Court Opinion

ID: 158093
Source: CourtListenerOpinion
Date Created: 2010-08-14 05:12:33+00
Date Added: 2024-06-11T16:57:38.209037
License: Public Domain

F I L E D
                                                      United States Court of Appeals
                                                              Tenth Circuit
                                  PUBLISH
                                                             JUN 16 1999
                    UNITED STATES COURT OF APPEALS
                                                          PATRICK FISHER
                                                                  Clerk
                         FOR THE TENTH CIRCUIT

MOBIL EXPLORATION &
PRODUCING U.S., INC., and MOBIL
CORPORATION,

      Plaintiffs,

and
OXY USA INC. and OCCIDENTAL                 No. 98-5009
OIL AND GAS CORPORATION,

      Plaintiffs - Appellants,
v.
DEPARTMENT OF INTERIOR, sued
as: Bruce Babbitt, Secretary,
Department of the Interior; Cynthia
Quarterman, Director, Minerals
Management Service, Department of
the Interior; Erasmo Gonzales, Chief,
Houston Compliance Division,
Minerals Management Service,
Department of the Interior; and Gary
L. Johnson, Chief, Dallas and Tulsa
Compliance Offices, Minerals
Management Service, Department of
the Interior,
      Defendants - Appellees.

       APPEAL FROM THE UNITED STATES DISTRICT COURT
         FOR THE NORTHERN DISTRICT OF OKLAHOMA
                    (D.C. No. 96-CV-790-K)
                  _________________________
Submitted on the briefs:

Patricia Dunmire Bragg and Stephen R. Ward of Gardere & Wynne, L.L.P., Tulsa
Oklahoma; Oliver S. Howard, Teresa B. Adwan, and Dennis C. Cameron of
Gable, Gotwals, Mock, Schwabe, Kihle, and Gaberino, Tulsa, Oklahoma; Patricia
A. Patten of Oxy USA Inc., Tulsa, Oklahoma, for Oxy USA Inc. and Occidental
Oil and Gas Corporation. David L. Bryant and Alinda F. Stephenson of Bryant
Law Firm, Tulsa, Oklahoma; Deborah B. Haglund of Mobil Business Resources
Corp., Dallas Texas, for Mobil Exploration & Producing U.S. Inc. and Mobil
Corporation.

Lois J. Schiffer, Assistant Attorney General; Donna S. Fitzgerald and Robert L.
Klarquist, Attorneys, Department of Justice; Ivan K. Fong, Deputy Associate
Attorney General, Washington, D.C.; and Geoffrey Heath and Howard Chalker,
Office of the Solicitor, Department of the Interior, Washington, D.C., for
Defendants-Appellees.
                           _________________________

Before BALDOCK, McKAY, and BRORBY, Circuit Judges.

                           _________________________

McKAY, Circuit Judge.
                           _________________________

      After examining the briefs and the appellate record, this panel has

determined unanimously that oral argument would not materially assist the

determination of this appeal. See Fed. R. App. P. 34(a)(2); 10th Cir. R. 34.1(G).

The case is therefore ordered submitted without oral argument.

      Plaintiffs Occidental Oil & Gas Co. and its subsidiary OXY USA, Inc.,

appeal the district court’s order on cross-motions for summary judgment

                                        -2-
determining that it lacked subject matter jurisdiction over this action. 1 We

exercise jurisdiction under 28 U.S.C. § 1291.

                                          I.

      Plaintiffs are federal oil and gas lessees in California on leases issued

under the Mineral Leasing Act, 30 U.S.C. §§ 181-287, and the Outer Continental

Shelf Lands Act, 43 U.S.C. §§ 1331-1356. Defendants, the Secretary of the

Interior, the Department of the Interior, and the Minerals Management Service

[MMS], are responsible for administering oil and gas leases for federal, Indian,

and tribal lands issued under the mineral leasing laws. See generally Federal Oil

and Gas Royalty Management Act of 1982 [FOGRMA], 30 U.S.C. §§ 1701-1757.

The MMS is the agency within the Department of the Interior responsible for

determining royalty value and collecting royalties due on federal or Indian oil and

gas leases.

