Enter GRB, LLC v. Stull Ranches, LLC
763 F.3d 1252
| 10th Cir. | 2014Background
- Stull owns a surface estate in Colorado originally granted under the Stock-Raising Homestead Act of 1916; the United States reserved the mineral estate and the right to enter the surface as "reasonably incident" to mineral exploration and extraction, and the right to prescribe future rules for mineral disposition (43 U.S.C. § 299(a)).
- The Secretary of the Interior approved a unitization agreement (the Focus Ranch Unit Agreement) covering ~40,000 acres that treats operations "upon any tract of unitized lands" as operations for the benefit of every tract in the unit and declares inconsistent lease provisions subordinate to the unit plan.
- Entek is the designated unit operator for leases that underlie portions of Stull’s surface and nearby BLM land; Entek sought access across Stull’s surface both to develop leases under Stull and to service an existing well on adjacent BLM land via an existing road across Stull’s property.
- The district court granted summary judgment to Entek only to the extent of allowing access over Stull’s surface to develop the particular leases under Stull, but denied access to cross Stull’s land to service the adjacent BLM well.
- Stull argued (1) the 1916 Act’s surface-access reservation does not permit crossing one surface tract to service wells on other tracts, (2) it was not a party to the unit agreement and the agreement cannot alter its rights, and (3) issue preclusion should bar Entek from relitigating access because a predecessor (Clayton Williams) previously lost a similar claim.
- Entek argued that unitization (30 U.S.C. § 226(m) and the Focus Ranch Unit Agreement) treats operations anywhere in the unit as operations on every lease in the unit, thereby authorizing the unit operator to use any portion of the unit’s surface that is reasonably incident to production anywhere in the unit.
Issues
| Issue | Stull's Argument | Entek's Argument | Held |
|---|---|---|---|
| 1. Does unitization authorize an operator to cross one surface estate to mine or service wells benefitting other leases within the unit? | Unitization does not modify Stull’s surface rights; the 1916 Act reservation authorizes entry only above the specific lease beneath the surface tract. | Unitization deems operations on any tract to be operations on all unit tracts; the unit operator may occupy any surface reasonably incident to mining anywhere in the unit. | The unit agreement and §226(m) permit the unit operator to use unit surface areas reasonably incident to production anywhere in the unit; access is not confined to individual lease/surface boundaries. |
| 2. Can the Focus Ranch Unit Agreement alter Stull’s rights even though Stull was not a party? | A third‑party unit agreement cannot bind Stull or alter its surface rights absent Stull’s consent. | The 1916 reservation gave the United States the power to adopt future rules for mineral disposition; Congress authorized unitization, which the Secretary validly implemented. | The federal reservations in 1916 and subsequent unitization authority permit the government (and its designated operator) to effect such changes without Stull’s consent. |
| 3. Is Entek precluded by nonmutual offensive issue preclusion based on Clayton Williams’s prior loss? | Clayton Williams lost on the same issue; Entek, as successor, should be precluded from relitigating. | Clayton Williams settled and did not appeal; Entek is not in privity for purposes of preclusion and did not obtain rights under that settlement. | Preclusion denied: no sufficient privity because the prior litigation ended by settlement protecting only Clayton Williams’s personal interests, not successors. |
| 4. Does Entek still need the surface owner’s agreement or a bond to exercise access under the 1916 Act? | Stull emphasizes statutory consent/bond requirement (43 U.S.C. §299(a)) to protect surface owners. | Entek does not contend the requirement is eliminated by unitization. | The court recognized the statutory condition remains; Entek may need Stull’s consent or must post a bond, but bond issue was not decided here. |
Key Cases Cited
- Watt v. Western Nuclear, Inc., 462 U.S. 36 (Sup. Ct. 1983) (interpreting federal land‑grant reservations and subsequent regulatory authority)
- United States v. Midwest Oil Co., 236 U.S. 459 (Sup. Ct. 1915) (background on mineral reservations/scope)
- United States v. Union Pacific R.R. Co., 353 U.S. 112 (Sup. Ct. 1957) (discussing government’s reservation and future administration of mineral resources)
- Amoco Prod. Co. v. Heimann, 904 F.2d 1405 (10th Cir. 1990) (unitization under the Mineral Leasing Act contexts)
- Coosewoon v. Meridian Oil Co., 25 F.3d 920 (10th Cir. 1994) (unitization permits operation as a single entity without regard to surface boundaries)
- Mountain Fuel Supply Co. v. Smith, 471 F.2d 594 (10th Cir. 1973) (noting unitization’s effect on surface rights depends on whether leases were actually and legally modified)