Grynberg Petroleum Co v. Salazar
| Decision Date | 16 March 2011 |
| Docket Number | Civil Action No. 07-cv-02440-MSK-KMT |
| Parties | GRYNBERG PETROLEUM CO., Plaintiffs, v. KEN SALAZAR, Secretary of the Interior,1BUREAU OF LAND MANAGEMENT, and INTERIOR BOARD OF LAND APPEALS, Defendants. |
| Court | U.S. District Court — District of Colorado |
Honorable Marcia S. Krieger
THIS MATTER comes before the Court for resolution on the parties' dispute on the merits, pursuant to the contents of the Administrative Record (# 8), the Plaintiff's Opening Brief (# 17), the Defendant's response (# 18), the Plaintiff's reply (# 19), and the Defendant's sur-reply2 (# 21).
The facts, as demonstrated in the Administrative Record, reveal that the Plaintiff is the owner of a natural gas well, located in the vicinity of Montrose, Colorado. The well was drilledin the mid-1970s, pursuant to a lease between the Plaintiff and Defendant Bureau of Land Management ("BLM"). In 1991, the BLM observed that the well was not producing material amounts of natural gas and demanded that the Plaintiff either produce gas from the well or plug the well and abandon it. In 1996, the Plaintiff filed a Notice of Intent to Abandon, requesting permission to plug the well. The BLM approved the request, subject to certain conditions intended to protect nearby water supplies. The Plaintiff objected to the BLM's conditions, and appealed the approval to the Interior Board of Land Appeals ("IBLA"). In 2000, the IBLA affirmed the conditions imposed by the BLM on the plugging of the well.3 The Plaintiff then submitted additional proposals for plugging the well to conform to the BLM's requirements, and on August 10, 2000, the BLM formally approved the Plaintiff's plan for plugging the well.
In November 2000, the Plaintiff wrote to the BLM to explain "why this well has not been plugged yet." It explained that it had attempted to retain a contractor to perform the plugging operation, but that environmental conditions affecting access to the site and "crew and rig shortages" made it impossible to complete the process. The letter explained that the contractor "has promised that as soon as the road [to the well] becomes passable in the spring, he will visit the location and give us a bid and will plug the well shortly thereafter." The record indicates that the contractor was prepared to plug the well in June 2001, but the Plaintiff cancelled the effort, instead intending commencing attempts to connect the well to a nearby pipeline.
In July 2001, the well remained unplugged, and the BLM wrote to the Plaintiff, reminding it of its "commitment... to have this well plugged and abandoned early in theSummer." The BLM stated that it "is willing to grant [the Plaintiff] until the end of the summer to plug this well." The Plaintiff responded by noting its hope to connect the well to a nearby pipeline, thus restoring its productive capabilities, and the Plaintiff requested "an extension for plugging or connecting the subject well for one year from September 21, 2001." The BLM replied that the request for an extension of time to arrange a connection to a pipeline was not granted, insofar as the Plaintiff's had failed to demonstrate the likelihood of connecting to the pipeline, and that, in any event, the Plaintiff's lease to the well had been terminated. The BLM emphasized that "this well must be plugged and abandoned by September 21, 2001."
The Plaintiff failed to meet the September 21, 2001 deadline for plugging the well, and on November 13, 2001, the BLM issued the Plaintiff an "Incident of Noncompliance" ("INC") notice. The INC informed the Plaintiff that it was required to complete the plugging of the well by December 5, 2001, or else the BLM would issue another INC, accompanied by an assessment of penalties. The Plaintiff again failed to meet the BLM's deadline, and on December 13, 2001, the BLM issued a second INC and an assessment of $ 250 against the Plaintiff, pursuant to 43 C.F.R. § 3163.1(a)(2). The second INC gave the Plaintiff until January 8, 2002 to complete the plugging of the well, or to risk being subjected to civil penalties under 43 C.F.R. § 3163.2. The record does not reveal any response by the Plaintiff to these INCs.
