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Home My WebLink AboutO 174Other Order 174 Docket No: OTH-20-003 1. July 2, 2019 Ltr to Operator regarding bonding amount 2. July 25, 2019 Alaskan Crude Request for Reconsideration of Bond Increase 3. ------------ email 4. October 30, 2019 Notice of Hearing, Affidavit of Publication and Mailing 5. January 22, 2020 Alaskan Crude Request Supplemental Reconsideration of Bond Increase 6. January 23, 2020 Transcript, exhibit and sign in sheet 7. February 19, 2020 Alaskan Crude Supplemental filing 8. February 25, 2020 AOGCC informing operator of keeping record open until 5/22/2020 9. April 30, 2020 AOGCC informing operator of keeping record open until September 30, 2020 10. July 29, 2020 Letter from Alaska Crude regarding bond increase ORDERS STATE OF ALASKA ALASKA OIL AND GAS CONSERVATION COMMISSION 333 West 7" Avenue Anchorage, Alaska 99501 Re: Request by Alaskan Crude Corporation ) Docket Number: OTH-20-003 for reduction in the bonding amount ) Other Order 174 required under new regulation 20 AAC ) 25.025. ) Alaskan Crude Corporation Bond Reconsideration Request October 15, 2020 DECISION AND ORDER ON RECONSIDERATION On July 2, 2019, the Alaska Oil and Gas Conservation Commission (AOGCC) sent Alaskan Crude Corporation (ACC) a letter regarding the new bonding requirements in 20 AAC 25.025. This letter advised that under the new regulation ACC's 3 permitted wellheads increased ACC's bonding level to $1,200,000. Because ACC had a $200,000 bond in place, an additional $1,000,000 in bonding was required, payable in two annual installments of $500,000. On July 25, 2019, ACC requested reconsideration. On January 23, 2020, the AOGCC held a hearing on ACC's request for reconsideration. After the hearing, the record was left open until July 31, 2020 in order to permit ACC to provide any additional evidence it wanted considered. FINDINGS: Based upon the evidence presented by ACC, AOGCC finds as follows: ACC is the operator of record for the Mike Pelch 1, the Burglin 33-1, and the Katalla KS - 01 wells. 2. ACC's July 25, 2019, request for reconsideration claimed AOGCC's bonding regulation was an illegal ex post facto law and that the bonding regulation was beyond the scope of the AOGCC's authority under its enabling act. 3. At the January 23, 2020 hearing, ACC added an argument, "that you can't really tell what it (AOGCC's bonding regulation) means." At the conclusion of the hearing, AOGCC left the record open until February 19, 2020 to allow ACC to provide additional information, including its plans for the three wells. 4. In correspondence dated February 19, 2020, ACC added another claim that AOGCC lacked the authority to require the plugging and abandonment of wells prior to termination of an owner's rights in the property upon which the well is located. As to its plans for its wells, ACC asserted it lacked the authority to plug and abandon the Katalla well, that it had been absolved of any responsibility for plugging and abandonment of the Burglin well and that it lacked the authority to plug and abandon the Burglin well, and that the Pelch well had a permit to be re-entered and re -worked so plugging and abandoning the Pelch well would be premature. ACC also claimed it filed for bankruptcy in 1990 and that the bankruptcy may have discharged its bonding obligation. ACC requested the record remain Other Order 174 October 15, 2020 Page 2 of 3 open until June 30, 2020 to allow ACC to look into the bankruptcy issues. Due to the COVID-19 outbreak, the record was ultimately left open until July 31, 2020. 5. On July 29, 2020, ACC again claimed the bonding obligation had been discharged in its 1990 bankruptcy but provided no support for its position. ACC also advised that it was a completely different entity from the entity that went bankrupt in 1990. ACC also demanded that AOGCC provide copies of any bankruptcy documents in AOGCC's file. ACC was advised that to the extent any such documents existed, they were available on AOGCC's website. 6. ACC requests a $1,000,000 reduction of its new AOGCC bonding amount, leaving ACC with the bonding requirement of $200,000. CONCLUSIONS: The AOGCC DENIES ACC's request for reconsideration. 1. AOGCC is authorized to require a bond for the performance of the duty to plug wells and the duty to repair wells causing waste. Every operator is required to have a bond in place to ensure compliance with those duties. Any bankruptcy that occurred in 1990 cannot remove subsequent bonding obligations. 2. ACC is the operator of record for the Katalla KS -01, Burglin 33-1, and Mike Pelch 1 wells. ACC is required to have a bond in place for all three wells. 3. A bond does not confer any rights on an operator. 4. ACC provided no written documentation of any change of operator for any of the three wells. Therefore, ACC remains the Operator of Record for all three wells and is responsible for the plugging and abandonment of the wells. ACC has provided no evidence to support its assertion that it is prohibited from plugging and abandoning any of the wells. Absent written proof either that the landowners have prohibited ACC from entering the properties to plug and abandon the wells or that the landowners have agreed to assume responsibility to plug and abandon the wells, ACC remains responsible to do so. 5. On July 23, 2018, ACC submitted an Application for Sundry Approval to abandon Burglin 33-1. The Sundry was approved by the AOGCC on August 29, 2018. As of the date of this order, Burglin 33-1 has not been plugged and abandoned. In addition to the bond required, the AOGCC reserves the right to pursue enforcement action in connection with the failure to properly plug and abandon Burglin 33-1. Other Order 174 October 15, 2020 Page 3 of 3 NOW THEREFORE IT IS ORDERED THAT: ACC's request for reconsideration is denied. ACC's bonding requirement is $1,200,000 less ACC's existing $200,000 AOGCC bond. As a result, ACC's revised bond requires an additional $1,000,000. DONE at Anchorage, Alaska and dated October 15, 2020. JeremyM. Digitally slgne by Jeremy M. Prlee Price Date: :@O.1o.15 1OD953-0BbP Jeremy M. Price Commissioner, Chair Daniel T. Seamount,Jr.m°�°^•°°®°^ Daniel T. Seamount, Jr. Commissioner AND Jessie L. ggl°'b,lgaaeby,lel. cmm.ingFl Chmielowski Jessie L. Chmielowski Commissioner This order on reconsideration is the FINAL order of the AOGCC. It may be appealed to superior court. Any appeal MUST be filed within 33 days after the date on which the AOGCC mails this order, OR 30 days ifthe AOGCC otherwise distributes this order. 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 does not fall on a weekend or state holiday. 