UNITED STATES COURT OF APPEALS FOR THE D.C. CIRCUIT


AMAX LAND COMPANY

v.

QUARTERMAN, CYNTHIA


98-5367a

D.C. Cir. 1999


*	*	*


Silberman, Circuit Judge: Amax Land Company, a lessee  of federally
owned coal-containing land, challenges the legali- ty of a regulation
adopted by the Minerals Management  Service (MMS) and a payment order
issued pursuant thereto.  The regulation assesses interest on late
coal lease payments  at a higher rate than the government can earn on
investments  of its short term operating cash, and was interpreted by 
MMS in the payment order to allow that higher rate to  fluctuate from
month to month and to authorize the assess- ment of compound interest
(i.e., interest on interest). The  district court concluded the
regulation was ultra vires insofar  as it established the higher rate,
and set aside the regulation  and the payment order. We disagree and
hold that the  general rulemaking provisions found in MMS' organic
stat- utes countenance assessing the higher rate so long as that  rate
satisfies the criteria imposed by those general rulemak- ing
provisions; we remand for the district court to make this 
determination. We agree, however, with the district court's 
conclusions on the questions of shifting interest rates and  compound
interest. The Debt Collection Act (DCA) plainly  forbids the
utilization of shifting interest rates, and its imple- menting
regulations (the Federal Claims Collection Stan- dards), while perhaps
not as unambiguous on the matter of  compound interest, are most


I.


A.


Under the Mineral Lands Leasing Act of 1920 (MLLA) and  other statutes,
MMS (a subdivision of the Department of the  Interior) leases federal
and Indian lands containing coal, oil, 


and other resources to private entities for exploration and 
extraction.1 In exchange, lessees of federal land remit royal- ties
and other rental payments to the government, of which  50% is
disbursed to the state in which the land is located (90%  in the case
of Alaska). 30 U.S.C. s 191 (1994). Lessees of  Indian land remit
similar payments to the government, acting  as trustee for the
Indians; the entirety is then conveyed to  the Indians. Gov't Br. 11
n.7. The size of the royalty  payments is determined by statutory
formulae. On coal  leases, for example, lessees must pay "a royalty in
such  amount as the Secretary shall determine of not less than 121/2 
per centum of the value of coal as defined by regulation,  except the
Secretary may determine a lesser amount in the  case of coal recovered
by underground mining operations."  30 U.S.C. s 207(a) (1994).


The agency's determination of that amount not surprisingly  gives rise
to disputes from time to time (mainly appeals to  higher levels of the
agency) between MMS and the lessee. If  the dispute is resolved
favorably to MMS after the due date,  and if the lessee has timely
remitted only a payment based on  its own estimate of the coal's
value, the lessee will be late on  part of its royalty payment
obligation--to fully compensate  MMS and the states or Indians, the
lessee would have to  remit the late portion plus interest on that
amount. On the  other hand, if the lessee were to pay the full amount
demand- ed by the agency prior to appeal and subsequently win the 
appeal (hence making an overpayment), the lessee would  receive a
refund only of the excess portion, not interest on  that amount. That
is because Congress has not expressly  provided by statute or contract
for recovery of interest  against the government, and in the absence
of such a waiver  of sovereign immunity, interest cannot be awarded
against  the United States. See Library of Congress v. Shaw, 478  U.S.
310, 314-17 (1986). Recognizing this asymmetry, lessees 




__________

n 1 See MLLA, 30 U.S.C. ss 181 et seq. (1994); Mineral Leasing  Act for
Acquired Lands, 30 U.S.C. ss 351 et seq. (1994); 25 U.S.C.  ss 396,
396a-396g (1994) (Indian allotted and tribal lands).


involved in a good-faith royalty dispute typically will timely  pay
only their lower estimate of the royalty payment.


To address the typical underpayment situation, MMS in  1980 adopted
regulations assessing interest on underpay- ments on leases of
resource-containing lands at the current  value of funds (CVF) rate.
See 45 Fed. Reg. 84,762, 84,764  (1980) (interim regulations); 47 Fed.
Reg. 22,524, 22,527  (1982) (final regulations). The CVF rate is a
rate prescribed  by the Treasury Department, by reference to
prevailing  market rates, for short-term investments of the federal
gov- ernment's operating cash. See 31 U.S.C. s 323 (1994). Con-
sequently, an award based on the CVF rate compensates the  government
for its lost opportunity to make short-term in- vestments due to the


In 1983, Congress imposed a higher rate by statute--but  only for oil
and gas leases, not geothermal or solid mineral  leases (such as coal
leases). See Federal Oil and Gas Royalty  Management Act (FOGRMA),
Pub. L. No. 97-451, Title I,  s 111(a), 96 Stat. 2447, 2455 (1983)
(codified at 30 U.S.C.  s 1721(a) (1994)). (Congress explicitly
deferred legislation on  coal leases until MMS studied the matter and
filed a report,  see id. at s 303, 96 Stat. at 2461 (codified at 30
U.S.C.  s 1752 note (1986)).) The rate chosen for oil and gas leases 
was the so-called "IRS rate" already in use for underpayment  of taxes
pursuant to 26 U.S.C. s 6621(a)(2) (1994): the mar- ketable rate for
treasury bonds of less than three years  maturity, to be determined
monthly, plus three percentage  points. Roughly speaking, this rate
tends to be 3% higher  than the CVF rate. The agency adopted a new
implementing  regulation for oil and gas leases assessing interest at
the IRS  rate, see 49 Fed. Reg. 37,336, 37,346-47 (1984) (codified at
30  C.F.R. ss 218.54, 218.55 (1999)), while continuing to assess 
interest on coal lease underpayments at the CVF rate.


