MOBIL EXPLORATION & PRODUCING U.S., INC., and Mobil Corporation, Plaintiffs, and Oxy USA Inc. and Occidental Oil and Gas Corporation, Plaintiffs-Appellants, v. DEPARTMENT OF INTERIOR, sued as: Bruce Babbitt, Secretary, Department of the Interior; Cynthia Quarterman, Director, Minerals Management Service, Department of the Interior; Erasmo Gonzales, Chief, Houston Compliance Division, Minerals Management Service, Department of the Interior; and Gary L. Johnson, Chief, Dallas and Tulsa Compliance Offices, Minerals Management Service, Department of the Interior, Defendants-Appellees.
No. 98-5009
United States Court of Appeals, Tenth Circuit
June 16, 1999
180 F.3d 1192
IV.
We AFFIRM the district court‘s denial of Mr. LaFaver‘s motion to dismiss.6
Lois J. Schiffer, Assistant Attorney General; Donna S. Fitzgerald and Robert L. Klarquist, Attorneys, Department of Justice; Ivan K. Fong, Deputy Associate Attorney General, Washington, D.C.; and Geoffrey Heath and Howard Chalker, Office of the Solicitor, Department of the
Before BALDOCK, McKAY, and BRORBY, Circuit Judges.
McKAY, Circuit Judge.
After examining the briefs and the appellate record, this panel has determined unanimously that oral argument would not materially assist the determination of this appeal. See
Plaintiffs Occidental Oil & Gas Co. and its subsidiary OXY USA, Inc., appeal the district court‘s order on cross-motions for summary judgment determining that it lacked subject matter jurisdiction over this action.1 We exercise jurisdiction under
I.
Plaintiffs are federal oil and gas lessees in California on leases issued under the Mineral Leasing Act,
On July 18, 1996, the MMS sent a letter to OXY stating that it was “conducting a review of the valuation of crude oil for royalty purposes... [which would] cover crude oil and related transactions for January 1, 1980 through [July 31, 1996].” Appellants’ App., Vol. II, Doc. 12 at 342. The letter also stated:
MMS requests OXY to keep all records related to its California operations for the audit period. [MMS] also request[s] access to all documents and information in OXY‘s possession related to the production and disposition of crude oil for the audit period. An initial request for information is set forth in the Enclosure. Additional records and information necessary to complete the audit will be requested as needed.
Id. Plaintiffs did not respond to the letter nor did they provide the MMS with access to the documents requested. Consequently, on September 4, 1996, the MMS issued an administrative subpoena to Occidental to produce information pursuant to
Plaintiffs brought this action in the United States District Court for the Northern District of Oklahoma seeking two results: (1) a declaratory judgment that the document request letter and the administrative subpoena relating to the MMS audit are invalid; and (2) injunctive relief barring or preventing enforcement of the document request letter and the subpoena. Defendants filed a motion to dismiss the action pursuant to Rules
With respect to whether Plaintiffs’ claim objecting to the document request letter was ripe for review, and relying partly on the government‘s disavowal that it would pursue penalties against Plaintiffs under
The district court also determined that because the administrative subpoenas were not self-executing and because no enforcement action had been filed in the Northern District of Oklahoma, review of Plaintiffs’ complaint would contradict the general rule against reviewing pre-enforcement actions. Although Defendants had filed an enforcement action against Plaintiffs in the Central District of California, the court did not believe that the enforcement action conferred jurisdiction in the Northern District of Oklahoma.2 Therefore, the court held that it was “not persuaded that an anticipatory action challenging the validity of an administrative subpoena confers jurisdiction on this Court.” Id., Doc. 23 at 909.
In response to Plaintiffs’ claim that “dismissal of this action would condemn them to maintain records beyond the six-year statute of limitation” set forth in
II.
We review orders granting or denying summary judgment de novo. See Phillips Petroleum Co. v. Lujan, 963 F.2d 1380, 1384 (10th Cir.1992) (Phillips II). Summary judgment is appropriate “if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law.”
On appeal, Plaintiffs argue that the court erred in determining that it did not have jurisdiction and they essentially repeat the arguments they made to the district court. They assert that the district court possesses subject matter jurisdiction because the document request letter and the administrative subpoena constitute final agency actions which are ripe for review. In the alternative, Plaintiffs contend that their claims are reviewable because the MMS exceeded its statutory authority in initiating the audit relating to, ordering the retention and disclosure of, and issuing the subpoena for documents more than six years old. Defendants respond that the district court correctly determined that Plaintiffs’ claims were not ripe for judicial review.