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 Richard Wagner P.O. Box 60868 Fairbanks, AK 99706 Colombie, Jody J (CED) From: James B. Gottstein <james.b.gottstein@gottsteinlaw.com> Sent: Thursday, August 6, 2020 8:07 PM To: Colombie, Jody J (CED) Cc: james.b.gottstein@gottsteinlaw.com Subject: RE: Bonding Categories: Yellow Category Thanks Ms. Colombie. Jim Gottstein (907)274-7686 406 G St Ste 206 Anchorage, AK 99501 http://Psvchriehts.org http://gottsteinlaw.com / http://alaskabldg.com/ From: Colombie, Jody J (CED)[mailto:jody.colombie@alaska.govj Sent: Thursday, August 6, 2020 6:12 PM To: James B. Gottstein Cc: Colombie, Jody J (CED) Subject: Bonding Mr. Gottstein, Law offices of JAMES B. GOTTSTEIN 406 G STREET, SUITE 206 ANCHORAGE, ALASKA 99501 (907)274-7686 1E 00PIER(907)274-9193 Alaska Oil & Gas Conservation Commission July 29, 2020 via e-mail Re: Reconsideration of July 2, 2019, Increased Bonding Requirement: Alaskan Crude Corporation Dear Alaska Oil & Gas Conservation Commission: On July 2, 2019, the Commission issued a letter to Mr. James White of Alaskan Crude Corporation (Alaskan Crude) that under recently amended 20 AAC 25.025, ACC was required to increase its bonding in favor of the Commission from Two Hundred Thousand Dollars ($200,000) by One Million Dollars ($1,000,000) to a total of One Million Two Hundred Thousand Dollars ($1,200.000). On July 25, 2019, Alaskan Crude timely filed a request for reconsideration on two grounds. The first is the amended regulation is unconstitutional as an ex post facto law, and the second is the amended regulation exceeds the Commission's authority. The Commission granged rehearing on or around August 5, 2019, and a hearing was held on January 23, 2020, at the end of which the Commission asked Alaskan Crude to provide its future plans for the Burglin 33-1, Mike Pelch 1, and Katalla KS -1 wells. Alaskan Crude responded by letter dated February 19, 2020, describing the situation for each well and why there was no current obligation by Alaskan Crude to plug and abandon those wells. It was also noted Alaskan Crude was purchased in bankruptcy and normally in such circumstances obligations of the debtor remain in the bankruptcy estate. Another way to look at it is the current Alaskan Crude is a completely different entity than the one that filed bankruptcy. The undersigned noted he was not scheduled to be back in Anchorage to follow-up on this until sometime in May of 2020 and requested until June 30, 2020 to research this issue and provide this information to the Commission. On May 22, 2020, the Commission allowed Mr. White until May 22, 2020, to provide this information and on April 30, 2020, because of the COVID-19 pandemic, the Commission extended this until July 31, 2020. As a result of the COVID-19 pandemic, the undersigned has still not been able to travel to Anchorage to obtain copies of the relevant documents and is unlikely to make it back before April or May of 2021, if then. In discussing this matter with Mr. White, it appears this issue may have been specifically dealt with in the bankruptcy proceeding. The Commission must have the documents pertaining to this in its files. Therefore, as a way to move forward, Mr. White is requesting the Commission scan and forward to me all of the documents in its possession in any way pertaining to the Alaskan Crude bankruptcy and allow him 60 days after delivery of such documents to supplement its request for reconsideration. Any appeal pertaining to the requirement of plugging and abandoning the three wells will necessarily require these documents be included in the record on appeal so it seems the Commission might as well get this done now. These documents could very well influence or even dictate the Commission's decision regarding plugging and abandoning these wells and thus might obviate an appeal. cc: James White INDEXES THE STATE °fALASKA GOVERNOR MICHAEL J. DUNLEAVY April 30, 2020 James B. Gottstein Attorney at Law 406 G street, Suite 206 Anchorage, Alaska 99501 Re: Docket No. OTH-20-003 Extension of Record to Remain Open Dear Mr. Gottstein: 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 This matter is pending on Alaskan Crude Corporation's request to keep record open until May 22, 2020. Asa result of the continuing disruptions from the COVID-19 virus outbreak, the record will remain open until July 31, 2020. Sincerely,` Jeremy M. Price Chair, Commissioner 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 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 does not fall on a weekend or state holiday. TIfl. SIAL I( "ALASKA Gov i1,11ICHAEL 1. PUNLEA': Y February 25, 2020 James B. Gottstein Attorney at Law 406 G street, Suite 206 Anchorage, Alaska 99501 Dear Mr. Gottstein: 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 On February 19, 2020, the Alaska Oil and Gas Conservation Commission (AOGCC) received a request from Alaskan Crude Corporation (ACC) asking that the record for ACC's bond reconsideration hearing be held open to perform additional research. The purpose of this correspondence is to advise ACC that its request is granted. The record will remain open until May 22, 2020. Sincerely, Daniel eamount, Jr. Commissioner ±JeieL Cbmielowski issioner Colombie, Jody J (CED) From: James B. Gottstein <james.b.gottstein@gottsteinlaw.com> Sent: Tuesday, February 25, 2020 9:07 PM To: Colombie, Jody J (CED) Subject: RE: Alaskan Crude Request to Hold Record Open Thanks Ms. Columbie. James B. Gottstein Law Offices of James B. Gottstein 406 G Street, Suite 206 Anchorage, AK 99501 Tel: (907) 274-7686 Fax: (907) 274-9493 e-mail: JameS.B. Gottstein@ GottsteinLaw.Com From: Colombie, Jody J (CED)[mailto:jody.colombie@alaska.gov] Sent: Tuesday, February 25, 2020 10:16 AM To: James B. Gottstein Cc: Colombie, Jody J (CED) Subject: Alaskan Crude Request to Hold Record Open Original Letter to follow US Mail. Jody J. Colombie Special Assistant Alaska Oil and Gas Conservation Commission 333 West 7°i Avenue Anchorage, AK 99501 (907) 793-1221 Direct (90 7) 2 76- 7542 Fax Law offices of JAMES A GOTTSTEIN 406 G STREET, SUITE 206 ANCHORAGE, ALASKA 99501 (907)274-7686 nLECOP@R (907) 274-9493 February 19, 2020 Alaska Oil & Gas Conservation Commission via e-mail 333 West 7th Ave. Anchorage, AK 99501 Re: Reconsideration of July 2, 2019, Increased Bonding Requirement: Alaskan Crude Corporation Dear Alaska Oil & Gas Conservation Commission: At the end of the January 23, 2020 hearing on Alaskan Crude Company's request to reconsider the Commission's imposition of increased bonding under 20 AAC 25.025, as adopted on May 18, 2019 (Reconsideration Request), the Commission asked Alaskan Crude to provide the future plans for the Burglin 33-1, Mike Pelch 1, and Katalla KS -1 wells, hereinafter referred to as the Burglin, Pelch and Katalla wells, respectively. Presumably this question arose because of the Commission's direction to plug and abandon the three wells, stating "regulations require that all wells be properly