By 1993, the agency came to view the CVF rate as an  inadequate
response to the underpayment problem on coal  leases. Not only did the
agency see that rate as insufficient  to compensate it and the states
or Indians for lost investment  income on the late portion of the
royalty payments on the 


leases, it believed the CVF rate actually caused underpay- ment in the
first place because the lessee had an incentive to  withhold payment,
invest the amount withheld, and remit  payment to MMS at a later date,
pocketing the spread  between the lessee's investment rate of return
and the CVF  rate. A higher rate was thought necessary, and following
the  model of its regulation on oil and gas leases, the agency 
settled on the IRS rate, which would "serve as an effective  deterrent
to discourage late and underpayments" and "fairly  compensate the
Federal Government ... States, Indian  tribes and allottees, and other
recipients ... for the lost time  value of money." 59 Fed. Reg.
14,557, 14,557 (1994) (codified  at 30 C.F.R. s 218.202(c)-(d)
(1999)). As authority, the agen- cy invoked the general rulemaking
provisions found in the  several organic statutes it administers,
particularly MLLA  s 32, which provides that "[t]he Secretary of the
Interior is  authorized to prescribe necessary and proper rules and
regu- lations and to do any and all things necessary to carry out  and
accomplish the purposes of this chapter." 30 U.S.C.  s 189 (1994).2


B.


Amax Land Company is the successor-in-interest to a 1965  lease of
certain federal coal-containing lands in Wyoming. 




__________

n 2 See also 30 U.S.C. s 359 (1994) ("The Secretary of the  Interior is
authorized to prescribe such rules and regulations as are  necessary
and appropriate to carry out the purposes of this chapter,  which
rules and regulations shall be the same as those prescribed  under the
mineral leasing laws to the extent that they are applica- ble."); 25
U.S.C. s 396 (1994) ("[T]he Secretary of the Interior is  authorized
to perform any and all acts and make such rules and  regulations as
may be necessary for the purpose of carrying the  provisions of this
section into full force and effect[.]") (leases of  allotted Indian
lands); 25 U.S.C. s 396d (1994) ("All operations  under any oil, gas,
or other mineral lease issued pursuant to the  terms of sections 396a
to 396g of this title or any other Act affecting  restricted Indian
lands shall be subject to the rules and regulations  promulgated by
the Secretary of the Interior.") (leases of unallotted  Indian


Amax's troubles began in 1985 when the agency invoked its  right under
the lease to readjust the royalty rate from one  based on the weight
of the coal produced (171/2 cents per ton)  to one based on the value
of the coal produced (121/2% of the  value of the coal produced by
strip or auger methods and 8%  of the value of coal produced by
underground methods).3  The switch from weight to value as the metric
for computing  royalty payments created uncertainty for Amax, which
had  begun to utilize coal drying processes to increase the BTU 
content (and hence the value) of the coal it mined. Amax  explained
its methodology for determining value to MMS in a  1989 letter and
submitted payments accordingly. But in  1994, the agency informed Amax
that the coal had been  revalued and that additional royalties would
be assessed  retroactively for the period between January 1989 and
July  1993. On September 23, 1994, Amax paid the principal 
underpayment amount of $35,706.38. Then, in a payment  order, MMS
assessed Amax $9,044.78 in interest on this  principal, calculated as
follows: Between March 1989 and  April 1, 1994, MMS employed the CVF
rate (which fluctuated  from month to month), in accordance with the
regulation in  force at the time, computed as simple interest. Between
 April 1, 1994--the effective date of MMS' regulation adopting  the
IRS rate for coal leases--and the payment of the princi- pal on
September 23, 1994, the agency charged interest at the  IRS rate
(which again fluctuated from month to month),  compounded daily.


After an unsuccessful administrative appeal, Amax filed  suit in the
district court, seeking invalidation of the 1994  regulation and the
payment order. See Amax Land Co. v.  Quarterman, Civ. Act. No.
96-1839, 1998 WL 306582 (D.D.C. 




__________

n 3 The agency's modification of the lease was in response to the 
Federal Coal Leasing Amendments Act, Pub. L. No. 97-377, s 6(a),  90
Stat. 1083, 1087 (1976) (codified at 30 U.S.C. s 207(a)), which 
amended the MLLA to provide that "[a] lease shall require pay- ment of
a royalty in such amount as the Secretary shall determine  of not less
that 121/2 per centum of the value of the coal as defined by 
regulation, except the Secretary may determine a lesser amount in  the
case of coal recovered by underground operations."