III.
The Administrative Procedure Act provides a right to judicial review of “final agency action for which there is no other adequate remedy in a court.”
In evaluating claims pursuant to the ripeness doctrine, we generally consider four factors:
- whether the issues in the case are purely legal;
- whether the agency action is “final agency action” within the meaning of the Administrative Procedure Act,
5 U.S.C. § 704 ; - whether the action has or will have a direct and immediate impact upon the plaintiff;
- and whether the resolution of the issues will promote effective enforcement and administration by the agency.
Ash Creek, 934 F.2d at 243 (citing Abbott Lab., 387 U.S. at 149-54). As to the first factor, the parties do not dispute that the issues before us are purely legal. The second factor, however, is particularly pertinent to our review of this case because the parties fundamentally disagree about whether the July 1996 document request letter and the administrative subpoena constitute final agency action.
A. Final Agency Action
It is well established that the finality of an administrative action depends on whether the action “impose[s] an obligation, den[ies] a right or fix[es] some legal relationship as a consummation of the administrative process.” Id. (citation omitted); see also Phillips II, 963 F.2d at 1387. More recently, the Supreme Court has articulated this test for final agency action as having two conditions. “First, the action must mark the ‘consummation’ of the agency‘s decisionmaking process.... And second, the action must be one by which ‘rights or obligations have been determined,’ or from which ‘legal consequences will flow.‘” Bennett v. Spear, 520 U.S. 154, 177-78 (1997) (citations omitted); see also Franklin v. Massachusetts, 505 U.S. 788, 797 (1992) (stating test as “whether the agency has completed its decisionmaking process, and whether the result of that process is one that will directly affect the parties“).
1. Document Request Letter
Plaintiffs argue that the document request letter, which they characterize as an “audit engagement order,” is reviewable final agency action for three reasons: (1) it imposes a legal obligation to retain royalty records for the audit period; (2) it represents the consummation of the administrative process; and (3) there is no other adequate remedy under the Administrative Procedure Act.
Under the Bennett framework, the first question before us is whether the letter sent by the MMS to OXY constituted the consummation of the MMS’ decisionmaking process for purposes of our finality determination. Plaintiffs seem to argue that the letter consummated the MMS’ decisionmaking process about whether to conduct an audit because the letter initiated an audit under
While we are initially guided by the Supreme Court‘s instruction that an action of “a merely tentative or interlocutory nature” does not mark the consummation of an agency action, Bennett, 520 U.S. at 178, the Court‘s decision in FTC v. Standard Oil Co. of Cal., 449 U.S. 232 (1980), further elucidates what type of action may constitute the consummation of the agency decisionmaking process. In Standard Oil, the Court held that the FTC‘s issuance of a complaint averring that it had reason to believe that eight major oil companies were violating the Federal Trade Commission Act was not final agency action. See id. at 246. The Court reasoned that the FTC‘s averment of “reason to believe” that the oil companies were violating the FTCA was “not a definitive statement of position [but instead] represent[ed] a threshold determination that further inquiry [was] warranted and that a complaint should initiate proceedings.” Id. at 241. The Court then determined that, because the issuance of the complaint served only to initiate the proceedings by which a definitive agency position could become known, the complaint had no legal force or practical effect that was comparable to the regulation at issue in Abbott Laboratories, 387 U.S. at 151-53 (holding that regulations issued by Commissioner of Food and Drugs were ripe for review because they were definitive, immediately effective, and directly and immediately affected petitioners’ daily business activities). See Standard Oil, 449 U.S. at 241-43.
We think the posture of the MMS letter is strikingly similar to that of the FTC complaint in Standard Oil. Rather than consummating any agency decisionmaking process, the letter merely asked OXY to keep its records for the audit period, requested access to all documents and information in OXY‘s possession relating to crude oil production and disposition for the audit period, and notified OXY that the MMS intended to initiate an audit. At best, the letter served only to initiate further proceedings by which the MMS could determine whether Plaintiffs owed royalties. For this reason, we agree with the district court that the letter represents a tentative or interlocutory action.
