State v. Salazar

• Decision Date: 15 March 2016
• Docket Number: Civil Action Nos.: 11-2253 (RBW),12-253 (RBW)
• Citation: 170 F.Supp.3d 75
• Parties: State of Louisiana, et al., Plaintiffs, v. Kenneth Lee Salazar, Secretary of the United States Department of the Interior, et al., Defendants. State of Alabama, et al., Plaintiffs, v. Kenneth Lee Salazar, Secretary of the United States Department of the Interior, et al., Defendants.
• Court: U.S. District Court — District of Columbia

170 F.Supp.3d 75

State of Louisiana, et al., Plaintiffs,

v.Kenneth Lee Salazar, Secretary of the United States Department of the Interior, et al., Defendants.

State of Alabama, et al., Plaintiffs,

v.Kenneth Lee Salazar, Secretary of the United States Department of the Interior, et al., Defendants.

Civil Action Nos.: 11-2253 (RBW)

12-253 (RBW)

United States District Court, District of Columbia.

Signed March 15, 2016

Jonathan David Simon, Van Ness Feldman, LLP, Washington, DC, Jackson D. Logan, III, Ryan Michael Seidemann, Louisiana Department of Justice, Baton Rouge, LA, J. Matt Bledsoe, Office of Attorney General, Montgomery, AL, for Plaintiffs.

Michael D. Thorp, Joanna K. Brinkman, U.S. Department of Justice, Washington, DC, for Defendants.

MEMORANDUM OPINION

REGGIE B. WALTON, United States District Judge

The plaintiffs, the state of Louisiana (“Louisiana”) and the state of Alabama (“Alabama”) allege in this civil suit violations of the Administrative Procedure Act (“APA”), 5 U.S.C. §§ 701 -706 (2012), the Outer Continental Shelf Lands Act (“OCSLA”), 43 U.S.C. §§ 1331 -1356b (2012), the Submerged Lands Act (“SLA”), 43 U.S.C. §§ 1301 -1315 (2012), and the federal Debt Collection Act (“DCA”), 31 U.S.C. §§ 3701 -3720E (2012), against the defendants, the United States Department of the Interior (“DOI”) and “responsible agencies and officials within the DOI.” State of Louisiana Complaint (“La. Compl.”) ¶ 1; State of Alabama Complaint (“Ala. Compl.”) ¶ 1. Specifically, the plaintiffs challenge the defendants' revised approach for calculating oil and gas revenues paid to coastal states along the Gulf of Mexico, resulting in alleged over-payments to certain coastal states that the defendants now seek to have returned to the federal government in some manner. La. Compl. ¶ 2; Ala. Compl. ¶ 2. Currently pending before the Court are the Plaintiffs' Motion for Summary Judgment (“Pls.' Summ. J. Mot. ”) and the Defendants' Cross-Motion for Summary Judgment (“Defs.' Summ. J. Mot.”).¹ Upon careful consideration of the parties' summary judgment motions,² as well as their oral arguments at the February 16, 2016 hearing, the Court concludes for the following reasons that it must grant in part and deny in part the parties' motions.

I. BACKGROUND

A. Statutory Background

In 1953, Congress passed the SLA, which “relinquished all federal interest in the submerged lands within three geographic miles of the coast.” United Ass'n of Journeymen, Local Union No. 412 v. Barr, 981 F.2d 1269, 1270 (D.C.Cir.1992) (citing Maryland v. Louisiana, 451 U.S. 725, 730, 101 S.Ct. 2114, 68 L.Ed.2d 576 (1981) ); see also Alabama v. U.S. Dep't of Interior, 84 F.3d 410, 412 (11th Cir.1996) (“Coastal states own submerged lands adjoining their coasts extending seaward three miles.” (citing 43 U.S.C. § 1312 )); Louisiana ex rel. Guste v. United States, 832 F.2d 935, 938 (5th Cir.1987) (“In 1953, the Submerged Land[s] Act was passed giving coastal states the right and power to manage submerged lands adjoining their respective coasts. For most coastal states, ... the grant extends seaward for three miles.” (citation omitted)). The SLA extended “the seaward boundary of a costal [s]tate ... to a line three miles from its coastline.” Amoco Prod. Co. v. Vill. of Gambell, 480 U.S. 531, 547, 107 S.Ct. 1396, 94 L.Ed.2d 542 (1987). “At that line, the [Outer Continental Shelf] commences.”³ Id.(citing 43 U.S.C. § 1331(a) ).

Then, in a related measure later in 1953, Congress enacted the OCSLA to “address the issue of federal authority” over the Outer Continental Shelf. Chevron, U.S.A., Inc. v. F . E . R . C ., 193 F.Supp.2d 54, 57 (D.D.C.2002) (footnote omitted), aff'd sub nom. Williams Cos. v. F . E . R . C ., 345 F.3d 910 (D.C.Cir.2003) ; see also United States v. California, 381 U.S. 139, 85 S.Ct. 1401, 14 L.Ed.2d 296 (1965) (“In a later measure related to the Submerged Lands Act, Congress declared that the United States owned all submerged land in the continental shelf seaward of the lands granted to the States.” (citation omitted)); United Ass'n of Journeymen, 981 F.2d at 1270 (similar); Dr. Edward A. Fitzgerald, The Seaweed Rebellion: The Battle over Section 8(g) Revenues, 8 J. Energy L. & Pol'y 253, 255 (1988) (“Fitzgerald”) (“One month after the enactment of the SLA, Congress passed the [OCSLA]. The OCSLA granted the federal government jurisdiction over [Outer Continental Shelf] lands beyond the three[-]mile limit established in the SLA.” (footnote omitted)). The OCSLA, inter alia, “authorize[s] federal leasing of the [Outer Continental Shelf] for oil and gas development.” Oceana v. Bureau of Ocean Energy Mgmt., 37 F.Supp.3d 147, 150 (D.D.C.2014) (quoting Sec'y of the Interior v. California, 464 U.S. 312, 336, 104 S.Ct. 656, 78 L.Ed.2d 496 (1984) ). The Secretary of the Interior (“Secretary”) has primary responsibility for administering the OCSLA. Chevron, 193 F.Supp.2d at 57 (citing 43 U.S.C. § 1334(a) ).

