Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca10-89-08037/USCOURTS-ca10-89-08037-0/pdf.json

Nature of Suit Code: 890
Nature of Suit: Other Statutory Actions
Cause of Action: 

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FILED 

Uoited Snues Coon of Appeals 

PUBLISH Tenth Circuit 

UNITED STATES COURT OF APPEALS tl.UG 16 1990 

TENTH CIRCUIT .ROBERT L. HOECKER 

No. 89-8037 

ARCH MINERAL CORPORATION ) 

and ARK LAND COMPANY, ) 

) 

Plaintiffs-Appellants, ) 

) 

v. ) 

) 

MANUEL LUJAN, JR., Secretary ) 

of the Interior, and BARRY A. ) 

WILLIAMSON, Director, Minerals ) 

Management Service, u.s. ) 

Department of the Interior, ) 

) 

Defendants-Appellees. ) 

Appeal from the United States District Court 

For the District of Wyoming 

(D.C. No. C88-0113K) 

Clerk 

Bruce A. Salzburg of Herschler, Freudenthal, Salzburg, Bonds & 

Rideout, P.C., Cheyenne, Wyoming, for Plaintiffs-Appellants. 

Ellen J. Durkee, Attorney, Department of Justice, Washington, D.C. 

(Donald A. Carr, Acting Assistant Attorney General; Richard A. 

Stacy, United States Attorney and Carol A. Statkus, Assistant 

United States Attorney, Cheyenne, Wyoming; Charles W. Findlay and 

John A. Bryson, Attorneys, Department of Justice, Washington, 

D.C.; Of Counsel: Susan K. Hoven, Office of the Solicitor, 

Department of the Interior, Washington, D.C., with her on the 

brief), for Defendants-Appellees. 

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Before HOLLOWAY, Chief Judge, McWILLIAMS, Circuit Judge, and 

BABCOCK, District Judge.* 

McWILLIAMS, Circuit Judge. 

* Honorable Lewis T. Babcock, United States District Judge, for 

the District of Colorado, sitting by designation. 

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Arch Mineral Corporation and its wholly owned subsidiary, Ark 

Land Company, hereinafter collectively referred to as Ark, filed 

the present action in the United States District Court for the 

District of Wyoming on April 14, 1988, against Donald P. Hodel, 

then Secretary of the Interior, and William D. Bettenberg, Director, Mineral Management Service, United States Department of the 

Interior. Ark had certain coal leases with the United States, and 

by its suit sought to enjoin the Secretary from taking any further 

administrative or judicial action to collect "readjusted" rents 

and royalties allegedly due the United States on those leases. 

The Secretary filed an answer and a counterclaim in which he 

sought judgment against Ark for underpaid rents and royalties on 

the several coal leases in the sum of approximately $5,000,000. 

Both parties filed motions for summary judgment. The 

district court denied Ark's motion for summary judgment and 

granted summary judgment in favor of the Secretary on the first 

three counts in Ark's complaint and dismissed the fourth count. 

The remaining three counts in the complaint were dismissed without 

prejudice so that they could be refiled after conclusion of pending administrative hearings, and the court also reserved its ruling on the Secretary's counterclaim pending the resolution of 

ongoing administrative proceedings. On motion, the district 

court, pursuant to Fed. R. Civ. P. 54(b), entered a final judgment 

on counts 1 through 4. Ark appeals. 

Although there are basically two, straight-forward issues 

raised on appeal, considerable background is essential to an 

understanding thereof. As indicated, Ark held certain leases of 

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federally-owned land from the United States which gave Ark the 

right to mine and remove coal therefrom. The leases in question 

were issued pursuant to the Mineral Lands Leasing Act of 1920 

(MLLA). 41 Stat. 437 (1920), amended £y 30 u.S.c. § 201, et seg. 

(1976). MLLA provided, inter alia, that the Department of the 

Interior could grant leases on federal lands for indeterminate 

terms to private parties to mine and remove coal at a royalty rate 

to be fixed by the Secretary, such rate, however, not to be less 

than five cents per ton of coal and subject to the right of the 

Secretary to readjust the terms and conditions of a lease, including the royalty rate, at the end of each 20-year period following 

the issuance of the lease. 

