Court Opinion

ID: 6988732
Source: CourtListenerOpinion
Date Created: 2022-07-24 03:21:01.922915+00
Date Added: 2024-06-11T16:09:32.410124
License: Public Domain

BROWN, Senior District Judge,
Dissenting.
I respectfully dissent. I believe we are bound by this court’s determination in Phillips III that § 2415(a) is the governing statute of limitations on claims like those at issue here.
Phillips III was identical in all material respects to the case now before us. It involved an administrative order by the Department of Interior directing a lessee to pay additional royalties. The lessee sued to enjoin the Department from enforcing the order and the district court granted summary judgment to the lessee, finding that the six-year statute of limitations in § 2415(a) barred the government from collecting the royalties. On appeal, the parties agreed that § 2415(a) was controlling, but the government maintained that its claim was timely because the claim did not accrue until an audit of the lessee was completed and because the statute of limitations was tolled during the audit. In deciding that appeal, a panel of this court declared that “we ... agree with the parties that 28 U.S.C. § 2415(a) is the controlling statute of limitations.... ” Phillips III, 4 F.3d 858, 860 n. 1 (10th Cir.1993). The panel went on to reject the government’s argument about accrual, but held that the statute of limitations was tolled until the Department knew or should have known of the lessee’s breach. The panel remanded the case for an evidentiary hearing concerning when the Department knew or should have known of the breach. Id. at 864.
Faced with this “bay horse case,” the majority cites a multitude of factors in an attempt to show that the panel’s finding in Phillips III that § 2415(a) governed the claim was “neither ‘necessary’ nor ‘essential’ to the determination of that case.” The majority’s analysis,- however, cannot be reconciled with a plain reading of Phillips III. The panel in that case did not hypothetically assume that § 2415(a) might apply; it stated flatly that “we ... agree with the parties that 28 U.S.C. § 2415(a) is the controlling statute of limitations .... ” It then applied the statute to the claims before it. Not 'only was the panel’s finding necessary to its determination, it was in fact the cornerstone of the decision. One can argue that the panel was wrong, or that it did not fully analyze the issue, or that other courts have not agreed with its finding, but I do not see how it can be argued that the panel’s finding was unnecessary to its judgment.1 *1192Absent that finding, there would have been no reason for the panel to rule on the accrual and tolling issues, and the case certainly would not have been remanded for an evidentiary hearing. The majority contends that the panel’s finding could be deleted from the opinion “without seriously impairing the analytical foundations of the holding.” But the applicability of the statute of limitations was the underlying premise of the panel’s ruling.2 Absent that premise, the entire appeal (as well as the proceedings conducted on remand) would be nothing more than advisory and hypothetical exercises. I do not think we can relegate to the status of dicta a finding that formed the basis of the court’s opinion. Perhaps the panel’s finding was erroneous, perhaps not — but in any event it was a straightforward legal ruling and we are bound to apply it unless it is changed by the en banc court.3 See In re Smith, 10 F.3d 723, 724 (10th Cir.1993) (we are bound by the precedent of prior panels in the absence of en banc consideration or an intervening decision by the Supreme Court).
Aside from the question of whether Phillips III is binding, I also dissent from the majority’s holding that § 2415(a) does not apply because MMS’ orders to pay royalties are not “actions” within the meaning of the statute. Section 2415 is entitled “Time for commencing actions brought by the United States.” Subsection (a) contains a time limit applicable to “every action for money damages brought by the United States or an officer or agency thereof which is founded upon any contract. ...” The clear object of the statute was to provide for a general statute of limitations on contract claims asserted by the government, including claims by government agencies. As the majority concedes, an exception in § 2415(f) for administrative setoffs supports the view that § 2415(a) was intended to apply to administrative proceedings as well as judicial proceedings. Despite this, the majority relies upon the dictionary definition of “action” and a presumption of construction in favor of the government to conclude that the statute only applies to lawsuits in court and not to administrative actions. I believe such a construction is at odds with the plain language and structure of the statute. In my view, § 2415(a)’s limitation on “every action” by the government includes an action by MMS claiming that it was owed additional royalties under a min*1193eral lease, regardless of whether MMS is attempting to recover on that claim through the filing of a lawsuit or through the issuance and enforcement of an administrative order.4
This ease presents an example of how excluding administrative collection proceedings from the definition of “action” leads to irrational results and permits government agencies to evade the statute of limitations through procedural gimmickry. Pursuant to § 2415(a), MMS was presumably barred from filing suit to collect unpaid royalties going back more than six years. Knowing this, MMS simply issued administrative “orders to pay” to the ap-pellees. At the date of their issuance, the orders demanded payment of royalties and accumulated interest going back some fifteen years or more. In OXY’s case, a 1996 order directed OXY to pay an additional $551,693.26 in royalties for alleged underpayments between 1980 and 1983, together with accumulated interest thereon of approximately $1.7 million. Shell fared less well, being ordered to pay $28 million in additional royalties and $70 million in interest dating back to 1980. These orders were apparently based on a 1996 decision by MMS to change its prior practice and to use higher cost Alaskan crude oil as the base value for determining royalty payments. MMS would have us believe it is free to issue such orders without regard to how far back in time they go, and that the unlucky recipients are bound to pay regardless of the fact that the orders come down like lightning bolts from Mount Olympus, because such orders do not constitute “actions” by the government. I think such a construction is unreasonable and is contrary to Congress’ intent in adopting the statute of limitations. See United States v. Hanover Ins. Co., 82 F.3d 1052, 1055 (Fed.Cir.1996); See also Phillips III, 4 F.3d at 863 (“The legislative history in support of § 2415(a) indicates Congress was motivated in part by notions of fairness and equity in government dealings with private litigants, and further motivated to reduce the costs of record keeping and encourage prompt agency actions on claims.”).
In view of the majority’s holding, I will not dwell on the other arguments raised by the appellants. I will simply say I find these other arguments unpersuasive. I believe that MMS’ claims for royalties going back to 1980 constitute an action for money damages, founded upon a contract, that is now barred by § 2415(a). I would also reject appellants’ argument that Congress has “otherwise provided” an applicable statute of limitation in FOGRMA inasmuch as that provision applies only to oil production after September 1, 1996. Under the circumstances, I believe the appel-lees are entitled to declaratory and injunc-tive relief prohibiting MMS from enforcing its claims. Accordingly, I would affirm the judgment of the district court.

