Plaintiffs State of California and the State of New Mexico (collectively "Plaintiffs") bring the instant action under the
The repeal process began in April 2017, when the ONRR issued a notice in the Federal Register ("Proposed Repeal") proposing to (1) repeal the Valuation Rule in its entirety and (2) reinstate a set of regulations that had been in effect for decades prior to the promulgation of the Valuation Rule ("pre-Valuation Rule regulations"). See Repeal of Consolidated Federal Oil & Gas and Federal & Indian Coal Valuation Reform; Proposed Repeal,
Plaintiffs now bring the instant action against the DOI, ONRR and related parties (collectively "Federal Defendants")
The parties are presently before the Court on four summary judgment motions filed by Plaintiffs, Federal Defendants, Conservation Intervenors and Industry Intervenors. Having read and considered the papers filed in connection with this matter and being fully informed, summary judgment is GRANTED in favor of Plaintiffs on their APA claims. Plaintiffs' non-APA claim is DISMISSED and Federal Defendants' summary judgment motion as to said claim is DENIED as moot. The Court, in its discretion, finds this matter suitable for resolution without oral argument. See Fed. R. Civ. P. 78(b) ; N.D. Cal. Civ. L.R. 7-1(b).
I. BACKGROUND
A. FACTUAL SUMMARY
1. Statutory and Regulatory Framework
The federal government leases vast tracts of public and Indian lands to private companies for fossil-fuel exploration, development, and production. Under the Mineral Leasing Act of 1920 ("MLA"),
In 1982, Congress enacted the Federal Oil and Gas Royalty Management Act of 1982 ("FOGRMA"),
In September 1984, the MMS promulgated regulations implementing FOGRMA.
In the case of non-arm's length transactions (also referred to as "captive" transactions-i.e., sales involving interested parties or affiliates)-the MMS adopted a sequential "benchmark" system that looks to outside indicia of market value. See
2. Promulgation of the Valuation Rule
In December 2007 the Subcommittee on Royalty Management ("Subcommittee"), a subcommittee of the DOI's Royalty Policy Committee, issued a report titled "Mineral Revenue Collection from Federal and Indian Lands and the Outer Continental Shelf."
The Subcommittee's report prompted the ONRR to commence an extended process to update and modernize its royalty regulations. In 2011, ONRR published two advanced notices of proposed rulemaking, seeking suggestions for new valuation methodologies. See
On January 6, 2015, the ONRR issued the "Consolidated Federal Oil & Gas and Federal & Indian Coal Valuation Reform; Proposed Rule" ("Proposed Valuation Rule"), a consolidated proposal to reform its coal, oil, and gas valuation regulations.
On July 1, 2016, ONRR finalized the Valuation Rule, with a stated effective date of January 1, 2017.
(1) to offer greater simplicity, certainty, clarity, and consistency in product valuation for mineral lessees and mineral revenue recipients; (2) to ensure that Indian mineral lessors receive the maximum revenues from coal resources on their land, consistent with the Secretary's trust responsibility and lease terms; (3) to decrease industry's cost of compliance and ONRR's cost to ensure industry compliance; and (4) to provide early certainty to industry and to ONRR that companies have paid every dollar due.
3. Repeal of the Valuation Rule
The Valuation Rule was set to effect on January 1, 2017, but lessees were not required to report and pay royalties under the Rule until February 28, 2017. See Postponement of Effeсtiveness of the Consolidated Federal Oil & Gas and Federal & Indian Coal Valuation Reform 2017 Valuation Rule ("Postponement Notice"),
On February 17, 2017, the petitioners in the District of Wyoming cases requested the ONRR to postpone implementation of the Valuation Rule. The ONRR responded that the Wyoming lawsuits raised "serious questions concerning the validity or prudence of certain provisions of the 2017 Valuation Rule, such as the expansion of the 'default provision' and the use of the sales price of electricity to value coal."
In response to the Postponement Notice, California and New Mexico, the same Plaintiffs herein, filed suit in this Court alleging that the ONRR's action violated the APA. See Case No. 17-cv-2376-EDL (N.D. Cal.). Magistrate Judge Elizabeth Laporte agreed and declared that the ONRR's postponement of the Valuation Rule violated the APA. Becerra v. U.S. Dept. of the Interior,
On April 4, 2017, the ONRR posted the three-page Proposed Repeal in the Federal Register, "proposing to repeal the 2017 Valuation Rule in its entirety" and to restore the pre-Valuation Rule regulations.
