276 F. Supp. 3d 953
N.D. Cal.2017Background
- ONRR promulgated the "Consolidated Federal Oil & Gas and Federal & Indian Coal Valuation" final rule (the Rule) with an effective date of January 1, 2017 after multi‑year notice-and-comment rulemaking. ONRR estimated increased royalties from the Rule.
- The Rule took effect January 1, 2017 (first reports/payments due February 28, 2017). Industry challengers sued in the District of Wyoming and obtained stays there; ONRR then issued its own February 22–27, 2017 notice postponing the Rule’s effective date pursuant to 5 U.S.C. § 705.
- ONRR later initiated and completed notice-and-comment rulemaking to repeal the Rule; the Repeal Rule became effective September 6, 2017.
- California and New Mexico (state attorneys general) sued seeking declaratory and injunctive relief, arguing ONRR violated the APA by (1) invoking § 705 to postpone a rule after it had gone into effect and (2) effectively repealing the rule without prior notice-and-comment.
- The court heard cross‑motions and denied defendants’ request to dismiss as prudentially moot; it concluded ONRR’s February 2017 postponement violated the APA and granted summary judgment for plaintiffs, awarding declaratory relief but declining vacatur of the postponement.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether 5 U.S.C. § 705 authorizes an agency to postpone a rule after its published effective date | §705 permits postponement only of a rule’s effective date; it does not authorize suspending a rule already in effect | §705 can be applied to preserve the status quo up to compliance deadlines (the "compliance date"), so agency may postpone between effective date and compliance deadline | Court: §705 authorizes postponement of the effective date, not retroactive suspension after the effective date; ONRR violated the APA by postponing an already‑effective rule under §705 |
| Whether ONRR’s postponement (and subsequent action) could be justified as pending judicial review | Plaintiffs: ONRR blocked meaningful judicial review by obtaining stays and then pursuing repeal—§705 requires postponement "pending judicial review" | Defendants: Postponement was taken "in light of pending litigation"—aimed at preserving status quo and avoiding irreparable injury | Court: ONRR invoked §705 while also seeking and obtaining stays and pursuing repeal, frustrating judicial review; this undercuts §705 justification |
| Whether ONRR’s February 2017 action constituted rulemaking requiring notice-and-comment (i.e., an unlawful effective repeal without public comment) | The February postponement operated in substance as a suspension/repeal and thus required notice-and-comment under APA §§ 553(b),(c) | §705 does not explicitly incorporate notice-and-comment and waiting for full notice-and-comment may be impractical in some circumstances | Court: Agency effectively restored the prior regulatory regime without prior notice-and-comment; substantive repeal requires rulemaking procedures, so ONRR’s unilateral postponement violated the APA |
| Appropriate remedy (declaratory relief and/or vacatur) | Plaintiffs: Seek declaratory judgment and vacatur of the postponement so the Rule is reinstated | Defendants: Vacatur would be disruptive and unnecessary given repeal is imminent/underway | Court: Grants declaratory relief that postponement violated the APA; declines to vacate the postponement because vacatur would be unduly disruptive given the imminence of the Repeal Rule and equitable considerations |
Key Cases Cited
- Motor Vehicle Manufacturers Ass'n v. State Farm Mut. Auto. Ins. Ass'n, 463 U.S. 29 (review of agency action is narrow under arbitrary-and-capricious standard)
- Chevron U.S.A., Inc. v. Natural Resources Defense Council, 467 U.S. 837 (framework for judicial deference to agency statutory interpretation)
- United States v. Mead Corp., 533 U.S. 218 (limits on Chevron deference where delegation is not clear)
- Steel Co. v. Citizens for a Better Environment, 523 U.S. 83 (jurisdiction is threshold issue)
- American Rivers v. National Marine Fisheries Serv., 126 F.3d 1118 (mootness and jurisdictional principles in administrative cases)
- Environmental Defense Fund, Inc. v. Gorsuch, 713 F.2d 802 (deferral of regulatory processes can constitute unlawful suspension of rules requiring notice-and-comment)
- Natural Resources Defense Council, Inc. v. United States Environmental Protection Agency, 683 F.2d 752 (repeal of a rule is rulemaking subject to notice-and-comment)
- Idaho Farm Bureau Federation v. Babbitt, 58 F.3d 1392 (equitable remand without vacatur where vacatur would be disruptive)
- W.T. Grant Co. v. United States, 345 U.S. 629 (public interest in settling legality of recurring governmental practices)