Opinion ID: 158093
Heading Depth: 3
Heading Rank: 1

Heading: Document Request Letter

Text: Plaintiffs argue that the document request letter, which they characterize as an “audit engagement order,” is reviewable final agency action for three reasons: (1) it imposes a legal obligation to retain royalty records for the audit period; (2) it represents the consummation of the administrative process; and (3) there is no other adequate remedy under the Administrative Procedure Act. -9- Under the Bennett framework, the first question before us is whether the letter sent by the MMS to OXY constituted the consummation of the MMS’ decisionmaking process for purposes of our finality determination. Plaintiffs seem to argue that the letter consummated the MMS’ decisionmaking process about whether to conduct an audit because the letter initiated an audit under 30 U.S.C. § 1713(b) and the initiation of an audit requires Plaintiffs to retain all records for the audit period until the Secretary releases them from that obligation. 3 The statute provides that a lessee must maintain records “for 6 years after [they] are generated unless the Secretary notifies the record holder that he has initiated an audit or investigation involving records and that such records must be maintained for a longer period.” 30 U.S.C. § 1713(b) (emphasis added). While we are initially guided by the Supreme Court’s instruction that an action of “a merely tentative or interlocutory nature” does not mark the consummation of an agency action, Bennett, 520 U.S. at 178, the Court’s decision 3 To support their arguments on both the consummation and the legal consequences prongs, Plaintiffs seem to rely on the apparent stipulation by the parties in a proposed order of dismissal that the letter to OXY initiated an audit. See Appellants’ App., Vol. II, Doc. 12 at 479. We point out that the district court never signed the proposed order containing this stipulation. Further, the document request letter states only that the MMS “plan[ned] to initiate this audit no later than 30 days from [OXY’s] receipt of this letter.” Id. at 343. Thus, while we accept that the letter notified OXY that an audit would be commenced, the unsigned stipulation by the parties has no bearing on whether the letter initiated the audit or was the consummation of the MMS’ decisionmaking process. -10- in FTC v. Standard Oil Co. of Cal., 449 U.S. 232 (1980), further elucidates what type of action may constitute the consummation of the agency decisionmaking process. In Standard Oil, the Court held that the FTC’s issuance of a complaint averring that it had reason to believe that eight major oil companies were violating the Federal Trade Commission Act was not final agency action. See id. at 246. The Court reasoned that the FTC’s averment of “reason to believe” that the oil companies were violating the FTCA was “not a definitive statement of position [but instead] represent[ed] a threshold determination that further inquiry [was] warranted and that a complaint should initiate proceedings.” Id. at 241. The Court then determined that, because the issuance of the complaint served only to initiate the proceedings by which a definitive agency position could become known, the complaint had no legal force or practical effect that was comparable to the regulation at issue in Abbott Laboratories, 387 U.S. at 151-53 (holding that regulations issued by Commissioner of Food and Drugs were ripe for review because they were definitive, immediately effective, and directly and immediately affected petitioners’ daily business activities). See Standard Oil, 449 U.S. at 24143. We think the posture of the MMS letter is strikingly similar to that of the FTC complaint in Standard Oil. Rather than consummating any agency decisionmaking process, the letter merely asked OXY to keep its records for the -11- audit period, requested access to all documents and information in OXY’s possession relating to crude oil production and disposition for the audit period, and notified OXY that the MMS intended to initiate an audit. At best, the letter served only to initiate further proceedings by which the MMS could determine whether Plaintiffs owed royalties. For this reason, we agree with the district court that the letter represents a tentative or interlocutory action. Plaintiffs’ claim that the letter was final agency action because it initiated the audit does not change our analysis. Even assuming that the MMS made a decision to begin the audit process, Standard Oil makes clear that not every decision made by an agency qualifies as the type of decisionmaking which is evaluated for ripeness purposes. See id. at 241-42. Thus, even if the letter did