Interior Board of Land Appeals


The following are some notable recent decisions by the Interior Board of Land Appeals relating to oil and gas leasing and public lands:

Refund of lease bonus: Lands may only be disposed of by the United States in accordance with the then-governing official plat of survey. Thus the land description and acreage in an oil and gas lease must be based on the official plat of survey that is effect at the time of lease issuance; and the bonus bid for the lease must be calculated accordingly. Therefore, the payment of a bonus bid in that amount would not be an “overpayment of an obligation” that must be refunded under the Federal Oil and Gas Royalty Management Act, even where the lease was partially cancelled because a portion of the lands described in the lease were no longer in existence at the time of lease issuance, as they now lay in the bed of a navigable river and were no longer federally owned, and the change in the course of the river was recognized in a resurvey that was approved subsequent to lease issuance. However, BLM nevertheless should consider whether, under the Federal Land Policy and Management Act, a refund of the excess bonus amount should be made because of the changed legal land description of the leased lands. Agri Properties LLP & Bakken Production Inc., 193 IBLA 389 (2018). 

Ripeness for appeal: When a BLM decision, on State Director Review, is remanded to BLM for further consideration of an issue, the issue is not ripe for appeal to the Board if, in light of the totality of the circumstances, it could become moot or significantly changed by future actions or by BLM’s decision on remand (even where the scope of BLM’s further consideration is limited by the State Director’s instructions on remand). XTO Energy, Inc., 193 IBLA 101 (2018).

Color of title: An application for a patent under the Color of Title Act not only must satisfy the stringent statutory criteria of that Act, but also is subject to protest by a party who opposes the application. The protesting party need not assert an interest in the lands in order to have standing; and even though issuance of a patent is mandatory for an application that satisfies the Class 1 statutory criteria (holding the tract in good faith and in peaceful adverse possession for more than 20 years, with valuable improvements), a protest may still be filed questioning whether the criteria are satisfied – i.e., there remains an action proposed to be taken – so long as a patent has not yet been issued. In this case, while determining – in an unpublished order that is merely summarized in the decision – that BLM had improperly dismissed the protest, the Board upheld BLM’s finding on the merits, concluding that the applicant had made valuable improvements, and that he held the lands in good faith: that his prior belief that he owned the lands was not “unreasonable in light of the facts available.” (By contrast, issuance of a patent under a Class 2 application – for which the criteria are holding the tract in good faith and in peaceful adverse possession since at least January 1, 1901, with payment of property taxes – is discretionary. But only if the applicable criteria have been satisfied since January 1, 1901, is it possible to obtain a patent without a mineral reservation. In this case, BLM had rejected the applicant’s Class 2 application because property taxes had not been paid in recent years – even though the reason that they had not been paid was because no assessments had been sent.) Public Land/Water Access Association, Inc., 193 IBLA 23 (2018).

Appeals: While an appeal of a bureau decision is pending before the Board, the bureau lacks jurisdiction to issue a further decision directly relating to the same subject matter (although the bureau may still issue decisions that are functionally independent from the decision being appealed). Sojitz Energy Venture, Inc., 193 IBLA 1 (2018); Cimarex Energy Co., et al., 193 IBLA 6 (2018).

Standing: In Statoil Oil & Gas, LP, 192 IBLA 32 (2017), the Board, in an en banc decision over a vigorous (and persuasive) dissent, dismissed the appeal for lack of standing, without offering the appellant an opportunity to prove otherwise, based on the Board’s belief that the BLM decision being appealed could not, on its face, adversely affect the appellant. In a further en banc decision, 192 IBLA 241 (2018), the Board denied a petition for reconsideration or clarification of its prior ruling on standing, this time with the concurrence – because of appellant’s failure to submit evidence of a legally cognizable interest that was substantially likely to be adversely affected by BLM’s decision – of the administrative judge who previously had dissented.

