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Chance v. Zinke

United States District Court, N.D. Oklahoma

April 18, 2017

MERRILL CHANCE, Plaintiff,
v.
RYAN ZINKE Defendants.

          OPINION AND ORDER

         Now before the Court are a motion to dismiss (Dkt.# 25) of Ryan Zinke, in his official capacity as Secretary of the United States Department of the Interior (“Interior”); the United States Bureau of Indian Affairs (“BIA”); and Weldon Loudermilk, in his official capacity as Director of the BIA (“Federal Defendants”), [1] and a motion to dismiss (Dkt.# 21) filed by Great Southwestern Exploration, Inc. (“GSE”). Federal Defendants ask the Court to dismiss Plaintiff's amended complaint under Federal Rule of Civil Procedure 12(b)(1) for lack of subject matter jurisdiction (Dkt.# 25). GSE moves to dismiss Plaintiff's amended complaint under Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim for which relief may be granted (Dkt.# 21).

         BACKGROUND

         This case arises from the BIA's approval of a lease assignment and two drilling permits on the subsurface mineral estate underlying Plaintiff's lands. Plaintiff is the owner of surface land in Osage County, Oklahoma located in the Eastern half (E/2) of the Southeast Quarter (SE/4) of Section 1, Township 25 North, Range 3 East (Dkt.# 17 at ¶ 2). Pursuant to the Osage Allotment Act, the subsurface mineral estate in Osage County (“Osage Mineral Estate”) is held in trust by the United States on behalf of the Osage Nation. Act of June 28, 1906, Pub. L. No. 59-321, § 3, 34 Stat. 539, 543-44, as amended (“1906 Act”); see also Osage Nation v. Irby, 597 F.3d 1117, 1120-21 (10th Cir. 2010). Under the 1906 Act, the Osage Nation is authorized to lease the Osage Mineral Estate for oil and gas exploration and development “with the approval of the Secretary of the Interior, and under such rules and regulations as he may prescribe.” 1906 Act § 3. The Secretary has delegated this authority to the Superintendent of the Osage Agency. See 25 C.F.R §§ 226.4, 226.5(b); see also 209 DM 8.1(A). The regulations governing leasing of the Osage Mineral Estate for oil and gas mining are set forth in 25 C.F.R. Part 226.[2]

         The Superintendent of the Osage Agency is authorized to approve oil and gas leases made by the Osage Minerals Council involving the Osage Mineral Estate. See 25 C.F.R. § 226.2. Upon receipt of an approved lease, lessees have the right to use so much of the surface of the land within the Osage Mineral Estate as may be reasonable for operations and marketing. 25 C.F.R. § 226.19(a). However, except for the surveying and staking of a well, no operations of any kind shall commence until the lessee meets with the surface owner to discuss lease access and the settlement of surface damages. 25 C.F.R. § 226.18. Prior to commencing drilling operations on a leased tract, a lessee must submit an application for a permit to drill (“APD”), obtain the Superintendent's approval thereof, Id. at § 226.16(b), and pay the surface owner a commencement fee, Id. at § 226.18(b). In accordance with the National Environmental Policy Act of 1969 (“NEPA”), 42 U.S.C. § 4321, et seq., each oil and/or gas lease and the associated activities and installations subject to the regulations in 25 C.F.R. Part 226 must be assessed for its environmental affects prior to approval by the Superintendent. 25 C.F.R. § 226.2©; Davis v. Morton, 469 F.2d 593, 596-97 (10th Cir. 1972).

         On April 23, 1963, the Osage Tribe and Eason Oil Company (“Eason”) entered into an oil lease for the SE/4 of Section 1, Township 25 North, Range 3 East, Contract No. 14-20-406-1354 (“Chance Lease”) (Dkt.# 17 at ¶ 45; Dkt.# 17-3). The Superintendent of the BIA Osage Agency (“Superintendent”) approved the Chance Lease on June 3, 1963. Id. The Chance Lease was subsequently assigned and as of August 31, 1990, Buck Creek Associates held 100% right, title and interest therein. On February 25, 1991, Buck Creek Associates assigned the Chance Lease to GSE (Dkt.# 17 at ¶ 51; Dkt.# 17-3). The Superintendent approved the assignment from Buck Creek Associates to its affiliate, GSE on April 23, 1991. Id. Plaintiff asserts that the BIA violated NEPA by failing to conduct an environmental analysis prior to approval of the Chance Lease assignment to GSE (Dkt.# 17 at ¶¶ 51-52).

         On December 3, 1990, the BIA approved an APD submitted by Buck Creek Associates for Well No. 3 on the Chance Lease (Dkt.# 17 at ¶ 48). Buck Creek Associates began drilling Well No. 3 on December 24, 1990, and finished drilling on January 8, 1991. Id. at ¶ 50; Dkt.# 17-1). On June 21, 1991, the BIA approved an APD submitted by Buck Creek Associates for Well No. 4 on the Chance Lease (Dkt.# 17 at ¶ 54; Dkt.# 17-4). Buck Creek Associates began drilling Well No. 4 on June 20, 1991, and finished drilling on July 1, 1991. Id. Plaintiff asserts that the BIA failed to comply with NEPA in its approval of the APDs for Wells No. 3 and 4, and that the BIA failed to provide Plaintiff or his predecessors-in-interest with notice that the APDs for either well had been approved (Dkt.# 17 at ¶¶ 48, 54). Plaintiff alleges that GSE drilled Wells No. 3 and 4 and constructed oil and gas related facilities on Plaintiff's property. Id. at ¶¶ 50, 54. Plaintiff asserts that GSE's actions caused significant erosion and other environmental damage. Id. Plaintiff also alleges that the BIA has approved other unspecified or unknown “oil and gas related activity” on Plaintiff's property in violation of NEPA and without notice to Plaintiff or his predecessors-in-interest. Id. at ¶ 60.

