Del Rio Drilling Programs, Inc. v. United States

35 Fed. Cl. 186, 1996 U.S. Claims LEXIS 36, 1996 WL 116353
CourtUnited States Court of Federal Claims
DecidedMarch 15, 1996
DocketNo. 569-86L
StatusPublished
Cited by5 cases

This text of 35 Fed. Cl. 186 (Del Rio Drilling Programs, Inc. v. United States) is published on Counsel Stack Legal Research, covering United States Court of Federal Claims primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Del Rio Drilling Programs, Inc. v. United States, 35 Fed. Cl. 186, 1996 U.S. Claims LEXIS 36, 1996 WL 116353 (uscfc 1996).

Opinion

OPINION

BRUGGINK, Judge.

This is an action for breach of contract, or in the alternative, for a Fifth Amendment taking. The case was transferred to this judge on January 25, 1994. The matter is currently before the court on plaintiffs’ Motion for Partial Summary Judgment regarding the applicability to certain oil and gas leases of the Tribal Consent Act (“TCA”), 25 U.S.C. §§ 323-328 (1994), and on defendant’s more comprehensive motion for summary judgment. Oral argument was held on November 18,1995, and on January 25,1996, in Washington, D.C.

Del Rio Drilling Programs, Inc. (“Del Rio”) and the other plaintiffs allege that the United States, acting through the Bureau of Indian Affairs (“BIA”) 1 violated the terms of leases executed by the Bureau of Land Management (“BLM”) granting plaintiffs, or their predecessors in interest, oil and gas mining rights.2 Plaintiffs further allege, in the alternative, that these actions constitute a taking of their leasehold interests without just compensation in violation of the Fifth Amendment of the United States Constitution. Specifically, Del-Rio contends that by applying the Tribal Consent Act to Del-Rio’s mineral leases, the Government caused the leases to be extinguished. For the reasons set forth below, both motions for summary judgment are denied.

BACKGROUND

This controversy involves land on the Uin-tah and Ouray Indian Reservation in southern Utah (“Reservation”). Immediately pri- or to 1948, this land was owned exclusively by the federal Government. In 1948 Congress split the land into surface and mineral estates with the surface estate being transferred to the Ute Indian Tribe (“Tribe”) for the creation of the Hill Creek Extension of the Uintah and Ouray Reservation. Act of March 11, 1948, Pub.L. No. 80-440, 62 Stat. 72 (1948) (“the Act”). Title to the land is in the name of the United States, in trust for the Tribe. The Act states that “the foregoing [Reservation ... shall include surface rights only in lands withdrawn by Executive Order Numbered 5327 ... as interpreted by Circular Numbered 1220____” 62 Stat. at 77. Executive Order No. 5327, along with the Department of the Interior’s Circular No. 1220, 53 I.D. 127 (1930), outlines the withdrawal of public oil-shale deposits and lands containing oil-shale deposits from lease or other disposal. These lands were later made available for leasing under the Mineral Lands Leasing Act of 1920, 30 U.S.C. §§ 181-287 (1994). Thus, under the Act, with respect to any lands within the Hill Creek Extension that were withdrawn under Executive Order 5327, the fee simple was severed, with the Government retaining the mineral estate.

[189]*189Between 1968 and 1974, BLM issued several leases covering subsurface oil and gas mining rights in Uintah County, Utah, to plaintiffs or their predecessors in interest.3 Roughly fifty percent of the land covered by the leases consists of split estates located within the Reservation. The remainder of the land covered by the leases consists of unified estates in which plaintiffs have surface access specifically granted by the leases.