initiate an audit, it still did not consummate the type of decisionmaking process envisioned by the Supreme Court in Abbott Laboratories and Standard Oil as final agency action. Circuit courts interpreting the Supreme Court standards have not found agency decisionmaking processes similar to the action taken in this case to be final. See Veldhoen, 35 F.3d at 225 (stating that, in a case involving a marine casualty reporting and investigation, “[a]n agency’s initiation of an investigation does not constitute final agency action”); CEC Energy Co. v. Public Serv. Comm’n, 891 F.2d 1107, 1110 (3d Cir. 1989) (concluding that agency’s determination that it had jurisdiction to investigate a public utility contract was -12- not definitive but was merely a determination to commence an investigation); Aluminum Co. of Am. v. United States, 790 F.2d 938, 941 (D.C. Cir. 1986) (“It is firmly established that agency action is not final merely because it has the effect of requiring a party to participate in an agency proceeding.”). Under FOGRMA, we think such definitive decisionmaking processes would include, for example, enforcing an order or subpoena for records or determining royalties owed as a result of an audit and requiring OXY to pay such royalties, neither of which occurred in the MMS letter here. See 30 U.S.C. § 1711(a) (indicating that primary duties under FOGRMA are to determine royalties and other payments owed and to collect and account for such amounts in a timely manner). We therefore hold that the letter constituted no more than “a threshold determination that further inquiry [in the form of an audit was] warranted.” Standard Oil, 449 U.S. at 241. Because we have determined that the MMS’ July 1996 letter to OXY was not the consummation of the agency’s decisionmaking process, we need not analyze the second prong of the finality determination which asks whether the letter imposes legal obligations or consequences on Plaintiffs. See Bennett, 520 U.S. at 177 (stating that the “two conditions must be satisfied for agency action to be ‘final’”). Thus, we hold that the MMS letter to OXY did not constitute final agency action. -13- Although our analysis with respect to the document request letter would normally end here because Plaintiffs cannot satisfy both prongs of the finality test under Bennett, we will briefly address Plaintiffs’ argument that their claims are reviewable because there is no other adequate remedy under the APA. We believe Plaintiffs’ reasoning is flawed. Simply put, the course of events in this case indicates that Plaintiffs already have pursued the remedy available to them, i.e., they refused to provide Defendants with the information requested in the MMS letter. In response to Plaintiffs’ refusal to meet the letter’s requests, Defendants issued an administrative subpoena under 30 U.S.C. § 1717 to legally force Plaintiffs to provide the requested information. A request for information followed by a subpoena is exactly the procedure authorized by 30 U.S.C. §§ 1713(a) and 1717(a). Subpoena recipients may then obtain judicial review by simply refusing to comply with the subpoenas and forcing the MMS to bring subpoena enforcement actions. 4 See 30 U.S.C. § 1717(b). Should Defendants file a proper enforcement action, we think the law provides Plaintiffs with every opportunity to contest the validity of the underlying audit and of the document request letter as they pertain to the enforcement of the administrative subpoena. 5 4 In this case, Defendants may refile an enforcement action in the appropriate federal court to compel compliance because the prior action filed in the Central District of California was dismissed without prejudice. 5 It is worth noting that Plaintiffs also have successfully availed themselves (continued...) -14- See Belle Fourche Pipeline Co. v. United States, 751 F.2d 332, 334 (10th Cir. 1984) (interpreting Reisman v. Caplin, 375 U.S. 440, 449 (1964), for the proposition that an adequate legal remedy exists because the investigated party may challenge the validity of the subpoena on any appropriate ground in a subsequent enforcement hearing), cert. denied, 474 U.S. 818 (1985). In summary, Plaintiffs not only have pursued the proper procedure and remedies available under FOGRMA by refusing to comply with the document request letter and with the subsequent subpoena but they also possess additional opportunities to assert their rights and arguments in an enforcement action, should Defendants file one. Accordingly, we conclude that FOGRMA provided Plaintiffs with an adequate legal remedy or remedies under the APA, and we reiterate our holding that the MMS letter to OXY did not constitute final agency action.