Opinion ID: 2621393
Heading Depth: 3
Heading Rank: 2

Heading: The Commission Applied the Proper Statutory Standard in Reaching Its Decision on Unitization.

Text: Allen argues that the commission, in making its determination whether unitization was warranted, applied the wrong statutory standard. The commission applied AS 31.05.110, which by its terms deals with involuntary unitization. Allen argues that the commission was required by AS 31.05.110(q) to apply the standards of AS 38.05.180 instead. Alaska Statute 38.05.180, which is administered by the DNR, applies to voluntary unitization. The statute that the commission applied, AS 31.05.110, has a number of relevant subsections. The first, subsection (a), provides that the commission has jurisdiction, power and authority, and it is its duty to make and enforce orders for unitization even where the owners of a pool do not agree. Subsection (b) lays out the four criteria for involuntary unitization. [40] Subsection (c) provides that [o]nly so much of a pool or pools as has been defined and determined to be productive on the basis of information available to the commission may be so included within the unit area. This subsection goes on to prescribe detailed procedures for establishing and administering a unitization plan. Subsection ( o ) states that expansion of a unit may proceed on the same basis as formation. Finally, subsection (q) states that [t]his section applies to all involuntary units formed in the state. Subsections (a) and (g)-(p) of this section apply to all voluntary units formed in the state and to a voluntary cooperative or unit plan of development or operation entered into in accordance with AS 38.05.180(p). On the basis of subsection (q), Allen argues that, since the NCIU was originally established voluntarily, the commission should have applied the standards of AS 38.05.180(p) and related regulations. Alaska Statute 38.05.180(p) authorizes DNR to approve voluntary unitization by holders of DNR leases under criteria more relaxed than those of AS 31.05.110. [41] The relevant DNR regulations are also more permissive, referring to potential hydrocarbon accumulations rather than requiring, as does AS 31.05.110(b), substantially more oil and gas from the pool than would otherwise be recovered. [42] By its terms, however, AS 38.05.180(p) applies only to voluntary unitization. Allen does not have the consent of other members of the unit. The DNR may approve or deny a unitization request, but appears to have no authority to order unitization. Allen seems to be arguing that, since the NCIU was originally established voluntarily, the commission should have evaluated his unitization petition under the standards that the DNR uses to evaluate requests for voluntary unitization. But Allen is seeking involuntary unitization. Whether the NCIU was originally established voluntarily or involuntarily is of no moment. Though AS 31.05.110(b) applies only to involuntary units, any order by the commission would create a new involuntary unit composed of the NCIU and the Allen leases rather than simply expanding the size of the NCIU. [43] Thus the commission correctly applied AS 31.05.110. As the superior court stated, Subsection (q) merely directs voluntary versus involuntary inquiries towards respective subsections, and reinforces the separation between the Commission and the DNR. Allen already had a chance to invoke AS 38.05.180. Prior to the commission's hearing on remand, DNR invited Allen to apply under AS 38.05.180(p) for unit expansion. Allen declined the invitation. We decline to renew it.