MEMORANDUM OPINION [DKTS ## 89, 93]
RICHARD J. LEON, UNITED STATES DISTRICT JUDGE
Plaintiff
Solenex LLC ("Solenex"), the holder of a federal
oil and gas lease in Montana, brings suit against the
Secretary of the Interior, the Secretary of Agriculture, the
Director of the Bureau of Land Management, the Chief of the
Forest Service, and several other subordinate federal
officials (collectively, "federal defendants" or
"the Government") relating to the Government's
cancellation of its lease after suspending all oil and
gas> drilling and extraction activity on that lease for
more than thirty years. See First Amend. Compl.
[Dkt. # 73] ¶¶ 3-13, 99-115. Plaintiff seeks
declaratory and injunctive relief, including that this Court
vacate the cancellation and reinstate the lease, based on
federal defendants' alleged violations of the
Administrative Procedure Act ("APA"), 5 U.S.C.
§ 551 et seq. See First Amend. Compl.
¶¶ 116-158. Before this Court are the parties'
Cross-Motions for Summary Judgment. See Pl's
Motion for Summary Judgment [Dkt. #89] ("Pl's
Mot."); Defs.' Cross-Motion for Summary Judgment
[Dkt. # 93] ("Defs.' Mot.").
For the
following reasons, the Court GRANTS the plaintiffs motion for
summary judgment and DENIES the defendant's cross-motion
for summary judgment.
BACKGROUND
I.
Regulatory Landscape
Plaintiff
Solenex seeks declaratory and injunctive relief for federal
defendants' alleged violations of the Administrative
Procedure Act ("APA"), 5 U.S.C. § 551
etseq., by cancelling the Solenex lease after
holding it in suspension for more than thirty years.
Plaintiff raises several independent reasons for finding that
federal defendants acted unlawfully: (1) federal defendants
lack authority to cancel the lease both because the Secretary
exceeded his authority and because his cancellation was
arbitrary and capricious, (2) the cancellation is time barred
by a statutory limitations period or, alternatively, the
doctrine of laches, (3) defendants are estopped from
cancelling the lease by a pattern of conduct treating the
lease as valid, and (4) the lease was properly issued in
compliance with NEPA and the NHPA. A brief overview of these
is in order.
First,
plaintiff argues that the Department of Interior's
("Interior") authority to administratively cancel a
lease is limited under the Mineral Leasing Act of 1920
("MLA"). 30 U.S.C. §§ 181-287. The MLA
governs the Secretary of Interior's (hereinafter
"the Secretary") authority to issue leases for
"[a]ll lands subject to disposition under this Act which
are known or believed to contain oil or gas deposits."
Id. § 226(a). Pursuant to the MLA, the
Secretary may also cancel those leases if the lease is (1)
"in violation of the MLA, unless the current leaseholder
is a bona fide purchaser," id. §
184(h)(1), (h)(2); (2) "when a lessee has violated the
statute, regulations, or the lease itself, id.
§ 188(a); or (3) "where the lessee is in violation
of lease provisions after at least 30-days' notice"
and the lease is a non-producing lease, id. §
188(b). Interior has also promulgated its own regulations
allowing for administrative cancellation of leases under
certain conditions. See 43 C.F.R. § 3108.5.
Namely, that the Secretary can cancel leases for either (1)
the lessee's failure "to comply with any of the
provisions of the law, the regulations issued thereunder, or
the lease" after notice and 30 days to cure, 43 C.F.R.
§ 3108.3(a), or (2) the agency's determination that
the lease was "improperly issued." Id.
§ 3108.3(d).
