Kenai Oil and Gas, Inc. v. Dept. of Interior

• Citation: 522 F. Supp. 521
• Decision Date: 15 September 1981
• Docket Number: Civ. No. C 81-0203A.
• Parties: KENAI OIL AND GAS, INC., a corporation, Bow Valley Petroleum, Inc., a corporation, for themselves and for all others similarly situated, Plaintiffs, v. The DEPARTMENT OF the INTERIOR of the United States; James G. Watt, individually and as Secretary of the Interior; the Bureau of Indian Affairs; Thomas Fredricks or his successor, individually and as Commissioner of the Bureau of Indian Affairs; Curtis Geiogamah, individually and as Acting Area Director of Indian Affairs, Phoenix Area; L. W. Collier, Jr., individually and as Superintendent of the Bureau of Indian Affairs, Uintah and Ouray Agency; Ute Indian Tribe, a federal corporation; and Ruby Black, Charles Redfoot, Antone Appawoo, Floyd Wopsock, Leon Perank, Ouray McCook, Sr., individually and as members of the Ute Tribal Council, Defendants.
• Court: U.S. District Court — District of Utah

522 F. Supp. 521

KENAI OIL AND GAS, INC., a corporation, Bow Valley Petroleum, Inc., a corporation, for themselves and for all others similarly situated, Plaintiffs, v. The DEPARTMENT OF the INTERIOR of the United States; James G. Watt, individually and as Secretary of the Interior; the Bureau of Indian Affairs; Thomas Fredricks or his successor, individually and as Commissioner of the Bureau of Indian Affairs; Curtis Geiogamah, individually and as Acting Area Director of Indian Affairs, Phoenix Area; L. W. Collier, Jr., individually and as Superintendent of the Bureau of Indian Affairs, Uintah and Ouray Agency; Ute Indian Tribe, a federal corporation; and Ruby Black, Charles Redfoot, Antone Appawoo, Floyd Wopsock, Leon Perank, Ouray McCook, Sr., individually and as members of the Ute Tribal Council, Defendants.

Civ. No. C 81-0203A.

United States District Court, D. Utah, C. D.

September 15, 1981.

COPYRIGHT MATERIAL OMITTED

F. Alan Fletcher, Lawrence S. Skiffington, Salt Lake City, Utah, for plaintiffs.

William McConkie, Wallace Boyack, Asst. U. S. Atty., Francis M. Wikstrom, U. S. Atty., Salt Lake City, Utah, Martin Seneca, Washington, D. C., Woodrow Sneed, Ft. Duchesne, Utah, for defendants.

ALDON J. ANDERSON, District Judge.

1. INTRODUCTION

Plaintiffs filed a Motion for Extension of Lease Suspension and Preliminary Injunction on April 1, 1981, supported by a Memorandum of Points and Authorities filed April 16, 1981. A hearing was held May 8, 1981, at which the court heard testimony, received exhibits, and heard oral argument. The motion seeks a continuation of an order previously issued on March 23, 1981, which had the effect of suspending the expiration of certain oil and gas mining leases of Indian tribal land that would otherwise have expired on or about March 23, 1981. The parties have stipulated that the March 23 order be extended until the court shall have ruled on plaintiffs' motion for an extension. Pursuant to the stipulation the court so ordered, in an order filed April 16, 1981. Plaintiffs had previously tendered communitization agreements to the Indian defendants and to defendant Secretary of the Interior, through his representative for the Uintah and Ouray Agency of the Bureau of Indian Affairs which, had they been approved, would have effectively continued the leases for the duration of the period during which oil was produced in paying quantities. Plaintiffs assert that defendants had a duty to accept and approve the communitization agreements and that their failure to do so gives rise to an actionable claim.

The amended complaint asserts that the court has jurisdiction under 28 U.S.C. §§ 1331 and 1361. Although subject matter jurisdiction with respect to the Indian defendants had not been pled with particularity, as required by Rule 8(a)(1) of the Federal Rules of Civil Procedure, the court believes that the controversy may involve a federal question sufficient to satisfy the jurisdictional requirements of section 1331. At least, for the purposes of this motion and considering the likelihood that plaintiffs will amend their complaint to plead jurisdiction with greater specificity, the court will give plaintiffs the benefit of the doubt.

In seeking a preliminary injunction plaintiffs have the burden of establishing (1) substantial likelihood that they will eventually prevail on the merits; (2) a showing that they will suffer irreparable injury unless the injunction issues; (3) proof that the threatened injury to plaintiffs outweighs whatever damage the proposed injunction may cause defendants; and (4) a showing that the injunction, if issued, would not be adverse to the public interest. Lundgrin v. Claytor, 619 F.2d 61, 63 (10th Cir. 1980). Having heard the evidence presented at the hearing the court is persuaded that if the injunction is not granted then plaintiffs will suffer irreparable harm. If no injunction is issued they will suffer the loss of those leases that would have previously expired by their own terms but for the court's order temporarily suspending the leases. Damages incurred because of the loss of the leases would be difficult, if not impossible, to measure monetarily. The court feels also that plaintiffs have met their burden of showing that the threatened injury they would suffer if the leases lapse outweighs any damages resulting to defendants if the injunction is granted. Nor would the injunction be adverse to the public interest. The court, however, is not convinced that there exists a substantial likelihood that plaintiffs will eventually prevail on the merits. Having failed in respect to this element plaintiffs' motion must be denied.

