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Chance v. Zinke

United States Court of Appeals, Tenth Circuit

August 6, 2018

MERRILL CHANCE, Plaintiff - Appellant,
v.
RYAN ZINKE, in his official capacity as Secretary of the United States Department of Interior; UNITED STATES BUREAU OF INDIAN AFFAIRS, an agency within the United States Department of Interior; DARRYL LACOUNTE, in his official capacity as Director of the United States Bureau of Indian Affairs; GREAT SOUTHWESTERN EXPLORATION, INC., an Oklahoma corporation, Defendants - Appellees. PAWNEE NATION OF OKLAHOMA; WALTER R. ECHO-HAWK, Amici Curiae.

          Appeal from the United States District Court for the Northern District of Oklahoma (D.C. No. 4:16-CV-00549-JHP-FHM)

          Donald A. Lepp (Gentner F. Drummond, Garry M. Gaskins, II, and Logan L. James with him on the briefs), Drummond Law, PLLC, Tulsa, Oklahoma, for Merrill Chance, Plaintiff-Appellant.

          Tamara N. Rountree, Environmental & Natural Resources Division, United States Department of Justice, Washington, D.C. (Jeffrey H. Wood, Eric Grant, Mark R. Haag, and Jody H. Schwarz, Environmental & Natural Resources Division, United States Department of Justice, Washington, D.C., and Charles R. Babst, Jr., Kristen D. Kokinos, and Stephen L. Simpson, Office of the Solicitor, United States Department of the Interior, Washington, D.C., with her on the brief), for Ryan Zinke, Darryl LaCounte, and United States Bureau of Indian Affairs, Defendants-Appellees.

          James D. Sicking, Jr., Tulsa, Oklahoma (Thomas Mortensen, Tulsa, Oklahoma, with him on the brief), for Great Southwestern Exploration, Inc., Defendant-Appellee.

          Michael S. Freeman, Earthjustice, Denver, Colorado (Yuting Chi, Earthjustice, Denver, Colorado, and Don Mason, Attorney General, Pawnee Nation of Oklahoma, Pawnee, Oklahoma, with him on the brief) for the Pawnee Nation of Oklahoma and Walter R. Echo-Hawk, Amici Curiae.

          Before LUCERO, PHILLIPS, and MORITZ, Circuit Judges.

          MORITZ, CIRCUIT JUDGE.

         Merrill Chance, a landowner in Osage County, Oklahoma, sued the government[1] to void a lease and various permits that allow Great Southwestern Exploration, Inc. (GSE) to drill for oil and gas beneath his property. He also seeks damages from GSE for trespassing on his property. The district court ruled that Chance's claims against the government were untimely under 28 U.S.C. § 2401(a); thus, it reasoned, it lacked subject-matter jurisdiction to hear these claims and therefore dismissed them. It also dismissed Chance's claims against GSE.

         We agree with the district court that Chance's claims against the government are untimely. But the Supreme Court has warned us to beware of "profligate use of the term 'jurisdiction.'" Sebelius v. Auburn Reg'l Med. Ctr., 568 U.S. 145, 153 (2013). Today we heed that warning and hold that the district court wrongly concluded it lacked subject-matter jurisdiction over Chance's claims against the government.

         Therefore, we reverse the district court's order dismissing Chance's claims against the government for lack of subject-matter jurisdiction and instruct the district court to dismiss those claims for failure to state a claim. We affirm the district court's judgment over Chance's claims against GSE because, to the extent Chance's claims against the government fail, the district court properly declined to exercise supplemental jurisdiction over Chance's claims against GSE.

         Background

         The controversy surrounding Chance's property stems from the government's unusual presence in Osage County. Before the turn of the twentieth century, Osage County was a tribal reservation belonging to the Osage Nation. See Osage Nation v. Irby, 597 F.3d 1117, 1120 (10th Cir. 2010). But Congress disestablished the reservation in 1906 upon Oklahoma's induction into the union. See id. At the same time, Congress severed the surface estate from its subterranean mineral estate. Id. It divided the surface estate and distributed most of the parcels to tribal members. Id. at 1120-21. But importantly, the government retained the subterranean estate in trust for the Osage Nation's benefit. See id. at 1120.

         Today, Department of Interior regulations task the Osage Agency of the BIA with managing this trust. See 25 C.F.R. §§ 226.1-226.46. These regulations give the Osage Agency authority to lease tracts of the subterranean estate, with the Osage Tribal Council's permission. § 226.2(b). The Osage Agency exercises significant oversight over these leases. Among other responsibilities, it must approve all new oil leases, id.; assignments of existing leases, § 226.15(b); and drilling permits, § 226.16(b).

         Chance is the surface owner of a tract of land in Osage County. In 1963, the Osage Agency granted the Eason Oil Company (Eason) an oil lease for deposits underlying Chance's property. Eason drilled two wells in 1964 that remain in operation today. With the BIA's approval, Eason assigned its lease to GSE in 1991. The BIA granted GSE permits to drill three new wells that same year. Two of these wells remain in operation. Chance maintains that the construction and operation of these wells has damaged his surface property in various ways over the years.

         In October 2016-25 years after Eason assigned its lease to GSE and the BIA granted GSE permits to drill new wells on the lease-Chance filed this lawsuit. He argued that 42 U.S.C. § 4332(c), part of the National Environmental Policy Act (NEPA) of 1969, required the Osage Agency to conduct site-specific environmental-impact assessments before approving Eason's assignment to GSE and GSE's new drilling permits. And he alleged that the Osage Agency never conducted these assessments. Chance also asserted that the Osage Agency failed to notify his predecessors-in-interest that it approved the new permits. Further, he contended that the Osage Agency improperly took various other unknown actions related to his property without conducting site-specific environmental-impact assessments or notifying him or his predecessors-in-interest.

         Additionally, Chance asserted that the Osage Agency's failure to comply with NEPA reflects systemic problems. He alleged that for decades, the Osage Agency had been relying only on an assessment it conducted in 1979 that evaluated the general impact of the Osage County drilling program rather than conducting site-specific environmental-impact assessments, as Chance argued NEPA requires. Chance further alleged that the Osage Agency attempted to conceal its noncompliance with NEPA.

         The government moved to dismiss Chance's claims against it for lack of subject-matter jurisdiction under Federal Rule of Civil Procedure 12(b)(1), and GSE moved to dismiss Chance's claims against it for failure to state a claim under Rule 12(b)(6). The district court granted both motions. It first ruled that Chance's claims against the government were untimely under § 2401(a), which establishes a six-year statute of limitations for nontort claims against the government. Chance urged the district court to equitably toll § 2401(a)'s limitations period. But the district court determined that § 2401(a) is a jurisdictional bar and thus not subject to equitable tolling. Alternatively, it ruled that Chance wasn't entitled to equitable tolling under the facts of this case. The district court further ruled that Chance failed to exhaust his administrative remedies. And it denied Chance's motion for jurisdictional discovery.

         The district court then concluded that Chance's claims against GSE necessarily relied on his claims against the government, so it granted GSE's Rule 12(b)(6) motion. It alternatively declined to exercise supplemental jurisdiction over Chance's claims against GSE and dismissed for lack of subject-matter jurisdiction. Chance appeals the ...


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