June 3, 1998). Amax contended that MMS lacked authority  to assess the
IRS rate of interest, to allow the rate to shift  from month to month,
and to charge compound interest. The  district court agreed. The court
first held that the regulation  was ultra vires insofar as it adopted
the IRS rate, reasoning  that Congress' 1982 legislation imposing the
IRS rate only on  oil and gas lease underpayments, while deferring
legislation  on coal leases until MMS had studied the matter and pro-
posed or requested new legislation (which never occurred),  implies
that Congress understood MMS to possess authority  merely to assess
the CVF rate on coal lease underpayments.  The court concluded that
although neither the MLLA nor  FOGRMA expressly speaks to the issue of
interest on late  coal lease payments, the agency's reading of MLLA s
32 was  unreasonable under step II of Chevron U.S.A. Inc. v. Natural 
Resources Defense Council, Inc., 467 U.S. 837, 842-45 (1984).  See
Amax Land Co. 1998 WL 306582, at *6. The district  court next turned
to the question of MMS' authority to  employ shifting rates and to
assess compound interest, which  the court thought answered by the
Standards (regulations  establishing uniform cash management practices
for all feder- al agencies) promulgated under the Debt Collection Act
of  1982 (DCA), Pub. L. No. 97-365, 96 Stat. 1749 (codified as 
amended at 31 U.S.C. ss 3701 et seq. (1994 & Supp. II 1996)),  which
provide that "[t]he rate of interest, as initially assessed,  shall
remain fixed for the duration of the indebtedness" and  that
"[i]nterest should not be assessed on interest," 4 C.F.R.  s 102.13
(c) (1999). See id. at *6-7. Accordingly, the district  court granted
summary judgment in favor of Amax, invalidat- ing the regulation and


II.


The agency urges us to defer under Chevron to its inter- pretation of
the general rulemaking provisions of its organic  statutes as
providing ample authority to assess the IRS rate,  to allow that rate
to shift over time, and to assess compound  interest. Amax responds
that Congress' 1982 enactment  concerning oil and gas leases, the
common law of interest, or 


both, indicate Congress' unambiguous intent to limit the  agency to a
compensatory rate (which Amax assumes to be  the CVF rate). Moreover,
it is argued that the agency has  departed from its earlier
interpretation of its organic statutes  without sufficient
explanation, and--even apart from the al- leged switch--that the
agency's current approach is arbitrary  and capricious. And Amax
submits that the questions of  shifting rates and compound interest
are readily resolved, as  the district court concluded, by reference
to the Debt Collec- tion Act and the implementing Standards.


We think Amax's common law argument-that the federal  common law
permits the government to recover no more than  a compensatory rate
(Amax argues the IRS rate is a punitive  rate), and hence constrains
the agency's otherwise broad  authority under its organic
statutes--can be disposed of handi- ly. Assuming the common law
imposes a restraint on an  agency's statutory interpretation in a
post-Chevron era, see  Michigan Citizens for an Indep. Press v.
Thornburgh, 868  F.2d 1285, 1292-93 (D.C. Cir.) (distinguishing canons
that  embody a policy choice and should not be employed by a 
reviewing court at Chevron step I or II from canons designed  to
discern Congress' intent that are appropriately used at  Chevron step
I), aff'd by an equally divided Court, 493 U.S.  38 (1989), and
assuming the common law rule is as Amax  describes it (the government
characterizes the common law  rule as applying only to a federal
court's equitable powers,  not to interest demands grounded in an
administrative regu- lation), it is an anachronism to speak of the
federal common  law of interest since Congress' enactment of the DCA
in 1982.  That statute "changed the common law" by making mandato- ry
the federal government's common law right to assess  interest on
private persons' overdue obligations to the gov- ernment. United
States v. Texas, 507 U.S. 529, 534 n.4  (1993). It also "speak[s]
directly," United States v. Bestfoods,  118 S. Ct. 1876, 1885 (1998)
(quoting Texas, 507 U.S. at 534),  to the question of setting an
interest rate, thereby supplant- ing any guidance the common law may


point: "The head of an executive, judicial, or legislative  agency
shall charge a minimum annual rate of interest on an  outstanding debt
on a United States Government claim owed  by a person that is equal to
[the CVF rate]." 31 U.S.C.  s 3717(a)(1) (Supp. II 1996) (emphasis
added).4 Thus, the  DCA plainly provides authority for an agency to
decide what  rate is compensatory or even to impose a greater-than-
compensatory rate.


To be sure, MMS did not rely on the DCA when it  published the
regulation challenged here (perhaps because  that could have negative
consequences with respect to the  agency's claimed exemption from the
DCA regarding the  compound interest and shifting rate issues, which
we discuss  below), and its response before us to Amax's common law 
argument likewise does not rely on the DCA. But the  government does
claim that the common law does not apply  to it, and our reading of
Texas and the DCA--which of course  have been cited to us in other
respects--convinces us that  these authorities obviously support the
government's claim.  Whether or not a federal court should exercise
its discretion  to entertain a logically antecedent legal claim not
made by a  party, see United States Nat'l Bank v. Independent Ins. 
Agents of Am., Inc., 508 U.S. 439 (1993), a court may certain- ly
consider any legal authority that bears on an argument  that is made,
see Independent Ins. Agents of Am., Inc. v.  Clarke, 955 F.2d 731, 743
(D.C. Cir. 1992) (Silberman, J.,  dissenting) (discussing Kamen v.