plugged and abandoned prior to the expiration of the owner's rights in the property upon which the well is located." While 20 AAC 25.105 does provide that someone having the right to drill into and produce oil and gas must plug and abandon wells before expiration of their rights in the property, it does not appear the Commission had the authority to promulgate such a regulation. Individual Wells Each of the three wells have different circumstances. Burglin Well. Under the relevant oil and gas lease with the Department of Natural Resources (DNR), ADL 318613, that officially terminated in 1990, the Burglin Well became the property of DNR and Alaskan Crude was "absolved of all further responsibility [for] eventual abandonment and rehabilitation." The well is a valuable DNR asset and it is believed was a significant factor in DNR's ability to lease the property at least twice since ADL 318613 expired. Alaskan Crude does not believe it has authority to enter on the property to plug the well, in any event. To my knowledge, DNR has not requested that their suspended well be plugged and abandoned, or specified how DNR plans to pay for the plugging and abandonment of their well that is in suspended status. Katalla Well. While the Katalla Well was not drilled under a DNR lease, that well is also the property of the landowner and Alaskan Crude has no authority to enter on the property to plug it. Pelch Well. The Pelch Well is also on private property. It has a permit and permission to be re-entered and re -worked so plugging and abandoning that well is premature. Potential Effect of the Alaskan Crude Bankruntcv There is also the effect of the Alaskan Crude bankruptcy. In 1990 Alaskan Crude filed for bankruptcy protection in the United States Bankruptcy Court for the District of Alaska, Petition # 90-00567. It is my understanding that all three wells were drilled prior to this. Re: Reconsideration February 19, 2020 Page 2 Normally, once a bankruptcy petition is filed all of the then obligations of the debtor (Alaskan Crude here) remain in the bankruptcy estate. In such case, legally, Alaskan Crude Corporation as currently constituted is a completely different entity than the Alaskan Crude Corporation that drilled the wells and had the plugging and abandoning requirement. I understand there was litigation over the status of the $200,000 bond and a decision that it would remain in place to secure the obligation to plug and abandon the three wells. I am out of state until some time in May and would need to examine the bankruptcy file to determine whether there was something that changed the normal rule that pre-petition obligations remained in the bankruptcy estate. Therefore, I am requesting the record be held open until June 30, 2020, to allow me to research and provide this information to the Commission. The foregoing constitutes additional reasons why the July 2, 2019, order or decision requiring Alaskan Crude to pay an additional $1 million in bonding is erroneous. Yours truly, J e ®. Gottstein cc: James White AOGCC 1/23@020 ITMO: REQIIESTFORRECONSIDERATION ALASKA OIL AND GAS CONSERVATION COMMISSION In the Matter of Reconsideration Requirements by Corporation. the Request for ) of Bonding ) Alaskan Crude ) PUBLIC HEARING Anchorage, Alaska January 23, 2020 1:00 P.M. BEFORE: Jeremy Price, Chairman Jessie Chmielowski, Commissioner Daniel T. Seamount, Commissioner Computer Matrix, UC Phane'. 97-243-0 8 135 Chnstensen Dr., Ste, 2., Anch. AK 99501 Fez: 909-243-1473 Email: while rGOSci.nq AOGCC 1123=0 ITMO: REQUESTFORRECONSIDERATIONOFBONDMGREQUIREMENTS Page 2 1 TABLE OF CONTENTS 2 Opening remarks by Chairman Price 03 3 Testimony by Mr. Gottstein 04 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Computer Merdx, LLC Phone907-2430 8 135 Chn,,mma n Dr., Sle. 2., Aneh. A 99501 Fax 907-243-1473 Email'. sahile©6ei.nel occC 1/23/2020 1T 10: REQUESTFORRECONSIDERATIONOFRONDINGREQUIMWNTS Page 3 1 P R O C E E D I N G S 2 (On record - 1:00 p.m.) 3 CHAIRMAN PRICE: Good afternoon. I'll call 4 this hearing to order. This is a public hearing to 5 consider Alaskan Crude Corporation's request for 6 reconsideration of their new bonding amounts. This 7 hearing is being held on the afternoon of January 23, 8 2020 at 1:00 p.m. The location is the Alaska Oil and 9 Gas Conservation Commission offices at 333 West Seventh 10 Avenue, Anchorage, Alaska. Before we begin I'll 11 introduce the Commissioners. To my left is 12 Commissioner Dan Seamount, to my right is Commissioner 13 Jessie Chmielowski and I am Jeremy Price, Commissioner 14 and Chair. 15 If any persons here need special accommodations 16 to participate in this proceeding please see Samantha 17 Carlisle and she'll do her best to accommodate you. 18 So we have in the room to testify today Mr. 19 Gottstein. I -- that's all I have on my list. Anyone 20 else wanting to testify please let us know. 21 This hearing is being recorded by Computer 22 Matrix today. Upon completion and preparation of the 23 transcript persons desiring a copy will be able to 24 obtain it by contacting Computer Matrix. 25 Alaskan Crude Corporation by letter dated July Computer NUUix, LLC Phone: 907-243-0668 135 Christensen Dc, Ste. 2., Anch. AR 99501 Fix: 907-243-1473 Email: sahile,@gci net AOGCC M/2020 "0: MQUESTFORRECONSIDE TIONOFBONDMGMQUMR NTS Page 4 1 1 25th, 2019 requested the Alaska Oil and Gas 2 Conservation Commission reconsider bonding amounts that 3 were established when 20 AAC 25.025 was adopted on May 4 18th, 2019. Alaskan Crude currently has a bond for 5 $200,000. The new bond amount is based on Alaskan 6 Crude having three wells, Burglin 33-1, Mike Pelch 1 7 and Katalla KS -1. Therefore the new bonding amount is 8 $400,000 each with a total of 1.2 million. 9 This hearing is being held in accordance with 10 Alaska Statute 44.62 and 20 AAC 25.540 of the Alaska 11 Administrative Code. Again this hearing will be 12 recorded. 13 Mr. Gottstein, can I swear you in right now. 14 MR. GOTTSTEIN: Yes. 15 CHAIRMAN PRICE: Can you raise your hand. 16 (Oath administered) 17 MR. GOTTSTEIN: Yes. 18 CHAIRMAN PRICE: Thank you, Mr. Gottstein. 19 JIM GOTTSTEIN 20 called as a witness on behalf of Alaskan Crude 21 Corporation, testified as follows on: 22 DIRECT EXAMINATION 23 CHAIRMAN PRICE: Let's establish your 24 credentials if we could. Are you going to be 25 considering yourself as an expert witness today in..... Computer Metrix, LLC Phone: 907-243-0 135 Chrir[ n Dr., Ste, 2, Mch. A 99501 F. 907-243-1473 Emeil: sM le©gdnel AOGCC 1/232020 ITMO: REQUEST FOR RECONSIDERATION OF RONDMG REQUIREMENTS Page 5 1 MR. GOTTSTEIN: I'm Mr. White -- Alaskan 2 Crude's lawyer. 3 CHAIRMAN PRICE: Oh, microphone, please. 4 MR. GOTTSTEIN: I'm Alaska -- Jim White -- 5 Alaskan Crude's lawyer. 6 CHAIRMAN PRICE: Okay. So you're representing 7 Alaskan Crude today? 8 MR. GOTTSTEIN: Right. 