Kodiak Oil & Gas (USA) Inc. v. BurrKodiak Oil & Gas (USA) Inc. v. Burr
In the Eighth Circuit, sovereign immunity presents a jurisdictional question. Hagen v. Sisseton-Wahpeton Cmty. Coll.,
A tribe's sovereign immunity certainly extends to tribal officers or agencies. Hagen,
the named officer defendants have acted outside the amount of authority that the sovereign is capable of bestowing, an exception to the doctrine of sovereign immunity is invoked.... If the sovereign did not have the power to make a law, then the official by necessity acted outside the scope of his authority in enforcing it ....
N. States Power Co. v. Prairie Island Mdewakanton Sioux Indian Cmty.,
Judge Seaworth and Falcon contend that as tribal court officers they are cloaked in sovereign immunity as there has been no express and unequivocal waiver of immunity by the Tribe. In fact, Judge Seaworth and Falcon assert the Plaintiffs filed suit against them, in their official capacities, to evade the Tribe's immunity since the Plaintiffs' claims seek "relief from the imposition of the tribal law including the resolution entitled, Regulation of Flaring of Gas, Imposition of Tax, Payment of Royalties and Other Purposes. " See Docket No. 1-2 (Case No. 4:14-cv-085). In their complaints, Kodiak Oil, EOG Resources, and HRC Operating seek only injunctive and declaratory relief against the Tribal Court Defendants. Pursuant to the holding of Santa Clara Pueblo,
2. FAILURE TO EXHAUST TRIBAL REMEDIES
The Tribal Court Defendants also contend this Court lacks jurisdiction over this matter because Kodiak Oil, EOG Resources, and HRC Operating are required to exhaust tribal rеmedies before filing a federal suit, citing National Farmers Union Ins. Cos. v. Crow Tribe of Indians ,
In Strate v. A-1 Contractors , the United States Supreme Court concluded National Farmers cannot be read to require exhaustion of tribal remedies: "we do not extract from National Farmers anything more than a prudential exhaustion rule ...."
Here, the Tribal Court "had a full opportunity to determine its own jurisdiction." See Belcourt Pub. Sch. Dist.,
In their complaints, Kodiak Oil, EOG Resources, and HRC Operating seek both declaratory and injunctive relief preventing the Tribal Court from exercising jurisdiction over the underlying Tribal Court action and preventing the Tribal Court Plaintiffs from proceeding with the underlying Tribal Court action. See Docket Nos. 17, 57, (Case No. 4:14-cv-085) and 6 (Case No. 4:14-cv-087). Consequently, in their motions for preliminary injunctive relief, Kodiak Oil, EOG Resources, and HRC Operating request a preliminary injunctive because the Tribal Court lacks jurisdiction over them.
It is well-established that the movant has the burden of establishing the necessity of a temporary restraining order or a preliminary injunction. Baker Elec. Co-op., Inc. v. Chaske,
1. PROBABILITY OF SUCCESS ON THE MERITS
When evaluating a movant's likelihood of success on the merits, the court should "flexibly weigh the case's particular circumstances to determine 'whether the balance of equities so favors the movant that justice requires the court to intervene to preserve the status quo until the merits are determined.' " Calvin Klein Cosmetics Corp. v. Lenox Labs., Inc.,
The Court must consider the substantive claims in determining whether the Plaintiffs have a likelihood of success on the merits. All three plaintiffs assert claims of declaratоry and injunctive relief. See Docket Nos. 17, 57, (Case No. 4:14-cv-085) and 6 (Case No. 4:14-cv-087). Specifically, the Plaintiffs seek a judgment declaring that the Tribal Court lacks jurisdiction over them and enjoining the Defendants from prosecuting the underlying action in Tribal Court.
In their motions for preliminary injunction, the Plaintiffs contend they are able to demonstrate a strong likelihood of success on the merits of their claims because: (1) the underlying action gives rise to a federal question over which tribal courts lack jurisdiction, and, alternatively, (2) the United States Supreme Court decision in Montana v. United States ,
In their motions, the Plaintiffs contend they are able to demonstrate a strong likelihood of success on the merits of their claims because: (1) the underlying action gives rise to a federal question over which tribal courts lack jurisdiction, and, alternatively, (2) the United States Supreme Court decision in Montana v. United States ,
i. The Precedent of United States Supreme Court
The Court first addresses the Plaintiffs' contention that pursuant to the United States Supreme Court decision of Nevada v. Hicks ,
Hicks then bought suit against the tribal court judge, tribal officers, the state wardens, in their individual and official capacities, and the State of Nevada in tribal court for trespass to land and chattels, abuse of process, and violation of civil rights, each remediable under
The areas in which such implicit divestiture of sovereignty has been held to have occurred are those involving relations between an Indian tribe and nonmembers of the tribe ...