(a) preserve the regulatory status quo while ONRR reconsiders whether revisions are appropriate or needed to thepre-existing regulations governing royalty values; (b) avoid the costs to both government and industry of converting to controversial new royalty reporting and payment systems while the reconsideration takes place; (c) eliminate the need for continued and uncertain litigation over the validity of the 2017 Valuation Rule, and (d) enhance the lessees' ability to timely and accurately report and pay royalties, because they would continue to use a well-known system that has been in place for decades.
Simultaneously, but independent of the Proposed Repeal, the ONRR published a notice in the Federal Register seeking "comments and suggestions from affected parties and the interested public on whether revisions to the regulations governing the valuation, for royalty purposes, of oil and gas produced from Federal onshore and offshore leases and coal produced from Federal and Indian leases, are needed and, if so, what specific revisions should be considered." Federal Oil and Gas and Federal and Indian Coal Valuation, Advance Notice of Proposed Rulemaking ("ANPRM"),
As discussed above, ONRR requests comments on two possible scenarios pending the outcome of the proposed rule to repeal the 2017 Valuation Rule. We recognize the outcome of the proposed rule to repеal the 2017 Valuation Rule may not be known by the closing date of this ANPRM. Therefore, we encourage commenters to consider both of the two possible outcomes of that rulemaking when preparing their submissions as follows.
1. If the 2017 Valuation Rule is repealed, ONRR requests comments regarding whether a new rulemaking would be beneficial or is necessary. If commenters believe that a new rulemaking would be beneficial, ONRR requests comments regarding specific changes to the Federal oil and gas and Federal and Indian coal valuation regulations.
2. If the 2017 Valuation Rule is not repealed, ONRR requests comments regarding whether potential changes to the 2017 Valuation Rule are needed. Possible topics include, but are not limited to:
• Whether ONRR should have one rule addressing Federal oil and gas and Federal and Indian coal valuation, or separate rulemakings.
• How best to value non-arm's-length coal sales and/or sales between affiliates.
• Whether ONRR should update the valuation regulations governing nonarm's-length dispositions of Federal gas, and if so, how.
• Whether ONRR should address marketable condition and/or unbundling, and if so, how.
• Whether ONRR should have a default provision clarifying how ONRR will exercise Secretarial authority to determine value for royalty purposes in cases where there is misconduct, breach ofduty to market, or ONRR cannot otherwise verify value. Other potential valuation methods or necessary changes to ONRR valuation regulations.
The ONRR provided for a thirty-day comment period in connection with both the Proposed Repeal and the ANPRM. Although the Proposed Repeal instructs on how to submit comments, it does not specify any areas or topics on which the ONRR would like to receive comments. The ONRR received numerous requests for extensions of the comment period, which it denied.
On August 7, 2017, ONRR published the Final Repeal, which repealed the Valuation Rule "in its entirety" and reinstated the pre-Valuation Rule regulations.
B. PROCEDURAL HISTORY
On October 7, 2017, Plaintiffs filed a Complaint for Declaratory and Injunctive Relief in this Court against Federal Defendants. The Complaint alleges three claims: (1) Violation of the APA,
Plaintiffs have filed a motion for summary judgment, focusing on their claims under the APA. Federal Defendants have filed a combined opposition to Plaintiffs' motion and a cross-motion for summary judgment as to all claims alleged in the Complaint. Conservation Intervenors and Industry Intervenors have filed unopposed motions to intervene and motions for summary judgment.
C. MOTION FOR LEAVE TO FILE AMICUS BRIEF
The "classic role" of amicus curiae is to assist a court in a case of public interest by "supplementing the efforts of
Federal Defendants object to the Institute's amicus brief, claiming that it contains extra-record citations, raises new issues, and adds nothing new to the proceedings. None of these objections is compelling. First, the extra-record citations, which are provided to support contextual points, are neither material to the Institute's arguments nor the Court's ruling. Second, the Institute's brief does not, as Federal Defendants assert, present a new claim that the ONRR violated Executive Order 12,866,
Accordingly, the Institute's motion to file an amicus brief is granted.
