Superior Oil Co. v. U.S., 85-1330

• Decision Date: 13 August 1986
• Docket Number: No. 85-1330,85-1330
• Parties: SUPERIOR OIL COMPANY, et al., Plaintiffs-Appellants, v. The UNITED STATES of America, et al., Defendants-Appellees.
• Court: U.S. Court of Appeals — Tenth Circuit

Page 1324

798 F.2d 1324

SUPERIOR OIL COMPANY, et al., Plaintiffs-Appellants, v. The UNITED STATES of America, et al., Defendants-Appellees.

No. 85-1330.

United States Court of Appeals, Tenth Circuit.

Aug. 13, 1986.

Thomas C. Jepperson (Arthur H. Nielsen, with him on the brief) of Nielsen & Senior, Salt Lake City, Utah, for plaintiffs-appellants.

Edward J. Shawaker (F. Henry Habicht, Asst. Atty. Gen., Washington, D.C., Brent D. Ward, U.S. Atty., Joseph W. Anderson, Asst U.S. Atty., Salt Lake City, Utah, and Robert L. Klarquist, Atty., Dept. of Justice, Washington, D.C., with him on the brief), Atty., Dept. of Justice, and Louis Denetsosie (R. Randall Harrison, Window Rock, Ariz., and Kevin N. Anderson, Salt Lake City, Utah, with him on the brief), Navajo Nation Dept. of Justice, for defendants-appellees.

Before BARRETT, SEYMOUR and BALDOCK, Circuit Judges.

BARRETT, Circuit Judge.

Superior Oil Company (Superior) appeals from the District Court's dismissal of its amended complaint seeking declaratory, mandamus and injunctive relief against the United States, the Secretary of the Interior, other officers of the Department of the Interior, the Navajo Tribe of Indians, its Council, and certain named tribal departments and certain Navajo Indians, sued individually and in their official capacities. Jurisdiction was asserted under the Fifth Amendment and the Fourteenth Amendment of the Constitution of the United States, 28 U.S.C. Sec. 1331 (federal questions), Sec. 1332 (diversity of citizenship), Sec. 1343 (mandamus), Sec. 2201 (declaratory relief), 5 U.S.C. Sec. 701, et seq. (Administrative Procedure Act), 25 U.S.C. Sec. 1301 (Indian Civil Rights Act), and 25 U.S.C. Secs. 396a-396g (Omnibus Indian Mineral Leasing Act of 1938).

The action involves rights asserted by Superior to explore for oil and gas on tribal lands under oil and gas leases granted by the Navajo Tribe, and approved by the Secretary pursuant to 25 C.F.R. Sec. 211.20(b) (1984). Superior claims that the statutory and regulatory scheme governing Indian oil and gas leases is such that the Secretary of the Interior has exclusive regulatory control and that this authority preempts regulatory control by the Navajo Tribe. Further, Superior contends that the Secretary has failed and refused to act to approve certain assignments. Superior also claims that the Navajo Tribe and certain Navajo officials have intentionally and purposely sought to deprive Superior of its property interests in the oil and gas leases by refusing to allow Superior to undertake seismic operation with the sole purpose and intent of having the leases expire, constituting unlawful confiscation of Superior's property rights. Superior alleges that said action is not within the scope of the Tribe's sovereign powers and is in conflict with an overriding national interest to prevent such deprivation. The District Court, in granting defendants' Motion for Summary Judgment, dismissing Superior's complaint, ruled that (a) the court was without jurisdiction to grant relief against the Navajo Tribe and its named officials based upon the sovereign immunity of the Tribe, and (b) there is no case or controversy involving the United States or its named officials. The court further ruled that the appropriate initial forum for presentation of Superior's complaint is with the Tribal Court. See, Superior Oil Company v. United States, 605 F.Supp. 674 (D.Utah, C.D., 1985).

The Background

In viewing the evidence in the light most favorable to Superior, as we must in light of the trial court's grant of a summary judgment in favor of defendants, see Clark v. Atchison, Topeka & Santa Fe Ry., 731 F.2d 698 (10th Cir.1984), the record reflects the following:

Superior and Arapaho Petroleum, Inc., non-Indian corporations, filed this action seeking declaratory and injunctive relief requiring approval of certain oil and gas lease assignments and permits to undertake pre-drilling seismic exploration on tribal lands subject to the leases. The lands concerned are situate in San Juan County, Utah, within the boundaries of the Navajo Reservation.