The revenues derived from the leasing of the Outer Continental Shelf for oil and gas development are distributed by the Secretary according to a specific framework laid out in the statute. See 43 U.S.C. § 1337(g)(2), (g)(7). The OCSLA provides that the Secretary

shall deposit ... revenues ... derived from any lease ... of any [f]ederal tract which lies wholly ... within three nautical miles of the seaward boundary of any coastal [s]tate, or, ... in the case where a [f]ederal tract lies partially within three nautical miles of the seaward boundary, a percentage of ... revenues ... derived from any lease ... of such tract equal to the percentage of surface acreage of the tract that lies within such three nautical miles. ... [T]he Secretary shall transmit to such coastal [s]tate [twenty-seven] percent of those revenues, together with all accrued interest thereon. The remaining balance of such revenues shall be transmitted simultaneously to the miscellaneous receipts account of the ... United States.

43 U.S.C. § 1337(g)(2). And,

[w]hen the Secretary leases any tract which lies wholly or partially within three miles of the seaward boundary of two or more [s]tates, the revenues from such tract shall be distributed as otherwise provided by this section, except that the [s]tate's share of such revenues that would otherwise result under this section shall be divided equally among such [s]tates.

Id.§ 1337(g)(7).⁴

B. Factual Background

The following material facts underlying this litigation are not in dispute. For many years, the defendants disbursed 8(g) oil and gas revenues to adjacent states that owned overlapping 8(g) lease tracts on the Outer Continental Shelf “in proportion to [their] respective interests in the tract,” Pls.' Summ. J. Mem. at 16, i.e., the defendants “allocate[d] revenues between two coastal [s]tates at their boundaries based on the pro-rata percentage of acreage lying on each [s]tate's side of its extended lateral boarder,” Defs.' Summ. J. Mem. at 14. This “[p]roportional allocation [of revenues] was determined by 'drawing a lateral boundary line between adjacent states all the way through the 8(g) zone and sharing revenues for only those tracts intersected by this lateral boundary.' ” Pls.' Summ. J. Mem. at 16-17 (ellipses omitted) (quoting Administrative Record (“A.R.”) at DOI KD 39-45); see also Defs.' Summ. J. Mem. at 20 (explaining that, in the diagram below, “lease block 862 would have been split with a majority of the [s]tate portion ... [being] allocated to Mississippi ... and the remainder of the [s]tate portion ... [being] allocated to Alabama”

(alterations to diagram). In 2007, the defendants decided that their approach for disbursing revenues to coastal states sharing interests in the same lease tracts was inconsistent with the plain language of 43 U.S.C. § 1337(g)(7). See Pls.' Summ. J. Mem. at 5; Defs.' Summ. J. Mem. at 13-15. First, the defendants concluded that the approach “ignored the fact that a substantial amount of leased acreage within the 8(g) zone is located well within three miles of a [s]tate's seaward boundary despite lying on the ... [adjacent] [s]tate's side of the extended lateral boundary.” Defs.' Summ. J. Mem. at 20; see also A.R. at DOI KD 56. Second, they also concluded that revenues from tracts with overlapping ownership between adjacent states were not allocated “equally” to them. Defs.' Summ. J. Mem. at 14; see also A.R. at DOI KD 57. Based on these conclusions, the defendants revised their approach. See Pls.' Summ. J. Mem. at 17; Defs.' Summ. J. Mem. at 20. Instead of drawing a lateral boundary between two states that stretched through the relevant 8(g) zone, the defendants began “[drawing] a three[-]mile arc at the point where a lateral boundary between adjacent states intersected the SLA boundary.” Pls.' Summ. J. Mem. at 17 (emphasis added) (quoting A.R. at DOI KD 39-45); see also Defs.'

Summ. J. Mem. at 21 (“The semicircle depicted in the image below reflects the combined results of this 'arc methodology,' identifying the full area located 'within three miles of the seaward boundary of' both Mississippi and Alabama.

(alterations to diagram)); A.R. at DOI KD 56. Accompanying the defendants' adoption of this “arc methodology” was their decision “that, in circumstances where ... [adjacent] [s]tates are involved, the [s]tates' share of the [leasing] revenues be split fifty-fifty.” Defs.' Summ. J. Mem. at 24; see also DOI KD at 57.

In July 2011, the defendants issued demand letters to the plaintiffs, advising them of the flawed nature of their prior approach for disbursing revenues to states that shared 8(g) tracts and seeking to recover over-payments from the plaintiffs as a result of their mistakes. See A.R. at DOI KD 39-45; see also Defs.' Summ. J. Mem. at 15 (citing portions of administrative record indicating that notice of flaws was provided to the plaintiffs well before July 2011). The plaintiffs then commenced this lawsuit, challenging the defendants' decision to revise their approach for disbursing oil and gas revenues...