United States District Court, District of Columbia
W.A. MONCRIEF, JR., Plaintiff,
UNITED STATES DEPARTMENT OF INTERIOR, and JAMIE E. CONNELL, in her official capacity as State Director, Montana Dakotas Office, Bureau of Land Management, Defendants.
MEMORANDUM OPINION [## 19, 21, 24]
RICHARD J. LEON, UNITED STATES DISTRICT JUDGE
W.A. Moncrief, Jr. ("Moncrief"), the holder of a
federal oil and gas lease in Montana, brings suit against the
United States Department of Interior ("Interior")
and the Director of the Montana Bureau of Land Management
("BLM") (collectively, "federal
defendants" or "the Government") relating to
the Government's cancellation of his lease after
suspending all oil and gas drilling and extraction activity
on that lease for more than thirty years. See Compl.
[Dkt. # 1] ¶¶ 9-11, 48-59. 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 Compl. ¶¶ 60-86.
Before this Court are the parties' Cross-Motions for
Summary Judgment. See PL's Motion for Summary
Judgment [Dkt. #19] ("PL's Mot."); Defs.'
Cross-Motion for Summary Judgment [Dkt. # 21]
("Defs.' Mot."); Df.-Intervenor's
Cross-Motion for Summary Judgment [Dkt. # 24]
("Df-Intervenor's Mot."). For the following
reasons, the plaintiffs motion for summary judgment [Dkt. #
19] is GRANTED and defendants' motions [Dkt. ##
21, 24] are DENIED.
W.A. Moncrief ("Moncrief') lease is one of several
leases located in the Badger-Two Medicine
("Badger-Two") area in the Lewis and Clark National
Forest in northwestern Montana. In 1981, the United States Forest
Service ("Forest Service") prepared a 165-page
Environmental Assessment ("EA") of oil and gas
drilling in the Lewis and Clark National Forest, including
the Badger-Two area. See Non-Wilderness Leasing
Environmental Assessment, Joint Appendix ("J.A.")
Vol. VI [Dkt. # 32-3] at 44-54 (FS-HC-014364-014434). The EA
considered alternatives to leasing, including "no
action" type alternatives, and engaged in American
Indian Religious Freedom Act consultation with the Blackfeet
Tribe. See Id. at 50 (FS-HC-014404). The Forest
Service ultimately issued a Decision Notice ("DN")
and Finding of No. Significant Impact ("FONSI"),
approving "Alternative 3" which 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. at 45-46
Forest Service issued Federal Lease No. 53320 to Randall L.
Weeks ("Weeks") on June 1, 1982. See
Issuance of Lease, J.A. Vol. I [Dkt. # 31-1] at 69-80
(BLM-M000764-774). Weeks subsequently sold the lease to
Atlantic Richfield Corporation C'ARCO") in December
1983 for $1.3 million. See 1/13/84 Lease Assignment,
J.A. Vol. I at 49 (BLM-M000687). In May 1988, ARCO requested
a suspension of the lease while BLM was considering
applications for permits to drill ("APD") on other
leases in the Badger-Two area, including the leases owned by
Fina Oil (subsequently acquired by Solenex LLP) and Chevron,
see 6/1/88 DOI Letter to ARCO, J.A. Vol. I at 68
(BLM-M000746), intending that suspension to "terminate
upon completion of the Environmental Impact Statement for
[the] pending application[s]., .at which time the BLM and
Forest Service would consider other drilling proposals."
Id. It was with the understanding that this was a
"temporary suspension" that W.A. "Monty"
Moncrief purchased the lease for "substantial
consideration" on March 1, 1989. See 6/1/82
Lease Assignment, J.A. Vol. I at 66-67 (BLM-M000740-741);
see also Decl. of C.B. Moncrief ("Moncrief
Decl.") [Dkt. # 19-2] ¶3.
