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Home My WebLink AboutO 150Other Order 150 1. February 28, 2019 Petition for a hearing on a complaint of waste Hilcorp, filed by Hollis French 2. March 12, 2019 Email from Hollis French regarding petition 3. April 8, 2019 French Request for Reconsideration 4. March 15, 2024 French submission 5. Mach 21, 2024 AOGCC response to French submission STATE OF ALASKA ALASKA OIL AND GAS CONSERVATION COMMISSION 333 West Seventh Avenue Anchorage, Alaska 99501 Re: Petition for a Hearing on a Complaint ) Other Order 150 of Waste. AS 31.05.60(a) ) Docket Number: OTH-19-002 March 20, 2019 On March 1, 2019, the Alaska Oil and Gas Conservation Commission (AOGCC) received a "petition for a hearing on a complaint of waste," dated February 28, 2019, from Hollis S. French (French). French alleges "waste occurred from an 8" line carrying fuel gas to Platform A in Cook Inlet, which is operated by Hilcorp." According to French, "the line leaked gas to the atmosphere for approximately three months in the winter of 2017, at a rate of approximately 300,000 scf per day." French demands a hearing to be allowed to urge AOGCC to take action upon his complaint. AOGCC investigated the leak at the time it occurred. AOGCC initially believed the source of the leak was upstream gas, i.e., gas which remained an AOGCC-regulated resource and had not been metered and severed from the property. Had that proven to be the case, the gas leak would have constituted waste and AOGCC would have instituted an enforcement action against Hilcorp. However, AOGCC's investigation ultimately revealed the leaking gas had been purchased by Hilcorp from a third -party provider, Harvest Pipeline (Harvest), and was being shipped back to Platform A. The primary purpose behind the prohibition against waste is to maximize resource recovery. Consequently, like every other state's oil and gas conservation regulatory authority, AOGCC regulates waste occurring upstream (occurring before oil or gas is metered and severed from the property) in connection with drilling, exploration, and production activities. Neither AOGCC nor any of its counterparts in other states has ever attempted to extend its jurisdiction over waste to gas which has been sold by a vendor. Once oil or gas is metered and severed from the property, AOGCC's authority to make a waste determination regarding use of the oil or gas is at an end. The gas involved in the Hilcorp leak had been sold by Harvest to Hilcorp. AOGCC does not have waste jurisdiction over gas Hilcorp purchased from Harvest. Absent jurisdiction, there is no basis for a hearing. French's request for a hearing is DENIED. Daniel T. Seamount, Jr. J sie L�Clmnielowski Commissioner Commissioner Other Order 150 March 20, 2019 Page 2 of 2 rcca.anvaruGtcA1 JUN AND APPEAL NOTICE As provided in AS 31.05.080(a), within 20 days after written notice of the entry of this order or decision, or such further time as the AOGCC grants for good cause shown, a person affected by it may file with the AOGCC an application for reconsideration of the matter determined by it. If the notice was mailed, then the period of time shall be 23 days. An application for reconsideration must set out the respect in which the order or decision is believed to be emoneous. The AOGCC shall grant or refuse the application for reconsideration in whole or in part within 10 days after it is filed. Failure to act on it within 10 -days is a denial of reconsideration. If the AOGCC denies reconsideration, upon denial, this order or decision and the denial of reconsideration are FINAL and may be appealed to superior court. The appeal MUST be filed within 33 days after the date on which the AOGCC mails, OR 30 days if the AOGCC otherwise distributes, the order or decision denying reconsideration, UNLESS the denial is by inaction, in which case the appeal MUST be filed within 40 days after the date on which the application for reconsideration was filed. If the AOGCC grants an application for reconsideration, this order or decision does not become final. Rather, the order or decision on reconsideration will be the FINAL order or decision of the AOGCC, and it may be appealed to superior court. That appeal MUST be filed within 33 days after the date on which the AOGCC mails, OR 30 days if the AOGCC otherwise distributes, the order or decision on reconsideration. In computing a period of time above, the date of the event or default after which the designated period begins to run is not included in the period; the last day of the period is included, unless it falls on a weekend or state holiday, in which event the period runs until 5:00 P.m. on the next day that dnea —t r i ,.., , ..,veva.a _- ----- STATE OF ALASKA ALASKA OIL AND GAS CONSERVATION COMMISSION 333 West Seventh Avenue Anchorage, Alaska 99501 Re: Petition for a Hearing on a Complaint ) Other Order 150 of Waste. AS 31.05.60(a) ) Docket Number: OTH-19-002 March 20, 2019 On March 1, 2019, the Alaska Oil and Gas Conservation Commission (AOGCC) received a "petition for a hearing on a complaint of waste," dated February 28, 2019, from Hollis S. French (French). French alleges "waste occurred from an 8" line carrying fuel gas to Platform A in Cook Inlet, which is operated by Hilcorp." According to French, "the line leaked gas to the atmosphere for approximately three months in the winter of 2017, at a rate of approximately 300,000 scf per day." French demands a hearing to be allowed to urge AOGCC to take action upon his complaint. AOGCC investigated the leak at the time it occurred. AOGCC initially believed the source of the leak was upstream gas, i.e., gas which remained an AOGCC-regulated resource and had not been metered and severed from the property. Had that proven to be the case, the gas leak would have constituted waste and AOGCC would have instituted an enforcement action against Hilcorp. However, AOGCC's investigation ultimately revealed the leaking gas had been purchased by Hilcorp from a third -party provider, Harvest Pipeline (Harvest), and was being shipped back to Platform A. The primary purpose behind the prohibition against waste is to maximize resource recovery. Consequently, like every other state's oil and gas conservation regulatory authority, AOGCC regulates waste occurring upstream (occurring before oil or gas is metered and severed from the property) in connection with drilling, exploration, and production activities. Neither AOGCC nor any of its counterparts in other states has ever attempted to extend its jurisdiction over waste to gas which has been sold by a vendor. Once oil or gas is metered and severed from the property, AOGCC's authority to make a waste determination regarding use of the oil or gas is at an end. The gas involved in the Hilcorp leak had been sold by Harvest to Hilcorp. AOGCC does not have waste jurisdiction over gas Hilcorp purchased from Harvest. Absent jurisdiction, there is no basis for a hearing. French's request for a hearing is DENIED. //signature on file// //signature on file// Daniel T. Seamount, Jr. Jessie L. Chmielowski Commissioner Commissioner Other Order 150 March 20, 2019 Page 2 of 2 As provided in AS 31.05.080(a), within 20 days after written notice of the entry of this order or decision, or such further time as the AOGCC grants for good cause shown, a person affected by it may file with the AOGCC an application for reconsideration of the matter determined by it. If the notice was mailed, then the period of time shall be 23 days. An application for reconsideration must set out the respect in which the order or decision is believed to be erroneous. The AOGCC shall grant or refuse the application for reconsideration in whole or in part within 10 days after it is filed. Failure to act on it within 10 -days is a denial of reconsideration. If the AOGCC denies reconsideration, upon denial, this order or decision and the denial of reconsideration are FINAL and may be appealed to superior court. The appeal MUST be filed within 33 days after the date on which the AOGCC mails, OR 30 days if the AOGCC otherwise distributes, the order or decision denying reconsideration, UNLESS the denial is by inaction, in which case the appeal MUST be filed within 40 days after the date on which the application for reconsideration was filed. If the AOGCC grams an application for reconsideration, this order or decision does not become final. Rather, the order or decision on reconsideration will be the FINAL order or decision of the AOGCC, and it may be appealed to superior court. That appeal MUST be filed within 33 days after the date on which the AOGCC mails, OR 30 days if the AOGCC otherwise distributes, the order or decision on reconsideration. In computing a period of time above, the date of the event or default after which the designated period begins to run is not included in the period; the last day of the period is included, unless it falls on a weekend or state holiday, in which event the period runs until 5:00 nm nn thr.nwt ef-11,„A..e..--n.n___...__�__I .. . ... Bernie Karl K&K Recycling Inc. P.O. Box 58055 Fairbanks, AK 99711 George Vaught, Jr. P.O. Box 13557 Denver, CO 80201-3557 Gordon Severson 3201 Westmar Cir. Anchorage, AK 99508-4336 Darwin Waldsmith P.O. Box 39309 Ninilchik, AK 99639 Penny Vadla 399 W. Riverview Ave. Soldotna, AK 99669-7714 Richard Wagner P.O. Box 60868 Fairbanks, AK 99706 5 Alaska Oil and Gas Conservation Commission 333 West Seventh Avenue Anchorage, Alaska 99501-3572 Main: 907.279.1433 Fax: 907.276.7542 www.aogcc.alaska.gov March 21, 2024 Hollis S. French 2640 Telequana Drive Anchorage, Alaska 99517 Dear Mr. French, On March 18, 2024, the Alaska Oil and Gas Conservation Commission (AOGCC) received your correspondence addressing concerns regarding a matter the AOGCC previously investigated and issued a final decision on in 2022.1 While your letter will be part of the public record, the AOGCC considers this matter closed. Sincerely, Brett W. Huber, Sr. Chair, Commissioner 1 Alaska Oil and Gas Conservation Commission, Other Order 191 (January 20, 2022). Brett W. Huber, Sr. Digitally signed by Brett W. Huber, Sr. Date: 2024.03.22 13:59:33 -05'00' 4 March 15, 2024 Commissioner Brett Huber Alaska Oil and Gas Conservation Commission 333 W. 7" Avenue Anchorage, AK 99501 Dear Commissioner Huber, 2640 Telequana Drive Anchorage, Alaska 99517 RECFIVE® MAR 18 [024 AOGCC I've recently reviewed correspondence between AOGCC and Representative Jennie Armstrong and was dismayed to find the AOGCC erroneously describing its jurisdictional powers. I write to correct the record. This controversy began in 2017 when a large leak of natural gas was discovered in Cook Inlet. In answering a complaint I filed alleging waste, AOGCC put forth these reasons in defense of its position that its jurisdiction ends at the leaseline or sales gas meter: 1. "The agency does not have jurisdiction over gas sold by a vendor." 2. "The agency does not have jurisdiction over gas Hilcorp purchased from Harvest Pipeline." 3. "The agency does not have jurisdiction over gas metered and severed from a property." These three rationales are from Other Order 150, issued March 20, 2019. 1 appealed the agency's ruling and the majority of the brief I filed in Superior Court was devoted to rebutting these reasons. (I've included a copy of my briefing with this letter.) I focused on the police power of the state and listed examples from legal cases in which the police power was not defeated by commercial transactions. See the material gathered at Tab A, under the heading, "The police power of the state applies to private sales of oil and gas and to both sides of the meter." In response to my argument in Superior Court, the agency articulated three new rationales for lacking jurisdiction: 4. "Waste only occurs when recoverable hydrocarbons are lost" 5. "Once metered and severed, the gas has been produced, and ceases to be a recoverable resource" 6. "The combined effect of custody transfer and severance from the lease is that the resource has been produced, and in turn there is no longer a natural resource subject to a waste determination" In my reply, I focused on demonstrating the weakness of these rationales. For example, I pointed out that there is no definition in Alaska law for "recoverable hydrocarbon." As you might imagine, undefined terms are generally a poor place to put a lot of legal emphasis. 1 also noted that the agency failed to consider many of the listed examples in the statutory definition of waste, found at Alaska Statute 31.05.170(15), and which pertained to the leak of gas in Cook Inlet. (A copy of that statute is found at Tab B.) I noted that the leak of gas in Cook Inlet directly led to losses in oil production. I also used a 1947 case from Texas to show how broadly one can read the Texas definition of waste, and, by extension, since the two are very similar, Alaska's definition of waste. Finally, I pointed out the absurdity of the position taken in point 6: how in the name of reason can one even suppose that gas downstream of the meter is no longer a natural resource? The ruling in Superior Court was in favor of the agency. I appealed. When the case got to the Alaska Supreme Court, the agency had to defend the Superior Court decision. In attempting to harmonize what the AOGCC said itself in Other Order 150 with what the Superior Court judge wrote in his decision, the agency made some grievous mischaracterizations of the record. I pointed this out to the Supreme Court in a heading titled, "The dilemma faced by the agency caused it to misrepresent what Other Order 150 actually said." It was in this vein that I pointed out the agency reached a legal low point when it argued that "f a]bsent waste, there is no waste jurisdiction" I stated that the agency's reasoning put the cart before the horse. Imagine how pleased I was when the Supreme Court, in its decision, repeated the phrase: "The Commission's jurisdiction argument puts the cart before the horse." (The Court's decision can be found under Tab E.) But more important than repeating my argument back to me, the Alaska Supreme Court, having considered the rationales advanced by the AOGCC for lacking jurisdiction, rejected every single one, ruling specifically that the agency had jurisdiction over the leak of gas in Cook Inlet. All of this brings us to the correspondence with Rep. Armstrong. The letter dated May 17, 2023, states that "while the AOGCC has jurisdiction nearly everywhere to investigate whether waste exists, if that investigation reveals that that (sic) the alleged oil and gas waste occurred after the oil or gas was produced and purchased (which is typically at the lease/unit line as mentioned in the earlier response) then it cannot be considered 'waste' under the AOGCC's enabling act and the AOGCC does not have jurisdiction or authority to enforce a waste determination." It should be simple for the agency to cite the exact statute in 'AOGCC's enabling act" that supports this position. The failure to do so should be tantamount to a confession of error. The statute, which does not exist, would have to say something like, "The waste of oil and gas on the lease is prohibited," or that "The waste of oil and gas, in the production of oil and gas, is prohibited." This is an approach some states take. Alaska, however, did not. See, for example, the material gathered in my Supreme Court Brief, beginning at Tab C, under the heading "A comparison of Alaska's petroleum conservation laws with those of other states leads to the conclusion that Alaska's laws are to be broadly construed." Alaska, having the benefit of writing 2 its petroleum conservation laws long after most other oil producing states did, drafted its statutes without restricting them to simply the production side. While he was alive, I discussed the history of Alaska's petroleum conservation laws with Vic Fischer. He paid me the honor of coming to visit me when I worked at the Commission, and I asked him to gather his recollections and send them to me. Here is what he sent: The waste of oil and gas in the state is Prohibited (AS 31.05.095)(1955) During the 1955 session of the Alaska Territorial Legislature I was in Juneau representing the Alaska League of Cities (now Alaska Municipal League), working on statehood issues, and tracking what else was going on. I clearly remember Rep. Irene Ryan's leadership in enactment of legislation dealing with oil and gas. But Ryan, as a geologist who had studied the experience of other regions, also knew that Alaska must be ready to deal with oil and gas impacts when significant development occurred. Keep in mind that the 1955 statute was written and passed two years before the Swanson River discovery. There had been no discoveries in Cook Inlet, much less the North Slope. But most of us were aware of ongoing leasing and other activities on the Kenai and other places, and Rep. Ryan's comprehensive legislation on oil and gas was considered basic to Alaska's future. The prohibition of oil and gas waste is a clear statement of a broad principle to be applied uniformly across the then territory and the future state. As with like basic principles included in the Alaska Constitution, the drafting of which began later in 1955, we would certainly not have supported a narrow, technical application of this statute. Vic Fischer Irene Ryan was a fascinating person who went on the serve in the State Senate and in Governor Egan's cabinet. She was a true Alaska pioneer. She was very knowledgeable about the oil industry; indeed, she was investing in Alaska oil projects during the 1950's and 1960's. She was perfectly capable of drafting a law that put the AOGCC's jurisdictional line at the sales meter or leaseline or anywhere else. She did not. She drafted a law with statewide application. What that law says, in clear and unambiguous words, is that the waste of oil and gas in the state is prohibited. Those words, so short and simple, cover nothing less than the entire vastness of Alaska. The Territorial Legislature put the world on notice that, in Alaska, wasting the state's most precious resource was not going to be tolerated anywhere in the state. That was the law in 1955 and that remains the law today. The Cook Inlet gas leak easily satisfied two different statutory definitions of waste and arguably satisfies two more. (Remember that only one statutory definition needs to be satisfied to sustain a finding of waste.) First, it was waste in the ordinary sense of the word. The leaking 3 gas did not accomplish any work. Most of the natural gas produced in Southcentral Alaska is used to heat homes or generate electricity. The gas that leaked did neither. It vented directly to the atmosphere. It was wasted. Second, the leak involved the unnecessary dissipation of reservoir energy. In other words, the reservoir energy from which this gas originated, instead of being used to lift oil from the ground in a gas lift design, or instead of being used to power a turbine that would energize a waterfiood system to enhance oil recovery, dissipated into the air. The specific use for which this gas was intended, fuel gas for Platform A, meant a shutdown of the platform when the leak was being repaired. The loss of oil production which resulted from the leak further buttresses this point. Third, the leak created an unnecessary fire hazard. Almost all leaks of natural gas do this. Granted, the flammability of this particular leak was never put to the test by trying to ignite it. Nevertheless, natural gas, especially compressed gas, is extremely dangerous when it escapes the confines of a pipe. Finally, the leak involved the "escape into the open air of gas, from a well producing oil or gas." I believe that, because this gas can be traced back to a well in Alaska, that it satisfies the definition. The commission could decide to take a stricter view of the matter, given that this gas had been mingled with gas from other wells. Having demonstrated that the leaking gas was waste under Alaska law, the only question left is whether the commission had jurisdiction. In the hands of gifted legal theorists, jurisdiction can be a bit of a tricky subject. One reason for this rests in the nature of our federalist system of government. A national government of limited powers is created and controlled by the US Constitution. States, by contrast, are typically referred to as possessing general powers. James Madison described the difference this way: The powers delegated by the proposed Constitution to the federal government are few and defined. Those which are to remain in the State governments are numerous and indefinite. Figuring out state jurisdiction is generally easier than figuring out federal jurisdiction. At the state level, you only need two guidelines. The first is to know that jurisdiction is like a light switch. It is either on or off. See the material at Tab D, under the heading 'Jurisdiction is either on or off." The other guideline is from the great Supreme Court Justice Oliver Wendell Holmes who wrote over one hundred years ago, that 'Jurisdiction is authority to decide the case either way." The Fair v. Kohler Die and Specialty Co., 228 U.S. 22, 25 (1913). 0 The commission's jurisdictional powers are set out in two statutes, both of which employ sweeping language. Alaska Statute 31.05.027 says in relevant part: The authority of the commission applies to all land in the state lawfully subject to its police powers, including land of the United States and land subject to the jurisdiction of the United States. Alaska Statute 31.05.030(a)says: The commission has jurisdiction and authority over all persons and property, public and private, necessary to carry out the purposes and intent of this chapter. The commission's formulation of jurisdiction as expressed to Rep. Armstrong is inconsistent with these two statutes. Under AOGCC's conception, its jurisdictional power in Alaska flickers on or off, depending on where the leak of gas is. That isn't right. You might also note that this formulation is very similar to ones already advanced in court hearings. See points 1 through 6 above. Yet those arguments failed. The Alaska Supreme Court said plainly that the agency had jurisdiction over the gas leak in Cook Inlet. In doing so it affirmed that Alaska law granted to AOGCC the power to decide the case. AOGCC's position, which is without statutory support, would remove that authority from the agency. The agency's failure to learn from this case is regrettable. The Cook Inlet gas leak stands as a nearly perfect rebuttal to the AOGCC's point of view on jurisdiction. The Cook Inlet gas leak, besides wasting a very large volume of precious natural gas, something currently in short supply in the Cook Inlet basin, caused a notable loss of oil production. This is a stubborn fact that has yet to be addressed by the agency either in its legal pleadings or elsewhere. The agency's failure to act upon the Cook Inlet leak is a matter of record. However, the larger point at stake here looks past this one incident. AOGCC's powers are crucial to the protection and conservation of Alaska's most valuable resource, now and in the future. Those powers were set by law in 1955 and must not be diminished by anyone, least of all by those employed to wield them. Sincerely yours, ►,V Hollis S. French 5 IN THE SUPERIOR COURT FOR THE STATE OF ALASKA THIRD JUDICIAL DISTRICT AT ANCHORAGE HOLLIS S. FRENCH, Appellant, V. ALASKA OIL AND GAS CONSERVATION COMMISSION, Appellee. ) Agency Case: OTH-19-002 ) Appeal Case: 3AN-19-6694CI APPEAL FROM THE ALASKA OIL AND GAS CONSERVATION COMMISSION Filed on the day of _ Anchorage Superior Court Clerk of the Superior Court By APPELLANT'S BRIEF Hollis S. French 2640 Telequana Drive Anchorage, Alaska 99517 (907)244-7135 AK Bar No. 9606033 2019 Deputy Clerk TABLE OF CONTENTS TABLE OF CONTENTS.......................................................... i TABLE OF AUTHORITIES...................................................... ii STATUTES PRINCIPALLY RELIED UPON ............................. v JURISDICTIONAL STATEMENT ............................................. ISSUES PRESENTED FOR REVIEW .......................................... STATEMENT OF THE CASE ................................................... STANDARD OF REVIEW ....................................................... 6 ARGUMENT....................................................................... I. The waste of oil and gas in the state is prohibited ..................... II. The police power of the state applies to private sales of oil and gas and to both sides of the meter ...................................... 14 A. The police power overrides private contract rights.......... 18 B. The police power survives metering and severing........... 21 111. The primary purpose behind the prohibition against waste is to maximize resource recovery ............................................ 25 A. Losing gas to the atmosphere does not maximize resource recovery........................................................... 25 B. Oil production was immediately reduced by the gas leak in Cook Inlet ..................................................... 27 C. Longer term production losses are attributable to the leak. 28 CONCLUSION............................................................ 30 TABLE OF AUTHORITIES FEDERAL CASES Brown v. Maryland, 25 U.S. (12 Wheat.) 419 (1827)---------------------- 15 License Cases, 46 U.S. (5 How.) 504 (1847)-------------------------------- 15,17 New York v. Miln. 36 U.S. 102 (1837)------------------------- ------------- 16 Ohio Oil Company v. Indiana (No. 1), 177 U.S. 190 (1900)-------------- 23.26 Union Dry Goods v. Georgia Public Service Corp.. 248 U.S. 372 (1919) 18,19 United States v. Alaska, 422 U.S. 184 (1975)------------------------------- 11.13 United States v. Lopez, 514 U.S. 549 (1995)-------------------------------- 16 ALASKA CASES Alaska Crude Corp. v. State, DNR, 261 P.3d 412 (Alaska 2011)-------- 8,13 Alyeska Pipeline Service Co. v. State, 288 P.3d 736 (Alaska 2012)----- 6 Cabana v. Kenai Peninsula Borough, 21 P.3d 833 (Alaska 2001) ----- 8 Exxon Corp. v. State, 40 P.3d 786 (Alaska 2001)------------------------- 8 Shephard v. State Dept. of Fish and Game, 897 P.2d 33 (Alaska 1995) 8 State, DNR v. Greenpeace, 96 P.2d 1056 (Alaska 2000)----------------- 8 Tesoro Alaska Petroleum v. Kenai Pipeline, 746 P.2d 896 (Alaska 1987)------------------------------------------------------------------ 13 Union Oil Co. of Cal. v. Dept. of Revenue, 560 P.2d 21 (Alasla 1977)------------------------------------------------------------------ 6.14 ii CASES FROM OTHER JURISDICTIONS Bel Oil Co. v. Roland, 137 So. 308 (Louisiana 1962)------------------ 3 Jamieson v. Indiana Natural Gas & Oil Company, 128 Indiana 555, 28 N.E. 76 (Indiana 1891)------------------------------------------------- 23 STATUTES AS 31.05.027------------------------------------------------------------------ 4, 11, 14 AS31.05.030------------------------------------------------------------------- 7,11 AS31.05.095------------------------------------------------------------------- 7, 26 AS 31.07.170(15)------------------------------------------------------------- 25 OTHER AUTHORITIES Alex DeMarban, Hilcorp Agrees To Temporarily Shut Down Oil Production To Fight Cook Inlet Gas Leak, March 25, 2017------------ 28 Dan Carpenter, Investigation Finds Hilcorp Gas Leak Poses Risks & Started Earlier Than First Reported, March 7, 2017----------------- 27 ConocoPhillips, Inc., Prudhoe Bay Unit Facility Information --------- 25 Cathy Foerster, Written Testimony to the House Subcommittee on Energy and Mineral Resources, October 13, 2017----------------------- 12 Forbes, #745 Jeffrey Hildebrand Harvest Midstream, Our Aflliates 20 20 Norman J. Hyne, Nontechnical Guide to Petroleum Geology, Exploration, Drilling and Production 2"a Ed. 2001---------- 2,23 Dan Joling, Alaska Underwater Gas Leak Continues, 2nd Group to Sue, March1. 2017------------------------------------------------------------------ 26 Linkedin, Hilcorp Company Profile 20 iii James Madison, The Federalist Paper No. 45 15 Leslie Moses, The Constitutional, Legislative and Judicial Growth of Oil and Gas Conservation Statutes, 13 Miss. L.J. 353 (1941)----------- 17,24 Regulatory Commission of Alaska, Natural Gas Rates ------ ------------ 25 Bernard Schwartz, A History of the Supreme Court (Oxford University Press) 1993------------------------------------------------------------------ 16, 17 State ofAlaska v. BP Exploration, Alaska, Trial Motion, 2009 WL 7274134--------------------- ----------------------------------------- -------- 24 State of Alaska, Department of Environmental Conservation, Hilcorp Natural Gas Leak From 8 " Pipeline -------- — ----------------------------- 26 U.S. Energy Information Administration, Frequently Asked Questions 25 H. Williams & C. Meyer, Oil and Gas Law, Volume 8 (2018)--------- 3 Wikipedia, Prudhoe Bay Oil Spill 24 Gordon S. Wood, The Creation of the American Republic 1776 -1787 (1969)--------------------------------------------------------------------------- 8 iv STATUTES PRINCIPALLY RELIED UPON ALASKA STATUTE 31.05.027 The authority of the commission applies to all land in the state lawfully subject to its police powers, including land of the United States and land subject to the jurisdiction of the United States. The authority of the commission further applies to all land included in a voluntary cooperative or unit plan of development or operation entered into in accordance with AS 38.05.180(p). ALASKA STATUTE 31.05.030(a) The commission has jurisdiction and authority over all persons and property, public and private, necessary to carry out the purposes and intent of this chapter. ALASKA STATUTE 31.05.095. The waste of oil and gas in the state is prohibited. ALASKA STATUTE 31.05.170(15) "waste" means, in addition to its ordinary meaning, "physical waste" and includes (A) the inefficient, excessive, or improper use of, or unnecessary dissipation of, reservoir energy; and the locating, spacing, drilling, equipping, operating or producing of any oil or gas well in a manner which results or tends to result in reducing the quantity of oil or gas to be recovered from a pool in this state under operations conducted in accordance with good oil field engineering practices; (B) the inefficient above -ground storage of oil; and the locating, spacing, drilling, equipping, operating or producing of an oil or gas well in a manner causing, or tending to cause, unnecessary or excessive surface loss or destruction of oil or gas; (C) producing oil or gas in a manner causing unnecessary water channeling or coning; (D) the operation of an oil well with an inefficient gas -oil ratio; (E) the drowning with water of a pool or part of a pool capable of producing oil or gas, except insofar as and to the extent authorized by the commission; (F) underground waste; (G) the creation of unnecessary fire hazards; (H) the release, burning, or escape into the open air of gas, from a well producing oil or gas, except to the extent authorized by the commission; u JURISDICTIONAL STATEMENT This is an appeal from a final administrative decision by the Alaska Oil and Gas Conservation Commission ("AOGCC" ), designated as Other Order 150 and issued March 20, 2019. Appellant timely filed an application for reconsideration April 8, 2019, to which the AOGCC did not respond. The application for reconsideration was deemed denied ten days later, or April 18, 2019. This appeal was timely, filed on May 1, 2019. This Court has jurisdiction pursuant to AS 44.62.560(a); AS 22.10.020(d); and Ak. R. App. P. 601(b). ISSUES PRESENTED FOR REVIEW Were AOGCC's rulings regarding its jurisdiction contrary to the governing law. Specifically, did the agency err by ruling that: 1. It does not have jurisdiction over gas sold by a vendor; 2. It does not have jurisdiction over gas metered and severed from a property, and: 3. It does not have jurisdiction over gas Hilcorp purchased from Harvest Pipeline. STATEMENT OF THE CASE Appellant filed a petition for a hearing on a complaint of waste with the Alaska Oil and Gas Conservation Commission on February 28, 2019. The petition identified the source of the waste as gas that leaked to the atmosphere 1 from an 8" line carrying fuel gas to Platform A in Cook Inlet, operated by Hilcorp. The petition noted that the gas leaked from the pipeline at a rate of approximately 300,000 standard cubic feet per day, and did so for approximately three months in the winter and spring of 2017. In denying appellant's petition for a hearing, AOGCC issued Other Order 150 in which the agency did not dispute the underlying facts asserted in the petition, but incorrectly stated that "[o]nce oil or gas is metered and severed from the property, AOGCC's authority to make a waste determination regarding use of the oil or gas is at an end." Other Order 150 does not identify the location of the lease where the gas was "metered and severed," though it must have happened in Southcentral Alaska, as there is no gas import facility in the state and no pipeline carrying gas off the North Slope. Neither "metered" nor "severed" is defined in Alaska law. Gas metering generally refers to measurement.' Severance is defined as "separation of a mineral or royalty interest from other interests in the land by 1 "Gas volume is measured by a gas meter on the flowline. An orifice gas meter is commonly used. It measures the difference in gas pressures on gas flowing through an orifice (a round hole in a plate) on both sides of the orifice. The higher the flow rate, the greater the pressure drop across the orifice .... The gas velocity has been calibrated to gas volume by a meter prover. Meter provers are used for both gas and liquid meters. They compare the volume of fluid flowing through the accurately calibrated meter prover with the same volume of fluid flowing through the meter being tested... [The gas meter] is used to determine gas payments to the operator." Norman J. Hyne, Nontechnical Guide to Petroleum Geology, Exploration, Drilling and Production 2"d Ed., p. 373-74 (2001). 2 grant or reservation."2 Severed also can mean "the point at which natural resources are severed from the surface of the earth."' Other Order 150 did not explain the legal significance of metering and severing with respect to the agency's jurisdiction. The Order simply asserted that metering and severing puts an end to the agency's authority to act. This misconception of the agency's jurisdiction underlies two other rulings included in Other Order 150: (1) that the agency does not have jurisdiction over gas which has been sold by a vendor, and (2) that the agency does not have jurisdiction over gas sold by one company to another. In relevant part the order states that: AOGCC investigated the leak at the time it occurred. AOGCC initially believed the source of the gas was upstream` gas, i.e., gas which remained an AOGCC-regulated resource and had not been metered and severed from the property. Had that proven to be the case. the gas leak would have constituted waste and AOGCC would have instituted an enforcement action against Hilcorp. However, AOGCC's investigation ultimately revealed the leaking gas had been purchased by Hilcorp from a third -party provider, Harvest Pipeline (Harvest), and was being shipped back to Platform A. z H. Williams & C. Meyer, Oil and Gas Law, Volume 8, p. 960 (2018). ' Bel Oil Corp. v. Roland, 137 So.2d 308, 310 (Louisiana 1962) 4 The terms 'upstream' and `downstream' generally mean the same in the oil industry as they do in the rest of the world. They simply refer to a direction of flow. In this case the gas well would be the beginning of the flow. Steel pipe carries the gas away from the well -- downstream. At some point the gas goes through a custody transfer meter, where it is measured, and it is typically at this point that the state would claim its royalty share of the production, and would levy its production tax, if any. Downstream of the meter the gas joins a interconnected distribution system that brings the gas either to an underground storage well, or to its end users, whether homes, power generation plants, or, in this case, an 8" line that supplies fuel gas to Platform A's generators and turbines. 3 The primary purpose behind the prohibition against waste is to maximize resource recovery. Consequently, like every other state's oil and gas conservation regulatory authority, AOGCC regulates waste occurring upstream (occurring before oil or gas is metered and severed from the property) in connection with drilling, exploration, and production activities. Neither AOGCC nor any of its counterparts in other states has ever attempted to extend its juris- diction over waste to gas which has been sold by a vendor. Once oil or gas is metered and severed from the property, AOGCC's authority to make a waste determination is at an end. The gas involved in the Hilcorp leak had been sold by Harvest to Hilcorp. AOGCC does not have waste jurisdiction over gas Hilcorp purchased from Harvest. Absent jurisdiction, there is no basis for a hearing.s Appellant timely filed for reconsideration of Other Order 150, pointing out that AS 31.05.027 6 gives the agency statewide jurisdiction over waste. Appellant pointed out that if the Legislature had wanted the agency's jurisdiction to terminate at the meter, it would have said so. Appellant summarized the gas leak this way: Here's what happened in Cook Inlet two winters ago: a gas line burst and spewed gas to the atmosphere for several months. That is waste. The lack of gas led to the platform shutting down, which resulted in a loss of production. That is bad. The waste led to a loss of production.7 s Record at 0005. 6 "The authority of the cormnission applies to all land in the state lawfully subject to its police powers, including land of the United States and land subject to the jurisdiction of the United States." 7 Record at 0001. m In seeking reconsideration, Appellant also alerted the AOGCC that: • An AOGCC commissioner had testified to Congress that "Alaska statutes give AOGCC responsibility to exert jurisdiction on all lands within the state of Alaska (except Denali National Park) and all state waters." The Commissioner of the Department of Natural Resources determined that the leak of gas led to a reduction in Platform A's oil production.8 • The loss in oil production from Platform A provided an additional basis, besides the waste of the gas, for AOGCC to exert jurisdiction. as it was in alignment with the commission's own position, in Other Order 150, that the "primary purpose behind the prohibition against waste is to maximize resource recovery." The commission did not respond to the application for reconsideration. "'The Middle Ground Shoal A Platform was temporarily shut down in 2017 due to a leaking fuel gas pipeline.... Production information demonstrates that current production has dropped below 975 BOPD because of the shutdown. Prior to this shutdown, production was approximately 1.150 BOPD. Production returned at approximately 1,000 BOPD, and has since declined below 975 BOPD. Production in general from this platform has been in decline, but a decline curve analysis of oil production prior to the shutdown shows that production would not have declined to 1000 BOPD by the date that production returned. Importantly, the decline curve shows that without the 2017 shutdown production would currently be above 975 BOPD. " Record at 0003 (emphasis supplied). 