Plaintiffs contend, however, that the court misunderstood the facts, and when that misunderstanding is corrected, it necessarily changes the court's due process analysis. The court disagrees. First, although the plaintiffs erroneously interpreted the language used by the court in its prior opinion, the court correctly understood the facts and analyzed the due process question accordingly. Second, to the extent that the plaintiffs use the court's language as an opportunity to disagree with the court's analysis, the court shall now reaffirm its holding and deny plaintiffs' motion to amend the judgment on this issue.
The court's due process analysis concluded that plaintiffs did not have a protected property interest in the withheld overpayments that would implicate the protections of the due process clause.
Plaintiffs erroneously presumed that once the MMS established that a lessee had overpaid on a lease, the lessee acquired a property interest in that overpayment. To the contrary, the court found that plaintiffs mistakenly viewed each payment on each lease as an isolated transaction. The court held that when properly viewed in the context of the ongoing relationship between a lessee and the MMS, the lessee could not be said to have a property interest in the overpayment on one lease when it owed prior debts to the MMS on the same or other mineral leases.
In this motion, plaintiffs argue that the court's analysis breaks down when the overpayment on one lease is held to offset the underpayment on a different lease. Because the various leases are "separate," plaintiffs argue that the court must find a property interest in the overpayment that exceeds any prior debt owed on that lease. The answer to plaintiffs' contention remains in the nature of the relationship between the plaintiffs and the MMS. The MMS administers all the mineral leases in question. The plaintiffs are all lessees of various leases. The debts as well as the overpayments stem from these leases. The MMS and the plaintiffs have several lease contracts that represent an ongoing relationship where the plaintiffs have and continue to utilize' the natural resources of the federal government and Native Americans. In light of the relationship between the various leases as brought together by the MMS as the administrator or lessor combined with the continuous and ongoing relationship between the plaintiffs and the MMS, plaintiffs cannot acquire property rights in the overpayment on one lease while refusing to pay debts on the same and other leases.
Moreover, the overpayments on a lease are not overpayments that the plaintiffs are entitled to until a lessee's prior debts are satisfied. Although the MMS has determined that the plaintiffs overpaid for recent periods on the various leases, the MMS has not determined that plaintiffs are entitled to the credits in light of the prior debts. In fact, the MMS has decided just the opposite. In this sense, property rights do not inure to the lessee until the lessee satisfies the prior debts owed to the MMS on its other mineral leases.
The court's conclusion is reinforced by the cases finding a due process property interest when money in the hands of the government is appropriated to satisfy an unrelated debt. For example, courts have found property interests in tax refunds appropriated to satisfy delinquent child support payments, Marcello v. Regan, 574 F. Supp. 586, 595 (D.R.I. 1983), and in duly earned wages appropriated to satisfy student loans, Toney v. Burris, 650 F. Supp. 1227, 1234 (N.D. Ill. 1986). In those cases it is clear that the debt bore no relationship to funds owing to the person. The same cannot be said about this case. Plaintiffs have numerous leases with the MMS and a continuous relationship stemming from them. Ultimately, unlike a person depending on the receipt of wages or a tax refund that suddenly finds that money usurped without process, any withholding of plaintiffs' overpayments on mineral leases stems directly from debts on mineral leases for benefits already reaped. The court will not extend those cases to this situation.
Finally, plaintiffs direct the court to authority indicating that the Department of the Interior's own substantive regulations prohibit offsetting the debt of one lease with the overpayment from another lease account when a lessee overpays one lease and underpays another.
In light of this, plaintiffs contend, the court must find that the leases are separate for the purposes of its due process analysis. The court finds plaintiffs' reliance on the MMS' substantive regulations to be misplaced.
In their complaint, plaintiffs do not allege that the MMS' failure to comply with their own substantive regulations (that is, by withholding funds for prohibited offset) entitles the plaintiffs to a return of the withheld funds. Indeed the court believes that plaintiffs could not allege such a cause of action. See Cort v. Ash, 422 U.S. 66, 78, 45 L. Ed. 2d 26, 95 S. Ct. 2080 (1975).
Thus, if the regulations do not provide the plaintiffs with a cause of action for preventing the defendants from offsetting the debts, it does not follow that the regulations can require the court to find a property interest for the purposes of due process. Plaintiffs do not provide any authority to support their contention that an agency's regulations can provide the basis for finding a property interest under the due process clause. Moreover, the court finds that because the regulations were not promulgated to guide a due process inquiry, they cannot be used to force the court to now treat the leases as separate so as to enable the plaintiffs to find a property interest. Thus, the court holds that its constitutional inquiry under the due process clause is not controlled by the MMS' treatment of offset in its regulations.
Hence, the court reaffirms its due process analysis and finds that plaintiffs have no protected property interest in overpaid royalties withheld for offset.
For the above-stated reasons, it is hereby
1. Mobil Exploration & Producing U.S., Inc.'s motion to vacate the judgment as it pertains to it is GRANTED, and the court dismisses Mobil's claims without prejudice;
2. Marathon Oil Company's motion to vacate the judgment as it pertains to it is DENIED; and
3. the remaining plaintiffs' motion to alter or amend the judgment is DENIED.
Royce C. Lamberth
United States District Judge