On August 4, 1976, the Federal Coal Leasing Amendments Act 

(FCLAA) was enacted by Congress, which amended much of MLLA. Pub. 

L. No. 94-377, 90 Stat. 1083, 1085 (codified as amended at 30 

u.s.c. § 201, et seg. (1982)). FCLAA (1976) included a provision 

that royalty on a coal lease shall be in such amount as the 

Secretary shall determine, but not less than 12 1/2% of the value 

of the coal. 30 u.s.c. § 207 (1982). 

Ark's leases here involved were 

1964. On October 30, 1981, the Bureau of 

entered into in 1961 and 

Land Management (BLM) 

advised Ark that it intended to "readjust" the leases entered into 

on November 1, 1961, in accord with the provision of FCLAA (1976). 

The readjusted lease terms were given to Ark on June 11, 1982. 

Ark resisted any readjustment. A decision by the Wyoming BLM Office, entered on August 12, 1983, dismissing in part and sustaining in part Ark's objections to the readjustment of leases, was 

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appealed to the Interior Board of ·Land Appeals (IBLA). On appeal, 

the IBLA, on April 25, 1985, with a single exception which is not 

here pertinent, affirmed the decision of the Wyoming State Office, 

BLM. See Ark Land Co., 86 IBLA 153 (1985). In so doing, IBLA 

held, inter alia, that the Secretary's notice of intent to 

readjust royalty rates was "timely" and further that the provisions of FCLAA (1976) applied to leases entered into prior to the 

enactment of FCLAA (1976). Also, the IBLA, with the single exception above noted, upheld Ark's challenges to specific provisions 

of the readjusted leases. 

On July 30, 1985, 

Administrative Procedure 

Ark, pursuant to Section 10 of the 

Act, 5 u.s.c. § 701-706 (1988), filed a 

petition for review of the IBLA's decision of April 25, 1985, and, 

in addition to asking that the district court vacate the IBLA 

decision, Ark sought injunctive and declaratory relief prohibiting 

the Bureau of Land Management from taking "any further action to 

improperly readjust the terms of the Subject Leases." In 

particular, Ark challenged the IBLA's holding that Ark had 

received "timely notice" of BLM's intention to readjust the terms 

of Ark's 1961 leases and that FCLAA (1976) applied to leases 

entered into before 1976. 

referred to as Ark I. 

That petition for review will be 

On November 13, 1985, the defendants in Ark I answered with a 

general denial. The defendants did not file any counterclaim, and 

the fact that no counterclaim was filed in Ark I is the basis for 

Ark's present argument that the Secretary is now barred from seeking to collect any underpayment o~ royalties resulting from the 

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so-called readjusted royalty rates on the 1961 coal leases. Be 

that as it may, proceedings in Ark I were stayed, by agreement, 

pending disposition in this court of another case involving the 

same issues. 

On April 9, 1987, we filed our opinion in FMC Wyoming Corp. 

v. Hodel, 816 F.2d 496 (lOth Cir. 1987), cert. denied, 484 U.S. 

1041, 108 S. Ct. 772, 98 L. Ed.2d 859 (1988). In that case we 

held that a notice of intent to readjust filed on or shortly 

before the 20-year anniversary date was timely, and·we further 

held that the provisions of FCLAA (1976) did apply to coal leases 

entered into prior to the enactment of FCLAA (1976). See also 

Coastal States Energy Co. v. Hodel, 816 F.2d 502 (lOth Cir. 1987). 

Based on our decision in FMC Wyoming Corp. v. Hodel, supra, 

the district court granted the government's motion for summary 

judgment in Ark I. Ark then appealed that judgment. However, 

that appeal, by stipulation of the parties, was dismissed on March 

31, 1988, after the Supreme Court denied FMC Wyoming Corp.'s application for certiorari in FMC Wyoming Corp. v. Hodel, supra. 