5 STANDARD OF REVIEW The issue before this court is one of statutory construction. "When reviewing an agency's interpretation of a statute, we apply the reasonable basis standard when the interpretation implicates agency expertise or a determination of fundamental policies within the scope of the agency's statutory functions. We apply the independent judgment standard when `the agency's specialized knowledge and experience would not be particularly probative on the meaning of the statute."'9 Deciding the limits of the agency's jurisdiction does not implicate the expertise of the AOGCC.10 Thus the independent judgment standard applies. 9 Alyeska Pipeline Service Co. v. State, 288 P.3d 736, 740 (Alaska 2012)(footnotes omitted). to "[W]here, as here, the issues to be resolved turn on statutory interpretation, the knowledge and expertise of the agency is not conclusive of the intent of the legislature in passing a statute. Statutory interpretation is within the scope of the court's special competency, and it is our duty to consider the statute independently." Union Oil Co. of Cal. v. Dept. of Revenue, 560 P.2d 21, 23 (Alaska 1977)(footnote omitted). 2 ARGUMENT I. "THE WASTE OF OIL AND GAS IN THE STATE IS PROHIBITED."" The words quoted above are the law. They are also the fundamental rule of petroleum conservation. AOGCC's rulings on its jurisdiction set out in Other Order 150 fail to take into account the sweeping and powerful nature of this basic conservation statute. The statute, which predates statehood and has not been amended since, declares with logical simplicity that there is no place in all of Alaska where it is lawful to waste oil or gas. The statute is a model of clarity. AOGCC's rulings on its jurisdiction would have the effect of amending the statute by replacing the words "in the state" with the words "upstream of the meter." The Legislature was certainly capable of drafting and passing such a narrow law, but it did not. AOGCC's rulings on its jurisdiction circumscribe its own powers, to the benefit of the oil industry, and to the detriment of the public it purports to serve. The comprehensive nature of the statute is in keeping with the vital place that natural resources, particularly oil and gas, occupy in the state. Our state's jurisprudence is replete with recognitions that there is a public interest in the 11 A5 31.05.095. 7 conservation of Alaska's natural resources.12 Consider these examples, all from significant natural resource cases that came before the Alaska Supreme Court: "Natural resources are of prime importance to the public."' 3 "[T]he protection of state natural resources vindicates an important public interest."14 "That the natural resources of the state belong to the state, which controls them as trustee for the people of the state, is explicit in the Alaska Constitution."' 5 The public's interest in conserving Alaska's vital natural resources can only be defended by state agencies. Or, as historian Gordon Wood put it, "Since the people obviously could not `exercise the powers of government personally,' they must `trust to agents."'16 The AOGCC is the state agent charged with protecting the public's interest in oil and gas conservation.17 Its failure to understand the proper limits of its own jurisdiction must be corrected, otherwise 12 Exxon Corp. v. State, 40 P.3d 786, 791 (Alaska 2001). 13 State, DNR v. Greenpeace, 96 P.2d 1056, 1062 (Alaska 2004). 14 Cabana v. Kenai Peninsula Borough, 21 P.3d 833, 837 fn.16 (Alaska 2001). 15 Shephard v. State Dept. of Fish and Game, 897 P.2d 33, 40 (Alaska 1995). 16 Gordon S. Wood, The Creation of the American Republic 1776-1787, p. 546 (1969). 17 "AOGCC is an `independent quasi-judicial agency of the state' created by the Alaska Oil and Gas Conservation Act. AS 31.05.005(a). AOGCC, which has authority over all land subject to the state's police power, regulates to prevent waste, insure greater recovery, protect correlative rights and underground water, and further public health and safety. See AS 31.05.027; AS 31.05.095; AS 31.05.100; AS 31.05.110; AS 31.05.030." Alaska Crude Corp. v. State, Depart- ment of Natural Resources, 261 P.3d 412, 414 fn.3 (2011). 0 the public's interest in preventing the waste of a precious natural resource will not be protected across vast parts of the state. The factual case before the court could not be better drafted to illustrate these principles. As appellant pointed out to the AOGCC on reconsideration: Here's what happened in Cook Inlet two winters ago: a gas line burst and spewed gas to the atmosphere for several months. That is waste. The lack of gas led to the platform shutting down, which resulted in a loss of production. That is bad. The waste led to a loss of production.18 Note that the AOGCC does not dispute any of the facts in the preceding sentences. The agency does not dispute that a large volume of natural gas spewed directly to the atmosphere. The agency does not dispute that oil production was reduced as a result. Other Order 150 concedes that. but for the metering and severing of the gas, "the gas leak would have constituted waste and AOGCC would have instituted an enforcement action against Hilcorp." 19 This is an important concession, as it sharpens the legal question presented in this case. The agency's analysis essentially creates an absolute barrier to the exercise of AOGCC _jurisdiction at the place where the natural gas was metered and severed from the lease where it was produced. In other words, Other Order 150 asserts that, downstream of the meter, AOGCC's authority is non-existent. 18 Record at 0001. 19 Record at 0005. E Other Order 150 does not specify where exactly the metering and severing it refers to took place. While the order declares that "AOGCC investigated the leak at the time it occurred," 20 the agency submitted no documentation of its own, none at all, to substantiate this aspect of the case when it filed its record as required by Appellate Rule 604(b)(1). This is a point worth a moment's consideration. While it may be something of a relief for this court to not face a voluminous record, as is so often the case in administrative appeals, the lack of any documentation to flesh out the parameters of this so-called investigation reveals the lackluster effort put forth by the AOGCC in this case. Apparently, not a single piece of paper in the agency's files can be found that documents this investigation. No field notes from an agency inspector. No letter from AOGCC to Hilcorp demanding pertinent information. No public hearing on the matter. Appellant would be happy to allow the agency some extra time to supplement the record, if it has something to add, however unlikely that may be. Perhaps a future AOGCC hearing will flesh out the details of which well or wells on which lease supplied the gas to the 8" fuel gas line going to Platform A that burst sometime in the winter of 2017. As a practical matter, the gas must have come from a well in Southcentral Alaska. There is no pipeline carrying gas away from the North Slope. There is no natural gas import facility in the state. Whatever the source of the gas, it came from an Alaskan well. Appellant points 20 Record at 0005. ME these facts out only to prevent red herrings from cropping up. For the legal issues to be resolved in this case, however, the location of the metering is not germane. Again, there is no dispute that gas from an Alaskan well spewed from the broken 8" fuel gas line running to Platform A. And there is no dispute that the leak took place in Alaskan waters. 21 There is no better legal answer to the agency's flawed position on its own jurisdiction than the text of the relevant statutes. The first statute states: The authority of the commission applies to all land in the state lawfully subject to its police powers, including land of the United States and land subject to the jurisdiction of the United States?2 And the second says this: The commission has jurisdiction and authority over all persons and property, public and private, necessary to carry out the purposes and intent of this chapter.23 If you wanted to establish a robust watchdog agency, these are the words you would choose. Imagine for a moment that a law enforcement agency was given these powers. What portion of the state would lie beyond its reach? 21 The dividing line between state and federal waters in this portion of the state runs along a line across Cook Inlet at Kalgin Island. All oil development infrastructure in Cook Inlet is north of the line. In a case involving a proposed oil lease sale in Kachemak Bay, which is south of Kalgin Island, the US Supreme Court noted that "[t)he upper, or inner portion, of the inlet is not in dispute, for that part is conceded to be inland waters subject to Alaska's sovereignty." United States v. Alaska, 422 U.S. 184, 185 (1975). zz AS 31.05.027 (emphasis added). 23 AS 31.05.030(a) (emphasis added). 11 The narrow position the agency has adopted regarding its jurisdiction over a major leak of gas in Cook Inlet squarely conflicts with the plain language of both statutes. According to the agency, the authority of the commission does not apply to all land in the state; it only applies to land in the state that is upstream of the place where gas is metered. According to the agency, the commission does not have jurisdiction and authority over all persons and property, public and private; it only has that power upstream of the meter. Both conclusions are seriously incorrect. Moreover, the agency's position on its jurisdiction conflicts with sworn testimony it has given to Congress. Then -commissioner Cathy Foerster submitted testimony to encourage the federal government to allow states to assume more control over oil and gas development. She stated "Alaska statutes give AOGCC responsibility to exert jurisdiction on all lands within the state of Alaska (except Denali National Park) and all state waters."24 The agency's current position on its jurisdiction cannot be harmonized with Commissioner Foerster's sworn testimony. This is remarkable. The agency promised to Congress that it would assert jurisdiction on all lands within the state and on all state waters, without any qualification or limitation. Yet, according to Other Order 150, the agency does not have the duty or the obligation to exert jurisdiction on a gas line that runs through Cook Inlet. 24 Written testimony of Cathy Foerster to the House Committee on Natural Resources: Subcommittee on Energy and Mineral Resources, October 13, 2017. 12 Remember these are state waters, waters the United States Supreme Court has specifically identified as "inland waters subject to Alaska's sovereignty."25 Holding strong cards, in the form of statutes and court decisions, and having boasted to Congress of its plenary powers, the agency's feeble response to this leak is difficult to understand. The position the agency has adopted in Other Order 150 regarding its jurisdiction is at odds with the plain language of the relevant law and a sworn statement it submitted to Congress. Additionally it is at odds with the Alaska Supreme Court's understanding of the agency's jurisdiction.76 The agency's position must be corrected by this court. The "goal of statutory construction is to give effect to the legislature's intent" and the court must do so using the common meaning of the words in the law, unless those words have acquired a peculiar meaning.`7 The Alaska Territorial legislature declared with great precision and economy that "the waste of oil and gas in the state is prohibited." Not one of those words is ambiguous or difficult to understand. The legislature has declared that the agency's authority 25 United States v. Alaska, 422 U.S. 184, 185 (1975). 26 "AOGCC ... has authority over all land subject to the slate's police power." Alaska Crude Corp. v. State, Department of Natural Resources, 261 P.3d 412, 414 fn.3 (2011). 21 "The goal of statutory construction is to give effect to the legislature's intent, with due regard for the meaning the statutory language conveys to others. In this respect, we have repeatedly stated that unless words have acquired a peculiar meaning, by virtue of statutory definition or judicial construction, they are to be construed in accordance with their common usage." Tesoro Alaska Petroleum v. Kenai Pipeline, 746 P.2d 896, 905 (Alaska 1987)(intemal citation omitted). 13 applies to "all land in the state lawfully subject to its police powers" and to "all persons and property, public and private." Despite these sweeping words, the AOGCC has, without justification and without a statutory basis of support, taken the position that a major gas leak that went on for months in an oilfield just south of Anchorage, a gas leak that caused an oil production platform to shut down and to lose production, is beyond its power. The agency's position diminishes the value of Alaska's nonrenewable oil and gas resources, and does so by abdicating its responsibility to defend the public interest in preventing waste. The agency's interpretation of its own jurisdiction is not entitled to any deference from this court.28 This court must exercise its independent judgment. The court should heed the plain language of the statutes and in doing so should find that the agency may use its powers in this case. II. THE POLICE POWER OF THE STATE APPLIES TO PRIVATE SALES OF OIL AND GAS AND TO BOTH SIDES OF THE METER. The agency's interpretation of its jurisdiction is contrary to law for another independent reason. It does not account for the police powers of the state. AS 31.05.027 provides that "the authority of the commission applies to all land in the state lawfully subject to its police powers." It is not simple to define the exact boundary of a state's police powers, but as the following history demonstrates, they most certainly are sufficient to give the commission the authority to act in this case. 28 Union Oil Co. of Cal. v. Dept. of Revenue, 560 P.2d 21, 23 (Alaska 1977). 14 That a state would be armed with a general sovereign power was first posited during our nation's founding. The concept's origins can be traced to the theory of federalism embodied in the Constitution. James Madison, writing in the Federalist Papers, described the distinction between the powers of the proposed national government and those of the states this way: The powers delegated by the proposed Constitution to the federal government are few and defined. Those which are to remain in the State govermuents are numerous and indefinite. The powers reserved to the several States will extend to all the objects which, in the ordinary course of affairs, concern the lives, liberties, and properties of the people, and the internal order, improvement, and prosperity of the State.29 The `powers reserved to the several States' gradually became known as police powers. The term was first coined by Justice Marshall in Brown v. Marvland30 in 1827. Twenty years later, in 1847, the idea was articulated in this fashion: (W]hat are the police powers of a state? They are nothing more or less than the powers of government inherent in every sovereignty to the extent of its dominions. And whether a State passes a quarantine law, or a law to punish offenses, or to establish courts of justice, or requiring certain instruments to be recorded, or to regulate com- merce within its own limits, in every case it exercises the same power, that is to say, the power to govern men and things within the limits of its dominion. It is by virtue of this power that it legislates 31 29 James Madison, Federalist Paper No. 45. 30 25 U.S. (12 Wheat.) 419, 442-43 (1827). 31 License Cases, 46 U.S. (5 How.) 504, 583 (1847). is The License Cases, from which the above quote is taken, confirmed the power of the states to regulate the sale of liquor imported from abroad. The decision was in accord with a case from ten years earlier, New York V. Miln,32 that upheld a New York law requiring shipmasters to submit to the city a list of passengers landing from abroad and to post security for them, which was attacked as violating the Commerce Clause. Miln and the License Cases were crucial to the development and articulation of the police power concept.33 While these cases from long ago may seem a bit dusty and obscure, Madison's concept of federalism, based on a national government of enumerated powers, and state governments armed with general police powers, retains its vitality in the modern day: We start with first principles. The Constitution creates a Federal Government of enumerated powers. See Art. I, § 8. As James Madison wrote: `The powers delegated by the proposed Constitution to the federal government are few and defined. Those which are to remain in the State governments are numerous and indefinite.' The Constitution mandates this ... by withholding from Congress a plenary police power that would authorize enactment of every type of legislation. To uphold the Government's contentions here, we would have to pile inference upon inference in a manner that would convert congressional authority under the Commerce Clause to a general police power of the sort retained by the States. ,34 32 36 U.S. 102 (1837). 33 See Bernard Schwartz, A History of the Supreme Court, p. 78-81, (1993). 34 United States v. Lopez. 514 US 549, 552 (1995). 16 As the quoted material above from Lopez makes clear, the Court was concerned about granting to the federal government a "general police power of the sort retained by the States." By contrast, the Court takes for granted that state governments possess "`numerous and indefinite powers to order affairs within their borders. Indeed, it is the police power that undergirds each state's oil and gas conservation statutes.35 Appellant makes these points to impress upon the court that the Territorial Legislature, acting in 1955, was guided by and referencing over one hundred years of jurisprudence when it declared that the "authority of the commission [AOGCC] applies to all land in the state lawfully subject to its police powers." As shown. a state's police powers are "nothing more or less than the powers of government inherent in every sovereignty to the extent of its dominions."36 The police power essentially represents the limits of a state's sovereignty.37 This power, as will be demonstrated in the following sections, overwhelms the thin rationales for inaction adopted by the AOGCC in Other Order150. 35"The State's power to legislate for the protection of its natural resources... is based essentially upon its police power." Leslie Moses, The Constitutional, Legislative and Judicial Growth of Oil and Gas Conservation Statutes, 13 Miss. L.J. 353, 363 (1941). 36 License Cases, supra n.31. 37 See Schwartz, supra at n. 33, "In [this] conception, police powers and sovereign powers are the same." 17 A. The police power overrides private contract rights. Other Order 150 claims that the AOGCC may not act in this case because its investigation revealed that "the leaking gas had been purchased by Hilcorp from a third -party provider, Harvest Pipeline (Harvest) and was being shipped back to Platform A."38 Without explaining why, the agency simply asserts that "AOGCC does not have waste jurisdiction over gas Hilcorp purchased from Harvest. ,39 The agency claims further that never in history has the agency or its counterparts in other states "ever attempted to extend its jurisdiction over waste to gas which has been sold by a vendor."40 Other Order 150 attempts to suggest that the private sale of gas defeats the state's power to regulate. The problem for the agency is that this line of reasoning was thoroughly rejected by the United States Supreme Court one hundred years ago. In Union Dry Goods v. Georgia Public Service Corp.4' the Court was presented with a dispute over rates for electricity set by the Railroad Commission of Georgia, and a claim that the rates impaired a contract between the plaintiff and the defendant. The Court began its analysis by noting that electric light and power is a subject in which "the public has an interest which justifies rate regulation by the State in the exercise of its police power."42 The Court was ,just warming up, however, and it would go on to articulate a 38 Record at 0005. 391d. 40 Id. 4' 248 U.S. 372 (1919). "Id. at 3 75 . iE comprehensive series of legal principles governing what should occur when the right to contract conflicts with the public good: That private contract rights must yield to the public welfare, where the latter is appropriately declared and defined and the two conflict, has often been decided by this court. One whose rights, such as they are, are subject to state restriction, cannot remove them from the power of the State by making a contract around them. The contract will carry the infirmity of the subject matter. There is no absolute freedom to do as one wills or to contract as one chooses. The guaranty of liberty does not withdraw from legislative supervision that wide department of activity which consists in the making of contracts, or deny to government the power to provide restrictive safeguards. Liberty implies the absence of arbitrary restraint, not immunity from reasonable regulations and prohibitions unposed in the interests of the community. This court has so often affirmed the right of the State in the exercise of its police power to place reasonable restraints like that here involved, upon the freedom of contract that we need only refer to some of the cases in passing.43 The legal principles set forth above should end the debate on this point. The Union Dry Goods case obliterates the idea, as set out by the AOGCC in Other Order 150, that the sale of natural gas by one party to another puts that gas beyond the police power of the state. The AOGCC's elevation of Hilcorp's contract rights over the public interest in managing Alaska's invaluable oil and gas resources is embarrassing to the agency, or it should be. Whether the agency 431d. at 375-76 (internal citations omitted). 19 is embarrassed or not, the rationales it has offered should be rejected by this court. One more point. The agency stated that in the course of its investigation it learned that the gas that leaked from the fuel gas line running to Platform A had been purchased by Hilcorp from a company the order identifies as "Harvest Pipeline (Harvest)."44 The court should know a few more facts about this transaction. Hilcorp is privately owned. Its website claims that it is "the largest privately owned oil and natural gas company in the country."45 Its sole owner is reported to be a man named Jeff Hildebrand,46 though, as with any private company, that is subject to change without notice to the public. Harvest, which identifies itself as "Harvest Midstream" on its website'47 is a pipeline company. The relationship between Hilcorp and Harvest is simple: they both belong to the same person. Or as Harvest's website puts it: "Harvest's and Hilcorp's affiliation begins with common ownership."48 With these facts in mind, reconsider the assertion in Other Order 150 that the gas that leaked to the atmosphere from the 8" fuel gas line running towards 44 Record at 0005. 45 Linkedin, Hilcorp Company Profile, www.linkedin.com/company/hileorp (last visited June 29, 2019). 46 Forbes, #745 Jeffrey Hildebrand, www.forbes.com/profile/Jeffrey-hildebrand/ #197812bl33b (last accessed June 30, 2019). 47 Harvest Midstream, Our Aff lliates, www.harvestmidstream.com/our-affilliates (last accessed June 29, 2019). 48 Id. 20 Platform A was gas that had been "purchased by Hilcorp from a third -party provider." The statement, we can now see, is very likely to be false. Harvest and Hilcorp share "common ownership." When Hilcorp and Harvest engage in commercial transactions, there is no third parry to the deal. if the agency had conducted a hearing on this matter, these facts, which are not hard to ascertain, might have come to tight. To reiterate: In Other Order 150 the AOGCC is of the view that the months' long leak of gas in Cook Inlet was rendered absolutely beyond the reach of the state's oil and gas conservation watchdog by having undergone a sale that passed it from one corner of Mr. Hildebrand's pocket to another corner. To allow this commercial arrangement to defeat the police power of the state would represent a triumph for corporatism and would render the public interest an orphan. This court should rule that the AOGCC's rationales on this point are flawed, inconsistent with the language of the statute and the legal precedents cited, and should be rejected. B. The police power survives metering and severing. Finally, Other Order 150 takes the position that "[o]nce oil or gas is metered and severed from the property, AOGCC's authority to make a waste determination regarding use of the oil or gas is at an end." 49 The analysis here begins by noticing that the agency cites no statute to support its position. There is 49 Record at 0005. 21 none. Lacking a legal basis for its position, AOGCC should have at least supplied a rationale for the order. Other Order 150 does not attempt to supply a rationale, either. At this point it seems worth asking the question: What is so special about metering and severing? How does metering and severing bring the authority of the AOGCC, which the law says extends to "all land in the state lawfully subject to its police powers," to an end? As described previously, the natural gas in this case came up from an Alaskan reservoir through a wellhead located in Alaska. Steel pipe carried it away from the well. The metering and severing Other Order 150 refers to probably took place on the lease where the well sits. It certainly took place somewhere in Southcentral Alaska. Metering is accomplished for gas by passing it through a measuring device. Once metered for custody transfer purposes, the gas is then considered to be severed from the lease. The order does not explain what happened when the gas was metered and severed such that the jurisdiction of the AOGCC was totally defeated. While the mechanical layout of the metering shed where the metering took place might be of some interest, for the legal purposes of this case, however, the exact details are irrelevant. Unless the gas was metered immediately prior to its export from the state, which, since the shuttering of Kenai's LNG export facility in 2011, does not happen anywhere in Alaska, the gas was crossing Alaskan soil when it entered the meter, and was still crossing Alaskan soil when it exited the meter, and was 22 headed for somewhere in Alaska. It was subject to the police power of the state at all moments. Two cases should help guide the court on this point. The first is from the nineteenth century. When the state of Indiana passed a law in 1891 prohibiting gas pipelines from operating at a pressure greater than 300 pounds, it was attacked by on the grounds that the enforcement of the law by the state impaired interstate commerce.50 The case was analyzed by the US Supreme Court in the seminal case of Ohio Oil Company v. Indiana (No.]),5' wherein the Court noted that the pipeline statute at issue in Jamieson was upheld on the grounds that "the dangerous nature of the product, its susceptibility to explosion and the consequent hazard to life and property which might arise from movement through pipes, made the act of transmitting it a fit subject for police regulation."'' The relevance of this old case to the Cook Inlet leak is that gas transmission lines are generally referred to as `downstream.'53 Gas in transmission lines has been metered and severed from the lease. Thus, the AOGCC's claim in Other Order 150 that "[n]cither AOGCC nor any of its counterparts in other states has ever attempted to extend its jurisdiction over waste to gas which has been sold by a vendor" should be viewed with skepticism, given that gas in transmission lines is so Jamieson v. Indiana Natural Gas & Oil Company, 128 Indiana 555 (1891). " 177 U.S_ 190 (1900).. 52Id. at 206. 53 See Hyne, supra at fn. 1, p. 543, defining `upstream' as petroleum exploration, drilling and production, and `downstream' as pertaining to transportation, refining and marketing. 23 subject to the police power of a state, and it is by and through the police power that conservation commissions do their job.54 The other case is from the twenty-first century, and from Alaska. In March of 2006, a very large oil spill was discovered at Prudhoe Bay. The spill was traced to a hole in a pipeline operated by BP Exploration, Alaska.55 The pipeline was a `transit line' carrying processed oil. BP faced significant legal consequences, which included a lawsuit filed by the State of Alaska. Two of the counts of the State's complaint made allegations of waste. BP moved the trial judge to stay the waste counts. The argument it made for doing so rested on its view that the "AOGCC ... has primary jurisdiction to investigate and determine whether waste of oil or gas occurred.'>se The brief presents a concise summation of the agency's powers: The AOGCC, by statute and by operation of the leases between BPXA and the state, has primary jurisdiction to investigate and determine whether waste of oil or gas occurred. The AOGCC has comprehensive jurisdiction to regulate oil and gas conservation in general and to make determinations concerning waste in particular. The governing statute expressly directs the AOGCC to investigate waste. The AOGCC has adopted specific regulations prohibiting waste. It has plenary power to adjudicate issues of waste and to require actions to address waste.57 54 Moses, supra at fn. 35. ss Wikipedia, Prudhoe Bay Oil Spill, en.wikipedia.org/wiki/Prudhoe Bay_oil_ spill. s6 State of Alaska v. BP Exploration, Alaska, Trial Motion, 2009 WL 7274134 at 9. 57 Id. (footnotes omitted)(emphasis supplied). Pt,! The BP spill case is relevant here for two reasons. First, the oil that spilled had been metered for allocation purposes.$$ It had been severed from whatever specific Prudhoe Bay lease it had been produced from. It was downstream oil. Second, note that BP considers AOGCC's powers to prevent waste to be not only "plenary," but primary compared to those of the State Department of Law. While Appellant readily concedes that BP's view of AOGCC's jurisdiction is not dispositive. the court reasonably would conclude that its argument in this instance is persuasive. In sum, there is nothing in the metering and severing of oil and gas from the leases that renders it beyond the police power of the state. and that claim by the AOGCC as a basis for declining to exercise jurisdiction is fatally flawed. 111. THE PRIMARY PURPOSE BEHIND THE PROHIBITION AGAINST WASTE IS TO MAXIMIZE RESOURCE RECOVERY. The heading above appears in Other Order 150. Appellant agrees with the agency that maximizing resource recovery is one of the purposes of the prohibition against waste. The Order does not explain, however, the application of the principle to the Cook Inlet gas leak. Appellant will now attempt to do so. se Prudhoe Bay Unit Facility Information, htip://www.fairbanks pipeline company. com/pdf/CGF-CCP_Facility_Description.pdf 25 A. Losing gas to the atmosphere does not maximize resource recovery. Gas venting directly to the atmosphere is waste.59 Ipso facto. While this is a rule of petroleum conservation today, in the early days of the petroleum industry, before the nature of oil reservoirs was understood, it was believed that allowing the gas from a reservoir to vent to atmosphere was a necessary first step to getting oil out of the ground. As reservoir engineering developed, however, the crucial place that gas holds in increasing oil production from a reservoir became clear. Many of the first petroleum conservation laws were directed at ending the wasteful practice of venting gas. Indeed, the statute at issue in Ohio Oil Company v. Indiana (No. 1)60 forbade the venting of gas from a well for longer than two days. The oil company argued that the state legislature had. "by making it unlawful to allow the gas to escape made it practically impossible to profitably extract the oil."61 The argument was rejected. The gas venting of times past was intentional. The gas leak here was an accident, but the impact on resource recovery is the same. It is self-evident that losing gas to the atmosphere does not maximize resource recovery. The facts of this case bear out that rule. The gas leak in Cook Inlet was not small. The volume of gas that was emitted from the leaking fuel gas line running to Platform A was estimated at between 200,000 and 300,000 sef per 59 AS 31.05.170(15)(H). 60 177 U.S. 190 (1900). 61 Id. at 211. 26 day.62 The leak was first discovered on February 7, 2017, and was not repaired until a clamp was put on the line by divers on April 13, 2017.63 While it is not possible to know precisely how much gas was lost, given the uncertainty that 64 surrounds exactly when the leak began. even a few days of leaking at that rate is substantial. Consider that, as of 2014, the average home in Anchorage uses about 137 ccf of gas per month 65 A `ccf equals 100 Sef.66 Thus, even using the lower estimate of 200,000 scf of lost gas per day, enough gas was leaking every day to heat a home in Anchorage for over a year.67 The gas was lost permanently to the atmosphere. It was not recovered. It was wasted. The AOGCC exists to prevent waste. It had the authority to act in this case. It should have. But it didn't. B. Oil production was immediately reduced by the gas leak in Cook Inlet. 62 Dan Joling, Alaska Underwater Gas Leak Continues, 2"d Group to Sue, March 1, 2017, www.cbe.ca/news/canada/north/alaska gas-leak-cook-inlet-lawsuit- 1.4005024 fi3 Hilcorp Natural Gas Leak From 8 " Pipeline, http://dec.alaska.gov /spar/ppr/spit l-information/response/2017/04-hicorp/ 64 Dan Carpenter, Investigation Finds Hilcorp Gas Leak Poses Risks & Started Earlier Than First Reported, March 7, 2017, www.ktau.com/content/news/ Investigation -finds -Hi leorp-gas-leak-poses-risks--starter-earlier-than-first- reported-415636093.htinl 65 Natural Gas Rates, Regulatory Commission of Alaska, http://rca.alaska.gov/ RCAWeb/Documents/ Reports/2014Gas.pdf 66 Frequently Asked Questions, www.cia.gov/tools/fags/faq.php?id=45&t=8 67 Each home uses 137 ccf per month. 137 times 100 equals 13,700 scf. 200,000 scf of lost gas per day divided by 13,700 (gas usage each month) equals 14.6 months. Appellant cautions the court that he is not an engineer. 27 More detrimental to resource recovery was the effect of the gas leak on oil production. Platform A is situated in what's known as the Middle Ground Shoal .68 It is one of two remaining Middle Ground Shoal platforms still producing oil. Fixing the gas leak required Hilcorp to shut down oil production from the Middle Ground Shoal field.69 Monthly production data from the AOGCC for the Middle Ground Shoal in 2017 shows the following: Month Barrels March 41.791 April 72 May 55 June 0 July 0 August 0 September 1%564 As the court can readily observe, shutting down the platforms reduced the oil production from them to zero for three months. The platforms were shut down because of the gas leak. The gas leak caused the reduction in oil barrels produced. In other words, resource recovery was impaired due to the wasted gas. 68 Record at 0003. 69 Alex DeMarban, Hilcorp Agrees To Temporarily Shut Down Oil Production To Fight Cook Inlet Gas Leak, March 25, 2017, www.adn.com/business- economy/energy/2017/03/25/following-talks-with-governor-about-cook-inlet-gas- leak-hilcorp-agrees-to-temporarily-shut-down-oil-production/ go The reduction in oil production should have prompted the AOGCC to assert jurisdiction in this case. C. Longer term production losses are attributable to the leak. Other production losses are attributable to the leak besides the production lost during the months listed above. Production from the field before the leak was about 1150 barrels of oil per day.70 When production was returned however, it was about 150 barrels a day less. Production soon declined below 975 barrels of oil per day. Hilcorp, relying on production going below 975 barrels of oil a day, applied to the state for a reduction in the royalties it owed to the state. based upon a state law allowing the same. The royalty relief request was sent to the Department of Natural Resources. Then -Commissioner Andy Mack rejected the request, citing the leak as the reason for the reduction.71 These lost barrels do not represent a maximization of recovery. To be clear, the reduction in oil production is not defined as waste itself. Nevertheless the conclusion that there was oil production lost due to wasted gas is inescapable. Thus, by the terms of its own cardinal rule, the reduction in resource recovery ought to have spurred the AOGCC to action. But it did not move. 70 Record at 0003. 71 Record at 0003. 29 CONCLUSION The agency's inaction in the face of the Cook Inlet gas leak is to the detriment of the public it serves. The agency is failing to protect the abiding public interest in Alaska's most valuable natural resource. Oil and gas built Alaska, and will sustain Alaska into the future, if the resource is wisely managed. There is a public interest in the conservation of natural resources. The public interest in the lost gas, a natural resource of the state, is considerable. One need only recall the critical place that natural resources occupy in Alaska, as set out by appellant on page eight of this brief, to see how this case must be decided. The court should reverse the decision below, rule that the AOGCC had, and indeed, still has, jurisdiction over this case, and require that AOGCC comply with the law enacted by the legislature defining its jurisdiction. DATED: July 15, 2019 6C2;(- -- Hollis S. French Alaska Bar No. 9606933 30 IN THE SUPERIOR COURT FOR THE STATE OF ALASKA THIRD JUDICIAL DISTRICT AT ANCHORAGE HOLLIS S. FRENCH, Appellant, V. ALASKA OIL AND GAS CONSERVATION COMMISSION, Appellee. Agency Case: OT14-19-002 ) Appeal Case: 3AN-19-6694CI APPEAL FROM THE ALASKA OIL AND GAS CONSERVATION COMMISSION APPELLANT'S REPLY Filed on the day of Anchorage Superior Court Clerk of the Superior Court By Hollis S. French 2640 Telequana Drive Anchorage, Alaska 99517 (907)244-7135 AK Bar No. 9606033 2019 Deputy Clerk TABLE OF CONTENTS TABLE OF CONTENTS.......................................................... i TABLE OF AUTHORITIES...................................................... iii STATUTES PRINCIPALLY RELIED UPON ................................. v ARGUMENT....................................................................... 1 I. AOGCC's Rationales For Its Belief That It Lacks Jurisdiction Over The Cook Inlet Gas Leak Are Not Supported By Any Relevant Statute or Case. ......................................... 1 A. What does `waste' mean within the context of petroleum conservation? ....................................... 2 B. AOGCC's flawed rationales: ................................. 8 1. "Waste occurs when recoverable hydrocarbons arelost." ................................................. 8 2. "Once metered and severed, the gas has been produced, and ceases to be a recoverable natural resource." ..................................... 11 3. "The combined effect of custody transfer and severance from the lease is that the resource has been produced, and in turn there is no longer a natural resource subject to a waste determination." ....................................... 12 II. AOGCC's Flawed Understanding Of Its Jurisdiction Fails To Protect The Public Interest In The Conservation Of Alaska's Oil And Gas Resources Over Vast Parts Of TheState............................................................ 14 III. The Appropriate Standard Of Review Is The Independent Judgment Standard ................................. 16 CONCLUSION.................................................................. 20 TABLE OF AUTHORITIES FEDERAL CASES Ohio Oil Co. v. Indiana (No.1), 177 U.S. 190 (1900)...................... 