Prosecuting Administrative and Judicial Appeals From Federal Royalty Valuation and Collection Decisions

Heralded in a decade ago by release of the Linowes Commission Report2 and by enactment of the Federal Oil and Gas Royalty Management Act3 (“FOGRMA”), heightened attention has been focussed on proper payment of royalties for production of minerals from federal and Indian lands. Royalty valuation and collection decisions rendered by the Department of the Interior (“Department”) have increased ten-fold in the last decade, both in the number of decisions issued and in the dollar values assessed.4 Administrative and judicial appeals from those decisions have correspondingly increased.5 Under those circumstances it comes as little surprise that administrative and judicial review procedures have been the subject of substantial [12-2] commentary, much of it directed to technical aspects of the appeals process.6 This paper seeks to supplement that commentary by exploring practical approaches to prosecuting administrative and judicial appeals from royalty valuation and collection decisions rendered by the Department.

I. AN OVERVIEW OF THE ADMINISTRATIVE APPEALS PROCESS FOR ROYALTY VALUATION AND COLLECTION DECISIONS.

The Secretary of the Interior (“Secretary”) has delegated to the Minerals Management Service (“MMS”) primary responsibility for assessing and collecting royalties on production of oil, gas, coal, and other non-locatable minerals produced from federal or Ind