As indicated, certain of Ark's 1964 coal leases had their 20-

year anniversary date on January 1, 1984, and the BLM notified Ark 

of its intent to readjust those leases in accord with FCLAA (1976) 

on July 11, 1983. By notices dated October 21 and 25, 1983, BLM 

tendered Ark the proposed terms and conditions of the readjusted 

leases. Ark resisted any readjustment and filed timely objections 

thereto. BLM considered these objections and issued its decision 

readjusting Ark's coal leases on July 20, 1984. Ark appealed that 

decision to the IBLA. On review, the IBLA, by decisions entered 

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on December 10, 1985, and, upon reconsideration, on March 11, 

1987, again held, inter alia, that the notices to readjust were 

timely and that the provisions of FCLAA (1976) applied to coal 

leases predating 1976. See Ark Land Co., 90 IBLA 43 (1985) and 

Ark Land Co., 96 IBLA 140 (1987) (on reconsideration). 

One of Ark's 1964 leases was originally entered into by Ark's 

predecessor on October 8, 1924, and had been readjusted in 1944 

and 1964. Prior to October 8, 1984, Ark was given notice of BLM's 

intent to readjust this particular lease. The BLM, however, was 

still considering Ark's objections to the readjusted lease as of 

October 8, 1984. BLM subsequently overruled most of Ark's objections, and, on appeal, on May 13, 1987, the IBLA affirmed, in the 

main, the BLM. Ark Land Co., 97 IBLA 241 (1987). Again, the IBLA 

held that the notice to readjust was timely, and that FCLAA 1976 

applied to leases entered into prior to 1976. 

On July 15, 1987, Ark filed in the United States District 

Court for the District of Wyoming a petition for review of the 

IBLA's decisions of March 11, 1987 and May 13, 1987. This petition is referred to as Ark II. The petition in Ark II parallels 

the petition in Ark I. The Secretary did not file an answer, but 

did file a motion for summary judgment based on our opinion in FMC 

Wyoming Corp. v. Hodel, supra. No counterclaim was filed in Ark 

II. After FMC Wyoming Corp. •-s application for certiorari was 

denied by the Supreme Court, Ark II was dismissed in the district 

court on stipulation. 

By way of statutory and general regulatory background, the 

Secretary of Interior is responsible for leasing federally owned 

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coal lands and for collecting rents and royalties due under the 

leases. Federal coal leases are issued pursuant to the Mineral 

Leasing Act of 1920, as amended, 30 u.s.c. § 191. et. ~ Within 

the Department of Interior, the Bureau of Land Management has the 

responsibility for the issuance and readjustment of the leases. 

After the BLM issues the leases, the Minerals Management 

Service (MMS) exercises the Secretary's authority to collect rents 

and royalties. The lessee is expected to keep records, compute 

the proper payment, and then remit, as due, proper royalty and 

rental payments to MMS. MMS randomly audits the lease holders to 

determine if proper payments have been made. In the event MMS 

determines that there has been an underpayment, or an untimely 

payment, notice of a preliminary determination is sent to the lessee for the "purpose of giving the lessee an opportunity to comment or provide additional information that would refute" the 

preliminary determination. A final order for payment is issued by 

an MMS officer if, after review of the audit and lessee's submission, MMS still concludes that monies are owed. 

A federal coal lessee may appeal the officer's final 

determination to the Director of the MMS and may thereafter appeal 

the Director's decision to the IBLA. The IBLA's decision 

constitutes the Secretary's decision and its final administrative 

action which may then be challenged in federal district court 

pursuant to the Administration Procedure Act, 5 u.s.c. § 706. 

Should the lessee simply refuse to comply with the Secretary's 

decision, the government may file an action in federal district 

court to reduce the royalty assessment to judgment. 

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On January 9, 1987, MMS notified Ark that it proposed to 

institute an audit of Ark's financial records for the purpose of 

determining whether Ark was properly computing and paying its coal 

royalties. As a result of the audit conducted for the period of 

January 1981 through December 1986, MMS made a preliminary decision that Ark, because of its flawed computation of the gross 

value of its coal, had failed to pay $5,200,501.29 in royalties on 

nine leases. By letter of July 31, 1987, MMS notified Ark of the 

agency's preliminary determination and invited Ark to "comment or 

provide any additional documentation that would refute [MMS's] 

preliminary determination." MMS requested Ark "to review the 

factual information . and advise this office no later than 

August 14, 1987, of your concurrence or the specific reasons for 

your non-concurrence." The letter further stated that "[t]his 

letter is to advise you of a potential underpayment of MMS royalties on the referenced leases and should not be interpreted to be 

an official order to pay." 