II. LEGAL STANDARD
Summary judgment should be granted only if the moving party has shown that there are no genuine issues of material fact and that the moving party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56 ; Celotex Corp. v. Catrett,
Plaintiffs and Conservation Intervenors contend that the ONRR violated the APA in issuing the Final Repeal, which repealed the Valuation Rule and restored the prior regulatory scheme. First, they contend that the ONRR failed to provide a reasoned explanation for repealing the Valuation Rule. Second, they argue that the ONRR failed to comply with the APA's notice and comment requirement. Federal Defendants and Industry Intervenors disagree and argue that the Final Repeal should be upheld.
A. REASONED EXPLANATION
Judicial review of an agency's rule making process is governed by the APA,
"Agencies are free to change their existing policies as long as they provide a reasoned explanation for the change." Encino Motorcars, LLC v. Navarro, --- U.S. ----,
In Fox, the Court held that a policy change complies with the APA if the agency (1) displays "awareness that it is changing position," (2) shows that "the new policy is permissible under the statute," (3) "believes" the new policy is better, and (4) provides "good reasons" for the new policy, which, if the "new policy rests upon factual findings that contradict those which underlay its prior policy," must include "a reasoned explanation ... for disregarding facts and circumstances that underlay or were engendered by the prior policy."
Organized Vill. of Kake v. U.S. Dep't of Agric. ("Kake" ),
Federal Defendants maintain that the ONRR had "good reasons" for repealing the Valuation Rule and reinstating the prior regulations it had just replaced.
1. Defects
a) Failure to Explain Inconsistencies
The Final Repeal identified seven "defects" that allegedly "make certain provisions [of the Valuation Rule] challenging to comply with, implement or enforce."
The ONRR's flawed analysis is particularly illustrated in its discussion of the Valuation Rule's method of valuing non-arm's length transactions involving coal. Previously, the value of such transactions
The ONRR's notices identified numerous flaws in the existing coal valuation regulations and solicited comments on eliminating the use of benchmarks.
In promulgating the Valuation Rule, the ONRR specifically "sought input on the merits of eliminating the benchmarks for valuation of non-arm's length sales...."
In repealing the Valuation Rule, the ONRR completely contradicts its prior findings. Despite its previous, detailed conclusions in support of the Valuation Rule's approach to valuing non-arm's length coal transactions-and dismissing
The Court finds that the ONRR's conclusory explanation in the Final Repeal fails to satisfy its obligation to explain the inconsistencies between its prior findings in enacting the Valuation Rule and its decision to repeal such Rule. The ONRR's repeal of the Valuation Rule is therefore arbitrary and capricious. See Navarro,
b) Failure to Discuss Alternatives
Even if the ONRR's discussion of the alleged defects in the Valuation Rule were not deficient, the Court is unpersuaded that the ONRR adеquately considered alternatives to a complete repeal. When considering revoking a rule, an agency must consider alternatives in lieu of a complete repeal, such as by addressing the deficiencies individually. Yakima Valley Cablevision, Inc. v. F.C.C.,
In response to the Proposed Repeal, the ONRR received comments suggesting that in lieu of complete repeal of the Valuation Rule, the ONRR should address specific problems "separately and not entirely abandon the rule in its entirety."
2. Executive Order 13783
The second justification recited in the Final Repeal for repealing the Valuation Rule is Executive Order 13783, issued on March 28, 2017. The Executive Order, entitled "Promoting Energy Independence and Economic Growth," states, in pertinent part, as follows:
[I]t is the policy of the United States that executive departments and agencies (agencies) immediately review existing regulations that potentially burden the development or use of domestically produced energy resources and appropriately suspend, revise, or rescind those that unduly burden the development of domestic energy resources beyond the degree necessary to protect the public interest or otherwise comply with the law.
Exec. Order 13783 (Mar. 28, 2017) (emphasis added). Citing unspecified comments and its own "internal review," the ONRR concluded in the Final Repeal that "certain provisions of the [ ] Valuation Rule would unnecessarily burden the development of Federal oil and gas and Federal and Indian coal beyond the degree necessary to protect the public interest or otherwise comply with the law."
