Opinion ID: 770952
Heading Depth: 2
Heading Rank: 3

Heading: The Federal Oil and Gas Royalty Management Act

Text: 31 Since 2415(a) does not apply, it is also incumbent upon this court to decide whether the FOGRMA independently requires the government to collect unpaid royalties in a timely fashion. The statute directs the Secretary to establish a comprehensive inspection, collection and fiscal and production accounting and auditing system to provide the capability to accurately determine oil and gas royalties, interest, fines, penalties, fees, deposits, and other payments owed, and to collect and account for such amounts in a timely manner. 30 U.S.C. 1711(a) (emphasis added). Likewise, one of the goals of the statute is to require the development of enforcement practices that ensure the prompt and proper collection and disbursement of oil and gas revenues owed to the United States and Indian lessors and those inuring to the benefit of States. 30 U.S.C. 1701(b)(3) (emphasis added). 32 At the outset, we reject the government's argument that the FOGRMA is irrelevant because OXY failed to exhaust its administrative remedies concerning this issue. See Reply Brief for the Appellants in Case No. 98-5222 at 19. It is settled that a court may excuse the exhaustion requirement if administrative remedies would be futile. Bryan v. Office of Personnel Management, 165 F.3d 1315, 1319 n.4 (10th Cir. 1999). The district court retained jurisdiction over the claims at issue in this appeal on precisely that basis, noting that the MMS has consistently rejected statute of limitations challenges to orders to pay, finding them inapplicable to administrative proceedings. Supplemental Appendix of OXY USA Inc. at 17. There is no reason to believe that a limitations argument based on the FOGRMA would fare any better before the MMS than an argument based on 2415(a). Since the former would have been just as futile as the latter, OXY was not required to pursue it in administrative proceedings. 11 33 OXY argues that the words prompt and timely indicate that the FOGRMA limits the time in which the government can collect royalties. But the language and structure of the statute undermine that assertion. For example, the word timely appears in a section of the statute titled Duties of Secretary. See 30 U.S.C. 1711(a). If Congress had truly intended to limit the time in which the government can collect royalties, it would have referred to this section as a statute of limitations. From our review of the FOGRMA when read as a whole, it is clear that Congress knew how to enact a statute of limitation when that was its intent. Section 1755 of title 30 expressly sets forth a six-year Statute of limitations for actions to recover certain penalties. Similarly, in the 1996 amendments to the FOGRMA Congress specifically enacted a seven-year limitation period complete with provisions governing accrual and tolling for any judicial proceeding or demand which arises from, or relates to, an obligation. See 30 U.S.C. 1724(b). 34 OXY's reference to the word prompt is equally unavailing. The word prompt appears in a section of the statute titled Congressional statement of findings and purposes. See 30 U.S.C. 1701(b)(3). Once again, if Congress had intended to enact an independent timeliness requirement, it would have called it a statute of limitations and would have avoided locating it in a statement of findings and purposes. Moreover, 1701 merely lists the goals of the FOGRMA and sets forth a series of tasks that the Secretary should do. See 30 U.S.C. 1701(a). It follows that any obligations created by 1701 are precatory and aspirational, not mandatory. 35 Finally, the legislative history of the FOGRMA also undermines OXY's claim. The House Report contains no support for the proposition that Congress intended to limit the time in which the government can initiate administrative collection proceedings. Aside from a reference to 1755, the Report makes no mention of a statute of limitations of any kind. Indeed, if anything, the Report supports the government's arguments that (1) the phrase in a timely manner in 1711 refers to the comprehensive inspection, collection and fiscal production accounting and auditing system to be adopted by the Secretary (rather than to specific orders issued by the MMS); and (2) the words timely and prompt were inserted to promote the revenue interests of the federal, state, and Indian beneficiaries of the federal leasing programs and not to provide a shelter for royalty payors such as OXY. See Reply Brief for the Appellants at 21. Among other things, the Report indicates that when Congress enacted the FOGRMA it was primarily concerned with (1) lost revenues resulting from poor royalty accounting practices by administrative agencies; (2) substandard auditing and verification procedures; (3) lax security on certain lease sites resulting in theft and fraud; and (4) an inadequate and inflexible array of enforcement tools. We conclude Congress' use of the word timely in 30 U.S.C. 1711(a) and the word prompt in 30 U.S.C. 1701(b)(3) was not intended to create a statute of limitation in which the government must act to collect royalties.