Drainage: The Board’s decision in Statoil Oil & Gas, LP, 192 IBLA 32, also provides a review of the parties’ obligations, and BLM’s rights, in the event of drainage. Where federal minerals are being drained, the regulations provide, at 43 CFR 3162.2-2, that BLM may (a) “require the lessee [of the federal lease that is being drained] to drill and produce all wells that are necessary to protect the lease from drainage;” or (b) “execute agreements with the owners of interests in the producing well under which the United States . . . may be compensated for drainage,” whether the federal minerals are leased or unleased; or . . . (d) “approve a unit or communitization agreement that provides for payment of a royalty on production attributable to unleased mineral resources.” Accordingly, under 43 CFR 3162.2-4, BLM may require the lessee of the federal lease that is being drained to “(a) Drill or modify and produce all wells that are necessary to protect the leased mineral resources from drainage; (b) Enter into a unitization or communitization agreement with the lease containing the draining well; or ( c) Pay compensatory royalties for drainage that has occurred or is occurring.” 43 CFR 3162.2-7 elaborates that “(a) If more than one person holds record title interests in a portion of a lease that is subject to drainage, each person is jointly and severally liable . . . during the period and for the area in which it holds its record title interest;” and “(b) Operating rights owners are jointly and severally liable with each other and with all record title holders for drainage affecting the area and horizons in which they hold operating rights during the period they hold operating rights.” (emphasis added) (See also 43 CFR 3100.2-1, 3100.2-2.) The Board, in Statoil (where the appellant was the operator of a well on private lands that was draining the tract in question), finds that, under the regulations, “well operators cannot be required to pay compensatory royalty. The regulations specify that BLM may require only lessees and operating rights owners to pay compensatory royalty for drainage of Federal mineral resources.” 192 IBLA at 40. [Query: On what authority may BLM require the owners of interests in the well that is draining the federal minerals to enter into either an agreement to compensate the United States for the drainage, or a communitization or unit agreement that includes the federal minerals? For that matter, on what authority may unleased federal minerals be communitized?]

Surface use plan of operations: Where the operations covered by a sundry notice will involve surface disturbance, the operator must submit and obtain approval of a surface use plan of operations before proceeding with those operations. See 43 CFR 3162.3-2(a). Failure to do so may result in BLM’s issuance to the operator, under 43 CFR 3163.1, of a notice of incident of noncompliance. Valid Energy, Inc., 192 IBLA 7 (2017).

Standing to appeal: For a party to have standing to appeal, it must be adversely affected by the decision being appealed – i.e., it must have a legally cognizable interest that has been injured, or is substantially likely to be injured, by the decision. A state or local government cannot establish a legally cognizable interest in a route on federal public lands by (a) relying on state laws that do not give it authority to manage routes on federal public lands; (b) asserting an adverse effect on the welfare of its citizens; or ( c) projecting a loss of tax revenue when that loss is merely speculative. State of Utah, 191 IBLA 345 (2017).

Trespass: Using, occupying, or developing public lands or their resources without a right-of-way grant from BLM, where such a ROW is required, constitutes a trespass. Pam and Ron Brown, 191 IBLA 302 (2017).

Right to appeal: An inaccurate notification, in a BLM decision, as to a right to appeal (or to seek state director review) cannot affect that right. BLM’s failure to notify a party that an appeal right exists will not deprive the party of its right; while erroneously notifying a party of an appeal right, when none exists, will not create such a right. Moreover, BLM’s failure to notify a party of an appeal right will not “preserve or extend an appellant’s right to appeal that would otherwise have expired as untimely.” (In other words, if a party who is entitled to appeal is not notified by BLM of his appeal right, not only may he do so in the absence of such notification; but if he does not timely do so, his appeal right will be lost.) Entek GRB, LLC, 191 IBLA 291 (2017), at 295-296, citing Liberty Southern Partners, LLC, 183 IBLA 383 (2013), and Devon Energy, 171 IBLA 43 (2007). (Note: In connection with the appellant’s untimely filing of a request for state director review in this case, the Board refused to excuse the untimeliness, not only because the Board found no basis for estoppel, but also because it found that the doctrine of equitable tolling – where a party has been misled into allowing a deadline to pass – did not apply. This was so, even though the regulations governing the filing deadline – which the Board itself was able to determine correctly – were so convoluted and confusing that both BLM and the Solicitor’s Office gave erroneous advice on the due date for appellant’s request.)

Appeals: In an appeal, the Board has de novo review authority – i.e., it may, in its discretion, consider information that is not a part of the record of the decision by BLM. Southern Utah Wilderness Alliance, 191 IBLA 37 (2017), at 45.