On the basis of Ark's response to MMS's letter of July 31, 

1987, MMS adjusted its preliminary determination and issued an 

official order, dated January 7, 1988, directing Ark to pay 

$5,039,635.15 as underpaid rents or royalties. That order advised 

Ark of its right to appeal to the Director of MMS and of the 

requirement that Ark make payment or file a surety bond in lieu 

thereof. 

In a letter to MMS on February 3, 1988, Ark challenged MMS's 

billing on six different grounds. On April 12, 1988, Ark filed a 

"Statement of Reasons" with MMS in which it alleged six "reasons" 

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for barring collection of the underpaid rents and royalties. In 

addition, Ark filed with MMS a Motion to Allow Discovery for the 

purpose of inquiring into all factual matters pertaining to its 

Statement of Reasons. 

While the matter was thus pending before the MMS, Ark, two 

days after filing its "Statement of Reasons" with MMS, filed the 

instant case in the United States District Court in the District 

of Wyoming seeking declaratory judgment and an injunction to 

enjoin the defendants from taking any further steps to collect the 

alleged underpayment of royalties. 

Specifically, the complaint contained seven counts. The 

first count alleged that under Fed. R. Civ. P. 13(a) MMS was 

barred from pursuing any administrative or judicial collection 

actions because the government had failed to counterclaim for 

underpaid rents and royalties in Ark I and Ark II. The second 

count alleged that the Secretary had failed to comply with the 

Debt Collection Act of 1982, 31 u.s.c. § 3701, et seq., and that 

he was therefore barred from collecting any unpaid royalties. The 

third count claimed that collection and assessment of interest or 

penalties was barred because the Secretary had failed to 

promulgate regulations pursuant to the Debt Collection Act, 31 

U.S.C. § 3711, 3717. The fourth count claimed that no interest or 

penalties for late payment could be collected under the authority 

of the Federal Oil and Gas Royalty Management Act of 1982, 30 

u.s.c. § 1701, et seq. Counts 5 and 7 charged that MMS made 

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auditing errors, and count 6 claimed that the statute of limitations had run on the demand for rentals from certain miscellaneous 

leases. 

By way of answer, the Secretary alleged, inter alia, that Ark 

had failed to exhaust its administrative remedies, and in addition, the Secretary counterclaimed for underpaid rents and royalties. 

As mentioned at the outset, the district court, on motion, 

entered summary judgment for the Secretary on the first three 

counts in Ark's complaint, dismissed count 4, dismissed counts 5, 

6, and 7 without prejudice, and reserved ruling on the Secretary's 

counterclaim. Ark now appeals the district court's final judgment, entered under Fed. R. Civ. P. 54(b), on the first four 

counts of the complaint. 

In granting summary judgment in favor of the Secretary on the 

first four counts in Ark's complaint, the district judge held, 

inter alia, that the Secretary under the MLLA (1970) and FCLAA 

(1976) had the authority to collect underpaid royalties and interest and penalties thereon, and further, that at the time of Ark I 

and Ark II the Secretary's claim against Ark had not yet matured, 

and therefore did not constitute a compulsory counterclaim under 

Fed. R. Civ. P. 13(a). We are in accord with the district court's 

holdings. 

On appeal, Ark raises two main issues: (1) Fed. R. Civ. P., 

13(a) bars the Secretary from asserting in the present proceeding 

a counterclaim for allegedly underpaid rents or royalties because 

the Secretary failed to assert a counter claim in Ark I and Ark 

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II; and (2) the Secretary is acting outside his statutory authority in attempting to collect allegedly unpaid rents and royalties 

by means of agency action. In connection with the latter, Ark 

states "that it does not here challenge Interior's authority to 

collect royalties which have accrued under leases which it 

administers. Rather, Arch [Ark] maintains that such collection 

activities must be brought in the courts, rather than by 

administrative adjudication." Each of these two issues has bearing on the other, as a resolution of the second issue will assist 

in determining just when the Secretary's claim for unpaid rent and 

royalties matured. 

