Court Opinion

ID: 4360231
Source: CourtListenerOpinion
Date Created: 2019-01-18 17:00:24.457511+00
Date Added: 2024-06-11T14:46:21.796536
License: Public Domain

FILED
                                                                    United States Court of Appeals
                                       PUBLISH                              Tenth Circuit

                      UNITED STATES COURT OF APPEALS                     January 18, 2019

                                                                       Elisabeth A. Shumaker
                            FOR THE TENTH CIRCUIT                          Clerk of Court
                        _________________________________

 MARALEX RESOURCES, INC., a
 Colorado corporation; ALEXIS M.
 O'HARE; MARY C. O'HARE,

       Plaintiffs - Appellants,

 v.                                                        No. 17-1421

 DAVID BARNHARDT, in his official
 capacity as Acting Secretary of the United
 States Department of the Interior; THE
 UNITED STATES DEPARTMENT OF
 INTERIOR; THE UNITED STATES OF
 AMERICA,

       Defendants - Appellees.
                      _________________________________

                     Appeal from the United States District Court
                             for the District of Colorado
                          (D.C. No. 1:15-CV-01893-CMA)
                       _________________________________

William E. Zimsky, Abadie & Schill, PC, Durango, Colorado, appearing for the
Appellants.

Tamara N. Rountree, Attorney, Environmental and Natural Resources Division, United
States Department of Justice, Washington, DC (Jeffrey H. Wood, Acting Assistant
Attorney General, and Eric Grant, Deputy Assistant Attorney General, United States
Department of Justice, Washington, DC; William Lazarus and John L. Smeltzer,
Attorneys, Environmental and Natural Resources Division, United States Department of
Justice, Washington, DC; and Philip C. Lowe, Rocky Mountain Regional Solicitor’s

      
       In accordance with Fed. R. App. P. 43(c)(2), David Barnhardt is substituted
for Ryan Zinke, as the respondent in this action.
Office, Department of the Interior, Lakewood, Colorado, with her on the brief), appearing
for the Appellee.
                        _________________________________

Before BRISCOE, LUCERO, and MATHESON, Circuit Judges.
                   _________________________________

BRISCOE, Circuit Judge.
                     _________________________________

      Plaintiffs Maralex Resources, Inc. (Maralex), Alexis O’Hare and Mary C.

O’Hare (the O’Hares) filed this action against the Secretary of the Department of the

Interior (Secretary), the Department of the Interior, and the United States seeking

review of a decision of the Interior Board of Land Appeals (IBLA) upholding four

Notices of Incidents of Noncompliance that were issued by the Bureau of Land

Management’s (BLM’s) Tres Rios Field Office to Maralex for failing to allow a

BLM representative to access certain oil and gas lease sites operated by Maralex on

land owned by the O’Hares. The district court affirmed the IBLA’s decision.

Plaintiffs now appeal.

      Exercising jurisdiction pursuant to 28 U.S.C. § 1291, we conclude that the

BLM, in issuing the Notices of Incidents of Noncompliance, lacked authority to

require plaintiffs to provide BLM with a key to a lease site on privately-owned land

or to allow the BLM to install its own locks on the gates to such lease site.

Consequently, we reverse and remand to the district court with instructions to enter

judgment in favor of plaintiffs on this “key or lock” issue.

                                           2
                                                I

                            The Parcel and its component Tracts

          At issue in this case is a 320-acre parcel of land (the Parcel) that is located in

the S1/2 of Section 35, Township 34 South, Range 7 West in La Plata County in

southwestern Colorado. The Parcel, which is comprised of 240 acres of private

surface/mineral estate and 80 acres of Indian surface/mineral estate, lies over the

Ignacio Blanco gas field and the Fruitland coal formation.

          The O’Hares own the surface and mineral estate in a 120-acre tract of land in

the SW1/4SE1/4 and E1/2SW1/4 of the Parcel (the O’Hare Tract). The Southern Ute

Indian Tribe (Tribe) holds the surface and mineral estate in the W1/2SW1/4 of the

Parcel (the Tribe Tract). The remainder of the Parcel (the Remainder Tract)—the

N1/2SE1/4 and SE1/4SE1/4—is privately-owned by the O’Hare family, J. Elmer and

Wanda Lee Kenner, and Irma Rowse.

                                   The leases of the Tracts

          On June 6, 1974, the Tribe, acting pursuant to the Indian Mineral Leasing Act

of 1938, 25 U.S.C. §§ 396a-396g (2012), issued to Sun Oil Company an Indian oil

and gas lease, Mining Lease Contract No. MOO-C-1420-1531, for its mineral estate

in the Tribe Tract. Amoco Production Company (Amoco) later took over as the

lessee.

                                               3
          On April 28, 1995, the O’Hares issued to Maralex1 a private oil and gas lease

for the O’Hare Tract. SG Interests III, Ltd. (SG III) later joined Maralex as co-

lessee.

          The O’Hares, Kenners, and Rowse issued three private oil and gas leases

covering the Remainder Tract. SG III and Maralex became the lessees of those

leases.

                              The Communitization Agreement

          In 1996, all of the parties (SG III, Maralex, the Tribe, the O’Hares, Kenners,

and Rowe) “communitized” their coal and gas interests in the Parcel under the terms

of a written agreement. More specifically, in a written Communitization Agreement

(CA) dated May 1, 1996, the parties agreed to develop and operate the Parcel “as an

entirety, with the understanding and agreement . . . that all Communitized Substances

produced therefrom [would] be allocated among the leaseholds comprising said area

in the proportion that the acreage interest of each leasehold bears to the entire

acreage interest committed to [the CA].” Aplt. App. at 3. The CA further stated, in

pertinent part, that “[t]he royalties payable on Communitized Substances allocated to

the individual leases comprising the [Tract] . . . shall be determined and paid on the

basis prescribed in each of the individual leases.” Id.

