Alaska Oil and Gas Conservation Commission Proposes Repeal of Certain Alaska Administrative Code Regulations

The Alaska Oil and Gas Conservation Commission (AOGCC) has proposed a repeal of regulation changes in 20 AAC 25. of the Alaska Administrative Code. Specific regulations proposed for repeal are as follows: 20 AAC 25.037 well control requirements for other drilling and completion operations; 20 AAC 25.047 reserve pits and tankage; 20 AAC 25.225 potential of gas wells; 20 AAC 25.245 common production facilities; 20 AAC 25.260 illegal production; 20 AAC 25.528 open pit storage of oil; and 20 AAC 25.320 filing of forms.

AAOGC intends for the repeal to eliminate outdated or duplicative regulations.

Public comments regarding the proposed regulation changes must be submitted by 4:30 pm on December 10, 2019. Written comments may be submitted to the following address:

Jody Colombie
333 West 7th Avenue
Anchorage, Alaska  99501

Comments may also be submitted by fax (to (907) 276-7542) or email (to aogcc.customer.svc@alaska.gov).

Written comments may also be submitted at a hearing on December 10, 2019, at the above address, which will be held from 10:00 a.m. – 2:00 p.m.

Additional details regarding comment submission, along with directions for requesting a copy of the proposed regulation changes, may be viewed here.

Upon closure of the public comment period, AOGCC may either adopt the repeal or other provisions relating to the same subject, without further notice, or they may decide to take no action.

Federal Mine Safety and Health Review Commission Withdraws Simplified Procedures

The Federal Mine Safety and Health Review Commission (“Commission”) announced that it intends to withdraw its simplified proceedings rule effective November 25, 2019. The Commission’s Federal Register announcement is found here.

The simplified proceedings were originally published in a final rule by the Commission on December 28, 2010. The Commission’s intention was to streamline its increasing caseload by making the administrative process more efficient for the simplest cases, sharply limiting discovery and implementing compressed timeframes for proceedings. The Commission also expected that the simplified proceedings would better support settlement efforts by the Mine Safety and Health Administration and mine operators.

The Commission has since determined that simplified proceedings settle at approximately the same rate as those governed by conventional procedures. In addition, the Commission had given simplified proceedings priority over more complex cases, which resulted in disproportionate Commission attention to the simplest cases.

Given the Commission’s return to conventional procedures, we urge mine operators to exercise discretion in how they choose to handle their cases. While they often can continue to represent themselves before the Commission, they may be more comfortable consulting with experienced counsel before proceeding too deeply into formal litigation.

If you have any questions about the content of this post or about Commission proceedings generally, please reach out to Stoel Rives attorney Willa B. Perlmutter.

Update on Alaska’s Efforts to Finance Oil and Gas Tax Credit Purchases

tax creditIn my most recent column for State Tax Notes, I provide an update on H.B. 331, which was passed by the State Legislature in 2018 to create a mechanism for the issuance of up to $1 billion in bonds to finance oil and gas tax credit purchases. I also look at budget tensions created by the impasse over H.B. 331 as well as a push by some state legislators for additional changes to the structure of the production tax.

A lawsuit was filed challenging in two respects the constitutionality of H.B. 331 – that it might violate the requirement to not dedicate future revenue for a specific purpose or violate limitations on contracting for state debt. In January 2019, a judge of the Juneau Superior Court dismissed the complaint based on a failure to state a claim on which relief can be granted. The plaintiff filed an appeal to the Alaska Supreme Court, and oral arguments before the court were scheduled for September, with the court promising to “decide the case expeditiously.”

With state budget tensions running high, the legislature made no appropriation to the oil and gas tax credit fund this year for the purchase of tax credits, but added a placeholder appropriation of an estimated $700 million for the H.B. 331 bond program to the operating budget, which was signed by the governor.

My next column will include an update on the constitutional challenge to H.B. 331 as well as further discussion about Alaska’s revenue outlook and legislative activity.

Read the article here.

Originally published as “Alaska Taxpayers Feel the Heat” on August 19, 2019, by State Tax Notes.

Alaska DNR Issues Notice of Public Scoping for Possible Appeal Regulations Revisions

The Alaska Department of Natural Resources (DNR) is soliciting public comment regarding potential regulation revisions involving the process for filing and handling appeals and requests for reconsideration under 11 AAC 02.

No specific regulations are being proposed at this time. Rather, DNR is seeking public input and suggestions before the department begins drafting proposed regulations. DNR is seeking feedback on whether and how the department could revise the current regulatory framework related to providing public notices for certain land management issues, with the goal of clarifying and improving the appeal process, and to address existing ambiguities.