13 ALASKA CASES Alaska Crude Corp. v. State, 261 P.3d 412 (Alaska 2011).................. 15 City of Kenai v. CINGSA, 373 P.3d 473 (Alaska 2016)................... 7 Exxon Corp. v. State, 40 P.3d 786 (Alaska 2001)........................... 14 McKibben v. Mohawk Oil Co., 667 P.2d 1223 (Alaska 1983)............. 9 Mukluk Freight Lines, Inc. v. Nabors Drilling, Inc., 516 P.2d 408 (Alaska 1973)..................................................................... 19-20 Sprucewood Inv. Corp. v. Alaska Housing Finance Corp., 33 P.3d 1156 (Alaska 2001).................................................................... 8 State of Alaska v. BP Exploration, Alaska, Trial Motion, 2009 WL 7274134........................................................................... 14 Union Oil Co. of Cal. v. Dept. of Revenue, 560 P.2d 21 (Alaska 1977) 17-18 CASES FROM OTHER JURISDICTIONS Jamieson v. Indiana Natural Gas & Oil Company, 128 Indiana 555 (1891)............................................................................. 13 Mobil Oil Corp. v. State Corporation Commission, 608 P.2d 1325 (Kansas 1980)................................................................... 16 Osborn v. Texas Oil & Gas Corp., 661 P.2d 71, 76 O. & G.R. 101 (Ok. Ct. App. 1983)............................................................ 16 Railroad Commission v. Shell Oil Co., 206 S.W.2d 235 (Texas 1947).... 3-7. 16 iii STATUTES AS 31.05.027...................................................................... 1,8 AS 31.05.095...................................................................... 1, 5, 8 AS 31.05.170(15)............................................................... 1-3. 10 OTHER AUTHORITIES American Heritage Dictionary, 5 h Edition, 2016........................... 7 AOGCC Other Order 150...................................................... 1,8 Evan D. Johnson, Anchorage, We Have A Problem. The Cold, Harsh Truth About The Alaska Oil And Gas Conservation Commission's Ability To Regulate Gas -Cap Production (A Texas Perspective), 44 Houston Law Review 1455(2007).......................................... 6 Patrick H. Martin, The Jurisdiction of State Oil and Gas Commission, 18A RMMLF-INST 3(1985).......................................... 16 8 Patrick H. Martin and Bruce Kramer Williams & Meyer Oil and Gas Law, Manual of Terms(2019)............................................... 2,15 70 STATUTES PRINCIPALLY RELIED UPON ALASKA STATUTE 31.05.027 The authority of the commission applies to all land in the state lawfully subject to its police powers, including land of the United States and land subject to the jurisdiction of the United States. ALASKA STATUTE 31.05.095 The waste of oil and gas in the state is prohibited. ALASKA STATUTE 31.05.170(15) (15) `'waste" means, in addition to its ordinary meaning, "physical waste" and includes (A) the inefficient, excessive, or improper use of, or unnecessary dissipation of, reservoir energy; and the locating, spacing, drilling, equipping, operating or producing of any oil or gas well in a manner which results or tends to result in reducing the quantity of oil or gas to be recovered from a pool in this state under operations conducted in accordance with good oil field engineering practices; (B) the inefficient above -ground storage of oil; and the locating, spacing, drilling, equipping, operating or producing of an oil or gas well in a manner causing, or tending to cause, unnecessary or excessive surface loss or destruction of oil or gas; (C) producing oil or gas in a manner causing unnecessary water channeling or coning; (D) the operation of an oil well with an inefficient gas -oil ratio; (E) the drowning with water of a pool or part of a pool capable of producing oil or gas, except insofar as and to the extent authorized by the commission; (F) underground waste; (G) the creation of unnecessary fire hazards; (H) the release, burning, or escape into the open air of gas, from a well producing oil or gas, except to the extent authorized by the commission; v (I) the use of gas for the manufacture of carbon black, except as provided in this chapter; (J) the drilling of wells unnecessary to carry out the purpose or intent of this chapter. kv ARGUMENT Appellant's opening brief set out a simple, statute -based case showing that AOGCC's Other Order 150 erroneously disclaimed jurisdiction over a major leak of gas in Cook Inlet. Appellant's proof rests on three statutory legs: 1) the waste of oil and gas in the state is prohibited'; 2) the authority of the commission applies to all land in the state subject to its police powers 2; and 3) gas escaping into the air is waste' AOGCC responded. Appellant addresses AOGCC's arguments below. I. AOGCC's Rationales For Its Belief That It Lacks Jurisdiction Over the Cook Inlet Gas Leak Are Not Supported By Any Relevant Statute Or Case. AOGCC has failed to cite a legal basis for declining jurisdiction over the gas leak in Cook Inlet. Instead. AOGCC's brief creates confusion around the concept of waste and makes several unsupported assertions about waste that do not appear in Other Order 150 and that it failed to buttress with citations to relevant statutes or cases from Alaska, or anywhere else. The Court should view these unsupported rationales for what they are — mere assertions. Appellant will begin by defining and discussing the concept of waste, and then will analyze each flawed rationale the agency has put forward. I AS 31.05.095. 2 AS 31.05.027. 3 AS 31.05.170(15). 1 A. What does `waste' mean within the context of petroleum conservation law? A leading treatise on oil and gas law begins its treatment of the concept of waste this way: The term is too broad and has too many meanings for a one- or two- sentence definition. In the oil industry, it suggests the ultimate loss of oil or gas. The prevention of waste is conservation. The term is best understood when broken down. There is physical waste (q.v.) and economic waste (q.v.). Physical waste is the loss of oil or gas that could have been recovered and put to use. Such waste can occur on the surface or underground. ... [T]he reader is directed to the specific statutes of the states for the precise meaning of the term in that state."`' The treatise advises us to now turn to Alaska's definition of waste, found at AS 31.05.170(15).' The first thing to note about Alaska's definition of waste is that there is no reference to economic waste therein. The case before this court. however, is about the physical waste of gas. The relevant portions of Alaska's definition of waste are: (15) "waste" means, in addition to its ordinary meaning, "physical waste"' and includes (A) the inefficient, excessive, or improper use of, or unnecessary dissipation of, reservoir energy;..... (G) the creation of unnecessary fire hazards: 4 8 Patrick H. Martin & Bruce M, Kramer, Williams & Meyers Oil and Gas Law, Manual of Oil and Gas Terms (2019) at 1131 (emphasis supplied). s The full definition is set out under Statutes Principally Relied Upon, at p. v. There are ten specific examples of waste in the full definition. E (H) the release, burning, or escape into the open air of gas, from a well producing oil or gas, except to the extent authorized by the commission. Each of the lettered definitions arguably pertain to this case of gas escaping to the atmosphere from an 8" line running to Platform A. For example, taking the definition at (A): the gas that vented to the atmosphere had the effect of unnecessarily dissipating the energy of the reservoir from which it originated. Regarding (G): the gas that vented to the atmosphere created an unnecessary fire hazard. And as to (H): the gas escaped to the atmosphere.6 The lettered definitions describe some, but not all, of the forms that waste can take under Alaska law. The introductory phrase to the lettered examples is far broader than the specific examples in the lettered definitions. Alaska's definition of waste begins this way: "'waste' means, in addition to its ordinary meaning, `physical waste' and includes....."7 The phrase "in addition to its ordinary meaning —and includes" is not to be lightly passed over. A 1947 case decided by the Texas Supreme Court8 turned on 6 Appellant assures the Court, contrary to the assertions made by AOGCC in its brief on p. 7, that he has read this definition to the end on numerous occasions. To the point raised by AOGCC on p. 7 of its brief, that the definition "explicitly requires [the gas escaping into the air] to be gas `from a well producing oil or gas,"' Appellant would simply respond: gas in Alaska comes from wells, and nowhere else. AS 31.05.170(15)(in part)(emphasis supplied). a Railroad Commission v. Shell Oil Co., 206 S.W.2d 235 (Texas 1947). 3 a similar phrase in that state's petroleum conservation laws. The Texas statute combined into one law a statewide prohibition on waste and then defined waste, as Alaska does today, by reference to ten specific examples, and prefaced its list with the phrase "[t[he term 'waste' among other things shall specifically include:.... „' 0 The Texas statute. wrote the Texas Supreme Court, significantly prefaces an enumeration of ten specific wasteful practices with the declaration that waste among other things should specifically include the practices there interdicted. That language must have been deliberately selected to avoid narrowing the sweeping language in the first sentence of the article, by which all waste in the handling of oil and gas was declared unlawful and prohibited, as well as to preserve the wide scope of [the statute], which was aimed with the utmost generality at the prevention of waste.' � The analysis of the Texas court is equally applicable to the similar phrase in Alaska's definition of waste. The idea common to both preambles is that there are many forms of waste, and the lettered examples are not exhaustive of them. Before going further it is instructional to compare side -by -side the Texas law prohibiting waste and its Alaska counterpart. 9 "The production, storage or transportation of crude petroleum oil or of natural gas in such a manner, in such amount, or under such conditions as to constitute waste is hereby declared to be unlawful and is prohibited. The term `waste' among other things shall specifically include:" Id. at 239. to Id. 11 Id. (emphasis in the original). 4 Texas: The production, storage or transportation of crude petroleum oil or of natural gas in such a manner, in such amount, or under such conditions as to constitute waste is hereby declared to be unlawful and is prohibited.12 Alaska: The waste of oil and gas in the state is prohibited.13 In Railroad Commission v. Shell, quoted above, the Texas anti -waste statute is described as "sweeping" and having a "wide scope." As the Court can see, the Alaska statute, written eight years after the Texas case was decided, is written in more general terms. It would be a fair inference for the Court to draw that our Alaska Territorial legislators, working in 1955, decided to improve upon the Texas statute preventing waste, making it more sweeping and giving it an even wider scope. In Railroad Commission v. Shell, the Texas Court finished its analysis this way: The term waste has an ordinary and generally accepted meaning. Whatever the dictates of reason. fairness and good judgment under all the facts would lead one to conclude is a wasteful practice in the production, storage, or transportation of oil and gas, must be held to have been denounced by the legislature as unlawful. The Constitution had vested in the lawmaking body the duty of preventing waste, not of part but of all the natural resources of this State, and it must not be considered that the legislature meant by its enactments to discharge less than the full duty which was thus entrusted to it.14 12 Id. 13 AS 31.05.095. 14 206 S.W.2d at 239. 5 This 1947 Texas case is important for two reasons. First, it is helpful in that it provides the Court with some context for our Alaskan laws on petroleum conservation. Texas wrote its petroleum conservations laws beginning in 1919. Alaska did not take up the same task until 1955. As one writer explains it: Alaska, on the other hand, has enjoyed the luxury of more hindsight in its regulation of the oil and gas industry, benefiting not only from Texas's mistakes but also from technological advances in drilling and recovery methods over the last fifty years. As custodian to one of the last abundant reserves of U.S. domestic oil supply, Alaska has shown a keen awareness of its prominent role in maintaining the delicate balance between politics and economics that dictates oil and gas regulation. Accordingly, the Alaska legislature has given its regulator, agency in charge of oil conservation -the Alaska Oil and Gas Conservation Commission (AOGCC)-far greater authority to regulate waste and correlative rights than Texas bestowed upon its agency, the Texas Railroad Commission (RRC). i_ The analysis above supports an inference from which this Court could conclude that the authority of AOGCC to act in this case, to assert .jurisdiction, should be construed broadly. The Texas case is equally important because it sheds light on how we are to understand the phrase "in addition to its ordinary meaning... and includes" in Alaska's definition of waste. We can presume that the phrase was "deliberately selected to avoid narrowing the sweeping language" of our statewide prohibition on waste. We can presume that it was "deliberately selected" to "preserve the 15 Evan D. Johnson, Anchorage, We Have A Problem: The Cold, Harsh Truth About The Alaska Oil And Gas Conservation Commission's Ability To Regulate Gas -Cap Production (A Texas Perspective), 44 Houston Law Review 1455, 1457 (2007)(footnotes omitted)(emphasis supplied). 2 wide scope" of our statewide prohibition against waste. We can presume that the Territorial legislature meant to prevent the waste "not of a part but of all of the natural resources of this State." This analysis is consistent with Alaska law regarding the interpretation of statutes: "[w]e presume that the legislature intended every word, sentence, or provision of a statute to have some purpose, force, and effect, and that no words or provisions are superfluous." 16 Alaska's definition of waste includes the "ordinary meaning" of waste. What, then, is the ordinary meaning of waste? Let's start with the dictionary. The dictionary meaning of 'waste,' is "to fail to take advantage of or use for profit: lose: waste an opportunity. " 17 With the foregoing in mind, consider the gas that leaked for several months directly to the atmosphere from the 8" line running towards Platform A. Was that gas lost? Yes. Was it put to use? No. Was it used for profit? Again, no. That gas was wasted, or, in other words, it was not conserved. The gas that leaked to atmosphere was waste according to the ordinary meaning of the term. In sum, Appellant believes, as a leading treatise attests, that the prevention of waste is conservation. Yet the Alaska Oil and Gas Conservation Commission, 16 City of Kenai v. CINGSA, 373 P.3d 473, 480 (Alaska 2016)(imernal citations omitted). 17 The American Heritage Dictionary of the English Language, Fifth Edition (2016) at 1955 (emphasis in the original). P1 whose central statutory mission is to prevent waste of oil and gas in the states, and told explicitly in statute that it has statewide authority19 to do its job can't see that it has jurisdiction to act in this instance of a long term release of gas to the atmosphere, in the middle of Cook Inlet, from a pipeline running straight to an oil production platform. The reasons AOGCC offered in its brief for failing to do its job are all flawed, as the following analysis demonstrates. 13. AOGCC's flawed rationales: 1. "Waste occurs when recoverable hydrocarbons are lost."20 AOGCC's brief cites no law, no definition and no case in support of this sentence. The Court should view the unsupported assertion at I.B.I with suspicion. AOGCC had more than three months to research and to write its brief.'' It failed during that time to find a case, statute, law review article or treatise to support the sentence quoted above. Alaska law does not define "recoverable hydrocarbon." Other Order 150 certainly did not rely on this tern. Other Order 150 makes no mention of "recoverable hydrocarbons." The agency on appeal has inserted a 18 "The waste of oil and gas in the state is prohibited." AS 31.05.095, 19 "The authority of the commission applies to all land in the state lawfully subject to its police powers, including land of the United States and land subject to the jurisdiction of the United States." AS 31.05.027. 20 Brief of Appellee, p. 3. 21 Appellant filed his brief in this appeal on July 15, 2019. AOGCC filed its brief on October 21, 2019. concept foreign to both the Order it issued, and to petroleum conservation — that waste only occurs when a "recoverable" hydrocarbon is lost — to cobble together a rationale for its decision that it lacked jurisdiction. Invented terms are a weak foundation upon which to build. A longer variant of the sentence quoted in I.B.1 appears on p. 5 of AOGCC's brief. There, the agency asserts that In oil and gas conservation, waste occurs when recoverable natural resources — here gas — are lost, i.e., during production the operator damages the interest of another in the gas. This sentence does come with a footnote, number 12 in Appellee's brief. The footnote does not direct the reader to Alaska's statutory definition of waste. Instead, the footnote cites three cases, not one of which touches even remotely upon petroleum conservation law. The first cited case is Sprucewood Inv. Corp. v. Alaska Housing Finance Corp. 22 If the names of the parties suggests that this case might not be relevant, a brief review of the facts of that case confirms it. The case is not about oil and gas conservation. It does not discuss recoverable hydrocarbons, or any kind of hydrocarbon. The first sentence of the case informs us that "[t]he main question presented in this case is how to interpret a `demolition" contract."23 There is a reference to waste in Sprucewood, but it is waste as that term pertains to real 22 33 P.3d 1156 (Alaska 2001). 23 Id. ;i estate. 24 If the Court is puzzled by the agency's selection of a case about a real estate dispute to make a point about how waste is to be understood in the world of oil and gas conservation, so is Appellant. The second case is McKibben v. Mohawk Oil Co." That case concerned a business dispute over a mine near Fairbanks.26 There are no hydrocarbons present in McKibben. As in the Sprucewood case, the waste referred to in McKibben is not oil and gas waste, but waste within the context of real estate law. The Court in McKibben cited directly to treatises on real estate when it wrote that: Waste occurs when the owner of a possessory estate engages in unreasonable conduct that results in physical damage to the land and substantial diminution in the value of estates owned by others in the same land. See W. Burby, Real Property § 12 (3d ed. 1965); 2 H. Tiffany, Real Property § 630 (3d ed. 1939).27 AOGCC's citation to a real estate definition of waste should trouble the Court. In any event, neither Sprucewood nor McKibben is on point. Neither case cites to the oil and gas law definition of waste found at 31.05.170(H). The final case cited in footnote 12 of AOGCC's brief simply informs us that McKibben was 24 Id. at 1165. 25 667 P.2d 1223 (Alaska 1983). 26 "[T]he complaint alleges that defendants breached the lease; committed waste and conversion; engaged in unworkmanlike mining; and intentionally diluted the ore." Id. 27 Id. at 1228. FS17 overruled on different grounds by another case. In short, none of the cases cited by AOGCC in footnote 12 are about oil and gas conservation law. 2. "Once metered and severed, the gas has been produced, and ceases to be a recoverable natural resource."28 This concept is related to the one listed in I.B.I above, and equally foreign to petroleum conservation theory and law. AOGCC cites no law, no definition, and no case to support the statement quoted in I.B.2. The agency repeats the assertion in a slightly altered way three more times in its brief. It claims that "[t]he gas had been produced, was [sic] no longer a recoverable natural resource;"29 and that "[m]etered and severed gas is no longer a recoverable resource•'30and that "[b]ecause the leaking gas had passed through a custody transfer meter and been severed, it was no longer a recoverable natural resource, and therefore not waste."31 This invented concept is no more legitimate having been rephrased in different ways. 28 Brief of Appellee, p. 6. 29 Brief of Appellee, p. 6. 30 Brief of Appellee, p. 8. 31 Brief of Appellee, p. 2. 11 In general, it is difficult to prove a negative_ However, Appellant can confidently assert that no Alaskan case refers to a `recoverable natural resource."32 AOGCC had a duty to provide a legal basis for its assertions. It failed. It appears as if the agency has created this term out of thin air. 3. "The combined effect of custody transfer and severance from the lease is that the resource has been produced, and in turn there is no longer a natural resource subject to a waste determination."" AOGCC now takes a turn into uncharted waters, The sentence in I.B.3 comes without a footnote pointing the Court to a statute, a court decision, a law review article, or a treatise, to substantiate it. In I.B.2 above, metering and severing of the natural gas in question supposedly rendered that natural gas no longer 'recoverable.' Now, in I.B.3, the gas in question becomes no longer a natural resource.' Appellant is at a loss here. The position put forward in I.B3 is shocking. How does natural gas stop being a natural resource? More importantly, what Alaskan statute says that? None. As noted above, the agency had three months to 32 A WESTLAW search of phrase `recoverable natural resource" in the Alaska database conducted November 12, 2019, returned zero cases. A Google Scholar search of the same term within the Alaska courts database conducted November 14, 2019, returned zero cases. 33 Brief of Appellee, p. 10. 34 AOGCC makes this same point in a slightly different way at the bottom of page 7 of its brief. The sentence is a bit convoluted, but the gist of it is that gas is no longer a natural resource after it is produced and custody and ownership of the gas has transferred to the operator. 12 prepare its brief. It apparently could not find a case or a passage in a textbook or even one of its own regulations that explains the magic it claims that happens by flowing gas through a custody transfer meter; magic that somehow changed the natural gas from one of the Kenai Peninsula's oil and gas reservoirs into.....? Not a natural resource? What is it then? Contrary to AOGCC's novel argument, the natural gas is still natural gas, it is still flammable, and it is still one of Alaska's most valuable natural resources. The agency appears to have created this rationale out of thin air. Before leaving this point, Appellant would remind the Court of the cases cited in Appellant's Brief at pp. 23-25. The first, Jamieson v. Indiana Natural Gas & Oil Company' involved natural gas in transmission lines, much like the transmission line running to Platform A in this case. The case was later analyzed by the US Supreme Court in Ohio Oil Co. v. Indiana (No.1),36 wherein the Court noted that the pipeline statute at issue in Jamieson was upheld on the ground that "the dangerous nature of the product, its susceptibility to explosion and the consequent hazard to life and property which might arise from movement through pipes, made the act of transmitting it a fit subject for police regulation."37 The Court could reasonably rely on Jamieson for the proposition that gas in 35 128 Indiana 555 (1891). 36 177 U.S. 190 (1900)(emphasis supplied). 37 Id. at 206. 13 transmission lines is subject to Alaska's police power and therefore subject to the jurisdiction of AOGCC. The second case, State of Alaska v. BP Exploration, 38 involved oil in transmission lines. In the latter case, BP did not question the authority of AOGCC to adjudicate a case of waste of a natural resource that was severed from its lease and had been passed through a custody transfer. Indeed, BP wrote that AOGCC "has plenary power to adjudicate issues of waste and to require actions to address waste." AOGCC failed to discuss, much less distinguish, these two cases in its brief. In sum, not one of AOGCC's rationales for its position on its jurisdiction is supported by Alaska law. IL AOGCC's Flawed Understanding Of Its Jurisdiction Fails To Protect The Public Interest In The Conservation Of Alaska's Oil And Gas Resources Over Vast Parts Of The State. There is a public interest in the conservation of Alaska's natural resources.39 AOGCC's brief does not discuss this vital aspect of its mission. The words "public interest" do not appear in its brief. The agency's description of its role in the state, offered at several points in its brief, focuses on drilling and 38 State of Alaska v. BP Exploration, Alaska, Trial Motion, 2009 WL 7274134 at 9. 39 Exxon Corp. v. State, 40 P.3d 786, 791 (Alaska 2001). 14 wells.40 While those descriptions are not inaccurate, they are incomplete. This Court should be aware that the Alaska Supreme Court takes a broader view of the agency's mission than does the agency itself: AOGCC is an `independent quasi-judicial agency of the state' created by the Alaska Oil and Gas Conservation Act. AS 31.05.005(a). AOGCC, which has authority over all land subject to the state's police power, regulates to prevent waste, insure greater recovery, protect correlative rights and underground water, and further public health and safety 41 The agency's first mission is to prevent waste, according to the Alaska Supreme Court. As noted in a leading oil and gas law treatise, "[s]uch waste can occur on the surface or underground."42 Yet the agency disclaims jurisdiction over waste occurring on the surface but past the point of metering and severing. Aboveground waste of Alaska's most precious natural resource occurring downstream of the point of metering and severing is waste over which the Alaska Oil and Gas Conservation Commission is powerless, according to the agency's rationales in Other Order 150. 40 "The AOGCC is the regulatory and enforcement authority over wells and drilling operations involving the production of hydrocarbon natural resources." Brief of Appellee at p. 3; "AOGCC is the regulatory and enforcement authority over drilling and well operations for production of hydrocarbon natural resources, often referred to by the shorthand of `everything downhole."' Brief of Appellee at p. 4. 41 Alaska Crude Corp. v. State, 261 P.3d 412, 414 (fn. 3)(Alaska 2011). 42 See fn. 4, p 2. 15 The legal question before the Court is simple: does the agency's Jurisdiction extend past the point of metering and severing? Packed within that question is a significant impact on the public interest in protecting Alaska's natural resources. A ruling in favor of the agency would render vast portions of the state beyond AOGCC's reach. Such a ruling would be contrary to Alaska's petroleum conservation laws, which Appellant asserts were designed to be all -encompassing as to waste. In other words, if petroleum conservation laws in Texas protect "not ... part but ... all the natural resources"43 of that state, Alaska deserves no less. The situation before the court is not unheard of in the law. Oil and gas commissions do not always appreciate the full extent of their powers. "In some instances we find a commission asserting that it lacks certain authority. but a court concluding otherwise.' 44 This Court should protect the public interest in preventing waste by correcting the agency's flawed understanding of its own jurisdiction. III. The Appropriate Standard Of Review Is The Independent Judgment Standard. The issue before the Court is one of statutory construction. The general rule for statutory construction cases is set out in Union Oil Co. of Cal. v. Dept. of 43 Railroad Commission v. Shell. 206 S. W at 239. 44 Patrick H. Martin, The Jurisdiction of State Oil and Gas Commission, 18A RMMLF-INST 3 at 7 (1985)(citing Mobil Oil Corp. v. State Corporation Commission. 608 P.2d 1325 (Kan. 1980) and Osborn v. Texas Oil & Gas Corp., 661 P.2d 71, 76 O. & G.R. 101 (Ok. Ct. App. 1983)). 16 Revenue: "[W]here, as here, the issues to be resolved turn on statutory interpretation, the knowledge and expertise of the agency is not conclusive of the intent of the legislature in passing a statute. Statutory construction is within the scope of the court's special competency, and it is our duty to consider the statute independently."/5 The Union Oil case concerned the appropriate interpretation to be given a provision of an oil and gas production tax law enacted by the Legislature and a regulation interpreting the statute promulgated by the Department of Revenue. The Department urged the Court to adopt the reasonable basis standard of review. The Court's discussion of the issue is helpful: In support of a reasonable basis standard of review, the Department argues that its interpretation made all the complicated variables of the tax calculation fit together in an efficient and workable manner ...' and was based upon `... the department's expertise in administering tax calculations, taxpayer notifications and payment procedures'.... These considerations do not warrant application of the reasonable basis test. While tax structure and collection procedures do involve certain policy considerations which we consider in independently interpreting this statute, none of the policy .judgments argued in this case is the type of specialized agency .judgment which has caused us to apply the reasonable basis test in the past. 46 45 560 P.2d 21, 23 (Alaska 1977)(footnote omitted). 46 Id. at 24 (footnote omitted). 17 The Court ruled that the independent judgment standard was the correct one to be applied' A comparison between two sets of precedents cited by the Court in Union Oil and the standard of review applied in each case reveals the weakness of the agency's position on this point. Here are issues the Union Oil Court found to be properly reviewed through the reasonable basis test: questions of oil discovery evaluation and prediction of future well productivity; • procedures adopted for competitive bidding for oil and gas leases and criteria for qualified applicants for such leases; • decisions regarding initiation of a rate investigation pursuant to charges of discrimination; and • conclusions relatine to the desirability of creating a borough.aR Compare that list of issues to this one, to which the Court has applied the independent judgment standard of review: • interpretation of a statute relating to public land auction procedures; • a determination whether administrative procedures were consistent with due proeess.49 47 Id. 48 Id at 25, fn. 6 (internal citations omitted). 49 Id at 25, fn. 7 (internal citations omitted). EM The last example comes from Mukluk Freight Lines, Inc. v. Nabors Drilling, Inc.50 The case is instructive. Mukluk involved the transfer of a trucking company's authority to operate. Several trucking competitors challenged the transfer. The matter went before the Alaska Transportation Commission. It announced that it intended to hold an evidentiary hearing in the matter .51 The Transportation Commission then issued an order cancelling the evidentiary hearing. "In the place of an evidentiary hearing, the Commission announced that it would employ a `modified procedure."'52 That order was appealed to superior court, which ruled that in "transfer proceedings the Commission had discretionary authority to either grant or deny evidentiary hearings." An appeal to the Alaska Supreme Court followed. The first question the Court had to decide was the proper standard of review. The Court noted that the reasonable basis standard applies to cases in which the "particularized experience and knowledge of the administrative personnel goes into the detennination."i3 The Court set out the test for the independent judgment standard: The other kind of case presents questions of law in which knowledge and experience in the industry affords little guidance so 516 P.2d 408 (Alaska 1973). sl Id. at 408-409. sz Id. 53 Id. 19 toward a proper consideration of the legal issues. These cases usually concern statutory interpretation or other analysis of legal relationships about which courts have specialized knowledge and experience. Consequently, courts are at least as capable of deciding this kind of question as an administrative agency.`4 The question in this case concerns the extent of the AOGCC's jurisdiction. This is a classic question of law. To use the words of the Mukluk Court: the knowledge and experience of AOGCC `affords little guidance' on this question. The knowledge and experience of AOGCC is directed towards questions of well engineering and geology. For the foregoing reasons, in reviewing this case, the Court must apply its independent judgment. CONCLUSION The laws of the state of Alaska give to the Alaska Oil and Gas Conservation Commission statewide jurisdiction over waste. Appellant seeks an order from this Court that could be as narrow as this: the agency would not be exceeding its powers to assert jurisdiction over the gas leak in Cook Inlet. AOGCC has taken a position at odds with the law. at odds with the historical place Alaska occupies in the development of petroleum conservation doctrines, and at odds with good public policy. The agency has taken the position that, as far as its authority goes, this leak of Alaskan natural gas might as well have happened in Canada, or in Venezuela. The agency has taken the position 54 Id. 20 that, even if the leak were twice as voluminous and still going on today, it would be powerless to act. The agency is mistaken. For the foregoing reasons, the court should reverse the decision below, rule that AOGCC had, and indeed, still has, jurisdiction over this case, and require that AOGCC comply with the law enacted by the legislature defining its jurisdiction. DATED: November 20, 2019 Hollis S. French Bar No. 9606933 Pursuant to Ak. R. App. P. 513.5(c)(2), I hereby certify that Appellant's Reply is in 13 point Times New Roman. Hollis S. French 21 Alaska Statute 31.05.170(15): "waste" means, in addition to its ordinary meaning, "physical waste" and includes (A) the inefficient, excessive, or improper use of, or unnecessary dissipation of, reservoir energy; and the locating, spacing, drilling, equipping, operating or producing of any oil or gas well in a manner which results or tends to result in reducing the quantity of oil or gas to be recovered from a pool in this state under operations conducted in accordance with good oil field engineering practices; (B) the inefficient above -ground storage of oil; and the locating, spacing, drilling, equipping, operating or producing of an oil or gas well in a manner causing, or tending to cause, unnecessary or excessive surface loss or destruction of oil or gas; (C) producing oil or gas in a manner causing unnecessary water channeling or coning; (D) the operation of an oil well with an inefficient gas -oil ratio; (E) the drowning with water of a pool or part of a pool capable of producing oil or gas, except insofar as and to the extent authorized by the commission; (F) underground waste; (G) the creation of unnecessary fire hazards; (H) the release, burning, or escape into the open air of gas, from a well producing oil or gas, except to the extent authorized by the commission; (I)the use of gas for the manufacture of carbon black, except as provided in this chapter; (1) the drilling of wells unnecessary to carry out the purpose or intent of this chapter. IN THE SUPREME COURT OF THE STATE OF ALASKA HOLLIS S. FRENCH, Appellant, ) V. ) Supreme Court No. S-17822 ALASKA OIL AND GAS CONSERVATION ) COMMISSION, ) Superior Court No. Appellee. ) 3AN-19-06694 CI 1 APPEAL FROM THE SUPERIOR COURT THIRD JUDICIAL DISTRICT AT ANCHORAGE THE HONORABLE ERIC AARSETH, PRESIDING THE HONORABLE ADOLF ZEMAN, PRESIDING APPELLANT'S BRIEF HOLLIS S. FRENCH AK Bar No. 9606033 2640 Telequana Dr. Anchorage, AK 99517 (907)244-7135 hsfrench@gmail.com Filed in the Supreme Court of the State of Alaska, this day of 2020 Clerk of the Appellate Court TABLE OF CONTENTS TABLE OF CONTENTS.......................................................... i TABLE OF AUTHORITIES.................................................... iii AUTHORITIES PRINCIPALLY RELIED UPON .......................... ix JURISDICTIONAL STATEMENT ............................................. ISSUES PRESENTED FOR REVIEW .......................................... STATEMENT OF THE CASE ................................................... 2 ARGUMENT.................................................................... I. The AOGCC Had Jurisdiction to Decide the Issue Presented in French's Petition ..................................................... A. Jurisdiction is Either On or Off ................................ B. In Which the Geography of the Kenai Peninsula's Oil and Gas Fields, the Technology by Which Gas is Trans- ported, and the Location of the Leak are Illuminated, But Not Its Source .................................................. 10 C. The Plain Language of AOGCC's Jurisdictional Statutes Give the Agency Statewide Powers .............. 16 D. All Available Evidence Points to a Broad Reading of AOGCC's Jurisdictional Statutes ............................ 21 In settings other than Other Order 150, the commission has asserted that its powers are statewide ............... 21 2. The regulated community interprets the statutes broadly. 22 3. The public policy which animates petroleum conser- vation law points to a broad reading of AOGCC's jurisdictional reach ............................................ 23 TABLE OF CONTENTS, con't 4. A comparison of Alaska's petroleum conservation laws with those of other states leads to the conclusion that Alaska's laws are to be broadly construed ............... 25 E. AOGCC's Rationales For Lacking Jurisdiction are Contrary To Law and Good Public Policy ................................. 28 1. Buying or selling gas does not remove it from the jurisdiction of AOGCC....................................... 28 2. Neither metering nor severing defeat the jurisdiction of AOGCC........................................................ 31 3. Alaska and other states have exercised jurisdiction over downstream gas ............................................... 33 a. Other states ................................................ 33 b. Alaska petroleum conservation laws extend down- stream, to transmission ................................. 35 i. Carbon black ...................................... 35 ii. CINGSA........................................... 37 F. The Rule Advanced by AOGCC Leads to Absurd Results. 38 1. A leak just past the meter. Or Farther ....................... 38 2. A leak just outside CINGSA ............................... 39 3. A leak closer to Platform A ................................. 40 II. The Superior Court Erred in Affirming Other Order 150's Denial of A Hearing to Appellant ............................................ 42 III. The Superior Court Erred in Awarding Attorney's Fees in the Amount of $6270...................................................... 44 CONCLUSION............................................................... 