!FILECOPV] r:"iLED In the Supreme Court of the State of Alask~F?i='u,\r[ ;~:JUr:T:'; 20 II SEP I 4 AM /0: 4 I STATE OF ALASKA, DEPARTMENT OF ) NATURAL RESOURCES, ) ) 8'(: Petitioner, ) OEPU1'Y Cl.i~F" ) Supreme Court Case No. S-13730 vs. ) Trial Court Case No. 3AN-06-13751 ) (Consolidated Appeals) EXXON MOBIL CORPORATION, ) Case No. 3AN-06-13760 CI OPERATOR OF THE POINT THOMSON ) Case No. 3AN-06-13773 CI UNIT; BP EXPLORATION (ALASKA) ) Case No. 3AN-06-13799 CI INC.; CHEVRON U.S.A. INC.; ) Case No. 3AN-07-04634 CI CONOCOPHILLIPS ALASKA, INC., ) Case No. 3AN-07-04620 CI ) Case No. 3AN-07-04621 CI Respondents. ) ----------------------------) BRIEF OF RESPONDENTS EXXON MOBIL CORPORATION, BP EXPLORATION (ALASKA) INC., CHEVRON U.S.A. INC., AND CONOCOPHILLIPS ALASKA, INC. PETITION FOR REVIEW FROM THE SUPERIOR COURT r THIRD JUDICIAL DISTRICT - HONORABLE SHARON GLEASON, SUPERIOR COURT JUDGE Of Counsel: Douglas J. Serdahely ] M. Randall Oppenheimer Alaska Bar No. 7210072 Charles C. Lifland Barat M. LaPorte O'MEL VENY & MYERS LLP Alaska Bar No. 9511064 ] 400 South Hope Street PATTON BOGGS LLP Los Angeles, California 90071 601 West 5th Avenue, Suite 700 ] Phone: (213)430-6000 Anchorage, Alaska 99501 Phone: (907) 263-6310 William B. Rozell 1 Alaska Bar No. 7210067 Attorneys for Respondent Exxon Mobil P.O. Box 20730 Corporation Juneau, Alaska 99802 J Phone: (907) 463-5647 Marilyn May, Clerk George R. Lyle Susan Orlansky Alaska Bar No. 8411126 Alaska Bar No. 8106042 GUESS & RUDD PC FELDMAN ORLANSKY & SANDERS 510 L Street, Suite 700 500 L Street, Suite 400 Anchorage, Alaska 99501 Anchorage, Alaska 99501 Bradford G. Keithley Alaska Bar No. 1010054 I PERKINS COlE LLP 1029 West 3rd Avenue, Suite 300 Anchorage, Alaska 99501 I Attorneys for Respondent BP Exploration (Alaska) Inc. ~ Of Counsel: Stephen M. Ellis ~ Alaska Bar No. 7510065 P. Jefferson Ballew DELANEY WILES, INC. U G. Luke Ashley 1007 West 3rd A venue, Suite 400 THOMPSON & KNIGHT LLP Anchorage, Alaska 99501 1722 Routh Street, Suite 1500 U Dallas, Texas 75201-2533 Attorneys for Respondent Chevron U.S.A. Inc. I Spencer C. Sneed Alaska Bar No. 7811140 D DORSEY & WHITNEY LLP 1031 West 4th Avenue, Suite 600 Anchorage, Alaska 99501 a Attorneys for Respondent ConocoPhillips !J Alaska, Inc. IJ IJ ! ] IJ iJ [1 ~ TABLE OF CONTENTS 1. Issues Presented ................................................................................................................... 1 II. Introduction and Summary of Argument ............................................................................ 1 III. Statement of the Case .......................................................................................................... 4 IV. Standard of Review ........................................................................................................... 31 V. Argument. .......................................................................................................................... 33 A. DNR Was Required To Invoke Section 21 To Unilaterally Increase The Rate Of Prospecting, Development, Or Production.............................................. 33 1. Section 21 Applies Whenever DNR Seeks Unilaterally To Alter The Rate Of Prospecting, Development, Or Production ........................... 35 2. Section 21 Is Consistent With Section 10, Which Under DNR's Contrary Reading Would Nullify Section 21. ........................................... 38 3. DNR's Various Arguments That Section 21 Does Not Apply In . The Present Circumstances Are Without Merit. ....................................... 42 4. The Parties' Past Conduct Does Not Undermine The WIOs' Interpretation Of Section 21. ..................................................................... 47 5. Section 21 Is Consistent With The Statutes And Regulations In Effect In 1977 And Does Not Undermine DNR's Authority To Manage The State' s Natural Resources In The Public Interest. ................ 51 B. DNR Again Violated The WIOs' State and Federal Due Process Rights ............. 58 ] 1. The Superior Court Correctly Applied In re Robson In Analyzing Whether The Attorneys And Staff Who Represented DNR In The First Appeal Could Advise The Commissioner In The Remand 1 Proceeding ................................................................................................. 59 2. The Appointment Of Ms. Thompson As Hearing Officer Also Violated The WIOs' Due Process Rights .................................................. 63 ] 3. DNR's Call For A Balancing Test Is Not Appropriate In Light Of Robson's Determination That Improper Mixing Of An Agency's Advocatory And Adjudicatory Functions Is A Per Se Due Process J Violation .................................................................................................... 