Sprint Corporation v. Department of The Interior

          MEMORANDUM OPINION

          TIMOTHY J. KELLY UNITED STATES DISTRICT JUDGE.

         Scattered across the United States, telecommunications sites support the ubiquitous phone and internet services on which customers increasingly rely. Crown Castle GT Company, LLC (“Crown”) operates a telecommunications site in New Mexico, on federal land managed by Defendant Bureau of Land Management (BLM). In 2003, Alamosa Properties LP (“Alamosa”)-a subsidiary of Plaintiff Sprint Corporation (together with Alamosa, “Sprint”)- entered into a sublease with Crown that permitted it to place antennas on Crown's existing cellular tower and designated a lease area upon which Sprint planned to install items known as cellular cabinets. A few years later, BLM promulgated a regulation requiring any subtenant on a telecommunications site that owns an “equipment shelter” present there to obtain a separate BLM authorization for it and pay a related fee.

         This case concerns BLM's subsequent application of this regulation and the relevant authorizing statute to Sprint's cellular cabinets. In 2013, BLM initiated a trespass action against Sprint, assessing penalties against it for failing to obtain a BLM authorization for its cellular cabinets, on the theory that the cabinets qualified as “equipment shelters” under the regulation. Sprint appealed this determination to the Interior Board of Land Appeals (IBLA or “Board”), arguing that it did not trespass and that, even if it did, BLM lacked statutory authority to impose the penalties in question. The IBLA largely sided with BLM. Through this action, Sprint appeals the IBLA's ruling.

         Before the Court are the parties' cross-motions for summary judgment. For the reasons explained below, the Court concludes that (1) the IBLA's determination that Sprint trespassed on public land because its cellular cabinets qualified as equipment shelters under the relevant regulation was not arbitrary and capricious, and (2) the IBLA's assessment of penalties against Sprint for its failure to obtain a right-of-way authorization for the cellular cabinets did not exceed its statutory authority. Therefore, the Court will deny Sprint's Motion for Summary Judgment (ECF No. 23) and grant Defendants' Cross-Motion for Summary Judgment (ECF No. 24).^[1]

         I. Background

         A. Statutory and Regulatory Background

         BLM, an agency of Defendant Department of the Interior, is responsible for managing public lands. The Federal Land Policy and Management Act of 1976 (FLPMA), 43 U.S.C. § 1701 et seq., governs its management of those lands. See Norton v. S. Utah Wilderness All., 542 U.S. 55, 58 (2004). The statute authorizes BLM to grant rights-of-way on public lands for telecommunications purposes. See 43 U.S.C. § 1761(a)(5). These “[r]ights-of-way shall be granted, issued, or renewed . . . consistent with . . . any . . . applicable law” and “shall also be subject to such terms and conditions as the Secretary concerned may prescribe regarding extent, duration, survey, location, construction, maintenance, transfer or assignment, and termination.” Id. § 1764(c). The FLPMA provides that, when BLM grants a right-of-way, “[t]he holder of a right-of-way shall pay in advance the fair market value thereof, as determined by the Secretary granting, issuing, or renewing such right-of-way.” Id. § 1764(g).

         BLM regulations provide that users of public lands “must have a grant under this part when [they] plan to use public lands for systems or facilities over, under, on, or through public lands.” 43 C.F.R. § 2801.9(a). A “facility” is defined as “an improvement or structure, whether existing or planned, that is or would be owned and controlled by the grant or lease holder within a right-of-way.” Id. § 2801.5. In the telecommunications context, a “facility means the building, tower, and related incidental structures or improvements authorized under the terms of the grant or lease.” Id. BLM regulations also provided that “the holder of a right-of-way grant for communication purposes may authorize other parties to use a facility, without prior written consent of the authorized officer, if so provided by terms and conditions of the grant.” 43 C.F.R. § 2801.1-1(f) (1996).

         In June 2005, BLM promulgated a regulation (the “2005 Regulation”) that included new subsections (b) and (c) below:

If I am a tenant or customer in a facility, must I have my own grant or lease and if so, how will this affect my rent?

