Prima Exploration, Inc. v. Mercier et al

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NORTH DAKOTA
)
Prima Exploration, Inc, 	)
)
Plaintiff, 	)
vs. 	)
)
Darryl LaCounte, in his official capacity 	) 	ORDER FOR DISMISSAL
as Director of the United States Bureau of 	) 	WITHOUT PREJUDICE
Indian Affairs; Bureau of Indian Affairs; 	)
Debra Halaand in her official capacity as 	)
Secretary of the United States Department 	)
of the Interior, Department of the Interior, 	)
Interior Board of Indian Appeals, Enerplus 	)
Resources (USA) Corporation; PetroShale 	)
(USA) Inc.; Madelene Bruce; Kevin Bruce; )
Lynn T. Bruce; Ronelle M. Bruce; Todd 	) 	Case No. 1:22-cv-143
Bruce; Justin L. Bruce; Lisa G. Bruce; 	)
Cheryle Danks; Sheldon J. Hand; Deborah 	)
A. Painte; Zachiery J. Sitting Crow; and 	)
Carol J. Walker, 	)
)
Defendants. 	)
______________________________________________________________________________
Before the Court are three motions to dismiss. PetroShale (USA) Inc. (“PetroShale”) filed
a motion to dismiss on April 19, 2023. See Doc. No. 54. On April 19, 2023, Darryl LaCounte, in
his official capacity as Acting Director of the United States Bureau of Indian Affairs (“BIA”), the
BIA, Debra Haaland in her official capacity as Secretary of the Department of the Interior, the
Interior Board of Indian Appeals (“IBIA”), and the BIA, as Trustee for the Heirs of Madelene
Bruce, Deceased, Kevin Bruce, Lynn T. Bruce, Ronelle M. Bruce, Todd Bruce, Justin L. Bruce,
Lisa G. Bruce, Cheryle Danks, Sheldon J. Hand, Deborah A. Painte, Zachiery J. Sitting Crow, and
Carol J. Walker (together the “Federal Defendants”) also filed a motion to dismiss. See Doc. No.
56. On April 19, 2023, Enerplus Resources (USA) Corporation (“Enerplus”) also filed a motion to
dismiss. See Doc. No. 58. The Plaintiff, Prima Exploration, Inc. (“Prima”), filed a response in
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opposition to the motions on May 24, 2023. See Doc. No. 65. On June 21, 2023, PetroShale, the
Federal Defendants, and Enerplus filed reply briefs. See Doc. Nos. 72-74. The motions have been
fully briefed and are ripe for consideration. For the following reasons, the Court orders dismissal
without prejudice.
I. 	BACKGROUND
This controversy arises from a dispute regarding a mineral leasehold interest located on the
Fort Berthold Indian Reservation. Prima held an interest in a lease approved by the BIA in 1952.
The lease covered 320 acres located in the south half of Section 16, Township 152 North, Range
94 West in McKenzie County, North Dakota (the “Disputed Leasehold”). On December 17, 2013,
the Superintendent of the BIA’s Fort Berthold Agency declared 240 acres of the Disputed
Leasehold terminated and approved a new lease of that same acreage to Enerplus. The BIA
declared the remaining 80 acres of the Disputed Lease segregated. On December 18, 2015, the
BIA declared the remaining 80 acres terminated and approved a lease of that same acreage to
PetroShale. Prima appealed the decisions to segregate and terminate the Disputed Lease. Prima
also appealed the decisions to approve the Enerplus and PetroShale leases.
On May 31, 2018, Prima filed suit (“Dismissed Case”) in this Court challenging the BIA’s
decisions regarding the Disputed Leasehold. See Doc. No. 1 in Case No. 1:18-cv-116. Prima
asserted Enerplus and PetroShale conspired with the BIA to divest Prima of its leasehold interest.
Prima requested a declaration that it has a valid interest in the Disputed Leasehold. Prima asserted
various causes of action against the BIA, including deprivation of due process and unlawful
regulatory taking. Prima also asserted various causes of action against Enerplus and PetroShale,
including trespass, conversion, tortious interference, slander of title, unjust enrichment, and
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accounting. 	In its complaint, Prima also sought a preliminary injunction against all defendants.
On October 1, 2018, the Court dismissed the case for lack of subject matter jurisdiction due to
Prima’s failure to exhaust administrative remedies. Prima Expl., Inc v. LaCounte, 2018 WL
4702153 (D.N.D. Oct. 1, 2018).