68 4. The Superior Court's Decision Was Necessary Under Robson And Is Neither Impractical Nor Unduly Burdensome to DNR ......................... 69 VI. Conclusion ......................................................................................................................... 71 1 TABLE OF AUTHORITIES Page(s) CASES tlfl.:. Alaska Hous. Fin. Corp. v. Salvucci, 950 P.2d 1116 (Alaska 1997) .................................................................................................. 32 Amara v. Cigna Corp., 534 F. Supp. 2d 288 (D. Conn. 2008), vacated ....................................................................... 45 Amerada Hess Pipeline Corp. v. Regulatory, Comm 'n of Alaska, 176 P.3d 667 (Alaska 2008) (per curiam) ......................................................................... 60,61 Ardestani v. INS, 502 U.S. 129 (1991) ................................................................................................................ 69 Atlantic Richfield Co. v. State, 705 P.2d 418 (Alaska 1985) .................................................................................................... 33 Bd. of Trade, Inc. v. Dep't of Labor, Wage & Hour Admin., 968 P.2d 86 (Alaska 1998) ...................................................................................................... 33 Betz v. Chena Hot Springs Group, 657 P.2d 831 (Alaska 1982) .................................................................................................... 40 i Botsko v. Davenport Civil Rights Comm 'n, ] 774 N.W.2d 841 (Iowa 2009) .................................................................................................. 69 Brewster v. Lanyon Zinc Co., 140 F. 801 (8th Cir. 1905) ....................................................................................................... 11 ] Calvert v. Dep't of Labor & Worliforce Dev., 251 P.3d 990 (Alaska 2011) .................................................................................................... 33 1 Cigna Corp. v. Amara, 131 S.Ct. 1866 (2011) ............................................................................................................. 45 ConocaPhillips Alaska, Inc. v. State, 109 P.3d 914 (Alaska 2005) ................................................................................................ 5,32 J Danca Exploration, Inc. v. State, Dep't af Natural Res., 924 P.2d 432 (Alaska 1996) .................................................................................................... 70 J Davenport Pastures, LP v. Morris Cry. Bd. afCty. Comm'rs, 238 P. 3d 731 (Kan. 2010) ...................................................................................................... 69 ] II Dep't of Revenue v. Atlantic Richfield Co., 858 P.2d 307 (Alaska 1993) .................................................................................................... 33 Exxon Corp. v. State, 40 P.3d 786 (Alaska 2001) .......................................................................................... 32,40,53 Frost v. Spencer, 218 P.3d 678 (Alaska 2009) .................................................................................................... 59 Grant v. Anchorage Police Dept., 20 P.3d.553 (Alaska 2001) ...................................................................................................... 36 GroZier, Inc. v. Federal Trade Comm'n, 615 F.2d 1215 (9th Cir. 1980) ................................................................................................. 69 In re ANS Royalty Litigation, No. lJU-77-847, at 41-42 (Alaska Super. Mar. 13, 1991) (Carpeneti, J.) ........................ 11,41 In re Nash, No. 6585, slip op. (Alaska, July 29,2011) .............................................................................. 60 In re Robson, 575 P.2d 771 (Alaska 1978) ............................................................................................. passim Kay v. Danbar Inc., 132 P.3d 262 (Alaska 2006) .................................................................................................... 45 Norville v. Carr-Gottstein Foods Co., 84 P.3d 996 (Alaska 2004) ...................................................................................................... 36 Nw. Pipeline Corp. v; Adams County, 131 P.3d 958 (Wash. Ct. App. 2006) ...................................................................................... 45 P.M. v. State, Dept. of Health and Soc. Servs., Div. of Family and Youth Servs., 42 P.3d 1127 (Alaska 2002) .................................................................................................... 68 Quality Asphalt Paving, Inc. v. State, Dep't of Transp. & Pub. Facilities, 71 P.3d 865 (Alaska 2003) .....................................................................................................