Opinion ID: 1191743
Heading Depth: 3
Heading Rank: 1

Heading: The Conclusive Consistency Determination

Text: Sale 78 must comply with the ACMP, because the Sale area is located within Alaska's coastal zone. 6 Alaska Administrative Code (AAC) 80.010(b) (1995). Under the ACMP, all [u]ses and activities conducted in the coastal zone by State agencies must be consistent with the standards of the ACMP and the coastal management programs of affected coastal districts (DCMPs). 6 AAC 80.010(b). Therefore, before DNR could authorize Sale 78, it had to make a conclusive consistency determination that the Sale was consistent with the ACMP standards and the incorporated standards of the affected DCMPs. 6 AAC 50.190(4), (9) (1995). NTC argues that this conclusive consistency determination was deficient for a number of reasons. [1]
NTC contends that the September 9, 1993, CCD is invalid, because it relies on the consistency analysis contained in the Preliminary Best Interest Finding (PBIF) issued July 15, 1993, and does not analyze the Sale as finalized under the final BIF issued October 19, 1993. The PBIF includes a list of mitigation measures prescribed by DNR which the lessees must comply with in order for Sale 78 to be consistent with the ACMP. NTC argues that this analysis is insufficient, because the regulations require that the consistency analysis be conducted after imposition of all stipulations, conditions, and modifications designed to ensure a project's consistency with the ACMP. [2] The State maintains that a CCD need not be concurrent with the final BIF, because the BIF includes a determination that a project is consistent with the ACMP. The State argues that it is appropriate for DNR to make a consistency determination before proceeding to its final BIF, because it is not practical for DNR to expend significant resources in making a BIF only to find later that the disposal was not consistent with the ACMP. The issue is one of timing. The regulations implementing the ACMP define a CCD as a document issued by the coordinating agency containing a brief description of the project, and the findings of the consistency review together with any stipulations, conditions, or modifications to the project which must be attached to the applicable permits, and a brief justification for those necessary modifications, conditions, or stipulations. 6 AAC 50.190(9)(A) (1995). The modifications, conditions, and stipulations prescribed within the CCD are intended to achieve and maintain a project's consistency with the ACMP. When DNR adopts and subsequently amends operation permit terms prescribing mitigation measures to ensure a project's consistency with the ACMP, the agency should not have to review the project again for consistency following compliance with those measures. The September 9, 1993, CCD expressly makes its finding of consistency subject to the stipulations and plan of operations permit terms outlined in the mitigation measures proposed in the July 15, 1993 [PBIF] and [the] ACMP Consistency Analysis as amended. [3] Therefore, because the finding of consistency was directly subject to these measures, we conclude that DNR could rely on the PBIF in issuing its CCD and that the CCD need not be concurrent with the final BIF in order to be valid.

NTC also argues that DNR's CCD is invalid because it did not satisfy the coastal development standard. NTC contends that in its CCD DNR failed to determine specifically which activities are water-dependent, and then failed to give priority to any water-dependent uses and activities, particularly fishing, as required by the regulations. The State responds that it properly applied the coastal development standard and prescribed general mitigation measures at the lease sale stage. [4] The State argues that it could not make a specific determination that a lessee's proposed activities would be water-dependent or water-related at this stage, [5] because it could not know whether the tract to be developed was located onshore or offshore. [6] A more focused application of the coastal development standard is reserved until lessees seek specific permission to undertake exploration. [7] The ACMP coastal development standard provides: In planning for and approving development in coastal areas, districts and state agencies shall give in the following order, priority to: (1) water-dependent uses and activities; (2) water-related uses and activities; and (3) uses and activities which are neither water-dependent nor water-related for which there is no feasible and prudent inland alternative to meet the public need for the use or activity. 6 AAC 80.040(a) (1995). [8] In applying the coastal development standard, DNR impliedly found that lessees' proposed activities at the lease sale stage were either water-dependent or water-related. In accordance with this finding, DNR proposed more than twenty general mitigation measures designed to prevent significant interference with other water-dependent and water-related activities.... (Emphasis added.) In Trustees for Alaska v. State, Department of Natural Resources, 851 P.2d 1340, 1346-47 (Alaska 1993) ( Camden Bay II ), Trustees challenged an oil and gas lease sale CCD on the basis that DNR did not make an objective determination that the mitigation measures prescribed to ensure the sale's consistency with the ACMP would be effective. This court rejected that argument, holding that it was reasonable for DNR to prescribe general mitigation measures at the lease sale stage. Id. at 1347. The court explained: We find DNR's position reasonable. In our view, DNR's mitigation measures provide sensible guidelines to minimize the harmful effects of oil and gas development. Most importantly, the lessees cannot develop their leases until they submit detailed plans, which must satisfy the ACMP regulations. If the plans do not satisfy the ACMP regulations, DNR can impose additional mitigation measures that assure that the regulations are complied with. Thus we reject Trustees' argument to the extent that it would tie the reasonableness of DNR's consistency determination to its developing and assessing detailed mitigation measures even before knowing which activities it needs to mitigate. Id. In this case, DNR prescribed general mitigation measures which provide sensible guidelines to minimize the effects of development on other water-dependent and water-related activities. These measures include Term 13, which authorizes the director to restrict lease-related use to prevent unreasonable conflicts with subsistence and commercial fishing operations. Because DNR determined that the proposed activities were either water-dependent or water-related, and prescribed general mitigation measures at the lease sale stage to ensure that these activities do not interfere with other water-dependent and water-related uses, we find that the coastal development standard is satisfied at this stage of the project. [9]