On September 13, 2018, the Regional Director of the BIA supplemented the file in the first
of Prima’s four appeals (“Appeal No. 1”) with lease assignments that had been retroactively
approved and affected Prima’s interest in the Disputed Lease. On October 15, 2018, Prima filed
an inaction appeal with the BIA in accordance with 25 C.F.R. § 2.8, challenging inaction regarding
Appeal No. 1. On November 18, 2018, the Regional Director issued an opinion on Appeal No. 1
affirming the Superintendent’s decision to segregate and partially terminate Prima’s lease. The
issuance of the decision resulted in dismissal of Prima’s inaction appeal. Prima appealed the
Regional Director’s decision to the IBIA. The IBIA has not yet issued a decision on Appeal No.
1. Appeal Nos. 2, 3, and 4 remain before the Regional Director. According to the Federal
Defendants, the Regional Director will issue a decision in the remaining appeals after the IBIA
issues its decision on Appeal No. 1 because the subject matter is so closely related. See Doc. No.
57, p. 7.
Prima filed the present action on August 8, 2022, based on the same legal theories as the
Dismissed Case. See Doc. No. 1. On March 20, 2023, Prima filed an amended complaint. See Doc.
No. 50. Prima’s amended complaint primarily differs from the original complaint in this case and
the complaint in the Dismissed Case in that it adds three parties and two claims. Prima added the
Department of the Interior (“DOI”), Debra Haaland in her official capacity as Secretary of the
Department of the Interior, and the Interior Board of Indian Appeals as parties. In count six of the
amended complaint Prima seeks a writ of mandamus compelling the DOI, Secretary Haaland, the
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BIA, and the IBIA to act on Prima’s administrative appeal. In count seven Prima seeks an order
compelling the DOI and its agencies to enforce an automatic stay in favor of Prima because of
their violation of 5 U.S.C. § 706(1) and an order compelling the DOI and its agencies to conclude
its proceedings in a legal and timely fashion. The amended complaint also differs from the
complaint in the Dismissed Case in that it includes facts regarding Prima’s inaction appeal, BIA’s
supplementation of the record, the Regional Director’s decision in Appeal No. 1, and Prima’s
appeal of the decision in Appeal No. 1.
II. 	LEGAL DISCUSSION
PetroShale, the Federal Defendants and Enerplus filed motions to dismiss. The Federal
Defendants and Enerplus argue this Court lacks subject matter jurisdiction because there are
appeals pending before the BIA and IBIA, and thus Prima has failed to exhaust its administrative
remedies. See Doc. Nos. 57 and 59. PetroShale’s motion to dismiss argues this Court lacks subject
matter jurisdiction because issue preclusion prevents Prima from relitigating the claims raised in
the Dismissed Case. See Doc. No. 55. Prima acknowledges the doctrine of exhaustion ordinarily
would apply to its case, but contends various exceptions excuse it from pursuing administrative
remedies. See Doc. No. 50. Prima also disputes PetroShale’s assertion that it cannot relitigate its
claims and argues that the controlling facts are substantially different from the underlying facts in
the Dismissed Case. As discussed below, the Court concludes Prima must exhaust administrative
remedies before bringing suit in this Court.
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A. 	STANDARD OF REVIEW
Federal Rule of Civil Procedure 12(b)(1) governs motions to dismiss for lack of subject
matter jurisdiction. “Subject matter jurisdiction defines the court’s authority to hear a given type
of case.” Carlsbad Tech., Inc. v. HIF Bio, Inc., 556 U.S. 635, 639 (2009). Jurisdictional issues are
a matter for the court to resolve prior to trial. Osborn v. United States, 918 F.2d 724, 729 (8th Cir.
1990). The Plaintiff bears the burden to prove subject matter jurisdiction exists. Herden v. United
States, 726 F.3d 1042, 1046 (8th Cir. 2013).
“A court deciding a motion under Rule 12(b)(1) must distinguish between a ‘facial attack’
and a ‘factual attack’ on jurisdiction.” Osborn, 918 F.2d at 729 n.6. In a facial attack, “the court
restricts itself to the face of the pleadings, and the non-moving party receives the same protections
as it would defending against a motion brought under Rule 12(b)(6).” Id. (internal citations
omitted). “In a factual attack, the court considers matters outside the pleadings, and the non-
moving party does not have the benefit of 12(b)(6) safeguards.” Id. (internal citation omitted). If a
defendant wishes to make a factual attack on “the jurisdictional allegations of the complaint, the
court may receive competent evidence such as affidavits, deposition testimony, and the like in
order to determine the factual dispute.” Titus v. Sullivan, 4 F.3d 590, 593 (8th Cir. 1993). In this
case, the Court will treat these motions as facial attacks and afford the Plaintiff all the protections
afforded by Rule 12(b)(6). The Court will consider only the complaint and the exhibits attached to
the complaint. 	See Carlsen v. GameStop, Inc., 833 F.3d 903, 908 (8th Cir. 2016) (discussing a
facial attack).