          Two other provisions of the CA are relevant to this case. First, the CA stated:

“This agreement shall be subject to all applicable Federal and State laws or executive

          1
       According to the record on appeal, Mary O’Hare is the president of Maralex.
Aplt. App. at 8.
                                              4
orders, rules and regulations . . . .” Id. at 4. In addition, the CA stated: “It is agreed

between the Parties Hereto that the Secretary of the Interior, or his duly Authorized

Officer, shall have the right of supervision over all operations within the

Communitized Area to the extent same includes the oil and gas lease(s) under which

the . . . Tribe is lessor and insofar as governed by applicable oil and gas regulations

of the Department of Interior.” Id. at 5.

       The CA was approved by the Tribe and the Bureau of Indian Affairs (BIA)

effective May 1, 1996.

                           The wells operating under the CA

       There are four wells associated with the CA and arising from the underlying

leases, all of which are operated by Maralex. The four wells are physically situated

in two areas on the O’Hares’ private surface estate in the O’Hare Tract. Each such

area is enclosed by a fence and a locked gate. All four of the wells are producing

“both fee and Tribal minerals” from the Fruitland coal formation. Id. at 32.

Although the oil and gas at issue is produced from private mineral interests and from

wells situated on private surface estates, such production is, under the terms of the

CA, allocated to all of the oil and gas interests, including that of the Tribe, as the

owner of record title to the mineral estate in the Tribe’s Section of the Parcel.

                           BLM’s attempt to inspect the wells

       On February 11, 2013, Gabriel Trujillo, a Petroleum Engineering Technician

employed by the BLM, sent an email to Maralex stating that he planned to inspect the

four wells. On February 12, 2013, Christi Reid, a Maralex employee, responded by

                                             5
email, noted that the wells were situated “on Mickey O’Hare’s property,” and stated

that she envisioned “problems with him granting access” to Trujillo. Id. at 18. One

day later, on February 13, 2013, Reid emailed Trujillo again, stating: “I talked to

Mickey O’Hare and let him know that you want to inspect the . . . wells. He wants to

talk to you directly . . . .” Id.

       On February 22, 2013, Trujillo drove to the Parcel in an attempt to examine

the wells. Upon arrival, Trujillo found that there was a locked gate that prevented

him from examining the wells. That same day, Trujillo spoke by phone with Mickey

O’Hare. O’Hare informed Trujillo that he had no right to inspect the wells because

O’Hare owned both the surface and mineral rights.

                            BLM’s issuance of INCs to Maralex

       On February 26, 2013, Trujillo completed four official BLM forms entitled

“Notice of Incidents of Noncompliance” (INC). Id. at 23. The INCs noted that

Trujillo had attempted unsuccessfully to access the wells on February 22, 2013. The

INCs, which were sent to Maralex, alleged that Maralex was in violation of 43 C.F.R.

§ 3162.1(b), and they gave Maralex until March 25, 2013, to provide Trujillo and the

BLM with access to the wells. In the “Remarks” section of the INCs, Trujillo stated:

“For corrective action, I will need a key to access the location or be able to put a

BLM lock in with it.” Id. at 24.

                       Maralex’s administrative appeal of the INCs

       On March 27, 2013, a law firm representing Maralex and the O’Hares sent a

letter to BLM appealing the four INCs. The letter asserted that the BLM had

                                            6
misinterpreted its authority to inspect oil and gas wells located on private land. More

specifically, the letter asserted that the BLM “ha[d] limited authority to inspect

facilities on Fee Tracts” and that the applicable regulations “only allow[ed] annual

inspections” of such wells. Id. at 33. The letter also asserted that “there [wa]s no

statutory authority nor . . . any legitimate justification for giving the BLM unbridled

discretion to search the facilities at issue in order to ensure that there [wa]s adequate

site security measurement and that Maralex [wa]s properly measuring the production

and operation of the wells.” Id. “Thus,” the letter asserted, “BLM’s request for a

key to any gates to conduct inspections [wa]s violative of Maralex’s constitutionally

guaranteed protection against unreasonable searches under the Fourth Amendment.”

Id. Lastly, the letter asserted that “there [wa]s no legal authority for the BLM’s

demand for unfettered access to the O’Hare’s surface.” Id. And the letter argued that

“[i]f the BLM was entitled to unfettered right to access O’Hare’s property under

Section 3162.1(b), it would constitute a regulatory taking of O’Hare’s property in

violation of O’Hare’s property rights as guarantee [sic] by the takings clause of the

Fifth Amendment.” Id. at 34.

      On April 10, 2013, the BLM notified Maralex’s counsel that it was treating the

March 27, 2013 letter “as a request for State Director’s review (SDR) . . . under 43

CFR 3165.3.” Id. at 88.

      On July 9, 2013, the BLM’s Deputy State Director, Energy, Lands, and

Minerals, Colorado State Office, sent a letter to Maralex’s counsel responding to

each point raised by Maralex’s counsel. The letter disagreed that the applicable

                                            7
regulations allowed only for “annual inspections for fee tracts in a CA.” Id. at 90.