Plaintiffs’ claim that the letter was final agency action because it initiated the audit does not change our analysis. Even assuming that the MMS made a decision to begin the audit process, Standard Oil makes clear that not every decision made by an agency qualifies as the type of decisionmaking which is evaluated for ripeness purposes. See id. at 241-42. Thus, even if the letter did initiate an audit, it still did not consummate the type of decisionmaking process envisioned by the Supreme Court in Abbott Laboratories and Standard Oil as final agency action. Circuit courts interpreting the Supreme Court standards have not found agency decisionmaking processes similar to the action taken in this case to be final. See Veldhoen, 35 F.3d at 225 (stating that, in a case involving a marine casualty reporting and investigation, “[a]n agency‘s initiation of an investigation does not constitute final agency action“); CEC Energy Co. v. Pub. Serv. Comm‘n, 891 F.2d 1107, 1110 (3d Cir.1989) (concluding that agency‘s determination that it had jurisdiction to investigate a public utility contract was not definitive but was merely a determination to commence an investigation); Aluminum Co. of Am. v. United States, 790 F.2d 938, 941 (D.C.Cir.1986) (“It is firmly established that agency action is not final merely because it has the effect of requiring a party to participate in an agency proceeding.“). Under FOGRMA, we think such definitive decisionmaking processes would include, for example, enforcing an order or subpoena for records or determining royalties owed as a result of an audit and requiring OXY to pay such royalties, neither of which occurred in the MMS letter here. See
Because we have determined that the MMS’ July 1996 letter to OXY was not the consummation of the agency‘s decisionmaking process, we need not analyze the second prong of the finality determination which asks whether the letter imposes legal obligations or consequences on Plaintiffs. See Bennett, 520 U.S. at 177 (stating that the “two conditions must be satisfied for agency action to be ‘final’ “). Thus, we hold that the MMS letter to OXY did not constitute final agency action.
Although our analysis with respect to the document request letter would normally end here because Plaintiffs cannot satisfy both prongs of the finality test under Bennett, we will briefly address Plaintiffs’ argument that their claims are reviewable because there is no other adequate remedy under the APA. We believe Plaintiffs’ reasoning is flawed. Simply put, the course of events in this case indicates that Plaintiffs already have pursued the remedy available to them, i.e., they refused to provide Defendants with the information requested in the MMS letter. In response to Plaintiffs’ refusal to meet the letter‘s requests, Defendants issued an administrative subpoena under
In summary, Plaintiffs not only have pursued the proper procedure and remedies available under FOGRMA by refusing to comply with the document request letter and with the subsequent subpoena but
2. Administrative Subpoena
Although the Bennett framework applies in theory to an evaluation of the finality of an administrative subpoena, courts are generally guided first by the principle against pre-enforcement review when a party seeks injunctive relief from an agency subpoena: “Where an agency must resort to judicial enforcement of its subpoenas, courts generally dismiss anticipatory actions filed by parties challenging such subpoenas as not being ripe for review because of the availability of an adequate remedy at law if, and when, the agency files an enforcement action.” In re Ramirez, 905 F.2d 97, 98 (5th Cir.1990) (citing cases suggesting that party wishing to challenge enforceability of administrative subpoena should refuse to comply with subpoena and await enforcement action by issuing agency). Because administrative subpoenas issued by the MMS pursuant to
Mindful of this principle, we proceed to Plaintiffs’ argument that the district court erred in characterizing their action as an anticipatory challenge. They assert that review of their claims for injunctive relief would not be “pre-enforcement” review because the MMS already has effectively enforced the subpoena by filing an enforcement action in a California federal court and by issuing Plaintiffs orders to pay royalties. Plaintiffs also contend that the court erred in concluding that under
We think the statutory language of
Further, as we concluded above, Plaintiffs’ argument that they have no alternative adequate remedy is without merit. Plaintiffs pursued the remedy available under
In light of our conclusion that the district court properly determined that it did not have jurisdiction to address an anticipatory challenge to the subpoena, we reject Plaintiffs’ remaining arguments that the subpoena consummated the agency decisionmaking process and imposed legal obligations which would make it ripe for review and that Defendants’ California enforcement action and orders to pay are essentially a counterclaim which supplies the court with an independent ground for jurisdiction. We now turn to Plaintiffs’ argument that their claims are ripe because final agency action is not needed in this case.
3. Exception to the Requirement of Finality
Plaintiffs argue that the district court may exercise jurisdiction under Leedom v. Kyne, 358 U.S. 184 (1958), because the MMS exceeded its statutory authority by initiating the audit, requiring Plaintiffs to maintain records beyond the six-year period specified in
agency action will only fall within the exception created by Kyne when the agency‘s determination is “made in excess of its powers,” when the agency “disobeyed the express command of [its organic act]... and in doing so... acted in excess of its powers,” when the agency order is “an attempted exercise of power that had been specifically withheld,” and when it is “agency action taken in excess of delegated powers.”
