Department of Commerce, Community, and Economic Development
Alaska Oil and Gas Conservation Commission
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HomeMy WebLinkAboutO 186Other Order 186
Docket No: OTH-21-013
1. April 21, 2021 Letter to Emerald House LLC regarding the investigation of Umiat
18 plug and abandonment operations
2. June 10, 2021 Notification of proposed enforcement action per 20 AAC 25.535
(b)(1) and 20 AAC 25.353 (b)(2)
3. July 06, 2021 AOGCC granting Emerald House LLC permission to re-enter
Umiat 18 with the purpose of completing plug and abandonment
operations
ORDERS
STATE OF ALASKA
ALASKA OIL AND GAS CONSERVATION COMMISSION
333 West Seventh Avenue
Anchorage Alaska 99501
Re: Compliance with Sundry 321-114
Umiat 10 (PTD 2130140)
Umiat 18
Other Order 186
Docket Number:OTH-21-013
August 19, 2021
DECISION AND ORDER
On June 10, 2021 the Alaska Oil and Gas Conservation Commission (AOGCC) issued a Notice of
Proposed Enforcement Action (Notice) to Emerald House LLC (Emerald House) for violating the
provisions of 20 AAC 25.507 (Change of an approved program) by failing to perform operations
in accordance with conditionally approved Sundry 321-114. Emerald House was granted approval
to re-enter Umiat-18 to complete plug and abandonment operations and clear the location. The
Notice proposed a specific corrective action and a $40,000 civil penalty under AS 31.05.150(a).
Summary of Proposed Enforcement Action:
The Notice proposed a civil penalty for violating four approval conditions while performing
abandonment operations. The Notice also proposed that Emerald House submit a detailed written
explanation that describes how recurrence of this violation will be prevented in future operations.
Violation - Failure to Comply with Sundry Approval Conditions:
On March 15, 2021 the AOGCC conditionally approved Sundry 321-114, authorizing Emerald
House to re-enter Umiat-18 to complete plug and abandonment operations and clear the location.
By letter dated April 21, 2021 AOGCC notified Emerald House of an investigation to determine
if the completed abandonment operations at Umiat-18 comported with the requirements of the
conditionally approved Sundry, focusing on the following conditions of approval:
- Cementing program to be approved by AOGCC before commencing cementing operations;
- Cement chemical injection line before pumping cement plugs into the tubing and tubing -
casing annulus;
- Submit daily reports to AOGCC once operations commence;
- Reservoir cement plug verification before placing the surface cement plug, as required in
20 AAC 25.112(g) and as described in the proposed procedure of Sundry 321-114.
Emerald House neither requested informal review nor a public hearing regarding the notice of
proposed enforcement. By letter dated June 30, 2021 Emerald House acknowledged receipt of the
Notice and stated:
"Emerald House management conducted an internal review of the Umiat-18 field work.
The elements if noncompliance revealed by that assessment did not materially differ from
those cited by the AOGCC in items 1 through 4 on page 2 of 3. In that regard, we concur
with the Commission's findings that Emerald House did violate the provisions of 20 AAC
25.507 ("Change of an approved program") while performing abandonment operations at
Umiat-18 and in accordance with that determination enclose herewith the civil penalty of
$40,000.00."
Other Order 186
August 19, 2021
Page 2 of 3
Mitigating Circumstances:
The factors in AS 31.05.150(g) were considered in determining the appropriate penalty. Emerald
House's lack of good faith in its attempts to comply with the imposed conditions, the potential
seriousness of the violation, and need to deter similar behavior in future operations are the factors
which most heavily influence AOGCC's decision and the penalty being assessed. AOGCC's
conditions of approval were clearly written. Regulation 20 AAC 25.507 is clear about requirements
for making changes to approved permits. Verbal discussions occurred with Emerald House
representatives responsible for plug and abandonment operations at Umiat-18 through the work
planning and implementation. Mitigating circumstances include no injury to the public or the
environment by the unapproved changes, and no history of noncompliance by Emerald House.