      On July 18, 1996, the MMS sent a letter to OXY stating that it was

“conducting a review of the valuation of crude oil for royalty purposes . . . [which

would] cover crude oil and related transactions for January 1, 1980 through [July

31, 1996].” Appellants’ App., Vol. II, Doc. 12 at 342. The letter also stated:

      Plaintiffs Mobil Exploration & Producing U.S., Inc., and Mobil
      1

Corporation were dismissed from this appeal by this court’s Order filed January 6,
1999.

                                         -3-
      MMS requests OXY to keep all records related to its California
      operations for the audit period. [MMS] also request[s] access to all
      documents and information in OXY’s possession related to the
      production and disposition of crude oil for the audit period. An
      initial request for information is set forth in the Enclosure.
      Additional records and information necessary to complete the audit
      will be requested as needed.

Id. Plaintiffs did not respond to the letter nor did they provide the MMS with

access to the documents requested. Consequently, on September 4, 1996, the

MMS issued an administrative subpoena to Occidental to produce information

pursuant to 30 U.S.C. §§ 1711, 1713(a), and 1717(a) by September 30, 1996. See

id. at 368-71. Although Plaintiffs turned over documents maintained for the six

years prior to July 31, 1996, they have not complied with the subpoena to the

extent that it orders the production of documents generated before July 31, 1990.

      Plaintiffs brought this action in the United States District Court for the

Northern District of Oklahoma seeking two results: (1) a declaratory judgment

that the document request letter and the administrative subpoena relating to the

MMS audit are invalid; and (2) injunctive relief barring or preventing

enforcement of the document request letter and the subpoena. Defendants filed a

motion to dismiss the action pursuant to Rules 12(b)(1) and 12(b)(6) of the

Federal Rules of Civil Procedure. The district court denied the motion but stated

that it would revisit the jurisdictional issue on summary judgment. The parties

then filed cross-motions for summary judgment. Defendants again claimed that

                                         -4-
the court did not have subject matter jurisdiction.

       With respect to whether Plaintiffs’ claim objecting to the document request

letter was ripe for review, and relying partly on the government’s disavowal that

it would pursue penalties against Plaintiffs under 30 U.S.C. § 1719(c)(2), the

district court found that the letter did not impose any legal obligation on

Plaintiffs. Additionally, even assuming that a legal obligation existed, the court

found that the letter did not constitute final agency action because it was not the

consummation of the agency’s decisionmaking process.

       The district court also determined that because the administrative

subpoenas were not self-executing and because no enforcement action had been

filed in the Northern District of Oklahoma, review of Plaintiffs’ complaint would

contradict the general rule against reviewing pre-enforcement actions. Although

Defendants had filed an enforcement action against Plaintiffs in the Central

District of California, the court did not believe that the enforcement action

conferred jurisdiction in the Northern District of Oklahoma. 2 Therefore, the court

held that it was “not persuaded that an anticipatory action challenging the validity

of an administrative subpoena confers jurisdiction on this Court.” Id., Doc. 23 at

909.

       The United States District Court for the Central District of California
       2

dismissed the enforcement action without prejudice because the instant case was
pending in the Northern District of Oklahoma.

                                         -5-
      In response to Plaintiffs’ claim that “dismissal of this action would

condemn them to maintain records beyond the six-year statute of limitation” set

forth in 30 U.S.C. § 1713(b), id. at 913, the court held that “there is no per se rule

against document requests by the MMS beyond the six-year statute of limitation.”

Id. at 914. Finally, the district court cast aside Plaintiffs’ assertion that the MMS’

initiation of the audits exceeded its statutory authority. The court held that this

case did not “‘present one of the extraordinary exceptions to the [final agency

action] requirement.’” Id. at 915 (quoting Veldhoen v. United States Coast

Guard, 35 F.3d 222, 225 (5th Cir. 1994)). Accordingly, the district court

concluded that it lacked subject matter jurisdiction because Plaintiffs’ claims

were not ripe for review, and it granted summary judgment to Defendants.

                                          II.

