UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

____________________

No. 98-40364

____________________

UNITED STATES OF AMERICA,

Plaintiff-Appellee,

versus

CHEVRON U.S.A., INCORPORATED; CHEVRON CORPORATION,

Defendants-Appellants.

_________________________________________________________________

Appeal from the United States District Court

for the Eastern District of Texas

_________________________________________________________________

August 24, 1999

Before JONES, DUHÉ, and BARKSDALE, Circuit Judges.

RHESA HAWKINS BARKSDALE, Circuit Judge:

Concerning the alleged underpayment of roya lties to the

Government for production under federal oil and gas leases, chiefly

at issue is the authority of the Inspector General (IG) for the

Department of the Interior to subpoena documents from Chevron

(pursuant to a district court enforcement order; Chevron has

complied) , Chevron having provided many of the same documents in

other contexts not only to the Department of the Interior, but also

to the Department of Justice. We AFFIRM.- 2 - I.

As an oil and gas lessee on federal and Indian lands, Chevron

(Chevron USA, Inc., and Chevron Corporation) pays the United States

royalties on its production. Chevron must report monthly

production value to the Minerals Management Ser vice of the

Department of the Interior (MMS).

In 1996, the Interior a nd Justice Departments began

investigat ions after private q ui tam plaintiffs under the False

Claims Act (FCA), 31 U.S.C. § 3730(b), alleged that Chevron, among

others, had misrepresented the value of their federal lease

production. The Department of the Interior IG issued

admin istrative subpoenas to Chevron for documents related to the

federal leases since 1986. The documents concerned both the value

Chevron derived from the leases and the methods it used to

calculate royalties.

Chevr o n objected to the subpoenas’ scope and concomitant

threat to confidential and proprietary information. In March 1997,

the IG sought enforcement by the district court. Pursuant to an

agreed order staying enforcement, the parties attempted to agree on

a protective order. Negotiations having failed, the district court

in January 1998 ordered the subpoenas enforced, but subject to an

IG-drafted protective order. (As discussed infra in parts II.A.

and C., Chevron challenges the protective order, especially its

provisions concerning confidentiality/disclosure to third parties.)

The district court and this court denied stays pending appeal.

Thereafter, Chevron complied with the subpoena.- 3 -

Meanwhile, in the FCA case, and shortly before the January

1998 subpoena enforcement order, the Department of Justice issued

Civil Investigative Demands (CIDs) for documents pertaining to

Chevron’s federal leases. The documents called for by the DOJ CIDs

and the IG administrative subpoenas were similar, but not

identical. For example, the CID called for documents dating back

to 1990; the administrative subpoenas, to 1986.

II.

A.

Because Chevron has produced the documents in response to the

IG subpoenas and DOJ CIDs, we face a threshold question of

mootness, which we must address sua sponte if necessary. E .g.

,

Dailey v. Vought Aircraft Co. , 141 F.3d 224, 227 (5th Cir. 1998).

“The mootness doctrine requires that the controversy posed by the

plaintiff’s complaint be ‘live’ not only at the time the plaintiff

files the complaint b ut also throughout the litigation process.”

Rocky v. King , 900 F.2d 864, 866 (5th Cir. 1990).

Among other things, the continuing di s pute regarding the

protective order, discussed infra

, keeps this a “live” controversy.

The subpoenas and CIDs cover distinct sets of documents and offer

different protections. Were we to vacate the enforcement order on

any of the grounds Chevron advances, MMS would be required to

return documents produced in response to the subpoenas, alleviating

Chevron’s concern. S ee In re Grand Jury Subpoena

, 14 8 F.3d 487,

490 (5th Cir. 1998), cert. denied

, 119 S.Ct. 1336 (1999) (case not

moot where court can still grant some relief by ordering documents- 4 -

returned or destroyed) (citing Church of Scientology of California

v. United States , 506 U.S. 9, 13 (1992)).

B.

A subpoena enforcement order is reviewed for abuse of

discretio n. E .g.

, N.L.R.B. v. G.H.R. Energy Corp.

, 707 F.2d 110,

113 (5th Cir. 1982). “[I]t is settled that the requirements for

judicial enforcem ent of an administrative subpoena are minimal.”

Burlington Northern Railroad Co. v. Office of Inspect or General,

Railroad Retirement Board

, 983 F.2d 631, 637 (5th Cir. 1993).

Courts will enforce an administrative subpoena if it (1) is within

the agency’s statutory authority; (2) seeks information reasonably

relevant to the inquiry ; (3) is not unreasonably broad or

burdensome; and (4) is not issued for an improper purpose, such as

harassment. See, e.g., id ., 983 F.2d at 638.

