REPLY OF DEFENDANTS, B & G OIL COMPANY AND WELLCO ENERGY, INC., TO RESPONSE OF PLAINTIFFS [DKT. 162] TO MOTION TO DISMISS [DKT.

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1 Case 4:14-cv JHP-FHM Document 170 Filed in USDC ND/OK on 11/07/14 Page 1 of 10 IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF OKLAHOMA MARTHA DONELSON, et al., Plaintiffs, v UNITED STATES OF AMERICA, et al., Defendants. No. 14-CV-316-JHP-FHM [Judge James H. Payne] REPLY OF DEFENDANTS, B & G OIL COMPANY AND WELLCO ENERGY, INC., TO RESPONSE OF PLAINTIFFS [DKT. 162] TO MOTION TO DISMISS [DKT. 124] Non-Federal Defendants, B & G Oil Company and Wellco Energy, Inc., respectfully reply to the Response of Plaintiffs [DKT. 162] to the Motion to Dismiss of B & G Oil Company and Wellco Energy, Inc. [DKT. 124]. The fatal flaw in Plaintiffs' attempt to subject Non-Federal Defendants to subject matter jurisdiction of this Court is vividly exposed in Plaintiffs' Response to our Motion to Dismiss [DKT. 162]. I. PLAINTIFFS' PREMISE THAT NEPA CAUSES LEASES TO BE "VOID AB INITIO" IS UNFOUNDED AND UNSUPPORTABLE Plaintiffs' connecting premise that concession agreements, leases and drilling permits are all void ab initio is not supported by any law which can be identified and is the fatal flaw in Plaintiffs' claim against Non-Federal Defendants. Certainly, Plaintiffs do not cite any support for such theory in their brief or otherwise. Courts

2 Case 4:14-cv JHP-FHM Document 170 Filed in USDC ND/OK on 11/07/14 Page 2 of 10 have held that an agency which does not have proper NEPA review cannot deny the agreements or leases which have already been entered into. For instance, in Sierra Club v Peterson, 717 F.2d 1409 (D.C. Cir. 1983, the Court held that, even though there were NEPA challenges and, perhaps, additional requirements, the Government could not deny drilling permits to drill on leases which had been entered into, but could only impose reasonable conditions. In other words, the Interior Department could not and the court could not void the actions already taken. See also, Chihuahuan Grasslands Alliance v Norton, 507 F. Supp. 2d 1216 (D. N.M. 2007, 1235 ["it is true that the agency cannot forbid all oil and gas development on land for which it has issued leases"]; Conner v Burford, 848 F.2d 1441 (9th Cir. 1988, 1449 [agreeing with Sierra Club v Peterson, supra., limiting government action to post-leasing reasonable regulations consistent with the lease development and environment]. Plaintiffs concede that Non-Federal Defendants and the Osage Nation are not subject to NEPA requirements and that NEPA forms no basis for suing Non-Federal Defendants in this case. (See, Defs.' Mot. to Dismiss [DKT. 124], pp Plaintiffs' claims against Non-Federal Defendants depend entirely upon their premise that they have legitimate administrative procedure appeals and/or a legitimate declaratory judgment justiciable issue against the Federal Defendants and that failure of the BIA to meet NEPA's "hard look" requirement, causes all 2

3 Case 4:14-cv JHP-FHM Document 170 Filed in USDC ND/OK on 11/07/14 Page 3 of 10 concession agreements, leases and drilling permits of Non-Federal Defendants to be "void ab initio" thereby converting lessees and concession holders into trespassers, subject to pendent subject matter jurisdiction of this Court. Even if Plaintiffs were to overcome the valid objections that their claim is programmatic and there are no individual legitimate APA appeals or other discrete justiciable events pled or existing (Defs.' Mot. to Dismiss [DKT. 124], p. 8; Federal Defendants' Mot. to Dismiss [DKT. 148], pp. 8-9, Plaintiffs cannot support under any theory of law that, because of NEPA review, thousands of long-existing concession agreements, leases and drilling permits "are void ab initio." II. PLAINTIFFS' ATTACK ON COMPLETED ACTIONS AND VESTED INTERESTS IS MOOT The Court will not entertain subject matter jurisdiction over issues which are moot. Cox v Phelps Dodge Corp., 43 F.3d 1345, 1348 (10th Cir It is well established that the doctrine of mootness applies to alleged NEPA issues. Florida Wildlife Fed'n v Goldschmidt, 611 F.2d 547 (5th Cir. 1980, and other cases cited in Defendants' Motion to Dismiss [DKT. 124]. Plaintiffs assert the mootness doctrine does not apply to NEPA and cite the case of Airport Neighbors Alliance, Inc. v United States, 90 F.3d 426 (10th Cir. 1996, and similar cases. These cases do not support Plaintiffs' position. In these cases, a NEPA examination was not considered moot 3