      We review orders granting or denying summary judgment de novo. See

Phillips Petroleum Co. v. Lujan, 963 F.2d 1380, 1384 (10th Cir. 1992) (Phillips

II). Summary judgment is appropriate “if the pleadings, depositions, answers to

interrogatories, and admissions on file, together with the affidavits, if any, show

that there is no genuine issue as to any material fact and that the moving party is

entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(c); see Wolf v.

Prudential Ins. Co. of Am., 50 F.3d 793, 796 (10th Cir. 1995). “If there is no

                                          -6-
genuine issue of material fact in dispute, then we next determine if the

substantive law was correctly applied by the district court.” Wolf, 50 F.3d at 796.

      On appeal, Plaintiffs argue that the court erred in determining that it did not

have jurisdiction and they essentially repeat the arguments they made to the

district court. They assert that the district court possesses subject matter

jurisdiction because the document request letter and the administrative subpoena

constitute final agency actions which are ripe for review. In the alternative,

Plaintiffs contend that their claims are reviewable because the MMS exceeded its

statutory authority in initiating the audit relating to, ordering the retention and

disclosure of, and issuing the subpoena for documents more than six years old.

Defendants respond that the district court correctly determined that Plaintiffs’

claims were not ripe for judicial review.

                                          III.

      The Administrative Procedure Act provides a right to judicial review of

“final agency action for which there is no other adequate remedy in a court.”

5 U.S.C. § 704. Under the APA, a court is authorized to “hold unlawful and set

aside agency action, findings, and conclusions found to be . . . arbitrary,

capricious, an abuse of discretion, or otherwise not in accordance with law,” or

“in excess of statutory jurisdiction, authority or limitations.” Id. § 706(2)(A) &

                                            -7-
(C). “[B]efore a court may review an agency decision, it must evaluate ‘the

fitness of the issues for judicial review and the hardship to the parties of

withholding court consideration.’” Ash Creek Mining Co. v. Lujan, 934 F.2d

240, 243 (10th Cir. 1991) (quoting Abbott Lab. v. Gardner, 387 U.S. 126, 149

(1967)). Our application of the doctrine of ripeness prevents courts from

entangling themselves in administrative policy disagreements and “protect[s] the

agencies from judicial interference until an administrative decision [is]

formalized and its effects felt in a concrete way by the challenging parties.”

Abbott Lab., 387 U.S. at 148.

      In evaluating claims pursuant to the ripeness doctrine, we generally

consider four factors:

      (1) whether the issues in the case are purely legal; (2) whether the
      agency action is “final agency action” within the meaning of the
      Administrative Procedure Act, 5 U.S.C. § 704; (3) whether the action
      has or will have a direct and immediate impact upon the plaintiff[;]
      and (4) whether the resolution of the issues will promote effective
      enforcement and administration by the agency.

Ash Creek, 934 F.2d at 243 (citing Abbott Lab., 387 U.S. at 149-54). As to the

first factor, the parties do not dispute that the issues before us are purely legal.

The second factor, however, is particularly pertinent to our review of this case

because the parties fundamentally disagree about whether the July 1996 document

request letter and the administrative subpoena constitute final agency action.

                                           -8-
A. Final Agency Action

      It is well established that the finality of an administrative action depends on

whether the action “‘impose[s] an obligation, den[ies] a right or fix[es] some

legal relationship as a consummation of the administrative process.’” Id. (citation

omitted); see also Phillips II, 963 F.2d at 1387. More recently, the Supreme

Court has articulated this test for final agency action as having two conditions.

“First, the action must mark the ‘consummation’ of the agency’s decisionmaking

process . . . . And second, the action must be one by which ‘rights or obligations

have been determined,’ or from which “legal consequences will flow.’” Bennett

v. Spear, 520 U.S. 154, 177-78 (1997) (citations omitted); see also Franklin v.

Massachusetts, 505 U.S. 788, 797 (1992) (stating test as “whether the agency has

completed its decisionmaking process, and whether the result of that process is

one that will directly affect the parties”).

1. Document Request Letter

      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 241-

43.

      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.

2. Administrative Subpoena

      Although the Bennett framework applies in theory to an evaluation of the

finality of an administrative subpoena, courts are generally guided first by the

principle against pre-enforcement review when a party seeks injunctive relief

      5
        (...continued)
of their legal remedy of challenging the audit by contesting administrative orders
to pay royalties that had been issued by the MMS. See OXY USA, Inc. v.
Babbitt, No. 96-C-1067-K, 1997 WL 910381 (N.D. Okla. Sept. 23, 1997).

