, PLC claims Hilcorp is already producing from PLC's lease.
The State also argues an ORRI holder's interest attaches only when
hydrocarbons are produced at the surface. But PLC claims gas has already been
produced from beneath its lease. Gas is being produced from the reservoir beneath the
Falls Creek Participating Area. If that reservoir extends beneath PLC's lease, it has an
interest in realizing profits from its ORRI. So while the State presents the issue as
whether an ORRI holder generally has a sufficient personal stake in unit management
decisions, the real question is whether PLC has a sufficient personal stake in DNR's
decision to exclude the acreage in which PLC has an ORRI from the Falls Creek
Participating Area. Because the outcome of DNR's decision affects PLC's interest, it
does have such a stake.
This does not conflict with our prior cases considering the rights of ORRI
holders. In Allen v. Alaska Oil & Gas Conservation Commission ORRI holders
34 See Kanuk ex rel. Kanuk v. State, Dep't of Nat. Res. , 335 P.3d 1088, 1092-
93 (Alaska 2014); cf. Griswold v. Homer Bd. of Adjustment , 440 P.3d 248, 254 (Alaska
2019) (determining Griswold met a statutory standing requirement by producing
evidence showing municipally-enabled reduced setbacks on neighboring property
diminished his enjoyment of his properties half a mile away).
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35
unsuccessfully petitioned for forced unitization the day before their leases expired. The
AOGCC dismissed the ensuing appeal as moot, but we disagreed because a retroactive
36 We noted AOGCC
unitization order would operate to extend the ORRI holders' leases.
had conceded standing and, in a footnote, "express[ed] no view on how the issue would
be decided in the absence of a concession by the commission."37
In Gottstein v. State, Department of Natural Resources we affirmed
dismissal of a lease's ORRI holders' due process claims in relation to DNR's approval
of a unit operator's proposed development plan excluding the lease from development.38
The lease was set to expire if not explored and it did so after the commissioner approved
the plan.39 On appeal by the lease's ORRI holders, the superior court upheld the
commissioner's decision, and we affirmed.40 On the issue of standing, we cited Allen ,
stating again that we expressed "no view on how the issue [of standing] would be
decided," had the issue been raised below.41 In response to the ORRI holders' due
process claim, we determined "approval of the [plan] neither deprived nor infringed on
35 1 P.3d 699, 700 (Alaska 2000).
36 Id.
37 Id. at 702 n.7. The State argues AOGCC's standing provision, which
allows an "interested person" to petition AOGCC, is broader than DNR's standard, under
which a person must be "aggrieved by" a decision. That may be true but would not
preclude a determination that PLC has standing if PLC can show the requisite interest
and injury to qualify as aggrieved.
38 223 P.3d 609, 622 (Alaska 2010).
39 Id. at 612, 616-18.
40 Id. at 610, 618, 620.
41 Id. at 620 n.22.
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[the] overriding royalty interest" in the lease, describing the ORRI holders' property
interests as unchanged by the decision and noting the working interest holders had the
same right to develop the lease as before the plan was approved. 42
The State argues that here, just as in Gottstein, an ORRI holder contests the
Commissioner's approval of a unit operator's proposal that fails to advance the ORRI
holders' interests. Because we concluded in Gottstein that DNR's approval did not
"deprive or infringe on" an ORRI, the State would have us conclude that DNR's action
could not affect PLC's ORRI.
But Gottstein answered a question ofORRI holders' due process rights, not
their standing. A party need not prove an agency has infringed upon or deprived it of its
fundamental rights just to establish it has an appreciable personal stake in an
administrative action. And even if the legal questions were identical, the facts in
Gottstein and this case are fundamentally different. In Gottstein the ORRI holders
43 here, PLC claims the unit operator
pressed to have the unit operator develop its lease;
already has. The Gottstein unit operator excluded the ORRI holders' leases from its
development plan. Here, the unit operator included PLC's lease in its expansion plan;
DNR was the entity that excluded the lease from the expansion.
2. PLC's interest is adversely affected by DNR's decision.
To establish interest-injury standing PLC must show "an interest which is
adversely affected by the complained-of conduct."44 PLC undoubtedly has an interest
42 Id. at 622.
43 Id. at 616.
44 Keller v. French, 205 P.3d 299, 304 (Alaska 2009) (quoting Alaskans for
a Common Language, Inc. v. Kritz, 3 P.3d 906, 915 (Alaska 2000)).