Rather, the letter asserted, the “inspected annually” language in the regulation merely

established a minimum standard as to what was to be accomplished. Id. As for its

authority to conduct inspections of the wells, the BLM noted that

       Section 101(b) of the Federal Oil and Gas Royalty Management Act of
       1982 (FOGRMA) provides that, “Authorized and properly identified
       representatives of the Secretary may without advance notice, enter
       upon, travel across and inspect lease sites on Federal or Indian lands
       and may obtain from the operator immediate access to secured facilities
       on such lease sites, for the purpose of making any inspection or
       investigation for determining whether there is compliance with the
       requirements of the minearal [sic] leasing laws and this Act.”

Id. at 90-91 (italics in original). The BLM in turn stated that “[s]ince the subject

wells’ production is subject to a federal CA and the government receives a portion of

the production’s royalty, the BLM is responsible for assuring production

accountability” and that “[t]his includes inspections for site security, proper handling,

measurement and reporting of production and protection against product theft.” Id. at

91. “Therefore,” the letter stated, “BLM must be allowed to perform the production

related inspection which necessitates physical access to the subject wells and their

associated facilities without advance notice.” Id. In a section entitled “Decision,”

the letter stated:

              Upon review, the four INCs covering denied access to the subject
       wells were properly issued and are upheld. The stay of enforcement
       action granted in our April 10, 2013, letter to Maralex is hereby lifted.

             Maralex must provide the BLM Tres Rios Field Office access
       without advance notice as required by the INCs and the regulations. If
       Maralex chooses not to provide access as required, Maralex will be
       subject to assessments pursuant to 43 CFR 3163.1. In addition further

                                            8
       non-compliance shall result in proposed civil penalties pursuant to 43
       CFR 3163.2(e)(1).

Id. at 93.

       On August 20, 2013, Maralex’s counsel sent the BLM a notice of appeal of the

July 9, 2013 decision. Id. at 97. Maralex’s counsel followed that up by filing with

the IBLA a Statement of Reasons for Appeal. Id. at 98. The Statement of Reasons

argued that the regulation relied on by the BLM, 43 C.F.R. § 3162.1(b), applies only

“to Federal and Indian lease sites,” and that “there is no statutory authority to support

the BLM’s suggestion that it has the right to conduct warrantless searches of

Maralex’s facilities.” Id. at 113. “Thus,” the Statement of Reasons asserted, “BLM’s

request violates Maralex’s right not to be subject to unreasonable searches as

guaranteed by the Fourth Amendment.” Id. Lastly, the Statement of Reasons

asserted that “if the BLM does have the statutory and regulatory authority to access

the O’Hare’s Fee Tract at any time, such authority would constitute a regulatory

taking of the O’Hare’s property in violation of their due process rights under the

Fifth Amendment.” Id.

       On July 10, 2015, the IBLA issued a written decision affirming the BLM’s

July 9, 2013 decision. In doing so, the IBLA did not address whether plaintiffs were

required to provide the BLM with a key or allow the BLM to install its own locks on

Maralex’s gates, nor did the IBLA address plaintiffs’ constitutional arguments.

                            The district court proceedings

                                            9
      On September 1, 2015, Maralex and the O’Hares initiated these proceedings

by filing a complaint in federal district court against the Secretary, the Department of

the Interior, and the United States. The complaint sought reversal of the IBLA’s

decision, as well as declaratory relief.

      On October 19, 2017, the district court issued an order affirming the IBLA’s

determination. Plaintiffs now appeal.

                                           II

      Plaintiffs raise two issues on appeal: (1) whether they waived their argument

that the BLM lacked authority to require them to provide the BLM with keys to the

locked gates on the O’Hares’ private property or, alternatively, to allow the BLM to

place its own locks on those gates; and (2) whether the BLM has statutory or

regulatory authority to require plaintiffs to provide the BLM with keys to locked

gates on privately-owned lands or, alternatively, to allow the BLM to place its own

locks on such gates.2 As discussed in more detail below, whether plaintiffs waived

their argument is a close question, but assuming they did, we nevertheless exercise

discretion to address the underlying issue. We in turn conclude that BLM lacked

authority to impose the “key or lock” requirement.

              Did plaintiffs waive their argument that the BLM lacked authority
          to require them to provide keys to their locked gates or to allow the
                       BLM to place its own locks on those gates?

      2
        Until recently, plaintiffs asserted three additional issues on appeal, including
Fourth and Fifth Amendment challenges to the inspection protocol advocated by the
BLM. At oral argument, however, plaintiffs abandoned those issues. Consequently,
we do not address them.
                                           10
       As noted, plaintiffs first argue that the district court erred in concluding that

they waived their argument that the BLM lacked authority to require them to provide

the BLM with keys to locked gates or to allow the BLM to place its own locks on

those gates. The district court concluded that plaintiffs “did not present to the IBLA

this particular argument that the BLM’s corrective action exceeded its authority.”

Aplt. App. at 207-08. The district court in turn concluded “that Plaintiffs waived this

argument for purposes of this appeal and [it] decline[d] to consider it.” Id. at 208.

       To resolve this issue, we begin by turning to the record. Plaintiffs, in their

initial appeal of the INCs, “claim[ed] that BLM ha[d] no statutory authority or

legitimate justification giving the BLM unbridled discretion to search the subject

well facilities in order to ensure site security and proper measurement” and that,

consequently, “the BLM’s request for a key to any gates to conduct inspections [wa]s

in violation of Maralex’s constitutionally guaranteed protection against unreasonable

searches under the Fourth Amendment.” Aplt. App. at 90.