To support its findings regarding the Valuation Rule's alleged "burden" on the development of domestic energy sources
More fundamentally, the ONRR's speculation that provisions of the Valuation Rule would be unduly burdensome, difficult to apply and increase costs, directly contradict its рrevious findings in its promulgation of the Valuation Rule. At that time, the ONRR specifically found that, on a net impact basis, the new regulations would increase royalty collections by between $ 71.9 million and $ 84.9 million and reduce administrative costs by $ 3.61 million.
Federal Defendants contend that the ONRR, in fact, considered the "pros and cons of repeal" and string-cites a number of documents in the record. Defs.' Mot. at 21. These documents consist of internal agency documents that summarize the public comments ONRR received on the proposed repeal. As such, the documents-which do not contain any agency response to the comments-hardly constitute a reasoned explanation by the ONRR for supporting its decision to forfeit the Valuation Rule's royalty benefits and administrative cost savings. See State Farm,
The ONRR's third and final rationale for the Final Repeal is that the recently reestablished Royalty Policy Committee would "advise ONRR on current and emerging" valuation issues.
Federal Defendants argue that the "ONRR did not rely on a future Committee analysis to justify the repeal rulemaking." Fed. Defs.' Mot. at 20.
As an independent basis for their APA claims, Plaintiffs aver that the ONRR failed to allow for meaningful public comment on the Proposed Repeal in two significant respects. First, the Proposed Repeal lacked adequate detail to meaningfully inform the public regarding the ONRR's rationale for repealing the Valuation Rule. Second, the Proposed Repeal failed to invite comments on the substance or merits of the Valuation Rule and the prior regulatory scheme that it replaced. Because of these shortcomings, the ONRR allegedly deprived the public of a meaningful opportunity to comment on important components of the Proposed Repeal, as required by the APA.
1. Overview
The APA requires that, as a prerequisite to promulgating regulations, an agency must issue a "[g]eneral notice of proposed rulemaking" in the Federal Register.
The above notice and comment requirement likewise applies when an agency seeks to amend or repeal a rule that has previously has been promulgated. See Am. Hosp. Ass'n v. Bowen,
The APA imposes exacting requirements regarding the content of notices. Under
2. Failure to Recite Rationale for Repeal
Plaintiffs contend that the Proposed Repeal failed to adequately inform the public of the ONRR's rationale for repealing the Valuation Rule. The Court agrees. The Proposed Repeal asserted that the Valuation Rule should be repealed so that the ONRR could reconsider whether changes to the Valuation Rule were needed and to avoid the costs of implementing its "controversial" provisions.
The Proposed Repeal fails to pass muster under the APA. As an initial matter, it is not enough that an agency merely identify some of the problems it believes may justify a repeal; rather, "[n]otice of a proposed rule must include sufficient detail on its content and basis in law and evidence to allow for meaningful and informed comment[.]" Am. Med. Ass'n v. Reno,
Federal Defendants argue that the ONRR had no obligation to identify "every possible reason in its notice" and merely identifying some of the agency's concerns with the Valuation Rule was enough to comply with the APA's requirements. Fed. Defs.' Opp'n at 22. Perhaps so, but that argument misses the point. Plaintiffs are not faulting the ONRR for failing to identify every conceivable problem with the Valuation Rule. Rather, the problem is that the Proposed Repeal fails to explain in detail the reasons the ONRR allegedly believed that the problems it previously had identified now justify the complete repeal of the Valuation Rule. Without that information, Plaintiffs aver, the public could not meaningfully comment on the ONRR's proposed repeal. See Connecticut Light & Power Co. v. Nuclear Regulatory Comm'n,
The Court concludes that, by failing to provide the requisite information to adequately apprise the public regarding the reasons the ONRR was seeking to repeal the Valuation Rule in favor of the former regulations it had just replaced, the ONRR effectively precluded interested parties from meaningfully commenting on the proposed repeal. See Connecticut Light & Power Co.,
3. Failure to Solicit Comments
As an alternative matter, Plaintiffs argue that the ONRR violated the APA by failing to allow for meaningful comment on their proposed rules.
The Fourth Circuit's decision in North Carolina Growers' Association is instructive. In that case, various plaintiffs brought an APA action against the Department of Labor ("Department") after it suspended 2008 regulations governing temporary agricultural workers and reinstated the prior set of 1987 regulations. In its notice of proposed rulemaking, the Department cited difficulties in operating the program governing the employment of foreign agricultural workers under the 2008 regulations, including a lack of resources, inability to implement operations and processing delays, as the basis for the proposed action.