47 ii TABLE OF AUTHORITIES FEDERAL CASES Champlin Refining Company v. Corporation Commission, 286 U.S. 210 (1933)----------------------------------------------------------------------------- 25 Ex Parte McCardle, 7 Wall. 506 (1869) License Cases, 46 U.S. (5 How.) 504 (1847) E 16 Ohio Oil Company v. Indiana (No. 1), 177 U.S. 190 (1900)-------------- 32 Pennoyer v. Neff, 95 U.S. (5 Otto) 714 (1889) 17 Union Dry Goods v. Georgia Public Service Corp., 248 U.S. 372 (1919) 29 United Parcel Service, Inc. v. Chadwick's of Boston, Ltd., 900 F. Supp. 557 (D. Mass. 1995)------------------------------------------------------------ 9 United States v. Alaska, 422 U.S. 184 (1975)------------------------------- 21 ALASKA CASES Alaska Crude Corp. v. State, DNR, 261 P.3d 412 (Alaska 2011)-------- 18 American National Bank and Trust Company v. International Seafoods of Alaska, Inc., 735 P.2d 747 (Alaska 1987)--------------------------------- 17 B-C Cable Co., Inc. v. City and Borough of Juneau, 613 P.2d 616 (Alaska 1980)------------------------------------------------------------------ 17 Cabana v. Kenai Peninsula Borough, 21 P.3d 833 (Alaska 2001) ----- 45 City of Kenai v. CINGSA, 373 P.3d 473 (Alaska 2016)------------------ 13 Colville Environmental Services, Inc. v. North Slope Borough, 831 P.2d 341 (Alaska 1992)----------------------------------------------------- 17 Exxon Corp. v. State, 40 P.3d 786 (Alaska 2001)------------------------- 45 Far North Sanitation, Inc. v. Alaska Public Utilities Commission, 825 P.2d 867 (Alaska 1992)------------------------------------------------------ 9 iii Forquer v. State, Commercial Fisheries Entry Commission, 677 P. 2d 1236 (Alaska 1984)------------------------------------------------------------- 41,42 Gold Country v. Fairbanks North Star Borough, 270 P.3d 787 (Alaska 2012)------------------------------------------------------------------------------ 43,44 Homer Electric Association v. City of Kenai, 816 P.2d 182 (Alaska 1991)----------------------------------------------------------------------------- 6 Jeffries v. Glacier State Telephone Co., 604 P.2d 4 (Alaska 1979) ----- 15 Johnson v. State, 421 P.3d 124 (Alaska 2018)----------------------------- 9 Kenai Peninsula Fisherman's Co-op Association v. State, 628 P.2d 897 (Alaska 1981)------------------------------------------------------------------- 19 Matanuska Electric Association, Inc. v. Chugach Electric Association, Inc., 99 P.3d 553 (Alaska 2004)---------------------------------------------- 9 Moore v. State, 553 P.2d 8 (Alaska 1976)------------------------------------ 16 Regulatory Commission of Alaska v. Matanuska Electric Association, 436 P.3d 1015 (Alaska 2019)---------------------------------------------- 6 Riddle v. Lanser, 421 P.3d 35 (Alaska 2018)------------------------------- 8 Shephard v. State Dept. of Fish and Game, 897 P.2d 33 (Alaska 1995) 45 State, Dept. of Commerce, Community and Economic Development v. Alyeska Pipeline Service Co., 262 P.3d 593 (Alaska 2011)------------- 6,20 State, DNR v. Greenpeace, 96 P.2d 1056 (Alaska 2000)----------------- 45 Tesoro Alaska Petroleum v. Kenai Pipeline, 746 P.2d 896 (Alaska 1987)------------------------------------------------------------------ 6,19 CASES FROM OTHER JURISDICTIONS Bel Oil Co. v. Roland, 137 So. 308 (Louisiana 1962)------------------- 30 iv Jamieson v. Indiana Natural Gas & Oil Company, 128 Indiana 555, 28 N.E. 76 (Indiana 1891)------------------------------------------------- 32 Lone Star Gas Company, Inc. v. The Railroad Commission of Texas, 798 S.W. 2d 888 (Tex. Ct. App. Austin 1990)---------------------------- 33 Mobil Oil Corp. v. State Corporation Commission, 608 P.2d 1325 (Kan. 1980)------------------------------------------------------------------- 40 Osborn v. Texas Oil & Gas Corp., 661 P.2d 71 (Ok. Ct. App. 1983) - 40 Railroad Commission v. Shell Oil Co., 206 S.W.2d 235 (Texas 1947) 23 State ex. rel. v. Sinclair Pipe Line Company, 180 Kan. 425, 304 P.2d 930 (1956)--------------------------------------------------------------------- 25 ALASKA CONSTITUTION ArticleVIII §2----------------------------------------------------------------- 45 ALASKA STATUTES AS31.05.005------------------------------------------------------------------- 18 AS31.05.009------------------------------------------------------------------- 7 AS 31.05.027------------------------------------------------------------------- passim AS31.05.030---------------------------- -------------------------------------- passim AS 31.05.060(a)--------------------------------------------------------------- 2, 42, 43 AS31.05.095------------------------------------------------------------------- 18,25 AS. 31.05.120------------------------------------------------------------------ 35 AS 31.05.170(6)--------------------------------------------------------------- 10 AS 31.05.170(15)-------------------------------------------------------------- 26 v ALASKA REGULATIONS 20 AAC 25.020----------------------------------------------------------------- 11 STATUTES FROM OTHER JURISDICTIONS Arkansas: A.C.A. § 15-72-102---------------------------------------------- 26 California: Cal.Pub.Res.Code § 3300-------------------------------------- 33 Kansas: K.S.A. 55-701------------------------------------------------------- 25 Louisiana: LSA-R.S. 30:3--------------------------------------------------- 26 North Dakota: NDCC § 38-08-02------------------------------------------ 26 Oklahoma: 52 Okla. Stat. § 236-------------------------------------------- 25 OTHER AUTHORITIES Alaska Rule of Appellate Procedure 508(e)(4)(B)------------------------ 44,45 AOGCC, AOGCC, 50 Years of Service to Alaska (rev10/10/10)------- 27, 31, 36 Earl Boebert and James M. Blossom, Deepwater Horizon, A Systems Analysis of the Macondo Disaster, Harvard University Press (2016) -- 38 Tim Bradner, Hilcorp Acquires Additional Inlet Oil Assets, Alaska Journal of Commerce, 7/7/2015--------------------------------------------- 39 Dan Carpenter, Investigation Finds Hilcorp Gas Leak Poses Risks & Started Earlier Than First Reported, KTUU, March 7, 2017------- 2,10 Alex DeMarban, Hilcorp Agrees to Temporarily Shut Down Oil Production to Fight Cook Inlet Gas Leak, Alaska Daily News, March 27, 2017----------------------------------------------------------------------- 2,10 CINGSA, Cook Inlet Natural Gas Storage, Alaska, cingsa.com/about- cingsa--------------------------------------------------------------------------- 38 CIRCAC, Fact Sheet: Cook Inlet Oil and Gas Production, circac.org (April 2000)-------------------------------------------------------------------- 14,31 vi CIRCAC, Platform Information, Cook Inlet, Alaska, First Edition, circac.org (1993)----------------------------------------------------------- James A. Clark, Three Stars For The Colonel, The Biography of Ernest O. Thompson, Random House (1954)-----------------------. Anthony J. Colangelo, What Is Extraterritorial Jurisdiction, 99 Cornell L. Rev. 1303 (2014)----------------------------------------- Havard Devold, Oil and Gas Production Handbook, an Introduction To Oil and Gas Production (ISBN 978-82-997886-1-8)--------------- K.K. DuVivier, Sins of the Father, 1 Tex. A&M J. Prop. L. 391, 404 (2014)-------------------------------------------------------------------------- Richard H. Fallon, Jr. & Daniel Meltzer, Habeas Corpus Jurisdiction, Substantive Rights, and the War on Terror, 120 Harv. L. Rev. 2029 (2007)-------------------------------------------------------------------------- Cathy Foerster, Written Testimony to the House Subcommittee on Energy and Mineral Resources, October 13, 2017-------------------- Forbes, 4745 Jeffrey Hildebrand, www.forbes.com/profile/jeffrey- hildebrand/# 197812b 133b------------------------------------------------. Gordon Harrison, Alaska's Constitution, a Citizen's Guide, Alaska Legislative Affairs Agency, Fifth Edition (2012)---------------------. Harvest Midstream, Our Affiliates, www.harvestinidstream,com/our- affiliates------------------------------------------------------------------------- Zaz Hollander, Small Team Boards Burned Cook Inlet Platform to Begin Damage Assessment, Anchorage Daily News, Oct. 3, 2013 --- Ralph Horween, What Are the Essentials for Sound Oil Conservation For Illinois? 5 J. Marshall L.Q. 223 (1939)------------------------------- Norman J. Hyne, Nontechnical Guide to Petroleum Geology, Exploration, Drilling and Production, 2"d Ed. (2001)--------- IOGCC, A Study of Conservation of Oil and Gas in the United States, (1964)--------------------------------------------------------------------------- W. 34 17 15, 30, 31, 37 22 E7 20,47 12 11 12 w 26 passim 22 vii IOGCC, Member States, iogcc.publishpath.com/Default.aspx? shortcut=member-states&OriginalDomain=iogcc.ok.gov----------------- 22 Dan Joling, Alaska Underwater Gas Leak Continues, 24d Group to Sue, Associated Press, March 1, 2017--------------------------------------------- 2,10 Evan D. Johnson, Anchorage, We Have A Problem: The Cold, Harsh Truth About The Alaska Oil And Gas Conservation Commission's Ability To Regulate Gas -Cap Production (A Texas Perspective), 44 Houston Law Review 1455 (2007)---------------------------------------- 24 Kenai Landing, Inc. v. CINGSA, Brief of Appellee, 2018 WL 2971925 (Alaska)------------------------------------------------------------- 22, 35, 36, 38 Evan Tsen Lee, The Dubious Concept of Jurisdiction, 54 Hastings L.J. 1613 (2003)-------------------------------------------------------------------- 17 Linkedin, Hilcorp Company Profile, www.linkedin_com/company/ hilcorp-------------------------------------------------------------------------- 12 Patrick H. Martin, The Jurisdiction of State Oil and Gas Commission, 18 A RMMLF-INST 3 (1985)----------------------------------------------- 40 Patrick H. Martin & Bruce M. Kramer, Williams & Meyers Oil and GasLaw (2019)--------------------------------------------------------------- 1 1, 18, 28, 30 Leslie Moses, The Constitutional, Legislative and Judicial Growth of Oil and Gas Conservation Statutes, 13 Miss. L.J. 353 (1941)----------- 16 Blakely M. Murphy, ed., Conservation of Oil & Gas, a Legal History 1948, Section of Mineral Law, American Bar Association -------------- 24 NaturalGas.org., The Transportation of Natural Gas, naturalgas.org/ naturalgas/transport ----------------------------------------------------------- 15 Order Remanding Other Order 151 to The Alaska Oil and Gas Conservation Commission, Superior Court Judge Herman Walker, April 7, 2020------------------------------------------------------------------- 42 Prudhoe Bay Unit Operating Agreement ----------------------------------- 28 Noel Sargent, Conservation and the Police Power, 12 Ill. L.R. 162, (1917-1918)-------------------------------------------------------------------- 32 viii Bernard Schwartz, A History of the Supreme Court, Oxford University Press(1993)------------------------------------------------------------------- 16 State of Alaska v. BP Exploration, Alaska, Trial Motion, 2009 WL 7274134------------------------------------------------------------------------- 21 U.S. Energy Information Administration, Alaska state profile and energy estimates, eia.gov/state/analysis.php?sid=AK-------------------- 13 Howard Williams, Conservation of Oil and Gas, 65 Harv. L. Rev. 1155 (1952)--------------------------------------------------------------------- 34 Wikipedia, Deepwater Horizon Oil Spill ---------------------------------- 36 Wikipedia, Exxon Valdez Oil Spill ------------------------------------------ 36 Wikipedia, Texas City Refinery Explosion -------------------------------- 36 Wikipedia, Upstream (petroleum industry) -------------------------------- 11 Gordon S. Wood, The Creation of the American Republic 1776 -1787 (1969)--------------------------------------------------------------------------- 23 Erich W. Zimmerman, Conservation in the Production of Petroleum, Petroleum Monograph Series Volume 2 (Yale) (1957)---------------------- 23 AUTHORITIES PRINCIPALLY RELIED UPON ALASKA CONSTITUTION Article VIII § 2 The legislature shall provide 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. AS 31.05.005(a) ALASKA STATUTES ix There is created as an independent quasi-judicial agency of the state the Alaska Oil and Gas Conservation Commission composed of three commissioners appointed by the governor and confirmed by the legislature in joint session. In making appointments to the commission under AS 31.05.009 and this subsection, the governor shall consider and give preference to a person who demonstrates experience in oil and gas operations in the state. AS 31.05.009 Members shall be qualified as follows: (1) one member shall be a petroleum engineer who (A) holds a certificate of registration as an engineer under AS 08.48 and, under regulations adopted to implement that chapter, has qualified as a petroleum engineer; or (B) has earned a degree from a university in the field of engineering and has at least 10 years of professional subsurface experience in the oil and gas industry in drilling, well operations, production process operations, reservoir engineering, or a combination thereof; for the purposes of this subparagraph, a person meets the requirement of earning a degree in the field of engineering if the person obtains an undergraduate or graduate degree in engineering that meets the requirements for program accreditation by the Engineering Accreditation Commission of the Accreditation Board for Engineering and Technology and the person completes university or industry training specific to petroleum engineering that illustrates application of engineering principles to the problems encountered and methods used in the petroleum industry, including drilling, production, reservoir engineering, fluid flow through subsurface formations, and hydrocarbon transportation; (2) one member shall be a geologist who (A) holds a certification as a professional geologist under AS 08.02.011 and has professional experience in the field of petroleum geology; or (B) has earned a degree in the field of geology from a university accredited in the field of geology and has a minimum of 10 years professional experience in the field of petroleum geology; and (3) one member who shall have training or experience that gives the person a fundamental understanding of the oil and gas industry in the state. AS 31.05.027 The authority of the commission applies to all land in the state lawfully subject to its police powers, including land of the United States and land subject to the jurisdiction of the United States. The authority of the commission further applies to all land included in a voluntary cooperative or unit plan of development or operation entered into in accordance with AS 38.05.180(p). AS 31.05.030 (a) The commission has jurisdiction and authority over all persons and property, public and private, necessary to carry out the purposes and intent of this chapter. (b) The commission shall investigate to determine whether or not waste exists or is imminent, or whether or not other facts exist which justify or require action by it. (c) The commission shall adopt regulations and orders and take other appropriate action to carry out the purposes of this chapter. (d) The commission may require (1) identification of ownership of wells, producing leases, tanks, plants, and drilling structures; (2) the making and filing of reports, well logs, drilling logs, electric logs, lithologic logs, directional surveys, and all other subsurface information on a well for which a permit to drill has been issued by the commission, subject to the following: (A) the reports required to be filed by the commission under this paragraph shall be filed within 30 days after the completion, abandonment, or suspension of the well; and (B) the well logs, drilling logs, electric logs, lithologic logs, directional surveys, and all other information required to be filed by the commission under this paragraph shall be filed within 90 days after the completion, abandonment, or suspension of the well, unless extended by the commission on request; (3) the drilling, casing, and plugging of wells in a manner that will prevent the escape of oil or gas out of one stratum into another, the intrusion of water into an oil or gas stratum, the pollution of fresh water supplies by oil, gas, or salt water, and prevent blowouts, cavings, seepages, and fires; (4) the furnishing of a reasonable bond with sufficient surety conditions for the performance of the duty to plug each dry or abandoned well or the repair of wells causing waste; (5) the operation of wells with efficient gas -oil and water -oil ratios, and may fix these ratios; (6) the gauging or other measuring of oil and gas to determine the quality and quantity of oil and gas; (7) every person who produces oil or gas in the state to keep and maintain for a period of five years in the state complete and accurate records of the quantities of oil and gas produced, which shall be available for examination by the commission at all reasonable times; (8) the measuring and monitoring of oil and gas pool pressures; (9) the filing and approval of a plan of development and operation for a field or pool to prevent waste, ensure a greater ultimate recovery of oil and gas, and protect the correlative rights of persons owning interests in the tracts of land affected. (e) The commission may regulate (1) for conservation purposes and, to the extent not in conflict with regulation by the Department of Labor and Workforce Development or the Department of Environmental Conservation, for public health and safety purposes, (A) the drilling, producing, and plugging of wells; (B) the perforating, fracture stimulation, and chemical treatment of wells; xi (C) the spacing of wells; (D) the disposal of salt water, nonpotable water, and oil field wastes; (E) the contamination or waste of underground water; (F) the quantity and rate of the production of oil and gas from a well or property; this authority shall also apply to a well or property in a voluntary cooperative or unit plan of development or operation entered into in accordance with AS 38.05.180(p); (G) the underground injection of gas for purposes of storage; (2) the disposal of drilling mud, cuttings, and nonhazardous drilling operation wastes in the annular space of a well for which a permit to drill has been issued by the commission; in this paragraph, a "nonhazardous drilling operation waste" means a waste, other than a hazardous waste identified by the Environmental Protection Agency in 40 C.F.R., Part 261, 1 its regulation identifying and listing hazardous wastes, associated with the act of drilling a well for exploratory or production purposes. (f) The commission may classify a well or a specific portion of a well as an exploratory, development, service, or stratigraphic test well and may classify a development well as an oil or gas well for purposes material to the interpretation or enforcement of this chapter. (g) When the commission finds sufficient likelihood of an unexpected encounter of oil, gas, or other hazardous substance as a result of well drilling in an area of the state, the commission may, by regulation, designate the area and specify a depth in the area as one in which wells or any boring into the soil in excess of the specified depth but not otherwise subject to this chapter are subject to the regulations and requirements adopted under this section. The designation of an area or specification of a depth under this subsection does not constitute a certification that no hazardous substance will be encountered in another area or at a lesser depth, and the state is not liable for any damages arising from such an unexpected encounter of a hazardous substance. (h) The commission may take all actions necessary to allow the state to acquire primary enforcement responsibility under 42 U.S.C. 300h-1 and 42 U.S.C. 300h-4 (Safe Drinking Water Act of 1974, as amended, 42 U.S.C. 300f — 300j-26), for the control of underground injection related to the recovery and production of oil and natural gas and the control of underground injection in Class I wells, as defined in C.F.R. 144.6, as amended. (i) The commission shall accept written plans submitted by lessees for purposes of AS 38.05.180(f)(5). If a lessee submits a plan, the commission shall hold a public hearing on the plan and, within 45 days after receipt of the plan, grant approval of the plan if the plan contains a voluntary agreement by the lessee to use its best efforts to employ residents of this state, consistent with law, and to contract with firms in this state for work in connection with the development of the field, including the fabrication and installation of required facilities, whenever feasible. The decision of the commission to grant approval may not be appealed. 0) For exploration and development operations involving nonconventional gas, the commission (1) may not (A) issue a permit to drill under this chapter if the well would be used to produce gas from an aquifer that serves as a source of water for human consumption or agricultural purposes xii unless the commission determines that the well will not adversely affect the aquifer as a source of water for human consumption or agricultural purposes; or (B) allow injection of produced water except at depths below known sources of water for human consumption or agricultural purposes; (2) shall (A) regulate hydraulic fracturing in nonconventional gas wells to ensure protection of drinking water quality; (B) regulate the disposal of wastes produced from the operations unless the disposal is otherwise subject to regulation by the Department of Environmental Conservation or the United States Environmental Protection Agency; (C) as a condition of approval of a permit to drill a well for regular production of coal bed methane, require the operator to design and implement a water well testing program to provide baseline data on water quality and quantity; the commission shall make the results of the water well testing program available to the public. (k) The commission shall certify to the Department of Natural Resources the volume of oil production from a field or platform for the purposes of AS 38.05.180(f)(6)(A), (C), (E), and (G). (0 For purposes of AS 46.04.050(c) and upon application by the operator, the commission shall evaluate the likelihood that a well at a natural gas exploration facility may penetrate a formation capable of flowing oil to the ground surface and issue a determination based on results of the evaluation. If the commission determines that evidence obtained through the evaluation demonstrates with reasonable certainty that a well will not penetrate a formation capable of flowing oil to the ground surface, it shall report its determination to the Department of Environmental Conservation. In this subsection, (1) "natural gas exploration facility" has the meaning given in AS 46.04.050 (c); (2) "oil" has the meaning given in AS 46.04.050(c (m) The commission has jurisdiction and authority over all persons and property, public and private, necessary to carry out the purposes and intent of AS 41.06, except for provisions in AS 41.06 for which the Department of Natural Resources has jurisdiction. (n) Upon request of the commissioner of revenue, the commission shall determine the commencement of regular production from a lease or property for purposes of AS 43.55.160 (f) and (g) and 43.55.165(n) and (o). AS 31.05.060(a) The commission may act upon its own motion or upon the petition of an interested person. On the filing of a petition concerning a matter within the jurisdiction of the commission under this chapter, the commission shall promptly fix a date for the hearing, and shall cause notice of the hearing to be given. The hearing shall be held without undue delay after the filing of a petition. The commission shall enter its order within 30 days after the hearing. AS 31.05.095. The waste of oil and gas in the state is prohibited. AS 31.05.090 (a) A person shall apply for and receive a permit from the commission before drilling (1) a well in search of oil or gas; (2) a well in support of the recovery or production of oil or gas; (3) an underground injection well for the purpose of gas storage; or (4) an underground injection well for which the state has acquired primary enforcement responsibility under AS 31.05.030(h). (b) A person must submit a separate permit application for each well. The permit application must be in the form required by the commission and include all information required by the commission. (c) After receiving an application under (b) of this section, the commission shall promptly approve or deny the application for a permit to drill. (d) In making a determination under (c) of this section, the commission shall consider whether the (1) proposed well is contrary to law, a provision of this chapter, a regulation adopted under this chapter, or an order, stipulation, or term of a permit issued by the commission; or (2) applicant is in violation of a provision of this chapter, a regulation adopted under this chapter, or an order, stipulation, or term of a permit issued by the commission and the magnitude of such violation. AS 31.05.120 The use of gas from a well producing gas only, or from a well which is primarily a gas well for the manufacture of carbon black or similar products predominantly carbon is declared to constitute waste prima facie, and the gas well may not be used for this purpose unless it is clearly shown at a public hearing held by the commission, on application of the person desiring to use the gas, that waste would not take place by the use of the gas for the purpose applied for, and that gas which would otherwise be lost is now available for such purpose, and that the gas to be used cannot be used for a more beneficial purpose, such as for light or fuel purposes, except at prohibitive cost, and that it would be in the public interest to grant the permit. If the commission finds that the applicant has clearly shown a right to use the gas for the purpose applied for, it shall issue a permit upon terms and conditions it finds necessary in order to permit the use of the gas and at the same time require compliance with the intent of this section. AS 31.05.170(6) "gas" includes all natural gas and all hydrocarbons produced at the wellhead that are not oil. xry AS 31.05.170(15) "waste" means, in addition to its ordinary meaning, "physical waste" and includes (A) the inefficient, excessive, or improper use of, or unnecessary dissipation of, reservoir energy; and the locating, spacing, drilling, equipping, operating or producing of any oil or gas well in a manner which results or tends to result in reducing the quantity of oil or gas to be recovered from a pool in this state under operations conducted in accordance with good oil field engineering practices; (B) the inefficient above -ground storage of oil; and the locating, spacing, drilling, equipping, operating or producing of an oil or gas well in a manner causing, or tending to cause, unnecessary or excessive surface loss or destruction of oil or gas; (C) producing oil or gas in a manner causing unnecessary water channeling or coning; (D) the operation of an oil well with an inefficient gas -oil ratio; (E) the drowning with water of a pool or part of a pool capable of producing oil or gas, except insofar as and to the extent authorized by the commission; (F) underground waste; (G) the creation of unnecessary fire hazards; (H) the release, burning, or escape into the open air of gas, from a well producing oil or gas, except to the extent authorized by the commission; ALASKA REGULATIONS 20 AAC 25.020 Designation of Operator. (a)If an owner of a property wishes to designate a new operator for the property, the owner shall submit to the commission for approval a Designation of Operator (Form 10-411). The commission will not approve the designation of a new operator without the signature of the newly designated operator on the same Designation of Operator form. By signing the Designation of Operator form, the newly designated operator agrees to accept the obligations of an operator. The newly designated operator shall furnish a bond and, if required, security as provided for in 20 AAC 25.025. The commission's acceptance of the designated operator's bond constitutes the release of the former operator's bonding obligation for the property indicated on the Designation of Operator form. (b) The operator shall notify the commission in writing not later than 30 days after any change in the operator's office address, primary telephone number, electronic mail address, or principal contact. Arkansas OTHER STATE STATUTES I:VL A.C.A. § 15-72-102 (15) "Waste", in addition to its ordinary meaning, means "physical waste" as that term is generally understood in the oil and gas industry. California Cal.Pub.Res.Code § 3300. The unreasonable waste of natural gas by the act, omission, sufferance, or insistence of the lessor, lessee or operator of any land containing oil or gas, or both, whether before or after the removal of gasoline from the gas, is opposed to the public interest and is unlawful. The blowing, release, or escape of gas into the air shall be prima facie evidence of unreasonable waste. Kansas K.S.A. 55-701. Waste of natural gas prohibited -- The production of natural gas in the state of Kansas in such manner and under such conditions and for such purposes as to constitute waste is hereby prohibited. Louisiana LSA-R.S. 30:3. Definitions (16) "Waste", in addition to its ordinary meaning, means "physical waste" as that term is generally understood in the oil and gas industry. North Dakota NDCC § 38-08-02. Definitions. 19. "Waste" means and includes: a. Physical waste, as that term is generally understood in the oil and gas industry. Oklahoma 52 Olka. Stat. §236. Waste prohibited. The production of natural gas in the State of Oklahoma, in such manner, and under such conditions as to constitute waste, shall be unlawful. Texas V.T.C.A. § 85.045. The production, storage, or transportation of oil or gas in a manner, in an amount, or under conditions that constitute waste is unlawful and is prohibited. V.T.C.A. § 85.046. Waste (a) The term "waste," among other things, specifically includes.... xvi JURISDICTIONAL STATEMENT Issues number one and two are an appeal from a final decision by Superior Court Judge E. Aarseth designated as Order Re: and distributed June 9, 2020. The superior court case was an appeal from a decision of the Alaska Oil and Gas Conservation Commission. A timely filed motion for reconsideration of Order Re: was denied June 30, 2020. This appeal was timely filed on July 8, 2020. This Court has jurisdiction pursuant to AS 22,05.0 1 0(c); and Ak. R. App. P. 202(a). Issue three is an appeal from an award of attorney's fees in this case by Superior Court Judge A. Zeman in Order Granting Motion for Rule 508(e) Attorney Fees, distributed August 10, 2020, and joined to this appeal by motion. ISSUES PRESENTED FOR REVIEW Did the superior court err by: 1. Affirming the rulings of the Alaska Oil and Gas Conservation Commission that it had no jurisdiction over gas sold by a vendor; that it had no jurisdiction over gas metered and severed from a property; and that it had no jurisdiction over gas Hilcorp purchased from Harvest Pipeline; 2. Affirming the ruling of the Alaska Oil and Gas Conservation Commission that denied Appellant a hearing before the agency on a petition regarding waste of gas; and 3. Awarding attorney's fees in the amount of $6270. STATEMENT OF THE CASE Appellant filed a petition for a hearing on a complaint of waste with the Alaska Oil and Gas Conservation Commission ("AOGCC") on February 28, 2019.' The factual allegations in the petition were these: The waste occurred from an 8" line carrying fuel gas to Platform A in Cook Inlet, which is operated by Hilcorp. The line leaked gas to the atmosphere for approximately three months in the winter and spring of 2017, at a rate of approximately 300,000 scf per day.z The petition cited AS 31.05.060(a).3 Relying on the statute, Appellant requested a hearing. Other Order 150, issued by AOGCC on March 20, 2019, denied Appellant's request for a hearing by erroneously disclaiming jurisdiction over the gas leak.' The agency's order disclaimed jurisdiction in three related, but distinct ways. In relevant part Other Order 150 reads: AOGCC investigated the leak at the time it occurred. AOGCC initially believed the source of the gas was upstream gas, i.e., gas which remained an AOGCC-regulated resource and had not been metered and severed from the property. Had that proven to be the case, the gas leak would have constituted waste and AOGCC would 1 Exc. 001. 2 Id. And see Alex DeMarban, Hilcorp Agrees to Temporarily Shut Down Oil Production to Fight Cook Inlet Gas Leak, Alaska Daily News, March 25, 2017; Dan Carpenter, Investigation Finds Hilcorp Gas Leak Poses Risks & Started Earlier Than First Reported, KTUU, March 7, 2017; Dan 7oling, Underwater Gas Leak Continues, 21" Group to Sue, Associated Press, March 1, 2017. 3 AS 31.05.060(a) states "The commission may act upon its own motion or upon the petition of an interested person. On the filing of a petition concerning a matter within the jurisdiction of the commission under this chapter, the commission shall promptly fix a date for the hearing, and shall cause notice of the hearing to be given. The hearing shall be held without undue delay after the filing of a petition. The commission shall enter its order within 30 days after the hearing." ° Exc.002. 2 have instituted an enforcement action against Hilcorp. However, AOGCC's investigation ultimately revealed the leaking gas had been purchased by Hilcorp from a third -party provider, Harvest Pipeline (Harvest), and was being shipped back to Platform A. The primary purpose behind the prohibition against waste is to maximize resource recovery. Consequently, like every other state's oil and gas conservation regulatory authority, AOGCC regulates waste occurring upstream (occurring before oil or gas is metered and severed from the property) in connection with drilling, exploration, and production activities. Neither AOGCC nor any of its counterparts in other states has ever attempted to extend its jurisdiction over waste to gas which has been sold by a vendor. Once oil or gas is metered and severed from the property, AOGCC's authority to make a waste determination is at an end. The gas involved in the Hilcorp leak had been sold by Harvest to Hilcorp. AOGCC does not have waste jurisdiction over gas Hilcorp purchased from Harvest. Absent jurisdiction, there is no basis for a hearing.' Thus, according to Other Order 150, the AOGCC lacks jurisdiction over 1. Gas sold by a vendor; 2. Gas that has been metered and severed from the property; 3. Gas Hilcorp purchased from Harvest. Appellant timely moved the AOGCC to reconsider Other Order 150 on April 8, 2019.E The agency did not respond. The motion was deemed denied by operation of law ten days later, or April 18, 2019.7 Appellant timely filed an appeal of Other Order 150 in superior court on May 1, 2019. 5 Exc.002. 6 Exc.004. ' Exc.003. Kl Appellant's points on appeal were challenges to the jurisdictional rulings of Other Order 150.8 The case was briefed and oral arguments were held. Superior Court Judge E. Aarseth issued his ruling in an order titled Order Re:9 and dated June 9, 2020. A close reading of the superior court order reveals that the lower court misperceived what AOGCC actually said in Other Order 150. The superior court framed the issue of the case this way: "we are presented with reviewing AOGCC's investigation and determination of whether or not waste existed."10 Other Order 150 did not ask whether or not waste existed. It certainly did not rule that the gas that leaked in Cook Inlet was not waste. Other Order 150 ruled that AOGCC lacked jurisdiction: "Absent jurisdiction, there is no basis for a hearing. French's request for a hearing is DENIED."" The superior court order unfortunately did not address the jurisdictional rulings of Other Order 150. The lower court went on to apply the rational basis test to a determination not made by the AOGCC and ruled in favor of the agency.12 Appellant timely filed for reconsideration, citing two grounds. First, Appellant pointed out that the court's order did not address the jurisdictional rulings of Other Order 8 Exc. 009, Exc. 011. 9 Exc.025-035. to Exc.034. 11 Exc.002. 12 Exc.035. 0 150, and thus had overlooked a material question in the case presented.13 Second, the superior court overlooked the fact that the AOGCC denied Appellant a hearing.14 Appellant's motion for reconsideration was denied June 30, 2020.15 This appeal was timely filed July 8, 2020. In response to the final ruling from the superior court, AOGCC moved for attorney's fees.16 Superior Court Judge A. Zeman made an award of attorney's fees, in an order dated August 10, 2020.17 By motion the award was added to the issues on review in this appeal. STANDARD OF REVIEW There are three issues on appeal. The first issue confronts the jurisdictional rulings of AOGCC in Other Order 150. Appeal of Other Order 150 was taken to superior court, which upheld the order. When the superior court acts as an intermediate court of appeal, this Court gives no deference to the lower court's decision.18 This Court independently scrutinizes the merits of the administrative determination.19 The administrative determination in question is Other Order 150's ruling that "[a]bsent jurisdiction, there is no basis for a hearing."20 To properly scrutinize that decision 13 Exc.036-037. 14 "Absent jurisdiction, there is no basis for a hearing. French's request for a hearing is DENIED." Exc. 002. is Exc.041. 16 Exc.042-043. 17 Exc.044-047. is Tesoro Alaska Petroleum v. Kenai Pipeline, 746 P.2d 896, 903 (Alaska 1987). 19 Id. 20 Exc.002. 5 will require the Court to examine the statutes that confer jurisdiction upon the AOGCC: AS 31.05.02721 and AS 31.05.030(a).22 The rule for interpreting a statute is well settled: The proper interpretation of a statute presents a question of law that we review de novo, `adopting the rule of law most persuasive in light of precedent, reason, and policy.'23 When the issue is the extent of a state agency's jurisdiction, this Court has consistently applied the independent judgment standard: [w]here the statute to be construed ... is, as in this case, the very statute that defines the scope of the agencys function, the court properly makes its own interpretation 24 This case involves the scope of AOGCC's authority. This is not an instance where the agency's expertise, which is in geology and engineering, merits any deference.25 The three precedents cited in fn. 24 took up the question of the extent of a state agency's authority. The three precedents cited are on -point. All three reviewing Courts employed 21 AS 31.05.027 reads: "The authority of the commission applies to all land in the state lawfully subject to its police powers, including land of the United States and land subject to the jurisdiction of the United States." 22 AS 31.05.030(a) reads: "The commission has jurisdiction and authority over all persons and property, public and private, necessary to carry out the purposes and intent of this chapter." 23 State, Dept. of Commerce, Community and Economic Development v. Alyeska Pipeline Service Co., 262 P.3d 593, 596 (Alaska 2011). 24 Homer Electric Association v. City of Kenai, 816 P.2d 182, 184 fn. 10 (Alaska 1991)(emphasis supplied); Tesoro, 746 P.2d at 903; Regulatory Commission of Alaska v. Matanuska Electric Association, 436 P. 3d 1015, 1025 (Alaska 2019): "We exercise our independent judgment on [any] issue concerning the scope of an agency's authority since it involves statutory interpretation, or analysis of legal relationships, about which courts have specialized knowledge and expertise." 