Plaintiffs hold various royalty interests in the mineral leaseholds.4 Del Rio acquired “farm out” interests in the subject leases in 1981 and 1982.5 It obtained record title in six of the eleven leases at issue in 1987 and 1988.6 The record does not fully reflect the property interests of the other plaintiffs.7

The leases are of a standard form. Section 1 describes the rights of access:

The lessee is granted the exclusive right and privilege to drill for, mine, extract, remove, and dispose of all the oil and gas deposits, except helium gas, in the lands leased, together with the right to construct and maintain thereupon, all works, buildings, plants, waterways, roads, telegraph or telephone lines, pipelines, reservoirs, tanks, pumping stations, or other structures necessary to the full enjoyment thereof, for a period of 10 years, and so long thereafter as oil and gas is produced in paying quantities; subject to any unit agreement to govern the lands heretofore and hereafter approved by the Secretary of the Interior, the provisions of said agreement to govern the lands subject thereto where inconsistent with the terms of this lease.

Ex. A to Pis.’ Compl. at 2 (emphasis added). Plaintiffs assert that this language reflects a recognition that the Government transferred to the lessees its own pre-existing right-of-way over the surface estate. They also contend that this section was breached by the Government when BLM and BIA gave the Tribe power to veto the granting of rights-of-way by the Secretary of the Interior (“Secretary”).

On December 20, 1979, Del Rio received approval of its Application for Permit to Drill (“APD”) for the Flatroek # 30-2A site from BLM.8 This approval included the following condition: “Permits for road rights-of-way and drilling pads have not been applied for from BIA Where the Ute Tribe does not own the minerals, these [rights-of-way] must be acquired before drilling.” In subsequent APD approvals and approvals of requests to survey, BIA and BLM iterated the requirement to obtain rights-of-way from the Tribe in order to proceed. The Government contends that, if the plaintiffs have a cause of action, it began to accrue when they received these notices.

[190]*190A total of six wells have been drilled by Del Rio since 1979.9 On December 10, 1979, Del Rio entered into a separate agreement with the Tribe to operate and maintain an existing airstrip near the mineral leases. On September 1, 1981, BLM approved the Oil Canyon II Unit Agreement, which consolidated a number of leases, including the ones at issue here, for the purposes of simplifying the calculation of royalties.10 Del Rio, as unit operator, also obtained a permit from BIA, with the Tribe’s consent, to take water from the Towave Reservoir.11

On November 1,1982, the Chairman of the Ute Tribal Business Committee wrote to the Vernal District Manager of the BLM, stating: “[tjhis is to formally notify your office that the Ute Indian Tribe is adamantly opposed to any form of resource development in the Bookcliff Resource Area.”12 The Hill Creek Extension of the Uintah and Ouray Reservation is part of the Bookcliff Resource Area, in which some of the leases are located. On May 16, 1983, Del Rio applied for a Suspension of Operations and Production (“SOP”) for a number of leases committed to the Oil Canyon II Unit, citing inclement weather and the need to wait for Tribe approval of the lessees’ right-of-way applications. The leases were otherwise due to expire on June 1,1983, for lack of production that would hold the Unit. The SOP was granted through September 1,1983.

On July 14,1983, the Tribe passed Resolution No. 83-134, which provides:

[T]he Tribe hereby refuses to grant, nor give permission to the Secretary of the Interior or his delegate to grant or approve, any easement, surface lease, or right of way relative to mineral exploitation and/or roadway construction within ...

Free access — add to your briefcase to read the full text and ask questions with AI

Related

Stearns Co. v. United States
53 Fed. Cl. 446 (Federal Claims, 2002)
Del-Rio Drilling Programs, Inc. v. United States
46 Fed. Cl. 683 (Federal Claims, 2000)
No. 97-5055
146 F.3d 1358 (Federal Circuit, 1998)
Del-Rio Drilling Programs Inc. v. United States
146 F.3d 1358 (Federal Circuit, 1998)

Cite This Page — Counsel Stack

Bluebook (online)
35 Fed. Cl. 186, 1996 U.S. Claims LEXIS 36, 1996 WL 116353, Counsel Stack Legal Research, https://law.counselstack.com/opinion/del-rio-drilling-programs-inc-v-united-states-uscfc-1996.