NTC argues that even if a general analysis is appropriate at this stage, the CCD is still invalid because DNR failed to give priority to water-dependent uses, particularly fishing. NTC argues that oil and gas leasing activity is not a water-dependent use, because of the availability of techniques such as directional drilling, which can provide access to oil and gas deposits from land. [10] NTC contends that fishing and oil and gas exploration and development are in direct and irreconcilable conflict, and that because oil and gas lease activities rank lower than marine fishing and marine transportation in the hierarchy of uses, oil and gas development cannot occur. The State responds that directional drilling and other land-based methods of accessing offshore tracts are necessarily utilized adjacent to Cook Inlet and, therefore, are water-dependent. The State further argues that oil and gas development and fishing do not necessarily conflict, and that one activity need not exclude the other. The State argues that NTC's all-or-nothing approach is contrary to the core purpose of the ACMP and Alaska's constitutional mandate for the management of State lands, [11] and that giving priority to one use over another does not mean altogether abandoning any use that conflicts with the preferred use. The ACMP envisions management of the coastal zone for multiple uses. See AS 46.40.020(4). Multiple use management is inconsistent with simply identifying conflicts among uses and then applying a hierarchy of uses to exclude lesser ranking uses; instead, it inherently contemplates harmonizing competing uses whenever possible. AS 46.40.020(4) (providing that management of coastal land and water uses will generally give priority to those which are economically or physically dependent on coastal location, thus implying that other uses are not excluded). DNR has done this to the extent it reasonably could at the lease sale stage. It will have to do so again at the exploration and development stages, if they are reached. Consequently, we find that DNR's CCD for Sale 78 conforms with the ACMP coastal development standard.
NTC also contends that the CCD is invalid because it did not satisfy the habitats standard of the ACMP. The habitats standard provides that coastal area habitats must be managed so as to maintain or enhance the biological, physical, and chemical characteristics of the habitat which contribute to its capacity to support living resources. 6 AAC 80.130(b); see also 6 AAC 80.130(c) (1995). DNR may permit uses or activities which do not maintain and enhance the coastal habitat only if it finds (1) there is a significant public need for the proposed use or activity; (2) there is no feasible prudent alternative to meet the public need for the proposed use or activity which [would maintain and enhance the coastal habitat]; (3) all feasible and prudent steps to maximize conformance with [this section's standards] will be taken. 6 AAC 80.130(d) (1995). DNR found in its consistency analysis that if oil and gas deposits are discovered in the proposed sale area, there may be uses or activities in the sale area which will not `maintain or enhance the biological, physical, and chemical characteristics' of the coastal habitat in which they are located. Accordingly, DNR was required to perform the three-part analysis under 6 AAC 80.130(d). DNR found that each element necessary to satisfy the analysis was present. NTC charges that each of these findings was inappropriate and, therefore, that DNR violated the habitats standard. This court's review is limited to ensuring that DNR's decision was not arbitrary, capricious, or unreasonable. Camden Bay II, 851 P.2d at 1347.
DNR found that the first part of the test was satisfied, as there is a significant public need for the proposed oil and gas lease sale. DNR found that there was a public need for the revenue from the Sale, which would help offset projected revenue declines. DNR also found that proceeds from the Sale would provide much-needed local revenue, and that there was a significant public need for jobs that would be created by exploration and, if it occurs, development. In Trustees for Alaska v. State, Department of Natural Resources, 795 P.2d 805 (Alaska 1990) ( Camden Bay I ), we discussed the benefits to the State of oil and gas lease development in the context of a BIF for an oil and gas lease sale. In that BIF, DNR discussed the State's dependence on petroleum-related income, and the long-range goal of the State of utilizing the oil and gas lease program to provide the basis for a stable and prosperous economy. Id. at 810. It found that the State would benefit from the bonus payments received from oil companies for the privilege of leasing whether or not actual deposits are discovered, and that if actual development does occur, it will make it more economically feasible for other companies in the area to develop existing oil deposits. Id. Consequently, we held that DNR's decision that the sale was in the best interests of the State was not arbitrary or capricious. Id. at 809-10. In accordance with the holding in Camden Bay I, we conclude that DNR properly determined that there is a significant public need for oil and gas lease Sale 78. The first element of the 6 AAC 80.130(d) analysis is therefore satisfied.