__________

n 4 When Texas was decided, the DCA provided that the term  " 'person'
does not include an agency of the United States Govern- ment, of a
State government, or of a unit of general local govern- ment." 31
U.S.C. s 3701(c) (1994). The Supreme Court held that  Congress'
explicit limitation of the DCA in this manner did not  indicate that
Congress had directly spoken to the common law rule  allowing the
federal government to recover compensatory interest  from a local
government as debtor, see, e.g., Board of Comm'rs of  Jackson County
v. United States, 308 U.S. 343 (1939), and hence  that this aspect of
the common law did survive the DCA. See  Texas, 507 U.S. at 535. The
DCA has since been amended to  include states and local governments.
See Pub. L. No. 104-134,  s 31001(d)(1), 110 Stat. 1321, 1321-359


500 U.S. 90 (1991)), rev'd on other grounds, 508 U.S. 439  (1993),
especially when such legal authority has already been  brought to the
court's attention, cf. Carducci v. Regan, 714  F.2d 171, 177 (D.C.
Cir. 1983).


The FOGRMA statute, on which the district court relied,  presents more
difficult questions. Obviously if FOGRMA,  properly construed,
revealed a congressional intent that the  agency not be authorized to
charge the IRS rate it could not  be thought "necessary and proper"
under MLLA s 32 to do  so. The government properly objects to the
district court's  conclusion that "FOGRMA ... makes it clear that
Congress  itself did not believe that the MLLA ever provided
sufficient  authority for the department to charge the IRS rate." (em-
phasis added). That assertion runs afoul of the principle that  a
later Congress' interpretation of what an earlier Congress  intended
carries no particular weight--when used for that  purpose alone. A
later Congress' views can be relevant,  however, in interpreting the
meaning of its own duly enacted  legislation. See generally United
States ex rel. Long v. SCS  Bus. & Tech. Inst., Inc., 173 F.3d 870,
881 n.15 (D.C. Cir.  1999) (collecting cases). And this seems to be
the nature of  Amax's argument, i.e., that the FOGRMA Congress' under-
standing of the agency's interest authority under the MLLA 
illuminates what the FOGRMA Congress intended in restrict- ing FOGRMA
to oil and gas leases and deferring legislation  on coal leases until
the agency's completion of a report. If we  agreed with Amax's
interpretation of FOGRMA, that statute  itself--wholly apart from the
MLLA--would limit the agen- cy's interest authority on coal leases.


We start with FOGRMA's text. Section 111(a) provides  that "[i]n the
case of oil and gas leases where royalty pay- ments are not received
by the Secretary on the date that such  payments are due, or are less
than the amount due, the  Secretary shall charge interest on such late
payments or  underpayments at the [IRS rate]." 30 U.S.C. s 1721(a)
(1994 


& Supp. II 1996) (emphasis added). Here, and indeed  throughout FOGRMA,
Congress spoke only to oil and gas  leases, notwithstanding that the
original Senate bill would  have extended to leases of all mineral
resources. See S. Rep.  No. 97-512, at 11 (1982) (noting that Senate
bill had been  amended in committee to cover only oil and gas leases).
 Reading s 111 together with Congress' stated purpose to  "expand ...
the authorities and responsibilities of the Secre- tary of the
Interior to implement and maintain a royalty  management system for
oil and gas leases on Federal lands,"  30 U.S.C. s 1701(b)(2)
(emphasis added), Amax infers that  Congress demonstrated that
legislation was necessary to  authorize the agency to impose the IRS
rate on oil and gas  lease underpayments, and that Congress' omission
of such  legislation for coal leases evinces its intent to prohibit
the  agency from assessing the IRS rate in that context.


Amax also directs us to the one provision of FOGRMA  where Congress did
address coal leases. That section pro- vides:


The Secretary shall study the question of the adequacy  of royalty
management for coal, uranium and other ener- gy and nonenergy minerals
on Federal and Indian lands.  The study shall include proposed
legislation if the Secre- tary determines that such legislation is
necessary to  ensure prompt and proper collection of revenues owed to 
the United States, the States and Indian tribes or Indian  allottees
from the sale, lease or other disposal of such  minerals.


s 303(a), 96 Stat. at 2461 (codified at 30 U.S.C. s 1752 note  (1986)).
In Amax's view, this section expresses Congress'  understanding (and
therefore its intent) that MMS lacks the  authority independently to
adopt royalty management mea- sures (including charging interest at
the IRS rate) similar to  those imposed by FOGRMA on the agency for
oil and gas  leases. Such authority on coal leases, we are told, could
only  come from Congress, and presumably only after the request- ed
report on coal royalty management had been submitted  pursuant to s
303. (The agency's 1984 report concluded that 


no such legislation was necessary. See U.S. Department of  the
Interior, Report to the Congress of the United States on  the Adequacy
of Royalty Management For Solid Minerals 18  (1984).)


Amax bolsters its textual arguments with an excerpt of  legislative
history. The House Report, in describing the pre- FOGRMA state of
affairs, explained that "[t]he Federal roy- alty management system
lacks adequate enforcement tools.  Under the present system, the MMS
has very limited authori- ty to impose penalties (beyond ordinary
interest charges)  even for gross, repeated underpayments of
royalties." H. R.  Rep. No. 97-859, at 18 (1982), reprinted in 1982
U.S.C.C.A.N.  4268, 4272. Equating "ordinary interest charges" with
the  compensatory CVF rate, appellee views this excerpt as quite 
supportive of its interpretation.