9 CHAIRMAN PRICE: And I think you're an 10 attorney..... 11 MR. GOTTSTEIN: Yes. 12 CHAIRMAN PRICE: .....by trade. Okay. So why 13 don't you run through your education, background, 14 credentials and then it sounds like we'll identify you 15 as an expert witness in the field of law. But if we 16 get into this discussion of anything technical we'll 17 postpone that discussion for another time. Does that 18 sound fair? 19 MR. GOTTSTEIN: Yeah, I would -- sure. I mean, 20 I grew up here, I graduated from West High in 1971, 21 graduated from the University of Oregon in 1974 in 22 finance with honors, business law -- I mean, business 23 administration and finance. I went to -- graduated 24 from Harvard Law School in 1978. I've been in private 25 practice basically since then. I've represented a Computer Metrix, LLC Phone: 909-243-0668 135 Chrislensen Dr., Ste. 2., Anch. A 99501 Fix: 907-243-1493 Email: sahil.&&.0 AOGCC 1=020 ITMOREQUESTFORRECONSIDERATIONOFBONDMGREQUIREMENTS Page 6 1 number of -- well, I represented the plaintiffs in the 2 Alaska Mental Health Trust Lands litigation, I was 3 primarily the land guy. So I've done a fair amount of 4 representation, legal representation. 5 Do you need more than that? 6 CHAIRMAN PRICE: No, that's good. I -- any 7 issue from Commissioners recognizing Mr. Gottstein as 8 an expert in the field of law? 9 COMMISSIONER CHMIELOWSKI: No. 10 COMMISSIONER SEAMOUNT: I have none. 11 CHAIRMAN PRICE: Okay. And, sorry, I missed 12 that last part. Your experience as an attorney in the 13 oil and gas industry has consisted of? 14 MR. GOTTSTEIN: Well, I've represented a few 15 oil and gas companies..... 16 CHAIRMAN PRICE: Okay. 17 MR. GOTTSTEIN: .....with Mr. White over the 18 years. 19 CHAIRMAN PRICE: Okay. 20 MR. GOTTSTEIN: (Indiscernible) actually. 21 CHAIRMAN PRICE: Okay. 22 (Off record comments - GCI conference line) 23 MR. GOTTSTEIN: So in the Mental Health Trust 24 Lands litigation the territory of Alaska was granted a 25 million acres of land to be used first for the Corepumr Mauo, LLC Phone 907-U34668 135 Chri¢enun Do, Ste 2., Anch. A 99501 F. 907-293-1473 6.0 sahile©Sci.na AOGCC V23@020 17MO: REQUESTFORRECONSIDERATIONOFBONDINGREQUIREMENTS Page 7 1 necessary expenses of the Alaska Mental Health Program. 2 . In 1978 the legislature passed a law basically 3 redesignating it as its own land. So we sued saying 4 that wasn't legal and they said, well -- anyway so that 5 was declared illegal and like I said before I was kind 6 of the main land guy. And there was a lot of oil and 7 gas interests in that. I mean, and so I got a certain 8 amount of experience in oil and gas through that. And 9 then as I've mentioned I've represented the -- two that 10 come to mind is Jim White and his various entities and 11 Dan Donkle and his various entities. 12 CHAIRMAN PRICE: Okay. Thank you for that. I 13 appreciate it. 14 One final note, notice of this hearing was 15 published in the Anchorage Daily News on October 30th, 16 2019. It was also posted on the state of Alaska Online 17 Notices website as well as their distribution list and 18 on our website. 19 So, Mr. -- so actually, sorry. Commissioners, 20 any thoughts, comments before we get started? 21 COMMISSIONER CHMIELOWSKI: No, I'm ready. 22 COMMISSIONER SEAMOUNT: I'm ready. 23 CHAIRMAN PRICE: Mr. Gottstein, do you have 24 anything -- we did receive your letter yesterday that 25 will obviously be included in the record. Do you have Compuw Mabiz LLC Phone907-2434665 135 Christensen Dr., 54, 2., Mch. A 99501 Fax 907-243-1473 Email: while d net 123/2020 ITMO: REQU STFORRECONSIOERATIONOFBONDPIOREQUIREMBNTS 1 a presentation or any evidence you'd like to walk 2 through today? 3 MR. GOTTSTEIN: Yes, I would, if you don't 4 mind. That's why I came. 5 So there really are two simple -- two simple 6 points I put in and kind of another one that kind of 7 jumps out at you or at me anyway. One is that the 8 regulation as it applies to Alaskan Crude's existing 9 wells is an unconstitutional ex post facto law. And 10 the second one is that the regulations go beyond the 11 authority of the Commission and are there -- and is 12 therefore invalid. 13 So with respect to the ex post facto issue, 14 it's simply not constitutional to increase the bonding 15 security requirements for existing permit holders. In 16 Underwood versus State, an Alaska Supreme Court 17 decision in 1994, the Alaska Supreme Court defined an 18 unconstitutional ex post facto enactment as quote, a 19 law which takes away or impairs vested rights acquired 20 under existing laws or creates new obligations, imposes 21 a new duty or attaches a new disability in respect to 22 transactions or considerations already passed. 23 And so these wells were permitted, he got -- 24 you know, he put up the required bond at the time and 25 the Commission can't simply constitutionally go back Compute, Matrix, LLC Phone907-243-0668 135 Christensen Dr, Ste. 2., And AK 99501 F. 907-243-1473 Em4'. sahilcQi gci nn AOGCC 1Mn020 ITMO: 11EQUESTFOR RECONSIDERATION OF BONDMG REQUIREMENIS 1 and increase those requirements. It's taking away 2 vested right, it's increasing -- creates new obligation 3 and it's an unconstitutional ex post facto law. 4 So that means the increase in bonding for the 5 three wells you mentioned, the Burglin, Pelch and 6 Katalla wells, the increase in the bonding requirements 7 on those wells are invalid because it's 8 unconstitutionally increasing the amount of bonding on 9 those wells. 10 Okay. So even -- but even if it's not an ex 11 post facto law which I think it is, but there's another 12 grounds basically for the regulation not being valid. 13 And that is that a regulation that exceeds the 14 authority of the Commission is invalid. And this is a 15 longstanding principle that the Alaska Supreme Court 16 has enunciated a number of times over a long period of 17 time. 18 So in 1971 in Kelly versus Amarillo the court 19 ruled that reviews regulations -- regulation to ensure 20 the agency has not exceeded the power delegated by the 21 legislature. In 1985 in the Madison case it ruled that 22 the regulation was invalid since it was inconsistent 23 with the statute. In Powers -- and these are all cited 24 in my letter, but I just want to go through it, in 1988 25 the Supreme Court ruled regulations made by an agency Computer Minix, LLC Phone: 90"/-243-0668 135 Christensen Dr, Ste. 2., Anch. A 99501 Fax: 90]-243-14]3 Email sehileQSci.nN AOGCC 1/23/2020 ITMO: REQUESTFORRECONSIDERATIONOFBONDINGREQUIUE WS Page 10 1 which exceed its statutory authority are invalid. In 2 1996 in Muller versus BP the court ruled quote, to the 3 extent the agency promulgating a regulation which 4 differs substantively from the clear language of the 5 statute, it would be invalid, end quote. And then most 6 recently as last year in State versus Planned 7 Parenthood, the Alaska Supreme Court held quote, to the 8 extent that the regulation, dot, dot, dot, exceeds the 9 agency's statutory authority it is invalid. Okay. So 10 that's the basic principle. 