Opinion
Case No. 1:18-CV-00217
04-06-2020
Tex HALL, individually, and on behalf of the Fort Berthold Allottee Land and Mineral Owners Association, Melanie Brugh-Johnson, Vernita Finley, and all other similarly situated Allottees on the Fort Berthold Indian Reservation, McKenzie and Dunn Counties, North Dakota, Plaintiffs, v. TESORO HIGH PLAINS PIPELINE COMPANY, LLC, Tesoro Logistics GP, LLC, Tesoro Companies, Inc. (Tesoro) aka Andeavor, and Andeavor Logistics, LP, Defendants.
Debra L. Hoffarth, Ashleigh B. Ensrud, Matthew H. Olson, Reed Alan Soderstrom, Scott M. Knudsvig, Pringle & Herigstad PC, Minot, ND, for Plaintiffs. Jeffrey A. Webb, Norton Rose Fulbright US LLP, San Antonio, TX, Matthew A. Dekovich, Norton Rose Fulbright US LLP, Houston, TX, Robert D. Comer, Norton Rose Fulbright US LLP, Denver, CO, for Defendants.
Debra L. Hoffarth, Ashleigh B. Ensrud, Matthew H. Olson, Reed Alan Soderstrom, Scott M. Knudsvig, Pringle & Herigstad PC, Minot, ND, for Plaintiffs.
Jeffrey A. Webb, Norton Rose Fulbright US LLP, San Antonio, TX, Matthew A. Dekovich, Norton Rose Fulbright US LLP, Houston, TX, Robert D. Comer, Norton Rose Fulbright US LLP, Denver, CO, for Defendants.
ORDER GRANTING, IN PART, AND DENYING, IN PART, MOTION TO DISMISS
Daniel M. Traynor, District Judge
[¶1] THIS MATTER comes before the Court on the Motions to Dismiss filed on March 29, 2019 by the Defendants, Tesoro High Plains Pipeline Company, LLC, Tesoro Logistics, GP, LLC, Tesoro Companies, Inc. (Tesoro) aka Andeavor, and Andeavor Logistics L.P. (collectively referred hereinafter as "Defendants"). See Doc. Nos. 20, 27. The Plaintiffs, Tex Hall, individually, and on behalf of the Fort Berthold Allottee Land and Mineral Owners Association, Melanie Brugh-Johnson, Vernita Finley, and all other similarly situated Allottees on the Fort Berthold Indian Reservation, McKenzie and Dunn Counties, North Dakota (collectively referred hereinafter as "Plaintiffs") filed a Response to the Motions to Dismiss on May 13, 2019. Doc. No. 30. The Defendants filed Replies in Support of the Motions to Dismiss on July 1, 2019. Doc. Nos. 34, 35. For the reasons stated below the Motion to Dismiss is GRANTED, in part, and DENIED , in part, as MOOT .
I. FACTS
[¶2] The Defendants comprise of a group of oil and gas related companies which do business in the State of North Dakota and on the Fort Berthold Reservation. See Doc. No. 9, at ¶¶6-8. The Defendants operate a pipeline that runs across land within the Fort Berthold Reservation. Id. at ¶16. The Plaintiffs are enrolled members of the Three Affiliated Tribes who possess ownership interests in individually owned tracts of lands on the Fort Berthold Reservation, which are held in trust by the Bureau of Indian Affairs ("BIA"). Id. at ¶14. More specifically, the Plaintiffs to this suit have ownership interests in land under which the Defendants’ pipeline crosses. Id. It is alleged that over 450 tribal members and 64 acres of allotted lands are affected by the Defendants’ pipeline. Id. at ¶15.
Throughout this Order the Court will use the terms Plaintiffs and allottees. Because some of the allottees involved in the underlying dispute have not joined this putative class action, when the Court references "allottees" it includes both Plaintiffs and these non-joining allottees.