The government, for its part, observes that s 111(a) is  phrased as a
mandatory command--"the Secretary shall  charge interest [at the IRS
rate]," 30 U.S.C. s 1721(a) (em- phasis added)--rather than as a grant
of authority. Thus,  Congress may have intended to require the IRS
rate for oil  and gas leases, while leaving to the agency's discretion
which  rate to impose for coal leases. The government responds 
similarly to appellee's reliance on the study-and-report provi- sion
in s 303, reading that section to mean that if the agency  wanted
mandatory royalty management measures imposed  on it by Congress
(including the IRS rate), it could submit  such a request in the
report. Accordingly, the study-and- report command does not imply
anything regarding the agen- cy's authority to impose such measures on
itself by regula- tion.5 And whereas appellant focuses on Congress'
stated  purpose to "expand" the agency's authority regarding royalty 
management for oil and gas leases, see 30 U.S.C. s 1701(b)(2)  ("It is
the purpose of this chapter to clarify, reaffirm, expand, 




__________

n 5 The agency appeared to assume this interpretation of s 303 in  the
1984 report submitted to Congress. See U.S. Department of  the
Interior, supra, at 18 ("[A]ny additional authorities determined  to
be necessary can and will be developed through modification of 
internal procedures, new lease terms, or by rulemaking.").


and define the authorities and responsibilities of the Secre- tary of
the Interior to implement and maintain a royalty  management system
for oil and gas leases on Federal  lands...."), the government
highlights the words "clarify"  and "reaffirm," and submits that in
the context of a statute  addressing so many aspects of oil and gas
lease royalty  management, it is far from clear that Congress meant to
link  the word "expand" in this general statement of purposes to  the
one specific provision mandating assessment of the IRS  rate. Finally,
the government points to FOGRMA s 304,  which provides that "[t]he
penalties and authorities provided  in this chapter are supplemental
to, and not in derogation of,  any penalties or authorities contained
in any other provision  of law," 30 U.S.C. s 1753(a) (1994). While
there may be  disagreement as to the scope of those "authorities
contained  in any other provision of law," the government urges that
this  section must at least mean that Congress intended FOGRMA  to


Amax's s 111(a) argument, by itself, would be based on a  use of the
expressio unius est exclusio alterius canon in a  context, where, as
we have indicated before, it is rather  tenuous. See Cheney R.R. Co.
v. ICC, 902 F.2d 66, 69 (D.C.  Cir. 1990) ("[T]he contrast between
Congress's mandate in  one context with its silence in another
suggests not a prohibi- tion but simply a decision not to mandate any
solution in the  second context, i.e., to leave the question to agency
discre- tion.") (emphasis in original); see also Shook v. District of 
Columbia Fin. Responsibility & Management Assistance  Auth., 132 F.3d
775, 782 (D.C. Cir. 1998). But the explicit  mention of coal
leases--the "alterius"--in the study-and- report command makes the
negative implication somewhat  stronger. And we agree that the
legislative history is at least  supportive. Still, we cannot say that
Congress directly ad- dressed the issue before us as the first step of
Chevron  requires. So we must defer to the agency's interpretation, if
 reasonable. We think that, particularly in light of s 304, the 
agency's interpretation passes that test, and therefore we  disagree
with the district court's conclusion.


III.


Amax alternatively argues that MMS' present view of its  rulemaking
authority contradicts an earlier position taken by  Interior's Board
of Land Appeals (a body that reviews the  MMS Director's adjudicatory
decisions) in Shell Offshore,  Inc., 115 I.B.L.A. 205 (1990). This
contention, if true, would  not of itself defeat Chevron deference,
see Paralyzed Veter- ans of Am. v. D.C. Arena L.P., 117 F.3d 579, 586
(D.C. Cir.  1997) (citing Chevron, 467 U.S. at 863), cert. denied sub
nom.  Pollin v. Paralyzed Veterans of Am., 118 S. Ct. 1184 (1998), 
but would, under Motor Vehicle Mfrs. Ass'n of United States,  Inc. v.
State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 46-57  (1983), require
the agency to provide a reasoned explanation  for the changed
interpretation, see Smiley v. Citibank, N.A.,  517 U.S. 735, 742
(1996); Arent v. Shalala, 70 F.3d 610, 616  n.6 (D.C. Cir. 1995)
(citing Rust v. Sullivan, 500 U.S. 173,  186-87 (1991)).6




__________

n 6 We recognize that there is some inconsistent language in the 
Supreme Court's cases on the proper level of deference due an 
agency's revised interpretation of a statute it administers. Com-
pare, e.g., INS v. Cardoza-Fonseca, 480 U.S. 421, 446 n.30 (1987) 
("An agency interpretation of a relevant provision which conflicts 
with the agency's earlier interpretation is 'entitled to considerably 
less deference' than a consistently held agency view." (quoting Watt 
v. Alaska, 451 U.S. 259, 273 (1981))), with Rust, 500 U.S. at 186-87 
("This Court has rejected the argument that an agency's interpreta-
tion 'is not entitled to deference because it represents a sharp break
 with prior interpretations' of the statute in question." (quoting 
Chevron, 467 U.S. at 862)). See generally Comment, Chevron, Take  Two:
Deference to Revised Agency Interpretations of Statutes, 64  U. Chi.
L. Rev. 681 (1997). Although we have cited Cardoza- Fonseca
approvingly in dicta, see Huls America, Inc. v. Browner,  83 F.3d 445,
450 n.6 (D.C. Cir. 1996), we more frequently articulate  and apply the
standard in analogous terms to those chosen by the  Supreme Court in
its most recent statement (albeit in dicta) of the  issue in Smiley,
517 U.S. at 742, see Independent Bankers Ass'n of  Am. v. Farm Credit
Admin., 164 F.3d 661, 668 (D.C. Cir. 1999)  (citing Smiley); Paralyzed
Veterans, 117 F.3d at 586; Bush- Quayle '92 Primary Comm., Inc. v.
FEC, 104 F.3d 448, 453-55  (D.C. Cir. 1997); Arent, 70 F.3d at 616