The Fourth Circuit held that the Department's "content restriction" in the notice of rulemaking violated the APA.
Plaintiffs argue that, like the suspension notice in North Carolina Growers' Association, the notice of rulemaking limited comments to the repeal itself, while excluding consideration of any comments regarding the merits of either the Valuation Rule or pre-Valuation Rule regulations. They contend that comments pertinent to the merits of those regulation were inappropriately deferred to the ANPRM, even though they were inextricably intertwined with the question of the whether the Valuation Rule should have been repealed in first instance. Federal Defendants counter that the Proposed Repeal did not expressly limit the scope of comments to be considered and that the ONRR fully considered comments presented in response to the Proposed Repeal and ANPRM in its repeal decision. As will be discussed below, the Court finds that Plaintiffs have presented the more compelling argument.
To facilitate the repeal of the Valuation Rule, the ONRR published two proposed agency actions simultaneously: the Proposed Repeal and the ANPRM. The Proposed Repeal recited the ONRR's intention to repeal the Valuation Rule, which would thereby "maintain the current regulatory status quo by keeping the longstanding pre-existing regulations in effect."
The Proposed Repeal does not provide any guidance on the comments the ONRR was seeking. Nevertheless, the ANPRM confirms that the focus of the comments to be submitted in response to the Proposed Repeal was limited to whether to repeal the Valuation Rule and restore the pre- Valuation Rule regulations.
Though the Proposed Repeal did not impose an express content restriction, it effectuated a de facto one by deferring consideration of substantive comments regarding the regulations at issue to the ANPRM. Like the suspension notice at issue in North Carolina Growers' Association, the Proposed Repeal claimed that implementation of and compliance with the recently-enacted regulations were problematic, and therefore the current regulations should be rescinded and prior regulations reinstated. The alleged problems identified in the Proposed Repeal raised "relevant and significant issues" which, in turn, obligated the ONRR to consider and address comments concerning the substance and merits of both the Valuation Rule and pre-Valuation Rule regulations. See N. Carolina Growers' Ass'n,
For their part, Federal Defendants do not directly address whether the ONRR impermissibly deferred the comment process to the ANPRM. Instead, they argue that the ONRR "considered all of the comments it received for both the proposed repeal and the [ANPRM], regardless of their content." Fed. Defs.' Opp'n at 23 (citing AR 008957-60, AR 008961-62, AR 008973-81, AR 009011-12). But whether or not the ONRR considered all comments received is separate and distinct from whether the ONRR complied with the notice and comment requirement in the first instance. In any event, the record documents cited by Federal Defendants only show that ONRR staff summarized the thirty-three comments received in response to the ANPRM, see AR 8961-62, 8973-81; there is no indication that the ONRR responded to or otherwise considered them in deciding to repeal the Valuation Rule. Indeed, the record shows that ONRR staff treated the ANPRM and Proposed Repeal as separate undertakings. See AR 8785-86.
Finally, the ONRR's failure to provide a meaningful opportunity to comment is underscored by the brevity of the comment period. While there is no bright-line test for the minimum amount of time allotted for the comment period, North Carolina Growers' Ass'n,
In the instant case, a comparison between the ONRR's rulemaking process leading to the Valuation Rule and the process used to repeal it exemplifies the ONRR's failure to provide for a meaningful rulemaking process. The Valuation Rule was promulgated following an extensive period of consideration. After issuing two advanced notices of rulemaking in 2011, the ONRR embarked on a five-year rulemaking process that included public workshops and extensive outreach to the industry, government and public. In January 2015, the ONRR published a draft Valuation Rule followed by a 60-day comment period, which was extended to 120 days at the request of coal and oil and gas companies and their trade associations. AR 6381. During the public comment period, the ONRR received more than 1,000 pages of written comments, from over 300 commenters and 190,000 petition signatories.
In contrast to the years of consideration leading to the promulgation of the Valuation Rule, the ONRR's actions to repeal it took place in a matter of months. Whereas the ONRR provided a 120-day comment pеriod for the draft Valuation Rule, the ONRR allowed only a 30-day comment period to consider its repeal.