[¶3] The Defendants’ pipeline was installed on the Fort Berthold Reservation in 1953, pursuant to a 20-year easement dated September 18, 1953. Id. at ¶21. A new easement was issued on June 18, 1973 for another twenty-year period. Id. at ¶22. The Amended Complaint also alleges a third 20-year easement was issued on February 7, 1995, with an effective date of June 18, 1993. Id. at ¶23. It is alleged the Defendants continue to operate a pipeline on the affected lands despite no existing easement. Id. at ¶24.
[¶4] On an undisclosed date, the Defendants paid "the Three Affiliated Tribes $53,777,513 to compensate for trespass and an easement on 28.2 acres of Tribal land." Id. at ¶27. Defendants reached out to individual allottees in October of 2017 attempting to negotiate a new easement and resolve trespass claims regarding their individual allotments. Id. at ¶29. On January 30, 2018, the BIA issued an Order to Show Cause to the Defendants herein "regarding its unauthorized occupancy of the lands held in trust by the United States for the Three Affiliated Tribes and individual landowners." Id. at ¶30. Defendants notified the BIA that they were engaged in good faith negotiations with individual landowners. Id. The Plaintiffs allege "[n]egotiations have failed regarding compensation to individual Allottees regarding the continued presence of the pipeline on Plaintiffs’ property." Id. The Defendants assert negotiations are still ongoing. See Doc. No. 21, p.10.
[¶5] The Plaintiffs argue the Defendants have been in trespass since at least 2013, but possibly since 1993 because they question the validity of the 1993 easement, alleging it is void. See Doc. No. 30, p.2, n.1. They assert "Defendants may not have received consent from the Allottees in 1993, calling into question the validity of the 1993 lease." Id. The Defendants assert the 1993 easement was valid and argue the holdover allegations are still being investigated by the BIA. See Doc. No. 21, p.10.
[¶6] The Plaintiffs filed an Amended Complaint against the Defendants on January 8, 2019, asserting eleven causes of action (1) trespass; (2) unjust enrichment; (3) accounting; (4) conversion; (5) wrongful and willful occupation of property; (6) violation of federal law; (7) constructive trust; (8) actual fraud, constructive fraud, and deceit; (9) breach of contract; (10) declaratory relief; and (11) punitive damages. See Doc. No. 9.
[¶7] On March 29, 2019, the Defendants filed two Motions to Dismiss on twelve separate grounds including (1) failure to exhaust administrative remedies; (2) failure to join a required party; (3) Plaintiffs’ federal common law trespass claim and dependent declaratory relief claim fail as a matter of law; (4) Plaintiffs’ conversion claim fails to state a legally cognizable claim; (5) Plaintiffs’ constructive trust and accounting counts are not independent causes of action; (6) Plaintiffs’ unjust enrichment claim fails; (7) Plaintiffs’ wrongful and willful occupation of property count is not a cause of action; (8) Plaintiffs’ breach of contract claim fails for lack of privity; (9) Plaintiffs’ fraud and deceit claim fails to state a claim; (10) Plaintiffs have no private right of action under 25 C.F.R. § 169.25(5)(j), (vii) ; (11) punitive damages are not an independent cause of action; and (12) the "Fort Berthold Allottee Land and Mineral Owners Association" lacks standing and Tex Hall cannot sue on its behalf. See Doc. Nos. 21, 22.
[¶8] For the reasons stated below, the Court GRANTS the Motion to Dismiss on ground (1) and DENIES as MOOT grounds (2) through (12).
II. LAW AND ANALYSIS
1. Failure to Exhaust Administrative Remedies
[¶9] The Defendants assert the Court should dismiss this suit because the Plaintiffs have failed to exhaust their administrative remedies with the BIA. Specifically, they assert the BIA regulations require the Plaintiffs to complete the administrative appeal process prior to seeking judicial review. See Doc. No. 34 at p.18. In the alternative, they argue that even if the BIA regulations do not impose such a requirement, the Court should use its judicial discretion to find exhaustion is still required. Id. at p.19. The Plaintiffs counter that no statute or regulation requires them to exhaust administrative remedies with the BIA, and therefore, the Court should decline to require them to do so and allow them to proceed in this Court. See Doc. No. 30, p.17. The Court must determine first if the BIA regulations require the Plaintiffs to exhaust their administrative remedies prior to seeking suit.
i. The relevant BIA regulations require exhaustion.