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in the production of hydrocarbons from beneath its lease, but it must also show that
DNR's decision adversely affected that interest.
PLC spends the majority of its brief outlining this alleged injury. PLC
relies primarily on Appendix A to show that the bottom hole of a producing well is
located beneath its lease. But Appendix A is not in the agency record and was never
submitted to or considered by the agency, so the superior court did not abuse its
45
discretion in refusing to consider Appendix A.
The State thus argues that nothing in the record shows that hydrocarbons
have been removed from beneath PLC's lease. But this is not entirely true. Hilcorp
initially included 80 acres of PLC's lease in its application to expand the participating
area and described that acreage as "proven to contribute" to the production of natural
gas. PLC's letter to DNR during the public comment period on the original proposed
expansion included an argument that the participating area should include even more of
PLC's acreage. This letter included geological data that PLC claims justifies its position.
And when appealing DNR's approval of the modified expansion, PLC argued that
Hilcorp's well files supported Hilcorp's assertion that PLC's acreage had been proven
to contribute natural gas; specifically, PLC referenced the publicly available files of the
Falls Creek #6 well, which PLC claimed had been drilled diagonally into its lease and
which Hilcorp had reported was producing natural gas.
More to the point, PLC is not specifically required to prove hydrocarbons
are being removed from beneath its lease to show an adverse affect on its interest. We
express no opinion on whether PLC's ultimate position, that the unit expansion should
include PLC's lease, is correct. That is a question on the merits the Commissioner is
much better situated to resolve. But by showing first that the unit operator applied to
45
See infra IV.B.
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expand the unit to include PLC's lease as "proven to contribute" to hydrocarbon
production and second that DNR excluded PLC's lease from the expansion, PLC has
made a plausible allegation of injury sufficient to establish standing here.
The State argues PLC's alleged injury is only theoretical and standing
cannot be based on theoretical harm, citing Tesoro Corp. v. State, Department of
46 In Tesoro, however, the alleged harm was much more abstract than it is here.
Revenue.
To attack a taxation structure, Tesoro made up a hypothetical example of an entity that
would be impermissibly taxed on revenue exceeding its total earnings.47 Werejected that
argument; Tesoro's reality did not align with the hypothetical injury it described.48 But
here PLC does not concoct a hypothetical entity that would be harmed by the State's
action. Instead it claims to have actually lost revenue as a result of DNR's decision to
exclude its acreage from the participating area. This is not the kind of hypothetical harm
we cautioned against using to establish standing in Tesoro.
Hilcorp's application toexpandtheparticipatingareaincludedacreagefrom
PLC's lease and affirmed that acreage was proven to produce hydrocarbons. DNR's
decision to reject that proposal and use a different methodology to define the
participating area resulted in the exclusion of PLC's 80 acres from the expansion.
Evidence in the record supports that the participating area is producing natural gas in
paying quantities. Had PLC's lease been included in the expansion as Hilcorp originally
requested, PLC would have been entitled to a share of the profits of production of natural
46 312 P.3d 830, 845-46 (Alaska 2013) (holding hypothetical harm from
alleged inconsistency in taxation regulations was insufficient to confer standing).
47 Id.
48 Id.
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49
gas from the entire participating area. DNR's decision to exclude that acreage resulted
in lost revenue to PLC, adversely affecting its financial interests. This alleged injury is
sufficient to satisfy the statutory requirement that PLC be "aggrieved by" DNR's
50 We thus conclude PLC had standing to appeal DNR's decision to the
decision.
Commissioner.
B. The Superior Court Did Not Abuse Its Discretion In Striking
Appendix A From The Record.
PLC asserts the superior court abused its discretion by striking Appendix
A from the record on appeal. Appendix A is a 273-page AOGCC well-history file that
PLC submitted to the superior court as an attachment to its brief. PLC did not move that
the administrative record be supplemented with the document. The State moved to strike
Appendix A under Alaska Appellate Rules 604(b)(1) and 210(a) because it was not in
the record on appeal before the Commissioner. The superior court granted the State's
motion.