25 The commission has three commissioners. By law one must be a petroleum engineer, one must be a petroleum geologist, and the third is a member of the public who has a "fundamental understanding of the oil and gas industry in the state." AS 31.05.009. IN the independent judgment standard. Appellant respectfully urges the Court to follow its own precedents and employ the independent judgement standard of review in analyzing the extent of the AOGCC's jurisdiction. The second issue for review is the superior court's affirming the AOGCC decision that denied French a hearing before the agency on his petition. 26 Simple logic leads to the use of the independent judgment standard on this point. If the agency had jurisdiction, it was compelled by AS 31.05.060(a) to grant a hearing to Appellant. If the agency did not have jurisdiction, then the agency properly denied the request. Indeed, the Court's resolution of the jurisdictional question essentially resolves this point of appeal as well. This Court's determination of the jurisdictional question posed by this appeal, as outlined above, should be undertaken through the application of the independent judgment standard. Likewise, the Court should employ the same exacting standard here. The third issue on appeal is the award of attorney's fees. Abundant case law on this point is clear that, in reviewing an award of attorney's fees, the appropriate standard is abuse of discretion.27 26 "Absent jurisdiction, there is no basis for a hearing." Exc. 002. 27 Riddle v. Lanser, 421 P.3d 35, 44 (Alaska 2018). 7 ARGUMENT I. THE AOGCC HAD JURISDICTION TO DECIDE THE ISSUE PRE- SENTED IN FRENCH'S PETITION. Other Order 150 declared unambiguously that AOGCC could not hold a hearing because it lacked jurisdiction over the basis of Appellant's petition, which was a reported gas leak in Cook Inlet. The superior court did not rule either way on this fundamental question. The failure to take up the question of jurisdiction led the lower court astray. A. Jurisdiction is Either On or Off. Jurisdiction is foundational. The first step in any case is to determine jurisdiction. This is not a new concept. Without jurisdiction the court cannot proceed at all in any cause. Jurisdiction is power to declare the law, and when it ceases to exist, the only function remaining to the court is that of announcing the fact and dismissing the cause.38 There has not been any better enunciation of the principle since Ex Parte McCardle, and what was true in 1869 remains true today. "Jurisdiction is a threshold issue that functions as an on -off switch. ,29 Either you have it or you don't. The boundary of jurisdiction is marked with a "bright-line."30 When there is a question about jurisdiction, "the answer to the question must be YES or NO."31 28 Ex Parte McCardle, 7 Wall. 506, 514 (1869). 29 Richard H. Fallon, Jr. & Daniel Meltzer, Habeas Corpus Jurisdiction, Substantive Rights, and the War On Terror, 120 Harv. L. Rev. 2029, 2049 (2007). 30 Matanuska Electric Association, Inc. v. Chugach Electric Association, Inc., 99 P.3d 553, 559 fn. 20 (Alaska 2004)(citing United Parcel Service, Inc. v. Chadwick's of Boston, Ltd., 900 F.Supp. 557, 563 (D. Mass. 1995)). 31 900 F. Supp. at 563 (emphasis in the original). 1.1 Jurisdictional issues therefore have to be taken up first. If raised by a party or identified by the court, a potential flaw in subject -matter jurisdiction is a threshold issue that we must decide before addressing other issues presented in an appeal." The rule applies as much to administrative agencies as it does to any court. "Jurisdictional defects deprive the agency of power to adjudicate or regulate the subject matter."33 AOGCC correctly understood that there is a limit to its power. Its error was putting the bright -line end to its powers in the wrong place. As will be shown, the agency believes its powers terminate at the point between production of oil and gas and transmission of the same. The incorrect positioning of its jurisdictional boundary is contrary to law and public policy; it is contrary to and inconsistent with the way the regulated industry understands AOGCC's jurisdiction; it is contrary to the place Alaska holds in the development of petroleum conservation law; and it leaves enormous regulatory gaps that could lead to absurd legal results, as the following subsections demonstrate. B. In Which the Geography of the Kenai Peninsula's Oil and Gas Fields, the Technology by Which Gas is Transported, and the Location of the Leak are Illuminated, But Not Its Source. The petition French filed with the AOGCC alleged that a leak from a line carrying fuel gas to Platform A in Cook Inlet constituted waste.34 Without confirming any details 32 Johnson v. State, 421 P.3d 124, 138 (Alaska 2018). 33 Far North Sanitation, Inc. v. Alaska Public Utilities Commission, 825 P.2d 867, 870 (Alaska 1992). 34 Exc. 001: "The waste occurred from an 8" line carrying fuel gas to Platform A in Cook Inlet, which is operated by Hilcorp. The line leaked gas to the atmosphere for E of the petition such as the duration of the leak or its daily or ultimate volume, AOGCC concurred in Other Order 150 that there was a gas leak, and added that its investigation revealed that "the leaking gas ... was being shipped back to Platform A."35 French's understanding of the location of the leak, and the agency's understanding of the location of the leak, are both consistent with news reports of the leak.36 Both parties agree that the leaked material was natural gas.37 What is unclear from the record, since there was never a hearing on this leak before the commission, is the source of the gas. Both sides agree that the gas was flowing towards the platform. This means the gas was coming from a source located somewhere else. That in all likelihood means the gas came from wells on the Kenai Peninsula. AOGCC said in its order that it initially believed the source of the gas was upstream gas, i.e., gas which remained an AOGCC-regulated resource and had not been metered and severed from the property. Had that proven to be the case, the gas leak would have constituted waste and AOGCC would have instituted an enforcement action against Hilcorp.38 approximately three months in the winter and spring of 2017, at a rate of approximately 300,000 scf per day." 35 Exc.002. 36 DeMarban, supra n.2; Carpenter, supra n.2; Joling, supra n.2. 37 Exc. 001; Exc. 002; and see AS 31.05.170(6): "'gas' includes all natural gas and all hydrocarbons produced at the wellhead not defined as oil." 38 Exc.002. 10 To understand these two sentences requires some knowledge of the oil industry. The "upstream gas" that the agency is referring to is the gas that was coming out of the wells on Platform A.39 According to AOGCC, when gas is upstream it is subject to the AOGCC's jurisdiction. First question, then, is "upstream" of what? The passage suggests that the agency marks its jurisdictional boundary as starting from the well and ending at the point where the gas was "metered and severed from the property." Most Alaskans know that petroleum wells pierce oil and gas reservoirs and bring a mixture of oil and gas to the surface of the earth in steel pipes. The legal framework for this process is familiar to practitioners: the oil industry gains access to land and executes leases with the mineral rights owner for the right to drill wells and produce the reservoir.40 In Alaska, the mineral rights owner is often the State of Alaska.41 This is true even when the owner of the land over the minerals is a private landowner. This is the basic definition of severance: when title to minerals beneath the earth is owned by different hands than the title above it, to the surface of the earth above the minerals " When it comes to an oil or gas well, or an oil or gas field, AOGCC regulations make the operator of the lease the entity that is legally responsible for what happens there 43 In 39 Wikipedia, Upstream (petroleum industry), last accessed October 20, 2020. 40 Norman J. Hyne, Nontechnical Guide to Petroleum Geology, Exploration, Drilling and Production, 334 (Second edition, 2001). 41 Gordon Harrison, Alaska's Constitution, a Citizen's Guide, 139 (Fifth Edition, 2012). 42 Patrick H. Martin & Bruce Kramer, Williams & Meyers Oil and Gas Law, Manual of Terms, 625-26 (2019). 43 See 20. AAC. 25.020. Designation of Operator. the case of Platform A, AOGCC names Hilcorp as the operator against whom it would have pursued an enforcement action, had the gas been coming from Platform A.44 But the gas was flowing out to the platform, coming from somewhere else. There is no direct evidence before the Court regarding the source of the gas. Because there was no hearing conducted before the agency, and because there are no records of the agency's investigation, the information the Court has about the source of the natural gas that leaked is merely conjectural" AOGCC in its order says the "leaking gas had been purchased by Hilcorp from a third -party provider, Harvest Pipeline (Harvest).i46 The order does not say where Harvest Pipeline got the gas, or how the agency gained this information. Hilcorp is reported to be privately owned. Its website claims that it is "the largest privately -owned oil and natural gas company in the country."47 Its sole owner is reported to be a man named Jeff Hildebrand.48 Harvest, which identifies itself as "Harvest Midstream" on its website,49 is a pipeline company. The relationship between Hilcorp and 44 Exc.002. 45 Exc. 001-008. Of the seven pages of material the agency submitted to the superior court in its transmittal of record — all seven pages — two pages are Other Order 150, and the rest were first sent to the agency by French. No records of the agency's investigation apparently were kept. 46 EXc.002. 47 Linkedin, Hilcorp Company Profile, accessed June 29, 2019). 48 Forbes, #745 Jeffrey Hildebrand, #197812bl33b (last accessed June 30, 2019). 49 Harvest Midstream, Our Aflliates, (last accessed June 29, 2019). www.linkedin.com/company/hilcorp (last www.forbes.com/profile/Jeffrey-hildebrand/ www.harvestmidstream.com/our-affilliates 12 Harvest is simple: they both belong to the same person. Or as Harvest's website puts it: "Harvest's and Hilcorp's affiliation begins with common ownership."so AOGCC does not identify the point of sale where Hilcorp purchased the gas from Harvest. The internal logic of the AOGCC's order suggests that the sale happened somewhere onshore: "the leaking gas had been purchased... and was being shipped back to Platform A." Otherwise the gas leaking from the pipeline would have still have belonged to Harvest. For the purposes of this appeal, this point -of -sale does not need to be identified. This is because AOGCC disclaims jurisdiction as soon as gas is "metered and severed from the property." The location of "the property" from which this gas was metered and severed is not identified by AOGCC. It can only be identified by inference. Alaska does not import natural gas. There is no pipeline carrying North Slope gas to Southcentral Alaska.51 Where did the gas come from? The agency's investigation stopped short of the source. Without all the facts, Appellant can only suggest that there are two likely sources: oil and gas wells on the Kenai Peninsula, or from a storehouse of gas called CINGSA. CINGSA is an acronym for Cook Inlet Natural Gas Storage Alaska, LLC.52 CINGSA, located on the Kenai Peninsula, has leases that allow it to store natural gas in a depleted reservoir owned by the State of Alaska and Cook Inlet Region, Inc.53 The basic so Id. 51 U.S. Energy Information Administration, Alaska state profile and energy estimates, eia.gov/state/analysis.pbp?sid=AK, last accessed October 20, 2020. 52 City of Kenai v. CINGSA, 373 P.3d 473, 473 (Alaska 2016). 53 Id. 13 idea of CINGSA is that excess gas is pumped into the reservoir during the summer, when gas demand is low, and taken out of the reservoir in the winter, when demand is high. There are seventeen producing gas fields on the Kenai Peninsula.54 Appellant regrets that there is not a piping diagram before the Court showing how the Kenai Peninsula's oil and gas wells, and CINGSA, and the leak of fuel gas from an 8" pipeline running towards Platform A all interconnect. This detailed inquiry into the platform's exact location, and the pipelines that connect Platform A to the shore, and the location of gas fields on the Kenai Peninsula including the location of CINGSA and lease points -of - sale, would all best have taken place at the agency, in a hearing that develops a proper record. Nevertheless, on the facts before the Court, it is reasonable to assume the leaked gas had come from one or more reservoirs on the Kenai Peninsula, that it was metered as it left those individual gas fields, and it may have stopped on its journey in a reservoir controlled by CINGSA.55 According to AOGCC, it lost jurisdiction to this gas back at the property where it came from, because the gas was "metered and severed"56 there. Generally, the meter marks 54 CIRCAC, Fact Sheet: Cook Inlet Oil and Gas Production, www.cireac.org/wp- content/uploads/AOGA_CI_ Fact_Sheet.pdf, 1 (April 2000). 55 A reader might be asking "why was the gas flowing towards Platform A? Don't platforms produce oil and gas? Shouldn't the gas be flowing towards shore?" There is no answer in the record. It may be the case that the aging wells on Platform A do not produce enough gas for all the needs of the platform, and that gas was being shipped to the platform to help the platform run. 56 Exc.002. 14 a point of sale as the gas leaves the lease, or property.57 The meter also represents the limit of "production" as the gas joins a transmission line.58 Presumably this is also where Harvest bought the gas, and may have been where it was "sold by a vendor" to adopt the language of the AOGCC in Other Order 150. AOGCC does not explain with any precision at all in Other Order 150 where this point is. Wherever it came from, the gas would have had to travel by a steel transmission line from the lease or property where it was produced to a connection with the steel pipeline that ran out to Platform A.59 Before it got all the way to Platform A, however, much of the gas leaked to the atmosphere. case. With this much factual background, we can now approach the laws that apply to this C. The Plain Language of AOGCC's Jurisdictional Statutes Give the Agency Statewide Powers. "The jurisdiction of the agency depends ... upon the administrative authority conferred upon it by the relevant statutes."60 There are two statutes that define the jurisdiction of the AOGCC. The first is AS 31.05.027: The authority of the commission applies to all land in the state lawfully subject to its police powers, including land of the United States and land subject to the jurisdiction of the United States. The other is AS 31.05.030(a): 57 Havard Devold, Oil and Gas Production Handbook, an Introduction to Oil and Gas Production, 53 (ISBN 978-82-997886-1-8). 58 See Hyne, supra, at 543, defining `upstream' as petroleum exploration, drilling and production, and `downstream' as pertaining to transportation, refining and marketing. 59 NaturalGas.org., The Transportation of Natural Gas, naturalgas.org/ naturalgas/transport, last accessed October 20, 2020. 60 Jefferies v. Glacier State Telephone Co., 604 P.2d 4, 8 fn. 9 (Alaska 1979). 15 The commission has jurisdiction and authority over all persons and property, public and private, necessary to carry out the purposes and intent of this chapter. The first grants the commission the power to exercise its authority on "all land in the state lawfully subject to its police powers." There is no definition of "land" in Title 31, though it is defined expansively elsewhere in state law.61 The police power of a state has, since the early days of our nation, represented "nothing more or less than the powers of government inherent in any sovereignty to the extent of its dominions."62 Thus the police power represents the extent of a state's sovereignty.63 Indeed, a "State's power to legislate for the protection of its natural resources ... is essentially based upon its police power."" Thus, according to the plain language of AS 31.05.027, the AOGCC may apply its authority anywhere the state police may apply theirs. For all practical purposes, this represents the length and breadth of the entire state. There does not appear to be any substantive difference between the "authority" referred to in the first statute, AS 31.05.027, and the "jurisdiction and authority" referred to in the second, AS 31.05.030(a). The Legislature also used the terms interchangeably in 61 "The general definition section of the Alaska Land Act provides the following definition of `lands': Sec. 38.05.365. Definitions.... (16) `state lands' or `lands' means all lands, including shore, tide and submerged lands, or resources belonging to or acquired by the state." Moore v. State, 553 P.2d 8, 25 (Alaska 1976)(emphasis in citation). 62 License Cases, 46 U.S. (5 How.) 504, 583 (1847), and see Exc. 013-024. 63 See Bernard Schwartz, A History of the Supreme Court, 78-81 (1993). 64 Leslie Moses, The Constitutional, Legislative and Judicial Growth of Oil and Gas Conservation Statutes, 13 Miss. L.J. 353, 363 (1941). 16 the statute conferring jurisdiction on the Alaska Public Utilities Commission.65 The two terms may have first been associated with one another in the case of Pennoyer v. Neff." One scholar suggests the terms are exactly equivalent: "we should say that jurisdiction equals authority."67 Another tells us that "the word `jurisdiction' is basically a legal term for power."68 By the plain language of the two statutes, AOGCC has "authority" that applies to "all land" and it has "jurisdiction and authority" over "all persons and property, public and private." The plain language of the two statutes grant power to the state's petroleum conservation commission to conserve oil and gas on all land, and with respect to all persons, and all property. It is hard to quickly think of an exception to this grant of power. Either statute alone would at least seem to cover the months -long leak of natural gas from a pipeline somewhere in Alaska. 65 "Sec. 42.05.641. Regulations by municipality. The commission's jurisdiction and authority extend to public utilities operating within a city or borough, whether home rule or otherwise." Cited in B-C Cable Co., Inc. v. City and Borough of Juneau, 613 P.2d 616, 618 (Alaska 1980) and Colville Environmental Services, Inc. v. North Slope Borough, 831 P.2d 341, 349 (Alaska 1992). 66 95 U.S. (5 Otto) 714, at 722 (1889): "The other principle of public law referred to follows from the one mentioned; that is, that no State can exercise direct jurisdiction and authority over persons or property without its territory...." Cited in American National Bank and Trust Company v. International Seafoods of Alaska, Inc., 735 P.2d 747, 750 fn. 6 (Alaska 1987). 67 Evan Tsen Lee, The Dubious Concept of Jurisdiction, 54 Hastings L.J. 1613, 1641 (2003). 68 Anthony J. Colangelo, What Is Extraterritorial Jurisdiction, 99 Cornell L. Rev. 1303, 1310 (2014). 17 These two jurisdictional statutes, read together, declare that there is no place in the state of Alaska where the state's petroleum conservation commission may not exercise its authority and jurisdiction if it is working to carry out the purposes and intent of the chapter in which these statutes appear. The mission of AOGCC has been succinctly described by this Court: AOGCC is an `independent quasi-judicial agency of the state' created by the Alaska Oil and Gas Conservation Act. AS 31.05.005(a). AOGCC, which has authority over all land subject to the state's police power, regulates to prevent waste, insure greater recovery, protect correlative rights and underground water, and further public health and safety.69 The Alaska Crude Court appropriately declared that the first duty of the Commission is to "prevent waste." The statutory support for this duty is found at AS 31.05.030(b)70 which commands the agency to investigate whether waste exists and AS 31.05.09571 which tells the agency it can look statewide to find it_ This is all in keeping with basic conservation law. The essence of conservation is to prevent waste, according to a leading treatise on oil and gas law, which states with admirable economy: "The prevention of waste is conservation."72 69 Alaska Crude Corp. v. State, DNR, 261 Pad 412,414 fn. 3 (Alaska 2011)(emphasis supplied). 70 "The commission shall investigate to determine whether or not waste exists or is imminent, or whether or not other facts exist which justify or require action by it." 71 "The waste of oil and gas in the state is prohibited." This statute was passed by the Territorial Legislature in 1955 and was revised only after statehood, to reflect that fact. The original text, which appeared as the first section in the territory's new petroleum conservation statutes, reads: "The waste of oil and gas is prohibited in the Territory of Alaska." Ch. 40, sec. 1, SLA 1955. 72 Martin & Kramer, supra, at 1131. 0 This Court has further defined conservation: "'Conserving' implies controlled utilization of a resource to prevent its exploitation, destruction or neglect."73 This is in keeping with the basic philosophy of resource conservation, which is not a doctrine of non- use, but rather one of wise use. The guidelines for statutory analysis, which are surely familiar to this Court, also contain these rules: The goal of statutory construction is to give effect to the legislature's intent, with due regard for the meaning the statutory language conveys to others. In this respect, we have repeatedly stated that unless words have acquired a peculiar meaning, by virtue of statutory definition or judicial construction, they are to be construed in accordance with their common usage.74 Appellant urges the Court to construe the wording of the two statutes that define the boundaries of the state's petroleum conservation commission's jurisdiction in accordance with their common usage. "The authority of the commission applies to all land in the state lawfully subject to its police powers," says AS 31.05.027 in relevant part. This is not a technical tax statute that uses arcane or specialized terms. This is a broad grant of authority. Couple that expansive grant of authority with this language from AS 31.05.030(a): "The commission has jurisdiction and authority over all persons and property, public and private." Either statute, standing alone, sweeps broadly across the state of Alaska according to the common usage of their terms. Read together, the two statutes leave very 73 Kenai Peninsula Fisherman's Co-op Association v. State, 628 P.2d 897, 903 (Alaska 1981)(citing to Webster's Dictionary). 74 Tesoro, 746 P.2d at 905. 19 little, if any, of Alaska that is not covered by the jurisdiction of the AOGCC if it is working towards one of the purposes and intents of its chapter. It is true that this Court has declined to mechanically apply a "plain meaning" rule of statutory interpretation, instead adopting a sliding scale approach.75 Under the sliding scale, the plainer the meaning of the statute, "the more convincing the evidence of contrary legislative intent must be.i76 D. All Available Evidence Points to a Broad Reading of AOGCC's Juris- dictional Statutes. In settings other than Other Order 150, the commission has asserted that its powers are statewide. AOGCC submitted this testimony to Congress by way of encouraging the federal government to allow states to assume more control over oil and gas development: Alaska statutes give AOGCC responsibility to exertjurisdiction on all lands within the state of Alaska (except Denali National Park) and all state waters."77 75 "In interpreting a statute we `look to the plain meaning of the statute, the legislative purpose, and the intent of the statute.' We have declined to mechanically apply the plain meaning rule when interpreting statutes, adopting instead a sliding scale approach: `The plainer the statutory language is, the more convincing the evidence of contrary legislative purpose or intent must be.' We apply this sliding scale approach even if a statute is facially unambiguous." State, Dept. of Commerce, 262 P.3d at 596. 76 Id. 77 Written testimony of Cathy Foerster to the House Committee on Natural Resources: Subcommittee on Energy and Mineral Resources, October 13, 2017. www.congress.- gov/115.crec/2017/10/13/CREC-2017-10-13.pdf. Appellant and Foerster were both commissioners in October 2017. 20 The testimony of this AOGCC commissioner was presumably based upon a plain reading of the two jurisdictional statutes" Yet this testimony conflicts with, and cannot be harmonized with Other Order 150's rulings on jurisdiction. In testifying to Congress, the agency promised to "exert jurisdiction on all lands within the state of Alaska... and all state waters." In Other Order 150, the agency stated that do so would be unparalleled in history.79 If the Court had to decide this case based only on the language of the jurisdictional statutes, and the testimony submitted to Congress by the agency in 2017, and the agency's Other Order 150, it would have to conclude that Other Order 150 was the odd man out. 2. The regulated community interprets the statutes broadly. Attorneys for BP Exploration have argued in state court that AOGCC's powers with respect to a suspected case of waste of metered oil were primary to those of the state's Department of Law.80 Their argument would apply equally to metered gas. Likewise, lawyers for CINGSA have acknowledged AOGCC's jurisdiction over their well and reservior, whose purpose is to store for future use natural gas produced in other reservoirs 78 With the notable exception of Denali National Park. Appellant is unaware of any statute that excludes Denali National Park from the jurisdiction of the AOGCC. Note that AS 31.05.027 specifically includes "land of the United States and land subject to the jurisdiction of the United States." This discrepancy does not need to be resolved, given that the gas leak in question occurred in the upper Cook Inlet, a part of the state specifically identified as "subject to Alaska's sovereignty" in United States v. Alaska, 422 U.S. 184, 185 (1975). 79 "Neither AOGCC nor any of its counterparts in other states has ever attempted to extend its jurisdiction over waste to gas which has been sold to a vendor." Exc. 002. 80 State of Alaska v. BP Exploration, Alaska, Trial Motion, 2009 WL 7274134 at 9. 21 and transported to the CINGSA injection site.B1 Neither company's view is dispositive of the issue in this case, nevertheless, it is worth noting that their view of the agency's jurisdiction comports with the position advanced herein. 3. The public policy which animates petroleum conservation law points to a broad reading of AOGCC's jurisdictional reach. The International Oil and Gas Compact Commission, founded in 1935 by an act of Congress, is an organization that "helped create a framework to promote the conservation of oil resources through stricter regulation.s82 In a 1964 study, the IOGCC wrote that The importance, indeed the necessity, of petroleum to modern society, especially in the United States, is self-evident. National security and also normal civilian life and activities depend so much on a reliable and adequate supply of petroleum that the lack of such supply for more than a short time would be disastrous.... It necessarily follows that the prevention of reasonably avoidable waste or loss of petroleum, a non-renewable resource so vital to our lives, is essential. The public interest is self-evident.83 The IOGCC's statement of purpose further reads: "The purpose of this compact is to conserve oil and gas by the prevention of physical waste thereof from any cause."84 Alaska is a member state.85 There is an economic basis to petroleum conservation laws: 81 Kenai Landing, Inc. v. CINGSA, Brief of Appellee CINGSA, 2018 WL 2971925 at 6-7. 82 K.K. DuVivier, Sins of the Father, 1 Tex, A&M J. Prop. L. 391, 404 (2014). 83 IOGCC, A Study of Conservation of Oil and Gas in the United States, 1964, 10-11. 84 Id. at 5 (emphasis supplied). 85 IOGCC, Member States, iogcc.publishpath.com/Default.aspx?shortcut=member- states&OriginalDomain=iogcc.ok.gov, last accessed October 20, 2020. 22 To the economist ... conservation was something that served the public rather than the private interest and which only the government, as the agency representing the public interest, could accomplish. Even as conservative an economist as John Bates Clark had this to say: `In many instances the individual wins a profit by what inflicts upon the public a melancholy waste. Exploitation usually makes the individual richer and the people poorer, and it nearly always gives the individual far less than it takes from the public."' One easy way of thinking about conservation and waste is to see them as opposite sides of the same coin. Conservation is simply the prevention of waste. It is hard to overstate just how central the idea of preventing waste is to petroleum conservation law. Consider this from the petroleum state of Texas, written in 1947: The term waste has an ordinary and generally accepted meaning. Whatever the dictates of reason, fairness and good judgment under all the facts would lead one to conclude is a wasteful practice in the production, storage, or transportation of oil and gas, must be held to have been denounced by the legislature as unlawful. The Constitution had vested in the lawmaking body the duty of preventing waste, not of part but of all the natural resources of this State, and it must not be considered that the legislature meant by its enactments to discharge less than the full duty which was thus entrusted to it.87 And lastly, this analysis of Texas oil and gas law vis a'vis Alaska helps put our state laws in a historical context. Alaska, on the other hand, has enjoyed the luxury of more hindsight in its regulation of the oil and gas industry, benefiting not only from Texas's mistakes but also from technological advances in drilling and recovery methods over the last fifty years.... Accordingly, the Alaska legislature has given its regulatory agency in charge of oil 86 Zimmerman, Conservation in the Production of Petroleum, Petroleum Monograph Series Volume 2, 28 (1957)(emphasis supplied); and see Gordon S. Wood, The Creation of the American Republic 1776-87, 546 (1969): "Since the people obviously could not `exercise the powers of government personally,' they must `trust to agents."' 87 Railroad Commission v. Shell Oil Co., 206 S.W.2d 235, 239 (Texas 1947). 23 conservation- ...the AOGCC far greater authority to regulate waste and correlative rights than Texas bestowed upon its agency, the Texas Railroad Commission (RRC).S8 With all this in mind, we can now turn to Alaska. Our foundational law of petroleum conservation is found at AS 31.05.095: "The waste of oil and gas in the state is prohibited." The statute is a model of clarity. Read it again. This law would appear (from just a couple of quick readings) to apply statewide, and when you add to that reading some knowledge of the history and development of petroleum conservation law, and the policy which animates it, one can begin to appreciate the errors of Other Order 150. Good public policy runs contrary to the agency's cramped view of its own authority. 4. A comparison of Alaska's petroleum conservation laws with those of other states leads to the conclusion that Alaska's laws are to be broadly construed. The Alaska Territorial Legislature passed Alaska's petroleum conservation laws in 1955.s9 This was late compared to other states.90 As in other areas of the law, Alaskan lawmakers took wise advantage by adopting the best practices of the moment. AOGCC's jurisdictional statutes are broadly written. Whereas some states restrict the authority of their conservation agency to production, which is generally considered to 88 Evan D. Johnson, Anchorage, We Have A Problem: The Cold, Harsh Truth About The Alaska Oil And Gas Conservation Commission's Ability To Regulate Gas -Cap Production (A Texas Perspective), 44 Houston Law Review 1455, 1457 (2007)(footnotes omitted)(emphasis supplied). 89 Chapter 40 SLA 1955. 91) Blakely M. Murphy, ed., Conservation of Oil & Gas, a Legal History 1948, Section of Mineral Law, American Bar Association. Pal be the meter,91 Alaska's laws do not contain such a restriction. AS 31.05.027 applies to "all land in the state" and AS 31.05.030(a) applies to "all persons and property, public and private." Compare that with state law in Oklahoma, for example, where the US Supreme Court found in 1933 that "the waste -prevention statutes are limited to production, and do not relate to the sale or transportation of the oil or gas.s92 This ruling would have been available for Alaska lawmakers to read in 1955. (The limitation is still in place today in Oklahoma.93) Kansas, like Oklahoma, also limited its petroleum conservation laws to production.94 Since AOGCC's jurisdictional statutes do not contain any restriction of their reach to "production" it is reasonable to infer that Alaska lawmakers did not intend for the power granted in AS. 31.05.027 and AS 31.05.030(a) to stop at the limit of production. The power would continue to extend downstream, to transmission. The police power cuts across oil field leases and lease lines. It was recognized to do so in 1939, sixteen years before Alaska wrote its petroleum conservation law. "The police 91 See Hyne, supra, at 105. 92 Champlin Refining Company v. Corporation Commission, 286 U.S. 210 (1933). 93 52 Olka. Stat. §236: "Waste prohibited. The production of natural gas in the State of Oklahoma, in such manner, and under such conditions as to constitute waste, shall be unlawful." 94 State ex. rel. v. Sinclair Pipe Line Company, 180 Kan. 425, 304 P.2d 930 (1956). And see K.S.A. 55-701: "The production of natural gas in the state of Kansas in such manner ... as to constitute waste is hereby prohibited." Q power, of course, cuts across any lease obligations, express or implied.i95 If the police power cuts across a lease, it can cut across a meter located on the lease. Turning now to Alaska's definition of waste,96 it is also, if not the most broadly written, among the broadest of all the states. In states that wrote their petroleum conservation laws before Alaska, the definition of waste sometimes contains a limitation: that the concept of waste be understood, "as that term is understood in the oil and gas industry."97 Alaska law contains no such limitation. Not adopting a common limitation to the legal concept of waste is evidence that Alaska lawmakers intended a broad application of its definition of waste. 95 Ralph Horween, What Are the Essentials of Sound Oil Conservation Legislation for Illinois? 5 J. Marshall L.Q. 223, 233 (1939). 96 AS 31.05.170(15) reads: "waste" means, in addition to its ordinary meaning, "physical waste" and includes (A) the inefficient, excessive, or improper use of, or unnecessary dissipation of, reservoir energy; and the locating, spacing, drilling, equipping, operating or producing of any oil or gas well in a manner which results or tends to result in reducing the quantity of oil or gas to be recovered from a pool in this state under operations conducted in accordance with good oil field engineering practices; (B) the inefficient above -ground storage of oil; and the locating, spacing, drilling, equipping, operating or producing of an oil or gas well in a manner causing, or tending to cause, unnecessary or excessive surface loss or destruction of oil or gas; (C) producing oil or gas in a manner causing unnecessary water channeling or coning; (D) the operation of an oil well with an inefficient gas -oil ratio; (E) the drowning with water of a pool or part of a pool capable of producing oil or gas, except insofar as and to the extent authorized by the commission; (F) underground waste; (G) the creation of unnecessary fire hazards; (H) the release, burning, or escape into the open air of gas, from a well producing oil or gas, except to the extent authorized by the commission; 97 Arkansas: A.C.A. § 15-72-102 (15) "Waste", in addition to its ordinary meaning, means "physical waste" as that term is generally understood in the oil and gas industry. Louisiana: LSA-R.S. 30:3. Definitions (16) "Waste", in addition to its ordinary meaning, means "physical waste" as that term is generally understood in the oil and gas industry. North Dakota: NDCC § 38-08-02. Definitions. 19. "Waste" means and includes: a. Physical waste, as that term is generally understood in the oil and gas industry. 26 Finally, the first order ever issued by the agency, titled Order No. 1 and passed August 7, 1958, was to adopt rules and regulations "of a general nature and Territory -wide applicability."98 From the outset, the agency had to know that it was small, and trying to cover a big, big place. Alaska is twice as big as Texas, after all. E. AOGCC'S Rationales For Lacking Jurisdiction are Contrary to Law and Good Public Policy. Other Order 150 disclaims the jurisdiction of AOGCC in three different sentences, listed as follows in the order in which they appear in Other Order 150. 1. "Neither AOGCC nor any of its counterparts in other states has ever attempted to extend its jurisdiction over waste to gas which has been sold by a vendor." 2. "Once oil or gas is metered and severed from the property, AOGCC's authority to make a waste determination is at an end." 3. "AOGCC does not have waste jurisdiction over gas Hilcorp purchased from Harvest." None of these explanations withstand much scrutiny. 1. Buying or selling gas does not remove it from the jurisdiction of AOGCC. The operative verbs in the first and third explanations above are "sold" and "purchased." The idea common to both sentences is that transferring the ownership of the gas places it beyond the power of AOGCC. Such a position is contrary to the plain language of AS 31.05.027 and AS 31.05.030(a). Transferring the ownership of natural gas 98 AOGCC, AOGCC, 50 Years of Service to Alaska, inside cover (rev. 10/10/10), available at 333 W. 7' Ave. Anchorage, AK (emphasis supplied). 27 does nothing to impede the jurisdiction of AOGCC as it is defined in either AS 31.05.027 or AS 31.05.030(a). Appellant would assert the agency has jurisdiction over the gas by its presence in the state. That is the jurisdiction of AS 31.05.027: "[t]he authority of the commission applies to all land in the state lawfully subject to its police power." The other approach is to think of gas as a property, which it is. AS 31.05.030(a): "The commission has jurisdiction and authority over all ... property, public and private." Natural gas can be a public property, where the gas belongs to the state, as is the case in reservoirs before the rights to develop them are leased, or when the state takes a royalty - in -kind share of gas. Gas can also be privately owned, and the ways in which its ownership can be divided and transferred are limited only by the imagination of the commercial entities involved. A leading treatise informs us that a contract for the purchase and sale of oil is normally less complex than is a contract for the purchase and sale of gas or casinghead gas. 99 Take, for example, just one section of the Prudhoe Bay Operating Agreement that deals with Separator Off-Gas.1 ' Given the intricacies of ownership alluded to in Part 99 Martin & Kramer, supra, at 625-26. 