687 F.2d 1324 (10th Cir. 1982), 80-1481, Jicarilla Apache Tribe v. Andrus

Docket Nº:80-1481, 80-1586, 80-1632 to 80-1640 and 80-1685.
Citation:687 F.2d 1324
Party Name:JICARILLA APACHE TRIBE, Plaintiff-Appellant-Cross-Appellee, v. Cecil D. ANDRUS, Secretary of the Interior of the United States of America; and Amoco Production Company; Benson-Montin-Greer Drilling Corporation; Dugan Production Corporation; Gulf Oil Corporation; Hicks-Enco, Inc.; J. M. Huber Corporation; Merrion and Bayless Drilling; Mesa Petroleum
Case Date:August 20, 1982
Court:United States Courts of Appeals, Court of Appeals for the Tenth Circuit
 
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687 F.2d 1324 (10th Cir. 1982)

JICARILLA APACHE TRIBE, Plaintiff-Appellant-Cross-Appellee,

v.

Cecil D. ANDRUS, Secretary of the Interior of the United

States of America; and Amoco Production Company;

Benson-Montin-Greer Drilling Corporation; Dugan Production

Corporation; Gulf Oil Corporation; Hicks-Enco, Inc.; J. M.

Huber Corporation; Merrion and Bayless Drilling; Mesa

Petroleum Company; Nassau Resources, Inc.; North American

Exploration Company; Southland Royalty Company; Tesoro

Petroleum Corporation; Union Oil Company of California,

Defendants-Appellees-Cross- Appellants.

Nos. 80-1481, 80-1586, 80-1632 to 80-1640 and 80-1685.

United States Court of Appeals, Tenth Circuit

August 20, 1982

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Terry D. Farmer of Moses, Dunn, Beckley, Espinosa & Tuthill, and B. Reid Haltom of Nordhaus, Haltom & Taylor, Albuquerque, N. M. (Robert J. Nordhaus, Albuquerque, N. M., also of that firm, with him on the brief), for plaintiff-appellant-cross-appellee, Jicarilla Apache Tribe.

Edward J. Schawaker, Atty., Dept. of Justice, Washington, D. C. (James W. Moorman,

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Asst. Atty. Gen., Sanford Sagalkin, Deputy Asst. Atty. Gen., Peter R. Steenland, Jr., Chief, Appellate Section, and Jose N. Uranga, Atty., Dept. of Justice, Washington, D. C., with him on the brief), for defendant-appellee-cross-appellant Cecil D. Andrus, Secretary of the Interior.

Lynn H. Slade of Modrall, Sperling, Roehl, Harris & Sisk, P. A., Albuquerque, N. M. (John R. Cooney, Albuquerque, N. M., also of that firm, for Southland Royalty Co.; Michael B. Campbell of Campbell & Black, P. A., Santa Fe, N. M., for Gulf Oil Corp.; S. B. Christy, IV, of Jennings & Christy, Roswell, N. M., for Amoco Production Co., J. M. Huber Corp., Mesa Petroleum Co., Union Oil Co. of California, and Nassau Resources, Inc.; Jason W. Kellahin of Kellahin & Kellahin, Santa Fe, N. M., for Tesoro Petroleum Corp. and North American Exploration Co.; Breck Tommy Roberts, Farmington, N. M., for Dugan Production Corp.; Richard T. C. Tully and James B. Cooney, P. A., Farmington, N. M., for Benson-Montin-Greer Drilling Corp., Merrion and Bayless Drilling, and Hicks-Enco, Inc., with him on the brief), for defendants-appellees-cross-appellants Amoco Production Co., Benson-Montin-Greer Drilling Corp., Dugan Production Corp., Gulf Oil Corp., Hicks-Enco, Inc., J. M. Huber Corp., Merrion and Bayless Drilling, Mesa Petroleum Co., Nassau Resources, Inc., North American Exploration Co., Southland Royalty Co., Tesoro Petroleum Corp., and Union Oil Co. of California.

Before HOLLOWAY, BARRETT and McKAY, Circuit Judges.

HOLLOWAY, Circuit Judge.

In 1976 the Jicarilla Apache Tribe (the Tribe) filed this action against the Secretary of the Interior and certain oil and gas lessees (lessee defendants or the companies), claiming that the Secretary failed to comply with his regulation, 25 CFR § 171.3, when advertising four sales of oil and gas leases on the Jicarilla Apache Indian Reservation. The Tribe also alleged failure to comply with the National Environmental Policy Act (NEPA). The Tribe sought a declaration that the nonproducing leases were invalid and an order directing the Secretary to cancel them. In addition the Tribe sought an order that the Secretary prepare an environmental impact statement for producing leases and that he recommend changes in the lease terms based thereon.