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B. 	EXHAUSTION OF ADMINISTRATIVE REMEDIES
Prima asserts the BIA, PetroShale, and Enerplus conspired to divest it of its interest in the
Disputed Leasehold. Prima’s allegations are premised upon its assertion that the BIA’s decision
regarding the Disputed Leasehold is incorrect. In its amended complaint Prima stated, “Prima
brings this lawsuit seeking a declaration that Prima’s interests in the lease have not been segregated
or terminated and for judgment in the amount of all damages caused by this wrongful conduct.”
See Doc. No. 50, p. 3. Consequently, the issue of whether Prima’s lease was improperly segregated
and terminated must be addressed before Prima’s conspiracy claims can be decided. When
dismissing nearly identical claims in the Dismissed Case, this Court held that Prima is required to
exhaust administrative remedies before seeking judicial review of the BIA’s decisions. Prima’s
addition of two new claims and its addition of the DOI, Secretary Haaland, and the IBIA as
defendants in this case does not change this Court’s analysis. This Court lacks subject matter
jurisdiction of Prima’s claims because Prima has not exhausted administrative remedies.
Federal district courts have subject matter jurisdiction under 28 U.S.C. § 1331 to review,
pursuant to the Administrative Procedures Act (“APA”), decisions by the BIA. Runs After v.
United States, 766 F.2d 347, 351 (8th Cir. 1985). “Although the APA may not be used as an
independent grant of subject matter jurisdiction to review agency actions, the Supreme Court stated
in Califano v. Sanders, 430 U.S. 99, 105 . . . (1997), that 28 U.S.C. § 1331 confers general
jurisdiction on federal courts to review agency actions ‘subject only to preclusion-of-review
statutes.’” Fort Berthold Land and Livestock Assoc. v. Anderson, 361 F. Supp. 2d 1045, 1049
(D.N.D. 2005). The appropriate inquiry is whether any preclusion-of-review statutes warrant
dismissal. Id.
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The BIA has promulgated specific provisions governing appeals. Under 25 C.F.R. § 2.6, a
BIA decision does not constitute a final agency action subject to judicial review if it may be
appealed to a superior authority within the Department of the Interior. See also Coosewoon v.
Meridian Oil Co., 25 F.3d 920, 924 (10th Cir. 1994) (“Under Department of Interior regulations,
if an agency decision is subject to appeal within the agency, a party must appeal the decision to
the highest authority within the agency before judicial review is available.”).
In Fort Berthold Land and Live Stock this Court explained the legal framework governing
BIA appeals:
Since 1975, regulations governing challenges to decisions of the Bureau of Indian
Affairs have required an administrative appeal from most BIA decisions before
judicial review of such decisions can be obtained. See, e.g., 25 C.F.R. § 2.3(b)
(1988); 40 Fed.Reg. 20, 625–626 (1975). In 1989, the regulations requiring an
administrative appeal were revised without changing the appeal requirement. See
54 Fed.Reg. 6478, 7666 (1989). The provision requiring an appeal now appears at
25 	C.F.R. 	§ 	2.6(a) 	(1992). 	These 	regulatory 	revisions 	also 	eliminated 	an
intermediate appeal to the Commissioner of Indian Affairs and provided for direct
review of BIA Area Director decisions by the Interior Board of Indian Appeals. See
54 Fed.Reg. 6478 (1989); compare 25 C.F.R. § 2.3(a) (1988) with id. § 2.4(e)
(1992). At the same time, the rules governing appeals to the IBIA were amended to
“ensure compatibility between those regulations and regulations of the Bureau of
Indian Affairs.” 54 Fed.Reg. 6483 (1989). In particular, one amendment reiterated
the need for an appeal to the IBIA before the decision could be reviewed judicially.
See id. at 6486; compare 43 C.F.R. § 4.314(a) (1991) with id. (1988).
Fort Berthold Land and Live Stock, 361 F. Supp. 2d at 1050 (citing Stock West Corp. v. Lujan,
982 F.2d 1389, 1393 (9th Cir. 1993)). 	The Court also explained the need for exhaustion of
administrative remedies in the context of BIA appeals:
‘The doctrine of exhaustion of administrative remedies is one among related
doctrines—including abstention, finality, and ripeness—that govern the timing of
federal-court decisionmaking.’ McCarthy v. Madigan, 503 U.S. 140, 144 (1992). It
is well-established that ‘[w]here relief is available from an administrative agency,
the plaintiff is ordinarily required to pursue that avenue of redress before
proceeding to the courts; and until that recourse is exhausted, suit is premature and
must be dismissed.’ Reiter v. Cooper, 507 U.S. 258 (1993); see Harris v. P.A.M.