100 Part 40.101: "During the Interim Period, allocation of Separator Off -Gas shall be made in the manner described in Part 27.200 or Part 27.300, as appropriate, except that in said Parts all procedures required at Major Gas Sale shall be required at Interim Gas Sale, and Working Interest Owners shall not be required to take gas in kind during the Interim Period. Each Working Interest Owner who takes or disposes of Separator Off -Gas Production during any month shall, for purposes of calculating such Working Interest Owner's Gas Reserve Debt under Section 27.901, be deemed to have taken or disposed of Oil Rim Off -Gas and Gas Cap Off -Gas in such volumes that the same ratio which exists 0 40.101, it may not be possible with any high degree of certainty to determine the ownership of any individual molecule of gas, or even a TCF of it, found within reach of the area covered by the agreement, that being Prudhoe Bay, the state's largest oil field. No matter. The gas at Prudhoe Bay hasn't left the state, and it is either public property or private. Either way, if it is in Alaska, it falls under the jurisdiction of the AOGCC. Other Order 150's two declarations that the private sale of gas defeats the agency's jurisdiction conflict with the plain language of the jurisdictional statutes, and they conflict with legal precedent. Over a century ago the US Supreme Court ruled that contract rights must bow before the state's police power. In Union Dry Goods v. Georgia Public Service Corp."' the Court declared that One whose rights, such as they are, are subject to state restriction, cannot remove them from the power of the State by making a contract around them. The contract will carry the infirmity of the subject matter.102 AOGCC never identifies how it claims to know that the gas that leaked in this case had been purchased by Hilcorp from Harvest. If it reviewed a contract between the two entities, it did not submit any evidence of having done so. No matter. Whether that contract is scrawled on the back of a napkin, or runs to several volumes, like the Prudhoe Bay between that Working Interest Owner's allocation of Oil Rim Off -Gas for the month and its allocation of Gas Cap Off -Gas for the month is maintained between its Oil Rim Gas Debits for the month and its Gas Cap Gas Reserve Debits for the month." Prudhoe Bay Unit Operating Agreement, available at Department of Natural Resources, 550 W. 7' Avenue, Suite 1360, Anchorage, AK. 101 248 U.S. 372 (1919). 102 Id. at 375. at Operating Agreement, the contract cannot remove the natural gas from state supervision. One cannot contract around the power of AOGCC's jurisdictional statutes. 2. Neither metering nor severing defeat the jurisdiction of AOGCC. Other Order 150 takes the position that "[o]nce oil or gas is metered and severed from the property, AOGCC's authority to make a waste determination regarding use of the oil or gas is at an end.s103 The analysis here begins by noticing that the agency cites no statute to support its position. There is none. Lacking a legal basis for its position, AOGCC should have at least supplied a rationale for the order. Other Order 150 does not attempt to supply a rationale, either. Neither "metered" nor "severed" is defined in Alaska law. Gas metering generally refers to measurement.104 Severance, as noted earlier, can be defined as "separation of a mineral or royalty interest from other interests in the land by grant or reservation."105 As noted above, this idea means that the surface owner of land may not own the mineral rights underneath. Severed also can mean "the point at which natural resources are severed from the surface of the earth."106 This would generally happen at the wellhead.117 103 Exc.002.. 104 "Gas volume is measured by a gas meter on the flowline. An orifice gas meter is commonly used. It measures the difference in gas pressures on gas flowing through an orifice (a round hole in a plate) on both sides of the orifice. The higher the flow rate, the greater the pressure drop across the orifice.... [The gas meter] is used to determine gas payments to the operator." Hyne, supra., 373-74 (emphasis in the original). 105 Martin & Kramer, supra, at 625-26. 106 Bel Oil Corp. v. Roland, 137 So.2d 308, 310 (Louisiana 1962). 107 "The wellhead sits on top of the actual oil or gas well heading down to the reservoir." Devold, supra, at 13 30 AOGCC erroneously puts a bright -line jurisdictional boundary for itself at the point where oil and gas is metered and severed from the property. This would generally be at the point of "fiscal metering," where relative shares between governments and financial partners are assessed.108 Appellant asked for judicial review of this jurisdictional ruling, but that review did not happen on appeal. The superior court was not free to skip over this crucial determination. AOGCC does not explain in Other Order 150 what happened when the gas was metered and severed such that the jurisdiction of the AOGCC was totally defeated. It also does not tell us where exactly this happened. There may be as many as seventeen metering sheds where the metering could have taken place at the exits from the seventeen gas fields on the Kenai Peninsula that could have supplied the gas that leaked.109 Or the gas may have come in part from CINGSA, as the leak began in winter, when CINGSA is generally exporting gas. The agency's investigation did not answer this question. From French's perspective, and for the legal purposes of this case, however, the exact piping details are irrelevant. Unless the gas was metered immediately prior to its export from the state (which does not happen anywhere in Alaska, unfortunately) the gas 108 "Partners, authorities, and customers all calculate invoices, taxes and payments based on the actual product shipped out. Often custody transfer takes place at this point, which means transfer of responsibility or title from the producer to a customer...or pipeline operator." Devold, supra, at 53. 109 CIRCAC, supra, at n.54; See also Cook Inlet Basin Map, Appendix C, AOGCC, AOGCC: 50 Years of Service to Alaska, 87 (rev 10/10/10). 31 was crossing Alaskan soil when it entered the meter, and was still crossing Alaskan soil when it exited the meter, and was headed for somewhere in Alaska. It was subject to the police power of the state at all moments. And if it is on land that is subject to the state's police power, it is subject to the jurisdiction of the AOGCC. 3. Alaska and other states have exercised jurisdiction over downstream gas. a. Other States. Indiana passed some of the earliest oil and gas laws. An 1894 statute "prohibited the wasteful burning of natural gas by the owner."' 'I This was not a statute directed at the location of the well, but at the end -user located in towns where "flambeau lights" were used for illumination. The law was upheld."' An 1891 Indiana statute prohibiting gas pipelines from operating at a pressure greater than 300 pounds was attacked on the grounds that the enforcement of the law by the state impaired interstate conmlerce.112 The case was analyzed by the US Supreme Court in the seminal case of Ohio Oil Company v. Indiana (No.1),111 wherein the Court noted that the pipeline statute at issue in Jamieson was upheld on the ground that the dangerous nature of the product, its susceptibility to explosion and the consequent hazard to life and property which might arise from movement through pipes, made the act of transmitting it a fit subject for police regulation.14 110 Noel Sargent, Conservation and the Police Power, 12 Ill. L.R. 162, 169 (1917- 1918). ill Id 112 Jamieson v. Indiana Natural Gas & Oil Company, 128 Indiana 555 (Indiana 1891). 113 177 U.S. 190 (1900). 114 Id. at 206. 32 In short, the police power of Indiana covered gas in transmission lines. The relevance of these cases to the Cook Inlet leak is that flambeau lights and gas transmission lines are `downstream.' � 15 Gas carried in transmission lines has been metered and severed from the lease. Gas in flambeau lights has been bought from a vendor. Thus, the AOGCC's claim in Other Order 150 that "[n]either AOGCC nor any of its counterparts in other states has ever attempted to extend its jurisdiction over waste to gas which has been sold by a vendor" simply is false. Texas is another state that has extended its jurisdiction downstream of the meter.16 California is another. Their statute for waste explicitly makes gas escaping into air "prima facie evidence of unreasonable waste.""" There is no express limitation of the California law to upstream gas. Appellant readily concedes that the ultimate relevance of other state's conservation laws to a question of Alaska conservation law is limited. b. Alaska petroleum conservation laws extend downstream, to transmission. i. Carbon black. 115 See Hyne, supra at 543, defining "`upstream' as petroleum exploration, drilling and production, and `downstream' as pertaining to transportation, refining and marketing." 116 See Lone Star Gas Company, Inc. v. The Railroad Commission of Texas, 798 S.W. 2d 888, 893 (Tex. Ct. App. Austin 1990)(commission has statutory rulemaking authority over gas moving in intrastate pipelines)(overruled on other grounds). "' Cal.Pub.Res.Code § 3300: "The unreasonable waste of natural gas by the act, omission, sufferance, or insistence of the lessor, lessee or operator of any land containing oil or gas, or both, whether before or after the removal of gasoline from the gas, is opposed to the public interest and is unlawful. The blowing, release, or escape of gas into the air shall be prima facie evidence of unreasonable waste." 33 Carbon black is a petroleum product that was at one time crucial to the manufacture of tires. When carbon black is made, there is incomplete combustion of the natural gas used to make it. Making carbon black is a wasteful thing to do. History written in 1954 about the Panhandle gas field in Texas allows us to approach the subject of carbon black as it was understood in that era in the United States. The field had fifty-five gasoline plants and twenty-five carbon black plants. These plants were popping more than 500 million cubic feet of residue gas into the air every day. That was a half -a -billion cubic feet of rank waste of residue gas, a valuable product from nature's storehouse that could never be replaced."' The wastefulness of carbon black was well -established in the 1950's. Conservation reformers took notice. New laws were needed. An entirely different type of conservation measure is the prohibition or regulation of the use of natural gas for the manufacture of carbon black. `End -use' controls of this type are designed, not to maximize recovery, but to stretch the available supply of gas over a longer period of time by prohibition of the use of gas for relatively less beneficial or important uses.' 1 9 It is possible that the 1955 Alaska Territorial legislators were good readers, and that one or more of them were aware that Random House had recently published a biography of the man credited with being the father of petroleum conservation, or that a Harvard Law Review article from 1952 contained some pertinent legal analysis that might be of help to the territory as it began to write laws about oil and gas. But even if no one in Alaska was 118 James A. Clark, Three Stars for the Colonel, the Biography of Ernest O. Thompson, 194, Random House (1954)(emphasis supplied). 119 Howard R. Williams, Conservation of Oil and Gas, 65 Harv. L. Rev. 1155, 1179 (1952). 34 aware of these passages, we can still glean an insight into the intention of the Alaska Territorial legislators. The presence of a statute regulating carbon black indicates a concern about wasteful uses of precious natural resources. And so, in 1955, the Territorial Legislature passed A.S. 31.05.12012' and made it unlawful to manufacture carbon black without a permit from the AOGCC. It only seems logical that if AOGCC can prevent a wasteful use of gas anywhere in the state, then it should be able to hold a hearing regarding what certainly would appear to be the pure waste of natural gas, like here, where it was shooting straight into the waters of upper Cook Inlet and, after bubbling to the surface, into the atmosphere, all for a period of several months. ii. CINGSA. As noted earlier, CINGSA is a gas storage reservoir located on the Kenai Peninsula. "In natural gas storage facilities, customers pay to inject gas purchased elsewhere into the storage reservoir, store the gas, and later withdraw it when needed.""' "AOGCC approved 120 The statute reads: "The use of gas from a well producing gas only, or from a well which is primarily a gas well for the manufacture of carbon black or similar products predominantly carbon is declared to constitute waste prima facie, and the gas well may not be used for this purpose unless it is clearly shown at a public hearing held by the commission, on application of the person desiring to use the gas, that waste would not take place by the use of the gas for the purpose applied for, and that gas which would otherwise be lost is now available for such purpose, and that the gas to be used cannot be used for a more beneficial purpose, such as for light or fuel purposes, except at prohibitive cost, and that it would be in the public interest to grant the permit. If the commission finds that the applicant has clearly shown a right to use the gas for the purpose applied for, it shall issue a permit upon terms and conditions it finds necessary in order to permit the use of the gas and at the same time require compliance with the intent of this section." 121 Kenai Landing, supra at 6-7. 35 the CINGSA injection order and regulates CINGSA safety, pressure limits, and other operational matters."122 AOGCC has jurisdiction over CINGSA by virtue of the statutes cited in in. 122. Injection wells were added to the agency's portfolio of responsibilities in 2007.121 From the agency's perspective, this was not an extension of its jurisdiction to a new area. The agency wrote that the changes in the law were merely a clarification of its powers.124 In Other Order 150, AOGCC did not discuss the possibility that some of the gas that leaked had come from CINGSA, where it has jurisdiction. F. The Rule Advanced by AOGCC Leads to Absurd Results. Hydrocarbons are extremely dangerous. The following discussion will raise the possibility of oil spills and gas releases, of fires and explosions, and loss of human life. None are rare in the oil and gas industry. For specific examples, consider the Exxon Valdez oil spill, the Deepwater Horizon disaster, and the explosion and fire at BP's Texas City refinery on March 23, 2005.12s With these in mind, consider three hypotheticals. 122 Id. (citing AS.31.05.030(d) and (e)(1)(G); and AS 31.05.090(1)(3)). 123 Ch 54 SLA 2007. 124 "Other changes clarified the Commission's authority to regulate underground storage of natural gas." AOGCC, supra, at 68. 125 The Exxon Valdez spilled 10 million gallons of crude oil (Wikipedia, The Exxon Valdez Oil Spill (last accessed Sept. 27, 2020). The Deepwater Horizon explosion in the Gulf of Mexico cost the lives of eleven, and led to what is considered to be the largest marine hydrocarbon spill in history (Wikipedia, Deepwater Horizon Oil Spill (last accessed Sept. 27, 2020) and Earl Boebert and James M. Blossom, Deepwater Horizon, A Systems Analysis of the Macondo Disaster (2016). The fire and explosion at BP's Houston refinery killed 15 and injured 180 others (Wikipedia, Texas City Refinery Explosion, last accessed Sept. 27, 2020). 36 1. A leak just past the meter. Or farther. The physical place where oil and gas are metered and severed from the lease, and where the ownership of the hydrocarbon is likely to have changed hands,12' can be located. A person standing at that metering location onshore on the Kenai Peninsula could point to the transmission lines carrying the two separate hydrocarbon streams — crude oil in one, and natural gas in the other -- away from the lease. That person could point to a leak from either pipeline that is within sight, just a few feet away, or perhaps a bit farther, where there are rivers and homes and schools. The Alaska Oil and Gas Conservation Commission's jurisdiction is completely off where both those leaks on the Kenai Peninsula are happening, according to Other Order 150.127 Make the leaks as big as your imagination will allow. The amount of gas escaping straight into the atmosphere could make a deafening roar. AOGCC jurisdiction is still off. Set the gas on fire. Still off. The commission's statewide powers would not allow it to even hold a hearing, according to the reasoning of Other Order 150, on a leak fifty feet downstream from a meter, or anywhere farther downstream.128 That is absurd. 126 Devold, supra, at 53. 127 To understand the way jurisdiction turns off the way it goes on, like a light switch, or crossing a bright -line, just think of an imaginary gas pipeline leaving the state overland through Canada. AOGCC's jurisdiction turns off at the border. 128 To the extent the reader is interested in a stopping point for the agency's statewide powers to investigate and hear cases of waste, consider first the boundary of the state, which is currently crossed by crude oil in tankers, but not by any gas. In the state, consider the place crude oil is refined. AOGCC's statutes do not cover gasoline. Somewhere inside a refinery, AOGCC's powers come to an end. For natural gas, consider where gas is separated into its constituent parts, such as propane. A propane tank is filled with gas, but not natural gas as we think of it from the well. For the most nervous among us, yes, by this 37 2. A leak just outside of CINGSA. CINGSA is located in Kenai.12' A visit to their website allows for a bird's eye view of the facility. AOGCC has jurisdiction over CINGSA.130 The agency approved CINGSA's injection order.131 Yet CINGSA is downstream of any meter on any lease besides its own. Thus, the gas arriving at CINGSA is gas over which the agency has disclaimed jurisdiction. It is not clear from Other Order 150's logic where the agency would draw the boundary of its jurisdiction around CINGSA. AOGCC's rule is unworkable for gas going into and out of CINGSA. 3. A leak closer to Platform A. In this example we get the closest to the actual circumstances of this case. Imagine that the leak in this case happened a little further west from where it occurred. Keep moving the leak west until you are getting closer to Platform A. Platform A sits six miles offshore.132 The history of Platform A begins in 1964, when Shell Oil Company set it, the first platform installed in Cook Inlet, in eighty feet of water and on top of the Middle Ground Shoal, a promising geological formation. Shell hit oil. The platform had an expected lifespan of twenty years.133 At its height, the field theory the AOGCC could check the natural gas connections behind your house, if it had a warrant or permission to do so. But that case is not this one. 129 CINGSA, Cook Inlet Natural Gas Storage, Alaska, cingsa.com/about-eingsa (last accessed Sept. 27, 2020). 130 AS.31.05.030(d) and (e)(1)(G). 131 Kenai Landing, supra, 6-7. 132 CIRCAC, Platform Information, Cook Inlet, Alaska, First Edition, 1993 (available at circac.org, last accessed Sept. 27, 2020). 133 Id R produced over 50,000 barrels of oil a day. In 2015, the Middle Ground Shoal was producing about 1750 bbls a day.134 Producing platforms are staffed.1 ' The gas leak in this case was identified by AOGCC and the petition French filed as "fuel gas."136 This suggests the gas was going to be burned on Platform A in an engine powering either a compressor or perhaps a generator. For the hypothetical, it doesn't matter what the company planned to do with it, once the gas got to the platform. Now imagine the leak in this case had happened closer to its targeted end -point, but short of it, maybe by just a few feet, or by a hundred feet. The leak can be small, and relatively harmless. Or the leak could light on fire and burn the platform down to the water, and create an ecological disaster. If the AOGCC has nothing to say about this leak when it is closer to shore, then, when, as we move the leak closer and closer to the platform, does the agency begin to think about reasserting jurisdiction, if at all? A mile away, the agency is powerless to do something about a gas leak from a pipe marked "fuel gas." But move the leak close enough to a platform, and then it can act? How does that work? The agency's rule, strictly applied, 134 Tim Bradner, Hilcorp Acquires Additional Inlet Oil Assets, Alaska Journal of Commerce, 7/7/2015 (available at www.alaskajoumal.com/business-and-finance/2015-07- 07/hilcorp-acquires-additional-inlet-oil-assets, last accessed September 29, 2020). 135 See Zaz Hollander, Small Team Boards Burned Cook Inlet Platform to Begin Damage Assessment, Anchorage Daily News, updated Sept. 28, 2016 (available at w.ww.adn.com/energy/article/hilcorp-hopes-get-investigators-aboard-burned-cook-inlet- platform/2014/10/03, last accessed September 29, 2020)(noting that the fire began in the crew's quarters). 136 Exc. 001, Exc. 002. 39 could leave itself powerless to even hear a case in which metered gas is threatening to or has caused a fire and explosion that destroyed an oil platform in Cook Inlet. This is absurd and unworkable. The final point here is that, believe it or not, from time to time even conservation authorities misjudge the extent of their own power. "In some instances we find a commission asserting that it lacks certain authority, but a court concluding otherwise.i137 AOGCC has asserted it lacks a certain authority to hear French's petition on the gas leak in Cook Inlet. This Court should conclude otherwise. To sum up: the plain meaning of AS. 31.05.027 and AS 31.05.030(a) give the agency statewide powers to investigate waste. Agency testimony to Congress is consistent with the statutes' plain meaning, and so is the interpretation given the statutes by the regulated community. The rule proposed by the agency in Other Order 150 is unworkable. Together, this leaves little doubt that AOGCC has jurisdiction to hear cases of suspected petroleum waste that occur anywhere in the state. II. THE SUPERIOR COURT ERRED IN AFFIRMING OTHER ORDER 150'S DENIAL OF A HEARING TO APPELLANT. Appellant's petition filed with AOGCC requested a hearing. Other Order 150 denied Appellant's request, citing a lack of jurisdiction. As Appellant demonstrated in 137 Patrick H. Martin, The Jurisdiction of State Oil and Gas Commission, 18A RMMLF-INST 3 at 7(citing Mobil Oil Corp. v. State Corporation Commission, 608 P.2d 1325 (Kan. 1980) and Osborn v. Texas Oil & Gas Corp., 661 P.2d 71, 76 O. & G.R. 101 (Ok. Ct. App. 1983)). m Section I above, the agency was mistaken. In affirming Other Order 150, Order Re: upheld the denial of a hearing to Appellant. This is error. The statute cited in Appellant's petition to AOGCC, AS 31.05.060(a), reads as follows: The commission may act upon its own motion or upon the petition of an interested person. On the filing of a petition concerning a matter within the jurisdiction of the commission under this chapter, the commission shall promptly fix a date for the hearing, and shall cause notice of the hearing to be given. The hearing shall be held without undue delay after the filing of the petition. The commission shall enter its order within 30 days after the hearing. The law grants a statutory right to a hearing if two preconditions are met: 1. an interested person must file 2. a petition concerning a matter within the jurisdiction of the commission. Assuming these two preconditions are met, the statute tells the commission that it "shall" promptly fix a date for the hearing etc. The statute is similar to the statute analyzed in Forquer v. State, Commercial Fisheries Entry Commission.138 In that case, the fishermen plaintiffs were denied a hearing before the commission in spite of a statute promising otherwise.13' The error resulted in remand. "' 138 677 P. 2d 1236 (Alaska 1984). 139 Id. at 1241-42. 140 Id. at 1243. 41 A case141 recently litigated in Anchorage Superior Court also involved the failure of AOGCC to honor the promises of AS 31.05.060(a).14I The case resulted in a finding that the agency was wrong to do so. "Upon finding the Commission erred, this Court remands the issue back to the Commission so it may fix a date for a hearing on [Appellant's] petition of waste."143 The court's ruling focused on the meaning to be given to the four instances of "shall" in AS. 31.05.060(a). AOGCC argued in Superior Court that it had the discretion to not comply with the statute. The judge disagreed: The Commission's argument is also troubling because it is entirely inconsistent with the Court's interpretation of the mandatory provisions of AS 31.05.060(a), which the Court found are intended to afford an interested person notice of an issue and an opportunity for expression of opinion. The Court found fixing a date for a hearing, causing notice of the hearing to be given, holding a hearing, and entering an order mandatory under AS 31.05.060(a). The Commission erred because it did not comply with these mandates.'" This superior court order does not control the outcome of this case, it is true. Appellant would assert that the Forquer case does. In any event, this Court could reasonably conclude that, under the circumstances of this case, the promises made in AS 31.05.060(a) should be kept by remanding this case with instructions for AOGCC to hold a hearing. 141 3AN-19-06531 CI. 142 Order Remanding Other Order 151 to The Alaska Oil and Gas Conservation Commission, Superior Court Judge Herman Walker, April 7, 2020. 143 Id. 144 Id. at 26 (footnotes omitted). 42 HI. THE SUPERIOR COURT ERRED IN AWARDING ATTORNEY'S FEES IN THE AMOUNT OF $6270. The award of $6270 in attorney's fees was an abuse of discretion. AOGCC's demand for attorney's fees should have been reduced or eliminated by the superior court under Alaska Rule of Appellate Procedure 508(e)(4)(B). Rule 508 was amended by SCO 1843, effective April 15, 2015. The amendment gives the court discretion to modify an award where "the court determines that an award of fees would be so onerous to the non - prevailing party that it would deter similarly situated litigants from the voluntary use of the courts if not reduced."146 This language parallels the wording of Civil Rule 82(b)(3)(I), which allows an adjustment in attorney's fees awards if a court determines that a variation is warranted, taking into consideration "the extent to which a given fee award may be so onerous to the non -prevailing party that it would deter similarly situated litigants from the voluntary use of the courts."146 In Gold Country v. Fairbanks North Star Borough.47 this Court upheld a trial court's denial of an award of attorney's fees, citing the public policy implications behind the rule: This rule provision embodies the concern expressed by Justice Matthews in his dissenting opinion in Bozarth v. Atlantic Richfield Oil Co., where he cautioned: `If the superior court is to serve its constitutional purpose as a forum available to all the people, superior court judges must consider whether an award of attorney's fees will impair the constitutional right of access to the courts.' In State v. Native Village of Nunapitchuk, we expressly stated that Rule 82(b)(3)(I) `continues to apply to all cases,' including "those 145 Ak.R.App.Proc.508(e)(4)(B). 146 Ak.R.Civ.Proc.82(b)(3)(I). 147 270 P.3d 787 (Alaska 2012). 43 intended to effectuate public policies." We further observed that `[t]rial courts remain free to reduce awards that would otherwise be so onerous to the losing party as to deter similarly situated litigants — including litigants that would have previously been identified as public interest litigants — from accessing the courts.' .... Here, the superior court determined that an award of fees against Gold Country would chill further suits seeking review of the government's actions under its own processes. 148 The underlying claims in Gold Country were alleged violations of the Open Meetings Act.149 There was no money judgment sought in the case.15' While unsuccessful on the merits, the superior court found no bad faith on the part of the litigants.151 This Court should look to the same factors herein. Appellant sought no money damages in this case. Appellant had no economic incentive to file the complaint. Appellant did not litigate in bad faith. Appellant sought a hearing on a claim of waste of the state's natural resources. To award attorney's fees against Appellant would work to dissuade similarly situated litigants from seeking voluntary use of the courts. The award of attorney's fees15. in this case was an abuse of discretion. Additionally, Appellant will point out that Appellee filed an eleven -page brief in the superior court case. Appellee's claimed attorney's fees thus amount to nearly $3000 per double-spaced page of legal writing.153 This Court should find that Appellee's fees are 148 Id. at 800 (internal citations and footnotes omitted). 149 Id. at 790. ISO Id. at 799. 151 Id 152 Exc.043-046. 153 The total amount of fees claimed by counsel for AOGCC was $31,350. Exc. 042. CV unreasonable, and thus not "necessarily incurred" as required by Rule 508(e)(4). For the foregoing reasons, this Court should find the award of attorney's fees was an abuse of discretion, and remand accordingly. CONCLUSION There is a public interest in the conservation of natural resources,15' which are of prime importance to the public."' The natural resources of Alaska belong to the state, which controls them as trustee for the people of the state.l "6 The promise is explicit in the Alaska Constitution."' The maximum benefit of the state's natural gas resources is not attained when gas is released directly to the atmosphere. The state statutes defining the jurisdiction and authority of the Alaska Oil and Gas Conservation Commission are broad enough to encompass the months' long release of natural gas to the atmosphere in upper Cook Inlet. The breadth of the jurisdictional statutes is consistent with the agency's promise to Congress to "exert jurisdiction on all lands within the state of Alaska... and all state waters"158 and consistent with the interpretation given those statutes by the regulated community.15' The petition Appellant filed with the AOGCC was sufficient to trigger the 154 Exxon Corp. v. State, 40 P.3d 786, 791 (Alaska 2001); and Cabana v. Kenai Peninsula Borough, 21 P.3d 833, n.16 (2001): "[T]he protection of state natural resources vindicates an important public interest." 155 State, DNR. V. Greenpeace, 96 P.2d 1056, 1060 (Alaska 2004). 156 Shephard v. State Dept. of Fish and Game, 897 P.2d 33, 40 (Alaska 1995). 157 Article VIII §2 provides: "The legislature shall provide 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." isa Foerster, supra at n.77. 159 BP Exploration, supra at n.80; Kenai Landing, supra at n.81. 45 statutory promise of a hearing "on a matter within the jurisdiction of the agency" found in AS 31.05.060(a). In light of the foregoing, Appellant respectfully urges this Court to reverse the court below and remand this case for a hearing before the Alaska Oil and Gas Conservation Commission. Hollis S. French AK Bar No. 9606033 Dated September 30, 2020 Typeface Certification I certify that the typeface in this document is 13-point Times New Roman. Hollis S. French m FILE® IN THE SUPREME COURT OF THE STATE OF ALASKA HOLLIS S. FRENCH, Appellant, V. ALASKA OIL AND GAS CONSERVATION COMMISSION, Appellee. JAN I j' 2021 APPELLATE COURTS STATFOOF THE RECEIVED JAN 2 5 2021 APPELLATE COURTS Supreme Court No. OF THE 5-17822 STATF OP ALASKA Superior Court No. 3AN-19-6694 CI CERTIFICATE OF SERVICE I certify that I caused a copy of Appellant's Reply to be served upon: 1. Thomas Ballantine State of Alaska, Department of Law Assistant Attorney General 1031 W. 4" Avenue, Suite 200 Anchorage, AK 99501 By placing a true copy in First Class Mail to the address above on this date. DATED: January 19, 2021 Hollis S. French Bar No. 9606933 IN THE SUPREME COURT OF THE STATE OF ALASKA HOLLIS S. FRENCH, Appellant, ) Supreme Court No. S-17822 ALASKA OIL AND GAS CONSERVATION ) COMMISSION, ) Superior Court No. Appellee. ) 3AN-19-06694 CI APPEAL FROM THE SUPERIOR COURT THIRD JUDICIAL DISTRICT AT ANCHORAGE THE HONORABLE ERIC AARSETH, PRESIDING THE HONORABLE ADOLF ZEMAN, PRESIDING APPELLANT'S REPLY HOLLIS S. FRENCH AK Bar No. 9606033 2640 Telequana Dr. Anchorage, AK 99517 (907)244-7135 hsfrench@gmail.com Filed in the Supreme Court of the State of Alaska, this 28th day of January , 2021 I� Arr�a� ¢erL Clerk of the Appellate Court TABLE OF CONTENTS TABLE OF CONTENTS.......................................................... i TABLE OF AUTHORITIES...................................................... ii AUTHORITIES PRINCIPALLY RELIED UPON ................................. iv ARGUMENT....................................................................... 1 I. AOGCC Has a Statutory Duty to Hold a Hearing ...................... 1 II. AOGCC's Rationales in Defense of Other Order 150 Fail........... 3 A. The Dilemma Faced by the Agency Caused it to Misrepresent What Other Order 150 Actually Said ............................... 3 B. Appellant's Petition Was Sufficient to Trigger a Hearing....... 7 C. The Legislature's Actions or Inactions are Irrelevant ............. 8 D. CINGSA Creates Insuperable Difficulties for AOGCC's Position................................................................. 9 E. AOGCC Ignores the Public Interest in Preventing Waste....... 11 CONCLUSION.................................................................... 13 i TABLE OF AUTHORITIES FEDERAL CASES Borough of Duryea, Pennsylvania v. Guarnieri, 131 S. Ct. 2488 (2011)... 7 The Fair v. Kohler Die & Specialty Co., 228 U.S. 22, (1913)............... 5 Helvering v. Hallock, 309 U.S. 106(1940).................................... 9 Ohio Oil Co. v. Indiana (N6.1), 177 U.S. 190 (1900)........................ 11 ALASKA CASES Allen v. Alaska Oil and Gas Conservation Commission, 154 P.3d 664 (Alaska 2006) .. .................................................................... 9 Cabana v. Kenai Peninsula Borough, 21 P.3d 833 (Alaska 2001) ........ 13 Kenai Landing, Inc. v. Cook Inlet Nat. Gas Storage Alaska, LLC, 441 P.3d 954 (Alaska 2019).......................................................... 9 Exxon Corp. v. State, 40 P.3d 786 (Alaska 2001)............................ 13 Far North Sanitation, Inc, v. Alaska Public Utilities Commission, 825 P.2d 867 (Alaska 1992).......................................................... 3 Northwest Medical Imaging, Inc. v. State, Dept. of Revenue, 151 P.3d 434 (Alaska 2006)................................................................ 5,6 CASES FROM OTHER JURISDICTIONS People v. Associated Oil Co., 211 Cal. 93 (Cal. 1930)....................... 12 Townsend v. State, 147 Ind. 624 (Ind. 1897).................................. 11 STATUTES AS 31.05.005(a)................................................................... 6 AS 31.05.027...................................................................... 1 ii AS31.05.030...................................................................... 1,2 AS31.05.060(a)................................................................... 1,3 AS 31.05.070(a)................................................................... 3 AS31.05.095...................................................................... 1 STATUTES FROM OTHER JURISDICTIONS Kansas: K.S.A. § 55-701....................................................... 2 Oklahoma: 52 Okla. Stat. § 236................................................ 2 OTHER AUTHORITIES AOGCC, AOGCC, 50 Years of Service to Alaska (rev 10/10/10).......... 9 John W. Broomes, Waste Not, Want Not: The Marketable Product Rule Violates Public Policy Against Waste of Natural Gas Resources, 150 Kan. L. Rev. 149 (2014)......................................................... 10 Wm. E. Colby, The Law of Oil and Gas, 31 Cal. L. Rev. 357 (1943)...... 12 S. Dorsett & S. McVeigh, Jurisdiction (New York: Routledge, 2012) .... 5 William N. Eskridge, Jr., Interpreting Legislative Inaction, 87 Mich. L. R. 67 (1988).................................................................... 9 Stephen A. Higgenson, A Short History of the Right to Petition Government for the Redress of Grievances, 96 Yale L. J. 142 (1986)..... 7 Robert J. Martineau, Subject Matter Jurisdiction on Appeal: Reining in an Unruly Horse, 1988 BYU L. Rev. 1(1988)............................ 5 8 Patrick H. Martin and Bruce Kramer Williams & Meyer Oil and Gas Law(2019)......................................................................... 10 H. H. Rumble, Limitations on the Use of Property by Its Owner, 5 Virginia L. Rev. 297 (1918).................................................. 