11 Now AS 31.05.030 allows the Commission to 12 require and regulate a number of things. I would say a 13 pretty large number of things are allowed -- the 14 Commissioners are allowed to regulate and require. But 15 it only allows the Commission to require a bond for 16 plugging and abandoning wells and repairing wells 17 causing waste. 18 So more specifically AS 31.05.030(d) states, 19 the Commission may require the furnishing of a 20 reasonable bond with sufficient surety conditions for 21 the performance of the duty to plug each dry or 22 abandoned well or the repair of wells causing waste. 23 So the only things that the statute allows the 24 Commission to require a bond for are to plug and 25 abandon wells or repair wells causing waste. Computm Matrix, LLC Ph.. : 907-243-0668 135 Chdalmsm a., Ste. 2., Anch. A 99501 Fax 907-243-1473 Email: sahile@gd.net AOcCC 1/232020 ITMO: REQUESTFORRECONSIDERATIONOFRONDMGREQUIREMENTS Page 11 1 So the new regulations says the new bond amount 2 is to provide quote, security to ensure that each well 3 is drilled, operated, maintained, repaired and 4 abandoned and each location is cleared with accordance 5 -- in accordance with this chapter. So that's -- the 6 only thing in the statute that is in the new regulation 7 that's allowed in the -- authorized under the statute 8 that's in the new regulation is abandoned. So all 9 those other things exceed the authority of the 10 Commission. 11 Now there's another mechanism for enforcement 12 of these other requirements. Under AS 31.05.150 the 13 Commission is allowed to fine companies or whatever, 14 operators, up to $10,000 a day for violations of other 15 requirements. So making the bond as security for these 16 other obligations is just simply beyond the authority 17 of the Commission. I might point out too that the 18 courts do not really defer to the Commission's 19 interpretation of its -- of this issue and that was in 20 the Madison case at page 173, 696 P.2d 173. 21 Now as I was going through preparing for this 22 oral argument, this is kind of a new issue, it became 23 apparent to me that another problem with the regulation 24 is you can't really tell what it means. Okay. Under 25 the regulation the Commission can seize the bond money Computer Mania, I Phone: %7-243-0668 135 Ch&tmsm Dc, Ste, 2., Anch. A 99501 Fu: 97-241-1473 Email: sahile@gci.net AOGCC IM/2020 FFMO: REQUESTFORRECONSIDERATIONOFBONDINGREQUIMWWS Page 12 1 if the well is not drilled in accordance with 20 AAC 2 25. What does this even mean. Does any deviation 3 trigger a forfeiture of the bond, any deviation. I 4 mean, that's what the regulation says. So can the bond 5 be seized, the two -- you know, the -- whatever, the 6 400,000 if 20 AAC 25.040's requirement that quote, 7 every well must be identified by a sign posted in a 8 conspicuous place is violated. That's what the 9 regulations says. It seems pretty extreme. 10 So the same question arises well, if the well 11 is not operated in accordance with 20 AAC what does 12 that mean. Does any deviation trigger the forfeiture. 13 Maintained, repaired or cleared in accordance with 20 14 AAC 25. 15 So now, you know, the regulation does say that 16 it's secured for performance of abandon -- you know, of 17 the well being abandoned. So that is within 18 31.05.030(d), but it's -- you know, it's the only one 19 in there in the current -- I think the current bonding 20 -- the previous bonding regulation really covers that. 21 Now 20 AAC 25 has almost 47,000 words in it. 22 That's about 200 double spaced pages. So are all those 23 requirements, a violation of anything in there trigger 24 the bond, forfeiture of the bond. I mean, that doesn't 25 really seem possible. Compumr Mama, LLC Phone: 907-243f 8 135 Christensen Dr., Ste. 2., Anch, A 99501 F. 90]-243-14]3 Email whiie@gci.net AOGCC 1232020 RMO: REQUESTFORRECONSIDERATIONOFRONDM(;R QUIREMENTS Page 13 1 So it is impossible to tell really what the 2 regulation means, what triggers the bond being 3 forfeited. You can't tell. So that -- I think that 4 also makes it invalid. I mean, enforcement of this 5 regulation, you know, because of these problems that 6 I've raised with the interpretation would just be 7 inherently arbitrary. 8 So that -- that's it. 9 CHAIRMAN PRICE: Is that the conclusion of your 10 arguments? 11 MR. GOTTSTEIN: Yes. 12 CHAIRMAN PRICE: I have a question for you. 13 You frequently cited in your testimony today subsection 14 (d), the Commission may require. I'm curious what you 15 think what subsection (c) means which says quote, the 16 Commission shall adopt regulations and orders and take 17 other appropriate action to carry out the purposes of 18 this chapter. What do you think that section means, 19 subsection? 20 MR. GOTTSTEIN: Well, it -- the Commission can 21 adopt regulations to implement the authority that's 22 granted to it, but that specifically -- but for 23 bonding, I mean, there's a lot of things that the 24 authority is granted authority over and can promulgate 25 regulations, but not -- but the statute specifically Computer Matrix, LLC Phone: 901-2434668 135 Chrirtensen Dr., Sm, 2., And. A 99501 Fax: 907-243-1413 Email: sehlle(r gd no AOGCC Ik3/2020 ITMO: MQUESTFORRECONSIDERATIONOFBONDINGMQUIUE NTS Page 14 1 limits the bonding requirements to plugging and 2 abandoning and wells causing waste, repair of wells 3 causing waste. 4 CHAIRMAN PRICE: Any questions from 5 Commissioners? 6 COMMISSIONER CHMIELOWSKI: Mr. Gottstein, do 7 you have any knowledge of Alaskan Crude Corporation's 8 three wells? 9 MR. GOTTSTEIN: Some. 10 COMMISSIONER CHMIELOWSKI: Okay. I had a 11 question about one of the wells which is Burglin 33-1. 12 MR. GOTTSTEIN: Is that the one on the North 13 Slope? 14 COMMISSIONER CHMIELOWSKI: Correct. 15 MR. GOTTSTEIN: Uh-huh. 16 COMMISSIONER CHMIELOWSKI: I believe that the 17 state lease associated with that well was terminated in 18 2018, then the AOGCC sent a letter to Alaskan Crude 19 Corporation requiring that well be plugged and 20 abandoned. And I believe Alaskan Crude submitted a 21 sundry to do that work, but it's expired. So I was 22 curious to know what's the -- what are the plans for 23 that well? 24 MR. GOTTSTEIN: Can I get back to you on that? 25 I mean, I'd hate to say anything that ends up not being C.,ter Aa ix, LLC Phone: %7-143-0668 135 Christensen Dc, Ste, 2., An6. AR 99501 Fax: 907-243-1413 Email: sehileLJyci.nn AOGCC 1232020 ITMO: REQUESTFORRECONSIDERATIONOFBONDINGREQUIB WNTS Page 15 1 accurate, but I can certainly get back with you on 2 that. 3 COMMISSIONER CHMIELOWSKI: Okay. How much time 4 would you need to get that information? 