United States Dep‘t of Interior, 1 F.3d at 1061 (quoting Kyne, 358 U.S. at 185, 186-87, 189, 190).
Plaintiffs claim that Kyne applies here because the challenged subpoena was issued solely for purposes of an audit which Plaintiffs allege is in contravention of statutory limits on the agency‘s authority. Specifically, they assert that under Phillips Petroleum Co. v. Lujan, 4 F.3d 858 (10th Cir.1993) (Phillips III), the audits and subpoenas are illegal because the MMS is barred from initiating an audit and requesting records more than six
First, this language is dictum. It was not directly related to the facts or the holding of the case, and it was simply intended to guide the district court‘s determination on remand. The critical question in Phillips III was when a cause of action to recover unpaid royalties should accrue under
Our clarification of Phillips III is supported by the language of
Phillips I specifically addressed whether the Secretary of the Interior and the MMS had the authority to order an oil and gas lessee to provide eight-year-old records in connection with an audit. See Phillips I, 951 F.2d at 259-60. The court clearly held that the defendants possessed that authority. Reversing the district court‘s grant of summary judgment to the plaintiff-lessee, the court determined that neither the six-year record-keeping requirement of
Consequently, we think that the mention in Phillips III of a “per se unreasonable delay” related only to the court‘s advice to the district court concerning the tolling of the six-year statute of limitations under
B. Direct and Immediate Impact
Turning to the third ripeness consideration, neither the document request letter nor the administrative subpoena has an appreciable direct and immediate impact upon Plaintiffs. While the second prong of the Bennett finality analysis generally requires the court to examine whether any legal consequences arise from the agency action, the approach to the third prong of the ripeness doctrine is a broader one, focusing on financial and operational impacts as well as on legal ones. We begin by comparing the effects of the letter and the subpoena on Plaintiffs with the effects of the obligations imposed on the petitioner in the seminal case on this point, namely, Abbott Laboratories. In that case, the petitioner was forced to choose between costly compliance with food and drug regulations and severe criminal and civil penalties for noncompliance. In determining that the petitioner‘s claims were ripe, the Court found that the required changes in products and the costs associated with ensuring compliance and preventing civil and criminal prosecution for noncompliance constituted direct and immediate impacts on petitioner‘s daily business. See Abbott Lab., 387 U.S. at 152-53.
The document request letter and subpoena have no immediate substantial impact upon Plaintiffs similar to the burdens described in Abbott Laboratories. Plaintiffs’ refusal to comply with the document request letter itself evidences the letter‘s lack of impact. The letter did not force Plaintiffs to disclose any information; it merely requested that they cooperate with the investigation. Even after the MMS served Plaintiffs with an administrative subpoena, Plaintiffs still did not suffer any immediate or substantial effect for refusing to comply with it.7 Any “consequences” Plaintiffs claim to have suffered or to be suffering as a result of their procedural wrangling with Defendants do not constitute direct and immediate impacts because they do not impose any appreciable obligations upon their daily business. See CEC Energy, 891 F.2d at 1110-11 (stating that agency‘s action determining jurisdiction only imposed obligation to respond to agency‘s further inquiries); cf. Standard Oil, 449 U.S. at 243,
Further, we do not think Plaintiffs’ alleged burden of having to retain information more than six years old is the type of consequence which, standing alone, creates ripeness. Not only does this type of burden arise from every audit requiring records to “be maintained for a [period] longer” than six years,
C. Agency Enforcement and Administration
The fourth and final factor in the ripeness analysis asks whether the resolution of the issues will promote effective enforcement and administration by the agency. We agree with the Government‘s assessment that judicial review of the MMS letter, which we have concluded does not constitute final agency action, would cause substantial disruption to the administrative process. See Appellees’ Br. at 18. As noted above, Plaintiffs’ allegation of harm—that they are illegally forced to retain records for a period beyond the six-year period stated in
IV.
In conclusion, we hold that neither the document request letter nor the administrative subpoena is ripe for review. We therefore AFFIRM the district court‘s grant of summary judgment to Defendants for lack of subject matter jurisdiction.
MONROE G. McKAY
UNITED STATES CIRCUIT JUDGE