Pursuant to the f irst and third of these prongs, Chevron

claims the subpoenas are outside the IG’s authority and are unduly

burdensome.

1.

Inspectors General were placed in various federal agencies and

programs by the Inspector General Act of 1978 (IGA), 5 U.S.C. app.

3. S ee B urlington Northern , 983 F.2d at 634. Amendments to the

Act have added them to other agencies and programs. Interior was

one of the original departments with an IG. 5 U.S.C. app. 3 §

11(2). Section 4(a) states his broad authority:

It shall be the duty and responsibility of

each Inspector General, with respect to the

establishment within which his Office is

established—- 5 - (1) to provide policy direction for

and to conduct, supervi se, and

coordinate audits and investigations

r elating to the programs and

operations of such establishment;

...

(3) to recommend policies for, and

to conduct, supervise, or coordinate

other activities carried out or

f inanced by such establishment for

the purpose of promoting economy and

efficiency in the administration of,

or preventing and detecting fraud

and abuse in

, its programs and

operations.

(Emphasis added.) Section 6(a)(4) of the IGA authorizes an IG

to require by subpena [sic] the production of

all information, documents, reports, answers,

records, accounts, papers, and other data and

documentary evidence necessary in the

performance of the functions assigned by this

Act....

a.

As discussed in Burlington Northern

, 983 F.2d at 634, concern

about fraud in federal programs was one of Congress’ primary

reasons for enacting the IGA. In the light of Inspectors General

being tasked by the IGA, as quoted above, with an anti-fraud

mission, Chevron attempts to distinguish underpayment of royalties

from “fraud and abuse” in MMS programs and operations. In this

regard, it contends that only recipients of federal funds are

subject to IG oversight.

Obviously, Chevron’s re ceiving a federal l ease (and the

concomitant oil and ga s production), rather than federal f unds

,

makes its alleged fraud no less “fraud

... in” MMS’ program.

Needless to say, both an underpay ing lessee and an overcharging- 6 -

contractor extract a benefit fraudulently disproportionate to what

is received by the Government; both fall squarely within the IG’s

statutory auth ority. The IGA legislative history Chevron cites

referring to government-funded projects, e.g.

, S. R EP

. N O

. 95-1071,

at 27, 34, reprinted in 1978 U.S.C.C.A.N. 2676, 2702, 2709

(referring to “the way in which Federal tax dollars are spent” and

“the way federal funds are expended”) sets out a central, but not

exclusive, concern; it does not suggest a limit to such IG

activities.

b.

Burlingto n Northern c onstrued the IGA, 5 U.S.C. app. 3 §

9(a)( 2) (“there shall not be transferred to an Inspector General

... program operating responsibilities”) to bar IG investigations

which, “as pa rt of a long-term, continuing plan”, perform “those

investigations or audits which are most appropriately viewed as

being within the authority of the agency itself”. B urlington

Northern, 9 83 F.3d at 642. There, based on the district court’s

finding that the IG investigation had such an improper purpose, our

court affirmed the district court ’s refusal to enforce an IG

subpoena. Id. at 640-41.

C hevron claims that, as did the tax audits in B urlington

Northern

, the subpoenas usurp MMS “program operating

r esponsibilities”. But, unlike the situation in B urlington

Northern

, the subpoenas do not assume MMS program operating

responsibilities, because MMS con tinues to keep the relevant

records. The subpoenas do not displace any agency- 7 -

responsibilities; therefore, no agency functions have been

“transferred” to the IG. As our court noted recently in

distinguishing Burlington Northern

,

Section 9(a)(2) prohibits the transfer of

‘program operating responsibilities,’ and not

the duplication of functions or copying of

techniques. ... In order for a transfer of

function to oc cur, the agency would have to

relinquish its own performance of that

function.

Winters Ranch Partnership v. Viadero , 123 F.3d 327, 334 (5th Cir.

1997). Performance of functions has not been relinquished by MMS;

accordingly, the Burlington Northern /§9(a) limit is not implicated.

c.

Chevron maintains that IG subpoenas connected with an action

under the FCA must be subject to the restrictions imposed upon DOJ

CIDs. It invi tes us to infer an implicit limit on the IG flowing

from the authority granted to DOJ by the FCA.

The 1986 FCA amendments, Pub. L. No. 99-562, 100 Stat. 3153

(1986), empower DOJ to issue CIDs for material or information

relevant to a false claims law investig ation. S ee 31 U.S.C. §

3733. CIDs differ from IG subpoenas in several ways. In some ways,

they provide greater protection to the recipient than does a

subpoena. For example, § 3733(a)(2)(G) makes the Attorney

General’s CID authority nondelegable; § 3733(i)(1 ) requires a

single designated custodian for CID-obtained materials; § 3733(k)

exempts CID materials from the Freedom of Information Act, 5 U.S.C.

