CHAPTER 5 APPEALING ROYALTY DECISIONS TO THE INTERIOR BOARD OF LAND APPEALS— PUTTING YOUR BEST CASE FORWARD

• Jurisdiction: United States

Federal & Indian Oil & Gas Royalty Valuation and Management III
(2000)
CHAPTER 5
APPEALING ROYALTY DECISIONS TO THE INTERIOR BOARD OF LAND APPEALS— PUTTING YOUR BEST CASE FORWARD
Will A. Irwin, Administrative Judge ^*
Interior Board of Land Appeals
Arlington, Virginia
Co-Presenter
James L. Byrnes
Interior Board of Land Appeals
Arlington, Virginia

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April 18, 2000

I. Introduction

The Interior Board of Land Appeals (IBLA) was established as a component of the Office of Hearings and Appeals in 1970.¹ In 1973, the U.S. Geological Survey amended its regulations to provide that decisions by the Director of the USGS (later, as of 1982, the Director of MMS) on royalty matters could be appealed further to IBLA.² These regulations in 30 CFR Part 290 were recently amended on May 13, 1999.³

Historically, MMS royalty appeals have been an important part of IBLA's caseload. In fiscal years 1989-1999, we issued headnoted opinions disposing of a total of 292 royalty appeals. MMS was affirmed in 188 of them, i.e., 64% of the time. In addition, we issued orders disposing of another 65 appeals on the merits; in these summary dispositions MMS was affirmed in 45 appeals, i.e., 69% of the time. So, overall, MMS has been affirmed about 65% of the time. See Appendix A. These statistics, and the fact that Board decisions are reviewed under the arbitrary and capricious standard in 5 U.S.C. § 706(2)(A) ⁴ indicate the importance of putting your client's best case forward at the stage of Board review of MMS royalty decisions.

Since the beginning of fiscal year 2000, we have received 9 appeals from MMS decisions (2 OCS operations cases, and 7 OCS suspension of production cases) and disposed of 31 appeals (24 of the 31 were withdrawn or settled). At the end of February 2000, IBLA had 62 appeals from MMS decisions (including petitions for reconsideration) pending on its docket. A list of those cases is attached as Appendix B.

II. Selected Precedents and Recommendations for Practice before IBLA

The May 13, 1999, rules continue to provide for an initial appeal of MMS orders to the Director of MMS, with a right of appeal to the IBLA for any party adversely affected by the MMS Director's decision.⁵ "Order" is carefully defined in the rule.⁶ Appeals to the IBLA continue to be governed by the rules in 43 CFR, Part 4, Subpart E.⁷

Chuck Kaiser's paper for the 1992 special institute remains a very valuable resource concerning appeals to the IBLA under the rules in 43 CFR, Part 4, Subpart E, and I recommend it.⁸ A copy is attached; other selected references are listed at the conclusion of this paper. Below I offer some supplementary precedents and recommendations.

A. Need for a Decision by the Director of MMS

Caution is appropriate for Kaiser's statement that if the facts show

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the Director of MMS was aware of a decision by an MMS officer, a party may not be required to appeal to the Director of MMS before appealing to IBLA.⁹ He states that Marathon Oil Co., 94 IBLA 78, 81 (1986), vacated in part, Marathon Oil Co. (On Reconsideration), 103 IBLA 138 (1988), "may suggest that the IBLA will liberally construe the `knowledge' requirement so that appeals may be taken directly to it."¹⁰ While Marathon appears viable, see Blackwood & Nichols Co., 139 IBLA 227, 229 (1997), we have recently dismissed an appeal that was not first considered by the Director of MMS. KMF Mineral Resources, Inc., 151 IBLA 35, 38 (1999).

B. Proper Place of Filing a Notice of Appeal

Kaiser's statement that a notice of appeal filed with the Board, rather than with the Director of MMS, will be considered properly filed is no longer correct.¹¹ See Marc Thomsen, 148 IBLA 263, 264 (1999); Thelma M. Eckert, 120 IBLA 367 (1991). 43 CFR § 4.411(a) provides that

A person who wishes to appeal to the Board must file in the office of the officer who made the decision (not the Board) a notice that he wishes to appeal. A person served with the decision being appealed must transmit the notice of appeal in time for it to be filed in the office where it is required to be filed within 30 days after the date of service.

C. Consequences of Failure to Serve

Kaiser notes that 43 CFR § 4.402 provides that failure to serve a notice of appeal or statement of reasons on an adverse party subjects an appeal to summary dismissal.¹² Although we do not encourage failure to serve, we usually require that a party moving to dismiss an appeal for such a failure demonstrate prejudice from the failure. James C. Mackey, 114 IBLA 308, 313 (1990); cf. Texaco Inc., 134 IBLA 109, 113 n. 3 (1995) (declining to disregard an untimely answer under 43 CFR § 4.414).