Further, AOGCC has not imposed per -day assessments for the violations, which reduced the
proposed penalty.
Findings and Conclusions:
Despite admitting that it did violate the provisions of 20 AAC 25.507 ("Change of an approved
program") while performing abandonment operations at Umiat-18, and paying the civil penalty,
Emerald House requested that AOGCC reconsider the amount of the penalty. The basis for this
request is based on unspecified impacts of COVID-19 affecting their ability to comply, dual
permitting by state and federal agencies, communication challenges because of the remote well
location, and other unspecified "hurdles". Emerald House's argument suggests that a technical
success for the plug and abandonment operations should somehow overshadow compliance with
clear and specific regulatory requirements, including conditions of the Sundry approval.
The AOGCC finds that Emerald House violated 20 AAC 25.507 at Umiat-18 by failing to obtain
prior approval for changes to the approval conditions attached to Sundry 321-114. Emerald House
has not disputed the findings in the Notice and has paid the civil penalty proposed by AOGCC.
Emerald House has not provided any factual information that would warrant changing the penalty
amount. The request to reconsider the penalty amount is rejected.
Now Therefore It Is Ordered That:
Emerald House is assessed a civil penalty in the amount of$40,000 for violating 20 AAC 25.507
for failing to comply with the approval conditions in Sundry 321-114. Within 10 days of the date
of AOGCC's final decision, Emerald House shall provide a detailed written explanation that
describes how it intends to prevent recurrence of this violation.
As an Operator involved in an enforcement action, Emerald House is required to preserve
documents concerning the above action until after resolution of the proceeding.
Done at Anchorage, Alaska and Dated August 19, 2021
Digitaly vgnetl by
Jeremy Jeremy g
Jessie L. Digitally signed by Jessie
L. Chmielowski
Dan
Dyn,[ysiqnm Wwo
Date: 2021.08.19
Price
Date: 2021.08.19
ChmielowSkI
Seamount
11
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111, 111.08.1112.1.11
13,0931.08'p0
12:06:22-08'00
ea
Jeremy M. Price
Jessie L. Chmielowski
Daniel T.
Seamount, Jr.
Chair, Commissioner
Commissioner
Commissioner
cc: AOGCC Inspectors
Phoebe Brooks (AOGCC)
Other Order 186
August 19, 2021
Page 3 of 3
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 pan 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.
From: Carlisle, Samantha I (CED)
To: AOGCC Public Notices
Subject: Other Order 186 (Emerald House)
Date: Thursday, August 19, 2021 2:34:00 PM
Attachments: OtherlWodf
Compliance with Sundry 321-114
Umjat 10 (PTD 2130140)
Umiat 18
Docket Number: OTH-21-013
Samantha Carlisle
Executive Secretary Ili
Alaska Oil and Gas Conservation Commission
333 West 7th Avenue
Anchorage, AK 99501
(907) 793-1223
From:
Carlisle Samantha ) (CED)
To:
"er"k oostad@)amail.mm"
Subject:
Other Order 186
Date:
Thursday, August 19, 2021 2:36:00 PM
Attachments:
Other186.odf
Please see attached
Samantha Carlisle
Executive Secretary III
Alaska Oil and Gas Conservation Commission
333 West 71h Avenue
Anchorage, AK 99501
(907) 793-1223
From: Carlisle Samantha ] (CED1
To: Inspectors(AOGCC.1nsoectorsCalalaska.aov); Brooks, Phoebe L (CED)
Subject: Other Order 186 (Emerald House)
Date: Thursday, August 19, 2021 2:35:00 PM
Attachments: Other186 odf
Samantha Carlisle
Executive Secretary III
Alaska Oil and Gas Conservation Commission
333 West 7th Avenue
Anchorage, AK 99501
(907)793-1223
Bernie Karl Gordon Severson Richard Wagner
K&K Recycling tnc. 3201 Westmar Cir. P.O. Box 60868
P.O. Box 58055 Anchorage, AK 99508-4336 Fairbanks, AK 99706
Fairbanks, AK 99711
George Vaught, Jr.
