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Jicarilla Apache Nation v. United States Dep't of the Interior

August 31, 2009

JICARILLA APACHE NATION, PLAINTIFF,
v.
UNITED STATES DEPARTMENT OF THE INTERIOR, ET AL., DEFENDANTS, AND MERIT ENERGY COMPANY, INTERVENOR-DEFENDANT.



The opinion of the court was delivered by: John D. Bates United States District Judge

MEMORANDUM OPINION

Plaintiff Jicarilla Apache Nation ("Jicarilla") brings this action against the United States Department of the Interior (the "Department") and Ken Salazar,*fn1 Secretary of the Interior (collectively, "defendants"). The dispute arises from leases Jicarilla entered into with Merit Energy Company ("Merit") pursuant to the Indian Mineral Leasing Act of 1938 for oil and gas production on Jicarilla's reservation. Audits of these leases performed by the Department's Mineral Management Service ("MMS") revealed that Merit improperly calculated royalties due to Jicarilla. MMS then issued an Order to Perform ("OTP") directing Merit to recalculate the royalties and pay any additional royalties due. The OTP provided a 30-day window within which to appeal the order. When Merit did not respond to the OTP, MMS issued a Notice of Noncompliance. Merit requested a hearing on the Notice of Noncompliance, and at that hearing an administrative law judge ("ALJ") decided, in relevant part, that the Department lacked jurisdiction to consider Merit's challenges to the substance of the OTP because Merit did not timely appeal that order. Merit appealed this decision to the Interior Board of Land Appeals ("IBLA"), which reversed the ALJ on the jurisdictional question and remanded the case for further proceedings. Jicarilla then initiated this action seeking review of the IBLA's jurisdictional decision under the Administrative Procedure Act ("APA") and also asserting a breach of trust claim against defendants. Merit subsequently intervened in this action as a defendant. Currently before the Court is Merit's motion to dismiss the amended complaint. For the reasons explained below, the Court will grant this motion.

BACKGROUND

Jicarilla is a federally recognized Indian tribe with a reservation in northwest New Mexico. Am. Compl. ¶ 2. Under the Indian Mineral Leasing Act of 1938, Jicarilla is the lessor for various oil and gas mining leases with Merit. Id. ¶ 7. The tribe is entitled to royalties for oil and gas produced under these leases, which are calculated based on a provision of the leases known as the "major portion price" provision. Id. ¶ 12. MMS determines the major portion prices for gas from Jicarilla's reservation and is also responsible for auditing Jicarilla's leases. Id. ¶¶ 13-14. During an audit, MMS determined that Merit's royalties for oil and gas production under its leases with Jicarilla were miscalculated. Id. ¶¶ 14-15.

On February 16, 1999, MMS issued an OTP to Merit directing it to recalculate royalties on its leases with Jicarilla and pay any additional royalties due. Id. ¶ 16. It provided that Merit could appeal the OTP "within 30 days from service of the order." Id. ¶¶ 18-19. Merit did not appeal the OTP. Id. ¶ 24. Merit contends that it never appealed because MMS sent the OTP to a former Merit employee and it never reached Merit's management.*fn2 See Merit Mem. in Supp. of Mot. to Dismiss ("Merit Mem.") ¶ 10. On August 19, 1999, MMS issued a Notice of Noncompliance to Merit for failure to comply with the OTP. Am. Compl. ¶ 25. About a month later, Merit requested a hearing on the Notice of Noncompliance. Id. ¶ 28.

On November 16, 2001, the ALJ ruled in relevant part that the Department lacked jurisdiction to consider Merit's challenges to the substance of the OTP in the context of a hearing on the Notice of Noncompliance. Id. ¶¶ 32, 35; Merit Energy, 172 IBLA at 156. Merit appealed the ALJ's decision to the IBLA. Am. Compl. ¶ 38. The IBLA reversed the ALJ on the jurisdictional question -- finding that the ALJ could consider the substance of the OTP in the Notice of Noncompliance proceedings -- and remanded the case to the ALJ for further proceedings. Id. ¶¶ 40, 43; Merit Energy, 172 IBLA at 156.

Jicarilla filed a complaint against defendants in this Court on February 25, 2008 and an amended complaint followed on May 1, 2008. Jicarilla contends that the IBLA's decision on the jurisdictional question is arbitrary, capricious, and an abuse of discretion in violation of the APA, 5 U.S.C. § 706 (Count I). It also asserts that defendants violated their trust responsibility to Jicarilla because the IBLA's decision places an excessive burden on MMS's ability to enforce Indian leases (Count II). Jicarilla seeks a declaratory judgment setting aside the IBLA's decision. Am. Compl. at 10. On September 8, 2008, Merit filed an unopposed motion to intervene in this action as a defendant, which the Court granted. That same day, Merit filed a motion to dismiss both counts of the amended complaint. Merit contends that Count I should be dismissed because the IBLA's decision was not "final agency action," and thus is not subject to judicial review under the APA. Merit Mem. at 6. Moreover, Merit argues that because Jicarilla seeks only declaratory relief as to both counts of its amended complaint, Count II should be dismissed as well because there has been no final agency action. Merit Reply at 2.

