Sanguine, Ltd. v. U.S. Dept. of Interior

• Citation: 736 F.2d 1416
• Decision Date: 15 June 1984
• Docket Number: No. 82-1030,82-1030
• Parties: , 39 Fed.R.Serv.2d 751 SANGUINE, LTD., Plaintiff-Appellee, v. UNITED STATES DEPARTMENT OF the INTERIOR, Bureau of Indian Affairs, United States Geological Survey, Stanley Speaks, and F.L. Stelzer, Defendants- Appellees, Delra M. Toohey, Mae Lamar Davis, Imogene Birch, Eva Lois Warden, Richard Guy, Wildena F. Guy Moffer, Willard B. Guy, Berdena Holder and Ronnie F. Birch, Sr., Movants-In- Intervention Appellants.
• Court: United States Courts of Appeals. United States Court of Appeals (10th Circuit)

Page 1416

736 F.2d 1416

77 A.L.R.Fed. 531, 39 Fed.R.Serv.2d 751

SANGUINE, LTD., Plaintiff-Appellee, v. UNITED STATES DEPARTMENT OF the INTERIOR, Bureau of Indian Affairs, United States Geological Survey, Stanley Speaks, and F.L. Stelzer, Defendants- Appellees Delra M. Toohey, Mae Lamar Davis, Imogene Birch, Eva Lois Warden, Richard Guy, Wildena F. Guy Moffer Willard B. Guy, Berdena Holder and Ronnie F. Birch, Sr. Movants-In- Intervention Appellants.

No. 82-1030.

United States Court of Appeals, Tenth Circuit.

June 15, 1984.

Patricia L. Brown, Washington, D.C. (John Michael Facciola, of Wilkinson, Cragun & Barker, Washington, D.C., and Jap W. Blankenship of Fellers, Snider, Blankenship, Bailey & Tippins, Oklahoma City, Okl., of counsel, with her on the brief), for movants-in-intervention appellants.

Kent L. Jones, Tulsa, Okl. (James C.T. Hardwick and Mark K. Blongewicz, Tulsa, Okl., with him on the brief) of Hall, Estill, Hardwick, Gable, Collingsworth & Nelson, Tulsa, Okl., for plaintiff-appellee Sanguine, Ltd.

Thomas H. Pacheco, Atty., Dept. of Justice, Washington, D.C. (Carol E. Dinkins, Asst. Atty. Gen., Washington, D.C., John E. Green, Acting U.S. Atty., Roger Stuart, Asst. U.S. Atty., Oklahoma City, Okl., and Laura Frossard, Atty., Dept. of Justice, Washington, D.C., on the brief), for defendants-appellees.

Before DOYLE and LOGAN, Circuit Judges, and CHILSON, District Judge. ^*

LOGAN, Circuit Judge.

This is an appeal from the district court's denial of a motion for intervention as of right under Fed.R.Civ.P. 24(a)(2) and for permissive intervention under Fed.R.Civ.P. 24(b). Because we hold that appellants were entitled to intervene as of right, we do not discuss the permissive intervention issue.

Appellants, nine members of the Wichita and Affiliated Tribes of Oklahoma, own restricted Indian lands in western Oklahoma. Pursuant to its trust responsibilities to Indians, the United States, through the Department of Interior, oversees and must approve all oil and gas leases on restricted Indian lands. 25 U.S.C. Sec. 396a. With the approval of the Bureau of Indian Affairs (BIA), sometime before April 10, 1981, appellants leased their lands to Sanguine, Ltd., an oil and gas exploration company. Each lease grants Sanguine the right to drill for and extract oil and gas from the land for a specified term of years and as long thereafter as oil and gas are produced from the land in paying quantities.

The Secretary of Interior may subject leases on Indian lands to "any reasonable cooperative unit or other plan" for oil and gas production. 25 U.S.C. Sec. 396d. Each lease between Sanguine and an appellant provides that the parties will abide by any cooperative or unit agreement that is adopted by a majority of operating interests in the unit and approved by the Secretary. The unit development plan most common for restricted Indian lands in western Oklahoma is a "communitization" agreement. This type of agreement pools or communitizes all oil and gas production from leases within an area established by the Oklahoma Corporation Commission as a drilling and spacing unit for one well. The agreement provides that production anywhere within the unit is deemed produced from each lease within the unit. Thus, production anywhere within the unit will extend the duration of any lease within the unit beyond its primary term.