DNR also found that the second element of the 6 AAC 80.130(d) analysis was satisfied, because there is no feasible and prudent alternative available to meet the public need for the proposed oil and gas lease sale. [12] The State maintains that while it might be feasible to offer less promising areas for lease, it would not be prudent because potential lessees have expressed an interest in the Sale 78 area. NTC argues that DNR failed to demonstrate that there is no feasible and prudent alternative to Sale 78. In Camden Bay I, DNR based its finding that the sale was in the State's best interest in part on the fact that if development occurred it would make development of existing oil deposits near the sale area economically feasible. 795 P.2d at 810. In Camden Bay II, DNR found that industry interest in the area was significant, and concluded that it would not be prudent to lease areas of lesser potential. Accordingly, we found that DNR had articulated sufficient support for its finding that no feasible and prudent alternative existed for the proposed sale. 851 P.2d at 1348. In this case, DNR also considered economic factors in determining the existence of a feasible and prudent alternative, including the prudence of offering the area selected for development as opposed to another area. DNR found that [t]he only feasible alternative to offering lands in the coastal zone is to offer lands outside of the coastal zone. Given the public need for oil and gas revenues, however, this is not a prudent alternative in Alaska because most of the prospective acreage and facilities infrastructure lies in coastal areas. Because DNR had a reasonable basis for finding that there was no feasible and prudent alternative available, we hold that DNR satisfied the second part of the tripartite test.
Finally, DNR found that the third element of the tripartite analysis was met as it had taken all feasible and prudent steps to maximize conformance of the sale with 6 AAC 80.103(b) and (c) at the lease sale stage. DNR based this finding on its determination that the mitigation measures prescribed in the lease provide adequate support for the habitats standard. NTC charges that DNR improperly found that all feasible and prudent steps to maximize conformance with the habitats standard had been required. In Camden Bay II DNR identified twenty lease stipulations expressly designed to achieve maximum compliance with the goals of maintaining and enhancing the coastal habitat. Camden Bay II, 851 P.2d at 1347. DNR found that the lease terms and stipulations complied with ACMP standards and minimized the sale's impact on the environment. Id. at 1348. The court held that this analysis was sufficient to support DNR's finding of compliance with the habitats standard. Id. In this case, DNR found that [t]he proposed permitting terms and lease stipulations represent all feasible and prudent steps necessary to maximize conformance of the sale with 6 AAC 80.130(b) and (c) at the lease sale stage. Additional measures may be identified and imposed when specific development activities are reviewed for consistency with the ACMP through the permitting process. In accordance with this finding DNR proposed more than twenty terms and stipulations to minimize the Sale's impact on the environment. [13] For example, Term 2 requires the use of vehicles which do not damage the vegetation or ground surface [during exploration]. The term restricts road construction during exploration by requiring the use of existing road systems, port facilities, or air services whenever feasible. Also, Term 9 regulates the siting and construction of pipelines to prevent obstruction to marine navigation and fishing operations, and to provide protection from climatic conditions, tides, currents, and geophysical hazards. It is clear from the detailed and particular nature of these stipulations that DNR took a hard look at the feasible and prudent steps necessary to minimize the impact of the Sale on the habitat. Therefore, we hold that DNR's analysis demonstrates a reasonable basis for its finding that all feasible and prudent steps to maximize conformance with the habitats standard have been taken.
Finally, NTC charges that the CCD is invalid because DNR failed to comply with the relevant DCMPs  for the Kenai Peninsula Borough (Kenai), the Matanuska-Susitna Borough (Mat-Su), and the Municipality of Anchorage (Anchorage). NTC argues that DNR is obligated to make an independent determination that the Sale is consistent with each DCMP, and that DNR failed to apply the requirements of the DCMPs to the Sale.