On January 22, 2002, the BLM wrote to the Plaintiff, noting that the requirement that the well be plugged had still not been complied with, and thus, the BLM stated that it was imposing civil penalties on the Plaintiff pursuant to 43 C.F.R. § 3163.2(g)(2)(iii), in the amount of: $50 per day, retroactively, from December 19, 2001 to January 28, 2002; and (ii) $ 500 per day between January 28 and February 17, 2002, after which the BLM would arrange to have the well pluggedat the Plaintiff's expense.4 On February 5, 2002, the Plaintiff invoked its right to appeal the imposition of civil penalties to a BLM hearing officer.5
The BLM hearing officer heard the appeal in November 2003. At that hearing, the Plaintiff's position (as reflected in its closing argument) was that the BLM "gave no consideration at all to what were probably the most relevant factors to determine whether there was a reasonable abatement period" for the violation-namely, "weather factors" making access to the site difficult for the heavy equipment required to perform the operation and "whether there was a rig available." The BLM hearing officer rendered a decision on August 3, 2004, finding that: (i) it was not necessary to determine who bore the burden of proving a violation, as the BLM's proof was sufficient to meet any burden it bore, and thus, the Plaintiff had the burden of showing that the BLM's decision was arbitrary and capricious or against the weight of the evidence; (ii) the BLM properly followed the procedures for imposing a civil penalty under 43 C.F.R. § 3162.2(g)(2), and thus, had not acted arbitrarily or capriciously; (iii) the Plaintiff's complaint that winter weather conditions warranted a longer abatement period were unsupported, in that the Plaintiff had not visited the well site during the winter of 2001-02, that BLM personnel visited the site twice during that winter without incident, and that portions of the well had been drilled during winter months (admittedly, by somewhat different equipment than thatwhich would be used to plug the well); (iv) the Plaintiff's contentions that the unavailability of rigs warranted a longer abatement period was not supported by any evidence, and indeed, the evidence indicated that the Plaintiff's delay in plugging the well was the result of his attempts to connect it to the pipeline, not due to the unavailability of rigs; (v) once the BLM has set a presumptively reasonable abatement period, the burden is on the Plaintiff to request an extension, something that the Plaintiff did not do; and (vi) the amount of penalties imposed by the BLM were not rendered unreasonable by the lack of harm resulting from the failure to plug the well or the Plaintiff's alleged "good faith" in offering a bond to secure the costs of plugging the well in the future.
The Plaintiff appealed the hearing officer's decision to the IBLA, arguing that the hearing officer had misapplied the burden of proof-that is, the Plaintiff argued that the BLM bore the burden of proving that the abatement period it offered was reasonable under the circumstances (and, by extension, that the BLM was required to show that weather conditions would not prevent heavy equipment from accessing the site and that such equipment was available during the abatement period). On August 23, 2007, the IBLA affirmed the hearing officer's decision in pertinent part, 6 finding: (i) the Plaintiff's citation to caselaw supporting its contention that the BLM had the burden of proof as to the reasonableness of the abatement period applied only where the evidence was in equipoise, and here, the BLM's evidence was more substantial than the Plaintiff's; (ii) the burden is on a producer to prove that a facially-valid abatement period is unreasonable or to show that the producer reasonably sought an extension of time to comply;(iii) the penalties imposed took into account the minor nature of the violation.
The Plaintiff then commenced this action, asserting a single claim for relief pursuant to the Administrative Procedures Act ("APA"), 5 U.S.C. § 701 et seq. As framed by the Complaint (# 1), the Plaintiff alleges that the IBLA's decision was arbitrary and capricious in that: (i) the IBLA improperly apportioned the burden of proof, and that the BLM bears the burden of showing both that a violation occurred and, with regard to the reasonableness of the abatement period, that "the site was accessible [and] that plugging equipment was available"; (ii) the BLM abused its discretion by imposing the maximum penalty for a minor violation; and (iii) it was an abuse of discretion by the BLM not to reduce the penalty imposed in light of the circumstances here.
The APA provides that a court may review and set aside any agency action that is "arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law." 5 U.S.C. § 706(2)(a). Agency actions are arbitrary and capricious (or otherwise in violation of the APA), when the agency entirely failed to consider an important aspect of the problem, offered an explanation for its decision that runs counter to the evidence before the agency, is so implausible that it could not be ascribed to a difference in view or the product of agency expertise, failed to base its decision on consideration of the relevant factors, or if there has been a clear error of judgment on the agency's part. Wilderness Workshop v. Bureau of Land Management, 531 F.3d 1220, 1224 (10th Cir. 2008).
The Plaintiff's first contention is that the IBLA erred in finding that the BLM does not bear the burden of showing that the non-compliant condition can be abated within the abatement period that the BLM has chosen.
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