Opinion ID: 25026
Heading Depth: 3
Heading Rank: 3

Heading: Oil and Gas Mineral Leases

Text: 22 Based on the extensive regulatory scheme involved in the administration of oil and gas leases on tribal lands, the district court opined that its authority to adjudicate the instant dispute was beyond question. Comstock, 78 F. Supp. at 595 (citing The Indian Mineral Development Act of 1982, 25 U.S.C. §§ 2101-2108, C.F.R. Part 225, The Indian Mineral Leasing Act of 1938, 25 U.S.C. §§ 396a-396d, and 25 C.F.R. §§ 211.19-.21). 5 23 The tribal council members argue that under TTEA, the district court lacked jurisdiction to hear the oil companies' declaratory judgment action because the contested oil and gas leases were mere contracts. See TTEA, 183 F.3d at 681 (The federal courts do not have jurisdiction to entertain routine contract actions involving Indian Tribes.). Moreover, they claim the district court should have exercised federal question jurisdiction over the oil companies' declaratory judgment action only if the statutory provisions provided the tribe with an unambiguous right to sue the oil companies. Because the federal statutes and regulations governing tribal oil and gas leases provide no such express right, the tribal council members contend that those provisions cannot furnish a basis for federal question jurisdiction over the oil companies' declaratory judgment action. See id. ('Federal courts have regularly taken original jurisdiction over declaratory judgment suits in which, if the declaratory judgment defendants brought a coercive action to enforce its rights, that suit would necessarily present a federal question.')(quoting Franchise Tax Bd. v. Constr. Laborers Vacation Trust, 463 U.S. 1, 20, 103 S. Ct. 2841, 77 L. Ed. 2d 420 (1983)). The tribal council members further contend that, under TTEA, the district court lacked subject matter jurisdiction because the oil companies' declaratory judgment action involved no statute that provides for an implied right of action. 24 The oil companies counter that important distinctions exist between TTEA and the case at bar. They first observe that the declaratory judgment plaintiff in TTEA asserted jurisdiction based on the inapplicability of 25 U.S.C. § 81, which requires the Secretary of Interior to approve certain contracts between Indian tribes and non-members. See TTEA, 181 F.3d at 680. This court ultimately found that assertion inadequate to establish subject matter jurisdiction. Id. at 681 (reasoning that the possibility that the Tribe might invoke § 81 as a defense to TTEA's action cannot bestow federal jurisdiction because, [u]nder the well-pleaded complaint rule, an anticipatory federal defense is insufficient for federal jurisdiction). Second, the oil companies charge that unlike the smoke shop agreements at issue in TTEA, the contested oil and gas leases are not routine contracts. They note that, although a precise definition for the term has not been established, the cases on which this court relied in TTEA to make the routine contract pronouncement each involved an action between an Indian tribe and non-members that was governed by general common law principles of contract. See Gila River Indian Cmty. v. Hennigson, Durham & Richardson, 626 F.2d 708 (9th Cir. 1980)(involving a suit for negligent design under an architectural design contract); Mescalero Apache Tribe v. Martinez, 519 F.2d 479 (10th Cir. 1975)(adjudicating a suit for breach of a construction contract). Finally, relying on Rainbow Resources, Inc. v. Calf Looking, 521 F. Supp. 682 (D. Mont. 1981), 6 the oil companies propound that the statutes regulating oil and gas mineral leases on tribal lands are indeed sufficient to provide for an implied right of action in federal courts. 25 The tribal council members' contentions are unavailing. In Tenneco Oil Co., v. Sac & Fox Tribe of Indians of Oklahoma, 725 F.2d 572, 574 (10th Cir. 1984), Tenneco Oil Company (Tenneco) acquired an interest in an oil and gas lease with the Sac and Fox Tribe. The Sac and Fox Tribe subsequently enacted several ordinances designed to impose licensing, organizational, and taxation requirements on Tenneco and attempted to cancel Tenneco's lease. Id. Tenneco sued for declaratory and injunctive relief in federal court, but the district court granted the Sac and Fox Tribe's motion to dismiss, which alleged sovereign immunity and asserted that no federal question had been raised. Id. 26 On appeal, the Tenth Circuit reasoned that Tenneco's claim had raised a federal question. Id. at 575. It noted that, by its express terms, the lease provided that it 'shall be subject to the regulations of the Secretary of Interior now or hereafter in force . . . .' Id. (citation omitted). It further opined that the Tribal Leasing Act itself defers to and recites that it is intended to supplement the supervisory power of the Secretary of the Interior and, therefore, held that federal question jurisdiction was present. Id. 27 Two years later, the court approvingly cited Tenneco during its discussion of another case that raised a jurisdictional issue regarding tribal oil and gas leases. See Superior Oil Co. v. United States, 798 F.2d 1324 (10th Cir. 1986). The Tenth Circuit emphasized its holding in Tenneco that federal question jurisdiction was present based on federal regulation of oil and gas leases. Id. at 1330. The court concluded, however, that exercise of that federal jurisdiction is proper only after all available remedies have first been exhausted in the tribal court, unless exhaustion would be futile. Id. at 1331. 28 We agree with Tenneco and Superior. The federal regulations and statutes governing tribal oil and gas leases are adequate to invoke federal question jurisdiction over the instant dispute between the Tribe and oil companies. 7 Moreover, this extensive regulatory scheme demonstrates that tribal oil and gas leases represent a very specialized subset of contracts and, therefore, compels the conclusion that they belie characterization as routine contracts. This is a significant distinction. Thus, we do not contradict the reasoning of TTEA 8 by adopting the rationale of our sister circuit and holding that the district court properly exercised jurisdiction over the oil companies' declaratory judgment action.