(a) You may have your own authorization, but BLM does not require a separate grant or lease for tenants and customers using a facility authorized by a BLM grant or lease that contains a subleasing provision. BLM charges the facility owner or facility manager rent based on the highest value use within the facility (including any tenant or customer use authorized by a separate grant or lease) and 25 percent of the rent from the rent schedule for each of the other uses subject to rent (including any tenant or customer use a separate grant or lease authorizes and the facility owner's use if it is not the highest value use).

(b) If you own a building, equipment shelter, or tower on public lands for communication purposes, you must have an authorization under this part, even if you are also a tenant or customer in someone else's facility.

(c) BLM will charge tenants and customers who hold their own grant or lease in a facility, as grant or lease holders, the full annual rent for their use based on the BLM communication use rent schedule. BLM will also include such tenant or customer use in calculating the rent the facility owner or facility manager must pay.

43 C.F.R. § 2806.36. In the Federal Register, BLM explained that “[w]e added a new paragraph (b) to this section to make it clear that when someone owns a building, equipment shelter, or tower on public lands for communication purposes, they must have a BLM right-of-way authorization for their improvements, even if they are a tenant or customer in someone else's facility.” Rights-of-Way, Principles and Procedures; Rights-of-Way Under the Federal Land Policy and Management Act and the Mineral Leasing Act, 70 Fed. Reg. 20, 970, 21, 015 (Apr. 22, 2005). According to BLM, the new subsection (b) was “consistent with current [BLM] policy” at the time and was designed to “eliminate confusion among some right-of-way holders.” Id.

         B. Factual and Procedural Background

         1. The Orogrande Communications Site

         The Orogrande Communications Site (the “Site”) is located in south-central New Mexico. Pl.'s MSJ Br. at 1. In 1990, BLM issued “communications right-of-way grant/temporary use permit” number 83847 for the Site. Id. at 4; AR 59-60. The right-of-way granted the “right to construct, operate, maintain, and terminate a communication site and access road” and to place “[c]ellular mobile and portable communications” equipment on the Site. AR 59-60. In particular, the original right-of-way permitted the holder to place a 125-foot self-supporting steel monopole microwave antenna, a 12-foot high equipment building, a generator, a fuel tank, an access road, and a fence encumbering 3, 250 square feet of public lands on the Site. AR 24, 35, 59-60, 490-91. The holder agreed to pay BLM “fair market value” for the right-of- way. AR 60. The right-of-way provided that “[i]f renewed, the right-of-way permit shall be subject to the regulations existing at the time of renewal.” AR 59.

         In 2000, Crown acquired the right-of-way via assignment. AR 327-28, 338-39. BLM approved the assignment “subject to the terms and conditions of the original [right-of-way (ROW)] grant.” AR 354. The assignment “cover[ed] the right to construct, operate, maintain, and terminate a communication site and access road” at the Site. AR 355. The right-of-way did not authorize subleasing without advance notice to and approval by BLM. AR 500. After acquiring the assignment, Crown requested authorization to enter into subleases with tenants at the Site. In January 2001, BLM granted Crown authority to sublease “subject to the terms and conditions of the original ROW grant” and “[a]ll applicable regulations in 43 CFR 2800.” AR 371. That same month, BLM also granted Crown approval to amend the original right-of-way to install a 140-foot self-supporting tower. AR 366.