The record on appeal from an administrative agency "consists of the
original papers and exhibits filed with the administrative agency."51
The record also
52 An appellate
includes information considered by the agency in reaching its decision.
court will supplement the record only in a few narrow circumstances: procedural
irregularities at the administrative level; indicia of the applicant's right to due process
49 See 11 AAC 83.371 (providing for allocation of production and costs
among leases in unit area once approved by Commissioner).
50 AS 44.37.011(b).
51 Alaska R. App. P. 604(b)(1)(A).
52 Alvarez v. Ketchikan Gateway Borough, 28 P.3d 935, 939 (Alaska 2001).
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having been compromised; or a clear showing that "the proffered evidence would impact
the outcome of the case." 53
PLC concedes that Appendix A was not in the agency record. PLC argues
that the record on appeal is incomplete without the material in Appendix A because it
proves injury using information that may have been contained in a confidential
geological report submitted to DNR but excluded from the record on appeal. But PLC
could have presented Appendix A to the Commissioner in its original appeal and chose
not to do so. And PLC did not seek to supplement, modify, or correct the record with
the unit operator's geological report actually submitted to DNR but missing from the
record on appeal.54
We considered a similar issue in South Anchorage Concerned Coalition,
Inc. v. Municipality of Anchorage Board of Adjustment, when the appellant sought to
supplement the record on appeal with a scientific report issued after the administrative
55 We affirmed the superior court's decision to deny the motion,
proceedings concluded.
56 As in South
noting the new report was relevant but not determinative to the outcome.
Anchorage , Appendix A is unnecessary to our holding here.
53 S. Anchorage Concerned Coal., Inc. v. Municipality of Anchorage Bd. of
Adjustment , 172 P.3d 774, 780 (Alaska 2007).
54 See Alaska R. App. P. 210(e)(2) (providing confidential materials filed
below "shall be maintained under seal while they constitute part of a record upon
appeal"), (i) (establishing appellate court's power to correct, modify, or supplement the
appellate record); Alaska R. App. P. 604(b)(1) (providing agency record on appeal
includes "the original papers and exhibits filed with the administrative agency" and
establishing that Alaska R. App. P. 210 generally applies to administrative appeals).
55 172 P.3d at 779.
56 Id. at 780, 782.
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PLC argues the data contained in Appendix A was "necessarily considered
by the Commissioner" and therefore should be included in the record on appeal. PLC
cites Alvarez v. Ketchikan Gateway Borough , in which a taxpayer appealing a property
assessment moved to supplement the record with the borough assessor's complete files
on the properties, claiming the board had referred to information from and thus
57 We affirmed the superior
necessarily considered these files in making its decision.
court's denial of the motion because the record on appeal did contain all materials
presented to, considered by, and referred to by the board during its proceedings.58
In contrast to Alvarez, there is a gap in this record on appeal. Hilcorp
submitted a confidential geologic report to DNR as part of its original application to
expand the participating area; the cover page of that report appears in the appellate
record, while the content is absent. But that fact alone does not give PLC authority to
bring new, different evidence before an appellate body. The absence of one document
from the record does not give a party the right to attach an entirely different document
to an appellate brief in contravention of the appellate rules.59
As in Alvarez , the record lacks any indication that DNR considered the
materials in Appendix A. These materials were not submitted to DNR, and DNR never
referenced them when approving the expansion plan. Nor did the Commissioner rely on
57 28 P.3d at 937, 939.
58 Id. at 940.
59 See State, Dep't of Nat. Res. v. Transamerica Premier Ins. Co., 856 P.2d
766, 776 (Alaska 1993) ("[A]n appellate brief can neither append nor refer to evidence
outside the record."); A laska R. App. P. 210(a) ("Material never presented to the trial
court may not be added to the record on appeal."); Alaska R. App. P. 212(c)(1)(G)
("Appellant shall state the facts relevant to each issue, with references to the record as
required by paragraph (c)(8) . . . .").
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Appendix A in reaching his decision, which was based solely on his interpretation of the
rights enjoyed by ORRI holders generally. Similarly, the superior court engaged in a
general assessment of the rights of ORRI holders. The contents of Appendix A are
irrelevant to both decisions. And Appendix A is unnecessary to our holding on the
question of standing. We thus conclude the superior court did not abuse its discretion
by striking Appendix A from the record.
C. The Superior Court Did Not Abuse Its Discretion When It Denied The
Motion For Relief From Judgment.