. As the district court in this case noted, "[i]t is, as a matter of logic, essential to the [Phil*1192lips III] holding concerning accrual of a claim ... that § 2413(a) applies in the first place.”

. I do not understand the assertion that the panel’s finding was unnecessary to the decision because "we could have assumed arguen-do that § 2415(a) applied and still found in the government’s favor based on the tolling provision....” Maj. Op. at 1185. The issue is not what we could have done but what we did. In this regard, I would point out that it was only because the Phillips III panel concluded that the statute of limitations applied that it remanded the case for further proceedings rather than reversing the district court and directing it to enter judgment for the government.
The majority also finds that Amerada Hess Corp. v. Department of Interior, 170 F.3d 1032 (10th Cir.1999), implicitly shows that Phillips Ill’s finding was not binding. 1 disagree. The Amerada Hess panel declined to address the applicability of the statute of limitations, finding instead that the government's claim was timely even assuming § 2415(a) applied. This assumption, which is consistent with Phillips III, in no way shows that Amerada Hess considered Phillips III to be non-binding. In fact, Phillips III was not mentioned in the decision and there is no indication that the Amerada Hess panel was aware of it. Additionally, Amerada Hess serves to highlight the distinction between an assumption of law that makes no difference to the disposition of a case and a finding of law that does make a difference. Phillips III is an example of the latter, inasmuch as the court’s finding required it to remand the case to the district court for further proceedings.

. As a cautionary note, I might add that an overly expansive view of "dicta” could inject confusion into seemingly settled principles of law. District judges, who must decide in the first instance what law governs a claim, are entitled (and required) to consider as precedent clear conclusions of law stated in circuit court opinions. Parties to controversies likewise rely upon such statements in assessing their rights and liabilities and in litigating and settling claims.

. It seems clear that at some point the agency would have to resort to a court for enforcement of its order or that the validity of the order would be subject to review in a court proceeding. As such, the majority’s emphasis that the terms "action” and "complaint” in § 2415(a) refer only to judicial proceedings is, in my view, misplaced. See Marathon Oil Co. v. Babbitt, 938 F.Supp. 575, 579 (D.Alaska 1996) ("debate over whether the statute does or does not apply to the administrative proceeding itself seems beside the mark since the government must come to court to enforce any such order”). Section 2415(a) contemplates that agency decisions will be followed by court proceedings. It thus provides that when final agency decisions are made in administrative proceedings required by contract or by law, the government’s claim will be barred unless a complaint is filed within one year of the decision. MMS does not argue that its claim is timely by virtue of this provision.