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:

Surveys: In determining that lands were added to a private tract in a river through avulsion, thus retaining their character as federal public domain that had been omitted from a prior survey, rather than through accretion, thus becoming a part of the privately-owned tract, BLM is required by the Manual of Surveying Instructions to support its determination with positive evidence of avulsion that is not subject to a different interpretation. A determination that meets this standard will be upheld except where a material error in BLM’s analysis can be shown by a preponderance of the evidence. Battle Creek Island Ranch, LLC, 194 IBLA 214 (2019).

Drilling without approved APD; trespass: The Board’s decision in Zavanna, LLC, 194 IBLA 206 (2019), is as interesting for what it did not decide as for what it did. This case concerned a well that was drilled directionally from a non-federal tract on one side of a river, through lands under the river and a second tract, to be completed under a non-federal third tract. The second tract comprised federal lands under the most recent official plat of survey (which was over 100 years old); and BLM had issued a lease covering that tract; but in fact the course of the river had shifted long since, eroding the entire federal tract and accreting a portion of it to the non-federal tract on the opposite side of the river. BLM issued a notice of an incident of noncompliance (INC), citing the well operator for drilling through the ostensible federal lease without an approved application for permit to drill. The Board resolved the matter by ruling that BLM could not issue an INC to a party that had no connection to the federal lease and thus was not subject to the applicable federal regulations; and that BLM’s only recourse against such a party would be a proceeding for trespass, under 43 CFR Part 9230. The decision did not reach the issue of title to the lands in question, or BLM’s issuance of a lease covering an apparently-nonexistent tract (which BLM asserted could only be addressed through an action in federal district court under the Quiet Title Act).

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).