                                        -15-
from an agency subpoena: “Where an agency must resort to judicial enforcement

of its subpoenas, courts generally dismiss anticipatory actions filed by parties

challenging such subpoenas as not being ripe for review because of the

availability of an adequate remedy at law if, and when, the agency files an

enforcement action.” In re Ramirez, 905 F.2d 97, 98 (5th Cir. 1990) (citing cases

suggesting that party wishing to challenge enforceability of administrative

subpoena should refuse to comply with subpoena and await enforcement action by

issuing agency). Because administrative subpoenas issued by the MMS pursuant

to 30 U.S.C. § 1717 are not self-executing, 6 to enforce subpoenas, the agency

“must seek an order from a federal district court compelling compliance

with . . . [them].” Belle Fourche, 751 F.2d at 334; see 30 U.S.C. § 1717(b).

      Mindful of this principle, we proceed to Plaintiffs’ argument that the

district court erred in characterizing their action as an anticipatory challenge.

They assert that review of their claims for injunctive relief would not be “pre-

enforcement” review because the MMS already has effectively enforced the

      6
       In connection with any hearings, inquiry, investigation, or audit conducted
under the auspices of the FOGRMA, the Secretary of the Interior is authorized “to
require by subpena [sic] the attendance and testimony of witnesses and the
production of all . . . documents . . . , as the Secretary may request.” 30 U.S.C.
§ 1717(a)(3). In the event of a refusal to obey a subpoena and “upon application
of the Attorney General at the request of the Secretary and after notice to” the
person refusing to obey, the statute grants jurisdiction to any district court of the
United States in which the person is found, resides, or transacts business to
compel compliance with the subpoena. Id. § 1717(b).

                                         -16-
subpoena by filing an enforcement action in a California federal court and by

issuing Plaintiffs orders to pay royalties. Plaintiffs also contend that the court

erred in concluding that under § 1717(b) an enforcement action initiated in the

Central District of California did not confer jurisdiction on its own court, i.e., the

Northern District of Oklahoma. They contend that this narrow interpretation

improperly allows the MMS to forum-shop in enforcing its subpoenas.

      We think the statutory language of 30 U.S.C. § 1717 speaks for itself. The

statute clearly indicates that the district court only has jurisdiction to enforce a

subpoena “upon application of the Attorney General at the request of the

Secretary,” 30 U.S.C. § 1717(b), assuming that general requirements of venue and

jurisdiction are satisfied. This language succinctly implies that only the district

court in which the action is filed has jurisdiction over that action. A review of the

legislative history confirms that the choice of where to file an enforcement action

belongs to the Secretary of the Interior. To this effect, the committee reports

reveal that Congress “intended that the Secretary have broad enforcement

authority relating to his royalty and lease management functions.” See H.R. R EP .

N O . 97-859, at 32 (1982), reprinted in 1982 U.S.C.C.A.N. 4268, 4286; see also

Phillips Petroleum Co. v. Lujan, 951 F.2d 257, 260 (10th Cir. 1991) (Phillips I)

(indicating that “administrative agencies vested with investigative power,” such

as the Department of the Interior, “have broad discretion to require the disclosure

                                          -17-
of information concerning matters within their jurisdiction”). Thus, we agree

with the district court that the MMS is authorized to choose when and where to

file an enforcement action, subject to constraints imposed by reasonableness and

the usual jurisdictional requirements. Because the MMS did not file an

enforcement action in the Northern District of Oklahoma, the court correctly

concluded that it did not have jurisdiction to ascertain the validity of the

subpoena.

      Further, as we concluded above, Plaintiffs’ argument that they have no

alternative adequate remedy is without merit. Plaintiffs pursued the remedy

available under 30 U.S.C. § 1717 by refusing to produce the subpoenaed

documents and thereby forcing Defendants to file an enforcement action to

compel compliance with the subpoena. See 30 U.S.C. § 1717(b). Thus, judicial

review is available to Plaintiffs if and when Defendants refile an enforcement

action in the appropriate federal district court. We therefore hold that Plaintiffs

“possess[] an adequate legal remedy and [are] not exposed to the type of

immediate . . . injury necessary to justify jurisdiction.” Belle Fourche, 751 F.2d

at 335.