5 MR. GOTTSTEIN: I'm heading south Saturday so 6 I'd probably get it to you tomorrow. 7 COMMISSIONER CHMIELOWSKI: Okay. 8 MR. GOTTSTEIN: Assuming I can talk to Mr. 9 White. 10 COMMISSIONER CHMIELOWSKI: Sure. 11 MR. GOTTSTEIN: I think I can. 12 COMMISSIONER CHMIELOWSKI: We can give you five 13 working days, would that be good? 14 MR. GOTTSTEIN: Sure. 15 COMMISSIONER CHMIELOWSKI: Okay. 16 MR. GOTTSTEIN: I can email it, I assume? 17 COMMISSIONER CHMIELOWSKI: Yes. 18 MR. GOTTSTEIN: Yeah. 19 CHAIRMAN PRICE: Any other evidence or 20 arguments you'd like to present today? 21 MR. GOTTSTEIN: No. I'd be happy to answer any 22 questions -- any other questions. 23 COMMISSIONER SEAMOUNT: I have some questions, 24 but I suggest we take a 10 minute recess. 25 CHAIRMAN PRICE: Okay. We'll take a..... Computer Matrix, LLC Phone 901-243-0668 135 Christensen Dc, Ste. 2., Aneh, A 99501 F. 907-243-1493 EmaO'. aahileQSd.net AOGCC 1232020 "0: REQOESTFORRECONSIDERAUONOFBONDINGREQO MENTS Page 16 1 MR. GOTTSTEIN: Do you want me to stay here? 2 CHAIRMAN PRICE: That would be great. Yeah, if 3 you would. 4 MR. GOTTSTEIN: Okay. 5 CHAIRMAN PRICE: We'll take a 10 minutes 6 recess. We'll come back at 1:30. 7 (Off record - 1:20 p.m.) 8 (On record - 1:40 p.m.) 9 CHAIRMAN PRICE: Okay. We'd like to reconvene 10 the hearing. The time is 1:40. 11 We have a few follow-up questions for you, Mr. 12 Gottstein. 13 COMMISSIONER CHMIELOWSKI: Mr. Gottstein, could 14 either you or Alaskan Crude please provide the future 15 plans for all three wells including the schedule for 16 work planned for those wells. It'll be including the, 17 you know, P&A of Burglin 33-1. 18 MR. GOTTSTEIN: Yeah, I'll get with Mr. White 19 on that. 20 COMMISSIONER CHMIELOWSKI: And the transcript 21 of this meeting won't be available for two weeks so we 22 thought we would give three weeks -- keep the record 23 open for three weeks until close of business on 24 February 13th just so that you have time and your 25 client to review the transcript if needed. Would that Computer Matrix,1.LC PhoneW7-243-0668 135 Chriatensen Dr., Ste, 2., Anch, A 90501 Fax: 907-243-1473 Email: awhile@g&nel AOGCC 1 work for you? 1/23/2020 TFMO: REQUESTFORRECONSIDERATIONOFBONDMGREQUIREMENTS Page 17 2 MR. GOTTSTEIN: Can we make it four because 3 this is more than -- yeah, the..... 4 COMMISSIONER CHMIELOWSKI: Sure. So four weeks 5 so February 20th? 6 MR. GOTTSTEIN: Yeah. February what, 20th? 7 COMMISSIONER CHMIELOWSKI: 20th. We'll keep 8 the record open until then. 9 CHAIRMAN PRICE: Okay. Did anyone else in the 10 room want to testify or on the phone? 11 (No comments) 12 CHAIRMAN PRICE: Any other questions from 13 Commissioners? 14 COMMISSIONER SEAMOUNT: I have none. 15 COMMISSIONER CHMIELOWSKI: No. Thank you. 16 CHAIRMAN PRICE: At this time we will adjourn. 17 (Adjourned - 1:42 p.m.) 18 (END OF PROCEEDINGS) 19 20 21 22 23 24 25 Comp ier Marne, LLC Phone: 907.243A 69 135 Christen neer Dr., Ste. 2, Anch, AR 99501 F. 907-243-1473 Email: sahileQSci rid AOOCC 1/232020 ITMO: Page 18 1 1 TRANSCRIBER'S CERTIFICATE 2 I, Salena A. Hile, hereby certify that the 3 foregoing pages numbered 02 through 18 are a true, 4 accurate, and complete transcript of proceedings IN RE: 5 Bonding Requirements by Alaskan Crude Corporation, 6 transcribed under my direction from a copy of an 7 electronic sound recording to the best of our knowledge 8 and ability. 9 10 11 DATT? SALFNA A RILE, (Transrr _) 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Computer Mao x, LLC Phone: 907-243-0 135 ChdRensen Dc, Ste.2., Anch, AK 99501 Fes 90]-243-14]3 Emaif. sahileQSciw STATE OF ALASKA ALASKA OIL AND GAS CONSERVATION COMMISSION ALASKAN CRUDE CORPORATION RECONSIDERATION OF BONDING AMOUNT JANUARY 23, 2020 at 1:00 PM NAME AFFILIATION Testifv (yes or no) Chr i s G.la4ct (,t a4-QDG CC- A/o Law offices of JAMES A GOTTSTEIN 406 G STREET, SUITE 206 ANCHORAGE, ALASKA 99501 (907)274-7686 R EC r.--I� TELECOPIER (907)274-9493 � Lc Lr) January 22, 2020 JAN 2 2 2020 Alaska Oil & Gas Conservation Commission 333 West 7th Ave. A®GCC Anchorage, AK 99501 Re: Reconsideration of July 2, 2019, Increased Bonding Requirement: Alaskan Crude Corporation Dear Alaska Oil & Gas Conservation Commission: In my July 28th letter I noted that due to a mix-up with Alaskan Crude's mailing address I only had a few hours to put together the request for reconsideration. The grounds for the reconsideration request are pretty simple and straight forward. First, the ex post facto application to existing permit holders is illegal under Article 1 § 15 of the Alaska Constitution. Second, the new regulation goes beyond the scope of the authorizing statute and is therefore invalid. I cited controlling authority for the first ground, the illegality of the regulation because it is an ex post facto enactment. However, the time constraints did not allow me to cite controlling authority for the second ground that the regulation exceeds the Commission's authority. I do so now. The Alaska Supreme Court has long and repeatedly held that a regulation which exceeds its statutory authorization is void. State v. Planned Parenthood of the Great Northwest, 436 P.3d 984, n. 90 (Alaska 2019) ("to the extent that the regulation ... exceeds the agency's statutory authority, it is invalid"); Muller v. BP Exploration (Alaska) Inc., 923 P.2d 783, n. 9 (Alaska 1996) ("To the extent the agency were promulgating a regulation which differs substantively from the clear language of the statute, it would be invalid."); Powers v. State, Public Employees' Retirement Bd., 757 P.2d 65, 68 (Alaska 1988) ("regulations made by an agency which exceed its statutory authority are invalid"); Madison v. Alaska Dept. of Fish and Game, 696 P.2d 168, 170 (Alaska 1985) (regulation invalid since it is inconsistent with statute); and Kelly v. Zamarello, 486 P.2d 906, 911 (1971) (Court reviews regulation to insure agency has not exceeded the power delegated by the legislature.) The Legisature only authorized the Commission to require a bond to secure the "the duty to plug each dry or abandoned well or the repair of wells causing waste." The new regulation goes far beyond the Commission's authority when it set the bond amount as "security to ensure that each well is drilled, operated, maintained, repaired, and abandoned and each location is cleared in accordance with this chapter." This clearly exceeds the Commission's authority and makes the regulation invalid. cc: James White STATE OF ALASKA ADVERTISING ORDER NOTICE TO PUBLISHER SUBMIT INVOICE SNOWING ADVERTISING ORDER NO, CERTIFIED AFFIDAVIT OF PUBLICATION WITH ATTACHED COPY OF ADVERTISMEW. ADVERTISING ORDER NUMBER �f p AO-20-000 FROM: AGENCY CONTACT: Jody Colombie/Samantha Carlisle Alaska Oil and Gas Conservation Commission DATE OF A.O.AGENCY PHONE: 333 West 7th Avenue 10/29/2019 (907 279-1433 Anchorage, Alaska 99501 DATES ADVERTISEMENT REQUIRED: COMPANY CONTACT NAME: PHONE NUMBER: ASAP FAX NUMBER: 907 276-7542 TO PUBLISHER: SPECIAL INSTRUCTIONS: Anchorage Daily News, LLC PO Box 140147 Anchorage, Alaska 99514-0174 TYPE OF ADVERTISEMENT: 1✓ LEGAL I— DISPLAY CLASSIFIED OTHER (Specify below) DESCRIPTION PRICE Alaskan Crude Corporation Initials of who prepared AO: Alaska Non -Taxable 92-600185 silsiHlr ii�rvtj�cesilgwiaiti:aovelir5juyc LICATION.N RYIFIE6iAFIFimAVfr.OF:;: PU84iCA7'IONWIT.H AYlACNEDCgF1';bP.' AbV6RTISMENT TO; AOGCC 333 West 7th Avenue Aneboraize, Alaska 99501 1 Pae I of 1 Total of All Pages S REF Type I Number Amount Date Comments I PvN IVCO21795 2 AD AO-20-008 3 4 FIN AMOUNT SY Act. Template PGM LGR Object FY I DIST LIQ I 20 AOGCC 3046 20 2 3 4 P rchastug A rt N I : Purchasing Authority's Signature Telephone Number l.A.O.