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Federal Register / Vol. 86, No. 187 / Thursday, September 30, 2021 / Rules and Regulations
gathering policy which had been overturned by the 2016 Valuation Rule, reinstating extraordinary processing allowances which had been repealed by the 2016 Valuation Rule, and making changes to the index-based pricing options which had been discussed but rejected in the 2016 Valuation Rule.
Likewise, instead of merely repealing the default provision, the definition of misconduct, the requirement for signatures on contracts, and the requirement to cite legal precedent in requests for valuation determinations, ONRR should have discussed other alternatives which could have included further amendment of the existing provisions or amendments to related provisions.
These shortcomings resemble ONRRs 2017 attempt to repeal the 2016
Valuation Rule, where the United States District Court for the Northern District of California found that ONRR did not discuss alternatives to a full repeal of the 2016 Valuation Rule and explained that an agency must discuss alternatives even if the agency is repealing less than an entire rulemaking. See California, 381 F. Supp. 3d at 116869; Yakima Valley Cablevision, Inc. v. F.C.C., 794
F.2d 737, 746 n. 36 D.C. Cir. 1986.
With respect to the repeal of the two coal provisions, ONRR notes that the position taken in the 2020 Rule is consistent with, but not identical to, the position taken by the Federal defendants in the Cloud Peak case, specifically that the coal cooperative provisions and the provisions providing for valuation of certain coal sales based on electricity are defective. See Cloud Peak Energy Inc. v. U.S. Dept of the Interior, 415 F. Supp. 3d 1034 D. Wyo.
2019. However, on September 8, 2021, the United States District Court for the District of Wyoming issued a ruling on the merits of the Cloud Peak petitions, which ruling renders moot the portions of the 2020 Rule applicable to Federal and Indian coal.
Public Comment: A commenter stated that ONRRs Proposed Withdrawal Rule fails to cite any legal support for its assertion that the APA requires an analysis of the alternatives to a repeal of regulations. The commenter also stated that ONRR failed to quantify the amount of discussion required to meet this standard. The commenter asserted that ONRRs reliance on California is unhelpful to its position because, according to the commenter, the case is currently under appeal at the U.S. Court of Appeals for the Ninth Circuit. The commenter also argued that the case law relied upon by ONRR is inapplicable in this instance. More specifically, the commenter stated that the California
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case primarily focused on rule repeals.
The commenter further stated that the 2020 Rule did not repeal the entire 2016
Valuation Rule, but instead modified only some of the regulations promulgated through the 2016
Valuation Rule.
Another commenter noted appreciation for the alternatives provided in the Proposed Withdrawal Rule. However, this commenter stated that a full withdrawal of the 2020 Rule is necessary due to the legal and procedural deficiencies underpinning the 2020 Rule.
ONRR Response: As shown in the Proposed 2020 Rule, ONRR cited authority, including California, 381 F.
Supp. 3d at 116869, that supports the requirement that ONRR must discuss alternatives due to the unique factual circumstances of this rule, its attempted repeal of the 2016 Valuation Rule, and the California decision. See also DHS v.
Regents of the Univ. of Cal., 140 S. Ct.
1891, 191315 2020 discussing the requirement to consider alternatives. In addition, the commenters statement regarding the status of the California litigation is incorrect. California is a final decision, binding on ONRR, because no party to that case appealed any of the District Courts decisions, including the final merits decision dated March 29, 2019.
C. Lack of Reasoned Explanation The Proposed 2020 Rule did not fully explain why the amendments were being proposed. ONRR needed to provide a reasoned explanation for repealing most of the substantive provisions adopted in 2016 Valuation Rule. The California Court noted a similar flaw in ONRRs 2017 proposal to repeal the 2016 Valuation Rule, finding that ONRR did not identify the reasons supporting its proposed repeal. 381 F.
Supp. 3d at 117374 The Court concludes that, by failing to provide the requisite information to adequately apprise the public regarding the reasons the ONRR was seeking to repeal the Valuation Rule in favor of the former regulations it had just replaced, the ONRR effectively precluded interested parties from meaningfully commenting on the proposed repeal. The Court therefore concludes that Federal Defendants violated the APA by failing to comply with the notice and comment requirement. citations omitted.
Specifically, ONRRs Proposed 2020
Rule lacked the full statement of the reasons why ONRR was both proposing to return to some of the historical practices and suggesting other changes that were eventually adopted by the 2020 Rule, most of which targeted the
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changes adopted in the 2016 Valuation Rule and 2016 Civil Penalty Rule. While the Proposed 2020 Rule identified the proposed changes, discussed the anticipated economic impact of the changes, and set forth the language of the proposed amendments, ONRR did not fully discuss why it was repealing most of the substantive provisions adopted in 2016 Valuation Rule. Cf. 85
FR 6205662062 with 86 FR 46174640.
ONRR needed to provide such an explanation in light of the California case, the lengthy and complex rulemaking history, and the repeal of most of the substantive provisions adopted in 2016 Valuation Rule.
Moreover, for the changes that were reverting to historical practices i.e., those existing before the 2016 Valuation Rule was adopted, ONRR did not fully explain why it was reverting to practices it had rejected in its last substantive rulemaking. Thus, the Proposed 2020
Rule did not provide sufficient notice of the reasons for the 2020 Rule. As such, the public was deprived of a meaningful opportunity to comment.
Public Comment: A commenter stated that frequent rule changes create confusion and unnecessary cost within the regulated community.
ONRR Response: While ONRR
understands there may be confusion caused by the recent change in requirements due to the successive adoption of the 2016 Valuation Rule, publication of the 2020 Rule, and now this withdrawal, ONRR notes that the 2020 Rule has never gone into effect and no company has ever been required to report thereunder. ONRR also notes that the 2016 Valuation Rule has been in effect for a relatively short period of time. Withdrawing the 2020 Rule will avoid additional rule changes until such time as the public has had adequate opportunity to review and comment on any proposed amendments and ONRR
has considered the associated costs of any changes to the regulated community.
Public Comment: Some commenters agreed with ONRRs analysis in the Proposed Withdrawal Rule, agreeing that the 2020 Rule lacked evidentiary support and a reasoned justification for the rulemaking.
ONRR Response: ONRR agrees. For the reasons stated in the Proposed Withdrawal Rule and herein, the withdrawal of the 2020 Rule is appropriate.
D. Inadequate Justification for Change in Recently Adopted Policy At the time the Proposed 2020 Rule was published, the 2016 Valuation Rule was in force only from March 29, 2019,
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