      In light of our conclusion that the district court properly determined that it

did not have jurisdiction to address an anticipatory challenge to the subpoena, we

reject Plaintiffs’ remaining arguments that the subpoena consummated the agency

                                         -18-
decisionmaking process and imposed legal obligations which would make it ripe

for review and that Defendants’ California enforcement action and orders to pay

are essentially a counterclaim which supplies the court with an independent

ground for jurisdiction. We now turn to Plaintiffs’ argument that their claims are

ripe because final agency action is not needed in this case.

3. Exception to the Requirement of Finality

      Plaintiffs argue that the district court may exercise jurisdiction under

Leedom v. Kyne, 358 U.S. 184 (1958), because the MMS exceeded its statutory

authority by initiating the audit, requiring Plaintiffs to maintain records beyond

the six-year period specified in 30 U.S.C. § 1713(b), and subpoenaing records

more than six years old. In Kyne, the Supreme Court held that the federal district

court had jurisdiction to review a National Labor Relations Board action despite a

statutory provision intended to preclude such review because the agency had acted

“in excess of its delegated powers and contrary to a specific prohibition in the

[National Labor Relations] Act.” Kyne, 358 U.S. at 188. “In considering whether

to proceed under Kyne, courts have emphasized that the case provides an

exception of ‘very limited scope,’ to be ‘invoked only in exceptional

circumstances.’” United States Dep’t of Interior v. FLRA, 1 F.3d 1059, 1061

(10th Cir. 1993) (citations omitted); see also Boire v. Greyhound Corp., 376 U.S.

                                         -19-
473, 481 (1964) (“The Kyne exception is a narrow one.”). According to this

court’s interpretation of Kyne,

      agency action will only fall within the exception created by Kyne
      when the agency’s determination is “made in excess of its powers,”
      when the agency “disobeyed the express command of [its organic
      act] . . . and in doing so . . . acted in excess of its powers,” when the
      agency order is “an attempted exercise of power that had been
      specifically withheld,” and when it is “agency action taken in excess
      of delegated powers.”

United States Dep’t of Interior, 1 F.3d at 1061 (quoting Kyne, 385 U.S. at 185,

186-87, 189, 190).

      Plaintiffs claim that Kyne applies here because the challenged subpoena

was issued solely for purposes of an audit which Plaintiffs allege is in

contravention of statutory limits on the agency’s authority. Specifically, they

assert that under Phillips Petroleum Co. v. Lujan, 4 F.3d 858 (10th Cir. 1993)

(Phillips III), the audits and subpoenas are illegal because the MMS is barred

from initiating an audit and requesting records more than six years old. Plaintiffs

contend that Phillips III stands for the proposition that an audit begun more than

six years after the relevant records were generated is per se unlawful. To support

their argument, they rely on the court’s statement in Phillips III that “it is clear

that if the government fails to initiate an audit within six years after the records

were generated, the delay is per se unreasonable.” Id. at 864. Reading this

language in the context within which it was stated and in conjunction with the

                                          -20-
holdings of Phillips I and Phillips III, we think Plaintiffs’ assertion is wide of the

mark.

        First, this language is dictum. It was not directly related to the facts or the

holding of the case, and it was simply intended to guide the district court’s

determination on remand. The critical question in Phillips III was when a cause

of action to recover unpaid royalties should accrue under 28 U.S.C. § 2415(a).