#anj eiving agency n must appear wall invoices and dccumems relating to this purchase. 2. The state istered for taxfree transactions under Chapter 32, IRS code. Registration number 92-73-0006 K. Items are for the exclusive use of the state and not for resale. limstoa F'Iscal/OTigilial A Copies Pablshcr (taxed):; Plvlscaa Flasat, Reegivia Form: 02-901 Revised: 10/29/2019 Notice of Public Hearing STATE OF ALASKA ALASKA OIL AND GAS CONSERVATION COMMISSION Re: Alaskan Crude Corporation Request for reconsideration of bonding requirements 20 AAC 25.025 Alaskan Crude Corporation requested the Alaska Oil and Gas Conservation Commission (AOGCC) reconsider bonding amounts that were established when 20 AAC 25.025 was adopted May 18, 2019. The AOGCC has scheduled a public hearing on this application for January 23, 2020, at 1pm. at 333 West 7" Avenue, Anchorage, Alaska 99501 In addition, written comments regarding this application may be submitted to the AOGCC, at 333 West 7U' Avenue, Anchorage, Alaska 99501. Comments must be received no later than the conclusion of the January 23, 2020 hearing. If, because of a disability, special accommodations may be needed to comment or attend the hearing, contact the AOGCC's Special Assistant, Jody Colombie, at (907) 793-1221, no later than January 20, 2020. ,. CGL----- J4e L. Chmielowski Commissioner 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 Colombie Jody J (CED) From: Colombie, Jody J (CED) Sent: Tuesday, October 29, 2019 8:18 AM To: James B. Gottstein Cc: Colombie, Jody J (CED) Subject: Public Notice Attachments: Alaskan Crude Bonding Public Hearing Notice.pdf Jody J Colombie Special Assistant Alaska Oil and Gas Conservation Commission 333 West 7t° Avenue Anchorage, AK 99501 (907) 793-1221 Direct (907) 276-7542 Fax Colombie, Jody J (CED) aNaaaa To: ANC Legal Ads Subject: RE: Public Notice Approved From: ANC Legal Ads <legalads@adn.com> Sent: Tuesday, October 29, 2019 2:18 PM To: Colombie, Jody J (CED) <jody.colombie@alaska.gov> Subject: Re: Public Notice Below is the confo and proof. Please let me know before 3pm if this is approved to run. Order Number: VV0012194 Notice of Public Rearing Order Status: Submitted Classification Legals & Public Notices STATE OF ALASKA ALASKA OIL AND GAS Package: LegaIs ADN CONSERVATION COMMISSION Final Cost 11954 Re: Alaskan Crude Corporabon Referral Code: AO -20-008 Request for reconsideration of bonding requirements Payment Type: 20 AAC 25.025 User ID: W0010445 Alaskan Crude Corporation requested the Alaska Oil and Gas Conservation commission owere ACCOUNT INFORMATION amounts that establishled when 20 AAC 25.025 waS adopted May 18, 2019. ST OF AK OIL AND GAS CONSERVATION COMMISSION The AOGCC has scheduled a 333 W. 7TH AVE STE 100 public hearing on this application ANCHORAGE. AK 99501 for January 23, 2020, at tpm. at otAvenue, Anchorage, 907-279-1433 Alaska 9995 IegaladsGradn.com In addhion, written comments ST OF AK/AK OIL AND GAS CONSERVATION COMMISSION regarding [Ns application may be submitted W the AOGCO, at 333 West 7th Avenue, Anchorage, Alaska 99501. COMITE tS must TRANSACTION REPORT be received no later than the conclusion of the January 23, 2020 hearing. Date 2:24 PM - Tue. Oct 29, 2019 d, because of a disability, special Amount: 124.54 accommodations may be needed Date 2:25 PM -Tue. Oct 29, 2019 to comment or attend the hearing, contact the AOGCC'S Jody C01017 Anhount (5.001 Speda ASSIStam, , at (907) 7931221, no later than January 20, 2020, BY: X51 Jessie L. Chmlelowskl SCHEDULE FOR AD NUMBER W00121940 commissioner Published: October 30, 2019 Wed Oct 30, 2019 Anchorage Daily News vre hew Your cd LegaIs Ipeg small pdf previev: Lisi Misa Legal Advertising legalads( adn.COm 1907-257-4286 Anchorage Daily News I adn.com 300 W. 31st Ave. Anchorage, AK 99503 ©00 1 " As of :tAly 8th, we will be charging for affidavits. The standard affidavit charge is $5. This charge will automatically be included in all costiquotes unless requested otherwise. Please keep all correspondence for legal advertising addressed to leaalads(a)adn.com, to assure best service and tracking . On Tue, Oct 29, 2019 at 1:55 PM Colombie, Jody J (CED) <iody.colombie@alaska.aov> wrote: Thank you. Second One. Jody J Colombie Special Assistant Alaska Oil and Gas Conservation Commission 333 West 7h Avenue Anchorage, AK 99501 (907) 793-1221 Direct (907) 2 76- 7542 Fax Colombie, Jody J (CED) r - From: Colombie, Jody J (CED) Sent: Monday, August 5, 2019 2:20 PM To: James B. Gottstein Cc: Colombie, Jody 1 (CED) Subject: RE: Request for Reconsideration Mr. Gottstein: Please wait until after the hearing and a final decision has been made by the Commission. will take note of your unavailability. Jody Colombie From: James B. Gottstein <james.b.gottstein@gottsteinlaw.com> Sent: Monday, August 5, 2019 2:02 PM To: Colombie, Jody J (CED) <jody.colombie@alaska.gov> Cc: james.b.gottstein@gottsteinlaw.com; Jim White <jim5thgn@gmail.com> Subject: RE: Request for Reconsideration Thank you Ms. Colombie. I assume the installment scheduled to be due August 16, 2019, is put on hold pending further action by the Commission. For the Commission's information, I am scheduled to be out of town from August 14th until August 26th, and September 17th until September 23rd. James B. Gottstein Law Offices of James B. Gottstein 406 G Street, Suite 206 Anchorage, AK 99501 Tel: (907) 274-7686 Fax: (907) 274-9493 e-mail: James.B. Gottstein@ GottsteinLaw.Com From: Colombie, Jody J (CED) rmailto:iody.colombie@alaska.aovl Sent: Monday, August 5, 2019 1:35 PM To: iames.b.gottstein(o)gottsteinlaw.com Cc: Colombie, Jody J (CED) Subject: Request for Reconsideration Mr. Gottstein: Your Request for Reconsideration is GRANTED. The Alaska Oil and Gas Conservation Commission will issue a Notice of Hearing in the near future. Law offices of JAMES A GOTTSTEIN 406 G STREET, SUITE 206 ANCHORAGE, ALASKA 99501 (907)274-7686 TEUCOPIER (907) 270.9493 July 25, 2018 Alaska Oil & Gas Conservation Commission 333 West 7th Ave. Anchorage, AK 99501 