STANDARD

Merit's motion requests dismissal of the amended complaint pursuant to Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6). Merit Mot. at 1. Dismissal on the ground of no final agency action under the APA is properly sought under Rule 12(b)(6). Fund for Animals, Inc. v. U.S. Bureau of Land Mgmt., 460 F.3d 13, 18 n.4 (D.C. Cir. 2006). The issue of ripeness falls under Rule 12(b)(1). See Venetian Casino Resort, L.L.C. v. EEOC, 409 F.3d 359, 363-64 (D.C. Cir. 2005).

"[I]n passing on a motion to dismiss, whether on the ground of lack of jurisdiction over the subject matter or for failure to state a cause of action, the allegations of the complaint should be construed favorably to the pleader." Scheuer v. Rhodes, 416 U.S. 232, 236 (1974); see Leatherman v. Tarrant Cty. Narcotics and Coordination Unit, 507 U.S. 163, 164 (1993); Phillips v. Bureau of Prisons, 591 F.2d 966, 968 (D.C. Cir. 1979). Therefore, the factual allegations must be presumed true, and plaintiff must be given every favorable inference that may be drawn from the allegations of fact. Scheuer, 416 U.S. at 236; Sparrow v. United Air Lines, Inc., 216 F.3d 1111, 1113 (D.C. Cir. 2000). However, the Court need not accept as true "a legal conclusion couched as a factual allegation," nor inferences that are unsupported by the facts set out in the complaint. Trudeau v. Federal Trade Comm'n, 456 F.3d 178, 193 (D.C. Cir. 2006) (quoting Papasan v. Allain, 478 U.S. 265, 286 (1986)).

Under Rule 12(b)(1), the party seeking to invoke the jurisdiction of a federal court --plaintiff here -- bears the burden of establishing that the court has jurisdiction. See US Ecology, Inc. v. U.S. Dep't of Interior, 231 F.3d 20, 24 (D.C. Cir. 2000) (citing Steel Co. v. Citizens for a Better Env't, 523 U.S. 83, 103-04 (1998)); see also Grand Lodge of Fraternal Order of Police v. Ashcroft, 185 F. Supp. 2d 9, 13 (D.D.C. 2001) ("[A] Rule 12(b)(1) motion imposes on the court an affirmative obligation to ensure that it is acting within the scope of its jurisdictional authority."); Pitney Bowes, Inc. v. U.S. Postal Serv., 27 F. Supp. 2d 15, 19 (D.D.C. 1998). Although a court must accept as true all the factual allegations contained in the complaint when reviewing a motion to dismiss pursuant to Rule 12(b)(1), Leatherman, 507 U.S. at 164, "'plaintiff[s'] factual allegations in the complaint . . . will bear closer scrutiny in resolving a 12(b)(1) motion' than in resolving a 12(b)(6) motion for failure to state a claim." Grand Lodge, 185 F. Supp. 2d at 13-14 (quoting 5A Charles Alan Wright & Arthur R. Miller, Federal Practice and Procedure § 1350 (2d ed. 1990)). At the stage of litigation when dismissal is sought, a plaintiff's complaint must be construed liberally, and the plaintiff should receive the benefit of all favorable inferences that can be drawn from the alleged facts. See EEOC v. St. Francis Xavier Parochial Sch., 117 F.3d 621, 624 (D.C. Cir. 1997). Additionally, a court may consider material other than the allegations of the complaint in determining whether it has jurisdiction to hear the case, as long as it still accepts the factual allegations in the complaint as true. See Jerome Stevens Pharmaceuticals, Inc. v. FDA, 402 F.3d 1249, 1253-54 (D.C. Cir. 2005); St. Francis Xavier Parochial Sch., 117 F.3d at 624-25 n.3; Herbert v. Nat'l Acad. of Scis., 974 F.2d 192, 197 (D.C. Cir.1992).

In reviewing a motion to dismiss pursuant to Rule 12(b)(6), the Court is mindful that all that the Federal Rules of Civil Procedure require of a complaint is that it contain "'a short and plain statement of the claim showing that the pleader is entitled to relief,' in order to 'give the defendant fair notice of what the . . . claim is and the grounds upon which it rests.'" Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (quoting Conley v. Gibson, 355 U.S. 41, 47 (1957)); accord Erickson v. Pardus, 551 U.S. 89, 93 (2007) (per curiam). Although "detailed factual allegations" are not necessary to withstand a Rule 12(b)(6) motion to dismiss, to provide the "grounds" of "entitle[ment] to relief," a plaintiff must furnish "more than labels and conclusions" or "a formulaic recitation of the elements of a cause of action." Twombly, 550 U.S. at 555-56; see also Papasan, 478 U.S. at 286. "To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face.'" Ashcroft v. Iqbal, 556 U.S. ___, 129 S.Ct. 1937, 1949 (2009) (quoting Twombly, 550 U.S. at 570); Atherton v. District of Columbia Office of the Mayor, --- F.3d ---, 2009 WL 1515373, at *6 (D.C. Cir. 2009). A complaint is plausible on its face "when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Iqbal, 129 S.Ct. at 1949. This amounts to a "two-pronged approach" under which a court first identifies the factual allegations entitled to an assumption of truth and then determines "whether they plausibly give rise to an entitlement to relief." Id. at 1950-51.

ANALYSIS

I. Count I -- Judicial Review of the ...


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