[¶10] To make the determination of whether the BIA regulations require exhaustion, one must consider the relevant regulations pertaining to rights-of-way over tribal and individually owned Indian land. The BIA regulations related to rights-of-way of tribal and individual Indian owned land are set forth in 25 C.F.R Ch. 1, Subch. H, Pt. 169. The purpose of Part 169 is "intended to streamline the procedures and conditions under which BIA will consider a request to approve (i.e., grant) rights-of-way over and across tribal lands, individually owned Indian lands, and BIA lands, by providing for the use of the broad authority under 25 U.S.C. 323 – 328, rather than the limited authorities under other statutes." 25 C.F.R. § 169.1. Additionally, Part 169, "is also intended to support tribal self-determination and self-governance by acknowledging and incorporating tribal law and policies in processing a request for a right-of-way across tribal lands and defer to the maximum extent possible to Indian landowner decisions regarding their Indian land." Id.
[¶11] "BIA will act on requests for rights-of-way using the authority in 25 U.S.C. 323 – 328 and relying on supplementary authority such as 25 U.S.C. 2218, where appropriate." 25 C.F.R. § 169.6. Additionally, "rights-of-way are subject to the regulations in this Part and also all federal laws and tribal laws which are not inconsistent with applicable law." 25 C.F.R. § 169.9.
[¶12] Part 169 covers "rights-of-way over and across Indian or BIA land for ... oil and gas pipelines." 25 C.F.R. § 169.5(8). Pursuant to 25 C.F.R. § 169.4, a person who wishes to cross Indian land and who is not an owner of the tribal or individually owned Indian land must obtain a right-of-way from "[the BIA], with the consent of the owners of the majority interest in the land, and the tribe for tribal land, before crossing the land or any portion thereof." Id.
[¶13] Specifically, 25 C.F.R. § 169.107 outlines the procedure for an applicant to obtain consent from a tribe or individual Indian land owner. Pursuant to 25 C.F.R. § 169.107(a), "[f]or a right-of-way across tribal land, the applicant must obtain tribal consent, in the form of a tribal authorization and a written agreement with the tribe, if the tribe so requires, to a grant of right-of-way across tribal land." As to a right-of-way across individually owned Indian land, "the applicant must notify all individual Indian landowners and, except as provided in paragraph (b)(1) of this section, must obtain written consent from the owners of the majority interest in each tract affected by the grant of right-of-way." 25 C.F.R. § 169.107(b).
25 C.F.R. § 169.107(b)(1)(i)-(iv) states:
(1) [The BIA] may issue the grant of right-of-way without the consent of any of the individual Indian owners if all of the following conditions are met:
(i) The owners of interests in the land are so numerous that it would be impracticable to obtain consent as defined in paragraph (c) of this section;
(ii) We determine the grant will cause no substantial injury to the land or any landowner, based on factors including, but not limited to, the reasonableness of the term of the grant, the amount of acreage involved in the grant, the disturbance to land that will result from the grant, the type of activity to be conducted under the grant, the potential for environmental or safety impacts resulting from the grant, and any objections raised by landowners;
(iii) We determine that all of the landowners will be adequately compensated for consideration and any damages that may arise from a grant of right-of-way; and
(iv) We provide notice of our intent to issue the grant of right-of-way to all of the owners at least 60 days prior to the date of the grant using the procedures in § 169.12, and provide landowners with 30 days to object.
