August 26, 2019

Tenth Circuit: Subsurface Mineral Rights Lessee May Cross Surface Owner’s Property to Access Leasehold

The Tenth Circuit Court of Appeals issued its opinion in Entek GRB, LLC v. Stull Ranches, LLC on Thursday, August 14, 2014.

Stull Ranches is the surface owner of a tract of property in rural Colorado. Entek GRB leases subsurface mineral rights, and, in order to access those subsurface rights, sought to access them by installing oil wells on the surface of Stull’s property. Entek’s subsurface oil leasehold rights extend onto neighboring property owned by the Bureau of Land Management, and Entek sought to traverse Stull’s property in order to reach the subsurface minerals on BLM’s property, since the only way to access the BLM property was on the existing road crossing Stull’s property. Stull objected, arguing that Entek’s drilling would disrupt Stull’s grouse hunting business. The district court granted summary judgment to Entek regarding access to its wells on Stull’s property, but denied Entek’s request to cross Stull’s property in order to access the BLM land. Entek appealed to the Tenth Circuit.

The Tenth Circuit explored the history of the government’s land grants, specifically as to separate grants of surface ownership and rights to subsurface minerals and water. Stull is the successor in interest of land acquired under the Stock-Raising Homestead Act of 1916, which expressly reserved to the government all mineral rights, along with the right to enter and use as much of the surface as is “reasonably incident” to the exploration and removal of mineral deposits, and the right to enact future laws and regulations regarding “disposal” of the mineral estate. The subsequently-enacted Mineral Leasing Act granted the Secretary of the Interior the right to amend mineral leases, which it did for the lease encompassing the subsurface mineral rights on Stull’s property and the adjacent BLM property in the Focus Ranch Unit Agreement. This agreement deems all drilling and producing operations on one part of a leasehold interest will be accepted and performed on all leasehold interests. Because Entek is allowed to drill through Stull’s surface estate to access its subsurface mineral lease, it is deemed access to all leasehold interests, including the leasehold interest on BLM’s surface property. Entek has the right to use the existing road that traverses Stull’s property in order to achieve efficient access to its subsurface leasehold.

Stull also argued that, in a case involving the prior holder of Entek’s current rights, the district court ruled that the lessee of the mineral rights was not permitted to access a different property in order to reach a well on an adjacent tract. However, that case was not appealed because the prior lessee entered into an agreement with Stull allowing it to traverse Stull’s property. The Tenth Circuit ruled that preclusion was precluded by this prior agreement.

The district court’s grant of summary judgment to Stull was vacated and the case was remanded for further proceedings consistent with the Tenth Circuit opinion.

Tenth Circuit: Statute of Limitations Begins to Run Under Mineral Leasing Act with Final Decision of Secretary

The Tenth Circuit Court of Appeals published its opinion in Impact Energy Resources, LLC v. Salazar on Wednesday, September 5, 2012.

Appellants are energy companies who submitted high bids on oil and gas leases at a BLM auction. Before the leases were issued, Secretary of the Interior Ken Salazar “announced his decision at a February 4, 2009, press conference and memorialized his determination in a February 6 memorandum to the BLM’s Utah State Director. On February 12, 2009, a subordinate BLM official mailed letters to the high bidders indicating that the leases would not be issued.” The energy companies sued 90 days after the February 12th letter. The district court dismissed the suit because 30 U.S.C. § 226-2 of the Mineral Leasing Act provides a 90-day statute of limitation “after the final decision of the Secretary relating to such matter,” and the final decision of the Secretary had occurred on February 6, not 12.

In a per curiam opinion, a majority of the Tenth Circuit panel agreed with the district court, and with its decision that equitable tolling did not apply here. “Judge Lucero would hold that under the plain text of the MLA, the Secretary’s decision was final on February 6 regardless of whether plaintiffs’ claims under the Administrative Procedure Act (“APA”) had accrued at that time. Judge Seymour would hold that the word “final” bears the same meaning in the phrase “final decision of the Secretary,” 30 U.S.C. § 226-2, as it does in the phrase “final agency action” under the APA, 5 U.S.C. § 704, and that final agency action occurred no later than February 6.”