         On August 19, 2016, Plaintiff brought this suit against the Federal Defendants and GSE (Dkt.# 1). Plaintiff filed an amended complaint on October 26, 2016 (Dkt.# 17). Plaintiff brings his claims against the Federal Defendants under the Administrative Procedure Act, 5 U.S.C. § 551, et seq. (“APA”). Plaintiff asks that the Court enter declaratory judgment finding that the Superintendent's approval of the Chance Lease assignment and APDs for Wells No. 3 and 4 violated NEPA and are therefore invalid (Dkt.# 17 at ¶¶ 67, 77, 87). Plaintiff also asks that the Court enter declaratory judgment finding that the Superintendent's approval of any unknown leases, drilling or workover permits since January 1, 1970, violated NEPA and are void ab initio. Id. at ¶ 96. In addition to the foregoing, Plaintiff also asserts that GSE's entry onto his property constitutes trespass because GSE's lease and drilling permits are inoperative, and asks the Court to enjoin GSE from entry upon his land without a valid oil and gas lease or permit. Id. at ¶ 106. Finally, Plaintiff alleges that he is entitled to rent payments under Oklahoma law for GSE's occupation of his land for the six years preceding the filing of the complaint. Id. at ¶¶ 108-110. The Federal Defendants now move for dismissal of Plaintiff's claims against them for lack of subject matter jurisdiction, Dkt.#25 at 1, and GSE moves for dismissal for failure to state a claim upon which relief may be granted on the claims against it, Dkt.# 21 at 1.

         THE MOTIONS TO DISMISS

         I. Motion of Federal Defendants

         Federal Defendants argue that Plaintiff's claims are barred by the statute of limitations, that Plaintiff has failed to establish a waiver of sovereign immunity, that Plaintiff has failed to exhaust his administrative remedies, that Plaintiff has failed to identify any final agency action with respect to his claim regarding unknown leases and permits, and that Plaintiff's claims are moot (Dkt.# 25).

         “Federal courts are courts of limited jurisdiction . . ., possessing only that power that [is] authorized by Constitution and statute.” Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377 (1994). When considering a motion under Fed.R.Civ.P. 12(b)(1), the burden of establishing the court's subject-matter jurisdiction resides with the party seeking to invoke it, and that party has the burden of establishing jurisdiction by a preponderance of the evidence. McNutt v. Gen. Motors Acceptance Corp. of Ind., 298 U.S. 178, 189 (1936). Federal subject-matter jurisdiction “cannot be consented to or waived, and its presence must be established in every cause under review in the federal courts.” Firstenberg v. City of Santa Fe, N.M., 696 F.3d 1018, 1022 (10th Cir. 2012). If the Court, at any time, determines that it lacks subject-matter jurisdiction, the case should be dismissed. Fed.R.Civ.P. 12(h)(3).

         Rule 12(b)(1) motions can take one of two forms: “(1) a facial attack on the sufficiency of the complaint's allegations as to subject-matter jurisdiction; or (2) a challenge to the actual facts upon which subject matter jurisdiction is based.” Ruiz v. McDonnell, 299 F.3d 1173, 1180 (10th Cir. 2002). Federal Defendants' motion presents both a facial attack and a factual attack.

         A. Plaintiff's claims are barred by the six-year statute of limitations set forth in 28 U.S.C. § 2401(a)

         1. Plaintiff's challenges to the lease and two drilling permits are untimely

         “[E]very civil action commenced against the United States shall be barred unless the complaint is filed within six years after the right of action first accrues.” 28 U.S.C. § 2401(a). Claims brought pursuant to the APA, such as Plaintiff's claims in the instant case, are subject to the six-year statute of limitations period set forth in 28 U.S.C. § 2401(a). Impact Energy Res., LLC v. Salazar, 693 F.3d 1239, 1245-46 (10th Cir. 2012); Nagahi v. Immigration & Naturalization Serv., 219 F.3d 1166, 1171 (10th Cir. 2000). “Unlike an ordinary statute of limitations, [28 U.S.C.] § 2401(a) is a jurisdictional condition attached to the government's waiver of sovereign immunity . . . .” Spannus v. U.S. Dep't of Justice, 824 F.2d 52, 55 (D.C. Cir. 1987); see also Ute Distrib. Corp. v. Sec'y of Interior, 584 F.3d 1275, 1282 (10th Cir. 2009), cert. denied, 560 U.S. 905 (2010) (suggesting that section 2401(a) is jurisdictional).

         Determination of the accrual date of an action is critical for purposes of applying 28 U.S.C. § 2401(a). Id. “A claim against the United States first accrues on the date when all events have occurred which fix the liability of the Government and entitle the claimant to institute an action.” Wild Horse Observers Ass'n, Inc. v. Jewell, 550 F.Appx. 638, 641 (10th Cir. 2012) (citing Ute Distrib. Corp., 584 F.3d at 1282); see also Phillips Petroleum Co. v. Lujan, 4 F.3d 858, 861 (10th Cir. 1993). A plaintiff need not know the full extent of his injuries before the statute of limitations begins to run. Indus. Constructors Corp. v. U.S. Bureau of ...


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