The regulations under review were last significantly revised in 2001. Since that time, DNR has handled a substantial volume of appeals and requests for reconsideration. By soliciting feedback on this process, DNR hopes to craft revised regulations that best serve the public and parties affected by DNR decisions.

Comments should specify the regulation or provision of a regulation to which the feedback applies. All submitted feedback will be reviewed by DNR, and any subsequent proposed regulatory developments will be released for public review and comment under the Administrative Procedures Act found in AS 44.62.

Written feedback must be received by DNR no later than 5:00 p.m. on Friday, November 15, 2019. All submissions must be sent by mail or email to the DNR contact below:

Joseph Joyner
Alaska Department of Natural Resources
550 West 7th Avenue, Suite 1070
Anchorage, Alaska 99501-3577
dnr.appeal.regulation@alaska.gov

MSHA Announces Reinstatement of 2017 Obama-Era Rule on Workforce Examinations

On Monday, September 30, the Mine Safety and Health Administration (MSHA) reinstated an Obama-era rule imposing heightened requirements for health and safety workplace examinations in surface metal and nonmetal mines. The reinstatement represents yet another volley in an already protracted regulatory process spanning two presidential administrations and multiple lawsuits.

The 2017 Obama-era rule, marking one of the administration’s final acts, required that:

  1. workplace exams had to be completed before miners begin work in the area examined;
  2. operators had to notify miners in the affected areas of conditions that might adversely affect health and safety;
  3. operators had to promptly initiate action to correct those adverse conditions;
  4. the workplace exam records had to include specific information, including, among other things, a description of all conditions found that might adversely affect health or safety and a notation as to when the corrective actions were complete; and
  5. records of the workplace exams had to be made available to MSHA and miner representatives upon request.

The rule initially went into effect on October 2, 2017. Just three days later, however, MSHA withdrew the rule, delaying the effective date to June 2018.

Following the 2017 election, the Trump administration published a revised rule that featured two key changes. First, examinations could be carried out either before work starts or as work was getting underway. Second, exam records no longer had to document adverse conditions, so long as the conditions were promptly corrected.

Continue Reading

Rental Rate Increases Go into Effect for State of Alaska Mining Claims, Leasehold Locations, Prospecting Sites, and Mining Leases

New rental rates are now in effect for state mining claims, leasehold locations, prospecting sites, and mining leases in Alaska. The new rental rates became effective on August 30, 2019, and thus are applicable to the rental year that commenced on September 1, 2019.

These increases were made by the State of Alaska Department of Natural Resources (DNR) under Alaska Statute 38.05.211, which requires DNR to adjust the rental rates every 10 years based on the change in the Bureau of Labor Statistics Consumer Price Index (CPI) for Alaska. The last adjustment was completed in 2009.

The new rental rate schedule may be viewed here.

Rent for the rental year commencing on September 1, 2019, must be paid in accordance with the new rates at the DNR office in Anchorage or Fairbanks no later than Monday, December 2, 2019. The regular due date of November 30 falls on a Saturday, so under 11 AAC 88.130(d) the due date is extended “to the next day the office is open to the public.” Note that last year DNR unexpectedly closed its Anchorage office on November 30, and many state computer systems were offline on that date and for several days thereafter, due to the earthquake that struck at 8:29 a.m. that morning. To avoid such unforeseen circumstances affecting either your ability to pay or DNR’s ability to accept payment, we recommend that you make your payment well before the deadline.

Claimants who make a partial payment based on the old rates should receive notice and an opportunity to cure under 11 AAC 86.221(e).

BLM Increases Required Fees for Mining Claims, Sets September 3 Deadline for Annual Filings

The Bureau of Land Management (BLM) has increased location and maintenance fees for mining claims on federal lands. The new location fee is $40, and the new maintenance fee is $165 per lode mining claim or site and $165 for each 20 acres or portion thereof for placer mining claims. The due date for all annual filings is September 3, 2019 (due to September 1 falling on a Sunday and September 2 being a holiday).

The full text of BLM’s Federal Register notice of the fee increases may be viewed here. BLM indicates that it sent a postcard to all federal mining claim owners in July, alerting them to the same information. Many of these postcards were returned as undeliverable. If you did not receive a postcard, please contact your local BLM office to update your address.

Claimants who have already submitted maintenance fees and those who timely pay maintenance fees based on the previous rate, will be notified and given an opportunity to cure by submitting the additional fee within 30 days.

