CHAPTER 9 ADMINISTRATIVE APPEALS
| Jurisdiction | United States |
(Feb 1998)
ADMINISTRATIVE APPEALS
AS ADOPTED BY THE ROYALTY POLICY COMMITTEE
March 21, 1997
Table of Contents
Executive Summary
Introduction
Background
Recommendations and Rationale
Appendix A — Roster of Subcommittee Members and Participants
Appendix B — Description of Current MMS Appeals Process
Appendix C — Flow Chart of Revised Appeals Process Based on Subcommittee Recommendations
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Executive Summary
Introduction
The Department of the Interior (DOI) established a Royalty Policy Committee (RPC) in 1995 under the Minerals Management Advisory Board. The RPC's purpose was to provide advice to the Secretary on the Department's management of Federal and Indian mineral leases, revenues, and other minerals-related policies. The RPC included representatives from states, Indian tribes and allottee organizations, minerals industry associations, Federal agencies and the public. At its first meeting in September 1995, the RPC established eight Subcommittees, including the Appeals and Alternative Dispute Resolution (ADR) Subcommittee.
Appeals and ADR Subcommittee
The Appeals and ADR Subcommittee was created to make recommendations to the Royalty Policy Committee to improve the processes involving appeals and alternative dispute resolution. This report sets forth the Subcommittee's recommendations upon which consensus was reached, for the consideration by the RPC.
Membership in the Appeals and ADR Subcommittee has varied over the course of the year and one-half of its existence. At the conclusion of its deliberations it included eleven representatives from industry, five representatives from states, and two representatives from Indian tribes. In addition to the voting members, the Subcommittee benefitted from the participation of several other persons as non-voting members and of two employees of MMS as staff to the Subcommittee. These representatives and other persons are listed in Appendix A.
Consensus was defined as a two-thirds majority vote. This recommendation has been adopted unanimously.
Purpose of the Administrative Appeals Process
The Subcommittee agreed that the principal purpose of the MMS administrative appeals process should be the expeditious and independent review of cases involving disputed facts, legal issues, or policy upon request of the adversely affected party.
Concerns with Current Appeals Process
The Subcommittee recognized that the MMS appeals process had been under criticism and serious review since 1991 and that substantial reform was needed. Among others, the Subcommittee identified the following problems with the existing appeals process:
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1. Lack of timely resolution;
2. Lack of clarity in some orders;
3. The perceived lack of independence and unfairness of the MMS Director level of appeals due to the surname process and possible ex parte communication;
4. Policy uncertainty—orders issued without the MMS having clearly decided and explained policy issues;
5. Inability for appellant to know or ascertain exactly what is contained in the administrative record;
6. The conflicting roles of the Solicitor's Office in satisfying institutional needs (assisting in setting policy and overall litigation strategy) and acting as a legal advocate for MMS; (this means that sometimes decisions on individual appeals become secondary to the larger matrix of policy and decision-making); and,
7. Duplication of effort within MMS Director review and Interior Board of Land Appeals (IBLA) level review.
Events Affecting the Subcommittee's Considerations
While the Subcommittee was working, the President signed the Federal Oil and Gas Royalty Simplification and Fairness Act (FOGRSFA), which, among other provisions, established a 33-month time limitation for the Department of the Interior to make final decisions on appeals involving royalties due on Federal oil and gas leases and required a settlement conference for such appeals. This provided a further impetus to the Committee's efforts to reduce overall time for making final Departmental decisions on appeals and to expand opportunities for ADR. In addition, MMS proposed a draft regulation that would place a 16-month time limitation on the MMS appeals process, leaving the rest of the 33-month period for review at the IBLA. The Subcommittee strongly urges that the recommendations in this report be substituted for MMS's proposed regulation.