One count concerned two leases executed by the Tribe, as Lessor, approved by the Secretary of the Interior, and Arapaho, as Lessee. After issuance, Arapaho designated Superior as its operator and agent under a Farmout Agreement. Superior thereafter undertook seismic activities on the leased lands pursuant to permits issued by the Tribe and Secretary and then obtained drilling permits. Before drilling, Superior determined that further seismic exploratory work was required in order to judge the best location for the wells. Prior thereto the chairman of the Navajo Tribal Council had requested that Arapaho renegotiate the royalty rate on each of its leases. Even though Superior believed that the Secretary of Interior had exclusive authority and right to issue such permits, it requested of the Navajo Tribal Council, as an expression of cooperation, permission to undertake the seismic testing. The Navajo Council had promulgated ordinances requiring, inter-alia, tribal approval of assignments of oil and gas leases and permits to undertake seismic tests all in the interest of public safety and tribal economic security. When it became apparent that the tribal officials would not grant Superior's seismic permits prior to expiration of the primary terms of the leases, Superior filed this suit to avoid the expiration of the ten year term of the leases. A preliminary injunction was granted declaring the leases extended so long as the Navajo Tribe failed to act on the seismic permit requests. The Secretary of the Interior refused to approve the issuance of the seismic permits without the approval of the Tribe. The Department of the Interior suspended the primary term of one of the two leases for the reason that the laws, regulations and policies of the Navajo Tribe had denied approval of Superior's applications for permits to drill. (R., Vol. V, Exh. 71, p. 3.) The other lease came into production before expiration of the primary term and is no longer at issue.

Superior, in recognition of a dispute concerning the proposed seismic testing insofar as surface damages were concerned, offered to escrow surface damage money, which had been a standard procedure of the Navajo Land Development office. (R., Vol. IV, Exh. 4, p. 2.) This request was likewise denied. A staff employee of the Navajo Tribe had been instructed to find any reason to deny Superior's request. (R., Vol. XV, pp. 143, 144.) The only reason given by the Tribe for refusal to act on the permits was that only Arapaho was entitled to make such applications because it alone was entitled to conduct drilling operations under the leases. This position was apparently anchored to the view that the Farmout Agreement between Arapaho and Superior did not accomplish an assignment of lessee rights under the leases to Superior. The Tribe required, under its ordinances, that assignments of leases be submitted to the Tribe for approval. Superior has not recognized this authority and has submitted the request for seismic permits only in the spirit of cooperation.

The second count of the amended complaint related to a lease which had been issued to Gulf Oil Corporation, as lessee. In this instance, too, Superior had been designated as operator and local agent, and thereafter Superior requested a seismic permit from the Secretary and the Tribe. Thereafter, Gulf assigned the lease to Superior. Superior alleged that the Tribe willfully failed and refused to act on the assignment or the application for seismic permit, with intention to require expiration of the lease so as to renegotiate better lease terms for the Tribe. The tribal chairman denied the right to undertake seismic operations on the lands covered by this lease because it "[w]ould be in the economic interests of the Tribe" if the lease should expire. (R., Vol. IV, Exh. 35.)

The third count involved some seven leases relative to which Superior had filed for approval of assignments or operating rights. No action has been taken by the Secretary or the Tribe. Superior sought mandamus relief to compel the Secretary and the Navajo Tribe to approve the assignments of leases or to declare that tribal approval was not required. Superior's position relative to the Secretary of Interior was that the Secretary was without authority to grant seismic permits or, if so, they should have been granted; further, that the Secretary has sole authority to approve assignments or if such approval is dependent upon prior approval of the Tribe, the court should order the Secretary to approve the assignments.

The Navajo Tribe's ordinance of December 16, 1983, provided that no assignment of mineral interests in Navajo lands shall be effective until approved by the Chairman of the Navajo Tribal Council. This ordinance did not meet with the approval of the Acting Area Director of the Bureau of Indian Affairs. (R., Vol. II, p. 313.) Even so, the District Court concluded that the ordinance is authorized under the inherent sovereignty retained by the Navajo Tribe "[t]o determine whether to issue a seismic permit to lessees" and "to approve and disapprove assignments of leases and operating rights." 605 F.Supp. at 684. The District Court observed that "[T]he conduct that the plaintiffs here assert is beyond the Tribe's sovereignty is directly related to the Tribe's economic security" and that the Tribe "would lose some of its economic security if it were unable to regulate the sale of those resources." Id. at 683, 684. On this premise, the court ruled that it is discretionary with the Chairman of the Tribal Council whether to approve or disapprove all requests for permits and that the acts of the chairman are acts of the sovereign, over which the court has no jurisdiction. Id. at 685. Thus, although the District Court ruled that the doctrine of sovereign immunity shielded both the Tribe and the individual...