[¶14] Part 169 vests the BIA with administering the process for obtaining right-of-way across tribal land; however, it also allows a tribe or tribal organization to administer certain functions. Specifically, 25 C.F.R. § 169.8 states:
A tribe or tribal organization may contract or compact under the Indian Self–Determination and Education Assistance Act ( 25 U.S.C. 450f et seq. ) to administer on BIA's behalf any portion of this part that is not a grant, approval, or disapproval of a right-of-way document, waiver of a requirement for right-of-way grant or approval (including but not limited to waivers of fair market value and valuation), cancellation of a right-of-way, or an appeal. Applicants may inquire at either the BIA office or the tribal office to determine whether the tribe has compacted or contracted to administer realty functions.
[¶15] The BIA regulations further outline the appeal process from decisions regarding rights-of-way. 25 C.F.R. § 169.13. Particularly, "[a]ppeals from BIA decisions under this part may be taken under part 2 of this chapter, except our decision to disapprove a right-of-way grant or any other right-of-way document may be appealed only by the applicant or an Indian landowner of the tract over or across which the right-of-way was proposed." 25 C.F.R. § 169.13(a).
[¶16] This regulation allows interested parties to appeal any BIA right-of-way decision, but limits who may appeal the BIA's disapproval of a right-away grant. The avenue for those appeals is through 25 C.F.R. Ch. 1, Subch. A, Pt. 2.
The regulations also outline who "interested parties" are for purposes of appeals from BIA decisions under Part 169, noting " ‘interested party’ is defined as "any person whose land is subject to the right-of-way or located adjacent to or in close proximity to the right-of-way whose own direct economic interest is adversely affected by an action or decision." 25 C.F.R. 169.13(b).
[¶17] The appeals process of administrative decisions from the Department of the Interior are outlined in 25 C.F.R. Part 2 and 43 C.F.R. Part 4. The appeal process is specifically made applicable to the BIA through 25 C.F.R. § 2.3(a), which states it "applies to all appeals from decisions made by officials of the Bureau of Indian Affairs by persons who may be adversely affected by such decisions." 25 C.F.R. § 2.3(a). Part 2 ceases to apply only "if any other regulation or Federal statute provides a different administrative appeal procedure applicable to a specific type of decision." 25 C.F.R. § 2.3(b). Of particular importance is 25 C.F.R. § 2.6, which mandates that judicial review is not available until the BIA decision has been considered final, stating:
No decision, which at the time of its rendition is subject to appeal to a superior authority in the Department, shall be considered final so as to constitute Departmental action subject to judicial review under 5 U.S.C. 704, unless when an appeal is filed, 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.
[¶18] A review of the pertinent regulations reveals the BIA intended interested parties to utilize its appeal processes and to preclude judicial review until a final administrative decision has been made. This conclusion is in accord with this District's previous holdings and also relevant Eighth Circuit precedent. As recently as 2018, this District noted the history and importance of parties utilizing the BIA appeal process, observing:
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).
Prima Expl., Inc. v. LaCounte, No. 1:18-CV-116, 2018 WL 4702153, at *3 (D.N.D. Oct. 1, 2018) (citing Fort Berthold Land & Livestock Ass'n. v. Anderson, 361 F. Supp. 2d 1045, 1050 (D.N.D. 2005) ).
[¶19] The Eighth Circuit agrees with this approach. In Klaudt v. U.S. Dep't of Interior, the Eighth Circuit reiterated "[t]he federal regulations provide that administrative procedures must be followed before seeking relief in the court system" and noted, "[t]here are clearly detailed administrative processes and remedies set forth in 25 C.F.R. Part 2 and 43 C.F.R. Part 4." 990 F.2d 409, 411 (8th Cir. 1993). The Circuit Court rebuked the appellants in Klaudt for failing to take "even the first steps of the administrative appeal process," and instead, asserting "their claims for the first time in federal court." Id. at 411. The same scold can be made here.
[¶20] Insofar as the Plaintiffs are challenging the BIA's grant of the 1993 easement, to this Court's knowledge, the Plaintiffs have never appealed that decision with the BIA itself. The regulations require an allottee who is dissatisfied with the BIA's grant of a right-of-way to seek redress through Part 2. See 25 C.F.R. § 169.13(a). Discretionary decisions by the BIA, like the 1993 easement, must first be appealed directly to the BIA.
