Opinion ID: 2454108
Heading Depth: 4
Heading Rank: 1

Heading: The text of the statute

Text: Alaska Statute 38.05.180(aa)(2)(B) provides that DNR should not approve a request for contract pricing if the prospective reduction in royalty receipts would not be balanced by increased benefits to in-state gas and electric consumers. (Emphasis added.) DNR notes that Black's Law Dictionary defines prospective as meaning [i]n the future. [23] According to DNR, prospective refers to the future period after the application is approved and therefore AS 38.05.180(aa) only allows contract pricing for future production. DNR maintains that AS 38.05.180(aa) does not permit application of contract pricing to past production. Marathon argues that the word prospective has a different meaning within the context of the statute. In Marathon's view, the legislature's reference to prospective reduction in royalty receipts is not the same as requiring that a request be made in advance of or commensurate in time with first gas production. Marathon instead argues that the word refers to the future effects of DNR's decision to approve or deny a request for contract pricing. According to Marathon, DNR can decide to approve contract pricing for any period, past or future, but DNR must consider the prospective effects of that decision. Marathon contends that DNR may still consider the `prospective reduction in royalty receipts' resulting from use of the contract price even if the royalty would [correlate] with gas deliveries and production occurring in the past. The term prospective could plausibly have either meaning. The use of the word could signify that the legislature only intended contract pricing to be available for future gas production; or the use of the word could be incidental and the timing of the [application]. . . immaterial. We agree with the superior court that the phrase `prospective reduction in royalty receipts' is ambiguous.
Marathon argues that AS 38.05.180(aa)(2) provides an exhaustive list of the reasons that DNR may reject a request for contract pricing. Alaska Statute 38.05.180(aa)(2) provides that DNR should reject a lessee's request for contract pricing if the commissioner makes a finding that (A) the contract price or transfer price is unreasonably low; (B) the prospective reduction in royalty receipts would not be balanced by increased benefits to in-state gas and electric consumers; (C) the lessee and the utility are related in management, ownership, or other aspect and, in the case of a transfer price, that relationship is not regulated under AS 42.05; and (D) the contract price or transfer price is not in the best interest of the state. Marathon contends that because retroactivity is not among the listed reasons for rejection, DNR had no right to refuse Marathon's request for retroactive application. Marathon claims that AS 38.05.180(aa) creates a presumption in favor of approval and that DNR did not respect this presumption. But AS 38.05.180(aa)(2)'s core scope is more limited than Marathon contends. Alaska Statute 38.05.180(aa)(2) provides an exhaustive list of the price-related reasons DNR can reject requests for contract pricing, but the statute does not address other grounds for rejection. The legislative history of the 1986 amendments indicates that AS 38.05.180(aa)(2) is exclusively concerned with objections to the price a lessee submits as its contract price. [24] Other non-price related reasons for rejecting a request may still exist. If DNR is correct that the statute does not authorize retroactive contract pricing, then DNR is justified in rejecting such a request even though the statute does not specifically list that reason for rejection. Therefore, AS 38.05.180(aa) would not preclude DNR from rejecting Marathon's request. As we will discuss below, agencies are generally given discretion to manage such procedural matters.