## F I L E D United States Court of Appeals Tenth Circuit 

### JUN 16 2004 

### PATRICK FISHER Clerk PUBLISH
UNITED STATES COURT OF APPEALS

TENTH CIRCUIT

DON QUARLES, an individual; OSAGE ENVIRONMENTAL CONSERVATION FOUNDATION, on behalf of themselves and all others similarly situated, Plaintiffs - Appellants, v. UNITED STATES OF AMERICA, ex rel. BUREAU OF INDIAN AFFAIRS; UNITED STATES OF AMERICA, ex rel. UNITED STATES ENVIRONMENTAL PROTECTION AGENCY; TEXACO, INC.; GETTY OIL CO.; PHILLIPS PETROLEUM COMPANY; SUN OIL COMPANY; LITTLE RIVER ENERGY CO.; SPESS OIL COMPANY, INC.; YARHOLA PRODUCTIONS CO.; CHAMBERS & HENDRIX OIL & GAS, INC.; JOHN DOE, 1–1000, Defendants - Appellees. No. 03-5035

Appeal from the United States District Court for the Northern District of Oklahoma (D.C. No. 00-CV-913-EA(C))
Gentner F. Drummond (Will K. Wright, Jr. with him o n the briefs), The Drummond Law Firm, Tulsa, Oklahoma, for the Plainti ffs-Appellants.- 2 -

Matthew J. Sanders (Thomas L. Sansonetti, AssistantAttorney General; Earl Salo, Acting Associate General Counsel, Alan Carpien and James Harvard, United States Environmental Protection Agency; Charles R. Babst, Jr., United States Department of the Interior; Elizabeth A. Peterson a nd Natalia T. Sorgente, United States Department of Justice, Environment & Natural Resources Division with him on the brief), United States Department of Just ice, Environment & Natural Resources Division, Washington, D.C., for the Feder al Defendants-Appellees. Rick D. Westcott (James C. Daniel with him on the b rief), Daniel, Baker & Associates, Tulsa, Oklahoma, for the Defendants-App ellees with the exception of the United States.

Before EBEL , McKAY, and LUCERO , Circuit Judges.

LUCERO , Circuit Judge.

At issue in this case is whether the district courterred in its blanket determination that assorted claims by Appellant Quarles—alleging both statutory and common law violations against various defendant s—are all subject to an administrative exhaustion requirement found in the Osage Allotment Act. We take jurisdiction pursuant to 28 U.S.C. § 1291, and REVERSE and REMAND for further proceedings.
I Don Quarles, an owner and recreational user of prop erty in Osage County, Oklahoma, brought suit against the Bureau of IndianAffairs (“BIA”), the Environmental Protection Agency (“EPA”), and severa l oil companies (“Oil1 The named Oil Company Defendants include Texaco I nc., Getty Oil Co.,

Phillips Petroleum Co., Sun Oil Co., Little River E nergy Co., Yarhola Production Co., Spess Oil Co., and Chambers & Hendrix Oil & Ga s, Inc..

2 Quarles’ amended complaint includes Osage Environ mental Conservation Foundation (“OECF”) as a named plaintiff and seeks certification as a class; however, the district court noted in its order, int er alia, that the matter had not been certified as a class action, and that there “i s some issue as to whether [OECF] has standing to sue.” Quarles v. United States , No. 00–CV–0913–EA (C), at 4–5 (N. D. Okla. filed Jan. 31, 2003) (Dist . Ct. Order).

3 Quarles argues that the unlawful release and disc harge of hazardous substances violates OPA, 33 U.S.C. § 2702, CWA, 33 U.S.C. §1321, CERCLA 42 U.S.C. §§ 9603, 9604, 9607, as well as the common l aw doctrines of negligence and nuisance.

4 Quarles relies on the citizen suit provisions of CERCLA, 42 U.S.C. § 9659, the Safe Drinking Water Act, 42 U.S.C. § 30 0j-8, and CWA, 33 U.S.C. § 1365. - 3 - Company Defendants”) 1 for alleged waste water leaks in 1998 and 1999 fro m oil production. Specifically, Quarles claims that the Oil Company Defendants unlawfully released oil, oil products, hazardous su bstances, and pollutants, damaging his property by causing salt scarring and advanced soil erosion, and contaminating the soil and water with radioactive m aterials. The waste water leaks also allegedly migrated or will migrate to Sk iatook Lake, the Arkansas River, and other nearby waters, contaminating them. These alleged releases prompted Quarles 2 to file suit against the Oil Company Defendants, the BIA, and the EPA. Quarles alleges various statutory and common law violations 3 in addition to citizen suit claims 4 under the- 4 -

Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), 42 U.S.C. § 9601 et seq ., the Oil Pollution Act of 1990 (OPA), 33 U.S.C.A. §§ 2702, 2706, and the Clean Water Act (CWA), 33 U.S.C. § 1251, et
seq ., for loss of enjoyment of natural resources and t he BIA and EPA’s alleged failure to remediate the pollution. Quarles also b rings negligence claims under the Federal Tort Claim Act (FTCA), 28 U.S.C. § 1346 (b), asserting that the EPA and BIA violated their nondiscretionary duties to a ssess natural resource damage to Quarles’ and other class members’ property, and that the BIA violated the “Indian Trust Doctrine” through its historic failur e to administer federal environmental statutes. In addition, Quarles alleg es state and common law nuisance and negligence claims against the Oil Comp any Defendants. The district court concluded that the Osage Allotme nt Act of June 28, 1906, 34 Stat. 539, as amended by Act of March 2, 1929, c h. 493, § 1, 45 Stat. 1478–79, required Quarles to submit to arbitration before fi ling suit for damages resulting from oil and gas operations on the Osage Reservatio n. Because Quarles had not made a request for arbitration, the district court dismissed without prejudice Quarles’ complaint for failure to exhaust administr ative remedies. Quarles appeals.- 5 - II We review a district court’s dismissal on exhaustio n grounds for an abuse of discretion. United States v. Tsosie , 92 F.3d 1037, 1041 (10th Cir. 1996). Erroneous conclusions of law or clearly erroneous f indings of fact constitute an abuse of discretion. Kiowa Indian Tribe of Okla. v . Hoover , 150 F.3d 1163, 1165 (10th Cir. 1998). Questions regarding the applicab ility and construction of federal law are reviewed de novo. United States v. Davis , 339 F.3d 1223, 1226 (10th Cir. 2003); Foutz v. United States , 72 F.3d 802, 804 (10th Cir. 1995); United States v. Diaz , 989 F.2d 391, 392 (10th Cir. 1993). Congress passed the Osage Allotment Act (“Act”), 34 Stat. 539, in 1906 in part for the purpose of dividing the land in the Os age Reservation among the members of the Osage Tribe. Coincidentally, the Ac t established a subsurface mineral estate trust, held by the United States, on behalf of the Osage Tribe. Id. at § 2.7. The Secretary of the Interior is directe d to manage oil and gas extraction leases, with the royalties earned from the leases r eserved to the Osage Tribe. Id. In 1929 the Act was amended, establishing a mandato ry administrative procedure for surface owners or lessees of Osage Re servation lands in order to address claims under the Act for damages caused by oil or gas extraction on the Osage Reservation. Act of March 2, 1929, ch. 493, § 1, 45 Stat. 1478–79. Surface owners or lessees must submit to arbitratio n claims under the Act- 6 -

resulting from oil or gas extraction, id. , and the Secretary of the Interior has promulgated a detailed arbitration procedure in ord er to recover damages. See 25 C.F.R. § 226.21 (2003). In its decision, the district court did not disting uish between the claims against the Oil Company Defendants and the Federal Agency Defendants; nor did the court separately analyze the claims Quarles rai sed under various federal environmental statutes, the FTCA, the Indian Trust Doctrine, and the assorted common law claims. Instead the court reasoned thatthe Act is “a special law for Osage land, and that law blankets [Quarles’] claims .” Thus it concluded, because the specific controls the general, the Act’s mandat es and the regulations promulgated thereunder applied to all of Quarles’ n umerous claims. Quarles v. United States , No. 00–CV–0913–EA (C), at 4, 5 (N. D. Okla. filed Jan. 31, 2003). Accordingly, the district court granted the Little River Energy Co. and Yarhola Production Co.’s joint motion to dismiss the compla int for failure to exhaust administrative remedies. As a result of the dismis sal, the pending motions to dismiss filed by the remaining Oil Company Defendants and the Federal Defendants were deemed by the district court to be moot. In order to determine if the district court erred i n its dismissal of Quarles’ complaint, we must interpret § 2 of the Osage Allot ment Act. As with all statutory interpretation cases, we begin with the p lain language of the Act. New- 7 -

Mexico Cattle Growers Assoc. v. United States Fish and Wildlife Service , 248 F.3d 1277, 1281 (10th Cir. 2001). In analyzing the language of the statute, we attempt to “give effect to its meaning,” Schusterma n v. United States , 63 F.3d 986, 989 (10th Cir. 1995), and construe the words o f the statute in their ordinary sense, Chickasaw Nation v. United States , 208 F.3d 871, 876 (10th Cir. 2000). When the statute’s language is clear, only rarely i s that language not controlling. Ramah Navajo Chapter v. Lujan , 112 F.3d 1455, 1460 (10th Cir. 1997). Moreover, we give effect, if possible, to every wor d of the statute. Lamb v. Thompson , 265 F.3d 1038, 1051 (10th Cir. 2001) (quoting Ben nett v. Spear , 520 U.S. 154, 173 (1997)); Finley v. United States , 123 F.3d 1342, 1347 (10th Cir. 1997) (noting that we must construe statutes “in su ch a manner that every word has some operative effect”); United States v. Wickl und , 114 F.3d 151, 154 (10th Cir. 1997) (citing Moskal v. United States , 498 U.S. 103, 109–10 (1990).) Section 2 of the Act as pertinent to the instant matter states: The bona fide owner or lessee of the surface of the land shall be compensated, under rules and regulations prescribedby the Secretary of the Interior in connection with oil and gas mining oper ations, for any damage that shall accrue after the passage of this Act as a result of the use of such land for oil or gas mining purposes, or out of dama ges to the land or crops thereon, occasioned thereby . . . . All claims fordamages arising under this section shall be settled by arbitration under rules and regulations to be prescribed by the Secretary of the Interior . . . . Arbitration, or a bona fide offer in writing to arbitrate, shall constitute con ditions precedent to the right to sue for such damages . . . .- 8 -

Osage Allotment Act of June 28, 1906, 34 Stat. 539, as amended by Act of March 2, 1929, ch. 493, § 2, 41 Stat. 1249. Our reading of the Act differs from that of the dis trict court. Under § 2 of the Act, it is clear that claims by owners or lesse es of surface land for damages resulting from oil and gas mining operations “arisi ng under this section” are to be submitted to arbitration; given the plain language, however, it appears likewise clear that this requirement is limited to claims “a rising under” § 2 of the Act. In the instant case, Quarles raised many claims, none under § 2 of the Act, and in dismissing his complaint, the district court did no t explain how or why any of the numerous claims “ar[ose] under” the Act. We cannot agree with the district court’s finding t hat the Osage Allotment Act blankets all of Quarles’ varied claims. Accord ingly, we REVERSE the district court’s dismissal of Quarles’ amended comp laint for failure to exhaust his administrative remedies under the Act, and REMAND to the district court for further proceedings.