[¶21] As to the alleged holdover situation, it is of utmost importance to note that the BIA is apparently conducting its investigation. The BIA has not made a final determination. Since 25 C.F.R. § 2.6 allows judicial review only of final decisions by the BIA, this Court must refrain from intervening at this time. The Eighth Circuit's requirement that BIA remedies be exhausted, combined with the specifically set out administrative appeal procedures, compels the Court to conclude that Plaintiffs must exhaust their remedies through the BIA administrative procedure. Even if this Court were to find that no statute or regulation required Plaintiffs to exhaust their administrative remedies, the Court would do so using its judicial discretion.
ii. Even if the BIA regulations do not require exhaustion, the Court finds the Government's interests in exhaustion outweigh the Plaintiffs’ need for immediate judicial review.
[¶22] The Court is required to employ a balancing test when determining if exhaustion of administrative remedies should be required when no statute or regulation mandates it. West v. Bergland, 611 F.2d 710, 715 (8th Cir. 1979). "[A]dministrative remedies need not be pursued if the litigant's interests in immediate judicial review outweigh the government's interests in the efficiency or administrative autonomy that the exhaustion doctrine is designed to further." Id. This District previously outlined the important governmental interests when considering whether to require exhaustion, noting:
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. [United States v. ] Bisson, 646 F. Supp. [701] at 706 [(D.S.D.1986)] ; see also McKart v. United States, 395 U.S. 185 [89 S.Ct. 1657, 23 L.Ed.2d 194] (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 [58 S.Ct. 459, 82 L.Ed. 638] (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 [93 S.Ct. 2488, 37 L.Ed.2d 235] (1973) ; FPC v. Louisiana Power & Light Co., 406 U.S. 621, 647 [92 S.Ct. 1827, 32 L.Ed.2d 369] (1972) ; Whitney National Bank v. Bank of New Orleans & Trust Co., 379 U.S. 411 [421, 85 S.Ct. 551, 13 L.Ed.2d 386] (1965) ).
Prima Expl., Inc., 2018 WL 4702153, at *3 (citation omitted).
1. Exhaustion will allow the parties to develop a complete factual record and avoid needless repetition of administrative and judicial factfinding.
[¶23] The Court finds the governmental interests in requiring administrative exhaustion outweigh the Plaintiffs’ desire for immediate judicial review. The BIA and the parties have not had the opportunity to develop a complete factual record concerning this matter. The Plaintiffs question the legality and effect of the BIA's grant of the 1993 easement to Defendants. See Doc. No. 30, p.2, n.1. There is insufficient information in the record to determine what the BIA relied upon when it granted the 1993 easement. The BIA should be given the first opportunity to develop a factual record addressing that claim.
[¶24] The same rationale applies to the holdover claim. The BIA should again be allowed to identify facts that relate to their final determination on the holdover issue. This Court cannot make a final determination on an incomplete record and with a moving target. This is the reason that 25 C.F.R. § 2.6 requires a final decision before allowing for judicial review. Requiring exhaustion will allow the Court to have a complete factual record. It may also eliminate the need for judicial review and "promote judicial economy by avoiding needless repetition of administrative and judicial factfinding." Prima Expl., Inc., 2018 WL 4702153, at *3 (citation omitted).
2. Exhaustion will not only promote agency autonomy by allowing the BIA the opportunity in the first instance to apply its expertise, exercise whatever discretion it may have been granted, and correct its own errors, but it will also prevent encouraging people to ignore its procedures.