The tribal defendants in this case are the Ute Indian Tribe, a federal corporation, and individual members of the Ute Business Committee, referred to in the amended complaint as the "Ute Tribal Council." The evidence shows that, pursuant to section 17 of the Indian Reorganization Act, 25 U.S.C. § 477, the Ute Indian Tribe of the Uintah and Ouray Reservation chartered the defendant corporation on July 6, 1938. The tribe had previously been organized, having adopted a constitution and bylaws, pursuant to section 16 of the Act. 25 U.S.C. § 476. The corporation was chartered under the corporate name "The Ute Indian Tribe," and was formed "to further the economic development of the Ute Indian Tribe of the Uintah and Ouray Reservation in Utah." Corporate Charter, § 1. Section 5 of the charter enumerates certain corporate powers to be possessed by the corporation. Included in the enumeration is the following provision:

5. The Tribe, subject to any restrictions contained in the Constitution and Bylaws of the said Tribe, shall have the following corporate powers, in addition to all powers already conferred or guaranteed by the tribal constitution and by-laws:

....

(i) To sue and be sued in courts of competent jurisdiction within the United States; but the grant or exercise of such power to sue and to be sued shall not be deemed a consent by the said Tribe or by the United States to the levy of any judgment, lien, or attachment upon the property of the Tribe other than income or chattels specially pledged or assigned.

The present controversy involves thirty oil and gas leases, entered into in 1971, of property located on the Uintah and Ouray Indian Reservation. The complaint alleges that the original lessees assigned their interests to plaintiff Bow Valley Petroleum, Inc., which in turn entered into a farm-out agreement with plaintiff Kenai Oil and Gas, Inc. Each of the leases contained the following provision:

Unit Operation. — The parties hereto agree to subscribe to and abide by any agreement for the cooperative or unit development of the field or area, affecting the leased lands, or any pool thereof, if and when collectively adopted by a majority operating interest therein and approved by the Secretary of the Interior, during the period of supervision.

Plaintiffs assert that defendants were bound by this provision to enter into the proposed communitization agreements. They are requesting that the court use its equity power to order that defendants enter into the agreements, including any necessary approval of the Secretary of the Interior.

2. WHO ARE THE LESSORS?

The determination as to who the lessors were is relevant to the question of immunity, raised as a defense by the Indian defendants. The unitization provision contained in all the leases by its terms binds only the parties to the lease contracts. There is no dispute that plaintiffs are parties to the contracts, as successors in interest to the original lessees. Who the lessors were, however, is not so certain. The court is powerless to order any but the lessors, their assigns, or successors, to comply with the provisions of the contract.

The thirty leases are attached as exhibits to the amended complaint, Exhibits A through DD. Each of the leases was executed on a printed form on which the blanks were filled in. Two forms were used, each apparently originating with the Bureau of Indian Affairs of the Department of the Interior, Form 5-154h (Jan. 1962), and Form 5-157 (July 1964). Form 5-154h was used where the lessor was an allottee of the tribal lands to be leased. Lease 2685 (Exhibit B) is typical of the twenty-three leases executed on Form 5-154h (the italicized portions represent those parts of the lease in which blanks were filled in on the printed form):

THIS INDENTURE OF LEASE, made and entered into in quintuplicate this 1st day of March, 1971, by and between Tommy Thompson, a widower of Bandlett, State of Utah, allottee No. 237, U&W, of the Ute Tribe of Indians, lessor, and Chevron Oil Company, a California corporation, P. O. Box 599 of Denver, State of Colorado 80201, lessee .

Form 5-154h was used in twenty-three leases, numbered respectively: 2685 (Exhibit B), 2686 (Exhibit C), 2704 (Exhibit D), 2750 (Exhibit E), 2807 (Exhibit F), 2808 (Exhibit G), 2668 (Exhibit H), 2669 (Exhibit I), 2758 (Exhibit J), 2759 (Exhibit K), 2692 (Exhibit L), 2745 (Exhibit M), 2670 (Exhibit N), 2693 (Exhibit P), 2761 (Exhibit R), 2746 (Exhibit V), 2694 (Exhibit W), 2695 (Exhibit X), 2674 (Exhibit Y), 2675 (Exhibit Z), 2673 (Exhibit AA), 2755 (Exhibit BB), 2756 (Exhibit CC). In all of these leases the lessors are individual members of the tribe. Defendant Ute Indian Tribe, the tribal corporation, is not named as a party, nor do any of the above-listed leases contain the signature of anyone authorized to act in its behalf. The unitization provision of the lease, paragraph 11 of those leases executed on Form 5-154h, provides that the parties to the lease will be bound to enter into an adopted and approved communitization agreement. It is an elementary principle of contract law that a nonparty to a contract is not bound thereby. Since, therefore, the corporation is not a party to any of these leases, it is not bound thereby. The amended complaint must fail on those claims asserted...