Recommendations
The Subcommittee has developed a number of specific steps involving both appeals and ADR processes, incorporated into a one-stage IBLA administrative appeal process, which are designed to solve the problems identified above. The Subcommittee recommends that:
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1. MMS resolve all fundamental policy questions before it, (or delegated states1 or Indian tribes), issues a demand or order;
2. DOI encourage the resolution of disputes without completing the formal administrative appeals process;
3. DOI clarify the standing of Indian lessors and "states concerned" with respect to the administrative appeals process;
4. DOI change the structure of the administrative appeals process, so that appeals of MMS, state or tribal orders are taken to the Interior Board of Land Appeals, under a special set of rules applicable to royalty appeals. The rules would specify some differences for appeals involving Indian leases (and possibly solid minerals leases), since the provisions of FOGRSFA do not apply to these categories of leases;
5. each demand or order contain a clear and complete statement of the facts, law, and agency policy decisions upon which the demand is based; and
6. the contents of the administrative record be identified early in the process and prior to the filing of formal briefs with the IBLA.
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Introduction
Probably no aspect of the Minerals Management Service Royalty Management Program has been more studied over the past several years than the MMS Appeals Process. Yet despite a myriad of recommendations and reforms, the customers remain convinced that the process is unfair, too costly, too time consuming and does not constitute a true appeals process. The Royalty Policy Committee constituted this subcommittee on appeals and alternative dispute resolution to 1) study once again the way the appeals, and its associated alternative dispute resolution, process currently works, and 2) recommend changes in those processes, if they are warranted.
The Subcommittee held extensive meetings over the course of many months. There were significant differences among the members during those meetings, but after thorough investigation, the Subcommittee unanimously adopted this report, which recommends fundamental changes in the way the royalty appeals process works. The Subcommittee did not study, and makes no recommendations on changes in other MMS appeals processes involving offshore minerals management.
Throughout its study, the subcommittee insisted that its recommendations needed to meet certain principles: 1) the position of the MMS would not be substantially harmed by changes in process; 2) the process would need to be reasonably completed within less than 33 months, 3) the parties should be encouraged to develop the facts, clarify the issues, and resolve disputes at the earliest possible opportunity; 4) the costs of the process to the participants would be reduced; 5) the role of Indian lessors as parties would be clarified; and 6) the ability of delegated state auditors to assure that their input was considered would be clarified. We believe we have met these principles and more.
We have assured Indian lessors standing as parties. We believe this conclusion is not only good law, but good policy, as the lessor is the real party in interest. We have allowed delegated states to participate in a way akin to parties when the MMS does not support their position. We believe this participation is called for due to both the provisions of section 204 of the Federal Oil and Gas Royalty Management Act (FOGRMA), which provides for suits by states in Federal Court to collect underpayments, and the
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amendments to section 205 of FOGRMA contained in section 3 of FOGRSFA, which provide that states may issue orders without MMS consent. The committee concluded that if Congress wanted states to be able to issue orders and to sue, then participation in the administrative process would be consistent with those provisions.
The most fundamental recommendation was to initiate a process wherein royalty cases are appealed directly with the Interior Board of Land Appeals. The committee believed this was necessary 1) to assure the appearance of fairness in the process, 2) to clarify the role of the Solicitor, the MMS, and potential states as advocates, and 3) to assure that the process would reasonably be completed within the 33-month time limit set by FOGRSFA for Federal oil and gas royalty appeals. While that is the fundamental recommendation, the Subcommittee believes that it is the details of its proposal that make the process an improvement. We urge you to read the report carefully and to consider it in its entirety. It is important to realize that consensus, while elusive at times, was reached after months of deliberation. The Subcommittee supports these recommendations and believes that they should be adopted in full by the RPC and the Secretary, and substituted for the MMS proposed rule to change the MMS appeals process.
Background
1. Appeals and Alternative Dispute Resolution (ADR) Subcommittee
The Appeals and ADR Subcommittee of the Royalty Policy Committee met initially on February 29, 1996, to discuss the purposes of the appeals process, concerns with the current process, and possible solutions. The Subcommittee held five additional meetings...
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