Transport, Inc., 339 F.3d 635, 638 (8th Cir. 2003) (requiring the same).
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The exhaustion requirement serves four primary purposes. First, it
carries out the congressional purpose in granting authority to the
agency by discouraging the ‘frequent and deliberate flouting of
administrative processes [that] could . . . encourag[e] people to
ignore its procedures.’ Second, it protects agency autonomy by
allowing the agency the opportunity in the first instance to apply its
expertise, exercise whatever discretion it may have been granted,
and correct its own errors. Third, it aids judicial review by allowing
the parties and the agency to develop the facts of the case in the
administrative proceeding. Fourth, it promotes judicial economy by
avoiding 	needless 	repetition 	of 	administrative 	and 	judicial
factfinding, and by perhaps avoiding the necessity of any judicial
involvement at all, if the parties successfully vindicate their claims
before the agency. Bisson, 646 F.Supp. at 706; see also McKart v.
United 	States, 	395 	U.S. 	185 	(1969). 	Without 	an 	exhaustion
requirement, 	people 	would 	be 	encouraged 	to 	ignore 	the
administrative dispute resolution structure, destroying its utility.
Andrade v. Lauer, 729 F.2d 1475, 1484.
Peters v. Union Pacific R. Co., 80 F.3d 257, 263 (8th Cir.1996). ‘As a general rule,
judicial interference should be withheld until the administrative process has run its
course.’ Burlington Northern, Inc. v. Chicago and North Western Transp. Co., 649
F.2d 556, 558–59 (8th Cir.1981) (citing Myers v. Bethlehem Shipbuilding Corp.,
303 U.S. 41, 50–51 (1938)). Specifically, the Eighth Circuit has cautioned ‘that
declaratory actions should not be used to circumvent administrative procedures.’
Id. at 559 (citing Weinberger v. Bentex Pharmaceuticals, Inc., 412 U.S. 645, 652–
53 (1973); FPC v. Louisiana Power & Light Co., 406 U.S. 621, 647 (1972);
Whitney National Bank v. Bank of New Orleans & Trust Co., 379 U.S. 411, 421
(1965)).
Fort Berthold Land and Live Stock, at 1050-1051 (alteration in original) (portions of citations
omitted).
In the present case, Prima argues that it is not required to exhaust administrative remedies
because legal issues predominate and further proceedings before the IBIA and BIA would be futile.
Prima also argues the BIA’s delay and conduct display bias and violate its due process rights. In
the Dismissed Case the Court rejected these same arguments as to why Prima’s exhaustion is
excusable. This Court held,
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The exhaustion requirement should ‘be relaxed only under extremely exceptional
and unusual circumstances.’ Fort Berthold Land and Livestock, 361 F. Supp. 2d at
1051 (quoting Glover v. United States, 286 F.2d 84, 90 (8th Cir. 1961)). This Court
has 	required 	exhaustion 	even 	when 	delays 	on 	the 	part 	of 	the 	BIA 	were
‘unreasonable’ and ‘unwarranted.’ Id. at 1052 (‘Neither the equities nor the law
appear to favor the BIA in this prolonged dispute . . . . Nevertheless, the Court must
await a final decision by the Regional Director.')…When an administrative remedy
is available, that recourse must be pursued, ‘and until that recourse is exhausted,
suit is premature and must be dismissed.’ Reiter, 507 U.S. at 269.
Prima Expl., Inc v. LaCounte, 2018 WL 4702153, *4 (D.N.D. Oct. 1, 2018).
Nothing has changed since the Dismissed Case that excuses Prima’s failure to exhaust
administrative remedies. Since the Dismissed Case in 2018, the Regional Director supplemented
the file in Appeal No. 1. Then Prima filed an inaction appeal that was subsequently rendered moot
when the Regional Director affirmed the Superintendent’s decision in Appeal No. 1. Prima
appealed the Regional Director’s decision and the parties completed briefing on Prima’s appeal of
the Regional Director’s decision. These additional facts occurring after the Dismissed Case show
some limited progress in Prima’s administrative appeals, albeit not at Prima’s desired pace.1
Prima’s failure to exhaust administrative remedies is not excused.
C. 	5. U.S.C. § 706(1) CLAIM
In the amended complaint, Prima asserts a claim under 5 U.S.C. § 706(1) against the DOI,
Secretary Haaland, the BIA, and the IBIA. See Doc. No. 50, pp. 20-21. Prima also asserts 5 U.S.C.