As
asserted by federal defendants, one of the ways in which a
lease can be "improperly issued" and therefore
subject to administrative cancellation is by non-compliance
with either the National Environmental Policy Act
("NEPA") or the National Historic Preservation Act
("NHPA"). Defs.' Mot. at 27-29. NEPA requires
that agencies take a "hard look" at the
environmental consequences, Robertson v. Methow Valley
Citizens Council, 490 U.S. 332, 350 (1989), of
"major Federal actions" that "significantly
affect [] the quality of the human environment." 42
U.S.C. § 4332(C); 40 C.F.R. §§ 150.3,
1501.4(c).[1] Nevertheless, an "agency is not
constrained by NEPA from deciding that other values outweigh
the environmental costs." Robertson, 490 U.S.
at 350. NHPA, for its part, requires that the agency
"take into account the effect of [an] undertaking on any
historic property." 54 U.S.C. §§ 300308,
306108. This requires that the agency consult with the
Advisory Council of Historic Preservation ("ACHP").
See Id. NHPA consultation is usually considered
adequate where the acting agency has "visited the site
[and] consulted with the preservation authorities"
before concluding there will be no adverse impact on the
historic property. Duncan's Point Lot Owners
Ass'n Inc. v. F.E.R.C, 522 F.3d 371, 377 (D.C. Cir.
2008); cf. Nat'l Parks Conservation Ass'n v.
United States, 177 F.Supp.3d 1 (D.D.C. 2016) (permitting
mineral development in a designated NHPA historic district
after the Forest Service conducted an environmental
assessment but not a full-blown environmental impact
statement). Importantly, while both of these statutes require
agencies to follow certain procedures to gather information
to help assist with decision-making, they do not themselves
impose substantive requirements with respect to the outcome
of that decision-making. See, e.g., Sierra Club v.
Federal Energy Regulatory Commission, 867 F.3d 1357,
1367 (D.C. Cir. 2017) ("NEPA directs agencies only to
look hard at the environmental effects of their decisions,
and not to take one type of action or another.")
(internal quotation marks omitted); id.
("[NEPA] is primarily information-forcing");
Delaware Riverkeeper Network v. F.E.R.C, 753 F.3d
1304, 1310 (D.C. Cir, 2014) ("NEPA is 'essentially
procedural' and designed to ensure 'fully informed
and well-considered decision[s]' by federal agencies)
(quoting Vt. Yankee Nuclear Power Corp. v. NRDC, 435
U.S. 519, 558 (1978)); Nat'l Mining Ass'n v.
Fowler, 324 F.3d 752, 755 (D.C. Cir. 2003) ("An
essentially procedural statute, [NHPA] imposes no substantive
standards on agencies, but it does require them to solicit
the Council's comments and to take into account the
effect of their undertakings.") (internal citation
omitted).
Any
agency action can be set aside under the APA where it is
"arbitrary, capricious, an abuse of discretion, or
otherwise not in accordance with law." 5 U.S.C. §
7O6(2)(A). As articulated by the Supreme Court, "[t]he
scope of review under the 'arbitrary and capricious'
standard is narrow and a court is not to substitute its
judgment for that of the agency." Motor Vehicle
Mfrs. Ass'n of the United States, Inc. v. State Farm Mut.
Auto. Ins. Co. ("State Farm"), 463 U.S. 29, 43
(1983). Nevertheless, even an action that is within the
agency's statutory authority may still be arbitrary and
capricious if the agency fails to exhibit reasoned
decision-making. See Encino Motorcars, LLC v.
Navarro, 136 S.Ct. 2117, 2126 (2016)
('"Unexplained inconsistency' in agency policy
is 'a reason for holding an interpretation to be an
arbitrary and capricious change from agency
practice...'"); Am. Wild Horse Pres. Campaign v.
Perdue, 873 F.3d 914, 923 (D.C. Cir. 2017) ("A
central principle of administrative law is that, when an
agency decides to depart from decades-long past practices and
official policies, the agency must at a minimum acknowledge
the change and offer a reasoned explanation for it.").
It is through this lens that I view the Bureau of Land
Management's relatively recent decision to cancel the
Solenex lease for purported pre-lease violations of NEPA and
NHPA after holding it in suspension for over three
decades!
II.
