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Delgado v. Department of the Interior

Citation: 28 ELR 21523
No. 97-6125, 153 F.3d 726/(10th Cir., 07/10/1998)

The court upholds the U.S. Department of the Interior's (DOI's) decision to deny lessors' request to cancel their Native American oil and gas lease because of the lessee's royalty underpayment violations. The court first holds that the lessors' constitutional argument is meritless. Instead of arguing that the process received was constitutionally lacking, the lessors argued that the DOI Secretary's action was unreasonable. In addition to this failure to state a due process argument, the lessors failed to raise the issue adequately before the Secretary. Moreover, the lessors have no property interest in cancelling the lease, and, in any case, they received process from the Secretary that was more than sufficient. The court next holds that the Secretary's interpretation of the cancellation provision set forth at 25 C.F.R. § 212.23(a) is permissible. There is no justification for concluding that the severe sanction of cancellation of the lease is the only relief for all breaches of the lease terms or for any failureto pay royalties. Moreover, disallowing the Secretary discretion in cancelling leases would entail nearly absurd results. The court further holds that the Secretary's interpretation is not inconsistent with the Federal Oil and Gas Royalty Management Act. This Act is careful not to alter the Secretary's preexisting authority to cancel leases. The fact that the Act gives the Secretary additional remedies for Native American lease violations indicates quite strongly that cancellation cannot be the only appropriate remedy. The court also holds that the Secretary's decision was not arbitrary and capricious. The Interior Board of Indian Appeals' decision indicates the agency properly weighed the evidence, including what the lessors presented, and arrived at a conclusion supported by the evidence. Last, the court rejects the lessors' argument that the Secretary was bound to cancel the lease under the lease's own terms. The lease gives the Secretary the power to cancel; it does not require him to do so.

Counsel for Plaintiffs
R. Robyn Assaf
Law Offices of R. Robyn Assaf
4312 N. Classen Blvd., Oklahoma City OK 73118
(405) 525-0777

Counsel for Defendants
R. Anthony Rogers
Environment and Natural Resources Division
U.S. Department of Justice, Washington DC 20530
(202) 514-2000/305-0483

Before Baldock and McKay, JJ.