§ 706(1) as a basis for jurisdiction. Section 706(1) states that a district court shall “compel agency
action unlawfully withheld or unreasonably delayed”. Under 25 C.F.R. §2.6(a), a BIA decision
does not constitute a final agency action subject to judicial review if it may be appealed to a
1 Prima’s first notice of appeal of the BIA’s administrative decision to terminate the lease was filed on January 28,
2014. There have been other appeals pending before the IBIA since December 2018. The lengthy delays in the
pending appeals before the BIA and the IBIA are senseless, thoughtless, and irrational. This Court would
respectfully request that common sense come into play and the pace of decision-making be quickened.
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superior authority within the DOI “unless the official to whom the appeal is made determines that
public safety, protection of trust resources, or other public exigency requires that the decision be
made effective immediately.” Prima refers to this provision as the “automatic stay” regulation.
Prima argues the automatic stay regulation requires the BIA to continue to recognize Prima’s lease
and legal interests as valid and in full force and effect, pending a final decision on the Disputed
Leasehold. Prima maintains the BIA ignored this regulation by treating the Enerplus and
PetroShale leases as valid. Prima contends it is entitled to an order compelling the DOI and its
agencies to enforce the automatic stay and an order compelling the DOI and its agencies to
conclude proceedings in a legal and timely fashion under 5 U.S.C. § 706(1).
In Norton v. Southern Utah Wilderness Alliance, the United States Supreme Court held
that the only agency action that can be compelled under the APA is action that is legally required
by an agency. 542 U.S.C. 55, 63. Section 706(1) “empowers a court only to compel an agency ‘to
perform a ministerial or non-discretionary act,’ or ‘to take action upon a matter, without directing
how it shall act.’ Id. at 64 (citing to Attorney General's Manual on the Administrative Procedure
Act 108 (1947)). “Thus, a claim under § 706(1) can proceed only where a plaintiff asserts that an
agency failed to take a discrete agency action that it is required to take.” Id. In Org. for Competitive
Markets v. U.S. Dep't of Agric., the Eighth Circuit Court of Appeals determined a claim under
Section 706(1) should be reviewed as a petition for a writ of mandamus. 912 F.3d 455, 462 (8th
Cir. 2018). The Eighth Circuit held, “[t]he issuance of a writ of mandamus is an extraordinary
remedy reserved for extraordinary situations.” Id.
Prima cannot show the DOI or its agencies failed to take a discrete agency action that it is
required to take under 25 C.F.R. § 2.6. 	Section 2.6 provides that a decision is final when the
official to whom the appeal is made determines that public safety, protection of trust resources, or
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other public exigency requires the decision to be made effective immediately. Prima alleges the
BIA is ignoring the automatic stay by implementing its decision. However, there has been no
decision by any BIA or IBIA official that immediate implementation of any BIA action is required
due to public safety, protection of trust resources, or other public exigency. Therefore, there is no
discrete agency action that the BIA is required to take. This is not an extraordinary situation that
entitles Prima to the extraordinary remedy of a Court order compelling agency action.
Prima does not point to any statute that compels the DOI to conclude its proceedings in a
legal and timely fashion. Thus, there is no alleged ministerial or non-discretionary act unlawfully
withheld or unreasonably delayed that this Court could compel the DOI or its agencies to take.
Accordingly, 5 U.S.C. § 706(1) does not give this Court subject matter jurisdiction over Prima’s
claims or excuse Prima of its requirement to exhaust administrative remedies. Pursuant to the APA
and 25 C.F.R. § 2.6, this Court lacks subject matter jurisdiction over this matter until Prima
exhausts administrative remedies. 2 Therefore, dismissal is warranted.
III. 	CONCLUSION
The Court has carefully reviewed the entire record, the parties’ filings, and the relevant
law. For the reasons set forth above, the Federal Defendants and Enerplus’s motions to dismiss
are GRANTED (Doc. Nos. 56 and 58). PetroShale’s motion to dismiss (See Doc. No. 54) is
MOOT. The case is dismissed without prejudice for lack of subject matter jurisdiction.
IT IS SO ORDERED
Dated this 25th day of October, 2023.
2 Because the Eighth Circuit treats Section 706(1) claims as equivalent to a writ of mandamus, the Court need not
address whether the Plaintiff’s request for a writ of mandamus in Count 6 provides the Court subject matter
jurisdiction in this case.
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/s/ Daniel L. Hovland
Daniel L. Hovland, District Judge
United States District Court
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