Opinion ID: 6336934
Heading Depth: 3
Heading Rank: 3

Heading: Second Regulatory Benchmark

Text: OXY then argues that the Director misapplied the 1988 regulatory factors to alternatively affirm the agency’s valuation under the second regulatory benchmark. 34 Appellate Case: 21-2011 Document: 010110678144 Date Filed: 05/02/2022 Page: 35 Here, OXY’s challenge focuses on the district court’s analysis, rather than maintaining the required focus on the Director’s analysis under the APA. Aplt. Br. at 32–36. In affirming the Director’s alternative analysis under the 1988 regulatory factors, the district court stated that it “[would] not second-guess the Director’s decision in weighing the regulatory factors where the Director considered and analyzed the relevant factors and evidence.” ROA, at 87 (emphasis added). OXY takes issue with this statement because the district court “overlook[ed] the threshold point that the Director had no occasion to second-guess Hess’[s] valuation in the first instance.” Aplt. Br. at 35. OXY’s assertion is plainly wrong under the 1988 regulations, as well as the Unit Agreement and underlying Leases. Under the 1988 regulations, ONRR is required to audit the valuations that lessees supply and provide reasons for rejecting a lessee’s application of the regulatory benchmarks. 30 U.S.C. § 1711(c). Under the Unit Agreement and Leases, their terms dictate that ONRR retains the authority to establish a reasonable minimum valuation in accordance with the Lease valuation factors. ROA, at 442b, 446b, 450b, 454b [Sec. 2(d)(2)]. As demonstrated, ONRR did that here. Id. at 242–43. Moreover, we use ordinary APA deference principles to review the Director’s reasons for rejecting Hess’s Unit Average and approving ONRR’s valuation under the second regulatory benchmark. We cannot reweigh the regulatory factors if substantial evidence supports the Director’s reasoning—we cannot even displace ONRR’s choice “between two fairly conflicting views, even though the court would justifiably have made a different choice had the matter been 35 Appellate Case: 21-2011 Document: 010110678144 Date Filed: 05/02/2022 Page: 36 before it de novo.” Wyo. Farm Bureau Fed’n, 199 F.3d at 1231 (internal citations omitted). Because the record reveals substantial evidence in support of the Director’s analysis of the regulatory valuation factors, the Director’s decision to alternatively affirm the agency’s valuation under the second regulatory benchmark is not arbitrary or capricious.