This appeal arises from a suit that Sanguine filed against the Department of Interior and some of its subsidiary agencies and officials (hereafter the "government"). Sanguine alleged that before April 10, 1981, the BIA routinely approved a form of communitization agreement (the "Standard Form" agreement) under which production of oil and gas in paying quantities from any zone within the unit is deemed produced from every zone on every lease within the unit. On April 10, 1981, however, Stanley Speaks, Anadarko Area Director of the BIA, announced that the BIA would only approve communitization agreements submitted on the "Rev. April 1981 Form." That form provides, "All Trust or Restricted Leases committed by this agreement are hereby amended to provide that any non-producing zones shall be released at the end of the primary term of said lease." Sanguine had not yet entered into communitization agreements for its leases with appellants when Speaks made this announcement. Thus, Sanguine filed suit, seeking a declaration that Speaks' ruling requiring use of the Rev. April 1981 Form was unlawful and an injunction against enforcement of Speaks' ruling.

After a hearing on Sanguine's motion for a preliminary injunction, the district court issued an order on July 20, 1981, declaring that Speaks' ruling was unlawful because (1) it was adopted in violation of public notice and comment procedures required for rulemaking; (2) it constituted an improper retroactive modification of Sanguine's leases; and (3) Speaks acted beyond the scope of his delegated authority in adopting the rule. The court enjoined the government defendants from requiring Sanguine to use the Rev. April 1981 Form and ordered them to approve communitization agreements that Sanguine submitted on the Standard Form. On August 11, 1981, the parties reached a settlement agreement. The parties stipulated both to the facts set forth in Sanguine's complaint and the invalidity of Speaks' ruling. The parties also submitted a consent decree, which the district court entered as its final order on that date. The order permanently enjoined the government from requiring Sanguine to use the Rev. April 1981 Form, declared that Speaks' ruling was unlawful, and ordered the government to approve communitization agreements that Sanguine submitted on the Standard Form pending the lawful adoption of a different form of communitization agreement.

On September 14, 1981, appellants filed a motion to intervene in the action between Sanguine and the government, which the district court denied. Fed.R.Civ.P. 24(a)(2) provides,

"Upon timely application anyone shall be permitted to intervene in an action ... when the applicant claims an interest relating to the property or transaction which is the subject of the action and he is so situated that the disposition of the action may as a practical matter impair or impede his ability to protect that interest, unless the applicant's interest is adequately represented by existing parties."

The district court found that appellants' motion to intervene was timely. Nonetheless, it denied the motion to intervene as of right because it found that the government adequately represented appellants' interests. The Indian lessors appealed and appellees Sanguine and the government both support the trial court's ruling.

I

Appellees contend that the district court erred in finding that appellants' motion for intervention was timely. The trial court must determine timeliness in light of all of the circumstances, NAACP v. New York, 413 U.S. 345, 366, 93 S.Ct. 2591, 2603, 37 L.Ed.2d 648 (1973), including the length of time since the applicant knew of his interest in the case, prejudice to the existing parties, prejudice to the applicant, and the existence of any unusual circumstances. United Nuclear Corp. v. Cannon, 696 F.2d 141, 143 (1st Cir.1982); Stallworth v. Monsanto Co., 558 F.2d 257, 264-66 (5th Cir.1977). The trial court's determination is subject to review only for abuse of discretion. NAACP v. New York, 413 U.S. at 366, 93 S.Ct. at 2603; Lumbermens Mutual Casualty Co. v. Rhodes, 403 F.2d 2, 5 (10th Cir.1968), cert. denied, 394 U.S. 965, 89 S.Ct. 1319, 22 L.Ed.2d 567 (1969).

Appellants did not move to intervene in the instant case until more than thirty days after entry of judgment. Courts are normally reluctant to grant a motion to intervene at a late stage in the proceedings or after entry of judgment. See, e.g., Alaniz v. Tillie Lewis Foods, 572 F.2d 657, 659 (9th Cir.) (per curiam), cert. denied, 439 U.S. 837, 99 S.Ct. 123, 58 L.Ed.2d 134 (1978). Furthermore, in reliance on the consent decree, Sanguine entered into communitization agreements and began drilling on appellants' lands before appellants moved to intervene. Thus, Sanguine may suffer prejudice if we grant appellants' motion. On the other hand, as we discuss below, appellants will suffer prejudice if we do not allow them to intervene. Moreover, appellants submitted an affidavit from Newton Lamar, President of the Wichita and Affiliated Tribes, Appellants' Reply Brief, Ex. A, indicating that appellants were not aware of their interest until approximately two weeks after entry of judgment. The affidavit also asserts that appellants did not learn of their interest until that late date because the BIA did not release the names of the affected lessors until August 20, 1981, over a month after Lamar had requested that information. Under these circumstances, we cannot conclude that the trial court abused its discretion in finding that appellants' motion to intervene was timely.

II

A

Although an applicant for intervention as of right bears the burden of showing inadequate representation, that burden is the "minimal" one of showing that representation "may" be inadequate. Trbovich v. United Mine Workers, 404 U.S. 528, 538 n. 10, 92 S.Ct. 630, 636 n. 10, 30 L.Ed.2d 686 (1972); National Farm Lines v. ICC, 564 F.2d 381, 383 (10th Cir.1977). An applicant may fulfill this burden by showing collusion between the...