These limitations rest on the fact that the dependent status of Indian tribes within our territorial jurisdiction is necessarily inconsistent with their freedom independently to determine their external relations. But the powers of self-government ... are of a different type. They involve only the relations among members of a tribe. Thus, they are not such powers as would necessarily be lost by virtue of a tribe's dependent status.
Against this backdrop, the Supreme Court in Hicks first recognized the 'consensual relationship' Montana exception did not apply to a warden executing a state search warrant within the reservation, and continued to determine whether "regulatory jurisdiction over state officers in the present context is 'necessary to protect tribal self-government or to control internal relations' and if not, whether such regulatory jurisdiction has been congressionally conferred."
Concluding that neither Montana exception applied, the Supreme Court in Hicks
This conclusion by the Supreme Court in Hicks was buttressed by the "anomalies" that would be created under the federal removal statute,
Kodiak Oil, EOG Resources, and HRC Operating assert that this Court should hold an action for breach of a mineral lease entered into pursuant to the Indian Mineral Leasing Act, 25 § 396, also presents a federal question and, since tribal courts are not court of general jurisdiction pursuant to Hicks , the tribal courts lacks jurisdiction over such action. The Court agrees with the Plaintiffs that Hicks clearly establishes that tribal courts are not courts of general jurisdiction. However, this conclusion, standing alone, does not preclude a tribal court's adjudicative authority over a federal question. Instead, as the United States Supreme Court articulated in Montana and its progeny, "a tribe's adjudicative jurisdiction does not exceed its legislative jurisdiction." Strate,
In Montana , the United States Supreme Court articulated the general rule that "the inherent sovereign powers of an Indian tribe do not extend to the activities of nonmembers of the tribe," absent express congressional delegation. Montana,
1) "A tribe may regulatiоn, through taxation, licensing, or other means, the activities of nonmembers who enter consensual relationships with the tribe or its members, through commercial dealing, contracts, leases, or other arrangements[,]" and
2) "A tribe may also retain inherent power to exercise civil authority over the conduct of non-Indians on fee lands within its reservation when that conduct threatens or has some direct effect on the political integrity, the economic security,or the health or welfare of the tribe."
ii. Tribal Court Jurisdiction Under the First Montana Exception
The first exception articulated in Montana extends tribal jurisdiction to regulate, through taxation, licensing, or other means, the "activities of nonmembers who enter consensual relationships with the tribe of its members, through commercial dealing, contracts, leases, or other arrangements." Montana,
It is clear under the United States Supreme Court's analysis in Plains Commerce Bank , the first Montana exception is triggered when a non-member has a consensual relationship with the tribe or its members and such activities arising from the consensuаl relationship implicate the tribe's sovereign interests. Following the rationale of Montana and Plains Commerce Bank , this Court concludes that the tribe's regulation of the mineral lease allegedly breached by Kodiak Oil, EOG Resources, and HRC Operating does not implicate the tribe's sovereign interests and, therefore, even presuming consensual relationships between members of the tribe and the Plaintiffs exist, the first Montana exception is not triggered.
In consideration of the foregoing, the lessee hereby agrees:
(f) Diligence, prevention or waste-To exercise reasonable diligence in drilling and operating wells for oil and gas on the lands covered hereby, while such products can be secured in paying quantities; to carry on all operations hereunder in a good and workmanlike manner in accordance with the approved methods and practice, having due regard for the prevention of waste of oil or gas developed on the land,
...
Provided , That the lessee shall not be held responsible for delays or casualties occasioned by causes beyond the lessee's control.
See
Pursuant to the authority granted under the Mineral Leasing Act of 1938 and the Indian Mineral Development Act of 1982, the Department of the Interior promulgated an extensive and comprehensive scheme, including regulations, Onshore Oil and Gas Orders, and NTLs governing all aspects of oil and gas operations on federal Indian lands. See 25 U.S.C. §§ 396a - 396g ; 25 C.F.R. Parts 211, 212, 214; 43 C.F.R. Part 3160, §§ 3161.4, 3161.2. At the time the underlying lawsuit was filed with the Tribal Court, this scheme included the following flaring standards set forth in NTL-4A:
Gas Production (both gas well gas and oil wеll gas) subject to royalty shall include that which is produced and sold on a lease basis or for the benefit of a lease under the terms of an approved communitization or unitization agreement. No royalty obligation shall accrue on any produced gas which (1) is used on the same lease, same communitized tract, or same unitized participating area for beneficial purposes, (2) is vented or flared with the Supervisor's prior authorization or approval during drilling, completing, or producing operations, (3) is vented or flared pursuant to the rules, regulations, or orders of the appropriate State regulatory agency when said rules, regulations, or orders have been ratified or accepted by the Supervisor, or (4) the Supervisor determines to have been otherwise unavoidably lost ... Where produced gas (both gas well gas and oil well gas) is (1) vented or flared during drilling, completing, or producing operations without the prior authorization, approval, ratification, or acceptance of the Supervisor or (2) otherwise avoidably lost,as determined by the Supervisor, the compensation due the United States or the Indian lessor will be computed on the basis of the full value of the gas so wasted, or the allocated portion thereof, attributable to the lease.