Fed. R. Civ. P. 13(a) reads as follows: 

(a) Compulsory Counterclaims. A pleading shall 

state as a counterclaim any claim which at the time of 

serving the pleading the pleader has against any opposing party, if it arises out of the transaction or occurrence that is the subject matter of the opposing party's 

claim and does not require for its adjudication the 

presence of third parties of whom the court cannot 

acquire jurisdiction. But the pleader need not state 

the claim if (1) at the time the action was commenced 

the claim was the subject of another pending action, or 

(2) the opposing party brought suit upon the claim by 

attachment or other process by which the court did not 

acquire jurisdiction to render a personal judgment on 

that claim, and the pleader is not stating any 

counterclaim under this Rule 13. 

A prerequisite for the application of Rule 13(a), as applied 

to the instant case, is that "at the time of serving the pleading 

[an answer] the pleader [the Secretary] has [a claim] against any 

opposing party [in this case, Ark], • aris[ing] out of the 

transaction or occurrence that is the subject matter of the opposing party's [Ark's] claim II Where a defendant acquires a 

claim after his answer has been filed it is not a compulsory 

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counterclaim even if it arises out of the same transaction. Young 

v. City of New Orleans, 751 F.2d 794, 801 (5th Cir. 1985), quoting 

6 C Wright & A. Miller, Federal Practice & Procedure § 1411 

(1971). The district court held, inter alia, that at the time the 

Secretary was required to file an answer in both Ark I and Ark II 

he did not have a claim against Ark, and that the counterclaim he 

has asserted in the present proceeding was acquired after the time 

the Secretary was required to answer in Ark I and Ark II. We 

agree. 

Ark's position is that the Secretary's claim against Ark for 

unpaid rents and royalties matured when the IBLA rejected Ark's 

claim that the notices of intent to readjust were untimely and 

that FCLAA (1976) did not apply to pre-1976 leases. Accordingly, 

Ark argues, a counterclaim should have been asserted by the 

Secretary in Ark I and II, and, since they were not, they are now 

barred. 

The Secretary's position is that his claims were not matured 

claims as of the date of the IBLA's decision, that he later 

instituted the administrative procedures above described to 

determine whether there had in fact been underpayment, and if so, 

how much, and that any claim matured when Ark backed off the 

administrative process and filed the instant proceeding, in which 

proceeding he did assert a counterclaim. We agree with the 

Secretary's position. 

At the outset we reject Ark's argument that on the date of 

the IBLA's decision on April 25, 1985, the Secretary had a matured 

claim against Ark which should have been asserted as a compulsory 

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counterclaim in Ark I, i.e., Ark's petition to review the IBLA's 

decision of April 25, 1985, and that because such claim was not 

asserted in Ark I, the Secretary is barred from asserting it in 

the present proceeding. In accord therewith, we also reject Ark's 

parallel argument that on the date of IBLA's decision on March 11, 

1987, which reconsidered its earlier decision in the same proceeding on December 10, 1985, and on the date of IBLA's decision- on 

May 13, 1987, the Secretary also had matured claims against Ark 

which should have been asserted as a compulsory counterclaim in 

Ark II, i.e., Ark's petition to review the IBLA's decisions of 

March 11, 1987, and May 13, 1987, and that because they were not 

asserted in Ark II the Secretary is barred from asserting them in 

the present proceeding. We do not believe that the Secretary had 

matured claims on any of those dates. 

In support of its argument that on the respective dates of 

the IBLA decisions the Secretary had a matured claim against Ark, 

Ark relies on 43 C.F.R. § 3451.2(e) (1986), which provides as follows1: 

1 The most recent version of 43 C.F.R. § 3451.2 is different than 

the provision relied on by Ark. Our decision is not affected by 

the new language in§ 3451.2 (1989). The pertinent part of the 

1989 version is as follows: 

(c) The readjusted lease terms and conditions shall 

become effective on the anniversary date; 

(d) The lessee may appeal the decision of the 

authorized officer in accordance with the procedure set 

out in 43 C.F.R. Part 4; and 

(e) Regardless of whether an appeal is filed by the 

lessee(s), all of the readjusted lease terms and conditions, including, but not limited to, the reporting and 

payment of rental and royalty, shall be effective on the 

anniversary date. 