But no such change has occurred here. In Shell Offshore,  the agency's
Board of Land Appeals was presented with the  question whether MMS
could assess interest at the IRS rate  on delinquent oil and gas
lessees for periods of time prior to  Congress' explicit authorization
of the IRS rate for oil and  gas leases in FOGRMA. The Board of Land
Appeals held  that the MMS could only assess interest at the CVF rate
for  such periods:


Although prior to the passage of 30 U.S.C. s 1721 (1982),  MMS was
authorized by equity to assess interest in  order to compensate the
Department for the time value  of money, the interest rate authorized
by 30 U.S.C.  s 1721 (1982) is greater than necessary to compensate 
for the time value of money.... Thus, although MMS  was authorized to
assess interest prior to passage of  FOGRMA, it was not authorized to
assess interest at the  rate specified by FOGRMA....


Shell Offshore, 115 I.B.L.A. at 212 (emphasis added) (citations  and
footnote omitted). That interpretation of the agency's  interest
authority may be dubious insofar it is grounded in  general notions of
"equity." (Agencies, of course, are totally  creatures of statute.)
But in any event, as the government  points out, the Board of Land
Appeals in Shell Offshore did  not consider that MLLA s 32 or the
other general rulemak- ing provisions might furnish the authority for
the agency to  assess the IRS rate. MMS' 1994 rulemaking, which
express- ly relied on those provisions, see 59 Fed. Reg. at 14,557-58,
 accordingly cannot be deemed a departure.


So it is that MLLA s 32 gives the agency the authority to  reach the
subject matter of interest. But not without limits:  Section 32, it
will be recalled, requires that any regulations  adopted by MMS be
"necessary and proper ... to carry out  and accomplish the purposes of
this chapter." 30 U.S.C.  s 189. Amax, supported by the National
Mining Association  as amicus curiae, contends that MMS' regulation is
arbitrary  and capricious, see 5 U.S.C. s 706(2)(A) (1994)--which is 
more or less the same as saying that the agency has ignored 


the "necessary and proper" command.7 It is argued, for  example, that
the degree of underpayment on coal leases  pales in comparison to the
magnitude of underpayment on oil  and gas leases that prompted FOGRMA,
so that the IRS rate  is not "necessary" to deter late payments; that
the CVF rate  is adequate to deter late payments because the coal
mining  industry's return on assets is lower than the CVF rate; that 
most late payments result from coal lessees losing good-faith 
administrative appeals rather than engaging in strategic in- vestment
behavior; and that the agency has failed to consider  an important
aspect of the late payment problem, i.e., the  agency's leisurely
processing of administrative appeals  (which, it is feared, may get
worse once the agency stands to  receive a higher interest rate). The
agency's response is  somewhat anemic. In its rulemaking statement, it
dismissed  complaints about the length of the administrative appeals 
process with the brusque assertion that "[t]his issue is beyond  the
scope of this rulemaking" and a promise to streamline the  appeals
process. 59 Fed. Reg. at 14,557. And in its brief,  the agency ignores
most of the contentions advanced by  Amax and its amicus and simply
says that $27 million in lost  interest revenue is not so
insubstantial a sum as to make the  agency's corrective measure




__________

n 7 Whether MMS' regulation is "necessary and proper" is not so  much a
Chevron statutory interpretation question as an arbitrary  and
capricious issue. That standard is more fitting here given the 
breadth of the "necessary and proper" command. See National  Ass'n of
Regulatory Util. Comm'rs v. ICC, 41 F.3d 721, 727 (D.C.  Cir. 1994)
("When Congress' instructions are conveyed at a high  level of
generality, an agency is not likely to consider its action as  an
'interpretation' of the authorizing statute, nor is that action likely
 to be challenged as a 'misinterpretation.' "). Still, we have also 
recognized a significant overlap between Chevron step II and APA 
arbitrary or capricious review. See, e.g., Republican Nat'l Comm.  v.
FEC, 76 F.3d 400, 407 (D.C. Cir. 1996); Arent, 70 F.3d at 616 n.6; 
Regulatory Util. Comm'rs, 41 F.3d at 728. At bottom, the label put  on
the reviewing framework is not so important in this case: it is  not
much different to ask whether MMS' regulation is "necessary  and
proper" than to ask whether it is "arbitrary [or] capricious."


