Court Rules for Tribe|in Gas Royalty Dispute

     (CN) – The Department of Interior’s rejection of a well-established formula for calculating natural gas royalties for the Jicarilla Apache Nation in New Mexico “does not reflect the reasoned decision making required of an agency,” the D.C. Circuit ruled, reversing a decision denying the tribe added royalties.

     The federal appeals court said the agency ignored its own precedent when it overruled a decision granting the Jicarilla Apache Nation extra royalties for natural gas leases on the tribe’s northwestern New Mexico reservation.
     “Silence in the face of inconvenient precedent is not acceptable,” Judge Janice Rogers Brown wrote for the three-judge panel.
     The tribe and and the Mineral Management Service developed the so-called “Jicarilla methodology” for calculating the major portion of Jicarilla natural gas leases in 1996. In 2000 the Interior Department approved the method when it rejected the appeals of companies ordered to pay the extra royalties.
     But in 2007, the agency reversed itself, ruling that the Jicarilla methodology was inconsistent with 1988 regulations and could not be used to calculate royalties on gas sold from January 1984 through June 1995.
     The Jicarilla challenged this reversal in federal court, claiming it was arbitrary and capricious and a violation of the government’s trust responsibility.
     The tribe argued that the 2007 decision wrongly used 1988 regulations to reject the Jicarilla methodology for computing royalties for gas sold before those regulations went into effect on March 1, 1988.
     Judge Brown said the government “virtually concedes” this point in its brief.
     “We hold (the Interior Department’s 2007 decision) arbitrary and capricious with respect to the time period from January 1984 through February 1988,” Brown wrote. “Interior’s decision fails to consider an important aspect of the problem and does not reflect the reasoned decision making required of an agency.”

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