[¶25] The Court also finds the BIA's special status as trustee favors requiring administrative exhaustion. The BIA is entrusted with handling rights-of-way over Indian lands. See 25 C.F.R. § 169.1. While the parties disagree whether the BIA has exclusive authority to investigate right-of-way compliance issues, specifically in holdover situations, it is evident the BIA contemplated playing an active role in these situations. Throughout the regulations, the BIA has delineated certain discretionary actions it could take in both compliance investigations of rights-of-way and in holdover situations. Most importantly, the regulations provide that BIA decisions may be appealed under Part 2, which provides the BIA with the opportunity to re-evaluate its decisions and make corrections if needed. Allowing the BIA to employ these procedures promotes "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." Prima Expl., Inc., 2018 WL 4702153, at *3 (citation omitted).
See, e.g. 25 C.F.R. § 169.402(b) (2) "We may enter the Indian land subject to a right-of-way at any reasonable time, upon reasonable notice, and consistent with any notice requirements under applicable tribal law and applicable grant documents, to protect the interests of the Indian landowners and to determine if the grantee is in compliance with the requirements of the right-of-way." see also 25 C.F.R. § 169.410 "If a grantee remains in possession after the expiration, termination, or cancellation of a right-of-way, and is not accessing the land to perform reclamation or other remaining grant obligations, we may treat the unauthorized possession as a trespass under applicable law and will communicate with the Indian landowners in making the determination whether to treat the unauthorized possession as a trespass. Unless the parties have notified us in writing that they are engaged in good faith negotiations to renew or obtain a new right-of-way, we may take action to recover possession on behalf of the Indian landowners, and pursue any additional remedies available under applicable law, such as a forcible entry and detainer action. The holdover time will be charged against the new term."
[¶26] Indeed, the BIA is an active participant in this matter and issued an Order to Show Cause to the Defendants on January 30, 2018. See Doc. No. 21-10; Doc. No. 30-20. This is one of the steps in the BIA process of investigating and determining holdovers. See 25 C.F.R. § 169.404. Because the Defendants notified the BIA they were engaged in good faith negotiations with allottee landowners, the BIA has refrained from taking any action. That is exactly what the regulations allow. See 25 C.F.R. § 169.410 ("Unless the parties have notified us in writing that they are engaged in good faith negotiations to renew or obtain a new right-of-way, we may take action to recover possession on behalf of the Indian landowners, and pursue any additional remedies available under applicable law, such as a forcible entry and detainer action.").
[¶27] The Plaintiffs assert the Defendants have not engaged in good faith negotiations, there are none pending, and/or they have failed. See Doc. No. 30, p.5. However, this is all information the BIA should consider in making a final determination as to whether to treat the holdover as a trespass. The BIA should be afforded the opportunity to conduct its investigation and conclude its administrative processes regarding this matter. "As a general rule, judicial interference should be withheld until the administrative process has run its course." Prima Expl., Inc., 2018 WL 4702153, at *3. If this Court were to intervene, it would encourage others "to ignore the administrative dispute resolution structure, destroying its utility." Id.
iii. The Plaintiffs fail to prove any exceptions to the exhaustion doctrine are present here.
[¶28] Moreover, the Plaintiffs have failed to prove any of the exceptions to the exhaustion doctrine. "Courts may waive the exhaustion requirement if the claimants establish: (1) their claims to the district court are collateral to their claim of benefits; (2) that irreparable injury will follow; and (3) that exhaustion will otherwise be futile." Degnan v. Burwell, 765 F.3d 805, 808 (8th Cir. 2014). "A court deciding whether to waive exhaustion should be ‘guided by the policies underlying the exhaustion requirement.’ " J.M. v. Francis Howell Sch. Dist., 850 F.3d 944, 950 (8th Cir. 2017).
