Chevron U.S.A. Inc. v. LeResche, s. 6396
| Decision Date | 29 April 1983 |
| Docket Number | 6648,Nos. 6396,s. 6396 |
| Citation | 663 P.2d 923 |
| Parties | CHEVRON U.S.A. INC., a California corporation; Marathon Oil Company, an Ohio corporation; and Phillips Petroleum Company, a Delaware corporation, Appellants, v. Robert E. LeRESCHE, Commissioner, Alaska Department of Natural Resources; Geoffrey Haynes, Deputy Commissioner, Alaska Department of Natural Resources; Glen Harrison, Director, Division of Minerals and Energy Management, Alaska Department of Natural Resources; Wilson L. Condon, Attorney General of the State of Alaska; Arthur H. Peterson, Regulations Attorney in the Department of Law; James L. Baldwin, Assistant Regulations Attorney in the Department of Law; and State of Alaska, Appellees. John KATZ, Commissioner, Alaska Department of Natural Resources; Geoffrey Haynes, Deputy Commissioner, Alaska Department of Natural Resources; Glenn Harrison, Director, Division of Minerals and Energy Management, Alaska Department of Natural Resources; Wilson L. Condon, Attorney General of the State of Alaska; and the State of Alaska, Appellants, v. EXXON CORPORATION, Appellee. |
| Court | Alaska Supreme Court |
Stephen M. Ellis, Marc D. Bond, Delaney, Wiles, Hayes, Reitman & Brubaker, Inc., Anchorage, for appellants in No. 6396.
Michael Arruda, Asst. Atty. Gen., Anchorage, Robert M. Maynard, Asst. Atty. Gen., Wilson L. Condon, Atty. Gen., Juneau, for appellants in Nos. 6396 and 6648.
Carl J.D. Bauman, Hughes, Thorsness, Gantz, Powell & Brundin, Anchorage, Melinda Furche Harmon and Kevin Todd Haroff, Houston, Tex., of counsel, for appellee in No. 6648.
Before BURKE, C.J., and RABINOWITZ, MATTHEWS and COMPTON, JJ.
This opinion addresses together the issues raised in two appeals: Chevron U.S.A., Inc. v. LeResche, no. 6396, and Katz v. Exxon Corp., no. 6648. Each appeal involves a challenge to the validity of certain regulations promulgated by the Department of Natural Resources. The challenged regulations require persons desiring to explore for oil or gas on state lands to obtain a miscellaneous land use permit from the Department. In exchange for the permit, explorers must agree to submit certain data and information flowing from the exploration to the Department. Two superior court judges reached opposite conclusions regarding the validity of these regulations. Although the cases were not consolidated on appeal, the parties stipulated to a tandem briefing scheme. We affirm no. 6396, and reverse and remand no. 6648.
In 1979, the Department of Natural Resources (Department) noticed its intent to adopt a new chapter in the Alaska Administrative Code, 11 AAC 65. This new chapter was to deal with land use permits for use of state lands. On July 11, 1980, then Commissioner of Natural Resources Robert LeResche proposed amendments to this new chapter that would require submission of certain data gathered through oil and gas exploration as a condition to receipt of the permit that would allow such exploration.
On August 18, 1980, the Department held a hearing on the proposed amendments. Representatives of the oil and gas industry opposed the proposed regulations, claiming that they were not authorized by statute, the data to be submitted was unnecessary in leasing oil and gas tracts, and the confidentiality of the data might be breached.
Proposed chapter 11 AAC 65 was never adopted, but the regulations first presented as amendments to that chapter were eventually promulgated as part of 11 AAC 96. Pursuant to these regulations, anyone conducting geophysical exploration activities on any state lands must first obtain a miscellaneous land use permit from the Director of the Division of Minerals and Energy Management of the Department of Natural Resources. 11 AAC 96.010(1)(e). Within ninety days after completion of permitted exploration activities, the permittee must notify the director of the acquisition of all geophysical data obtained under the permit. 11 AAC 96.210(1). Within thirty days after completion of initial computer processing of the data, and after each subsequent processing, the permittee must make all processed information available to the director. Id. The director may inspect and require submission of geophysical exploration data and information up to five years after notification of completion of the initial processing. Id. The Department will reimburse the permittee "for all reasonable costs directly incurred ... because of the submission of geophysical exploration data and ... information," including "the costs of magnetic-tape copying, reproduction, and shipping related to the submission" of such data and information. 11 AAC 96.230(a). If requested to do so, the Department will keep confidential all information submitted pursuant to the above provisions. There is no time limit on the period of confidentiality. 11 AAC 96.220.