P.O. Box 13557
Denver, CO 80201-3557
Darwin Waldsmith
P.O. Box 39309
Ninilchik, AK 99639
�Xt ����\
INDEXES
Emerald House, LLC
P.O. Box 112212, Anchorage, Alaska 99511-2212
June 30, 2021
Mr. Jeremy M. Price
Chair, Commissioner RECEIVED
Alaska Oil & Gas Conservation Commission
333 West Seventh Avenue JUL 0 6 2021
Anchorage, Alaska 99501-1433 AOGCC
Re: Docket #: OTH-21-013
Compliance w/Sundry 321-114
Umiat-18 (PTD 2130140)
Commissioner Price (Chair):
On March 15, 2021, the Alaska Oil & Gas Conservation Commission ("AOGCC")
conditionally approved Sundry 321-114, authorizing Emerald House LLC
("Emerald House") to re-enter Umiat-18 with the objective to complete plug and
abandonment operations and clear the location. Plug and abandonment
operations were completed by Emerald House on April 2, 2021.
By letter dated April 21, 2021, the AOGCC notified Emerald House of an
investigation to determine if the abandonment operations at Umiat-18 comported
with the requirements of the conditionally approved Sundry or had Emerald House
violated the provisions of 20 AAC 25.507 ("Change of an approved program"),
while performing abandonment operations at Umiat-18.
By letter dated June 10, 2021, AOGCC notified Emerald House of a proposed
enforcement action that included the intent to impose a civil penalty on Emerald
House under AS 31.05.150(a) in the amount of $40,000 for failing to comply with
the conditions imposed by Sundry approval 321-114.
After receiving the AOGCC letter dated June loth, Emerald House management
conducted an internal review of the Umiat-18 field work. The elements of
noncompliance revealed by that assessment, did not materially differ from those
cited by the AOGCC in items 1 through 4 on page 2 of 3. In that regard, we concur
with the Commission's finding that Emerald House did violate the provisions of 20
AAC 25.507 ("Change of an approved program") while performing abandonment
operations at Umiat-18 and in accordance with that determination enclose
herewith the civil penalty of $40,000.00.
Following on that submittal, we would respectfully request that the Commission
reconsider the amount of that penalty.
From our perspective, the deviations from the conditions of approval imposed by
Sundry 321-114 were largely the result of some initial confusion on the part of
the field team given the federal & state duopoly in NPRA, coupled with the
Erik Opstad
VPimerald House
(907) 244-5210
Page 2 of 2
unprecedented impact of required COVID-19 protocol compliance and a number
of communication challenges posed by the Umiat-18 site itself that included;
limited snow trail access, no cell phone coverage, poor satellite links, no line of
sight radio tie in due to terrain issues, weather imposed access constraints, plus
a host of other minor hurdles that made this site uniquely challenging.
My takeaway was that everyone working on the program from the state & federal
agencies through Emerald House with its vendors, were doing their best to get
the job done under daunting conditions. Given the acknowledged deviations from
the Sundry COA's, in hindsight that effort needed some improvement in several
largely procedural areas, but the abandonment program was a technical success
and achieved those results with no adverse environmental or personnel safety
impacts whatsoever! At the end of the day, the abandonment of Umiat-18 was
fully approved by the AOGCC and separately by BLM without comment.
Although somewhat imperfect in its procedural execution, it is hard for us to see
given the extenuating circumstances and positive outcome how a $40,000 penalty
is warranted, and again, respectfully ask the Commission to reconsider the
amount of the imposed penalty.
We appreciate your forbearance in the matter.