Based on the record presented, the Court finds that the ONRR failed to provide meaningful opportunity for comment. The ONRR did not solicit or receive substantive comments regarding either the Valuation Rule or pre-Valuation Rule regulations nor did it fully consider the comments received in repealing the Valuation Rule. As a result, the ONRR "ignored
C. REMAINING CLAIMS
Plaintiffs' second cause of action alleges violations of FOGRMA, FLPMA, MLA and the APA. Federal Defendants contend that they are entitled to summary judgment on the non-APA claim. Fed. Defs.' Mot. at 23-24. Since Plaintiffs do not respond to this argument in their reply, the Court deems this claim abandoned. See Shakur v. Schriro,
D. REMEDY
The Court has determined above that the ONRR violated the APA, which presents the final question as to the proper remedy for such violation. The Complaint seeks declaratory relief and vacatur as relief. For the reasons discussed above, the Court finds that declaratory relief is the proper remedy for the ONRR's violation of the APA. Thus, the Court finds and declares that Federal Defendants' Final Repeal was arbitrary and capricious. See Becerra,
Plaintiffs also seeks vacatur of the Final Repeal. Vacatur is the "standard remedy" when a court concludes that an agency's conduct was illegal under the APA. See Stewardship Council v. EPA,
Federal Defendants deny that they committed any errors and claim that vacating the Final Repeal will be disruptive. They also request an opportunity to submit further briefing on these issues. With regard to the first point, the Court finds that the ONRR committed a number of serious violations of the APA and that its repeal of the Valuation Rule was effectuated in a wholly improper manner. As discussed more fully above, the ONRR violated clearly established Supreme Court precedent requiring an agency to provide a reasoned explanation for disregarding and contradicting facts and circumstances underlying the adoption of the rules that it now seeks to repeal. In addition, the ONRR failed to comport with the APA's notice and comment requirement, thereby
The Court also is unpersuaded by Federal Defendants claim that vacating the Final Repeal will be unduly disruptive. The only disruption identified is "that lessees and the ONRR would need [time] to convert their accounting systems." Fed. Defs.' Mot. at 25. Setting aside the lack of any facts in the record to support that assertion, Federal Defendants overlook that any significant change in the rules governing royalty calculations inevitably will result in a period of adjustment for interested parties. As for further briefing, the Court finds it unnecessary. Federal Defendants have had ample opportunity to prepare their briefs in this action. As such, any arguments regarding whether vacatur is warranted should have been included in their motion papers. Moreover, further briefing will result in further delay. The Valuation Rule was originally scheduled to take effect on January 1, 2017, but, due to the ONRR's improper attempt to postpone the rule and subsequent repeal, none of its royalty valuation provisions were implemented.
The Court finds that both declaratory relief and vacatur are appropriate remedies based on the ONRR's violations of the APA.
IV. CONCLUSION
For the reasons stated above,
IT IS HEREBY ORDERED THAT:
1. Conservation Intervenors and Industry Intervenors' motions to intervene are GRANTED.
2. The Institute's motion for leave to file an amicus curiae brief is GRANTED.
3. Plaintiff and Conservation Intervenors' motions for summary judgment are GRANTED. The Court finds and declares that the ONRR violated the APA when it issued the Final Repeal, which shall be vacated. Federal Defendants and Conservation Intervenors' motions are DENIED.
4. Plaintiffs' second cause of action is DISMISSED insofar as it is premised on statutes other than the APA.
IT IS SO ORDERED.
Notes
The party-defendants are: the DOI; David Bernhardt, Acting Secretary of the Interior; the ONRR; and Gregory Gould, Director of the ONRR. There are two sets of intervenors: (1) Natural Resources Defense Council, Northern Plains Resource Council, The Wilderness Society and Western Organization of Resource Councils (collectively, "Conservation Intervenors"); and (2) National Mining Association, Wyoming Mining Association and American Petroleum Institute (collectively, "Industry Intervenors"). The Conservation Intervenors and Industry Intervenors are aligned with Plaintiffs and Federal Defendants, respectively.
Formed in 1982, the MMS was formerly the Conservation Division of the U.S. Geological Survey. See Secretarial Order No. 3071, as amended on May 10, 1982. In 2010, the DOI reorganized the MMS. Specifically, the ONRR was created to assume MMS's responsibility for collecting payments and royalties and enforcing related regulations. Secretarial Order No. 3200;
The federal oil valuation regulations were amended in 2000. See
Magistrate Judge Laporte, the assigned judge in Becerra, declined to relate the instant action.