See Docket No. 1-3 (Case No. 4:14-cv-085).
As of January 17, 2017, NTL-4A was replaced by federal regulations of flaring, which are applicable to the leases at issue. See
The extensive federal regulatory scheme applicable to the flaring of natural gas on Indian lands demonstrates the regulation of such flaring and enforcement of regulations lies with the federal government, through its various agencies, and is outside the control of tribes. Notably, as to allotted Indian lands, tribes as sovereignties have no role in the approval of mineral leases, the determination of whether royalties are due for flaring under those leases, or the collection or payment of any royalties due to individual allottees. Consequently, the determination of whether the Plaintiffs breached the mineral leases by failing to pay royalties for flared natural gas is entirely controlled by federal laws and regulations, with the federal government, through its agencies, determining if royalties are due, recovering any royalties that may be due, and distributing
The Court recognizes that while commercial activities on a reservation may certainly affect a tribe's self-governance and even intrude on the internal relations of the tribe, the specific activity from which the Tribal Court Plaintiffs seek relief in their breach of contract action is wholly regulated, determined, and enforced by the federal government. This characteristic of flaring clearly distinguishes it from other commercial activities that occur on a reservation which are subject to regulation by the tribe. There is no immediate control of flaring by the tribe and whether the mineral lease was breached is, without question, a determination left to the federal government.
The Court recognizes the flaring of natural gas occurs on allotted lands within the reservation, but the status of the land as allotted does not prevent the Court from concluding the regulation of flaring occurring on such land does not implicate the tribe's sovereign. The ownership status of the land on which flaring occurs is not dispositive to the issue of whether the activities implicate the tribe's sovereign interests. See Plains Commerce Bank,
iii. Tribal Jurisdiction Under the Second Montana Exception
The Court next considers whether Montana 's second exception brings this action within the Tribal Court's аdjudicative authority. Pursuant to Montana , a tribe retains inherent power to exercise authority over the conduct of non-members "when the conduct threatens or has some direct effect on the political integrity, the economic security, or the health or welfare of the tribe."
The United States Supreme Court's decisions in Strate and Hicks dictate a narrow interpretation of the second Montana exception. See Hicks,
This Court recognizes the flaring of natural gas may jeopardize the health of tribal members. However, the Court nevertheless does not interpret the second Montana exception to apply to a claim to recover royalties for flaring arising from a mineral lease entered into pursuant to
iv. Congressional Delegation
In Montana , the United States Supreme Court articulated the general rule that "the inherent sovereign powers of an Indian tribe do not extend to the activities of nonmembers of the tribe," absent express congressional delegation. Montana,
v. Joinder of the United States and Exhaustion of Administrative Remedies
HRC Operating also contends the Tribal Court lacks jurisdiction over the underlying action because the Defendants failed to exhaust administrative remedies and failed to join the United States as a party to the tribal action. See Docket No. 59, pp. 9-11. Since the Court has found a strong likelihood of success on at least one of the Plaintiff's claims no further analysis is required at this stage. See Nokota Horse Conservancy,
In addition, because the Court has already concluded at this stage that the Tribal Court lacks jurisdiction over the underlying action, the Court need not address whether the Tribal Court Plaintiffs failed to join the United States in the Tribal Court action.
Based upon the Court's review of the complaint, the Tribal Court documents, and the relevant case law, the Court finds Kodiak Oil, EOG Resources, and HRC Operating have a strong likelihood of success on at least one of their claims against the Defendants. Consequently, the Court finds Kodiak Oil, EOG Resources, and HRC Operating have demonstrated the "success on the merits" factor weighs in favor of the issuance of a preliminary injunction.
2. IRREPARABLE HARM
Kodiak Oil, EOG Resources, and HRC Operating must establish there is a threat of irreparable harm if injunctive relief is not granted, and that such harm is not compensable by an award of money damages. Doe v. LaDue,
The Plaintiffs argue they will suffer irreparable harm if forced to litigate in Tribal Court, which this Court has determined lacks jurisdiction. The Eighth Circuit Court of Appeals has explained that a district court can presume irreparable harm if the movant has a likelihood of success on the merits. Calvin Klein Cosmetics Corp.,
3. BALANCE OF HARMS
As outlined above, Kodiak Oil, EOG Resources, and HRC Operative have demonstrated the threat of irreparable harm. The balance of harm factor requires consideration of the balance between the harm to the movant and the injury the injunction's issuance would inflict on other interested parties. See Pottgen v. Mo. State High Sch. Activities Ass'n,
If the Court does not issue a preliminary injunction preventing the Tribal Court Plaintiffs from proceeding in Tribal Court, Kodiak Oil, EOG Resources, and HRC Operating must then continue to defend
4. PUBLIC INTEREST
Avoiding duplicative legal proceedings in multiple venues is in the public interest. However, the Court is also mindful that it is in the public interest to preserve tribal court adjudicative authority over issues affecting a tribe's internal relations and protecting tribal self-governance. Therefore, the Court finds this factor is neutral. Nonetheless, after a careful review of the entire record and the Dataphase factors, the Court finds the Plaintiffs have met their burden under Rule 65(b) of establishing the necessity of a preliminary injunction order.