D. Extensions of Time

Kaiser advises seeking extensions of time where necessary, and states that IBLA is generally willing to grant them.¹³ Our practice concerning extensions has, of course, been significantly altered as a result of the enactment of section 115(h)(1) of the Federal Oil and Gas Royalty Simplification and Fairness Act of 1996 (RSFA), 30 U.S.C. § 1724(h)(1). See the discussion in section III., below.

E. Standard Employed in Deciding Whether to Refer for a Hearing

Kaiser recites the standard we employ when considering whether to refer a matter for a hearing before an Administrative Law Judge under 43 CFR § 4.415, i.e., "when there are significant factual or legal issues remaining to be decided and the record without a hearing would be insufficient for resolving them" Stickelman v. United States, 563 F.2d 413, 417 (9th Cir. 1977)), and notes that motions for hearing are often denied.¹⁴

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We are reluctant to grant hearings because they are expensive and because they are frequently a considerable (and intentional) source of delay. We do not find a hearing is necessary "in the absence of a material issue of fact which, if proven, would alter the disposition of the appeal." Woods Petroleum Co., 86 IBLA 46, 55 (1985). If you request a hearing, support the request with an explanation of "what specific issues of material fact require a hearing, what evidence concerning these issues must be presented by oral testimony and what witnesses need to be examined, and what evidence could be presented in documentary form, e.g., by affidavit, rather than by oral testimony." W.J. and Betty Lo Wells, 122 IBLA 250, 252 (1992); see Kernco Drilling Co., 71 IBLA 53, 56 (1983).

F. Compiling a Complete Administrative Record

Kaiser recommends obtaining a copy of the record that MMS forwards to IBLA.¹⁵ If you have any doubt whether the record forwarded to the Board by MMS is complete, or contains anything you may not have seen, arrange with the IBLA Docket Attorney to examine it, either at IBLA's offices or at a convenient office of the Department to which we would send it for examination and copying. You may call the Docket Attorney at 703-235-3750.

If you have documents you believe are relevant to IBLA review of an MMS Director's decision that are not in the record MMS has submitted, you may include them with your statement of reasons for appeal or afterwards.¹⁶ Cf. (In Re Lick Gulch Timber Sale), 72 IBLA 261, 273 n. 6, 90 I.D. 189, 196 n. 6 (1983):

The entire purpose of the appellate system in this Department is to afford aggrieved parties a forum in which their grievances can be adjudicated at the Departmental level. *** The Board, in essence, makes the determination for the Secretary of the Interior. As his direct delegate, the Board, no less than the Secretary, himself, is required to consider all relevant information tendered both by an appellant and by BLM. *** In rendering decisions for the Department the Board has the right to expect as complete a record as the parties can provide.

Kaiser observes that "Departmental rules do not contemplate discovery in typical IBLA proceedings."¹⁷ Given this situation, to address the need for a prompt compilation of the administrative record, the Royalty Policy Committee report suggested that if all affected parties could not agree on the evidence to be provided as part of the administrative record, a party could petition an Administrative Law Judge in the Department's Office of Hearings and Appeals (OHA) or an agreed-upon arbitrator to resolve disputes.¹⁸ In the January 1999 proposed rules, MMS and OHA provided that if the parties to a record development conference could not agree on the contents of the record, a party could submit an additional statement of facts and issues and supporting documentation to MMS, and could, after the record was deemed complete, petition the IBLA to allow the record to be supplemented; in addition, after the appeal reached IBLA, IBLA could order the parties to produce additional evidence or could refer the

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matter for a hearing under 43 CFR § 4.415.¹⁹ In the absence of the adoption of these proposed rules, if you believe MMS has withheld materials from the record upon which it relied in reaching the Director's decision, you may wish to consider filing a FOIA request.²⁰

Don't hold back submitting documents, anticipating we will grant a hearing at which they would be admitted. See Pine Grove Farms, 126 IBLA 269, 275 (1993).

Similarly, don't submit new information with a petition for reconsideration of an IBLA decision, unless you can explain why the information was not available for the original adjudication. See State of Alaska (Mabel S. Brown), 123 IBLA 233, 239A (1992); United States v. Aiken Builders Products (On Reconsideration), 102 IBLA 70, 77-78 (1988); 52 FR 21307 (June 5, 1987). But see Dugan Production Corp. (On Reconsideration), 117 IBLA 153 (1990).

Appeals from MMS decisions have been the occasion for the IBLA to state how a complete administrative record should be compiled, see Mobil Oil Exploration and Producing Southeast, Inc., 90 IBLA 173, 177 (1986), and what the consequences of an incomplete record are:

The reason for filing the complete agency record with the Board is...