60 Found. J. for Nat. Resources & Energy L. 1
| Jurisdiction | United States |
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No substantive oil and gas legislation was passed in this year's state legislative session.
Santos, Ltd. (Santos) is an Australian oil and gas producer, formerly known as Oil Search, LLC.2 For several years, Santos has sought to use roads built by ConocoPhillips (Conoco) at Conoco's Kuparuk River Unit (the KRU), which is located on state-owned land that is leased to Conoco pursuant to state oil and gas leases, so Santos could access other state lands for resource development at Santos' Pikka project.3 Conoco and Santos failed to reach a permanent agreement regarding Santos' use of the KRU roads, and Santos filed an application for a miscellaneous land use permit to allow it access the roads, which was granted by the Director of the Alaska Division of Oil and Gas.4 Conoco appealed and the Commissioner of the Alaska Department of Natural Resources decided that Santos could use the KRU roads because roads constructed by oil and gas lessees on state-owned lands are allowed to be concur-
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rently used by other parties, like Santos, for the development of other state oil and gas leases, especially given that the usage of those roads by Conoco was not being unreasonably impaired.
The Alaska Oil and Gas Conservation Commission has amended 20 AAC 25.072(d), 20 AAC 25.105(c)(2), 20 AAC 25.110, 20 AAC 25.534, and 20 AAC 25.990, which "update drilling, wells, inspections, and definitions to provide more clarity in carrying out the purposes of Alaska Statutes 31.05."5 The amendment was signed into law on June, 28, 2022, and appears in Register 243, October 2022, of the Alaska Administrative Code.6
In Sagoonik v. State, a group of young Alaskans sued the State of Alaska, "alleging that its resource development is contributing to climate change and adversely affecting their lives."7 The young Alaskans sought declaratory and injunctive relief based on allegations that the State has, through existing policies and past actions, violated both the constitutional natural resources provisions and their individual constitutional rights. However, the superior court dismissed the case, and the Alaska Supreme Court upheld dismissal on appeal in part, reasoning that the legislature's stated energy policy both recognizes "concerns about global climate change" and "encourage[s] economic development by . . . promoting the development, transport, and efficient use of non-renewable and alternative energy resources . . . ."8 The import of "purposeful development of the state's abundant natural resources" was only undertaken with the consideration of citizens' social and economic views and assurances of adequate protection of Alaska's environment.9
There were no 2022 Arkansas legislative developments. The Arkansas General Assembly meets in general session biannually, in odd numbered years.
Because the Arkansas Oil and Gas Commission's regulations are constantly in revision, practitioners are advised to regularly check these regulations,
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online at http://www.aogc.state.ar.us. Proposed rule changes as well as a tabulation of recently enacted, repealed, or amended rules are available online at http://www.aogc.state.ar.us/rules/new.aspx.
Numerous Arkansas appellate decisions involving deed interpretation have relied upon the so-called "four corners" rule to determine the intent of the grantor and grantee.10 That rule requires the court to determine whether the deed in question is ambiguous. Outside evidence of the parties' intent is only admissible if the deed is determined to be ambiguous.
Two recent decisions of the Arkansas Court of Appeals cited the four corners rule but appear to have expanded the inquiry from the "four corners" of the deed itself to include consideration of prior and contemporaneous instruments within in the parties' title chain.
Phifer v. Ouellette,11 involved a series of conveyances, the last of which was a deed from Appellee, Ruth Wilburn, now deceased, to Appellant, Phifer. The question presented was whether that deed conveyed a one-half or one-fourth mineral interest. The answer depended upon the interpretation of a prior instrument in the parties' title chain. That prior instrument excepted "one-half of all oil, gas and other minerals . . . previously conveyed . . . ."12 The "previous conveyance" thus referred conveyed a one-half mineral interest to the other Appellees, Richard and Margot Cowin, immediately prior to the Phifer deed. The question was whether the exception in the Phifer deed of "one-half previously conveyed" excepted the full one-half or only one-half of that one-half. The court permitted evidence of the entire title chain including the mineral deed to Richard and Margot and concluded that a full one-half mineral interest had been excepted.
Mehaffy v. Clark,13 involved two quitclaim deeds that had been executed on the same day to different grantees. The deeds were otherwise identical. Each quitclaimed to its respective grantee one-half of the grantor's interest which, at the time, included a 75% mineral interest. The two deeds were not recorded until two and one-half years later, also on the same day. Clark, the grantee of the deed which was recorded first, claimed a full one-half mineral interest out of the grantor's three-quarter interest based the earlier recording time, rather than three-eighth's interest (one-half of the common grantor's three-quarter interest). The appeals court recited the identical "four corners" deed interpretation rule quoted above, but did not decide whether or not the deed to Clark was ambiguous. Instead, it merely held that, in the context of the other near-identical contemporaneous deed, the common grantor had intended to convey one-half of the grantor's interest to each grantee.
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With the enactment of Senate Bill 1137,14 the California legislature has effectively attempted to ban drilling and reworking operations in any inhabited area within the state and has imposed broad new requirements on existing oil and gas production operations. Senate Bill 1137 added new Article 4.6 (commencing with section 3280) to Chapter 1 of Division 3 of the Public Resources Code. New section 328115 prohibits the California Geologic Energy Management Division (CalGEM) from approving any "notice of intention" submitted by an operator under Public Resources Code section 320316 for the drilling of oil or gas wells or the reworking of existing oil or gas wells within a "health protection zone," defined as the area within 3,200 feet of a "sensitive receptor."17 Sensitive receptors include any residence, school, community resource center, health care facility, long-term care hospital, prison, and building housing a business open to the public.18 Section 3281(a) does contain limited exceptions to respond to health, safety, or environmental threats, to plug and abandon a well, or "[t]o comply with a court order finding that denying approval would amount to a taking of property, or a court order otherwise requiring approval of a notice of intention."19 Section 3281 also requires operators to submit additional information with a notice of intention, including a sensitive receptor inventory and map, and "a statement certifying that the operator has confirmed . . . that there are no sensitive receptors . . . within 3,200 feet of the wellhead . . . ."20 Section 3284 requires operators to provide baseline and follow-up surface water and groundwater testing to property owners and tenants within the health protection zone.21
SB 1137 also imposes a number of new requirements on existing production operations. Every operator must submit a sensitive receptor inventory and map to the CalGEM by July 1, 2023, and annually provide updates.22 Commencing January 1, 2025, all oil or gas wells and production facilities within a health protection zone will have to comply with new requirements for sound levels, lighting, dust control measures, emissions and vapor venting, and chemical analyses of produced waters, as well as comply with applicable state, federal, and local permits.23 Operators within a health protection zone will be required
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to submit a leak detection and response plan by January 1, 2025, and implement their plan by January 1, 2027.24
The oil and gas industry has submitted a referendum to repeal SB 1137 and reportedly obtained enough voter signatures for certification of the referendum, thereby allowing it to go on the ballot.25 Upon certification by the Secretary of State, SB 1137 may be delayed from going into effect until the referendum is voted on in the 2024 statewide election.26
Despite the referendum challenging SB 1137, CalGEM gave notice of a proposed emergency rulemaking action on December 19, 2022, to adopt emergency regulations implementing SB 1137, with an intended effective date of January 7, 2023. The proposed regulations would, among other things, impose new requirements for the permitting of production facilities.27
Public Resources Code § 3205.7, enacted in 2019, directed CalGEM, commencing July 1, 2022, to require each operator to submit a report to the Supervisor "demonstrat[ing] the operator's total liability to plug and abandon all wells and to decommission all attendant...
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