       In their appeal to the IBLA from the State Director’s decision denying their

initial appeal, plaintiffs argued, in pertinent part, that “there [wa]s no statutory

authority nor . . . any legitimate justification for giving the BLM unbridled discretion

to search the facilities at issue at any time and without notice,” and that,

consequently, “BLM’s request for a key to any gates to conduct unannounced

inspections [wa]s violative of Maralex’s constitutionally guaranteed protection

against unreasonable searches under the Fourth Amendment.” Id. at 102. Plaintiffs

further argued that “there [wa]s no statutory support for warrantless, unannounced

                                            11
inspections of [the] Fee Tracts,” and thus the BLM could not “rely on” its own

regulations “for conducting unannounced, warrantless searches of the sites at issue.”

Id. at 107–08. Plaintiffs also argued that “Paragraph 13” of the CA “does not provide

the BLM with the unlimited right to conduct inspections without advance notice nor

does it form the basis for giving the BLM a key to have unlimited physical access to

the wells and related facilities on Fee Tracts, which is applicable only to Federal and

Indian lease sites.” Id. at 112. Lastly, the plaintiffs challenged the State Director’s

rejection of “the O’Hare’s [sic] assertion that forcing them to supply the BLM with a

key to a lock to allow the BLM to have physical access to their surface property for

unannounced inspections of Maralex’s wells and related facilities located on the

O’Hare’s [sic] surface constitute[d] an unauthorized takings under the Fifth

Amendment.” Id. at 112-13.

      In our view, it is a close question whether plaintiffs presented their argument

to the IBLA that BLM exceeded its statutory and regulatory authority by requiring a

key or lock in the INCs. On the one hand, plaintiffs clearly argued, as part of their

Fourth Amendment challenge, that the BLM lacked both statutory and regulatory

authority to impose the key/lock requirement. On the other hand, plaintiffs expressly

asserted before the IBLA that it lacked authority to address their Fourth Amendment

challenge and they asked the IBLA not to consider it.

      Even assuming, however, that plaintiffs failed to properly present to the IBLA

their argument that the key/lock requirement exceeded the BLM’s statutory and

regulatory authority, we nevertheless choose to exercise our discretion to address that

                                           12
issue.3 See U.S. Nat’l Bank of Oregon v. Indep. Ins. Agents of Am., Inc., 508 U.S.
439, 447–48 (1993) (discussing authority of appellate court to address potentially

waived issue). We have held, albeit in a slightly different context, that we may

depart from general waiver principles “particularly when we are presented with a

strictly legal question, the proper resolution of which is beyond doubt or when

manifest injustice would otherwise result.” Daigle v. Shell Oil Co., 972 F.2d 1527,

1539 (10th Cir. 1992). Further, in considering whether to address an alternative

theory, we take into account (1) “whether the ground was fully briefed and argued

here and below,” (2) “whether the parties have had a fair opportunity to develop the

factual record,” and (3) “whether, in light of factual findings to which we defer or

uncontested facts, our decision would involve only questions of law.” Elkins v.

Comfort, 392 F.3d 1159, 1162 (10th Cir. 2004) (citations omitted).

      In this case, the issue of the BLM’s statutory and regulatory authority has been

fully briefed and argued in this court by both sides. Further, the factual record is

essentially undisputed and, thus, we are presented with only a question of law.

Lastly, and perhaps most importantly, the BLM has indicated its intention to enforce

the key/lock requirement at the conclusion of this litigation. On October 22, 2018,

      3
         We are not aware of, nor has the BLM cited to, any authority holding that
preservation of the issue before the IBLA is a jurisdictional prerequisite. See Air
Courier Conference of Am. v. Am. Postal Workers Union AFL-CIO, 498 U.S. 517,
523 n.3 (1991) (“The judicial review provisions of the APA are not jurisdictional . . .
.”); Chissoe v. Zinke, 725 F. App’x 614, 621 (10th Cir. 2018) (stating that “judicial
exhaustion requirements under the APA are prudential only.”); Vietnam Veterans of
Am. v. Shinseki, 599 F.3d 654, 661 (D.C. Cir. 2010) (“We think the proposition that
the review provisions of the APA are not jurisdictional is now firmly established.”).
                                           13
we issued an order to show cause directing the parties to address, in pertinent part,

the question of whether the BLM was continuing to require Maralex to provide the

BLM with a key to the lock on the O’Hares’ gate or to allow the BLM to place its

own lock on the gate. On December 18, 2018, defendants responded that, indeed,

“BLM continues to require Maralex to either provide the agency with a key to the

lock on the O’Hares’ gate or allow BLM to place its own lock on the gate.” Aple.

Resp. to Order to Show Cause at 2. Defendants asserted that, “[i]n the absence of

compliance with the [key/lock requirement] in the INCs, Mr. O’Hare may refuse

BLM access to the wells at any time, as he did in February 2013 (which led to BLM’s

issuance of the INCs).” Id. at 3. Thus, despite the fact that the INCs were issued

nearly six years ago, it is clear that the BLM intends to enforce the key/lock

requirement once this litigation ends. For this reason, we conclude that the interests

of justice are best served if we address the merits of plaintiffs’ argument that BLM

lacks statutory and regulatory authority to impose the key/lock requirement.

             Does the BLM have authority to require a landowner or operator
       to provide the BLM with keys to the landowner’s locked gates or allow
             the BLM to place its own locks on the landowner’s gates?