The Secretary denied any violation of the statutes or regulations in the advertising of the sales of the oil and gas leases, as did the lessees defendants. The Secretary and the lessee defendants denied that NEPA applied and asserted equitable defenses against the claim of violation of the regulations and the NEPA claim. The lessee defendants also counterclaimed for damages, alleging wrongful action by the Tribe in filing this action, breach of the leases by the Tribe in bringing suit, and violation of various provisions of the Indian Civil Rights Act, 25 U.S.C. §§ 1301 et seq. 1

The four lease sales were conducted by the Bureau of Indian Affairs (BIA) on April 22, 1970, July 14, 1971, November 17, 1971, and September 6, 1972, by sealed-bid auction pursuant to 25 U.S.C. § 396b. Of a total 415,885.90 acres offered, 276,117.61 acres were actually leased. At trial the companies essentially sought to demonstrate lack of violation of the regulations on notice procedures, lack of harm to the Tribe's interests, compliance with NEPA, and laches and unclean hands.

The trial court found that there had been a "technical violation" of the notice requirements of 25 CFR § 171.3, but it declined to order outright cancellation. Instead, the court declared the Secretary's actions to be

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violative of the regulation and ordered the Secretary to "cancel a lease unless, within 60 days from entry of final judgment, the particular lessee pays plaintiff Jicarilla Apache Tribe an adjusted bonus" based on a percentage of the bonus payment recommended in testimony by the Tribe's expert. The court also tolled the primary lease terms and delay rentals from the date of service of process to the date of judgment. The NEPA claim was rejected on a finding of laches and unclean hands on the part of the Tribe. Finally, the lessee defendants' counterclaims were dismissed on the ground of the Tribe's sovereign immunity. 546 F.Supp. at 587.

The parties appealed and cross-appealed. The Tribe argues that leases issued in violation of the regulations are void and must be cancelled; that the district court erred in awarding "speculative damages" by the adjusted bonus payments; that non-compliance with NEPA compels cancellation; that the court's finding of laches and unclean hands as to the NEPA claim was error; that the leases cannot be tolled to extend beyond their statutory term; that delay rentals were improperly suspended during litigation; and that the Tribe should have been awarded costs.

The Secretary urges that there was no violation of the statutory notice requirements; that the BIA complied with its longstanding, reasonable interpretation of 25 CFR § 171.3; and that the court properly denied relief under NEPA because of laches and unclean hands.

The lessee defendants argue that the district court erred in finding a violation of 25 CFR § 171.3; that the court erroneously placed the burden on the lessees to prove that any violation of the regulations did not harm the Tribe; that the court properly denied outright cancellation but erroneously failed to deny all relief for noncompliance with 25 CFR § 171.3 due to laches and unclean hands; and that the Tribe waived its sovereign immunity as to the counterclaims by filing this action.

We turn first to the basic issue whether the Secretary's regulations were violated in giving notice of the lease sales.

I

Propriety of the procedures used to give notice of the lease sales

The notice procedures which the Government must follow when offering oil and gas leases for sale on behalf of Indian tribes are set forth in 25 CFR § 171.3, 22 Fed.Reg. 10588 (1957), as amended at 23 Fed.Reg. 7068 (1958), promulgated pursuant to 25 U.S.C. § 396b. 2 Section 171.3 provided in pertinent part as follows:

(a) At such times and in such manner as he may deem appropriate, after being authorized by the tribal council or other authorized representative of the tribe, the superintendent shall publish notices at least thirty days prior to the sale, unless a shorter period is authorized by the Commissioner of Indian Affairs, that oil and gas leases on specific tracts, each of which shall be in a reasonably compact body, will be offered to the highest responsible bidder for a bonus consideration, in addition to stipulated rentals and royalties....

(b) All notices or advertisements of sales of oil and gas leases shall reserve to

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the Secretary of the Interior the right to reject all bids when in his judgment the interests of the Indians will be best served by so doing, and that if no satisfactory bid is received, or if the accepted bidder fails to complete the lease, or if the Secretary of the Interior shall determine that it is unwise in the interests of the Indians to accept the highest bid, the Secretary may readvertise such lease for sale, or if deemed advisable, with the consent of the tribal council or other governing tribal authorities, a lease may be made by private negotiations. The successful bidder or bidders will be required to pay his or their share of the advertising costs.... (Emphasis added).

The trial court found, and its findings in this regard are undisputed, that the notice actually given to potential bidders for the leases in question consisted of (1) a "short-form notice" which appeared in various trade publications at least thirty days prior to leasing, and (2) a "long-form notice" which concededly contained all the information required by the regulation.

Although never printed in any newspaper or trade journal, the long-form notice was distributed in three ways: first, more than 30 days prior to the sale it was mailed to names in a BIA file of individuals and companies which had expressed an interest in leases on the Jicarilla Reservation. Second, bulk mailings were made to some BIA offices and post offices in the area to be put on display. Third, it was sent to anyone requesting details of the sale.

One of the short form notices which appeared in trade publications read as follows (I J.App. A-29):

Legal Notice

U. S. DEPARTMENT OF THE INTERIOR, BUREAU OF INDIAN AFFAIRS. Notice is hereby given that 25 tracts of Jicarilla Tribal lands comprising 58,017 acres located in Rio Arriba and Sandoval Counties, New Mexico in the Eastern San Juan Basin are...

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