Sincerely,
Emerald House, LLC
Erik Opstad
Vice President
(907)244-5210
Emerald House, LLC
P.O. Box 112212, Anchorage, Alaska 99511-2212
June 30, 2021
Mr. Jeremy M. Price
Chair, Commissioner RECEIVE®
Alaska Oil & Gas Conservation Commission
333 West Seventh Avenue JUL 0 6 2021
Anchorage, Alaska 99501-1433 AOGCC
Re: Docket #: OTH-21-013
Compliance w/Sundry 321-114
Umiat-18 (PTD 2130140)
Commissioner Price (Chair):
On March 15, 2021, the Alaska Oil & Gas Conservation Commission ("AOGCC")
conditionally approved Sundry 321-114, authorizing Emerald House LLC
("Emerald House") to re-enter Umiat-18 with the objective to complete plug and
abandonment operations and clear the location. Plug and abandonment
operations were completed by Emerald House on April 2, 2021.
By letter dated April 21, 2021, the AOGCC notified Emerald House of an
investigation to determine if the abandonment operations at Umiat-18 comported
with the requirements of the conditionally approved Sundry or had Emerald House
violated the provisions of 20 AAC 25.507 ("Change of an approved program"),
while performing abandonment operations at Umiat-18.
By letter dated June 10, 2021, AOGCC notified Emerald House of a proposed
enforcement action that included the intent to impose a civil penalty on Emerald
House under AS 31.05.150(a) in the amount of $40,000 for failing to comply with
the conditions imposed by Sundry approval 321-114.
After receiving the AOGCC letter dated June loth, Emerald House management
conducted an internal review of the Umiat-18 field work. The elements of
noncompliance revealed by that assessment, did not materially differ from those
cited by the AOGCC in items 1 through 4 on page 2 of 3. In that regard, we concur
with the Commission's finding that Emerald House did violate the provisions of 20
AAC 25.507 ("Change of an approved program") while performing abandonment
operations at Umiat-18 and in accordance with that determination enclose
herewith the civil penalty of $40,000.00.
Following on that submittal, we would respectfully request that the Commission
reconsider the amount of that penalty.
From our perspective, the deviations from the conditions of approval imposed by
Sundry 321-114 were largely the result of some initial confusion on the part of
the field team given the federal & state duopoly in NPRA, coupled with the
Enk OVstad
VP Lmerald House
(907) 2445210
Page 2 of 2
unprecedented impact of required COVID-19 protocol compliance and a number
of communication challenges posed by the Umiat-18 site itself that included;
limited snow trail access, no cell phone coverage, poor satellite links, no line of
sight radio tie in due to terrain issues, weather imposed access constraints, plus
a host of other minor hurdles that made this site uniquely challenging.
My takeaway was that everyone working on the program from the state & federal
agencies through Emerald House with its vendors, were doing their best to get
the job done under daunting conditions. Given the acknowledged deviations from
the Sundry COA's, in hindsight that effort needed some improvement in several
largely procedural areas, but the abandonment program was a technical success
and achieved those results with no adverse environmental or personnel safety
impacts whatsoever! At the end of the day, the abandonment of Umiat-18 was
fully approved by the AOGCC and separately by BLM without comment.
Although somewhat imperfect in its procedural execution, it is hard for us to see
given the extenuating circumstances and positive outcome how a $40,000 penalty
is warranted, and again, respectfully ask the Commission to reconsider the
amount of the imposed penalty.
We appreciate your forbearance in the matter.