The district court saw no need to reach this issue given its 
resolution of the antecedent question of the agency's authori- ty in
favor of Amax. See Amax Land Co., 1998 WL 306582,  at *3. That, of
course, does not bar us from doing so: these  are questions of law,
which were presented to the district  court, and we sit in the same
posture as the district court in  reviewing an administrative
regulation or adjudication. See,  e.g., Associated Builders &
Contractors, Inc. v. Herman, 166  F.3d 1248, 1254 (D.C. Cir. 1999);
Marshall County Health  Care Auth. v. Shalala, 988 F.2d 1221, 1225
(D.C. Cir. 1993).  Still, since the issue has not been fully briefed,
and since both  Amax (paradoxically) and MMS request us to remand to
the  district court for consideration of this issue, we will do so, 
notwithstanding the amicus' preference that we resolve it  here and
now. Cf. Narragansett Indian Tribe v. National  Indian Gaming Comm'n,
158 F.3d 1335, 1338 (D.C. Cir. 1998)  (declining to consider an
argument advanced by an amicus  but not by any party).


IV.


Whether the benchmark rate is the CVF rate or the IRS  rate, there
remains the issue of MMS' authority to allow the  rate to shift over
time and to assess compound interest (i.e.,  interest on interest).
The regulation itself is silent on these  matters, but the agency
interpreted it in the payment order  issued to Amax as authorizing the
assessment of compound  interest (compounded daily), apparently
reasoning that the  regulation adopts the IRS rate set forth in 26
U.S.C.  s 6621(a)(2), which contemplates shifting interest rates, see 
id. s 6621(b), and that an adjacent provision in the Internal  Revenue
Code provides that the rate shall be compounded  daily, see id. s




__________

n 8 MMS also advanced its interpretation of the regulation as 
authorizing compound interest in the regulation's preamble. See 59 
Fed. Reg. at 14,558 ("The IRS rate is compounded daily, as  contrasted
to the CVF rate which is calculated as simple interest.").


Amax does not claim these are misinterpretations of the  agency's own
regulation, 30 C.F.R. s 218.202, but rather  submits that the DCA and
the implementing Standards place  an external constraint on the
agency's authority to assess  compound interest or to employ shifting
rates. The DCA  provides, in relevant part,


s 3717. Interest and penalty on claims


(a)(1) The head of an executive, judicial, or legislative  agency shall
charge a minimum annual rate of interest on  an outstanding debt on a
United States government  claim owed by a person that is equal to the
average  investment rate for the Treasury tax and loan accounts  for
the 12-month period ending on September 30 of each  year, rounded to
the nearest whole percentage point ...


...


(c) The rate of interest charged under subsection (a) of  this
section--


...


(2) remains fixed at [the rate in effect on the date  from which
interest begins to accrue] for the duration of  the indebtedness.


31 U.S.C. s 3717 (emphasis added). MMS defends its au- thority to
employ shifting rates by contending that  s 3717(c)(2)'s apparently
plain prohibition of shifting rates  applies only when an agency
chooses to impose the "mini- mum" CVF rate and not when an agency
exerts its authority,  drawn from these provisions or others, to
assess a higher  rate. Even aside from the fact that we owe no
deference to  MMS' interpretation of a statute it does not administer,
see,  e.g., Scheduled Airlines Traffic Offices v. Department of 
Defense, 87 F.3d 1356, 1361 (D.C. Cir. 1996); OPM v. FLRA,  864 F.2d
165, 171 (D.C. Cir. 1988); the DCA is unambiguous  on this issue. 31
U.S.C. s 3717(a)(1) requires agencies to  assess interest on overdue
obligations and sets a floor on the  rate chosen at the CVF rate. The
ceiling is established by 5  U.S.C. s 706(2)(A): the agency may not
choose an arbitrary  or capricious rate. See also 4 C.F.R. s 102.13(c)
("An agency  may set a higher rate if it reasonably determines that a


higher rate is necessary to protect the United States."). Any  rate
within this spectrum is "the rate of interest charged  under
subsection (a)" for purposes of 31 U.S.C. s 3717(c), and  hence must
remain "fixed ... for the duration of the indebt- edness." We
therefore firmly reject the government's argu- ment.


As to compound interest, the DCA is silent but Amax  invokes the
Standards, which expressly disfavor the practice  of charging compound
interest.


The rate of interest shall be the [CVF rate]. An agency  may assess a
higher rate of interest if it reasonably  determines that a higher
rate is necessary to protect the  interests of the United States. The
rate of interest, as  initially assessed, shall remain fixed for the
duration of  the indebtedness, except that where a debtor has default-
ed on a repayment agreement and seeks to enter into a  new agreement,
the agency may set a new interest rate  which reflects the current
value of funds to the Treasury  at the time the new agreement is
executed. Interest  should not be assessed on interest, penalties, or
adminis- trative costs required by this section.


4 C.F.R. s 102.13(c) (emphasis added). The government's  response echos
its unsuccessful attempt to evade the DCA's  prohibition on shifting
rates. We are told that the "interest  should not be assessed on
interest" command applies only in  the case of "interest ... required
by this section," that the  only interest required by s 102.13 is the
CVF rate, and hence  that the rule against compound interest does not
apply when  the agency imposes a rate higher than the CVF rate. We 
think that is a rather implausible reading of the regulation.  How
could the CVF rate be the only "required" rate when  the second
sentence contemplates a higher rate? The "inter- est ... required by
this section" sensibly means either the  CVF rate (as described in the
first sentence) or a higher rate  (as described in the second
sentence). It may be that the  government's reading, while weak, is
nonetheless reasonable.  But even assuming it is reasonable (we
express no view), we  owe no deference to MMS' interpretation of a
regulation that  it did not promulgate and does not administer, Martin


OSHRC, 499 U.S. 144, 152-53 (1991). Left to proceed de  novo, we of
course pick what we think is the best interpreta- tion of the
regulation.