PLC argues the superior court abused its discretion when it denied PLC's
motion for relief from judgment. PLC moved for relief from judgment under Alaska
Civil Rule 60, contending a job application by the superior court judge's law clerk to the
Department of Law created the appearance of impropriety. But because the superior
court was acting as an intermediate appellate court, PLC's request is more properly
analyzed as a petition for rehearing under Alaska Appellate Rule 506. A party may
petition for rehearing when the court "overlooked, misapplied or failed to consider" a
directly controlling legal principle or "overlooked or misconceived" a material fact,
60
proposition of law, or material question in the case.
Canon 2 of the Alaska Code of Judicial Conduct states: "In all activities,
61 The test
a judge shall . . . avoid impropriety and the appearance of impropriety. . . ."
for an appearance of impropriety is stated in the commentary to this canon: "whether the
conduct would create in reasonable minds a perception that the judge's ability to carry
60 Alaska R. App. P. 506(a)(1)-(3).
61 Alaska Code Jud. Conduct Canon 2(A).
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62
out judicial responsibilities with integrity, impartiality, and competence is impaired."
We assume without deciding that the law clerk's use of a superior court draft opinion in
favor of a party when applying for a job with that party's legal representation created an
appearance of impropriety under this test. The question before us is whether such an
appearance of impropriety would require vacating this superior court decision.
To determine whether to vacate a judgment tainted by the appearance of
impropriety, we apply the factors articulated by the United States Supreme Court in
Liljeberg v. Health Services Acquisition Corp. : "(1) the risk of injustice to the parties in
the particular case; (2) the risk that the denial of relief will produce injustice in other
63
cases; and (3) the risk of undermining the public's confidence in the judicial process."
We conclude these factors do not require overturning the superior court's decision in this
case.
First, there appears to be little risk of injustice to the parties in this case.
PLC expresses concern at the similarity between the issued opinion and the writing
sample, noting the released opinion shares three typographicalerrors withthe lawclerk's
draft and another error was changed with white-out. PLC argues this similarity shows
the superior court judge failed to properly review the opinion before publishing it. But
there is more to opinion drafting than merely reviewing for typographical errors, and the
mere presence of such errors in the final product says little about the judge's role in the
decision process. In her affidavit, the judge confirmed she was solely responsible for her
decision, stating, "In no way did I delegate my analysis or decision-making to anyone
else."
62 Alaska Code Jud. Conduct Canon 2(A) cmt.
63 Heber v. Heber, 330 P.3d 926, 930 (Alaska 2014) (quoting Vent v. State,
288 P.3d 752, 757 (Alaska App. 2012) (citing Liljeberg v. Health Servs. Acquisition
Corp., 486 U.S. 847, 864 (1988))).
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Second, there appears to be little risk that denial of relief will produce
injustice in other cases. When the judge gave permission for her clerk to use the draft
as a writing sample all underlying issues were resolved, and the decision was already part
of the public record. The judge did not know which positions the clerk was applying for
when she gave this permission. And the parties have not advised us of any other cases
where this clerk's application could have raised an appearance of impropriety.
Finally, we cannot discern any reason this situation should undermine the
public's confidence in the judicial process. In response to PLC's motion, the superior
court judge fully disclosed the circumstances of her decision to allow the clerk's use of
the draft opinion as a writing sample, and she acknowledged she had exercised poor
judgment because the clerk effectively used a draft opinion affirming DNR's decision
to apply to DNR's "law firm" very shortly after that opinion was issued. But the judge
confirmedshehad exercised independent judgmentin reaching her decision, and shewas
unaware the clerk was applying to this position when she issued the opinion.
We therefore conclude the superior court did not abuse its discretion by
64 But we hope publication of this
denying PLC's motion for relief from judgment.
opinion will minimize the possibility of this situation happening again.
V. CONCLUSION
Becauseweconclude PLChas standing to appeal toDNR's Commissioner,
weREVERSEthe superior court's decision and REMAND the matter to DNRfor further
proceedings consistent with this opinion. We VACATE the grant of attorney's fees to
the State.
64 Because we hold PLChas standing to appeal DNR's decision on the merits,
the State is not entitled to costs and fees under Alaska Appellate Rule 508. We thus
decline to comment on the merits of PLC's objections to the superior court's fee order.
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