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The readjusted lease terms and conditions 

shall be effective pending the outcome of the 

appeal, unless the authorized officer 

provides otherwise. Upon the filing of an 

appeal (to the IBLA], the obligation to pay 

royalties and rentals when due under the 

readjusted lease shall be suspended pending 

the outcome of the appeal. However, during 

the pendency of the appeal, royalties and 

rentals shall accrue under the readjusted 

lease terms and shall be payable if the decision is upheld on appeal, plus interest at 

the rate specified for late payments in Part 

3480 of this title. 

The foregoing regulation cannot be read in isolation and must 

be considered along with the entire administrative scheme which 

governs the Secretary in his efforts to collect rents and royalties, be they readjusted, adjusted, or non-adjusted. In our 

case, the IBLA by its decisions of April 25, 1985 and March 11, 

1987, held that the Secretary had the authority to readjust Ark's 

leases of 1961 and 1964, which included the authority to raise 

the royalty rate on Ark's leases. There was no determination of 

amounts due the Secretary by Ark. 

On January 9, 1987, long after any compulsory counterclaim 

would have had to have been filed in Ark I, the Secretary, 

through MMS, in accord with applicable regulations, notified Ark 

that it proposed to institute an audit of Ark's financial records 

for the purpose of determining whether Ark was properly computing 

and paying its coal royalties. An audit was thereafter conducted 

for the period of January, 1981, through December, 1986. By letter of July 31, 1987, MMS notified Ark of the agency's 

preliminary determination that because of Ark's flawed computation of the gross value of its coal it had failed to pay 

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$5,200,501.29 in royalties on nine leases and invited Ark to 

"comment or provide any additional documentation that would 

refute [MMS's] preliminary deter-mination." MMS requested Ark 

"to review the factual information and advise this office no 

later than August 14, 1987, of your concurrence or the specific 

reasons for your non-concurrence." This same letter further 

stated that "[t]his letter is to advise .you of potential 

underpayment of MMS royalties on the referenced leases and should 

not be interpreted to be an official order to pay." 

On the basis of Ark's untimely response, dated August 21, 

1987, coupled with further information gathered by MMS, MMS 

adjusted its preliminary determination and issued an order, dated 

January 7, 1988, directing Ark to pay $5,039,635.15 in underpaid 

rents and royalties. This letter issued long after any 

counterclaim would have had to have been filed in Ark II. This 

letter explained the factual basis for the determination of the 

amount due and informed Ark, inter alia, of its right to appeal 

to the Director of MMS. On February 3, 1988, Ark, by letter to 

the area director, did challenge MMS's billing. On April 12, 

1988, it filed with the Director a "Statement of Reasons" why it 

should not be required to pay any amount and also filed a motion 

to allow discovery. As above indicated, two days after its letter of April 12, 1988, Ark decided to abandon its right of 

administrative review and filed the instant case. 

In sum, we agree with the district court that as of the time 

the Secretary was required to respond to Ark's petitions to 

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review the decisions of the IBLA, the Secretary did not have a 

matured claim against Ark for underpaid rents and royalties. 

In the district court, the Secretary also argued that regardless of when his claim against Ark matured, such did not meet the 

"same transaction or occurrence" test of Rule 13(a). The 

district court did not rule on this issue. 2 However, it is the 

Secretary position that Ark I and Ark II involved petitions to 

review decisions of the IBLA, and the fact that Ark also asked 

for declaratory and injunctive relief does not change the basic 

nature of the proceeding, i.e., judicial review of final 

administrative action. Any counterclaim for underpaid rents and 

royalties, according to the Secretary, does not "arise out of the 

transaction or occasion that is the subject matter of the opposing party's [Ark's] claim ... " Neither of Ark's petitions to 

review the two IBLA's decisions sets forth a "claim" in the sense 

that term is used in Rule 13(a), argues the Secretary. 3 As 

2 The district court did recognize the importance of the "same 

transaction or occurrence" test to a Rule 13(a) analysis. In its 

final analysis, however, the district court determined that, "the 

demand payment involved in the instant action, regardless of 

whether or not one regards it as flowing from the same transaction 

or occurrence that formed the basis of Ark I and Ark II, was not 

only premature but also dependent upon the outcome of Ark I and 

Ark I I . " (emphasis added) . 

