Murphy Exploration & Production Co. v. United States Department of the Interior

252 F.3d 473, 346 U.S. App. D.C. 282, 150 Oil & Gas Rep. 1, 2001 U.S. App. LEXIS 13499, 2001 WL 681692
CourtCourt of Appeals for the D.C. Circuit
DecidedJune 19, 2001
DocketNo. 00-5218
StatusPublished
Cited by65 cases

This text of 252 F.3d 473 (Murphy Exploration & Production Co. v. United States Department of the Interior) is published on Counsel Stack Legal Research, covering Court of Appeals for the D.C. Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Murphy Exploration & Production Co. v. United States Department of the Interior, 252 F.3d 473, 346 U.S. App. D.C. 282, 150 Oil & Gas Rep. 1, 2001 U.S. App. LEXIS 13499, 2001 WL 681692 (D.C. Cir. 2001).

Opinions

Opinion for the Court filed by Circuit Judge SENTELLE.

Dissenting opinion filed by Circuit Judge ROGERS.

SENTELLE, Circuit Judge:

Murphy Exploration and Production Co. (“Murphy”) appeals the District Court’s dismissal, for lack of jurisdiction, of its claim that the Department of the Interior (“DOI”) failed to reimburse it for mining royalty overpayments. Murphy’s lawsuit invokes the Federal Oñ and Gas Royalty Simplification and Fairness Act (“FOGRS-FA”), which confers jurisdiction on courts to consider challenges to “administrative proceedings” that the agency fails to resolve within 33 months after they are commenced. Murphy proposes that it commenced such an “administrative proceeding” when it submitted a refund request to DOI. Because we conclude that FOGRSFA’s 33-month deadline period begins to run when a party submits a refund request, we hold that the district court erroneously concluded that it lacked jurisdiction to hear Murphy’s claim.

I. BACKGROUND

Several acts of Congress confer on DOI the authority to issue leases to mining companies that wish to extract minerals from lands administered by the federal government. See, e.g., the Mineral Leasing Act, 30 U.S.C. § 181 et seq.; the Mineral Leasing Act for Acquired Lands, 30 U.S.C. § 351 et seq.; and the Outer Continental Shelf Lands Act, 43 U.S.C. § 1331 et seq. As a condition of their leases, lessees must pay the government royalties based on the value of the minerals they produce.

[476]*476In response to a series of court decisions between 1988 and 1997, DOI’s Minerals Management Service (“MMS”) altered the method it uses to calculate the royalties that producers must pay when they extract gas from its lands. See Diamond Shamrock Exploration Co. v. Hodel, 853 F.2d 1159 (5th Cir.1988); Independent Petroleum Ass’n of Am. v. Babbitt, 92 F.3d 1248 (D.C.Cir.1996); In re Century Offshore Mgmt. Corp., 111 F.3d 443 (6th Cir.1997). Royalties now are based on a company’s “gross proceeds.” A gas producer’s “gross proceeds” include “buydowns” (moneys paid by a purchaser to reduce the price at which gas covered by an initial contract will be sold in the future), but do not include “buyouts” (payments by a gas purchaser to terminate a contract), or “take-or-pay payments” (payments a purchaser is obliged to make even if it does not take the gas it contracted to buy). Mobil Exploration and Producing U.S., Inc., MMS-94-0151-OCS (1998); Antelope Prod. Co., MMS-96-0068-O&G (1998).

A producer may challenge an MMS order to pay royalties in two ways. First, it may pursue an administrative appeal. 30 C.F.R. Pt. 290. Second, the producer is entitled to immediate judicial review if the agency fails to resolve the royalties dispute timely. The latter type of challenge is authorized by FOGRSFA. Enacted in 1996, FOGRSFA requires DOI’s Secretary to “issue a final decision in any administrative proceeding, including any administrative proceedings pending on August 13, 1996, within 33 months from the date such proceeding was commenced or 33 months from August 13, 1996, whichever is later.” 30 U.S.C. § 1724(h)(1). If the Secretary fails to do so within the allotted time, she “shall be deemed to have issued a final decision in favor of the Secretary ... and the appellant shall have a right to judicial review of such deemed final action in accordance with Title 5.” Id. § 1724(h)(2)(B). FOGRSFA further defines “administrative proceeding” as “any Department of the Interior- agency process in which a demand, decision or order issued by the Secretary ... is subject to appeal or has been appealed.” Id. § 1702(18). In other words, DOI’s failure to resolve an “administrative proceeding” relating to a royalties dispute within 33 months triggers the right to immediate judicial review.

In 1999, DOI promulgated regulations interpreting FOGRSFA’s 33-month deadline. 64 Fed.Reg. 26,240 (1999). As the agency sees it, § 1724(h)’s reference to “any administrative proceedings” includes only administrative appeals — or, to say the same thing, the 33 months begin to run only when a party files a notice of appeal with the agency. “For appeals involving Federal oil and gas leases covered by this new provision, DOI has 33 months from the date a proceeding is commenced to complete all levels of administrative review.” Id. at 26,240 (emphasis added). If DOI fails to “decide the appeal within 33 months, the appeal is deemed decided for or against DOI, depending on the type of order and the monetary amount at issue in the appeal.” Id. (emphasis added). FOGRSFA’s deadline is not triggered, for example, “on the date that an MMS order is received by the recipient.” Id. at 26,-248.

On February 3, 1989, Murphy — a producer that holds oil and gas leases on a number of DOI-administered lands — submitted a refund request claiming that the agency owed it some $4.1 million for past royalty overcharges. Murphy’s claim was not resolved for nearly ten years. On November 3, 1998, MMS issued an order instructing Murphy to pay it nearly $368,000 in -outstanding royalties. The agency determined that Murphy had overpaid by nearly $990,000 on certain contracts, but that it owed $1.3 million in [477]*477royalties on certain others. Murphy appealed administratively on December 4, 1998.

On March 5, 1999, with its administrative appeal still pending, Murphy challenged the November 3 order in the United States District Court for the District of Columbia. Murphy’s lawsuit cited FOGRSFA for the proposition that DOI’s failure to resolve timely its refund request was a final agency action entitling it to immediate judicial review. Because, Murphy argued, its refund request set in motion an “agency process” that could result in the Secretary issuing “a demand, decision or order” that “is subject to appeal,” 30 U.S.C. § 1702(18), it therefore was an “administrative proceeding” within the meaning of FOGRSFA. And because its request had been pending for more than 33 months when the statute was enacted, the company was entitled to immediate judicial review. Murphy also argued that, even assuming the validity of DOI’s interpretation of the statute, it was entitled to immediate judicial review of one portion of its refund request — a December 1993 DOI order that it had appealed and that the agency later rescinded. Finally, Murphy argued that, quite apart from FOGRSFA, the expiration of nearly ten years from the filing of its refund request to DOI’s November 1998 order constituted an unreasonable delay under Telecommunications Research, & Action Center v. FCC, 750 F.2d 70 (D.C.Cir.1984).

The district court on January 27, 2000 dismissed Murphy’s suit for lack of jurisdiction, on the grounds that FOGRSFA’s 33-month deadline had not yet expired. Murphy Exploration & Prod. Co. v. Dep’t of the Interior, No. 99-570 (D.D.C. Jan. 27, 2000).

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252 F.3d 473, 346 U.S. App. D.C. 282, 150 Oil & Gas Rep. 1, 2001 U.S. App. LEXIS 13499, 2001 WL 681692, Counsel Stack Legal Research, https://law.counselstack.com/opinion/murphy-exploration-production-co-v-united-states-department-of-the-cadc-2001.