See id. at 859. Answering this question, the court held that the government’s

right of action under 28 U.S.C. § 2415(a) accrues “on the date the contract was

breached, which was the date the royalties were due and payable.” Id. at 861. In

response to the government’s claim that the statute of limitations was tolled under

28 U.S.C. § 2416(c) until the government completed its audit, the court held that

the statute of limitations would be tolled until completion of an audit only if

“facts material to the right of action [were] not known and reasonably could not

be known without the audit, and [if] the audit was completed within a reasonable

time after the deficient royalty payment.” Id. at 863 (internal quotation marks

omitted). The Phillips III court reversed the district court’s decision barring the

government’s claims and remanded for an evidentiary hearing on the tolling

question to determine whether the government knew or reasonably should have

known about the allegedly deficient royalty payment. See id. With respect to the

remand order, the court then advised the district court to consider FOGRMA in

                                           -21-
making its determination. In this limited scope, the court warned that “if the

government fails to initiate an audit within six years after the records were

generated,” id. at 864, then the government’s delay will not invoke the tolling of

the six-year statute of limitations to pursue an action to collect unpaid royalties

under 28 U.S.C. § 2415. See id. at 864. Conversely, Phillips III did not say that

a six-year delay would prohibit the MMS from requiring a lessee to retain

documents or to disclose documents beyond the six-year period required in 30

U.S.C. § 1713(b) in connection with an audit.

      Our clarification of Phillips III is supported by the language of § 1713(b).

This section of FOGRMA specifically authorizes the Secretary to order a lessee to

maintain documents “for a [period] longer” than the mandatory six years.

30 U.S.C. § 1713(b). Additionally, this court’s decision in Phillips I ratifies

Defendants’ contention that the MMS has the authority to seek and require

Plaintiffs to retain and disclose documents more than six years old which were

voluntarily maintained by Plaintiffs prior to the audit.

      Phillips I specifically addressed whether the Secretary of the Interior and

the MMS had the authority to order an oil and gas lessee to provide eight-year-

old records in connection with an audit. See Phillips I, 951 F.2d at 259-60. The

court clearly held that the defendants possessed that authority. Reversing the

district court’s grant of summary judgment to the plaintiff-lessee, the court

                                         -22-
determined that neither the six-year record-keeping requirement of 30 U.S.C.

§ 1713(b) nor the six-year statute of limitations on actions to collect royalty

payments under 28 U.S.C. § 2415 precludes the MMS from seeking, and the

lessee from disclosing, information that is more than six years old. See id. at

260-61. The court also stated that “[a]dministrative agencies vested with

investigatory power have broad discretion to require the disclosure of information

concerning matters within their jurisdiction,” id. at 260, and that the

“[d]efendants’ investigatory power is their power to audit records maintained by

[oil and gas] lessees.” Id. at 260 n.6. Phillips I further noted that “by giving the

Secretary the authority to unilaterally extend the period for retaining records,

Congress has recognized that [§ 1713(b)’s] six-year limitation is not absolute.”

Id. at 260 n.5.

      Consequently, we think that the mention in Phillips III of a “per se

unreasonable delay” related only to the court’s advice to the district court

concerning the tolling of the six-year statute of limitations under 28 U.S.C.

§ 2415 in an action to recover unpaid royalties. While this case does not require

us to decide whether Defendants have imposed upon Plaintiffs the obligation to

retain their records for more than six years, it is plain under Phillips I that even if

Defendants had imposed such an obligation they would not have contravened their

statutory mandate. Because “‘this dispute is over the agency’s interpretation of

                                          -23-
its statute and the regulations, an activity to which courts generally grant

deference to agencies,’” Appellants’ App., Vol. II, Doc. 23 at 915 (quoting

Veldhoen, 35 F.3d at 226), and because the MMS has not “acted in excess of its

powers,” Kyne, 358 U.S. at 187, we hold that the case before us does not present

the type of extraordinary circumstances necessary to invoke the narrow exception

established in Kyne. “An attack on the authority of an agency to conduct an

investigation does not obviate the final agency action requirement.” Veldhoen, 35

F.3d at 225.