4 Case 4:14-cv JHP-FHM Document 170 Filed in USDC ND/OK on 11/07/14 Page 4 of 10 for future and ongoing activities or construction. Completed items did render NEPA moot. In Airport Neighbors Alliance, at 428, the Court stated: "Ordinarily, a NEPA claim no longer presents a live controversy when the proposed action has been completed and when no effective relief is available.... However, courts still consider NEPA claims after the proposed action has been completed when the court can provide some remedy if it determines that an agency failed to comply with NEPA as to a specific discreet event or action." Id., 428. Leases executed by the Nation, wells drilled, concession agreements negotiated by the Nation or the Tribal Council and investment in exploration and production and the receipt of royalties over 40 years are completed actions, vested rights and done deals which should not be, and cannot be, set aside as void ab initio based upon allegations of inadequate NEPA review. The Plaintiffs' sole basis for attempting to subject Non-Federal Defendants to jurisdiction of the Court in this action is their flawed premise that "concession agreements, leases and drilling permits are void ab initio." This premise cannot withstand judicial examination because it seeks to set aside completed transactions and events which are now moot. III. WHEN PLAINTIFFS ATTACK THE VESTED INTEREST OF THE OSAGE NATION, IT IS AN INDISPENSABLE PARTY Plaintiffs' position on indispensable party likewise cannot withstand judicial examination. 4

5 Case 4:14-cv JHP-FHM Document 170 Filed in USDC ND/OK on 11/07/14 Page 5 of 10 Initially, Plaintiffs' contention that the Osage mineral estate is held in trust by the United States or Department of Interior is not correct. The Osage minerals were reserved from the surface allotment deeds to tribal members by the Act of 1906 for a term of 25 years (34 Stat. L. 539, June 28, That reservation of minerals was extended over the years and, in the Act of 1978 (92 Stat. L. 1660, January 19, 1978, Congress extended the reservation to perpetuity. The Act of 1906, SEC. 3, provided that the minerals covered by the land selection "are hereby reserved to the Osage tribe for a period of twenty-five years..." and that leases for production of minerals "may be made by the Osage tribe of Indians through its tribal council, and with the approval of the Secretary of the Interior, and under such rules and regulations as he may prescribe: Provided, That the royalties to be paid to the Osage tribe under any mineral lease so made shall be determined by the President of the United States...". In other words, the Osage Tribe owns the minerals and it is the responsibility of the Secretary of Interior to set up rules for leasing and production. That is not a trust relationship. No where in the Department regulations, 25 C.F.R., Part 226, is the Secretary obliged to sue, be sued or defend suits on behalf of the Osage Nation. It is true that SEC. 4 of the Act of 1906 required the United States to collect and account for money from the minerals and that such money until accounted for is held in trust. A number of courts have referred to trust relationship; however, the only trust relationship deals with money, the accounting for money and the payment 5

6 Case 4:14-cv JHP-FHM Document 170 Filed in USDC ND/OK on 11/07/14 Page 6 of 10 of money, all of which have been the subject of litigation. There is no trust ownership or relationship of the Osage minerals by the United States or Department of Interior. Thus, Plaintiffs' reliance upon cases where the Government did hold land in trust is wholly inapposite. In addition, Plaintiffs ignore the consequences of their claim that NEPA is the basis for voiding existing transactions and vested interests, including those of the Osage Nation. Plaintiffs again fail to distinguish between future or existing actions for which NEPA can assure the "hard look" required as to environmental and sitespecific concerns, the claim and remedy which they seek against the Non-Federal Defendants is vitiate all leases, permits, etc. The courts have clearly distinguished between matters which adjust or even delay an action and those which would terminate or set aside an action involving a vested interest. (Defs.' Mot. to Dismiss [DKT. 124], pp For purposes of their legal position, Plaintiffs contend they only want to address the adequacy of NEPA examinations as applied to leases and that it would not involve any vested right of the Osage Nation or the holders of leases. This would be similar to the situation in Manygoats v Kleppe, 588 P.2d 556 (10th Cir. 1977, wherein the court was examining whether a delay in an existing lease would require joinder of the Tribe. However, what Plaintiffs seek against the Non-Federal Defendants is to terminate all of their vested rights, along with those of the Osage Nation, who has granted the leases and to whom the royalties have been 6