      We now turn to the merits of plaintiffs’ argument. Plaintiffs assert that, even

assuming some statutory or regulatory authority exists for the BLM to conduct

inspections on fee lands without advanced notice, “there are limits to such

inspections.” Aplt. Br. at 40. Plaintiffs point to the language of 30 U.S.C. § 1718 to

support their position. Section 1718, plaintiffs note, “limits the right to enter upon,

travel across and inspect lease sites to not only ‘authorized’ representatives of the

                                           14
Secretary, but to representatives that are ‘properly identified.’” Id. And, plaintiffs

argue, “[b]ecause the landowner and the operator have the right to ensure that the

representative is properly identified, the BLM cannot force either the landowner or

the operator to provide a key to the landowner’s locked gates or be forced to allow

the BLM to place a lock on the landowner’s locked gates since by doing so neither

the landowner nor operator will be able to check the identification of the person(s)

entering upon, travelling across, and/or inspecting the facilities.” Id. at 40-41.

Lastly, plaintiffs argue that “[a]ll that is required of the operator under Section

1718(b) is to provide ‘immediate access to secured facilities’ to a properly identified

representative of the Secretary.” Id. at 41. This means, plaintiffs argue, that “if the

operator is on site at the time of the inspection, it is required to open any gates or

otherwise secured facilities” and “[i]f the operator is not on the lease site when the

authorized, properly identified representative arrives at the lease site, then the

operator is required to go to the lease site and provide immediate access.” Id.

       Defendants argue, in response, that “the INCs’ corrective action requiring

Plaintiffs to provide BLM with key or lock access is permissible under the statute and

the regulations.” Aple. Br. at 39. In particular, defendants assert that “FOGRMA

and its implementing regulations provide that any person who fails to allow

authorized inspections is liable for penalties, which may not be applied if the liable

person takes the prescribed corrective action within the required timeframe.” Id.

       a) Standard of review

                                            15
       Although this is an appeal from the district court’s decision, we accord no

particular deference to that decision. Instead, we conduct our own independent

review of the agency’s decision. Exxon Mobil Oil Corp. v. Norton, 346 F.3d 1244,

1248 (10th Cir. 2003). Under the Administrative Procedures Act, we will “set aside

agency’s action if it is arbitrary, capricious, an abuse of discretion, or otherwise not

in accordance with law.” Utah Envtl. Cong. v. Bosworth, 439 F.3d 1184, 1188 (10th

Cir. 2006) (internal quotations omitted); see 5 U.S.C. § 706(2)(A).

       When reviewing an agency’s interpretation of a statute it administers, we first

determine whether Congress has directly spoken to the precise issue. See Chevron,

U.S.A., Inc. v. Nat. Res. Def. Council, Inc., 467 U.S. 837, 842 (1984); Cliffs Synfuel

Corp. v. Norton, 291 F.3d 1250, 1257 (10th Cir. 2002). “If the intent of Congress is

clear, that is the end of the matter; for the court . . . must give effect to the

unambiguously expressed intent of Congress.” Chevron, 467 U.S. at 842–43. If,

however, the statute is silent or ambiguous on the issue in question, we do not impose

our own construction on the statute, but rather ascertain whether the agency’s

interpretation is a permissible construction of the statute. Id. at 843. If it is, we defer

to that interpretation. Id. at 844. Our review of federal regulations is similar. “In the

usual course, when an agency is authorized by Congress to issue regulations and

promulgates a regulation interpreting a statute it enforces, the interpretation receives

deference if the statute is ambiguous and if the agency’s interpretation is reasonable.”

Encino Motorcars, LLC v. Navarro, 136 S. Ct. 2117, 2124 (2016). “This principle is

implemented by the two-step analysis set forth in Chevron.” Id. “At the first step, a

                                             16
court must determine whether Congress has ‘directly spoken to the precise question

at issue.” Encino, 136 S. Ct. at 2124 (quoting Chevron, 467 U.S. at 842). “If the

intent of Congress is clear, that is the end of the matter; for the court, as well as the

agency, must give effect to the unambiguously expressed intent of Congress.”4

Chevron, 467 U.S. at 842-43. “If not, then at the second step the court must defer to

the agency’s interpretation if it is ‘reasonable.’” Encino, 136 S. Ct. at 2125 (quoting

Chevron, 467 U.S. at 844). “It is well established that an agency’s interpretation

need not be the only possible reading of a regulation—or even the best one—to

prevail.” Decker v. Nw. Envtl. Def. Ctr., 568 U.S. 597, 613 (2013). “When an

agency interprets its own regulation, the Court, as a general rule, defers to it unless

that interpretation is plainly erroneous or inconsistent with the regulation.” Id.

(quotation marks omitted).

       b) Analysis

       We begin our analysis by briefly examining the overall statutory and

regulatory scheme for inspections of oil and gas lease sites that implicate Indian

       4
         At the first step of the Chevron analysis, “we must giv[e] all undefined terms
their ordinary meaning.’” Nat’l Credit Union Admin. Bd. v. Nomura Home Equity
Loan, Inc., 764 F.3d 1199, 1227 (10th Cir. 2014) (quoting Fed. Hous. Fin. Agency v.
UBS Americas Inc., 712 F.3d 136, 141 (2d Cir. 2013)). “We may consult a
dictionary to determine the plain meaning of a term” and may “also take into account
the broader context of the statute as a whole when ascertaining the meaning of a
particular provision.” Conrad v. Phone Directories Co., 585 F.3d 1376, 1381 (10th
Cir. 2009) (quotation marks and citation omitted).
                                            17
mineral interests. In § 1702 of FOGRMA, Congress set forth the following

definitions that are relevant to understanding the substantive provisions of the Act:

      (1) “Federal land” means all land and interests in land owned by the
      United States which are subject to the mineral leasing laws, including
      mineral resources or mineral estates reserved to the United States in the
      conveyance of a surface or nonmineral estate;
      ···
      (3) “Indian lands” means any lands or interest in lands of an Indian tribe
      or an Indian allottee held in trust by the United States or which is
      subject to Federal restriction against alienation or which is administered
      by the United States pursuant to section 14(g) of Public Law 92-203 [43
      USC § 1613(g)], as amended, including mineral resources and mineral
      estates reserved to an Indian tribe or an Indian allottee in the
      conveyance of a surface or nonmineral estate, except that such term
      does not include any lands subject to the provisions of section 3 of the
      Act of June 28, 1906 (34 Stat. 539) [unclassified];
      ···
      (5) “lease” means any contract, profit-share arrangement, joint venture,
      or other agreement issued or approved by the United States under a
      mineral leasing law that authorizes exploration for, extraction of, or
      removal of oil or gas;
      (6) “lease site” means any lands or submerged lands, including the
      surface of a severed mineral estate, on which exploration for, or
      extraction or removal of, oil or gas is authorized pursuant to a lease;
      ···

30 U.S.C. § 1702(1), (3), (5), (6).

      In our view, the plain language of the statutory definition of “lease” includes

communitization agreements approved by the United States, such as the one at issue

in this case. More specifically, a communitization agreement is a “contract” or

“other agreement” that, depending upon the circumstances, has been “approved by

the United States under a mineral leasing law,” i.e., federal law governing mineral

rights on Indian and trust land, “that authorizes exploration for, extraction of, or

                                           18
removal of oil or gas.”5 Thus, the statutory definition of “lease site” necessarily

includes any lands, including privately-owned lands, on which exploration for and

extraction of oil and gas is occurring pursuant to a communitization agreement.

      Section 1718 of FOGRMA, entitled “Inspection,” provides in pertinent part as

follows:

      (b) Inspection of lease sites for compliance with mineral leasing laws
      and 30 USCS §§ 1701 et seq. Authorized and properly identified
      representatives of the Secretary may without advance notice, enter upon,
      travel across and inspect lease sites on Federal or Indian lands and may
      obtain from the operator immediate access to secured facilities on such
      lease sites, for the purpose of making any inspection or investigation for
      determining whether there is compliance with the requirements of the
      mineral leasing laws and this Act. The Secretary shall develop
      guidelines setting forth the coverage and the frequency of such
      inspections.

30 U.S.C. §1718(b). Although § 1718(b) incorporates the statutory phrase “lease

sites,” it proceeds to limit the scope of that phrase by authorizing BLM

representatives to, “without advance notice, enter upon, travel across and inspect”

lease sites that exist “on Federal or Indian lands,” i.e., non-fee lands owned by the

United States or held in trust by the United States for a tribe, and that arise out of

      5
         Neither the IBLA nor the BLM have expressly adopted this broad definition
of “lease.” Instead, the IBLA interpreted the identically-worded regulatory definition
of the term “lease site” to include more than “Federal or Indian lease sites,” and also
concluded that the identically-worded regulatory definition of the term “lease” was
not incorporated into the regulatory phrase “lease site.” Aplt. App. at 170, 174. We
reject this latter conclusion as inconsistent with the statutory language and normal
rules of statutory construction. In particular, “it is a normal rule of statutory
construction that identical words used in different parts of the same act are intended
to have the same meaning,” and we see no evidence that Congress intended for the
term “lease,” as used in the term “lease site,” to carry a different meaning. Pereira v.
Sessions, 138 S. Ct. 2105, 2115 (2018).
                                            19
contracts or agreements issued or approved by the United States. Further, the statute

is silent with respect to how, if at all, BLM representatives may access lease sites on

privately-owned lands.

      Defendants concede that “Congress did not expressly address the application

of Section 1718(b) inspection authority to fee lands committed to communitization

agreements.” Aple. Br. at 15. But, defendants argue, “[g]iven that ambiguity, BLM

reasonably exercised its delegated rulemaking authority to include the inspection of

fee lands that, like the O’Hares’, are subject to a communitization agreement that was

approved by the Department and involves Indian lands where the affected tribe shares

in the production and royalties of the oil and gas operation.” Id.

      Defendants’ arguments hinge on the threshold question of whether § 1718(b) is

ambiguous or not. A statute is “ambiguous if it is reasonably susceptible to more

than one interpretation or capable of being understood in two or more possible senses

or ways.” Nat’l Credit Union Admin. Bd. v. Nomura Home Equity Loan, Inc., 764
F.3d 1199, 1226 (10th Cir. 2014) (quotations and citations omitted); see Chickasaw

Nation v. United States, 534 U.S. 84, 90 (2001). Although it may be reasonable from

a policy standpoint for the BLM to have authority to inspect fee lands that are subject

to a communitization agreement approved by the United States, § 1718(b) simply is

not ambiguous and thus does not provide the BLM with any authority to exercise its

delegated rulemaking authority on that issue. As noted, § 1718(b) quite clearly limits

the BLM’s inspection authority to lease sites on federal and Indian lands.

                                          20
          To be sure, § 1718(b) is silent with respect to inspections of lease sites on fee

lands, but that silence does not render the statute ambiguous. See Spring Creek Expl.