III. CONCLUSION
After a careful review of the entire record, and a careful consideration of all of the Dataphase factors, the Court finds the Dataphase factors, when viewed in their totаlity, clearly weigh in favor of the issuance of a preliminary injunction. The Plaintiffs have met their burden of establishing the necessity of a preliminary injunction.
The Court GRANTS Kodiak Oil, EOG Resources, and HRC Operating's motions for preliminary injunction (Docket Nos. 29, 58 (Case No. 4:14-cv-085) and 26 (Case No. 4:14-cv-087) ), and ORDERS Defendants Jolene Burr, Ted Lone Fight, Georgianna Danks and Edward S. Danks enjoined from further prosecuting the underlying action in Tribal Court and Defendants Judge Mary Seaworth, in her capacity as Acting Chief Judge of the Fort Berthold District Court, and Yvette Falcon, in her capacity as the Court Clerk/Consultant of the Three Affiliated Tribes District Court of the Fort Berthold Indian Reservation, enjoined from exercising jurisdiction over the underlying Tribal Court action until a final determination of the Plaintiffs' claims in federal court. Further, the Court DENIES the Tribal Court Defendants' motions to dismiss (Docket Nos. 44, 52 (Case No. 4:14-cv-085) and 31 (Case No. 4:14-cv-087) ).
IT IS SO ORDERED.
Notes
In their motions to dismiss, the Tribal Court Defendants also contend this mattеr must be dismissed because the Three Affiliated Tribes is a necessary and indispensable party to the action, but cannot be joined. See Docket No. 45, p. 19 (Case No. 4:14-cv-085). Whether a party is required to be joined pursuant to Rule 19 of the Federal Rules of Civil Procedure does not present a threshold jurisdictional question. Consequently, at this juncture, the Court declines to pass on the merits of whether the Three Affiliated Tribes should be joined as a party.
In its order, the MHA Nation Supreme Court also acknowledged the extensive federal regulatory scheme over flaring of natural gas. Specifically, in its order, the MHA Nation Supreme Court stated:
1. With respect to "individually allotted trust lands, mineral leases are governed by regulations found in25 C.F.R. § 212 ." See Docket No. 29-9, p. 6 (Case No. 7:14-cv-085).
2. "[T]he BLM's regulations for oil and gas development on Indian land are extensive. Indeed, the very issue presented here-the relationship between the flaring of natural gas frоm and royalty obligations under development leases-is specifically addressed in the federal regulatory scheme." See Docket No. 29-9, p. 16(Case No. 7:14-cv-085).
3. "Respondents' complaint alleged the Petitioners breached mineral leases executed by the parties under the IMLA [Indian Mineral Leasing Act].25 U.S.C. § 396 . As indicate[d] above, the IMLA establishes a consistent system of leasing procedures that apply to mineral leases in Indian lands. For oil and gas leases negotiated and executed under the IMLA, the Bureau of Indian Affairs Mineral Development Leasing Regulations apply." See Docket No. 29-9, p.18 (Case No. 7:14-cv-085).
4. "[A]ll of the claims made by the Respondents fall within the regulatory authority of the U.S. Department of Interior, Bureau of Land Management." See Docket No. 29-9, p. 19 (Case No. 7:14-cv-085).
The Court notes the complaint brought in Tribal Court is a breach of contract action. See Docket No. 27-1 (Case No. 4:14-cv-087). The Tribal Court Plaintiffs did not bring a cause of action to enforce the Tribal Resolution, Regulation of Flaring of Gas, Imposition of Tax, Payment of Royalties and Other Purposes , referred to in the parties' briefing. Because this action is limited to a breach of contract claim, upon which resolution of the claims hinges on the federal government's determination of a breach (i.e. whether flaring was avoidable or unavoidable), the Court does not pass on the question of whether the Tribe's adjudicative authority extends to claims brought pursuant to the Tribal Resolution.
In Hicks , Justice Scalia noted the Court must consider tribal court jurisdiction over Section 1983 claims since the Court had already determined the Montana exceptions do not extend tribal court jurisdiction to state wardens executing a search warrant of an off-reservation crime.