7 Case 4:14-cv JHP-FHM Document 170 Filed in USDC ND/OK on 11/07/14 Page 7 of 10 and will continue to be paid if not set aside. These are clearly a vested interest and not an inchoate interest. When the action challenged is completed and it involves vested interests, as opposed to inchoate interests, the affected party to the interest is an indispensable party. Citizen Potawatomi Nation v Norton, 248 F.3d 993 (10th Cir. 2001, 997. In other words, Plaintiffs' position may be effective with the federal agency to examine procedures to determine whether they are arbitrary and capricious, but it is not effective when NEPA is used as a basis to terminate existing and vested rights. The Osage Nation is both the lessor and the recipient of the royalties under producing leases and, therefore, if we are to consider cancelling all of its leases, is an indispensable party. CONCLUSION Plaintiffs' theories in this case are based on little fact and even less law. However, their premise is simple. NEPA procedures were not done sufficiently to satisfy Plaintiffs. Because of that, all concession agreements, leases and well permits of the Osage Nation and the Osage mineral estate are void ab initio. The Non-Federal Defendants under authority of all those void concession agreements, leases and well permits have been going upon the surface owners' land illegally and, thereby, are trespassers and should be punished. 7

8 Case 4:14-cv JHP-FHM Document 170 Filed in USDC ND/OK on 11/07/14 Page 8 of 10 Even if Plaintiffs were to satisfy the deficiencies of the foundation for their APA and declaratory judgment actions, they can never cure the unsupported fallacy that inadequate NEPA review results in a completed transaction being void ab initio. Nor can the Court terminate vested leases and agreement without the party who will lose the agreement and its proceeds, the Osage Nation. Plaintiffs' allegations and briefs do not support subject matter jurisdiction in this Court of the claims or theories asserted by Plaintiffs in their First Amended Complaint [DKT. 46]. Nor, if this Court does have subject matter jurisdiction, can this case proceed without the Osage Nation, an indispensable party. Respectfully Submitted, B & G OIL COMPANY WELLCO ENERGY, INC. By: s/ Guy Clark GUY CLARK OBA #1698 Northcutt, Clark, Gardner, Hron & Brune P.O. Drawer 1669 Ponca City, OK Telephone: ( Facsimile: ( Attorneys for Defendants, B & G Oil Company and Wellco Energy, Inc. 8

9 Case 4:14-cv JHP-FHM Document 170 Filed in USDC ND/OK on 11/07/14 Page 9 of 10 CERTIFICATE OF SERVICE I hereby certify that on this 7th day of November, 2014, I electronically transmitted the foregoing document to the Clerk of the Court using the ECF System for filing and transmittal of a Notice of Electronic Filing to the following ECF registrants: Gentner F. Drummond OBA #16645 Garry M. Gaskins, II OBA #20212 Donald A. Lepp OBA #16260 J. Randall Miller OBA #6214 Wendy P. Drummond OBA #21697 DRUMMOND LAW, PLLC 1500 S. Utica, Ste. 400 Tulsa, OK ( ( [facsimile] gfd@drumlaw.com gmg@drumlaw.com dal@drumlaw.com wpd@drumlaw.com federalfilings@drumlaw.com aft@drumlaw.com has@drumlaw.com Attorneys for Plaintiffs Cathryn D. McClanahan OBA #14853 Wyn Dee Baker OBA #465 UNITED STATES ATTORNEY'S OFFICE 110 W. 7th St., Ste. 300 Tulsa, OK ( ( [facsimile] cathy.mcclanahan@usdoj.gov wyndee.baker@usdoj.gov carie.s.mcwilliams@usdoj.gov christina.watson@usdoj.gov connie.sullivent@usdoj.gov AND Stephen R. Terrell CA Bar # U.S. DEPARTMENT OF JUSTICE Ben Franklin Station, P.O. Box 7611 Washington, D.C ( ( [facsimile] stephen.terrell@usdoj.gov efile_nrs.enrd@usdoj.gov Attorneys for Defendant, United States of America, Department of Interior, ex rel. Bureau of Indian Affairs James M. Chaney OBA #1606 KIRK & CHANEY 101 Park Ave., Ste. 800 Oklahoma Ctiy, OK ( ( [facsimile] chaney@kirkandchaney.com cjones@kirkandchaney.com standard@kirkandchaney.com Attorney for Defendant, Cardinal River Energy I LP Randall G. Vaughan OBA #11554 Robert Mitchener, III OBA #30178 PRAY WALKER, P.C. 100 W. 5th St., Ste. 900 Tulsa, OK ( ( [facsimile] rvaughan@praywalker.com rmitchener@praywalker.com hkinney@praywalker.com sjohndrow@praywalker.com kscibilia@praywalker.com Attorney for Defendant, Ceja Corporation J. Kevin Hayes OBA #4003 Pamela Anderson OBA #11613 HALL, ESTILL, HARDWICK, GABLE, GOLDEN & NELSON 320 S. Boston Ave., Ste. 200 Tulsa, OK ( khayes@hallestill.com panderson@hallestill.com lwest@hallestill.com lhooks@hallestill.com ghambrick@hallestill.com Attorneys for Defendants, CEP Mid-Continent LLC & Halcon Resources Corporation Nicholas V. Merkley OBA #20284 FELLERS SNIDER BLANKENSHIP BAILEY & TIPPENS, P.C. 100 N. Broadway, Ste Opklahoma City, OK ( ( [facsimile] mmerkley@fellerssnider.com lpeebles@fellerssnider.com npaulk@fellerssnider.com AND Anthony J. Shaheen CO Bar #14295 Christopher A. Chrisman CO Bar #33132 HOLLAND & HART, LLP th St., Ste Denver, CO ( ( [facsimile] ajshaheen@hollandhart.com cachrisman@hollandhart.com intaketeam@hollandhart.com kpbell@hollandhard.com sjohnson@hollandhart.com Attorney for Defendant, Chaparral Energy, LLC Mary Quinn Cooper OBA #11966 Charles Greenough OBA #12311 Jessica John Bowman OBA #30388 MCAFEE & TAFT 1717 S. Boulder Ave., Ste. 900 Tulsa, OK ( ( [facsimile] maryquinn.cooper@mcafeetaft.com charles.greenough@mcafeetaft.com jessica.johnbowman@mcafeetaft.com anna.deshazo@mcafeetaft.com julia.wallis@mcafeetaft.com karen.dutton@mcafeetaft.com jessicajohnbowman@gmail.com AND Timothy J. Bomhoff OBA #13172 Laura J. Long OBA #22215 MCAFEE & TAFT 10th Fl., Two Leadership Sq. 211 N. Robinson Ave. Oklahoma City, OK ( ( [facsimile] tim.bomhoff@mcafeetaft.com laura.long@mcafeetaft.com sandy.lewis@mcafeetaft.com valary.gwinn@mcafeetaft.com rina.pearce@mcafeetaft.com Attorneys for Defendants, Devon Energy Production Company, L.P. & Linn Energy Holdings, LLC AND Robert C. Mathes CO Bar #32324 BJORK LINDLEY LITTLE PC 1600 Stout St., Ste Denver, CO ( ( [facsimile] rmathes@bjorklindley.com sgunter@bjorklindley.com Attorneys for Defendant, Devon Energy Production Company, L.P. 9