Under the ACMP, DNR must find that Sale 78 is consistent with the Kenai, Mat-Su, and Anchorage DCMPs. The ACMP regulations provide: Uses and activities conducted by state agencies in the coastal area must be consistent with the applicable district program and the standards contained in this chapter. 6 AAC 80.010(b) (emphasis added). An agency can authorize a use or activity in the coastal zone only if the agency finds that the use or activity is consistent with the applicable district program. Id. The State argues that DNR could rely on the districts' concurrence with its consistency determination as the basis for its finding that Sale 78 was consistent with the applicable district program[s]. Agencies give substantial deference to a district's interpretation of its CMP requirements. According to ACMP regulation 6 AAC 50.120(a) (1995), an agency rendering a CCD should give deference to the comments of affected coastal districts with approved programs. The regulation observes that [a] coastal resource district whose district program has been incorporated into the ACMP is considered to have expertise in the interpretation and application of its program. 6 AAC 50.120(a). Because the regulations mandate such deference to the districts themselves, DNR can rely on the concurrence of coastal districts as one basis for its conclusion that a sale is consistent with the DCMPs. [14] This deference does not, however, relieve DNR of the duty to independently determine that the Sale is consistent with the affected DCMPs. 6 AAC 80.010(b).
If an affected coastal district does not expressly concur in DNR's CCD, DNR must apply the local DCMPs to the extent it reasonably can at the lease sale stage. See 6 AAC 50.120(a) (1995).
The Kenai district expressed its concurrence by letter. Therefore, DNR could properly rely on the district's express finding that the Sale is consistent with its CMP. Nonetheless, and despite the deference DNR owes to the findings of a local district, 6 AAC 80.010(b) required DNR to determine independently that the Sale is consistent with the Kenai DCMP. The record does not indicate that DNR made any such determination. Instead, DNR's final finding is arguably inconsistent with the Kenai DCMP requirement that the cumulative effects of a consistency determination be examined. DNR stated that Cook Inlet was a mature petroleum province but did not address possible effects of the federal Cook Inlet leasing program or a coal processing project. Further, DNR's lease stipulations may squarely conflict with the express terms of the DCMP's mitigation standard. We remand to DNR with directions to independently determine whether the Sale is consistent with the Kenai DCMP.
The Municipality of Anchorage did not expressly concur in DNR's CCD for Sale 78. Therefore, 6 AAC 80.010(b) required DNR to apply the Anchorage DCMP standards to the Sale tracts within the Municipality of Anchorage to be consistent with the ACMP. NTC argues that DNR failed to comply with the Anchorage DCMP because it failed to prefer development of tracts in areas already developed. According to NTC, DNR failed to comply with this goal because, instead of looking at the specific areas in question, it considered the entire Cook Inlet as one developed area. The State responds that this approach is appropriate, as the tracts within the Municipality of Anchorage are designated by the DCMP as Class IV waters. Class IV waters are classified under utilization environment, which comprises areas recognized as being potentially suitable for future growth and development. The State argues that the preference for `development within already developed areas' is embodied in the classification of Class IV waters. Based on the Anchorage DCMP, the designation of an area as Class IV waters does not appear to mean that all parts of that area are in fact already developed; it means that they are subject to development. DNR discussed the Anchorage DCMP briefly, but nowhere considered the DCMP's goal that [e]mphasis should be given to development within already developed areas. Consequently, DNR did not comply with the Anchorage DCMP. We remand to DNR with instructions to consider the Anchorage DCMP's goal of emphasi[zing] ... development within already developed areas.
The Mat-Su Borough did not expressly concur in DNR's CCD for Sale 78. Therefore, DNR also had to apply the Mat-Su DCMP standards to tracts within that borough for the Sale to be consistent with the ACMP. NTC argues that, among other things, DNR failed to comply with the Mat-Su DCMP's mitigation technique requirements. The State replies that DNR reasonably addressed the mitigation concerns of the Mat-Su DCMP at the lease sale stage, and will apply the requirements more specifically at the exploration and development stages. Coastal Habitats Standard 6 of the Mat-Su DCMP provides that [m]itigation techniques ... shall include replacing stream bank vegetation where possible [and] creation of oil and grease separators prior to road development runoff entering rivers, lakes, and streams, creation of settlement systems prior to development runoff entering stream corridors thereby decreasing sedimentation. Lease Term 21 addressed this mitigation standard, and provides in relevant part: At the option of the state, all improvements such as roads, pads, and wells must either be abandoned and the sites rehabilitated by the lessee to the satisfaction of the state, or be left intact and the lessee absolved of all further responsibility as to their maintenance, repair, and eventual abandonment and rehabilitation. However, this lease term is vague and standardless, and gives DNR the discretion not to require revegetation at a later stage. It therefore does not satisfy the Mat-Su mitigation technique requirements. Accordingly, we remand to DNR with instructions to consider the Mat-Su DCMP's mitigation standard in rendering its CCD.