B. Direct and Immediate Impact

      Turning to the third ripeness consideration, neither the document request

letter nor the administrative subpoena has an appreciable direct and immediate

impact upon Plaintiffs. While the second prong of the Bennett finality analysis

generally requires the court to examine whether any legal consequences arise

from the agency action, the approach to the third prong of the ripeness doctrine is

a broader one, focusing on financial and operational impacts as well as on legal

ones. We begin by comparing the effects of the letter and the subpoena on

Plaintiffs with the effects of the obligations imposed on the petitioner in the

seminal case on this point, namely, Abbott Laboratories. In that case, the

petitioner was forced to choose between costly compliance with food and drug

                                         -24-
regulations and severe criminal and civil penalties for noncompliance. In

determining that the petitioner’s claims were ripe, the Court found that the

required changes in products and the costs associated with ensuring compliance

and preventing civil and criminal prosecution for noncompliance constituted

direct and immediate impacts on petitioner’s daily business. See Abbott Lab.,

387 U.S. at 152-53.

      The document request letter and subpoena have no immediate substantial

impact upon Plaintiffs similar to the burdens described in Abbott Laboratories.

Plaintiffs’ refusal to comply with the document request letter itself evidences the

letter’s lack of impact. The letter did not force Plaintiffs to disclose any

information; it merely requested that they cooperate with the investigation. Even

after the MMS served Plaintiffs with an administrative subpoena, Plaintiffs still

did not suffer any immediate or substantial effect for refusing to comply with it. 7

Any “consequences” Plaintiffs claim to have suffered or to be suffering as a result

of their procedural wrangling with Defendants do not constitute direct and

immediate impacts because they do not impose any appreciable obligations upon

      7
        If Defendants were to file a proper enforcement action to obtain the
subpoenaed information, Plaintiffs likely could more readily show the type of
effects which Abbott Laboratories envisioned. However, while we think the
distinction between pre- and post-enforcement impacts is an important one, we do
not answer today whether post-enforcement impacts would in fact satisfy the
Abbott Laboratories standard.

                                         -25-
their daily business. See CEC Energy, 891 F.2d at 1110-11 (stating that agency’s

action determining jurisdiction only imposed obligation to respond to agency’s

further inquiries); cf. Standard Oil, 449 U.S. at 243 (determining that agency’s

issuance of complaint had no impact “other than the disruptions that accompany

any major litigation”).

      Further, we do not think Plaintiffs’ alleged burden of having to retain

information more than six years old is the type of consequence which, standing

alone, creates ripeness. Not only does this type of burden arise from every audit

requiring records to “be maintained for a [period] longer” than six years, 30

U.S.C. § 1717(b), but, like the obligation of having to disclose documents, merely

being required to retain information does not impose the type of costs or the

potential for severe criminal penalties recognized in Abbott Laboratories.

Additionally, because the MMS has avowed not to pursue penalties against

Plaintiffs under 30 U.S.C. § 1719(c)(2), there is no merit to Plaintiffs’ argument

that such penalties would have a substantial and severe impact upon them. For

these reasons, we are not persuaded that the document request letter and the

administrative subpoena expose Plaintiffs to the type of direct and immediate

“injury necessary to justify jurisdiction.” Belle Fourche, 751 F.3d at 335.

C. Agency Enforcement and Administration

                                        -26-
      The fourth and final factor in the ripeness analysis asks whether the

resolution of the issues will promote effective enforcement and administration by

the agency. We agree with the Government’s assessment that judicial review of

the MMS letter, which we have concluded does not constitute final agency action,

would cause substantial disruption to the administrative process. See Appellees’

Br. at 18. As noted above, Plaintiffs’ allegation of harm–that they are illegally

forced to retain records for a period beyond the six-year period stated in 30

U.S.C. § 1713(b)–is the type of obligation which accompanies many audits and

investigations under FOGRMA. If such an allegation of harm was sufficient to

justify review of an agency’s decision to initiate an audit and request documents,

“courts would constantly be reviewing such decisions,” CEC Energy, 891 F.2d at

1111, and the MMS’ ability to conduct audits would be unreasonably hampered.

Cf. Abbott Lab., 387 U.S. at 148 (noting that ripeness doctrine is intended to

prevent courts from unnecessarily intervening in administrative decisionmaking).

Additionally, because further agency action is needed to enforce the

administrative subpoena, we think that any action by the courts at this stage

would impede the agency’s ability to pursue the prescribed administrative

processes.

                                         IV.

                                        -27-
      In conclusion, we hold that neither the document request letter nor the

administrative subpoena is ripe for review. We therefore AFFIRM the district

court’s grant of summary judgment to Defendants for lack of subject matter

jurisdiction.

                                       -28-