10 Case 4:14-cv JHP-FHM Document 170 Filed in USDC ND/OK on 11/07/14 Page 10 of 10 Frederic Dorwart OBA #2436 J. Michael Medina OBA #6113 Paul DeMuro OBA #17605 Miriam LeeAnn Sweetin OBA #30270 FREDERIC DORWART, LAWYERS 124 E. 4th St. Tulsa, OK ( ( [facsimile] Attorneys for Defendants, Kaiser-Francis Anadarko, LLC & Nadel and Gussman, LLC C. Michael Copeland OBA #13261 JONES, GOTCHER & BOGAN, P.C. 15 E. 5th St., Ste Tulsa, OK ( ( [facsimile] Attorney for Defendant, Lamamco Drilling, Inc. Lee I. Levinson OBA #5395 Terence P. Brennan OBA #10036 Trevor R. Henson OBA #30104 Evan M. McLemore OBA #31407 LEVINSON, SMITH & HUFFMAN, P.C E. 71st St. Tulsa, OK ( ( [facsimile] Attorneys for Defendants, The Link Oil Company & Toomey Oil Company Bruce W. Robinett OBA #7667 Jess M. Kane OBA #22418 Rick D. Tucker OBA #15864 BREWER, WORTEN, ROBINETT P.O. Box 1066 Bartlesville, OK ( ( [facsimile] Attorneys for Defendants, Performance Energy Resources, LLC; Short Oil, LLC; Marco Oil Company, LLC; Osage Energy Resources, LLC; Helmer Oil Corp.; and Clear Mountain Production, LLC Jack H. Santee OBA #7903 Scott V. Morgan OBA #30183 MOYERS MARTIN, LLP 401 S. Boston Ave., Ste Tulsa, OK ( ( [facsimile] Attorneys for Defendant, Revard Oil & Gas Properties, Inc. Brian T. Inbody OBA #17188 MCNAMARA, INBODY & PARRISH, PLLC 1437 S. Boulder Ave., Ste Tulsa, OK ( Attorneys for Defendants, Sullivan and Company, LLC; Sullivan Wildcreek, LLC; Spyglass Energy Company, LLC; Orion Exploration, LLC & Warren American Oil Company Gerald L. Hilsher OBA #4218 Robert J. Joyce OBA #12728 Christina M. Vaughn OBA #21390 MCAFEE & TAFT 1717 S. Boulder Ave., Ste. 900 Tulsa, OK ( ( [facsimile] Attorneys for Defendant, Encana Oil & Gas (USA, Inc. Thomas M. Ladner OBA #5161 LADNER & ELDREDGE, PLLC 320 S. Boston Ave., Ste Tulsa, OK ( ( [facsimile] Attorney for Defendant, Black Lava Resources, LLC /s/ Guy Clark GUY CLARK 10