§ 552; and § 3733(i)(2)(C) allows disclosure to other agencies or

Congress only upon application to a district court and notice to- 8 -

the CID recipient. In other ways, CIDs are broader than a

subpoena. For example, § 3733(a)(1)(B) & (C) allow CIDs to seek

types of information (such as oral testimony and answers to

interrogatories) beyond that permitted an administrative subpoena.

Chevron’s claim that the FCA l imits the IG is belied by the

silence in the FCA and IGA on the matter and by FCA legislative

history, which plainly contemplat es cooperation in FCA cases

between an IG and DOJ. S ee, e.g.

, S. R EP

. N O

. 99-345, at 33 (1986),

reprinted in 1986 U.S.C.C.A.N. 5266, 5298 (noting that, in FCA

cases, DOJ had historically relied on information from IGs and

criminal gran d juries, and that proposed CID authority would

“ supplement [] the investigative powers of the IGs” in the face of

jud icial limits on DOJ use of grand jury materials) (emphasis

added).

Ack nowledging this legislative history (but pointing to no

other), Chevron claims that the FCA amendment confirms prior IG

inability to investigate false claims; that, by “supplementing” IG

investigative authority, the CIDs filled a void in IG authority.

To say the least, this is a quite strained reading of “supplement”,

one belied by the explicit statement that, before the amendment, an

IG’s FCA material was available to DOJ. Chevron’s further claim

that IG authority to investigate FCA claims w ould render

superfluous and senseless the DOJ’s CID authority ignores both the

ways in which CIDs exceed IG subpoenas in scope and the usefulness

to the DOJ of an independ ent investigative authority exercisable

without IG participation.- 9 -

The FCA empowers DOJ to investigate false claims against the

Government, and the IGA empowers an IG to investigate fraud and

abuse in government programs. Obviously, investigative authority

granted by each Act overlaps. Obviously, if an IG investigation is

within statutory authority, the fact that it also involves matters

r elevant to an FCA claim does not alter the propriety of the

investigation.

2.

In the last of it s challenges to two of the four bases that

m ust be satisfied before a district court will enfo rce on

administrative subpoe na, Chevron claims that the subpoenas are

overbroad and unduly burdensome. In the main, these contentions

restate the complaints about the la ck of CID-type protections.

Chevron contends that the subpoenas are broader than a CID could

be, for instance, because they cover years outside the FCA

limitations period, or for which FCA claims are otherwise barred.

(Chevron thus ironically asserts that the subpoena is invalid both

because it covers documents not relevant to an FCA case, and also

because it covers documents which are .)

However, “a subpoena is not unreasonabl y burdensome unless

compliance threatens to unduly disrupt or seriously hinder normal

operations of a business”. F

. T. C. v. Jim Walter Corp.

, 651 F.2d

251, 258 (5th Cir. 1981) (quotation omitted). While the time and

effort required to comply with the subpoena are obviously extensive

(as is th e alleged fraud), Chevron offers no explanation

independent of its CID-related arguments why, relative to Chevron’s- 10 -

size, the compliance cost and effort “undul y disrupt[ed] or

seriously hinder[ed] normal operations”.

Chevron also contends that, because it has already provided

many of the same documents to MMS for regulatory au dits, the IG

should not have been able to obtain them again. See United States

v. Powell

, 379 U.S. 48, 57-58 (1964) (agency seeking documents must

not already have them in its possession). However, it is undisputed

that MMS h as not retained those documents. Chevron’s producing

them again may have been duplicative, but this is, in part,

necessary for an independently-operating IG, consistent with the

IGA and required by Burlington Northern

.

C.

Regarding the protective order, Chevron keys especially on the

confidentiality/disclosure provisions. As part of the enforcement

order, the district court found that the protective order “affords

[Chevron] adequate protection”. We review for abuse of discretion.

See Leatherman v. Tarrant County Narcotics Intelli gence and

Coordination Unit , 28 F.3d 1388, 1394 (5th Cir. 1994) (protective

order under F ED

. R. C IV

. P. 26). (Of course, an abuse of discretion

regarding the protective order would not alone compel vacating the

enforcement order, the only relief Chevron seeks.)

