Chevron USA Inc, ConocoPhillips Alaska Inc, ExxonMobil Alaska Production Inc and Forest Oil Corporation v State of Alaska - Department of Revenue Supreme Court No S-15891 - Superior Court No 3AN-13-04430 CI - Opinion No 7142 - 16 December 2016
Country
Year
2016
Summary
In this appeal oil producers (the Producers) challenge an administrative decision (the Decision) in which the Alaska Department of Revenue (DOR) decided to treat separate oil and gas fields operated by common working interest owners as a single entity when calculating the Producers' oil production tax obligations. Relying on a statute that gave DOR the discretion to "aggregate two or more leases or properties (or portions of them), for purposes of determining [their effective tax rate], when economically interdependent oil or gas production operations are not confined to a single lease or property,"2 DOR concluded that operations on a number of smaller oil fields were economically interdependent with larger operations on the adjacent Prudhoe Bay oil field. The Producers argue that in interpreting the phrase "economically interdependent" in the Decision, DOR effectively promulgated a regulation without following the procedures established in the Alaska Administrative Procedure Act (APA)3 and, as a result, DOR's Decision was invalid. We conclude that DOR's Decision was not a regulation because it was a commonsense interpretation of the statute and, therefore, DOR was not required to comply with APA rulemaking requirements. We affirm the superior court's decision upholding DOR's decision.