         In January 2003, Crown entered into a sublease (the “Sublease”) with Sprint for its tenancy at the Site. AR 962-1024. The Sublease's terms, conditions, and covenants were “subject to and subordinate to” the terms, conditions, and covenants of Crown's right-of-way, also referred to as the “Prime Lease.” AR 967. The Sublease authorized Sprint to install four 60-inch by 12-inch by 7-inch antennas weighing 27 pounds each on Crown's tower, at a specified height. AR 962. The Sublease also designated a “lease area” of 17 feet by 12 feet by 10 feet for Sprint, referred to as “[e]quipment building/floor space.” AR 962; see also AR 997 (showing the “[p]roposed . . . lease area”). The Sublease required Sprint to use the Site “in compliance with all applicable . . . regulations . . . of any governmental bodies and administrative agencies” and “obtain, at its own expense, any and all necessary licenses or permits . . . from such governmental authorities as shall have jurisdiction in connection with the construction, installation, operation, repair, alteration or replacement of [its] equipment or with any of its activities thereon.” AR 965. The Sublease provided that Sprint would pay Crown a “Basic Monthly Payment” (starting at $1, 500/month) and “Additional Payments” for the “portion, if any, of any tax, fee or other assessment attributable to [Sprint's] use of the Facility or against the Facility generally . . . .” AR 963. After the Sublease was executed, Sprint installed its antennas on the tower and its cellular cabinets at the Site. Pl.'s MSJ Br. at 5; Compl. ¶ 3. Pursuant to the lease between BLM and Crown, Crown submitted rental calculation spreadsheets to BLM between 2003 and 2013 that listed tenants at the Site, including Sprint.^[2] Pl.'s MSJ Br. at 8 (citing AR 403, 405, 410, 446, 517, 527, 592, 597, 602, 605, 607). However, Sprint did not seek authorization from BLM for its cellular cabinets, either before or after the 2005 Regulation was promulgated.

         2. BLM's Management of the Site and Sprint's Alleged Trespass

         As the manager of the federal public lands, BLM periodically inspected the Site. In March 2005, a BLM employee performed a compliance check at the Site and documented Sprint's cellular cabinets. See AR 430 (noting one “outside cabinet not on lease, possibly owned by Alamosa and/or Sprint”). He recommended that BLM “[i]ssue [a] separate lease to [the] owner of [the] outside cabinet.” Id.

         In 2008, BLM also issued a guidance document for the Site called the Orogrande Communications Site Plan (the “2008 Site Plan”). See AR 541-91. The 2008 Site Plan “govern[ed] development and management of” the Site, AR 544, and was “incorporated into all leases, grants, and reservations issued” for the Site, AR 547. It included pictures of Sprint's cellular cabinets and labeled them on a diagram of the Site. AR 568, 590. But an appendix to the 2008 Site Plan listed the cabinets as a “facility” without an authorization number. See AR 570 (showing “Auth # NMNM xxxxxx” for “South Facility #4 Alamosa (Sprint)”). The 2008 Site Plan also contained provisions addressing tenants' rights to build equipment shelters. Specifically, it provided that “[t]enants . . . may not construct their own equipment shelter (building, shelter or cabinet) . . . [and] [i]f that is not possible, a separate . . . application . . . and authorization are required.” AR 548. The 2008 Site Plan further provided that if a tenant had to construct its own equipment shelter, it is “a tenant/customer of the original lease/holder in addition[] to being a separate facility for billing purposes.” Id.

         In 2009, BLM personnel again noted the presence of potentially unauthorized cabinets on the Site. See AR 600 (containing note to “check if authorized, ” in reference to the cabinets).

         In April 2013, a BLM employee conducted an audit of the Site. AR 648. He determined that Sprint had placed unauthorized cellular cabinets on the Site. Pl.'s MSJ Br. at 9 (citing AR 638-47). As a result, BLM issued a trespass notice (“the Trespass Notice”) to Sprint on May 29, 2013. AR 655-58. The Trespass Notice stated that BLM had discovered equipment operating at the Site that it believed belonged to Sprint. AR 655. On July 2, 2013, Sprint responded to the Trespass Notice, making the case that it was not trespassing because it was occupying the Site pursuant to its Sublease with Crown. AR 659-61. On July 23, 2013, BLM issued a trespass decision (the “Trespass Decision”) against Sprint. AR 670-78. It concluded that Sprint had violated 43 C.F.R. § 2808.10, the regulation defining trespass, and 43 C.F.R. § 2806.36(b). AR 670-71. The Trespass Decision required Sprint to pay $86, 931.96 for having its cellular cabinets on the Site between 2003 and 2013. AR 674-75.

         3. Sprint's ...