These regulations, specifically 11 AAC 96.210--.240, 1 are the subject of these appeals.
On June 16, 1981, Chevron U.S.A., Inc. and Marathon Oil Company filed a complaint pursuant to AS 44.62.300, 2 seeking invalidation of 11 AAC 96.210--.240 and a permanent injunction against their enforcement. An amended complaint later added Phillips Petroleum Company as a plaintiff. 3 On July 27, 1981, Chevron moved for summary judgment. The motion was argued before the Honorable Mark Rowland on September 11, 1981. Judge Rowland upheld the challenged regulations on September 16, 1981. He found that the Commissioner of Natural Resources had the authority to adopt the regulations and did not exceed it in doing so, that they were consistent with the authorizing statutes, and that they were reasonably necessary and not arbitrary or unreasonable. Chevron appealed on October 13, 1981.
Exxon Corporation (Exxon) filed a complaint on August 31, 1981, while Chevron's action was still pending. Exxon also sought a declaration of the invalidity of 11 AAC 96.210-.240 and a permanent injunction against the enforcement of the regulations. The Department moved for summary judgment on October 21, 1981, and Exxon filed a cross-motion for summary judgment on November 9, 1981. The Honorable Daniel A. Moore heard the motions on January 8, 1982. Judge Moore granted Exxon's cross-motion and permanently enjoined enforcement of the regulations. He found that the regulations exceeded the scope of the Department's regulatory authority; were inconsistent with AS 38.05.180, which the Department cited as statutory authority for the regulations; and that the Department had not followed the notice provisions of the Alaska Administrative Procedure Act, AS 44.62, in adopting the regulations. 4 The Department appealed on February 9, 1982.
In assessing the validity of an administrative regulation, we follow the procedure set out in Kelly v. Zamarello, 486 P.2d 906 (Alaska 1971). 5 Therefore, we must determine whether the legislature delegated rule-making authority to the Department, whether the Department followed the Administrative Procedure Act in promulgating the regulation, and whether the regulation is consistent with and reasonably necessary to implement the statutes authorizing its adoption. 6 Id. at 911.
The Department listed four statutes as authorizing these regulations: AS 38.05.020, .035, .180, and .330. Chevron and Exxon allege that none of these statutes provides authority for the regulations. 7 Because we conclude that AS 38.05.020(b)(1), 8 read in conjunction with AS 38.05.180, 9 authorizes these regulations, we need not address the parties' contentions regarding AS 38.05.035 and .330.
Chevron and Exxon contend that neither AS 38.05.020(b)(1) nor AS 38.05.180 provides authority for the challenged regulations. They allege that AS 38.05.020(b)(1) is merely a general grant of authority to administer the Alaska Land Act, AS 38.05, and that the section provides no direct authority relevant to these regulations. They also assert that since the only provisions of AS 38.05.180 that mention collection of geophysical data 10 do not authorize collection of such data via regulations such as these, section 180 also contains no direct authority for their adoption.
However, considered together, these two statutes imply authority to adopt the challenged regulations. AS 38.05.020(b)(1) allows the Commissioner to "establish reasonable procedures and adopt reasonable rules and regulations necessary to carry out" the Alaska Land Act. AS 38.05.180(a), (b), (c), (e), and (f) impose upon the Commissioner the responsibility to maximize State return from State owned oil and gas resources through careful planning, including pre-sale analysis of tracts proposed for lease. Such planning and pre-sale analyses require the Commissioner to have access to the most reliable geological and geophysical data available. These regulations are therefore reasonably necessary to insure that the planning process is carried out responsibly. The authority to adopt them may be clearly implied from AS 38.05.020(b)(1) and .180(a), (b), (c), (e), and (f). 11
We must now determine whether the Department followed the procedures dictated by the Administrative Procedure Act in promulgating the challenged regulations. We hold that the regulations are procedurally valid.
The regulations were originally considered as amendments to proposed 11 AAC 65. The Department later dropped this proposed chapter, but subsequently adopted the regulations as part of 11 AAC 96. The regulations that were eventually adopted differed from the proposed regulations in that they require submission not only of initially processed information from geophysical exploration data, but also of information that is subsequently processed.
Exxon successfully contended below that this variation was so substantial as to invalidate the regulations. However, we agree with the Department that the lower court erred in this determination. AS 44.62.100(a)(3) 12 establishes a rebuttable presumption that a properly filed regulation is procedurally valid. A...
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