Pursuant to Federal Rule of Civil Procedure 24, the Court grants the Conservation Intervenors and Industry Intervenors' unopposed motions to intervene.
Federal Defendants asserts that Woodfin is "wholly inapplicable" because it was not brought under the APA. Fed. Defs.' Opp'n to Mot. for Leave to File an Amicus Brief at 5, Dkt. 56. That contention is wholly without merit. Woodfin simply recites the general standard for permitting an amicus brief. Notably, Federal Defendants cite no authority for the notion that there is a different standard for permitting amicus briefs in APA cases.
Federal Defendants claim they need only articulate "good reasons" for the Final Repeal and that the ONRR amply supplied its reasons for believing that certain aspects of the Valuation Rule would be unworkable in practice. See Fed. Defs.' Mot. at 13-14; Fed. Defs.' Reply at 1-2, Dkt. 62. To that end, both Federal Defendants and Industry Intervenors focus much of their discussion on purported defects in the Valuation Rule. See Fed. Defs.' Mot. at 6-14; Fed. Defs.' Reply at 3-10; Indus. Mot. at 11-21; Indus. Reply at 3-11, Dkt. 63. As discussed, however, the Supreme Court requires a detailed or reasoned explanation when the current findings in support of a policy change contradict earlier findings, as is the case here. Fox,
Industry Intervenors confirm that they previously provided "voluminous comments" containing "detailed legal arguments and economic analyses" on the proposed rule that eventually became the Valuation Rule. Indus. Mot. at 5. They add that with its issuance of the Final Repeal, the ONRR was "finally willing to acknowledge" the defects in the Valuation Rule about which Industry Intervenors had "previously warned" in its comments to the ONRR. Id. at 1, 5, 6. Thus, it is abundantly clear that the defects cited by the ONRR in the Final Repeal are the same issues that the ONRR had rejected in enacting the Valuation Rule. E.g., Becerra,
The benchmarks operate in a sequential fashion such that if the criteria specified in the first benchmark is inapplicable, the lessee then applies the next benchmark, and so on.
In their brief, Federal Defendants assert that the Valuation Rule's method for valuing non-arm's length coal transactions "proved to be 'very challenging,'
Like the purported defect pertaining to valuing non-arm's length coal transactions, the other "defects" in the Valuation Rule identified by the Final Repeal also lack the necessary reasoned explanation. See Navarro,
These comments came from an unidentified member of Congress and a public interest group, who opined that, in light of the significant resources expended in developing the Valuation Rule, a complete repeal would be wasteful.
It bears noting that, based on the comments received, the most controversial aspect of the Valuation Rule was its new provisions for valuing coal transactions.
The Industry Intervenors contend that fiscal impact on federal, state, and local governments and to the public from the Final Repeal (i.e., $ 60.1 to 74.8 million) amounts to 1 percent or less of the total amount of total royalties collected from oil, gas and coal production leases on federal and Indian lands. Industry Mot. at 21. The Court disagrees with the suggestion, inherent in Industry Intervenors' argument, an agency may disregard ostensibly nominal benefits of a rule. See California II,
This argument is at odds with statements presented earlier in Federal Defendants' brief that "establishing the Royalty Policy Committee supported repeal ...." Defs.' Mot. at 12 (emphasis added).
It bears noting that, in contrast to the few sentences in the Proposed Repeal identifying the purported defects with the Valuation Rule, the Final Repeal allocated five pages to discussing those defects-as well as other alleged problems mentioned nowhere in the Proposed Repeal.
As Judge Laporte recognized in Becerra, the ONRR's use of the term "status quo" is inaccurate and misleading.
Notably, the ANPRM delinеates in detail the specific merit-based comments to be submitted, such as whether the Valuation Rule should be amended or whether "new rulemaking would be beneficial or necessary" if the Rule is repealed.
Defendants dismiss this disparity, claiming that a comment period as short as 10 days have been found to be adequate. Fed. Defs.' Opp'n at 21. However, "instances actually warranting a 10-day comment period will be rare" and generally are limited to instances "characterized by the presence of exigent circumstances in which agency action was required in a mere matter of days." N. Carolina Growers' Ass'n,
The Final Repeal states that the ONRR received "more than a thousand comments from 2,342 commenters."