The protective order, supplemented by the Government’s postargument stipulation in our court, proscribes disclosure of any

confidential material, as designate d pursuant to the protective

order, to any other person except in accordance with the procedures

set by the protective order; requires a court order for disclosure- 11 -

to a private party, with the IG being required to resist, to the

extent permitted by law, such parties’ attempts to obtain documents

(for instance, under the Freedom of Information Act), with notice

to be given pre-disclosure to Chevron; permits disclosure to other

agencies of the United St ates (subject to their maintaining the

protections accorded confidential materal); and, concerning a

request from Cong ress, permits disclosure, but Congress is to be

advised about the protective order and Chevron is to be notified,

unless Congress objects.

As with its claims of undue burden and overbreadth, Chevron’s

contentions largely restate its position regarding CIDs; it asserts

that the confidentiality provisions are less than those provided by

a CID, but points to no authority for this claimed entitlement to

greater protections. We find no abuse of discretion.

Along this line, we agree with the D.C. Circuit that an

agency’s determinations on the protections required for

confidential information are not to be lightly disregarde d. S ee

U.S. International Trade Com'n v. Tenneco West

, 822 F.2d 73, 79

(D.C. Cir. 1987) (“deference [is] due an agency in choosing its own

procedures for guarding confidentiality”); F. T. C. v . Texaco,

Inc.

, 555 F.2d 862, 884 n.62 (D.C. Cir. 1977) (“it is the agencies,

not the courts, which should, in the first instance, establish the

procedures for safeguarding confidentiality”) (citing FCC v.

Schreiber , 381 U.S. 279, 290-1, 295-6 (1965)).

Chevron’s primary concer n is, under the protective order as

written, not being per mitted to object to disclosure to third- 12 -

parties ( not including Congress or any agency of the United

S t ates). But, the Government’s post-argument s tipulation has

greatly deflated, if not mooted

, this sub-issue. Under protective

order ¶1, “Protected Competitive Material” (designated pursuant to

protective order-procedures) is not to “be disclosed to any other

person except in accord with [the protective order] or as may

otherwise be requ ired by law”. As we directed at oral argument,

the Government’s post-argument submittal covers its “obligations to

preserve the confidentiality of documents obtai ned through [the

IG’s] subpoenas”.

Concerning the above quoted disclosure-proscription, the

Government has stipulated that it “will not disclose Protec ted

Competitive Material to any private party unless compelled to do so

by a judicial order entered by a court of competent jurisdiction”.

(Emphasis added.) In explaining why it has so stipulated, even

though a disclosure-order is n ot explicitly required by the

protective or der, the Government states in its post-argument

submittal that it “construe[s] these [protective order ¶1]

provisions as barring voluntary governmental disclosure of

Protected Confidential Material to Chevron’s business competitors

or to any other private party”. In t hat the Government has

stipulated to no non-ord er disclosure, and in that, pursuant to

protective order ¶10, Chevron must be given pre-disclosure notice,

it may well be that the court considering disclosure vel non will

allow Chevron to first ob ject. In any event, as noted, prior to

s uch disclosure, the Government is to resist to the extent- 13 -

permitted by law and “Chevron [is to] be given as much no tice as

practical”, offering it opportunity to intervene and, inter alia

,

make a reverse Freedom of Information Act claim. S ee Chrysler

Corp. v. Brown

, 441 U.S. 281, 317-18 (1979) (allowing “reverse

FOIA” challenge under Administrative Procedures Act to disclosure

of documents).

Regarding disclosure to agencies of the United States, Chevron

concedes that sharing of information between the IG and other

agencies, such as DOJ, is contemplated in the legislative history

of CID provisions cited above, the legislative history of the IGA,

and other cases. S ee, e.g.

, S. R EP

. N O

. 95-1071, at 6-7 (1978),

reprinted in 1978 U.S.C.C.A.N. 2676, 2681-82 (recommending

“inspector general concept” because it would “strengthen[]

cooperation between the agency and [DOJ] in investigating and

prosecuting fraud cases”); U.S. v. Educational Development Network

Corp. , 884 F.2d 737, 743 n.10 (3rd Cir. 1989) (“Congress expected

cooperation between the IG and [DOJ] in investigating and

pr osecuting fraud cases.”); U .S. v. Aero Mayflower Transit Co.,

Inc.

, 831 F.2d 1142, 1146 (D.C. Cir. 1987) (“So long as the

Inspector General's subpoenas seek information releva nt to the

discharge of his duties, the exact degree of Justi ce Department

guidance or influence se ems manifestly immaterial.”). And, for

disclosure to such agencies and Congress, the former are to

maintain the confidentiality provis ions and the latter is to be

notified about those provisions (with Chevro n being notified,

unless Congress objects).- 14 -

Again, there was no abuse of discretion concerning the

protective order. This is all the more so in the light of the

Government’s post-argument stipulation.

III.

For the foregoing reasons, the enforcement order is

AFFIRMED.