Procedural History
The
circumstances underlying this case date back to May 24, 1982,
when the Bureau of Land Management ("BLM") approved
federal oil and gas Lease M-53323 to Solenex's
predecessor, Sidney M. Longwell ("Longwell").
See Statement of Material Facts in Support of
Pis.' Mot. for Summary Judgment
("PSOF")[2] ¶¶ 11-21. BLM issued the lease
after conducting a 165-page Environmental Assessment
("1981 EA") covering nearly 200 pending leases in
the Badger Two Medicine ("Badger-Two") area of the
Lewis and Clark National Forest in cooperation with the
United States Forest Service ("Forest Service").
Id. ¶¶ 1-9. The 1981 EA considered the
effects on the environment of various alternatives to
leasing, including "no action" alternatives.
See Id. ¶¶ 4, 5. In addition to the EA,
the Forest Service also engaged in American Indian Religious
Freedom Act consultation with the Blackfeet Tribe.
Id. ¶ 4. Ultimately, the Forest Service issued
a Decision Notice ("DN") and Finding of No.
Significant Impact ("FONSI"), id. ¶
6, approving "Alternative 3" which conditionally
granted leases "with surface occupancy...only for
accessible areas that could be protected" and provided
that "[a]fter lease issuance, any proposed oil and gas
activities would be fully analyzed under NEPA."
Id. ¶ 5.
Longwell
subsequently assigned his lease to a company called Fina in
June 1983.. Id. In November of that year, Fina
submitted an Application for Permit to Drill
("APD") an exploratory well to BLM. Id.
Two years later, after considering the adverse environmental
effects of approving the APD, the Forest Service issued a
318-page EA ("1985 EA") evaluating and ultimately
approving it. Id. ¶ 30. The 1985 EA
expressly incorporated the earlier 1981 EA approving the
lease itself. The 1985 EA also documented consultation with
other agencies required by law, id. ¶ 29, and
with the Blackfeet Tribe. See Id. ¶ 30. The
Forest Service expressly found that the APD would not affect
the Tribe's reserved rights in the ceded strip and that
"[n]o religious sites or activities were identified in
the project area..." Id. On an administrative
appeal, the IBLA upheld the approval but remanded for further
consideration of four issues. Id. ¶¶
31-32. Despite the approval of the Fina APD, in 1993 BLM
suspended the lease for further environmental assessments.
Id. BLM then suspended the lease every year after
that for nearly twenty years. Id.
Solenex
brought this suit in 2013 against the Secretary of the
Interior, the Secretary of Agriculture, the Director of the
Bureau of Land Management, the Chief of the Forest Service,
and several other subordinate federal officials relating to
the suspension of all oil and gas drilling and extraction
activity on that lease. See generally First Amend.
Compl, [Dkt. # 1]. On July 27, 2015, this Court partially
granted Solenex's motion for summary judgment on federal
defendants' suspension of its lease, finding that
defendants' 29-year delay in reviewing the suspended
lease constituted unreasonable delay under the APA.
See 7/27/15 Order Granting Partial Summary Judgment
to Solenex LLP ("7/27/15 Order") [Dkt. #52].
Accordingly, I ordered defendants to submit, within 21 days,
a "proposed accelerated schedule" of the remaining
tasks to be completed in the administrative process.
Id. at 5.
On
August 17, 2015, defendants submitted a proposed schedule,
see Dels.' Response to Order of the Court
("Defs.' Response") [Dkt. # 53], that I found
deficient in several respects, including that: (1) it
proposed that defendants have until July 15, 2017 to complete
compliance under NEPA and lift the suspension on the lease;
and (2) it lacked any explanation as to why this much time is
necessary to determine whether-after 33 years and four APD
approvals-the lease was "improperly issued" under
43 C.F.R. § 3108.3(d). See 10/8/15 Mem. Order
[Dkt. # 57] at 3; see also Transcript of 10/6/15
Proceeding [Dkt. #56], As such, I rejected defendants'
proposal as unreasonable and ...