CHAPTER 17 JUDICIAL REVIEW OF FEDERAL|INDIAN|STATE ROYALTY AND COLLECTION DECISIONS
| Jurisdiction | United States |
(Mar 1988)
JUDICIAL REVIEW OF FEDERAL/INDIAN/STATE ROYALTY AND COLLECTION DECISIONS
Gorsuch, Kirgis, Campbell, Walker and Grover
Denver, Colorado
I. INTRODUCTION
The purpose of this paper is to provide an overview of the procedural aspects of judicial review of royalty valuation decisions and to offer some practical litigation strategy suggestions. Since there is, of course, no discrete body of law peculiar to review of royalty rulings, most of the discussion will focus on general principles of judicial review of agency actions and decisions under the Administrative Procedure Act ("APA"), 5 U.S.C. §§ 701-706 , and to a much lesser extent its state statutory counterparts. Wherever possible, however, citations are included to those royalty valuation cases which illustrate relevant judicial review concepts.
To a tremendous extent, the efficacy of the judicial review will depend on the groundwork which has been laid at the agency level. For this reason, the paper on administrative appeals is required reading. The failure to raise issues at the administrative level can prove fatal to the court proceeding. Similarly, a flimsy effort to introduce fact and expert evidence and proffer technical data during the proceedings within the Department of Interior or state agency can result in a very one-sided administrative record.
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In short, the moment the challenged payment order or notice of other agency action is received, the potential of ultimate judicial review must be considered and the necessary factual and legal ammunition for judicial review gathered.
II. JURISDICTION
Court jurisdiction will generally be invoked by a challenge to a final agency action (such as a calculation or payment order) or rule-making, in the appeal of an adjudicatory enforcement ruling (such as a penalty) or in the defense of an enforcement action.
Federal court jurisdiction is usually based upon 28 U.S.C. § 1331, the "federal question" provision, which gives the United States district courts original jurisdiction "of all civil actions arising under the Constitution, laws or treaties of the United States."
The federal court complaint should thus recite that the action arises under the appropriate federal statutes, such as the Mineral Lands Leasing Act of 1920, 30 U.S.C. § 181 et seq.; the Minerals Leasing Act for Acquired Lands, 30 U.S.C. § 351-359 ; and the Federal Oil and Gas Royalty Management Act of 1982 ("FOGRMA"), 30 U.S.C. §§ 1701 et seq.
With respect to offshore leases covering lands located on the Outer Continental Shelf, there is an independent statutory basis for federal district court jurisdiction pursuant to the Outer Continental Shelf Lands Act ("OCSLA"), 43 U.S.C. § 1331, et seq. See 43 U.S.C. § 1349(b).
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Most federal proceedings involve judicial review under the APA, so the Complaint should also refer to the judicial review provisions of that Act, 5 U.S.C. §§ 701 -706. (Note, however, that the APA itself is not an independent jurisdictional basis for judicial review of agency action. Califano v. Sanders, 430 U.S. 99 (1977).)
If declaratory relief is sought in the federal district court, reference in the Complaint should be made to the Declaratory Judgments Act, 28 U.S.C. §§ 2201 and 2202. Notably the APA permits judicial review of agency action by suits for declaratory judgment or mandatory injunction. In appropriate cases, relief in the nature of mandamus may also be sought under 28 U.S.C. § 1361.
The following is an example of a complaint paragraph alleging federal district jurisdiction over a controversy relating to federal lease royalty valuation:
This action arises under the Outer Continental Shelf Lands Act ("OCSLA"), 43 U.S.C. § 1331, et seq.; the Mineral Lands Leasing Act, 30 U.S.C. § 181, et seq.; the Federal Oil and Gas Royalty Management Act, 30 U.S.C. § 1701, et seq.; the Administrative Procedure Act, 5 U.S.C. § 701, et seq.; and the Constitution of the United States. The Court has jurisdiction over the action under 28 U.S.C. § 1331(a) (federal question) and 43 U.S.C. § 1349(b) (OCSLA). Declaratory relief is authorized by 28 U.S.C. §§ 2201 and 2202.
Contract claims against the United States for damages are governed by the Tucker Act, 28 U.S.C., § 1346(a)(2), § 1491, and the United States Court of Claims has exclusive jurisdiction over such claims for amounts in excess of $10,000.
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III. VENUE
Venue for the federal court action will usually be governed by 28 U.S.C. § 1391(e), which relates to civil actions "in which a defendant is an officer or employee of the United States or any agency thereof acting in his official capacity or under color of legal authority, or an agency of the United States, or the United States...."
