Maralex Res., Inc. v. Barnhardt

January 18, 2019

United States Court of Appeals, Tenth Circuit

January 18, 2019

913 F.3d 1189 (Click for text of opinion)

The Tenth Circuit Court of the United States held that the “Inspection” provision, 30 U.S.C.S. § 1718(b) of the Federal Oil and Gas Royalty Management Act of 1982 (FOGRMA), did not provide authority for the Bureau of Land Management (BLM) to require private landowners to provide BLM with a key to a lease site or to allow BLM to install its own locks on the gates to such lease sites.

Maralex operated a private oil and gas lease on private property owned by another party who maintained surface and mineral rights (“landowner”). When a BLM engineering technician attempted to inspect four oil wells operated by Maralex, a locked gate denied his access and he was met by the landowner who told the technician that he had no right to access. Maralex was served with notice of violations of federal law, in which BLM suggested corrective action that either BLM be given a key to the lock for access, or else that the lock be replaced with a BLM lock. An administrative appeal resulted in a decision that FOGRMA authorized entry without advance notice for inspections. Maralex and the Property Owner filed suit to reverse the administrative ruling. The district court upheld the decision and an appeal followed.

The 10th Circuit Court held that while the plain language of FOGRMA clearly allowed the right to enter leased sites on federal and/or tribal land, specifically, it was silent as to entry on leased sites on privately owned land. Because of this silence, the Court held that the BLM had the authority to conduct unannounced inspection of such sites, but must rely on the operating rights owner or operator to afford them entry to the lease site. BLM could not therefore require a key or lock access that would allow unfettered right of access.