United States District Court, D. Colorado
MARALEX RESOURCES, INC., a Colorado corporation, ALEXIS M. O'HARE, and MARY C. O'HARE, Plaintiffs,
v.
DAVID BARNHARDT, in his official capacity as Acting Secretary of the United States Department of the Interior, [1] THE UNITED STATES DEPARTMENT OF THE INTERIOR, and THE UNITED STATES OF AMERICA, Defendants.
ORDER AFFIRMING IN PART AND REJECTING IN PART AGENCY
DETERMINATION
CHRISTINE M. ARGUELLO UNITED STATES DISTRICT JUDGE
This
matter is before the Court upon the Court of Appeals for the
Tenth Circuit's Opinion (Doc. # 39) reversing and
remanding this Court's Order Affirming Agency
Determination (Doc. # 31). Consistent with the Court of
Appeals' Order, the Court now affirms in part and rejects
in part determinations of the Department of the Interior and
its Interior Board of Land Appeals (“IBLA”). It
affirms the IBLA's conclusion that the Bureau of Land
Management (“BLM”) had authority to inspect the
wells at issue, owned by Plaintiff Maralex Resources, Inc.
(“Maralex”). However, the BLM lacks authority to
require an operator or landowner to provide it with a key to
the landowner's locked gates or to allow the BLM to place
its own locks on the landowner's gates.
I.
PROCEDURAL HISTORY
The
Court detailed the factual background of this case in its
Order Affirming Agency Determination (Doc. # 31), as did the
Court of Appeals when it reversed that Order in Maralex
Resources, Inc. v. Barnhardt, 913 F.3d 1189 (10th Cir.
2019), see (Doc. # 39). This Court's previous
Order and the Court of Appeals' Opinion are incorporated
by reference, and the factual background explained therein
need not be repeated here. The Court recounts only the facts
necessary to address the Court of Appeal's instructions
on remand.
Briefly,
this matter concerns a 320-acre parcel of land in La Plata
County, Colorado (the “Parcel”). Plaintiffs
Alexis O'Hare and Mary O'Hare (together, the
“O'Hares”) own the surface and mineral estate
in a 120-acre tract of land (the “O'Hare
Tract”) of the Parcel. In 1995, the O'Hares issued
Maralex a private oil and gas lease for the O'Hare Tract.
The Southern Ute Indian Tribe holds the surface and mineral
estate in an 80-acre tract of land of the Parcel; the
remainder is privately owned by the O'Hares and others.
In 1996, all parties “communitized” their coal
and gas interests in the Parcel under the terms of a
Communitization Agreement, pursuant to which they agreed to
develop and operate the Parcel as a single entity. The
Southern Ute Indian Tribe and the Bureau of Indian Affairs
approved the Communitization Agreement on May 1, 1996.
The
four wells at issue in this matter are operated by Maralex
and are located on the O'Hare Tract, where they are
enclosed by fences and locked gates. The four wells draw
minerals from the coal formation below the area's
surface; the production of these minerals is, under the terms
of the Communitization Agreement, allocated to all of the oil
and gas interests, including that of the Southern Ute Indian
Tribe.
On
February 11, 2013, a BLM technician contacted Maralex to gain
access to the four wells so that he could inspect them.
Maralex directed the BLM technician to Mickey O'Hare, who
in turn told the technician that the BLM did not have a right
to be on his land to inspect the wells and that “the
surface and minerals were owned by him.” The BLM
technician and a BLM law enforcement officer attempted to
inspect the wells but were blocked from doing so by a locked
gate on February 22, 2013.
On
February 26, 2013, the BLM issued four Notices of Incidents
of Noncompliance (“INCs”) to Maralex for refusing
to allow inspection of the wells. The BLM alleged in the INCs
that Maralex was in violation of 43 C.F.R. § 3162.1(b)
and gave Maralex one month to provide the BLM with access to
the wells. A BLM official wrote on the INCs, “For
corrective action, I will need a key to access the location
or be able to put a BLM lock in with it.” This demand
for corrective action is central to the issues before the
Court of Appeals and now again before this Court. Maralex and
the O'Hares sent a letter appealing the four INCs to the
BLM, which the BLM treated “as a request for State
Director's review (SDR) . . . under 43 CFR 3165.3.”
On July 9, 2013, the BLM's Deputy State Director for
Energy, Lands, and Minerals of Colorado replied to each of
Maralex's assertions in a letter. Relevant here, the BLM
cited the Federal Oil and Gas Royalty Management Act of 1982
(“FOGRMA”), 30 U.S.C. § 1711, as authorizing
the BLM to “perform the production related inspection
which necessitates physical access to the subject wells and
their associated facilities without advance notice.”
The BLM stated that “the four INCs covering denied
access to the subject wells were properly issued and are
upheld” and ordered Maralex to “provide the BLM
Tres Rios Field Office access without advance notice as
required by the INCs and the regulations.” Maralex sent
the BLM a Notice of Appeal of the BLM's July 9, 2013
decision and a Statement of Reasons for Appeal shortly
thereafter.
Some
two years later, on July 10, 2015, the IBLA issued a written
decision affirming the BLM's July 9, 2013 decision.
See (Doc. # 1-1.) The IBLA relied on FOGRMA, 30
U.S.C. §§ 1711(a) and 1718(b), as authorizing the
BLM's actions. The IBLA did not address whether
Plaintiffs were required to provide the BLM with a key to
locked gates or to permit the BLM to place its own locks on
the gates.
Plaintiffs
initiated this action against Defendants on September 1,
2015, seeking reversal of the IBLA's decision, as well as
declaratory relief. (Doc. # 1.) Relevant here, Plaintiffs
argued in their Opening Brief that, assuming arguendo that
the BLM has authority pursuant to 30 U.S.C. § 1718(b) to
conduct inspections of oil and gas facilities on fee lands
without advanced notice, “there is no statutory or
regulatory requirement that an operator or landowner provide
the BLM with a key to the landowner's locked gates or
allow the BLM to place its own locks on the landowner's
locked gates.” (Doc. # 21 at 19-21.) Plaintiffs also
argued that if such a requirement existed, it would
constitute “an unreasonable search and seizure of [the
landowner's] fee lands in violation of their rights
guaranteed by the Fourth Amendment” and would
constitute “a physical taking of [the landowner's]
property in violation of their substantive due process rights
guaranteed by the Takings Clause of the Fifth
Amendment.” (Id. at 21-24.)
The
Court held in its October 19, 2017 Order Affirming Agency
Determination that the IBLA's “finding that
[FOGRMA] authorizes [BLM] representatives to conduct
warrantless, unannounced inspections of oil wells on
Plaintiffs' fee lands was not arbitrary, capricious, or
otherwise contrary to law.” (Doc. # 31 at 1.) The Court
declined to address Plaintiffs' statutory and
constitutional concerns about the corrective action the BLM
ordered-keys to Plaintiffs' locks or access to put its
own locks on Plaintiffs' gates-because Plaintiffs
“did not present to the IBLA th[at] particular
argument” and thereby waived it for purposes of the
appeal. (Id. at 11-12.)
Plaintiffs
appealed this Court's Order Affirming Agency
Determination to the Court of Appeals on November 17, 2017.
See (Doc. # 34.)
II.
DISCUSSION
A.
THE COURT OF ...