The government, however, points to an introductory provi- sion of the
Standards that says: "The standards set forth in  this chapter shall
apply to the administrative handling of civil  claims of the Federal
Government for money or property but  the failure of an agency to
comply with any provision of this  chapter shall not be available as a
defense to any debtor." 4  C.F.R. s 101.8 (emphasis added).
Unfortunately, this claim  comes too late.9 The government concedes
that it did not  present this contention to the district court, and it
cannot be  heard to do so now. See Singleton v. Wulff, 428 U.S. 106,
120  (1976). Whether it can timely assert this "defense" on re- mand,
see R.G. Johnson Co. v. Apfel, 172 F.3d 890, 895 (D.C.  Cir. 1999)
(citing Peralta v. U.S. Attorney's Office, 136 F.3d  169, 173 (D.C.
Cir. 1998)), and, if so, the proper outcome on  the merits, are
matters we leave to the district court to decide  in the first


* * * *


That disposes of Amax's challenge to the regulation itself,  but there
is one last wrinkle concerning Amax's challenge to 




__________

n 9 Our treatment of this claim as waived differs from our earlier 
willingness to consider the impact of the DCA on the common law 
notwithstanding the government's failure to make the argument.  There
is a good reason. Unlike the DCA, which provided an  additional
argument supporting the government's already asserted  claim that the
common law does not apply to it, the government's  citation of 4
C.F.R. s 101.8 here is surely a new claim, akin to a  statute of


10 It may be that 4 C.F.R. s 101.8, while preventing a debtor  from
invoking the Standards as a "defense" to the government  agency's
"administrative handling of civil claims," does not preclude  a
challenge--wholly aside from a dispute over a particular debt--to  the
legality of an agency's regulation. Here Amax challenges both  MMS'
payment order and MMS' regulation, 30 C.F.R. s 218.202.  See Complaint
for Declaratory and Set Aside Relief p 1, Civ. Act.  No. 96-839
(D.D.C. Aug. 6, 1996).


the payment order. Although we hold that the DCA and the  Standards
forbid the use of shifting interest rates or the  assessment of
compound interest, the DCA comes with two  exemptions. The one invoked
by the agency provides that 31  U.S.C. s 3717 does not apply "to a
claim under a contract  executed before October 25, 1982, that is in
effect on October  25, 1982." 31 U.S.C. s 3717(g)(2); see also 4
C.F.R.  s 102.13(i)(1)(ii) (identical exemption from operative subsec-
tions of 4 C.F.R. s 102.13). The parties disagree as to  whether
Amax's lease agreement is such a pre-1982 contract.


Amax is the successor-in-interest to a 1965 lease. Section  2(c) of the
original lease required the lessee to remit royalties  based on the
weight of the coal produced (171/2 cents per ton  for the first 10
years and 20 cents per ton for the remainder  of the first 20-year
period), and s 3(d) reserved to MMS the  right "reasonably to readjust
and fix royalties payable here- under and other terms and conditions
at the end of 20 years  from the date hereof and thereafter at the end
of each  succeeding 20-year period during the continuance of this 
lease...." In 1985, the agency, invoking s 3(d), readjusted  the lease
terms to provide that "the royalty shall be 121/2  percent of the
value of the coal produced by strip or auger  methods and 8 percent of
the value of the coal produced by  underground mining methods."


Amax insists that the 1985 readjustment of the royalty rate  effected a
novation of the 1965 lease agreement and a con- summation of a new
agreement going forward. The govern- ment responds that the 1985
readjustment was explicitly  contemplated by the original 1965 lease,
and therefore is  properly characterized as an assertion of rights
under the  original contract, not a novation. Since Amax, as the party
 challenging the payment order, has not cited any authority in 
support of its view, we are inclined to agree with the govern- ment's
characterization, see Carducci, 714 F.2d at 177, which  seems the more
reasonable one in any event. Accordingly,  we hold that the DCA
imposes no constraint on MMS vis-a- vis underpayments on this
particular lease, and unless it is  determined on remand that shifting
rates or compound inter- est are not "necessary" within the meaning of


regards this particular lease, the payment order is valid. See  30
U.S.C. s 189 ("The Secretary of the Interior is authorized  ... to do
any and all things necessary to carry out and  accomplish the purposes
of this chapter.").


* * * *


For the foregoing reasons, we reverse the district court  and uphold
MMS' regulation, 30 C.F.R. s 218.202, except  insofar as the agency
has interpreted it to allow for shifting  interest rates and compound
interest. We remand the case  for the district court to consider
Amax's claim that the  regulation, insofar as it adopts the IRS rate,
is not "necessary  and proper" within the meaning of MLLA s 32. And we
 uphold the payment order in all respects, subject to the  possibility
that Amax may demonstrate on remand that com- pound interest and
shifting rates are not "necessary" within  the meaning of MLLA s 32 as
regards Amax's particular  lease.


So ordered.