3 On order of this court the parties filed supplemental briefs 

addressing the question of whether Rule 13(a) has any application 

in a proceeding which involves a petition to review a decision of 

the Secretary of the Interior. Rule 81(a)(4). The Secretary 

argued that logically Rule 13(a) should not be applied in such a 

proceeding, but could find no case bearing directly on the precise 

matter. Accordingly, we review the matter on the basis it was 

decided by the district court. In this general connection, 

however, we direct attention to Caleshu v. United States, 570 F.2d 

711 (8th Cir. 1978). In Caleshu a taxpayer brought suit in the 

United States District Court for the Eastern District of Missouri 

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stated, the district court did not rule on this "same transaction 

or occurrence" argument, and, in view of our belief that any 

claim was premature, we need not here pursue the matter. 

As above indicated, Ark also argued in the district court, as 

it does here, that the Secretary has no authority to attempt to 

collect unpaid rents or royalties by means of administrative action, and that it should be restricted to going into court to 

' 

prove any such claim. As applied to the instant case, this would 

mean that the Secretary had no authority to conduct an audit of 

Ark's business records, make a preliminary determination, 

consider Ark's objections thereto, and hear Ark's appeal to the 

MMS Director and the IBLA, and that the Secretary should have 

bypassed that procedure and gone directly to court and had the 

issue of underpaid rents and royalties thrashed out and resolved 

in an adversarial proceeding in open court. The district court 

made short shrift of that argument, as do we. Under the MMLA, 

the "Secretary of the Interior is authorized to prescribe necessary and proper rules and regulations and to do any and all 

for a tax refund, and the United States thereafter brought suit 

against the taxpayer in the United States District Court for the 

District of Hawaii to reduce unpaid assessments to judgment. The 

federal court in Missouri ordered the United States to cease 

prosecuting its collection suit in Hawaii on the ground that the 

government's suit in Hawaii .was a compulsory counterclaim in the 

Missouri proceeding. The Eighth Circuit reversed the district 

court and held that the government's collection action in Hawaii 

was not a compulsory counterclaim in the Missouri proceeding. In 

thus holding, the Eighth Circuit stated that "the nature and 

purpose of the statutes authorizing government tax collection 

suits demonstrate Congress's intent that such suits were not to be 

compulsory counterclaims." In the instant case, the Secretary's 

elaborate administrative scheme for collecting unpaid and 

underpaid rents and royalties on coal leases, authorized by 

Congressional action, also indicates that Rule 13(a) is not to be 

applied to any claim of the Secretary against Ark. 

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things necessary to carry out and accomplish the purposes of this 

Chapter ...• " 30 u.s.c. § 189. That, to us, is a broad grant 

of authority. And the collection of royalties and rents is 

certainly one of the purposes of the Act. We are advised that 

for decades the Secretary has taken responsibility for royalty 

and rent collection under the MMLA through administrative 

procedures similar to those followed in the instant case. 

The district court in granting the Secretary's summary judgment upheld the Secretary's authority to impose certain "late 

charges," i.e., interest and penalties on the underpaid rents and 

royalties. At the same time the district court reserved ruling 

on the Secretary's counterclaim. Since there has as yet been no 

hearing on the Secretary's counterclaim for underpaid rents and 

royalties, consideration of the question of whether "late 

charges" can be tacked onto any underpaid rents and royalties is, 

in our view, premature. 

Accordingly, the judgment as it concerns "late charges" is 

vacated. Otherwise, the judgment is affirmed. 

-19-

Appellate Case: 89-8037 Document: 01019381521 Date Filed: 08/16/1990 Page: 19