[¶29] Plaintiffs argue the futility exception applies here. While the Eighth Circuit has said "when an administrative appeal would be futile and little more than a formality, exhaustion will not be required," it also stated the futility exception applies "when there is nothing to be gained other than an agency decision adverse to the plaintiff." Sioux Valley Hosp. v. Bowen, 792 F.2d 715, 724 (8th Cir. 1986). Additionally, "[a]n administrative remedy will be deemed futile if there is doubt about whether the agency could grant effective relief." Ace Prop. & Cas. Ins. Co. v. Fed. Crop Ins. Corp., 440 F.3d 992, 1000 (8th Cir. 2006). Most concerning in this matter is the BIA has not made any decision regarding the alleged holdover by the Defendants, let alone an adverse one to the Plaintiffs. The BIA could very well conclude the Defendants are in trespass, thereby, ruling in favor of the Plaintiffs. The BIA could grant the Plaintiffs effective relief and obviate the need for judicial review.
[¶30] The Plaintiffs cite Poafpybitty v. Skelly Oil Co., 390 U.S. 365, 374, 88 S.Ct. 982, 19 L.Ed.2d 1238 (1968), for the proposition the BIA is overburdened and may not have the resources to assist them in this matter. The Supreme Court in Poafpybitty acknowledged the challenges facing the BIA regarding its trust responsibility over tribal and individually owned Indian lands, noting:
The Bureau of Indian Affairs, which is the agency of the Department of the Interior charged with fulfilling the trust obligations of the United States, is faced ‘with an almost staggering problem in attempting to discharge its trust obligations with respect to thousands upon thousands of scattered Indian allotments. In some cases, the adequate fulfillment of trust responsibilities on these allotments would undoubtedly involve
administrative costs running many times the income value of the property.’
Poafpybitty, 390 U.S. at 374, 88 S.Ct. 982.
[¶31] This is not a case where the BIA has completely failed to act. It is undisputed that the BIA invoked its administrative procedures to address the Defendants’ alleged holdover. While the Court appreciates the bureaucratic process may be frustrating, this District has required exhaustion even when delays on the part of the BIA were "unreasonable" and "unwarranted." Prima Expl., Inc., 2018 WL 4702153, at *4 ("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.").
Both parties reference the fact that the BIA sent an Order to Show Cause letter to Tesoro on January 30, 2018 in regard to the alleged holdover on allotted land. See Doc. No. 30, p.5; Doc. No. 21, p.8.
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[¶32] Rather than bringing the instant suit, the Plaintiffs may pursue administrative safe guards in the event the BIA does not take timely action. For example, 25 C.F.R. § 169.304, provides specific mechanisms for compelling BIA action when a "Superintendent does not meet a deadline for granting or denying a right-of-way, renewal, amendment, assignment, or mortgage." For those BIA decisions that do not fit in the above category, 25 C.F.R. § 2.8 provides a mechanism for challenging other BIA inaction. Under that procedure, a party whose interests are adversely affected "by the failure of an official to act on a request to the official, can make the official's inaction the subject of appeal." 25 C.F.R. § 2.8. If no action is taken after the inaction appeals process, the agency's inaction becomes final for purposes of judicial review. See Coosewoon v. Meridian Oil Co., 25 F.3d 920, 925 (10th Cir. 1994). The Plaintiffs’ decision to forego available administrative remedies is a bar to this suit. 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 v. Cooper, 507 U.S. 258, 269, 113 S.Ct. 1213, 122 L.Ed.2d 604 (1993).
[¶33] The Court understands the frustrations experienced by all parties. However, the Court also understands the BIA has a trust responsibility to protect the lands of the hundreds of allottees affected in this matter. Because the BIA has undertaken steps to fulfill that obligation, this Court must refrain from disrupting the process. The Court must await a final decision by the BIA, subject to review by the Interior Board of Indian Appeals, before judicial review in the United States District Court is warranted. The matter is still currently pending before the BIA. Simply stated, there must be an appeal of the BIA's final decision and an exhaustion of administrative remedies before judicial review is available here.
III. CONCLUSION.
[¶34] The Court GRANTS the Motion to Dismiss without prejudice on the grounds that the Plaintiffs have failed to exhaust administrative remedies. As a result, the Court DENIES AS MOOT the remaining grounds (2) through (12) of the Defendants’ Motion to Dismiss.
[¶35] IT IS SO ORDERED.