Re: Reconsideration of July 2, 2019, Increased Bonding Requirement: Alaskan Crude Corporation Dear Alaska Oil & Gas Conservation Commission: '. tz JUL "52019 :A®GCC This letter is to seek reconsideration of that certain July 2, 2019, letter to James White, President of Alaskan Crude Corporation (ACC), requiring it to post an additional $1,000,000 over two years in bonds for three existing wells: Burglin 33-1 (Burglin Well), Mike Pelchl (Pelch Well), and Katalla KS -01 (Katalla Well). As an initial matter, my client, James White/ACC, was severely prejudiced because you sent the letter to the wrong address.I Mr. White only received the letter yesterday and I this afternoon. ACC therefore requests it be allowed additional time to supplement this application for reconsideration to allow for a more full presentation of the reasons why the decision is erroneous. However, even with the short time frame it is clear the imposition of the increased bonding is erroneous. First, the ex post facto application to existing permit holders is illegal under Article 1 § 15 of the Alaska Constitution. It is simply not legal to increase the bondingisecurity requirements for existing permit holders. In Underwood v. State, 881 P.2d 322, 327 (Alaska 1994), the Alaska Supreme Court defined an unconstitutional ex post facto enactment as: a law which "takes away or impairs vested rights acquired under existing laws, or creates new obliizations, imposes a new duty or attaches a new disability in respect to transactions or considerations already past." (emphasis added). The increased bonding requirement is an illegal ex post facto law as applied to the Burglin, Pelch & Katalla wells. Second, the new regulations go beyond the scope of the authorizing statute. AS 31.05.030, the statute cited in the notice for the increased bonding requirements as authorizing the new regulations, provides in pertinent part: (d) The commission may require ... (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; I His correct address is 1011 Villa Lea Ln, Houston, TX 77071, which I understand he has advised you. Re: Reconsideration July 25, 2019 Page 2 (Emphasis added). The new regulations, however, go far beyond that allowed by the statute, requiring, "security to ensure that each well is drilled, operated, maintained, repaired, and abandoned and each location is cleared in accordance with this chapter." (emphasis added). It is apparent the new regulations go far beyond the statutory authority of allowing bonds to be required to "plug each dry or abandoned well or the repair of wells causing waste." Simply put, the regulations imposing the increased bonding requirements are illegal. Therefore ACC respectfully requests the Commission grant reconsideration and rescind its July 2, 2019, letter. B. Gottstein TIIF SI'ATF July 2, 2019 °fALASKA GOVERNOR MICHAEL J. DUNLEAVY James White President Alaskan Crude Corporation 4614 Bohill Street San Antonio, TX 78217-1413 Dear Mr. White: Alaska Oil and Gas Conservation Commission 333 West Seventh Avenue Anchorage, Alaska 99501-3572 Main: 907.279.1433 Fax: 907.276.7542 www.00gcc.alaska.gov On May 18, 2019, revisions to the Alaska Oil and Gas Conservation Commission's (AOGCC) Regulation 20 AAC 25.025 became effective (see enclosed). Under 20 AAC 25.025(b), bonding amounts are set based on the number of permitted wellheads. According to AOGCC records, Alaskan Crude Corporation has 3 permitted wellheads (see enclosed list). Alaskan Crude Corporation is required to establish a bond in the amount of $1,200,000 with the AOGCC. Alaskan Crude Corporation currently has bond number 1308725850 in the amount of $200,000 on file with the AOGCC. Under the new regulation, an operator with a bond in place on May 18, 2019 is permitted to increase the amount of its current bond using up to four installment increments --subject to a minimum installment amount --over a period of three years. If Alaskan Crude Corporation chooses to increase its bond amount using installment increments, the schedule is: Installment Due Date Minimum Bond Increase First August 16 2019 $500,000 Second August 16, 2020 $500 000 Third August 16 2021 $0 Fourth August 16, 2022 $0 Enclosed are new Forms 10-402A and 10-402B for use with establishing a new surety or personal bond. Also enclosed is the AOGCC's Assignment of Certificate of Deposit and Confirmation and Agreement of Issuing Bank form, should Alaskan Crude Corporation choose a Certificate of Deposit as its bonding instrument. Page 2 of 2 If you have any questions, please contact Ms. Jody Colombie at 907-793-1221 or iody.colombieC alaska.aov or Mr. Dave Roby at 907-793-1232 or dave.robyAalaska.Qov. . Sincerely, Daniel T eamount, Jr. Colnm'ssioner Enclosures: Jes L. Chmielowski CoWimissioner 20 AAC 25.025 Regulations Forms: 10-402A and 10-402B Form: AOGCC — Assignment of CD / Confirmation/Agreement List of Permitted Wellheads 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 grantor 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 does not fall on a weekend or state holiday. Alaska Oil and Gas Conservation Commission Alaskan Crude Corporation Wellhead Report 7/2/2019 Page 1 of 1 ii:eii 5tatus btatus x. *EXPLORATORY '184-059 50-029-21106-00-00 IBURGLIN 33-1 1985-03-17 SUSP 1985-037 *EXPLORATORY 186-007 50-133-20333-90-00 (MIKE PELCH 1 1986-08-07 1 -GAS 1986-08-07 KATALLA 185-124 50-069-20002-00-00 KATALLA KS -01 1986-10-01 SI 1986-10-01 Wellhead Report 7/2/2019 Page 1 of 1 C3 r w ru Wn Certlfled Mail Fee C3 $ nJ F to Services & F ru ❑Return Recelpt0 C3❑ Return R.slPt Is .3 ❑ Carlifiec Mall Ra C3 L]MASignaNreF ❑Adult SlgneWR F 0 (Postage m- I P Here .. Here JUL-2201C o TemlPJames W to \ r2\ Pres' nt a senrnA kan Crude Corporation E3 sreete 614 Bohill Street �lSan Antonio, TX 78217-1413 ■ Complete items 1, 2, and 3. ■ Print your name and address on the reverse so that we can return the card to you. ■ Attach this card to the back of the mailpiece, or on the front if space Permits._ James White — Alaskan Crude Corporation 10011 Villa Lea Lane Houston, TX 77071 IIIIIIIII (IIIIIIIIIIIIIII IIIIIIIIIIIIIIIIIIIII 9590 9402 3704 7335 2702 36 7018 0680 0002 2052 7514 A. Signature x J, _1% GE ❑ Agent ddress different from item 1? ❑ Yes r delivRaddress below: E] No 3. Service Type—A' j5 —Recalpt(eleZ211) $ ❑CeNfled Mall flesMcletl Delivery $ ❑Adult Signature ❑ ❑ Aduft Signature Restricted Delivery ❑ ❑ Certified Mal® I ❑ Certified Mal Restricted Delivery ❑ ❑ Collect on Delivery C3 CO o ❑ Collect on Delivery Restricted Delivery 0 Delivery PS Form 3811, July 2015 PSN 7530-02-000-9053 Domestic Return Receipt ru C3 j5 —Recalpt(eleZ211) $ ❑CeNfled Mall flesMcletl Delivery $ Postmark `n Here I V J [1Aduk SignaW.RapuivoI S 0MUK Signature ReatrlPted Dentary $ I C3 CO o James White Alaskan Crude Corporation co ra 10011 Villa Lea Lane C3 Houston, TX 77071