Sincerely,
Emerald House, LLC
Erik Opstad
Vice President
(907)244-5210
7[
6758
ELKO International LLC
3500 Taiga Drive
Anchorage, Alaska 99516-2886
+1 907 2 10 1 +1 907 02 8937
EIN #
PAY TO THE State of Alaska - AOGCC
ORDER OF —
Forty Thousand and
fate o Alaska A G
333 West 7th Avenue
Anchorage, Alaska 99501-3572
MEMO Violation or Non -Compliance (20 AAC 25.535(b)(1))
NORTHRIM BANK
P.O. Box 241489
Anchorage, AK 99503
89-9311252
119006758iP is L 25 2009341:7100075030iP
ELKO International LLC 7/2/2021
State of Alaska - AOGCC Violation or Non -Compliance (20 AAC 25.535(b)(1))
RECE�vED
�UL 0 6 2021
p OOGGG
Northrim Checking Violation or Non -Compliance (20 AAC 25.535(b)(
7/2/2021
$ **40,000.00
3
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DOLLARS 8
6758
40,000.00
40,000.00
THE STATE
°fALASKA
GOVLRNOR MIKE DUNLEAVY
June 10, 2021
Mr. Erik Opstad
Emerald House, LLC
P.O. Box 112212
Anchorage, AK 99511-2212
Re: Docket Number:OTH-21-013
Compliance with Sundry 321-114
Umiat 18 (PTD 2130140)
Alaska Oil and Gas
Conservation Commission
333 Wesi Seventh Avenue
Anchorage, Alaska 99501-3572
Main: 907.279, 1433
Fax: 907.276.7542
www.00gcc.a[aska.gov
Dear Mr. Opstad:
Pursuant to 20 AAC 25.535, the Alaska Oil and Gas Conservation Commission (AOGCC) hereby
notifies Emerald House LLC (Emerald House) of a proposed enforcement action.
Nature of the Apparent Violation or Noncompliance (20 AAC 25.535(b)(1)).
Emerald House has violated the provisions of 20 AAC 25.507 ("Change of an approved program")
while performing abandonment operations at Umiat 18.
Basis for Finding the Violation or Noncompliance (20 AAC 25.535(b)(2)).
Exploration well Umiat 18 was drilled and evaluated in 2013. The well was suspended as approved
by AOGCC in Sundry 313-225. On March 15, 2021 the AOGCC conditionally approved Sundry
321-114, authorizing Emerald House to re-enter Umiat 18 to complete plug and abandonment
operations and clear the location. Plug and abandonment operations were completed by Emerald
House on April 2, 2021.
By letter dated April 21, 2021 AOGCC notified Emerald House of an investigation to determine
if the abandonment operations at Umiat 18 comported with the requirements of the conditionally
approved Sundry, focusing on the following conditions of approval:
- Cementing program to be approved by AOGCC before commencing cementing operations;
- Cement chemical injection line before pumping cement plugs into the tubing and tubing -
casing annulus;
- Submit daily reports to AOGCC once operations commence;
- Reservoir cement plug verification before placing the surface cement plug, as required in
20 AAC 25.112(g) and as described in the proposed procedure of Sundry 321-114.
Docket Number: OTH-21-013
Notice of Proposed Enforcement
June 10, 2021
Page 2 of 3
Per 20 AAC 25.507 an operator may not undertake a change to an approved program or activity
without AOGCC approval. Paragraph (a) of 20 AAC 25.507 further describes the information that
must be submitted to AOGCC. To make a change, the well's current condition and proposed
change must be provided to AOGCC for review and approval. AOGCC investigation indicates
Emerald House failed to comply with the conditions imposed in the approved Sundry 321-114,
including the noted changes and obligations in the work procedure inserted by AOGCC.
Specifically, Emerald House:
1) Commenced pumping cement into the tubing and tubing -casing annulus in Umiat 18 on
March 22, 2021. The cementing procedure was submitted to AOGCC on March 24, 2021.
2) Attempted to pump cement into the 1/4-inch chemical injection line on March 23, 2021
without success. Cement plugs were pumped into the tubing and tubing -casing annulus on
March 22, 2021.
3) Submitted summaries of daily operations on March 25 and April 1, 2, and 3, 2021. Plug
and abandonment operations were commenced on March 20, 2021.
4) Changed the approved plugging procedure without obtaining AOGCC approval. Two
plugs were required in the approved sundry with the integrity of the reservoir plug verified
before pumping the surface plug. Cement was instead pumped to surface in both the tubing
and tubing -casing annulus, eliminating the required plug tag and pressure test verifications.
Proposed Action (20 AAC 25.535(b)(3)).