11 iii AUTHORITIES PRINCIPALLY RELIED UPON ALASKA CONSTITUTION Article I § 6 The right of the people peaceably to assemble, and to petition the government shall never be abridged. ALASKA STATUTES AS 31.05.005(a) There is created as an independent quasi-judicial agency of the state the Alaska Oil and Gas Conservation Commission composed of three commissioners appointed by the governor and confirmed by the legislature in joint session. In making appointments to the commission under AS 31.05.009 and this subsection, the governor shall consider and give preference to a person who demonstrates experience in oil and gas operations in the state. AS 31.05.027 The authority of the commission applies to all land in the state lawfully subject to its police powers, including land of the United States and land subject to the jurisdiction of the United States. AS 31.05.030 (a) The commission has jurisdiction and authority over all persons and property, public and private, necessary to carry out the purposes and intent of this chapter. (b) The commission shall investigate to determine whether or not waste exists or is imminent, or whether or not other facts exist which justify or require action by it. (c) The commission shall adopt regulations and orders and take other appropriate action to carry out the purposes of this chapter. (d) The commission may require (1) identification of ownership of wells, producing leases, tanks, plants, and drilling structures; (2) the making and filing of reports, well logs, drilling logs, electric logs, lithologic logs, directional surveys, and all other subsurface information on a well for which a permit to drill has been issued by the commission, subject to the following: iv (A) the reports required to be filed by the commission under this paragraph shall be filed within 30 days after the completion, abandonment, or suspension of the well; and (B) the well logs, drilling logs, electric logs, lithologic logs, directional surveys, and all other information required to be filed by the commission under this paragraph shall be filed within 90 days after the completion, abandonment, or suspension of the well, unless extended by the commission on request; (3) the drilling, casing, and plugging of wells in a manner that will prevent the escape of oil or gas out of one stratum into another, the intrusion of water into an oil or gas stratum, the pollution of fresh water supplies by oil, gas, or salt water, and prevent blowouts, cavings, seepages, and fires; (4) the furnishing of a reasonable bond with sufficient surety conditions for the performance of the duty to plug each dry or abandoned well or the repair of wells causing waste; (5) the operation of wells with efficient gas -oil and water -oil ratios, and may fix these ratios; (6) the gauging or other measuring of oil and gas to determine the quality and quantity of oil and gas; (7) every person who produces oil or gas in the state to keep and maintain for a period of five years in the state complete and accurate records of the quantities of oil and gas produced, which shall be available for examination by the commission at all reasonable times; (8) the measuring and monitoring of oil and gas pool pressures; (9) the filing and approval of a plan of development and operation for a field or pool to prevent waste, ensure a greater ultimate recovery of oil and gas, and protect the correlative rights of persons owning interests in the tracts of land affected. (e) The commission may regulate (1) for conservation purposes and, to the extent not in conflict with regulation by the Department of Labor and Workforce Development or the Department of Environmental Conservation, for public health and safety purposes, (A) the drilling, producing, and plugging of wells; (B) the perforating, fracture stimulation, and chemical treatment of wells; (C) the spacing of wells; (D) the disposal of salt water, nonpotable water, and oil field wastes; (E) the contamination or waste of underground water; (F) the quantity and rate of the production of oil and gas from a well or property; this authority shall also apply to a well or property in a voluntary cooperative or unit plan of development or operation entered into in accordance with AS 38.05.180(p); (G) the underground injection of gas for purposes of storage; (2) the disposal of drilling mud, cuttings, and nonhazardous drilling operation wastes in the annular space of a well for which a permit to drill has been issued by the commission; in this paragraph, a "nonhazardous drilling operation waste" v means a waste, other than a hazardous waste identified by the Environmental Protection Agency in 40 C.F.R., Part 261, 1 its regulation identifying and listing hazardous wastes, associated with the act of drilling a well for exploratory or production purposes. (f) The commission may classify a well or a specific portion of a well as an exploratory, development, service, or stratigraphic test well and may classify a development well as an oil or gas well for purposes material to the interpretation or enforcement of this chapter. (g) When the commission finds sufficient likelihood of an unexpected encounter of oil, gas, or other hazardous substance as a result of well drilling in an area of the state, the commission may, by regulation, designate the area and specify a depth in the area as one in which wells or any boring into the soil in excess of the specified depth but not otherwise subject to this chapter are subject to the regulations and requirements adopted under this section. The designation of an area or specification of a depth under this subsection does not constitute a certification that no hazardous substance will be encountered in another area or at a lesser depth, and the state is not liable for any damages arising from such an unexpected encounter of a hazardous substance. (h) The commission may take all actions necessary to allow the state to acquire primary enforcement responsibility under 42 U.S.C. 300h-1 and 42 U.S.C. 300h-4 (Safe Drinking Water Act of 1974, as amended, 42 U.S.C. 300f — 300j-26), for the control of underground injection related to the recovery and production of oil and natural gas and the control of underground injection in Class I wells, as defined in C.F.R. 144.6, as amended. (i) The commission shall accept written plans submitted by lessees for purposes of AS 38.05.180(f)(5). If a lessee submits a plan, the commission shall hold a public hearing on the plan and, within 45 days after receipt of the plan, grant approval of the plan if the plan contains a voluntary agreement by the lessee to use its best efforts to employ residents of this state, consistent with law, and to contract with firms in this state for work in connection with the development of the field, including the fabrication and installation of required facilities, whenever feasible. The decision of the commission to grant approval may not be appealed. 6) For exploration and development operations involving nonconventional gas, the commission (1) may not (A) issue a permit to drill under this chapter if the well would be used to produce gas from an aquifer that serves as a source of water for human consumption or agricultural purposes unless the commission determines that the well will not adversely affect the aquifer as a source of water for human consumption or agricultural purposes; or (B) allow injection of produced water except at depths below known sources of water for human consumption or agricultural purposes; (2) shall A (A) regulate hydraulic fracturing in nonconventional gas wells to ensure protection of drinking water quality; (B) regulate the disposal of wastes produced from the operations unless the disposal is otherwise subject to regulation by the Department of Environmental Conservation or the United States Environmental Protection Agency; (C) as a condition of approval of a permit to drill a well for regular production of coal bed methane, require the operator to design and implement a water well testing program to provide baseline data on water quality and quantity; the cormnission shall make the results of the water well testing program available to the public. (k) The commission shall certify to the Department of Natural Resources the volume of oil production from a field or platform for the purposes of AS 38.05.180(f)(6)(A), (C), (E), and (G). (0 For purposes of AS 46.04.050(c) and upon application by the operator, the commission shall evaluate the likelihood that a well at a natural gas exploration facility may penetrate a formation capable of flowing oil to the ground surface and issue a determination based on results of the evaluation. If the commission determines that evidence obtained through the evaluation demonstrates with reasonable certainty that a well will not penetrate a formation capable of flowing oil to the ground surface, it shall report its determination to the Department of Environmental Conservation. In this subsection, (1) "natural gas exploration facility" has the meaning given in AS 46.04.050 (c); (2) "oil" has the meaning given in AS 46.04.050(c (m) The commission has jurisdiction and authority over all persons and property, public and private, necessary to cant' out the purposes and intent of AS 41.06, except for provisions in AS 41.06 for which the Department of Natural Resources has jurisdiction. (n) Upon request of the commissioner of revenue, the commission shall determine the commencement of regular production from a lease or property for purposes of AS 43.55.160 (f) and (g) and 43.55.165(n) and (o). AS 31.05.060(a) The commission may act upon its own motion or upon the petition of an interested person. On the filing of a petition concerning a matter within the jurisdiction of the commission under this chapter, the commission shall promptly fix a date for the hearing, and shall cause notice of the hearing to be given. The hearing shall be held without undue delay after the filing of a petition. The commission shall enter its order within 30 days after the hearing. AS 31.05.070(a) The commission may summon witnesses, administer oaths, and require the production of records, books and documents for examination at a hearing or vii investigation conducted by it. A person may not be excused from attending or testifying, or from producing books, papers and records before the commission or a court or from obedience to the subpoena of the commission or a court, on the ground or for the reason that the testimony or evidence, documentary or otherwise, required of that person may tend to incriminate or subject that person to a penalty or forfeiture. This section does not require a person to produce books, papers or records, or to testify in response to an inquiry not pertinent to some question lawfully before the commission or court for determination. A natural person is not subject to criminal prosecution or to a penalty or forfeiture for or on account of any transaction, matter or thing concerning which, in spite of objection, that person may be required to testify or produce evidence, documentary or otherwise, before the commission or court, or in obedience to its subpoena. However, a person testifying is not exempt from prosecution and punishment for perjury committed in so testifying. AS 31.05.095. The waste of oil and gas in the state is prohibited. OTHERSTATESTATUTES Kansas K.S.A. § 55-701: Waste of Natural Gas Prohibited -- The production of natural gas in the state of Kansas in such a manner and under such conditions and for such purposes as to constitute waste is hereby prohibited. Oklahoma 52 Okla. Stat. § 236: "The production of natural gas in the state of Oklahoma in such manner, and under such conditions as to constitute waste, shall be unlawful." viii ARGUMENT I. AOGCC HAS A STATUTORY DUTY TO HOLD A HEARING. This case can be boiled down to one question: whether the gas leak in Cook Inlet constituted "a matter within the jurisdiction"' of the Alaska Oil and Gas Conservation Commission. Other Order 150 declared unequivocally that the agency was without jurisdiction: "Absent jurisdiction, there is no basis for a hearing."Z In Other Order 150 the agency mistakenly placed the limits to its power at the custody transfer meter.' The law is contrary to the agency's position. Consider again the relevant language of the two statutes which define the jurisdiction of the commission: 1. AS 31.05.027: "The authority of the commission applies to all land in the state lawfully subject to its police powers ...." 2. AS 31.05.030(a): "The commission has jurisdiction and authority over all persons and property, public and private, necessary to carry out the purposes and intent of this chapter." One of the "purposes" of chapter 31 is to prevent the waste of the oil and gas in Alaska. The legislature carefully spelled out this purpose in a statute, AS 31.05.095, which reads: "The waste of oil and gas in the state is prohibited." ' AS 31.05.060(a). z Exc.002. ' "Once oil or gas is metered and severed from the property, AOGCC's authority to make a waste determination is at an end." Exc. 002. 1 The statute is there to fulfill the purpose of protecting not some, but all of the state's most valuable natural resource from being wasted. Notice that the statute does not say that the waste of oil and gas on the lease is prohibited. The statute does not say that the waste of oil and gas upstream of the custody transfer meter is prohibited. The legislature was certainly capable of drafting a petroleum conservation law with a narrow scope. Alaska could have chosen to take the approach of Kansas and Oklahoma, which explicitly limit their petroleum conservation laws to production.' Alaska's legislature chose to draft its anti -waste statute more broadly. AOGCC's indifference to waste occurring downstream of the meter is unfortunate, but this indifference does not constitute a legitimate jurisdictional boundary, any more than a custody transfer meter does. The gas leak in question went on for months and caused a production platform to shut down.' As a result, oil production was lost.6 The gas leak sparked an investigation by the AOGCC.' The agency had a statutory duty to do so.' The powers that attend an AOGCC investigation are spelled out in statute: "[t]he commission may summon witnesses, administer oaths, and require the production of records, books and documents for examination at a hearing or investigation conducted ' K.S.A. § 55-701: "The production of natural gas in the state of Kansas in such a manner and under such conditions and for such purposes as to constitute waste is hereby prohibited." 52 Okla. Stat. § 236: "The production of natural gas in the state of Oklahoma in such manner, and under such conditions as to constitute waste, shall be unlawful." ' Exc.006. 6 Id. 7 Exc.002. 8 AS 31.05.030(b). 2 by it."' The hearing referred to may be held on the agency's own motion10 and must be held if the agency is petitioned to do so by "an interested person."" The statutory powers that allowed the agency to conduct an investigation assign to the agency the duty to hold a hearing if petitioned for one. To sum up: if the agency had jurisdiction to conduct an investigation, it had the statutory obligation to conduct a hearing if one was requested. Other Order 150 denied a hearing to Appellant. This Court should correct that error. II. AOGCC'S RATIONALES IN DEFENSE OF OTHER ORDER 150 FAIL. A. The dilemma faced by the agency caused it to misrepresent what Other Order 150 actually said. The agency is caught on the horns of a dilemma. If it had jurisdiction, it was compelled to grant Appellant a hearing. I I If it did not have jurisdiction, it had no authority to decide anything else.13 In trying to avoid this dilemma, the agency misrepresents what Other Order 150 actually said. The most glaring example is on page 6 of its brief, where the agency claims, in bold print, that Other Order 150 reflected "AOGCC's determination that the Hilcorp leak was not waste...."14 This is not accurate. 9 AS 31.05.070(a). 10 AS 31.05.060(a). 11 Id. 12 AS 31.05.060(a). 13 "Jurisdictional defects deprive the agency of power to adjudicate or regulate the subject matter." Far North Sanitation, Inc. v. Alaska Public Utilities Commission, 825 P.2d 867, 870 (Alaska 1992). 14 Appellee's Brief, p. 6. Other examples include Appellee's Brief at p. 1: "Whether AOGCC's determination that leaking commercial fuel gas was not waste within AOGCC's jurisdiction was reasonable." And see Appellee's Brief at p. 11: "French's claim that Other Order 150 did not make a waste determination cannot be reconciled with Other Order 150." 3 Other Order 150 stated repeatedly that the agency was incapable of making a waste determination: 1. "Once metered and severed from property AOGCC's authority to make a waste determination regarding use of the oil or gas is at an end." I 2. "AOGCC does not have waste jurisdiction over gas Hilcorp purchased from Harvest"16 Other Order 150 disclaimed jurisdiction over the gas leak — "Absent jurisdiction, there is no basis for a hearing."17 Other Order 150 did not make a determination that the gas leak was not waste, as Appellee's brief erroneously claims. The contradiction between Other Order 150 and the agency's brief on appeal regarding the central issue of this case cannot be reconciled in any legally coherent way. Appellee's brief, in trying to massage Other Order 150 into something it is not, throws confusion on the nature of jurisdiction. No statement captures this confusion better than this one: "[a]bsent waste, there is no waste jurisdiction."18 This does not reflect a sound understanding of the concept of jurisdiction. 15 Exc.002. 16 Id. 17 Id, 18 Appellee's Brief at 10. On the same page: "French's arguments fallaciously equate subject matter jurisdiction — a determination whether waste has occurred— with AOGCC's statewide geographic jurisdiction ifAOGCC determines waste has occurred." (emphasis in the original). Appellant expects that his disappointment in not having the difference between subject matter jurisdiction and geographic jurisdiction elucidated by Appellee is shared by the Court. And see Appellee's Brief at 21: "French was entitled to a hearing only if the leak was waste." 4 "Jurisdiction is authority to decide the case either way.s19 The esteemed author of the preceding sentence, Oliver Wendell Holmes, did not invent this formulation. Coke (one of the few common law jurists to try to define jurisdiction) stated that 'jurisdiction is the authority to decide or give judgment among parties concerning actions to be taken over people and property ... "I AOGCC's contention in its brief that there is no jurisdiction unless there is waste gets Holmes and Coke backwards. It puts the cart before the horse. Jurisdiction, understood correctly, concerns whether the agency had the power to decide this case. The purpose of this appeal is to find out whether the agency had jurisdiction over the leak of gas in Cook Inlet. If the agency had jurisdiction, it had the authority to decide whether the leaked gas constituted waste. This conception of jurisdiction is consistent with how this Court has described subject matter jurisdiction. Subject matter jurisdiction is 'the legal authority of a court to hear and decide a particular type of case.' The doctrine of subject matter jurisdiction applies to judicial and quasi-judicial bodies to ensure that they do not overreach their adjudicative powers. Subject matter jurisdiction is a prerequisite to a courts ability to decide a case: '[A] court which does not have subject matter jurisdiction is without power to decide a case.'21 19 The Fair v. Kohler Die & Specialty Co., 228 U.S. 22,25 (1913). 20 S. Dorsett & S. McVeigh, Jurisdiction (New York: Routledge, 2012), 4. 21 Northwest Medical Imaging, Inc. v. State, Dept. of Revenue, 151 P.3d 434, 438 (Alaska 2006)(intemal citations omitted); and see Robert J. Martineau, Subject Matter Jurisdiction on Appeal: Reining in an Unruly Horse, 1988 BYU L. Rev. 1, 3: "Courts and commentators have little difficulty in agreeing on an abstract definition of subject matter jurisdiction. There is a consensus that subject matter jurisdiction means the authority to adjudicate the type of controversy involved in an action." Having these precepts in mind reveals the flaw in AOGCC's formulation of the issue presented by this case. The agency incorrectly frames the issue this way: "Whether AOGCC's determination that the leaking commercial fuel gas was not waste within AOGCC's jurisdiction is reasonable."22 Again, Other Order 150 did not make a determination. Other Order 150 specifically denied the power to make a determination: "Once metered and severed from the property, AOGCC's authority to make a waste determination is at an end.1123 The agency on appeal attempts to rewrite Other Order 150: "The order cannot be read without understanding that downstream gas is not deemed waste by AOGCC.1124 Appellant begs to disagree. The order is consistent about a lack of jurisdiction; the agency in Other Order 150 is declaring itself "without power to decide.s25 The agency on appeal would prefer to have it both ways, and thus escape from its dilemma. It wants credit for having enough jurisdiction to make a determination about the leaked gas, but not so much jurisdiction as would require it to hold a hearing. This Court must rectify this error. The question for this Court is whether the AOGCC, "an independent quasi-judicial agency of the state,"26 had subject matter jurisdiction over the gas leak in Cook Inlet. A gas leak that went on for months. A gas leak that caused a producing oil platform to shut 22 Appellee's Brief at 1. 23 Exc.002. 24 Appellee's Brief at 11. 25 Northwest Medical Imaging, 151 Pad at 43S. 26 A.S.31.05.005(a). 2 down. If the Court finds that AOGCC did have jurisdiction, then the case should be remanded for a hearing before the agency. B. Appellant's petition was sufficient to trigger a hearing. AOGCC suggests in its brief that the petition filed in this case was somehow deficient.27 The agency seems to be hinting that, if only Appellant had framed his petition differently, his request for a hearing would have been granted. This Court should not countenance such charades. Both the federal and the state constitution protect Appellant's right to petition the government11 "Petition, as a word, a concept, and an essential safeguard of freedom, is of ancient significance in the English law and the Anglo-American legal tradition."'-9 The idea behind the right has been explained by scholars this way: The original design of the First Amendment petition clause — stemming from the right to petition local assemblies in colonial America, and forgotten today — included a governmental duty to consider petitioners' grievances.30 "Petitions to the government assume an added dimension when they seek to advance political, social, or other ideas of interest to the community as a whole."31 French's petition 27 "Since waste was the only jurisdictional basis claimed in French's petition, AOGCC entered Other Order 150, denying his demand for a hearing." Appellee's Brief, p. 2. "Because waste was the only matter within AOGCC's jurisdiction alleged in French's demand for a hearing, AOGCC denied his demand." Appellee's Brief, p. 5. 28 U.S. Const. amend. I; Alaska Const. Art. I § 6: "The right of the people peaceably to assemble, and to petition the government shall never be abridged." 29 Borough of Duryea, Pennsylvania, et. al. v. Guarnieri, 131 S. Ct. 2488, 2498 (2011). 30 Stephen A. Higgenson, A Short History of the Right to Petition Government for the Redress of Grievances, 96 Yale L. J. 142, 142-143(1986)(internal citations omitted)(emphasis supplied). 31 Borough of Duryea, 131 S. Ct. at 2498. 7 alleged that waste occurred as a result of a gas leak.32 The gas leak was a matter of public concern. The leak "garnered a tremendous amount of publicity."33 AOGCC cannot escape its duty to conduct a hearing by suggesting that it might have other forms of jurisdiction downstream of the custody transfer meter which, unfortunately, Appellant failed to invoke. The agency has a duty to consider Appellant's petition in a hearing. C. The Legislature's actions or inactions are irrelevant. `Spurious' barely describes the argument AOGCC advances in its brief regarding the actions of the Alaska Legislature. The agency claims French is ignoring "the Alaska Legislature's response to AOGCC's determination."34 The analysis here begins by asking exactly which determination AOGCC is referring to? The agency's first public pronouncement on this matter was Other Order 150, which was issued March 20, 2019 35 Appellant hopes that this is enough to eliminate the 2017 and 2018 Legislatures from consideration. Once Other Order 150 was decided, anyone, including legislators, would have been able to see that the commission's order was immediately appealed. Appellant could as legitimately assert that his confirmation as the public commissioner to the agency by the Legislature in 2017 was a ratification by the Legislature of his view of the scope of the agency's jurisdiction. Setter in this instance to heed the words of Justice Frankfurter, who wrote that "we walk on quicksand when we try to find in the absence of corrective legislation a controlling 32 Exc.001. 33 Appellee's Brief, p. 12. 34 Id. 35 Exe.002. f legal principle."36 Or heed the words of the commission itself, when it described legislative inaction as a "weak reed" upon which to rely.37 In any event, AOGCC's reliance on the Legislature is misplaced. D. CINGSA creates insuperable difficulties for AOGCC's position. CINGSA is an underground storehouse of gas located on the Kenai Peninsula. The facility stores natural gas collected from other sites by injecting it into a mostly depleted rock formation nearly a mile underground — the Sterling C Reservoir — so that it can be withdrawn in wintertime when the demand for natural gas exceeds what local production can immediately supply.38 In its own publication, AOGCC described the legislation that put CINGSA under its authority as having "clarified," not extended, its jurisdiction.39 Appellant raised this point in his opening brief in hopes that AOGCC would, in its brief, address its own words on this issue and explain where, under its theory of the case, it would draw the jurisdictional boundary into and out of CINGSA 40 AOGCC failed to do either. Instead, it offers the unsupported assertion that "AOGCC's jurisdiction to order CINGSA to rectify any issues with gas leaking from the storage reservoir... would not make any leaking gas owned by 36 Helvering v. Hallock, 309 U.S. 106, 121 (1940), and see William N. Eskridge, Jr., Interpreting Legislative Inaction, 87 Mich. L. R. 67, 90-95 ("Problems with Inferring Legislative Intent f o7n Legislative Inaction")(1988). 37 "The commission and ConocoPhillips respond that legislative inaction is a `weak reed' to lean on in construing a statute." Allen v. Alaska Oil and Gas Conservation Cwnmission, 154 P.3d 664, 669 (Alaska 2006). 38 Kenai Landing, Inc. v. Cooklnlet Nat. Gas Storage Alaska, LLC, 441 P.3d 954,957 (Alaska 2019). 39 "Other changes clarified the Commission's authority to regulate underground storage of natural gas." AOGCC, AOGCC, SO Years of Service to Alaska, p. 68 (rev 10/10/10), available at 333 W. 7" Ave., Anchorage, AK. 40 Appellant's Brief at 36 and 38. 0 CINGSA waste."41 The sentence comes without explanation or footnote. The agency is in full retreat from its responsibilities. The agency's willingness to abandon its central mission — to prevent waste — over a vital reserve of gas is inexcusable. Its inability to grapple with the legal problems that attend its misconceptions about jurisdiction should indicate to the Court that its position is unworkable. Moving a hydrocarbon from one reservoir to another is good engineering, as it leads to greater ultimate recovery for the state of Alaska as a whole. Whether the gas is ultimately used to fuel a turbine, or to heat homes in southcentral Alaska, everyone benefits. Yet the AOGCC's narrow conception of its jurisdiction removes itself from policing any leaks, no matter how large, that occur in the process, and thwarts its statutory mission to prevent waste. Physical waste is generally defined as `the loss of oil or gas that could have been recovered and put to use,' and further described to include the `failure to recover the maximum quantity [of oil or gas] which theoretically could be produced.' Accordingly, any circumstance that precludes recovery of all the oil or gas that would otherwise be economically recoverable from a given property may be said to cause physical waste of those hydrocarbon resources." The same analysis applies to the leak in this case. The unidentified reservoir or reservoirs that supplied gas to the fuel gas line running to Platform A lost energy unnecessarily, and the Middle Ground Shoal reservoir that relied on the gas to help it 41 Appellee's Brief at 18. 42 John W. Broomes, Waste Not, Want Not: the Marketable Product Rule Violates Public Policy Against Waste of Natural Gas Resources, 150 Kan. L. Rev. 149, 179 (2014)(citing to 8 Patrick H. Martin & Bruce M. Kramer, Williams & Meyers Oil and Gas Law at 765 and 1133 (2009)). 10 produce, lost production. No one benefited from this months -long release of gas to the atmosphere. There is nothing good about gas leaking directly to the atmosphere. The agency's focus on waste only upstream of the custody transfer meter blinds it to the negative effects of gas leaks to the state as a whole which occur downstream of the meter. The custody transfer meter is important, but it is not a jurisdictional boundary. Disclaiming jurisdiction over hydrocarbons at the custody transfer meter is bad policy. E. AOGCC ignores the public interest in preventing waste. The agency on appeal defines waste as narrowly as possible. It claims, without citation to any statutory language, that the definition of waste relates to "upstream drilling and production,"43 and that the "purpose of the prohibition against waste is to ensure the maximum ultimate recovery of the gas or oil from a reservoir or pool."44 This narrow view ignores the broader view of waste outlined in the previous section, and ignores over one hundred years of jurisprudence that recognizes the public interest in preventing waste. Here is an early formulation of this idea: Statutes prohibiting waste and regulating the taking of gas and oil from the soil are usually upheld as a valid exercise of the police power, because of the value of these commodities to the public." The agency's myopic view of waste is severely undercut once the value of the natural gas to the public is taken into account. The simplest hypothetical illustrates this. 43 Appellee's Brief at 7. 44 Appellee's Brief at 7-8. And see Appellee's Brief at 9: "Once metered and severed, the goal of maximizing recovery from a reservoir where it was produced is achieved." 45 H. H. Rumble, Limitations on the Use of Property by Its Owner, 5 Virginia L. Rev. 297, 304 n. 7 (1918)(citing to Townsend v. State, 147 Ind. 624, and Ohio Oil Co. v. Indiana, 177 U. S. 190)(emphasis supplied). 11 Imagine a gas leak just a few feet downstream of the custody transfer meter for a lease that vents any or all of the lease's gas production to the atmosphere. The reservoir is producing to its fullest, but the public interest is damaged. The public's interest in putting that gas to some beneficial use is reduced by the amount of the leak. Court decisions have recognized this interest. Referring to oil and gas, the Supreme Court of California in 1930 wrote: [b]ecause of their peculiar nature the public has a definite interest in their preservation from waste and destruction. This is true because of their character as natural resources and also because the public interest has attached by virtue of positive statutory law or by court judgment independent of statute.46 The preceding articulation of the public interest as being rooted in the inherent value of natural resources to the public would be ably summed up a few years later this way: The public has, however, an important interest in the deposits of oil and gas because of their vital character and their general use by the public and may, in its own behalf, control their capture by the lawful owners and also protect these owners as between themselves from any acts of their number which might result in waste or other similar prejudice to their common interest 47 These precepts found expression in Alaska's petroleum conservation statutes. The broad reach of the AOGCC's jurisdictional statutes combined with the blanket statewide prohibition against waste, and a definition of waste that is a wide or wider than any other state's definition,48 all point in the same direction, and to the same end. Alaska law 46 People v. Associated Oil Co., 211 Cal. 93, 102 (Cal. 1930). 47 Wm. E. Colby, The Law of Oil and Gas, 31 Cal. L. Rev. 357, 364 (1943). 46 Appellant's Brief at 26. 12 recognizes that there is a public interest in the conservation of natural resources49 and that the protection of state natural resources vindicates an important public interest.50 These values are not served by the truncated view of jurisdiction expressed in Other Order 150. CONCLUSION Appellant respectfully seeks an order from this Court reversing the court below, and remanding this case for a hearing before the AOGCC. LQ2�7 Hollis S. French AK Bar No. 9606033 Dated January 18, 2021 Typeface Certification I certify that the typeface in this document is 13-point Times New Roman. WT�-� Hollis S. French 49 Exxon Corp. v. State, 40 P.3d 786, 791 (Alaska 2001). 50 Cabana v. Kenai Peninsula Borough, 21 P.3d 833, 837, n. 16 (Alaska 2001). 13 IN THE SUPREME COURT OF THE STATE OF ALASKA HOLLIS S. FRENCH, Appellant, ) V. ) Supreme Court No. S-17822 ALASKA OIL AND GAS CONSERVATION ) COMMISSION, ) Superior Court No. Appellee. ) 3AN-19-06694 Cl APPEAL FROM THE SUPERIOR COURT THIRD JUDICIAL DISTRICT AT ANCHORAGE THE HONORABLE ERIC AARSETH, PRESIDING THE HONORABLE ADOLF ZEMAN, PRESIDING APPELLANT'S REPLY HOLLIS S. FRENCH AK Bar No. 9606033 2640 Telequana Dr. Anchorage, AK 99517 (907)244-7135 hsfrench@gmail.com Filed in the Supreme Court of the State of Alaska, this day of 12021 Clerk of the Appellate Court TABLE OF CONTENTS TABLE OF CONTENTS.......................................................... i TABLE OF AUTHORITIES...................................................... ii AUTHORITIES PRINCIPALLY RELIED UPON ................................. iv ARGUMENT....................................................................... 1 I. AOGCC Has a Statutory Duty to Hold a Hearing ...................... I I1. AOGCC's Rationales in Defense of Other Order 150 Fail........... 3 A. The Dilemma Faced by the Agency Caused it to Misrepresent What Other Order 150 Actually Said ............................... 3 B. Appellant's Petition Was Sufficient to Trigger a Hearing....... 7 C. The Legislature's Actions or Inactions are Irrelevant ............. 8 D. CINGSA Creates Insuperable Difficulties for AOGCC's Position................................................................. 9 E. AOGCC Ignores the Public Interest in Preventing Waste....... 11 CONCLUSION.................................................................... 13 TABLE OF AUTHORITIES FEDERAL CASES Borough of Duryea, Pennsylvania v. Guarnieri, 131 S. Ct. 2488 (2011)... 7 The Fair v. Kohler Die & Specialty Co., 228 U.S. 22, (1913)............... 5 Helvering v. Hallock, 309 U.S. 106(1940).................................... 9 Ohio Oil Co. v. Indiana (No.1), 177 U.S. 190 (1900)........................ 11 ALASKA CASES Allen v. Alaska Oil and Gas Conservation Commission, 154 P.3d 664 (Alaska 2006)...................................................................... 9 Cabana v. Kenai Peninsula Borough, 21 P.3d 833 (Alaska 2001) ........ 13 Kenai Landing, Inc. v. Cook Inlet Nat. Gas Storage Alaska, LLC, 441 P.3d 954 (Alaska 2019).......................................................... 9 Exxon Corp. v. State, 40 P.3d 786 (Alaska 2001)............................ 13 Far North Sanitation, Inc. v. Alaska Public Utilities Commission, 825 P.2d 867 (Alaska 1992).......................................................... 3 Northwest Medical Imaging, Inc. v. State, Dept. of Revenue, 151 P.3d 434 (Alaska 2006)................................................................ 5,6 CASES FROM OTHER JURISDICTIONS People v. Associated Oil Co., 211 Cal. 93 (Cal. 1930)....................... 12 Townsend v. State, 147 Ind. 624 (Ind. 1897).................................. I 1 STATUTES AS 31.05.005(a)................................................................... 6 AS31.05.027...................................................................... 1 ii AS31.05.030...................................................................... 1,2 AS 31.05.060(a)................................................................... 1,3 AS 31.05.070(a)................................................................... 3 AS31.05.095...................................................................... 1 STATUTES FROM OTHER JURISDICTIONS Kansas: K.S.A. § 55-701....................................................... 2 Oklahoma: 52 Okla. Stat. § 236................................................ 2 OTHER AUTHORITIES AOGCC, AOGCC, 50 Years of Service to Alaska (rev 10/10/10).......... 9 John W. Broomes, Waste Not, Want Not: The Marketable Product Rule Violates Public Policy Against Waste of Natural Gas Resources, 150 Kan. L. Rev. 149 (2014)......................................................... 10 Wm. E. Colby, The Law of Oil and Gas, 31 Cal. L. Rev. 357 (1943)...... 12 S. Dorsett & S. McVeigh, Jurisdiction (New York: Routledge, 2012) .... 5 William N. Eskridge, Jr., Interpreting Legislative Inaction, 87 Mich. L. R. 67 (1988).................................................................... 9 Stephen A. Higgenson, A Short History of the Right to Petition Government for the Redress of Grievances, 96 Yale L. J. 142 (1986)..... 7 Robert J. Martineau, Subject Matter Jurisdiction on Appeal: Reining in an Unruly Horse, 1988 BYU L. Rev. 1(1988)............................ 5 8 Patrick H. Martin and Bruce Kramer Williams & Meyer Oil and Gas Law(2019)......................................................................... 10 H. H. Rumble, Limitations on the Use of Property by Its Owner, 5 Virginia L. Rev. 297 (1918).................................................. 11 iii AUTHORITIES PRINCIPALLY RELIED UPON ALASKA CONSTITUTION Article I § 6 The right of the people peaceably to assemble, and to petition the government shall never be abridged. ALASKA STATUTES AS 31.05.005(a) There is created as an independent quasi-judicial agency of the state the Alaska Oil and Gas Conservation Commission composed of three commissioners appointed by the governor and confirmed by the legislature in joint session. In making appointments to the commission under AS 31.05.009 and this subsection, the governor shall consider and give preference to a person who demonstrates experience in oil and gas operations in the state. AS 31.05.027 The authority of the commission applies to all land in the state lawfully subject to its police powers, including land of the United States and land subject to the jurisdiction of the United States. AS 31.05.030 (a) The commission has jurisdiction and authority over all persons and property, public and private, necessary to carry out the purposes and intent of this chapter. (b) The commission shall investigate to determine whether or not waste exists or is imminent, or whether or not other facts exist which justify or require action by it. (c) The commission shall adopt regulations and orders and take other appropriate action to carry out the purposes of this chapter. (d) The commission may require (1) identification of ownership of wells, producing leases, tanks, plants, and drilling structures; (2) the making and filing of reports, well logs, drilling logs, electric logs, lithologic logs, directional surveys, and all other subsurface information on a well for which a permit to drill has been issued by the commission, subject to the following: iv (A) the reports required to be filed by the commission under this paragraph shall be filed within 30 days after the completion, abandonment, or suspension of the well; and (B) the well logs, drilling logs, electric logs, lithologic logs, directional surveys, and all other information required to be filed by the commission under this paragraph shall be filed within 90 days after the completion, abandonment, or suspension of the well, unless extended by the commission on request; (3) the drilling, casing, and plugging of wells in a manner that will prevent the escape of oil or gas out of one stratum into another, the intrusion of water into an oil or gas stratum, the pollution of fresh water supplies by oil, gas, or salt water, and prevent blowouts, cavings, seepages, and fires; (4) the furnishing of a reasonable bond with sufficient surety conditions for the performance of the duty to plug each dry or abandoned well or the repair of wells causing waste; (5) the operation of wells with efficient gas -oil and water -oil ratios, and may fix these ratios; (6) the gauging or other measuring of oil and gas to determine the quality and quantity of oil and gas; (7) every person who produces oil or gas in the state to keep and maintain for a period of five years in the state complete and accurate records of the quantities of oil and gas produced, which shall be available for examination by the commission at all reasonable times; (8) the measuring and monitoring of oil and gas pool pressures; (9) the filing and approval of a plan of development and operation for a field or pool to prevent waste, ensure a greater ultimate recovery of oil and gas, and protect the correlative rights of persons owning interests in the tracts of land affected. (e) The commission may regulate (1) for conservation purposes and, to the extent not in conflict with regulation by the Department of Labor and Workforce Development or the Department of Environmental Conservation, for public health and safety purposes, (A) the drilling, producing, and plugging of wells; (B) the perforating, fracture stimulation, and chemical treatment of wells; (C) the spacing of wells; (D) the disposal of salt water, nonpotable water, and oil field wastes; (E) the contamination or waste of underground water; (F) the quantity and rate of the production of oil and gas from a well or property; this authority shall also apply to a well or property in a voluntary cooperative or unit plan of development or operation entered into in accordance with AS 38.05.180(p); (G) the underground injection of gas for purposes of storage; (2) the disposal of drilling mud, cuttings, and nonhazardous drilling operation wastes in the annular space of a well for which a permit to drill has been issued by the commission; in this paragraph, a "nonhazardous drilling operation waste" v means a waste, other than a hazardous waste identified by the Environmental Protection Agency in 40 C.F.R., Part 261, 1 its regulation identifying and listing hazardous wastes, associated with the act of drilling a well for exploratory or production purposes. (f) The commission may classify a well or a specific portion of a well as an exploratory, development, service, or stratigraphic test well and may classify a development well as an oil or gas well for purposes material to the interpretation or enforcement of this chapter. (g) When the commission finds sufficient likelihood of an unexpected encounter of oil, gas, or other hazardous substance as a result of well drilling in an area of the state, the commission may, by regulation, designate the area and specify a depth in the area as one in which wells or any boring into the soil in excess of the specified depth but not otherwise subject to this chapter are subject to the regulations and requirements adopted under this section. The designation of an area or specification of a depth under this subsection does not constitute a certification that no hazardous substance will be encountered in another area or at a lesser depth, and the state is not liable for any damages arising from such an unexpected encounter of a hazardous substance. (h) The commission may take all actions necessary to allow the state to acquire primary enforcement responsibility under 42 U.S.C. 300h-1 and 42 U.S.C. 300h-4 (Safe Drinking Water Act of 1974, as amended, 42 U.S.C. 300f — 300j-26), for the control of underground injection related to the recovery and production of oil and natural gas and the control of underground injection in Class I wells, as defined in C.F.R. 144.6, as amended. (i) The commission shall accept written plans submitted by lessees for purposes of AS 38.05.180(f)(5). If a lessee submits a plan, the commission shall hold a public hearing on the plan and, within 45 days after receipt of the plan, grant approval of the plan if the plan contains a voluntary agreement by the lessee to use its best efforts to employ residents of this state, consistent with law, and to contract with firms in this state for work in connection with the development of the field, including the fabrication and installation of required facilities, whenever feasible. The decision of the commission to grant approval may not be appealed. 