Those claimants who do not have a current address on file with BLM may lose their claim if they do not receive the notification and take advantage of the opportunity to cure.

We encourage you to relay the details regarding fee changes and the upcoming September 3 deadline to other claim owners.

National Park Service Regulations Do Not Apply to Inholdings in Alaska

Alaska is different—it has moose hunters on hovercrafts, many large national parks, and certain unique federal laws. Last week the U.S. Supreme Court unanimously held that National Park Service laws and regulations of general applicability do not apply to inholdings within Alaska’s national parks. Sturgeon v. Frost, 587 U.S. ___ (2019).

While on a moose hunting trip twelve years ago, John Sturgeon was repairing his hovercraft on a section of the Nation River within the Yukon-Charley Rivers National Preserve (a unit of the National Park System) when park rangers ordered him to stop using the hovercraft in the preserve. Mr. Sturgeon left that day without the benefit of his hovercraft and without a moose. He later sued, arguing that the Park Service ban on hovercrafts did not apply to the Nation River, a navigable river the bed of which is owned by the State of Alaska.

This case arose under the Alaska National Interest Lands Conservation Act of 1980 (ANILCA). When the federal government designated national park lands in ANILCA, it swept tracts of nonfederal lands (state, Alaska Native corporation, and private inholdings) within the park boundaries. ANILCA provides that no state, Native, or private inholdings “shall be subject to the regulations applicable solely to public lands within [conservation system] units.” 16 U.S.C. § 3103(c). Nonetheless, the federal government claimed that the Park Service could regulate the inholdings like park lands. Continue Reading

Earthquake Disrupts Mining Filings and Payments: What You Need to Know

The 2018 deadline to record affidavits of labor and pay rental on State of Alaska mining claims was disrupted by a 7.0 earthquake near Anchorage at 8:29 a.m. on Friday, November 30. As a result of the earthquake, the Department of Natural Resources’ Anchorage office and the State of Alaska Recorder’s Office closed, preventing the payment of rent and the recording of affidavits on the apparent last day to do so.

However, under existing DNR regulations, when the filing office is officially closed on the last day to make a filing or payment, the time for filing or paying is extended to the next day the office is open to the public:

When the last day of the time for filing or payment falls on a day the designated filing office is officially closed, the time for filing is extended to the next day the office is open to the public.
11 AAC 88.130.

State offices in Anchorage and Palmer are also closed today, December 3, 2018, and a phone call to the Juneau Recorder’s Office revealed that the servers are offline so no recording district can record documents today. This means that affidavits of labor that are recorded on Tuesday, December 4, 2018, should be considered timely. Similarly, payment of claim rentals should be considered timely if paid on Tuesday, December 4, 2018.

We are working with the Division of Mining, Land, and Water within DNR to have a formal statement issued acknowledging the effect of 11 AAC 88.130 extending the deadline for recording a 2018 affidavit of labor and paying rent.

We are aware that some claim holders submitted affidavits of labor for recording electronically and are awaiting acceptance and confirmation of those attempts to record. If you have not received confirmation from your recording district that your affidavit was accepted for recording by midday of the extended deadline, we suggest that you e-record the affidavit again.

How Will Alaska Pay its Rebatable Production Tax Credits?

Alaska’s rebatable production tax credit program was created by state legislators to be an incentive for explorers and small producers to invest in oil and gas exploration and production in the state but was hurt by its own success when oil prices dropped. The legislature repealed the program but a queue of valid outstanding credits still awaits payment.

My latest article for State Tax Notes:

  • Provides an overview of the rebatable production tax credits, which were crafted specifically to encourage exploration and development by explorers, small producers and new entrants to the state.
  • Outlines the status of funding to pay down the tax credit queue and notes that the explorers and small producers the tax credit was meant to lure have been the ones hardest hit by the lack of a significant appropriation to the oil and gas tax credit fund over the last two years for purchase of the outstanding balance of credit certificates.
  • Discusses H.B. 331, introduced in February 2018 by Alaska Gov. Bill Walker, which would establish the Alaska Tax Credit Bond Corp. in the Department of Revenue and authorize it to issue up to $1 billion in bonds to finance purchases of the oil and gas tax credits.

Check back soon for a detailed look at H.B. 331 and an update about the challenges the bill is facing as to its constitutionality.

Read the article here.

Originally published as “The Battle Over Payment for Alaska’s Tax Credits” on September 10, 2018, by State Tax Notes.

Links to my earlier columns can be found here and here.

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