Under that provision, the action may be brought in any judicial district in which "(1) a defendant in the action resides, or (2) the cause of action arose, or (3) any real property involved in the action is situated, or (4) the plaintiff resides if no real property is involved in the action."
With respect to determining where a government defendant "resides" for purposes of subpart (e)(1) of the statute, courts have held that the residence of a federal official is the place where he performs his official duties. See e.g., Reuben H. Donnelly Corporation v. Federal Trade Commission, 580 F.2d 264, 266 (7th Cir. 1978); Lamont v. Haig, 590 F.2d 1124, 1128 (D.C. Cir. 1978).
Determining the place where a cause of action arises for purposes of subpart (e)(2) entails a common sense appraisal, permitting venue "where a substantial portion of the acts or omissions giving rise to the actions occurred, notwithstanding that venue might also lie in other districts." Lamont v. Haig, supra, 590 F.2d at 1134. See also Murphy v. Weinberger, 554 F. Supp. 811, 818 (D.D.C. 1983).
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It is important to bear in mind that the residence of a corporate plaintiff for venue purposes under subpart (e)(4) is limited to the state of its incorporation. Johns-Manville Sales Corporation v. United States, 796 F.2d 372, 373 (10th Cir. 1986); Data Disc, Inc. v. Systems Technology, Inc., 557 F.2d 1280, 1289 (9th Cir. 1977); Carter-Beveridge Drilling Company, Inc. v. Hughes, 323 F.2d 417 (5th Cir. 1963).
The statute creates the opportunity for permissible forum-shopping because of the alternatives set forth above. Factors to consider in determining an appropriate district in which to file should include: the favorable or unfavorable nature of prior royalty valuation decisions of the district court or of the court of appeals in the particular circuit; any discernible tendency of the court either to "rubber stamp" or to scrutinize critically agency decisions; the degree of difficulty of obtaining a stay or injunctive relief, if necessary; the likelihood of the court's permitting evidentiary hearings or discovery; and the likelihood of obtaining a speedy determination.
While venue for judicial review of most Department of Interior royalty valuation orders will be under § 1391(e), venue for certain actions is specifically limited by statute. For example, venue for actions arising under OCSLA may be instituted in the "judicial district in which any defendant resides or may be found, or in the judicial district of the state nearest the place the cause of action arose." 43 U.S.C. § 1349(b).
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Under the FOGRMA, actions by the Attorney General or his designee to restrain violations of the Act or to compel actions required by or under any mineral leasing law of the United States may be brought only in the federal district court for the judicial district where the act, omission, or transaction constituting a violation occurred or where the defendant is found or transacts business. 30 U.S.C. § 1722(b).
Actions by a state to recover any royalty, interest or civil penalty with respect to a federal oil and gas lease may be brought only in the federal district court in which "the lease site or the leasing activity complained of is located." 30 U.S.C. § 1734(b).
Judicial review of final orders imposing civil penalties must be sought in the federal district court in which the violation allegedly took place. 30 U.S.C. § 1719(j).
As noted above, actions to recover damages in excess of $10,000 against the United States (other than those based on tort claims) must be brought in the Court of Claims. 28 U.S.C. § 1491.
IV. SCOPE OF REVIEW
For the most part, the scope and standard of judicial review of federal royalty valuation orders and actions will be governed by § 706 of the APA, 5 U.S.C. § 706, which provides as follows:
To the extent necessary to decision and when presented, the reviewing court shall decide all relevant questions of law, interpret constitutional
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and statutory provisions, and determine the meaning or applicability of the terms of an agency action. The reviewing court shall —
(1) compel agency action unlawfully withheld or unreasonably delayed; and
(2) hold unlawful and set aside agency action, findings, and conclusions found to be—
(A) arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law;
(B) contrary to constitutional right, power, privilege, or immunity;
(C) in excess of statutory jurisdiction, authority, or limitations, or short of statutory right;
(D) without observance of procedure required by law;
(E) unsupported by substantial evidence in a case subject to sections 556 and 557 of this title or otherwise reviewed on the record of an agency hearing provided by statute; or
(F) unwarranted by the facts to the extent that the facts are subject to trial de novo by the reviewing court.
In making the foregoing determinations, the court shall review the whole record or those parts of it cited by a party, and due account shall be taken of the rule of prejudicial error.
A. Review of Non-Adjudicative Rulings
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