53 F.3d 1145 (10th Cir. 1995), 94-4062, State of Utah v. Babbitt

Docket Nº:94-4062, 94-4063.
Citation:53 F.3d 1145
Party Name:STATE OF UTAH, Board of Trustees of the Utah Navajo Trust Fund, Plaintiffs-Appellees, v. Bruce BABBITT, in his capacity as Secretary of the United States Department of the Interior; Department of the Interior; Bureau of Indian Affairs; Navajo Area Director, Bureau of Indian Affairs; United States of America, Defendants-Appellants, Navajo Nation, In
Case Date:April 26, 1995
Court:United States Courts of Appeals, Court of Appeals for the Tenth Circuit
 
FREE EXCERPT

Page 1145

53 F.3d 1145 (10th Cir. 1995)

STATE OF UTAH, Board of Trustees of the Utah Navajo Trust

Fund, Plaintiffs-Appellees,

v.

Bruce BABBITT, in his capacity as Secretary of the United

States Department of the Interior; Department of the

Interior; Bureau of Indian Affairs; Navajo Area Director,

Bureau of Indian Affairs; United States of America,

Defendants-Appellants,

Navajo Nation, Intervenor-Appellant,

and

Chuska Energy Co., Intervenor.

Nos. 94-4062, 94-4063.

United States Court of Appeals, Tenth Circuit

April 26, 1995

Page 1146

[Copyrighted Material Omitted]

Page 1147

Philip C. Pugsley, Asst. Atty. Gen. (Brian Farr and Reed Richards with him on the brief), Salt Lake City, UT, for plaintiffs-appellees.

David C. Shilton, Atty., Dept. of Justice (Lois J. Schiffer, Acting Asst. Atty. Gen., Washington, DC, Thornton W. Field and Edward J. Shawaker, Attys., Dept. of Justice, Washington, DC, and Edwin G. Winstead, Field Sol., U.S. Dept. of the Interior, Window Rock, AZ, with him on the brief), Washington, DC, for defendants-appellants.

Kevin N. Anderson (Joe Lennihan, Navajo Nation Dept. of Justice, Window Rock, AZ, Diane H. Banks and Douglas R. Brewer of Fabian & Clendenin, Salt Lake City, UT, with him on the brief), Las Vegas, NV, for intervenor Navajo Nation.

Before KELLY, BARRETT and HENRY, Circuit Judges.

PAUL J. KELLY, Jr., Circuit Judge.

Defendants-appellants appeal from the district court's judgment in favor of Plaintiffs-appellees. Our jurisdiction arises under 28 U.S.C. Sec. 1291 and we affirm.

Background

Under the Act of March 1, 1933 ("Act"), 47 Stat. 1418, as amended, 82 Stat. 121 (1968), the federal government took 552,000 acres of land from the public domain and added it to the Navajo Reservation. The Act provided that if "oil or gas [were] produced in paying quantities within the lands ... added to the Navajo Reservation, 37 1/2 per centum of the net royalties accruing therefrom derived from tribal leases [would] be paid to the State of Utah." 47 Stat. 1418, as amended, 82 Stat.121 (1968); Aplee.Supp.App. at 30. The royalties collected by Utah were to be used to provide benefits to the Navajos who resided on the added lands. Oil was subsequently discovered on one of the added tracts of land, known as the Aneth Extension. Royalties derived from leases on the land were divided according to the Act, with 37 percent going to Utah and 62 1/2 percent going to the Navajo Nation.

In 1968, Congress amended the Act to allow more flexibility in distributing funds to the Navajos. Specifically, the amendment provided that the State of Utah was to spend the royalties collected "for the health, education, and general welfare of the Navajo Indians residing in San Juan County." Act of May 17, 1968, 82 Stat. 121; Aplee.Supp.App. at 32. Congress effected this change after determining that many Navajo Indians did not reside permanently on the added lands, but moved back and forth between this area and other locations.

In 1987, the Navajo Nation and Chuska Energy Co. ("Chuska") entered into what was referred to as an "operating agreement." The agreement appointed Chuska as the exclusive oil and gas operator of certain land and as the sales agent for the oil and gas produced from the land. The agreement was approved by the Area Director of the Bureau of Indian Affairs ("BIA"). Under the terms of the agreement, Chuska paid the Navajo Nation both a set sum for each acre of land it utilized and a percentage of the gross proceeds, initially 20 percent, received from the sale of production on the land.

Previously unleased portions of the Aneth Extension constitute part of the land being developed by Chuska under the agreement. Consequently, in November 1990, Utah demanded payment of 37 1/2 percent of the royalties from the production of oil and gas on that particular land. The Area Director, however, found that such payment was not required because the Act only applied to leases, as opposed to an operating agreement. Utah appealed the BIA Area Director's decision to the Interior Board of Indian Appeals ("IBIA"), which affirmed the BIA's decision. Utah then challenged the

Page 1148

IBIA's holding in federal district court, and the Navajo Nation and Chuska intervened as defendants. The district court subsequently granted summary judgment in favor of Utah.

The federal Defendants now appeal, arguing that the district court erred both in finding that the royalty-sharing provision of the Act applied to the agreement and holding the Secretary of the Interior ("Secretary") responsible for the collection and payment of royalties owed to the State of Utah. The Navajo Nation also appeals, arguing that the district court erred in reversing the...

To continue reading

FREE SIGN UP