For violating 20 AAC 25.507 the AOGCC intends to impose a civil penalty on Emerald House
under AS 31.05.150(a) in the amount of $40,000 for failing to comply with the conditions imposed
in Sundry approval 321-114.'
In addition to the imposed civil penalty, AOGCC intends to require Emerald House to provide a
detailed written explanation that describes how Emerald House intends to prevent recurrence of
this violation.
Rights and Liabilities (20 AAC 25.535(b)(4))
Within 15 days after receipt of this notification — unless the AOGCC, in its discretion, grants an
extension for good cause shown —Emerald House may file with the AOGCC a written response
that concurs in whole or in part with the proposed action described herein, requests informal
review, or requests a hearing under 20 AAC 25.540. If a timely response is not filed, the proposed
action will be deemed accepted by default. If informal review is requested, the AOGCC will
provide Emerald House an opportunity to submit documentary material and make a written or oral
statement. If Emerald House disagrees with the AOGCC's proposed decision or order after that
review, it may file a written request for a hearing within 10 days after the proposed decision or
order is issued. If such a request is not filed within that 10-day period, the proposed decision or
order will become final on the 111 day after it was issued. If such a request is timely filed, the
AOGCC will hold its decision in abeyance and schedule a hearing.
' AS 31.05.150(g) requires AOGCC to consider nine criteria in setting the amount of a civil penalty.
Docket Number: OTH-21-013
Notice of Proposed Enforcement
June 10,2021
Page 3 of 3
If Emerald House does not concur in the proposed action described herein, and the AOGCC finds
that Emerald House violated a provision of AS 31.05, 20 AAC 25, or an AOGCC order, permit or
other approval, then the AOGCC may take any action authorized by the applicable law including
ordering one or more of the following: (i) corrective action; (ii) suspension or revocation of a
permit or other approval; and (iii) imposition of penalties under AS 31.05.150. In taking action
after an informal review or hearing, the AOGCC is not limited to ordering the proposed action
described herein, as long as Emerald House received reasonable notice and opportunity to be heard
with respect to the AOGCC's action. Any action described herein or taken after an informal review
or hearing does not limit the action the AOGCC may take under AS 31.05.160.
Sincerely,
Jeremy DigRal",nW
byxmWl�
oare::ozi.W0
Price MS�36�W
Jeremy M. Price
Chair. Commissioner
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THE STATE
oALASKA
WVICRNO R MIKE, I)l'NLI'.A%'S
April 21, 2021
Mr. Erik Opstad
Emerald House, LLC
P.O. Box 112212
Anchorage, AK 99511-2212
Re: Docket Number:OTH-21-013
Compliance with Sundry 321-114
Umiat 18 (PTD 213014)
Dear Mr. Opstad:
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
Certified Mail
Return Receipt Requested
7018 0680 0002 2052 9433
Plug and Abandonment operations were recently completed on Umiat 18 by Emerald House LLC.
The Alaska Oil and Gas Conservation Commission (AOGCC) conditionally approved the Sundry
Application (321-114) for the proposed work on March 15, 2021. The following conditions are
the focus of AOGCC's investigation:
Cementing program to be approved by AOGCC before commencing cementing operations;
- Cement chemical injection line before pumping cement plugs into the tubing and IA;
- Submit daily reports to AOGCC once operations commence;
- Reservoir cement plug verification before placing the surface cement plug, as required in
20 AAC 25.112(g) and as described in the proposed procedure of Sundry 321-114.
The All is reviewing whether the abandonment operations at Umiat 18 comported with the
requirements of the conditionally approved Sundry. Should you have any questions about this
investigation notice, please contact Mr. Bryan McLellan, Senior Petroleum Engineer, at
(907) 793-1226 or via email at bryan.mclellan@alaska.gov.
Sincerely,
JeremyM. 1' 1 I"�'"e""
MeZ M. Prke
Price D1e2031NII
1318:11-08W
Jeremy M. Price
Chair, Commissioner
cc: David Wall (Emerald House, LLC)
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