0) For exploration and development operations involving nonconventional gas, the commission (1) may not (A) issue a permit to drill under this chapter if the well would be used to produce gas from an aquifer that serves as a source of water for human consumption or agricultural purposes unless the commission determines that the well will not adversely affect the aquifer as a source of water for human consumption or agricultural purposes; or (B) allow injection of produced water except at depths below known sources of water for human consumption or agricultural purposes; (2) shall vi (A) regulate hydraulic fracturing in nonconventional gas wells to ensure protection of drinking water quality; (B) regulate the disposal of wastes produced from the operations unless the disposal is otherwise subject to regulation by the Department of Environmental Conservation or the United States Environmental Protection Agency; (C) as a condition of approval of a permit to drill a well for regular production of coal bed methane, require the operator to design and implement a water well testing program to provide baseline data on water quality and quantity; the commission shall make the results of the water well testing program available to the public. (k) The commission shall certify to the Department of Natural Resources the volume of oil production from a field or platform for the purposes of AS 38.05.180(f)(6)(A), (C), (E), and (G). (n For purposes of AS 46.04.050(c) and upon application by the operator, the commission shall evaluate the likelihood that a well at a natural gas exploration facility may penetrate a formation capable of flowing oil to the ground surface and issue a determination based on results of the evaluation. If the commission determines that evidence obtained through the evaluation demonstrates with reasonable certainty that a well will not penetrate a formation capable of flowing oil to the ground surface, it shall report its determination to the Department of Environmental Conservation. In this subsection, (1) "natural gas exploration facility" has the meaning given in AS 46.04.050 (c); (2) "oil" has the meaning given in AS 46.04.050(c (m) The commission has jurisdiction and authority over all persons and property, public and private, necessary to carry out the purposes and intent of AS 41.06, except for provisions in AS 41.06 for which the Department of Natural Resources has jurisdiction. (n) Upon request of the commissioner of revenue, the commission shall determine the commencement of regular production from a lease or property for purposes of AS 43.55.160 (f) and (g) and 43.55.165(n) and (o). AS 31.05.060(a) The commission may act upon its own motion or upon the petition of an interested person. On the filing of a petition concerning a matter within the jurisdiction of the commission under this chapter, the commission shall promptly fix a date for the hearing, and shall cause notice of the hearing to be given. The hearing shall be held without undue delay after the filing of a petition. The commission shall enter its order within 30 days after the hearing. AS 31.05.070(a) The commission may summon witnesses, administer oaths, and require the production of records, books and documents for examination at a hearing or vii investigation conducted by it. A person may not be excused from attending or testifying, or from producing books, papers and records before the commission or a court or from obedience to the subpoena of the commission or a court, on the ground or for the reason that the testimony or evidence, documentary or otherwise, required of that person may tend to incriminate or subject that person to a penalty or forfeiture. This section does not require a person to produce books, papers or records, or to testify in response to an inquiry not pertinent to some question lawfully before the commission or court for determination. A natural person is not subject to criminal prosecution or to a penalty or forfeiture for or on account of any transaction, matter or thing concerning which, in spite of objection, that person may be required to testify or produce evidence, documentary or otherwise, before the commission or court, or in obedience to its subpoena. However, a person testifying is not exempt from prosecution and punishment for perjury committed in so testifying. AS 31.05.095. The waste of oil and gas in the state is prohibited. OTHER STATE STATUTES Kansas K.S.A. § 55-701: Waste of Natural Gas Prohibited -- The production of natural gas in the state of Kansas in such a manner and under such conditions and for such purposes as to constitute waste is hereby prohibited. Oklahoma 52 Okla. Stat. § 236: "The production of natural gas in the state of Oklahoma in such manner, and under such conditions as to constitute waste, shall be unlawful. " viii ARGUMENT I. AOGCC HAS A STATUTORY DUTY TO HOLD A HEARING. This case can be boiled down to one question: whether the gas leak in Cook Inlet constituted "a matter within the jurisdiction" l of the Alaska Oil and Gas Conservation Commission. Other Order 150 declared unequivocally that the agency was without jurisdiction: "Absent jurisdiction, there is no basis for a hearing."' In Other Order 150 the agency mistakenly placed the limits to its power at the custody transfer meter.3 The law is contrary to the agency's position. Consider again the relevant language of the two statutes which define the jurisdiction of the commission: 1. AS 31.05.027: "The authority of the commission applies to all land in the state lawfully subject to its police powers ...." 2. AS 31.05.030(a): "The commission has jurisdiction and authority over all persons and property, public and private, necessary to carry out the purposes and intent of this chapter." One of the "purposes" of chapter 31 is to prevent the waste of the oil and gas in Alaska. The legislature carefully spelled out this purpose in a statute, AS 31.05.095, which reads: "The waste of oil and gas in the state is prohibited." AS 31.05.060(a). 2 Exc.002. 3 "Once oil or gas is metered and severed from the property, AOGCC's authority to make a waste determination is at an end." Exc. 002. 1 The statute is there to fulfill the purpose of protecting not some, but all of the state's most valuable natural resource from being wasted. Notice that the statute does not say that the waste of oil and gas on the lease is prohibited. The statute does not say that the waste of oil and gas upstream of the custody transfer meter is prohibited. The legislature was certainly capable of drafting a petroleum conservation law with a narrow scope. Alaska could have chosen to take the approach of Kansas and Oklahoma, which explicitly limit their petroleum conservation laws to production.' Alaska's legislature chose to draft its anti -waste statute more broadly. AOGCC's indifference to waste occurring downstream of the meter is unfortunate, but this indifference does not constitute a legitimate jurisdictional boundary, any more than a custody transfer meter does. The gas leak in question went on for months and caused a production platform to shut down.' As a result, oil production was lost.' The gas leak sparked an investigation by the AOGCC.' The agency had a statutory duty to do so.' The powers that attend an AOGCC investigation are spelled out in statute: "[t]he commission may summon witnesses, administer oaths, and require the production of records, books and documents for examination at a hearing or investigation conducted ' K.S.A. § 55-701: "The production of natural gas in the state of Kansas in such a manner and under such conditions and for such purposes as to constitute waste is hereby prohibited." 52 Okla. Stat. § 236: "The production of natural gas in the state of Oklahoma in such manner, and under such conditions as to constitute waste, shall be unlawful." ' Exc.006. 6 Id. 7 Exc.002. 8 AS 31.05.030(b). by ft."' The hearing referred to may be held on the agency's own motion10 and must be held if the agency is petitioned to do so by "an interested person."' 1 The statutory powers that allowed the agency to conduct an investigation assign to the agency the duty to hold a hearing if petitioned for one. To sum up: if the agency had jurisdiction to conduct an investigation, it had the statutory obligation to conduct a hearing if one was requested. Other Order 150 denied a hearing to Appellant. This Court should correct that error. II. AOGCC'S RATIONALES IN DEFENSE OF OTHER ORDER 150 FAIL. A. The dilemma faced by the agency caused it to misrepresent what Other Order 150 actually said. The agency is caught on the horns of a dilemma. If it had jurisdiction, it was compelled to grant Appellant a hearing.12 If it did not have jurisdiction, it had no authority to decide anything else.13 In trying to avoid this dilemma, the agency misrepresents what Other Order 150 actually said. The most glaring example is on page 6 of its brief, where the agency claims, in bold print, that Other Order 150 reflected "AOGCC's determination that the Hilcorp leak was not waste...."14 This is not accurate. 9 AS 31.05.070(a). 10 AS 31.05.060(a). 11 Id. 12 AS 31.05.060(a). 13 "Jurisdictional defects deprive the agency of power to adjudicate or regulate the subject matter." Far North Sanitation, Inc. v. Alaska Public Utilities Commission, 825 P.2d 867, 870 (Alaska 1992). 14 Appellee's Brief, p. 6. Other examples include Appellee's Brief at p. 1: "Whether AOGCC's determination that leaking commercial fuel gas was not waste within AOGCC's jurisdiction was reasonable." And see Appellee's Brief at p. 11: "French's claim that Other Order 150 did not make a waste determination cannot be reconciled with Other Order 150." 3 Other Order 150 stated repeatedly that the agency was incapable of making a waste determination: 1. "Once metered and severed from property AOGCC's authority to make a waste determination regarding use of the oil or gas is at an end."u 2. "AOGCC does not have waste jurisdiction over gas Hilcorp purchased from Harvest."16 Other Order 150 disclaimed jurisdiction over the gas leak — "Absent jurisdiction, there is no basis for a hearing."17 Other Order 150 did not make a determination that the gas leak was not waste, as Appellee's brief erroneously claims. The contradiction between Other Order 150 and the agency's brief on appeal regarding the central issue of this case cannot be reconciled in any legally coherent way. Appellee's brief, in trying to massage Other Order 150 into something it is not, throws confusion on the nature of jurisdiction. No statement captures this confusion better than this one: "[a]bsent waste, there is no waste jurisdiction."18 This does not reflect a sound understanding of the concept of jurisdiction. 15 Exc.002. 16 Id. 17 Id. i8 Appellee's Brief at 10. On the same page: "French's arguments fallaciously equate subject matter jurisdiction — a determination whether waste has occurred — with AOGCC's statewide geographic jurisdiction if AOGCC determines waste has occurred." (emphasis in the original). Appellant expects that his disappointment in not having the difference between subject matter jurisdiction and geographic jurisdiction elucidated by Appellee is shared by the Court. And see Appellee's Brief at 21: "French was entitled to a hearing only if the leak was waste." 4 "Jurisdiction is authority to decide the case either way."19 The esteemed author of the preceding sentence, Oliver Wendell Holmes, did not invent this formulation. Coke (one of the few common law jurists to try to define jurisdiction) stated that `jurisdiction is the authority to decide or give judgment among parties concerning actions to be taken over people and property ... "I AOGCC's contention in its brief that there is no jurisdiction unless there is waste gets Holmes and Coke backwards. It puts the cart before the horse. Jurisdiction, understood correctly, concerns whether the agency had the power to decide this case. The purpose of this appeal is to find out whether the agency had jurisdiction over the leak of gas in Cook Inlet. If the agency had jurisdiction, it had the authority to decide whether the leaked gas constituted waste. This conception of jurisdiction is consistent with how this Court has described subject matter jurisdiction. Subject matter jurisdiction is `the legal authority of a court to hear and decide a particular type of case.' The doctrine of subject matter jurisdiction applies to judicial and quasi-judicial bodies to ensure that they do not overreach their adjudicative powers. Subject matter jurisdiction is a prerequisite to a court's ability to decide a case: `[A] court which does not have subject matter jurisdiction is without power to decide a case."' 19 The Fair v. Kohler Die & Specialty Co., 228 U.S. 22, 25 (1913). 20 S. Dorsett & S. McVeigh, Jurisdiction (New York: Routledge, 2012), 4. 21 Northwest Medical Imaging, Inc. v. State, Dept. of Revenue, 151 P.3d 434, 438 (Alaska 2006)(internal citations omitted); and see Robert J. Martineau, Subject Matter Jurisdiction on Appeal: Reining in an Unruly Horse, 1988 BYU L. Rev. 1, 3: "Courts and commentators have little difficulty in agreeing on an abstract definition of subject matter jurisdiction. There is a consensus that subject matter jurisdiction means the authority to adjudicate the type of controversy involved in an action." Having these precepts in mind reveals the flaw in AOGCC's formulation of the issue presented by this case. The agency incorrectly frames the issue this way: "Whether AOGCC's determination that the leaking commercial fuel gas was not waste within AOGCC's jurisdiction is reasonable."22 Again, Other Order 150 did not make a determination. Other Order 150 specifically denied the power to make a determination: "Once metered and severed from the property, AOGCC's authority to make a waste determination is at an end."23 The agency on appeal attempts to rewrite Other Order 150: "The order cannot be read without understanding that downstream gas is not deemed waste by AOGCC."24 Appellant begs to disagree. The order is consistent about a lack of jurisdiction; the agency in Other Order 150 is declaring itself "without power to decide."25 The agency on appeal would prefer to have it both ways, and thus escape from its dilemma. It wants credit for having enough jurisdiction to make a determination about the leaked gas, but not so much jurisdiction as would require it to hold a hearing. This Court must rectify this error. The question for this Court is whether the AOGCC, "an independent quasi-judicial agency of the state,"26 had subject matter jurisdiction over the gas leak in Cook Inlet. A gas leak that went on for months. A gas leak that caused a producing oil platform to shut 22 Appellee's Brief at 1. 23 Exc.002. 24 Appellee's Brief at 11. 25 Northwest Medical Imaging, 151 Pad at 438. 26 A.S.31.05.005(a). 0 down. If the Court finds that AOGCC did have jurisdiction, then the case should be remanded for a hearing before the agency. B. Appellant's petition was sufficient to trigger a hearing. AOGCC suggests in its brief that the petition filed in this case was somehow deficient.27 The agency seems to be hinting that, if only Appellant had framed his petition differently, his request for a hearing would have been granted. This Court should not countenance such charades. Both the federal and the state constitution protect Appellant's right to petition the government 28 "Petition, as a word, a concept, and an essential safeguard of freedom, is of ancient significance in the English law and the Anglo-American legal tradition."" The idea behind the right has been explained by scholars this way: The original design of the First Amendment petition clause — stemming from the right to petition local assemblies in colonial America, and forgotten today — included a governmental duty to consider petitioners' grievances.3o "Petitions to the government assume an added dimension when they seek to advance political, social, or other ideas of interest to the community as a whole."31 French's petition 27 "Since waste was the only jurisdictional basis claimed in French's petition, AOGCC entered Other Order 150, denying his demand for a hearing." Appellee's Brief, p. 2. "Because waste was the only matter within AOGCC's jurisdiction alleged in French's demand for a hearing, AOGCC denied his demand." Appellee's Brief, p. 5. 28 U.S. Const. amend. I; Alaska Const. Art. I § 6: "The right of the people peaceably to assemble, and to petition the government shall never be abridged." 29 Borough of Duryea, Pennsylvania, et. al. v. Guarnieri, 131 S. Ct. 2488, 2498 (2011). 30 Stephen A. Higgenson, A Short History of the Right to Petition Government for the Redress of Grievances, 96 Yale L. J. 142, 142-143(1986)(internal citations omitted)(emphasis supplied). 31 Borough of Duryea, 131 S. Ct. at 2498. FA alleged that waste occurred as a result of a gas leak.32 The gas leak was a matter of public concern. The leak "garnered a tremendous amount of publicity."33 AOGCC cannot escape its duty to conduct a hearing by suggesting that it might have other forms of jurisdiction downstream of the custody transfer meter which, unfortunately, Appellant failed to invoke. The agency has a duty to consider Appellant's petition in a hearing. C. The Legislature's actions or inactions are irrelevant. `Spurious' barely describes the argument AOGCC advances in its brief regarding the actions of the Alaska Legislature. The agency claims French is ignoring "the Alaska Legislature's response to AOGCC's determination."34 The analysis here begins by asking exactly which determination AOGCC is referring to? The agency's first public pronouncement on this matter was Other Order 150, which was issued March 20, 2019.35 Appellant hopes that this is enough to eliminate the 2017 and 2018 Legislatures from consideration. Once Other Order 150 was decided, anyone, including legislators, would have been able to see that the commission's order was immediately appealed. Appellant could as legitimately assert that his confirmation as the public commissioner to the agency by the Legislature in 2017 was a ratification by the Legislature of his view of the scope of the agency's jurisdiction. Better in this instance to heed the words of Justice Frankfurter, who wrote that "we walk on quicksand when we try to find in the absence of corrective legislation a controlling 32 Exc.001. 33 Appellee's Brief, p. 12. 34 Id. 35 EXc.002. 3 legal principle.1136 Or heed the words of the commission itself, when it described legislative inaction as a "weak reed" upon which to rely37 In any event, AOGCC's reliance on the Legislature is misplaced. D. CINGSA creates insuperable difficulties for AOGCC's position. CINGSA is an underground storehouse of gas located on the Kenai Peninsula. The facility stores natural gas collected from other sites by injecting it into a mostly depleted rock formation nearly a mile underground — the Sterling C Reservoir — so that it can be withdrawn in wintertime when the demand for natural gas exceeds what local production can immediately supply.38 In its own publication, AOGCC described the legislation that put CINGSA under its authority as having "clarified," not extended, its jurisdiction.39 Appellant raised this point in his opening brief in hopes that AOGCC would, in its brief, address its own words on this issue and explain where, under its theory of the case, it would draw the jurisdictional boundary into and out of CINGSA.40 AOGCC failed to do either. Instead, it offers the unsupported assertion that "AOGCC's jurisdiction to order CINGSA to rectify any issues with gas leaking from the storage reservoir... would not make any leaking gas owned by 36 Helvering v. Hallock, 309 U.S. 106, 121 (1940), and see William N. Eskridge, Jr., Interpreting Legislative Inaction, 87 Mich. L. R. 67, 90-95 ("Problems with Inferring Legislative Intent from Legislative Inaction")(1988). 37 "The commission and ConocoPhillips respond that legislative inaction is a `weak reed' to lean on in construing a statute." Allen v. Alaska Oil and Gas Conservation Commission, 154 P.3d 664, 669 (Alaska 2006). 38 Kenai Landing, Inc. v. Cook Inlet Nat. Gas Storage Alaska, LLC, 441 P.3d 954, 957 (Alaska 2019). 39 "Other changes clarified the Commission's authority to regulate underground storage of natural gas." AOGCC, AOGCC, 50 Years of Service to Alaska, p. 68 (rev 10/10/10), available at 333 W. 71 Ave., Anchorage, AK. 40 Appellant's Brief at 36 and 38. CINGSA waste."41 The sentence comes without explanation or footnote. The agency is in full retreat from its responsibilities. The agency's willingness to abandon its central mission — to prevent waste — over a vital reserve of gas is inexcusable. Its inability to grapple with the legal problems that attend its misconceptions about jurisdiction should indicate to the Court that its position is unworkable. Moving a hydrocarbon from one reservoir to another is good engineering, as it leads to greater ultimate recovery for the state of Alaska as a whole. Whether the gas is ultimately used to fuel a turbine, or to heat homes in southcentral Alaska, everyone benefits. Yet the AOGCC's narrow conception of its jurisdiction removes itself from policing any leaks, no matter how large, that occur in the process, and thwarts its statutory mission to prevent waste. Physical waste is generally defined as `the loss of oil or gas that could have been recovered and put to use,' and further described to include the `failure to recover the maximum quantity [of oil or gas] which theoretically could be produced.' Accordingly, any circumstance that precludes recovery of all the oil or gas that would otherwise be economically recoverable from a given property may be said to cause physical waste of those hydrocarbon resources. 42 The same analysis applies to the leak in this case. The unidentified reservoir or reservoirs that supplied gas to the fuel gas line punning to Platform A lost energy unnecessarily, and the Middle Ground Shoal reservoir that relied on the gas to help it 41 Appellee's Brief at 18. 42 John W. Broomes, Waste Not, Want Not: The Marketable Product Rule Violates Public Policy Against Waste of Natural Gas Resources, 150 Kan. L. Rev. 149, 179 (2014)(citing to 8 Patrick H. Martin & Bruce M. Kramer, Williams & Meyers Oil and Gas Law at 765 and 1133 (2009)). 10 produce, lost production. No one benefited from this months -long release of gas to the atmosphere. There is nothing good about gas leaking directly to the atmosphere. The agency's focus on waste only upstream of the custody transfer meter blinds it to the negative effects of gas leaks to the state as a whole which occur downstream of the meter. The custody transfer meter is important, but it is not a jurisdictional boundary. Disclaiming jurisdiction over hydrocarbons at the custody transfer meter is bad policy. E. AOGCC ignores the public interest in preventing waste. The agency on appeal defines waste as narrowly as possible. It claims, without citation to any statutory language, that the definition of waste relates to "upstream drilling and production,"43 and that the "purpose of the prohibition against waste is to ensure the maximum ultimate recovery of the gas or oil from a reservoir or pool.1144 This narrow view ignores the broader view of waste outlined in the previous section, and ignores over one hundred years of jurisprudence that recognizes the public interest in preventing waste. Here is an early formulation of this idea: Statutes prohibiting waste and regulating the taking of gas and oil from the soil are usually upheld as a valid exercise of the police power, because of the value of these commodities to the public 45 The agency's myopic view of waste is severely undercut once the value of the natural gas to the public is taken into account. The simplest hypothetical illustrates this. 43 Appellee's Brief at 7. 44 Appellee's Brief at 7-8. And see Appellee's Brief at 9: "Once metered and severed, the goal of maximizing recovery from a reservoir where it was produced is achieved." 45 H. H. Rumble, Limitations on the Use of Property by Its Owner, 5 Virginia L. Rev. 297, 304 n. 7 (1918)(citing to Townsend v. State, 147 Ind. 624, and Ohio Oil Co. v. Indiana, 177 U. S. 190)(emphasis supplied). 11 Imagine a gas leak just a few feet downstream of the custody transfer meter for a lease that vents any or all of the lease's gas production to the atmosphere. The reservoir is producing to its fullest, but the public interest is damaged. The public's interest in putting that gas to some beneficial use is reduced by the amount of the leak. Court decisions have recognized this interest. Referring to oil and gas, the Supreme Court of California in 1930 wrote: [b]ecause of their peculiar nature the public has a definite interest in their preservation from waste and destruction. This is true because of their character as natural resources and also because the public interest has attached by virtue of positive statutory law or by court judgment independent of statute. 46 The preceding articulation of the public interest as being rooted in the inherent value of natural resources to the public would be ably summed up a few years later this way: The public has, however, an important interest in the deposits of oil and gas because of their vital character and their general use by the public and may, in its own behalf, control their capture by the lawful owners and also protect these owners as between themselves from any acts of their number which might result in waste or other similar prejudice to their common interest.47 These precepts found expression in Alaska's petroleum conservation statutes. The broad reach of the AOGCC's jurisdictional statutes combined with the blanket statewide prohibition against waste, and a definition of waste that is a wide or wider than any other state's defmition,48 all point in the same direction, and to the same end. Alaska law 46 People v. Associated Oil Co., 211 Cal. 93, 102 (Cal. 1930). 47 Wm. E. Colby, The Law of Oil and Gas, 31 Cal. L. Rev. 357,364 (1943). 48 Appellant's Brief at 26. 12 recognizes that there is a public interest in the conservation of natural resources49 and that the protection of state natural resources vindicates an important public interest.50 These values are not served by the truncated view of jurisdiction expressed in Other Order 150. CONCLUSION Appellant respectfully seeks an order from this Court reversing the court below, and remanding this case for a hearing before the AOGCC. kKQT_�� Hollis S. French AK Bar No. 9606033 Dated January 18, 2021 Typeface Certification I certify that the typeface in this document is 13-point Times New Roman. Hollis S. French 49 Exxon Corp. v. State, 40 P.3d 786, 791 (Alaska 2001). so Cabana v. Kenai Peninsula Borough, 21 P.3d 833, 837, n. 16 (Alaska 2001). 13 Notice: This opinion is subject to correction before publication in the PACIFIC REPORTER. Readers are requested to bring errors to the attention of the Clerk of the Appellate Courts, 303 K Street, Anchorage, Alaska 99501, phone (907) 264-0608, fax (907) 264-0878, email corrections@akcourts.gov. THE SUPREME COURT OF THE STATE OF ALASKA HOLLIS S. FRENCH, Appellant, V. ALASKA OIL & GAS CONSERVATION COMMISSION, Appellee. Supreme Court No. S-17822 Superior Court No. 3AN-19-06694 CI OPINION No. 7553 — September 3, 2021 Appeal from the Superior Court of the State of Alaska, Third Judicial District, Anchorage, Eric A. Aarseth and Adolf V. Zeman, Judges. Appearances: Hollis S. French, Anchorage, Appellant. Thomas A. Ballantine, Senior Assistant Attorney General, Anchorage, and Clyde "Ed" Sniffen, Jr., Attorney General, Juneau, for Appellee. Before: Winfree, Maassen, and Carney, Justices. [Bolger, Chief Justice, and Borghesan, Justice, not participating.] WINFREE, Justice. I. INTRODUCTION An agency denied an individual's request for a hearing regarding a reported natural gas leak and whether the leak constituted "waste" under Alaska law. The agency concluded it had no jurisdiction over the matter because it previously had investigated and had concluded the leak did not constitute "waste." The individual appealed to the superior court, which affirmed the agency's decision. We reverse. II. FACTS AND PROCEEDINGS The Alaska Oil and Gas Conservation Commission is a quasi-judicial agency charged with investigating waste of oil and gas resources.' The parties agree that in early 2017 a gas line operated by Hilcorp Alaska, LLC leaked gas into Cook Inlet. In February 2019 Hollis French petitioned the Commission "for a hearing on a complaint of waste." French alleged: "The waste occurred from a[n] 8 [inch] line carrying fuel gas to Platform A in Cook Inlet, which is operated by Hilcorp. The line leaked gas to the atmosphere for approximately three months in the winter and spring of 2017." French noted that at the hearing he would "be urging the [C]ommission to take action upon [his] complaint." The Commission responded in March 2019, stating that it had "investigated the leak at the time it occurred" and that it had concluded "the leaking gas had been purchased by Hilcorp from a third -party provider ... and was being shipped back to Platform A." The Commission stated it had already concluded that, because the leaking gas had been "metered and severed from the property," the leaking gas could not be waste and the Commission therefore had no `waste jurisdiction over [the] gas." AS 31.05.005(a) (describing Commission as "independent quasi-judicial agency of the state ... composed of three Commissioners appointed by the governor and confirmed by the legislature in joint session"); AS 31.05.030(b) (requiring Commission to "investigate to determine whether ... waste exists or is imminent, or whether ... facts exist which justify or require action by it"); see also AS 31.05.170(15) (defining waste). See AS 31.05.060(a) (noting that "[C]ommission may act upon ... the petition of an interested person" and that "[o]n the filing of a petition concerning a matter within the jurisdiction of the [C]ommission .... the [C]ommission shall promptly fix a date for a hearing[] and shall cause notice of the hearing to be given"). -2- 7553 According to the Commission, "[a]bsent jurisdiction, there [was] no basis for ahearing." French requested reconsideration, which was denied by operation of law.' French appealed to the superior court, which affirmed the Commission's decision. The court applied rational basis review and concluded the Commission's determination, that gas once metered and severed from a property could not be waste, was reasonable. French moved for reconsideration, arguing that the superior court failed to address the agency's conclusion regarding its jurisdiction over the gas leak. The court denied French's motion for reconsideration. At the Commission's request, the superior court awarded the Commission $6,270 in attorney's fees.' French appeals. III. STANDARD OF REVIEW "When the superior court is acting as an intermediate court of appeal in an administrative matter, we independently review the merits of the agency or administrative board's decision."5 "We exercise our independent judgment on [any] issue concerning the scope of an agency's authority [because] it involves statutory interpretation, or analysis of legal relationships, about which courts have specialized knowledge and expertise."' We review an agency's factual findings "to determine ' See AS 31.05.080(a) (providing that failure to grant or refuse application for reconsideration within ten days of filing "is a refusal of [the application] and a final disposition of the application"). ` See Alaska R. App. P. 508(e). 5 Shea v. State, Dep't ofAdmin., Div. of Ret. & Benefits, 267 P.3d 624, 630 (Alaska 2011). 6 Regulatory Comm'n of Alaska v. Matanuska Elec. Assn., 436 P.3d 1015, 1025 (Alaska 2019) (first alteration original) (quoting Far N. Sanitation, Inc. v. Alaska Pub. Utils. Comm'n, 825 P.2d 867, 871 n.6 (Alaska 1992)). -3- 7553 whether they are supported by substantial evidence," meaning "such relevant evidence as a reasonable mind might accept as adequate to support [the agency's] conclusion." IV. DISCUSSION "The [C]ommission may act upon its own motion[] or upon the petition of an interested person. On the filing of a petition concerning a matter within [its] jurisdiction ... , the [C]ommission shall promptly fix a date for a hearing, and shall cause notice of the hearing to be givens' French filed a petition alleging that the Cook h- let gas leak constituted waste. The parties appear to assume that French is an interested person. The only issue thus is whether French's petition contained a matter within the Commission's broad jurisdiction. "The [C]ommission has jurisdiction and authority over all persons and property, public and private, necessary to carry out the purposes and intent of this chapter."' French argues that because the Commission is required to "investigate whether waste exists," the text of the statute gives the Commission jurisdiction over waste determinations.1" French also presents several policy arguments why the jurisdiction statute should be read broadly. The Commission concedes that it "has statewide jurisdiction over waste" but argues that it was required to determine whether the leak was waste before it could exercise jurisdiction because "[a]bsent waste, there is no waste jurisdiction." Shea, 267 P.3d at 630 (quoting Lopez v. Adm'r, Pub. Emps. ' Ret. Sys., 20 P.3d 568, 570 (Alaska 2001)). 8 AS 31.05.060(a). 9 AS 31.05.030(a). 10 See AS 31.05.030(a)-(b). -4- 7553 The Commission's jurisdiction argument puts the cart before the horse. The Commission's mission is investigating and identifying oil and gas waste," and it therefore has jurisdiction over "all persons and property, public and private, necessary to" investigate and identify oil and gas waste." The Commission thus had jurisdiction over the leak at issue. If we accepted the Commission's understanding of jurisdiction, the Commission could always undermine AS 31.05.060(a)'s hearing requirement by deciding the substantive issue behind closed doors and then disclaiming jurisdiction. The Commission argues that it properly denied French's request for a hearing because it already had investigated the leak and made a waste determination. But even assuming the Commission can deny a hearing because it previously investigated and decided a matter, the factual assertion that it has done so must be supported by substantial evidence." The Commission's statements about having investigated whether the leak was waste are wholly unsupported. The Commission's dismissal order contains several factual statements about the alleged investigation and waste determination, but there is no supporting evidence in the administrative record. French's request for a hearing therefore was improperly denied. The Commission has jurisdiction over waste determinations, and substantial evidence does not support its assertion that it investigated and concluded this leak was not waste. 11 AS 31.05.030(b) ("The [C]ommission shall investigate to determine whether or not waste exists or is imminent, or whether or not other facts exist which justify or require action by it.'). 12 See AS 31.05.030(a). 13 See supra note 7 and accompanying text. -5- 7553 V. CONCLUSION The superior court's decision is REVERSED, its attorney's fees award is VACATED, and this matter is REMANDED to the Commission for further proceedings consistent with this opinion. -6- 7553 2 2640 Telequana Drive Anchorage, AK 99517 February 28, 2019 Ms. Megan McPhee c/o AOGCC 333 W. 7h Avenue Anchorage, AK 99501 Dear Megan, This document is a petition for a hearing on a complaint of waste. AS 31.05.060(a). The waste occurred from a 8" line carrying fuel gas to Platform A in Cook Inlet, which is operated by Hilcorp. The line leaked gas to the atmosphere for approximately three months in the winter and spring of 2017, at a rate of approximately 300,000 scf per day. Please open a docket for this petition, and inform me of the date of the hearing. At the hearing, I will be urging the commission to take action upon this complaint. Sincerely yours, Hollis S. French RECEIVED 14AR 0 1 2019 AOGCC 1 2640 Telequana Drive Anchorage, AK 99517 February 28, 2019 Ms. Megan McPhee c/o AOGCC 333 W. 7th Avenue Anchorage, AK 99501 Dear Megan, This document is a petition for a hearing on a complaint of waste. AS 31.05.060(a). The waste occurred from a 8" line carrying fuel gas to Platform A in Cook Inlet, which is operated by Hilcorp. The line leaked gas to the atmosphere for approximately three months in the winter and spring of 2017, at a rate of approximately 300,000 scf per day. Please open a docket for this petition, and inform me of the date of the hearing. At the hearing, I will be urging the commission to take action upon this complaint. Sincerely yours, Hollis S. French R E 01 Ez REV E rt HAR 0 1 2019 GCC