& Prod. Co. v. Hess Bakken Inv., II, LLC, 887 F.3d 1003, 1018 (10th Cir. 2018)

(“silence is not ambiguity”). When the Supreme Court has discussed the exercise of

agency discretion “‘in the interstices created by statutory silence,’” it has done so

only when “considering undefined terms in a statute or statutory directive to perform

a specific task without giving detailed instructions.” Marlow v. New Food Guy, Inc.,

861 F.3d 1157, 1162 (10th Cir. 2017) (quoting Util. Air Regulatory Grp. v. EPA, 134
S. Ct. 2427, 2445 (2014) (internal quotation marks omitted)). And that is simply not

the case with § 1718(b). As noted, § 1718(b) plainly focuses on lease sites “on

Federal or Indian lands” and does not otherwise leave any terms or statutory

directives undefined.

          For these reasons then, we conclude that § 1718(b) does not afford the BLM

with authority to inspect lease sites on privately-owned lands. Thus, we must look

elsewhere to determine whether any authority exists for the BLM’s proposed

inspections of the wells in this case.

          The Secretary has issued regulations implementing the various statutory

directives outlined by Congress in FOGRMA. To begin with, 43 C.F.R. § 3161.1(b)

states:

          The regulations in this part and 43 CFR part 3170, including subparts
          3173, 3174, and 3175, relating to site security, measurement of oil and
          gas, reporting of production and operations, and assessments or
          penalties for non-compliance with such requirements, are applicable to
          all wells and facilities on State or privately owned lands committed to a

                                              21
      unit or communitization agreement, which include Federal or Indian
      lease interests, notwithstanding any provision of a unit or
      communitization agreement to the contrary.

43 C.F.R. § 3161.1(b) (emphasis added).

      In turn, 43 C.F.R. § 3161.3, entitled “Inspections,” states:

      (a) The authorized officer shall establish procedures to ensure that each
      Federal and Indian lease site which is producing or is expected to
      produce significant quantities of oil or gas in any year or which has a
      history of noncompliance with applicable provisions of law or
      regulations, lease terms, orders or directives shall be inspected at least
      once annually. Similarly, each lease site on non-Federal or non-Indian
      lands subject to a formal agreement such as a unit or communitization
      agreement which has been approved by the Department of the Interior
      and in which the United States or the Indian lessors share in production
      shall be inspected annually whenever any of the foregoing criteria are
      applicable.
      (b) In accomplishing the inspections, the authorized officer may utilize
      Bureau personnel, may enter into cooperative agreements with States or
      Indian Tribes, may delegate the inspection authority to any State, or
      may contract with any non-Federal Government entities. Any
      cooperative agreement, delegation or contractual arrangement shall not
      be effective without concurrence of the Secretary and shall include
      applicable provisions of the Federal Oil and Gas Royalty Management
      Act.

43 C.F.R. § 3163.3(a) and (b).6

      Lastly, 43 C.F.R. § 3162.1, which discusses “General requirements” for

operating rights owners and operators, states:

      (a) The operating rights owner or operator, as appropriate, shall comply
      with applicable laws and regulations; with the lease terms, Onshore Oil

      6
         The Secretary’s authority to enact the portion of this regulation concerning
inspections on privately-owned lands arises both from the general purposes
provisions of FOGRMA, § 1701(b)(3)-(5), as well as § 1711(a) and (b). Section
1711(a) directs the Secretary, in part, to “establish a comprehensive inspection . . .
system,” and §1711(b) directs the Secretary to conduct annual inspections of certain
lease sites, without limitation to sites contained on Federal or Indian lands.
                                          22
      and Gas Orders, NTL’s; and with other orders and instructions of the
      authorized officer. These include, but are not limited to, conducting all
      operations in a manner which ensures the proper handling,
      measurement, disposition, and site security of leasehold production;
      which protects other natural resources and environmental quality; which
      protects life and property; and which results in maximum ultimate
      economic recovery of oil and gas with minimum waste and with
      minimum adverse effect on ultimate recovery of other mineral
      resources.

      (b) The operator shall permit properly identified authorized
      representatives to enter upon, travel across and inspect lease sites and
      records normally kept on the lease pertinent thereto without advance
      notice. Inspections normally will be conducted during those hours when
      responsible persons are expected to be present at the operation being
      inspected. Such permission shall include access to secured facilities on
      such lease sites for the purpose of making any inspection or
      investigation for determining whether there is compliance with the
      mineral leasing laws, the regulations in this part, and any applicable
      orders, notices or directives.

      (c) For the purpose of making any inspection or investigation, the
      Secretary or his authorized representative shall have the same right to
      enter upon or travel across any lease site as the operator has acquired
      by purchase, condemnation or otherwise.