Forest Service and BLM prepared a joint Environmental Impact
Statement ("EIS") and approved the Fina and Chevron
APDs in 1991. See Forest Service ROD, J.A. Vol. I at
106-07 (FS002148-2149). The BLM and Forest Service later
withdrew approval to seek further review of traditional
practices in the Badger-Two area, but then approved the Fina
and Chevron APDs again in 1993. See 1/15/93 BLM
Letter to Fina Approving APD with Conditions, J.A. Vol. I at
108 (FS002207). Yet even though the Chevron and Solenex APDs
had been approved, BLM continued to suspend leases in the
Badger-Two Medicine area from 1993-1998, including the
Moncrief lease. See generally Defs.' Mot. at
7-9; PL's Mot. at 12. In 2002, after consultation with the
Blackfeet Nation under Section 106 of the NHPA, a portion of
Badger-Two area was designated as a "traditional
cultural district" or "TCD." See
1/31/02 Determination of TCD Eligibility Notification, J.A.
Vol. IV [Dkt. #32-1] at 201 (FS005942). This area did not
originally include the Solenex proposed well location or the
Moncrief lease. See 2002 Map of Badger-Two Medicine
TCD, J.A. Vol. I at 163 (FS004000). However, after 10 years
of continued consultation, additional acreage including the
Moncrief Lease was added to the TCD in 2012. See
9/21/15 ACHP Final Comments, J.A. Vol. I at 3-11
(FS006584-6592); 6/20/13 Letter re Boundary Expansion, J.A.
Vol. IV at 223 (FS006010); 2014 Map of Badger-Two Medicine
TCD, J.A. Vol. II [Dkt. #31-2] at 20 (FS004742).
the Forest Service did not make a determination of adverse
effects under the NHPA until 2014, - finding that there were
no mitigation measures agreeable to the Blackfeet Tribe that
would allow for development in the Badger-Two area.
See 12/3/14 Determination of Adverse Effects, J.A.
Vol. V [Dkt. # 32-2] at 69-79 (FS006532-654).
Additional consultations took place in 2015. See
Defs.' Mot. at 10. On September 21, 2015, the Advisory
Council of Historic Preservation ("ACHP")
recommended that the Departments of Interior and Agriculture
cancel the Solenex lease. See ACHP Comments, J.A.
Vol. VI at 8 (FS006590). Then on March 17, 2016, BLM
disapproved Solenex's APD and cancelled its lease,
claiming that the initial NEPA and NHPA analyses upon which
its leasing decision was based were inadequate. See
Defs.' Mot. at 11.
2016, a Moncrief employee received a phone call informing it
that its lease would likely be cancelled as well.
See Dels.' Answer ¶ 56; Email Messages,
J.A. Vol. 1 at 32 (BLM-M000665). Moncrief s attorneys sent a
letter to Interior on November 23, 2016, requesting that the
lease not be cancelled and also requesting a hearing.
See 11/23/16 WPD&N Letter, J.A. Vol. 1 at 84-85
(BLM-M000801-802). Interior never responded to
Moncrief s request for a hearing, but sent a letter decision
administratively cancelling the Moncrief Lease on January 6,
2017, in the waning days of the Obama administration.
See 1/6/17 Letter to Moncrief, J.A. Vol. 1 at 36-48
(BLM-M000670-682). Interior concurrently published a press
release on January 6, 2017 noting that all leases in the
Badger-Two area were being terminated. See 1/6/17
Press Release, J.A. Vol. 1 at 83 (BLM-M00800). Moncrief filed
suit against Interior and BLM in this court on April 5, 2017,
Thus, I now must review the lawfulness of federal
defendants' cancellation of the Moncrief lease.
Moncrief argues that the agency's 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). The Department of Interior has
also promulgated its own regulations governing the
cancellation of leases. See 43 C.F.R. §3108.5.
Namely, 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.
asserted by federal defendants, one of the ways in which the
lease could be "improperly issued" is by
non-compliance with the National Environmental Policy Act
("NEPA") and the National Historic Preservation Act
("NITPA"). Defs.' Mot. at 13. 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. §§ 1501.3,
1501.4(c). Nevertheless, an "agency is not
constrained by NEPA from deciding that other values outweigh
the environmental costs." Robertson, 490 U.S.
defendants also allege that the lease at issue was in
violation of the National Historic Preservation Act
("NHPA"). Defs.' Mot. at 14. NFIPA 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
and seek its comments. 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); see also Nat'l Parks Conservation
Ass'n v. United States ("NPCA "), 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). But, importantly here,
neither NEPA nor NHPA dictates a substantive outcome.
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).
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