671 F.3d 1241
D.C. Cir.2012Background
- OCS Lands Act authorizes the Secretary to sell, administer, and regulate leases on submerged lands and to promulgate related rules.
- Noble Energy acquired a California offshore lease, drilled Well 320-2 in 1985, and temporarily plugged and abandoned it pending further testing.
- Well 320-2 remains temporarily plugged after 27 years; suspensions extended lease life and deferred production obligations.
- A 1999 suspension was set aside by a California court for inconsistency with the Coastal Zone Management Act, triggering Amber Resources-type challenges.
- Lessees sued in the Court of Federal Claims; Amber Resources awarded restitution and discharged lease obligations, including removal duties.
- MMS issued a 2010s plug-and-abandon order to Noble; Noble argued the government’s breach discharged lessees from regulatory decommissioning duties.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Do regulatory plug-and-abandon duties survive government breach? | Noble argues discharge relieves regulatory duties after breach. | Gover nment contends regulations impose ongoing obligations regardless of breach. | Regulatory duties may be interpreted to survive or not; remand required to resolve interpretation. |
| Does common-law discharge apply to regulatory obligations in this context? | Noble relies on Texas-like discharge to absolve regulatory duties. | Texas principle does not automatically blanket regulatory obligations. | Discharge not clearly defined by regulations; remand needed for agency interpretation. |
| Did MMS's letter adequately interpret the regulations post-breach? | Letter may reflect agency interpretation of post-breach applicability. | Letter lacks stated reasoning and direct interpretation; cannot be relied on. | Remand to allow MMS successor to articulate interpretation. |
| Should the court remand to allow agency to interpret its own regulations? | Remand unnecessary if discharge applies. | Agency must interpret its regulations first; lack of agency reasoning requires remand. | Remand required; agency must interpret and justify applicability. |
| What is the proper judicial framework for review of the MMS action? | APA review should determine application of regulations and breach effect. | APA review is appropriate to interpret agency decision; need clearer rationale. | APA review and remand to clarify regulatory interpretation. |
Key Cases Cited
- United States v. Texas, 507 U.S. 529 (U.S. 1993) (presumption in favor of long-established common-law principles; need direct statutory language to abrogate)
- Amber Resources Co. v. United States, 538 F.3d 1358 (Fed. Cir. 2008) (breach and regulatory impact on lease development; recoveries under Amber Resources framework)
- ABN Amro Bank v. United States, 34 F.3d 126 (Fed. Cl. 1995) (regulations did not explicitly abrogate a common-law rule in a private–government context)
- Amoco Production v. Fry, 904 F. Supp. 3 (D.D.C. 1995) (statutory provisions did not imply abrogation of MMS procedures by other means)
- Prill v. NLRB, 755 F.2d 941 (D.C. Cir. 1985) (agency may not decide interpretively before the agency weighs in; remand when interpretation is ambiguous)
- Int’l Longshoremen’s Ass’n, AFL-CIO v. NLRB, 870 F.2d 733 (D.C. Cir. 1989) (agency interpretation required; deference to agency’s own regulation interpretation on remand)
- Auer v. Robbins, 519 U.S. 452 (U.S. 1997) (deference to agency interpretation of its own regulations; caution when interpretation appears in briefs)
- Peter Pan Bus Lines, Inc. v. Fed. Motor Carrier Safety Admin., 471 F.3d 1350 (D.C. Cir. 2006) (agency must provide interpretive reasoning on regulation interpretation)