43 C.F.R. § 3162.1 (emphasis added).7

      The regulatory provisions thus provide for an inspection framework that

applies to federal, Indian, and certain privately-owned lands, but that, not

surprisingly, provides the BLM with greater inspection authority over federal and

Indian lands than privately-owned lands. With respect to lease sites on federal and

Indian land that are “producing or . . . expected to produce significant quantities of

oil or gas in a year or which ha[ve] a history of noncompliance with applicable

      7
       It was this regulation that Maralex was cited for violating in the four INCs.
Aplt. App. at 168.
                                           23
provisions of law or regulations,” BLM representatives must inspect such lease sites

“at least once annually.” 43 C.F.R. § 3161.3(a). As for lease sites on privately-

owned lands that are committed to a unit or communitization agreement that has been

approved by the Department of the Interior, they are required to “be inspected

annually whenever” they are “producing or . . . expected to produce significant

quantities of oil or gas in any year or” if they “ha[ve] a history of noncompliance

with applicable provisions of law or regulations.”8 43 C.F.R. § 3161.3(a). They can

also be inspected by the BLM for purposes of assessing “site security, measurement,

reporting of production and operations, and assessments or penalties for

noncompliance with such requirements.” 43 C.F.R. § 3161.2. Further, the operating

rights owner or operator of any such lease site on privately-owned land is required to

“permit properly identified authorized representatives” of the BLM “to enter upon,

travel across and inspect lease sites and records normally kept on the lease pertinent

thereto without advance notice.” 43 C.F.R. § 3162.1(b). Any such inspections,

however, must normally “be conducted during those hours when responsible persons

are expected to be present at the operation being inspected.” Id. In addition, “[s]uch

permission” by the operating rights owner or operator “shall include access to

secured facilities on such lease sites for the purpose of making any inspection or

investigation for determining whether there is compliance with the mineral leasing

      8
        In this case, the IBLA expressly found that the wells at issue “are producing
or expected to produce significant quantities of oil and gas,” thus rendering the wells
subject to annual inspection under § 3163.3(a). Aplt. App. at 172.
                                          24
laws, the regulations . . . , and any applicable orders, notices or directives.” Id.

Lastly, BLM representatives are, “for the purpose of making any inspection or

investigation,” afforded the same right of entry to and travel access across the lease

site “as the operator has acquired by purchase, condemnation or otherwise.” Id. §

3162.1(c).

       Thus, at least for purposes of this case, the key difference between lease sites

on federal/Indian lands and lease sites on privately-owned land subject to a

communitization agreement is how BLM representatives may access them. For lease

sites on federal/Indian lands, BLM representatives have the right to enter those sites

by themselves without first seeking permission from the operating rights owner or

operator. In contrast, for lease sites on privately-owned lands, BLM representatives

may not independently enter the sites, but instead must seek entry (but do not have to

give advance notice) from the operating rights owner or operator and the operating

rights owner or operator, as noted, is obligated to allow such entry.

       As for how often BLM representatives may inspect the wells, the regulations

contain no limitation. Indeed, the only reference to frequency of inspections is

contained in § 3161.3(a), which, as noted, requires lease sites meeting certain

requirements to be inspected at least once annually. Section 3161.3(a) does not,

however, impose any upper limit on the number of inspections. In other words, as

both the State Director and the IBLA concluded in their respective decisions, “[t]he

[regulatory] wording ‘inspected annually’ is a minimum standard not a maximum

limitation.” Aplt. App. at 90; see id. at 176 n.10 (IBLA decision).

                                            25
          In sum, the BLM had authority to inspect the wells at issue. The question

remains, however, whether BLM had authority to require Maralex to provide BLM

with “a key to access the location or” allow BLM to install its own locks. Aplt. App.

at 24).

          We agree with plaintiffs that the BLM lacks authority to require an operator or

landowner to provide the BLM with a key to the landowner’s locked gates or to allow

the BLM to place its own locks on the landowner’s locked gates. But we arrive at

this conclusion in a different manner than suggested by plaintiffs. Although

plaintiffs base many of their arguments on the language of § 1718(b), that statutory

subsection, as discussed above, does not apply at all to lease sites on privately-owned

lands. Instead, the parameters of inspections of lease sites on privately-owned lands

are outlined in two regulations: 30 C.F.R. §§ 3162.1 and 3163.3. Neither of those

regulations provide any authority for the BLM to require an operating rights owner or

operator (or, for that matter, a private landowner) to (a) provide BLM with a key to a

lease site on privately-owned land, or (b) to install a BLM-lock on the gates to such

lease site. Rather, as discussed above, the BLM has the right to conduct

unannounced inspections of such sites, but must rely on the operating rights owner or

operator to afford them entry to the lease site.

          Defendants, for their part, cite in their appellate brief to the statutory and

regulatory provisions authorizing the BLM to take “corrective action.” Aple. Br. at

39 (citing 30 U.S.C. §§ 1719(a)(2)(A), (a)(2)(B) and 43 C.F.R. § 3163.1(a)(4)).

Those statutory provisions, however, speak only in terms of monetary “civil

                                               26
penalties” (the amount of which depends upon how long the violation has gone on).

30 U.S.C. §§ 1719(a)(2), (b). The regulatory provisions also mention the possibility

of lease cancellations and criminal penalties. 43 C.F.R. §§ 3163.1(a)(5), 3163.3.

Notably, nothing in the statutory and regulatory provisions mentions the remedy

imposed on the plaintiffs in this case, i.e., requiring them to provide BLM with a key

or to allow BLM to install its own locks. Although defendants concede this point,

they nevertheless argue that “it is reasonable to conclude that when a landowner

denies BLM entry, the very least that the agency can permissibly do under the statute

is order any reasonable remedy that will yield the access required to carry out

Congress’s charge.” Id. at 39-40. We reject that argument. Requiring the provision

of a key or lock access is, without question, a drastic measure that would, at a

minimum, require express congressional approval. Because no such approval

appears in the relevant statutes or regulations, defendants’ arguments must be

rejected.

                                               III

       We REVERSE and REMAND to the district court with directions to enter

judgment in favor of plaintiffs on their claim that the BLM lacks authority to require

plaintiffs to provide the BLM with a key to access the wells at issue or to allow BLM

to install its own locks.

                                          27