The opinion of the court was delivered by: GREEN
JOYCE HENS GREEN, UNITED STATES DISTRICT JUDGE.
I. BACKGROUND AND PROCEEDINGS BELOW
Plaintiff Star Lake Railroad (Star Lake) is appealing a final decision by the Interior Department's Interior Board of Indian Appeals (IBIA or Board) affirming the Navajo Area Board of Indian Affairs (Navajo Area BIA) termination of Star Lake's right-of-way on federal lands held in trust by the federal government for the Navajo. See Star Lake Railroad Co. v. Area Director, Navajo Area Office, Bureau of Indian Affairs and Navajo Tribe of Indians, 15 IBIA 220 (No. IBIA 86-42-A, July 10, 1987). The following account is derived primarily from the IBIA's decision.
In 1974 Star Lake, a subsidiary of the Atchison, Topeka and Santa Fe Railroad Company (Santa Fe), announced its plans to build a railroad line, connected to an existing line, in northwest New Mexico, for the transportation of coal. This line would cross state, Bureau of Land Management (BLM), tribal trust, tribal fee, private, and federal lands. In December 1979, the BLM granted Star Lake a right-of-way over more than twelve miles of public lands, but would not permit construction to begin until the Navajo Area BIA approved a right-of-way across Indian lands. 15 IBIA 222.
On January 15, 1981, the Assistant Secretary of the Interior-Indian Affairs directed the Navajo Area BIA Director to approve Star Lake's right-of-way across Navajo Trust lands, on the condition that the grant of the easement incorporate an agreement between the Navajo Tribe and the Santa Fe Railway. Administrative Record (AR) Folder D, Tab A. On January 16, 1981, the right-of-way, incorporating the agreement, was approved. In return for the grant, Star Lake agreed to pay $ 11,672.80 as well as provide certain benefits to the Tribe. AR Folder A, Tab K; 15 IBIA at 223.
The disagreement that prompted the instant action centers on the following language in the grant:
PROVIDED, that this right-of-way shall be terminable in whole or in part by the Grantor for any of the following causes upon 30 days' written notice and failure of the grantee within said notice period to correct the basis for termination:
A. Failure to comply with any term or condition of the grant or the applicable regulations.
B. A nonuse of the right-of-way for a consecutive two-year period for the purpose for which it was granted.
AR Folder A, Tab K; 15 IBIA at 223. This language is identical in all material respects to the Interior Department regulations governing rights-of-way on Indian lands. See 25 C.F.R. § 169.20 (1987).
At the request of the Tribe, the Area Director wrote Star Lake on October 24, 1984, that the Tribe wished to terminate the right-of-way, primarily because Star Lake had failed for two years to use the easement for its purpose: to construct a railroad line. AR Folder D, Tab J; 15 IBIA at 225. Star Lake responded by letter on November 20, 1984, that although it still intended to construct the rail line, its application to the ICC for permission to build was being opposed and therefore its failure to begin working on the line was involuntary. It did not deny its non-use. AR Folder A, Tab I. On December 21, 1984, the Area Director terminated the right-of-way on the basis of Star Lake's failure to demonstrate that it used the right-of-way for its intended purpose within the allotted time. In the termination letter, the Director noted that Star Lake had not filed any status reports during the first two years of the easement, nor had it requested any extensions of the period of use. 15 IBIA at 225; AR Folder A, Tab G.
During the same period as the events described above, Star Lake was attempting to secure rights-of-way over several lands held in trust by the United States for the benefit of individual Indians. 15 IBIA at 228. These actions by Star Lake were disputed at every stage; administrative findings and appeals, as well as various lawsuits, ensued.
Ultimately the Interstate Commerce Commission, following a remand from the Court of Appeals for the District of Columbia Circuit,
granted Star Lake authority to construct the railway as a whole, issuing a certificate of public convenience and necessity on April 4, 1987. Interstate Commerce Commission Decision, Finance Docket No. 28272, Star Lake Railroad Co. -- Rail Construction and Operation in McKinley County, New Mexico (April 10, 1987) (ICC Decision); AR Folder H, Tab 21.
The ICC decision took official notice of the termination of the easement at issue here, ICC Decision at 5, but nonetheless declared the line to be in the public interest. However, it noted, "our authorization is permissive; applicants will have to obtain the easement or make some other acceptable arrangement before they can construct the line." ICC Decision at 6; see also id. at 12 n. 16 ("we do not withhold our approval to operate a rail line . . . simply because the applicant has not already obtained all necessary approvals by other authorities."). The Court of Appeals affirmed the certificate. New Mexico Navajo Ranchers Association v. ICC, 271 U.S. App. D.C. 36, 850 F.2d 729 (D.C.Cir. 1988).
Meanwhile, Star Lake appealed the termination decision at issue here to the Acting Deputy Assistant Secretary-Indian Affairs. 15 IBIA at 226. On August 29, 1985, the Deputy remanded the case to the Area Director for his failure to explain his decision adequately. Specifically, the Deputy remanded for an explanation of what was in the Tribe's best interest and "because the decision to terminate is a discretionary one and one which rests with the Area Director" and "his reasoning was not adequately explained." AR Folder A, Tab A.
On February 12, 1986, the Area Director affirmed his 1984 termination decision. Two of the Director's findings are of note:
1) Grantee Star Lake failed to demonstrate that it had in any way used the right-of-way for the purpose for which it was intended or to otherwise cure the default including a timely filing of a request for an extension of time. The term of the grant of easement makes it mandatory that ...